CHAPTER 6

COMPARISON BETWEEN ICICI BANK AND SBI.

Contents 6.1 SBI v/s ICICI 6.2 Analysis & Interpretation of Services 6.3 Analysis of Performance of ICICI Bank & SBI 6.4 Major Findings 6.5 Testing of Hypothesis

136

CHAPTER 6

COMPARISON BETWEEN ICICI BANK AND SBI.

6.1 SBI v/s ICICI

SBI stands for State Bank of India. It is a public sector institution (government owned), with a huge customer base all over India. It has seven associate banks operating under its SBI name. It has over thirteen thousand branches across India and in some selected international countries and a 56,000 ATM network across India. The Standard Bank of India inherited the Bank of Calcutta, which was founded in 1806, and has been in existence for over two hundred years.

On the other hand, the ICICI is a private sector bank (privately owned), with a relatively smaller clientele base. It is one of the major banks in India (precisely the second largest), but much smaller than the SBI. It has 950 branches, with 3,500 branches across India. The bank has deposits of Rs 1.65 lakh crore compared to SBIs Rs 3.8 lakh crore (accumulated in a period of twelve years), racking up a net worth of Rs 22,000 against Rs 27,000 for the State Bank of India. This represents Rs 9 crore business generated by each ICICI employee per year, compared to Rs 3 crore worth of business per employee of the ICICI.

While the State Bank pays 4.7 percent on deposits, and earns less on advances, the ICICI pays 0.7 less (4 percent), while earning more on advances, and thus earns 0.4 percent more on assets than the SBI. This is no surprise, as theres seemingly limitless access to funds from the government for the state owned SBI.

137

On money transfers from overseas accounts, with the SBI, once a transfer transaction is completed, you will be able to know the exchange rate used, and there are no restrictions on the amounts you can transfer a day. However, the ICICI transfer is somewhat different. After completion of a money transfer transaction, the exchange rate can only be known after five days, and there is a daily limit of $5000 that can be transferred a day. Although the SBI has generally performed well in the past, in recent years, the ICICI has seen very good performance, almost edging out the SBI in every aspect, especially financially. The financial years between 2001-2002 and 2005, and 2006, saw very strong gains for the ICICI bank. Its deposits grew by 200 percent, five times more than the SBIs, and while SBIs revenue grew by 30 percent and the ICICI banks revenue grew by seven times that percentage. This trend means that ICICIs growth will eventually overtake SBIs in the future, in terms of deposits. The SBI is a government owned bank (public sector), while ICICI is a privately owned bank (private sector). The SBI is much older (more than 200 years old) and more established than the ICICI, which is less than 25 years old. The SBI does not limit daily international transfer amounts, while the ICICI limits daily transfers to $5000 a day. The SBI bank pays a higher percentage on deposits than the ICICI bank.

6.2 ANALYSIS AND INTERPRETATION OF SERVICES

Case 1 Sale of Gold during Akshya Tritiya (2012) SBI

138

ICICI

We can see here that SBI advertises sale of mutual fund units in their Gold Fund scheme during the festival of Akshaya Tritiya. Investors who have knowledge about the market will know very well that gold as a commodity yields an average 20% YoY and has since never saw a negative rate of return. SBI also had a scheme that offered 1% discount on all denominations of Gold coins except those above 100gms during their campaign. The drawback of advertising like this is, many do not know the benefits of investing in paper gold. Which means, gold mutual funds or gold exchange traded funds; this form of investment has superior advantages than investing in gold as a physical commodity. ICICI however had decorated all its branches during the festival and even offered a larger discount, 8% on gold coins being purchased online. Many Indians today still choose gold as a physical commodity and it is possible that ICICI had better sales than SBI in comparison to gold coins.

SBI could simply mention the rate of return on its gold mutual funds or offer the advantages of paper gold over physical gold in its advertisements during Akshaya Tritiya. The advantages of investing in paper gold are not even mentioned on their mutual funds website by means of a flash advertisement.

Case 2 Branch Service Delivery The below floor design matches the SBI Branch located in V.V. Puram in Bangalore

139

Here is a table that represents the services the below counters offer: Demand Drafts Operations Manager (Queries) Deposits / Withdrawals Deposits / Withdrawals Pass Book Entries Queries Clearing May I Help You

SBI has very limited space for the number of customers who transact daily. This crosses more than 500 daily just for deposits and withdrawals. Only two counters manage this which is highly inadequate; thus leading to crowding and frustration among customers at the VV Puram branch.

SBI could reduce the time spent by customers for waiting by simply adding additional counters or better yet in order to save cost, they could have the existing counters perform multiple services rather than only one.

To improve order among customers at the branch, they have installed a token machine that dispenses small slips of paper that show when the customer gets his turn
140

to complete the transaction. These dispense tokens only for deposits or withdrawals. It would be more convenient if they had a smart token machine that dispenses tokens for those wanting demand drafts, opening fixed or recurring deposits, NRI accounts or more importantly those seeking loans; which happen to be a major revenue source for the bank. There are very little advertisements displayed at the branch regarding the variety of services offered by the bank. SBI could do so much more, by putting up advertisements on the variety of accounts it offers for businesses, corporate and individuals. They have a 32 inch television that displays some of the services it offers but the television is placed at an angle which is not visible for the customers seated in the branch. The seating arrangements are for 15 but only 4 can view the television screen.

There is one excellent move by SBI to reduce time spent by customers in writing the deposit slips. The SBI Green Channel Counters, where the customer can simply swipe his debit card and deposit the required cash at the counter. The cashier would provide an acknowledgement slip thereafter. This is a boon to customers as they need not scavenge for a deposit slip, write the details and verify them in the crowded branch and instead get a token and wait.

The poor marketing of this initiative is clearly seen when you visit the branch. The benefits of the green channel counters are displayed on small pamphlets on the counter glass walls and the advantages of this are printed in small font text.

It is also seen when you Google SBI Green Channel the results do not display any information from the company website. In other words, SBI does not even mention this excellent move on its website.

The floor design below is that of the ICICI Bank Branch in Jayanagar 7th Block

141

Operations Manager (Complaints) New Accounts NRI / Forex Deposits Deposits Deposits May I Help You Fixed Deposits and Others Loans DEMAT, Mutual Funds It is seen that the bank branch is much larger and has more counters to cater to the needs of the customer. ICICI branch employees take up multi tasking during times when there are more customers to cater to. From 3 counters that accept deposits, they increase it to 4 or sometimes 5 to ensure waiting times of the customers are reduced.

The token system is very well organized, with separate tokens disbursed for non customers, customers and Gold Customers. The last set mentioned being customers who avail privilege banking services. There are also tokens disbursed for each service, which means if a customer wants to enquire mutual funds or DEMAT services, then all that needs to be done would be to select the customer type and then
142

press the button which has the label for the service needed. To make it even more easier, the token machine prioritizes deposit values as well. If you are a customer wanting to deposit more than Rs.50, 000/- there is a separate option for the same. This is not present in SBI, a customer who wants to deposit upwards of Rs.50,000/- would not get any priority than someone else who has to deposit say Rs.500/-

Case 3-ATM Services

SBI Cash Withdrawal Mobile Recharge Fund Transfers Mini Statement Balance Enquiry Donate to temple trusts Donate to relief funds Pay Utility Bills (MTNL and Bescom only) Pay SBI Credit Card Bills Pay SBI Life Insurance premium Pay fees of certain colleges

ICICI Cash Withdrawal Mobile Recharge Pay Utility Bills (All) Pay ICICI credit card bills Pay ICICI Prudential Insurance premium Request cheque book Fund Transfers Mini Statement Balance Enquiry

SBI ATMs do have more services than what ICICI ATMs offer. But there is a small glitch in their service delivery and marketing. SBI offers the basic services (highlighted purple) in all the ATMs. However, the rest are available only in a select few. The data for which is unavailable. Only on their website in a link that shows up when you type ATM in the search bar. Poor advertising of its ATM functionality has resulted in lack of awareness among consumers regarding the services available. In fact, the SBI website also does not advise any details on what services their ATMs offer.
143

The irony is, SBI keeps advertising on the number of ATMs and cash withdrawals made by consumers over the years in these ATMs. This advertising is irrelevant. As a customer of SBI, it makes no difference on the number of ATMs added over the years since the data is irrelevant. ICICI however offers all the services in all of its ATMs. And the advertising of its services has been clearly seen on all its branches. There is even a flash demo on the bank s website that provides details on the services available at its ATMs. Their current marketing campaign, suggests Our ATM is almost a bank branch indicating customers the improvised convenience offered to them. Case 4 Website User Interface SBI

144

ICICI

Some of the basic principles of running e-commerce would be to have a website that is user friendly and provides adequate info without having to do much of searching.

We can see here on the SBI website that the text of the links is not boldly displayed and hence does not stand out. The home page focuses on 3 areas of banking, personal, agriculture and NRI. These are 3 source of low volume of revenue. Assuming a start up wishes to bank with SBI, and opens their home page, the company executive would have very little info when he visits the corporate accounts page. The reason being, SBI merely offers soft benefits of using their service citing leaders in market, competitive pricing etc. It does not mention details of services such as asset management. It only mentions that it would be managed by SBI Capital. To know more about SBI capital one must visit their website. The page also provides details which form traditional services and nothing new. These include term loans, leasing and export/import credit; just to name a few. It is also seen that SBI does not
145

showcase any advertisement about its services. The only flash advertisement running so far is:

The advertisement follows mentioning a vast set of services offered by the bank. It is unfortunate that the flash advertisement has no hyperlink if a customer was interested to know what the vast set of services offered by the bank is. Brand reenforcement of SBI is not needed. Since the bank is generations old. Their brand value is familiar to the masses.

ICICI boldly advertises its services on the website giving customers and potential customers vast details of their banking services. Emphasis on Wealth Banking is an excellent move since there are more than 1 million newly rich Indians in this country who form their potential customer base. ICICI even offers student accounts as well which is gaining popularity among many today. In case of corporate accounts which are a major revenue source, there are vast details of what ICICI offers to those taking up their services. Here is a screenshot of the details:

146

6.3 ANALYSIS OF PERFORMANCE OF ICICI BANK AND SBI

25.5% increase in standalone profit after tax from Rs. 51.51 bn in FY2011 (April 2010-March 2011) to Rs. 64.65 bn in FY2012 (April 2011-March 2012) Net interest income increased by 19.0% year-on year; full year NIM improved by 9 basis points to 2.73% Fee income increased by 4.5% 30.8% reduction in provisions to Rs. 15.83 bn 25.4% increase in consolidated profit after tax from Rs. 60.93 bn in FY2011 to Rs. 76.43 bn in FY2012, despite additional third party motor pool losses for ICICI General 31.0% increase in standalone profit after tax from Rs. 14.52 bn in Q4-2011 (January-March 2011) to Rs.19.02 bn in Q4-2012 (January-March 2012) Net interest income increased by 23.7% year-on year; net interest margin at 3.01% compared to 2.74% in Q4-2011

147

35.8% year-on-year increase in non-interest income driven by increased dividends from subsidiaries Increase in provisions on account of restructuring of exposures in Q4-2012 Advances increased by 17.3% year-on-year to Rs.2,537.28 billion at March 31, 2012 CASA ratio at 43.5% at March 31, 2012; average CASA ratio at 39.0% in Q42012 Net NPA ratio decreased to 0.62% at March 31, 2012 from 0.70% at December 31, 2011 (March 31, 2011: 0.94%) (Table 6.1,6.2,6.3,6.4,6.5)

148

During fiscal 2012, ICICI Bank focused on profitable growth by leveraging its rebalanced funding mix and strong capital position to grow our loan portfolio and improving the credit quality of our loan portfolio. Profit after tax increased by 25.5% from Rs. 51.51 billion in fiscal 2011 to Rs. 64.65 billion in fiscal 2012. The increase in profit after tax was mainly due to a 19.0% increase in net interest income, 12.8% increase in non-interest income and 30.8% decrease in provisions and contingencies (excluding provisions for tax). Net interest income increased by 19.0% from Rs. 90.17 billion in fiscal 2011 to Rs. 107.34 billion in fiscal 2012, reflecting an increase of 9 basis points in net interest margin and an increase of 15.0% in average interest earning assets. Non-interest income increased by 12.8% from Rs. 66.48 billion in fiscal 2011 to Rs. 75.02 billion in fiscal 2012. The increase in non-interest income was primarily
149

due to an increase in dividend income from subsidiaries from Rs. 4.11 billion in fiscal 2011 to Rs. 7.36 billion in fiscal 2012 and a decrease in loss from treasury-related activities from Rs. 2.15 billion in fiscal 2011 to Rs. 0.13 billion in fiscal 2012. Loss from treasury-related activities for fiscal 2012 primarily includes realized/MTM provision on security receipts, offset, in part, by reversal of MTM loss/realized gain on investments in government of India securities and other fixed income positions and gain on equity/preference investments. Fee income increased by 4.5% from Rs. 64.19 billion in fiscal 2011 to Rs. 67.07 billion in fiscal 2012. Non-interest expenses increased by 18.6% from Rs. 66.17 billion in fiscal 2011 to Rs. 78.50 billion in fiscal 2012 primarily due to an increase in employee expenses and other administrative expenses. Provisions and contingencies (excluding provisions for tax) decreased by 30.8% from Rs. 22.87 billion in fiscal 2011 to Rs. 15.83 billion in fiscal 2012. The decrease in provisions and contingencies (excluding provisions for tax) was primarily due to a reduction in provisions for retail nonperforming loans, as accretion to retail non-performing loans declined sharply from fiscal 2011. Total assets increased by 16.6% from Rs. 4,062.34 billion at March 31, 2011 to Rs. 4,736.47 billion at March 31, 2012. Total deposits increased by 13.3% from Rs. 2,256.02 billion at March 31, 2011 to Rs. 2,555.00 billion at March 31, 2012. Savings account deposits increased by 13.7% from Rs. 668.69 billion at March 31, 2011 to Rs. 760.46 billion at March 31, 2012. Current and savings account (CASA) deposits ratio was 43.5% at March 31, 2012 compared to 45.1% at March 31, 2011. Term deposits increased by 16.6% from Rs. 1,239.55 billion at March 31, 2011 to Rs. 1,444.81 billion at March 31, 2012. Total advances increased by 17.3% from Rs. 2,163.66 billion at March 31, 2011 to Rs. 2,537.28 billion at March 31, 2012 primarily due to an increase in domestic and overseas corporate loans and an increase in the retail loan book. Net non-performing assets decreased by 22.9% from Rs. 24.58 billion at March 31, 2011 to Rs. 18.94 billion at March 31, 2012 and the net nonperforming asset ratio decreased from 0.94% at March 31, 2011 to 0.62% at March 31, 2012.

150

ICICI Bank continued to expand our branch network in India. Our branch network in India increased from 2,529 branches and extension counters at March 31, 2011 to 2,752 branches and extension counters at March 31, 2012. We also increased our ATM network from 6,104 ATMs at March 31, 2011 to 9,006 ATMs at March 31, 2012.

The total capital adequacy ratio of ICICI Bank on a standalone basis at March 31, 2012 in accordance with RBI guidelines on Basel II was 18.5% with a Tier I capital adequacy ratio of 12.7% compared to a total capital adequacy ratio of 19.5% and Tier I capital adequacy ratio of 13.2% at March 31, 2011.

Net Profit increased from Rs.8,265 crores in FY11 to Rs.11,707 crores in FY12 (41.66% YOY growth)

Operating Profit increased from Rs.25,336 crores in FY11 to Rs.31,574 crores in FY12 (24.62%YOY growth).

Capital Adequacy Ratio of the Bank increased from 11.98% (Tier I: 7.77%) in Mar 11 to 13.86% (Tier I: 9.79%) in Mar 2012 (188 bps YOY growth).

Net Interest Income increased from Rs.32,526 crores in FY11 to Rs.43,291 crores in FY12 (33.10%YOY growth).
151

Net Interest Margin (Whole Bank) increased from 3.32% in FY11 to 3.85% in FY12 (53 bps YOY growth). Domestic NIM increased from 3.63% in FY11 to 4.17% in FY12.

Dividend of Rs.35 per share (350%) proposed for the year ended 31st March 12.

Interest Income on Advances increased from Rs.59,976 crores in FY11 to Rs.81,078 crores in FY12 (35.18%YOY growth).

Interest Income on Resources Operations increased from Rs.20,062 crores in FY11 to Rs.24,300 crores in FY12 (21.12%YOY growth).

Interest paid on deposits increased from Rs.43,235 crores in FY11 to Rs.55,644 crores in FY12 (28.70%YOY growth).

Non Interest Income decreased from Rs.15,825 crores in FY11 to Rs.14,351 crores in FY12 (9.31%YOY decline).(Table 6.6,6.7,6.8,6.9,6.10,6.11)

152

153

Profit The Operating Profit of the Bank for 2011-12 stood at Rs.31,573.54 crores as compared to Rs.25,335.57 crores in 2010-11 registering a growth of 24.62%. The Bank has posted a Net Profit of Rs.11,707.29 crores for 2011-12 as compared to Rs.8,264.52 crores in 2010-11 registering a growth of 41.66%. While Net Interest Income recorded a growth of 33.10%, the Other Income declined by 9.31%, Operating Expenses increased by 13.27% attributable to higher staff cost and other expenses.

Dividend The Bank has declared dividend @ Rs.35.00 per share (350%) as against @ Rs.30.00 per share (300%) in the previous year.

Net Interest Income The Net Interest Income of the Bank registered a growth of 33.10% from Rs.32,526.41 crores in 2010-11 to Rs.43,291.08 crores in 2011-12. This was due to higher growth in the advances and investment portfolios. The gross interest income from global operations correspondingly rose from Rs.81,394.36 crores to Rs.1,06,521.45 crores during the year registering a growth of 30.87%.

Interest income on advances in India registered an increase from Rs.56,960.97 crores in 2010-11 to Rs.77,309.15 crores in 2011-12 due to higher volumes. The average yield on advances in India increased from 9.56% in 2010-11 to 11.05% in 2011-12. Interest income on advances at foreign offices has also grown by 24.99%.

Income from resources deployed in treasury operations in India increased by 22.05% mainly due to higher average resources deployed and increase in average yield. The average yield, which was 7.02% in 2010-11, has increased to 7.51% in
154

2011-12. Total interest expenses of global operations increased from Rs.48,867.96 crores in 2010-11 to Rs.63,230.37 crores in 2011-12. Interest expenses on deposits in India during 2011-12 recorded an increase of 29.19% compared to the previous year, whereas the average level of deposits in India grew by 14.31%. The average cost of deposits has consequently increased from 5.26% in 2010-11 to 5.95% in 2011-12.

Non-Interest Income Non-interest income stood at Rs.14,351.45 crores in 2011-12 as against Rs.15,824.59 crores in 2010-11 registering a decline of 9.31%. During the year, the Bank received an income of Rs.767.35 crores (Rs.827.73 crores in the previous year) by way of dividends from Associate Banks / subsidiaries and joint ventures in India and abroad.

Operating Expenses There was an increase of 11.59% in the Staff Cost from Rs.15,211.62 crores in 2010-11 to 16,974.04 crores in 2011-12. Other Operating Expenses have also registered an increase of 16.54% mainly due to increase in expenses on rent, taxes and lighting, postage, telegrams & telephones, insurance and miscellaneous expenditure. Operating Expenses, comprising both staff cost and other operating expenses, have registered an increase of 13.27% over the previous year.

Assets The total assets of the Bank increased by 9.13% from Rs.12,23,736.20 crores at the end of March 2011 to Rs.13,35,519.23 crores as at the end of March 2012. During the period, the loan portfolio increased by 14.65% from Rs.7,56,719.45 crores to Rs.8,67,578.89 crores. Investments increased by 5.61% from Rs.2, 95,600.57 crores to Rs.3,12,197.61 crores as at the end of March 2012. A major portion of the

155

investment was in the domestic market in government securities and investment in Subsidiaries & Associates.

Liabilities The Banks aggregate liabilities (excluding capital and reserves) rose by 8.01% from 11,58,750.16 crores on 31st March 2011 to Rs. 12,51,568.03 crores on 31st March 2012. The increase in liabilities was mainly contributed by increase in deposits and borrowings. The Global deposits stood at Rs.10, 43,647.36 crores as on 31st March 2012 against Rs.9,33,932.81 crores as on 31st March 2011, representing an increase of 11.75 % over the level on 31st March 2011.

156

Table 6.12

157

158

Table 6.13

6.4 MAJOR FINDINGS

Analysis based on Questionnaire for SBI, the cost of funds could go up partly because of the increase in the saving bank rate (by5-15 bps) and partly because of higher incremental costs. A temporary slack in credit growth (as is typically seen in the first half of financial year) and adjustment in the lending rate (to incorporate the higher rate on saving deposits, etc.) may lead to a dip in the NIM, which could however recover subsequently, depending on the credit offtake. The credit profiles of borrowers could weaken in 2012-13 because of a tight liquidity situation, higher interest rates, and moderation in GDP growth rate. The vulnerability of banks because of their increasing exposure to State power utilities is likely to increase, unless tariffs are revised upwards. However, these may not reflect in the Gross NPA percentage as there may be some regulatory respite. An increase in the proportion of infrastructure loans and deregulation of saving rates could worsen the asset-liability management (ALM) profile and increase the interest rate sensitivity of banks.

159

 Indian banks continue to enjoy a comfortable capitalization as compared with existing RBI norms with their Tier I capital close to 9%. Thus, apart from SBI, none of the PSBs may need significant Tier I capital in the short term. However, some of the fast-growing small private sector banks may need Tier I capital over short to medium term.

Figure 6.1. Innovative Banking Services

Banks

84

ICICI SBI

416.00

1.

On being asked about the innovative nature of banking services, 83.2 % of the customers of ICICI bank said that the banking schemes offered by ICICI bank are very much innovative.

2.

The SBI customer were asked about the innovative nature of SBI services, around 77.5 % customers out of 100 said that the schemes are very much innovative.

160

Figure 6.2.

Innovative Banking Services

Banks

242.5 257.5

ICICI SBI

3.

As far as the comparisons of innovative scheme of both the banks are concerned; it is found that ICICI bank offers more innovative schemes than SBI.

4.

About the dynamic nature of banking services offered by ICICI bank only 51.5% of the customers out of 100 said that the services are very much dynamic in nature whereas 33.3% SBI customers fell that the services provided by SBI are dynamic. In comparison with SBI about dynamic services, ICICI bank stands first.

161

Figure 6.3

Dynamic Services

Banks

218 ICICI 282 SBI

5.

In terms of competitiveness of banking schemes ICICI bank has only 56.4% customer saying its services are very much competitive.

6.

SBI customers are negative about the competitiveness of banking schemes of SBI. Around 37.3% customers feel that the services are very much competitive whereas majority of customers i.e. 50% have the opinion that the schemes offered by SBI are very less competitive.

Figure 6.4.

Competitive Schemes

Banks

218 ICICI 282 SBI

162

7.

The customers of ICICI bank are satisfied with the services offered by ICICI bank. Since 83.2 % of the, customers responded yes to the question whether they are satisfied with the services of ICICI bank.

Figure 6.5.

Service Satisfaction

Banks
84

ICICI SBI

416

8.

SBI customers are also satisfied with the banking services offered by SBI. The customers who are satisfied with ICICI bank services stand at 76.5%.

Figure 6.6.

Banking Services

Banks

117.5

SBI ICICI 382.5

163

9.

It was obvious that ICICI bank customers are more satisfied with 83.2% out of total 100 respondents when compared with SBI bank in terms of satisfaction.

Figure 6.7

Customer Satisfaction

Banks
84

ICICI SBI

416

10.

Private sector banks give more importance to customer satisfaction. For private sector banks, not only the product and services are important, but also the way they communicate about their new services, opening of new branches, changes in interest rates etc. to their customers. It shows that 80.2 % out of total respondents are satisfied with the communication from ICICI bank.

Figure 6.8

Product Satisfaction

Banks
99

ICICI SBI 401

164

11.

SBI customers are more satisfied at 85.3 % about communication from SBI about new services, changes in interest rates opening of new branches, etc.

Figure 6.9

Communication Satisfaction

Banks
73.5

SBI ICICI

426.5

12.

When ICICI bank and SBI are compared on satisfaction with the communication from banks it is found that SBI is more prompt and efficient in communication with the customers.

13.

It is found that 34.6 % customers of ICICI bank are always satisfied with the way ICICI bank markets it banking services. And 61.4% of the ICICI bank customers are sometimes satisfied with marketing of ICICI bank services.

14.

it is found that 50% customers of SBI are sometimes satisfied with the SBI markets its products, 47.1% customers of SBI are always satisfied with the way bank markets its services.

15.

ICICI bank has 11.9% customers who are not satisfied with the service of ICICI bank. The study also attempts to find out the reasons for dissatisfaction of services of ICICI bank, it is found that;
165

8.9% customers are not satisfied because of services. 1.0% customers are not satisfied because of schemes offered by ICICI bank. 7.9% customers are not satisfied with the staff of ICICI bank. 7.0% customers of ICICI bank are not satisfied because of banking charges. 4.0% percent customers of ICICI bank are not satisfied because of the time taken for transaction.

Figure 6.10

Staff and Scheme Satisfaction of ICICI Bank

Banks
59.5 44.5

500 39.5 35 20 ICICI ICICI ICICI ICICI ICICI ICICI 2301.5 SBI

16.

SBI has 7.9% out of the total respondents who are not satisfied with the services of SBI. The Study also attempts to find out the reasons for dissatisfaction of services of SBI It is found that: 6.9% of the customers of SBI are not satisfied because of services. 3.9% customers of SBI are not satisfied with the schemes offered by SBI 13.7% of the customers are not satisfied with the staff SBI
166

10.8% Customers of SBI are not satisfied with service charges charged by SBI 3.9% of the customers of SBI are not satisfied because of the time taken for transaction. Figure 6.11 Staff and Scheme satisfaction of SBI

Banks
34.5 19.5 39.5 68.5 54 19.5

SBI SBI SBI SBI SBI SBI ICICI 2764.5

17.

It is found out from the above study that the major reason for dissatisfaction of ICICI bank customers is banking staff and charges by ICICI bank.

18.

It is found out from the above study that the major reason for dissatisfaction of SBI customers is banking staff with 13.7% and service charges with 10.8%.

19.

When Customers of ICICI bank asked to rate ICICI bank on the basis of customer services the customer of ICICI bank have rated ICICI bank as follows: 32.7% of the total respondents said ICICI bank is excellent in terms of customer services.

167

28.7% of the total respondents said ICICI bank is very good in terms of customer service. 30.7% of the total respondents said ICICI bank is good in terms of customer service. 7.9% of the total respondents said ICICI bank is poor in terms of customer service. Figure 6.12 ICICI Customer Service

Banks
15

39.5

163.5 ICICI ICICI 153.5 ICICI ICICI SBI

143.5

20.

When customers of SBI asked to rate SBI on the basis of customer services the customers of SBI have rated SBI as follows: 25.5% of the total respondents said SBI is excellent in terms of customer services. 34.4% of the total respondents said SBI is very good in terms of customer services. 37.3% of the total respondents said SBI is good in terms of customer services. 4.9% of the total respondents said SBI is poor in terms of customer services.

168

Figure 6.13

SBI Customer Service

Banks
127.5 172 SBI 186.5 24.5 SBI SBI SBI 1489.5 ICICI

21.

When asked about the Redressal of complaints most of the marketing staff of ICICI bank replied in negative terms. Around 32% said it is satisfactory, 26% said it is poor. And 6% said the Redressal of complaints at ICICI bank is excellent, 10% said it is very good and 26% said it is good.

Figure 6.14

Complaint Redressal

Banks
20 130 160 ICICI ICICI ICICI ICICI 50 30 130 ICICI SBI

169

22.

The question regarding customer complaints when asked to marketing staff of SBI they replied in following way: reply to customer complaints at SBI is excellent 12%, very good 6%, good 45% and 16% satisfactory around 21% said it is poor.

Figure 6.15

Customer Complaint

Banks
20 105 60 30 SBI SBI SBI SBI 80 225 SBI ICICI

23.

IT is found that the marketing problems faced by marketing staff of SBI is related to banking products 8%, marketing strategies 12%, service charges 55% banking staff 20% and other 5%.

Figure 6.16

Marketing Staff

Banks
25 20 40 60 100

SBI SBI SBI SBI SBI

275

ICICI

170

24.

In case of ICICI bank it is found that the marketing problems faced by marketing staff is related to banking products 9% marketing strategies 10% service charges 63% banking staff 10 and other 8%.

25.

It is found that most of the time ICICI bank marketing staff faces problems in convincing the customers because of reasons such as service charges, banking staff, etc. at 79% where SBI staff faces problems at 51%.

26.

The major question remains whether all these problems affect the marketing staff in convincing the customer about other products. Only 2% of ICICI bank marketing staff feels that they have problem in convincing the customers all the times because of all these problems stated above, 9% have problems most of the time. 79% have problems some times, and 10% never have problems because of all these reason to convince the customers.

ICICI BANK With 7.2% share of India's total non-food credit disbursements and 9% of the banking system's deposits in FY11, ICICI Bank is the second largest bank in the country after SBI in terms of asset size. The bank has lost its share of the banking sector's advances from 10.2% in FY07 to 6.8% in FY11. At the end of March 2011, the bank had assets of over US$ 104 bn (Rs 4.7 trillion) and a franchise of over 5,700 ATMs and 1,800 branches spread across the country. Retail assets constituted 33% of advances in FY11 as against 65% in FY07. The bank is focusing on loan origination in the large corporate, SME and agriculture segments and on non-fund based products and services. Besides the bank itself being the market leader across retail loan portfolios, its subsidiaries ICICI Life Insurance, ICICI General Insurance and ICICI AMC are leaders in their respective businesses.

171

SBI SBI is India's largest bank in the country with an asset size of over 12 trillion. Although the bank's loan book is largely skewed towards corporate (large, mid and small) loans (51% of total advances in FY11), the retail side is also fast scatching up. SBI has a network of almost 13,700 branches and over 20,000 ATMs across the country.

Table. 6.14 Equity Share Data EQUITY SHARE DATA ICICI BANK SBI ICICI BANK/ 31/3/2012 31/3/2012 SBI

High

Rs

1,128

2,960

38.1%

Low

Rs

652

1,576

41.4%

Sales per share

Rs

329.6

2,193.6

15.0%

Earnings per share

Rs

54.1

-13.4

-402.9%

Cash flow per share

Rs

310.5

684.8

45.3%

Dividends per share

Rs

16.50

35.00

47.1%

Dividend yield (eoy)

1.9

1.5

120.1%
172

Book value per share

Rs

531.6

1,583.1

33.6%

Shares outstanding (eoy)

1,152.59

671.04

171.8%

Bonus/Rights/Conversions

ESOS

PI

Price / Sales ratio

2.7

1.0

261.1%

Avg P/E ratio

16.4

-168.9

-9.7%

P/CF ratio (eoy)

2.9

3.3

86.5%

Price / Book Value ratio

1.7

1.4

116.8%

Dividend payout

30.5

-260.6

-11.7%

Avg Mkt Cap

Rs m

1,025,805

1,521,919

67.4%

No. of employees

`000

58

215

27.0%

Total wages/salary

Rs m

51,049

220,840

23.1%

Avg. sales/employee

Rs Th

6,519.8

6,831.1

95.4%

Avg. wages/employee

Rs Th

876.0

1,024.9

85.5%

Avg. net profit/employee

Rs Th

1,311.5

712.0

184.2%

173

Table 6.15 Income data

INCOME DATA Net Sales Rs m 379,949 1,471,974 25.8%

Other income

Rs m

286,634

298,354

96.1%

Total revenues

Rs m

666,583

1,770,328

37.7%

Gross profit

Rs m

365,884

1,309,530

27.9%

Depreciation

Rs m

295,520

468,560

63.1%

Interest

Rs m

250,132

893,196

28.0%

Profit before tax

Rs m

106,866

246,128

43.4%

Minority Interest

Rs m

-2,947

-6,302

46.8%

Prior Period Items

Rs m

Extraordinary Inc (Exp)

Rs m

Tax

Rs m

27,490

86,395

31.8%

Profit after tax

Rs m

76,429

153,431

49.8%

Gross profit margin

96.3

89.0

108.2%

Effective tax rate

25.7

35.1

73.3%
174

Net profit margin

20.1

10.4

193.0%

Table 6.16Balance Sheet Data BALANCE SHEET DATA Current assets Rs m 2,921,254 11,636,702 25.1%

Current liabilities

Rs m

Net working cap to sales

768.9

790.6

97.3%

Current ratio

43.0

43.0

100.0%

Inventory Turnover

Days

Debtors Turnover

Days

Net fixed assets

Rs m

54,320

74,080

73.3%

Share capital

Rs m

11,528

6,710

171.8%

"Free" reserves

Rs m

438,127

571,380

76.7%

Net worth

Rs m

612,765

1,062,300

57.7%

Long term debt

Rs m

1,612,966

1,579,914

102.1%

175

Total assets

Rs m

6,041,914

18,299,562

33.0%

Interest coverage

1.4

1.3

111.9%

Debt to equity ratio

2.6

1.5

177.0%

Sales to assets ratio

0.1

0.1

78.2%

Return on assets

5.4

5.7

94.5%

Return on equity

12.5

14.4

86.4%

Return on capital

15.9

42.9

37.1%

Exports to sales

0.0

0.0

Imports to sales

0.0

0.0

Net fx

Rs m

6.5 TESTING OF HYPOTHESIS

In the beginning of the study the researcher had set hypothesis based on the survey data, charts, tables, diagrams and based on percentages, statically tool test of significance (z-test) has been applied.

176

The hypothesis of the study: ICICI Bank and SBI are provides innovative, dynamic and competitive services in terms of customer satisfaction in comparison to each other. However these banks are facing problems while marketing their services. In the light of the above cited objective, the researcher for the present study has set the following hypotheses: The sub hypothesis (HI) The banking services offered by ICICI bank are innovative, was put to statistical test by using z test of significance. The services provided by ICICI banks are very much invocative are tested against not so much innovative by using the proportion of customers responses who responded as the service are innovative. It is found that the services provided by ICICI bank are very much innovative (Z1=6.64) 1 percent level significance. Therefore the hypothesis services provided by ICICI bank are innovative stands accepted. Likewise the sub hypothesis (H2) the banking services offered by SBI are innovative, was put to statistical test by using z test of significance. The services provided by SBI are very much innovative is tested against not so much innovative by using the proportion of customers responses who respond as the services are innovative.; it is found that the services provided by SBI are very much innovative. (Z2-5.5) 1%level of significance. Therefore the hypothesis services provided by SBI bank are innovative stand s accepted. The sub hypothesis, (H3)- innovative services provided by ICICI bank and SBIs are homogenous put to statistical test by using z-test if significance. The services provided by ICICI bank and SBI are homogeneous is tested against services provided by ICICI bank is more innovative than SBI. (Z=1.02) Therefore the hypothesis Services provide ICICI bank and SBI are homogenous stands accepted.

177

The sub hypotheses, (H4) the banking service offered by ICICI bank are Dynamic, was put to statistical test by using z test of significance. The services provided by ICICI banks are very dynamic are tested against not so much dynamic by using the proportion of customers responses who responded as the services are dynamic. It is found that the services provided by ICICI bank are not very much dynamic at (Z1=0.3) 1 % level of significance. Therefore the hypothesis the banking services provided by ICICI bank are dynamic is rejected. Sub hypothesis, (H5) the services offered by SBI are competitive was put to statistical test by using the z test of significance. The services provided by SBI are very much competitive are tested against not so much competitive by using the proportion of customers Reponses who responded as the services are competitive. It is formed that the services provided by SBI are not very much competitive at (Z2 = -2.54) 1 percent level of significance. Therefore the hypothesis the banking services provided by SBI are competitive is rejected. The sub hypotheses, namely (H6) the customers of ICICI bank are satisfied with the services of ICICI Bank was put to statistical test by using the z test of significance. The customers of ICICI bank are satisfied with services provided by ICICI bank, is tested by using the proportion of customer responses who said they are not satisfied with the services. It is found that the customers of ICICI bank are satisfied with the services provided by ICICI bank at (Z1=6.64) at 1 percent significance level. There for the hypothesis the banking customers of ICICI bank are satisfied with the services provided by ICICI bank stands accepted.

178

The sub hypothesis (H7) the customers of SBI are satisfied with the services provided by SBI was put to statistical test by using (Z-test) of significance. The customers of SBI are satisfied with services provided by SBI is tested by using the proportion of customer responses who said they are not satisfied with the services. It is found that the customers of SBI are satisfied. Therefore the the banking customers of SBI bank are satisfied with the services provided by SBI stands accepted.

Sub hypothesis (H8) Services offered by ICICI bank and SBI are same was put to statistical test of significance (z-test) comparing the customer satisfaction of ICICI bank (Z1=6.64) with SBI (Z2=5.3) it is found that both the banks provide services to the satisfaction of customers (Z1=6.64, Z2=5.3) and there is no significant difference between them in the same (Z=1.19). Therefore the Hypothesis services offered by SBI and ICICI banks are same. Stands accepted.

179