The largest Public Sector bank has a huge scope for improvement in earnings when it will start delivering on key parameters like loan growth, margin expansion, lower operating expense, and stable asset quality.
The profit surge in Q2FY22 saw a glimpse of the above-mentioned parameters like margin expansion and stable asset quality (leading to lower provision). SBI is currently valued at around 1-time trailing core book value which is attractive considering the improving return ratios and is discounting most of its concerns in the current valuation.
State Bank of India or SBIN
SBI's origination goes back to the first decade of the 19th century with the establishment of the Bank of Calcutta in 1806 in Calcutta. 3 years later, SBI received its charter and was redesigned as the Bank of Bengal (on 2 January 1809). SBI became the first joint-stock bank of British India that was sponsored by the Bengal Government. The Bank of Bombay (on 15 April 1840) and the Bank of Madras (on 1 July 1843) followed the path of Bank of Bengal. All the three banks remained modern banking in India till their amalgamation as the Imperial Bank of India as on 27 January 1921. Primarily Anglo–Indian creations, the three specific banks came to existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce. Also, they were not imposed from outside arbitrarily to modernize India's economy. Their evolution was shaped by ideas culled from similar developments in both Europe and England. SBI is considered as the country’s oldest bank and a premier in terms of balance sheet size, various branches, market capitalization, and profits. The 200-year-old public sector is stirring out of its public sector legacy and moving with agility to give a run for their money for both private and foreign banks. It is also entering in many new businesses with strategic tie-ups such as Pension Funds, General Insurance, Custodial Services, Private Equity, Advisory Services, Mobile Banking, Point of Sale Merchant Acquisition, structured products, etc. Each one of such initiatives has a vast potential for growth. The bank is moving ahead with cutting edge technology and innovative new banking models. These are needed for the expansion of its rural banking base, looking at the vast untapped potential in the hinterland and proposes to cover 100,000 villages in the next 2 years. At the end of March 2011, the total number of branches was 13,542 while the number of ATMs stood at 20,084 across the country. SBI is also focusing on the top end of the market, and on wholesale banking capabilities for providing India's growing mid/large corporates with a complete array of products and services. It is also consolidating its global treasury operations and entering into the structured products and derivative instruments. Currently, the bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in India. It is also the only Indian bank that featured on the Fortune 500 list. Since 1973, the bank is involved in non-profit activity called Community Services Banking and every branch and offices in India, sponsor and engage in many welfare activities & social causes. It also makes them above banking, as they touch millions of lives anywhere in numerous ways. SBI has also received approval from the Government of India for the acquisition of SBI Commercial and International Bank (SBICI Bank). Also, the government had issued the 'Acquisition of SBICI Bank Order 2011' with order on 29 July 2011. The Bank entered the UK's home loan market and started with the mortgages for landlords, best known as buy–to–let mortgages. Along with the amounts ranging from £50,000 to £1.5 million, and loan to value of ratios of at least 60%. In April 2014, SBI launched three specific digital ba