18 May 2023 5:30 PM GMT

Company Review

Top Indian Companies: State Bank of India

Myfin Desk

Top Indian Companies: State Bank of India


It is the largest public sector bank in India with a 23% market share by assets

State Bank of India (SBI) is an Indian multinational public sector bank and financial services statutory body headquartered in Mumbai, Maharashtra.

It is the largest public sector bank in India with a 23% market share by assets and a 25% share of the total loan and deposits market. SBI has 2.73% weightage on Nifty 50.

Brief History

The bank descends from the Bank of Calcutta, founded in 1806 via the Imperial Bank of India, making it the oldest commercial bank in the Indian Subcontinent.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act. This made eight banks that had belonged to princely states into subsidiaries of SBI.


SBI provides a range of banking products through its network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). SBI has 16 regional hubs and 57 zonal offices that are located at important cities throughout India.


The bank had 191 overseas offices spread over 36 countries having the largest presence in foreign markets among Indian banks.

• SBI Australia

• SBI Bangladesh

• SBI Bahrain

• SBI Botswana

• SBI Cananda Bank

• SBI China

• SBI (Mauritius) Ltd ne in Mauritius.

• Nepal SBI Bank Limited

Former Associate Banks

SBI acquired the control of seven banks in 1960. They were the seven regional banks of former Indian princely states. They were renamed, prefixing them with 'State Bank of'. These seven banks were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBN), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT).

On 15 February 2017, the Union Cabinet approved the merger of five associate banks with SBI.

Non-banking subsidiaries

Apart from five of its associate banks (merged with SBI since 1 April 2017), SBI's non-banking subsidiaries include:

• SBI Capital Markets Ltd

• SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)

• SBI Life Insurance Company Limited

• SBI Mutual Fund

Yes Bank Investment

State Bank of India acquired 48.2% of the shares of Yes Bank as part of RBI directed rescue deal in March 2020.

Shareholding Pattern of SBI.

The Shareholding Pattern page of State Bank of India presents the Promoter's holding, FII's holding, DII's Holding, and Share holding by general public etc.

Shareholding Pattern - State Bank of India

Holder's Name No of Shares % Share Holding

NoOfShares 8924611534 100%

Promoters 5079775288 56.92%

ForeignInstitutions 914827688 10.25%

NBanksMutualFunds 1138258399 12.75%

CentralGovt 13429565 0.15%

Others 103911054 1.16%

GeneralPublic 581732629 6.52%

FinancialInstitutions 986407631 11.05%

GDR 106269280 1.19%

FY2023 Q4 and Full Year Results

SBI's March quarter net zoomed nearly 90 per cent to Rs 18,094 crore on a consolidated level, helped by handsome performance on the core income front and an improvement in asset quality to the decadal best.

On a standalone basis, the country's largest lender reported an 83 per cent jump in its net profit at Rs 16,695 crore, while the same for FY23 came 58 per cent up at Rs 50,232 crore. Both the quarterly and fiscal year profits were the highest ever.

Its chairman Dinesh Khara said India remains resilient to external shocks owing to the large domestic consumer base, and the bank continues to see more funding opportunities in the future as well.

In the reporting quarter, the bank's core net interest income grew 29.47 per cent to Rs 40,393 crore on a 19 per cent growth in advances and a 0.45 per cent widening in the net interest margin to 3.60 per cent.

The non-interest income grew 17.52 per cent to Rs 13,961 crore, despite a marginal reduction in the largest component of fee income.

Khara told reporters that the bank sees credit growth moderating to 12-14 per cent in FY24, which will include a 10-12 per cent growth in the large-value loans.

He said the bank has visibility on making loans of up to Rs 3.5 lakh crore either by way of a demand pipeline or already sanctioned lines.

On the asset quality front, the bank reported an improvement to a decadal best on the gross non-performing assets ratio, which reduced to 2.78 per cent from 3.14 per cent in December and 3.97 per cent in the year-ago period.

This led to a decline in the money set aside to cover bad assets, and the total provisions halved to Rs 3,315 crore from the Rs 7,237 crore in the year-ago period.

Khara said as the asset quality improves, the ageing provisions will also give benefits on the provisions front.

To a question on the transition to an expected credit loss system of provisions, he said the bank is ready for the shift and already carries additional provisions of over Rs 35,000 crore, which are higher than the money required under the new system as per its internal estimates.

It will like to sustain the asset quality at the current levels, Khara said, pointing to the lower stress on the loans unpaid for 30-89 days before they get recognised as NPAs.

The bank is targeting a further improvement in the agri NPAs, which have reduced to 11 per cent, and hopes to get them into single digits, Khara said.

The bank's chairman said it also sees scope for a further widening in the NIMs without sharing a level that it is targeting, even though he conceded that the bank will have to increase term deposit rates shortly.

Pricing power is coming back on the corporate demand, and Khara said there is higher demand in infrastructure and renewable sectors.

On the capital adequacy front, the bank's overall buffers stood at 14.68 per cent as of March 31 against 13.83 per cent in the year-ago period.

The SBI scrip closed 2.11 per cent down at Rs 547.15 apiece on the BSE on Thursday against a 0.21 per cent correction on the benchmark.

When asked to comment on his initial complaint about the bank being valued lower and the increase in share prices lately, Khara said: "Yeh dil maange more".

Brokerage Outlook

Axis Securities believe normalization in credit costs and improvement in growth outlook should lead to strong return ratios with ROAA/ROAE of ~1%/+15% over FY23-FY24E.

Moreover, the company’s subsidiaries have delivered an encouraging performance during the quarter. We maintain a BUY on the stock with a revised target price of Rs 720/share (SOTP basis core book at 1.3x FY24E and subsidiaries at Rs 211).

The bank’s asset quality performance has been significantly better than expectations including eventually stressed asset accruals which indicates credit costs normalization over FY22-23E. Axis Securities believe SBIN’s unsecured lending profile is strong with >90% to salaried government employees.

Retail book traction at 15% remains healthy, supported by home loans, and express credit, and further improvement is likely in the coming quarters. Currently, the Bank’s market share in Home loans and Auto Loans is over 20%. Among PSU banks, SBI, with a healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook, remains the best play on the gradual recovery of the Indian economy.

Axis Securities maintain BUY on the stock with a revised target price of Rs 720/share (SOTP basis core book at 1.3x FY24E and subsidiaries at Rs 211).

ESG and Sustainability

SBI aims to become carbon neutral by the year 2030 and to achieve the objective a number of measures taken to reduce its carbon impact.

It is not limited to the installation of solar power plants but tree plantation, organic farming and banning the use of single-use plastic on campus are some other measures, he added.

Policies have been put in place to increase the bank's exposure to climate change and the bank has been extending credit facilities to borrowers in the renewable energy sector at easier terms, he added.

Loans exceeding Rs 50 crore, borrowers are assigned scores on the basis of their performance on various ESG parameters.