Title of the Research Project

FINANCIAL PERFORMANCE ANALYSIS OF THE STATE BANK OF INDIA.

Research Project Submitted in Partial Fulfilment of the Requirements for the Degree of

BCOM Honours
By
YASHASVI POTDAR
to the

DEPARTMENT OF COMMERCE
BHOPAL SCHOOL OF SOCIAL SCIENCES
15th April ' 2021

Submitted by, Guided by,

Yashasvi Potdar Dr. Geetanjali Shrivastava
Assistant Professor
Department of Commerce
 DECLARATION

I hereby declare that this project report entitled “FINANCIAL PERFORMANCE ANALYSIS OF
THE STATE BANK OF INDIA “was carried out by me for the degree of BCOM Honours under
the guidance and supervision of DR GEETANJALI SHRIVASTAVA of Department of
Commerce, BSSS College. The interpretations put forth are based on my reading and
understanding of the original texts and they are not published anywhere in any form. The other
books, articles and websites, which I have made use of are acknowledged at the respective place
in the text. This research report is not submitted for any other degree or diploma in any other
University.

Place: Bhopal

Name of the Student: YASHASVI POTDAR

Class & Section: BCOM HONS 'A'

Date: 15/04/2021
 CERTIFICATE

It is certified that the work contained in the project report titled “FINANCIAL PERFORMANCE
ANALYSIS OF THE STATE BANK OF INDIA,” by “Yashasvi potdar” has been carried out
under my/our supervision and that this work has not been submitted elsewhere for a degree*

Signature of Supervisor: …………….

Name : Dr GEETANJALI SHRIVASTAVA, Assistant Professor

Department : Commerce

Bhopal School of Social Sciences

April, 2021
 ACKNOWLEDGEMENT

I would like to thank our Principal Dr. Fr. John P.J. and Vice Principal Dr Sr Sonia Kurien for
their immense support and blessings. I thank our HOD Dr Amit Kumar Nag for his support. I
would like to express my special thanks of gratitude to my research guide Dr. Geetanjali
Shrivastava, Assistant Professor of Department of Commerce for her valuable suggestions and
guidance and for giving me the golden opportunity to do this wonderful research project on the
topic: FINANCIAL PERFORMANCE ANALYSIS OF THE STATE BANK OF INDIA, Without
her help it would have been difficult for me to have reached this state of completion of my project
report. Also, I would like to thank my parents and friends who helped me a lot in the preparation
of this project.

I wish to acknowledge the help of all those who have provided me information, guidance and other
help during my research period.
 CHAPTER 1
INTRODUCTION OF THE TOPIC

1.1 Rationale of the study

SBI is the India's biggest business bank as far as resources, stores and representatives. SBI is the
favoured broker for a large portion of public area companies. It possesses a remarkable spot in the
Indian currency market as it orders more than 33% of India's bank assets. Public has colossal
confidence in State bank of India in view of its devoted administrations. This investigation targets
breaking down the Financial Ratio examination of State Bank of India. The fundamental target for
business bank is to boost the estimation of benefit. To do as such, banks focus on their monetary
presentation investigation and endeavour to structure their portfolios to expand their return. The
most well known instrument/method for examining the Financial Statement of Bank is Ratio
Analysis. Proportion investigation empowers the administration of banks to distinguish the reasons
for the adjustments in their advances, pay, stores, use, benefits and productivity throughout the
timeframe and along these lines helps in pinpointing the bearing of activity needed for expanding
the stores, pay, advances and lessening the use and for modifying the productivity possibilities of
the banks in future. In this manner the examination was embraced to dissect monetary status of
public area bank particularly to SBI (State Bank of India)

The goal of the current paper is to investigate the monetary exhibition of SBI (State Bank of India)
over a time of five years (2016 – 2020).
For this reason, monetary proportion examination has been utilized. With the assistance of this
investigation, it was gathered that in the public area banks, SBI is the highest level bank in India,
with its exhibition as far as monetary sufficiency being the awesome. For this investigation,
speculation valuation proportion, benefit proportion, the executives proficiency proportion,
monetary record proportion, and income pointers were utilized. Results show that the presentation
of SBI in the examination time frame has been fantastic. SBI's phenomenal presentation can be
credited to the selection of current innovation, banking changes, and great recuperation
components. Be that as it may, SBI needs to improve its situation with respect to a couple of
boundaries including obligation value, working benefit, and non-interest pay to add up to pay.
 1.2
Introduction to the industry

Banking sector
The quick change in the financial business throughout the most recent decade has made the
business more grounded, cleaner, straightforward, proficient, quicker, restrained and much
more serious. The financial business in India has an immense campaign of history, which
covers the conventional financial practices from the hour of britisher to the changes time
frame, nationalization to privatization of banks and now expanding quantities of unfamiliar
banks in India. Accordingly, banking in India has experienced a long excursion. Country
banking and miniature financing are the two doors for the Indian banks to develop and rival
worldwide banks.
The utilization of innovation has acquired an upset the working style of the banks and it has
infested every single part of human existence in an exceptional way.
Life has changed gigantically because of contraptions and machines getting simple to utilize
and that as well, in moderate costs.
Cell phones, Digital cameras, I-telephones, Dish TV are currently basic family products and
not any more come in classification of extravagance things. Along with that, the section of
plastic cash has opened new roads for credit only exchanges considered more secure and more
advantageous than observing each time whether the wallets are as yet struck in our hip pockets,
vanity sacks or not when we move out for shopping or on ventures.
As we probably are aware money is considered as the existence blood of every monetary
movement and has become indispensable piece of present day business. A country's monetary
framework works in a bunch of monetary business sectors, monetary administrations and
monetary establishments.

 Broadly, the financial market is categorized into two groups viz.:

 1 Money market which manages momentary account
And

 2 Capital market which manages long haul reserves.

 Banking industry is the spine for the development of any economy. In the new time, we
are seen that the World Economy is going through some little subtleties or parts conditions
as liquidation of banking and monetary foundations, obligation emergency in significant
economies of the world and euro zone emergency. The financial situation has become
extremely dubious causing downturn in significant economies like US and Europe.

 For the most part banking in India was genuinely adult regarding supply, item reach and
reach-despite the fact that reach in rustic India and to the helpless actually stays a test. The
public authority has created activities to address this through the State Bank of India
extending its branch organization and through the National Bank for Agriculture and Rural
Development with things like microfinance. This additionally incorporated the 2014
arrangement by the at that point executive to bring ledgers to the assessed 40% of the
populace that were still unbanked. Banks are a subset of the monetary administrations
industry.
 For recent many years, India's financial framework has a few exceptional accomplishments
shockingly. The banks are the fundamental members of the monetary framework in India.
The Banking area offers a few offices and freedoms to their clients. Every one of the banks
protect the cash and assets and give advances, credit, and instalment administrations, for
example, financial records, cash request, and clerk's checks.

 2. Need of the Banks:

 Prior to the foundation of banks, the monetary exercises were taken care of by cash loan
specialists and people. Around then the loan fees were high. Again there were no security
of public reserve funds and no consistency with respect to credits. Along these lines, as to
beat such issues the coordinated financial area was set up, which was completely managed
by the public authority. The coordinated heating area works inside the monetary framework
to give credits, acknowledge stores and offer different types of assistance to their clients.
 The accompanying elements of the bank clarify the need of the bank and its significance

 To give the security to the investment funds of client.

 ii. To control the stockpile of cash and credit.
 iii. To support public trust in the working of the monetary framework, increment reserve
funds expediently and proficiently.
 iv. To maintain a strategic distance from focal point of monetary forces in the possession
of a couple of people and organizations.
 v. To set equivalent standards and conditions (for example pace of interest, time of loaning
and so forth) to a wide range of clients.
 After Liberalization:

 In the mid 1990s, the then Narashimha Rao government set out on a strategy of progression,
authorizing few private banks. These came to be known as New Generation educated
banks, and included Global Trust Bank (the first of such new age banks to be set up), which
later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis),
ICICI Bank and HDFC Bank.

 This move, alongside the quick development in the economy of India, revived the financial
area in India, which has seen fast development with solid commitment from every one of
the three areas of banks, in particular, government banks, private banks and unfamiliar
banks.

 The following stage for the Indian banking has been set up with the proposed unwinding
in the standards for unfamiliar direct speculation, where all unfamiliar financial backers in
banks might be given democratic rights which could surpass the current cap of 10% as of
now. It has gone up to 74% for certain limitations.

 The new arrangement shook the Banking area in India totally. Brokers, till this time, were
utilized to the 4-6-4 technique (acquire at 4%; loan at 6%; return home at 4) of working.
The new wave introduced a cutting edge viewpoint and educated techniques for working
for customary banks. This prompted the retail blast in India. Individuals requested more
from their banks and got more.

 Presently (2007), banking in India is for the most part genuinely develop as far as supply,
item reach and reach-despite the fact that reach in country India actually stays a test for the
private area and unfamiliar banks. Regarding nature of resources and capital sufficiency,
Indian banks are considered to have spotless, solid and straightforward accounting reports
when contrasted with different banks exceptional economies in its area.

 The Reserve Bank of India is a self-sufficient body, with negligible pressing factor from
the public authority. The expressed approach of the Bank on the Indian Rupee is to oversee
unpredictability yet with no fixed conversion scale and this has for the most part been valid.
With the development in the Indian economy expected to be solid for a long while
particularly in its administrations area the interest for banking administrations, particularly
retail banking, home loans and speculation administrations are required to be solid.
 Design of Indian Banking Industry:

 All banks which are remembered for the Second Schedule to the Reserve Bank of India
Act, 1934 are Scheduled Banks. These banks involve Scheduled Commercial Banks and
Scheduled Co-operative Banks. Planned Commercial Banks in India are ordered into five
distinct gatherings as per their possession as well as nature of activity.

 These bank bunches are:

 1 .State Bank of India and its Associates

 2.Nationalized Banks
 3. Private Sector Banks Foreign Banks.4.Local Rural Banks.

 In the bank bunch savvy grouping, IDBI Bank Ltd. is remembered for Nationalized Banks.
Planned Co-employable Banks comprise of Scheduled State Co-usable Banks and
Scheduled Urban Cooperative Banks.

 Development of Banking in India:

 By 2010, banking in India was by and large genuinely develop as far as supply, item reach
and reach-despite the fact that reach in provincial India actually stays a test for the private
area and unfamiliar banks. As far as nature of resources and capital ampleness, Indian
banks are considered to have perfect, solid and straightforward accounting reports
comparative with different banks in tantamount economies in its area. The Reserve Bank
of India is an independent body, with insignificant pressing factor from the public
authority.

 With the development in the Indian economy expected to be solid for a long while
particularly in its administrations area the interest for banking administrations, particularly
retail banking, home loans and venture administrations are required to be solid. In March
2006, the Reserve Bank of India permitted Warburg Pincus to expand its stake in Kotak
 Mahindra Bank (a private area bank) to 10%. This is the first run through a financial backer
has been permitted to hold over 5% in a private area bank since the RBI reported standards
in 2005 that any stake surpassing 5% in the private area banks would should be checked
by them.
 three significant changes in the financial area after advancement are:

 Step to build the money outpouring through decrease in the legal liquidity and money save
proportion.

 ii. Nationalized banks including SBI were permitted to offer stakes to private area and
private financial backers were permitted to enter the financial space. Unfamiliar banks were
given more prominent admittance to the homegrown market, both as auxiliaries and
branches, given the unfamiliar banks kept a base allocated capital and would be
administered by similar guidelines and guidelines overseeing homegrown banks.

 iii. Banks were given more prominent opportunity to use the capital business sectors and
decide their resource portfolios. The banks were permitted to give progresses against value
gave as security and give bank certifications to the broking local area.

 India's administrations area has consistently served the Indian economy well, representing
almost 57% of the total national output (GDP). Here, the monetary administrations portion
has been a critical donor.

 The monetary administrations area in India is overwhelmed by business banks which have
more than 60% portion of the all out resources; different fragments incorporate shared
assets, protection firms, non-banking establishments, cooperatives and annuity reserves.

 The Government of India has acquainted changes with change, manage and improve the
country's monetary administrations industry. By and by, the nation can profess to be one
of the world's most dynamic capital business sectors. Despite the difficulties that are still
there, the area's future looks acceptable.

 1.3
  Introduction to the company

 State Bank of India


 The State Bank of India, popularly known as SBI, is India’s largest commercial bank with
a glorious history of more than 200 years. State Bank of India Introduction(SBI), Owned
by The Government of India, is categorized as an Indian Multinational, Public sector
banking and Financial services company, with its headquarters located in Mumbai,
Maharashtra.
 The chapter State Bank of India Introduction gives a brief introduction about State Bank
of India (SBI)
 With more than 14,000 branches in India, SBI is the largest and one of the premium
banking and financial services company in India by assets, deposits, profits, branches,
customers, and employees. SBI has also established and secured its roots globally with 191
foreign offices spread across 36 countries.

 ORIGIN

 The origin of the State Bank of India goes back to the first decade of the nineteenth century
with the establishment of the Bank of Calcutta in 1806 in Calcutta. Three years later the
bank received its charter and was re–designed as the Bank of Bengal (2 January 1809). A
unique institution, it was the first joint–stock bank of British India sponsored by the
Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1
July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern
banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

 Primarily Anglo–Indian creations, the three presidency banks came into existence either as
a result of the compulsions of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernise India's
economy. Their evolution was, however, shaped by ideas culled from similar developments
in Europe and England, and was influenced by changes occurring in the structure of both
the local trading environment and those in the relations of the Indian economy to the
economy of Europe and the global economic framework.
 The State Bank of India, the country’s oldest bank and a premier in term of balance sheet
size, number of branches, market capitalization and profits is today going through a
momentous phase of change and transformation – the two hundred year old public sector
behemoth is today stirring out of its public sector legacy and moving with an agility to give
the private and foreign banks a run for their money.

 The bank is entering into many new businesses with strategic tie ups – Pension Funds,
General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale
Merchant Acquisition, Advisory Services, structured products etc – each one of these
initiatives having a huge potential for growth.

 The bank is forging ahead with cutting edge technology and innovative new banking
models, to expand its rural banking base, looking at the vast untapped potential in the
hinterland and proposes to cover 100,000 villages in the next two years. At the end March,
2011, the total number of branches was 13,542 while the number of ATMs stood at 20,084
across the country.

 It is also focusing at the top end of the market, on whole sale banking capabilities to provide
India’s growing mid / large corporate with a complete array of products and services. It is
consolidating its global treasury operations and entering into structured products and
derivative instruments. Today, the bank is the largest provider of infrastructure debt and
the largest arranger of external commercial borrowings in the country. It is the only Indian
bank to feature in the Fortune 500 list.

 The bank is actively involved since 1973 in non–profit activity called Community Services
Banking. All branches and administrative offices throughout the country sponsor and
participate in large number of welfare activities and social causes. Their business is more
than banking because they touch the lives of people anywhere in many ways .State Bank
of India (SBI) has received an approval from the Government of India (GOI) for acquisition
of SBI Commercial and International Bank (SBICI Bank). The government had issued the
'Acquisition of SBICI Bank Order 2011' vide order dated July 29, 2011.

 SHAPE RANKING

 SBI is one of the Big Four banks of India, along with ICICI Bank, Bank of Baroda and
Punjab National Bank. As of 2016, SBI is ranked 232nd on the Fortune Global 500 list of
the world’s biggest corporations, and stands as the proxy for the Indian Economy. SBI was
ranked 152nd in The Forbes list of Global 2000 firms in May 2015. The Government of
 India owns 58.60% of SBI and thus is the largest shareholder of SBI, a Fortune 500
company.

 SHAPE HISTORY

 SBI, the oldest commercial bank, traces its ancestry to the 19th century (British India) when
the Bank of Calcutta was founded in 1806. In 1921, the Bank of Calcutta, merged with the
banks of Madras and Bombay to form the Imperial Bank of India. In 1955, when the
Government of India nationalized the Imperial Bank along with the RBI, the Imperial Bank
acquired the name State Bank of India. Since its beginning, SBI has been constantly
endeavouring to provide utmost customer satisfaction to the most ideal degree.

 SHAPE RECRUITMENT

 SBI provides several ambitious employment opportunities for young graduates as well as
experienced professionals for accelerated career growth. SBI is prominently known for
being one of the largest employers of probationary officers and special officers in India.
According to the Google search trends, SBI jobs is one of the most searched keywords in
2016 as compared to other banks.

 SBI ensures an amicable, collaborative, composed, dynamic, motivating, exciting, and a

fast-paced work environment for both professional and personal development. Learning is
a constant process for all the employees associated with SBI.

 Key people  Dinesh Kumar Khara

(Chairman)[1]

 Retail banking
 Products
 Corporate banking
 Investment banking
  Mortgage loans
 Private banking
 Wealth management
 Credit cards
 Finance and Insurance

 Revenue  ₹368,010.6492
crore (US$52 billion) [2] (2020)

 Operating  ₹75,105.2876
income crore (US$11 billion) [2] (2020)

 Net income  ₹11,439.4023

crore (US$1.6 billion) [2] (2020)

 Total assets  ₹4,197,492.3443

crore (US$590 billion) [2] (2020)

 Total equity  ₹250,167.6630

crore (US$35 billion) [2] (2020)

 Number of  249,448 (March 2020)

employees

 Parent  Government of India

 Subsidiaries  SBI Life Insurance Ltd

 SBI Cards and Payment
Services Ltd
 SBI General Insurance (70%)
 Jio Payments Bank (30%)
 Yes Bank (30%)
 Andhra Pradesh
GrameenaVikas Bank (35%
 CHAIRMAN OF THE STATE BANK OF INDIA

 Mr. DINESH KUMAR KHARA

 State Bank of India (SBI) managing director Dinesh Kumar Khara has been named as the
bank's chairman, effective today. Dinesh Kumar Khara was elected chairman of the bank
by the government on Tuesday for a three-year term beginning October 7. He has taken
over as SBI chairman from Rajnish Kumar, whose three-year term ends on October 7.
Khara's appointment comes at a time when the banking sector, along with the rest of the
economy, is in flux.
 Dinesh Kumar Khara began his career with SBI as a probationary officer in 1984 and now
has over 33 years of experience in retail credit, SME/corporate credit, deposit mobilisation,
foreign banking activities, and branch management.
 The 59-year-old banker has a post-graduate degree in business administration from Delhi
University's Faculty of Management Studies.

 Foundation of State Bank of India:



 STAMP DEDICATED TO THE STATE BANK OFINDIA IN THE YEAR 2005

 The State Bank of India is the greatest business bank and stands firm on an uncommon
foothold in the cutting edge business banking framework in India. It appeared on July 1,
1955 after the nationalization of Imperial Bank of India. The Imperial Bank of India was
set up in 1921 by amalgamating the three Presidency Banks of Madras, Bombay and
Bengal.

 Until the foundation of the Reserve Bank of India in 1935, the Imperial Bank of India,
notwithstanding its ordinary business banking capacities had been playing out certain focal
financial capacities. It used to go about as the financier to the public authority, as investor's
bank and as the clearing house.

 After the foundation of the Reserve Bank of India, the Imperial Bank of India left its focal
financial capacities, however kept on filling in as the specialist of the Reserve Bank in the
regions where the last didn't have its branches.

 In 1955, on the suggestions of the Rural Credit Survey Committee, the Imperial Bank of
India was nationalized and renamed as the State Bank of India through the State Bank of
India Act 1955.

 Association of State Bank of India:

 Capital.
 The state Bank of India has an approved capital of Rs. 20 crore which has been separated
into 20 lakh portions of Rs. 100 each. The gave capital of the State Bank is Rs. 5.6 crore.
 The portions of the State Bank are held by the Reserve Bank, insurance agencies and the
overall population. Toward the finish of March 2001, the settled up capital and the stores
of the State Bank were Rs. 13461 crore.

 ii. The board:

 The administration of the State Bank of India is heavily influenced by a Central Board of
Directors comprising of 20 individuals.

 The primary goals and elements of the State Bank of India are given beneath:

 Destinations:

 The State Bank of India has been set up to work on the ordinary business standards, with
the lone distinction that, in contrast to other business banks in the country, it contemplates
and reacts in a logically liberal way the monetary prerequisites of agreeable establishments
and limited scope ventures, especially in the provincial regions of the country.

 The principle destinations of the State Bank are:

 To act as per the expansive monetary arrangements of the public authority;

 (ii) To energize and assemble reserve funds by opening branches in provincial

 and semi-metropolitan territories and to advance rustic credit;

 (iii) To set up government organization in the arrangement of helpful credit;

 (iv) To broaden monetary assistance for the foundation of authorized stockrooms and
helpful promoting social orders;

 (v) To give monetary assistance to the limited scale and bungalow enterprises;

 (vi) To give settlement offices to the financial foundations.

 The State Bank of India plays out a wide range of business banking capacities:
 It gets stores from the public.(ii) It gives credits and advances against qualified
protections including products, bills of trade, promissory notes, completely paid portions
of organizations, enduring property or records of title, debentures, and so on

 (ii) It puts its overflow assets in government protections, rail route protections and
protections of companies and depository bills.

 4. DIFFERENT FUNCTIONS:

 The State Bank of India likewise plays out the accompanying different capacities:

 It purchases and sells gold and silver.

 (ii) It goes about as specialist of agreeable banks.

 (iii) It guarantees issues of stocks, offers, debentures, and different protections in which it
is approved to contribute reserves.

 (iv) It oversees, separately or together, domains for any reason as agent, trustee or
something else.

 (v) It draws bills of trade and awards letters of credit payable out of India.

 (vi) It purchases bills of trade payable out of India with the endorsement of the Reserve
Bank; it buys in purchases, obtains, holds and sells partakes in the capital of banking
organizations.

 5. Restricted Functions:

 The State Bank of India has been precluded from doing certain organizations by the State
Bank of India Act:

 The State Bank can't concede advances against stocks and offers for a period over a half
year.

 (ii) It can buy no steady property other than its own workplaces.

 (iii) It can neither rediscount nor offer advances against the security of trade charges whose
development period surpasses a half year.

 (iv) It can't rediscount charges which don't convey in any event two great marks.
 (v) It can neither rebate bills nor award credit to people or firms over as far aspossible.

 Accomplishments of State Bank of India:

 Coming up next are the significant accomplishments of the State Bank of India in various
fields:

 General Progress:

 The State Bank of India has gained an enormous headway since its initiation in 1955.

 Table shows the advancement of the bank in the fields of store activation, credit extension
and branch development:

 Store Mobilization:

 There has been an expanding pattern with respect to assembly of stores by the State Bank
of India. Complete stores and different records which were Rs. 226 crore toward the finish
of 1955, expanded to Rs.1227 crore toward the finish of 1969 and further to Rs. 242828
crore toward the finish of March 2001. In this way, there has been around multiple times
expansion in Banks' stores during 1955 to 2001.

 ii. Credit Expansion:

 The advancement in the field of credit extension has additionally been impressive
throughout the long term. Toward the finish of 1955, complete advances made by the State
Bank were Rs. 106 crore. These advances expanded to Rs. 841 crore in 1969 and Rs.
113590 crore in March 2001. This shows that there has been multiple times expansion in
progresses during 1955 to 2001.
 iii. Branch Expansion:

 The quantity of parts of the State Bank of India has likewise developed astoundingly since
its foundation. In 1955, the Bank had 497 workplaces, in 1969 and 2001, the number
expanded to 1673 and 9078 individually.

 iv. Present Position of State Bank Group:

 Before the finish of March 2001, complete stores of the State Bank Group (i.e., State Bank
of India and its seven partners) had arrived at Rs. 312117 crore, absolute advances allowed
by the gathering were Rs. 150390 crore, and complete number of parts of the Group was
13509.

 Along these lines, the State Bank of India Group represented around 41% of stores, 35%
of advances and around 21% of the workplaces of all planned business banks in India. The
settled up capital and stores of the Group were Rs. 4751 crore toward the finish of March
1994. Net benefits of the gathering were Rs. 2222 crore (Rs. 1604 crore of the SBI and Rs.
618 crore of the partner branches) during 2000-01.

 v. Benefits, Efficiency and Capital Adequacy:

 Throughout the long term, the SBI kept on showing better execution as far as benefits,
productivity and capital sufficiency. It recorded a net benefit of Rs. 1604 crore for the year
2000-01 against Rs. 832 crore for 1995-96, showing an increment of 48%.

 The major contributing elements for improved net benefits were higher premium pay from
propels just as venture tasks, lower working expense and better execution of unfamiliar
workplaces. The Bank's money to hazard weighted resources proportion was 12.79%
during 2000-01. This is well over the globally acknowledged proportion of 8%. Net NPA
of the Bank was 6.03% in March 2001 against 6.41% in March 2000.

 vi. Worldwide Banking:

 As of now (March 2001), the SBI has an organization of 52 abroad workplaces with their
tasks spread more than 31 nations. These unfamiliar workplaces predominantly take into
account the requirements of the country's unfamiliar exchange and give unfamiliar cash
assets to the Indian corporates.
 During 2000-01, the unfamiliar workplaces of the SBI procured a net benefit or Rs. 248
crore. The stores and advances of the Bank's unfamiliar workplaces were Rs. 7932 crore
and Rs. 14797 crore individually toward the finish of March 2001.

 vii. Innovation Upgradation and Consumer Services:

 The State Bank of India (SBI) has taken huge activities in the fields of innovation
upgradation and better purchaser administrations.

 Su
 Justification of the study:

 SBI has served the needs of Indian economic development since nationalisation by
launching rural-development initiatives and microcredit programmes, as well as financing
major agricultural and industrial projects and raising government loans.

 SBI is governed by a board of directors, with a chairman at the helm. The bank's chairman
and managing directors are chosen by the governmentthe area of credit growth. The State
Bank had made a tot the end of 1955. In 1969, these developments to90 crore. This means
that

 e has al
 AWARDS AND Appreciation. For the second year in a row, “The Asian Banker” has
named us the best transaction bank in India. For the eighth year in a row, “The Best Trade
Finance Bank (India)-2019” has been awarded. Green Bond Pioneer Award” for being the
most significant new emerging market. ‘Large Bank Award for Best MSME Bank'
CIMSME is an organisation that focuses on small and medium-sized companies. YONO,
our digital initiative, received the award for "Mobile Banking Initiative of the Year - North
America.Singapore and India” at the Asian Banking and Finance Retail Banking Awards
was awarded at the 2018 Asian Banker Financial Technology Innovation Awards.
 Over the years, there has also been significant improvement in the area of credit growth.
The State Bank had made a total of Rs. 106 crore in advances by the end of 1955. In 1969,
these developments totalled Rs. 841 crore, and in March 2001, they totaled Rs. 113590
crore. This means that between 1955 and 2001, advancements increased by 1072 times.
 After its inception, the State Bank of India's branch network has expanded dramatically.
The Bank had 497 offices in 1955, but by 1969 and 2001, the number had risen to 1673
and 9078, respectively.
 The group's overall advances were Rs. 150390 crore, and the group's total number of
branches was 13509. As a result, the State Bank of India Group accounted for roughly 41%
of deposits, 35% of advances, and 21% of all scheduled commercial banks' offices in India.

CHAPTER 2
REVIEW OF LITERATURE

INTERNATIONAL REVIEW(10)

1.
Noel Capon et al (1994) published a meta-analysis on the impact of the strategic planning
on financial performance which has omitted a major study on corporate planning in the
fortune five hundred manufacturing firms. Finally, the conclusions were that there is a
small but positive relationship between the strategic planning and the performance existed.

2.
Robertomisnter (2009) An Empirical Test of Financial Ratio analysis for Small Business
Failure. This study developed and empirically tested a number of methods for analyzing
financial ratios to predict the failure of small business.

3.
Edward I. Altman (1968) Financial ratios, discriminant analysis and the prediction of
corporate bankruptcy. This study used to analyse the performance of the business enterprise
by using ratio analysis as the analytical technique.

4.
R.J.Taffler (1982) Forecasting company failure in the UK using discriminant analysis and
financial ratio data. This paper reported on the discriminant model of operational for the
purpose of identification of the british companies which was under the risk of failure and
discussed the results from their application since from their development0) A financial
ratio analysis of commercial bank performance in South Africa. This paper investigated
the South Africa’s performance of commercial banking sector period for 2005-2009.this
financial ratio is used to measure the liquidity, profitability and credit quality performance
of large five commercial banks of South Africa.

5.
Query-Jen Yeh (1996) The application of Data Envelopment analysis in conjunction with
financial ratios for bank performance evaluation. This paper demonstrated the application
of DEA in respect to the conjunction with financial ratios to help the bank regulators in
Taiwan to gain the insight of various financial dimensions which is link to the financial
operational decisions of banks.

6.
James A.Largay et al (1980) Cash flows, Ratio analysis and the W.T. grant company
bankruptcy. The W.T Grant company problems such as bankruptcy, liquidation was not
raised at overnight. The traditional analysis which is the ratio
analysis only cannot reveal the company problems whereas cash flow analysis reveal most
of the problems of the company.

7.
Frederick D.S. Choi et al (1983) Analysing foreign financial statements: The use and
misuse of International ratio
analysis. The foreign companies are often misused the measurement of financial and return.
This paper used to explain the differences in the international accounting principles.

8.
G.E. Halkos (2004) Efficiency measurement of the Greek commercial banks with the use
of financial ratios: a data
envelopment analysis approach. This paper studied about the application of the non-
parametric analytic technique in respect of the DEA (Data Envelopment Analysis) to
measure the performance of Greek banking sector.

9.
Foster, (1986) reviewed of the literature describing methods and theories for evaluating
and predicting financial performance reveals that although methods have become
increasingly complex, few researchers
adequately address the problems associated with the sample used. For example, most ratio
analysis studies use multivariate analysis that is based on the assumption of a normal
distribution of the financial ratios. Without confirming the approximation of normality of
ratio distribution, the researcher is at risk of drawing erroneous
inferences. When considering the distribution of financial ratios in any database, the
normality of the distribution can be skewed by data recording errors, negative
denominators and denominators approaching zero.

10.
Malhotra and McLeod, (1994) argued that the only way to assess future financial
performance is through the inclusion of subjective measures.
Ross et al., (2007) implied that the most researchers divide the financial ratios into four
groups i.e. profitability, solvency, liquidity and activity ratios. Lasher, (2005) reviewed
dept. ratios show how effectively the organization uses other people’s money and whether
it is using a lot of borrowed money. Trelawney, (2006) described the nature of the
organization influences the ratios employed. For example, in the case of a bank, the
liquidity ratio is used to determine the amount of liquidity that a bank needs in order to
meet its liabilities; a bank also uses
profitability ratios

NATIONAL REVIEW(10)

1. Manish Mittal and Arunna Dhademade (2005) they found that higher profitability is th
only major parameter for evaluating banking sector performance from the shareholders
point of view. It is for the banks to strike a balance between commercial and social
objectives. They found that public sector banks are less profitable than private sector banks.
Foreign banks top the list in terms of net profitability. Private sector banks earn higher non-
interest income than public sector banks, because these banks offer more fee based services
to business houses or corporate sector. Thus there is urgent need for public sector banks to
provide such services to stand in competition with private sector banks.

2. I.M. Pandey (2005): An efficient allocation of capital is the most important financial
functioning modern times. It involves decision to commit the firm's funds to the long term
assets. The firm’s value will increase if investments are profitable and add to the
shareholders wealth.
Financial decisions are important to influence the firm’s growth and to involve
commitment of large amount of funds. The types of investment decisions are expansion of
existing business, expansion of new business and replacement and modernization. The
capital budgeting decisions of a firm has to decide the way in which the capital project will
be financed. The financing or structure decision. The assets of a company can be financed
either by increasing the owners claims on the creditors’ claims. The various means of
financing represent the financials variable and measured by Return on Assets (ROA) and
the intent income size. The independent variables are the size of banks as measured by total
assets of banks, assets management measured by asset utilization ratio (Operating income
divided by total assets) operational efficiency measured by the operating efficiency ratio
(total operating expenses divided by net income)

4. Vasant desai (2007): The Reserve Bank of India plays a very vital role. It is known as
the banker’s bank. The Reserve Bank of India is the head of all banks. All the money
formulations of commercial banks are done under the Reserve Bank of India. The RBI
performs all the typical functions of a good central bank as it is involved in planning the
economy of the country. The main function is that the RBI should control their credit. It is
mandatory for the Bank to maintain the external value of the rupee. Major function is that
it should also control the currency.

5. K. C. SHARMA
Banking has entered the electronic era. This has been due to reforms introduced under the
WTOcompliances. Private sector banks have been permitted to open their shops in the
country. These banks are either foreign or domestic banks with foreign partnerships. Some
of them have been set up by Development Financial Institutions in order to embrace
concept of universal banking,as practiced in advanced countries. The private sector on the
other hand have began their high-tech operations from the initial stage and made the elite
of the country to taste the best banking practices that happens in the western countries.
They have foreseen the digital world and have seen the emerging electronic market, which
has encouraged them to have a better customers service strategy that would be able to
deliver the things as per customer’s requirement.

6. Hr Michigan international publishers (2009): Efficiency can be considered from

technical, economical or empirical considerations. Technical efficiency implies increase in
output. In the case of banks defining inputs and output is difficult and hence certain ratios
of costs to assets or operating revenues are used to measure banks efficiency. In the Indian
context public sector banks accounts for a major portion of banking assets, it is necessary
to evaluate the financial decisions of these banks and compare them with private sector
banks to know the quality of
financial decisions on its impact or performance of banks in terms of efficiency,
profitability ,competitiveness and other economic variables.

7. DR.S. Gurusamy (2009): One of the key elements of importance for shaping the financial
system of a country is the pension fund. The fund contributes to the development of social
security systems of a country is the pension fund. The fund contributes to the development
of social security system of a country. A fund is established by private employers,
governments, or unions for the payment of retirement benefits. Pension funds are designed
to provide for poverty relief, consumption smoothing etc. Pension funds not only provide
compensation for the loyal service rendered in the past, but in a broader significance.

8. Dangwal and kapoor (2010) also undertook the study on financial performance of
nationalized banks in India and assessed the growth index value of various parameters
through overall profitability indices. They found that out of 19 banks, four banks had
excellent performance, five banks had good performance and six banks had poor
performance. Thus the performance of nationalized banks differ widely

9. Prasana Chandra (2010): Fundamental of financial management covers all the aspects
of the subject from the basics overview of the financial environment to the financial
analysis and financial planning. The basic consists of forms of business organization which
gives detailed information about the financial management of the organization. After the
analysis part budgeting of capital and fundamental valuation of concept is in detail. It
provides an introduction to the financial management and to the financial environment.
The fundamental of financial management provides a good coverage of the basic concepts
relating to the financial environment. The topics are explained with various examples like
the tax system, financial institution, banking arrangement & the regulatory framework. All
the concepts are explained using numerous examples & illustration besides the illustration
given within the chapter, additional concepts, tools & technique with illustration are
provided at the end of chapter section.

10. Jha DK and D S Sarangi (2011): The financial performance of seven public sector and
private sector banks during the period 2009-10. They used three sets of ratio, operating
performance ratio, financial ratio and Efficiency ratio. The study revealed that Axis bank
was on the top of these banks followed by ICICI, BOT, PNB, SBI, IDBI and HDFC.
 CHAPTER 3
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

 The examination has been directed concerning the information within SBI. The
examination looks at the monetary exhibition of certain factors and looks at the exhibition
of SBI for the time of 2016-2020
 The examination is an exploratory also, scientific in nature with an endeavour to investigate
the monetary execution of SBI.
 Wellspring of Data Collection: The Data assortment is auxiliary source was utilized as
reports through web.

 Sources for Data Collection: The information needed for the investigation will be
gathered from

o Annual reports of separate banks

o Journals and reports on patterns

 o Progress of Banking of India

o Books and sites

 Devices for Data Analysis: The information instrument utilizing R

o Mean
o , Standard Deviation
o , Covariance,
 P-esteem

o Hypothesis

o Lower Correlation

o 3.1 : Objective of the study.

o To evaluate the short term financial position of the State Bank of India.
o To evaluate the long term financial position of the State Bank of India.
o To evaluate the profitability ratio of financial position of the State Bank of India.
o To evaluate the performance ratio of financial position of the State Bank of India.

o 3.2 : Research hypothesis.

o H01: There is no significant differences in the short term solvency position of state
Bank of India.

o H02: There is no significant differences in the long term solvency position of the
State Bank of India..

o H03: There is no significant differences in the efficiency of the State Bank of India
over the study period.

o H04: There is no significant differences in the profitability position of the State

Bank of India during the study period.
 3.3: Scope of the study
 The research paper will also help to understand the financial performance SBI. This study
will throw light on the different aspects where the State Bank of India stand out and how
the banks will provide an opportunity in corresponding its activities to achieve the best
performance.

 3.4 : Limitation of the study

 The study was bounded to only 5 years of financial data analysis.

 The study is entirely based on secondary data which were taken from annual reports of SBI
 The ratio is enumerated from past financial statements and these are not future indicators.
 The study is considered only on the past records.
 Inadequacy of required data to evaluate and analyse the performance.

CHAPTER 4

DATA REPRESENTATION AND INTERPRETATION

4.1: Data representation and interpretation

TOOLS FOR THE STUDY

Ratio Analysis: Ratios analysis helps in knowing how liquid, profitable and sound a business
is. Below is the analysis of the financial performance of the STATE BANK OFINDIA .The
following ratios are calculated in order to analyse the financial position of the SBI under study:
Operating margin ratio.

Gross profit margin

Net profit margin

Current Ratio

Quick Ratio

Inventory turnover ratio.

Return on equity

Return on assets

Net interest margin

Debt to equity

1.OPERATING MARGIN

The operating ratio compares a company's overall operating cost (OPEX) to net revenue to
determine management performance. The operating ratio demonstrates how well a company's
management keeps costs down when increasing revenue or sales. The lower the ratio, the more
efficient the business is at generating revenue compared to total expenses.

The operating ratio measures a company's gross operating cost to net revenue to assess how
effective its management is.

A declining operating ratio is regarded as a positive indicator, as it shows that operating

expenses are becoming a smaller percentage of net sales.

YEAR 2020 2019 2018 2017 2016

RATIOS 10.31 9.53 8.95 8.14 -6.65
 12

10

4
OPERATING RATIO
2

0
2020 2019 2018 2017 2016
-2

-4

-6

-8

INTERPRETATION:

The success of a business can be analysed in a variety of ways by investment analysts.

The operating ratio is one of the most common ways to measure efficiency since it
focuses on core business operations. It is commonly used to calculate a company's
operating performance, alongside return on assets and return on equity. It's helpful to
keep track of the operating ratio over time to spot changes in operational performance
or inefficiency.

An growing operating ratio is regarded as a negative sign, as it implies that operating

costs are rising in relation to sales or income , as it can be dented from the table that
gradually till the year 2020 , the ratio has augmented by 10.31. Thus, the costs are
pacing up . If the operating ratio is declining, expenditures are decreasing, or income
is increasing, on the other hand.

2.GROSS PROFIT MARGIN

Analysts use gross profit margin to measure a company's financial health by measuring
the amount of money left over after subtracting the cost of products sold from product
 revenues (COGS). Gross profit margin is often expressed as a percentage of revenue
and is often referred to as the gross margin ratio.

The gross profit margin is an analytical statistic that is calculated by subtracting a

company's net profits from its cost of goods sold (COGS).
The gross profit margin is often expressed as a percentage of net revenue.

The gross profit margin reflects the profit before deducting marketing, general, and
administrative expenses, which is the net profit margin of the company.

YEAR 2020 2019 2018 2017 2016

RATIOS 9.28 8.22 7.26 6.81 -7.93

GROSS PROFIT MARGIN

12
10
8
6
4
2
GROSS PROFIT MARGIN
0
2020 2019 2018 2017 2016
-2
-4
-6
-8
-10

INTERPREATATION:
 If a company's gross profit margin fluctuates wildly, it may suggest bad management
and/or inferior goods. Such fluctuations, on the other hand, can be justified when an
organisation makes significant operational changes to its business model, in which case
temporary instability should not be a cause for concern.

For example, if a business chooses to automate certain supply chain functions, the initial
expenditure might be high, but the final cost of products would be lower due to lower
labour costs as a result of the automation.

Gross margins can be influenced by shifts in commodity pricing. With all other factors
being equal, if a business sells its goods at a premium,

3.NET PROFIT RATIO

The net profit margin, or simply net margin, is equal to how much net income or profit is generated
as a percentage of revenue. Net profit margin is the ratio of net profits to revenues for a company
or business segment. Net profit margin is typically expressed as a percentage but can also be
represented in decimal form. The net profit margin illustrates how much of each dollar in revenue
collected by a company translates into profit.

 Net profit margin measures how much net income is generated as a percentage of revenues
received.
 Net profit margin helps investors assess if a company's management is generating enough
profit from its sales and whether operating costs and overhead costs are being contained.
 Net profit margin is one of the most important indicators of a company's overall financial
health.

YEAR 2020 2019 2018 2017 2016

RATIOS 5.63 0.35 -2.96 5.97 6.06
 NET PROFIT RATIO
7
6
5
4
3
2
NET PROFIT RATIO
1
0
2020 2019 2018 2017 2016
-1
-2
-3
-4

INTERPRETATION:

The net profit margin influences all facets of a company's operations, including:

1.Total income

2.All incoming and outgoing funds,

3.Additional sources of income,

4.COGS as well as other operating costs,

5.Payments on debts, including interest,

6.Profits from savings and secondary activities,

7.One-time payments for unexpected cases like litigation and taxes.

One of the most important indicators of a company's financial health is its net profit margin.
A business can determine if current strategies are working and forecast profits based on
sales by monitoring increases and decreases in its net profit margin. It is possible to
 compare net profit margins since they are expressed as a percentage rather than a dollar
sum.

LIQUIDITY RATIO

1.CURRENT RATIO
The current ratio is a liquidity ratio that assesses a company's ability to pay short-term or
one-year obligations. It explains to investors and analysts how a company can use existing
assets on its balance sheet to pay off current debt and other obligations.

A current ratio of equal to or slightly higher than the industry average is usually regarded
as appropriate. A lower current ratio than the industry average could suggest a higher risk
of default or distress. Similarly, if a company's current ratio is exceptionally high relative
to its peers, it means that management isn't making the best use of its cash.

YEAR 2020 2019 2018 2017 2016

RATIOS 1.78 1.83 1.36 0.99 0.88
 CURRENT RATIO
2
1.8
1.6
1.4
1.2
1
CURRENT RATIO
0.8
0.6
0.4
0.2
0
2020 2019 2018 2017 2016

INTERPRETATION:

A company's ability to pay existing, or short-term, liabilities (debts and payables) with
current, or short-term, assets is determined by the current ratio (such as cash, inventory,
and receivables). In certain situations, a company with a current ratio less than 1.0 does not
have the liquidity on hand to fulfil all of its short-term commitments at once, while a current
ratio greater than one implies that the company has the financial resources to stay stable in
the short term. However, since the current ratio is just a snapshot of any given time, it is
rarely a complete picture of a company's short-term liquidity or long-term solvency.

For instance, a company may have a very high profit margin.

A current ratio of less than 1.0 means that a company's obligations due in the next year or
less are greater than its assets (cash or other short-term assets expected to be converted to
cash within a year or less.)

The higher the current ratio, on the other hand, the more capable a corporation is of meeting
its commitments because it has a higher proportion of short-term asset value compared to
the value of its short-term liabilities as it’s ostensibly denoted from the above table that
eventually in the year 2020 the current ratio took its pace.

Although a high ratio, say over 3, may mean that a company can cover its current liabilities
three times over, it may also indicate that the company isn't making the best use of its
current assets, isn't securing funding well, or isn't managing its cash flow well.
 2.QUICK RATIO

The fast ratio is a measure of a company's ability to fulfil short-term obligations with its
most liquid assets and is an indication of its short-term liquidity status.

It's also known as the acid test ratio because it shows a company's ability to pay down
current liabilities rapidly using near-cash assets (assets that can be converted quickly to
cash). A fast test designed to produce instant results is referred to as a "acid test.

The fast ratio assesses a company's ability to fulfil existing commitments without selling
inventory or receiving additional funding.

The short ratio is thought to be a more conservative metric than the current ratio.

YEAR 2020 2019 2018 2017 2016

RATIOS 17.05 18.06 13.83 11.94 10.89
 QUICK RATIO
20
18
16
14
12
10
QUICK RATIO
8
6
4
2
0
2020 2019 2018 2017 2016

INTERPRETATION:

The fast ratio compares the amount of liquid assets available to the amount of current
liabilities owed by a corporation. Current assets are those that can be easily turned into
cash with no effect on the price earned in the open market, while current liabilities are a
company's debts or commitments that must be paid to creditors within a year.

The usual fast ratio is described as a result of one. It means the company has precisely
enough money to pay off its existing liabilities in a moment. A business with a fast ratio of
less than one may not be able to pay off all of its current liabilities in the short term.

3.INVENTORY TURNOVER RATIO

Inventory turnover is a financial ratio that indicates how many times a company's inventory
has been sold and replaced in a given timeframe. The days it takes to sell the inventory on
hand can then be calculated by multiplying the number of days in the timeframe by the
inventory turnover formula.
 Calculating inventory turnover can assist companies in making better pricing, production,
marketing, and inventory purchase decisions.

Inventory turnover refers to how many times a business can replace its sold inventory in a
given time span.

A slow turnover ratio indicates low sales and likely surplus inventory, while a faster ratio
indicates high sales or inadequate inventory.

YEAR 2020 2019 2018 2017 2016

RATIOS 0.06 0.06 0.06 0.06 0.07

INVENTORY TURNOVER RATIO

0.072

0.07

0.068

0.066

0.064

0.062 INVENTORY TURNOVER RATIO

0.06

0.058

0.056

0.054
2020 2019 2018 2017 2016

INTERPRETATION:

Stock turnover is a metric that analysts use to assess how quickly a business sells inventory
to market averages. As by the above table by the year 2020, the sales were unchanged or
rather ,Low turnover indicates sluggish sales and, likely, surplus inventory (also known as
overstocking).
It may be the result of poor promotion or a problem with the products being offered for
sale.

A high ratio indicates either high sales or a lack of inventory. The former is preferable,
while the latter can result in a loss of business. When prices are expected to increase
(inventory pre-positioned to meet rapidly growing demand) or when shortages are
expected, a low inventory turnover rate may be advantageous.

4.DEBT TO EQUITY RATIO

Divide a company's total liabilities by its shareholder equity to get the debt-to-equity (D/E)
ratio. The balance sheet of a company's financial statements contains these figures.

The ratio is used to determine the financial leverage of a business. In corporate finance, the
D/E ratio is a crucial measure. It's an indicator of how much a corporation relies on debt to
finance its activities rather than wholly-owned funds. In the event of a market downturn, it
represents the willingness of shareholder equity to pay all outstanding debts.

The debt-to-equity (D/E) ratio is a calculation of how much debt a corporation has relative
to how much equity it has.

YEAR 2020 2019 2018 2017 2016

RATIO 17.08 16.89 15.79 15.08 14.24
 DEBT TO EQUTIY RATIO

17.5
17
16.5
16
15.5
15 DEBT TO EQUTIY RATIO
14.5
14
13.5
13
12.5
2020 2019 2018 2017 2016

INTERPRETATION:

A high debt/equity ratio is also correlated with high risk; it implies that a business has used
debt to finance its expansion.

When a lot of debt is used to fund growth, a business might be able to produce more
earnings than it would have been able to without it. Shareholders should continue to gain
if leverage raises profits by more than the debt's expense (interest). Share prices will fall if
the cost of debt financing outweighs the increased income produced. The cost of debt will
fluctuate depending on market conditions. As a result, unprofitable borrowing can go
undetected at first.

5. RETURN ON ASSETS RATIO

 Return on assets (ROA) is a calculation of a company's profitability in relation to its total
assets. The return on assets (ROA) tells a manager, investor, or analyst how effectively a
company's management is using its assets to produce profits. The ROA is expressed as a
percentage; the higher the ROA, the better.
 Return on Assets (ROA) is a metric that measures how profitable a company's assets are
used.
 When comparing related companies or a company's previous results, ROA is the most
useful metric.
  Unlike other related metrics like Return on Equity, ROA considers a company's debt
(ROE).

YEARS 2020 2019 2018 2017 2016

RATIOS 0.45 0.08 -0.12 -0.01 0.44

RETURN ON ASSET RATIO

2016

2017

2018
RETURN ON ASSET RATIO

2019

2020

-0.2 -0.1 0 0.1 0.2 0.3 0.4 0.5

INTERPRETATION
In simple terms, return on assets (ROA) indicates how much profit was earned from invested
capital (assets). The return on investment (ROI) for public corporations can vary significantly and
is highly dependent on the industry. As a result, it's better to equate ROA to a company's previous
ROA numbers or a similar company's ROA when using it as a comparative measure.
The return on investment (ROI) figure tells investors how well a business converts its investments
into profit.
The higher the return on investment (ROI), the better, because the company is making more
money with less investment.

6.RETURN ON EQUITY RATIO

The return on equity (ROE) is a financial performance indicator that is determined by dividing net
profits by shareholders' equity. Since shareholders' equity equals a company's assets minus its debt,
the return on net assets is referred to as ROE. The return on equity (ROE) is an indicator of a
company's profitability in relation to its stockholders' equity.

Return on equity (ROE) is a metric that calculates a company's profitability in relation to its
stockholders' equity.
If a ROE is deemed satisfactory, it will be determined by what is considered common in the
industry or among company peers.
Investors should consider a ROE near the long-term average of the S&P 500 (14% ) as an
appropriate ratio .

YEARS 2020 2019 2018 2017 2016

RATIOS 8.32 1.48 -2.16 -2.16 -0.22
 RETURN ON EQUITY RATIO
10

4
RETURN ON EQUITY RATIO
2

0
2020 2019 2018 2017 2016
-2

-4

INTERPRETATION

What constitutes a good or bad ROE will be determined by what is considered common among a
stock's peers. Utilities, for example, have a lot of assets and debt on their balance sheet due to a
small amount of net profits. In the utility sector, a typical return on investment (ROI) could be as
low as 10%. A technology or retail business with smaller balance sheet accounts compared to net
income which have a typical ROE of 18% or higher.
A reasonable rule of thumb is to strive for a ROE that is equal to or slightly higher than the peer
group's average.

7 Net Interest Margin (NIM)

The NIM ratio calculates a company's benefit from its investment activities as a percentage of its
total investing assets. This ratio is commonly used by banks and other financial institutions to
assess investment decisions and monitor the profitability of their lending operations. This allows
them to fine-tune their lending activities to increase profits.
This margin is also used by investment firms to assess the effectiveness of a fund manager's
investment decisions. A positive percentage means that the fund manager made wise decisions and
profited from his investments. A negative ratio, on the other hand, suggests that the fund manager
has lost money on his assets as a result of his decisions.
YEARS 2020 2019 2018 2017 2016
RATIOS 2.82 2.73 2.47 2.54 2.69

NET INTEREST MARGIN

2016

2017

2018 NET INTEREST MARGIN

2019

2020

0% 20% 40% 60% 80% 100%

INTERPRETATION:

The net margin is a metric that shows how effective an investment manager or business is at
making investment decisions and allocating capital. If this ratio is negative, it means the firm or
organisation hasn't made good investment decisions. In other words, the company "won" a
negative margin by losing money on its investments.

A positive number, on the other hand, indicates that the investment decisions were good and that
the fund manager or business made money.
4.3:Hypothesis testing

1. Standard deviation 7.147

Mean 6.056

1. H0 hypothesis
Since p-value > α, H0 is accepted.
The average of Group-1's population is considered to be equal to the μ0.
In other words, the difference between the average of the Group-1 and μ0 is not big
enough to be statistically significant.

2. P-value
p-value equals 0.790934, ( p(x≤Z) = 0.604533 ). This means that if we would reject H0,
the chance of type I error (rejecting a correct H0) would be too high: 0.7909 (79.09%).
The larger the p-value the more it supports H0.

3. The statistics
The test statistic Z equals 0.265099, is in the 95% critical value accepted range: [-1.9600 :
1.9600].
x=6.06, is in the 95% accepted range: [-44.7700 : 44.7700].
The statistic S' equals 22.844 .

4. Effect size
The observed standardized effect size is small (0.12). That indicates that the magnitude
of the difference between the average and μ0 is small.

1. Standard Deviation, s: 7.173

Mean, x̄: 4.8

1. H0 hypothesis
Since p-value > α, H0 is accepted.
The average of Group-1's population is considered to be equal to the μ0.
In other words, the difference between the average of the Group-1 and μ0 is not big enough to be
statistically significant.

2. P-value
p-value equals 0.834751, ( p(x≤Z) = 0.582625 ). This means that if we would reject H0, the
chance of type I error (rejecting a correct H0) would be too high: 0.8348 (83.48%).
The larger the p-value the more it supports H0.

3. The statistics
The test statistic Z equals 0.208613, is in the 95% critical value accepted range: [-1.9600 :
1.9600].
x=4.80, is in the 95% accepted range: [-45.1000 : 45.1000].
The statistic S' equals 23.009 .

4. Effect size
The observed standardized effect size is small (0.093). That indicates that the magnitude of the
difference between the average and μ0 is small.

2. Standard Deviation, s: 4.112

Mean, x̄:3.01

1. H0 hypothesis
Since p-value > α, H0 is accepted.
The average of Group-1's population is considered to be equal to the μ0.

In other words, the difference between the average of the Group-1 and μ0 is not
big enough to be statistically significant.

2. P-value
p-value equals 0.690631, ( p(x≤Z) = 0.654685 ). This means that if we would reject H0, the
chance of type I error (rejecting a correct H0) would be too high: 0.6906 (69.06%).
The larger the p-value the more it supports H0.

3. The statistics
The test statistic Z equals 0.397999, is in the 95% critical value accepted range: [-1.9600 :
1.9600].
x=3.01, is in the 95% accepted range: [-14.8200 : 14.8200].
The statistic S' equals 7.563 .

4. Effect size
The observed standardized effect size is small (0.18). That indicates that the magnitude
of the difference between the average and μ0 is small.
3. Standard Deviation, s: 0.437

Mean, x̄:1.368

1. H0 hypothesis
Since p-value < α, H0 is rejected.
The average of Group-1's population is considered to be not equal to the μ0.
In other words, the difference between the average of the Group-1 and μ0 is big
enough to be statistically significant.

2. P-value
p-value equals 0.00000, ( p(x≤Z) = 1.000000 ). This means that the chance of type1
error (rejecting a correct H0) is small: 0.000 (0.0%).
The smaller the p-value the more it supports H1.

3. The statistics
The test statistic Z equals 16.015398, is not in the 95% critical value accepted range: [-
1.9600 : 1.9600].
x=1.37, is not in the 95% accepted range: [-0.1700 : 0.1700].
The statistic S' equals 0.0854 .

4. Effect size
The observed standardized effect size is large (7.16). That indicates that the magnitude

of the difference between the average and μ0 is large.

4. Standard Deviation, s: 3.126

Mean, x̄:14.35

1. H0 hypothesis
Since p-value < α, H0 is rejected.
The average of Group-1's population is considered to be not equal to the μ0.
In other words, the difference between the average of the Group-1 and μ0 is big
enough to be statistically significant.

2. P-value
p-value equals 0.00102237, ( p(x≤Z) = 0.999489 ). This means that the chance of type1
error (rejecting a correct H0) is small: 0.001022 (0.10%).
The smaller the p-value the more it supports H1.

3. The statistics
The test statistic Z equals 3.284296, is not in the 95% critical value accepted range: [-
1.9600 : 1.9600].
x=14.35, is not in the 95% accepted range: [-8.5600 : 8.5600].
The statistic S' equals 4.369 .

4. Effect size
The observed standardized effect size is large (1.47). That indicates that the magnitude
of the difference between the average and μ0 is large.

5. Standard Deviation, s: 0.0044

Mean, x̄: 0.062

1. H0 hypothesis
Since p-value < α, H0 is rejected.
The average of Group-1's population is considered to be not equal to the μ0.
In other words, the difference between the average of the Group-1 and μ0 is big
enough to be statistically significant.

2. P-value
p-value equals 0.00000, ( p(x≤Z) = 1.000000 ). This means that the chance of type1
error (rejecting a correct H0) is small: 0.000 (0.0%).
The smaller the p-value the more it supports H1.

3. The statistics
The test statistic Z equals 6931.810730, is not in the 95% critical value accepted range:
[-1.9600 : 1.9600].
x=0.062, is not in the 95% accepted range: [-0.00001800 : 0.00001800].
The statistic S' equals 0.00000894 .

4. Effect size
The observed standardized effect size is large (3100.00). That indicates that the
magnitude of the difference between the average and μ0 is large.

CHAPTER 5
FINDINGS AND DISCUSSIONS

5.1: MAJOR FINDINGS

The study is case method of research and comparative financial performance analysis in nature,
the study used entirely secondary data that was assembled from research articles, reports and thesis
works already done on the subject and collaboratively took the ministrations from the annual
reports of the STATE BANK OF INDIA . The figures and findings were enumerated for the year
from 2016-2020, i.e. 5 years. For this study 6 specific ratios are used to measure profitability,
solvency ,short term and long term position levels
The findings for the study are as follows:

1 .OPERATING MARGIN RATIO

The operating ratio compares a company's overall operating cost (OPEX) to net revenue to
determine management performance. The operating ratio demonstrates how well a company's
management keeps costs down when increasing revenue or sales. The lower the ratio, the more
efficient the business is at generating revenue compared to total expenses.
The operating ratio measures a company's gross operating cost to net revenue to assess how
effective its management is.
As from the enumerated figures the ratios are increasing, which shows the operating expenses are
higher when juxtaposed with revenue ,as in 2016it was less compared to the eventual year ahead.
A declining operating ratio is regarded as a positive indicator, as it shows that operating expenses
are becoming a smaller percentage of net sales.

2.GROSS PROFIT MARGIN RATIO.

If a company's gross profit margin fluctuates wildly, it may suggest bad management and/or
inferior goods. Such fluctuations, on the other hand, can be justified when an organisation makes
significant operational changes to its business model, in which case temporary instability should
not be a cause for concern.

The higher the profit margin, the more efficient the bank is, as by enumeration it can be ostensibly
verified that gradually in the years ahead , the ratio augmented by the year 2020 it went up by 9.28.

3.NET PROFIT RATIO

The net profit margin, or simply net margin, is equal to how much net income or profit is generated
as a percentage of revenue. Net profit margin is the ratio of net profits to revenues for a company
or business segment. Net profit margin is typically expressed as a percentage but can also be
represented in decimal form. The net profit margin illustrates how much of each dollar in revenue
collected by a company translates into profit.
Net profit margin measures the overall profitability of the Industry considering all direct as well
as indirect cost.
As by the figures enumerated, by the year 2020 it had already gone up by 5.63 despite of certain
negative consideration in the year 2018 and so.

LIQUIDITY RATIO

1. CURRENT RATIO

The current ratio is a liquidity ratio that assesses a company's ability to pay short-term or one-year
obligations. It explains to investors and analysts how a company can use existing assets on its
balance sheet to pay off current debt and other obligations.

A current ratio of equal to or slightly higher than the industry average is usually regarded as
appropriate. A lower current ratio than the industry average could suggest a higher risk of default
or distress. Similarly, if a company's current ratio is exceptionally high relative to its peers, it
means that management isn't making the best use of its cash.

A low current ratio indicates that the industry does not have the liquidity on hand to fulfil all of its
short-term commitments at once, while a current ratio greater than one such as the figures
enumerated from the year 2019&2020 i.e. 1.78 and 1.83 , implies that the company has the
financial resources to stay stable in the short term.

2.QUICK RATIO

The fast ratio compares the amount of liquid assets available to the amount of current liabilities
owed by a corporation. Current assets are those that can be easily turned into cash with no effect
on the price earned in the open market, while current liabilities are a company's debts or
commitments that must be paid to creditors within a year.

The usual fast ratio is described as a result of one. By the figure provided from year 2020 and
2019, means the company has precisely enough money to pay off its existing liabilities in a
moment. A business with a fast ratio of less than one may not be able to pay off all of its current
liabilities in the short term.
3.INVENTORY TURNOVER RATIO.

Stock turnover is a metric that analysts use to assess how quickly a business sells inventory to
market averages. As by the above table by the year 2020 , the sales were unchanged or rather ,
Low turnover indicates sluggish sales and, likely, surplus inventory (also known as overstocking).
It may be the result of poor promotion or a problem with the products being offered for sale.
A high ratio indicates either high sales or a lack of inventory. The former is preferable, while the
latter can result in a loss of business as the growth was constant despite of higher growth in 2016.

4.RETURN ON ASSETS RATIO

The return on assets furfure gives investors an idea of how effective the company is in converting
the money it invests into net money.
The higher the ROA money , the better, because the company is earning more money on lit
investment.
The higher the ROA the better , as considering the figure in the year 2020 i.e 0.45 , it’s pontificated
ostensibly that the bank is earning more money.

5.RETURN ON EQUUTY RATIO

A high ROE suggests that a company’s management team is more efficient when it comes to
utilising investment financing. Thus , by the figure obtained in the year 2020 which is 8.32 it’s
higher when juxtaposed with the rest of the years.

6.NET INTEREST MARGIN RATIO.

This margin is also used by investment firms to assess the effectiveness of a fund manager's
investment decisions. A positive percentage means that the fund manager made wise decisions and
profited from his investments. Hence , by the figures from the table in each year gradually the
percentage augmented to 2.82 , which henceforth means that the entity operates profitably.

7.DEBT TO EQUITY RATIO.

A high debt/equity ratio is also correlated with high risk; it implies that a business has used debt
to finance its expansion.
The more an entity’s operations are funded by borrowed money , the greater the risk of bankruptcy
, which is clear from the gradual increase in ratios obtained from the year 2018.

5.2 : Discussion and suggestion

1. Decline in profitability of the banking system due to unsecured loans and advances.
2. The performance will indirectly affect the profitability of SBI.
3. Proper control over leverage should be taken in order to magnify DP ratio.
4. The DER is quite high viz. worrisome, as it indicates a precarious amount of leverage.
5. There should be a steady stream of sustainable dividends from a company, the dividend pay-out
ratio analysis is important.
6. A consistent trend in this ratio is usually more important than a high or low ratio
7. Bank has fallen a percentage each year for the last five years might indicate that the company
can no longer afford to pay such high dividends. This could be an indication of inclined operating
performance.

5.3: Conclusion.

The banking sector is critical for a country's economic growth. SBI is one of India's most well-
known public-sector banks. SBI has a stronger market place. The results show that there is no
discernible difference between deposits, savings, profitability, long and short term ratios, net
profit, and so on. The SBI group is becoming increasingly concerned about the banking system's
deteriorating profitability as a result of unsecured loans and advances. It has been extremely
overburdened and is looking for ways to reduce the viability of the current banking philosophy's
value. As a result, in the current study report, an attempt has been made to evaluate the financial
performance.
 The keeping money division is exceptionally critical for the economic development of a nation.
The SBI is one of the driving bank of Open division Bank in India. The showcase position of SBI
is better. The investigation uncovers that there's no significant difference between Advances, Net
Profit , liquidity ratio, solvency ratio etc., there's developing prove of concern by the SBI gather
on the declining productivity of the banking framework due to unsecured advances and progresses.
It has becomes greatly over and finds remedial measures to reduce the benefit within the esteem
of modern keeping money philosophy. Hence, within the show paper of the ponder an endeavour
has been made to analyse the budgetary execution of SBI.

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