Adapting to Change
Business Today|March 21, 2021
Rapid digitisation and scaling up of non-banking businesses, from cards to insurance and MFs to YONO, have helped SBI transform itself
B.S. SRINIVASALU REDDY

A week ago, Dinesh Kumar Khara, 59, the new Chairman of India’s largest bank, State Bank of India (SBI), had said the ‘elephant is ready to dance’. Khara’s optimism shows up in the bank’s stock market performance where its share price doubled since he took charge in October 2020.

The reasons are a greater control over asset quality deterioration, robust base of low-cost deposits, retail banking acceleration in mortgages and institutional setup for housing loans gone bad and financing long-term infrastructure projects. Also, the bank’s subsidiaries are already firing on all cylinders. Be it SBI Cards or SBI Life, the higher market valuations indicate the future scalingup of these businesses.

In the BT-KPMG study of India’s Best Banks, the jury was unanimous in recognising the initiatives taken by banks in digital areas and controlling asset qualities despite social sector obligations and other limitations of being a government-owned bank. The jury conferred the award for the best public sector bank to SBI.

That shows in the numbers. SBI has the lowest NPAs, is second in quality of earnings, and third in growth and capital adequacy. Currently, PSBs, though losing market share, control two-thirds of the market in deposits and advances. Despite a high base, SBI topped growth metrics as represented by the three-year CAGR in total deposits (17 per cent), loans & advances (14 per cent), fee income (16 per cent), and operating profit (10 per cent).

With a consolidated balance sheet size of ₹41,97,492.34 crore as of end-March 2020, and market capitalisation of over ₹3 lakh crore, it is India’s largest commercial bank. It ranked 55 according to the S&P Global Market Intelligence’s Annual Global Bank Ranking for 2019. Its balance sheet size has since grown to Ì€ 46,62,643.98 crore by December 2020.

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