State Bank of India (BOM:500112)

The Economic Times  4 hrs ago  Comment 
The Nifty Bank index was trading 0.20 per cent up at 27,430 around 10:45 am.
The Hindu Business Line  Sep 5  Comment 
The SBI Mutual Fund has appointed Ashwani Bhatia as MD & CEO of its asset management company SBI Funds Management. He will take over the reins fro
The Economic Times  Sep 5  Comment 
NHAI received an unsecured loan of Rupee 25,000 crore from the State Bank of India at an interest of 7.99 per cent for 10 years
The Times of India  Sep 4  Comment 
In its research report 'Ecowrap', SBI said given the "inefficacy" of sterilised intervention, RBI may follow a relatively hands off policy in forex market for now. "The rupee has now depreciated by 6.2 per cent since June 2018 when RBI started...
The Hindu Business Line  Sep 4  Comment 
The Economic Times  Sep 4  Comment 
The Nifty Bank index was trading 1.12 per cent down at 27,507 around 02:10 pm with 11, out of total 12 components, in the red.
The Economic Times  Sep 4  Comment 
The NSE Nifty index was trading 38 points down at 11,544, while the BSE Sensex was down 88 points at 38,225 around 09:45 am.
The Economic Times  Sep 4  Comment 
According to the committee report, the exposure of banks towards loans of Rs 500 crore and above would be around Rs 3.6 lakh crore, of which PSBs would have an exposure of Rs 3.1lakh crore.
The Economic Times  Sep 3  Comment 
Rupee remittance was about SGD856 million as end of last year. Thirty-five per cent of the 285,000 construction workers in Singapore are from India.
The Economic Times  Sep 3  Comment 
SBI, along with others, is slated to consider additional $60 million loan to Videocon Oil.
The Times of India  Sep 2  Comment 
SBI chairman Rajnish Kumar while highlighting how the 212-yr-old bank is still relevant to the youth with 25,000 new accounts opening daily through its mobile application, he said "up to March 2019, the accounts will have zero-balance requirement....


State Bank of India (BSE:SBI), a public sector bank, is the largest bank in India.[1] SBI accounts for almost one-fifth of the nation’s loans.[1]

Besides personal and corporate banking, SBI is also involved in NRI (Non Resident Indian) services through its network in India and overseas. The bank has 21 subsidiaries and 10,186 branches. SBI was recognized as the best bank in India in 2008 by The Banker magazine of The Financial Times.[2]

Banks across Asia are looking to shore up their balance sheets as they prepare for a tougher business environment amid a global economic downturn. SBI, which had no direct exposure to sub-prime mortgages, has said that it would still need to raise USD $2-4 billion capital to boost its Tier-1 capital adequacy ratio, but whether it would be done through a rights issue or other means has not been finalized.[3] Tier 1 capital is a core measure of a bank's financial strength. It is composed of core capital, which consists primarily of equity capital and cash reserves.

Company Overview

SBI offers banking services as well as an array of financial services which include Mutual Funds, Credit cards, Life Insurance, Merchant Banking, Security Trading & Primary dealership in the Money market. The Bank is actively involved in non-profit activity called community services banking apart from its normal banking activity.

Associate banks

There are six associate banks that fall under SBI, and together these seven banks constitute the State Bank Group. They are:

  • State Bank of Indore
  • State Bank of Bikaner & Jaipur
  • State Bank of Hyderabad
  • State Bank of Mysore
  • State Bank of Patiala
  • State Bank of Travancore

SBI is the only Indian bank that figures in Fortune’s top 100 banks. Its 11,000 branches and 5,600 automatic teller machines give it a reach throughout the length and breadth of the country; its work force of 200,000 dwarfs all other banks in India (its nearest competitor is Punjab National Bank, which has around 56,000 employees[4]).[5] It is also the second largest bank in the world, measured by the number of branches and employees.[6]

Joint Ventures

SBI has entered into strategic agreements with banks, insurers and other companies. Insurance Australia Group (IAG) has signed a $170 million joint venture agreement with the State Bank of India (SBI) to establish a general insurance company in India.

SBI will become the first public sector bank in India to enter the custody services sector. State Bank of India (SBI) and Societe Generale Securities Services (SGSS), part of Societe Generale Group, have announced a joint venture which will offer custody and related services in India. The new company, SBI SG Custodial Services, will be based in Mumbai and offer a range of services to both foreign and domestic investors and clients, covering custody, depository, fund administration, registration and transfer agent services. The joint venture will leverage SBI’s strength in the Indian financial sector.[7]

India is a preferred destination for private equity funds in real estate. SBI has planned to capitalize on this opportunity by teaming up with Australia’s Macquarie Group for a $2 billion infrastructure fund, and with an affiliate of Unitech Ltd, the country’s second largest publicly traded real estate company, to float a private equity (PE) real estate fund.[8]

Business and Financial Metrics

First Quarter Fiscal 2011 Results[9]

During the first quarter of fiscal 2011, State Bank of India reported operating profit increased year-over-year by 66.97%. Net Profit for Q1 FY2011 increased to Rs. 2914.20 crores from Rs. 2330.37 crores in Q1 FY2010, representing growth of 25.05%. Net interest income increased by 45.35% in Q1 FY11 over Q1FY10 by 4.30%. Interest expenses on deposits decreased by 11.85% during Q1 FY11 through strategic shedding of high cost bulk deposits. Interest expenses have come down despite deposits increasing by 6.78%. Interest income on advances increased by 8.62% year-over-year driven by growth of 20.74% in advances.

Interest earnings from Investments increased by 3.08%. Cumulative net interest margin improved significantly by 88 bps to 3.18% from 2.30% as at the end of June 2009. Total non interest income increased by 3.40% despite profit on sale of investments decreasing by 75.54% (Rs.535 crores). Non interest income excluding profit on sale of investments was up by 22.96%. Fee income increased by 29.41% year-over-year, driven by robust growth in loan processing charges, non fund based business, government business, and cross-selling.

Business Segments

Global Markets

In keeping with its integrated approach to all treasury activities in various markets in different time zones i.e., Forex, Interest Rates, Bullion, Equity and Alternative Assets, the Bank re-designated its Treasury Operations into “Global Markets.”

Wholesale Banking Group

The Bank's Wholesale Banking Group consists of three Strategic Business Units: Corporate Accounts Group, Project Finance & Leasing, and Stressed Assets Management Group. The Bank has recently launched the "Wholesale Banking Initiative" to harness the SBI Group synergy for the benefit of the corporate customers by providing them with a "One Stop Shop" facility for all their banking needs.[10] Testing....................

Mid-Corporate Group

The Mid-Corporate Group (MCG) has been immensely successful in attracting the business of Mid-Corporate units through relationship management and quicker credit processing. It is estimated that 38% of the Mid-Corporate universe in the country is covered by the bank. The total credit portfolio (fund based) of the Group stands at Rs 1,090.02 billion. This is more than the aggregate business handled by many of the top banks in the country. =

National Banking Group

The Bank's National Banking Group (NBG) consists of three Business Groups: Personal Banking, Small & Medium Enterprise (SME), and Government Banking.[10]

Rural Business Group

Rural Business Group comprises rural and semi urban branches, accounting for about 70% of the branch network of the Bank.

International Banking Group

The Bank has a network of 84 overseas offices spread over 32 countries covering all time zones. Net Profit from the Bank’s overseas operations (including subsidiaries and joint ventures with more than 50% shareholding) registered a growth of 84% during the fiscal year mainly driven by significant growth of 48% in Net Customer Credit.

Trends and Forces

Macro economic risk is the largest risk for SBI, given its size, penetration and exposures in India

Government regulations and the country's macroeconomic policies affect SBI's expansion and liquidity the most. Key ratios such as Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo rate and Reverse Repo rate are all controlled by the government and affect the bank's liquidity.

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Source: Dun & Bradstreet Report[11]

SBI and ICICI Bank Ltd, two of the nation’s largest banks, have been worst hit by the Reserve Bank of India’s (RBI) decision to increase the amount of cash they must hold with it (CRR).[12] In 2008, RBI hiked CRR from its long-standing value of around 6%, in steps, to 7.5%. Changes in interest rates adversely affect net interest margin — the difference between the yield the bank earns on assets and the interest rate it pays for deposits and other sources of funding — which in turn affects earnings. As SBI works to broaden its products and services and to increase its branch network, it will have to gain approval from the Reserve Bank of India and other government agencies.

International operations' increasing contributions to total income expected to continue and boost income further

SBI is laying greater and greater thrust on its international operations, capitalizing on its presence in 32 countries. Being the largest commercial bank in India, it is one of the most capable banks to cater to corporate India's growing appetite for international mergers and acquisitions. Net profit from the bank’s overseas operations (including subsidiaries and joint ventures with more than 50% shareholding) registered a growth of 84% during FY 2007-08 mainly driven by significant growth of 48% in Net Customer Credit. The bank was ranked No. 1 in the Asia Pacific (excluding Japan and Australia) in the mandated arranger/book runner league table for syndicated loans by IFR Asia in 2007-08.[10]

11,111 branches and still counting - a source of low-cost deposits

Bank branch expansion in India is regulated by RBI and banks cannot expand their branch network without RBI’s approval. As low-cost deposits are directly tied to the size of the branch network, the number of branches a bank has, is a key success factor for any bank in India. Branch expansion is particularly a key factor for SBI, given that SBI's profit growth is driven by core business. The operating profit increased by 54.5% year-over-year, given a robust increase in the net interest income and a modest rise in the non-interest income. Net profit rose by 40.2% year-over-year after accounting for a 30% increase in the tax paid.[13]

Public sector banks facing stiff competition from private sector banks

Public sector banks are facing competition from their private sector counterparts and foreign banks entering India in all realms of financial services. While public sector banks enjoy a pre-eminent position in terms of low-cost deposit base (also called CASA deposits in India – stands for Current Accounts and Savings Account), private-sector banks have been increasing their CASA base steadily over the years. ICICI Bank, the largest private bank in India, has expanded its CASA market share by 218% over the period of 2003-2007. The bank’s CASA deposits have grown at a CAGR of 61% over the same period, compared with a growth of 17.1% for public-sector banks, 32.5% for private sector banks and 29% for foreign banks in India.[14]

Private sector banks, armed with usually more efficient management and employees, are employing all tricks - branch expansion, mergers and acquisitions, and international operations - to compete with public sector banks.


  • Punjab National bank - Punjab National Bank (PNB) is the second largest government-owned commercial bank in India with about 4,500 branches across 764 cities.[15] This financial institution offers services in personal and corporate banking, including industrial, agricultural, and export finance, as well as international banking. It competes with SBI mostly in retail lending and wholesale businesses[16]
  • HDFC - Housing Development Finance Corporation Limited Bank Limited or HDFC Bank is the second largest private bank in India, catering to the whole universe of financial services from commercial to investment banking, mutual fund to insurance.[17] On February 25, 2008 HDFC agreed to buy Centurion Bank of Punjab. The combined entity has the largest branch network among private banks in India, a strong deposit base of around Rs 1220 billion and net advances of around Rs 890 billion.[18]
  • Bank of Baroda - Bank of Baroda is another private player. It has a rich countrywide network of over 2800 branches. It also has significant international presence with a network of 74 offices in 25 countries.[19]
  • Axis Bank - Axis Bank is India's third-largest private-sector bank after the significantly larger ICICI Bank, and HDFC Bank.
Comparison of Competitors[20] [21] [22]
Total Deposits Total Advances Net profit Total Assets Branches
State Bank of India 4,355.21 3,373.36 45.41 5,665.65 10,186
ICICI Bank 2,305.10 1,958.66 31.10 3,453.12 1,400
Punjab National Bank 1, 398.60 1,990.48 20.48 1,990.48 4,500
HDFC Bank 1,007.69 634.27 15.90 1,332.51 1,412
Bank of Baroda 1,520.34 1,067.01 14.35 1,795.99 2,800


  1. 1.0 1.1 SBI Website
  2. The Banker Awards - 2008
  3. SBI would need to raise capital in 2009
  4. , Reserve Bank of India's Profile of Banks 2007-08
  5. , Businessworld article on SBI
  6. , SBI- second largest branch network in world
  7. SBI's alliance with Societe Generale
  8. SBI's alliances in real estate sector
  9. [ State Bank of India Investor Relations: "PRESS RELEASE QUARTERLY RESULTS Q1 FY11"]
  10. 10.0 10.1 10.2
  11. Dun & Bradstreet Study - India: Economic Insights
  12. , SBI & ICICI will be worst hit by CRR hike, says Goldman Sachs
  13. Indiabulls Securities Report on SBI, 10 Nov, 2008
  14. , ICICI article on Wikinvest
  15. , Punjab National Bank website
  16. , Punjab National Bank profile on Hoover's
  17. , HDFC Bank website
  18. Press Release CBoP 20-05-2008
  19. , Bank of Baroda website
  20. , State Bank of India- Financial Highlights
  21. , Rediff Money- HDFC Bank Financial Highlights
  22. , Bank of Baroda- Financial Highlights, Page 9
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