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State Bank of India – Result Review

January 25, 2008

SBI has reported a very strong quarter, combining high growth, improving profitability, and stable asset quality. It’s also a strong come-back from the previous quarter, in which growth was at the cost of profitability.

The strong P&L is a mix of a) 35% fee growth (excluding one-offs), driven by FX revenues and 19% core fees b) Rebounding margins – up about 20bps qoq (boosted by investment yields), though still low at 284bps – with some strains ahead and c) Moderate cost growth, strong trading gains, and strong asset write-backs. Exone- offs and trading gains, pre-provisioning profit growth of 48% yoy and 33%qoq.

SBI also continues to gain market share with 26% loan growth, has improved its under-pressure deposit mix over the last quarter, and importantly, maintained asset quality.

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