Analysis of Q4 2011 Banking Companys' performance Public Sector and Private Sector The overall banking result for

Q4FY11 was a mixed bag. Most of the private banks emerged as clear winners owing to strong performance in asset quality, business growth and core profitability. The PSU Banks continued to bear the brunt of asset quality concerns which only got aggravated with significant increase in restructuring book. Most of the PSU banks results were a disappointment barring an exception of few. On operational basis, few banks reported good results which are as follows: ICICI Bank City Union Bank Yes Bank Indusind Bank Dena Bank DCB Karur Vysya Bank Kotak SBI
Bank SBI Union OF India PNB Bank of India Canara bank Bank of baroda Central bank Corporation bank IOB United NIMs NII YOY GROWTH C/I RATIO BPB YOY GROWTH NET PROFIT MARGIN GROSS NPA NET NPA CASA RATIO CAR 3.90% 45.20% 43.40% 57.80% 11.90% 4.40% 1.82% 46.60% 13.90% 3.30% 9.30% 39.30% 83.90% 11.90% 3.00% 1.70% 31.30% 11.90% 3.50% 9.30% 36.00% 17.10% 13.00% 2.90% 1.52% 36.20% 12.60% 2.90% 8.40% 41.90% 67.10% 10.90% 2.30% 1.47% 34.30% 12.00% 2.50% 3.40% 46.90% -12.00% 9.20% 1.70% 1.46% 25.20% 13.80% 3.00% 7.00% 44.50% 5.40% 16.80% 1.50% 0.54% 33.20% 14.70% 2.60% -11.50% 63.90% 85.10% -2.00% 4.80% 3.09% 33.30% 12.40% 2.40% 9.50% 35.20% 9.10% 8.80% 0.90% 1.26% 22.20% 13.00% 2.70% 10.30% 45.70% 2.60% 9.80% 2.70% 1.35% 26.40% 13.30% 3.00% 7.70% 44.20% 12.40% 6.30% 3.40% 1.72% 40.80% 12.70%

By judging on above parameter we believe that overall the macro environment is not supportive for the banking industry as a whole as of now. But once the environment improves the banks which are fundamentally stronger would be amongst the ones which will face a faster recovery as compared to the banks which are fundamentally weak. Intrepertation While banks have been hurt by restructuring bulk of the stressed assets we believe near term scope for improvement is very less. The banking sector on a whole continues to be haunted with lots of problems and no immediate solution is being seen which can provide a respite in the near term. Moreover, the announcement of certain regulations and discussion papers (Basel III, priority sector, dynamic provisioning etc.) has increased challenges for banks which will impact the earnings in the medium term. However, based on our overall study of the various parameters and the revised valuations we can conclude that there are some stocks which have shown some resilience to the current macroeconomic scenario; though not completely restrained from it. We believe issues related to asset quality will continue to remain over-hang for next couple of quarters coupled with slowing credit demand and decline in margin will be the key parameters to watch out for in near term. We believe that in such a scenario the stocks which have shown consistent performance over the last few quarters on most of the parameters and are attractively valued (post adjustment of estimated slippages) should be selected.

Based on our revised valuations we believe that these stocks can be accumulated on decline as these stocks will perform once the macro environment improves as compared to the banks which have been grappled with their own fundamental problems. Reference Nirmal Bang review