SWOT – SBI

Objective of SBI: “Purposeful banking sub serving the growing and diversified financial needs of planned economic development of the country”

SWOT analysis:

Strengths:

BRAND NAME: SBI Bank has earned a reputation in the market over the period of time(Being the oldest bank in India tracing history back to 1806)

Market Leader: SBI is ranked at 380 in 2008 Fortune Global 500 list, and ranked 219 in 2008 Forbes Global 2000. With an asset base of $126 billion and its reach, it is a regional banking behemoth.

Wide Distribution Network:

Excellent penetration in the country with more than 10000 core branches and more than 5100 branches of associate banks (subsidiaries).

Diversified Portfolio: SBI Bank has all the products under its belt, which help it to extend the relationship with existing customer.SBI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which SBI Bank is offering are: Retail Banking Business Banking Merchant Establishment Services (EDC Machine) Personal loans & Car loans Insurance Housing Loans

Government Owned: Government owns 60% stake in SBI. This gives SBI an edge over private banks in terms of customer security.

Low Transition Costs-SBI offers very low transition costs which attracts small customers.

Weaknesses:

The existing hierarchical management structure of the bank, although strength in some respects, is a barrier to change.

Though SBI cards are the 2nd largest player in the credit card industry, it has the highest non performing assets (NPAs) in the industry, which stand out to be at 16.28 % (Dec 2007).

Modernisation: SBI lags with respect to private players in terms of modernisation of its processes, infrastructure, centralisation, etc.

Opportunities:

Merger of associate banks with SBI: Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks value.

Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further increase its reach.

Increasing trade and business relations and a large number of expatriate populations offers a great opportunity to expand on foreign soil.

Threats:

Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank.

Consumer expectations have increased many folds in last few years and the bank has not been responsive enough to meet them on time.

Private banks have started venturing into the rural and semi-urban sector, which used to be the bastion of the State Bank and other PSU banks

Employee Strike: There was an employee strike in the year 2006 which disrupted SBI’s activities. This can be repeated in the future.