RAROC profile and corporate credit pricing model derived from Pillar 3 disclosures.
State Bank of India is a India-based bank with approximately EUR 12.4tn of corporate credit exposure (EAD) under the Standardised approach to credit risk capital. The numbers below come directly from State Bank of India's most recent Pillar 3 CR6 regulatory filings and are used to model how this bank prices corporate credit facilities.
State Bank of India is a top-10 corporate lender by disclosed EAD (9th). Its cost-to-income ratio of 54.0% is structurally efficient (+4.2pp vs the 59-bank cross-section average of 49.8%). The corporate portfolio is mixed-grade, with an EAD-weighted average PD of 1.8% against a cross-bank average of 2.1%.
The bank's Pillar 3 disclosure uses a standardised or jurisdiction-specific framework, which means its reported averages are not directly comparable to EU CRR IRB peers without adjustment. Unsecured LGD disclosed at 45.0% is +8.2pp against the 36.8% cross-bank average, indicating a harder workout profile than the peer median and pushing up capital consumption on defaulted exposures.
On the standardised BBB+ EUR 25M 5-year term loan used across every bank profile, State Bank of India lands in the lower half of the pricing ranking (#47 of 59), with a RAROC of 6.87% and a minimum spread of 262bp to reach the 12% hurdle. Within India specifically, the bank ranks #2 of 2 on this same calculation.
| Parameter | Value | What it means |
|---|---|---|
| IRB approach | Standardised | How the bank computes risk-weighted assets |
| Cost-to-income ratio | 54.0% | Operating cost share of net revenue |
| Effective tax rate | 25.0% | Applied to RAROC numerator after EL and funding |
| Average corporate PD | 1.80% | EAD-weighted probability of default |
| Avg LGD (unsecured) | 45.0% | Loss share if borrower defaults, no collateral |
| Avg LGD (secured) | 25.0% | Loss share with eligible collateral |
| Funding spread | 20bp | Bank's wholesale funding cost above risk-free |
| Corporate EAD | EUR 12.4tn | Total exposure at default to corporates |
On a representative BBB+ rated, 5-year term loan of EUR 25M at 150bp spread with a 20bp commitment fee, State Bank of India would generate an estimated RAROC of 6.87% against a typical 12% bank hurdle rate. To hit that hurdle on this exact deal, the bank would need a minimum spread of 262bp. This deal is significantly below target — the bank would either reprice it or decline.
| Component | Value |
|---|---|
| Annual revenue (spread + fees) | EUR 385,000 |
| Operating cost | EUR 154,000 |
| Expected loss (PD × LGD × EAD) | EUR 28,750 |
| Capital required (FPE) | EUR 2,451,320 |
| RAROC (after tax) | 6.87% |
| Min spread to hit 12% RAROC | 262bp |
Out of 59 banks in the OpenRAROC dataset, State Bank of India ranks #47 by RAROC on this sample deal.
| Rank | Bank | Country | RAROC | Min spread |
|---|---|---|---|---|
| 1 | Qatar National Bank | Qatar | 9.00% | 203bp |
| 2 | DBS Group | Singapore | 8.18% | 224bp |
| 3 | JP Morgan | United States | 8.12% | 231bp |
| 4 | ICBC | China | 8.06% | 233bp |
| 5 | China Construction Bank | China | 8.06% | 233bp |
| 46 | Westpac | Australia | 6.88% | 271bp |
| 47 | State Bank of India | India | 6.87% | 262bp |
| 48 | ANZ Group | Australia | 6.82% | 271bp |
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