Bank Performance Analysis

Nishtha Mehra
Pgfc1920

PROFITABILITY ANALYSIS
Mar-16 Mar-17 Mar-18

Rs in Crore Rs in Crore Rs in Crore

1 Total Assets 2,357,617.54 2,705,966.30 3,454,752.00
2 Earning Assets
Balances with RBI 129,629.33 127,997.62 150,397.18
Balances with Banks in Deposit Accounts
Balances with Banks & money at Call & Short Notice 37,838.33 43,974.03 41,501.46
Balances with Banks Outside India
Investments + 575,651.78 765,989.63 1,060,986.72
Advances + 1,463,700.42 1,571,078.38 1,934,880.19
Total Earning Assets 2206819.86 2509039.66 3187765.55
3 Interest bearing Liabilities
Deposits 1,730,722.44 2,044,751.39 2,706,343.29
Term & Other Deposits
Borrowings 323,344.59 317,693.66 362,142.07
Subordinated Debt
Total Interest bearing liabilities 2054067 2362445 3068485

Equity Capital 776.28 797.35 892.46

Reserves 143,498.16 187,488.71 218,236.10
Total Equity 144274.44 188286.06 219128.56
5 Interest Income 163685.31 175518.24 220499
6 Interest Expenditure 106,803.49 113,658.50 145,645.60
10 Non-interest operating income 27,845.37 35,460.93 44,600.69
11 Non-interest operating Expenditure 41,974.86 47,420.78 59,818.51
12 Provisions and Contingencies 33,307.15 40,363.79 66,058.41
Provisions and Contingencies include provision for tax
operating income 191531 210979 265100
Profit After tax 9,950.65 10,484.10 -6,547.45

Profitability Ratios
Return on Assets= NI/ TA 0.42% 0.39% -0.19%
Equity Multiplier TA/ TE 16.34 14.37 15.77
TE/ TA 1.112976823995 1.47101219538 1.4569991272
ROE=ROA X EM 6.90% 5.57% -2.99%

NI/ OR 5% 5% -2%
OR/ TA 0.081 0.078 0.077
TA/ TE 16.3412004233044 14.3715700461 15.765868219

(II - IE)/ TA 2.41% 2.29% 2.17%

(OI-OE)/ TA -0.00599312219233 -0.00441980745 -0.004404895
Provisions/TA 0.014127461063935 0.01491659006 0.0191210281
ROA 0.42% 0.39% -0.19%
(II- IE)/E A 2.58% 2.47% 2.35%
EA/ TA 0.936038107351373 0.92722502124 0.9227190693
(II - IE)/ TA 2.41% 2.29% 2.17%

NIM
II/ EA 7% 7% 7%
IE/ Intt Bearing Liab 5% 5% 5%
Intt Bearing Liabilities/ EA 93% 94% 96%
Spread 2% 2% 2%

Efficiency ratio= Non intt exp/ (Net Interest Income+Non intt income) 0.21915475891382 0.22476522208 0.2256450688

Risk Ratios
Liquidity Risk= Short term securities/ Deposits 0.057% 0.043%
Interest Rate Risk = Interest Sensitive Assets/ Interest Sensitive Liabilities 107% 106% 104%
Credit Risk = Provisioning / Assets 1% 1% 2%
Capital Risk = Capital / Assets 0.033% 0.029% 0.026%
Leverage ratio= Total equity/Total assets 6.120% 6.958% 6.343%
Total capital ratio= (Total equity + Long-term debt + Reserve for loan
losses)/Total assets 26% 26% 23%
Provision for loan loss ratio= PLL/ TL (provision for loan losses/total
loans and leases) 10% 12% 11%
Loan Ratio = Net loans/ Total assets 62% 58% 56%
Loss Ratio = Net charge-offs on loans (gross charge-offs minus
recoveries)/ Total loans and leases

Reserve Ratio = Reserve for loan losses (reserve for loan losses last year
minus gross charge-offs plus PLL and recoveries)/Total loans and leases

Nonperforming ratio= Nonperforming assets (nonaccrual loans and

restructured loans)/Total loans and leases

Operating efficiency (cost control)= Wages and salaries/Total expenses

17% 16% 12%

Volatile liability dependency ratio= (Total volatile liabilities - Temporary

investments)/Net loans and leases 2054067 1.50 0.96

Other Financial Ratios

total taxes 3,577.93 4,033.29 673.54
Tax rate = Total taxes paid/Net income before taxes 56% 63% -9%
Gap ratio = (Interest rate-sensitive assets – Interest rate-sensitive
liabilities)/ Total assets 6% 5% 3%

The value of rate sensitive assets divided by rate sensitive liabilities. A positive (negative) gap ratio has the
effect of making a bank gain (lose) if interest rates fall (rise). In this case gap ratio is decreasing year on year.
The value of rate sensitive assets divided by rate sensitive liabilities. A positive (negative) gap ratio has the
effect of making a bank gain (lose) if interest rates fall (rise). In this case gap ratio is decreasing year on year.
 Analysis and comments
Mar-19 Mar-20

Rs in Crore Rs in Crore Total asset of bank are growing. And total earning assets are also increasing
3,680,914.25 3951394 continously. This is because of increase in investment and advances. Money with
banks is increased in year 2020. This shows that the bank is investing in earning
176,932.42 166,735.78 assets as well as other assets in a proportional ratio

45,557.69 84,361.23

967,021.95 1,046,954.52
2,185,876.92 2,325,289.56 Total interest bearing liabilities are also increasing as we know that SBI is largest
3375388.98 3623341
bank in india so the customer base is also incresing thats why deposist and
borrowing are also increasing.
2,911,386.01 3,241,620.73
0
403,017.12 314,655.65
0
3314403 3556276

892.46 892.46 Equity capital of the bank is remain same for continously three years Reserves are
220,021.36 231115 also increasing which is primarily because of the security premium reserve and
220913.82 232007 profit. Net profit of the bank is also increasing as we can see that it is negitive in
242869 257,323.59 2018 and now it grows to 14488.
154,519.78 159,238.77
36,774.89 45,221.48
69,823.86 118,504.07
54,573.80 53,644.50

279644 302545
862.23 14,488.11 Interest Income minus Interest Expense is termed as Spread. (II-IE)/TA measures how effective
(II-IE)/TA of SBI shows that SBI efficiency to generate spread by utilizing its total assets is increa

0.02% 0.37%
16.66 17.03 Provisions/TA indicates the credit risk of the bank. The lower the ratio the better it is. The credit
1.2485773947 1.39146756622964 situation, it is around 0.2 on an average for the last 5 year and the fluctuations are also not so hi
0.39% 6.24%

0.3% 5%
0.076 0.077
16.662218099 17.0313249019654
Interest Income minus Interest Expense is termed as Spread. (II-IE)/EA measures how effectively b
trend in (II-IE)/EA of SBI shows that efficiency to generate spread by utilizing its earning assets is s
2.40% 2.48%
assets.
-0.008978468 -0.0185460097079
0.0148261536 0.01357609519225
0.02% 0.37%
Interest Bearing Liabilities/Earning Assets indicates bank's ability to pay its interest bearing liabil
of SBI it can be observesd that its ability of repay its interest bearing liabilities using its Earning A
decline of 1% in each year can be seen (considering current market situatuion this can be ignore
 Interest Bearing Liabilities/Earning Assets indicates bank's ability to pay its interest bearing liabil
2.62% 2.71% of SBI it can be observesd that its ability of repay its interest bearing liabilities using its Earning A
0.9169974498 0.91697794837929 decline of 1% in each year can be seen (considering current market situatuion this can be ignore
2.40% 2.48%

7% 7%
5% 4% Efficiency ratio indicated how efficient a bank is in genrating revenue compare to the non intere
98% 98% non interest income is not great as it is near to the maximum efficiency and the lower efficienc
3% 3% its non interest expenses.

0.2496888002 0.39169063306832

1.83% 2.28%
102% 102%
1% 1%
0.024% 0.023% Liquidity risk is a financial risk that for a certain period of time a given
6.002% 5.872% financial asset, security or commodity cannot be traded quickly enough
in the market without impacting the market price. we can see that the
23% 20% lequidity risk of the bank is increasing continously.

10% 10%
59% 59%
Credit risk is the possibility of a loss resulting from a borrower's
failure to repay a loan or meet contractual obligations. it refers to the
risk that a lender may not receive the owed principal and interest,
which results in an interruption of cash flow and increased costs for
collection. In this case credit risk of the company is maintained.

Risk capital refers to funds allocated to speculative activity and used for
high-risk, high-reward investments. Diversification is key for successful
18% 16%
investment of risk capital, as the prospects of each investment tends to
be uncertain by nature although the returns can be far above average
when an investment succeeds. capital risk of the comapny is decreasing
year on year.
1.49 1.51

745.25 2,803.14
637% 24% The efficiency ratio is typically used to analyze how well a company
uses its assets and liabilities internally. An efficiency  ratio can calculate
2% 2% the turnover of receivables, the repayment of liabilities, the quantity
and usage of equity, and the general use of inventory and
machinery. we can see that banks efficiency is at same level.

gative) gap ratio has the

is decreasing year on year.
gative) gap ratio has the
is decreasing year on year.
 o increasing
nces. Money with
esting in earning

that SBI is largest

deposist and

e years Reserves are

mium reserve and
that it is negitive in

II-IE)/TA measures how effectively bank is generating spread using its total assets. Increasing
y utilizing its total assets is increasing.

e ratio the better it is. The credit risk ratio of SBI is not high considering the currenct banking
he fluctuations are also not so high. So, it can be assumed that there is low creit risk in SBI.

E)/EA measures how effectively bank is generating spread using its earning assets. Consistent
d by utilizing its earning assets is stable and there is less risk of under utilization of Earning

y to pay its interest bearing liabilities using its Earning assets. Higher the ratio better it is. In case
aring liabilities using its Earning Assets is consistent except for decline in FY19 and FY20 where a
ket situatuion this can be ignored).
 y to pay its interest bearing liabilities using its Earning assets. Higher the ratio better it is. In case
aring liabilities using its Earning Assets is consistent except for decline in FY19 and FY20 where a
ket situatuion this can be ignored).

venue compare to the non interest expenses. SBI efficiency in generating revenue as compared to
fficiency and the lower efficienc ratio means the bank is generating more income as compared to

nd used for
successful
ent tends to
e average
s decreasing

a company
o can calculate
the quantity
d
vel.