PROJECT REPORT

ON

COMPARATIVE STUDY OF FINANCIAL PERFORMANCE OF STATE BANK OF INDIA AND BANK OF BARODA

Dr. Gaur Hari Singhania Institute of Management and Research

Dr. Gaur Hari Singhania Institute Of Management And Research

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Submitted to:

Institute mentor

Director Sir

Submitted by:

Jayati Poddar

Roll No. 1340

Sec- A

DECLARATION

I, Jayati Poddar studying in Dr. Gaur Hari Singhania Institute Of Management and Research do hereby declare that this project relating to the study of ratio analysis and the title “ Comparative Study Of Financial Performance Of State Bank Of India And Bank Of Baroda” has been prepared by me after undergoing the study as part of the PGDM program of GHS-IMR.

I, express a thanks to my Institute mentor- Prof. Prithvi Yadav Sir, Director of GHS-IMR for his support in the project.

I, further declare that this project work is the outcome of my efforts and not a replica of any other report/work submitted to any University/ Boards.

Name of Student: Jayati PoddarPlace: Kanpur

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ACKNOWLEDGEMENT

I express my gratitude to Prof. Prithvi Yadav sir, Director

Of GHS-IMR for providing me an opportunity to undergo summer training. And also for those who have guided and inspired me in completing this study. I would like to express my deep sense of gratitude to our Institute mentor Prof. Prithvi Yadav Sir for giving me support and helping me during my project study.

I would like to express my gratitude to my institute guide Prof. Prithvi Yadav sir for his constant encouragement and guidance without the task would not have been completed.

Last but not the least I would like to thank my parent and friends for their support.

THANKYOU ALL

Jayati Poddar

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PREFACE

In any organization, the two important financial statements are the Balance Sheet and Profit & Loss Account of the business. Balance Sheet is a statement of financial position of an enterprise at a particular point of time. Profit & Loss account shows the net profit or net loss of a company for a specified period of time. When these statements of the last few year of any organization are studied and analyzed, significant conclusions may be arrived regarding the changes in the financial position, the important policies followed and trends in profit and loss etc. Analysis and interpretation of financial statement has now become an important technique of credit appraisal. The investors, financial experts, management executives and the bankers all analyze these statements. Though the basic technique of appraisal remains the same in all the cases but the approach and the emphasis in the analysis vary. A banker interprets the financial statement so as to evaluate the financial soundness and stability, the liquidity position and the profitability or the earning capacity of borrowing concern. Analysis of financial statements is necessary because it helps in depicting the financial position on the basis of past and current records. Analysis of financial statements helps in making the future decisions and strategies. Therefore it is very necessary for every organization whether it is a financial or manufacturing, to make financial statement and to analyze it.

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Table of content

Chapter No. Particulars Page no.Acknowledgement 3Preface 4

1 Introduction of banking 6-182 Company Profile 19-61

State bank of IndiaBank of Baroda

3 Research methodology 83-854 Financial Analysis 86-96

Ratio analysis5 Financial comparative

analysis97-104

6 Findings, suggestions and conclusions 105-1127 References 113

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INTRODUCTION OF BANKING

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DEFINITION OF BANK

Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits of money from the public, repayable on demand or otherwise and withdraw by cheque, draft or otherwise."

- Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD “ BANK” :-

The origin of the word bank is shrouded in mystery. According to one view point the Italian business house carrying on crude from of banking were called banchi bancheri" According to another viewpoint banking is derived from German word "Branck" which mean heap or mound. In England, the issue of paper money by the government was referred to as a raising a bank.

ORIGIN OF BANKING :

Its origin in the simplest form can be traced to the origin of authentic history. After recognizing the benefit of money as a medium of exchange, the importance of banking was developed as it provides the safer place to store the money. This safe place ultimately evolved in to financial institutions that accepts deposits and make loans i.e., modern commercial banks.

Banking system in India

Without a sound and effective banking system in India it cannot have a healthy economy.The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors.

For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or

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INTRODUCTION OF BANKING

cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process.

HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that the transitions from many lending to banking must have occurred even before Manu, the great Hindu furriest, who has devoted a section of his work to deposit and advances and laid down rules relating to the rate of interest. During the mogul period, the indigenous banker played a very important role in lending money and financing foreign trade and commerce.

During the days of the East India Company it was the turn of agency house to carry on the banking business. The General Bank of India was the first joint stock bank to be established in the year 1786. The other which followed was the Bank of Hindustan and Bengal Bank. The Bank of Hindustan is reported to have continued till 1906. While other two failed in the meantime. In the first half of the 19th century the East India Company established there banks, The bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Bombay in1843. These three banks also known as the Presidency banks were the independent units and functioned well. These three banks were amalgamated in 1920 and new bank, the Imperial Bank of India was established on 27th January, 1921.

With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial Bank of India was taken over by the newly constituted SBI. The Reserve Bank of India (RBI) which is the Central bank was established in April, 1935 by passing Reserve bank of India act 1935. The Central office of RBI is in Mumbai and it controls all the other banks in the country.

In the wake of Swadeshi Movement, number of banks with the Indian management were established in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank of Baroda Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were nationalized and on 15th April 1980, 6 more commercial private sector banks were taken over by the government.

The first bank in India, though conservative, was established in 1786. From 1786 till today,the journey of Indian Banking System can be segregated into three distinct phases. They areas mentioned below:

Early phase from 1786 to 1969 of Indian Banks

Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms.

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New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991.

Phase IThe General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit mobilization was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence. In1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th July,1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country was nationalized.

Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership.

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The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1949: Enactment of Banking Regulation Act.

1955: Nationalization of State Bank of India. 1959: Nationalization of SBI subsidiaries. 1961: Insurance cover extended to deposits. 1969: Nationalization of 14 major banks. 1971: Creation of credit guarantee corporation. 1975: Creation of regional rural banks. 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%.

Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimhama, a committee was set up by his name which worked for the liberalization of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure.

BANKS IN INDIA

In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are of Indian origin and some are foreign players.

All these details and many more is discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful information’s are talked about.

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One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India.

BANKING STRUCTURE IN INDIA

SCHEDULED BANKS IN INDIA

(1) Scheduled Commercial Banks

Public Sector Banks Private Sector Banks

Foreign Banks In India

Regional Rural Banks

(26) (25) (29) (95)

Nationalized Bank

Other Public Sector Banks (IDBI)

SBI And Its Associates

Old Private Banks

New Private Banks

(2) Scheduled Cooperative Banks

Scheduled Urban Cooperative Banks Scheduled State Cooperative Banks

Public Sector Banks

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Public sector banks are those banks which are owned by the Government. The Govt. runs these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6 banks were also nationalized. Therefore in 1980 the number of nationalized bank 20. At present there are total 26 Public Sector Banks in India (As on 26-09-2009). Of these 19 are nationalised banks, 6(STATE BANK OF INDORE ALSO MERGED RECENTLY) belong to SBI & associates group and 1 bank (IDBI Bank) is classified as other public sector bank. Welfare is their primary objective.

Nationalized banks

Allahabad Bank Andhra Bank Bank Of Baroda Bank Of India Bank Of Maharastra Canara Bank Central Bank Of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank Of

Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank Of India United Bank Of India Vijaya Bank

Other Public Sector Banks

IDBI (Industrial Development Bank Of India)Ltd.

SBI & its Associates

State Bank of India

State Bank of Hyderabad

State Bank of Mysore

State Bank of Patiala

State Bank of Travancore

State Bank of Bikaner And Jaipur

(State Bank of Saurastra merged with SBI in the year 2008 and State Bank of Indore In 2010)

Private Sector Banks

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These banks are owned and run by the private sector. Various banks in the country such as ICICI Bank, HDFC Bank etc. An individual has control over there banks in preparation to the share of the banks held by him.

Private banking in India was practiced since the beginning of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted world class institutions in India. The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995. ING Vysya, yet another Private Bank of India was incorporated in the year 1930

Private sector banks have been subdivided into following 2 categories:-

Old Private Sector Banks

Bank of Rajasthan Ltd. Catholic Syrian Bank Ltd. City Union Bank Ltd. Dhanalakshmi Bank Ltd. Federal Bank Ltd. ING Vysya Bank Ltd. Jammu and Kashmir Bank Ltd. Karnataka Bank Ltd. Karur Vysya Bank Ltd. Lakshmi Vilas Bank Ltd. Nainital Bank Ltd. Ratnakar Bank Ltd. SBI Commercial and International

Bank Ltd. South Indian Bank Ltd. Tamilnad Mercantile Bank Ltd. United Western Bank Ltd.

New Private Sector Banks

Bank of Punjab Ltd. (since merged with Centurian Bank)

Centurian Bank of Punjab (since merged with HDFC Bank)

Development Credit Bank Ltd. HDFC Bank Ltd. ICICI Bank Ltd. IndusInd Bank Ltd. Kotak Mahindra Bank Ltd. Axis Bank (earlier UTI Bank) Yes Bank Ltd.

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Foreign Banks In India

ABN AMRO Bank N.V. Abu Dhabi Commercial

Bank Ltd American Express Bank Antwerp Diamond Bank Arab Bangladesh Bank Bank International

Indonesia Bank of America Bank of Bahrain & Kuwait Bank of Ceylon Bank of Nova Scotia Bank of Tokyo Mitsubishi

UFJ Barclays Bank BNP Paribas Calyon Bank ChinaTrust Commercial

Bank Citibank DBS Bank Deutsche Bank

HSBC (Hongkong & Shanghai Banking Corporation)

JPMorgan Chase Bank Krung Thai Bank Mashreq Bank Mizuho Corporate Bank Oman International Bank Shinhan Bank Société Générale Sonali Bank Standard Chartered Bank State Bank of Mauritius

Cooperative banks in India

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The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co operative, the expectations the co operative is supposed to fulfil, their number, and the number of offices the cooperative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India plays an important role even today in rural financing. The businesses of cooperative bank in the urban areas also has increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks. Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Rural banks in India

Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focussed upon the agro sector. Regional rural banks in India penetrated every corner of the country and extended a helping hand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI is spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to North East. The total number of SBIs Regional Rural Banks in India branches is 2349 (16%). Till date in rural banking in India, there are 14,475 rural banks in the country of which 2126 (91%) are located in remote rural areas.

Apart from SBI, there are other few banks which functions for the development of the rural areas in India.

Few of them are as follows.

Haryana State Cooperative Apex Bank Limited

The Haryana State Cooperative Apex Bank Ltd. commonly called as HARCOBANK plays a vital role in rural banking in the economy of Haryana State and has been providing aids and financing farmers, rural artisans, agricultural labourers, entrepreneurs, etc. in the state and giving service to its depositors.

NABARD

National Bank for Agriculture and Rural Development (NABARD) is a development bank in the

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sector of Regional Rural Banks in India. It provides and regulates credit and gives service for the promotion and development of rural sectors mainly agriculture, small scale industries, cottage and village industries, handicrafts. It also finance rural crafts and other allied rural economic activities to promote integrated rural development. It helps in securing rural prosperity and its connected matters.

Sindhanur Urban Souharda Co-operative Bank

Sindhanur Urban Souharda Co-operative Bank, popularly known as SUCO BANK is the first of its kind in rural banks of India. The impressive story of its inception is interesting and inspiring for all the youth of this country.

United Bank of India

United Bank of India (UBI) also plays an important role in regional rural banks. It has expanded its branch network in a big way to actively participate in the developmental of the rural and semi-urban areas in conformity with the objectives of nationalisation.

Syndicate Bank

Syndicate Bank was firmly rooted in rural India as rural banking and have a clear vision of future India by understanding the grassroot realities. Its progress has been abreast of the phase of progressive banking in India especially in rural banks.

Fact Files of Banks in India

The first Bank in India to be given an ISO certification. Canara Bank

The first Bank in Northern India to get ISO 9002 certification

for their selected branches.

Punjab and Sind Bank

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The first Indian Bank to have been started solely with Indian capital. Punjab National Bank

The first among the Private Sector Banks in Kerala to become Scheduled Bank in 1946 under the RBI act.

South Indian Bank

India’s oldest,largest and the most successful commercial bank offering the widest possible rang of domestic,international and NRI products and services,through its vast network in India and overseas.

State Bank of India

India’s second largest Private Sector Bank and is now the largest scheduled commercial bank in India.

The Federal Bank Limited

Bank which started as Private Shareholders Banks,mostly European shareholders.

Imperial Bank of India

The first Indian Bank to open a branch outside India in London in 1946 and the first to open a branch in continental Europe at Paris in 1974

Bank of India,

founded in 1906 in Mumbai.

The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 132 years.

Allahabad Bank

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The first Indian Commercial Bank which was wholly owned and managed by Indians.

Central Bank of India

INDIAN BANKING INDUSTRY

The Indian banking market is growing at an astonishing rate, with Assets expected to reach US$1 trillion by 2010. An expanding economy, middleclass, and technological innovations are all contributing to this growth.

The country’s middle class accounts for over 320 million People. In correlation with the growth of the economy, rising income levels, increased standard of living, and affordability of banking products are promising factors for continued expansion.

The Indian banking Industry is in the middle of an IT revolution, Focusing on the expansion of retail and rural banking. Players are becoming increasingly customer -centric in their approach, which has resulted in innovative methods of offering new banking products and services. Banks are now realizing the importance of being a big playerand are beginning to focus their attention on mergers and acquisitions to take advantage of economies of scale and/or comply with Basel II regulation.“Indian banking industry assets are expected to reach US$1 trillion by 2010 and are poised to receive a greater infusion of foreign capital,” says Prathima Rajan, analyst in Celent's banking group and author of the report. “The banking industry should focus on having a small number of large players that can compete globally rather than having a large number of fragmented players.

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STATE BANK OF INDIA

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STATE BANK OF INDIA

State Bank of India

Industry :Banks - Public Sector

 Incorporation Year   1955  Chairman   Pratip Chaudhuri  Managing Director   Hemant G Contractor   Company Secretary   -  Auditor   B M Chatrath & Co/ Kalyaniwala & Mistry

 Registered Office  State Bank Bhavan 8th Floor,  Madame Cama Road Nariman Point,  Mumbai,  400021,  Maharashtra

 Telephone   91-22-22883888/22022678  Fax   91-22-22855348  E-mail   gm.snb@sbi.co.in Website   http://www.sbi.co.in Face Value (Rs)   10  BSE Code   500112  BSE Group   A  NSE Code   SBIN  Bloomberg   SBIN IN  Reuters   SBI.BO ISIN Demat   INE062A01012  Market Lot   1

 Listing   Ahmedabad,Chennai,Delhi,Kolkata,London,Mumbai,  NSE

 Financial Year End   03  Book Closure Month   May  AGM Month   Jun

 Registrar's Name & Address

  Datamatics Financial Services,   PlotNo-A-16-17 PartB,   Cross Lane MIDC,   Marol Andheri (East),   Mumbai - 400 093.  91-22-28213383/90/66  91-22-28369408

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It is the largest Indian banking and financial services company (by turnover and total assets) with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banks, Bank of Calcutta and Bank of Bombay to form Imperial Bank of India, which in turn became State Bank of India. The government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India.

SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 Local Head Offices and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas.

With an asset base of $352 billion and $285 billion in deposits, SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. T The State Bank of India is the 29th most reputed company in the world according to Forbes. Also SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010. The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bank—its main competitors.

History of state bank of India:

State Bank of India is the largest state-owned banking and financial services company in India. The Bank provides banking services to the customer. In addition to the banking services, the Bank through their subsidiaries, provides a range of financial services, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market.    The Bank operates in four business segments, namely Treasury, Corporate/ Wholesale Banking, Retail Banking and Other Banking Business. The Treasury segment includes the investment portfolio and trading in foreign exchange contracts and derivative contracts. The Corporate/ Wholesale Banking segment comprises the lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets Management Group. The Retail Banking segment consists of branches in National Banking Group, which primarily includes personal banking activities, including lending activities to corporate customers having banking relations with branches in the National Banking Group.   SBI provides a range of banking products through their vast network of branches in India and overseas, including products aimed at NRIs. The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. The State bank of India is the 10th most reputed

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company in the world according to Forbes. The bank has 156 overseas offices spread over 32 countries. They have branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. They have offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town.   State Bank of India was incorporated in the year 1955. The Bank traces their ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making them the oldest commercial bank in the Indian Sub-continent. The Government of India nationalized the Imperial Bank of India in the year 1955, with the Reserve Bank of India taking a 60% stake, and name was changed to State Bank of India.  In the year 2001, the SBI Life Insurance Company was started by the Bank. They are the only Bank that have been permitted 74% stake in the insurance business. The Bank's insurance subsidiary 'SBI Life Insurance Company' is a joint venture with Cardif S.A in which Cardif holds 26% of the stake.   During the year 2005-06, the bank introduced 'SBI e-tax' an online tax payments facility for direct and indirect tax payment. They also launched the centralized pension processing. The Bank made a partnership with Tata Consultancy Services for setup C-Edg Technologies and consulting services to the banking, financial services and insurance industry. The bank was noted as 'The most preferred bank' in a survey by TV 18 in association with AC Nielsen-ORG Marg. Also, the Bank was voted as 'The most preferred housing loan provider' in AWAAZ consumer awards for the year 2006.   In the customer loyalty survey 2006-07 conducted by 'Business World', the Bank was ranked number one in all parameters of customer satisfaction, service orientation, customer care/ call center, customer loyalty and home loans. SBI Funds was judged 'Mutual fund of the year' by CNBC/TV-18/CRISL. The Bank introduced new products and services such as web-based remittance, instant fund transfer, online-trading and comprehensive cash management.   During the year 2007-08, the Bank launched 965 branches all over the country. They inaugurated a new state-of-the art Dealing Room with online connectivity to all active forex intensive Branches at Corporate Centre in Mumbai. They launched a new product, Construction Equipment Loan to cater to construction Companies. Also, they introduced new products such as SBI Reverse Mortgage Loan and SBI Home Plus in the areas of Home Loans.  During the year, the RBI transferred their entire shareholding in the Bank representing 59.73% of the issued capital of the Bank to the Government of India. The Bank acquired 92.03% of equity of Global Trade Finance Ltd. Consequently, GTFL became a subsidiary of the Bank. They signed an MoU with the Indian railways for installing ATMs at 682 railway stations. In March 2008, the Bank opened their 10,000th branch and became only the second bank in the world to have more than 10,000 branches after China's ICBC.   During the year 2008-09, the company launched Import factoring, a new product in association with SBI Factors & Commercial Services Ltd. They increased the number of branches for retail sale of gold coins from 250 to 518. Also, they re-launched Gold Deposit Scheme at 50 branches to mobilize gold from domestic market for deployment as metal loans to jewellers.    During the year, the Bank opened their 11,111th Branch at Sonapur (Kamrup District) in Assam. They introduced three new products viz., SBI Special Home Loan, SBI Happy Home Loan and SBI Lifestyle in response to the stimulus package announced by the Government of India. Also, they entered into an exclusive arrangement with TATA Motors for handling the booking process

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of TATA 'Nano' cars.  During the year, the Bank launched on their web-site an on-line application form for registering Auto Loan enquiries and expeditiously monitoring and converting these leads into Auto Loans. Also, they launched 'e-invest' for the ASBA (applications supported by blocked accounts) to aid investors for their equity subscriptions, IPO and Rights applications. During the year, the Bank set up a custodial services company namely SBI Custodial Services Pvt. Ltd., in joint venture with Societe Generale, France. They signed letter of intent for setting up of joint venture company for undertaking General Insurance Business. Also, they divested 10% equity stake in its wholly owned subsidiary SBI Pension Fund Pvt. Ltd at cost in favour of its subsidiaries. In October 2008, the Bank signed an MoU with State General Reserve Fund (SGRF) of Oman, for a general purpose private equity fund.   During the year, State Bank of Saurashtra (SBS), a wholly owned subsidiary of the Bank, amalgamated with the Bank with effect from August 13, 2008. They signed a joint venture agreement with Insurance Australia Group for undertaking General Insurance business. Also, they signed a joint venture agreement with Macquarie Capital Group, Australia and IFC, Washington for setting up an Infrastructure fund of USD 3 billion for investing in various infrastructure projects in India.  During the year 2009-10, the Bank opened 1,049 branches, out of which branches were opened in metro and urban areas with a view to increase the Bank's reach and be more accessible to customers. In July 2009, SBI introduced 'SBI Loan to Affluent Pensioners' enabling the government pensioners to avail personal loans upto Rs 3 lakh.  During the year, the Bank designed a special package, the Defence Salary Package, for personnel of the three Armed Forces i.e. the Army, Navy and Air Force who maintain their Salary accounts with them. As of March 2010, the Bank had 12,496 branches and 21,485 Group ATMs. In June 2009, the company increased their shareholding in Nepal SBI Bank Ltd to 55.02% and thus Nepal SBI Bank Ltd became a subsidiary of the Bank with effect from June 14, 2009.   In May

2010, the Bank selected consortium of Elavon Incorporation, USA and Visa International, USA as their joint venture (JV) partner for Merchant Acquiring Business. They set up a wholly owned subsidiary, namely SBI Payment Services Pvt Ltd for conducting Merchant Acquiring Business.

 In August 2010, State Bank of Indore was amalgamated with the Bank as per the scheme of amalgamation approved by the Central Board.  During the year 2010-11, the Bank introduced 2 new products, namely 'Pushpa Ullas' and 'Arthias Plus' on pilot basis. They made substantial progress in establishing itself as a leading PE fund player of the country. Also, they also signed a Joint Venture agreement with State General Reserve Fund (SGRF) of Sultanate of Oman, a sovereign entity, to set up a general purpose private equity fund with an initial corpus of USD 100 mn, expandable further to USD 1.5 bn.  During the year, the Bank opened 576 new branches besides merger of 470 branches of erstwhile State Bank of Indore. Also, they opened 14 foreign offices during the year, taking the total to 156. In July 1, 2010, the Bank launched their 'Green Channel Counter' at select branches across the country.  In General Insurance business, the Bank launched limited operations in April 2010 for the Corporate and Mid Corporate customers based at Mumbai, and it was expanded to six other

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major locations in July 2010. In the Retail segment, the Bank launched their Long Term Home Insurance business at Mumbai in October 2010, which was gradually extended to cover 56 RACPCs and RASMECCs. General Insurance SME business was launched on a pilot basis in Mumbai and Chennai in February 2011.  During the first quarter of the financial year 2011-12, the Government of India issued the 'Acquisition of State Bank of India Commercial & International Bank Ltd. vide notification dated July 29, 2011. Consequent to the said notification, the undertaking of State Bank of India Commercial & International stands transferred to and vest in State Bank of India with effect from July 29, 2011.

MILESTONE OF STATE BANK OF INDIA

1955 - On 1st July State Bank of India was constituted under the State Bank Of India Act 1955, for the purpose of taking over the undertaking and business of the Imperial Bank of India. The Imperial Bank of India was founded in 1921 under the Imperial Bank of India Act 1920. The Bank transacts general banking business of every description including, foreign exchange, merchant banking and mutual funds1959 - On September State Bank of India (Subsidiary Bank) Act was passed. On October State Bank of Hyderabad become the first subsidiary of SBI. 1960 - During this period, State Bank of Jaipur, State Bank of Bikaner, State Bank of Indore, State Bank of Travancore, State Bank of Mysore, State Bank Patiala and State Bank of Saurashtra became subsidiaries of the bank. 1962 - The Bhor State Bank Ltd was Amalgamated with the Bank bring the Total number of minor State associated banks so amalgamated to five. A scheme for amalgamation of the Bank of Aundh Ltd., was also approved. On 20th August, the Unit Bank Ltd. Chennai was taken over by the Bank. 1963 - In october Branch in London become bankers to the Indian High Commission, thereby taking over a function till then performed by the office of RBI. Of the other business transacted by the Branch, an important aspect was medium term loans mostly to Indian shipping companies. 1969 - On November 8th the Bank of Behar Ltd was amalgamated. 1972 - A merchant banking division was set up in the central office to cater to promotional needs of the corporate sector. 1977 –

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During the year bank introduced the Perennial Pension Plan Scheme Under which if the depositors make a regular monthly payment of a fixed amount for a period of 84 to 132 months, they become eligible from the 86th and 134th months respectively for getting a monthly pension of predetermined amount forever. In order to meet all the developmental needs of the villages Including their social and cultural needs, the bank launched an integrated Rural development programme, aimed at not only covering the credit needs of agriculture and agricultural activities and village industries, but also housing and social activities. 1980 - Bank introduced the cash Certificate Scheme under which deposit certificate are issued for a fixed period on payment of the issue price specified for the respective maturity period and the face value corresponding to the issue price plus interest compounded at quarterly intervals is paid on maturity. The certificates are issued for the face value of Rs 100, Rs 1000, Rs 10,000 and Rs 50,000 maturing after 29,65,84 and 120 months. 1982 - The Non-Resident Investment Cell was set up, which had streamlined The working operations of the non-resident investment sections at Important centers. 1983 - SBI launched self employment scheme, for providing self-employment To educated unemployed youth. Educated unemployed youths are Encouraged to undertake self-employment ventures in industry, services and business. 1984 - The bank provide need-based rehabitation assistance to large and medium sick industrial units. 1985 - During the year, company set up a data bank of sick units available for taken over by healthy units.With effect from 26th August, the Bank of Cochin Ltd with 108 branches was also amalgamated with the Bank. (i) All shares in the Capital of the Imperial Bank of India was vested in the RBI. The SBI was registered with an Authorised capital of Rs.20 crores, and an issued and paid up capital of Rs.562,50,000 divided into 562,500 shares of Rs.100 each. (ii) Every person who on the 30th June, 1955, was registered as a holder of shares in the Imperial Bank of India was paid by the Reserve Bank of India. 44,37,500 No. of shares issued at a premium of Rs 160 per share. 1986 - At the end of the year 324 sick units with an outstanding of Rs 1069 crores were assisted. Of these, 107 units were considered viable and 60 from them were placed under regular nursing programme.

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On 1st August a new subsidiary named SBI Capital Market was functioning independently, took up leasing business and certain other new services. 100,00,00 No. of shares issued at a prem. of Rs 160 per share. 1987 - Up to the end of the year the bank had sponsored 30 Regional Rural Banks covering 66 backward and underbanked districts in the country. In terms of deployment, the advances portfolio of overseas offices rose to Rs 5,767 crores. Investments in inter-bank money markets and also in prime securities amounted to Rs 2,670 crores by the end of the year. 1988 - During the year bank initiated UPTECH an Industrial Technology Group to direct and guide programmes aimed at facilitating technology upgradation. Also a scheme to develop enterpreneurship among woman under the name Stree Shakti was launched. Several concessions in respect of margin and and rate of interest have been built into the package. Three pilot programmes were launched at Chennai, Calcutta, and Hyderabad. On 20th September, the bank inaugurated `SBINET,' an integrated communication project aimed at improving customer service, operational efficiency and administrative convenience. The network has been designed to handle voice, fax data and manages through the trunk routes and exchanges in important centres. The bank sponsored 30 RRB's covering 66 divisions in the country. branches were opened raising the branch network to 2,306. 1989 - SBICAP, in their capacity as Trustee and Manager of Mutual Fund, launched two scheme viz., Mangnum Monthly Income Scheme 1989 and Magnum Tax Service Scheme 1990. During the same period SBI in association with Morgan Stanley Asset Management Inc. of USA, launched the India Magnum Fund. 1990 - New products launched during the year included a Regular Income Scheme, offering an assured return in excess of 12% and the first Pure Growth Scheme aimed at capital appreciation. A Second offshore fund of US $ 12 million called Asian Convertible and Indian Fund was launched in association with Asian Development Bank, Manila. During Kharif 1990, the bank introduced an agricultural credit card, known as SBI Green Card to give greater liquidity and flexibility to farmers in procuring agricultural inputs. The scheme was introduced on a pilot basis in 125 intensive centre branches. As at on 31st March, SBIMF had over 3,40,000 Indian investors and about Rs 475 crores by way of investible domestic funds. 50,00,000 No. of shares issued at a prem. of Rs 160 per share. 1991 -

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During February the bank set up a new subsidiary called the SBI Factors and Commercial Serviced Pvt. Ltd. for rendering factoring services to the industrial and commercial units in Western India. 1992 - The bank sponsored 30 RRBs with a network of 3189 offices covering 102 backward and under banked districts of the country. A sum of Rs 15.25 crores was contributed towards the share capital of the RRBs. During the period bank intoduced `Stockinvest' scheme. Also introduced a `Gyan Jyoti' that replaced earlier education loan schemes and offers substantial augmented assistance to students pursuing higher studies. Moreover dedicated NRI branches equipped with State-of-the-art technology was set up at Mumbai and Delhi to cater to the special needs of NRI residents. 1993 - During the year as a part of its overseas expansion the bank established representative office in Tashkent. During December, the bank issued 124,000,000 equity shares of Rs.10 each for cash at a premium of 90 per share of which 245,00,000 shareseach were reserved for allotment on a preferential basis to Indian Financial Institutions and Indian Mutual Funds. Balance issued to thepublic. Simultaneously it came out with another issue of 50,00,000 12% unsecured redeemable floating rate bonds in the nature of promisory notes of the face value of 1000 each. Oversubscription upon a furtheramount of Rs 500 crores (in all Rs 1000 crores) was to be allowed. Theface value of each bond would be redeemed at par at the expiry of 10 years from the date of allotment. In the event that the State Bank decides to exercise its option to call up the bonds they would be redeemed at the rate of 5% at the end of 5th year, at 3% at the end of7th year and 1% at the end of 9th year. It was proposed to issue 1200,00,000 right equity shares of Rs.10 eachat a premium of Rs.50 per share in the proportion of 3:5. Also another120,00,000 equity shares of Rs.10 each were to be issued at a premiumof Rs.50 per share to employees on an equitable basis. 250 sick units with the bank were referred to the BIFR including 31 public sector units. Approved rehabilitation packages being implemented in 85 units and 41 have been recommended to be wound up. The bank continued to be appointed as the operating agency and rehabilitation packages were submitted to BIFR in 48 cases. Equity shares subdivided. 1418,50,000 No. of Equity Shares of Rs. 10each issued at a prem. of Rs 90 per share to the public. Another 1319,78,726 shares of Rs 10 each offered at a prem. of Rs 90 per shareon Rights basis and to employees. 1994 - 358 sick units with the bank were referred to the BIFR including 55

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public sector units. Approved rehabilitation packages implemented in87 units. 1,80,463 No. of Shares kept in abeyance were issued. 1995 - 351 sick units with the bank were referred to the BIFR including 66 public sector units. Approved rehabilitation packages implemented in112 units. 683 No. of shares kept in abeyance were allotted. 1996 - On 3rd October the Bank Issued 261,45,000 GDRs amounting to 5,22,90,000equity shares. 1 GDR is issued to 2 equity shares. The issue price ofGDR was US $ 14.15 per GDR. 1997 - Shares issued to employees of the bank bearing distinctive numbers 46,26,00,001 to 47,46,00,000 will not be good delivery. The rights issue was for 12 crore equity shares at a premium of Rs.50 aggregatingRs.720 crore in addition to a further issue of 1.2 crore equity sharesof Rs.10 at a premium of Rs.50 aggregating Rs.72 crore for State Bankemployees. The price of the rights had been Rs.60 per share. After SBI Capital Markets, Manila-based Asian Development bank will pick up 15 per cent equity stake in the new stock broking subsidiary ofState Bank of India to be made operational by mid-1997. The balance 85per cent will be subscribed to by SBI. SBI Securities Ltd the 100 per cent stockbroking subsidiary of SBI, hasrecently received the much-awaited letter of incorporation from the Registrar of Companies. Following this, both SBI and ADB will pick up their respective shares in the new stockbroking firm. SSL will have anequity base of Rs.50 crore. The State Bank of India has tied up with GE Capital to float a venturein Mumbai. State Bank signed the memorandum of understanding with GE Caps in March. State Bank will tie up with either VISA or Mastercard or even both forthe franchise network. GE Caps through this joint venture will be imparting technology, credit card expertise and payment card mechanism. The Reserve bank of India has directed the SBI to set up a 0 million stand-by facility for the Indian oil corporation. State Bank of India (SBI) signed an agreement with the National Securities Depository Ltd (NSDL) for dematerialisation of its shares. Besides, SBI has also become an equity stake holder in NSDL to the extent of 4.76%. SBI Commercial and International Bank, has become the country's firstpublic sector bank to introduce optical disk (OD) facilities for datastorage. 1998 -

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State Bank of India will kick-start its credit card business on July 1by floating two joint ventures with GE Capital. The largest financial intermediary in the country will sign the joint venture agreement withGE Caps in the last week of January. The State Bank of India on Jan 27 kicked off its foray into the payment cards business with a joint venture agreement with US-based Financial services giant, General Electric Capital Corporation (GE Capital). State Bank of India (SBI) on June 24 signed an exclusive agreement with the world's largest payment system - Visa International - for Payment cards in India. The agreement was signed in Mumbai between the SBI managing director, Mr. O P Sethia, and the general manager and executivevice president (South East Asia) of Visa, Mr James G Murray. 1999 - State Bank of India (SBI) has bagged the mandate to syndicate the $ 120million loan for the National Thermal Power Corporation (NTPC). The State Bank of India (SBI) proposes to take up the life insurance and general insurance business once the sector is opened up. State Bank of India has tied up with its associate banks to market theSBI Card. The SBI has tied up with State Bank of Patiala in Chandigarhand State Bank of Mysore in Bangalore to help market its credit card. SBI proposes to introduce a value-added service for cardholders wherebythe credit card can also be used as an ATM card. The State Bank of India will tie up with international investment banker Credit SuisseFirst Boston and three domestic public sector banksto form a gold assaying venture. The State Bank of India (SBI) has decided to take over SBI Home Finance(SBIHF), with its assets and liabilities. Having the largest stake, SBI has been weighing various options for bailing out the joint venturecompany which has slipped into huge losses. The State Bank of India (SBI) has signed up with Central Depository Services (I) (CDSIL) for the dematerialisation of its shares. SBI shares have already been admitted as security with National Securities Depository (NSDL). Besides, SBI also has a stake (Rs 10 cr)in the equity of CSDL. According to an agreement entered into with the development bank, StateBank of India (SBI) was to reduce its stake in its investment bankingsubsidiary to below 50 per cent by March 31. The State Bank of India (SBI) has entered into an agreement with Moody's Investor Service and Icra, under which SBI will pick up Moody's11 per cent stake in Icra in case the global rating firm wants to getout of its investment in India. State Bank of India (SBI) has taken the lead in `convenience banking'by becoming the first public sector bank to offer its `savings bank' account holders the benefits of fixed deposits (higher interest rates)and current accounts (overdraft facility).

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2000 - The Bank has embarked upon the expansion of its ATM network in the twincities of Hyderabad and Secunderfabad. The Bank has become the first government owned financial institution tojoin the rank of companies declaring interim dividend. The Bank has proposed to come out with an issue under private placementof unsecured, non-convertible, subordinated bonds in the nature of promissory notes of Rs 1 lakh each aggregating Rs 600 crores with an option to retain oversubscription of up to Rs 40 crores. The Bank launched the Metal (Gold) Loan Scheme in Coimbatore. This is the third scheme to be introduced by SBI.SBI is also forming a subsidiary - SBI Gold and Precious Metals Pvt. Ltd. with 50 per cent equity participation. Mr. Vepa Kamesam, Deputy Managing Director, has been appointed as Managing Director with effect from 1st June. SBI board cleared the setting up of a separate subsidiary forinformation technology. KC Raut has recently taken charge as general manager at State Bank ofIndia, Chennai. The Bank has become the first public sector bank to offer fixed-ratehome loans. The State Bank of India has tied up with State Bank of Mysore tolaunch co-branded credit cards as part its strategy to collaborate withassociate banks to expand its cardholder base. Central Depository Services (India) Ltd has signed an agreement with State Bank of India as its Depository participant. State Bank of India and the Exim Bank of the US have signedamemorandum of understanding, involving 0 million, to support the small and medium-sized ndian companies to purchase US goods and services. Mr. Suresh Kumar Mehra, Workmen Directors, ceased to be a member of theCentral Board of the bank effect from October 1, due to his retirementat the close of the business on September 30. The Bank has launched an international credit cards for doctors, the frist of its kind in the country, offering facilities including specialdiscounts on medical equipment and personal loans from GE countrywide. The State Bank of India has introduced a new scheme to boostexports. The CRISIL has assigned a triple-A (AAA) rating to the State Bank of India's Rs 3,000 crore bonds programme. The Bank have decided to close down its fully-owned foreignsubsidiary - SBI European Bank Ltd., in London. Mr. S. Mukerji, Managing Director, of the bank retired from the bankon 30th of November. State Bank of India Mutual Fund has launched the Magnum Gilt Fund,dedicated to investing in government securities. 2001 - The Bank has signed an MoU with Cardif S.A. for the bank's lifeinsurance business. The Bank has introduced Voluntary Retirement Scheme for eligible employees, open from the 15th January 2001 to the 31st January 2001. The Bank has incorporated a subsidiary `SBI Life Insurance CompanyLtd.,' for doing life insurance business. The Bank will install 10 more Automated Teller Machines in the

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north-eastern region in addition to the one already commissioned at Guwahati. State Bank of India launched three more ATMs i n Bangalore. Mr Y Radhakrishnan has been promoted to the post of managingdirector of State Bank of India. SBI Cards has set up a special insurance cell in Ahmedabad for facilitating the claims of SBI cardholders affected by the tragic earthquake in Gujarat. SBI has assigned the Delhi-based HCL Com Net to provide it ATMteller inter-connectivity which could involve investments running into several hundred crores. SBI chief general manager Madhav M Mehta, who is currently theoperational head in Gujarat, has been transferred to its corporate office in Mumbai as chief general manager (CGM). July 3- Announces the launch of the SBI International card and theSBI Global Card for global travelers in India. SBI International cards and SBI Gold Cards would be accepted at over 20 million Visa outletsworldwide and one lakh outlets in India. State Bank of India has embarked upon an ambitious Rs 800-crore technology upgradation programme. The bank has appointed KPMG, aconsultant in computer technology, to provide inter connectivitynetworking to the computerised branches and also to the ATMs acrossthecountry enabling its customers to transact any kind of business from anywhere. State Bank of India was presented the award for JD Power AsiaPacific’s2001 India Sales Satisfaction Index (SSI) and Consumer FinancingSatisfaction (CFS) State Bank of India has added three more ATMs to its network. ThenewATMs were installed at SBI's Andheri (west),Goregaon (east),and Borivili (east) branches on September 22. State Bank Of India (SBI) has informed BSE that Shri K.J.Udeshi, ED,RBI has been nominated on the Central Board of the Bank as nomineeofRBI in place of Dr.Y.V.Reddy, w.e.f. September 22, 2001 under Sec.19(f)of SBI Act. State Bank of India has slashed the interest rate on home loans by 0.5per cent to 12 per cent, effective from September 15. IN A significant move, the State Bank of India has decided todistance itself from its subsidiaries - SBI Capital Markets, SBI Gilts, SBIAMCand State Bank of Credit and Commerce International. They will havethe autonomy, independent chairmen and external executives at thesenior management level at market-related salaries. At present, the SBI chairman is the ex-officio chairperson of all the subsidiaries,including the associate banks. The new scheme will be aimed only at the award staff, a categorythatwas included with officers in the January 2001 voluntary retirementscheme. SBI Cards on July 3, announced the launch of the SBI Internationalcardand the SBI Global Card for global travelers in India. - VRS implemented in which around 21,000 employees, includingofficers, were permitted to retire - The Bank has crossed another milestone by making a successfulforay into insurance. SBI is the only Bank to have been permitted a 74% stake in the insurance business. The Bank's insurance subsidiary, SBI Life Insurance Company, a joint venture with the Bank holding 74% and Cardif S.A., the Joint venture partner, the balance 26%, was incorporated to

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undertake life insurance and pension business. Cardif S.A. is a wholly-owned subsidiary of BNP-Paribas, which is the largest bank in France and one of the top ten banks in the world. Cardif S.A. is the largest bancassurance company in France. - The bank's efforts to establish a world -class credit information bureau in India culminated in the successful setting up of the Credit Information Bureau (India) Ltd., a joint venture of the Bank with HDFC Ltd., Dun and Bradstreet Information Services India Pvt. Ltd. and Trans Union International Inc. 2002 - In order to reduce risk and develop a transparent and active debt market in general and government securities market in particular, the Clearing Corporation of India Ltd. has been set up in Mumbai with the Bank as the chief promoter. -E K Thakur resigns from Directorship of SBI. -TCS bags order of Rs 500 crore from SBI. -SBI has informed that the following change in Directors. 1. Shri A C Kalita, Director on the Bank's Central Board ceased to be a Director on the Board wef May 13, 2002 on expiry of his term on May 12, 2002.2. Shri Y Radhakrishnan Managing Director & GE (CB) has relinquished office of the Managing Director as on June 30, 2002 and ceased to be Director on the Board wef July 01, 2002. -State Bank of India has informed BSE that Mr D C Gupta IAS Secretary (Financial Sector), Ministry of Finance, Department of Economic Affairs, New Delhi has been nominated as Director on the Board of State Bank of India with effect from July 17, 2002 vice Mr S K Purkayastha. -State Bank of India has informed BSE that Mr S Govindarajan, Managing Director & GE (NB) has relinquished office of the Managing Director as on July 31, 2002 and ceased to be Director on the Board w e f August 01, 2002.Further Mr P R Khanna, Director on the Bank's Central Board ceased to be a Director on the Board w e f August 20, 2002 consequent upon his resignation. -State Bank of India has informed BSE that the Bank has decided to close SBI Securities Ltd (SBISL), a subsidiary of the Bank, following a Directive in this regard from the RBI. -State Bank of India has informed that the Central Government appointed Mr A K Batra, Deputy Managing Director, State Bank of India as Managing Director, State Bank of India for the period from the date of his taking charge and upto August 31, 2003. Also, Mr P N Venkatachalam, Deputy Managing Director, State Bank of India, has been appointed as Managing Director, State Bank of India for the

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period from the date of his taking charge and upto March 31, 2004. -State Bank Of India has informed that Shri Prithvi Raj Khanna and Shri Kumar Bery have been duly elected as Directors under Section 19(c) of SBI Act at the General Meeting of the -State Bank of India has informed that it has appointed Mr Ananta Chandra Kalita, as a Director on the Central Board of the Bank from amongst the employees of the Bank, who are workmen, for a period not exceeding six months commencing from October 03, 2002 or until his successor is appointed or till he ceases to be workmen employee of State Bank of India, or until further orders, whichever event occurs earlier.shareholders of the bank held on September 09, 2002. -State Bank of India has informed BSE that Shri Janki Ballabh, Chairman has relinquished office of Chairman at the close of business hours on his attaining superannuation on October 31, 2002. -State Bank of India has informed that Smt Vineeta Rai, Secretary (Banking & Insurance), Ministry of Finance and Company Affairs, Department of Economic Affairs (Banking Division), New Delhi has been nominated as Director of the Board with effect from October 30, 2002. -State Bank of India has informed that the Central Government, after consultation with the Reserve Bank of India, appointed Shri A K Purwar, Deputy Managing Director, State Bank as Chairman, State Bank of India from the date of his taking charge of the post and upto May 31, 2003 i.e. date of his superannuation or until further orders whichever is earlier. Shri A K Purwar assumed the charge of Chairman, State Bank of India, on November 13, 2002. 2003- State Bank of India (SBI) and Maruti Udyog Ltd have announced a joint initiative aimed at making car finance affordable to middle and lower middle class customers. Customers will now have transparent car finance involving no hidden charges and pre-closure penalties, and also get the dealers' margins, Mr S.K. Bhattacharya, Chief General Manager, SBI, told newspersons. It will help both the bank and Maruti to aggressively tap the Andhra Pradesh market, he said. SBI offers finance facility even for lifetime tax, insurance and accessories of the vehicle. - State Bank of India has informed that the Bank has appointed Shri Ananta Chandra Kalita, Head Assistant, State Bank of India as a Director on the Central Board of the Bank amongst the employees of the Bank, who are workmen for a period of 3 years commencing from July 15, 2003 or until he ceases to be a workmen employee of the Bank

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or until further orders, whichever is earlier provided that he shall not hold the office continously for a period exceeding six year. - SBI group's total profit identified at Rs 3,354 cr in '02 - Mr. D C Gupta nominated as Director on the Board of SBI - SBI introduces IT upgradation plan with KPMG help - SBI Cards and Payment Services Private Ltd, the credit card subsidiary of the State Bank of India, introduces two new schemes recently- SBI Advantage Card to the bank's fixed deposit customers and SBI International Card for its home loan borrowers - Launches a new credit appraisal system targeting the small and medium enterprises (SME) for loans up to Rs 25 lakh - SBI selects TCS to execute trade finance solution - SBI and ICICI Bank among the top 100 banks in Asia in 2001 as per the study by Asian Banker Journal - Introduces SBI Cash Plus, its Maestro Debit Card that allows customers to access their deposit accounts from ATMs and merchant establishments 2003 - Promotes three Chief General Managers (CGM) to the posts of Deputy Managing Directors (DMDs). They are: A D Kalmankar, CGM in charge of Staff College of Hyderabad, A K Das, CGM, Hyderabad; and R K Sinha, CGM, Chandigarh - SBI appoints Mr. S K Bhattacharya as the new Chief General Manager for Hyderabad circle - Increases its equity stake in Discount and Finance House of India Ltd (DFHIL) to 51% - Ties up with Maruti Udyog Ltd. (MUL) for car finance - Receives permission from Insurance Regulatory and Development Authority (IRDA) to sell healthcare products to individuals - Increases its Equity Stake in DFHIL to 55.30% - Starts new 'Plus schemes' loans such as Justice Plus intended for

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the judges and court employees, Police Plus for the police personnel, Teacher Plus for the teaching community and Doctor Plus for the medical practitioners - Receives RBI licence to set up offshore banking units (OBUs) in special economic zones (SEZs) - Launches SBI Bangalore card meant for a broad-based target audience in the 25 plus age group ranging from upwardly mobile professionals and middle class segments - SBI unveils Hyderabad card, an exclusive initiative for the citizens of Hyderabad - Ananta Chandra Kalita ceases to be a Director of SBI - Christens the tieup with Maruti Udyog Ltd. as SBI-Maruti Finance - Orders For 1,500 ATMs With NCR Corporation - Orange, the cellular service operator of the Hutch group for the Mumbai circle, ties up with State Bank of India for prepaid card refill options - Ropes in US-based consultant McKinsey & Co to undertake Business Process Re-engineering (BPR) exercise for the bank - Launches charter for Small Scale Industries (SSIs) - NPA (Non Performing Assets) slashed to 4.5 pc, writes off Rs 4,000 crore worth of assets - Forays into stock market - Stock price crosses the Rs 400 mark for the first time since listing on BSE - Mr. A K Batra, Managing Director & Group Executive (Corporate Banking) of the Bank ceases to be a Director on the Board with effect from July 8, 2003 - Plans a new scheme to attract Resurgent India Bonds (RIB) - N S Sisodia, Secretary (Banking & Insurance), Ministry of Finance and Company Affairs, Department of Economic Affairs (Banking Division), has been nominated as a Director on the Board of State Bank of India w.e.f. July 11, 2003

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- Mr. Ananta Chandra Kalita, Head Assistant, State Bank of India, appointed as a Director on the Central Board of the Bank amongst the employees of the Bank - Inks two important agreements with its employees' unions and officers' associations. According to the contract SBI's staff will be having no rights to interfere in bank's computerisation plans - SBI, AirTel launch mobility service at Rs 299 - Central government nominates Mr. Arun Singh as a director on the board of the bank wef July 25, 2003 for a period of three years. - State Bank of India along with ANZ Investment Bank have consummated 5 year syndicate loan facility of 0 million to Indian Petrochemicals Corporation (IPCL) - Opens cheque clearing cente at Kolkata - Inks pact with Mahindra & Mahindra (M&M) for co-branded tractor scheme SBI-Mahindra Tractor Plus - Joins hands with Tractors and Farm Equipment Ltd (TAFE) for tractor loans - Launches insurance scheme in Kerala - Unveils new retail bank loan product Credit Khazana, which targets the bank's housing loan account holders - Unveils online ticket reservation system 'e-Rail' - Reserve Bank of India nominates Dr Rakesh Mohan, Deputy Governor, RBI, on the Central Board of the bank - Appoints Mr C. Narasimhan as the Chief General Manager of the SBI's Kerala Circle -Unveils Credit Khazana, retail bank loan product, to target the bank's housing loan account holders - MRO-TEK Ltd has secured State Bank of India's order of Rs 15-crore to provide networking solutions of 2Mbps and 64 Kbps high-end leased line modems for SBI to connect more than 800 branches across the country. -SBI joins hands with LIC to dentify long-term investment proposals for LIC

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-Tied with bajaj Auto to finance its two wheelers. -SBI granted Rs 125-cr loan to Nethaji Apparel park to set up units and buy machinery for the first batch of 54 garment plants in the 65-acre special apparel park. -The bank has tied up with TVS motor company to finance two wheeler loans -Tied up with apollo hospital enterprise to finance for the hospital treatement. -The company launched mobile pre-paid cards recharge facility at its ATM's -Tied up with ICICI Bank and HDFC for sharing ATM networks 2003-Bank has entered into MOU with both ICICI Bank and HDFC Bank for sharing Bank's ATM Network with them on bilateral terms. -The Central Government after consultation with the Reserve Bank of India, appointed Shri Chandan Bhattacharya, Deputy Managing Director State Bank Of India as Managing Director State Bank Of India for the period from December 17, 2003 to January 31, 2005. -The State Bank of India has announced a special package to BSNL employees by allowing concessional interest rates for different types of loans to be availed by the BSNL staff. 2004 -Former KCCI President nominated to SBI Bangalore Local Board -State Bank Of India has informed that Reserve Bank of India has nominated Shri A V Sardesai, Executive Director, Reserve Bank of India on the Central Board of State Bank of India vice Dr. Rakesh Mohan. -SBI sets up ATM counter in Ernakulam -Bahrain Monetary Agency (BMA) grants in-principle licence to Statte Bank of India (SBI) -SBI sets up India's first drive-in ATM in Hyderabad -State Bank of India has entered into an alliance with HDFC Bank for

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sharing ATM networks to be operationalised from February 3, this year. 2004 -SBI unveils new branch in Manjeri -Bank awarded special prize for lending to self help group run by women -SBI unveils floating ATM -State Bank of India appointed six new Deputy Managing Directors on February 11, 2004. The new DMDs are: Mr T.S. Bhattacharya, CGM, Product Development and Marketing, Mr M.M.Lateef, Managing Director, SBI Gilts, Mr Yogesh Agarwal, CGM, Chandigarh, Mr Krishnamurthy, CGM, Madras LHO and Mr R.Ramanathan, CGM, Technology and Mr Vijay Anand, CGM, Corporate Account group. These top level appointments follow the appointment of the new Managing Director for the bank, Mr Chandan Bhattacharya, in December. -GAIL ties up SBI for e-banking system -SBI join hands with Visa for travel card -SBI enters into ATM sharing agreements with UTI Bank & HDFC Bank -Signs a Memorandum of Understanding (MoU) under which the bank will provide term loans to farmers for purchasing capital inputs from Jain Irrigation Systems Ltd (JISL) -Join hands with Siemens for financing the medical equipments sold by Siemens -Joins hands with VST Tillers to launch SBI-VST Shakti, a new loan scheme for farm mechanisation programme -Unveils Vishwa Yatra foreign travel card, a prepaid card which offers the traveller a convenient and secure way to carry cash -Ties up with Same Deutz-Fahr India for tractor financing -In ally with Sikkim govt to beef up SMEs -The government has chosen State Bank of India (SBI) for channelising government credit to other countries which runs into billions of dollar

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-SBI opens MICR cheque processing center -Signs MoU with HMT Ltd. for financing their tractors -State Bank of India deploys Flexcube as core banking solution at Frankfurt -Mr Ashok K. Kini appointed as new Managing Director of State Bank of India with effect from April 1, 2004 to December 31, 2005 -SBI unveils Foreign Travel card in Orissa -ICICI Bank, SBI, LIC in pact for Rs 20,000-cr projects -Reliance Info in ATM pact with SBI -State Bank of India, Bangalore Circle, has announced its tie-up with New India Assurance Company Ltd (NIAC), for distribution of NIAC's general insurance products in Karnataka - SBI unveils new credit card in Ahmedabad -State Bank of India joined the billion dollar club -THE State Bank of India opened its 236th branch in the State at Tripunithura on June 16 -SBI inaugurates first Internet shoppe in Kochi -State Bank of India has opened a fully computerised branch at Karunagappally in Kollam district -L&T-John Deere Private Ltd has signed a memorandum of understanding (MoU) with State Bank of India for tractor finance -Buys 10% stake in Multi Commodity Exchange of India Ltd. (MCDEX) for Rs 2.1 crore -SBI join hands with Hero Honda to unveil co-branded credit card -State Bank of India launched its first mobile ATM for increasing the banking convenience of its customers -State Bank of India has signed a Memorandum Of Understanding (MOU) with the Societe Generale Asset Management of France (SGAM) for inducting Societe Generale Asset Management as a stake holding

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partner for SBI's mutual fund arm, SBI Fund Management Private Ltd (SBIFMPL) -State Bank of India, (SBI) with a view to expand the ambit of its educational loan schemes, has unveiled a unique educational loan scheme, christened Nursing Plus, for the nursing students of the country -SBI forges alliance with Hero Honda -SBI offers new scheme`School Plus' for schools -SBI Card has launched 'Instant Card' offering customers in need of instant credit opportunity. With this, the customers will get an opportunity to get ready to use credit card within a few hours of filing in their application form -SBI selects Finacle for international ops -SBI enters ATM tie up with Andhra Bank -SBI join hands with LIC for funding infrastructure projects -Tata Motors on December 7, 2004, signs an MoU with State Bank of India (SBI) -SBI partners with Eicher Motors on December 27, 2004 2005 -Raj Travels joins hands with SBI for travel loans -SBI opens branch at Vadakara -SBI join hands with Apollo Health to offer loans -SBI rolls out new loan scheme -SBI opens first branch in Lakshadweep island of Kavaratti -SBI enters into agreement for bilateral sharing of ATMs with PNB on May 10, 2005 -SBI signs MOU with Corporation Bank for ATM sharing -State Bank of India and 8 associate banks have entered into an agreement with Bharat Petroleum Corporation Ltd (BPCL) for enhancing

40

card usage at fuel stations -SBI launches new mortgage loan scheme for traders -SBI launches SBI card in Madurai -SBI inaugurates RBO in Thrissur -SBI signed a memorandum of understanding with Small Industries Development Bank of India for co-financing small and medium enterprises in Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Jammu & Kashmir, Jharkhand, Delhi and Bihar -State Bank of India and Crisil have signed a memorandum of understanding under which latter will assign ratings to small-scale industries that are borrowers of SBI -NSIC join hands with SBI to offer credit to SSI 2006 -SBI teams up with Nihilent to unveil feedback system -Bhatt to become SBI's new MD -State Bank of India (SBI) has informed that Shri. Yogesh Agarwal has been appointed as Managing Director on the Board of the Bank with effect from October 10, 2006 to the June 30, 2010 2007 -State Bank of India (SBI) has appointed Shri. S K Bhattacharya as Managing Director on the Board of the Bank with effect from October 08, 2007 to the October 31, 2010, as per the Notification dated October 08, 2007, by the Government of India. - The State Bank of India (SBI) has become the first foreign bank to set up a branch in the Israel's diamond exchange. Besides diamonds, they also see huge potential in telecommunications, hi-tech, chemicals, textiles, agriculture and water management, food processing, pharma and health care. 2008 -State Bank of India (SBI) has informed that the Government of India in pursuance of clause (e) of Section 19 of the State Bank of India Act, 1955 (23 of 1955) has nominated Shri. Arun Ramanathan,

41

Secretary, Ministry of Finance, Department of Financial Services, New Delhi as a Director on the Central Board of State Bank of India with effect from January 18, 2008, vice Shri. Vinod Rai. -State Bank of India (SBI) has informed that the Central Government, in consultation with the Reserve Bank of India and in pursuance of clause (d) of Section 19 of the State Bank of India Act, 1955 (23 of 1955), has nominated Dr. (Mrs.) Vasantha Bharucha as a part-time non-official Director on the Central Board of State Bank of India for a period of three years with effect from February 25, 2008, vice Shri Piyush Goel. - State Bank of India (SBI) has informed that the Central Government, in consultation with the Reserve Bank of India and in pursuance of clause (d) of Section 19 of the State Bank of India Act, 1955 (23 of 1955), has nominated Dr. Rajiv Kumar as part-time non-official director on the Central Board of Directors of State Bank of India for a period of three years with effect from September 08, 2008 or until further orders, whichever is earlier. - State Bank of India (SBI) has signed a Joint Venture Agreement with Insurance Australia Group to form a Joint Venture Company which will be engaged in General Insurance business in India. - State Bank of India has rolled out a micro insurance scheme 'Grameen Shakti', for its Self Help Group (SHG) members. The product was launched on Nov 26 at the Tamil Nadu Agricultural University. The bank is hopeful to cover at least five lakh SHG members by December 31. -The company has issued rights in the ratio of 1:5 at a premium of Rs.1580/- Per Share. 2009 - State Bank of India yesterday slashed its benchmark lending rate by half a percentage point to 11.75 per cent. The Benchmark Prime Lending Rate (BPLR) was revised down by 50 basis points with effect from June 29, SBI informed the Bombay Stock Exchange. This move would benefit home, car and corporate loan customers - State Bank of India on June 30 launched two new home loan products called as SBI Easy Home Loan and SBI Advantage Home Loan, with zero processing fees for both waived off till September 30. While SBI Easy Home is for loans amount up to Rs 30-lakh while the SBI Advantage Home is for loans above Rs 30-lakh, a press release issued here said.

42

- State Bank of India, entered into an agreement with the government of Gujarat to create a fund of Rs 5,000 crore for investing in equity of infrastructure projects. 2010 - State Bank of India, with a debit card base of over 70 million, comprising SBI Cash Plus, SBI Gold Debit Card and SBI Yuva Card, has added chip and PIN-based Platinum Debit Card to its bouquet on March 26. - Mr Arun Kumar Agarwal has taken over charge as General Manager at State Bank of India, Kerala Circle. Until now, he has been General Manager at the Lucknow Circle of the bank. Mr Agarwal is Certified Associate of Indian Institute of Bankers and joined State Bank of India as a Probationary Officer in 1977. An expert in credit and foreign exchange, he has held several assignments ranging from Branch Manager to Regional Manager in the Patna and Delhi circles. He also served in the bank's foreign department at Kolkata handling investment of the FCNB portfolio, derivatives and correspondent relations. He has headed the Pune Module of the bank and has also served as the Deputy General Manager and Business Head for Network-1 of the Mumbai Circle. - State Bank of India (SBI) has signed a pact with Unique Identification Authority of India (UIDAI) to work as a registrar for the UID registration of residents. It has become the first bank to take up registration work for the UIDAI project. As a registrar, SBI will capture through empanelled enrolment agencies, the biometric characters such as finger prints, iris and so on and send the information to UIDAI.

BALANCE SHEET FOR THE YEAR ENDING ON MARCH 2007-2011

2007 2008 2009 2010 2011

43

CAPITAL AND LIABILITIES

Total share capital 526.30 631.47 634.88 634.88 635.00

Equity share capital 526.30 631.47 634.88 634.88 635.00

Share application money 0.00 0.00 0.00 0.00 0.00

Preference share capital 0.00 0.00 0.00 0.00 0.00

Reserves 30772.26 48401.09 57312.82 65314.32 64351.04

Revaluation reserves 0.00 0.00 0.00 0.00 0.00

Net worth 31298.56 49032.66 57947.70 65949.20 64986.04

Deposits 435521.09 537403.94 742073.13 804116.23 933932.81

Borrowings 39703.34 51727.41 53713.68 103011.60 119568.96

Total debt 475224.43 589131.35 795786.81 907127.83 1053501.77

Other liabilities and provisions 60042.26 83362.30 110697.57 80336.70 105248.39

Total liabilities 566565.25 721526.31 964432.08 1053413.73 1223736.20

2007 2008 2009 2010 2011

ASSETS

Cash and balances with RBI 29,076.43 51534.62 55546.17 61290.87 94395.50Balance with banks, money at call

22892.27 15931.72 48857.63 34892.98 28478.65

Advances 337336.49 416768.20 542503.20 631914.15 756719.45Investments 149148.88 189501.27 275953.96 285790.07 295600.57Gross block

13189.28 11831.63 10403.03 11831.63 13189.28

Accumulated depreciation 8757.33 7713.90 6828.65 7713.90 8757.33Fixed Assets 4431.95 4117.73 3574.41 4117.73 4431.95Capital work in progress 332.23 295.18 263.44 295.18 332.23Other assets 43777.85 35112.76 37733.27 35112.76 43777.85Total assets

566565.25 721526.31 964432.08 1053413.74 1223736.20

Contingent liabilities585294.50

429917.37 614603.47 429917.37 585294.50

Bills for collection205092.29 166449.04 152964.06 166449.04 205092.29

44

Book value 1023.40 1038.76 912.73 1038.76 1023.40

EPS 86.29 106.56 143.67 144.37 116.07

Net block= gross block – depreciation Net block = fixed assets

PROFIT AND LOSS ACCOUNT OF STATE BANK OF INDIA

FOR THE ENDING ON MARCH 2007-2011

2007 2008 2009 2010 2011Income:Interest earned 39491.03 48950.31 63788.43 70993.92 81394.36Other income 7446.76 9398.43 12691.35 14968.15 14935.09

Total income 46937.79 58348.74 76479.78 85962.07 96329.45

Expenditure:Interest expended 23436.82 31929.08 42915.29 47322.48 48867.96Operating expenses 13251.78 14609.55 18123.66 24941.01 31430.88Total expenses 42396.48 51619.62 67358.55 76796.02 88959.12Other provision and contingencies 5707.88 5080.99 6319.60 4532.53 8660.28Net profit 4541.31 6729.12 9121.23 9166.05 7370.37Extraordinary items 0.00 0.00 0.00 0.00 0.00Profit B/F 0.34 0.34 0.34 0.34 0.34Total 4541.65 6729.46 9121.57 9166.39 7370.69Preference dividend 0.00 0.00 0.00 0.00 0.00Equity dividend 736.82 1357.66 1841.15 1904.65 1905.00Corporate dividend tax 125.22 165.87 248.03 236.76 246.52Per share data:EPS 86.29 106.56 143.67 144.37 116.07Equity dividend (%) 140.00 215.00 290.00 300.00 300.00Book value 594.69 776.48 912.73 1038.76 1023.40AppropriationsTransfer to statutory reserve 3682.15 5205.69 6725.15 6495.14 2488.96Transfer to other reserve -2.88 -0.10 306.90 529.50 2729.87Proposed dividend/ transfer to govt. 862.04 1523.53 2089.18 2141.41 2151.52Balance C/F to balance sheet 0.34 0.34 0.34 0.34 0.34Total 4514.65 6729.46 9121.57 9166.39 7370.69

45

SUSTAINABLE EARNINGS OF STATE BANK OF INDIA:

         

 201103 (12)

201003 (12)

200903 (12)

200803 (12)

200703 (12)

INCOME :    Total 97218.96 85962.07 76482.74 58437.42 44671.37    II. Expenditure    Total 88954.44 76796.02 67361.51 51708.3 40130.06       Fringe Benefit tax 0 0 142 105 88.5 Deferred Tax 976.82 -1407.75 -1055.1 -219.43 -19.83 Reported Net Profit 8264.52 9166.05 9121.23 6729.12 4541.31 Extraordinary Items -10.23 -5.83 -1.71 7 4.52 Adjusted Net Profit 8274.75 9171.88 9122.94 6722.12 4536.79         

 average of adjusted Net Profit 2009,2010 and 2011  

46

 8856.5233

3           

 rounding off 8857  

         Standard deviation : 504.33

Rounding off 504

CRAR%

201103

201003

200903

CRAR(%)

Year End20110

320100

320090

3CRAR - Tier I (%) 7.77 9.45 9.38CRAR - Tier II (%) 4.21 3.94 4.87Total CRAR (%) 11.98 13.39 14.25

   

Total CRAR (%)  

  2009 14.25  year 2010 13.39    2011 11.98  

47

2009 2010 2011year

10.5

11

11.5

12

12.5

13

13.5

14

14.5 14.25

13.39

11.98Total CRAR (%)

RATIO ANALYSIS:

CURRENT RATIO:

An indication of a company's ability to meet short-term debt obligations; the

higher the ratio, the more liquid the company is. Current ratio is equal to current assets

divided by current liabilities. If the current assets of a company are more than twice the

current liabilities, then that company is generally considered to have good short-term

financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations.

CURRENT RATIO = CURRENT ASSETS / CURRENT LIABILITY

current ratio

year 2007-2011year Ratio2007 0.052008 0.072009 0.04

48

2010 0.042011 0.04

LIQUID RATIO:

Liquid ratio is also known as ‘Quick’ or ‘Acid Test ‘Ratio. Liquid assets refer to

assets which are quickly convertible into cash. Current Assets other stock and prepaid expenses

are considered as quick assets.

Quick Ratio = Total Quick Assets

Total Current Liabilities

Quick Assets = Total Current Assets – Inventory

Year Ratio

2007 6.52

2008 6.15

2009 5.74

49

2010 9.07

2011 8.50

1 2 3 4 50

1

2

3

4

5

6

7

8

9

10

6.526.15

5.74

9.078.5

quick ratio

quick ratio

EARNING PER SHARE:

In order to avoid confusion on account of the varied meanings of the term capital

employed, the overall profitability can also be judged by calculating earning per share with the help of the following formula:

Earning Per Equity Share = Net Profit after Tax –Preference Dividend

No. of Equity shares

The earning per share of the company helps in determining the market price of the equity shares of the company. A comparison of earning per share of the company with another will also help in deciding whether the equity share capital is being effectively used or not. It also helps in estimating the company’s capacity to pay dividend to its equity shareholders.

Year Ratio

2007 86.29

2008 106.56

50

2009 143.67

2010 144.37

2011 116.07

1 2 3 4 50

20

40

60

80

100

120

140

160

86.29

106.56

143.67 144.37

116.07

Ratio

Ratio

DIVIDEND PER SHARE :

It is expressed by dividing dividend paid to equity shareholders by no. of equity shares.

this shows the per share dividend given to equity shareholders. It is very helpful for potential investors to know the dividend paying capacity of the company. It affects the market value of the company.

Dividend Per Share = Dividend Paid To Equity Shareholders

No. Of Equity Shares

   

dividend per share

51

       2007 14year 2008 21.5  2009 29  2010 30  2011 30

2007 2008 2009 2010 2011year

0

5

10

15

20

25

30

35

14

21.5

29 30 30

dividend per share

NET PROFIT RATIO:

This ratio indicates the Net margin on a sale of Rs.100. It is calculated as follows:

Net Profit Ratio = Net Profit X 100

Net Sales

This ratio helps in determining the efficiency with which affairs of the business are being managed. An increase in the ratio over the previous period indicates improvement in the operational efficiency of the business. The ratio is thus on effective measure to check the profitability of business.

   

net profit ratio  

         2007 10.12  

52

year 2008 11.65    2009 12.03    2010 10.54    2011 8.55  

2007 2008 2009 2010 2011year

0

2

4

6

8

10

12

14

10.12

11.65 12.03

10.54

8.55

net profit ratio

RETURN ON NET WORTH:

It measures the profitability of the business in view of the shareholders. It judges the earning capacity of the company and the adequacy of return on proprietor’s funds. Shareholders and potential investors are interested in this ratio. It is calculated as below:

Return On Net Worth = Net Profit After Interest And Tax x 100

Shareholder’s Funds

   

return on shareholder's    

           2007 14.5    year 2008 13.72    

53

  2009 15.74      2010 13.89      2011 12.71    

2007 2008 2009 2010 2011year

0

2

4

6

8

10

12

14

16

18

14.513.72

15.74

13.8912.71

return on shareholder's

DEBT- EQUITY RATIO:

The Debt-Equity ratio is calculated to find out the long-term financial position of the firm. This ratio indicates the relationship between long-term debts and shareholder’s funds. The soundness of long-term financial policies of a firm can be determined with the help of this ratio. It helps to assess the soundness of long-term financial policies of a business. It also helps to determine the relative stakes of outsiders and shareholders. Long-term creditors can assess the security of their funds in a business. It indicates to what extent a firm depends upon lenders to meet its long-term financial requirements. A low Debt-Equity ratio is considered better from the point of view of creditors.

   

Total Debt to Owners Fund

            2007 13.92year 2008 10.96  2009 12.81  2010 12.19

54

  2011 14.37

2007 2008 2009 2010 2011year

0

2

4

6

8

10

12

14

1613.92

10.96

12.8112.19

14.37

Total Debt to Owners Fund

Total Debt to Owners Fund

FIXED ASSETS TURNOVER RATIO:

It is also called as Sales to Fixed Assets Ratio. It measures the efficient use of fixed assets. This ratio is a measure of efficient use of fixed assets. it is calculated as:

Fixed Assets Turnover Ratio = Cost of goods sold or Sales

Net Fixed Assets

It measures the efficiency and profit earning capacity of the business. Higher the ratio, greater is the intensive utilization of fixed assets and a lower ratio shows under utilization of the fixed assets. This ratio has a special importance for manufacturing concerns where investment in fixed assets, is very high and the profitability is significantly dependent on the utilization of these assets.

   

assets turnover ratio  

         2007 5.44  year 2008 6.32    2009 7.2    2010 7.26    2011 7.24  

55

2007 2008 2009 2010 2011year

0

1

2

3

4

5

6

7

8

5.44

6.32

7.2 7.26 7.24

assets turnover ratio

CREDIT-DEPOSIT RATIO:

This ratio is very important to assess the credit performance of the bank. The ratio shows the

relationship between the amount of deposit generated by the bank as well as their deployment

towards disbursement of loan and advances. Higher credit deposit ratio shows overall good

efficiency and performance of any banking institution.

Credit Deposit Ratio= CreditsDeposits

×100

Credit means disbursement of advances

Deposit mean sum of fixed deposit,

Saving deposit and current deposit.

   

credit deposit ratio  

         2007 73.44  year 2008 77.51    2009 74.97    2010 75.96    2011 79.9  

56

2007 2008 2009 2010 2011year

70

72

74

76

78

80

82

73.44

77.51

74.97

75.96

79.9

credit deposit ratio

CASH DEPOSIT RATIO :

   

cash deposit ratio  

         2007 6.22  YEAR 2008 8.29    2009 8.37    2010 7.56    2011 8.96  

57

2007 2008 2009 2010 2011YEAR

0

1

2

3

4

5

6

7

8

9

10

6.22

8.29 8.37

7.56

8.96

cash deposit ratio

CAPITAL TURNOVER RATIO :

Income / capital employed

   

CAPITAL TURNOVER RATIO    

           2007 8.46    YEAR 2008 8.96      2009 8.99      2010 8.62      2011 8.48    

58

2007 2008 2009 2010 2011YEAR

8.1

8.2

8.3

8.4

8.5

8.6

8.7

8.8

8.9

9

9.1

8.46

8.968.99

8.62

8.48CAPITAL TURNOVER RATIO

Total assets turnover ratio:

   

total assets turnover ratio

       2007 0.08year 2008 0.09  2009 0.09  2010 0.09  2011 0.08

59

2007 2008 2009 2010 2011year

0.074

0.076

0.078

0.08

0.082

0.084

0.086

0.088

0.09

0.092

0.08

0.09 0.09 0.09

0.08

total assets turnover ratio

PRICE- EARNING RATIO:

Price earning ratio = market price per share/ earning per share

   

Price Earning (P/E)  

         2007 11.83  Year 2008 15.38    2009 7.63    2010 14.78    2011 21.92  

60

2007 2008 2009 2010 2011Year

0

5

10

15

20

25

11.83

15.38

7.63

14.78

21.92

Price Earning (P/E)

Price to Book Value:

Market Value of Security/ book value of shares

   

Price to Book Value ( P/BV)

       2007 1.67year 2008 2.06  2009 1.17  2010 2  2011 2.7

61

2007 2008 2009 2010 2011year

0

0.5

1

1.5

2

2.5

3

1.67

2.06

1.17

2

2.7

Price to Book Value ( P/BV)

Enterprise Value / EBIDTA

   EV/EBIDTA

       2007 15.64year 2008 14.46  2009 13.64  2010 15.33  2011 17.07

2007 2008 2009 2010 2011year

0

2

4

6

8

10

12

14

16

18

15.6414.46

13.64

15.33

17.07

EV/EBIDTA

EV/EBIDTA

62

BANK OF BARODA

63

INTRODUCTION

Bank of Baroda (BoB) (BSE: 532134) (Hindi: बैं�क ऑफ़ बैंड़ौ�दा) is the third largest bank in India, after the State Bank of India and the Punjab National Bank and ahead of ICICI Bank.[3] BoB is ranked 763 in Forbes Global 2000 list. BoB has total assets in excess of Rs. 3.58 lakh crores, or Rs. 3,583 billion, a network of over 3,409 branches and offices, and about 1,657 ATMs. It plans to open 400 new branches in the coming year. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, credit cards and asset management. Its total business was Rs. 5,452 billion as of June 30.[4]

As of August 2010, the bank has 78 branches abroad and by the end of FY11 this number should climb to 90. In 2010, BOB opened a branch in Auckland, New Zealand, and its tenth branch in the United Kingdom. The bank also plans to open five branches in Africa. Besides branches, BoB plans to open three outlets in the Persian Gulf region that will consist of ATMs with a couple of people.

The Maharajah of Baroda, Sir Sayajirao Gaekwad III, founded the bank on 20 July 1908 in the princely state of Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalized on 19 July 1969, by the government of India.

BALANCE SHEET OF BANK OF BARODA

2007 2008 2009 2010 2011

Total Share Capital   365.53 365.53 365.53 365.53 392.81

Equity Share Capital   365.53 365.53 365.53 365.53 392.81

Share Application Money   0 0 0 0 0

Preference Share Capital   0 0 0 0 0

Reserves   8284.41 10,678.40 12,470.01 14,740.86 20,600.30

Revaluation Reserves   0 0 0 0 0

Net Worth   8649.94 11,043.93 12,835.54 15,106.39 20,993.11

Deposits   124915.98 152,034.13 192,396.95 241,044.26 305,439.48

Borrowings   1142.56 3,927.05 5,636.09 13,350.09 22,307.85

Total Debt   126058.54 155,961.18 198,033.04 254,394.35 327,747.33

Other Liabilities & Provisions   8437.70 12,594.41 16,538.15 8,815.97 9,656.73

Total Liabilities   143146.18 179,599.52 227,406.73 278,316.71 358,397.17

    2007 2008 2009 2010 2011

Assets            

Cash & Balances with RBI   6413.52 9,369.72 10,596.34 13,539.97 19,868.18Balance with Banks, Money at Call   11866.85 12,929.56 13490.77 21,927.09 30,065.89

Advances   83620.87 106,701.320 143985.90 175,035.29 228,676.36

Investments   34943.63 43,870.07 52445.88 61,182.38 71,260.63

Gross Block   2244.62 3,787.14 3954.13 4,266.60 4,548.16

64

Accumulated Depreciation   1155.81 1,360.14 1644.41 1,981.84 2,248.44

Net Block   1088.81 2427.00 2309.72 2,284.76 2,299.72

Capital Work In Progress   0 0 0 0 0

Other Assets   5212.5 4301.83 4578.12 4,347.22 6,226.40

Total Assets   143146.18 179599.5 227406.73 278,316.71 358,397.180

             

Contingent Liabilities   54999.86 75364.33 64745.82 77,997.01 112,272.64

Bills for collection   12976.53 15105.51 22584.64 27,949.60 33,735.67

Book Value (Rs)   237.46 303.18 352.37 414.71 536.16

EPS 28.18 39.41 61.14 83.96 108.33

PROFIT AND LOSS OF BANK OF BARODA

PROFIT & LOSS OF BANK OF BARODA          

     IN RS. CR.    

  2007 2008 2009 2010 2011Income:          

Interest earned9,212.64

11,813.5

15,091.6

16,698.3

21,885.9

Other income 1,381.79

2,051.04

2,757.66

2,806.36

2,809.19

Total income 10,594.4

13,864.5

17,849.2

19,504.7

24,695.1

Expenditure:          Interest expended 5,426.5

67,901.6

79,968.1

710,758.

913,083.

7Operating expenses 2,771.4

53,370.2

73,844.6

64,711.2

35,669.8

8Other provision and contingencies 1,369.9

51,157.0

51,809.2

0 976.281,699.8

8Total expenses

9,568.012,429.

015,622.

016,446.

420,453.

4           Net profit 1,026.4

61,435.5

22,227.2

03,058.3

34,241.6

8Extraordinary items 0 0 0 0 0Profit B/F 0 0 0 0 0

Total1,026.4

61,435.5

22,227.2

03,058.3

34,241.6

8           Preference dividend 0 0 0 0 0Equity dividend 252.46 340.94 383.56 639.26 753.35

65

Corporate dividend tax 0 0 0 0 0Per share data:          EPS 28.18 39.41 61.14 83.96 108.33Equity dividend (%) 60 80 90 150 165Book value 237.46 303.18 352.37 414.71 536.16Appropriations          Transfer to statutory reserve

271.5 444.231,136.2

31,162.0

71,387.8

7Transfer to other reserve

502.5 650.35 707.411,257.0

02,100.4

6Proposed dividend/ transfer to govt. 252.46 340.94 383.56 639.26 753.35Balance C/F to balance sheet 0 0 0 0 0           Total 1,026.4

61,435.5

22,227.2

03,058.3

34,241.6

8

RATIO ANALYSIS OF BANK OF BARODA:

Current ratio: CURRENT ASSETS/ CURRENT LIABILITIES

   Current Ratio

       2007 0.04year 2008 0.03  2009 0.02  2010 0.02  2011 0.02

66

2007 2008 2009 2010 2011year

0

0.005

0.01

0.015

0.02

0.025

0.03

0.035

0.04

0.0450.04

0.03

0.02 0.02 0.02

Current Ratio

Current Ratio

QUICK RATIO:

   Quick Ratio

       2007 11.29year 2008 9.56  2009 9.62  2010 21.88  2011 26.38

2007 2008 2009 2010 2011year

0

5

10

15

20

25

30

11.299.56 9.62

21.88

26.38

Quick Ratio

Quick Ratio

67

   

Earnings Per Share

       2007 28.18year 2008 39.41  2009 61.14  2010 83.96  2011 108.33

2007 2008 2009 2010 2011year

0

20

40

60

80

100

120

28.18

39.41

61.14

83.96

108.33

Earnings Per Share

Earnings Per Share

   Total Debt to Owners Fund

       2007 14.44year 2008 13.77  2009 14.99  2010 15.96  2011 14.55

68

2007 2008 2009 2010 2011year

12.5

13

13.5

14

14.5

15

15.5

16

16.5

14.44

13.77

14.99

15.96

14.55

Total Debt to Owners Fund

Total Debt to Owners Fund

   Cash Deposit Ratio

       2007 4.46year 2008 5.7  2009 5.8  2010 5.57  2011 6.11

2007 2008 2009 2010 2011year

0

1

2

3

4

5

6

7

4.46

5.7 5.8 5.576.11

Cash Deposit Ratio

Cash Deposit Ratio

69

   Credit Deposit Ratio

       2007 65.67year 2008 68.72  2009 72.78  2010 73.6  2011 73.87

2007 2008 2009 2010 2011year

60

62

64

66

68

70

72

74

76

65.67

68.72

72.7873.6 73.87

Credit Deposit Ratio

Credit Deposit Ratio

   

Asset Turnover Ratio

       2007 4.25year 2008 3.47  2009 4.2  2010 4.48  2011 5.25

70

2007 2008 2009 2010 2011year

0

1

2

3

4

5

6

4.25

3.47

4.24.48

5.25

Asset Turnover Ratio

Asset Turnover Ratio

   Total Assets Turnover Ratios

       2007 0.07Year 2008 0.08  2009 0.08  2010 0.08  2011 0.08

2007 2008 2009 2010 2011year

0.064

0.066

0.068

0.07

0.072

0.074

0.076

0.078

0.08

0.082

0.07

0.08 0.08 0.08 0.08

Total Assets Turnover Ratios

Total Assets Turnover Ratios

71

   

Total Income / Capital Employed(%)

       2007 7.83year 2008 8.57  2009 8.51  2010 7.86  2011 7.75

2007 2008 2009 2010 2011year

7.2

7.4

7.6

7.8

8

8.2

8.4

8.6

8.8

7.83

8.578.51

7.867.75

Total Income / Capital Employed(%)

Total Income / Capital Employed(%)

   Net Profit / Total Funds

       2007 0.8year 2008 0.89  2009 1.09  2010 1.21  2011 1.33

72

2007 2008 2009 2010 2011year

0

0.2

0.4

0.6

0.8

1

1.2

1.4

0.80.89

1.091.21

1.33

Net Profit / Total Funds

Net Profit / Total Funds

   Dividend Per Share

       2007 6Year 2008 8  2009 9  2010 15  2011 16.5

2007 2008 2009 2010 2011year

0

2

4

6

8

10

12

14

16

18

6

89

1516.5

Dividend Per Share

Dividend Per Share

73

PRICE- EARNING RATIO:

Price earnings ratio = market price per share/ earnings per share

   

PRICE- EARNING  

         2007 7.93  YEAR 2008 7.49    2009 3.95    2010 7.87    2011 9.15  

2007 2008 2009 2010 2011YEAR

0

1

2

3

4

5

6

7

8

9

10

7.937.49

3.95

7.87

9.15

PRICE- EARNING

PRICE- BOOK VALUE

Market Value of Security/ book value of shares

   

PRICE-BOOK VALUE    

  2007 0.91    YEAR 2008 0.94      2009 0.67    

74

  2010 1.55      2011 1.8    

2007 2008 2009 2010 2011YEAR

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0.910.94000000000000

1

0.670000000000003

1.55

1.8

PRICE-BOOK VALUE

ENTERPRISE TO EBIDTA:

   EV/EBIDTA  

  2007 15.9  YEAR 2008 13.93    2009 14.01    2010 15.93    2011 16.64  

75

2007 2008 2009 2010 2011YEAR

12.5

13

13.5

14

14.5

15

15.5

16

16.5

17

15.9

13.93 14.01

15.93

16.64

EV/EBIDTA

TREND ANALYSIS

Trend Analysis is the practice of collecting information and attempting to spot a pattern, or trend, in the information. In some fields of study, the term "trend analysis" has more formally-defined meaning.

Although trend analysis is often used to predict future events, it could be used to estimate uncertain events in the past, such as how many ancient kings probably ruled between two dates, based on data such as the average years which other known kings reigned.

TREND ANALYSIS OF STATE BANK OF INDIA

BASE YEAR 2006-2007percentage (%) figures

 200

7 2008200

9201

0 2011           deposits 100 123 170 185 214advances 100 124 161 187 224net profit 100 148 201 202 162

76

2007 2008 2009 2010 20110

50

100

150

200

250

depositsadvancesnet profit

INTERPRETATION:

There is a continuous increase in deposits

There is a increase of advances

There is a increase in net profits till 2010 but there is a fall in 2011

The overall performance of the bank is satisfactory.

TREND ANALYSIS OF BANK OF BARODA

Bank of Baroda

Base year 2006-2007

In percentage(%) figures

2007 2008 2009 2010 2011

77

deposits 100 122 154 193 245advances 100 128 172 209 273net profit

100 140 217 298 413

2007 2008 2009 2010 20110

50

100

150

200

250

300

350

400

450

depositsadvancesnet profit

INTERPRETATION:

Deposits:-

The trend shows that the deposits are increasing from 2007-2011

Advances:-

The trend of advances shows that it is increasing in those four years 2008-2011

Net profit:-

The trend of net profit shows the increase from 2008-2011

BETA ANALYSIS

A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns..Also known as "beta coefficient".

78

BETA VALUATION OF STATE BANK OF INDIA

  1 2 3 4 5 6 7 8  

MONTH SENSEX SBI

RETURN OF SENSEX

RETURN OF SBI

return- average of return of sensex

variance of sensex

return of SBI- Average of return of SBI

covariance of sensex and SBI  

10-Sep 20,069.123,233.

20              

10-Oct 20,032.343,151.

20 0.00 -0.03 0.01 0.0001 0.01 0.0001  

10-Nov 19,521.252,994.

10 -0.03 -0.05 -0.01 0.0002 -0.01 0.00014  

10-Dec 20,509.092,811.

05 0.05 -0.06 0.06 0.0040 -0.02-

0.001407  

11-Jan 18,327.762,641.

05 -0.11 -0.06 -0.09 0.0088 -0.02 0.002018  

11-Feb 17,823.402,632.

00 -0.03 0.00 -0.01 0.0002 0.04-

0.000525  

11-Mar 19,445.222,767.

90 0.09 0.05 0.10 0.0108 0.09 0.009392  

11-Apr 19,135.962,805.

60 -0.02 0.01 0.00 0.0000 0.05-

0.000167  

11-May 18,503.282,297.

80 -0.03 -0.18 -0.02 0.0004 -0.14 0.00289  

11-Jun 18,845.872,405.

95 0.02 0.05 0.03 0.0010 0.09 0.002686  

11-Jul 18,197.202,342.

00 -0.03 -0.03 -0.02 0.0005 0.01-

0.000268  

11-Aug 16,676.751,974.

50 -0.08 -0.16 -0.07 0.0050 -0.12 0.008358  

11-Sep 16,933.831,945.

55 0.02 -0.01 0.03 0.0008 0.02 0.000683                     AVERAGE RETURN     -0.01 -0.04   0.0026   0.00200                     COVARIANCE

0.00199559                

79

                   

VARIANCE0.002642

95                                   BETA 0.755062                

BETA VALUATION OF BANK OF BARODA

  1 2 3 4 5 6 7 8  

MONTH SENSEX

BANK OF

BARODA

RETURN OF

SENSEX

RETURN OF

BANK OF

BARODA

return-

average of return

on sense

x

variance of

sensex

return-

average of return

on BOB

covariance of

sensex and

BOB  10-Sep 20,069.12 872.8              

10-Oct 20,032.34 1,011.00 -0.0018 0.15830.010

90.00011

90.165

0 0.0018  

10-Nov 19,521.25 937.75 -0.0255 -0.0725

-0.012

80.00016

4

-0.072

5 0.0009  

10-Dec 20,509.09 896.5 0.0506 -0.04400.063

3 0.00401

-0.044

0 -0.003  

11-Jan 18,327.76 869.15 -0.1064 -0.0305

-0.093

60.00876

8

-0.030

5 0.0029  

11-Feb 17,823.40 870.85 -0.0275 0.0020

-0.014

80.00021

90.002

0 -3E-05  

11-Mar 19,445.22 963.15 0.0910 0.10600.103

70.01075

70.106

0 0.011  

11-Apr 19,135.96 912.15 -0.0159 -0.0530

-0.003

21.01E-

05

-0.053

0 0.0002  

11-May 18,503.28 863.4 -0.0331 -0.0534

-0.020

30.00041

4

-0.053

4 0.0011  

11-Jun 18,845.87 871.9 0.0185 0.00980.031

20.00097

60.009

8 0.0003  11-Jul 18,197.20 878.3 -0.0344 0.0073 - 0.00047 0.007 -0.00016  

80

0.0217 1 3

11-Aug 16,676.75 736.6 -0.0836 -0.1613

-0.070

80.00501

8

-0.161

3 0.0114  

11-Sep 16,933.83 774.8 0.0154 0.05190.028

10.00079

20.051

9 0.0015                     

 AVERAGE RETURN   -0.0127 -0.0066  

0.002643   0.0023  

                   

 COVARIAN

CE   0.00234                               

  VARIANCE  0.00264

3                               

  BETA  0.88438

5            

RATIO ANALYSIS

A tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.

There are many ratios that can be calculated from the financial statements pertaining to a company's performance, activity, financing and liquidity. Some common ratios include the price-earnings ratio, debt-equity ratio, earnings per share, asset turnover and working capital.

SUSTAINABLE EARNINGS OF BANK OF BARODA

  IN RS. CR.                   

  201103 (12) 201003 (12)200903

(12) 200803 (12) 200703 (12)           

INCOME :             

Total 24695.1 19504.7 17876.11 13892.18 10438.12           

81

II. Expenditure             

Total 20453.42 16446.37 15648.91 12456.66 9411.66           

Fringe Benefit tax 0 0 0 11 7.5 Deferred Tax 0 0 0 -3.12 -3.11

Reported Net Profit 4241.68 3058.33 2227.2 1435.52 1026.46 Extraordinary Items -0.12 56.12 62.29 0.22 8.01

Adjusted Net Profit 4241.8 3002.21 2164.91 1435.3 1018.45

Average of Adjusted net profit for the year 2009,2010,2011

2009 2164.912010 3002.212011 4241.8

Sum = 9408.92

Average = 3136.30

Standard deviation 1044.466

Rounding off 1044

CRAR% OF BANK OF BARODA:

201103

201003

200903

CRAR(%)

Year End20110

320100

320090

3CRAR - Tier I (%) 9.99 9.2 8.49CRAR - Tier II (%) 4.53 5.16 5.56Total CRAR (%) 14.52 14.36 14.05

82

   

Total CRAR (%)  

  2009 14.05  year 2010 14.36    2011 14.52  

2009 2010 2011year

13.8

13.9

14

14.1

14.2

14.3

14.4

14.5

14.6

14.05

14.36

14.52

Total CRAR (%)

83

RESEARCH METHODOLOGY

84

RESEARCH TOPIC

“THE COMPARATIVE STUDY OF FINANCIAL PERFORMANCE OF STATE BANK OF INDIA AND BANK OF BARODA.”

OBJECTIVE OF THE STUDY:-

1. To know the strength and weakness of State Bank Of India and Bank Of Baroda through Ratio analysis.

2. To evaluate the performance of the companies.3. To understand the liquidity, profitability and efficiency positions of the companies. 4. To make comparison between the ratios during different periods.

INTRODUCTION

Financial Management is the specific area of finance dealing with the financial decision corporations make, and the tools and analysis used to make the decisions. The discipline as a whole may be divided between long-term and short-term decisions and techniques. Both share the same goal of enhancing firm value by ensuring that return on capital exceeds cost of capital, without taking excessive financial risks. Capital investment decisions comprise the long-term choices about which projects receive investment, whether to finance that investment with equity or debt, and when or whether to pay dividends to shareholders.Short-term corporate finance decisions are called working capital management and deal with balance of current assets and current liabilities by managing cash, inventories, and short-term borrowings and lending (e.g., the credit terms extended to customers). Corporate finance is closely related to managerial finance, which is slightly broader in scope, describing the financial techniques available to all forms of business enterprise, corporate or not.

RESEARCH METHODOLOGY

The conclusive research is being used to study the comparison of the companies.

85

Data collection:Secondary data is being taken

Websites

Outcomes of the study:

1. With this analysis we come to know about the strength and weakness of State Bank Of India and Bank Of Baroda through Ratio analysis.

2. To evaluate the performance of the companies.3. To understand the liquidity, profitability and efficiency positions of the companies. 4. To make comparison between the ratios during different periods.

Limitation of the study:

The study is done in Kanpur

Study is constrained to only the comparison of State Bank Of India and Bank Of Baroda.

TOOLS USED:

Comparative analysis

Ratio analysis

Trend analysis

Beta valuation

Sustainable earnings

Basel-II CRAR % capital requirement

Cash Flow Statement Analysis

STATISTICAL TOOL:

CAPITALINE

SPSS

86

FINANCIAL ANALYSIS

87

Introduction to the topic

RATIO ANALYSISFINANCIAL ANALYSISFinancial analysis is the process of identifying the financial strengths and weaknesses of the firm and establishing relationship between the items of the balance sheet and profit & loss account.Financial ratio analysis is the calculation and comparison of ratios, which are derived from the information in a company’s financial statements. The level and historical trends of these ratios can be used to make inferences about a company’s financial condition, its operations and attractiveness as an investment. The information in the statements is used byTrade creditors, to identify the firm’s ability to meet their claims i.e. liquidity position of the company.Investors, to know about the present and future profitability of the company and its financial structure.Management, in every aspect of the financial analysis. It is the responsibility of the management to maintain sound financial condition in the company.

RATIO ANALYSISThe term “Ratio” refers to the numerical and quantitative relationship between two items or variables. This relationship can be exposed asPercentagesFractionsProportion of numbersRatio analysis is defined as the systematic use of the 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. Ratio reflects a quantitative relationship helps to form a quantitative judgment.STEPS IN RATIO ANALYSISThe first task of the financial analysis is to select the information relevant to the decision under consideration from the statements and calculates appropriate ratios.To compare the calculated ratios with the ratios of the same firm relating to the pas6t or with the industry ratios. It facilitates in assessing success or failure of the firm.Third step is to interpretation, drawing of inferences and report writing conclusions are drawn after comparison in the shape of report or recommended courses of action.

BASIS OR STANDARDS OF COMPARISON

88

Ratios are relative figures reflecting the relation between variables. They enable analyst to draw conclusions regarding financial operations. They use of ratios as a tool of financial analysis involves thecomparison with related facts.

NATURE OF RATIO ANALYSISRatio analysis is a technique of analysis and interpretation of financial statements. It is the process of establishing and interpreting various ratios for helping in making certain decisions. It is only a means ofunderstanding of financial strengths and weaknesses of a firm. There are a number of ratios which can be calculated from the information given in the financial statements, but the analyst has to select the appropriate data and calculate only a few appropriate ratios. The following are the four stepsinvolved in the ratio analysis.Selection of relevant data from the financial statements depending upon the objective of the analysis.Calculation of appropriate ratios from the above data.Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with ratios of theindustry to which the firm belongs.INTERPRETATION OF THE RATIOSThe interpretation of ratios is an important factor. The inherent limitations of ratio analysis should be kept in mind while interpreting them.The impact of factors such as price level changes, change in accounting policies, window dressing etc., should also be kept in mind when attempting to interpret ratios.

IMPORTANCE OF RATIO ANALYSISAid to measure general efficiencyAid to measure financial solvencyAid in forecasting and planningFacilitate decision makingAid in corrective actionAid in intra-firm comparisonAct as a good communicationEvaluation of efficiencyEffective tool

LIMITATIONS OF RATIO ANALYSISDifferences in definitionsLimitations of accounting recordsLack of proper standardsNo allowances for price level changesChanges in accounting proceduresQuantitative factors are ignoredLimited use of single ratioBackground is over looked

89

Limited usePersonal biasIN THE VIEW OF FUNCTIONAL CLASSIFICATION THE RATIOSARE1. Liquidity ratio2. Leverage ratio3. Activity ratio4. Profitability ratio

1. LIQUIDITY RATIOS

Liquidity refers to the ability of a concern to meet its current obligations as & when there becomes due. The short term obligations of a firm can be met only when there are sufficient liquid assets. The short term obligations are met by realizing amounts from current, floating (or) circulating assets The current assets should either be calculated liquid (or) near liquidity. They should be convertible into cash for paying obligations of short term nature. The sufficiency (or) insufficiency of current assets shouldbe assessed by comparing them with short-term current liabilities. If current assets can pay off current liabilities, then liquidity position will be satisfactory.To measure the liquidity of a firm the following ratios can becalculatedCurrent ratioQuick (or) Acid-test (or) Liquid ratioAbsolute liquid ratio (or) Cash position ratio

(a) CURRENT RATIO:Current ratio may be defined as the relationship between current assets and current liabilities. This ratio also known as Working capital ratio is a measure of general liquidity and is most widely used tomake the analysis of a short-term financial position (or) liquidity of a firm.

Current ratio= current assets/ current liabilities

Components of current ratio:

Current Assets Current Liabilities

CuCash in handrrent AcunnnnSSETS Outstanding expenses

Cash at bank Bank overdraftBills receivable Bill payableInventories Short term advancesWork-in-progress Sundry creditorsMarketable securities Dividend payableShort-term investments Income-tax payableSundry debtorsPrepaid expenses

90

(b) QUICK RATIOQuick ratio is a test of liquidity than the current ratio. The term liquidity refers to the ability of a firm to pay its short-term obligations as & when they become due. Quick ratio may be defined as the relationshipbetween quick or liquid assets and current liabilities. An asset is said to be liquid if it is converted into cash with in a short period without loss of value.

Quick or liquid assets

Quick Ratio= quick or liquid assets/ current liabilities

ComponentsQuick Assets Current liabilitiesCash in hand Outstanding or accrued expensesCash at bank Bank overdraftBills receivable Bills payableSundry debtors Short term advancesMarketable securities Sundry creditorsTemporary investments Dividend payable

Income tax payable (c) ABSOLUTE LIQUID RATIOAlthough receivable, debtors and bills receivable are generallymore liquid than inventories, yet there may be doubts regarding theirrealization into cash immediately or in time. Hence, absolute liquid ratioshould also be calculated together with current ratio and quick ratio so as toexclude even receivables from the current assets and find out the absoluteliquid assets.

Absolute liquid ratio = Absolute liquid assets/Current liabilities

Absolute liquid assets include cash in hand etc. The acceptableforms for this ratio is 50% (or) 0.5:1 (or) 1:2 i.e., Rs.1 worth absolute liquidassets are considered to pay Rs.2 worth current liabilities in time as all the creditors are nor accepted to demand cash at the same time and then cashmay also be realized from debtors and inventories.Components:

Absolute liquid assets Current liabilities

Cash in hand Outstanding or accrued expensesCash in bank Bank overdraftInterest on fixed deposits Bills payable

Dividend payableSundry creditorsShort term advancesIncome tax payable

91

2. LEVERAGE RATIOSThe leverage or solvency ratio refers to the ability of a concernto meet its long term obligations. Accordingly, long term solvency ratiosindicate firm’s ability to meet the fixed interest and costs and repaymentschedules associated with its long term borrowings.The following ratio serves the purpose of determining thesolvency of the concern.· Proprietory ratio(a) PROPRIETORY RATIOA variant to the debt-equity ratio is the proprietary ratio whichis also known as equity ratio. This ratio establishes relationship betweenshare holders funds to total assets of the firm.

Proprietory ratio = Shareholders funds/ Total assets

Shareholder fund Total Assets

Share capital Fixed assetsReserve& surplus Current assets

Cash in hand Cash at bankBills receivableInventoriesMarketable securitiesShort term investmentSundry debtorsPrepaid expenses

3. ACTIVITY RATIOSFunds are invested in various assets in business to make salesand earn profits. The efficiency with which assets are managed directlyeffect the volume of sales. Activity ratios measure the efficiency (or)effectiveness with which a firm manages its resources (or) assets. Theseratios are also called “Turn over ratios” because they indicate the speed with which assets are converted or turned over into sales.Working capital turnover ratioFixed assets turnover ratioCapital turnover ratioCurrent assets to fixed assets ratio(a) WORKING CAPITAL TURNOVER RATIOWorking capital of a concern is directly related to sales.

Working capital= current assets – current liabilities

It indicates the velocity of the utilization of net working capital.

This indicates the no. of times the working capital is turned over in the

course of a year. A higher ratio indicates efficient utilization of working

92

capital and a lower ratio indicates inefficient utilization.

Working capital turnover ratio=cost of goods sold/workingcapital.

Components of working capital:

Current assets Current liabilities

Cash in hand Outstanding or accrued expenses

Cash at bank Bank overdraft

Bills receivable Bills payable

Prepaid expenses Short term advances

Short term investments Sundry creditors

Inventories Dividend payable

Work in progress Income tax payable

Marketable securities

Sundry debtors

(b) FIXED ASSETS TURNOVER RATIOIt is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm. Higher theratio, greater is the intensive utilization of fixed assets. Lower ratio meansunder-utilization of fixed assets.

Fixed assets turnover ratio = Cost of Sales/ Net fixed assets

Cost of Sales = Income from Services

Net Fixed Assets = Fixed Assets - Depreciation

(c) CAPITAL TURNOVER RATIOSSometimes the efficiency and effectiveness of the operationsare judged by comparing the cost of sales or sales with amount of capitalinvested in the business and not with assets held in the business, though inboth cases the same result is expected. Capital invested in the business may be classified as long-term and short-term capital or as fixed capital and working capital or Owned Capital and Loaned Capital. All CapitalTurnovers are calculated to study the uses of various types of capital.

Capital turnover ratio= cost of goods sold/capital employed

93

Capital employed = capital+ reserves& surplus

Cost of goods sold = income from services

(d) CURRENT ASSETS TO FIXED ASSETS RATIO

This ratio differs from industry to industry. The increase in theratio means that trading is slack or mechanization has been used. A decline in the ratio means that debtors and stocks are increased too much or fixed assets are more intensively used. If current assets increase with the corresponding increase in profit, it will show that the business is expanding.

Current assets to fixed assets ratio= current assets/ fixed assets

Current assets Fixed assets

Cash in hand Plant

Cash at bank Machinery

Bills receivables Land

Short term investment Building

Inventories Vehicles

Sundry debtors

Work in progress

Marketable securities

4. PROFITABILITY RATIOS

The primary objectives of business undertaking are to earn profits. Because profit is the engine, that drives the business enterprise.Net profit ratioReturn on total assetsReserves and surplus to capital ratioEarnings per shareOperating profit ratioPrice – earning ratioReturn on investments(a) NET PROFIT RATIONet profit ratio establishes a relationship between net profit (after tax) and sales and indicates the efficiency of the management in manufacturing, selling administrative and other activities of the firm.

94

Net profit after tax = net profit-( depreciation+ interest+ income tax)

Net sales = income from services

Net profit ratio = net profit after tax/ net sales

It also indicates the firm’s capacity to face adverse economicconditions such as price competitors, low demand etc. Obviously higher theratio, the better is the profitability.

(b) RETURN ON TOTAL ASSETS

Profitability can be measured in terms of relationship between

net profit and assets. This ratio is also known as profit-to-assets ratio. It

measures the profitability of investments. The overall profitability can be

known.

Returns on assets = net profit / total assets

Net profit = earnings before interest and tax

Total assets = current assets+ fixed assets

(c) RESERVES AND SURPLUS TO CAPITAL RATIOIt reveals the policy pursued by the company with regard togrowth shares. A very high ratio indicates a conservative dividend policyand increased ploughing back to profit. Higher the ratio better will be theposition.

Reserves& surplus to capital ratio = reserves& surplus/capital

(d) EARNINGS PER SHAREEarnings per share is a small verification of return of equity andis calculated by dividing the net profits earned by the company and those

95

profits after taxes and preference dividend by total no. of equity shares.

Earning per share = net profit after tax/ no. of equity shares

The Earnings per share is a good measure of profitability whencompared with EPS of similar other components (or) companies, it gives aview of the comparative earnings of a firm.

(e) OPERATING PROFIT RATIOOperating ratio establishes the relationship between cost of goods sold and other operating expenses on the one hand and the sales onthe other.

Operating ratio = operating cost / net sales

However 75 to 85% may be considered to be a good ratio in case of a manufacturing under taking.Operating profit ratio is calculated by dividing operating profitby sales.

Operating profit = net sales – operating cost

Operating profit ratio = operating profit / sales

(f) PRICE - EARNING RATIOPrice earning ratio is the ratio between market price per equityshare and earnings per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used byinvestors to decide whether (or) not to buy shares in a particular company.Generally, higher the price-earning ratio, the better it is. If theprice earning ratio falls, the management should look into the causes thathave resulted into the fall of the ratio.

Price earning ratio = market price per share/ earning per share

Market price per share = capital + reserves& surplus / no. of equity shares

Earning per share = earnings before interest and tax / no. of equity shares

96

(g) RETURN ON INVESTMENTSReturn on share holder’s investment, popularly known as Return on investments (or) return on share holders or proprietor’s funds isthe relationship between net profit (after interest and tax) and theproprietor’s funds.

Return on shareholder’s investment = net profit after interest and tax / shareholder’s fund

The ratio is generally calculated as percentages by multiplyingthe above with 100.

97

FINANCIAL COMPARATIVE ANALYSIS

98

BALANCE SHEET OF STATE BANK OF INDIA

FOR THE YEAR ENDING ON MARCH 2007-2011

IN RS CR.

2007-2008

2008-2009

2009-2010 2010-2011

Absolute change

% change

Absolute change

% change

Absolute change

% change

Absolute change

% change

Capital & LiabilitiesCapital 105.17 19.98 3.41 0.0054 0.00 0.00 0.12 0.018Reserve& surplus

17628.83 57.28 8910.91 18.41 8001.5 13.96 (963.28) (1.47)

deposits 101882.85

23.39 204669.19

38.08 62043.1 8.36 129816.58

16.14

borrowings 12024.07 30.28 1986.27 3.83 49297.92 91.77 16557.36 16.07Other liabilities and provisions

23320.04 38.83 27335.27 32.79 (30360.30)

(27.42)

24911.69 31.009

TOTAL CAPITAL AND LIABILITIES

154961.06

27.35 242905.77

33.66 88981.65 9.226 170322.47

16.16

2007-08 2008-09 2009-10 2010-11Absolute change

% change

Absolute change

% change

Absolute change

% change

Absolute change

% change

Assets:Investments 40352.39 27.055 86452.69 45.62 9836.11 3.56 9810.5 3.43Advances 79431.71 23.54 125735 30.16 89410.95 16.48 124805.3 19.75Fixed assets (314.22) (0.070

)(543.32) (0.13) 543.32 0.15 314.22 0.076

Capital Work In Progress

(37.05) (0.11) (31.74) (0.107)

31.74 0.1204 37.05 0.1255

Current assets (8665.09) (0.19) 2620.51 0.074 (2620.51) (0.069)

8665.09 0.24

TOTAL ASSETS:

154961.06

27.35 242905.77

33.66 88981.65 9.226 170322.47

16.16

99

Interpretation :

The capital of bank increased by 19.98%in 07-08, 0.0054% in 08-09, 0.018% in 10-11.

There is no change in capital of the bank in the year 09-10

There is a huge fluctuation in the rate of increasing in reserves& surplus .

The bank is utilizing its reserves &surplus in an effective manner.

In 07-08 deposits increase by 23.39%, 08-09 it increase by 38.08%, 8.36% in 09-10,16.14% in 10-11.

There is a huge fluctuating rate of increase . in 08-09 it had fluctuate to 3.83%.

The investment in 10-11 has increased with a low rate as compared to the preceding years .27.55% in 07-08,45.62% in 08-09,3.56% in 09-10,3.43% in 10-11.

The advances rose by 23.54% in 07-08,30.16% in 08-09,16.48% in 09-10, 19.75% in 10-11.

There has been a consistent decline in fixed assets in 07-08 and 08-09 0.070% ,0.13% respectively. Increased by 0.15% in 09-10, 0.076% in 10-11.

There is a fall of current assets 0.19% in 07-08 mainly due to the repayment of deposits.0.074% in 08-09, subsequent fall of current assets 0.069% in 09-10, and increase of 0.24% in 10-11.

PROFIT AND LOSS OF STATE BANK OF INDIA FOR THE YEAR ENDING ON MARCH 2007-2011 IN RS CR.

Particulars 2007-08   2008-09   2009-10 2010-11

 absolute change

% change

absolute change

% change

absolute change % change absolute change

% change

     

INCOME:    

operating income 11410.95  0.24 18131.04  0.31 9482.29 0.12 10367.38 0.12

EXPENDITURE:    

interest expended 8492.26  0.36 10986.21  0.18 4407.19 0.10 1545.48 0.032

operating expenses 1357.77  0.10

3514.11

 0.24 6817.35 0.37 6489.87 0.26

total expenses

9223.14

 0.21 15738.93 0.30 9437.47 0.14 12163.1 0.15provision and contingencies -626.89 -0.10 1238.61 0.24 -1787.07 0.14 12163.1 0.15net profit of the year 2187.81 0.48 2392.11 0.35 44.82 0.004914 -1795.68 -0.19extraordinary items 0 0 0 0 0 0 0 0

100

profit brought forward 0 0 0 0 0 0 0 0

total profit/(loss): 2187.81 0.48 2392.11 0.35 44.82 0.004914 -1795.68 -0.19

INTERPRETATION:

Net Profit Of The Year: it shows a fluctuating trend i.e., increased by 48% in2007-08,35% in 2008-09,0.49% in 2009-10 and decline by 19% in 2010-11due to increased tax liability. Interest Expended: it increases from 36% in 2007-08,18% in 2008-09, 10% in 2009-10 and 3.20% in 2010-11.

BALANCE SHEET OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH 2007-2011 IN RS CR.

                 

 2007-2008  

2008-2009  

2009-2010  

2010-2011  

 absolute change

% change

absolute change

% change

absolute change

% change

absolute change

% change

capital & liabilities:                

Capital 0 0 0 0 0 0 27.280.074631

reserves& surplus 2393.99

0.288975 1791.61

0.167779 2270.85

0.182105 5859.44

0.397496

Deposits27118.15

0.217091

40362.82

0.265485

48647.31

0.252849

64395.22

0.267151

Borrowings 2784.492.437062 1709.04

0.435197 7714

1.368679 8957.76

0.670989

other liabilities 4156.710.492635 3943.74

0.313134

-7722.18

-0.46693 840.76

0.095368

TOTAL LIABILITIES:

36453.34

0.254658

47807.21

0.266188

50909.98

0.223872

80080.46

0.287731

2007-08 2008-09 2009-10 2010-11

 absolute change

% change

absolute change

% change

absolute change

% change

absolute change

% change

ASSETS

Investments 8926.440.255453 8575.81

0.195482 8736.5

0.166581

10078.25

0.164725

Advances23080.45

0.276013

37284.58

0.349429

31049.39

0.215642

53641.07

0.306459

fixed assets 1338 1.2 (117) (0.05) (25) (0.01) 15 0.01capital work in progress 0 0 0 0 0 0 0 0Total assets 36453.3 0.25465 47807.2 0.26618 50909.9 0.22387 80080.4 0.28773

101

2 8 3 8 8 2 7 1INTERPRETATION:

The capital of the bank shows no change till 2009-10 but it increases by 7.40% in 2010-11.

There is a huge fluctuation in the increase of reserves and surplus. It increases by 28% in 2007-08,16%in 2008-09,18% in 2009-10 and 39% in 2010-11.

The investments has increased with a low rate . 2007-08- 25%,2008-09 – 19%, 2009-10 – 16.6%, 2010-11-16.47%

There is a fluctuating in increase in advances 27% in 2007-08,34.9% in 2008-09, 21.5%in 2009-10, 30.64% in 2010-11.

There is decline of fixed assets in 2008-09 and 2009-10 with 5% and 1% respectively. The reason may be the increase in the rate of depreciation in the subsequent years.

There has been an increase in borrowings. 243% in 2007-08, 43.5% in 2008-09, 136% in 2009-10,67% in 2010-11.

PROFIT AND LOSS OF BANK OF BARODA FOR THE YEAR ENDING ON MARCH 2007-11

 absolute change % absolute change %

absolute change %

absolute change %

  2007-08   2008-09   2009-10   2010-11  

particulars                

income:                

total income 3,270.1 30.87% 3,984.7 28.74% 1,655.5 9.27% 5,190.426.61

%

expenditure:                

interest expended 2,475.11 45.61% 2,066.50 26.15% 791 7.93% 2,324.821.61

%

operating expenses 598.82 21.61% 474.39 14.08% 866.57 22.54% 958.6520.35

%other provisions and contingencies -212.90 -15.54% 652.15 56.36% -832.92

-46.04% 723.60

74.12%

total expenses 2,861.0 29.90% 3,193.0 25.69% 824.3 5.28% 4,007.124.36

%

net profit of the year 409.06 39.85% 791.68 55.15% 831.13 37.32% 1,183.3538.69

%

extra ordinary items 0 0.00% 0 0.00% 0 0.00% 0 0.00%

profit brought forward 0 0.00% 0 0.00% 0 0.00% 0 0.00%

total 409.06 39.85% 791.68 55.15% 831.13 37.32% 1,183.3538.69

%

102

INTERPRETATION:

The net profit of the year shows a fluctuating trend i.e., 39.85% in 2007-08,55.15% in2008-09,37.32% in 2009-10and 38.69% in 2010-11.

The interest expended shows a fluctuating trend in 2007-08 to 2010-112007-08-45.61%,2008-2009-26.51% ,

BETA VALUATION :

 state bank of India bank of Baroda

     

beta 0.8 0.9

state bank of india bank of baroda0.74

0.76

0.78

0.8

0.82

0.84

0.86

0.88

0.9

beta

beta

The graph shows the compare beta of SBI and BOB which is 0.8 and 0.9 which means that both are comparatively good. There betas are<1 which means it is goodfor the investors to invest in the bank as it is less risky in nature.

SUSTAINABLE EARNINGS:

SBI BOBSUSTAINABLE 8857 3136

103

EARNINGS

SBI BOB0

1000

2000

3000

4000

5000

6000

7000

8000

9000

100008857

3136

SUSTAINABLE EARNINGS

SUSTAINABLE EARNINGS

CRAR% ANALYSIS :

SBI BOBBASEL-II CRAR% 11.98 14.52

104

SBI BOB0

2

4

6

8

10

12

14

16

11.98

14.52

BASEL-II CRAR%

BASEL-II CRAR%

CASH FLOW STATEMENT ANALYSIS OF BANK OFBARODA:

  2007 2008 2009 2010 2011

NET PROFIT BEFORE TAX 1654.262207.1

6 3342.94 4238.065650.3

2NET CASH FROM OPERATING ACTIVITIES 5153.94

2241.82 1125.47

11252.45

11778.81

NET CASH USED IN FROM INVESTING ACTIVITIES -307.65 -235.13 -238.93 -335.01 -489.76NET CASH USED IN FROM FINANCING ACTIVITIES -20.56

2012.23 901.29 462.51

3177.96

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENT 4825.73

4018.92 1787.83

11379.94

14467.01

OPENING CASH 13454.6418280.

3722299.2

924087.1

235467.

06

CLOSING CASH 18280.3722299.

2924087.1

235467.0

649934.

07

CASH FLOW STATEMENT ANALYSIS OF STATE BANK OF INDIA:

105

2007 2008 2009 2010 2011

PARTICULARS

Net Profit Before Tax 7625.08 10438.914180.6

4 13926.114954.2

3

Net Cash From Operating Activities -1776.07 -856.8729479.7

3 -1804.9934282.5

2

Net Cash (used in)/from Investing activities -284.56 -2798.01 -1651.93 -1761.52 -1245.53

Net Cash (used in)/from Financing Activities 9494.1119371.1

2 5097.38 -3359.67 2057.11

Net (decrease)/increase In Cash and Cash Equivalents 7433.4915716.2

432925.1

8 -6926.18 35094.1

Opening Cash & Cash Equivalents 44535.251968.6

971478.6

2 10311087780.0

5

Closing Cash & Cash Equivalents51968.6

967466.3

4104403.

896183.8

4122874.

2

106

FINDINGS, SUGGESTIONS AND CONCLUSIONS

State bank of India Bank of BarodaParticulars

1. Beta valuation 0.8 0.92. sustainable earnings ( standard

deviation)504 1044

Average sustainable earnings 8857 3136

3. Cash flow statement analysis: 14467.01 35094.1

4. Basel-II CRAR% 11.98 14.525. Profit & Loss statement analysis (19%) 38.69%6. Balance sheet statement analysis 16 28%7. Ratio analysis:

a. P/E ratio 21.92 9.15b. P/BV 2.7 1.8c. EV/EBIDTA 17.07 16.64

107

YEAR 2011

SBI BOBP/E 21.92 9.15P/BV 2.7 1.8EV/EBIDTA 17.07 16.64

P/E P/BV EV/EBIDTA0

5

10

15

20

25

21.92

2.7

17.07

9.15

1.8

16.64

SBIBOB

INTERPRETATION:

P/E RATIO OF State bank of India is 21.92 which is more than the P/E ratio of its peerset bank of Baroda 9.15 which means that it is overvalued and strongly sound in nature.

P/BV

The ratio of state bank of india is 2.7 and that of its peerset is 1.8 which means the bank is highly overvalued in nature

EV/EBIDTA

The ratio of state bank of india is 17.07 and that of its peerset is 16.64 which means that the bank is closely related to its peerset.

Both are fundamentally sound in nature.

108

  SBI BOBcredit deposit ratio 79.9 73.87CASH DEPOSIT 8.96 6.11

SBI BOB0

10

20

30

40

50

60

70

80

90

79.973.87

8.966.11

credit deposit ratioCASH DEPOSIT

CREDIT-DEPOSIT RATIO:

This ratio assess the credit performance of the bank.

The graph shows that state bank of india and bank of baroda both are performing well as both banks has overall good efficiency in nature.

SBI-79.9

BOB – 73.87

State bank of India has overall good efficiency and performance of banking institutions.

CASH DEPOSIT RATIO:

This ratio assesses the cash performance of the bank.

109

The graph shows that state bank of India and bank of Baroda is performing well in nature.

 

SUSTAINABLE EARNINGS    

  SBI BOB  STANDARD DEVIATION 504 1044  AVERAGE 8857 3136  

SBI BOB SUSTAINABLE EARNINGS

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

5041044

8857

3136

STANDARD DEVIATIONAVERAGE

OUTCOME:

Since the average sustainable earnings is high and standard deviation of state bank of India is low which means that the bank is fundamentally sound and it is performing good as compared to bank of Baroda.

110

 INDUSTRY SBI BOB

P/E RATIO 6.43 21.92 9.15

INDUSTRY SBI BOB0

5

10

15

20

25

6.43

21.92

9.15

P/E RATIO

P/E RATIO

INTERPRETATION:

Since the industry P/E ratio is 6.43 ,SBI 21.92,BOB 9.15.

It means that State bank of India P/E ratio is more than the industry/peerset company which means it is overvalued and it is fundamentally sound in nature as compared to its industry/ peerset bank of Baroda.

111

  SBI BOBdividend payout ratio 26.03 17.76

SBI BOB0

5

10

15

20

25

30

26.03

17.76

dividend payout ratio

dividend payout ratio

INTERPRETATION:

SBI 26.03

BOB 17.76

There is increase in ratio in the year 2011 in both the banks .

  SBI BOB

Earnings Per Share 116.07 108.33

Book Value1,023.4

0 536.16

112

Dividend Per Share 30 16.5Price Earning (P/E) 21.92 9.15Price to Book Value ( P/BV) 2.7 1.8

It is indicated that EPS AND DPS ARE INCREASING OF STATE BANK OF INDIA AS COMPARED TO BANK OF BARODA .

THE REASON MAY BE THAT THERE IS MORE USE OF DEBTTHAN DUE TO IMPROVED OPERATIONS.

P/E RATIO AND P/BV RATIO BOTH ARE INCREASING . .

THE OVERALL EFFICIENCY OF THE COMPANY IS GOOD AND IT IS PERFORMANCE IS BETTER IN THE BANKING INSTITUTION.

CONCLUSIONS:

1. State Bank Of India has overall better efficiency and has performed better in the banking institution as compared to Bank Of Baroda.

2. EPS And DPS Of State Bank Of India is increasing due to increase in the use of debt rather than the use of improved operations.

3. The P/E Ratio Of State Bank Of India is high as compared to its industry and Bank Of Baroda which means that SBI is using its funds in a better manner and it is fundamentally sound in nature.

4. Beta Of State Bank Of India And Bank Of Baroda is less than the market beta which means that both banks are giving less returns but they are less risky and investors can invest in these shares.

5. The Average Sustainable Earnings Of State Bank Of India is high and the standard deviation is low so the bank has its earnings is sustain and more robust in nature as compared to Bank of Baroda.

6. The Credit Deposit Of State Bank Of India And Bank Of Baroda is close but the ratio is high which means that State Bank Of India has overall good efficiency and better performance, i.e., the bank has high credit deposit ratio.

113

REFERENCES:

http://en.wikipedia.org/wiki/State_Bank_of_India

http://en.wikipedia.org/wiki/Bank_of_Baroda http://www.moneycontrol.com/financials/state bank of India/balance-sheet/SBI

http://www.moneycontrol.com/financials/bankofbaroda/balance-sheet/BOB http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/BOB

http://www.moneycontrol.com/financials/bankofbaroda/profit&loss/SBI

www.google.com

www.capitaline.com

www.sbi.com

www.investopedia.com

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