State Bank of India-Finance Topic Research Proposal for SBI

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Company Profiles of SBI

State Bank of India

Company Data Website: www.sbi.co.in Status: Public sector bank with associates

Strengths

• The merger with State Bank of Saurashtra increased SBI's market leadership.
• Highly capitalised and a high capital-adequacy ratio.
• It is the only dominant bank in India and has an extraordinarily large distribution network.

Weaknesses

• Potential non-performing assets arising in the real estate and SME sectors.
• Potential for political interference.
• The bank and its subsidiaries have experienced much employee discontent, resulting in repeated strike action.

Opportunities

• Further expansion of successful IT-based banking.
• Aggressive international expansion will spread SBI's risk and expand overseas revenue from 12%.
• SBI's consolidation of its insurance business can take advantage of the bank's large distribution network.

Threats

• The gradual entry of foreign banks operating more fully.

Company Overview

State Bank of India (SBI) is India's oldest bank and by far the largest. SBI and its subsidiary associate banks account for about a third of the total banking assets in India.

SBI started as the Bank of Calcutta in 1806. After extensive growth under various names, SBI was constituted by an act of parliament in 1955. In 1959, it was enabled to take over former state-associated banks as subsidiaries, later called associates. SBI has 14 local head offices and 57 regional offices. It has over 8,500 ATMs, about 10,000 SBI branches and 5,100 associate branches in India. There are also 52 foreign offices in 34 other countries.

SBI has a controlling interest of 75-100% in each of its six associate banks: State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Indore, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore. SBI merged with State Bank of Saurashtra in August 2008. The central bank is the largest shareholder in SBI with two-thirds, while the remainder is owned by institutional investors. The government is required by law to maintain a minimum 55% stake in SBI, although it is expected to reduce this threshold.

SBI reported profit of about US$2bn for the FY08/09, beating analysts' expectations by as much as 10%.
SBI has developed a long-term focus on overseas expansion in recent years. The bank planned to establish 23 new branches abroad to bring the total number of overseas branches to 160 by March 2010. SBI's overseas operations generate 12% of its revenue. Additional overseas operations will include a new office in Botswana and four in the UK. Reuters reported in September 2009 that the bank is looking at up to US$1bn in UK acquisitions, where it forecasts 40% growth. A source at the bank also said in December 2009 that SBI intends to enter Australia's retail business by mid-2011. The bank was planning to boost its capital resources to AUD50mn by the end of Q110, India's Financial Express reported, which is Australia's minimum to begin retail operations. In the UAE, SBI had its licence upgraded by the Dubai Financial Services Authority in Q409, allowing it to expand its operations from corporate finance to retail.

SBI has also been consolidating its insurance business. SBI General Insurance received final approval from the Insurance Regulatory and Development Authority (IRDA) in December 2009. The joint venture (JV) with Insurance Australia Group, which paid AUD126mn for its 26% stake, was to begin operations in H110. The bank is already a majority partner in SBI Life Insurance, a JV with BNP Paribas.

Table: Stock Market Indicators
	2004	2005	2006	2007	2008	2009	Oct 2010
Market Capitalisation, INR	343,538.16	477,958.34	655,557.88	1,247,933.88	818,233.38	1,440,542.75	2,099,049.81
Market Capitalisation, US$	7,904.70	10,609.51	14,811.52	31,661.39	16,810.14	30,961.10	47,148.47
Share Price, INR	615.60	856.86	1,175.25	2,237.23	1,288.80	2,269.00	3,305.60
Share Price, US$	14.16	19.02	26.55	56.76	26.48	48.77	74.25
Share Price, % change (eop)	27.20	34.28	39.61	113.76	-53.35	84.18
Change, year-to-date							1.55
Shares Outstanding (mn)	558.44	557.80	557.80	557.80	631.47	634.88	634.88
Source: SBI, Bloomberg

Table: Balance Sheet (INRmn, unless stated)
	2004	2005	2006	2007	2008	2009
Total Assets	5,509,844	6,285,776	6,968,324	8,151,744	10,272,700	13,048,260
Loans & Mortgages	2,200,294	2,865,295	3,743,168	4,809,337	5,997,848	7,446,466
Total Deposits	4,179,092	4,904,245	5,305,057	6,184,776	7,548,662	9,868,013
Total Shareholders' Equity	284,480.6	338,558.7	386,370.3	442,255.9	632,645.0	746,186.7
Earnings per share (INR)	99.16	178.52	198.45	128.97	159.09	172.68
Source: SBI, Bloomberg

Table: Balance Sheet (US$mn, unless stated)
	2004	2005	2006	2007	2008	2009
Total Assets	5,509,844	6,285,776	6,968,324	8,151,744	10,272,700	13,048,260
Loans & Mortgages	2,200,294	2,865,295	3,743,168	4,809,337	5,997,848	7,446,466
Total Deposits	4,179,092	4,904,245	5,305,057	6,184,776	7,548,662	9,868,013
Total Shareholders' Equity	284,480.6	338,558.7	386,370.3	442,255.9	632,645.0	746,186.7
Earnings per share (US$)	99.16	178.52	198.45	128.97	159.09	172.68
Source: SBI, Bloomberg

Table: Key Ratios (%)
	2004	2005	2006	2007	2008	2009
Return on Assets	1.05	1.69	1.67	0.95	0.97	0.94
Return on Equities	22.14	33.20	31.74	18.04	17.27	16.40
Loan/Deposit Ratio	52.65	58.42	70.56	77.76	79.46	75.46
Loan/Asset Ratio	39.93	45.58	53.71	59.00	58.39	57.07
Equity/Asset Ratio	4.98	5.18	5.35	5.22	5.96	5.55
Total Risk Based Capital Ratio	13.53	12.45	11.88	12.34	13.47	14.25
Tier 1 Capital Ratio	8.34	8.04	9.36	8.01	9.14	9.38
Source: SBI, Bloomberg If you want Dissertations, Thesis, Case Studies on Finance Topics, Research Proposals, Term Papers, MBA Project Report on State Bank of India, Research Projects, Assignments, Coursework, Essays, Articles, PowerPoint Presentations and Synopsis, than contact Mahasagar Publications, Mumbai, India by calling +91 9819650213 or +91 8081344446  or visit website www.projectspapers.com