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  • 1. A STUDY ON THE FINANCIAL PERFORMANCE OF M/S. SOUTH INDIAN BANK LTD, THRISSUR BY MR. SIBY LINSON1|Page
  • 2. CHAPTER I INTRODUCTION1.1 INTRODUCTION: The main role of a bank is to provide financial security and financial supportto its fellow customers. Bank provides a lot in the economic development of each andevery country. A modern industrial society cannot be run by self financing ofentrepreneurs. Some institutional assistance is necessary to mobilize the savings of thecommunity and to make them available to the entrepreneurs. The people a largemajority of who save in small odd lots also want an institution which can ensuresafety of their funds together with liquidity. Banks assure this with a further facilitythat the funds can be drawn back in case of need. From a broader social angle, banks act as a bridge between the users of capitaland those who save but cannot use the fund themselves. For activating and installingthe idle resources in a productive track both the private and public sector banks areundergoing a cut throat competition. Even though the public sector banks are the backbone of the Indian banking sector, the private sector banks is growing day by day andthey are considered as the energy packets to stimulate the economy. The objectivebehind this study is to find the financial performance of M S South Indian BankLtd. This analysis helps to find the banks financial strength and opportunities; on theother hand it throws light on the financial weaknesses and threats. In the context offinancial performance it deals with the firm‟s capacity to raise, handle and use money.2|Page
  • 3. The traditional method of financial analysis is uses balance sheet and trading& profit & loss account. The modern method for financial analysis is done by usingcomparative statements, common size statements, schedule of changes in workingcapital, ratio analysis, etc.1.2 FINANCIAL ANALYSIS – a brief note Financial Analysis is just playing with numbers. In the hands of an expert anda motivated management, however, it can make the difference between the successand failure of a business. The key to success in financial analysis is to first assessthe interest and needs of management by talking to them. Some owners andmanagers are looking simply to maintain current operations until retirement. Othershope to one day be the largest business in their industry. The more they are interestedin growth, the more analysis they will want. Financial analysis (also referred to as financial statement analysis oraccounting analysis) refers to an assessment of the viability, stability and profitabilityof a business, sub-business or project. It is performed by professionals whoprepare reports using ratios that make use of information taken from financialstatements and other reports. These reports are usually presented to top managementas one of their bases in making the following business decisions. Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital etc.3|Page
  • 4. 1.3 IMPORTANCE In a very real sense, finance is the language of business. Goals are set andperformance is measured in financial terms. From the very beginning Finance isconsidered as the life blood of each and every business enterprise. If there is no soundand efficient financial structure, then the firm will not have a prospective future. Thefinancial performance of an organization is a very important factor for the long runsurvival and profitability function of any organization. The importance of financialanalysis is to diagnose the information contained in financial statements so as to judgethe profitability and financial soundness of the company. Financial analysis is thestarting point for making plans before using any sophisticated forecasting andplanning procedures. Considering this study a study of the performance of the bankhelps in analyzing the profitability of the bank and thereby the strength andweaknesses of the bank. It also helps to understand the banking and organizationaloperations.1.4 OBJECTIVES OF THE STUDYPrimary objective  To study the financial performance of The Bank.Secondary objective  To assess the profitability position of the bank  To study the performance of investments of the bank  To ascertain the liquidity position of the bank  To examine the long term financial position of the bank  To understand about the future prospects of the bank4|Page
  • 5. 1.5 METHODOLOGY The study is empirical in nature. It is based primarily on secondary data. Thedata required for the study are collected from the published annual reports of the bankfor various years. Those which are not available from the annual reports arecollected through interviews with the executives and the public. Apart frompublished annual reports of the bank data were also taken from published journals,articles and other works of similar nature. A period of five years commencing from2005-06 to 2009-10 is taken for the purposes of the study considering the nature ofthe analysis and type of information. The collected data were analyzed andinterpreted using Comparative Statements, Common Size Statements and Ratios.Graphs and diagrams were made use for better understanding and easy identificationof relationships.1.6 LIMITATIONS OF THE STUDY Time: An in-depth study or analysis is not possible because of the limiting factor of time. Window dressing: The research is done on the basis of some financial statements which can be easily window dressed. So we cannot rely on the results to a large extent. Confidentiality of certain data: Some data available are confidential in nature that can‟t be used effectively in this research. Secondary data: The data used in this study have been taken from published sources. So the reliability of this study is based on the genuineness of published records.5|Page
  • 6. CHAPTER II INDUSTRY PROFILE2.1 DEFINITION OF BANKER According to Macleod: "The essential business of a Banker is to buy Moneyand Debts by creating other Debts. A Banker is therefore essentially a dealer in Debtsor Credit”. Definition given by Indian Banking Regulation Act Section 5 (1) (c) ofthe Indian Banking Regulation Act of 1949 (called the Indian Banking CompaniesAct of 1949 before March, 1966) defines the term "banking company" as "anycompany which transacts the business of banking in India." Section 5 (1) (b) of thesame Act defines the term "banking" as "accepting, for the purpose of lending orinvestment of deposits of money from the public, repayable on demand or otherwiseand withdrawable by cheque, draft, order or otherwise." This Act, besides stating the main banking activities, also enumerates inSection 6, the various subsidiary services, such as the collection of cheques, drafts andbills, remittance of funds, acceptance of safe-custody deposits, etc. that are performedby a bank. This Act also stipulates that banking business should be the main businessof a bank. Again Section 7 of this Act requires that every banking company shoulduse as part of its name, the term bank, banker or banking company. According tothe definition given by the Indian Banking Regulation Act of 1949 the essentialcharacteristics of bank are:6|Page
  • 7. 1. Acceptance of deposits from the public on current fixed and savings bank accounts. 2. Allowing of withdrawals of those deposits by cheques drafts orders or otherwise. 3. Utilization of deposits in hand for the purpose of lending or investment in securities. 4. Performance of other activities called subsidiary services, in addition to the principal activities of receiving of deposits and lending of funds. 5. Performance of banking business as the main business. 6. Using the term bank, banker or banking company as part of the name. The definition given by the Indian Banking Regulation Act of 1949 comprises all the essential features of a bank.2.2 HISTORY OF INDIAS BANKING STRUCTURE For the past three decades Indias banking system has several outstandingachievements to its credit. The most striking is its extensive reach. It is no longerconfined to only metropolitans or cosmopolitans in India. In fact, Indian bankingsystem has reached even to the remote corners of the country. This is one of the mainreasons of Indias growth process. The governments regular policy for Indian banksince 1969 has paid rich dividends with the nationalization of 14 major private banksOf India.7|Page
  • 8. The first bank in India, though conservative, was established in 1786. From 1786 tilltoday, the journey of Indian Banking System can be segregated into three distinctphases. 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. Banking in India originated in the last decades of the 18th century. The firstbanks were The General Bank of India, which started in 1786, and Bank ofHindustan, which started in 1790; both are now defunct. The oldest bank in existencein India is the State Bank of India, which originated in the Bank of Calcutta in June1806, which almost immediately became the Bank of Bengal. This was one of thethree presidency banks, the other two being the Bank of Bombay and the Bank ofMadras, all three of which were established under charters from the British East IndiaCompany. For many years the Presidency banks acted as quasi-central banks, as didtheir successors. The three banks merged in 1921 to form the Imperial Bank of India,which, upon Indias independence, became the State Bank of India. The periodbetween 1906 and 1911, saw the establishment of banks inspired by the Swadeshimovement. The Swadeshi movement inspired local businessmen and political figuresto found banks of and for the Indian community. A number of banks established thenhave survived to the present such as South Indian Bank, Bank of India, CorporationBank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.8|Page
  • 9. Post-Independence The partition of India in 1947 adversely impacted the economies of Punjaband West Bengal, paralyzing banking activities for months. Indias independencemarked the end of a regime of the Laissez-faire for the Indian banking. TheGovernment of India initiated measures to play an active role in the economic life ofthe nation, and the Industrial Policy Resolution adopted by the government in 1948envisaged a mixed economy. This resulted into greater involvement of the state indifferent segments of the economy including banking and finance. The major steps toregulate banking included: The Reserve Bank of India, Indias central banking authority, was nationalized on January 1, 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b) In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors.Nationalization Despite the provisions, control and regulations of Reserve Bank of India,banks in India except the State Bank of India or SBI, continued to be owned andoperated by private persons. By the 1960‟s, the Indian banking industry had becomean important tool to facilitate the development of the Indian economy. At the sametime, it had emerged as a large employer, and a debate had ensued about the9|Page
  • 10. nationalization of the banking industry. Indira Gandhi, then Prime Minister of India,expressed the intention of the Government of India in the annual conference of the AllIndia Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization."The meeting received the paper with enthusiasm.Thereafter, her move was swift and sudden. The Government of India issued anordinance and nationalised the 14 largest commercial banks with effect from themidnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, describedthe step as a "masterstroke of political sagacity." Within two weeks of the issue of theordinance, the Parliament passed the Banking Companies (Acquisition and Transferof Undertaking) Bill, and it received the presidential approval on 9 August 1969. A second dose of nationalization of 6 more commercial banks followed in1980. The stated reason for the nationalization was to give the government morecontrol of credit delivery. With the second dose of nationalization, the Government ofIndia controlled around 91% of the banking business of India. Later on, in the year1993, the government merged New Bank of India with Punjab National Bank. It wasthe only merger between nationalized banks and resulted in the reduction of thenumber of nationalized banks from 20 to 19. After this, until the 1990s, thenationalized banks grew at a pace of around 4%, closer to the average growth rate ofthe Indian economy.Liberalization In the early 1990s, the then Narasimha Rao government embarked on a policyof liberalization, licensing a small number of private banks. These came to be known10 | P a g e
  • 11. as New Generation tech-savvy banks, and included Global Trust Bank (the first ofsuch new generation banks to be set up), which later amalgamated with Oriental Bankof Commerce, Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. Thismove, along with the rapid growth in the economy of India, revitalized the bankingsector in India, which has seen rapid growth with strong contribution from all thethree sectors of banks, namely, government banks, private banks and foreign banks.Business significance of banks: Capital formation is the basic requirement of economic development For implementation of effective monetary policy The development of commercial banking strengthens the link between the organized and the unorganized sectors of the money market. Developing basic sectors such as agriculture, SSI‟s and rural industries.2.3 BANKING SERVICES: Most of our commercial banks offer the following services. This includes bothprimary as well as secondary services.1. Primary services:  Accepting deposits: The most important activity of a commercial bank is to mobilize deposits from the public. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. Thus,11 | P a g e
  • 12. deposits with the bank grow along with the interest earned. If the rate of interest is higher, public are motivated to deposit more funds with the bank.  Granting loans and advances: The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank‟s income.2. Secondary services  Issuing letters of credit, travellers cheques, circular notes etc.  Undertaking safe custody of valuables, important documents, and securities by providing safe deposit vaults or lockers;  Providing customers with facilities of foreign exchange.  Transferring money from one place to another; and from one branch to another branch of the bank.  Standing guarantee on behalf of its customers, for making payments for purchase of goods, machinery, vehicles etc.  Collecting and supplying business information;  Issuing demand drafts and pay orders; and,  Providing reports on the credit worthiness of customer12 | P a g e
  • 13. 2.4 INNOVATIONS IN INDIAN BANKING SECTOR  Retail banking  Online banking  Telephone Banking  Mobile banking or M-Banking or TEXT& SMS Banking  ATMs  Debit Credit cards  Offshore Banking  Credit Rating  Step to Door Banking  Digital TV Banking  Credit to the Weaker Section  Mutual funds  Insurance services  Merchant banking  Customer Relationship Management  Electronic Fund Transfer13 | P a g e
  • 14. 2.5 COMPANY PROFILE South Indian Bank Limited (SIB) is a private sector bank headquartered atThrissur in Kerala, India. The South Indian bank Ltd.., is one of the earliest banks inSouth India; “South Indian Bank” came into being during the Swadeshi movement.The establishment of the bank was the fulfillment of the dreams of a group ofenterprising men who joined together at Thrissur, a major town (now known as theCultural Capital of Kerala), in the erstwhile State of Cochin to provide for the peoplea safe, efficient and service oriented repository of savings of the community on onehand and to free the business community from the clutches of greedy money lenderson the other by providing need based credit at reasonable rates of interest.Translating the vision of the founding fathers as its corporate mission, the bank hasduring its long sojourn been able to project itself as a vibrant, fast growing, serviceoriented and trend setting financial intermediary. The bank is headed by Dr.V A Joseph, Managing Director & CEO of thebank. South Indian Bank has 641 branches and 3 extension counters spread acrossmore than 26 states and union territories in India. It has set up 494 ATMs all overIndia. In the current year 2010-11, the bank is planning to add 60 more branchesthroughout India which aims in having presence in all the states of India. The currentgrowth plan of the bank is to establish 750 branches, 750 ATMs and 75000 crores ofbusiness by the end of financial year 2013. The bank offers major services in varioussegments of accounts and deposits, loans, mutual funds, insurance, money transfersand other value added services. The Kerala Government had given permission to SIB14 | P a g e
  • 15. to accept commercial taxes. The bank has been appointed as the largest serviceprovider (point of sale) for the New Pension Scheme (India) launched by theGovernment of India.SLOGANS of the bank over time:The South Indian Bank Ltd. - In Step With ProgressTo Serve You Everywhere.Your Interest Above Everything ElseA Bank For All Seasons.Blending Tradition with Technology.Bank with the Bank not with the Branch;Experience Next Generation Banking.2.6 VISION AND MISSION OF THE BANKVISIONTo emerge as the most preferred bank in the country in terms of brand, values,principles with core competence in fostering customer aspirations, to build highquality assets leveraging on the strong and vibrant technology platform in pursuit ofexcellence and customer delight and to become a major contributor to the stableeconomic growth of the nation.15 | P a g e
  • 16. MISSIONTo provide a secure, agile, dynamic and conducive banking environment to customerswith commitment to values and unshaken confidence, deploying the best technology,standards, processes and procedures where customer convenience is of significantimportance and to increase the stakeholders‟ value.2.7 SIB - MILESTONES  The FIRST among the private sector banks in Kerala to become a scheduled bank in 1946 under the RBI Act.  The FIRST bank in the private sector in India to open a Currency Chest on behalf of the RBI in April 1992.  The FIRST private sector bank to open a NRI branch in November 1992.  The FIRST bank in the private sector to start an Industrial Finance Branch in March 1993.  The FIRST among the private sector banks in Kerala to open an "Overseas Branch" to cater exclusively to the export and import business in June 1993.  The FIRST bank in Kerala to develop an in-house, a fully integrated branch automation software in addition to the in-house partial automation solution operational since 1992.  The FIRST Kerala based bank to implement Core Banking System.  The THIRD largest branch network among Private Sector banks, in India, with all its branches under Core banking System.16 | P a g e
  • 17. 2.8 AWARDS AND ACCOLADES Business world, India‟s Best Bank Award 2010 The Best Web site Award from KMA Best Bank in Asset Quality Award- Dun & Bradstreet. No. 1 in Asset Quality- Business Today Ranking of Banks. Best Performer in Asset Quality- Analyst 2008 Survey. Top NPA Manager- ASSOCHAM- ECO Pulse Survey. Best Old Private Sector Bank- Financial Express Indias Best Banks 08-09. Best Asian Banking Website- Asian Banking & Finance Magazine, Singapore. Best private sector bank in India in the service quality segment- Outlook Money - CFore Survey Special award for excellence in Banking Technology from IDRBT (Institute for Development & Research in Banking Technology) – the technical arm of the Reserve Bank of India as a national level recognition to the excellent contribution made in the area of Information Systems Security Policies and ProceduresFuture PerfectThe South Indian Bank with a new logo and image, marches on. With branches allover India and a clientele across the world, the bank is considered one of the most proactive banks in India with a competent tech savvy team of professional at the core ofservices. The banks aim at achieving its long term target of Rs. 75,000 crore ofbusiness with 1500 delivery channels and well trained staff strength of 7500 by theend of March 2013.17 | P a g e
  • 18. 2.9 DEPARTMENTS AT CORPORATE OFFICE  Managing Director‟s Secretariat  Executive Director - I  Executive Director - II  Accounts  Department of Information and Communication Technology - [DICT]  Corporate Financial Management  Inspection & Vigilance Dept  Legal Department  NRI Division  Personnel Department  Planning Department  Secretarial department  Stationery Cell  Grievance redressal - Investor / Share Holder Complaints  IRMD  Credit Sanctions  Credit Recovery  Credit Monitoring  Organization & Methods and Compliance  Grievance redressal officer at HO18 | P a g e
  • 19. OTHER CORPORATE DEPARTMENTS  Treasury Department  Staff Training College  International Banking Division MARKETING DEPARTMENT  Online Trading Sibertrade  Demat Cell2.10 THE BRAND NEW CORPORATE LOGO Experience next generation banking OLD LOGO NEW LOGO South Indian Bank unveiled the new corporate logo that demonstrates themajor transformation the bank has undergone since its inception. The sharp ends ofthe font are smoothened, thickened, and twisted to a form of “S” which denotes thefirst letter of the bank. This “S” also stands for safe, solid, secular, shining, schooled,seasoned, successful, and straight forward bank. The brand new logo was unveiled bythe global brand ambassador Shri Bharath Mammootty.19 | P a g e
  • 20. 2.11 BRAND AMBASSADOR Super Star Malayalam Movie Actor Padmashree Bharat Mammootty is thebrand ambassador of South Indian Bank. The bank, as part of the global brandbuilding exercise, has signed South Indian actor Padmashree Bharat Mammootty asits brand ambassador banking on the film stars pan India appeal, clean image andpopularity among the NRI community. His tech savvy image goes hand-in-hand withthe bank which has always been in the forefront of embracing technology. The initialcontract between the bank and actor was for three years which was later extended forfive more years. Currently SIB is the only bank in South India that has a brandambassador. Through endorsing Mammootty as its global brand ambassador, SIB hasreceived a huge boost especially in the Middle East.2.12 BANKS TIE –UPs ING Life Bajaj Allianz General Insurance Company Ltd Export Credit Guarantee Corporation of India ICICI Prudential AMC Franklin Templeton TATA Mutual Fund Sundaram BNP Paribas UTI Mutual Funds Reliance Mutual Funds HSBC Investments HDFC Mutual Fund Fidelity Fund Management Pvt Ltd20 | P a g e
  • 21. Principal Mutual Funds Fortis Investments Birla Sun Life Asset Management Company Ltd DSP BlackRock Mutual Funds Sri Lankas Hatton National Bank (HNB)2.13 INVESTORS DESK The Bank’s shares are listed on  The Cochin Stock Exchange Ltd (CSE)  The Stock Exchange Mumbai (BSE)  The National Stock Exchange of India Ltd Mumbai (NSE)21 | P a g e
  • 22. CHAPTER III REVIEW OF LITERATURE Unless judged properly nothing could be justifiably understood from afinancial report or any other scientific report. Financial Statement analysis thusoccupies paramount importance these days. Any study, to be perfect needs somuch of filed review. Financial statement analysis is not at all a new topic. Thereare several school of thoughts on financial statement analysis. The judgment and thequality of interpretation of financial statement analysis depend largely on the abilityof the investigator. When more and more people look at the same thing severaltimes we get more and more insights and in-depth information‟s on the topic.The book Reminiscences(1) (1959), written by Shri. K.C. Mammen Mappilaithrows some light on the banking developments that took place in Kerala prior toindependence and also the role played by the Christian community in developing thebanking system in the state. It also contains the history of the National Quilon Bank,which was the premier bank at that time and explains the reasons for its failure.Webster’s new wolegiate dictionary (2) (1975) defines a ratio as: “a ratio is defined asthe indicated quotient of two mathematical expressions” and as “a relationshipbetween two or more things.(1) K. C. Mammen Mappilai (1959, ). Reminiscences Malayala Manorama Printing and Publishing Co.Kottayam, Kerala.(2) Webster‟s new wolegiate dictionary, 8th edition Springfield mass, G&C, Merriam, 1975, page no.5822 | P a g e
  • 23. S. Adve(3) (1980). had some interesting findings in his article “Financial Practices inIndian Corporate Sector," based on the RBI company finance data. He underlined therising dependence on borrowed capital in relation to the total capital employed in theIndian corporate sector. Trade credit was pointed out to be important sources ofcapital when the bank credit was squeezed. Making an industry-wise analysis, theauthor came to the conclusion that the industries with large profit margins and thosewith large depreciation and development rebate reserves had a relatively lower orderof overall indebtedness and many of them also had a lower order of bank borrowingsin relation to overall indebtedness.Shri. A.K. Seshadris "A Swadeshi Bank from South lndia"(4) (1982) gives an accountof the banking crisis that occurred in the state in 1930 due to the failure of theNational Quilon Bank and that in 1960 consequent upon the liquidation of the Palaicentral Bank, Palai.B.A Prakash‟s "Private Financing firms in Kerala"(5) (1984) provides an interestingaccount of the functioning of private financing firms in Kerala. The study based on a survey of the private financing firms in Trichur town seeks to examine the factors,which contributed to the emergence of these institutions, the method of their functioning and their importance as a parallel banking system. However he is silenton questions such as types of borrowers, total amount of uncounted money generated by the private financing firms, safety of depositors money and so on.(3) S. Adve (1980). "Financial Practices in Indian Corporate Sector, Inter-Group and Inter-SizeDifferences," Economic and Political Weekly, Feb. 23.(4) A K Seshadrl (1982). A Swadeshi Bank, from South India, Indian Bank, Madras23 | P a g e
  • 24. Kothari &Lee (2001)(6) provide an excellent coverage of research on economies &fundamental analysis in the accounting literature up until the year 2001, no surveycovers papers in the accounting literature after that year. Furthermore, recent financesurveys on anomalies focus almost exclusively on behavioral finance & do not coveraccounting anomalies or fundamental analysis. Therefore, one of the goals of oursurvey in to fill in some of the gaps of prior literature surveys & capture researchinnovations since the year 2000Mr. Solomon (7) (2006) an economist and financial management guru says while usingfund the finance manager must find rationale answering the following threequestions:- a. How large should an enterprise be and how fast should it grow? b. In what form should it hold its assets? c. How should the funds required be raised?James C. Van Horne(8) reveals, the functions of finance involve three major decisions.A company must make; the investment decision, financing decision and the dividend /share repurchase decision. Each must be considered in relation to our objective anoptimal combination of the three will create value.(5) B.A Prakash (1984). "Private Financing firms in Kerala", Economic and Political Weekly. Vol XIX.Dec. 15(6) Kothari & Lee (2001) research on economies & fundamental analysis(7) Solomon o.p.cit.(2006), pages 8-9(8) James C. Van Horne, in his book “financial management and policy” 12 th edition 2008. Page no.2424 | P a g e
  • 25. I.M pandey, In his book „financial management‟ (9) says, The term fund can be definedat least in three ways:- a. It may be in cash b. Working capital (difference between current assets and current liabilities) c. Financial resources (arising from both current and noncurrent items)Jonathan Berk, Peter de Marzol & Ashok Thambi in their book „financialmanagement‟ (10) reveals that, Financial Statements are firm issued accounting reportswith past performance information that a firm issues periodically. Public limitedcompanies need to present an annual report with their financial statements to shareholders every year. The annual report will contain three financial statements:- a. Balance sheet of the firm b. Profit and loss statement of the firm c. A statement of cash flowIn one of the studies published by Kerala Economic Review (11) , it is observed that theexpansion of commercial banks in the rural areas of Kerala is more pronounced thanin any other state.(9) I.M pandey, In his book „financial management‟ 9 th edition (2009), (vikas publication (10). Jonathan Berk , Peter de Marzol & Ashok Thambi in their book „financial management‟, Pearson(2010)(11) Kerala Economic Review, Thiruvananthapuram, 201025 | P a g e
  • 26. CHAPTER IV DATA ANALYSIS AND INTERPRETATION Comparative Balance Sheet as on 31St March for the years 2006 - 2010 (summary) Table 4.1.1 ( Rs in 000’s ) Amount of % ofParticulars 31/03/2006 31/03/2010 increase/ increase/ decrease decreaseCapital and LiabilitiesCapital 704052 1130065 426013 60.51%ESO(Grants ) outstanding _ 5745Reserves & Surplus 5704454 13717089 8012635 140.46%Deposits 95786598 230115241 134328643 140.23%Borrowings 7223 3309637 3302414 45720%Other liabilities and provisions 6071924 7062669 990745 16.32%Total capital & Liabilities 108274251 255340446 147066195 135.83%AssetsCash & balances with RBI 5460814 13909488 8448674 154.71%Balances with banks, money at 7973929 5967239 -2006690 -25.16%call & short noticeInvestments 27393852 71556127 44162275 161.21%Advances 63702307 158229174 94526867 148.39%Fixed Assets 898041 1525377 627336 69.9%Other Assets 2845308 4153041 1307733 46%Total Assets 108274251 255340446 147066195 135.83%Contingent liabilities 12951920 27297348 14345428 110.76%Bills for Collection 1830511 2574632 744121 40.65% Source: annual reports of the bank (2006-10) 26 | P a g e
  • 27. INTERPRETATION:  Capital has increased by Rs. 42,60,13,000 in the current year 2009-10 from the year 2005-06 . The 2009-10 figures are Rs. 1,13,00,65,000. There is an increase of 60.51%.  Deposits have also shown substantial increase during the period under consideration as a result of the aggressive deposit mobilization programmes adopted by the bank. It has shown an increase of 140.23% during the last 5 years and the aggregate deposit figure as on 31/03/2010 is 2,30,11,52,41,0000.  The investments showed a drastic increase of 161.21% as a result of the portfolio diversification and extension undertaken by the bank. From Rs. 27,39,38,52,000 on 31/03/2006, it has increased to Rs. 71,55,61,27,000 .  Fixed assets of the bank amounted to 89,80,41,000 as on 31/03/2006. In the current year it has reached by 69.9% to reach 1,52,53,77,000.27 | P a g e
  • 28. Comparative Income Statement for the years 2006 - 2010 Table 4.1.2 ( Rs in 000’s)Particulars Amount of % of 31/03/2006 31/03/2010 increase/ increase/ decrease decreaseI. INCOMEInterest Earned 7613225 19357210 11743985 154.25%Other Income 722662 2084602 1361940 188.47%TOTAL 8335887 21441812 13105925 157.22%II. EXPENDITUREInterest Expended 4511391 13674284 9162893 2031%Operating Expenses 2260636 3661814 1401178 61.98%Provisions & Contingencies 1054847 1768109 713262 67.62%TOTAL 7826874 19104207 11277333 144.08%III. PROFIT/LOSSNet Profit for the year 509013 2337605 1828592 359.24%Transfer from Revenue & Other _ _ _ _ReservesTransfer to Other Liabilities & _ _ _ _ProvisionsProfit brought forward from previous 391 146670 146279 37412%yearTOTAL 509404 2484275 1974871 387.68%IV. APPROPRIATIONSTransfer to Statutory Reserve 127300 584500 457200 359.15%Transfer to Capital Reserve 134640 6873 -127767 -94.91%Transfer to Revenue and OtherReserves 38180 900000 861820 2257.25%Transfer to Investment Reserve _ 202666 202666 _Transfer to Special Reserve u/s36(i)(viii) of Income Tax Act _ 92800 92800 _Proposed Dividend 126730 452026 325296 256.68%Tax on Proposed Dividend 17774 75076 57302 322.39%Balance carried over to Balance Sheet 64780 170334 105554 162.94% 509404 2484275 1974871 387.68%TOTAL Source: annual reports of the bank (2006-10) 28 | P a g e
  • 29. INTERPRETATION:  The total income earned shows a substantial growth in these five years. In the year 2010 it shows a hike of 157.22% than the year 2006.  The expenditure rate of the bank is also increasing but it doesn‟t affect profitability of the bank. The expenditure percentage in the year 2010 is of 144.08% more than that of in the year 2006.  The total profit of the bank also reveals a very drastic improvement. In the year 2006 the total profit of the bank is Rs 50, 94, 04,000 and in 2010 it is Rs 2,48,42,75,000. The increasing ratio is 387.68%29 | P a g e
  • 30. Common Size Balance Sheet for the years 2006 - 2010 Table 4.1.3 (Rs in 000’s)Particulars 31/03/2006 Relative % 31/03/2010 Relative %Capital and LiabilitiesCapital 704052 0.65% 1130065 0.44%ESO(Grants ) outstanding _ _ 5745 0.002%Reserves & Surplus 5704454 5.27% 13717089 5.37%Deposits 95786598 88.46% 230115241 90.12%Borrowings 7223 0.01% 3309637 1.30%Other liabilities and provisions 6071924 5.61% 7062669 2.80%Total capital & Liabilities 108274251 100% 255340446 100%AssetsCash & balances with RBI 5460814 5.04% 13909488 5.45%Balances with banks, money at 7973929 7.37% 5967239 2.33%call & short noticeInvestments 27393852 25.30% 71556127 28.03%Advances 63702307 58.84% 158229174 61.97%Fixed Assets 898041 0.82% 1525377 0.59%Other Assets 2845308 2.63% 4153041 1.63%Total Assets 108274251 100% 255340446 100% Source: annual reports of the bank (2006-10) 30 | P a g e
  • 31. INTERPRETATION:  The capital fund has increased but the relative percentage is decreasing. In 2006 the fund‟s percentage is 0.65% which has decreased to 0.445 in 2010.  E.S.O.Outstanding forms a relative percentage of 0.002% in the year 2010.  Deposits are also increasing. And the relative percentage was increased from 88.46 %( 2006) to 90.12% (2010).  Fixed assets of the bank have also increased. But the relative percentage has declined from 0.82% (2006) to 0.59% (2010).  The advances and investment pattern of the bank also reveals a steady growth trend.31 | P a g e
  • 32. Common size Income statement as on 31st March of 2006 & 2010 Table 4.1. 4 (Rs in 000’s)Particulars 31/03/2006 Relative % 31/03/2010 Relative %I. INCOMEInterest Earned 7613225 91.33% 19357210 90.28%Other Income 722662 8.67% 2084602 9.72%TOTAL 8335887 100% 21441812 100%II. EXPENDITUREInterest Expended 4511391 54.12% 13674284 63.77%Operating Expenses 2260636 27.12% 3661814 17.08%Provisions & Contingencies 1054847 12.66% 1768109 8.25%TOTAL 7826874 93.90% 19104207 89.10%III. PROFIT/LOSSNet Profit for the year 509013 6.10% 2337605 10.90% _ _ _ _Transfer from Revenue & Other Reserves _ _ _ _Transfer to Other Liabilities & ProvisionsProfit brought forward from previous year 391 0.01% 146670 0.68%TOTAL 509404 6.11% 2484275 11.58%V. APPROPRIATIONS 127300 584500Transfer to Statutory Reserve 134640 6873Transfer to Capital Reserve 38180 900000Transfer to Revenue and Other Reserves _ 202666Transfer to Investment ReserveTransfer to Special Reserve u/s 36(i)(viii) _ 92800of Income Tax Act 126730 452026Proposed Dividend 17774 75076Tax on Proposed Dividend 64780 170334Balance carried over to Balance Sheet 509404 6.11% 2484275 11.58%TOTAL Source: annual reports of the bank (2006-10) 32 | P a g e
  • 33. INTERPRETATION:  Interest earned has increased in a high rate, but the relative share of it in total income has decreased from 91.33% in 2006 to 90.28% in 2010. The contribution from other income to the total income has increased from 8.67% to 9.72% during these years.  Interest expended has increased; operating expenses and provisions & contingencies has declined. The share of total expenditure is decreased from 93.90% in 2006 to 89.10% in 2010.  There is a drastic improvement in the net profit percentage. In the year 2006 its relative share in the total profit is 6.10% out of 6.11%. In the year 2010 it is 10.90% out of 11.58% of total profit.33 | P a g e
  • 34. 1. NET PROFIT MARGIN:NET PROFIT MARGIN = NET PROFIT TOTAL INCOME Table 4.2.1 NET PROFIT MARGIN ( Rs in 000’s) YEAR NET PROFIT TOTAL INCOME PROFIT MARGIN (%) 2006 509013 8335887 6.11 2007 1041176 10797636 9.64 2008 1516235 14338175 10.57 2009 1947526 18511936 10.52 2010 2337605 21441812 10.90Source: annual reports of the bank (2006-10)34 | P a g e
  • 35. Figure 4.2.1 12 NET PROFIT MARGIN 10 8 RATIO 6 10.57 10.52 10.9 9.64 4 6.11 2 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION: The net profit margin of the bank is showing a improvement trend after a short decline in the financial year 2008-09. In the current year it is in the maximum, 10.90%.This shows the improvements in the earning capacity of the bank.35 | P a g e
  • 36. 2. DEBT EQUITY RATIO:DEBT EQUITY RATIO = TOTAL DEBT (EXTERNAL EQUITIES’) NET WORTH (INTERNAL EQUITIES) Table 4.2.2 DEBT EQUITY RATIO (Rs in 000’s ) YEAR TOTAL DEBT NET WORTH DEBT-EQUITY RATIO 2006 101865745 6408506 15.90 2007 129286172 7239618 17.96 2008 159289482 11609816 13.72 2009 190795179 13040040 14.63 2010 190754026 14847154 12.84Source: annual reports of the bank (2006-10)36 | P a g e
  • 37. Figure 4.2.2 18 DEBT EQUITY RATIO 16 14 12 10 RATIO 17.96 15.9 8 13.72 14.6 12.8 6 4 2 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:Debt equity ratio is the lenders contribution to each rupee of owner’scontribution. Ideal ratio is 1:1 in public limited companies and 2:1 in privatelimited companies. The bank in this year reveals a debt equity ratio of 12.84:1,which is not an ideal one but shows a decreasing trend compared to the previousyear.37 | P a g e
  • 38. 3. SOLVENCY RATIO:SOLVENCY RATIO = TOTAL LIABILITIES TO OUTSIDERS TOTAL ASSETS Table 4.2.3 SOLVENCY RATIO (Rs in 000’s) TOTAL TOTAL ASSETS SOLVENCY YEARS LIABILITIES TO RATIO: OUTSIDERS (%) 2006 101865745 10827425 94.1 2007 129286172 136525790 94.6 2008 159289482 170899298 93.2 2009 190795179 203794066 93.6 2010 190754026 255340446 74.7Source: annual reports of the bank (2006-10)38 | P a g e
  • 39. Figure 4.2.3 SOLVENCY RATIO 100 94.1 94.6 93.2 93.6 90 80 74.7 70 60RATIO 50 40 30 20 10 0 2006 2007 2008 2009 2010 YEAR INTERPRETATION: The ratios in the past four years are very high. Even though the solvency ratio is less in the year 2010(74.7%) when compared to previous year’s ratios, it stays satisfactory. 39 | P a g e
  • 40. 4. PROPRIETARY RATIO:PROPRIETARY RATIO= SHAREHOLDERS FUND TOTAL ASSETS Table 4.2.4 PROPRIETARY RATIO (Rs in 000’s) YEAR SHARE HOLDERS TOTAL ASSETS PROPRIETARY FUND RATIO (%) 2006 6408506 10827425 6 2007 7239618 136525790 5.3 2008 11609816 170899298 6.8 2009 13040040 203794066 6.39 2010 14847154 255340446 5.81Source: annual reports of the bank (2006-10)40 | P a g e
  • 41. Figure 4.2.4 PROPRIETARY RATIO 7 6 5 4 RATIO 6.8 6.39 6 5.81 3 5.3 2 1 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:This ratio shows the proportion of total assets financed by the share holders. Ahigh ratio indicates relatively favorable position to creditors at the time ofliquidation. A low ratio indicates higher risk and danger to creditors. The ratio ishigh in all years. While comparing five years the ratio is maximum in the year2008 (6.8%).41 | P a g e
  • 42. 5. RETURN ON SHARE HOLDERS INVESTMENT(ROI):RETURN ON SHARE HOLDERS EQUITY = NET PROFIT AFTER TAXES AVG.TOTAL SHARE HOLDERS EQUITY Table 4.2.5 RETURN ON SHARE HOLDERS EQUITY (Rs in 000’s)YEAR NET PROFIT SHARE RETURN ON HOLDERS INVESTMENT FUND 2006 509013 6408506 7.94 2007 1041176 7239618 14.38 2008 1516235 11609816 13.16 2009 1947526 13040040 14.93 2010 2337605 14847154 15.74Source: annual reports of the bank (2006-10)42 | P a g e
  • 43. Figure 4.2.5 RETURN ON SHARE HOLDERS INVESTMENT 16 14 12 10 RATIO 8 14.93 15.74 14.38 13.16 6 4 7.94 2 0 2006 2007 2008 2009 2010 YEARINTERPRETATION:The above diagram shows an upward trend in the ROI. When compared theROI in 20063 is low, after that it shows a drastic improvement in the ROIpattern. During the year 2010 it is in the peak position with 15.74%.43 | P a g e
  • 44. 6. EARNINGS PER SHARE: EPS= PROFIT AFTER TAX NO.OF SHARES OUTSTANDING Table 4.2.6 EARNINGS PER SHARE (Rs in 000’s) NET PROFIT YEAR AFTER TAX AND NO.OF EQUITY E.P.S PREF. DIVIDENT SHARES 2006 5090130 704052 7.23 2007 10411760 704052 14.79 2008 15162350 904052 16.77 2009 19475260 1130065 17.23 2010 23376050 1130065 20.68Source: annual reports of the bank (2006-10)44 | P a g e
  • 45. Figure 4.2.6 25 E.P.S 20 15 RATIO 10 20.68 16.77 17.23 14.79 5 7.23 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:The earnings per share ratio indicate the profit available to share holder’s pershare basis. It is one of the important market test ratio. The EPS year during thepast five years shows a tremendous increase. During the year 2010 it shows itsmaximum value rated as 20.68.45 | P a g e
  • 46. 7. RETURN ON ASSETS:ROA= NET PROFIT AVG. TOTAL ASSET Table 4.2.7 RETURN ON ASSETS (Rs in 000’s) YEAR NET PROFIT TOTAL ASSETS ROA RATIO 2006 509013 10827425 0.47 2007 1041176 136525790 0.76 2008 1516235 170899298 0.89 2009 1947526 203794066 0.96 2010 2337605 255340446 0.91Source: annual reports of the bank (2006-10)46 | P a g e
  • 47. Figure 4.2.7 1.2 RETURN ON ASSETS 1 0.96 0.89 0.91 0.8 0.76 RATIO 0.6 0.47 0.4 0.2 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:The term ROA shows the net profitability of the assets of the bank. In the year2006 the ROA shows a low rate after that ROA has a increased in a high rate .But in the year 2010 it shows a declining trend.47 | P a g e
  • 48. 8. RATIO OF RESERVE AND EQUITY CAPITAL:RATIO OF RESERVE AND EQUITY CAPITAL=RESERVES AND SURPLUS EQUITY CAPITAL Table 4.2.8 RATIO OF RESERVE AND EQUITY CAPITAL (Rs in 000’s) RESERVES AND EQUITY RATIO OF YEAR SUR PLUS CAPITAL RESERVE AND SURPLUS 2006 5704454 704052 8.10 2007 6535566 704052 9.28 2008 10705764 904052 11.84 2009 11909975 1130065 10.54 2010 13717089 1130065 12.14Source: annual reports of the bank (2006-10)48 | P a g e
  • 49. Figure 4.2.8 14 RATIO OF RESERVES AND EQUITY CAPITAL 11.84 12.14 12 10.54 10 9.28 8.1 8 RATIO 6 4 2 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:This ratio indicates the relationship between the ratio of reserve and equitycapital. Reserves are maintained to expand the business in future and also toincrease the overall efficiencies of the business. The ratio indicates how muchprofit the firm available for its future growth. Higher the ratio generally, betteris the position of the firm.This ratio shows a fluctuating trend in the amount of total reserves and theequity capital of the bank. In the year 2006 the ratio is 8.10. After that the ratereveals a higher trend. It is highest in the year 2010 with a rate of 12.1449 | P a g e
  • 50. 9. STAFF PROFITABILITY RATIO:STAFF PROFITABILITY RATIO=NET PROFIT NO.OF EMPLOYEES Table 4.2.9 STAFF PROFITABILITY RATIO (Rs in 000’s) NO.OF NET PROFIT YEAR NET PROFIT EMPLOYEES PER STAFF 2006 509013 3709 137.23 2007 1041176 3868 269.18 2008 1516235 4223 359.04 2009 1947526 4523 430.58 2010 2337605 4860 480.98Source: annual reports of the bank (2006-10)50 | P a g e
  • 51. Figure 4.2.9 600 NET PROFIT PER STAFF 500 480.98 430.58 400 359.04 RATIO 300 269.18 200 137.23 100 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:This shows the efficiency and effectiveness of the staff and the workingconditions of the bank. This ratio is directly proportional to the amount of profiteach individual employee can contribute. From the above ratios we can see ahike in the staff profitability ratio. It is highest in the year 2010.51 | P a g e
  • 52. 10. GROWTH RATE OF NET PROFIT:GROWTH RATE OF NET PROFIT=INCREASE IN CURRENT YEAR PROFIT PREVIOUS YEARS PROFIT Table 4.2.10 GROWTH RATE OF NET PROFIT (Rs in 000’s) CURRENT PREVIOUS AMOUNT OF % OF YEAR YEAR PROFIT YEARS INCREASE INCREASE PROFIT IN PROFIT 2006 509013 87009 422004 485.01% 2007 1041176 509013 532163 104.55% 2008 1516235 1041176 475059 45.63% 2009 1947526 1516235 431291 28.44% 2010 2337605 1947526 390079 20.03%Source: annual reports of the bank (2006-10)52 | P a g e
  • 53. Figure 4.2.10 500.00% YEARLY INCREASE IN PROFIT (%) 450.00% 400.00% 350.00% 300.00% RATIO 250.00% 485.01% 200.00% 150.00% 100.00% 104.55% 50.00% 45.63% 28.44% 20.03% 0.00% 2006 2007 2008 2009 2010 YEARSINTERPRETATION:This ratio shows the yearly profitability of the bank compared to the previousyear’s profit. As compared to 2005 the year 2006 shows a penetrating trend(485.01%). After that the yearly profit shows a declining trend. 2010’s yearlyprofit is 20.03% which is satisfactory.53 | P a g e
  • 54. 11. YIELD ON INVESTMENT:YIELD ON INVESTMENT= INCOME FROM INVESTMENTS X 100 AVERAGE INVESTMENTS Table 4.2.11 YIELD ON INVESTMENT (Rs in 000’s) INCOME FROM AVERAGE YIELD ON YEAR INVESTMENTS INVESTMENTS INVESTMENT (%) 2006 1871380 27393852 6.83 2007 2188035 34301326 6.38 2008 2727124 45722249 5.96 2009 3588133 60752032 5.91 2010 3780662 71556127 5.28Source: annual reports of the bank (2006-10)54 | P a g e
  • 55. Figure 4.2.11 8 YIELD ON INVESTMENT ( % ) 6.83 7 6.38 5.96 5.91 6 5.28 5 RATIO 4 3 2 1 0 2006 2007 2008 2009 2010 YEARSINTERPRETATION:This shows the earnings made by bank on its investments in share, debentures,bonds, government securities etc…The investment pattern of the bank is almost similar in past five years. In 2006the bank makes a high yield on its investments. But in succeeding years marketshowed a diminishing trend and it affected the earning capacity of the bankitself. Thus for the years after 2006 we can see a diminishing trend in the yield oninvestment.55 | P a g e
  • 56. 12. CURRENT RATIO:CURRENT RATIO= CURRENT ASSETS CURRENT LIABILITIES Table 4.2.12 CURRENT RATIO (Rs in 00,000’s) YEAR CURRENT CURRENT CURRENT ASSETS LIABILITIES RATIO 2006 229427.21 447194.92 0.51 2007 333266.43 922177.3 0.36 2008 336734.06 870908.67 0.387 2009 490438.25 984019.57 0.498 2010 1472607.6 315743.06 4.66Source: annual reports of the bank (2006-10)*Current assets include:Cash in hand and at bank, short term investment, other assets.Current liabilities include:Borrowings, short term deposits, other liabilities and provision.56 | P a g e
  • 57. Figure 4.2.12 5 4.66 4.5 CURRENT RATIO 4 3.5 3 2.5 2 1.5 1 0.51 0.498 0.5 0.36 0.387 0 2006 2007 2008 2009 2010INTERPRETATION:The current ratio shows the relation between current assets and currentliabilities of the bank. This ratio measures the banks short term solvency. Theideal ratio is 2:1. If the bank has ratio more than one it reveals the banks highpotential in paying off the debts. But if the ratio is more than two, it shows theinefficiency of management in controlling the current asset of the bank. In 2010the ratio shows a great hike (4.66:1) which will adversely affect the profitabilityof the bank.57 | P a g e
  • 58. SUMMARY AND FINDINGS 1. The net profits of bank shows an increasing trend in last five years. 2. The total funds available to the shareholders also show an increasing trend. Thus the bank can expand business widely. 3. The deposits available to bank show an upward trend. 4. In debt equity ratio is decreasing, but in 2007 this was very high. This may be due to the increasing borrowing from RBI. 5. Solvency ratio is above 1 in all cases and it shows a satisfactory and ideal position. 6. Proprietary ratio is high in all the five years, even though it is lower in 2010 than past two years. It shows a better position to all the creditors at the time of liquidity. 7. As the profitability of the business is increasing effectively. Shareholders are the primary party of benefit from it .Return was very less in 2005.But it increased very rapidly and it is a maximum of 2010. 8. EPS of the firm is increasing after a sudden fall in 2005. The EPS has improved from 17.23 in 2009 to 20.68 in 2010. 9. Interest on advances is high in all five years. The ratio is moving at marginal rate. This may be due to the increase in temporarily performing advance. Those which are having a chance to become NPA in the coming year 10. Yield on investment is generally decreasing. This is because majority of investment are made in government securities the return of which depends up on prevailing interest rate and is comparatively low in 2006-07 bank increased58 | P a g e
  • 59. investment and shares. This shows the inefficiency of bank in managing investment portfolio 11. Increasing trend in net profit margin the improvement in profitability and earning capacity. 12. The ratio of reserve and capital also show increase trend. This shows the bank availability of fund 13. Staff profitability ratio show light to earning capacity of employees. It is very well increasing and its maintains a satisfactory level in all the five years 14. The increase in current ratio to 4.66 shows a position of inefficiency of management. The ideal ratio is 2:1.59 | P a g e
  • 60. SUGGESTIONS AND RECOMMENDATIONS 1) The company has high level of current assets. It ensures liquidity. But at the same time profitability is adversely affected. So by bringing down liquidity ratio, the profitability can be increased. 2) More funds should be employed in investment, because it is the major source of income to bank. In addition to that, the bank should improve its investment portfolio to take benefit of boom in capital market. It should increase the proportion of shares and debenture in its investment mix and reduce the quantity of government securities as they are low income generating securities. 3) Reduction in net interest margin is not favorable to the firm so it must be increased. 4) The bank should try to increase the proportion of advances to priority sector and ensure not to increase the proportion to increase advance to public sector .This will help to reduce NPA of the bank. 5) The bank should try to decrease its PE ratio also to its places itself in favorite places among the rival of bang stock. 6) A conscious step to decrease the Debt- equity ratio is advised .A strong capital basis should be equipped. 7) Bank should try to increase net profit margin. 8) Necessary measure to increase the return to total asset should be undertaken. This owes a direct relation with profitability of the bank .Profitability can be increased by better management of current asset and avoiding unnecessary expenditure.60 | P a g e
  • 61. CONCLUSION The banking sector is the reflection of Indian economy. The last decade hasseen many positive developments in the Indian banking sector. Even though financialcrisis shook the entire globe the Indian banks still are in their growth stage. Thisreveals that the Indian banking sector has more untapped potential that can beexploited in the future years. From the analysis of financial statements it is found thatthe bank is successful in a significant increase in the net profits in the current financialyear. Proper changes and management of its investment portfolio will help the bank toincrease its earning from investments. The bank has been successful in changingregional character into national one by opening branches in almost all states anduniform territories of the country. From the study it is concluded that theinterpretations, suggestions and findings would support the bank to do things in betterand efficient way. Now it‟s the time for its customers to experience next generationbanking.61 | P a g e

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