From a business perspective, this consolidation will provide significant long-term benefits to the bank, SBI's annual report 2016-17 said.
This merger has catapulted SBI into one of the top 50 global banks (up from 55th position in 2016). It's balance sheet size is Rs 33 lakh crore and has 24,017 branches and 59,263 ATMs servicing over 42 crore customers. "Post merger, we have the ability to successfully process 15,000 transactions per second, versus actual utilisation of 4,600 transactions per second, making us future ready," it
As per State Bank of India (SBI), an enhanced scale of operations and the rationalisation of common costs are expected to result in meaningful savings. "The benefits of this merger will have a ripple effect on the liability franchise as well as the asset portfolio. As the bank takes advantage of the economies of scale, it will lead to a reduction in the cost of doing business and improved efficiencies," the report said.
India's largest lender believe that the long term benefits of the merger will significantly outweigh the near term challenges.
The resulting cost advantage, enhanced reach, and economies of scale from this merger, "will help SBI sustain its mission of being an enduring value creator".
SBI Chairman Arundhati Bhattacharya said that SBI's endeavour will be to "optimise costs and maximise revenues through the merger synergies", leading to significant cost savings and reduction in cost-to-income ratio.
"Net profit growth, however, remained muted at 5.36 per cent year-on-year due to elevated credit costs and reached Rs 10,484 crore.
"This financial year was also special owing to the impact of demonetisation in Q3 and severe drought conditions in South India," said Bhattacharya who took home Rs Rs 28,95,900 as salary and allowances in 2016-17.
On way forward, she said the asset quality pressures remained elevated during the last fiscal due to tepid growth in the economy and low capex demand. However, the recent ordinance issued by the government to resolve the NPA issue by vesting RBI with greater powers is a welcome move in this direction.
"I expect these issues to be resolved in the next two years, signs of which are evident at this stage," she said. The report said that on an average, over one crore transactions per day are routed through SBI ATM network and Rs 3,485 crore cash is being dispensed by the group ATMs on a daily basis.
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