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As of FY10, SBI (standalone) had 17.1% market share of total deposits and 23.2% market share
of savings deposits, a difference of 6%. The equivalent figure at other banks we cover varied from
-0.5% to 1.8%. In the current environment, SBI appears best placed to withstand pressure on
NIMs and it remains our top pick
FY01-10: total deposits – market share analysis
Over FY01-10, most public-sector banks (PSBs) under our coverage appear largely to have
maintained market share, except SBI which has lost 7.6% (see chart 1). Over the same period,
the three largest private-sector banks – Axis Bank, HDFC Bank and ICICI Bank – have gained
2.1-2.7% market share (see chart 2).
FY01-10: savings account deposits – market share analysis
SBI is the only public-sector bank in our universe to have gained market share in total savings
account deposits – 1.3% over FY01-10 (see chart 3). All the others appear to have lost market
share at rates ranging from 0.5-1.4%. The three largest private-sector banks have gained 3-4%
savings account market share (see chart 4). All this has translated into a 13-18% higher
proportion of savings bank deposits to total deposits at SBI, Axis Bank, HDFC Bank and ICICI
Bank over FY01-10. Further, over the same period, most public-sector banks under our coverage
have seen a 0.5-2.0% decline in the proportion of savings accounts to total deposits (see chart 7
and 8).
FY01-10: market share in savings deposits vs total deposits – analysis
What is relevant in terms of competitive dynamics is the market share in savings deposits
compared to market share in total deposits. On this parameter, as of March 2010, SBI had a
market share in savings deposits that was 6% above its overall share. At PNB, the difference was
1.8% (see chart 5). Axis Bank, HDFC Bank and ICICI Bank had relative excesses of 0.1%, 0.9%
and 0.5% respectively (see chart 6). On the same measure, other PSBs we cover had savings
deposit market shares that were 0.2-0.5% below their total deposits share.
It’s a liquidity problem; focus on banks with superior liability mix
Indian banking is facing a liquidity crunch that we expect to lead to an increase in overall cost of
funds (see our report The final countdown, dated 3 February 2011). Underlying GDP momentum
appears to be strong and lead indicators suggest that asset quality remains largely stable. In such
an environment, banks with a lower cost of funds (generally due to better mix of low-cost
deposits) should be able to withstand the pressure on net interest margins and, thus, maintain
core profitability. Given this and our analysis above, SBI remains our top pick in the Indian
banking universe.
Note: Total deposits include deposits of overseas operations, so data may not be strictly comparable across banks
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
As of FY10, SBI (standalone) had 17.1% market share of total deposits and 23.2% market share
of savings deposits, a difference of 6%. The equivalent figure at other banks we cover varied from
-0.5% to 1.8%. In the current environment, SBI appears best placed to withstand pressure on
NIMs and it remains our top pick
FY01-10: total deposits – market share analysis
Over FY01-10, most public-sector banks (PSBs) under our coverage appear largely to have
maintained market share, except SBI which has lost 7.6% (see chart 1). Over the same period,
the three largest private-sector banks – Axis Bank, HDFC Bank and ICICI Bank – have gained
2.1-2.7% market share (see chart 2).
FY01-10: savings account deposits – market share analysis
SBI is the only public-sector bank in our universe to have gained market share in total savings
account deposits – 1.3% over FY01-10 (see chart 3). All the others appear to have lost market
share at rates ranging from 0.5-1.4%. The three largest private-sector banks have gained 3-4%
savings account market share (see chart 4). All this has translated into a 13-18% higher
proportion of savings bank deposits to total deposits at SBI, Axis Bank, HDFC Bank and ICICI
Bank over FY01-10. Further, over the same period, most public-sector banks under our coverage
have seen a 0.5-2.0% decline in the proportion of savings accounts to total deposits (see chart 7
and 8).
FY01-10: market share in savings deposits vs total deposits – analysis
What is relevant in terms of competitive dynamics is the market share in savings deposits
compared to market share in total deposits. On this parameter, as of March 2010, SBI had a
market share in savings deposits that was 6% above its overall share. At PNB, the difference was
1.8% (see chart 5). Axis Bank, HDFC Bank and ICICI Bank had relative excesses of 0.1%, 0.9%
and 0.5% respectively (see chart 6). On the same measure, other PSBs we cover had savings
deposit market shares that were 0.2-0.5% below their total deposits share.
It’s a liquidity problem; focus on banks with superior liability mix
Indian banking is facing a liquidity crunch that we expect to lead to an increase in overall cost of
funds (see our report The final countdown, dated 3 February 2011). Underlying GDP momentum
appears to be strong and lead indicators suggest that asset quality remains largely stable. In such
an environment, banks with a lower cost of funds (generally due to better mix of low-cost
deposits) should be able to withstand the pressure on net interest margins and, thus, maintain
core profitability. Given this and our analysis above, SBI remains our top pick in the Indian
banking universe.
Note: Total deposits include deposits of overseas operations, so data may not be strictly comparable across banks
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