Ratio Analysis Of Sbi
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The document discusses the financial performance and ratios of State Bank of India. It provides details of SBI's subsidiaries and growth in business. SBI saw increases in deposits, advances, net profit and market share in the previous year. However, some ratios like capital structure and integrated ratios are decreasing which could signal future problems. While profitability is improving, the net profit ratio is not increasing satisfactorily and may not ensure adequate returns. Overall, the document analyzes SBI's financial ratios to evaluate its performance and potential risks.
Ratio Analysis Of Sbi
- 1. State Bank of IndiaRatio Analysis
- 2. How can I make more profits from my money?Mr. Dukhiram
- 3. How can I judge that firm is good or bad?Mr. Dukhiram
- 7. State Bank Group SBI Cards & Payment Services Pvt Ltd. (with GE Capital)SBI Funds Management Ltd (with Society Generale)19921998SBI Factors & Commercial Services P Ltd. SBI Life Insurance Co.Ltd ( with Cardiff SA)19912001SBI Capital Markets Ltd.SBI DFHI Ltd.** 20041986SBI, SBICI & 7 Associate Banks Foreign Subsidiaries & Joint VenturesOthers - RRBs, UTI-AMC, C-EdgeTech
- 9. Increase in Business Growth (Deposits by 23.39% and Advances by 23.36%) Branch Network crossed 10000 during the year Market Share in Deposits increased over March 2007 by 61 bpsMarket Share in Demand Deposits - up at 17.40% Increase in Net Profit by 48.18% over last year Steady reduction in Cost to Income Ratio at 49.03% Strong Growth in International Banking Loan Book by 50.41% International Loans contribute 14% of Total Loans Mid Corporate exposure crosses Rs 1 laccrores Retail Banking – SBI Number One in disbursement of Home Loans
- 12. SBI Group – Financial Highlights FY08Rs in BillionTotal Income: 683.77 ( 100%) Interest Earned: 572.38 (83.7%) Non-Interest Income: 8695 (28.53%) Interest Expended : 339.83 (49.7%) Operating Income : 343.94 (50.3%) Employee Expenses 105.97 (15.5%) Net Interest Income : 232.55 (34.0%) Operating Expenses : 12609 (6.65%) Other Expenses: 94.04 (13.75%) Provision for Investment Depreciation: 8.29 (1.21%) Operating Profit:13107 (31.07%) Provision for Loan Losses:17.76 (2.60%) Provisions and Contingencies :2668 (10.71%) Provisions for Std Assets:9.45 (1.38%)Profit Before Tax : 10439 (37.54%) Other Provisions :0.64 (0.09%) Provision for Tax: 3710(21.68%) Net Profit: 6729 (48.18%) Minority Interest: 253 (-1.2%)GroupProfit: 8960 (40.8%)(Figures in brackets indicate % to Total Income)
- 13. What is ratio analysis? I don’t know anything about it.Mr. Dukhiram
- 18. Liquidity Ratio
- 19. Liquidity ratioComments: As the ideal ratio is 2:1 but public sector companies have a very low current ratio as they have very little need for current assets. But liquidity position of bank is not good. Lesser the current ratio , less will be the firm’s ability to meet current obligations
- 20. Liquidity ratioComments: It is more rigorous and penetrating test of the liquidity position of a firm. 1:1 is the satisfactory level to meet all current claims.Bank’s short term solvency is in better position.
- 21. So should I now invest in this bank as its liquidity ratio is good?Mr. Dukhiram
- 23. PROFITABILITY RATIOComments : Bank’s operating profit is increasing as compared to previous year, it shows that it would ensure adequate return to owners in comparison to previous year.
- 24. PROFITABILITY RATIOComments : By analyzing gross profit ratio we measure that Bank has a good management as it implies that higher the gross profit to sales, higher will be the good managing power.
- 25. PROFITABILITY RATIOComments : As the net profit ratio is not increasing at a satisfying level, it would not ensure adequate return to owners as well as it enable the bank to with stand adverse economic conditions.
- 26. Now profitability of firm is also good so shall I proceed now with my investment?Mr. Dukhiram
- 28. Capital structure ratioComments: As it shows that the ratio is decreasing as compared to previous year, it is the danger signal for owners. If the project fails financially, the owners would lose heavily.
- 29. Capital structure ratioComments: As we can see that the ratio in current year is less than 50%, it shows a danger signal in using excessive debt and also lack of ability to offer assured payment of interest to the lenders.
- 30. INTEGRATED RATIO
- 31. integrated ratioComments: As firms earning power ratio is decreasing as compared to previous year, the bank should improve its performance either by generating more sales volume per rupee of investment or by increasing the profit margin per rupee of sales.
- 32. Q2 net upNet profit went up by 40.25% at Rs 2260 crore versus Rs 1611.42 crore.Net interest income (NII) also rose by 45% to Rs 5,455.35 as against Rs 3,762.93 crore.Consolidated NII was up by 42.53% to Rs 7,518.72 crore from Rs 5,275.12 crore. Net profit rose by 7.87% to Rs 2,378.19 crore from Rs 2,204.56 crore.Provision for non-performing assets (NPAs) stood at Rs 911 crore versus write back of Rs 16.5 crore.Treasury revenues went up by 32% at Rs 4,314.5 crore versus Rs 3,262.9 crore.Banking operations rose by 5.3%.Other income was up at Rs 2343.1 crore from Rs 2041.94 crore.
Editor's Notes
- #14: Ratio analysis is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two items/variables.
- #19: The liquidity ratios measure the ability of a firm to meet its short-term obligations and reflect the short-term financial strength/solvency of a firm.The higher the current ratio, the larger is the amount of rupees available per rupee of current liability, the more is the firm’s ability to meet current obligations and the greater is the safety of funds of short-term creditors. It is a measure of margin of safety to the creditors. Public utility companies have a very low current ratio, as normally such companies have very little need for current assets. The wholesale dealers, purchasing goods on cash basis or on credit basis for a very short period but selling to retailers on credit basis, require a higher current ratio.Limitations: it is a quantitative rather than a qualitative index of liquidity. Because it takes into account total current assets without making any distinction between various types of current assets such as cash, inventories and so on.Quick ratio: it is a rigorous measure of a firm’s ability to service short-term liabilities.
- #28: This ratio gives an idea about the long term solvency of the firm i.e. Payment of interest and Repayment of Principal amount of loan.