Project on equity analysis on banking sector

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Project on equity analysis on banking sector

  1. 1. EQUITY ANALYSIS WITH REPECT TO BANKING SECTOR Submitted in partial fulfillment of PGDM PGDM BATCH 2012-14 Submitted By HIMANI P.PADIA T-8032 Faculty Guide PROF. JAGADISH REDDY Director Academics PROF. MIR IRFAN UL HAQUE 1
  2. 2. Declaration I hereby declare that the project titled “EQUITY ANALYSIS WITH RESPECT TO BANKING SECTOR“is an original work undertaken by me, under the guidance of Prof. JAGADISH REDDY.The report submitted is a bona-fide work of my own efforts and has not been submitted to any institute/university/conference or published before. Signature of the student (HIMANI P. PADIA) PGDM 2012-14 T-8032 Date: Place: 2
  3. 3. Faculty Guide Certificate I Prof. JAGADISH REDDY certify Ms. HIMANI P. PADIA the work done and the training undertaken by her is genuine to the best of my Knowledge and is acceptable. Signature Date : 3
  4. 4. ACKNOWLEDGEMENT I extent my sincere gratitude to Director IRFAN UAL HAQ, VISHWA VISHWANI SCHOOL OF BUSINESS. I wish to show my deep sense of gratitude to my corporate guide Mr. ATISH GUPTA, Chief Manager, INDIABULLS Securities Ltd.for his support and guidance. Thanks and appreciation to the helpful employees of Capital First especiallyfor their support and for providing necessary information during the project work . I would like to I thank my Faculty Guide PROFESSOR JAGADISH REDDY for continuous support for pursuing my project. I render my whole hearted thanks to all the other respected faculties of the management department, for their assistance and co-operation given to me in regard to this work. Finally, yet importantly, I would like to express my heart full thanks to my beloved parents for their blessings, my friends and classmates for their help and cooperation extended in this endeavor of mine and wish me for the successful completion of this project. HIMANI P.PADIA 4
  5. 5. CONTENTS Page No. Chapter - 1  INTRODUCTION ------------------------------------------------------ 6-8 Chapter -2  Company profile------------------------------------------------------------9-13  Industry profile------------------------------------------------------------14-34  Literature review----------------------------------------------------------35 Chapter -3  Research methodology------------------------------------------------------36  Objectives-----------------------------------------------------------------------37  Limitations-----------------------------------------------------------------------37 Chapter-4  Data collection ------------------------------------------------------------38-48  Analysis & interpretation------------------------------------------------48-58 Chapter-5      Findings ----------------------------------------------------------------------59 Recommendations----------------------------------------------------------60 Conclusion-----------------------------------------------------------------61 Annexure-------------------------------------------------------------------62-77 Bibliography----------------------------------------------------------------78 5
  6. 6. CHAPTER-1 INTRODUCTION ABOUT THE TOPIC: What is Equity? Equity is the ownership interest of investors in a business firm. Investors can own equity shares in a firm in the form of common stock or preferred stock. Equity ownership in the firm means that the original business owner no longer owns 100% of the firm but shares ownership with others.On a company's balance sheet, equity is represented by the following accounts: common stock, preferred stock, paid-in capital, and retained earnings. Equity can be calculated by subtracting total liabilities from total assets. EQUITY ANALYSIS:Stock analysis is a term that refers to the evaluation of a particular trading instrument, an investment sector or the market as a whole. Stock analysts attempt to determine the future activity of an instrument, sector or market. There are two basic types of stock analysis: fundamental analysis and technical analysis. Fundamental analysis concentrates on data from sources including financial records, economic reports, company assets and market share. Technical analysis focuses on the study of past market action to predict future price movement. Equity Analysis on Banking Sector The main aim of this project is to analyze current growth trend of scripts of banking in equity market. Based on the study of Indianeconomy.Research studies have proved that investments in some shares with a longer tenure of investment have yielded far superior returns than any other investment. However, this does not mean all equity investments would guarantee similar high returns. Equities are high-risk investments. One needs to study them carefully before investing. Since 1990 till date, Indian stock market has returned about 17% to investors on an average in terms of increase in share prices or capital appreciation annually. Besides that on average stocks have paid 1.5 % dividend annually. Dividend is a percentage of the face value of a share that a company returns to its shareholders from its annual profits.Compared to most other forms of 6
  7. 7. investments, investing in equity shares offers the highest rate of return, if invested over a longer duration. Each investment alternative has its own strengths and weaknesses. Some options seek to achieve superior returns (like equity), but with corresponding higher risk. Other provide safety (like PPF) but at the expense of liquidity and growth. Other options such as FDs offer safety and liquidity, but at the cost of return. Mutual funds seek to combine the advantages of investing in arch of these alternatives while dispensing with the shortcomings. Indian stock market is semi-efficient by nature and, is considered as one of the most respected stock markets, where information is quickly and widely disseminated, thereby allowing each security’s price to adjust rapidly in an unbiased manner to new information so that, it reflects the nearest investment value. And mainly after the introduction of electronic trading system, the information flow has become much faster. But sometimes, in developing countries like India, sentiments play major role in price movements, or say, fluctuations, where investors find it difficult to predict the future with certainty. Banks are the major part of any economic system. They provide a strong base to Indianeconomy as well. Even in the share markets, the performance of banks shares is ofgreat importance. Thus, the performance of the share market, the rise and the fall of market is greatly affected by the performance of the banking sector shares and this report revolves around all factors, their understanding and a theoretical and technical analysis 7
  8. 8. CHAPTER-2 COMPANY PROFILE INTRODUCTION Indiabulls is India’s leading Financial, Real Estate and Power Company with a wide presence throughout India. They ensure convenience and reliability in all their products and services. Indiabulls has over 640 branches all over India. The customers of Indiabulls are more than 4,50,000 which covers from a wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. The company employs around 4000 Relationship managers who help the clients to satisfy their customized financial goals. Indiabulls entered the Real Estate business in the year 2005 with its group of companies. Large scale projects worth several hundred million dollars are evaluated by them. Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE), Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market capitalization of Indiabulls is around USD 2500 million (29thDecember, 2006). Consolidated net worth of the group is around USD 700 million. Indiabulls and its group companies have attracted USD 500 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital. Indiabulls Group is one of India’s top business houses with businesses spread over Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors. The group companies are listed on important Indian and Overseas markets. Indiabulls has been conferred the status of a “Business Superbrand” by The Brand Council, Superbrands India. VISION To be the largest and most profitable financial services organization in Indian retail market and become one stop shop for all non banking financial products and services for the retail customers. To become the preferred long term financial partner to a wide base of customers whilst optimizing stake holder’s value 8
  9. 9. MISSION Rapidly increase the number of client relationships by providing a broad array of product offering to emerge as a clear market leader. To establish a base of 1 million satisfied customers by 2010. We will create this by being a responsible and trustworthy partner. COMPANY’S HISTORY IN INDIA In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer Gehlaut established Indiabulls in 2000, after acquiring orbis Securities, a stock brokerage company in Delhi. The group started its operations from a small office near HauzKhas bus terminal in Delhi.The office had a tin roof and two computers. The idea of leveraging technology for trading stocks led to the creation of Indiabulls Incorporated on 10th January 2000, it was converted into a public limited company on 27th February 2004. Its original idea of leveraging technology bore fruit when Indiabulls was accorded permission to conduct online trading on Indian stock exchanges.The company had achieved the distinction of becoming only the second brokerage firm in India to be granted this consent. The challenges facing it were immense – not least of all the mind set of investors who were called to make the big leap from traditional stock trading to a completely online interface. Having overcome this resistance, the company later expanded its service portfolio to include equity, F&O, wholesale debt, mutual fund distribution and equity research. In 2003/04, Indiabulls ventured into insurance distribution and commodity trading. It successfully floated its IPO in September 2004 and in the same year entered the consumer finance segment. Real estate, the new sunrise industry, was the next frontier for Indiabulls. In 2004/05, it entered this sector. But it wasn’t just real estate that was booming. Opportunities were opening up in retail and infrastructure as well. To cement its position in the Indian business and industry firmament, Indiabulls acquired Pyramid Retail in 2007 and marked its presence in the power sector by launching Indiabulls Power. 9
  10. 10. Indiabulls Financial Services Limited Indiabulls Financial Services Limited was incorporated on January 10, 2000 as M/s OrbisInfoTech Private Limited at New Delhi under the Companies Act, 1956. The name of company was changed to M/s. Indiabulls Financial Services Private Limited on March 16, 2001. In the year 2004, Indiabulls came up with it own public issue & became a public limited company on February 27, 2004. The name of company was changed to M/s. Indiabulls Financial Services Limited. The company was promoted by three engineers from IIT Delhi, and has attracted more than Rs.700 million as investments from venture capital, private equity and institutional investors and has developed significant relationships with large commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN Amro Bank, Standard Chartered Bank and IL&FS. Brand Values Indiabulls is amongst the largest non-banking financial services companies in India and enjoys strong brand recognition and customer acceptance. The company attributes its dominant position in the brokerage industry to the preferential status it enjoys with investors Coupled with its forays into various segments; the Group believes that the bulk of its brand story is yet to be written. Indeed, when a case study on India’s youngest brands which have had a profound impact on the economy is crafted, Indiabulls will feature prominently in it INDIABULLS GROUP  Total Group Networth – Rs. 19,502 Cr  Total Group PAT for 9M FY 12-13 – Rs. 1,034 Cr.  Total Group Capital Expenditure – Rs. 6,200 Cr. (US $ 1.2 bn.) capex in FY 10-11. Planned capex of Rs. 29,000 (US $ 5.7 bn.) by FY 2014-15.  Focus on Execution and on ground results translating into profits. For its ongoing projects Indiabulls Group consumes 385 MT of Steel, 550MT of Cement & 1,700 CUM of RMC on daily basis.  Creating Value for Shareholders – Dividend payout of Rs. 543.6 Cr. in 9M FY12-13 10
  11. 11. Products offeredEquities and Derivatives Offers purchase and sale of securities (stock, bonds, debentures etc.) Broker assisted trade execution Automated online investing Access to all IPO's Our Management Team: Mr. Divyesh Shah ( Chief Executive Officer ) Mr. Sujitraychowdary ( Vice President ) Mr. R.Venkataraman (Executive Director) The Board of Directors: Mr. Sat Pal Khattar (Non Executive Director) Mr. SanjivAhuja (Independent Director) Mr. NileshVikamsey (Independent Director) Mr. KrantiSinha (Independent Director) Milestones Achieved Developed one of the first internet trading platforms in India Amongst the first to develop in-house real-time CTCL (computer to computer link) with NSE Introduction of integrated accounts with automatic gateways to client bank accounts Development of products such as Power Indiabulls for high volume traders Indiabulls Signature Account for self-directed investors Indiabulls Group Professional Network for information and trading service 11
  12. 12. STRATEGY AND FOCUS  Consolidation – aim to be among top 3 players in existing businesses within next 3 years  No new products – focus on gaining size and scale in existing core areas  No capital market fund raising – all businesses are well funded to achieve growth and size  Goal- FY 2013/14 – target of US $ 1.5 billion in cash generation from the 3 companies (Finance, Real Estate and Power) .MAJOR COMPETITORS  KOTAK SECURITIES  SHAREKHAN ANALYSING THE COMPETITORS STRENGTH &WEAKNESS :Competition, being an important market force needs to be tracked, analyzed &preempted. Market leader always have a system to help them preempt anycompetitive moves. For this, it is not just important to know competitor by name, but also critical to understand its major strength & weaknesses. A competitor’s strength may be its marketing systems, aggressive sales force, and it srelationship with major external environmental variables like government &financial i nstitute or a financial resources base. For the effective competitiveanalysis only strength & weaknesses are not sufficient we need to consider other key factors like market share of the company & 7p s of service marketing i.e. Product Price Place Promotion Process Physical evidence People etc. 12
  13. 13. SWOT ANALYSIS  Services:As products of Indiabulls is an extremely innovative product with very less cost services like online trading facility, institutional and domestic broking, customized research reports with almost 80% efficiency etc give Indiabulls an edge over its competitors. Exposure updating tie-ups with leading banks Well diverse Investment portfolio Indiabulls has presence in the Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and Power sectors  Weaknesses It should have its own mutual funds as it provides advises on mutual funds Position to answer the question of the clients in their fields. It does not provide indices on major world markets, ADR Prices of Indian Scripts. Lacks Banking arm.  Opportunities ATM facility should be provided for easy withdrawals. Tie-ups with third party companies for selling products. High client base will help for cross sales of its products.  Threats Companies like Sharekhan, ICICI Direct, Kotak Securities and Private brokers are major threats. Banks with Demat facilities are jockeying for position. Local brokers capable of charging lower brokerage 13
  14. 14. INDUSTRY PROFILE INTRODUCTION The banking section will navigate through all the aspects of the Banking System in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years. The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. has been well defined under three separate heads with one page dedicated to each bank. However, in the introduction part of the entire banking cosmos, the past has been well explained under three different heads namely: History of Banking in India Nationalisation of Banks in India Scheduled Commercial Banks in India The first deals with the history part since the dawn of banking system in India. Government took major step in the 1969 to put the banking sector into systems and it nationalised 14 private banks in the mentioned year. This has been elaborated in Nationalisation of Banks in India. The last but not the least explains about the scheduled and unscheduled banks in India. Section 42 (6) (a) of RBI Act 1934 lays down the condition of scheduled commercial banks. History of Banking in India Without a sound and effective banking system in India it cannot have a healthy economy. The banking system of India should not only be hassle free but it should be able to meet new challenges posed by the technology and any other external and internal factors. 14
  15. 15. For the past three decades India's banking system has several outstanding achievements to its credit. The most striking is its extensive reach. It is no longer confined to only metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of the country. This is one of the main reasons of India's growth process. The government's regular policy for Indian bank since 1969 has paid rich dividends with the nationalization of 14 major private banks of India. Not long ago, an account holder had to wait for hours at the bank counters for getting a draft or for withdrawing his own money. Today, he has a choice. Gone are days when the most efficient bank transferred money from one branch to other in two days. Now it is simple as instant messaging or dial a pizza. Money have become the order of the day. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991. The first bank in India, though conservative, was established in 1786. From 1786 till today, the journey of Indian Banking System can be segregated into three distinct phases. They are as mentioned below: Early phase from 1786 to 1969 of Indian Banks Nationalization of Indian Banks and up to 1991 prior to Indian banking sector Reforms. New phase of Indian Banking System with the advent of Indian Financial & Banking Sector Reforms after 1991. 15
  16. 16. Phase I The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was established which started as private shareholders banks, mostly European shareholders. In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935. During the first phase the growth was very slow and banks also experienced periodic failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To streamline the functioning and activities of commercial banks, the Government of India came up with The Banking Companies Act, 1949 which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of banking in India as the Central Banking Authority. During those days public had lesser confidence in the banks. As an aftermath deposit mobilisation was slow. Abreast of it the savings bank facility provided by the Postal department was comparatively safer. Moreover, funds were largely given to traders. Phase II Government took major steps in this Indian Banking Sector Reform after independence. In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially in rural and semi-urban areas. It formed State Bank of India to act as the principal agent of RBI and to handle banking transactions of the Union and State Governments all over the country. Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 16
  17. 17. 19th July, 1969, major process of nationalization was carried out. It was the effort of the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country were nationalized. Second phase of nationalization Indian Banking Sector Reform was carried out in 1980 with seven more banks. This step brought 80% of the banking segment in India under Government ownership. The following are the steps taken by the Government of India to Regulate Banking Institutions in the Country: 1949 : Enactment of Banking Regulation Act. 1955 :Nationalisation of State Bank of India. 1959 :Nationalisation of SBI subsidiaries. 1961 : Insurance cover extended to deposits. 1969 :Nationalisation of 14 major banks. 1971 : Creation of credit guarantee corporation. 1975 : Creation of regional rural banks. 1980 :Nationalisation of seven banks with deposits over 200 crore. After the nationalization of banks, the branches of the public sector bank India rose to approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the sunshine of Government ownership gave the public implicit faith and immense confidence about the sustainability of these institutions. Phase III This phase has introduced many more products and facilities in the banking sector in its reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his name which worked for the liberalisation of banking practices. The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a satisfactory service to customers. Phone banking and net banking is introduced. The entire system became more convenient and swift. Time is given more importance than money. 17
  18. 18. The financial system of India has shown a great deal of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high, the capital account is not yet fully convertible, and banks and their customers have limited foreign exchange exposure. Scheduled Commercial Banks In India The commercial banking structure in India consists of: Scheduled Commercial Banks in India Unscheduled Banks in India Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act. As on 30th June, 1999, there were 300 scheduled banks in India having a total network of 64,918 branches. The scheduled commercial banks in India comprise of State bank of India and its associates (8), nationalised banks (19), foreign banks (45), private sector banks (32), co-operative banks and regional rural banks. "Scheduled banks in India" means the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank being a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), but does not include a co-operative bank". "Non-scheduled bank in India" means a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled bank". 18
  19. 19. The following are the Scheduled Banks in India (Public Sector): State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Saurashtra State Bank of Travancore Andhra Bank Allahabad Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Overseas Bank Indian Bank Oriental Bank of Commerce Punjab National Bank Punjab and Sind Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank The following are the Scheduled Banks in India (Private Sector): ING Vysya Bank Ltd Axis Bank Ltd Indusind Bank Ltd ICICI Bank Ltd South Indian Bank HDFC Bank Ltd Centurion Bank Ltd Bank of Punjab Ltd IDBI Bank Ltd Jammu & Kashmir Bank Ltd. The following are the Scheduled Foreign Banks in India: American Express Bank Ltd. ANZ Gridlays Bank Plc. Bank of America NT & SA Bank of Tokyo Ltd. BanqucNationale de Paris Barclays Bank Plc Citi Bank N.C. Deutsche Bank A.G. Hongkong and Shanghai Banking Corporation Standard Chartered Bank. The Chase Manhattan Bank Ltd. Dresdner Bank AG. 19
  20. 20. Major Banks in India ABN-AMRO Bank Abu Dhabi Commercial Bank American Express Bank Andhra Bank Allahabad Bank Axis Bank (Earlier UTI Bank) Bank of Baroda Bank of India Bank of Maharashtra Bank of Punjab Bank of Rajasthan Bank of Ceylon BNP Paribas Bank Canara Bank Catholic Syrian Bank Central Bank of India Centurion Bank China Trust Commercial Bank Citi Bank City Union Bank Corporation Bank Dena Bank Deutsche Bank Development Credit Bank Dhanalakshmi Bank Federal Bank HDFC Bank HSBC ICICI Bank IDBI Bank Indian Overseas Bank IndusInd Bank ING Vysya Bank Jammu & Kashmir Bank JPMorgan Chase Bank Karnataka Bank KarurVysya Bank Laxmi Vilas Bank Oriental Bank of Commerce Punjab National Bank Punjab & Sind Bank Scotia Bank South Indian Bank Standard Chartered Bank State Bank of India (SBI) State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Saurastra State Bank of Travancore Syndicate Bank Taib Bank UCO Bank Union Bank of India United Bank of India United Western Bank Vijaya Bank Kotak Mahindra Bank Yes Bank 20
  21. 21. Organizational Structure of Banks in India: In India banks are classified in various categories according to differ rent criteria. The following charts indicate the banking structure Reserve Bank of India Commercial Banks Nationalized Agricultural Credit Private Co-operative Banks Short-term credit Urban Credit EXIM 21 Development Banks Long-term credit Industrial Agricultural
  22. 22. Broad Classification of Banks in India: 1) The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all scheduled banks and hence is known as the “Reserve Bank”. 2) Public Sector Banks:  State Bank of India and its Associates (8)  Nationalized Banks (19)  Regional Rural Banks Sponsored by Public Sector Banks (196) 3) Private Sector Banks:  Old Generation Private Banks (22)  Foreign New Generation Private Banks (8)  Banks in India (40) 4) Co-operative Sector Banks:  State Co-operative Banks  Central Co-operative Banks  Primary Agricultural Credit Societies  Land Development Banks  State Land Development Banks 5) Development Banks: Development Banks mostly provide long term finance for setting up industries. They also provide short-term finance (for export and import activities)  Industrial Finance Co-operation of India (IFCI)  Industrial Development of India (IDBI)  Industrial Investment Bank of India (IIBI)  Small Industries Development Bank of India (SIDBI)  National Bank for Agriculture and Rural Development (NABARD)  Export-Import Bank of India. 22
  23. 23. Role of Banks: Banks play a positive role in economic development of a country as repositories of community’s savings and as purveyors of credit. Indian Banking has aided the economic development during the last fifty years in an effective way. The banking sector has shown a remarkable responsiveness to the needs of planned economy. It has brought about a considerable progress in its efforts at deposit mobilization and has taken a number of measures in the recent past for accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened branches in urban, semi-urban and rural areas and have introduced a number of attractive schemes to foster economic development. The activities of commercial banking have growth in multi-directional ways as well as multi-dimensional manner. Banks have been playing a catalytic role in area development, backward area development, extended assistance to rural development all along helping agriculture, industry, international trade in a significant manner. In a way, commercial banks have emerged as key financial agencies for rapid economic development. By pooling the savings together, banks can make available funds to specialized institutions which finance different sectors of the economy, needing capital for various purposes, risks and durations. By contributing to government securities, bonds and debentures of term-lending institutions in the fields of agriculture, industries and now housing, banks are also providing these institutions with an access to the common pool of savings mobilized by them, to that extent relieving them of the responsibility of directly approaching the saver. This intermediation role of banks is particularly important in the early stages of economic development and financial specification. A country like India, with different regions at different stages of development, presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation and beyond. Mobilization of resources forms an integral part of the development process in India. In this process of mobilization, banks are at a great advantage, chiefly because of their network of branches in the country. And banks have to place considerable reliance on the mobilization of deposits from the public to finance development programmes. Further, deposit mobilization by banks in India acquired greater significance in their new role in economic development.Commercial banks provide short-term and medium-term financial assistance. The short-term credit facilities are granted for working capital requirements. The medium-term loans are for the acquisition of land, construction of factory premises and purchase of machinery and equipment. These loans are generally granted for periods ranging from five to seven years. They also establish letters of credit on behalf of their clients favoring suppliers of raw materials/machinery (both Indian and foreign) which extend the banker’s assurance for payment and thus help their delivery. Certain transaction, particularly those in contracts of sale of Government Departments, may require guarantees 23
  24. 24. being issued in lieu of security earnest money deposits for release of advance money, supply of raw materials for processing, full payment of bills on the assurance of the performance etc. Commercial banks issue such guarantees also. PRODUCTS AND SERVICES OFFERED BY BANKS Investment Banking Consumer Banking Commercial Banking Retail Banking Products Private Banking Asset Management Pensions Mortgages Credit Cards Broad Classification of Products in a bank: The different products in a bank can be broadly classified into: Retail Banking. Trade Finance. Treasury Operations. Retail Banking and Trade finance operations are conducted at the branch level while the wholesale banking operations, which cover treasury operations, are at the hand office or a designated branch. 24
  25. 25. Retail Banking: Deposits Loans, Cash Credit and Overdraft Negotiating for Loans and advances Remittances Book-Keeping (maintaining all accounting records) Receiving all kinds of bonds valuable for safe keeping Trade Finance: Issuing and confirming of letter of credit. Drawing, accepting, discounting, buying, selling, collecting of bills of exchange, promissory notes, drafts, bill of lading and other securities. Treasury Operations: Buying and selling of bullion. Foreign exchange Acquiring, holding, underwriting and dealing in shares, debentures, etc. Purchasing and selling of bonds and securities on behalf of constituents. The banks can also act as an agent of the Government or local authority. They insure, guarantee, underwrite, participate in managing and carrying out issue of shares, debentures, etc. Apart from the above-mentioned functions of the bank, the bank provides a whole lot of other services like investment counseling for individuals, short-term funds management and portfolio management for individuals and companies. It undertakes the inward and outward remittances with reference to foreign exchange and collection of varied types for the Government. Following Services Can Be Availed On The Internet:  Bill Payment  Funds Transfer  Special Promotions & Offers 25
  26. 26.  Ticket Booking  Online loans and credit cards  Online Shopping  Online Tax payment  Prepaid mobile recharge Banks will expand In overseas market In order to sustain the business growth amid highly competitive market and slowing Indian economy, banks are likely to expand in the overseas market. They will try to tap emerging opportunities by expanding into newer markets such as Africa, former Soviet region and other South East Asian countries, in which India has maintained good trade relations. They can set up captive operations or expand through inorganic means by undergoing M&A (mergers and acquisitions) with banks in foreign countries. Passage of 'Banking Laws (Amendment) Bill' aimed at attracting more foreign investments With an aim to reform and strengthen India's banking sector, the LokSabha passed the 'Banking Amendment Bill' in Dec 2012. Once, the bill is passed by RajyaSabha as well, it will pave way for RBI to issue new banking licenses to private sector and attract more foreign investments in the sector. The Bill also proposes to enhance the voting rights of investors in case of both public sector and private sector banks from existing 1% to 10% of public sector banks and from 10% to 26% of private sector banks. This move will attract more foreign investment in the sector 26
  27. 27. FACTORS AFFECTING BANKING SECTOR Starting off with the project, in the initial phase of SIP, I learnt the basics of the stock market. As I had to work here in this market for 3.5 months this was the basic necessity. In that phase I had a nice exposure of how to deal with clients, how to handle the queries of the investors, it was a practical exposure to learn the working of the market, how the market moves and all about the corporate culture. Also I had learnt what factors basically affect the equity market. Then I decided to limit my project to just Banking Sector, because it is one of the most dynamic sector and also availability of time was not permitting me to go beyond this. There are N numbers of factors which affect the share prices. They can be broadly classified into two:  INTERNAL FACTORS  EXTERNAL FACTORS INTERNAL FACTORS: As the name suggests, Internal Factors are those which affect the share prices internally, i.e. they are internal to the company or more specifically bank. Some of the major internal factors that affect the share prices of a bank are as follows: Earnings of the company: How much Profit a company earns acts as a significant factor in price movements. If the quarterly results are good for a bank, then the price goes up, and if the results are not good, the investors show no interest in such bank’s share and thus price falls. Investors invest money in the companies who earn well and in turn give good return on investment. Thus, a wealthy and a profitable company have good investors and thus have positive price movements. Price/Earnings Ratio also gives us idea about the same. 27
  28. 28. Market capitalization: Generally we commit one mistake that we guess the company’s worth from the price of its stock. It is the market capitalization of the company, rather than the stock price, that is more Important when it comes to determining the worth of the company. We need to multiply the stock price with the total number of outstanding stocks in the market to get the market capitalization of a company and that is the worth of the company. Thus, a company or bank with high Market Capitalization turns out to be more popular amonginvestors. For example, HDFC BANK, ICICI BANK and SBI are more popular among investors than other banks because they have huge market share and market capitalization. As market capitalization increases, the share price tends to increase and as market capitalization decreases, the share price tends to decrease. Price/earnings ratio: Price/Earnings ratio or the P/E ratio gives us a fair idea of how a company's share price compares to its earnings. If the price of the share is too much lower than the earning of the company, the stock is undervalued and it has the potential to rise in the near future. On the other hand, if the price is way too much higher than the actual earning of the company and then the stock is said to overvalued and the price can fall at any point. The earnings also have a direct relation with price which is already explained above. Internal affairs of the company: Any happening inside the company or any internal news does affect its share price. For example any key person moving out of the company, acquisition or takeover or merger news, share split, employee strike and any other thing internal to the affairs of the bank affects the share price. A positive note from the internal affairs takes the price to new highs and a negative does vice versa. Interest rates: Interest rates play a major role in determining stock market trends. Bull markets (those in an upward market) are usually associated with low interest rates and high Capital Gains, and bear markets (those in a downward trend) with high interest rates 28
  29. 29. and low Capital gains. Interest rates are determined by the demand for capital – pushes them up and normally indicates that the economy is thriving and that shares probably expensive. Low interest indicate low demand for capital, thus liquidity builds up on the economy, driving share price down. Other interest rates like that of on Deposits and Borrowings also have impact on share prices. Other factors: Other factors like Growth of the company, figures of deposits, advances, balance sheet, Profit and Loss Account, etc. Also affect the share prices drastically. A discussion for the same is done in later part of the report. EXTERNAL FACTORS: After studying the internal factors, let’s take a look at some External Factors which affect the Share Prices. Sentiments: Investor sentiment is almost impossible to predict and can be infuriating if, for example, you have bought shares in a company that you think is a good „buy‟ but the price remains flat. Investor sentiment is influenced by a wide variety of factors. Share prices can, for example, be flat during the summer simply because so many major investors are on holiday or attending major sporting events such as Royal Ascot and Wimbledon, hence the adage „sell in May and go away‟ . Investor sentiment can lead to irrational buying or selling of shares and result in bull and bear markets. A bull market is when share prices rise while a bear market is when they fall. In the technology boom of the late 1990s, for example, investors paid extremely high prices for shares and ignored traditional valuation measures, such as P/E ratios. This carried on until 2000 when investors belatedly realized these shares has risen too far and resulted in a three year bear market in shares. Thus, Sentiments of investors affect the share prices a lot and this is something unpredictable and immeasurable factor, but still the most important one. 29
  30. 30. Company news and other news: The way investors interpret news coming out of companies is also a major influence on share prices. If, for example, a company puts out a warning that business conditions are tough, shares will often drop in value. If, however, a director buys shares in the firm, it may be a signal that the company’s prospects are improving. Companies put out a great deal of news and most of the major announcements are covered by the financial press. But some announcements not regarded as so important and sometimes, particularly among smaller firms that are monitored less by investors and financial journalists, indicators of the company’s health can be missed. Takeovers or even rumours of takeovers also have a big influence on prices. This is because investors expect the bidder to pay a premium to shareholders. Also any other news or speculation about factors like change in Repo Rate, Cash Reserve Ratio, Reverse Repo Rate, any change or likely change in the policies of government or RBI or SEBI, any new guidelines issued by the concerned authority, etc. affect the price of the share. A positive news in any of these respects leads to a rise in price and a negative takes it to the other side. Thus, news in any respect is undoubtedly a huge factor when it comes to stock price. Positive news about a company can increase buying interest in the market while a negative press release can ruin the prospect of a stock. Having said that, we must always remember that often times, despite amazingly good news, a stock can show least movement. It is the overall performance of the company that matters more than news. It is always wise to take a wait and watch policy in a volatile market or when there is mixed reaction about a particular stock. Demand and supply: This fundamental rule of economics holds good for the equity market as well. The price is directly affected by the trend of stock market trading. When more people are buying a certain stock, the price of that stock increases and when more people are selling the stock, the price of that particular stock falls. Now it is difficult to predict the trend. Thus, we should be very careful while dealing in stocks as buying or selling pressure may lead to steep rise or fall in price of the shares. 30
  31. 31. Analysts’ reports: Reports produced by independent analysts also influence share prices. If an analyst changes their recommendation from „sell‟ to „buy‟ , for example, the shares will often rise in value. Analysts‟ reports are produced primarily by investment banks for professional investors, although some stockbrokers will make their research available to private investors. We may find summaries of some reports published on financial news websites or in newspapers and magazines. Some investment banks also publish their reports on their websites for free. We should remember that the recommendation an analyst puts on a company will affect its share price very quickly and can become irrelevant within hours. This is because the analyst will usually say a stock is a „buy‟ within a particular price range. If the price moves above their targets the improvements the analyst expects may be „priced in‟ and so the shares are not worth buying. But analysts‟ reports are always worth reading, even if the recommendation is out of date. The reports usually contain a great deal of useful information on the company and how its business is developing. They also often look at how the company rates against its competitors. The economy: The health of the global economy has a fundamental influence on share prices because it is ultimately responsible for driving company profits. Broadly speaking, if the economy is growing, company profits improve and shares will become more highly valued. If the economy is weakening, company profits will fall and share prices will go down. Investors look at a vast amount of data to try and work out what is going to happen to the economy and shift their portfolios before the events occur. This is why we will often see markets move well ahead of an actual event occurring. For example, we could get little reaction from the stock market when interest rates rise. This is because investors have already anticipated the shift months in advance and adjusted their portfolios beforehand. We can usually assume that the stock market will anticipate moves in the economy by around six to nine months. So if we want to stay ahead of the game we need to follow economic data as closely as the professionals. The kind of information we need to play close attention to is: employment data, the reports put out by the Monetary Policy Committee (to get an idea where interest rates are headed), trade with other countries, retail sales and manufacturing. Sentiment surveys produced by trade bodies such as the 31
  32. 32. Confederation of British Industry are also important indicators of where the economy is heading. It is not only news about the US and UK economy that will impact on share prices. The signals coming out of other major economies, particularly the US and UK‟ s major trading partners, such as the Europe and Asia will also affect US and UK shares as what happens in these economies will have an impact on our own. When looking at economic data, we need to think not only how the wider economy will be affected but whether certain areas will be more affected than others. A rise in interest rates is, for example, often bad news for house builders as people feel less confident about taking on debt. Retailers are often badly affected too as people spend less. Pharmaceutical companies are, however, usually unaffected as people’s demand for drugs is not influenced by the state of the economy. Companies whose profits are closely tied to the health of the economy are known as “cyclical” stocks. Those businesses that aren’t too affected by the economy are called “defensive” stocks. If economic conditions deteriorate you will often see investors shift from cyclical stocks to defensives. Thus, the economic health of an Economy affects the Share Prices. Press and broking house recommendations: The financial pages of most national newspapers and investment magazines usually contain share tips. Like analysts‟ reports these tips can have a major influence on share prices. If a journalist recommends a share, the price will usually rise and if they write a negative story the price will fall. These moves usually happen very quickly so if we follow the recommendation it often makes sense to do so as soon as possible. The Broking House also recommends BUY or SELL for particular shares based on their own research analysis. They display these recommendations in leading media such as Television and News Papers. Thus, these recommendations affect the price of shares and lead the market in the direction these recommendations take. Technical influences: Share prices can rise and fall for a variety of technical reasons that may have nothing to do with the actual outlook for an individual company or the outlook for the market. It is, for example, a common occurrence for share prices to drop back after a strong rally. This happens because investors take profits on some of the shares that have risen in value, protecting their gains just in case the shares start to slip back. 32
  33. 33. Investors often refer to this as market consolidation. Another technical reason for share prices to rise or fall is the quarterly adjustment in the FTSE 100™ index. Shares that are expected to enter the FTSE 100™ may experience a sharper rise than one would expect in the weeks beforehand while shares that leave the index can fall more sharply. This happens because funds that simply track the index have to match the composition of the index. Some professional fund managers who hold the affected stocks also adjust their portfolios as they do not want their holding to be too far above or below the company’s weighting in the index. Share prices can also be affected by investors who use technical analysis to drive their investment techniques. Technical analysis, also known as Chartism, is simply the study of past share price movements and stock market index trends, which are then used to forecast how shares and stock markets will behave in future. Market makers can also influence prices. If they, for example, do not own enough shares to balance their books they will have to buy more. Market makers also influence prices if the market is looking flat, reducing prices to attract buyers. Thus, technical reasons can also be a cause for the rise or fall in the prices of shares. OTHER FACTORS: Some other factors which influence share prices are as follows: Change in rates by RBI: Looking at the changing scenario, RBI keeps on changing rates like Repo Rate, Reverse Repo Rate and Cash Reserve Ratio. These rates have a direct relation with the Bank’s performance and in turn the share prices are linked with Bank’s Performance. Thus, a change in these rates or even a speculation of change in these rates affects share prices. Global changes: Any change in the global economy or in other words global changes also affects Indian economy. Thus, the performance of an economy and its banks is affected by these global changes. For example: The recession was first observed in the USA and later on it caught its lead in other countries too. When it entered India, the share market crashed literally. So, a careful and logical investor always keeps this in mind 33
  34. 34. that what global changes affect the market and thus leads to rise or fall in share prices. Change in Government Policies: Keeping in mind the progress and well wishes about the country, the government takes desired steps and keeps on reviewing its policies, rules and regulations and procedures. A change in FDI and FII inflow restrictions, entry exit barriers for foreign banks in India, EXIM regulations, change in Basel Norms, etc form part of important government policies. Thus, a change in these policies affects the market scenario. For example: if government allows entry of foreign Banks in India, then the competition would rise and it might happen that those foreign Banks may outperform and leave our own banks far behind. Then in this case, the investors would be interested in investing in those foreign Banks and a government would never like that the funds are invested in some foreign banks rather than our own banks. Thus, some restriction would follow and this will definitely affect the share prices. 34
  35. 35. Literature review A lot of investors trading in the financial markets with securities and stocks are trying to foresee the market movements with the help of accessible information of the press. This may concern the question will securities with higher prospective benefits get greater revenues to securities with lower prospective benefits? These ideas can be investigated using time research and deeper analysis. If a security is determined precisely, the future return of the security will come to the beta at the securities market line. Nevertheless, if it goes down that line then that states the security is understated and it is overrated if it goes above the line. In any situation, regulations have to be implemented. Security market line is a line that shows the risks against revenue in the trading market at a specified time and can expose all the securities that are in a good demand. It is also called characteristic line or SML. Security market line really shows the outcomes of the financial capital asset pricing model. It is also called CAPM formula. Risk on the market is represented through the X-axis also called beta. Prospective revenue is represented through the Y-axis. Securities risk premium is identified with the help of security market line. Security market line turns out to be an effective instrument in identifying if a security involved in your Security market gives sensible prospective revenue for specified risks. Your securities are represented on the chart with security market line. So, if the securities risks against the prospective profits are situated above the line it is undervalued security. It is so, as the trader supposes to get higher revenue for specified risk. The asset that is situated below the line is overvalued. This can happen when the trader can take less profit for the considered risk. Take this effective knowledge for your consideration and use for earning profits. 35
  36. 36. CHAPTER-3 RESEARCH METHODOLOGY The process used to collect information and data for the purpose for making business decisions. The methodology may include publication research , interviews , surveys and other research techniques, and could include present and historical information. The methodology of study consists of • Source of data collection • Statistical tools and techniques Source of data collection: The data has been collected through primary and secondary sources  primary data : Discussion with branch manager  Live trading in the market  secondary data: Books related to financial management  Web sites can be used as vital information source Statistical tool and techniques: The collected data needed for the analysis are: • • • Comparative analysis of balance sheets Financial ratio’s The data has been analysed through different graphs for the selected banks. 36
  37. 37. OBJECTIVES: The major objectives of the study:• To study and compare the performance of the banks in the banking sector. • To help the investors for choosing to make their investments in banking sector. • To calculate the risk-return stock of banking sector. • To understand the concept of investing in equity shares. • Comparative analysis of 4 selected banks. SCOPE The scopes of the project are limited to understanding the basics of fundamental analysis and technical analysis and apply it to take a decision of investing in banking sector LIMITATIONS  The study is based on the data is given by the investors and the employee which may not be 100% correct.  Moreover, very few investors and agents have a detail knowledge of the study.  The study is confined to only one sector.  The project has been limited to investment analysis of banking sector only. 37
  38. 38. CHAPTER-4 DATA COLLECTION Fundamental Analysis: Fundamental analysisrefers to the study of the core underlying elements that influence the economy of a particular entity. It is a method of study that attempts to predict price action and market trends by analyzing economic indicators, government policy and societal factors within a business cycle framework. The fundamental analysis of a company involves the following parameters: 1. Macroeconomic Analysis 2. Industry Analysis 3.Company analysis How does an investor determine if a stock is undervalued, overvalued, or trading at fair market value? With fundamental analysis, this may be done by applying the concept of intrinsic value. If all the information regarding a corporation's future anticipated growth, sales figures, cost of operations, and industry structure, among other things, are available and examined, then the resulting analysis is said to provide the intrinsic value of the stock. To a fundamentalist, the market price of a stock tends to move towards its intrinsic value. If the intrinsic value of a stock is above the current market price, the investor would purchase the stock. However, if the investor found through analysis that the intrinsic value if a stock was below the market price for the stock, the investor would sell the stock from their portfolio or take a short position in the stock. 1. Macroeconomic Analysis: Change in rates by RBI: Looking at the changing scenario, RBI keeps on changing rates such as Repo Rate, Reverse Repo Rate and Cash Reserve Ratio. These rates have a direct relation with Bank’s performance and in turn share prices are linked with bank’s performance. Thus, a change in these rates or even a speculation of change in these rates affects share prices. 38
  39. 39. Global Analysis: Any change in global economy or in other words, global changes also affects Indian Economy. For example: The recession was first observed in USA and later on it caught its lead in other countries too. When it entered India, the share market crashed literally. It affected many banks as ICICI and others, resulting in loss of people’s confidence towards banks. Change in Governments Policy: The government takes desired steps and keeps on reviewing its policies, rules, regulations and procedures. A change in FDI and FII inflow restrictions, entry exit barriers for foreign banks in India, EXIM regulations, change in Basel norms, etc. form a part of important government policies. For example if government allows entry of foreign banks in India, then competition would rise, and it may happen that those foreign banks may outperform and leave our own banks far behind. Thus, some restriction would follow and this will definitely affect share prices. Effect of Inflation on banking operations: Several economists have found that countries with high inflation rates have inefficiently small banking sectors and equity markets. This effect suggests that inflation reduces bank lending to the private sector, which is consistent with the view that a sufficiently high rate of inflation induces banks to ration credit. Effect of monetary policy on Banking Sector: Monetary policy affects banking sector in many ways. One way is through creditMarkets. Because of imperfect information, incomplete contracts and imperfect bankCompetition, monetary policy may affect banks’ loan supply. In particular, expansive Monetary policy may increase banks’ loan supply directly (bank lending channel), or Indirectly by improving borrowers’ net worth and, hence, by reducing the agency costs of lending. 39
  40. 40. 2. Industry Analysis: Life Cycle Analysis: Bank plays an important role in the economic development of the country. The entire commercial and industrial activities are well knitted with the banks. One cannot imagine the cessation of the banking activities even for a day. There may be an economic crisis in the country if the banks stop functioning for some days. In the early days, the banking business was confined to receiving of deposits and lending of money. But the modern bankers undertake wide variety of functions to assist their customers. Banks are like any other business in that they produce goods and services to customers. Like any other businesses, their products have life cycles. Cheques are in a decline phase of their life cycle and use of cheques is declining rapidly and being replaced by electronic bill pay and debit cards. Internet Banking and Electronic Bill pay are in their growth phase as more and more customers are using these services. Cards or Cheque Cards are in their maturity phase as they are accepted by nearly everyone. So overall, the banking industry is in a GROWTH PHASE, as new measures are being adopted overtime so as to make transactions speedy and easy. Porter’s five forces analysis: 1. Threat of New Entrants. The average person can't come along and start up a bank, but there are services, such as internet bill payment, on which entrepreneurs can capitalize. Banks are fearful of being squeezed out of the payments business, because it is a good source of fee-based revenue. Another trend that poses a threat is companies offering other financial services. Also, the possibility of a mega bank entering into the market poses a real threat. 2.Power of Suppliers. The suppliers of capital might not pose a big threat, but the threat of suppliers luring away human capital does. If a talented individual is working in a smaller regional bank, there is the chance that person will be enticed away by bigger banks, investment firms, etc. 40
  41. 41. 3. Power of Buyers. The individual doesn't pose much of a threat to the banking industry, but one major factor affecting the power of buyers is relatively high switching costs. If a person has a mortgage, car loan, credit card, checking account and mutual funds with one particular bank, it can be extremely tough for that person to switch to another bank. In an attempt to lure in customers, banks try to lower the price of switching, but many people would still rather stick with their current bank. On the other hand, large corporate clients have banks wrapped around their little fingers. Financial institutions - by offering better exchange rates, more services, and exposure to foreign capital markets - work extremely hard to get high-margin corporate clients. 4. Availability of Substitutes. There are plenty of substitutes in the banking industry. Banks offer a suite of services over and above taking deposits and lending money, but whether it is insurance, mutual funds or fixed income securities, chances are there is a non-banking financial services company that can offer similar services. On the lending side of the business, banks are seeing competition rise from unconventional companies. Sony, General Motors and Microsoft all offer preferred financing to customers who buy big ticket items 5. Competitive Rivalry. The banking industry is highly competitive. The financial services industry has been around for hundreds of years and just about everyone who needs banking services already has them. Because of this, banks must attempt to lure clients away from competitor banks. They do this by offering lower financing, preferred rates and investment services. The banking sector is in a race to see who can offer both the best and fastest services, but this also causes banks to experience a lower ROA. They then have an incentive to take on high-risk projects. In the long run, we're likely to see more consolidation in the banking industry. Larger banks would prefer to take over or merge with another bank rather than spend the money to market and advertise to people. 41
  42. 42. DATA ANALYSIS To study the financial performance of the following selected Banks: 1. STATE BANK OF INDIA 2. ICICI BANK LIMITED 3. PUNJAB NATIONAL BANK 4. CANARA BANK 5. BANK OF BARODA 6. BANK OF INDIA State Bank of India Company Profile Company Information Headquarters: Year of Incorporation: Base interest rate: No. of branches: No. of ATMs: Mumbai, India 1806 9.75% Over 14,000 Over 10,000 State Bank of India (SBI) is the India’s oldest and largest bank by revenue, assets and market capitalization. SBI has launched various cost-effective channels, such as SBI Tiny Card(biometrically enabled card), Kiosk banking (internet enabled kiosk/computer with biometric validation) and cell phonemessaging channel. The bank also has more than 170branches in ~30 foreigncountries, including multiple locations inthe US, Canada, and Nigeria. “The objective of the lending rate cut is to improve demand for assets which in our view could have a positive cascading effect on related industries” KEY MANAGEMENT MD & CEO: Managing Director: Managing Director: Managing Director: Mr. PratipChaudhari Mr. Hemant G. Contractor Mr. Diwakar Gupta Mr. A. Krishna Kumar 42
  43. 43. The State Bank Group includes a network of eight banking subsidiaries and several nonbanking Subsidiaries The Eight Banking subsidiaries are as follows: – State Bank of Bikaner and Jaipur (SBBJ) – State Bank of Hyderabad (SBH) – State Bank of India (SBI) – State Bank of Indore (SBIR) – State Bank of Mysore (SBM) – State Bank of Patiala (SBP) – State Bank of Saurashtra (SBS) – State Bank of Travancore (SBT) Banking segments of SBI Treasury: Includes investmentportfolio and tradingin foreign exchangecontracts andderivative contracts. Corporate/Wholesale: Comprises of lending activities of Corporate Accounts Group, Mid Corporate Accounts Group and Stressed Assets ManagementGroup. Retail :Comprises of branches in National Banking Group, which includes personal banking activities, including lending activities tocorporate customers. Other Services: NRI Services, ATM Services, Demat Services, E-Pay/E-Rail Broking Services. COMPANY PROFILE: COMPANY INFORMATION: Headquarters: Year of Incorporation: Base interest rate: No. of branches: No. of ATMs: Vadodra, India 1994 9.75% Over 2,880 Over 10,0 43
  44. 44. BUSINESS OVERVIEW: ICICI Bank (Industrial Credit and Investment Corporation of India) was originally promoted in 1994 by ICICI Ltd., an Indian financial institution ICICI acquired Bank of Rajasthan througha share swap in a non-cash deal that valued the bank of Rajasthan at aboutRs.3,000 crores on 2010. This merger added over 450 branches of ICICI to the network The bank is currently in talks with Vodafone to bring a concept of emoney into play “The strategy of focusing on profitability, growth and risk management for fiscal 2012 resulted in better than the expected results.” KEY MANAGEMENT: MD & CEO: MD & CFO: Executive Director: Executive Director: Ms. ChandaKocchar Mr. N.S. Kannan Mr. K. Ramkumar Mr. Rajiv Sabharwal Punjab National Bank Company Profile Company Information Headquarters: Year of Incorporation: Base interest rate: No. of branches: No. of ATMs: New Delhi, India 1895 10.50% Over 5,900 Over 6,000 44
  45. 45. Business Overview: Punjab National Bank (PNB) is the largest nationalized Bank in the country in terms of its branch network, totalbusiness, advances, operating profit and low cost CASA deposits Apart from offering banking products, the bank has also taken up Wealth Management Services such as credit card / debit card; bullion business; life/non-life insurance PNB Prernaand PNB Pragatiare two corporate social responsibility initiatives undertaken by the bank. “The status of the banking sector in 2013will depend on how the economy behaves over the next one year” Key Management: Chairman & MD: Executive Director: Executive Director: Executive Director: Mr. K. R. Kamath Mr. RakeshSethi Mr. UshaA Subramanian Mr. S. R. Bansal Canara Bank Company Profile Company Information: Headquarters: Bangalore, India Year of Incorporation: 1906 Base interest rate: 10.50% No. of branches: Over 3,600 No. of ATMs: Over 3,100 45
  46. 46. BUSINESS OVERVIEW: Over the years, Canara Bank has been scaling up its market position to emerge as a major 'Financial Conglomerate' with as many as nine subsidiaries/sponsored institutions/joint ventures in India and abroad Besides commercial banking, the Bank has also carved a distinctive mark in various corporate social responsibilities areas, namely, serving national priorities, promoting rural development and enhancing rural self-employment through several training institutes It is the first bank to introduce Centralized Solution for Service Units(CSSU), developed in-house adopting the latest technology in the IT Industry’ Key Management Chairman &Managing Director: Executive Director: Executive Director: Mr. R. K. Dubey Ms.Archana S. Bhargava Mr. Ashok Kumar Gupta COMPANY PROFILE COMPANY INFORMATION: Headquarters: Baroda, India Year of Incorporation: 1908 Base interest rate: 10.50% No. of branches: Over 4,000 No. of ATMs: Over 1,800 46
  47. 47. BUSINESS OVERVIEW: Bank of Baroda is a 103 year old State owned Bank with a good mix of modern &contemporary personality, offering banking products and services to large industrial, SME, retail & agricultural customers across the country The Bank has developed an Integrated Global Treasury Solution in its major territories such as the UK, UAE, Bahamas Bahrain, Honkong, Singapore, Belgium, USA and India to reduce the cost of operations and improve funds management. “The Indian banking industry has always been resilient in facing challenges” KEY MANAGEMENT: Chairman & MD: Mr. M. D. Mallya Executive Director: Mr. S. K. Jain Executive Director: Mr. P. Srinivas Executive Director: Mr. RanjanDhawan BANK OF INDIA COMPANY PROFILE COMPANY INFORMATION: Headquarters: Year of Incorporation: Base interest rate: No. of branches: No. of ATMs: Mumbai, India 1906 10.50% Over 4,000 Over 3,000 BUSINESS OVERVIEW: Bank of India was founded on 7thSeptember, 1906 by a group of eminent businessmen from Mumbai. The Bank was under private ownership and control till July 1969, after which it was nationalized along with 13 other banks 47
  48. 48. The Bank has a sizable presence abroad, with a network of 29 branches (including five representative office) at key banking and financial centers such as London, New York, Paris, Tokyo, Hong-Kong an Singapore. International business accounts for around 17.82% of the Bank's total business The bank is always looking forward to being more consumers centric and reaching out especially in the rural belts of the country. KEY MANAGEMENT: Chairman & MD: Mr. V. R. Iyer Executive Director: Mr. N. Seshadri Executive Director: Mr. M. S. Raghvan Executive Director: Mr. B. B. Sharma 48
  49. 49. DATA ANALYSIS AND INTERPRETATION NET PROFIT MARGIN RATIO: .TABLE 1.1 Profit margin ratio 2009 2010 2011 2012 STATE BANK OF INDIA 12.03 10.54 8.55 9.73 ICICI BANK LTD 9.74 12.17 15.91 16.14 PNB BANK 13.76 15.64 14.56 12.09 CANARA BANK 9.61 10.89 13.77 15.65 BANK OF BARODA 12.86 15.37 17.18 15.37 BANK OF INDIA 13.96 15.89 8.59 10.25 49
  50. 50. CHART 1.1 shows the net profit ratio of selected banks which are as follows:- 20 18 16 2009 14 2010 12 2011 10 2012 8 6 4 2 0 STATE BANK ICICI BANK LTD PUNJAB OF INDIA NATIONAL BANK CANARA BANK BANK OF BARODA BANK OF INDIA INTERPRETATION: The net profit margin is a good way of comparing companies in the same industry, since such companies are generally subject to similar business conditions. However, the net profit margins are also a good way to compare companies in different industries in order to gauge which industries are relatively more profitable. Also called net margin. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Profit margin. The profit margin ratio, also known as the operating performance ratio, measures the company’s ability to turn its sales into net income. To evaluate the profit margin, it must be compared to competitors and industry statistics. It is calculated by dividing net income by net sales 50
  51. 51. STATE BANK OF INDIA: In table 1.1 chart shows decreasing trend till 2011 and from 2012 it shows increasing trend . ICICI BANK: Its shows increasing trend.In 2011 and 2012 it has slightly increase which indicate more profit margin. PUNJAB NATIONAL BANK : Every year its fluctuating but only in 2010 it increases. CANARA BANK: It shows increasing trend at increasing rate. BANK OF BARODA: It has increases till 2011 but in 2012 it has decreases. BANK OF INDIA: Every year it has fluctuate. DIVIDEND PAY OUT RATIO: TABLE 1.2:DIVIDEND PAYOUT RATIO NET PROFIT 2009 2010 2011 2012 STATE BANK OF INDIA 22.90 23.36 26.03 22.59 ICICI BANK LTD 36.60 37.31 35.23 32.82 PUNJAB NATIONAL BANK 23.86 20.74 18.27 17.75 CANNARA BANK 24.53 18.51 15.88 14.09 BANK OF BARODA 17.22 20.90 17.76 16.22 BANK OF INDIA 12.23 16.34 24.61 17.85 51
  52. 52. Chart 1.2 which shows the dividend payout ratio of selected banks:40 35 30 25 2009 20 2010 15 2011 10 2012 5 0 STATE BANK OF ICICI BANK LTD INDIA PUNJAB NATIONAL BANK CANARA BANK BANK OF BARODA BANK OF INDIA INTERPRETATION: The part of the earnings not paid to investors is left for investment to provide for future earnings growth. Investors seeking high current income and limited capital growth prefer companies with high Dividend payout ratio. However investors seeking capital growth may prefer lower payout ratio because capital gains are taxed at a lower rate. High growth firms in early life generally have low or zero payout ratios. As they mature, they tend to return more of the earnings back to investors STATE BANK OF INDIA: There is a slightly increase inyear 2011 and decrease in 2012 ICICI BANK LTD:There is a decrease from year 2010 to 2012 PUNJAB NATIONAL BANK: There is decreasing trend in the following year CANARA BANK:There is decreasing trend at faster rate BANK OF BARODA:There is decrease in the year from 2010 BANK OF INDIA: There is increasing trend before the year 2011 but decrease in year 2012. 52
  53. 53. EARNING PER SHARE: TABLE 1.3 Shows the profitability ratios EPS Earnings per share 2009 2010 2011 2012 STATE BANK OF INDIA 143.67 144.37 116.07 174.15 ICICI BANK LTD 33.76 36.10 44.73 56.09 PUNJAB NATIONAL BANK CANARA BANK 98.03 123.86 139.94 144 38.17 50.55 73.69 90.88 BANK OF BARODA 61.14 83.96 108.33 121.79 BANK OF INDIA 57.26 33.15 45.54 46.66 Chart 1.3 shows the position of EPS ratio of selected banks which are as follows: 200 180 160 140 120 2009 100 2010 80 2011 60 2012 40 20 0 STATE BANK OF INDIA ICICI BANK PUNJAB NATIONAL BANK CANARA BANK 53 BANK OF BARODA BANK OF INDIA
  54. 54. INTERPRETATION:The portion of a company’s profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company’s profitability. Earningsper share is generally considered to be the single most important variable in determining a share’s price. It is also a major component used to calculate the price-to-earnings valuation ratio This chart shows that all selected banks are increasing, STATE BANK OF INDIA reduced 144 in year 2010 to 116 in yr 2011 then again by 58 in year 2012 . ICICI BANK, PUNJAB NATIONAL BANK ,CANARA BANK , BANK OF BARODA Shows increasing trend but again bank of India reduced in year 2010 then again increase gradually from year 2011. DIVIDEN PER SHARE: . TABLE 1.4 SHOWS PROFITABILITY RATIOS OF SECLECTED Dividend per share 2009 2010 2011 2012 STATE BANK OF INDIA ICICI BANK LTD 29 30 30 35 11 12 14 16.50 PUNJAB NATIONAL BANK 20 22 22 22 CANARA BANK 8 8 10 11 BANK OF BARODA 9 15 16.50 17 BANK OF INDIA 4 8 7 7 54
  55. 55. Chart 1.4 shows from the following:40 35 30 25 2009 20 2010 15 2011 10 2012 5 0 STATE BANK ICICI BANK LTD PUNJAB CANARA BANK OF INDIA NATIONAL BANK BANK OF BARODA BANK OF INDIA INTERPRETATION: The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued This chart1.4 indicates a positive trend as all are increasing except BANK OF INDIA. 55
  56. 56. CURRENT RATIO: TABLE 1.5 OF 6 SECLECTED BANKS ACCORDING TO INCOMEWISE ARE AS FOLLOWS: CURRENT RATIO 2009 2010 2011 2012 STATE BANK OF INDIA ICICI BANK LTD 0.04 0.04 0.04 0.05 0.13 0.14 0.11 0.13 PUNJAB NATIONAL BANK CANNARA BANK 0.02 0.02 0.03 0.02 0.02 0.02 0.01 0.02 BANK OF BARODA 0.02 0.02 0.02 0.03 BANK OF INDIA 0.03 0.02 0.04 0.02 CHART 1.5 SHOWS THE POSITION OF SECLECTED BANKS AS FOLLOWS:0.16 0.14 0.12 0.1 2009 0.08 2010 0.06 2011 0.04 2012 0.02 0 STATE BANK OF INDIA ICICI BANK PUNJAB NATIONAL BANK CANARA BANK 56 BANK OF BARODA BANK OF INDIA
  57. 57. INTERPRETATION: A liquidity ratio measures a company’s ability to pay short-term obligations. This chart 1.5 indicates that there is frequent fluctuations except State Bank Of India and Bank Of Baroda which has gradually increase in year 2012. QUICK RATIO: TABLE 1.6 SHOWS THE quick ratio of selected banks which are as follows:- QUICK RATIO 2009 2010 2011 2012 STATE BANK OF INDIA 5.74 9.07 8.50 12.05 ICICI BANK LTD 5.94 14.70 15.86 16.71 P & B BANK 9.75 20.47 22.24 23.81 CANARA BANK 9.17 11.29 26.98 30.86 BANK OF BARODA 9.62 21..88 26.38 28.00 BANK OF INDIA 11.63 12.30 22.15 19.06 57
  58. 58. CHART 1.6 SHOWS the position of selected banks:35 30 25 20 2009 2010 15 2011 2012 10 5 0 STATE BANK OF ICICI BANK LTD INDIA P & B BANK CANARA BANK BANK OF BARODA BANK OF INDIA INTERPRETATION: An indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. The higher the quick ratio, the better the position of the company. This chart 1.6 indicates increasing or positive trend except BANK OF INDIA which shows the downfall in year 2012. 58
  59. 59. TABLE 1.7shows the gross non-performing assets: - GROSS NONPERFORMING ASSETS 2009 2010 2011 2012 STATE BANK OF INDIA 15,714.00 19,534.89 25,326.29 39,676.46 ICICI BANK LTD 9,649.31 9,480.65 10,034.26 9,475.33 PUNJAB NATIONAL BANK 2,506.90 3,214.41 4,379.39 8,719.62 CANARA BANK 2,167.97 2,590.31 3,137.36 4,031.75 BANK OF BARODA 1,842.92 2,400.69 3,152.50 4,464.75 BANK OF INDIA 2,470.88 4,882.65 4,811.55 5,893.97 CHART 1.7 shows the movements of bank positions below: 45000 40000 35000 30000 25000 2009 20000 2010 15000 2011 10000 2012 5000 0 STATE BANK ICICI BANK LTD OF INDIA PUNJAB NATIONAL BANK CANARA BANK BANK OF BARODA BANK OF INDIA DATA INTERPRETATION:A debt obligation where the borrower has not paid any previously agreed upon interest and principal repayments to the designated lender for an extended period of time. The nonperforming asset is therefore not yielding any income to the lender in the form of principal and interest payments. Chart 1.7 shows a positive trend for every selected banks except ICICI BANK LTD which shows fluctuations in every year. 59
  60. 60. CHAPTER-5 FINDINGS From the data analysis and interpretations of the ratios of six selected banks the following findings have been given: 1. State bank of India: - In net profit margin ratio 2011 it has decrease in year 2011 from 10.54 to 8.55 i.e 1.99 times and again it has increased in 2012 1.18 times. In dividend payout ratio it has gradually increase in year 2010 by 0.46 times, in tear 2011 by 2.67 times which has reduced again in year 2012 by 3.47 times. Earnings per share have increase in year 2012 by 58.08 times which has decrease in year 2011 by 28.30 times. Dividend per share and Non-performing assets has also increase in every year. Current ratio has increase form 0.1 times in year 2012 and quick ratio has also frequently increases. 2. ICICI BANK LTD: -net profit margin, it has gradually increases in every year. In 2010 dividend payout ratio increases by 1 times but again it slowly it starts decreasing. Earnings per share, dividend per share & quick ratio increases frequently in every year. Current ratio there is frequent fluctuations. Non-performing assets fluctuates in every year. 3. PUNJAB NATIONAL BANK: - From year 2009 net profit margin has gradually increase but in year 2012 it has reduced to 2.47 times. Dividend payout ratio has decreased in every year frequently but Earning per share, Dividend per share , Quick ratio& Non-performing assets has increase frequently in every year. Current ratio has increase in year 2011 by 0.01 times and remains same in every 3 years. 60
  61. 61. 4. CANARA BANK: -net profit margin ratio, Earnings per share has frequently increased in every year but dividend payout ratio has decreased gradually in every year. Dividend per share increases by 1 times in year 2012. In 2011 current ratio has decrease by 0.01 times and remains same in all the 3 years. Quick ratio has increases slowly in every year. 5. BANK OF BARODA: -net profit margin ratio has slowly increases in year 2009 but in 2012 it has decreases by 2 times in year 2012.dividend payout ratio has frequent fluctuates in every year. Earnings per share Quick ratio, dividend per share& Non-performing assets has increases slowly in every year. Current ratio increases in year 2012 by 0.01 times. 6. BANK OF INDIA: - Net profit margin ratio has gradually increase but in year 2011 it has reduced to 7 times and again it has increase. Dividend payout ratio has slowly increased but in 2012 it decreases by 7 times. Earnings per share have decrease in year 2010 by 24 times and again started increasing. Dividend per share has increased by 4 times in year 2010and form year 2011 it started decreasing. Currentratio has frequent fluctuations by 0.01 times and quick ratio has increases every year slowly. Non – performing assets has increases in every year. 61
  62. 62. SUGGESTIONS High growth of Indian Economy: The growth of the banking industry is closely linked with the growth of the overall economy. India is one of the fastest growing economies in the world and is set to remain on that path for many years to come. This will be backed by the stellar growth in infrastructure, industry, services and agriculture. This is expected to boost the corporate credit growth in the economy and provide opportunities to banks to lend to fulfill these requirements in the future. Rising per capita income: The rising per capita income will drive the growth of retail credit. Indians have a conservative outlook towards credit except for housing and other necessities. However, with an increase in disposable income and increased exposure to a range of products, consumers have shown a higher willingness to take credit, particularly, young customers. A study of the customer profiles of different types of banks, reveals that foreign and private banks share of younger customers is over 60% whereas public banks have only 32% customers under the age of 40. Private Banks also have a much higher share of the more profitable mass affluent segment. New channel – Mobile banking is expected to become the second largest channel for banking after ATMs: New channels used to offer banking services will drive the growth of banking industry exponentially in the future by increasing productivity and acquiring new customers. During the last decade, banking through ATMs and internet has shown a tremendous growth, which is still in the growth phase. Financial Inclusion Program: Currently, in India, 41% of the adult population doesn’t have bank accounts, which indicates a large untapped market for banking players. Under the Financial Inclusion Program, RBI is trying to tap this untapped market and the growth potential in rural markets by volume growth for banks. Financial inclusion is the delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. Investors shouldn’t be depending upon the rumors and TV news which might affect the shares only for a short span of time. The banks can expand its network by increasing its branches.Investments are to be made in those banks which give fairly good returns, dividends every year. Financial inclusion initiatives also need to be taken care of as India fares very poorly on this regard as half the population does not have access to banking services. 62
  63. 63. CONCLUSION The economic growth of the country is an apt indicator for the growth of the banking sector. The Indian economy is projected to grow at a rate of 5-6 percent34 and the country’s banking industry is expected to reflect this growth. The onus for this lies in the capabilities of the Reserve Bank of India as an able central regulatory authority, whose policies have shielded Indian banks from excessive leveraging and making high risk investments. During 2011-12, majority of public sector banks failed to meet the priority sector target. Though at an aggregate level, foreign banks’ performance was better as compared to domestic banks, bank-wise data revealed that some foreign banks also failed to meet the priority sector lending target. Performance of banks during 2011-12 was conditioned by slowdown in the domestic economy coupled with higher interest rate environment. There are emergingchallenges, which appear in the forms ofconsolidation; recapitalization, prudentialregulation weak banks, and non-performing assets,legal framework etc. needs urgent attention. Thepaper concludes that, from a regulatoryperspective, the recent developments in thefinancial sector have led to an appreciation of thelimitations of the present segmental approach tofinancial regulation and favors adopting aconsolidated supervisory approach to financialregulation and supervision, irrespective of itsstructural design. The Indian banking sector has been relatively well shielded by the central bank and has managed to sail through most of the crisis. But, currently in light of slowing domestic GDP growth, persistent inflation, asset quality concerns and elevated interest rates, the investment cycle has been wavering in the country. 63
  64. 64. ANNEXURE Balance Sheet of State Bank of India ------------------- in Rs. Cr. ------------------Mar '09 Capital and liabilities Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities Assets Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Mar '10 12 mths 12 mths 12 mths 12 mths 634.88 634.88 635.00 671.04 634.88 634.88 635.00 671.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 57,312.82 65,314.32 64,351.04 83,280.16 0.00 0.00 0.00 0.00 57,947.70 742,073.13 53,713.68 795,786.81 65,949.20 804,116.23 103,011.60 907,127.83 64,986.04 933,932.81 119,568.96 1,053,501.77 83,951.20 1,043,647.36 127,005.57 1,170,652.93 110,697.57 80,336.70 105,248.39 80,915.09 964,432.08 Mar '09 1,053,413.73 Mar '10 1,223,736.20 Mar '11 1,335,519.22 Mar '12 12 mths 12 mths 12 mths 12 mths 55,546.17 61,290.87 94,395.50 54,075.94 48,857.63 34,892.98 28,478.65 43,087.23 542,503.20 275,953.96 10,403.06 631,914.15 285,790.07 11,831.63 756,719.45 295,600.57 13,189.28 867,578.89 312,197.61 14,792.33 6,828.65 7,713.90 8,757.33 9,658.46 3,574.41 263.44 4,117.73 295.18 4,431.95 332.23 5,133.87 332.68 64 Mar '11 Mar '12
  65. 65. Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 37,733.27 964,432.08 35,112.76 1,053,413.74 43,777.85 1,223,736.20 53,113.02 1,335,519.24 614,603.47 429,917.37 585,294.50 698,064.74 152,964.06 912.73 166,449.04 1,038.76 205,092.29 1,023.40 201,500.44 1,251.05 Profit & Loss account of State Bank of India ------------------- in Rs. Cr. ------------------Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths 106,521.45 81,394.36 70,993.92 63,788.43 Other Income 14,351.45 14,935.09 14,968.15 12,691.35 Total Income 120,872.90 96,329.45 85,962.07 76,479.78 Interest expended 63,230.37 48,867.96 47,322.48 42,915.29 Employee Cost 16,974.04 14,480.17 12,754.65 9,747.31 Selling and Admin Expenses 15,625.18 12,141.19 7,898.23 5,122.06 1,007.17 990.50 932.66 763.14 12,350.13 12,479.30 7,888.00 8,810.75 0.00 0.00 0.00 0.00 37,563.09 31,430.88 24,941.01 18,123.66 Income Interest Earned Expenditure Depreciation Miscellaneous Expenses Preoperative ExpCapitalised Operating Expenses 65
  66. 66. Provisions & Contingencies 4,532.53 6,319.60 109,186.89 88,959.12 76,796.02 67,358.55 Mar '11 Mar '10 Mar '09 12 mths Net Profit for the Year 8,660.28 Mar '12 Total Expenses 8,393.43 12 mths 12 mths 12 mths 11,686.01 7,370.35 9,166.05 Extraordionary Items 21.28 0.00 0.00 0.00 Profit brought forward 6.05 0.34 0.34 0.34 11,713.34 7,370.69 9,166.39 0.00 0.00 0.00 2,348.66 1,905.00 1,904.65 296.49 246.52 236.76 Total Preference Dividend Equity Dividend Corporate Dividend Tax 9,121.23 9,121.57 0.00 1,841.15 248.03 Per share data annualized Earning Per Share (Rs) 174.15 116.07 144.37 143.67 Equity Dividend (%) 350.00 300.00 300.00 290.00 1,251.05 1,023.40 1,038.76 912.73 Transfer to Statutory Reserves 3,531.35 2,488.96 6,495.14 6,725.15 Transfer to Other Reserves 5,536.50 2,729.87 Proposed Dividend/Transfer to Govt 2,645.15 2,151.52 2,141.41 0.34 0.34 0.34 11,713.34 7,370.69 9,166.39 Book Value (Rs) Appropriations Balance c/f to Balance Sheet Total 66 529.50 306.90 2,089.18 0.34 9,121.57
  67. 67. Balance Sheet of Punjab National Bank Capital and liabilities Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities ------------------- in Rs. Cr. ------------------Mar '12 12 mths Mar '11 12 mths Mar '10 12 mths Mar '09 12 mths Assets 339.18 316.81 315.30 315.30 339.18 316.81 315.30 315.30 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 26,028.37 19,720.99 15,915.63 12,824.59 1,449.53 1,470.76 1,491.99 1,513.74 27,817.08 21,508.56 17,722.92 14,653.63 379,588.48 312,898.73 249,329.80 209,760.50 37,264.27 31,589.69 19,262.37 4,374.36 416,852.75 344,488.42 268,592.17 214,134.86 13,524.18 12,328.27 10,317.69 18,130.13 458,194.01 378,325.25 296,632.78 246,918.62 Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets 18,492.90 23,776.90 18,327.58 17,058.25 10,335.14 5,914.32 5,145.99 4,354.89 293,774.76 242,106.67 186,601.21 154,702.99 122,629.47 95,162.35 77,724.47 63,385.18 5,265.08 4,981.60 4,215.21 3,930.36 2,096.22 1,876.01 1,701.74 1,533.25 3,168.86 3,105.59 2,513.47 2,397.11 0.00 0.00 0.00 0.00 9,792.88 8,259.42 6,320.07 5,020.20 458,194.01 378,325.25 296,632.79 246,918.62 Contingent Liabilities Bills for collection Book Value (Rs) 173,768.84 101,465.73 50,981.22 777.39 67 37,449.53 632.48 68,124.47 79,270.65 33,215.78 514.77 31,941.43 416.74
  68. 68. Profit & Loss account of Punjab National Bank ------------------- in Rs. Cr. ------------------Mar '12 Mar '09 12 mths 12 mths 12 mths 36,428.03 4,202.60 40,630.63 26,986.48 3,612.58 30,599.06 21,466.91 3,565.31 25,032.22 19,326.16 2,919.69 22,245.85 23,013.59 4,723.48 3,353.59 292.26 4,363.51 0.00 9,405.85 3,326.99 35,746.43 Mar '12 15,179.14 4,461.10 2,813.45 255.85 3,456.02 0.00 8,367.96 2,618.46 26,165.56 Mar '11 12,944.02 3,121.14 1,701.46 222.83 3,137.42 0.00 5,761.36 2,421.49 21,126.87 Mar '10 12,295.30 2,924.38 1,406.42 191.06 2,337.80 0.00 5,026.81 1,832.85 19,154.96 Mar '09 12 mths Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data annnualised Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Mar '10 12 mths Income Interest Earned Other Income Total Income Expenses Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative ExpCapitalised Operating Expenses Provisions & Contingencies Total Expenses Mar '11 12 mths 12 mths 12 mths 4,884.20 7.88 0.00 4,892.08 0.00 746.19 121.05 4,433.50 0.00 0.00 4,433.50 0.00 696.99 113.07 3,905.36 0.00 7.64 3,913.00 0.00 693.67 116.43 3,090.88 0.00 0.00 3,090.88 0.00 630.61 107.17 144.00 220.00 777.39 139.94 220.00 632.48 123.86 220.00 514.77 98.03 200.00 416.74 1,390.32 2,634.53 1,258.39 2,365.05 1,532.46 1,570.44 1,155.46 1,190.00 68
  69. 69. Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total 867.24 810.06 810.10 737.78 0.00 4,892.09 0.00 4,433.50 0.00 3,913.00 7.64 3,090.88 Balance Sheet of Canara Bank ------------------- in Rs. Cr. ------------------Mar '12 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths 443.00 443.00 0.00 0.00 20,181.82 2,065.14 22,689.96 327,053.73 15,525.39 342,579.12 8,891.12 374,160.20 Mar '12 443.00 443.00 0.00 0.00 17,498.46 2,098.36 20,039.82 293,972.65 14,261.65 308,234.30 7,804.64 336,078.76 Mar '11 410.00 410.00 0.00 0.00 12,129.11 2,132.68 14,671.79 234,651.44 8,440.56 243,092.00 6,977.30 264,741.09 Mar '10 410.00 410.00 0.00 0.00 9,629.61 2,168.16 12,207.77 186,892.51 7,056.61 193,949.12 13,488.91 219,645.80 Mar '09 12 mths Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities Mar '11 12 mths 12 mths 12 mths 22,014.79 15,719.46 10,036.79 8,693.32 3,933.75 6,622.99 212,467.17 83,699.92 4,686.15 1,841.74 2,844.41 0.00 6,359.15 169,334.63 69,676.95 4,480.37 1,620.99 2,859.38 0.00 3,216.92 138,219.40 57,776.90 4,440.07 1,510.61 2,929.46 0.00 4,060.26 Assets Cash & Balances with RBI 17,795.14 Balance with Banks, Money at 10,384.27 Call Advances 232,489.82 Investments 102,057.43 Gross Block 4,858.37 Accumulated Depreciation 2,000.84 Net Block 2,857.53 Capital Work In Progress 0.00 Other Assets 8,576.01 69
  70. 70. Total Assets 374,160.20 336,078.76 264,741.09 219,645.80 Contingent Liabilities Bills for collection Book Value (Rs) 166,419.96 36,132.91 465.57 111,805.73 29,041.74 405.00 110,627.02 21,206.47 305.83 136,851.39 25,757.73 244.87 Profit & Loss account of Canara Bank ------------------- in Rs. Cr. ------------------Mar '12 Mar '09 12 mths 12 mths 12 mths 30,850.62 2,949.75 33,800.37 23,064.01 2,826.98 25,890.99 18,751.96 3,000.82 21,752.78 17,119.05 2,427.10 19,546.15 23,161.31 2,973.09 2,245.56 156.89 1,980.82 0.00 5,967.81 1,388.55 30,517.67 Mar '12 15,240.74 2,954.84 1,817.82 151.36 1,700.34 0.00 5,420.49 1,203.87 21,865.10 Mar '11 13,071.43 2,193.70 2,164.65 155.13 1,146.44 0.00 4,903.79 756.13 18,731.35 Mar '10 12,401.25 1,877.15 1,540.27 173.64 1,481.42 0.00 3,965.24 1,107.24 17,473.73 Mar '09 12 mths Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Mar '10 12 mths Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative ExpCapitalised Operating Expenses Provisions & Contingencies Total Expenses Mar '11 12 mths 12 mths 12 mths 3,282.71 0.00 0.00 3,282.71 0.00 487.30 80.00 4,025.89 0.00 0.00 4,025.89 0.00 487.30 80.00 3,021.43 0.00 0.00 3,021.43 0.00 410.00 70.00 2,072.42 0.00 0.00 2,072.42 0.00 328.00 55.75 70
  71. 71. Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total Balance Sheet of Bank Of Baroda 74.10 110.00 465.57 90.88 110.00 405.00 73.69 100.00 305.83 50.55 80.00 244.87 1,530.15 1,185.26 1,765.29 1,693.30 1,676.35 865.08 1,508.64 180.03 567.30 567.30 480.00 383.75 0.00 3,282.71 0.00 4,025.89 0.00 3,021.43 0.00 2,072.42 ------------------- in Rs. Cr. ------------------Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths Total Share Capital 412.38 392.81 365.53 365.53 Equity Share Capital 412.38 392.81 365.53 365.53 Share Application Money 0.00 0.00 0.00 0.00 Preference Share Capital 0.00 0.00 0.00 0.00 27,064.47 20,600.30 14,740.86 12,470.01 0.00 0.00 0.00 0.00 Capital and liabilities Reserves Revaluation Reserves 71
  72. 72. Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities 27,476.85 20,993.11 15,106.39 12,835.54 384,871.11 305,439.48 241,044.26 192,396.95 23,573.05 22,307.85 13,350.09 5,636.09 408,444.16 327,747.33 254,394.35 198,033.04 11,400.46 9,656.73 8,815.97 16,538.15 447,321.47 358,397.17 278,316.71 227,406.73 Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths Cash & Balances with RBI 21,651.46 19,868.18 13,539.97 10,596.34 Balance with Banks, Money at Call 42,517.08 30,065.89 21,927.09 13,490.77 Assets Advances Investments 287,377.29 228,676.36 175,035.29 143,985.90 83,209.40 71,260.63 61,182.38 52,445.88 Gross Block 4,921.59 4,548.16 4,266.60 3,954.13 Accumulated Depreciation 2,580.09 2,248.44 1,981.84 1,644.41 Net Block 2,341.50 2,299.72 2,284.76 2,309.72 0.00 0.00 0.00 0.00 10,224.73 6,226.40 4,347.22 4,578.12 Capital Work In Progress Other Assets 447,321.46 358,397.18 278,316.71 227,406.73 Total Assets Contingent Liabilities Bills for collection 134,552.25 112,272.64 40,717.28 72 33,735.67 77,997.01 64,745.82 27,949.60 22,584.64
  73. 73. Book Value (Rs) 668.34 Profit & Loss account of Bank Of Baroda 536.16 414.71 352.37 ------------------- in Rs. Cr. ------------------Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths 29,673.72 21,885.92 16,698.34 15,091.58 Other Income 3,422.33 2,809.19 2,806.36 2,757.66 Total Income 33,096.05 24,695.11 19,504.70 17,849.24 19,356.71 13,083.66 10,758.86 9,968.17 Employee Cost 2,985.58 2,916.78 2,350.88 2,348.13 Selling and Admin Expenses 2,589.44 1,885.00 1,627.56 885.24 276.57 243.04 230.86 230.50 2,880.80 2,324.94 1,478.21 2,189.99 0.00 0.00 0.00 0.00 Operating Expenses 6,727.59 5,669.88 4,711.23 3,844.66 Provisions & Contingencies 2,004.80 1,699.88 976.28 1,809.20 28,089.10 20,453.42 16,446.37 15,622.03 Mar '12 Mar '11 Mar '10 Mar '09 12 mths 12 mths 12 mths 12 mths 5,006.96 4,241.68 3,058.33 2,227.20 Extraordionary Items 0.00 0.00 0.00 0.00 Profit brought forward 0.00 0.00 0.00 0.00 Income Interest Earned Expenditure Interest expended Depreciation Miscellaneous Expenses Preoperative ExpCapitalised Total Expenses Net Profit for the Year 73

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