Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
State Bank of India – Getting aggressive - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 20, 2000

    State Bank of India – Getting aggressive

    India’s largest commercial bank State Bank of India (SBI) is becoming aggressive in order to remain in competition with new private sector banks.

    SBI is the largest bank in the country with a customer base of around 80 m. The bank accounts for approximately 28% of the total deposits and advances in the country. The deposits of the bank stand at Rs 1,690 bn and advances at Rs 824 bn as on March 1999. It is also one of the cheapest providers of housing loans in the country. The bank is striving hard to improve its technological capabilities.

    In the retail segment the bank has launched string of products like credit cards, Internet banking and the recent announcement to install 1,000 ATMs by the end of March 2002. It has also announced plans to invest around Rs 6 bn in technology improvement in an attempt to make a foray into e-commerce by the end of the current fiscal year. It has already appointed KPMG as advisor for the proposed technology initiatives. The bank seems strategically well placed to consolidate its position with this IT initiatives.

    SBI has also planned a foray into insurance as it already fulfills the criterion set by RBI regarding networth. This lucrative segment will complement the reach of the SBI with its wide distribution network and will help to give a substantial boost to its topline growth. The bank is also expected to come out with a VRS scheme intending to reduce its high workforce by the end of this year. It is a one-time cost, which will improve the profitability of the bank in future by saving in employee cost.

    In the recent budget, government has announced to bring down its holding in PSU banks to 33%. The bank is likely to raise about Rs 45 bn from the capital markets in India and abroad in the near future subject to the amendment to the SBI Act. It is expected to raise the major portion through ADR issue, which will improve the Capital Adequacy Ratio (CAR) of the bank from the present 12.5%.

    At the current market price of Rs 231, SBI trades at Price/Book value ratio of 1.2 times. The bank gets comparatively lower valuations than private sector banks due to its high level of NPAs at 7.2%. The situation could improve this year since the management is becoming more focussed in its attempt to improve efficiencies by leveraging on technology. If the management’s initiatives were to trickle down to the bottomline, a re-rating of the stock would be a forgone conclusion.



    Equitymaster requests your view! Post a comment on "State Bank of India – Getting aggressive ". Click here!


    More Views on News

    Insider at It Again. This Time Stealing from Buffett and Berkshire (The 5 Minute Wrapup)

    Aug 12, 2017

    What is Equitymaster Insider Ankit Shah stealing from Berkshire's success?

    The Pied Pipers of 'Buy High, Sell Higher' (The 5 Minute Wrapup)

    Jul 14, 2017

    What should you make of Ola drivers turning day traders and Radio Jockeys giving opinion on the Sensex?

    SBI: Merger Pushes up Bad Loans (Quarterly Results Update - Detailed)

    May 23, 2017

    State Bank of India (SBI) ended FY17 on a healthy note but concerns on bad loans from associate banks remain.

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 12:21 PM



    Compare Company With Charts