International Journal of Management Studies ISSN(Print) 2249-0302 ISSN (Online)2231-2528

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A STUDY OF FINANCIAL PERFORMANCE:

A COMPARATIVE ANALYSIS OF STATE BANK
OF INDIA AND ICICI BANK

Chahat Gupta, Amandeep Kaur,

Assistant Professor, Assistant Professor,
G.G.S. College for Women, G.G.S. College for Women,
Chandigarh, India Chandigarh, India

ABSTRACT
Exponential growth and development of a country’s public and private sector
banks are the major contributors towards the socio-economic development of a
country. The major difference between the two sector banks is of their approach
towards their contribution to growth. State bank of India (SBI) and Industrial
Credit and Investment Corporation of India (ICICI) are the two leading banks of
India in the public and private sector. A country’s financial system is reflected by
the efficiency in the financial operations of its commercial banks. This study sets
out to apply various profitability ratios of the SBI and ICICI Bank so as to
compare and analyze their financial performance. The study analyzes and reflects
a difference of performance in the working of SBI and ICICI Banks. Data used for
the study is secondary in nature. On the basis of the study, it can be said that SBI
has large scale based operations than ICICI Banks.

Keywords: ICICI, SBI, Profitability Ratios, Financial Performance.

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INTRODUCTION:
Banking sector plays a vital role in the development of Indian economy. Higher profits are the
indicators of growth of the banking sector. Higher profits are dependent upon optimum
procurement and utilization of resources. Banks are the lenders of the last resort, thus are
helpful in satisfying the personal needs of the individual and play a significant role in the
development of the economy. Banks are the lifeline of the modern economy. Development of
banking contributes to the development of the economy. An efficient financial system is an
indicator of the strength of the economy which in turn depends upon the sound banking policies
and system. A sound banking system helps in productive utilization of resources and is able to
timely set off its obligations towards the depositors. After independence, banking sector has
made a major contribution towards the socio-economic progress of the country. Today banking
sector has a large network of branches with wide range of financial instruments in operation.
Through its intermediary activities, the banking sector fosters the production, distribution,
exchange and consumption processes in the economy. The efficiency of the banking system,
thus determines the pace of development of the economy. Similar to any other business
enterprise, the efficiency of the bank is evaluated based on profitability and quality of the assets
it possess. In post- independence period, the banking sector has played a catalyst and
commendable role in supporting the government to achieve its social and economic objectives
through deposit mobilization, mass branch networking, Priority sector lending, employment
generation etc. Achieving such social objectives resulted in imposing the extensive regulations
by the government which in turn hampered the productivity of Indian banking during the pre-
liberalization era. An evaluation of Indian banking industry during the pre-liberalization era
revealed the presence of several shortcomings which crept into the financial system due to
reduced productivity, deteriorated asset quality and increased cost structure.
Nationalization in the Indian Banking sector resulted in development of network of financial
branches and instruments. Nationalized banks are the major lenders in the Indian economy.
They occupy a dominant position because of their huge size and large scale networks. As by
2017, SBI has an employee base of 2,09,567 employees as against ICICI Of 84096 across India.
At present, SBI has total assets Rs. 2,705,966.30 crores (US$420 billion) and ICICI has total
assets Rs. 771791 crores (US $ 1.5 billion).
Increasing number of branches of the banks, deposits, credit facilities and banking operations are
the indicators of the trend towards growing economy. Financial performance need to be assessed
so as to know the improvement after the crisis. Today, India has about 27 Public Sector Banks, 20
Private Sector Banks and 43 Foreign Banks. Public Sector Banks holds near 75% of the total
assets of the industry where SBI and ICICI are the two major players in the banking sector.

Profile of SBI:
State Bank of India is one of the leading bank in the Public Sector with over 24000 branches
offering a range of banking service through its wide spread network within and across India. Its
Headquarter is in Mumbai with local head offices and zonal offices at important cities
throughout India. It was constituted on 1 st July, 1955 under the State Bank of India Act, 1955. It
has large number of subsidiaries and joint ventures out of India including United States,
Canada, Nigeria, Bhutan and Nepal. This bank has largest retail banking customer base in India.

Present Profile of SBI (2017):

Total Assets Rs. 2705966 Crores

Total Equity Rs. 188286 Crores
No. of Employees 209567
ATM’s 43000

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Subsidiaries of SBI:
State Bank of Bikaner & Jaipur
State Bank of Hydrabad
State Bank of Mysore
State Bank of Patiala
State Bank of Travancore

PROFILE OF ICICI BANK:

ICICI is also one of the leading Private Sector Bank in India with over 4850 branches and
13917 ATMs in India. It offers wide range of financial services and banking products for its
customers. This bank is also serving in capital investment banking, asset management and life
and non-life insurances too. Besides, other banking facilities include Tele-Banking, Net
Banking, and Mobile Banking etc. This bank too has spread networks across India including
Canada, Russia, U.K., U.S.A. This bank has its equity listed in India on Bombay Stock
Exchange and National Stock Exchange. Moreover, its American Depository Receipts (ADRs)
are also listed on Newyork Stock Exchange (NYSE). ICICI bank limited is major banking and
financial services organization in India. The bank is the second largest bank in India and the
largest private sector bank in India by Capitalization.

Present Profile of ICICI (2017):

Total Assets Rs. 771791 Crores
Total Equity Rs. 99951 Crores
No. of Employees 84096
ATM’s 13917

SUBSIDIARIES OF ICICI BANK:

National International
ICICI Lombard ICICI Bank UK PLC
ICICI Prudential Life Insurance Company Ltd ICICI Bank Canda
ICICI Securities Limited ICICI Bank Eurasia LLC
ICICI Prudential Asset Management Company Limited
ICICI Venture
ICICI Foundation

LITERATURE REVIEW:
Samad (2007) in his paper entitled, “Comparative Analysis of Domestic and Foreign Bank
Operations in Bangladesh” examines the operations of foreign and domestic banks in the
process of industrialization and economic development of Bangladesh.
Shobana (2010) in his paper entitled, “Operational Efficiency of Public Sector Banks in India- a
Non-Parametric Model” focuses on the operational efficiency of public sector banks in India
using a non-parametric model, which measures the efficiency as a ratio of output index to input
index. The study concluded that out of 27 public sector banks in India, only nine banks has
achieved high level of efficiency in its operations.
Dr. Anurag. B. Singh and Priyanka Tandon (2012): in their research paper entitled, “A
comparative Study on Financial Performance of State Bank of India and ICICI Bank” examined
the financial performance of SBI bank and ICICI bank, Public sector and Private sector
respectively. The data used for this study was secondary in nature. The study was conducted to

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International Journal of Management Studies ISSN(Print) 2249-0302 ISSN (Online)2231-2528
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determine the financial performance of SBI and ICICI banks on the basis of ratios such as credit
deposit, net profit margin etc. The study was undertaken from 2009 to 2014. In this study, it was
found that SBI is performing well and financially sound than ICICI bank but in context of
deposits and expenditures, ICICI bank has better managed than SBI bank.
Devi (2017): in their paper entitled “A Study on the Financial Comparison between SBI and
ICICI with reference to Chennai Annanagar Branch” examined the performance of the banks
from 2012-2017. Operating ratio, debt equity ratio were taken as the variables. It was examine
that operating profit ratio of SBI was better than ICICI.

OBJECTIVES OF THE STUDY:

1. To compare the financial performance of State Bank of India and ICICI Bank.
2. To compare the SBI and ICICI in terms of profitability and managerial efficiency.
3. To offer the suggestions in order to improve the financial performance of both banks selected
for the purpose of the study.

SCOPE OF THE STUDY:

The present study is undertaken to highlight the financial performance of SBI bank and ICICI
bank. SBI and ICICI Banks, being the best bank in India have been selected for the purpose of
the study. It rises to the level of 2 nd largest bank in India in terms of net assets after merger of
ICICI with ICICI bank. It has wide range of products and services. Ratio analysis is one of the
major criteria to determine the financial performance of both banks and this study will help to
understand the financial performance of State Bank of India and ICICI Bank.

RESEARCH METHODOLOGY:
Research methodology describes the various methods to conduct the research study. It shows
the sequence of the steps which are followed in research process from beginning of the study till
the completion of the study. So, research methodology is a way to systematically solve the
problem and get insights into phenomena.

DATA COLLECTION:
Research is based on the secondary data. The required data for the study has been collected
from published annual reports of the banks and other statements prepared by the SBI and ICICI
Banks.

PERIOD OF THE STUDY:

This study covers the period of 07 years from 2010-11 to 2016-17. The period of the study is
large enough to know the performance of both banks.

TOOLS FOR ANALYSIS:

Ratio Analysis:
For the purpose of the study, following parameters have been taken:
1. Net Profit Ratio
2. Operating Profit Ratio
3. Return on shareholder’s Investment or Net Worth Ratio
4. Earnings Per Share
5. Total Assets Turnover Ratio
6. Interest Expended to Interest Earned Ratio.

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DATA ANALYSIS AND INTERPRETATION:
NET PROFIT RATIO:
Table 1
SBI ICICI
(RS. IN CRORES) (RS. IN CRORES)
YEAR NET NET
NET NET NET NET
PROFIT PROFIT
PROFIT SALES PROFIT SALES
RATIO RATIO
2010-11 7370 96329 7.65 5149 33082 15.56
2011-12 11707 120872 9.68 6465 41045 15.75
2012-13 14105 135691 10.39 8325 48421 17.19
2013-14 10891 154903 7.03 9810 54606 17.96
2014-15 13101 174972 7.48 11175 61267 18.24
2015-16 9950 191843 5.18 9726 68062 14.29
2016-17 10484 210979 4.96 9801 73661 13.30
AVERAGE 7.48 AVERAGE 16.04

Table 1 displays that Net profit of both SBI and ICICI banks were fluctuating. The highest Net
Profit ratio of SBI was 10.39% in 2012-13 and that of ICICI bank, it was 18.24% in 2014-15,
where as the lowest Net Profit Ratio of SBI was 4.96% in 2016-17and that of ICICI, it was
13.30 % in 2016-17.
The average Net Profit Ratio of SBI is 7.48% and ICICI bank is 16.04% which implies that the
Net Profit Ratio of ICICI bank is 8.56, which is more than that of the SBI.

OPERATING PROFIT RATIO:

Table 2
SBI ICICI
(Rs. In Crores) (Rs. In Crores)
Year
Operating Net Operating Operating Net Operating
Profit Sales Profit Ratio Profit Sales Profit Ratio
2010-11 16217 96329 16.83 7380 33082 22.31
2011-12 31574 120872 26.12 10089 41045 24.58
2012-13 31082 135691 22.90 13199 48421 27.25
2013-14 32109 154903 20.72 16594 54606 30.38
2014-15 39537 174972 22.60 19720 61267 32.18
2015-16 43257 191843 22.55 23863 68062 35.06
2016-17 50847 210979 24.10 26487 73661 35.96
Average 22.26 Average 29.67

Table No 2 demonstrates that the Operating Profit Ratio of both SBI and ICICI banks were
fluctuating during the period of the study. The highest Operating Profit Ratio of SBI in the year
2011-12 was 26.12% and that of ICICI bank was 35.96% in 2016-17. Where as, the lowest
Operating Profit Ratio of SBI was 20.72% in the year 2013-14 and 22.31% in 2010-11 in ICICI
bank respectively.
The average Operating Profit Ratio of SBI is 22.26% and that of ICICI bank is 29.61% which
implies that the Operating Profit Ratio of ICICI 7.35% which is more than that of SBI bank.

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RETURN ON SHAREHOLDER’S INVESTMENT OR NET WORTH RATIO:
Table 3

SBI ICICI
(Rs. In Crores) (Rs. In Crores)
Year Net Net
Net Shareholder’s Net Shareholder’s
Worth Worth
Profit Funds Profit Funds
Ratio Ratio
2010-11 7370 64986 11.34 5149 55090 9.35
2011-12 11707 83951 13.94 6465 60405 10.70
2012-13 14105 98884 14.26 8325 66706 12.48
2013-14 10891 118282 9.21 9810 73213 13.40
2014-15 13101 128438 10.20 11175 80429 13.89
2015-16 9950 144274 6.89 9726 89735 10.84
2016-17 10484 188286 5.57 9801 99951 9.80
AVERAGE 10.20 AVERAGE 8.046

Table No 2 demonstrates that the Return on Net worth Ratio of both SBI and ICICI banks were
fluctuating during the period of the study. The highest Return on Net Worth Ratio of SBI in the
year 2012-13 was 14.26% and that of ICICI bank in 2014-15 was 13.89% .Whereas, the lowest
Return on Net Worth Ratio of SBI in the year 2016-17 was 5.57% and of ICICI bank, it was
9.35% inn 2010-11.
The average Net Worth Ratio of SBI is 10.20% and that of ICICI bank is 8.046% which implies
that the average Net Worth Ratio of SBI i.e. 2.154% more than the ICICI bank.

EARNING PER SHARE (EPS)

Table 4

SBI ICICI
(RS. In Crores) (RS. In Crores)
Year Earnings No. Of Earnings
Net No. Of Equity Net
Per Equity Per
Profit Shares Profit
Share Shares Share
2010-11 7370 63.50 116.06 5149 115.17 44.70
2011-12 11707 67.10 174.47 6465 115.27 56.08
2012-13 14105 68.40 206.21 8325 115.36 72.16
2013-14 10891 74.65 145.90 9810 115.50 84.93
2014-15 13101 74.65 175.49 11175 115.96 96.37
2015-16 9950 77.62 128.18 9726 116.31 83.62
2016-17 10484 79.73 131.49 9801 116.51 84.12
AVERAGE 153.97 AVERAGE 74.56

Table No.4 reveals that the highest Earnings per Share was 206.21 in the year 2012-13 and that
of ICICI bank was 96.37 in 2014-15. Whereas, the lowest Earnings per share of SBI in the year
2010-11 was 63.50 and that of ICICI bank in the year 2010-11 was 44.70.
The average Earnings per Share of SBI is 153.97 and ICICI bank is 74.56, which implies that
the Average Earnings per share of SBI is 79.41, which is more than that of ICICI bank.

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TOTAL ASSETS TURNOVER RATIO:
Table 5
SBI ICICI
(RS. In Crores) (RS. In Crores)
Total Total
Year
Total Assets Total Assets
Net Sales Net Sales
Assets Turnover Assets Turnover
Ratio Ratio
2010-11 96329 1223736 0.07 33082 406234 0.08
2011-12 120872 1335519 0.09 41045 473647 0.08
2012-13 135691 1566211 0.08 48421 536794 0.09
2013-14 154903 1792748 0.08 54606 594641 0.09
2014-15 174972 2048079 0.08 61267 646129 0.09
2015-16 191843 2357617 0.08 68062 720695 0.09
2016-17 210979 2705966 0.07 73661 771791 0.09
AVERAGE 0.078 AVERAGE 0.087

Table No. 5 depicts that the Total Assets Turnover Ratio of both SBI and ICICI banks was
stable. The highest Assets Turnover Ratio of SBI is 0.09 times in 2011-12 and that of ICICI
bank was stable during the study period. The average Total Assets Turnover Ratio of SBI is
0.078 times and of ICICI bank is 0.087 times, which implies that the average Total Assets of
SBI Bank is more than that of the ICICI bank.

INTEREST EXPENDED TO INTEREST EARNED RATIO:

Table 6
SBI ICICI
(RS. In Crores) (RS. In Crores)
Year
Interest Interest Interest Interest
Ratio Ratio
Expended Earned Expended Earned
2010-11 48868 81394 60.03 16957 25974 65.28
2011-12 63230 106521 59.36 22808 33542 68.00
2012-13 75325 119657 62.95 26209 40075 65.39
2013-14 87068 136350 63.85 27702 44178 62.70
2014-15 97382 152397 63.90 30051 49091 61.21
2015-16 106803 163685 65.24 31515 52739 59.75
2016-17 113658 175518 64.75 32419 54516 59.47
AVERAGE 62.86 AVERAGE 63.11

Table no. 6 explain that during the study period, Interest expended to Interest Earned Ratio of
both SBI bank and ICICI bank fluctuated. The highest Interest Expended to Interest Earned
Ratio of SBI was 65.24% in the year 2015-16 and for ICICI bank; it was 68.00% in 2011-12.
Whereas the lowest Interest Expended to Interest Earned Ratio of SBI was 59.36% in 2011-12
and for ICICI bank was 59.47 in 2016-17.
The average Interest Expended to Interest Earned Ratio of SBI is 62.86% and that of ICICI
bank is 63.11%, which implies that the average interest Expended to Interest Earned Ratio of
ICICI bank is more than that of the SBI bank with 0.25%.

FINDINGS, SUGGESTIONS AND CONCLUSION:

 The average Net Profit Ratio of SBI is 7.48% and ICICI bank is 16.04% which implies that
the Net Profit Ratio of ICICI bank is 8.56, which is more than that of the SBI.

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 The average Operating Profit Ratio of SBI is 22.26% and that of ICICI bank is 29.61% which
implies that the Operating Profit Ratio of ICICI 7.35% which is more than that of SBI bank.
 The average Net Worth Ratio of SBI is 10.20% and that of ICICI bank is 8.046% which
implies that the average Net Worth Ratio of SBI i.e. 2.154% more than the ICICI bank.
 The average Earnings per Share of SBI is 153.97 and ICICI bank is 74.56 , which implies that
the Average Earnings per share of SBI is 79.41, which is more than that of ICICI bank.
 The average Total Assets Turnover Ratio of SBI is 0.078 times and of ICICI bank is 0.087
times, which implies that the average Total Assets of SBI Bank is more than that of the
ICICI bank
 The average Interest Expended to Interest Earned Ratio of SBI is 62.86% and that of ICICI
bank is 63.11%, which implies that the average interest Expended to Interest Earned Ratio of
ICICI bank is more than that of the SBI bank with 0.25%.

SUGGESTIONS:
 As Earnings per share (EPS) of ICICI bank is low as comparative to SBI. Therefore, the
ICICI bank needs to take some measures to increase its income over its expenditure.
 Interest expended to interest earned ratio of SBI is less as comparative to ICICI. So, SBI bank
need to take some effectives steps in order to increase its more earning capacity.
 Average net worth ratio of ICICI bank is less. Therefore, ICICI should increase its net worth
more as comparative to other banks.

CONCLUSION:
It is concluded that both the selected banks i.e. SBI and ICICI are maintaining the equitable
standards and earning the profits. The position of the both the banks is satisfactory but by
comparing the performance of the SBI and ICICI banks, it indicates that there are significant
difference between SBI and ICICI in terms of Net profit, Operating profit and Net Worth. But it
is observed that the overall performance of SBI bank is better than ICICI bank.

REFERENCES:
Bodla, B.S. and Verma, R. (2006). Evaluating Performance of Banks through CAMEL Model:
A Case Study of SBI
Maheshwari & Maheshwari, Banking Law and Practices, Himalaya Publishing Pvt. Ltd.
Allahabad, pp. 152.
Pandey, I.M. Financial Management, Vikas Publishing House Pvt. Ltd. 2002, pp 633
Ram Pratap Sinha and Biswajit Chatteree (2009). Bank Ownership and Deposit Mobilization: A
Non-Parametric Approach, Journal of Social and Management Sciences, Vol.
XXXVIII, No.3,Oct-Dec 2009, Pg 159-180
Shobana V.K. (2010). Operational Efficiency of Public Sector Banks in India- A Non-
Parametric Model, The Journal Accounting and Finance, Vol 24, 2010, Pg. 85-96

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