Team 3

• Niharika Harish
• Katta Ashish
• Aju Shaju
• Gopika Nair S
• Ashish Prasad
• Sarin S
Macro Economic Analysis
on banking industry
Key Macro- Economic factors affecting
banking sector
• GDP - Fluctuating GDP affects investments, savings, interest rates etc.
• Inflation - The risk of loan default is more, it affects interest spread as well.
• Unemployment – Leads to more of NPA, further affecting liquidity as well.
• Seasonal changes – Mainly affects agriculture, trades etc.
• Changing policies, slow pace in getting approvals and so on.
• Income, exchange rates.
Scope of macro economics in banking
industry
• Gives an estimated picture on how the economy is, how it would be in
coming years.
• Helps in enhancing quality of decisions to make.
Mainly on lending's, provisions, funding etc.
• Enhances quality of services.
eg: Mainly on advisory services
IMPACT OF COVID 19 ON SBI

.
STEPS TO OVERCOME
• Support government actions
• Initiate credit forbearance and modification programs
• Prepare for losses
• Extend credit
• Digitize to manage the demand for refinancing
• Educate and train customers
• Minimize physical infection risks
• Personalize advice to consumers
• Support virtual SME relationship managers
• Accelerate digital sales and service
• Review project expenditures
• Be flexible with vendors and suppliers
• Invest in things that will outlive the virus
INDUSTRY
ANALYSIS
 SWOT ANALYSIS
STRENGTHS WEAKNESSES

 Public sector banks are the largest in India in terms of
market share, revenue and assets.
 Banking is as old as Human race
 Government Support
 Hedge from risk
 Connecting People
 Changing from mere savings & loan facilitator role
 Increasing NPA
 Vulnerable to risk
 Can’t reach to Under-penetrated market
 In spite of modernization, the banks still carries the
perception of traditional bank to new age customers
 Lack of proper technology driven services when
compared to private banks

OPPORTUNITIES THREATS

 Expansion into rural areas  Increase in the number of Private players

 Better scope of using advanced technologies.  Competition
 Changing Socio-cultural & demographic factors  Threat of stability of the system
 Rise in inflation figures which would lead to increase in
interest rates
 PESTLE ANALYSIS
POLITICAL
ECONOMICAL SOCIAL
 Regulatory
framework  Increase in population
 Monetary Policy  Changes in lifestyle
Macro Economic  Population Attitude
 Budget
Factors
measures

LEGAL
TECHNOLOGICAL ENVIRONMENTAL
 Internet Banking  Natural Disasters
 Banking
 IT service and  Paperless Banking
Regulation Act
Mobile Banking System
 Intervention By
 Credit cards
RBI
PORTERS FIVE FORCE MODEL
Competitive
Threat of New Threat of Substitutes
Rivalry :High
Entrant :Medium : Medium  Same
 License  Investing in gold,
Services
Regulation of RBI real estate, PF,  Similar
Mutual funds etc.
Strategies
 Riskier Options

Bargaining Power of
Suppliers: Low to Medium Bargaining power of
 Customer deposits. customers: High
 Mortgages and loans.  Cost of switching
 Mortgage-baked is low
securities.
 Loans from other
financial institutions.
 Recent Banking Scenario
• Rising NPA – Accounting to nearly 70-80% of total Banking Industry
• Fall in Stock value (Stock market crash 2018)
• Expansion of business into insurance sector etc.
• Merging of banks for survival – Eg:- PNB, Oriental bank of commerce and United bank of India
• Deregulations and intense competition.
• Evolution of Digital payment platforms.(G-pay, Paytm)
Future of banking industry
• Product innovation and Process re-engineering Eg:
• Adoption of Block-chain to improve quality of security.
• Big Data assistance to get a proper analysis, risk assessment and forecasting.
• Study on Behavior Finance in-order to achieve better customer satisfaction with AI assistance.
• More of Digital Currencies would be used. (Bitcoins)
• Wearable devices to remove plastic cards (These wearable will evolve into medical implants)
Company Analysis
 • Founded on 2nd June 1806
• Type: Public Company
• Industry: Banking, Financial Services
• Traded as: NSE, BSE

Introduction •
•
Owner: Government of India
No. of employees: 257252 (As of March
2019)
• Total assets: Rs50.80914 trillion(2019)
• Rank: 236th on the Fortune Global 500
list
 • Chairman Rajnish Kumar
• Over 24000 branches in India
• Provides a wide range of banking
products through its vast network of
Introduction branches in India and overseas. Over
190 offices in 35 countries across the
world.
• The headquarter of SBI is at Mumbai
• SBI has 17 Local Head Offices
• 101 Zonal Offices
 • On 2nd June 1806, the bank of Calcutta was
established
• Bank of Calcutta was renamed as the Bank of
Bengal
• On 27th January 1921
Bank of Bengal + Bank of Bombay + Bank of
Madras = Imperial Bank of India

History • On 1st July 1955, the Imperial Bank of India was

nationalised and became the State Bank of
India.
• In 1959, the government passed the State Bank
of India Act.
• This act attached 8 state associate banks to
State Bank of India.
• In 2017, State Bank of India merged with itself
five of its associate banks.
Chairman- Shri
Rajnish Kumar
Managing
Directors
• Shri Arijit Basu
• Shri Dinesh Kumar Khara
• Shri C S Setty
Directors
Logo & Slogan

Slogan:
“ The Nation Banks on us; Pure
Banking Nothing Else; With you
all the way”
 • Vision: Be The Bank Of Choice For
A Transforming India
Vision, • Mission: Committed To Providing
Mission & Simple, Responsive, And
Innovative Financial Solutions.
Values • Values: Service| Transparency|
Ethics| Politeness| Sustainability
Products
Services
 Net Profit Margin
We can see the banks were
underperforming during 2018 but March March
Particulars March
2019 2017
the banks has showed some 2018
   
positive signs of earnings and
especially the competitors of SBI Net Profit Margin (%) 0.35 -2.96 5.97
has got better performance ratio, SBI
but we can also make a note of the
conversion ratio during the bad
time of 2018 where SBI has the 0.86 -5.57 3.27
Net Profit Margin (%)
best conversion. The bank SBI may BoB
be having a less Net profit but we
can say that the bank is more
0.74 -10.23 2.71
reliable when compared to the Net Profit Margin (%)
competitors of the public sector. Canara Bank
Operating Profit Margin

March March
The operating profit ratio of Particulars
2019
March
2017
the 3 selected banks are  
2018
 
having the similar story as
-14.14 -23.19 -14.23
the Net profit margins. The Operating Profit Margin
SBI is having the least (%)
operating profit in the last SBI
FY. But this may be because
-11.32 -20.82 -12.73
of the large client base and Operating Profit Margin
the changes in the (%)
administration of the banks. BoB
Large NPA has highly -13.30 -27.06 -15.54
impacted the biggest bank Operating Profit Margin
of India in this case. (%) Canara Bank
Net Interest Margin

Particulars March March March

2019 2017
2018
   
The SBI has got the
2.4 2.16 2.28
best results in terms of Net Interest Margin (X)
the interest earnings. SBI

We can see some

steady increase in the Net Interest Margin (X) 2.39 2.15 1.94
ratio YoY. This is a BoB
positive sign for SBI.
2.08 1.97 1.69
Net Interest Margin (X)
Canara Bank
Return on Assets

March March
Particulars March
2019 2017
We can see the least  
2018
 
RoA on SBI. And we
0.02 -0.18 0.38
cannot expect more in Return on Assets (%)
a bank of this size with SBI
such huge operation Return on Assets (%)
0.05 -0.33 0.19
and large NPA. BoB
0.04 -0.68 0.19
Return on Assets (%)
Canara Bank
Return on Equity

March March
Particulars March
The SBI is having the 2019
2018
2017
least RoE due to the    
less Net Profit (Ratio Return on Equity / Net 0.39 -3.37 6.69
wise) and the large worth (%) SBI
shareholding. And but 0.94 -5.60 3.43
the RoE is less but is Return on Equity / Net
not a bad thing to have worth (%) BoB
this number. Return on Equity / Net
1.16 -14.51 3.96

worth (%) Canara Bank

 Non Performing Assets

SBI’s NPA was less in the year 2017 and

almost by 2 % it had increased in the
year 2018.
Reason could be Particulars
March 2019
March 2018
March 2017
   
• Inadequate pick-up in the global
economy and negative spill overs Gross NPA (In Cr) 172,750.36 223,427.46 112,342.99
from the global financial markets.
• less than adequate pick-up in
domestic growth and declining 65,894.74 110,854.70 58,277.38
exports. NET NPA (in Cr)

• delay in realisation of receivables

due to subdued demand, reduced 7.53% 3.01% 10.91% 5.73% 6.9% 3.71%
market confidence and stress in Gross NPA Net
steel, power and infrastructure % NPA %
projects
• In 2018-19 a divergence of Rs 11,932
crore was reflected.
CASA ratio

2019

•Higher the casa ratio better is SBI – casa ratio 44.57%

the net interest margin, which
means better is the operating
efficiency of the bank BoB – casa ratio 35.04%
Canara Bank – casa 29.18%
ratio
 For a large bank like SBI the ratios
are really good, and it can be
considered as a positive sign for
Conclusion investing as we can consider the
overall performance in the large
scale amid huge NPA.
Valuation