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A STUDY ON PERFORMANCE RATING OF SBI GROUP: CAMEL MODEL
ANALYSIS, ZIJMR_VOL9_ISSUE_6_JUNE_2019
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
A STUDY ON PERFORMANCE RATING OF SBI GROUP:
CAMEL MODEL ANALYSIS
MS. SWATI SHARMA1; DR. AJAY KUMAR PATEL2
1
ASSISTANT PROFESSOR,
JIMS ENGINEERING MANAGEMENT TECHNICAL CAMPUS, GREATER NOIDA.
2
ASSOCIATE PROFESSOR,
JAIPURIA SCHOOL OF BUSINESS, GHAZIABAD.
ABSTRACT
The merger and acquisitions in public sector banks especially SBI with tis associate banks, have
stirred the banking sector. There is various view point by experts that the merger will lead to
rationalization of resources, improve productivity, customer service and lower cost of lending
funds. The current work tries to evaluate the merger of largest public sector bank i.e. State bank
of India and its five associate banks viz, State Bank of Bikaner & Jaipur, State Bank of
Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore and
Bharatiya Mahila Bank with effect from April 1, 2017 The merger is to be done in phased
manner. The study has adopted CAMEL (Capital Adequacy, Asset Quality, Management,
Earning and Liquidity) Model to evaluate the SBI and its associate banks performance and rank
the selected banks on target performance indicators. The study concludes that SBBJ has high
efficiency in terms Capital Adequacy, SBP in Assets Quality, SPT in Management Quality, SBH
in Earning Quality and whereas in Liquidity SBI has the top position. All banks have different
competitive advantages and the merger has lead to exploit each other competitiveness for banks
overall performance.
KEY WORDS: CAMEL, Bank, Profitability, Liquidity, NPAs.
Rationale of Study
The current study is profitability analysis of SBI and its associate banks by applying the
conceptual framework of CAMEL. A descriptive and analytical research design is carried out to
measure bank’s effectiveness and efficiency on viz., Capital adequacy, Asset quality,
Management soundness, Earnings and profitability, Liquidity and Sensitivity to market risk of
the bank.
On the outset of global economic crisis, banking sector in India has become more complex. The
discussion on SBI bank merger with its subsidiary banks, the study will surely mark its
significance in literature by identifying and comparing the financial health of largest and
systematically important bank in India. The CAMEL model analysis provide the performance
which is beneficial to potential as well as existing shareholders, about risk return and utilizing
fund. The study is also useful for depositors, merchant bankers as well as other stakeholders;
9
ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
they can identify the overall performance of the bank. The purposed study will be significance
for the researchers, research group and academicians for the future in the view of review.
Statement of Problem
The general execution of finance related foundations may not reflect by budget summary, with the goal
that significant inquiry raises whether these are sufficient to mirror in implementation at organization.
Henceforth, there is an expectation to recognize the general conditions qualities, shortcoming,
opportunities and dangers in the banks and financial institutions. For these reasons, different financial
tools and strategies are created by various professionals and financial institutions everywhere throughout
the world. One measure of performance which covers almost all crucial aspects in financial institution is
CAMEL. This examination intends to survey the financial conditions and generally execution of SBI
bank in the scheme of CAMEL with following exploration questions.
•
•
•
•
•
What are the capital sufficiency proportions?
What are the characteristics of advantages?
How sound is the administration?
What are the procuring and profitability limits?
What is the liquidity position?
Review of Literature
The capital ampleness segment of the CAMEL rating framework to evaluate whether controllers
during the 1980s affected insufficiently promoted banks to enhance their capital. Utilizing
proportion of administrative weight that depends on freely accessible data, he found that
insufficiently promoted banks reacted to controllers' requests for more prominent capital. This
end is predictable with that come to by Keeley(1988) . However, a proportion of administrative
weight dependent on private capital sufficiency evaluations uncovers that capital direction at
national banks was less viable than at state-sanctioned banks. This outcome reinforces an end
come to by Gilbert (1991)
Hirtle and Lopez (1999) look at the value of past CAMELS appraisals in evaluating banks'
present conditions. They locate that, contingent on current open data, the private supervisory data
contained in past CAMELS appraisals gives further knowledge into bank current conditions, as
outlined by current CAMELS evaluations. The creators locate that, over the period from 1989 to
1995, the private supervisory data accumulated amid the keep going nearby test stays helpful as
for the present state of a bank for up to 6 to 12 quarters (or 1.5 to 3 years).
To survey the exactness of CAMELS evaluations in anticipating disappointment, Rebel Cole
and Jeffery Gunther (1998) use as a benchmark an off-site observing framework dependent on
freely accessible bookkeeping information. Their discoveries propose that, if a bank has not been
analyzed for multiple quarters, off-site checking frameworks as a rule give a more precise sign of
survivability than its CAMELS rating. The lower prescient exactness for CAMELS evaluations
"more seasoned" than two quarters makes the general precision of CAMELS appraisals fall
significantly underneath that of off-site checking frameworks. The higher prescient exactness of
off-site frameworks gets from both their convenience a refreshed off-site rating is accessible for
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
each bank in each quarter-and the precision of the monetary information on which they are
based. Cole and Gunther infer that off-site checking frameworks should keep on assuming a
noticeable job in the supervisory procedure, as a supplement to on location examinations.
Kenton Zumwalt (2002), utilizes a one of a kind informational collection given by Bank of
Indonesia to inspect the changing money related soundness of Indonesian banks amid
emergency. Bank Indonesia's non-open CAMELS appraisals information permit the utilization of
a constant bank soundness measure instead of ordinal measures. Likewise, board information
relapse techniques that take into consideration the distinguishing proof of the fitting factual
model are utilized. The observational outcomes demonstrate that amid Indonesia's steady
monetary periods, four of the five customary CAMELS segments give bits of knowledge into the
money related soundness of Indonesian banks.
Muhammad Tanko (2004), in their investigation contends that in spite of the persistent
utilization of money related proportions examination on banks execution assessment by banks'
controllers, restriction to it ability flourish with adversaries concocting new apparatuses fit for
hailing the general execution ( effectiveness) of a bank. In spite of the persistent utilization of
monetary proportions examination on banks execution assessment by banks' controllers,
resistance to it expertise flourish with adversaries thinking of new instruments equipped for
hailing the general execution (proficiency) of a bank. This examination paper was completed; to
discover the sufficiency of CAMELS in catching the general execution of a bank; to locate the
overall loads of significance in every one of the variables in CAMELS; and in conclusion to
illuminate on the best proportions to dependably receive by banks controllers in assessing bank's
productivity. The information for the exploration work is optional and was gathered from the
yearly reports of eleven business banks in Nigeria over a time of nine years (1997 - 2005).
Mishra Aswini Kumar, G. Sri Harsha, Shivi Anand and Neil Rajesh Dhruva (2012) , with a
goal is to examine the execution of 12 open and private area banks over a time of eleven years
(2000-2011) in the Indian managing an account division. For this reason, CAMELS approach
has been utilized and it is built up that private area banks are at the highest priority on the
rundown, with their exhibitions regarding soundness being the best.
Sushendra Kumar Misra and Parvesh Kumar Aspal (2013), endeavored to assess the
execution and budgetary soundness of State Bank Group utilizing CAMEL approach. It is
discovered that as far as Capital Adequacy parameter SBBJ and SBP were at the best position,
while SBI got most minimal position. Regarding Asset Quality parameter, SBBJ held the best
position while SBI held the most reduced position. Under Management effectiveness parameter
it was seen that top position taken by SBT and most reduced position taken by SBBJ. As far as
Earning Quality parameter the ability of SBM got the best position while SBP was at the most
minimal position. Under the Liquidity parameter SBI remained on the best position and SBM
was on the most minimal position. SBI needs to enhance its situation with respect to resource
quality and capital ampleness, SBBJ ought to enhance its administration productivity and SBP
ought to enhance its winning quality.
Objective of the Study
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
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The main objective of the study is to examine the financial performance through CAMEL test of
selected commercial banks and compare each other. To accomplish the main objective, specific
objective of the study are:
1) To assess financial performance of the banks in State Bank Group.
2) To evaluate the CAMEL parameters of the banks.
3) To rank banks on the basis of CAMEL approach and recommend the related banks for
the better improvement.
Research Design:
To fulfill the objectives of the study descriptive research design in adopted and the analysis of
this study is based on secondary data. To fulfill the objectives of the study six banks are selected
i.e. State Bank of India, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank
of Mysore, State Bank of Patiala, and State Bank of Travancore
CAMEL is a proportion based model to assess the execution of banks. It represents Capital
Adequacy, Asset Quality, Management Efficiency, Earning Quality and Liquidity. This model
identifies the strength and weakness of banks and helps in improving future development of
banking. The period for evaluating performance through CAMEL in this study is five years, i.e.
from financial year 2010-11 to 2014-15.
The secondary data sources are from respective banks balance sheets, profit & loss statements,
Ratio Analysis & interpretation was collected from journals, bank’s prospectus, bank’s annual
reports and internet.
Data Analysis and Interpretation
1)
Capital Adequacy (C) reflects whether the bank has enough cash-flow to hold up under
surprising misfortunes emerging later on. The higher CAR demonstrates more robust bank and
therefore better declaration of speculators. It is discovered that SBH positioned on the best
position with most noteworthy CAR of 13.32 pursued by SBT (13.43) and SBI (13.28). SBM
scored the least position with (12.538).
• Debt-Equity Ratio indicates how much extent of the bank business is financed through
value and how much through obligation. SBH is on the best position with least
normal of 1.0348 pursued by SBBJ (1.082) and SBM (1.085). SBI scored the most
reduced position.
• Advances to Assets Ratio is proportion that connection between the all out advances and
all out resources. SBBJ is on the best position with most noteworthy normal of 65.94
pursued by SBT (65.30) and SBM (64.28). SBH scored the most minimal position.
• Government Securities to Total Investments Ratio describes the degree of speculation,
lower will be the hazard associated with a bank's venture and the other way around.
SBBJ is on the best position with most elevated normal of 94.506 pursued by SBP
(92.354) and SBM (88.518) on second and third positions. SBI scored the most
minimal position.
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
Table 1: Capital Adequacy Parameter-Group Ranking
SBI
SBBJ
SBH
SBM
SBP
SBT
Percentage (%)
13.28
13.08
13.32
12.70
12.53
13.11
Rank
2
4
1
5
6
3
Ratio
1.500
1.082
1.034
1.085
1.411
1.578
Rank
5
2
1
3
4
6
Percentage (%)
61.98
65.94
61.7
65.28
63.74
65.3
Rank
5
1
6
3
4
2
Govt. Securities/Total
Percentage (%)
79.34
94.50
87.47
88.51
92.35
84.25
Invest.
Rank
6
1
3
4
2
5
Average
4.5
2
2.75
3.75
4
4
Rank
6
1
2
3
4.5
4.5
CAR
Debt-Equity
Advances to Total Assets
Group Rank
On the basis of group averages of four ratios of capital adequacy as expressed in the above table,
SBBJ and SBH was at the first and second position with group average of 2 & 2.75 respectively,
whereas SBT (3.75) with third position . SBI scored the lowest position due to its poor
performance in Debt-Equity, Advances to Assets and Government Securities to Total
Investments ratios.
2. Assets Quality (A) is an important parameter to examine the degree of financial strength. The
foremost objective to measure the assets quality is to ascertain the composition of nonperforming assets (NPAs) as a percentage of the total assets.


Net NPAs to Net Advances Ratio is estimated as Net NPAs = Gross NPAs - Net of
provisions on NPAs - interest in suspense account. SBH is on the top position with least
average of 0.942 followed by SBT (1.094) and SBP (1.164) on second and third positions
respectively. SBI scored the lowest position with highest percentage of 1.812.
Total Investments to Total Assets Ratio shows that the bank will provide safeguard to the
investments against NPAs if the ratio is higher. SBP is on the top position with least
average of 20.98 followed by SBBJ (21.5). SBT scored the lowest position with highest
ratio of 24.26.
On the basis of group averages of four ratios of assets quality as expressed in table 2, SBP was at
the first position with group average of 2.00, followed by SBBJ and SBH with ranking of (2.5).
SBI scored the lowest position with 6 ranks due to its poor performance in both of net NPAs to
net advances& total investments to total assets.
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
Table 2: Assets Quality Parameter or Composite Assets Quality-Group Ranking
SBI
SBBJ
SBH
SBM
SBP
SBT
1.812
1.328
0.942
1.504
1.164
1.094
6
4
1
5
3
2
Net NPAs to Net
Advances
Percentage (%)
Total Invest. to Total
Assets Ratio
Percentage (%)
23.4
21.5
24.24
23.4
20.98
24.26
Rank
3.5
2
5
3.5
1
6
Average
4.75
3
3
4.25
2
4
6
2.5
2.5
5
1
4
Group Rank
Rank
Rank
3. Management Efficiency (M) observes set norms, ability of planning and response to
changing environment, leadership and administrative capability of the bank.
 Total Advances to Total Deposits Ratio: SBI is on the top position with highest average
of 80.55 followed by SBM (78.148) and SBT (77.896) on second and third positions
respectively. SBH scored the lowest position with least percentage of 73.936.
 Profit per Employee: SBH is on the top position with highest average of 7.048 followed
by SBT (5.64) and SBI (4.97) respectively. SBM scored the lowest position with least
ratio of 4.178. Business per employee reveals the productivity and efficiency of human
resources of bank. It is followed as a tool to measure the efficiency of employees of a
bank. Higher the ratio, the better it is for the bank and vice versa. In the below table
6.3.3.3, SBH is on the top position (1037.944) followed by SBP (990.49) and SBT
(913.4) respectively. SBI scored the lowest position with least ratio of 725.99.
 Return on Equity: SBT is on the top position with highest average of 21.896% followed
by SBH (21.384%) and SBBJ (19.542%) respectively. SBI scored the last position with
least average of 15.124%.
On the basis of group averages of four ratios in table 13, SBT was at the first position with group
average of 2.25, followed by SBH (2.5). SBM scored the lowest position with 6th rank due to its
poor performance in profit per employee, business per employee ratio and return on equity.
Table 3: Management Quality Parameter or Composite Management Efficiency- Ranking
Total Adv. to
Total Dep. Ratio
Profit
Employee
Per
Business
Employee
Per
Return
Equity
Group Rank
on
SBI
SBBJ
SBH
SBM
SBP
SBT
80.55
77.748
73.94
78.14
76.49
77.89
Rank
1
4
6
2
5
3
Lakhs
4.97
4.71
7.048
4.178
4.966
5.64
Rank
3
5
1
6
4
2
Lakhs
725.9
732.27
1037.94
781
990.4
913.4
6
5
1
4
2
3
15.12
19.542
21.38
14.38
16.39
21.896
5
3
2
6
4
1
Average
3.75
4.25
2.5
4.5
3.75
2.25
Rank
3.5
5
2
6
3.5
1
Percentage
(%)
Rank
Percentage
(%)
Rank
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
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4. Earning Quality (E)
The quality of earnings represents the bank’s profitability and capability to maintaining and
earning consistently. It determines profitability of bank, sustainability and growth of future
earnings.




Operating Profit to Total Assets Ratio: In this ratio operating profit are expressed as
percentage of total assets. SBH is on the top position with highest average of 2.178
followed by SBI (2.158) and SBM (2.068) on second and third positions respectively.
SBT scored the lowest position with least percentage of 1.778.
Net Profit to Total Assets Ratio: Higher the ratio reflects better earning potential of a
bank in the future. SBH is on the top position with highest average of 0.9652 followed by
SBT (0.9208) and SBBJ (0.86) respectively. SBP scored the lowest position with least
ratio of 0.7408.
Interest Income to Total Income Ratio: SBP is on the top position with highest average
of 90.754 followed by SBT (90.442) and SBH (89.748) respectively. SBI scored the
lowest position with least ratio of 85.202.
Spread or Net Interest Margin (NIM) to Total Assets Ratio: SBBJ is on the top
position with highest average of 2.8944 followed by SBM (2.844) and SBT (2.826)
respectively. SBP scored the last position with least ratio of 2.36.
On the basis of group averages of four ratios of quality of earning as expressed in the below
table, SBH was at the top position with group average of 2.25, followed by SBBJ and SBM with
an average of (3.25) and (3.50) respectively. SBP scored the lowest position with 6th rank due to
its poor performance in Operating Profit to Total Assets, Net Profit to Total Assets and Net
Interest Margin (NIM) to Total Assets ratios.
Table 4: Earning Quality Parameter or Composite Earning Quality-Group ranking
Operating Profit to Total
Assets
Net Profit to Total Assets
Interest Income to Total
Income
Net Interest Margin
(NIM) to Total Assets
Group Rank
Percentage (%)
Rank
Percentage (%)
Rank
Percentage (%)
Rank
Percentage (%)
Rank
Average
Rank
SBI
SBBJ
SBH
SBM
SBP
SBT
2.158
2.03
2.178 2.068 1.818 1.778
2
4
1
3
5
6
0.851
0.86
0.965 0.799 0.740 0.920
4
85.20
6
2.826
3
3.75
3
88.95
5
2.894
1
3.25
1
89.74
3
2.672
4
2.25
5
89.61
4
2.844
2
3.5
6
90.75
1
2.36
6
4.5
2
90.44
2
2.522
5
3.75
4.5
2
1
3
6
4.5
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
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5. Liquidity (L)
Liquidity reflects bank’s ability to meet its financial obligations. In an adequate liquidity
position, an organization obtains sufficient liquid funds, either by increasing liabilities or by
converting its assets quickly into cash.




Liquid Assets to Total Assets Ratio: SBI is on the top position with highest average of
8.926 followed by SBH (8.12) and SBBJ (8.002) on second and third positions
respectively. SBM scored the last position with least percentage of 5.664.
Liquid Assets to Total Deposits Ratio: SBI is on the top position with highest average
of 11.372 followed by SBH (9.818) and SBBJ (9.464) respectively. SBM scored the
lowest position with least ratio of 6762.
Liquid Assets to Demand Deposits Ratio: SBT is on the top position with highest
average of 167.036 followed by SBP (157.984) and SBBJ (132.134) respectively. SBI
scored the lowest position with least ratio of 93.39.
Approved Securities to Total Assets Ratio: SBI is on the top position with (0.06209)
followed by SBM (0.06) and SBP (0.05) respectively. SBH scored the lowest position
with least ratio of 0.02608.
Table 5: Liquidity Parameter or Composite Liquidity-Group Ranking
SBI
SBBJ
SBH
SBM
SBP
Percentage
Liquid Assets to
(%)
8.926
8
8.12
5.664
6.798
Total Assets
Rank
1
3
2
6
4
Percentage
Liquid Assets to
(%)
11.372
9.46
9.818
6.762
8.122
Total Deposit
Rank
1
3
2
6
4
Percentage
Liquid Assets to
(%)
93.39
132
99.26
104.6
158
Demand Deposits
Rank
6
3
5
4
2
Percentage
Approved
(%)
0.0621
0.04
0.026
0.06
0.05
Securities to Total
Assets
Rank
1
4
6
2
3
Average
2.25
3.25
3.75
4.5
3.25
Group Rank
Rank
1
2.5
4
6
2.5
SBT
5.964
5
7.14
5
167
1
0.036
5
4
5
On the basis of group averages of four ratios of liquidity as expressed in table 23, SBI was at the
top position with group average of 2.25, followed by SBBJ with average of (3.25) and SBBJ
(3.25) respectively. SBM scored the last position with 06 rank due to its poor performance in
Liquid Assets to Total Assets, Liquid Assets to Total Deposits and Liquid Assets to Demand
Deposits ratios.
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
6. Overall Performance: CAMEL Rank of State Bank Group
In order to assess the overall performance of State Bank Group, we calculated the composite
rating and results are presented in table.
Table 6: Composite Ranking (Overall Performance) of State Bank Group
SBI
SBBJ
SBH
SBM
SBP
SBT
C: Capital Adequacy Parameter-Group Ranking
6
1
2
3
4.5
4.5
A: Assets Quality Parameter Group- Group
6
2.5
2.5
5
1
4
3.5
5
2
6
3.5
1
4.5
2
1
3
6
4.5
1
2.5
4
6
2.5
5
4.2
2.6
2.3
4.6
3.5
3.8
6
2
1
5
3
4
Ranking
M: Management Quality parameter- Group
Ranking
E: Earning Quality parameter-Group Ranking
L: Liquidity Parameter-Group Ranking
Average
Rank (Lower number represents Good Performance)
The above Table 6, depicts the group ranking of the State Bank Groups in India for the period of
2009-2013. It is found that under the Capital Adequacy Ratio(C) parameter SBBJ and SBH were
at the top position, while SBI got lowest rank. Under the Asset Quality (Q) parameter, SBP held
the top rank while SBI held the lowest rank. Under Management Efficiency (M) parameter it is
observed that top rank taken by SBT and lowest rank taken by SBM. In terms of Earning Quality
(E) parameter the capability of SBH got the top rank in the while SBP was at the lowest position.
Under the Liquidity (L) parameter SBI stood on the top position and SBM was on the lowest
position.
Test for variance of CAMEL ratios among banks
From the above rank, theoretically we came to a conclusion that on average the SBH has best
performance. To determine the whether there is actually significant difference between the
calculated CAMEL ratios among all selected banks, we applied Kruskal-Wallis H test.
For the test we have taken all the ratios of CAMEL for all selected bank and calculate the rank
for the same. The output is depicted below:
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ZENITH International
Journal of Multidisciplinary Research ____________ISSN 2231-5780
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TABLE 7: COMPARATIVE RANK OF CALCULATED RATIOS
SBI
SBBJ
SBH
SBM
SBP
CAMEL RATIOS/BANKS
SBT
CAR
59
57
60
56
55
58
Debt-Equity
21
15
14
16
20
23
Advances to Total Assets
74
78
73
76
75
77
Govt. Securities/Total Invest.
84
97
88
89
95
86
Net NPAs to Net Advances
25
19
12
22
18
17
69.5
67
71
69.5
65
72
Total Adv. to Total Dep. Ratio
85
81
79
83
80
82
Profit Per Employee
40
38
46
37
39
41
Business Per Employee
103
104
108
105
107
106
Return on Equity
62
64
66
61
63
68
Operating Profit to Total Assets
29
27
30
28
26
24
Net Profit to Total Assets
9
10
13
8
7
11
Interest Income to Total Income
87
90
92
91
94
93
Net Interest Margin (NIM) to Total Assets
34
36
33
35
31
32
Liquid Assets to Total Assets
Liquid Assets to Total Deposit
Liquid Assets to Demand Deposits
Approved Securities to Total Assets
51
48
49
42
45
43
54
52
53
44
50
47
96
6
100
3
98
1
99
5
101
4
102
2
Total Invest. to Total Assets Ratio
The result for the Kruskal-Wallis H test is as follows:
KRUSKAL-WALLIS H
CORRECTION FACTOR
ADJUSTED KRUSKAL-WALLIS H
P VALUE
0.020472
0.999995
0.020472
0.000386
The calculated output for the Kruskal-Wallis H, is with highlighted P Value 0.000386 which is very
low and good enough to conclude that null hypothesis is accepted and that there is no significant
difference in the calculated CAMEL ratios among all selected bank. Hence we can say that the
selected banks of SBI group have no significant difference in performance.
Conclusion
1. On the basis of group averages of four ratios of capital adequacy, SBBJ and SBH was at the
first and second position with group average of 2 & 2.75 respectively, whereas SBT (3.75)
with third position . SBI scored the most reduced position because of its poor execution in
Debt-Equity, Advances to Assets and Government Securities to Total Investments
proportions.
2. On the basis of group averages of four ratios of assets quality, SBP was at the first position
with group average of 2.00, followed by SBBJ and SBH with ranking of (2.5). SBI scored the
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Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
lowest position with 6 ranks due to its poor performance in both of net NPAs to net advances
& total investments to total assets.
3. Business per employee reveals the productivity and efficiency of human resources of bank. It
is pursued as a device to gauge the effectiveness of representatives of a bank. Higher the
proportion, the better it is for the bank and the other way around. Where, SBH is on the top
position (1037.944) followed by SBP (990.49) and SBT (913.4) respectively. SBI scored the
lowest position with least ratio of 725.99.
4. On the basis of group averages of four ratios, SBT was at the first position with group
average of 2.25, followed by SBH (2.5). SBM scored the lowest position with 06 rank due to
its poor performance in profit per employee, business per employee ratio and return on
equity.
5. On the basis of group averages of four ratios of quality of earning, SBH was at the top
position with group average of 2.25, followed by SBBJ and SBM with an average of (3.25)
and (3.50) respectively. SBP scored the lowest position with 06 rank due to its poor
performance in Operating Profit to Total Assets, Net Profit to Total Assets and Net Interest
Margin (NIM) to Total Assets ratios.
6. On the basis of group averages of four ratios, SBI was at the top position with group average
of 2.25, followed by SBBJ with average of (3.25) and SBBJ (3.25) respectively. SBM scored
the last position with 06 rank due to its poor performance in Liquid Assets to Total Assets,
Liquid Assets to Total Deposits and Liquid Assets to Demand Deposits ratio
7. The overall group ranking of the State Bank Groups in India for the period of 2009-2013 is
found that under the Capital Adequacy Ratio(C) parameter SBBJ and SBH were at the top
position, while SBI got lowest rank. Under the Asset Quality (Q) parameter, SBP held the top
rank while SBI held the lowest rank. Under Management Efficiency (M) parameter it is
observed that top rank taken by SBT and lowest rank taken by SBM. In terms of Earning
Quality (E) parameter the capability of SBH got the top rank in the while SBP was at the
lowest position. Under the Liquidity (L) parameter SBI stood on the highest position and
SBM was on the lowest position.
The study makes an attempt to examine and compare the performance of the State Bank Group
in India i.e. State Bank of India (SBI), State Bank of Bikaner & Jaipur (SBBJ) State Bank of
Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of
Travancore (SBT). The study has brought many interesting results, some of which are mentioned
as below:
1) All the six banks have succeeded in maintaining CRAR at a higher level than
the prescribed level of RBI i.e, 9%. But the SBH has maintained highest across the
duration of last five years. It is very good sign for the bank to survive and to expand in
the future.
2) Net NPAs to Net Advances has registered increasing trend for all the six banks during the
last five years. But, in total investment to total assets, there was fluctuation in all banks.
Together the two ratios indicate need of improvement in the asset quality position of all
the State Bank Group in India.
3) In Management Quality, it was found that total advances to total deposits and business
per employee ratio is increased during the last five years ,but also it was observed that
profit for employee and return on equity fluctuated during the study period. The
increment in total advances to total deposits and business per employee indicated that the
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Journal of Multidisciplinary Research ____________ISSN 2231-5780
Vol.9 (6), JUNE (2019), pp. 9-21
Online available at zenithresearch.org.in
growth of the bank as well as efficiency of the employee was good in all banks and they
will help to the bank to grow in future.
4) In Earnings Quality, SBH was at the top position, followed by SBBJ and SBM where
SBP scored the lowest position due to its poor performance in Operating Profit to Total
Assets, Net Profit to Total Assets and Net Interest Margin (NIM) to Total Assets ratios.
5) The Liquidity ratios indicate better liquidity of all the banks. However, SBI
has performed throughout well, SBI has an edge over in liquidity if compared with each
other according to these ratios.
From the above analysis, it can be concluded that SBBJ has high efficiency in terms Capital
Adequacy, SBP in Assets Quality, SPT in Management Quality, SBH in Earning Quality and
whereas in Liquidity SBI has the top position .After evaluating all the ratios, calculations and
ratings, the selected banks can be ranked as Rank 1: State Bank of Hyderabad (SBH); Rank 2:
State Bank of Bikaner & Jaipur (SBBJ); Rank 3: State Bank of Patiala (SBP); Rank 4: State
Bank of Travancore (SBT); Rank 5: State Bank of Mysore (SBM); Rank 6: State Bank of India
(SBI). Thus it can be concluded that all banks have different competitive advantages and the
merger has lead to exploit each other competitiveness for banks overall performance.
Suggestions and Recommendations
In SBT, debt-equity ratio is continuously rising over the years which are not good. So, they
should have to increase equity or reduce debts in their capital structure. All the banks have
increasing in term of Net NPAs to Net Advances which is not good. So, they should try to
reduce their Net NPAs by follow up to the clients regularly. SBBJ and SBM has comparatively
less Profit per employee. So, these banks should have to give more emphasis on human resource
resize in order to make better profit per employee. The earning quality ratios of all banks are in
increasing trend. So, all banks recommended that to increase more profit of the bank should
minimized its operating cost by increasing the operating efficiency of its employees.
Liquid assets of the commercial banks play an important role to meet the day to day and short
term obligation. If liquid assets of the banks are not maintained properly then there is a high
probability of banks going to liquidation. The liquidity ratio of SBI, SBBJ & SBP seems to be
satisfactory among six banks but SBT and SBM should be careful and try to increase liquidity
position by increasing Cash and Bank Balance Ratio and Investment in Government Security or
approved securities Ratio. Also I would like to recommend the entire six banks to investment on
approved government securities Rather than invest than risky assets.
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Online available at zenithresearch.org.in
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