State Bank of India (SBI) has raised salaries by 47% from fiscal 2011 to December quarter FY14. In fact, SBI’s average salary per employee at R10 lakh is 67% more than R6 lakh paid by ICICI Bank.
In a report, IDFC Institutional Securities said SBI’s average employee salary has risen 47% over FY11 (after the impact of pay hikes), while its better performing private sector peer ICICI Bank’s average salary has declined 22% over the same period.
The report added that most of the sharp increase in employee costs for PSU banks has come after a hike in compensation levels in FY11 and also because part of employee compensation for PSU banks is directly linked to inflation indices.
For the three months ended December 31, 2013, SBI’s total payment to employees at R4,512 crore was up 25.05% from R3,608 crore in the same period last year. SBI had reported net profit of R2,234.34 crore for the quarter ended December 31, down 34% from a year ago, on higher bad loans and increased provisioning. The bank saw provisions worth R3,429 crore for non-performing assets (NPAs) during the quarter, up 24% from a year ago.
“While ICICI has clearly been tightening its belt, SBI’s salaries are to some extent indirectly linked to inflation in the domestic economy, preserving the employee’s purchasing power over the longer term,” the report said.
A part of SBI’s salaries are in the form of long-term retiral benefits and, therefore, are not a part of take-home salaries. Retiral benefits were close to 22% of SBI’s employee costs in April-January period of fiscal 2014.