Zeichen Journal ISSN No: 0932-4747

A STUDY ON FINANCIAL PERFORMANCE OF STATE BANK OF INDIA

J.NISHA MARY

Research Scholar, PG and Research Department of Commerce, Sri Vidya Mandir Arts and
Science College, Uttangarai.

Dr.MARY.J.PRIYADHARISINI

Assistant Professor, Department of Commerce, Don Bosco College, Yellagiri Hills

ABSTRACT

The Global boom endured to remain sluggish in every year. Weaken commercial enterprise
surroundings near stagnation in growth dynamics. According to the brand new IMF
projections, the sector financial system is poised to grow at 3.2% in 2016 and select up to a
few.5% in 2017. There is growing proof of subject with the aid of the SBI institution on the
declining profitability of the banking device due to unsecured loans and advances. The RBI
pressures on banks profitability and recommend various strategies to reduce the unsecured
loans and advances, with changes inside the social and economic objective of Indian
commercial banks particularly of SBI group. It will become extremely over and reveals
remedial measures to reduce the profitability in the price of present day banking philosophy.
The approach of policy makers towards profitability has changed, with the result that low
income have end up a truth of life. Therefore, it's far a time to concentrate on evaluation of the
profitability overall performance. Hence, within the present paper an try has been made to
investigate the profitability performance of SBI. The goals of the paper are to look at the
profitability function of SBI and to research the profitability overall performance of SBI. The
statistics series of the paper is based on secondary facts with various facts tool using R for the
duration from 2008-09 to 2018-19.

Key words: Deposit, Advances, Net Profit, Borrowing, Investment.

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INTRODUCTION

The banking sector is the existence blood of any modern-day economy. It is one of the
important financial basements of the economic region, which plays a crucial function within
the functioning of a financial system. It could be very important for economic development of
a country that it’s financing necessities of alternate; industry and agriculture are met with
better diploma of commitment and obligation. The Indian banking sector is extensively
categorized into scheduled banks and non-scheduled banks. The scheduled banks are the ones
protected beneath the 2d Schedule of the Reserve Bank of India Act, 1934. The scheduled
banks are further classified into: nationalized banks; State Bank of India and its buddies;
Regional Rural Banks - foreign banks and different Indian personal area banks. The term
business banks refers to each scheduled and non-scheduled commercial banks regulated under
the Banking Regulation Act, 1949.Thus, integrally linked in banking enterprise in regularly
increasing.

The performance of economic machine is energy of economic system. A sound banking

system efficaciously mobilized saving in productive quarter and solvent machine guarantees
the talents to meet the depositor duty. The banking region is playing critical function in socio-
economic development of the us of a after independence. It is dominant in India because it
money owed for greater than half of the assets of economic area.

STATE BANK OF INDIA

State Bank of India (SBI) is an Indian multinational, public region banking and financial
offerings employer. It is a government-owned organization with its headquarters in Mumbai,
Maharashtra. As of 2018-19, it had belongings of 28.480 trillion (US$380 billion) and greater
than 14,800 branches, which include 220 overseas places of work unfold throughout 39
nations, making it the largest banking and economic services corporation in India by using
assets. The business enterprise is ranked 239th at the Fortune Global 500 listing of the sector's
largest organizations.

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They position of mobilization of deposits and disbursement of credit score to numerous

quarter of banking enterprise. This may also replicate health of the united states. As of 2019.
The Bank’s management is liable for the preparation of these monetary statements that provide
a true and honest view of the economic role, financial overall performance and coins flows of
the Bank according with the necessities of the Reserve Bank of India, the provisions of the
Banking Regulation Act, 1949, the State Bank of India Act, 1955 and identified accounting
policies and practices, such as the Accounting Standards issued by using the Institute of
Chartered Accountants of India (ICAI). This duty of the control includes the design,
implementation and renovation of internal controls and threat management systems relevant to
the coaching of the financial statements which might be free from cloth misstatement, whether
because of fraud or mistakes. In making the ones hazard tests, the control has implemented
such internal controls which might be relevant to the preparation of the financial statements
and designed techniques which can be suitable within the circumstances in order that the inner
manage with regard to all the activities of the Bank is powerful.

OBJECTIVES OF THE STUDY

 To study the financial performance of State Bank of India

 To know the profitability position of State Bank of India
 To study the managerial efficiency of State Bank of India.
 To offer findings and suggestions to enhance the financial performance of State Bank
of India

SCOPE OF THE STUDY

The research paper will also help to understand the financial performance SBI. This study will
throw light on the different aspects where the State Bank of India stand out and how the banks
will provide an opportunity in corresponding its activities to achieve the best performance.

RESEARCH METHODOLOGY

The study has been conducted with reference to the data related to SBI. The study examines the
financial performance of some variables and compares the performance of SBI for the period of

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2008-09 to 2018-19. A. The study is an exploratory and analytical in nature with an attempt to
explore the financial performance of SBI.

SOURCE OF DATA COLLECTION

The Data collection is secondary source was used in the form of reports through internet.

TOOLS FOR DATA COLLECTION

The data required for the study will be collected from Annual reports of respective banks,
Journals and reports on trends, Progress of Banking of India, Books and websites

TOOLS FOR DATA ANALYSIS

The data tool using R, Mean, Standard Deviation, Covariance, P-value Df, Hypothesis

SAMPLING VARIABLES

To apply Regression technique with following variables are required

Independent variable are Deposits, Borrowings, Investments, Advances, Return on Average

Assets(%),Return on Equity(%),Dividend Payout Ratio(%),Net NPA to Net Advances,
Dependent variables are Net Profit

REVIEW OF LITERATURE

Abhay Jaiswal and Chanchala Jain (2016), A Comparative Study of Financial Performance of
SBI and ICICI, The observe is an strive to research the monetary overall performance of SBI and
ICICI banks. The State Bank of India, popularly referred to as SBI is one of the main financial
institution of public quarter in India. SBI has 14 Local Head Offices and fifty seven Zonal
Offices placed at critical cities throughout the u . S .. ICICI financial institution is the second
largest, leading bank of private sector in India The Bank has 2,533 branches and six,800 ATMs
in India. The examine is descriptive and analytical in nature. The accrued records turned into
secondary in nature and collected from numerous reports issued via these banks via net. The
comparison of economic performance of those banks was made on the idea of ratio analysis.
The effects indicated that the SBI is acting properly and financially sound than ICICI Bank.
Also the market position of SBI is better than ICICI in phrases to earning in keeping with share,

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rate ratio in line with share and dividend payout ratio, but on the other hand ICICI bank is
appearing nicely in phrases of NPA and provision for NPA in assessment of SBI bank.

Dr.D.Guruswamy, (2012), describes Analysis of Profitability Performance of SBI and its

Associates, the paper an strive has been made to investigate the profitability performance of SBI
and its buddies. The targets of the paper are to have a look at the profitability of SBI and Its
Associates and to research the profitability performance of SBI and Its Associates. This paper is
based totally on secondary statistics. In order to derive the open surpassed consequences from
the facts amassed thru secondary records, diverse statistical gear like imply, S.D, variance,
CAGR, and ANOVA were finished. The scope of the paper is restricted to all the banks of SBI
group for a facts length from 1996-ninety seven to 2007-08. In the prevailing paper, for the
purpose of evaluating the overall performance of SBI and its pals, five profitability ratios had
been taken into consideration. On the idea of analysis of profitability ratios it's miles printout that
every one the five ratios suggests fluctuating fashion for the duration of the take a look at
duration in all the banks.

Dr. Kingshuk Adhikari, Nitashree Barman, Pinkumoni Kashyap (2014), take a look at on
Profitability of State Bank of India: An Analysis-The paper tries to investigate the profitability of
State financial institution of India during seven years. Apart from studying the fashion of various
components of both earnings and expenditure, overall performance of the bank has been
analysed with the parameters like OPTWF, ROA, ROE, ROI and EPS. There is a huge difference
no longer simplest between the components of earnings however additionally throughout the
components of expenditure. The paper concludes that the profitability overall performance of the
SBI is not steady throughout the examine duration. The financial institution must consciousness
greater on diversification of income and should also curtail working costs so as to improve
profitability overall performance.

Urmila Bharti, Surender Singh (2014), describes a examine on Liquidity and Profitability
Analysis of Commercial Banks in India – A Comparative Study,- Liquidity is needed to fulfill
out the spark off demands of clients and profitability is needed to fulfill out the expenses of
banks. But each the phrases are ontradictory in nature. If banks preserve extra liquidity, their
profitability lower and in the event that they growth their profitability they'll need to reduce their
liquidity. In this way, banks act as an engine for a business corporation. So inside the present

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observe an attempt has been made to evaluate the overall performance of various classes of
banks viz. Public, non-public and foreign financial institution corporations in India. For
evaluating the overall performance, 11 monetary ratios had been used. These ratios in addition
were labeled into categories viz. Liquidity and profitability. The duration of observe cowl the
years 2005-06 to 2011-12. From the effects, it's been found that during the study period the
liquidity and profitability position of public zone financial institution group declined whilst it has
progressed in different two corporations.

Dr. V.N. Sailaja Dr.N. Bindu Madhavi (2015), emphasis observe on comparison of capital shape
of public region banks and private sector banks and its effect on bank’s profitability- the capital
shape and profitability was analyzed by using too many researchers in educational stage.
However, most of them excluded banking industry due to extraordinary marketplace structure
and regulatory frameworks. The differential factor of banking enterprise with different economic
industries is minimal capital requirement that is eight% of fairness capital. This requirement is
for insurance of the financial institution's danger related assets. Research is aiming to research
the connection between capital shape of the public and private region banks and its profitability.
The goal of the paper -To recognize the part of debt and fairness in capital shape of selected
banks, To discover the Weighted Average Cost of Capital (WACC) of decided on banks, To
conduct comparative observe regarding capital structure of selected banks, To take a look at the
impact of capital structure on financial institution’s profitability. Sample length is 3 private
banks and three public banks based on the benefit sampling method which is one of the strategies
in non-probability sampling methods. The paper concludes that quarter banks is high as
compared to the non-public sector banks which can be overburden to the banks to pay excessive
quantity of hobby out of the income.

Ms. Shikha Gupta (2014), An Empirical Study of Financial Performance of ICICI Bank- a
Comparative Analysis,-The Bank works intently with ICICI Foundation throughout numerous
sectors and applications. As of 2014 it's far the second one largest bank in India in phrases of
belongings and market capitalization. ICICI financial institution emerged as a pioneer
assignment on the horizon of presenting an accelerated range of banking merchandise and
financial offerings for corporate and retail customers via its diverse shipping channels and
specialized subsidiaries in the areas of funding banking, asset control, venture capital and

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coverage. In the mild of its strategic importance within the state interest, it's miles critical to
assess the financial performance of the ICICI Bank. And the prevailing have a look at focused on
operational manage, profitability and solvency and many others. This research paper is aimed to
research and examine the Financial Performance of ICICI Bank and offer recommendations for
the development of efficiency within the financial institution.

Loriya Chirag, Thakarshibhai (2014), study on A Profitability Analysis of Banks in India- banks
consist of industrial banks and the co-operative banks. This have a look at tries to measure the
relative profitability of Indian banks. For this study, we've used public quarter banks and private
zone banks. It is very crucial to analyze how their profitability is influenced by way of number of
factors if you want to in addition advocate them in which they want to concentrate more. In this
article we've got analyzed of mean, widespread deviation and ANOVA check had been used. The
paper concludes Profitability is the primary motivating force for any monetary hobby. Business
agency is essentially being a financial employer; it has to maximize the welfare or the investment
of its stakeholders. To this case, the enterprise Undertaking has to earn profit from operations.
Profitability acts as a yardstick to degree the effectiveness and performance of business effort for
the boom and success of any business organizations.

Brindadevi .V (2013), A Study on Profitability Analysis of Private Sector Banks In India- The
goal of this take a look at became common profitability evaluation of different non-public sectors
banks in India based on the performances of profitability ratios like interest spread, internet
earnings margin, go back on long term fund, return on internet really worth & go back on asset.
Profitability is a measure of performance and manipulate it suggests the performance or
effectiveness with which the operations of the business are carried on. Recording profitability for
the past duration or projecting profitability for the coming duration, measuring profitability is the
most important degree of the fulfillment of the commercial enterprise. A commercial enterprise
that isn't profitable can't survive. Conversely, a commercial enterprise that is highly worthwhile
has the ability to reward its owners with a massive go back on their funding. Increasing
profitability is one of the most critical obligations of the business managers. Managers constantly
look for ways to exchange the enterprise to enhance profitability. These ability changes may be
analyzed with a aid of profits assertion and balance sheet.

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DATA ANALYSIS AND INTERPRETATION

Table 1. Shows the Regression Statistics

Regression Statistics

Multiple R 0.982

R Square 0.981

Adjusted R Square 0.959

Standard Error 749.56

F 34.42

Table 2. Performance indicators of SBI

Variable Mean SD P-value Df CV

Deposits 882082.31 480936.8 0.985 8 0.548
Borrowings 103049.54 74230.30 0.345 8 0.725
Investments 289391.08 113196.57 0.844 8 0.398
Advances 707226.23 440461.56 0.991 8 0.625
Net Profit 8459.31 3511.27 0.088 8 0.425
Return on Average Assets 0.84 0.17 0.081 8 0.222
(%)
Return on Equity 14.26 3.10 0.740 8 0.220
(%)
Dividend Payout 19.18 2.37 0.870 8 0.128
Ratio (%)
Net NPA to Net 2.22 0.72 0.325 8 0.325
Advances
Table value =0.0023 at 5%level of Significance

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HYPOTHESIS TESTING
 H01: There is no significant difference of performance of SBI in terms of Deposits.
 H02: There is no significant difference between performances of SBI in terms of
Borrowing.
 H03: There is no significant difference between performances of SBI in terms of
Investment.
 H04: There is no significant difference between performances of SBI in terms of
Advances.
 H05: There is no significant difference between performances of SBI in terms of Net
Profit.
 H06: There is no significant difference between performances of SBI in terms of ROA.
 H07: There is no significant difference between performances of SBI in terms of ROE.
 H08: There is no significant difference between performances of SBI in terms of DPR.
 H09: There is no significant difference between performances of SBI in terms of Net
NPA to Net Advances.

Table1 shows a regression statistics which shows relationship of the variable which shows
positively held between dependent and independent variable. Multiple R is 98.23 which near to
100 and with 5% confidence level. And R square is 98.10. F is 34.42

Table 2 shows the performance indicator of SBI - Deposits: the calculated value of covariance is
0.548 is greater than the table value 0.0023. Therefore, H01 is rejected. P-value is 0.985 Hence,
it is indirect that there is a significant difference between the performance of SBI Deposit.

Borrowings: the calculated value of covariance is 0.725 is greater than the table value 0.0023.
Therefore, H02 is rejected. P-value is 0.345. Hence, it is indirect that there is a significant
difference between the performances of SBI Borrowings.

DPR: the calculated value of covariance is 0.128 is greater than the table value 0.0023.
Therefore, H08 is rejected. P-value is 0.870. Hence, it is indirect that there is a significant
difference between the performances of SBI DPR.

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Net NPA to Net Advances: the calculated value of covariance is 0.325 is greater than the table
value 0.0023. Therefore, H09 is rejected. P-value is 0.325. Hence, it is indirect that there is a
significant difference between the performances of SBI Net NPA to Net Advances.

FINDINGS

Return on average is gradually decreasing in every year it has reached 1.00 and there is a
fluctuation in ever year.

Investment: the calculated value of covariance is 0.398 is greater than the table value 0.0023.
Therefore, H03 is rejected. P-value is 0.844 hence; it is indirect that there is a significant
difference between the performances of SBI Investment.

Advances: the calculated value of covariance is 0.625 is greater than the table value 0.0023.
Therefore, H04 is rejected. P-value is 0.991. Hence, it is indirect that there is a significant
difference between the performances of SBI Advances.

Net Profit: the calculated value of covariance is 0.425 is greater than the table value 0.0023.
Therefore, H05 is rejected. P-value is 0.0881. Hence, it is indirect that there is a significant
difference between the performances of SBI Net Profit.

ROA: the calculated value of covariance is 0.222 is greater than the table value 0.0023.
Therefore, H06 is rejected. P-value is 0.081. Hence, it is indirect that there is a significant
difference between the performances of SBI ROA.

ROE: the calculated value of covariance is 0.220 is greater than the table value 0.0023.
Therefore, H07 is rejected. P-value is 0.740. Hence, it is indirect that there is a significant
difference between the performances of SBI ROE.

Initially the Return on equity is 18.12 then it started fluctuating in coming years at the end 2015-
16it is 7.74.

In the year 2003-04 the Dividend payout ratio is 15.72 and increasing in the coming year and
reached 20.28 in 2015-16.

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Net NPA to Net Advances initially it is more 3.48 and decreased in 2006-07 i.e., 1.56 then it has
reached to 3.81.

Regression statistics which shows relationship of the variable which shows positively held
between dependent and independent variable.

Multiple R is 99.23 which near to 100 and with 5% confidence level. And R square is 98.48. F is
32.41

The performance indicator of SBI -Deposits: the calculated value of covariance is 0.545 is
greater than the table value 0.0023. Therefore, H01 is rejected. P- value is 0.984 hence; it is
indirect that there is a significant difference between the performances of SBI Deposit.

Borrowings: the calculated value of covariance is 0.720 is greater than the table value 0.0023.
Therefore, H02 is rejected. P-value is 0.340. Hence, it is indirect that there is a significant
difference between the performances of SBI Borrowings.

•Investment: the calculated value of covariance is 0.391 is greater than the table value 0.0023.
Therefore, H03 is rejected. P-value is 0.844 hence; it is indirect that there is a significant
difference between the performances of SBI Investment.

•Advances: the calculated value of covariance is 0.623 is greater than the table value 0.0023.
Therefore, H04 is rejected. P-value is 0.991. Hence, it is indirect that there is a significant
difference between the performances of SBI Advances.

•Net Profit: the calculated value of covariance is 0.415 is greater than the table value 0.0023.
Therefore, H05 is rejected. P-value is 0.0881. Hence, it is indirect that there is a significant
difference between the performances of SBI Net Profit.

SUGGESTIONS

Decline in profitability of the banking machine because of unsecured loans and advances.

The performance will in a roundabout way affect the profitability of SBI.

Proper control over leverage must be taken as a way to magnify DP ratio.

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The DER is pretty excessive viz. Worrisome, as it suggests a precarious amount of leverage.

There have to be a constant flow of sustainable dividends from a corporation, the dividend
payout ratio evaluation is critical.

A consistent fashion in this ratio is normally greater essential than a high or low ratio. Bank has
fallen a percent every year for the last 5 years might imply that the agency can not have enough
money to pay such excessive dividends. This might be an indication of negative working
performance.

CONCLUSION

The banking sector may be very important for the economic improvement of a country. The SBI
is one of the leading financial institution of Public area Bank in India. The marketplace role of
SBI is better. The analysis reveals that there may be no vast difference between Deposits,
Investment, Advances, Borrowing, Net Profit and so on., there's growing proof of subject by the
SBI organization at the declining profitability of the banking device because of unsecured loans
and advances. It has turns into extremely over and finds remedial measures to lessen the
profitability in the value of recent banking philosophy. Hence, inside the present paper of the
observe an strive has been made to analyze the financial performance of SBI.

REFERENCES

Abhay Jaiswal, Chanchala Jain A Comparative Study of Financial Performance of SBI and
ICICI, Volume-4, Issue- 3 E-ISSN: 2320-7639, 2016, IJSRCSE Volume 6, Issue 12,June 2014

Brindadevi .V, A Study on Profitability Analysis of Private Sector Banks In India, IOSR Journal
of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. Volume
13, Issue 4 (Sep. - Oct. 2013), PP 45-50

Dr. Kingshuk Adhikari, Nitashree Barman, Pinkumoni Kashyap Profitability of State Bank of
India: An Analysis, Pacific Business Review International

Dr. V.N. Sailaja Dr.N. Bindu Madhavi, Comparison of capital structure of public sector banks
and private sector banks and its effect on bank’s profitability, IJMSRR, E- ISSN - 2349-6746,
ISSN -2349-6738, Vol.1, Issue.11, May-2015

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Dr.D. Guruswamy, Analysis of profitability performnce of sbi and its associates, Vol.2 Issue 1,
January 2012, ISSN 2249 8826, ZENITH International Journal of Business Economics &
Management Research

Loriya Chirag, Thakarshibhai, A Profitability Analysis of Banks in India, Volume: 3, Issue: 12,
Dec 2014, ISSN - 2250-1991

Ms. Shikha Gupta, An empirical study of financial performance of icici bank- a comparative
analysis, IITM Journal of Business Studies (JBS) Vol. 1, Issue 1, 2014

Urmila Bharti, Surender Singh, Liquidity and Profitability Analysis of Commercial Banks in
India – A Comparative Study, Vol 6, Issue 4, October-December 2014, www.gjeis.org, GJEIS |
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