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General Overview
State Bank of India was constituted on 1st July 1955 under the State Bank of India
Act 1955, by undertaking the business of Imperial Bank of India. In present it is the
largest commercial bank in India, having it’s headquarter in Mumbai. Present
market share of SBI is around 23% in assets and one-fourth of the total loan and
deposits market. It has 16 regional hubs and 57 zonal offices located at important
cities throughout India. It has 24,000 branches in India and 195 overseas offices
spread over 36 countries as per April 2017 report. It provides a wide range of
services to individuals, commercial enterprises and large corporates through its
various branches and outlets. It has also one of the largest employer in the
country with 209,567 employees as on 31 March 2017, out of which there were
23% female employees. In the last quarter it has reported a total net profit of
3955 crore rupees with total interest income as 62,277 crore rupees. Earning per
share has been reported as 17.58 Rs.
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2. Weaknesses:-
a) Slow growth of market share: With the LPG policy there has been an
immense competition in the Indian market, which has slowed down the
growth rate of SBI. Even there has been a drop in the market share during
2008 to 2017.
b) NPA issues: There has been issues in loan repayment, bad loans, Non-
Performing Assets and loan restructuring specially in the case of associate
banks.
c) Huge Size: SBI is the largest commercial bank in India with largest
number of employees. This huge size brings economies of scale but it also
becomes its weakness when taking strategic decision.
d) Political intervention: Being the statutory body, it has more
government intervention than any other commercial bank in the country.
3. Opportunities:-
a) International Expansion: SBI has 195 overseas offices across 36
countries, but it has more opportunities to locate more offices especially
in Asian continent.
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4. Threats:-
a) Non-Performing Assets: Non-performing assets in India are estimated
at 10.2% by March 2018, from 9.6% in March 2017 in comparison to the
statistics last year September 2016, gross NPAs were at 9.2%. Hence this is
the biggest threat for SBI.
b) Cyber Threat: Cyber security is also an issue for SBI in the present
scenario. Information threat and security is the biggest threat for SBI.
c) FDI in banking sector: FDI allowed in banking sector can be a major
threat for SBI as people tend to switch to foreign banks for better facilities
and technologies in banking.
Competitive Analysis
After the LPG policy SBI faces the intense competition from its competitors. In
present scenario major competitors for SBI are-
a) HDFC Bank
b) ICICI Bank
Comparative Analysis of SBI and ICICI Bank
1. On the basis of Branch Service: SBI has very limited space for number of
customers who transact daily. Most of the time only two counter manage
this which is highly inadequate. Token system is also there, but it is only
limited to deposit and withdrawals & most of the time unorganised.
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3. Website user interface: SBI does not provide user friendly interface. It does
not showcase any advertisement about its services.
On the contrary, ICICI’s website is more user friendly. It advertises its
services giving potential customers vast details of their banking services.
4. Performance Comparison: Credit deposit ratio has been higher than in SBI
during the last 10 years.
SBI has higher Operating expense to fund ratio than ICICI bank during the
last 10 years.
There has been a drastic change in return to equity ratio in both the bank.
Now ICICI is leading in return to equity ratio in comparison to SBI bank.
Profit after tax to equity shareholder and profit after tax to net worth is
positive in SBI. Current ratio is also strong to SBI, which shows faith in
creditors and short term lenders.
Overall, profitability ratio is more profitable in SBI in comparison to HDFC
bank.
Conclusion
Based on the overall evaluation it has been found that, SBI is the leader in
commercial sector having good strength and opportunities in the market. It has
also good performance in comparison to its competitors.
However, it needs to improve itself in certain areas like more expansion, proper
marketing of its product and services and Innovation in product and services &
website user interface.
From the point of view of investment, it is worth investing company for long term
purpose as it has good profitability ratio and current ratio.
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