It is common knowledge that a Bank primarily earns its income from the interest charged on loans and Advances. Additionally, it generates fee-based income from the various services it provides to its customers. In FY2024, the State Bank of India (SBI), the largest public bank, recorded a total revenue of Rs 466,812 Cr on a standalone basis and Rs 594,574 Cr on a consolidated basis. In the same financial year, Bank of Baroda (BoB) generated a total revenue of Rs 127,101 Cr on a standalone basis and Rs 141,778 Cr on a consolidated basis and Punjab National Bank (PNB) generated a total revenue of Rs 120,285 Cr on a standalone basis and Rs 122,394 Cr on a consolidated basis.
The data presented in the table indicates that approximately 88-89% of the total revenue generated by the top three public sector banks in FY2024 was derived from interest income alone, with the remaining 11-12% coming from other sources such as fee-based income on an individual basis. However, when examining the consolidated numbers, the proportion of revenue from interest earned stood at 73.87% for State Bank of India (SBI), 83.50% for Bank of Baroda (BoB), and 89.11% for Punjab National Bank (PNB). The higher percentages of Other Income for SBI and BoB on a consolidated basis can be attributed to the fact that their subsidiaries contribute a significant amount of revenue from insurance and other business activities. Let us now explore the Business and Geographical segments of these three prominent public sector banks in India – SBI, BoB, and PNB.
Business Segments:
A Banking business is typically divided into Retail Banking, Corporate/Wholesale Banking, Treasury operations, and Other Banking Business. In the Retail Banking Segment, borrower accounts with exposure of less than ₹7.50Crores are included, while the Corporate/Wholesale Banking segment covers lending activities of borrowers with exposure of ₹7.50Crores and above as per RBI guidelines. The Treasury Segment encompasses the investment portfolio, trading in foreign exchange contracts, and derivative contracts. Revenue in the treasury segment mainly comes from fees, gains or losses from trading operations, and interest income on the investment portfolio. Other Banking Business includes segments not falling under the aforementioned categories.
In the fiscal year 2024, SBI derived 44.72% of its total revenue from Retail Banking, 27.90% from Corporate/Wholesale Banking, and 26.90% from Treasury Operation on a standalone basis. Conversely, BoB generated 37.08%, 38.17%, and 24.13% while PNB generated 28.82%, 42.91%, and 26.26% from Retail Banking, Corporate/Wholesale Banking, and Treasury Operation respectively on a standalone basis.
On the consolidated basis, SBI reported that Retail Banking contributed 34.83% to its total revenue, Corporate/Wholesale Banking contributed 22.06%, Treasury Operation contributed 20.63%, and Insurance Business contributed 17.51% in the fiscal year 2024. BoB, on the other hand, generated 34.62% from Retail Banking, 34.97% from Corporate/Wholesale Banking, and 22.72% from the Treasury Operation. Meanwhile, PNB's revenue breakdown showed that Retail Banking contributed 28.57%, Corporate/Wholesale Banking contributed 42.44%, and the Treasury Operation contributed 26.96%.
SBI stands out for generating the largest proportion of its overall revenue from Retail Banking, while PNB excels in generating revenue from Corporate/Wholesale Banking, both on a standalone and consolidated basis.
Geographical Segments:
Banks typically categorize their Geographical Business Segments into two main divisions: Revenue generated domestically and revenue generated internationally.
SBI generated the majority of its revenue, around 91-93%, from domestic sources on both standalone and consolidated basis. SBI's revenue from international operations accounted for 7-9%. In contrast, BoB derived 88-89% of its revenue from India and 11-12% from overseas. PNB's revenue was primarily from India, with 96-97%, and a smaller portion of 3-4% from international operations.
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Data Source
- State Bank of India, Annual Report 2023-24
- Bank of Baroda, Annual Report 2023-24
- Punjab National Bank, Annual Report 2023-24
Disclaimer
The content or analysis presented in the Blog is exclusively intended for educational purposes. It is important to note that this should not be considered as a suggestion for investing in stocks or as legal or medical advice. It is highly recommended to seek guidance from an expert before making any decisions.