Monday, January 19, 2015

SBI figures among top 50 most-valued global banks

SBI chairman Arundhati Bhattacharya
INDIA'S largest public sector lender State Bank of India (SBI) and private sector bank HDFC figure in a list of the top 50 global banks in terms of market capitalisation. HDFC Bank, India’s second-largest private lender in terms of...
asset size, ranks 45th, with a market capitalisation of $39 billion. With a market capitalisation of $38 billion, SBI is ranked 46th.
ICICI Bank, ranked 53rd, is the only other Indian entity to figure in the list of the 100 most valued global banks.
The market capitalisation, or value, of an entity is calculated by multiplying the total number of its shares outstanding by its stock price.
The huge leap in the rankings of Indian lenders is due to a sharp rally in their stocks in the past year. During this period, shares of HDFC Bank gained 50 per cent, while those of SBI nearly doubled.
A year ago, no Indian bank featured among the 60 most valued global banks.
The BSE Bankex, a barometer of the performance of banking stocks, has been one of the best-performing sectoral indices in the past year. It gained 75 per cent, against a 33 per cent rise in the benchmark Sensex.
The rise in bank stocks was in anticipation of a revival in domestic economic growth, led by a reform push by the new government.
Industrial and Commercial Bank of China (ICBC) tops the list of global banks, with a market capitalisation of $285 billion, over seven times that of HDFC Bank. Chinese banks dominate the list of the top 10 global banks, with Bank of China ($212 billion), China Construction Bank ($208.1 billion) and Agricultural Bank of China ($202 billion) also figuring in the list.
Wells Fargo ($263 billion) and JP Morgan Chase ($205 billion) are other major global banks, ranked second and fifth, respectively.
Experts say no Indian bank figures in the top 10 list because the country’s banking sector is quite fragmented, with a large number of players.
While the gross domestic product (GDP) of the US, the world’s largest economy, is about $17 trillion and China’s $9.2 trillion, India’s is $1.9 trillion. Analysts say typically, bank assets grow at about two times the economic growth rate.
In terms of asset size, Indian banks have a lot of catching up to do. At $400 billion, SBI has the highest assets among Indian lenders, though it is still a far cry from $2.4 trillion, the average asset size of the top five global banks.
As of December 2013, SBI had 17,000 branches, including 190 foreign offices, making it the largest banking and financial services company in India by assets.

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