International Journal of Research in Finance and Management 2024; 7(1): 148-150
P
P-ISSN: 2617-5754
E-ISSN: 2617-5762
IJRFM 2024; 7(1): 148-150 A comparative study on financial performance of SBI
www.allfinancejournal.com
Received: 06-02-2024 and ICICI bank in India
Accepted: 07-03-2024
Dr. Shashimala Kumari Dr. Shashimala Kumari
Ph.D., Department of
Commerce and Business
Administration, T.M.B.U.,
DOI: https://doi.org/10.33545/26175754.2024.v7.i1b.294
Bhagalpur, Bihar, India
Abstract
Banking company plays a crucial role in economic development of any country. The banking structure
of India is featured by a large network of bank branches, serving many kinds of financial services of
the Indian people. The State Bank of India, popularly known as SBI is one of the largest bank of public
sector in India. ICICI Bank is second largest and leading bank of private sector in India. The purpose of
the study is to examine the financial performance of SBI and ICICI Bank, public sector and private
sector respectively. The research is descriptive and analytical in nature. The data used for the study was
entirely secondary in nature. The present study is conducted to compare the financial performance of
SBI and ICICI Bank on the basis of ratios such as cost to income, net profit margin etc. The time
period of the study taken is from the year 2016-2017 to 2020-2021. The study found that SBI is
performing well and financially sound than ICICI Ltd. Bank but in context of deposits and expenditure
of ICICI bank has better managing efficiency than SBI Bank.
Keywords: Cost to income ratio, interest income to total income ratio, other income to total income
ratio, net profit margin
Introduction
The banking sector are the life blood of an economies of any country. The economy shall
freeze without a sound banking system. The nation's banking system aids in its progress and
development.
Therefore, a strong financial system is crucial to boosting an economy. Financial soundness
is a prerequisite for a healthy banking system.
This study compares the financial soundness of State Bank of India and ICICI Bank, two
significant players in the Indian banking industry. In India, ICICI Bank is the largest private
sector bank while State Bank of India (SBI) is the biggest public sector bank.
Objectives of the study
1 To study the financial performance of SBI Bank and ICICI Bank.
2. To study and know profitability of SBI Bank and ICICI Bank.
3. To understand the efficiency of SBI and ICICI Bank.
4. To study interest income of SBI and ICICI Bank.
Statement of problem
Financial performance and efficiency of the commercial Banks are the key elements of
efficiency and efficacy of the countries’ financial system. Increasing the banks' productivity
and profitability has been the main goal of India's banking sector reforms. Public sector
banks controlled a near-monopoly in the sector before banking reforms. But thanks to the
financial reforms, a number of foreign and private banks are expanding their market share
and gaining more autonomy. In order to compare the performance of SBI and ICICI Bank,
Correspondence
this study aims to use their profitability ratios.
Dr. Shashimala Kumari
Ph.D., Department of Need and scope of the study
Commerce and Business Financial analysis is mainly done to compare the growth, profitability and financial
Administration, T.M.B.U., soundness of the respective bank by diagnosing the information contained in the financial
Bhagalpur, Bihar, India
statements.
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International Journal of Research in Finance and Management https://www.allfinancejournal.com
Financial analysis is done to identify the financial strengths one of the fastest growing financial institutions in the world.
and weaknesses of the two banks by properly establishing Using purposive sample, State Bank of India and ICICI
relationship between the items of Balance Sheet and Profit Bank were selected as the sample units for the study. The
& Loss A/C. It helps in better understanding of banks sample units selected were considered one of the successful
financial position, growth and performance by examining units in the banking sector.
the financial statements with various tools and evaluating
the relationship between various elements of financial Tools of the Study
statements. Ratio analysis technique has been used in the course of
analysis.
Methodology
Period of the study and sources of data Cost to Income Ratio
This study undertakes the comparative financial It displays the expenses of a business compared to its
performance analysis of State Bank of India and ICICI Bank revenue. To calculate the ratio, divide the operating
for the period of 5 years i.e., from 2016-2017 to 2020-2021. expenditures by operational income (which includes fixed
The data for this study are taken from the annual reports of and administrative costs like salaries and property expenses
State Bank of India and ICICI Bank. Since the information but excludes written-off bad debts).
is based on the annual reports published by the company,
the study is said to be based on the secondary data. Cost to income ratio = Total Cost + Total Income
Sampling method: Banking sector in India is considered
Table 1: Cost to income ratio of SBI bank from 2016-2017 to 2020-2021
SBI Bank
Year Total Cost Total Income Cost to Income Ratio
2016-2017 1818930125 1918436662 9.49
2017-2018 16187139225 21097917525 47.53
2018-2019 20049507332 27964354125 44.68
2019-2020 27164746035 30254507225 42.58
2020-2021 27878131256 30864701231 43.35
Table 2: Cost to income ratio of ICICI bank from 2016-2017 to 2020-2021.
ICICI Bank
year Total Cost Total Income Cost to Income Ratio
2016-2017 583361991 680624864 8.57
2017-2018 683362992 6825641234 10.15
2018-2019 6753262392 7150025821 9.51
2019-2020 6883352495 7251234582 9.49
2020-2021 6953453496 7501245621 9.23
The lower the ratio, the more efficient the bank is Net Profit Margin = ((Total Revenue - Total Expenses) ÷
performing. Though the ratio has increased to a greater Total Revenue) × 100
extent in ICICI in the current year when compared to last
year, the ratios signifies that ICICI outperforms SBI in Net Profit Margin is in an increasing trend in ICICI, while it
terms of efficiency, i.e. by maintaining its Cost to Income keeps decreasing in SBI. This is because, Interest income
ratio in a much lower level when compared with SBI. have decreased in the years. Though interest income has not
increased measurably in ICICI too, they have taken proper
Interest Income to Total Income steps to cut down costs and other expenditures. They have
Interest income refers to the major part of income generated also raised their sources of income through other fees,
from assets of the bank (amount lent by the bank). And total charges and penalties, thereby increasing the net profits. But
income refers to both interest earned and other income SBI has failed to increase both interests and other incomes,
through fee charged for various other services provided by and also no steps have been taken to bring down the costs.
the bank. To calculate the ratio of interest income to total
income, divide interest income by total income. The higher Findings
the ratio signifies that the interest forms major part of total ▪ Interest Income to Total Income ratio has drastically
income of the bank. reduced in both the banks.
▪ Other Income to Total Income ratio has increased in
Net Profit Margin both the banks. The ICICI bank has a higher increase
Net profit margin is the percentage of revenue remaining when compared to SBI which must be immediately
after all operating expenses, interest, taxes and preferred taken into consideration by ICICI.
stock dividends (but not common stock dividends) have ▪ Net Profit Margin is in an increasing trend in ICICI
been deducted from a company's total revenue. while it is decreasing drastically in SBI.
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International Journal of Research in Finance and Management https://www.allfinancejournal.com
Suggestions
After analysing the above data the following suggestion are
given to improve the financial performance of the company.
▪ As the operating cost of both the banks has led to the
reduced profits, they have to be reduced in order to
increase the profits.
▪ The NPAs should be controlled in case of SBI to
increase the profits and realize the actual returns of the
loans it has lent.
▪ ICICI should cut down the charges it has imposed on
customers so as to attract more number of customers
thereby increasing the operations.
Conclusion
The analysis of both the banks using the various tools
reveals that both the banks have performed well over the
last 5 years from financial year 2016-2017 to 2021-2022.
The banks‟ profits were highly satisfactory during the years.
The solvency positions of the banks are fairly safe and they
are fully equipped to handle all the debts. Thus the banks
are in a good position and fully armed to handle all the
future contingencies.
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