Evaluation of Pre- and Post-Merger Financial Performance: A Case Study of SBI

Mergers and acquisitions are very popular means of inorganic growth. The Indian banking industry is going through a phase of consolidation through mergers. In 2020 alone there were 4 cases of merger among public sector banks. Merger of ING Vyshya with Kotak Mahindra bank, Bank of Rajasthan with ICICI Bank are the notable examples in private sector. Mergers and amalgamations of banking companies is regulated by the Banking Regulation Act, 1949. Through M&A, acquired banks get a new name, structure, products and services. However, the risk of NPAs continues to be a major problem for banks. The present paper studies the impact of mergers on the financial performance, market performance, asset quality and liquidity position of SBI after its merger with its associate banks and Bharatiya Mahila Bank through ratio analysis. A comparison of various financial ratios is made to find out the nature of change in the performance parameters of the bank. The study highlights reduction in profitability, increase in cost to income ratio, slight improvement in liquidity, decline in asset quality and market performance.