Banking

An industry Analysis

Manager in Making 16th March 2012

Group: 1

Key HR challenges in Indian Banking sector:

Sub Group: 5

To spot, recognize and nurture the right person for the right kind of job.
High attrition and difficulty in hiring qualified youngsters. Introducing talent management system in order to sustain and integrate the best talents. Skill up gradation through constant monitoring and T&D methods. Employee engagement, inadequate incentives to performers.

Skill up gradation in banking sector:

Sub Group: 5 Role restructuring and Job re designing. Continuous training and development techniques (E.g. RBI has established a no. of epic level training centers). Training colleges of individual banks to be upgraded as centres of excellence with mandate to carry out in-house research, provide learning support to the management and be responsible for continuing education efforts. Focus on E learning and alternative delivery channels. Two years training to be made mandatory for newly recruited officers to provide systematic exposure to all aspects of banking. Leadership training to precede posting to senior levels, after the promotion decision is taken. Every bank to develop a training policy. Policy to include mechanisms for ensuring that training inputs are properly used.

Employment opportunities in banking sector:

Sub Group: 5 Opening of more branches in rural areas. PSBs in India employ more than 7 lakh people at present. Since last 3 4 years, many PSBs have started recruiting via campus interviews. Need for qualified, best talent pool, adaptable to change employees. Banks are also having job openings for candidates with specialization in agriculture, economics, IT, etc. Most of the private banks prefer to recruit for the junior and mid level managerial positions from prestigious business schools.

Profitability of Indian banking sector:

Sub Group: 5 It can be analyzed through understanding the efficiency of fund management followed by generation of other income. The growth of total banking sector in India has decreased by 15%. The operating profit / Average total assets only form around 0.79%. The profit after tax according to March 2011 data is Rs. 146 billion, i.e. $2.9 billion. Return on net worth (2010 2011) is around 17%.

Comparison with US and UK:

Sub Group: 5 US: US banks enjoyed very high profits from the early-mid 1990s until the beginnings of the current crisis. Troublesome period in 1985-1991. The recovery of 1992-1999 The year 2000 Us banking sector profits: $4.1 billion profit for the third quarter Growth: 21% from the comparable period last year. UK: More than a third of UK banks increased their business volumes over the last three months compared with just 9% who saw volumes fall. (2010 data) That shows the strongest growth in the banking sector since June 2007.

Top 3 Indian and Global players

Sub Group: 5

SBI
Sub Group: 5 SBI accounts for almost one-fifth of the nations loans. SBI is also involved in NRI (Non Resident Indian) services through its network in India and overseas. During the first quarter of fiscal 2011, State Bank of India reported operating profit increased year-over-year by 66.97%. Net Profit for Q1 FY2011 increased to Rs. 2914.20 crores from Rs. 2330.37 crores in Q1 FY2010, representing growth of 25.05%. Net interest income increased by 45.35% in Q1 FY11 over Q1FY10 by 4.30%. Interest expenses on deposits decreased by 11.85% during Q1 FY11 through strategic shedding of high cost bulk deposits. Interest expenses have come down despite deposits increasing by 6.78%.

ICICI
Sub Group: 5
India's largest private sector bank and second largest overall in terms of assets.

Key Financial Metrics (in Rs. billions)

2008

2007

2006

Interest Income

340.94

240.02

151.35

Net Income

31.15

26.33

23.99

Net Interest Income / Total Funds (%)

1.96

1.89

2.24

Revenue

605.31

415.42

254.68

Total Assets

4,862.48

3,949.84

2,776.56

Business Per Employee

0.1008

0.1027

0.0905

Punjab National bank

Sub Group: 5 For the fiscal year ending March 31, 2009, PNB reported stand-alone net profit of Rs. 30.91 billion, highest among the Nationalised banks. he bank is focused on margin management and asset liability management. Net Interest Income (NII) increased 27% during the year, reflecting better margin improvement. Despite aggressive rate cuts, PNB managed to expand its Net Interest Margin to 3.62% fro 3.58% last year, which speaks volumes of the quality of its assets. With its focus on asset management, PNB reduced its net NPA ratio to 0.17% at the end of FY09, compared to 0.64% a year ago.