SBI is India's Upcoming JP Morgan

JP Morgan is America’s largest and World’s one of the largest investment bank and financial serving holding company headquartered in New York City, USA. In 1871, the House of Morgan established a partnership with Drexel, Morgan & Co. In 1895, Company renamed J. P. Morgan & Co. J. P. Morgan & Co. financed the formation of the United States Steel Corporation and in the same year, J. P. Morgan & Co. supplied the USA government with $62 million in gold to float a bond issue and restore the treasury surplus of $100 million.

Financial: –

J. P. Morgan & Co. is a leading global financial services firm with assets of $3.4 trillion or ₹246 trillion and operations worldwide. In the financial year 2020, J. P. Morgan & Co. reported $119 billion or ₹8612 billion revenue and $29 billion or ₹2100 billion profit. So we can calculate that now J. P. Morgan & Co. reported a 24.4% of profit margin. J. P. Morgan & Co. has mainly four types of business.

  • Consumer and Community Banking.
  • Corporate and Investment Bank.
  • Commercial Banking.
  • Asset and Wealth Management.

Some Key Market Share: –

  • J. P. Morgan & Co. had no. 1 in primary banking and credit card business in the USA and they hold 22% market share of USA credit card business.
  • J. P. Morgan & Co. have total deposits of $2144 billion or ₹155289 billion and loans of $1012 billion or ₹73299 billion. In auto lender, J. P. Morgan & Co. had no. 2 in market share.
  • In Asset & Wealth Management, J. P. Morgan & Co. had no. 1 market share in the USA.

SBI(State Bank of India) is an Indian multinational, public sector banking and financial services, headquartered in Mumbai, Maharashtra. Bank of Bengal established in 1806, Bank of Bombay incorporated on 15th April 1840 and Bank of Madras established on 1st July 1843 and that time these three banks called Presidency bank. The Presidency banks amalgamated on 27th January 1921 and the reorganized banking entity took as its name Imperial Bank of India. Reserve Bank of India, which is India’s Central Bank, acquired a controlling interest in the Imperial Bank of India in 1955 and the same year the Imperial Bank of India became the State Bank of India. In 2008, the Government of India acquired the Reserve Bank of India’s stake in SBI so as to remove any conflict of interest because the RBI is India’s banking regulatory authority.

Subsidiary Company: –

  • SBI provides a range of retail banking and corporate banking products through its network of branches in India and overseas, including products aimed at non-resident Indians(NRI).
  • SBI have wholly-owned subsidiaries as SBI Asset Management, Yono SBI.
  • In SBI Life Insurance, SBI holds 55.5% share and in SBI Cards and Payment, SBI holds 69.39%.
SBI Card and Life Insurance
SBI Card and Life Insurance
  • SBI holds 70% of the share in SBI General Insurance and 30% of the share in Jio Payments Bank in time off established. In March 2020, when YES Bank failed as a bank then SBI buys 30% of the share in YES Bank.
SBI General Insurance, Yes Bank and Jio Payment Bank
SBI General Insurance, Yes Bank and Jio Payment Bank
  • Other subsidiaries of SBI are in small banking entity like Andhra Pradesh Grameena Bank, Kaveri Grameena Bank, Nepal SBI Limited, Commercial Bank of India in Moscow, PT Bank Indo Monex in Indonesia and Giro Commercial Bank in Kenya.

Some Key Market Share: –

  • SBI have total deposits of ₹36,81,277 Cr. (₹17,30,722 Cr. in FY 2015-2016) which is 24.6% of India’s total deposits and deposits growth of 22.5% CAGR or compound annual growth rate in the last five years.
  • SBI have total advances of ₹24,49,497 Cr. (₹14,63,700 Cr. in FY 2015-2016) which is 22.8% of India’s total advances and have 23.5% of India’s total home loans. Advances growth of 13.5% CAGR in the last five years.
SBI Deposits and Advances
SBI Deposits and Advances
  • 34.7% of all debit card transactions in India done by SBI Debit cards and 19.8% of all credit card transactions in India done by SBI Credit cards.
  • Of all mobile banking transactions, 21.9% are done by SBI customers.
  • The total volume of monthly inward and outward RTGS in India stands at 1.73 lakh crore. SBI alone processes 10.8% of all these transactions.
  • 15.7% of all the bank branches in India are operated by SBI, 28.1% of all the ATM booths and machines in India are operated by SBI and 13.5% of all POS machines in India are operated by SBI.
SBI Debit, Credit Card, Branches, ATM, POS and RTGS
SBI Debit, Credit Card, Branches, ATM, POS and RTGS

Financial: –

When we see the financial there is something mess in every PSU or Public Sector Undertaking Bank as SBI also because of their bad loans. Every other company income from sales but a bank income from Net Interest Income(NII). NII means the difference between Interest earned from Advances and Interest Expand from Deposits. Bank need to control their bad loans or NPA(Non-Performing Assets) to strengthen their balance sheet. In 2013, Raghuram Rajan, as an RBI Governor, told Indian Banks to declare their NPA or bank fraud properly. After that, we see PSU Bank fraud or NPA rise came into public. In 2016, Vijay Mallya, Kingfisher fraud came into public and this is a huge loss for PSU Banks as well as SBI. The total fraud value was ₹9000 Cr. where ₹1600 Cr. from SBI. After that SBI’s NPA also rise but they control their NPA after some year this happened.

Banking: –
  • SBI is a leading Indian’s financial services firm with assets of $680 billion or ₹49.5 trillion
  • In Financial Year 2020-2021, SBI reported NII of ₹1,10,710 Cr. (₹44,329 Cr. in FY 2012-2013) and NII growth of 18.7% CAGR in last eight years whereas in total income SBI reported ₹3,07,107 Cr. (₹1,35,892 Cr. in FY 2012-2013) in FY 2020-21 and total income growth of 15.8% CAGR in last eight years.
  • In operating profit, SBI reported ₹70,014 Cr. (₹31,082 Cr. in FY 2012-2013) in FY 2020-2021 and operating profit growth of 15.7% CAGR in the last eight years.
  • In Financial Year 2020-2021, SBI reported a net profit of ₹20,410 Cr. (₹14,105 Cr. in FY 2012-2013). Net profit growth of 5.6% CAGR in last year years which is much lower CAGR from other financial numbers like NII, total income and operating profit. The reason behind their lower net profit CAGR, SBI had a bad loans problem after the Vijay Mallya scam. SBI needs to write off those bad loans to strengthen the bank’s balance sheet.
SBI NII, Total Income, Operating Profit, Profit
SBI NII, Total Income, Operating Profit, Profit
Asset Quality: –

Now comes to NPA(Non-Performing Assets), there are two types of NPA and those are Gross NPA and Net NPA. Gross NPA means total bad loans of banks where Net NPA means the difference between total bad loans and total write off. In the Financial year 2020-2021, SBI’s Gross NPA comes at 4.98% (4.75% in FY 2012-2013) of the total loan book whereas it rises up to 10.91% of the total loan book in FY 2017-2018. SBI’s Net NPA comes at 1.50% (2.10% in FY 2012-2013) of the total loan book and it rises up to 5.73% of the total loan book in FY 2017-2018.

SBI Gross and Net NPA
SBI Gross and Net NPA

Is Possible to SBI India’s Upcoming JP Morgan: –

  • SBI is India’s largest Bank and JP Morgan also the world’s one of largest and USA’s largest bank. In every banking sector like deposits, advances, home loan and auto loan, SBI is the leader of the banking industry.
  • SBI have subsidiaries, they are India’s top leaders in their sector same as JP Morgan also. Some of the SBI’s subsidiaries also are the leader of their sector like SBI AMC in the mutual fund sector and YONO SBI in mobile banking. Whereas other subsidiaries like SBI Card in the credit card business and SBI Life Insurance in the Life insurance business, they are one of the top leaders in their sector. Two of the listed subsidiaries of SBI, SBI Card and SBI Life Insurance, doing great in business and the other one listed subsidiaries YES Bank doing good business from their lowest level in March 2020. As of 1st June 2021, SBI holds a total of ₹1,31,663 Cr. market capitalization via its listed subsidiaries but its own market capital only at ₹3,85,543 Cr.

If SBI retains their market share in double-digit in every segment and maintain bad loans or bank frauds it can be possible for to SBI is India’s upcoming JP Morgan.

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