Portfolio Analysis Indian Banking Sector

Strategic Management - II
Portfolio Analysis Indian Banking Sector Group-7, Section-C PGP-1
Participant Abhimanyu Malhotra Akshay Gupta Archita Joshi Dinabandhu Kejriwal Kunal Biswal Richa Singh Shivendra Raizada
Roll Number 2011PGP504 2011PGP526 2011PGP568 2011PGP625 2011PGP703 2011PGP823 2011PGP876
Group-7 | Section-C
Portfolio Analysis Indian Banking Sector
CONTENTS S. No.
1. 2. 3. 4. 5.
Topic
Industry Overview Market Divisions Banks Selected for study Portfolio Analysis References
Page
3 5 9 12 23
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1. Industry Overview
1.1 Definition The banking industry consists of financial institutions that receive demand deposits and term deposits from customers and channelize this money into lending activities. The banking industry can be broadly divided into retail banking, corporate banking, treasury services, wealth management and agricultural banking. 1.2 Size, Growth and Growth Drivers The banking industry in India has witnessed a constant growth in the last decade. The most common form of measuring the size of the banking industry is measuring the total assets of the banks. According to BMI India
Asset Size of the Industry ($ billion, 2008-2016F)
CAGR: 27.59%
Commercial Banking Report, in 2011, the assets of the banking sector of India were valued at $1,267.7 billion. The banking industry in India grew at a rate of 13.92% between 2008 and 2011 and is expected to grow at 27.59% between 2012 and 2016As on 31st March 2011, the banking sector in India comprised of 170 commercial banks.
CAGR: 13.92%
4,352 3,482 1,632 1255.0 2,069
1,276 1,267 857 1,033
2008 2009 2010 2011 2012F2013F2014F2015F2016F
The growth in this sector has primarily been driven by increasing globalization and liberalization of Indian economy. Realising the potential of the Indian banking sector, many foreign banks are entering the industry which in turn is further driving the growth and opportunities of the industry. 1.3 Breakup of Loan Assets Growth of retail banking in last two decades The loan assets of the banks can be divided into four broad categories industrial lending, personal lending, services lending and farm & other sector lending. According to IBEF, during the past two decades, the share of industrial lending has reduced to 44%( was 50% in 1990s).This decline can be attributed to increase in the share of personal lending which almost
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doubled during the same period. Within personal lending, the semi-urban and rural segments are driving the growth of the industry.
Farm and other sectors 13% Services 24%
Share of Loan Assets (%, 2010) Industrial 44%
Credit Card Outstandin gs 3%
Breakup of Personal Lending (%, 2010) Other Loans 29% Home Mortgages 52% Personal Loans 16%
Personal Lending 19%
Increased purchasing power of consumers has also led to increase in demand for personal items, which has contributed towards the growth of this sector. The retail loans amount to 6% of the GDP of India (FICCI, 2010). 1.4 Structure of Indian Banking Sector The banks in India can be divided into four broad categories Public Sector Major Nationalized banks are State Bank of India, Punjab National Bank and Canara Bank.(GOI owned and run) Private Sector These banks are owned by individuals and are headquartered in India. Major banks in this segment are ICICI Bank, HDFC Bank and Axis Bank. Foreign Banks These India banks but are have
Foreign Banks 7.0% Private Sector Banks 19.0% Share of Total Deposits (%) Public Sector Banks 74.0%
headquartered
outside
operations in India. Major foreign banks include Citi Bank, HSBC, Standard Chartered Bank and The Royal Bank of Scotland. Co-operative Institutions These banks belong to its members, who are simultaneously the owners and the customers of the bank. Some of the co-operative banks operating in
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India are Delhi State Co-operative Bank, Maharashtra State Co-operative Bank and Punjab State Co-operative Bank. The public sector, private sector and foreign banks are collectively known as scheduled commercial banks (SCBs). The banking industry in India is dominated by SCBs while the cooperative banks have a very limited reach. Within SCBs, the public sector banks account for 78% of the total assets of the industry.
2. Market Divisions of Indian Banking Sector

The divisional structure of the Indian banking sector is as follows: Banking Sectors
Retail Banking
Corporate Banking
Treasury
Private Wealth Management
Agribusiness Banking
2.1 Retail Banking Retail banking is banking in which banking institutions execute transactions directly with consumers, rather than corporations or other banks. Services offered include: savings and transactional accounts,
Other Loans 29%
Breakup of Personal Lending (%, 2011)

Home Mortgages 52%
mortgages, personal loans, debit cards, credit cards. Retail banking comprises of services offered to retail individuals. It includes savings account, current
Credit Cards 3%Personal Loans 16%
account, loans, credit cards facility etc.
The largest bank in retail banking sector is State Bank of India, followed by ICICI Bank. This sector has grown at a CAGR of 30% over the past five years. Within retail banking, the semi-urban and rural segments have been driving the growth. Increased purchasing power of consumers has also contributed towards growth in personal loans.
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Group-7 | Section-C 2.2 Corporate Banking
Corporate banking typically refers to financial services offered to large clients ('wholesale clients'). Although many wholesale clients are large corporations, they may also include other institutions like pension funds, governments and other (semi-) public entities. Corporate banking is generally a very profitable division for banks, far more profitable than retail banking, which is aimed towards households and small and medium enterprises (SME's). Corporate banking comprises of services offered to industries, both manufacturing and services. These services mostly include corporate credit i.e. advancing loans. This sector has grown at a CAGR of 21.20% over the past few years. Growth Rate (%)
27%
26% 26% 23% 24% 24% 24% 24% 24% 24% 11% 11% 38% 39% 40% 43% 44% 45% 46% 4% 21% 24% 17% 13% 24% 21%
Sector wise credit growth
2007 2008 2009 2010 2011 2012E 2013E Industry Services
2007
2008
2009 Industry
2010
2011
2012
Services
2.3 Treasury Treasury management (or treasury operations) includes management of an enterprise's holdings, with the ultimate goal of maximizing the firm's liquidity and mitigating its operational, financial and reputational risk. Treasury Management includes a firm's collections, disbursements, concentration, investment and funding activities. In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management. Most banks have whole departments devoted to treasury management and supporting their clients' needs in this area. Treasury manages both SLR (80%) and non-SLR (20%) investments. smaller banks are increasingly launching and/or expanding their treasury management functions and
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offerings, because of the market opportunity afforded by the recent economic environment. Bank Treasuries may have the following departments: A Fixed Income or Money Market desk that is devoted to buying and selling interest bearing securities A Foreign exchange or "FX" desk that buys and sells currencies A Capital Markets or Equities desk that deals in shares listed on the stock market.
Treasury services include trading in foreign exchange, money markets, bonds and derivatives both proprietary and on behalf of the customers. This segment is one of the most important sources of income for any bank.
Net Investments (Billion Rupees)
Growth Rate
23.70% 23.10% 18.60% 17421 15860 16158 16572 14804 15458 13724 14240
2008
2009
2010
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
2.4 Private Wealth Management Private banking includes banking, investment and other financial services provided by banks to private individuals investing sizable assets. The term private refers to the customer service being rendered on a more personal basis than in mass-market retail banking, usually via dedicated bank advisers. It comprises personalized asset management services provided to High Net worth Individuals. The major players in this sector include Reliance Money, Edelweiss Capital and Karvy Broking Ltd. Most commercial banks also offer these services; however, they are not very prominent. This sector is projected to grow at a CAGR of 32% between 2009 and 2013.
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Group-7 | Section-C The number of people with more than $1 million of financial assets is estimated to double between 2008 and 2013. By 2012, the countrys wealth management market is expected to be USD 1 trillion.

Number of people having more than $1 million assets
166793
148922
105840 84000 118720 132966
2008
2009
2010
2011
2012E
2013E
2.5 Agribusiness Banking Agribusiness banking comprises of banking services provided to farmers and people employed in agricultural business. These services include savings account, loans, debit cards facility etc. The banking regulator, the Reserve Bank of India, has prescribed that a portion of bank lending should be for developmental
Breakup of Agricultural Lending
activities, which it calls the priority sector. The agricultural sector has been declared as a priority sector by government of India and commercial banks are required to lend a minimum ratio of their total advances to agricultural sector. While for local banks, both the public and private sectors have to lend 40 % of their net
RRBs 12% Cooperativ e Banks 18%
Commercia l Banks 70%
bank credit, or NBC, to the priority sector as defined by RBI, foreign banks have to lend 32% of their NBC to the priority sector. This sector comprises of mostly nationalized banks and regional rural banks. Commercial banks, most nationalized banks, hold a major chunk of agricultural lending. The commercial banks benefit from their vast networks to reach the rural areas.
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3. Banks selected for study

3.1 Axis Bank Axis Bank Limited, formerly UTI Bank, is an Indian financial services firm that had begun operations in 1994, after the Government of India allowed new private banks to be established. The bank changed its name to Axis Bank in April 2007 to avoid confusion with other unrelated entities with similar name. After the Retirement of Mr. P. J. Nayak, Shikha Sharma was named Total Assets (INR million, 2007-2011)
21.84 24,27,133 18,06,479 14,77,220 10,95,778 7,32,572 1.1 16.09 1.44 1.24
Key Ratios
19.93
1.67 19.89
1.68 20.13
2007 2007 2008 2009 2010 2011
2008
2009
2010
2011
ROA
ROE
as the bank's managing director and CEO on 20 April 2009. Axis Bank is the third largest private sector bank in India. The bank operates through treasury, retail banking, corporate/wholesale banking and other businesses divisions. The Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. At the end of December 2011, the Bank has a very wide network of more than had a network of 1,493 domestic branches and extension counters and 8,324 ATMs situated in 971 cities and town. Interest margins of Axis bank, while they have declined from the 3.15 per cent seen in 2003-04, are still hovering close to the 3 per cent mark. (The comparable margins for ICICI Bank and HDFC Bank are around 2.60 per cent and 4 per cent respectively. The margins for ICICI Bank are lower despite its much larger share of the higher margin retail business, since funding costs also are higher).
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Group-7 | Section-C 3.2 ICICI Bank ICICI (Industrial Credit and Investment Corporation of
Total Assets (INR million, 2004-2009)

48,56,166 39,43,347 27,72,296 13,07,476 17,84,336 48,26,910
India) Bank Ltd. is an Indian diversified company financial services in
headquartered
Mumbai, Maharashtra. It is a wholly owned subsidiary of ICICI Ltd. Established in 1994, it is the second largest bank in India by assets and third largest
2004 2005
2006
2007
2008
2009
by market capitalization. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank has a network of 2,575 branches and 8,003 ATM's in India, and has a presence in 19 countries, including India. ICICI Bank is one of the Big Four banks of India, along with State Bank of India, Punjab National Bank and HDFC Bank. Established in 1994, ICICI Bank is Indias second largest bank. It is a wholly owned subsidiary of ICICI Ltd. The bank has a network of 2533 branches and 6800 ATMS in India. Between 2004 and 2009, the total assets of the bank increased at a CAGR of 30%.
Key Ratios
1.32 102.31 1.55 1.42 102.06 95.66 89.25 0.83 94.73 0.79 0.79 21.91 23.92 109.91
18.75
12.11 2007
10.1 7.82 2008 2009
2004
2005 ROA
2006 ROE
Loan/Deposit Ratio
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Group-7 | Section-C 3.3 State Bank of India
State Bank of India (SBI) is the largest banking and financial services company in India by revenue, assets and market capitalization. Its a state-owned corporation with its headquarters in Mumbai, Maharashtra. As of March 2011, it had assets of US$ 370 billion with over 13,000 outlets including 150 overseas branches and agents globally. Between 2004 and 2009, the total assets of the bank increased at a CAGR of 19%. SBI provides a range of
Total Assets (INR million, 2004-2009)
1,30,48,260 1,02,72,700 69,68,324
banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State
55,09,844 62,85,776
81,51,744
Bank Group, with over 16,000 branches, has the largest

2004 2005 2006 2007 2008 2009
banking branch network in
India. SBI has 14 Local Head Offices situated at Chandigarh, Delhi, Lucknow, Patna, Kolkata, Guwahati (North East Circle), Bhuwaneshwar, Hyderabad, Chennai, Trivandram, Bangalore, Mumbai, Bhopal & Ahmedabad and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas. Established in 1806, State Bank of India (SBI) is the oldest and the largest bank of India. SBI has 14 local head offices and 57 regional offices across India. The bank has 8,500 ATMs, about 18,000 SBI branches and 5,100 associate branches. Between 2004 and 2009, the total assets of the bank increased at a CAGR of 19%. Key Ratios
1.05 52.65 22.14 2004 PGP 2011-2013 2005 ROA 1.69 58.42 33.2 1.67 70.56 31.74 2006
77.76 0.95 18.04
79.46 0.97
75.46
0.94
16.4 2009 Page 11
17.27
ROE
2007 2008 Loan/Deposit Ratio
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4. Portfolio Analysis
4.1 Approach Identified the business segments of the industry
Identified the three biggest banks in the industry
Identified the factors governing the market attractiveness and competitive strength
Translated these factors into measurable and quantifiable indicators relevant for banking industry
Found the values of these indicators for each bank in each business segment
Assigned weights to each factor and calculated overall rating of each business segment of each bank
Plotted the different business segments on BCG matrix and obtained the GE matrix
Identified the stronger and weaker areas of respective banks and generated recommendations 4.2 Market Attractiveness For measuring the market attractiveness, we translated the standard parameters to proxies which were relevant for the banking industry. The proxies were chosen in such a way that most of them were objective and provided quantified results which could be easily compared with others. After obtaining data for all these parameters, weights were assigned to each one of them in the order of their importance in determining market attractiveness of banking industry. Thereafter, the rating points for each banking segment were obtained by taking a weighted mean of the proxies. The results thus obtained are displayed below.
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Market Attractiveness Market Size Market Growth Profitability Pricing trends
Parameter Aggregate Lending or AUM or Investment CAGR over 5 years Income/Advances and Income/Investment Spread between lending and deposit rate
Weight 15% 20% 15% 5% 5% 5% 10%
Opportunity to Differentiate Average Deposits/Customer Entry Barriers Competitive rivalry Distribution Structure Requirements Necessary Investments Risk of return Regulation and licensing requirements Number of Competitors, Herfindahl index Number of channels and ease of set-up and maintenance Licensing cost & set-up cost Overall risk exposure of the bank
10%
5% 10%
Retail
Corporate Credit
Private Wealth
Agricultural Related
Treasury
6.02
6.45
7.97
2.99
5.12
4.3 Competitive Strength For measuring competitive strength, we translated the standard parameters to proxies which were relevant for the banking industry. The proxies were chosen in such a way that most of them were objective and provided quantified results which could be easily compared with others. After obtaining data for all these parameters, weights were assigned to each one of them in the order of their importance in determining competitive strength of respective banks. Thereafter, the rating
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points for each bank were obtained by taking a weighted mean of the proxies. The results thus obtained are displayed below. Competitive Strength Company Image Strength of Assets and Competencies Market Share Distribution Strength Access to Financial Resources Cost Position Record of Innovation Sales Force Parameter Awards received and law suits filed NPA/Advances Investment or Advances ATMs/branches/sales reps/telephone expenses Deposits Expenses No of Products launched last year No of Sales Reps Weight 10% 20% 25% 15% 15% 10% 3% 2%
Retail
Corporate Credit
Private Wealth 1.2 5.5 4.7
Agricultural Related 2.9 3.0 6.9
Treasury
Axis Bank ICICI Bank SBI
3.1 4.1 8.3
4.3 4.7 6.2
4.2 3.5 7.7
4.4 BCG Matrix Three BCG matrices were plotted for the three banks respectively. Agribusiness banking was found to be a dog for Axis Bank and ICICI Bank while for SBI it was a cash cow because of high market share. Retail banking and corporate banking were found to stars for all the banks because of their high growth rates and high market shares. Treasury was question mark for Axis Bank and ICICI Bank because they have a low market share in this segment.
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4.5 GE Matrix Based on the rankings obtained as described in the previous section, the GE matrix was obtained for the banking industry. The competitive strength of respective banks was plotted on the X-axis while market attractiveness of each banking segment was plotted on Y-axis. The GE matrix thus obtained is displayed below
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4.6 Observations from GE Matrix 4.6.1 Market Attractivess 4.6.1.1 Retail Banking Retail banking lies at number three in terms of market attractiveness followed by treasury and agribusiness banking. Profitability in this segment is a direct function of the number of branches and reach of the bank. This sector has maintained a good growth in the recent few years and the profitability is also high. However, the spread between the lending and deposit rates is decreasing which could reduce the profitability of the sector in future. This segment is characterized by huge expenditure in setting up distribution channels as compared to other banking segments. This reduces its attractivess in comparison to wealth management and corporate banking. In terms of risk of return, this sector ranks on a medium level because of chances of bad debts. Moreover, this sector does not provide a wide scope of differentiation as retail banking services have been commoditized over the past few years, thereby further reducing its attractiveness.
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Group-7 | Section-C 4.6.1.2 Corporate Banking
This sector ranks at number two in terms of market attractiveness, behind wealth management. Corporate banking has a higher market size as compared with retail banking. The cost efficiency of this sector is high because of lower fixed costs in setting up distribution channels. This segment does not require setting up of a large number of branches and ATMs which reduces the fixed costs. The average deposit per customer being higher in corporate banking, the opportunity to differentiate is also higher. Though the growth of retail banking sector is expected to be higher than corporate banking sector, the huge capital investments and intense competitive rivalry make it less attractive than corporate banking sector. 4.6.1.3 Private Wealth Management Private wealth management is a niche segment with a focused set of customers. This sector has not grown much in comparison to other banking segments such as corporate banking and retail banking. However, the increasing number of millionaires and billionaires is expected to drive its growth. There is a very high scope of innovation in this segment due to personalized services. This segment offers a very high degree of profitability and very less provisions for bad debts. Further, there are not much stringent entry regulations in terms of license requirements. The capital investment is very low as most of the communication is done directly with the customers and no branches and ATMs are required. This sector has a very high growth potential and it is recommended to innovate and invest in this sector. 4.6.1.4 Treasury This segment has the lowest market size among all the banking segments. This segment is involved in investing in SLR and non-SLR securities i.e. shares, bonds, commercial papers of other companies on its own behalf and that of its clients. Because of government regulations, 80% of treasury investment is SLR investment. These investments are done in government securities. The returns from these securities being low, this segment ranks very low in terms of profitability. The growth of this segment is linked to the growth of other segments namely retail and corporate banking. As a result, it possesses medium growth potential. This segment ranks best in terms of ease of entry. There are minimal entry barriers for this segment as the government itself promotes investment by this segment. The competitive rivalry is also not very
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high in this segment. Moreover, the requirement of capital investment is minimal and the risk on returns is also very low. 4.6.1.5 Agribusiness Banking This segment ranks lowest on the scale of market attractiveness. This is a generally unattractive segment. It is characterized by high default risk and political interference. The risk on returns is also very high because of high chances of bad debts. The profitability is also very low because there are upper limits on the interest rate being charged on advances made to farmers and other people employed in agricultural sector. Furthermore, setting up a branch network in rural areas is a daunting task because of poor infrastructure and technological support. Since this sector has been declared as a priority sector by the Indian government, the banks are required to lend a minimum percentage of their total loans to this sector. 4.6.2 Competitive Strength 4.6.2.1 Axis Bank Axis Bank has the lowest NPA percentage resulting in its high growth. This bank has the least amount of spending on advertising as a percentage of net profit. It is only 1.2% as against 1.73% and 3.12% by ICICI and SBI respectively. The bank does not have an as extensive distribution channel as ICICI bank and State Bank of India do. The market share of this bank is lowest in comparison with other two banks. Overall, the reputation of the company is lesser as compared to SBI and ICICI. The bank was previously named UTI Bank and has changed its name a couple of years back. However, the awareness about the bank is on a rise and is expected to match other major banks because of its high growth. 4.6.2.2 State Bank of India State Bank of India is the oldest and largest bank of India. Hence it is a clear winner in terms of company reputation and image. It has a very extensive distribution network and has reach in remote areas also. This makes it possible for this bank to serve rural areas too. SBI is clear winner in retail because of its extensive distribution network and high deposits. However, this bank suffers from higher NPA percentage as compared to other banks. At the same time, the advertising budget is highest among the three banks. It is a long established bank, resulting in
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high level of trustworthiness. But it has a lower operating efficiency. Because of its high market share in most of the business segments, this bank has high competitive strength. 4.6.2.3 ICICI Bank ICICI Bank is the largest private sector bank of India. It has high competitive strength in private wealth management segment because of international presence. It has highest market share in domestic private wealth management segment. The NPA levels are also satisfactory. Its performance during recent financial turmoil shows that the bank has strong fundamentals. It is accompanied by moderate expenditure in advertisement. It operates with high operating efficiency. However, it has high international exposure in risky assets which increases its risk on returns. This bank ranks second in all the business segments except private wealth management where it is ranked 1. 4.7 Position of Cost Advantage COST PARAMETERS (in Rs 000) AXIS Bank SBI 19,78,69,396 972189580 Total Income 16,39,84,490 889544390 Total expenditure 83% 91% Tot. expenditure as % of Total income Payments to and provisions for employees % of total income Rent, taxes and lighting % of total income Advertisement and publicity % of total income Profit per employee 1,61,39,001 8% 67,98,464 3.4% 7,90,153 0.40% 14.35 lacs 144801678 15% 17944879 1.8% 2578761 0.27% 3.84 Lacs
ICICI Bank 61,59,47,044 55,27,65,103 90% 43925959 7% 97,23,158 1.6% 38,74,585 0.63% 10 Lacs
From the above table it can be inferred that SBI has the highest percentage of total expenditure as a percentage of its income. Also the profit per employee is the lowest and there is a substantial difference between in this regard between SBI and the other two banks in comparison. The total expenditure of Axis bank is the lowest and its cost per employee is the highest which puts it in the position of a cost leader amongst the three banks.
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Further it can be noticed that the measure factor of difference for the expenditure amongst the three banks is the payments to and provisions for the employees. SBI is the least cost efficient in this parameter owing to being a public sector bank with bureaucracy and government interferences. However due to economies of scale and due to long years of establishment it enjoys some advantage in the expenditure in rent taxes and lighting. With regards to advertising ICICI spends the most as proportion of its total income owing to its aggressive advertisement campaign compared to the other two banks. 4.8 Recommendations and Suggestions
1. Axis Bank is a recent entrant in Private Wealth Management segment. Hence, either it has to wait for a long time to be among the top players or it has to look for alliances to acquire capabilities and resources to survive in this segment. Also since the segment is very much prone to innovation and differentiation, it is recommended for Axis Bank to switch from transactional model to advisory model. This will cement its place as valueadded services provider and will help it retain customers and acquire new ones. 2. Axis Bank and ICICI Bank lag behind SBI by a very huge margin in Retail Banking. To increase their market shares and competitive strength in this segment, it is adviable for
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them to look to acquire small regional banks to develop synergies. Currently, there are a large number of regional banks. This results in a lot of ATMs and branches setting up in an area. By consolidating these branches and ATMs, Axis Bank and ICICI Bank can gain economies of scale and provide competition to a large bank like SBI. Also these banks have to focus on tier II and III cities and develop a strong foothold there. 3. The agribusiness banking segment is not at all attractive and Axis Bank and ICICI Bank have very low penetration in this segment. These banks can look forward to exiting from this business segment. However, due to governmental regulations, they have to allot a certain minimum percentage of their loans to this segment. Hence, to minimize the losses due to bad debts, these banks should allocate limited resources to this segment for ensuring recovery. 4. Axis Bank and ICICI Bank do not fare very well in treasury segment. It is recommended that they focus on active management of resources in this segment. The source of revenue from this segment is the interest income and capital gains realised on investing in various securities. Hence these banks have to identify the securities which provide high returns and are less risky to invest in. 5. The corporate banking sector is moderately high in market attractiveness, yet none of these banks is very strong in this sector. To strengthen their presence in this segment, the banks have to develop competencies to provide core solutions to their clients ranging from insurance to investment banking. If the banks are able to develop themselves as onestop service provider, they will be able to retain their clients for a longer duration and will lead themselves to a position where they will have high bargaining power. 6. The private wealth management sector is characterized by the presence of a large number of non-banking financial corporations such as Edelweiss Capital and Reliance Money. Since these organisations are specialised in this area, they are able to provide better and more profitable services to their clients. Thus pure banks lag behind in this sector. In order to develop themselves, all the banks have to work towards building reputation and establishing offshore presence.
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7. State Bank of India has a very extensive distribution network in terms of number of branches and ATMs. Yet it suffers from low efficiency because of duplication of resources. The bank has to work towards achieving economies of scale and should leverage its unmatched presence. For this, it is recommended that SBI consolidates its branches and increases productivity in order to increase the operating efficiency. The bank has already taken measure in this direction and has consolidated some of its umbrella banks. It is recommended that they continue the trend. 8. SBI holds a competitive advantage over Axis Bank and ICICI Bank in treasury segment. In order to safeguard its position, it is suggested that the bank invest more in high return assets and minimize risky assets. 9. The agribusiness banking sector has been declared as a priority sector and being a nationalised bank, SBI has to cater to this segment. The bank already holds an advantage over other banks in this segment. Going forward, it is suggested that the bank focuses on improving its efficiency in this segment by minimizing the scope of bad debts. The bank should also innovate and come up with customised banking products for agricultural customers.
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5. References
2011-12 RBI report on Bank profiles Banking, Indian Brand Equity Foundation (November 2011) BMI India Commercial Banking Report Q2 2012 from www.businessmonitor.com Information about SBI from its website http://www.statebankofindia.com/user.htm Information about Axis Bank from its website
http://www.axisbank.com/
Information about ICICI Bank from its website

http://www.icicibank.com/
Financial Markets and Banking Update Vol. 3: FY2011-12, ICRA Research Crisil Reports India Wealth Management Research, Northbridge Capital (February 2011) Wealth Management in India: Challenges and Strategies, Cognizant (June 2011) Competitiveness of the Indian Banking Sector Public Sector Banks, State Bank of India Report by TRAI http://www.trai.gov.in/NFCNPrts/session2/2-SCBhatnagar.pdf
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Portfolio Analysis Indian Banking Sector

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Strategic Management - II