SBI SWOT Analysis by Naushad S Talukdar ThreatDeregulation of Saving Bank RateAs RBI had deregulated saving bank rate because of these private sector bank has increasedsaving bank rate, so customer will be more attracted towards private bank.External factorHigh fuel price, power prices etc. are also hurting SBI, since the banks lend to all segments,this will effect SBI. The point is, in context with huge lending to kingfisher where SBI wasthe biggest lender.Increased Competition from Private bankCustomer prefer to switch to private banks and financial service providers for loans andmortgages, as SBI involves strict verification procedure and take long time for processing.The scenario is opposite in case of private bank, private bank has better management andfaster processing times than SBI. Their DSA’s have strict sales target every month and hencemove faster to improve their performance. SBI employees are not bothered about this.The way private banks deals with their customer has made banking easier and less torturous.Instead of customer standing in queues at banks, the private banks started service to thecustomer at their doorsteps.According to Kotak securities, Private bank saw a rise in their market share from 14.9% to17.8%.Their share in overall saving accounts increases from 11% in 2005 to 16% in 2011.Employee StrikeIn 2006 April there was a 7 days strike costs huge loss for SBI. (Rs. 55000 crore loss in MP,Chattisgarh) strike was because of pension hike. During that time the government of U.P hastransferred its account to Allahabad bank, while Government of Maharastra was also in theprocess to do so.Venturing into Rural and Semi-Urban sectorPrivate bank has started venturing into rural and semi urban sector which used to be thebastion of the SBI and other PSU banks.According to RBI data, in 2012 no. of SBI branches increased by 4.9% whereas total no. ofbank branches increases by 6.6% in rural area. In case semi-urban, SBI branches increased by3.44% whereas total no. branches increased by 11.11%.
SBI SWOT Analysis by Naushad S Talukdar Weakness-Private Banks came with a great advantage from day one as they had core banking unlikeSBI or public sector bank. Whereas SBI had to transform their system into core banking forthis new skilled man power will be required.- SBI has the highest Non-Performing Asset or NPA in the Industry. SBI’s NPA constituteone third of gross NPA of all listed banks put together.- In spite of modernization bank still carries the perception of traditional bank to new agecustomer.-Based on RBI data a research was conducted by ________________ to find the multipledecision-making units efficiency point which was published in mbaskool.com. Followingfactor were considered to find the multiple decision-making units efficiency point--Where SBI ranks 4th, Yes bank got the 1st position.RBI has the largest no. of employee in the industry (more than 2lakh).Bank spends hugeportion of income on employee wages & salaries. Their wages accounted for 18.86% of thebank’s total expenses. While the industry average was 14.83% during 2009-2010. Business per employee of SBI is 6.36 crore against industry average of Rs. 8.373. Incontrast, business per employee of ICICI bank stood at 10.29 crore, while Axis Bank’s 11.11crore HSBC bank’s 11.35 crore and Citi bank’s per employee contribution was 19.7 croreduring 2009-2010. Opportunities
SBI SWOT Analysis by Naushad S Talukdar-Merger with five banks namely State bank of Hyderabad, state bank of Patiala, State bank ofBikaber as Jaipur , state bank of Travancore and state bank of Mysore are in approval stage.Merger will result in expansion of market share to defend its no. one position. As SBPposted 87% growth in profit SBBJ’s profit groth is 311% while SBT & SBH 30% nd 18%respectively. Moreover 5 associates banks has 6% market share in loans & deposits etc.- Since the bank is yet to modernize few of its banking operations, there is a better scope ofusing advanced technologies and software to improve.- SBI attracts most talented pool of graduates in the industry, for 2013 PO exams 17Insurance lakh student appeared. So chances are high that they will offer better customerservice in innovative way.-Recently Government allowed insurance company to use banks distribution channel,because of its vast distribution SBI can attract most of the insurance company and servicewill not free of cost so new way of revenue generation.-Good inflow from overseas operation: SBI has 150 offices in 32 countries which contribute14-15% in net profit. StrengthWide distribution NetworkSBI has more than 27000 ATM and SBI group i.e. including associate banks has about45,000 ATM whereas total no. of ATM as on October are 104500. As on June 2012,SBI has14127 branches and SBI group i.e. including SBI associates bank’s 21,500 branches as onMarch 2012 where total no. of bank branches in India are 90732 . SBI has become the firstbank to install an ATM at Drass in the Jammu & Kashmir Kargil region.Market leaderSBI has 20% market share in deposits and loans among Indian commercial banks. SBIcontrols 22.35% in business as on RBI. SBI life stood at the no. 1 position with a marketshare of 19.8% in private insurance business as of May 2011.Government owned: Government owns 60% stake in SBI, this gives SBI an edge over privatebanks in terms of customer security. They are automatically immune from failure becausethey have access to Central Government support.
SBI SWOT Analysis by Naushad S TalukdarSBI has the first mover advantage in commercial banking service: SBI has started itsoperation in very early stage. It acquire customer when there was very less competition or nocompetition.Brand Name: SBI bank has earned a reputation in the market over the period of time.