Bank Performance Analysis (SBI)

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
Saving 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/ 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 Data not available Data not availabl Data not availa

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
Data not available Data not availabl Data not availa
Reserve Ratio = Reserve for loan losses (reserve for loan losses last year
minus gross charge-offs plus PLL and recoveries)/Total loans and leases
Data not available Data not availabl Data not availa

Nonperforming ratio= Nonperforming assets (nonaccrual loans and

restructured loans)/Total loans and leases Data Not available Data Not availab Data Not avail

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 2362445 3068485

 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%
 Mar-19 Mar-20 Analysis and comments

Rs in Crore Rs in Crore
3,680,914.25 3951394

176,932.42 166,735.78

45,557.69 84,361.23

967,021.95 1,046,954.52
2,185,876.92 2,325,289.56
3375388.98 3623341

2,911,386.01 3,241,620.73
0
403,017.12 314,655.65
0
3314403 3556276

892.46 892.46
220,021.36 231115
220913.82 232007
242869 257,323.59
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

The amount of income earned from the

net assets is indicated by ROA. In the case
of SBI, FY2020 the ROA can be seen to
be rising over the last 5 years. The rise in
ROA shows that SBI is successful in using
its properties to earn income.
0.02% -0.01

The Equity Multiplier is a risk indicator

that indicates how much stakeholder
equity is funded by the company's cash.
SBI's Equity Multiplier pattern reveals
that the assets were funded by more equity
(declining EM) from FY16 to FY18, but
the spike in Equity Multiplier shows that
more of the assets were funded by debt
and not equity in FY20.
16.66 17.03
1.2485773947 1.39146756622964
ROE indicates a company's efficiency in
truning the capital into profits. ROE of
SBI is on an average -0.64% in the last 5
0.39% -12.43% years.

NI/OR indicates net income generated out

of the operating income. The higher the
ratio the better it is as it shows that
company has low non-operating expenses.
SBI NI/OR ratio has been on an average
0.3% 5% for the last five years.

OR/TA measures bank's ability to

generate operating revenue from its total
assets. In case of SBI it can be infered that
the bank is consistent in generating
0.076 0.077 operating revenue by utlizing its assets.
16.662218099 17.0313249019654

Interest Income minus Interest Expense is

termed as Spread. (II-IE)/TA measures
how effectively bank is generating spread
using its total assets. Increasing (II-
IE)/TA of SBI shows that SBI efficiency
to generate spread by utilizing its total
2.40% 2.48% assets is increasing
-0.008978468 -0.0185460097079

Provisions/TA indicates the credit risk of

the bank. The lower the ratio the better it
is. The credit risk ratio of SBI is not high
considering the currenct banking situation,
it is around 0.2 on an average for the last 5
year and the fluctuations are also not so
high. So, it can be assumed that there is
0.0148261536 0.01357609519225 low creit risk in SBI
0.02% -0.73%

Interest Income minus Interest Expense is

termed as Spread. (II-IE)/EA measures
how effectively bank is generating spread
using its earning assets. Consistent trend
in (II-IE)/EA of SBI shows that efficiency
to generate spread by utilizing its earning
assets is stable and there is less risk of
2.62% 2.71% under utilization of Earning assets.

Earning assets to Total asset ratio

0.9169974498 0.91697794837929
indicates what percentage of bank's total
assets are generating wealth for it. The
higher the ratio the better it is. The
increasing EA to TA ratio of SBI indicates
increasing efficiency of its assets to
generate wealth.

Interest Earning to Earning Asset ratio

measures the interest generated by the
utilization of Earning Assets. Higher ratio
means more effective utilization. The
II/EA ratio of Kotak Mahindra Bank is
declining depicting inefficient utlization
of Earning assets to generate Interest
7% 7% Income.
 Interest Expenses to Interest Bearing
Liabilities shows proportion of Interest
expenses in the Interest bearing liabilities.
The higher ratio indicates that the bank
have high interest expenses (high
deposits). The decling IE/Interest Liability
ratio of SBI indicates that the deposits of
the bank are declining which is not a good
sign as it will impact the lending capacity
5% 4% of the bank.

Interest Bearing Liabilities/Earning

Assets indicates bank's ability to pay its
interest bearing liabilities using its
Earning assets. Higher the ratio better it is.
In case of SBI it can be observesd that its
ability of repay its interest bearing
liabilities using its Earning Assets is
consistent except for decline in FY19 and
FY20 where a decline of 1% in each year
can be seen (considering current market
98% 98% situatuion this can be ignored).
3% 3%

Efficiency ratio indicated how efficient a

0.2496888002 0.39169063306832
bank is in genrating revenue compare to
the non interest expenses. SBI efficiency
in generating revenue as compared to non
interest income is not great as it is near to
the maximum efficiency and the lower
efficienc ratio means the bank is
generating more income as compared to
its non interest expenses.

The ratio indicates whether banks own

enough high-quality assets that can be
1.83% 2.28% easily converted into cash within one year.

It refers to the current or

prospective risk to the bank's capital and
earnings arising from adverse movements
in interest rates that affect the bank's
banking book positions. When interest
rates change, the present value and timing
of future cash flows change. It can be seen
102% 102% decreasing over the years

Credit risks are used by investors to find

out company's risk level and whether they
should invest in the shares of this bank or
not. An ideal credit risk ratio is less than
35% and here in all the years it is less than
1% 1% that and hence, one can invest in SBI.
 This ratio measures bank's financial
stability by measuring it's capital and risk.
The minimum capital to asset ratio is 8%
under BASEL Norm and anything above
it indicates that the capital is more than
the minimum requirement for daily
transactions to take place, SBI it is less
which indicates that the bank does not
have minimum money required to carry
0.024% 0.023% out it's operations.

The leverage ratio measures a bank's core

capital to its total assets. The ratio uses
tier 1 capital to judge
how leveraged a bank is in relation to its
consolidated assets. Tier 1 assets are ones
that can be easily liquidated if
a bank needs capital in the event of a
6.002% 5.872% financial crisis.

It is calculated by dividing Tier-1
capital by
a bank's average total consolidated assets 
and certain off-balance sheet exposures.
The higher the tier-1 leverage ratio is, the
more likely a bank can withstand negative
shocks to its balance sheet. It can be seen
decreasing over the years thus indicating
that SBI is not likely to withstand more
shocks towards the balance sheet
23% 20%

The loan loss provision coverage ratio is

an indicator of how protected a bank is
against future losses.It can be seen stable
over the years thus SBI is protected
10% 10% against the future losses
59% 59%

Data not availa Data not available

Data not availa Data not available

Data Not avail Data Not available

The Operating efficiency ratio is not

stable in the past 5 years, which implies
18% 16% that there is lack in efficiency

This ratio is an indicator of the degree of

which "hot" money is being used to
support the bank's most vulnerable assets.
Over the course of 5 years, volatile
liabilities have reduced, which suggests
that the vulnerability of the bank actually
reduces the likelihood of bad loans as well
1.49 1.51 as hot money with the bank.
745.25 2,803.14
637% 24%
A gap ratio over 1 indicates that there
are  more rate sensitive assets than liabiliti
es, meaning revenue or profits will likely 
increase as interest rates rise. A ratio 
below 1 indicates the opposite. The gap ra
2% 2% tio is most commonly used in banking.