Sangeete SBI Presentation1

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  • 8/6/2019 Sangeete SBI Presentation1


    The origin of the State Bank of India

    goes back to the first decade of the

    nineteenth century with theestablishment of the Bank of Calcutta in

    Calcutta on 2 June 1806.

    Three years later the bank received its

    charter and was re-designed as the Bankof Bengal (2 January 1809).

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    Aunique institution, it was the first joint-

    stock bank of British India sponsored by

    the Government of Bengal. The Bank ofBombay (15 April 1840) and the Bank of

    Madras (1 July 1843) followed the Bank of


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    First Five Year Plan In 1951, when the First Five Year Plan was

    launched, the development of rural India

    was given the highest priority.The commercial banks of the countryincluding the Imperial Bank of India had tillthen confined their operations to the urbansector and were not equipped to respond to

    the emergent needs of economicregeneration of the rural areas

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    In order, therefore, to serve the economy

    in general and the rural sector in

    particular, theA

    ll India Rural CreditSurvey Committee recommended the

    creation of a state-partnered and state-

    sponsored bank by taking over the

    Imperial Bank of India, and integratingwith it, the former state-owned or state-

    associate banks.

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    An act was accordingly passed inParliament in May 1955 and the State Bankof India was constituted on 1 July 1955. More

    than a quarter of the resources of the Indianbanking system thus passed under thedirect control of the State. Later, the StateBank of India (Subsidiary Banks) Act waspassed in 1959, enabling the State Bank of

    India to take over eight former State-associated banks as its subsidiaries (laternamed Associates).

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    State Bank of India is the largest and one

    of the oldest commercial bank in India, in

    existence for more than 200 years.The bank provides a full range of

    corporate, commercial and retail banking

    services in India.

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    Indian central bank namely Reserve Bank

    of India (RBI) is the major share holder of

    the bank with 59.7% stake.The bank is capitalized to the extent of

    Rs.646bn with the public holding (other

    than promoters) at 40.3%.

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    SBI has the largest branch and ATM networkspread across every corner of India.

    The bank has a branch network of over

    14,000 branches (including subsidiaries).Apart from Indian network it also has anetwork of 73 overseas offices in 30countries in all time zones, correspondentrelationship with 520 International banks in

    123 countries. In recent past, SBI hasacquired banks in Mauritius, Kenya andIndonesia.

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    The bank had total staff strength of198,774, Of this29.51% are officers,45.19% clerical staff and the remaining

    25.30% were sub-staff.The bank is listed on the Bombay Stock

    Exchange, National Stock Exchange,Kolkata Stock Exchange, Chennai StockExchange and Ahmedabad StockExchange while its GDRs are listed on theLondon Stock Exchange.

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    SBI group accounts for around 25% of the

    total business of the banking industry

    while it accounts for 35% of the totalforeign exchange in India.

    Net Interest Income of the bank has

    witnessed a CAGR of 13.3% during the

    last five years.

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    The bank has 14 directors on the Boardand is responsible for the management ofthe Banks business.

    The board in addition to monitoringcorporate performance also carries outfunctions such as approving the businessplan, reviewing and approving the annualbudgets and borrowing limits and fixingexposure limits. Mr. O. P. Bhatt is theChairman of the bank.

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    Recently, the senior management of thebank has been broadened considerably.

    The positions of CFO and the head of

    treasury have been segregated, and newheads for rural banking and for corporatedevelopment and new business bankinghave been appointed.

    The managements thrust on growth of the

    bank in terms of network and size wouldalso ensure encouraging prospects in timeto come.

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    Reserve Bank of India is the largest shareholderin the bank with 59.7% stake followed byoverseas investors including GDRs with 19.78%

    stake as on September 06. Indian financial institutions held 12.3% while

    Indian public held just 8.2% of the stock. RBI is the monetary authority and having

    majority shareholding reflects conflict of interest.

    SBI will have a further headroom to dilute theGOIs stake from 59.7% to 51.0%, which willfurther improve its CAR and Tier I ratio.

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    The business operations of SBI can be

    broadly classified into the key income

    generating areassuch as:

    National Banking

    International Banking

    Corporate BankingTreasury operations

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    Top Performing Public Sector Banks

    Andhra Bank

    Allahabad Bank

    Punjab National Bank

    Dena Bank

    Vijaya Bank

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    Top Performing Private Sector Banks

    HDFC Bank

    ICICI Bank

    AXIS Bank

    Kotak Mahindra Bank

    Centurion Bank of Punjab

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    The growth for SBI in the coming years is likely tobe fuelled by the following factors:

    Continued effort to increase low cost deposit

    would ensure improvement in NIMs and henceearnings.

    Growing retail & SMEs thrust would lead tohigher business growth.

    Strong economic growth would generate higher

    demand for funds pursuant to higher corporatedemand for credit on account of capacityexpansion.

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    The risks that could ensue to SBI in time tocome are as under:

    SBI is currently operating at a lowest CAR.

    Insufficient capital may restrict thegrowth prospects of the bank goingforward.

    Stiff competition, especially in the retailsegment, could impact retail growth ofSBI and hence slowdown in earningsgrowth.

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    Contribution of retail credit to total bankcredit stood at 26%. Significant thrust ongrowing retail book poses higher credit risk

    to the bank. Delay in technology upgradation could

    result in loss of market shares. Management indicated a likely pension

    shortfall on account ofAS-15 to be close toRs50bn.

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