Fairwealth Securities has maintained its buy rating on State Bank of India (SBI) with a long term target of Rs 3140 in its report dated January 19, 2011.

At the current price of Rs 2556, the stock is trading at just 12.18x and 8.85x times of the projected FY11E & FY12E earning.

During the three month period ended December 2010, the bank advances jumped 4.2% QoQ and 15.87% YOY.

Deposits increased 4.9% QoQ and 10.7% YOY on account of robust increase of 27.7% in the bank's CASA deposits.

According to the Basel II conditions of SBI, CAR remained at 13.39% during the end of the March 2010 with Tier-I at 9.45%. The CAR of the banking institution is high as against the minimum obligatory condition of 9%.

The bank is making plans to lift up around Rs 20000 crore via a right issue during the last quarter of this financial year.

The bank offers up different banking services thru its divisions in the country as well as abroad. The bank owns a network of 17337 arms comprising 4841 divisions of its six associates Banks dominates the banking industry.

Besides banking, SBI, via its subsidiaries, offers a complete range of financial services including life insurance, merchant banking, mutual fund, credit cards, factoring, security trading, pension fund management and primary dealership in the money market.

SBI owns 7 associates' banking institution that includes State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Sourashtra and State Bank of Travancore.

But presently, the bank owns only 5 associate's banks that with SBI make up the State Bank group.

Acquirement of State Bank of Indore appended around 470 divisions to the banks's subsisting network of 12448 and more than 21000 ATMs.

SBI's reported NIM has been seeing an upward trend since touching a low 2.30% during 1QFY2010, from which it meliorated by 113bp to 3.43% in 2QFY2011.

Bank's gross advances remained up by 16.94% to Rs 92940 crore as against Rs 548540 crore during March 09 to Rs 641480 crore in March 2010.

Consolidated advances of SBI increased 15.88% to Rs 869501.63 crore. The bank's advances likely to surge by 20% in financial year 2011 and 22.4% in financial year 2012 owing to the industrial demand and more infrastructure funding by the bank.

Bank's depository income climbed to Rs 62043 crore, an increase of 8.36% from 3 crore, Rs 742043 crore in March 2009 to Rs 804116 crore during March last year driven by CASA Rs. 742043 crore increase of 26.76%.

Bank's consolidated deposits surged 10.32% to Rs 116464.50 crore as on March 2010. SBI's depository income is likely to go up by 15% during the existing financial year and around 19% grow in fiscal 2011-12 due to the soaring deposits rate by the bank.

As on quarter ended September 30, 2010, net Interest Income of SBI went up by 45.59% as compared to a growth of 4.69% during the same quarter of 2009. The bank's net interest income will surge in the coming time owing to growing advances.