2QFY2012 Result Update | Banking

October 20, 2011

IDBI Bank
Performance Highlights

Particulars (` cr) NII Pre-prov. profit PAT

Source: Company, Angel Research

NEUTRAL
CMP Target Price
% chg (qoq) (2.6) (2.4) 54.0 2QFY11 1125 1025 429 % chg (yoy) (0.3) (1.9) 20.2

`105 -

2QFY12 1,122 1,006 516

1QFY12 1,152 1,031 335

Investment Period
Stock Info Sector Market Cap (` cr) Beta 52 Week High / Low Avg. Daily Volume Face Value (`) BSE Sensex Nifty Reuters Code Bloomberg Code

Banking 10,318 1.3 202/95 9,20,401 10 16,937 5,092 IDBI.BO IDBI@IN

For 2QFY2012, IDBI Bank reported 20.2% yoy growth in its net profit to `516cr, which was well above our as well as street estimates, primarily on account of lower-than-estimated provisioning and operating expenses and a lower effective tax rate. A marginal qoq compression in NIM despite strong traction in CASA balances and continuation of the deteriorating asset-quality trend were the key highlights of the result. We maintain our Neutral view on the stock. Healthy CASA traction; asset quality continues to deteriorate: For 2QFY2012, the banks advances grew marginally by 0.6% qoq (up 19.7% yoy). Deposits declined marginally by 1.0% qoq (up 13.0% yoy). CASA deposits growth continued to be healthy at 42.2% yoy (up 9.9% qoq), leading to a 393bp yoy improvement in CASA ratio to 19.2%. The surge in CASA deposits was led by robust 67.2% yoy growth in saving account deposits. In spite of the increase in share of CASA in the funding mix, reported NIM of the bank contracted, albeit marginally, by 7bp qoq to 2.0%. On the asset-quality front, the deteriorating trend continued with the annualised gross slippage ratio rising to 2.4% from 1.6% in 1QFY2012. Slippages in 1HFY2012 have been on the higher side considering that the bank had already switched over to system-based NPA recognition platform. Consequently, gross and net NPA ratios rose to 2.5% and 1.6%, respectively, and provision coverage ratio including technical write-offs fell to 70.1% (74.0% in 1QFY2012). Profitability in 2QFY2012 was aided by a lower effective tax rate (at 24.8%) as against managements guidance of 30-32%. Outlook and valuation: We believe the bank is set to improve its credit and deposit mix going forward on the back of its strong branch expansion plans. The bank has been amongst the fastest-growing banks in terms of CASA deposits over the past few years even when compared to private banks and has a market share of 2.1% (as of FY2011). At the CMP, the stock is trading at attractive valuations of 0.9x FY2013E P/ABV adjusting for SASF (0.7x without adjusting). However, considering the near-term cyclical headwinds to the asset quality, we remain Neutral on the stock. Key financials
Y/E March (` cr) NII % chg Net Profit % chg NIM (%) EPS (`) P/E (x) P/ABV (x) # RoA (%) RoE (%) FY2010 2,256 82.0 1,031 20.1 1.2 14.2 7.4 1.0 0.5 13.2 FY2011 4,329 91.9 1,650 60.0 1.8 16.8 6.3 0.8 0.7 15.8 FY2012E 4,691 8.4 1,839 11.4 1.8 18.7 5.6 0.8 0.7 13.8 FY2013E 5,488 17.0 2,081 13.2 1.8 21.1 5.0 0.7 0.7 14.0

Shareholding Pattern (%) Promoters MF / Banks / Indian Fls FII / NRIs / OCBs Indian Public / Others 65.1 15.6 3.9 15.4

Abs. (%) Sensex IDBI Bank

3m (8.5) (22.0)

1yr (14.8) (36.9)

3yr 69.8 44.3

Vaibhav Agrawal
022 3935 7800 Ext: 6808 vaibhav.agrawal@angelbroking.com

Shrinivas Bhutda
022 3935 7800 Ext: 6845 shrinivas.bhutda@angelbroking.com

Varun Varma
022 3935 7800 Ext: 6847 varun.varma@angelbroking.com

Source: Company, Angel Research; Note: # Without adjusting for SASF

Please refer to important disclosures at the end of this report

IDBI Bank | 2QFY2012 Result Update

Exhibit 1: 2QFY2012 performance

Particulars (` cr) Interest earned - on Advances / Bills - on investments - on balance with RBI & others - on others Interest Expended Net Interest Income Other income Other income excl. treasury - Fee Income - Treasury Income - Recoveries from written off a/c - Others Operating income Operating expenses - Employee expenses - Other Opex Pre-provision Profit Provisions & Contingencies - Provisions for NPAs - Provisions for Investments - Other provisions PBT Provision for Tax PAT Effective Tax Rate (%)
Source: Company, Angel Research

2QFY12 1QFY12 % chg (qoq) 2QFY11 % chg (yoy) 5,812 4,475 1,332 4 1 4,690 1,122 479 433 320 46 27 86 1,601 595 266 329 1,006 321 183 123 15 686 170 516 24.8 5,629 4,300 1,282 6 42 4,476 1,152 431 408 268 23 39 101 1,583 553 244 309 1,031 426 360 55 11 605 270 335 44.6 3.3 4.1 3.9 (34.2) (96.6) 4.8 (2.6) 11.2 6.2 19.4 100.0 (30.8) (14.7) 1.1 7.6 8.9 6.6 (2.4) (24.7) (49.2) 122.9 39.7 13.4 (37.0) 54.0 (1,984)bp 4,534 3,387 1,140 5 1 3,409 1,125 535 529 396 6 19 114 1,660 635 342 292 1,025 441 319 105 18 584 155 429 26.5 28.2 32.1 16.8 (29.0) (3.4) 37.6 (0.3) (10.5) (18.2) (19.2) 666.7 42.1 (24.6) (3.5) (6.3) (22.4) 12.6 (1.9) (27.4) (42.6) 17.3 (16.4) 17.4 9.7 20.2 (175)bp

Exhibit 2: Actual vs. Angel estimates

Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Company, Angel Research

Actual 1,122 479 1,601 595 1,006 321 686 170 516

Estimates 1,154 479 1,633 638 995 405 590 177 413

Variation (%) (2.8) (0.1) (2.0) (6.8) 1.1 (20.8) 16.2 (4.0) 24.9

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Exhibit 3: 2QFY2012 performance

Particulars Balance sheet Advances (` cr) Deposits (` cr) Credit-to-Deposit Ratio (%) Current deposits (` cr) Saving deposits (` cr) CASA deposits (` cr) CASA ratio (%) CAR (%) Profitability Ratios (%) Cost of funds Yield on assets Return on Earning Assets Cost of Liabilities Reported NIM Cost-to-income ratio Asset quality Gross NPAs ` cr) Gross NPAs (%) Net NPAs (` cr) Net NPAs (%) Provision Coverage Ratio (%) Slippage ratio (%) NPA provision to avg. assets (%)
Source: Company, Angel Research

2QFY12 1QFY12 %chg (qoq) 2QFY11 155,917 154,984 174,441 176,282 89.4 15,216 18,265 33,481 19.2 13.3 8.4 10.2 10.4 7.6 2.0 37.1 3,889 2.5 2,443 1.6 70.1 2.4 0.3 87.9 16,838 13,639 30,477 17.3 13.8 8.0 9.8 10.0 7.3 2.1 34.9 3,288 2.1 1,933 1.3 74.0 1.6 0.6 0.6 130,213 (1.0) 154,305 146bp (9.6) 33.9 9.9 190bp (49)bp 41bp 38bp 41bp 35bp (7)bp 224bp 18.3 37bp 26.4 32bp (393)bp 77bp (28)bp 84.4 12,621 10,925 23,546 15.3 14.2 6.7 9.1 9.4 6.1 2.2 38.2 2,472 1.9 1,549 1.2 74.5 1.3 0.6

%chg (yoy) 19.7 13.0 499bp 20.6 67.2 42.2 393bp (83)bp 170bp 109bp 102bp 148bp (24)bp (108)bp 57.4 59bp 57.7 38bp (446)bp 108bp (27)bp

Business growth remains sluggish; CASA growth healthy

For 2QFY2012, the banks advances grew marginally by 0.6% qoq (up 19.7% yoy). Advances growth on a yoy basis was driven by strong 42.8% growth in agricultural advances and a 28.1% increase in retail advances. Share of retail credit in the loan book increased to 17.5% from 16.3% in 2QFY2011; however, it has come off from 19.2% in 1QFY2012. The major constituent of the loan book corporate advances, which form over two-thirds of the loan book grew at a reasonable pace of 4.8% qoq and 20.4% yoy.

Exhibit 4: Retail lending showing strong yoy traction

Particulars (` cr) Corporate SME Agriculture Retail Total advances 2QFY12 108,222 9,646 10,815 27,234 155,917 1QFY12 103,295 12,655 9,247 29,787 154,984 % chg (qoq) 4.8 (23.8) 17.0 (8.6) 0.6 2QFY11 89,895 11,479 7,572 21,266 130,212 % chg (yoy) 20.4 (16.0) 42.8 28.1 19.7 % to total 69.4 6.2 6.9 17.5 100.0

Source: Company, Angel Research

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Deposits declined marginally by 1.0% qoq (up 13.0% yoy). CASA deposits growth continued to be healthy at 42.2% yoy (up 9.9% qoq), leading to a 393bp yoy improvement in CASA ratio to 19.2%. The surge in CASA deposits was led by robust 67.2% yoy growth in saving account deposits. About a year back, the bank had waived off all transaction and service-related charges on all current and saving bank accounts to attain higher growth in CASA deposits. As a result, the bank has increased the number of saving accounts by robust ~50% (to ~52.6lakh accounts) over the past one year. However, the bank is yet to witness meaningful accretion in these accounts and the average balances are yet to pick up. Also, the rising spread in saving account interest rates and FD interest rates has resulted in moderation in CASA deposits accretion for almost all banks. Accordingly, management had revised its guidance of 25% CASA ratio by FY2012-end to 17-18% in 1QFY2012. However, the strong sequential traction, especially in saving account deposits, has already improved the CASA ratio to 19%+ levels as of 2QFY2012.

Exhibit 5: Sluggish business growth trend continues

Adv. qoq chg (%) 30.0 89.5 20.0 10.0 84.4 87.0 87.9 89.4 90.0 80.0 Dep. qoq chg (%) CDR (%, RHS) 100.0

Exhibit 6: CASA deposits growth remains healthy

CASA ratio (%) 25.0 20.0 15.0 10.0
22.1 20.8

CASA yoy growth (%, RHS) 54.0 49.2 42.2 60.0 45.0 30.0

3.3

16.8 20.1

0.6

15.3

15.0

20.9

17.3

(3.8) (1.8)

(2.6)

(1.3) (2.3)

(1.0)

(10.0)

60.0

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

19.2

70.0

5.0

15.0 -

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

NIM declines marginally in spite of strong traction in CASA

The bank has seen a sharp 170bp yoy rise in its cost of funds due to its weak funding profile. Though the banks reliance on wholesale funding has declined over the past one year, it is still higher than peers. Reported NIM of the bank declined marginally by 7bp qoq to 2.0%. Considering the persistence of higher FD interest rates, management is targeting to maintain NIM at 2.0-2.2% (down from its earlier guidance of 2.12.2%) for FY2012.

Exhibit 7: NIM moderation continues...

(%) 2.50 2.25 2.00 1.75 1.50 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 2.24 2.28 2.10 2.07 2.00

Exhibit 8: ...due to rise in cost of funds

(%) 9.50 8.50 7.50 6.50 5.50 4.50 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 6.70 7.11 7.45 7.99 8.40

Source: Company, Angel Research

Source: Company, Angel Research

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Fee income dips; recoveries pick up

Non-interest income declined by 10.5% yoy (grew by 11.2% qoq) in 2QFY2012, primarily on account of a 19.2% yoy decline in fee income and a 45.5% reduction in income from forex transactions. Management attributed the low fee income to lower credit offtake, syndication deals and project advisory fees. Treasury income jumped almost seven-fold on a yoy basis and doubled sequentially to `46cr.

Exhibit 9: Fee income declines; recoveries pick up

Particulars (` cr) CEB Treasury Forex Recoveries Others Other income Other income excl. treasury
Source: Company, Angel Research

2QFY12 1QFY12 320 46 24 27 62 479 433 268 23 41 39 60 431 408

% chg (qoq) 2QFY11 19.4 100.0 (41.5) (30.8) 3.5 11.2 6.2 396 6 44 19 70 535 529

% chg (yoy) (19.2) 666.7 (45.5) 42.1 (11.5) (10.5) (18.2)

Slippages rise further

During 2QFY2012, overall asset quality deteriorated with gross NPAs increasing by 18.3% qoq and net NPAs rising by 26.4% qoq. Annualised gross slippage ratio increased further to 2.4% from 1.6% in 1QFY2012 and 1.4% in FY2011. Slippages were broadly spread across the loan segments with a couple of chunky accounts belonging to the food industry. Slippages from the SME segment declined sequentially. Slippages in 1HFY2012 have been on the higher side, considering that the bank had already switched over to system-based NPA recognition platform. The bank also restructured advances of ~`500cr during the quarter, which primarily constituted MFI advances. Gross NPA ratio increased to 2.5% from 2.1% in 1QFY2012, while net NPA ratio increased to 1.6% from 1.3% in 1QFY2012. Provision-to-coverage ratio including technical write-offs dipped to 70.1% from 74.0% in 1QFY2012.

Exhibit 10: NPA ratios inch up

Gross NPAs (%) 3.0 2.5 2.0 1.5 1.0 74.5 75.6 Net NPAs (%) 74.7 74.0 PCR (%, RHS) 80.0 70.1 70.0 60.0 50.0

Exhibit 11: Slippages surprise negatively

2.5 2.0 1.5 1.0 0.5 1.3 2QFY11 2.0 3QFY11 0.5 4QFY11 1.6 1QFY12 2.4 2QFY12 0.6 0.6 0.3 Slippages (%) 0.9 Credit cost (%, RHS) 1.0 0.8 0.6 0.4 0.2 -

0.2

1.9 1.2

2.2 1.2

1.8 1.1

2.1 1.3

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

2.5 1.6
40.0

0.5

Source: Company, Angel Research

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Opex largely under control; branch expansion on a steady track

The relatively faster rise in operating expenses vis--vis the operating income resulted in inching up of cost ratios. The banks cost-to-income ratio rose to 37.1% from 34.9% in 1QFY2012. Employee expenses declined by ~22.4% yoy, primarily due to a high base effect as 2QFY2012 had an element of one-time gratuity provisions. The banks branch expansion has gathered pace over the past one year, with opening of 149 branches of which 92 branches were added in 1HFY2012, which took the total branch network to 908. The bank plans to expand its branch network to 1,0001,050 by the end of FY2012.

Exhibit 12: Branch expansion at a steady pace

Branches 950 900 850 800 750 1,295 1,319 1,370 1,459 ATMs (RHS) 1,496 1,600 1,500 1,400 1,300

Exhibit 13: Cost ratios inch up a bit

(%) 1.2 0.9 0.6 0.3 1.1 0.9 1.0 0.9 1.0 20.0 Opex to average assets (%, RHS) 38.2 34.6 31.3 30.0 34.9 CIR (% , RHS) 37.1 40.0

759

766

816

883

700 650

908

1,200 1,100

10.0

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

2QFY11 3QFY11 4QFY11 1QFY12 2QFY12

Source: Company, Angel Research

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Investment arguments
Strong branch expansion and relatively healthy fee income
IDBI Bank enjoys the advantage of a modern, 100% CBS branch network, which is growing organically at a much faster rate than other PSU banks (17-18% CAGR post the FY2007 UWB acquisition). While the present 883 branches are predominantly urban-concentrated (66.5%), the bank intends to increase its presence in semi-urban areas going forward. Management has indicated its plans to take the branch network to 1,000-1,050 branches by the end of FY2012 and maintain an 18-20% CAGR in branch network. We believe this would continue to increase the contribution of retail deposits in the banks funding mix and drive strong CASA market share gains. The banks CASA deposits grew at a 36.0% CAGR over FY2007-11, and we have factored in a 28.0% CAGR over FY2011-13E. On account of the increasing retail expansion of the bank, we have also accordingly factored in a relatively high 20.6% CAGR in opex for the bank. Relative to other PSU banks, on account of the banks strong corporate relationships and government mandates, the banks fee income at 0.8% is also healthy (though going forward, we have factored in a moderate 10.4% CAGR in fee income over FY201113E in light of the banks recent move to waive off charges for retail depositors to attract CASA deposits, slower balance sheet growth and being consistent with managements guidance).

NIM and RoA headwinds

enjoying

structural

tailwinds,

but

cyclical

Historically, IDBI Bank has witnessed the lowest NIM in the industry, majorly on account of high cost of funding due to the liability mix heavily skewed towards bulk deposits. Also, since the bank relied heavily on corporate lending to increase its loan book, yields on assets on an average have been lower than peers. In wake of lower NIMs, the bank has indicated a strategy of lower advances growth (~15% for FY2012) than the system to concentrate on increasing the percentage of low-cost CASA deposits and consciously shifting focus from large corporate lending to retail and MSME lending to bring in higher-yielding loans. However, in the near term, the bank may find it hard to fully translate these improvements at the NIM level due to the substantial increase in interest rates. At the same time, the bank is expected to fare better than other smaller banks with similarly low CASA ratios on account of the incrementally higher momentum in retail assets and liabilities. Hence, in balance, we have factored in range-bound NIM going forward. Also, in-line with the banks guidance of potential chunky NPAs from the banks legacy corporate loan book (although to a much lesser quantum than that in the past), we have also not built in material improvement in credit costs for the bank.

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Investment concern
SASF A burden on the banks books
Due to the erstwhile DFI structure being challenged with a number of asset-quality issues, IDBI Bank at the time of the merger had to set up a stressed asset stabilization fund (SASF) to quarantine defaulted assets. The transfer value of the SASF was ~`9,000cr, through which the bank has witnessed only ~`3,500cr worth cash recoveries (as of FY2011). The possibility of an entire recovery seems implausible and would lead to full provisioning expenses towards the amount that remains unrecoverable. The SASF, with an outstanding value of ~`5,500cr, also remains a burden on the banks investment books due to its special nature of zero interest securities. Accordingly, we have adjusted 75% of the value of the SASF against the banks net worth to arrive at ABV estimates for valuing the bank. At the same time, the bank has material stakes in several financial institutions, including NSE, CARE, NSDL and ARCIL, apart from subsidiaries such as IDBI Federal Life. The market value of all these investments is estimated to be about `2,000cr more than the banks investment cost (about `15 per share, post 25% holding company discount). Monetization of these investments could help partially compensate the decline in the banks net worth on account of the legacy NPAs providing an upside to our estimates.

Outlook and valuation

We have tweaked our estimates for factoring in a marginal compression in NIM, lower opex run-rate and absence of counter-cyclical provisioning burden; this has led to an upward revision in net profit estimates for FY2012E by 10.6% and by 1.7% for FY2013E. Considering the deteriorating trend in asset quality, we have also hiked our slippage estimates by 20bp each for FY2012 and FY2013 to 1.7% each. We believe the bank is set to improve its credit and deposit mix going forward on the back of its strong branch expansion plans. The bank has been among the fastest-growing banks in terms of CASA deposits over the past few years (CAGR of 36.0% over FY2007-11) even when compared to private banks and now has a market share of 2.1% (as of FY2011). At the CMP, the bank is trading at 0.9x FY2013E P/ABV adjusting for SASF (0.7x without adjusting). However, in our view, there are near-term cyclical headwinds to the banks asset quality. Hence, we maintain our Neutral stance on the stock.

October 20, 2011

IDBI Bank | 2QFY2012 Result Update

Exhibit 14: Key assumptions

Particulars (%) Credit growth Deposit growth CASA ratio NIMs Other income growth Growth in staff expenses Growth in other expenses Slippages Treasury gain/(loss) (% of investments)
Source: Angel Research

Earlier estimates FY2012 12.0 15.0 23.2 1.8 3.4 23.1 23.1 1.5 0.3 FY2013 15.0 15.0 25.9 1.8 17.2 24.8 24.8 1.5 0.2

Revised estimates FY2012 12.0 15.0 23.2 1.8 3.4 16.5 16.5 1.7 0.1 FY2013 15.0 15.0 25.9 1.8 17.2 24.8 24.8 1.7 0.2

Exhibit 15: Change in estimates

FY2012 Particulars (` cr) NII Non-interest income Operating income Operating expenses Pre-prov. profit Provisions & cont. PBT Prov. for taxes PAT
Source: Angel Research

FY2013 Earlier estimates 5,561 2,524 8,085 3,462 4,622 1,594 3,028 983 2,046 Revised Var. (%) estimates 5,488 2,524 8,012 3,277 4,736 1,655 3,080 999 2,081 (1.3) (0.9) (5.4) 2.4 3.8 1.7 1.7 1.7

Earlier estimates 4,756 2,154 6,910 2,776 4,135 1,760 2,375 712 1,662

Revised Var. (%) estimates 4,691 2,154 6,846 2,627 4,219 1,592 2,627 788 1,839 (1.4) (0.9) (5.4) 2.0 (9.6) 10.6 10.6 10.6

Exhibit 16: P/ABV# band

Price (`) 250 200 150 100 50 0 0.4x 0.7x 1x 1.3x 1.6x

Oct-09

Nov-06

May-10

Dec-10

Aug-08

Source: Company, Angel Research; Note: #Without adjusting the book value for SASF

October 20, 2011

Mar-09

Feb-12

Jun-07

Jan-08

Apr-06

Jul-11

IDBI Bank | 2QFY2012 Result Update

Exhibit 17: Recommendation summary

Company AxisBk FedBk HDFCBk ICICIBk* SIB YesBk AllBk AndhBk BOB BOI BOM CanBk CentBk CorpBk DenaBk IDBI IOB J&KBk OBC PNB SBI* SynBk UcoBk UnionBk UtdBk VijBk
#

Reco. Buy Accumulate Accumulate Buy Accumulate Accumulate Accumulate Accumulate Buy Accumulate Buy Neutral Neutral Buy Accumulate Neutral Accumulate Accumulate Neutral Accumulate Accumulate Buy Buy Neutral Accumulate Buy Neutral

CMP (`) 1,131 396 490 878 23 285 151 120 749 335 47 458 102 414 75 105 207 99 831 301 984 1,934 103 67 250 72 54

Tgt. price (`) 1,426 422 519 1,146 24 324 174 126 943 371 57 489 81 220 104 325 1,129 2,335 125 286 91 -

Upside (%) 26.1 6.6 6.0 30.4 5.1 13.7 15.0 5.5 25.9 10.8 20.6 18.1 8.2 6.4 5.7 8.0 14.7 20.7 21.7 14.5 26.2 -

FY2013E P/ABV (x) 1.8 1.1 3.3 1.6 1.1 1.8 0.7 0.8 1.0 0.9 0.6 0.9 0.7 0.7 0.6 0.7 0.8 0.6 0.9 0.7 1.1 1.5 0.7 0.8 0.9 0.6 0.7

FY2013E Tgt. P/ABV (x) 2.3 1.2 3.5 2.1 1.2 2.1 0.8 0.9 1.3 1.0 0.8 0.8 0.6 0.9 0.7 0.8 1.3 1.8 0.9 1.1 0.8 -

FY2013E P/E (x) 9.5 8.2 17.0 12.7 6.7 9.5 4.3 5.4 5.7 5.5 4.4 5.3 5.0 4.1 3.6 5.0 5.3 3.9 5.8 5.3 6.1 7.4 4.7 4.1 5.3 4.3 6.6

FY2011-13E EPS CAGR (%) 20.4 18.3 30.5 24.1 15.6 19.9 8.9 (0.9) 10.6 15.2 31.8 (2.8) (14.6) 2.3 5.8 12.3 0.2 20.3 6.7 5.4 7.2 41.4 9.1 14.0 9.6 11.7 (3.2)

FY2013E RoA (%) 1.5 1.2 1.7 1.4 1.0 1.3 0.9 0.9 1.1 0.7 0.6 0.9 0.5 0.8 0.8 0.7 1.1 0.6 1.2 0.8 1.0 1.0 0.6 0.6 0.8 0.6 0.4

FY2013E RoE (%) 20.8 13.8 20.9 15.6 18.2 20.8 17.7 15.8 19.6 17.1 15.1 17.1 14.2 16.8 16.2 14.0 17.4 15.9 16.4 13.9 20.0 21.9 15.7 16.5 18.1 13.8 10.5

IndBk

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

October 20, 2011

10

IDBI Bank | 2QFY2012 Result Update

Income statement
Y/E March (` cr)
NII - YoY Growth (%) Other Income - YoY Growth (%) Operating Income - YoY Growth (%) Operating Expenses - YoY Growth (%) Pre - Provision Profit - YoY Growth (%) Prov. & Cont. - YoY Growth (%) Profit Before Tax - YoY Growth (%) Prov. for Taxation - as a % of PBT PAT - YoY Growth (%)

FY08
676 2.8 1,731 65.4 2,408 41.2 945 21.3 1,463 58.0 641 162.7 822 20.5 93 11.3 729 15.7

FY09
1,239 83.2 1,562 (9.8) 2,802 16.4 1,338 41.6 1,464 0.0 478 (25.3) 985 19.8 127 12.9 859 17.7

FY10
2,256 82.0 2,181 39.6 4,437 58.4 1,831 36.9 2,605 78.0 1,561 226.3 1,045 6.0 14 1.3 1,031 20.1

FY11
4,329 91.9 2,084 (4.4) 6,413 44.5 2,255 23.1 4,158 59.6 1,877 20.3 2,281 118.3 631 27.6 1,650 60.0

FY12E
4,691 8.4 2,154 3.4 6,846 6.8 2,627 16.5 4,219 1.5 1,592 (15.2) 2,627 15.2 788 30.0 1,839 11.4

FY13E
5,488 17.0 2,524 17.2 8,012 17.0 3,277 24.8 4,736 12.3 1,655 4.0 3,080 17.3 999 32.4 2,081 13.2

Balance sheet
Y/E March (` cr) Share Capital Reserves & Surplus Deposits - Growth (%) Borrowings Tier 2 Capital Other Liab & Prov. Total Liabilities Cash balances Bank balances Investments Advances - Growth (%) Fixed Assets Other Assets Total Assets - Growth (%) FY08
725 8,097 68.4 36,482 7,341 5,051

FY09
725 8,699 54.0 35,532 8,885 6,160

FY10
725 9,440 167,667 49.2 35,010 12,699 8,031 233,573 13,903 679 73,345 138,202 33.6 2,997 4,446 233,573 35.5

FY11
985 13,583 180,486 7.6 36,607 14,962 6,754 253,377 19,559 1,207 68,269 157,098 13.7 3,037 4,206 253,377 8.5

FY12E
985 14,965 207,559 15.0 40,218 16,758 7,863 288,347 13,491 7,141 83,626 175,950 12.0 3,353 4,787 288,347 13.8

FY13E
985 16,589 238,692 15.0 45,265 19,271 9,650 330,452 15,515 8,183 95,198 202,342 15.0 3,727 5,486 330,452 14.6

72,998 112,401

130,694 172,402 6,695 2,064 32,803 31.6 2,766 4,154 8,592 2,628 50,048 25.8 2,824 4,867

82,213 103,444

130,694 172,402 25.9 31.9

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IDBI Bank | 2QFY2012 Result Update

Ratio analysis
Y/E March Profitability ratios (%) NIMs Cost to Income Ratio RoA RoE B/S ratios (%) CASA Ratio Credit/Deposit Ratio CAR - Tier I Asset Quality (%) Gross NPAs Net NPAs Slippages Loan Loss Prov./Avg. Assets Provision Coverage Per Share Data (`) EPS ABVPS# DPS Valuation Ratios PER (x) P/ABVPS (x)# Dividend Yield DuPont Analysis (%) NII (-) Prov. Exp. Adj. NII Treasury Int. Sens. Inc. Other Inc. Op. Inc. Opex PBT Taxes RoA Leverage (x) RoE
Note:
#

FY08
0.6 39.2 0.6 11.2 16.6 112.6 12.0 7.4 1.9 1.3 1.5 0.1 30.8 10.1 84.3 2.0 10.4 1.2 1.9 0.6 0.5 0.0 1.0 1.0 0.5 1.5 0.8 0.7 0.1 0.6 18.0 11.2

FY09
0.9 47.8 0.6 12.1 14.8 92.0 11.3 6.6 1.4 0.9 0.8 0.1 33.9 11.8 94.6 2.5 8.8 1.1 2.4 0.8 0.3 0.5 0.3 0.8 0.8 1.5 0.9 0.7 0.1 0.6 21.3 12.1

FY10
1.2 41.3 0.5 13.2 14.6 82.4 11.0 6.1 1.5 1.0 1.4 0.4 70.0 14.2 110.3 3.0 7.4 1.0 2.9 1.1 0.8 0.3 0.3 0.7 0.7 1.4 0.9 0.5 0.0 0.5 25.9 13.2

FY11
1.8 35.2 0.7 15.8 20.9 87.0 13.1 7.7 1.8 1.1 1.4 0.5 74.7 16.8 128.5 3.5 6.3 0.8 3.3 1.8 0.8 1.0 0.1 1.1 0.8 1.9 0.9 0.9 0.3 0.7 23.3 15.8

FY12E
1.8 38.4 0.7 13.8 23.2 84.8 12.9 7.3 2.8 1.5 1.7 0.4 70.0 18.7 138.3 4.0 5.6 0.8 3.8 1.7 0.6 1.1 0.0 1.2 0.8 1.9 1.0 1.0 0.3 0.7 20.3 13.8

FY13E
1.8 40.9 0.7 14.0 25.9 84.8 12.8 7.0 3.4 1.6 1.7 0.4 70.0 21.1 153.8 4.0 5.0 0.7 3.8 1.8 0.5 1.2 0.0 1.3 0.8 2.1 1.1 1.0 0.3 0.7 20.8 14.0

without adjusting for SASF

October 20, 2011

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IDBI Bank | 2QFY2012 Result Update

Research Team Tel: 022 - 39357800

E-mail: research@angelbroking.com

Website: www.angelbroking.com

DISCLAIMER
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced, redistributed or passed on, directly or indirectly. Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in the past. Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in connection with the use of this information. Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement 1. Analyst ownership of the stock 2. Angel and its Group companies ownership of the stock 3. Angel and its Group companies' Directors ownership of the stock 4. Broking relationship with company covered

IDBI Bank No No No No

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

Ratings (Returns):

Buy (> 15%) Reduce (-5% to 15%)

Accumulate (5% to 15%) Sell (< -15%)

Neutral (-5 to 5%)

October 20, 2011

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