SBI Company Analysis

Industry analysis :

Banking is different from Manufacturing industry due to so many things. Except like General Motors, not all manufacturers are so big that if they failed, whole economy will get affected. Not all manufacturers keeping ties to divers profile of Public like Bank with si many different needs. And most importantly For manufacturers, Raw material and Final product is not same.

Banking in India, was existing from more than 150 years But the development of the Sector is taking place in recent years. The reason is as digitisation takes places its easy for banks to keep records. Centralised systems and applications changing banking in big way and that is helping Govt also. Big part of Indian population is living under the Poverty line, and giving them home and food is like Govt duty. For that Govt need to give Subsidy many Time. To ensure that it is going on right hands, Banks play key role. India is the country which even if second largest contry by population, but still the penetration of Banking is low.

Banking also plays key role as it is showing the strength of economy. If economy is Good, banks are also Good. The Asset Quality also good.

In this time, when banking system in India is going through many changes, banking is more important and difficult to analyse. Many different types of Bank are coming into Reality like 11 payment BANK, 10 Small Bank etc. Plus RBI make it open tab for licence with new rule and regulation. UPI makes banking in hand of Indian people.

In India there are 26 Public Sector banks, 25 private banks, 43 foreign Banks, 56 regional rural banks and many Small cooperative banks are working. But most of them are small.

The reason why I am mentioning it all is SBI is India’s largest Bank. After Merger with its associate banks, it will look 25% of Indian banking system.

Company analysis : SBI, Govt backed and Largest Lender as per Loan book and more than ₹20.5 trillion in deposit with 16300 branches and ₹17.3 trillion. The size of deposit and the Equity base give it edge as low cost  lender. The bank is largest lender and also operating in mortgage loan sector. It is also operating from offshore, the Profit percentage is low with respect to its private peers.

The bank also offers services like factoring, Asset Management, Insurance, pension, Private Equity, Advisory services. As largest lender the Bank keep exposure in many sectors which are important for development like Infrastructure, Steel, Power.

With high Loan book, Non performing Assets also going high which is big issue not only for whole banking but with respect to SBI, the Asset Quality is looking better then other public sector banks.

SHAREHOLDING Pattern


Financial performance and Ratio

 2010-112011-122012-132013-142014-152015-16
ROE11.3414.3615.9410.4911.177.74
ROA0.600.880.970.650.680.46
Net interest Margin ( times)2.653.242.832.742.682.52
Capital Adequacy Ratio Basel 3NaNaNa9.79.629.92
NET NPA to loan book1.631.822.12.572.123.81
Efficiency Ratio %41.233834.136.736.839.14
Book Value1023.41251.051445.61584.34172.04185.85
CASA Ratio46.6446.5044.4342.8843.84

Future prospects : Expected Merger with Bharatiya Mahila Bank and Associate Banks is big positive as it will reduce cost due to many reasons. In fact the Merger will make SBI one of the world’s largest Bank, after the Merger, Capital Adequacy and return on Asset will be boost as the need to keep seven different Treasury’s and other things. More branches and ATM may make Synergy for bank.
It is big positive for SBI and make re-rating as the Asset Quality of Bank may make better.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter