SBI betters market share in deposits

State Bank of India (SBI), after over a decade of witnessing a decline, increased its market share in deposits from 14.91 per cent at the end of March 2007 to 15.25 per cent in the first quarter of 2007-08.

SBI's deposits grew 19.04 per cent to Rs 4,49,660 crore at the end of June 2007 from Rs 3,77,742 crore a year earlier.

While, the deposit base of commercial banks grew by Rs 94,550 crore in the first three months of the year, SBI added Rs 14,139 crore to its total deposits.

ICICI Bank, the country's largest private sector bank, on the other hand, saw its deposit base grow by only Rs 278 crore to Rs 2,30,788 crore during the quarter. ICICI Bank's market share in deposits was around 8 per cent. 

IN RECOVERY MODE SBI's market share (in %)
At the end of	Deposits	Advances
Mar-03	17.60	17.43
Mar-04	17.30	16.76
Mar-05	16.98	16.33
Mar-06	16.09	15.88
Mar-07	14.91	15.55
Jun-07	15.25	15.64

"September 2006 was an inflection point for the bank which had been steadily losing market share to private and foreign counterparts," according to OP Bhatt, chairman, SBI.

SBI's deposit growth was fuelled by higher mobilisation of term deposits during the quarter. The bank added around Rs 4,000 crore deposits every month under the various retail deposit schemes.

Consequently, the bank's low cost deposits, current account and savings account deposits, declined from 43.57 per cent at the end of 2006-07 to 41.06 per cent in the June quarter.

The higher rate of interest for time deposits pushed up the bank's cost of funds by 56 basis points to 5.35 per cent from the year-ended March 2007. This was offset by a 113 basis point increase in yield on advances and the bank was able to maintain its net interest margin at 3.31 per cent sequentially.

The bank has since withdrawn its platinum scheme offering 9.25 per cent interest on one- to three-year deposits and is unlikely to extend its limited period offer of 9.5 per cent interest on 550-day deposits beyond August.

On the advances side, the bank added 9 basis points to its market share at the end of June 2007. The bank's share in total advances grew to 15.64 per cent from 15.55 per cent on March 31, 2007.

This is below the bank's target of increasing its market share in lending by 25 basis points every quarter and 1 per cent each year.

"In our October conclave last year, we decided we will stop losing market share and strive to increase market share by 25 basis points every quarter and 1 per cent every year,' said OP Bhatt.

While, bank credit declined by Rs 14,549 crore in the first quarter of 2007-08, SBI's loan book grew by Rs 2,012 crore to Rs 3,44,087 crore during the period. Its private sector counterpart, ICICI Bank also added Rs 2,411 crore of advances taking its total advances to Rs 1,98,277 crore during the quarter.