S SUBALAKSHMI et al.

: FINANCIAL RATIO ANALYSIS OF SBI [2009 - 2016]

DOI: 10.21917/ijms.2018.0095

FINANCIAL RATIO ANALYSIS OF SBI [2009 - 2016]

S. Subalakshmi1, S. Grahalakshmi2 and M. Manikandan3
1,2
Department of Commerce, Standard Fireworks Rajaratnam College for Women, India
3
Department of Commerce, Ayya Nadar Janaki Ammal College, India

Abstract confidence, which helps in mobilizing of deposits. Increase in

SBI is the India’s largest commercial bank in terms of assets, deposits deposits increases the lending business and therefore enhances the
and employees. SBI is the preferred banker for most of public sector possibilities of income generation for the bank. Moreover, a bank
corporations. It occupies a unique place in the Indian money market with a sound capital base can take business opportunity more
as it commands more than one third of India’s bank resources. Public effectively and can concentrate well on dealing with problem
has enormous faith in State bank of India because of its dedicated arising from unexpected loses. The success and survival of a bank
services. This study aims at analyzing the Financial Ratio analysis of depends to a great extent upon the dedication and competence of
State Bank of India. The main objective for commercial bank is to
maximize the value of profit. To do so, banks concentrate on their
its managers. A smart bank manager can, not only help to
financial performance analysis and attempt to structure their portfolios mobilize resources and deploy them in profitable channels, the
in order to maximize their return. The most popular tool/technique for manager can also reduce the amount of idle balances and help to
analyzing the Financial Statement of Bank is Ratio Analysis. Ratio earn more profits. The banks now focus on integrated balance-
analysis enables the management of banks to identify the causes sheet management where all the relevant factors which effect an
of the changes in their advances, income, deposits, expenditure, appropriate balance sheet composition deserve consideration.
profits and profitability over the period of time and thus helps in Therefore various components of balance sheet are analyzed
pinpointing the direction of action required for increasing the keeping in view the strengths of a bank. Analyzing Asset and
deposits, income, advances and reducing the expenditure and for
Liability behaviour means managing both assets and liabilities
altering the profitability prospects of the banks in future. Therefore
the study was undertaken to analyze financial status of public sector
simultaneously for the purpose of minimizing the adverse impact
bank especially to SBI (State Bank of India). of interest rate movement, providing liquidity and enhancing the
market value of equity. A careful designing and management of
Asset and Liability behaviour is integral part of banking business
Keywords: particularly because over three forth of its resources originate
Commercial Bank, SBI, Public Sector Corporations, Financial Status from the depositors. However, the banks do not have free hand in
the making of their behaviour on both sides (asset and liabilities).
1. INTRODUCTION Therefore the study was undertaken to analyze financial status of
public sector bank especially to SBI (State Bank of India).
Banks are life blood and the nervous system of the Indian The major objectives of the study are as follows:
economy. Banking plays an important role in the economic
• To study the comprehensive of growth and structure of SBI.
development of a country and forms the core of the money
market in an advanced country. In India, the money market is • To examine Assets and Liabilities Portfolio of SBI.
characterized by the existence of both the organized and • To analyze the financial performance of the SBI.
unorganized sectors. The organized sector includes Commercial • To offer suitable suggestions to strengthen the position of
banks, Co-operative banks and Regional Rural banks while the SBI banks.
unorganized sector includes indigenous bankers and private
money lenders. Among the banking institutions in the organized
sector, the commercial banks are the oldest institutions having a
2. REVIEWS
wide network of branches, commanding utmost public
The researcher an attempt has been made to provide an
confidence and having the lion’s share in the total banking
overview of various aspects of this study through the review of
operations. Initially, they were established as corporate bodies
literature. The sources referred to include various journals, books,
with share-holdings by private individuals, but subsequently
magazines and internet sites.
there has been a drift towards State ownership and control. Today
27 banks constitute the strong public sector in Indian commercial Khataybeh et al. [2] determined the influence of yields or rate
banking [1]. of return on portfolio composition and concluded that the
availability of funds is more important in determining the
In Modern times banking is the kingpin of all business
structure of these portfolios.
activity. It is an important instrument of mobilizing the
community’s resources through institutional framework. As a Baser et al. [3] indicated that Asset-Liability Management
matter of fact, economic and industrial development of a country (ALM) was a comprehensive and dynamic framework for
depends, is the main, upon how efficiently funds are managed by measuring, monitoring and managing the market risk of a bank.
the banks. Hence, banking plays an important in the economic The study attempted to evaluate the changing perspectives of the
development of the country. Adequacy of capital and competency banks in identifying and facing the risks and maintaining Asset
of management are the two pillars upon which the earnings of the Quality so as to ensure profitability with the help of ALM
banks depend. Sufficiency of capital instills depositor’s techniques.

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Prathap et al. [4] indicated ALM in Indian banking system is The results were summarized in capsule form. Therefore, he
still in a nascent stage. Against this backdrop, the objective of the recommended that the burden rate should be reduced by effecting
research was to study and analyze the status of ALM approach in cost control measures, and the spread rate be increased so that the
the Indian banking system. This study also indicates a strong profitability may be at a higher rate.
relationship between fixed assets and net worth for all groups of Sinha et al. [12] compared the performance of 40 Indian
banks. commercial banks using Window Analysis, considering deposit
Chaudhary et al. [5] stated that recently the Indian economy mobilizations as the output indicator. Among the in-samples
has witnessed the emergence of many banks in the private sector. banks, the private sector banks performed better than the public
There are several reasons behind the increasing number of sector banks.
commercialization of banks. The growth of such banks is not
possible unless they witness some success in the context of 3. IMPORTANCE OF THE STUDY
customer satisfaction or may it be the net assets held by these
banks, efficiency of their management or the networks of each The study is important as it is believed that banks with good
bank both in private as well as the public sector bank. Asset & Liability behaviour can maximize their earnings and also
Arias et al. [6] presented an econometric model to study the satisfy their social objectives as required by the Government and
determinants of profitability of the top five banks of United States. the Reserve Bank of India. At present, when most of the public
The study observed that capital asset ratio had positive impact on sector banks are reeling under the pressure of growing NPA, focus
profitability as large banks had ability to compete efficiently even on aspects of Assets and Liability behaviour can help the banks to
if the macroeconomic factor did not support. cut down their risk exposure as well as unnecessary spending so
Ibrahim et al. [7] stated that Indian scheduled commercial as to strengthen their balance sheet.
banks have improved their operational performance since 2000. In the context of strong opposition for privatization of public
There is constant increase in aggregate deposits. The C-D ratio sector commercial banks, this study attempts to analyse the
also shows an increasing trend. The investment deposit ratio and financial performances of State Bank of India and to identify the
priority sector advances have also gone up. reasons for the lag in performance of SBI and the possible
Ravinder et al. (2011) analyzed the profitability of four major corrective measures.
banks in India. The study revealed that State Bank of India
performed better in terms of earning per share and dividend 4. METHODOLOGY
payout ratio, while Punjab National Bank performed better in
terms of operating profit margin and return on equity [8]. In the present study, secondary data available over seven
Devamohan et al. [9], calculated the business ratios, such as years: 2009-2016 from various sources have been analyzed.
interest income to average working funds, non-interest income to Researcher has heavily relied upon the Reserve bank of India
average working funds, operating profit to average working publications, the Annual reports and balance sheets of SBI.
funds, return on assets, business per employee and profit per Government publications such as publications of individual
employee for public sector banks, private sector banks and foreign commercial banks were also collected for this study.
banks for the period 2004-05 to 2008-09. It was observed that the
foreign banks and new generation private banks have superior 5. FINANCIAL HIGHLIGHTS OF SBI DURING
business ratios. They effectively leverage technology, 2009-2016
outsourcing and workforce professionalism which helped them to
protect their bottom line. The Reserve bank of India identifies various items of assets
Vyas et al. [10] used multiple regression models to compare and liabilities under schedules 1 to 12. The Financial statements
mean capital to risk weighted assets ratio of various bank groups. of banks are actually prepared in 18 schedules in accordance to
They found a significant difference in the CRAR (Capital to Risk special provision of third schedule of Section 29 of Banking
Weighted Asset Ratio) of State Bank of India group and Foreign Regulation Act, 1949. Out of these, 12 schedules are allocated to
Banks operating in India in comparison to that of nationalized the Balance Sheet and schedules 13-16 are allocated to the
banks group. There is no significant difference in the CRAR of Income Statement. The other schedules are related to notes of
Indian private banks and that of nationalized banks, the study accounts, provision and contingencies or significant accounting
observed. policy changes.
Pasupathy et al. [11] stated that there were several factors that
determined the operating efficiency and profitability of the bank.

Table.1. Balance Sheet of SBI from 2009-16 (In ‘000 omitted)

Items 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Capital and Liabilities
Capital 634,88,26 634,99,90 671,04,48 684,03,40 746,57,31 746,57,31 776,27,77
Reserves
65314,31,60 64351,04,42 83280,16,10 124348,98,77 146623,96,30 160640,96,97 179816,08,85
and Surplus

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Deposits 804116,22,68 933932,81,30 1043647,36,23 1627402,61,19 1838852,35,65 2052960,78,88 2253857,56,44

Borrowings 103011,60,11 119568,95,50 157991,35,95 203723,19,69 223759,70,95 244663,46,71 258214,39,05
Other
80336,70,40 105248,38,93 80915,09,46 172695,87,88 181089,85,70 235601,10,84 271965,91,64
Liabilities
Total 1053413,73,05 1223736,20,05 1335519,23,07 2133108,57,03 2395981,60,98 2700110,02,46 2970897,64,19
Assets
Cash and
Balance 61290,86,52 94395,50,20 79199,20,61 89574,03,11 114095,60,38 144287,54,67 160424,56,91
with RBI
Balance
34892,97,64 28478,64,57 43087,22,63 55653,69,49 53065,74,09 44193,50,13 43734,89,64
with Bank
Investments 285790,07,06 295600,56,90 312197,61,03 519343,42,39 578793,08,61 673507,48,44 705189,07,67
Advances 631914,15,20 756719,44,80 867578,89,01 1392608,03,33 1578276,68,60 1692211,33,41 1870260,89,28
Fixed Assets 4412,90,67 4764,18,93 5466,54,92 9369,92,56 10559,78,10 12379,29,52 15255,68,28
Other
35112,75,96 43777,84,65 53113,01,62 66559,46,15 61190,71,20 133530,86,29 176032,52,41
Assets
Total 1053413,73,05 1223736,20,05 1335519,23,07 2133108,57,03 2395981,60,98 2700110,02,46 2970897,64,19
Source: Published Annual Report of SBI from 2009-16

Table.2. Profit and Loss account of SBI from 2009-16 (‘000 omitted)
Items 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Income
Interest Earned 70993,91,75 81394,36,38 106521,45,34 119655,10,00 136350,80,39 152397,07,42 163685,30,61
Other Income 14968,15,27 15824,59,42 14351,44,57 16036,84,23 18552,91,64 22575,89,26 28158,36,01
Total I 85962,07,02 97218,95,80 120872,89,91 135691,94,23 154903,72,03 174972,96,68 191843,66,62
Expenditure
Interest Expended 47322,47,80 48867,95,61 63230,36,87 75325,79,65 87068,63,25 97381,82,36 106803,49,21
Operating Expenses 20318,68,00 23015,43,26 26068,99,21 29284,42,23 35725,85,13 38677,64,14 41782,36,65
Provisions for contingencies 9154,85,92 17071,05,03 19866,24,97 16976,73,86 21218,06,48 25811,92,98 33307,15,39
Total II 76796,01,72 88954,43,90 109165,61,05 121586,95,74 144012,54,86 161871,39,48 181893,01,25
Net Profit
I-II 9166,05,30 8264,51,90 11707,28,86 14104,98,49 10891,17,17 13101,57,20 9950,65,37
Profit b/f 33,93 33,93 33,93 33,93 33,93 32,48 32,48
Total 9166,39,23 8264,85,83 11713,33,94 14105,32,42 10891,51,10 13101,89,68 9950,97,85
Source: Published Annual Report of SBI from 2009-16

6. RATIO ANALYSIS • Credit Deposit Ratio

• Deposit to Total Assets Ratio
The most popular tool/technique for analyzing the Financial • Return on Equity Ratio
Statement of Bank is Ratio Analysis. Ratio analysis enables the • Interest Expenses to Interest Earned Ratio
management of banks to identify the causes of the changes in their
• Profit Margin Ratio
advances, income, deposits, expenditure, profits and profitability
over the period of time and thus helps in pinpointing the direction • Equity Multiplier Ratio
of action required for increasing the deposits, income, advances • Net Interest Margin Ratio
and reducing the expenditure and for altering the profitability • NPA to Advance Ratio
prospects of the banks in future.
To analyses the performance of the SBI Banks, the researcher
has identified 16 ratios namely:

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6.1 CREDIT DEPOSIT RATIO 2012-13 1627402,61,19 2133108,57,03 0.76

Credit Deposit Ratio is a commonly used statistic for assessing 2013-14 1838852,35,65 2395981,60,98 0.77
a bank’s liquidity by dividing the banks total loans by its total 2014-15 2052960,78,88 2700110,02,46 0.76
deposits. The formula used to calculate the credit deposit ratio is, 2015-16 2253857,56,44 2970897,64,19 0.76
Credit Deposit Ratio = Credit/Deposits Average = 0.77
The ratio of credit to deposit of SBI during the study period is Maximum = 0.78
shown in the following Table.3.
Minimum = 0.76
Table.3. Credit Deposit Ratio of SBI (‘000 omitted) Computed Secondary Data
It is revealed from the Table.4, that the average Deposit to
Credit total assets ratio of SBI during the study period was 0.77. The
Year Credit Deposit
Deposit Ratio maximum Deposit to Total Assets Ratio has registered was 0.78
2009-10 631914,15,20 804116,22,68 0.79 during the year 2011-12 and the minimum Deposit to total assets
2010-11 756719,44,80 933932,81,30 0.81 ratio registered was 0.76 in the years 2009-10, 2010-11, 2012-13,
2014-15 and 2015-16.
2011-12 867578,89,01 1043647,36,23 0.83
As this ratio establishes the extent of the bank’s Assets being
2012-13 1392608,03,33 1627402,61,19 0.86 funded by Deposits. It is clear that around 76% of Total Assets is
2013-14 1578276,68,60 1838852,35,65 0.86 being funded by Deposits.
2014-15 1692211,33,41 2052960,78,88 0.82 6.3 EQUITY MULTIPLIER RATIO
2015-16 1870260,89,28 2253857,56,44 0.83 This ratio measures the extent to which assets of the financial
Average = 0.83 institutions are funded with equity relative to debt. Equity
Maximum = 0.86 Multiplier measures the value of assets funded per equity capital.
The higher this ratio, the more leverage or debt the bank is using
Minimum = 0.79 to fund its assets. The formula to calculate the Equity Multiplier
Computed Secondary Data Ratio is
It is inferred from the Table.3, the Credit Deposit Ratio in the Equity Multiplier Ratio = Total Assets/Total Equity Capital
year 2009-10 is 0.79, 2010-11 is 0.8, 2011-12 is 0.83, 2012-13 is The Ratio Total Assets to total equity capital of SBI during the
0.86, 2013-14 is 0.86, 2014-15 is 0.82 and 2015-16 is 0.83. The study is shown in the following Table.5.
average Credit Deposit ratio of SBI over the study period was
registered as 0.83. The minimum ratio was registered as 0.79 in Table.5. Equity Multiplier Ratio of SBI (‘000 omitted)
the year 2009-10 and the maximum ratio was registered as 0.86 in
the year 2012-13 and 2013-14. Total Equity Equity
Year Total Assets
It is concluded that, the Average Credit Deposit ratio of SBI Capital Multiplier Ratio
is 83% and it indicates that out of every 100 Deposited, Rs. 83 2009-10 1053413,73,05 634,88,26 1659.22
being lent and hence it is clear that the SBI may not have enough 2010-11 1223736,20,05 634,99,90 1927.15
liquidity to cover any unforeseen fund requirements.
2011-12 1335519,23,07 671,04,48 1900.21
6.2 DEPOSIT TO TOTAL ASSETS RATIO 2012-13 2133108,57,03 684,03,40 3118.42
The deposit to total assets ratio is an indicator of financial 2013-14 2395981,60,98 746,57,31 3209.31
leverage. It describes the percentage of total assets that were
2014-15 2700110,02,46 746,57,31 3616.67
financed by creditors, liabilities and debt. The deposits to total
assets ratio is calculated by dividing total deposits by its total 2015-16 2970897,64,19 776,27,77 3827.11
assets. The formula to calculate the deposit to total assets ratio is Average = 2743.17
Deposit to Total Assets Ratio = Deposit/Total Assets Maximum = 3827.11
The ratio Deposit to Total Assets of SBI during the study
Minimum = 1659.22
period is shown in the following Table.4.
Computed Secondary Data
Table.4. Deposit to Total Assets Ratio of SBI (‘000 omitted) The Table.5 reveals clearly that the average Equity Multiplier
ratio of SBI during the study period was registered as 2743.17.
Deposit to Total The maximum of Multiplier Ratio was registered as 3827.11 in
Year Deposit Total Assets
Asset Ratio the year 2015-16 and the minimum Multiplier Ratio was
2009-10 804116,22,68 1053413,73,05 0.76 registered as 1659.22 in the year 2009-10.
2010-11 933932,81,30 1223736,20,05 0.76 Higher the ratio indicates that more Assets were funding by
2011-12 1043647,36,23 1335519,23,07 0.78 Debt than by Equity. In other words, investors funded fewer assets

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than by creditors. This involves more risk for the investors It can be concluded that, the SBI always maintains around 67
because the SBI is highly levered with Debt. percentage of excess of interest earned over interest expended on
around 35%.
6.4 RETURN ON EQUITY RATIO
Table.7. Interest Expenses Ratio of SBI (‘000 omitted)
It measures the amount of net income after taxes earned for
Equity Capital contributed by the bank’s stock holders. The Interest Operating Interest
formula to calculate the return on Equity ratio is Year
Expenses Income Expenses Ratio
Return on Equity Ratio = Net income/Total Equity Capital 2009-10 47322,47,80 70993,91,75 0.67
The ratio Net Income to total equity capital of SBI during the
2010-11 48867,95,61 81394,36,38 0.60
study Period is shown in the following Table.6.
2011-12 63230,36,87 106521,45,34 0.59
Table.6. Return on Equity Ratio of SBI (‘000 omitted) 2012-13 106817,91,29 167976,13,88 0.64
Return on 2013-14 121479,04,34 189062,44,04 0.64
Year Net Income Equity Capital
Equity Capital 2014-15 97381,82,36 152397,07,42 0.64
2009-10 9166,39,23 634,88,26 14.44 2015-16 106803,49,21 163685,30,61 0.65
2010-11 8264,85,83 634,99,90 13.02 Average = 0.63
2011-12 15866,02,25 671,04,48 23.64 Maximum = 0.67
2012-13 18808,97,28 684,03,40 27.50 Minimum = 0.59
2013-14 10891,51,10 746,57,31 14.59 Computed Secondary Data
2014-15 13101,89,68 746,57,31 17.55
6.6 PROFIT MARGIN RATIO
2015-16 9950,97,85 776,27,77 12.82
Profit Margin measures bank’s ability to control expenses and
Average = 20.16
thus its ability to produce net income from its operating income
Maximum =27.50 (or revenue). These ratios measure the proportion of total
Minimum = 12.82 operating income that goes to pay the particular expense item. The
formula to calculate the Profit Margin Ratio is,
Computed Secondary Data
Profit Margin Ratio = Net Income/Total Operating Income
The Table.6 shows that the average returns on equity ratio of
SBI during the study period have registered as 20.16. The The ratio Net Income to Total Operating income of SBI during
maximum ratio was registered as 27.50 in the year 2012-13 and the study period is shown in the following Table.8.
the minimum average returns on equity ratio was registered as
12.82 in the year 2015-16 during the study period. Table.8. Profit Margin Ratio of SBI (‘000 omitted)
The Average Return on Equity ratio is 20.16 and this indicates Total Profit
how well the SBI is making effective use of the shareholder’s Year Net Income Operating Margin
capital. In other words Higher the Return on Equity will be better. Income Ratio
6.5 INTEREST EXPENSES TO OPERATING 2009-10 9166,39,23 70993,91,75 0.13
INCOME RATIO 2010-11 8264,85,83 81394,36,38 0.10
Interest expenses constitute the major part of Total expenses 2011-12 15866,02,25 106521,45,34 0.15
incurred by any bank. Interest is paid on the amount deposited by 2012-13 18808,97,28 167976,13,88 0.11
customers on various schemes like Fixed Deposit Schemes and
2013-14 10891,51,10 189062,44,04 0.06
Savings bank account. The formula to calculate the interest
expenses ratio is, 2014-15 13101,89,68 152397,07,42 0.09
Interest Expenses 2015-16 9950,97,85 163685,30,61 0.06
Interest Expenses Ratio=
Total Operating Income Average = 0.11
The ratio Interest expenses to total operating income of SBI Maximum = 0.15
during the study period is shown in the following Table.7. Minimum = 0.06
It is apparent from the Table.7 that the average Interest
Computed Secondary Data
expenses ratio of SBI during the study period was 0.63. The
maximum interest expenses ratio was 0.67 in the year 2009-10 The Table.8 highlights that the average profit margin ratio of
and the minimum interest expenses ratio was registered as 0.59 SBI during the study period was registered as 0.11. The maximum
2011-12 during the study period. average profit margin ratio was registered as 0.15 in the year
2011-12 and the minimum average profit margin ratio was
registered as 0.06 in the year 2015-16.

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The Average Profit Margin ratio is 11% and this low profit Table.10. NPA to Advance Ratio of SBI (in crores)
margin indicates the expenses are too high and need to cut
expenses. NPA to Advance Ratio
Year Net NPA Advance
(%)
6.7 NET INTEREST MARGIN RATIO 2009-10 10870.17 631914.15 1.72
The most important ratio when it comes to banks is the Net 2010-11 12,346.90 756719.44 1.63
Interest margin. Net Interest Margin is the difference between the 2011-12 15818.85 867578.89 1.82
interest income generated and the amount of interest paid out to
their lenders deposit divided by total assets. The Net Interest 2012-13 21,956.48 1392608.03 1.58
Margin is calculated by using the formula, 2013-14 31,096.07 1578276.69 1.97

Net Interest Margin=

 Interest Earned-Interest Expended  2014-15 27,590.58 1692211.33 1.63
Total Assets 2015-16 55,807.02 1870260.89 2.98
The Net Interest Margin of SBI during the study period is Average = 2.31
shown in the following Table.9.
Maximum = 2.98
Table.9. Net Interest Margin ratio of SBI (‘000 omitted) Minimum = 1.63
Net Computed Secondary Data
Interest Interest It is observed from the above Table.10, the average NPA to
Year Total Assets Interest
Earned Expended advance ratio of SBI during the study period is 2.31%. The
Margin
2009-10 70993,91,75 47322,47,80 1053413,73,05 0.02 Maximum NPA to Advance ratio was registered at 2.98% and the
minimum NPA to Advance ratio was registered at 1.63 in the year
2010-11 81394,36,38 48867,95,61 1223736,20,05 0.03 2015-16 and 2010-11 respectively.
2011-12 106521,45,34 63230,36,87 1335519,23,07 0.03 It is concluded that the NPA to Advance ratio has a fluctuating
2012-13 167976,13,88 106817,91,29 2133108,57,03 0.03 trend and starts increasing after 2015. So the SBI bank has strictly
followed the RBI guidelines by making provisions against NPAs.
2013-14 189062,44,04 121479,04,34 2395981,60,98 0.03 While situation was in control till 2014-15, the ratio increased to
2014-15 152397,07,42 97381,82,36 2700110,02,46 0.02 around 3 following the effective steps taken by RBI Governor
Raghuram Rajan to clean up the balance sheets of banks by
2015-16 163685,30,61 106803,49,21 2970897,64,19 0.02
eliminating the hidden NPAs.
Average = 0.025 The present study has been undertaken for critical evaluation
Maximum = 0.03 of only the leading Public sector bank in India, State Bank of
India. The study period is of seven years from 2009-10 to 2015-
Minimum = 0.02
16. In this study, the financial ratio analysis of SBI has been
Computed Secondary Data evaluated. The researcher pinpoints the emerging conclusion of
It is apparent from the above Table 9, that the average Net the study based on analysis carried out and puts forward
Interest Margin of SBI during the Study period was 0.025. The suggestions on the basis of the findings of the research work.
maximum Net Interest margin of SBI is 0.03 in the years 2010-11,
2011-12, 2012-13 and 2013-14. The minimum Net interest Margin 7. FINDINGS
of SBI is 0.02 in the years 2009-10, 2014-15 and 2015-16.
The Average Net Interest Margin ratio of SBI is 2.5%. The • The research work provides the key findings according to
positive of the Net Margin indicates the SBI investment strategy the data analysis.
costs more than it makes and was able to make optimal decision, • It is concluded that, the Average Credit Deposit ratio of SBI
as interest expenses were lower than the amount of returns is 83% and it indicates that out of every 100 Deposited, 83
produced by investments. being lent.
• It is clear from the Deposit to Total Assets ratio that around
6.8 NPA TO ADVANCE RATIO 76% of Total Assets is being funded by Deposits.
NPA is defined as a credit facility in respect of which the • The maximum Multiplier Ratio was registered at 3827.11 in
interest and/ or installment of principal has remained past due for the year 2015-16 and the minimum Multiplier Ratio was
a specified period of time. In simple terms, asset is tagged as non- registered at 1659.22 in the year 2009-10.
performing when it ceases to generate income for the lender the • It is understand that the Average Return on Equity ratio is
net NPA to loans (advance) ratio is used as a measure of the 20.16 during the study period.
overall quality of the bank’s loan. An NPA are those assets for • It can be concluded from the Interest Expenses ratio that the
which interest is overdue for more than 90 days (or 3 months). SBI always maintains the percentage of excess of interest
NPA Ratio = (Net Non-Performing Assets)/Loans earned over interest expended at around 35%.
• It is clear that, the Average of Profit Margin ratio comparing
The Ratio Non- performing assets to loans given of SBI during
the Interest earned and Net income is 11% during the study
the study period is shown in the following Table.10.
period.

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S SUBALAKSHMI et al.: FINANCIAL RATIO ANALYSIS OF SBI [2009 - 2016]

• The maximum of Net Interest margin ratio of SBI is 0.03 in a sufficient progress in the SBI and the overall performance of the
the years 2010-11, 2011-12, 2012-13 and 2013-14 and the Bank is good. The performance of SBI bank has been analyzed in
minimum Net interest Margin ratio of SBI is 0.02 in the detail in terms of deposit mobilization, loans and advances,
years 2009-10, 2014-15 and 2015-16. investment position, non-performing assets, earnings and
• The Maximum of NPA to Advance ratio was registered at profitability efficiency. According to the analysis, the SBI is
2.98% and the minimum of NPA to Advance ratio was maintaining the required standards and running profitability. SBI
registered at 1.63 in the year 2015-16 and 2010-11 have more profitability because it enters into the industry as well
respectively. as commercial market also and regularly it improving the service
quality level. In this highly competitive global environment it is
8. SUGGESTIONS imperative for the SBI bank to show outstanding performance in
various parameters.
On the basis of the analysis and interpretations of the collected
data, the researcher has identified some suggestions for REFERENCES
consideration. On the basis of the study the following suggestions
are given to the State Bank of India to improve their performance. [1] J.D. Agarwal, “Finance India”, Available at:
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individuals. Most borrow the funds they need from other Utility Approach: Evidence from Jordan”, International
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management, a much riskier method than asset management. [3] Narayan Baser, “Asset and Liability Management of
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ratio is 83% which means that out of every Rs.100 deposited [4] Suman Chakrabotry and Subhalaxmi Mohapatra, “An
Rs.83 being lent. So there is a need to maintain sufficient Empirical Study of Asset Liability Management by Indian
liquidity. Banks”, SSRN, pp. 1-11, 2009.
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indicates that more Assets are funded by Debt than the Sector Banks with the Public Sector Banks in India with
Reference to Assets and Liabilities”, International Journal
Equity, involves more risky for the investors and SBI is
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highly levered with Debts. So the SBI should concentrate on
3, No. 2, pp. 5-12, 2012.
their Equity Fund by attracting large investors to invest in
[6] J.W. Scott and J.C. Arias, “Banking Profitability
their equity shares.
Determinants”, Business Intelligence Journal, Vol. 4, No. 2,
• The Average Profit Margin Ratio is 11%. This is very low
pp. 209-230, 2011.
to the SBI and indicates the expenses are higher. So the SBI
[7] Ibrahim M. Syed, “Operational Performance of Indian
need to prepare efficient budget to cut off the expenses. If
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the expenses are high, it will create adverse impression in
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the minds of the shareholders, so the SBI must concentrate
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on it.
[8] K.V.N. Prasad and G. Ravinder, “Performance Evaluation of
• The Maximum of NPA to Advance ratio was registered at Banks: A Comparative Study on SBI, PNB, ICICI & HDFC”,
2.98% and the minimum of NPA to Advance ratio was Advances in Management, Vol. 4, No. 2, pp. 43-53, 2011.
registered at 1.63 in the year 2015-16 and 2010-11 [9] Alamelu and Devamohan, “Efficiency of Commercial Banks
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in NPA to bad debts in the near future too. Scheduled Commercial Banks in India”, Bauddhik, Vol. 1,
• Interest Expended to Interest Earned ratio of SBI is less No. 1, pp. 18-21, 2009.
satisfactory. It is suggested that the SBI Bank may take some [11] Rajamohan and Pasupathy, “Performance Evaluation of
steps to increase the interest earning capacity of the bank, by Tamil Nadu Industrial Co-operative Bank Ltd.)-An
inviting more deposits from public. Application of Structural and Growth Analysis”, Indian Co-
• The suggestions offered would enable the SBI to take operative Review, Vol. 37, No. 2, pp. 11-15, 2009.
necessary steps to improve the performance of the SBI. [12] Ram Pratap Sinha and Biswajit Chatterjee, “Bank
Ownership and Deposit Mobilization: A Non-Parametric
9. CONCLUSION Approach”, Prajnan-Journal of Social and Management
Sciences, Vol. 37, No. 3, pp. 159-180, 2009.
The present research work dealt with the performance of SBI
with reference to Ratio analysis and Percentage analysis. There is

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