This document provides details about a minor project report submitted by Akanksha Jain on analysis of the financial statements of ICICI Bank. It includes an introduction to ICICI Bank, its history, organizational structure, products and services. It also acknowledges the guidance provided by the internal faculty and expresses gratitude to various people involved in the project. The contents section provides an outline of the project report including chapters on financial statement analysis, analysis of ICICI Bank's financial statements, conclusions and recommendations.

1. MINOR PROJECT REPORT
ON
THE STUDY OF ANALYSIS OF
FINANCIAL STATEMENT
OF
ICICI BANK
Submitted in the partial fulfillment of required for the award of
degree of Bachelor of Business Administration.
Submitted By:
Akanksha Jain
ENROLL No- 001 /KRCHE /BBA(B&I)/2006
Under the guidance
(MR. A. Lenin Jothi)
( Mrs. Madhu Arora)
KASTURI RAM COLLEGE OF HIGHER EDUCATION
(AFFILATED TO GURU GOBIND SINGH UNIVERSITY, DELHI)

2. ACKNOWLEDGEMENT
Getting a project ready requires the work and effort of many people. I
would like to pay my sincere gratitude and thanks to those people, who
directed me at every step in this project work. The present report is based
on “ ANALYSIS OF FINANCIAL STATEMENT- CASE STUDY OF
ICICI BANK”.
I extended my sincere thank and gratitude to Mrs. Madhu Arora,
internal faculty, for her help and valuable support throughout the
term of the project. It was a learning experience to work under her
guidance.
I am also very thankful to Mr. A. Lenin Jothi who has given me the
opportunity to do this project report. I am also thankful to my
parents, all my friends and other sources who gave me their much
needed support and inspiration in preparing this project report.
(AKANKSHA JAIN)

3. CERTIFICATE
This is to certify that “Ms. Akanksha Jain” has accomplished the project
titled “ANALYSIS OF FINANCIAL STATEMENT- CASE STUDY OF
ICICI BANK” under my guidance and supervision.
She has submitted this project in the partial fulfillment for the award
of degree of Bachelor of Business Administration (B.B.A[B&I]) from
Guru Gobind Singh Indraprastha University.
The work has not been anywhere else for the award of degree. All source
of information have been duly mentioned.
Mrs. Madhu Arora
(Lecturer)
(Kasturi Ram College Of Higher Education)

4. CONTENT
PAGE NO.
1. INTRODUCTION 1-25
1.1 A Brief Introduction
2
1.2Objectives 2
1.3ICICI Bank 3
1.3.1 History 4
1.3.2 Board of Directors 5
1.3.3 Board Committees 6
1.3.4 Organisational Structure 7
1.3.5 Products & Services 12
1.3.6 Risk Aspects 18
1.3.7 Subsidiary companies 21
1.3.8 Key Group Companies 22
1.3.9 Public Recognition 24
2. FINANCIAL STATEMENT AND IT’S
ANALYSIS 26-44
2.1 Study of Profit & Loss A/C 27
2.2 Study of Balance-Sheet 28
2.3 Study of cash flow statement 38
2.3 Financial Statement Analysis 40
3. ANALYSIS OF FINANCIAL STATEMENT OF
ICICI BANK 45-61
3.1 Management Discussion & Analysis 46
3.2 Comparative Income Statement 53
3.3 Comparative Financial Position Statement 55
3.4 Ratio Analysis- Financial Statement 57
3.5 Cash Flow Statement 60
4. CONCLUSION 62-64
5. RECOMMENDATION & SUGGESTION 65-66
BIBLIOGRAPHY 67
ANNEXURE
68-70

5. Profit & Loss Account 69
Balance-Sheet
CHAPTER-1
INTRODUCTION

6. 1.1 A BRIEF INTRODUCTION
In any organization, the two important financial statements are the Balance
sheet & Profit and loss account of the business. Balance sheet is a
statement of the financial position of an enterprise at a particular point of
time. Profit and loss account shows the net profit or net loss of a company
for a specified period of time. When these statements of the last few year of
any organization are studied and analyzed, significant conclusions may be
arrived regarding the changes in the financial position, the important policies
followed and trends in profit and loss etc. Analysis and interpretation of the
financial statement has now become an important technique of credit
appraisal. The investors, financial experts, management executives and the
bankers all analyze these statements. Though the basic technique of
appraisal remains the same in all the cases but the approach and the
emphasis in analysis vary. A banker interprets the financial statement so as
to evaluate the financial soundness and stability, the liquidity position and
the profitability or the earning capacity of borrowing concern. Analysis of
financial statement is necessary because it help in depicting the financial
position on the basis of past and current records. Analysis of financial
statement help in making the future decision and strategies. Therefore, it is
very necessary for every organization whether it is a financial or
manufacturing etc. to make financial statement and to analyse it.
1.2 OBJECTIVE
The main objective of this report are the following:

7.  To study about ICICI BANK and its related aspects like its products & services, history, organizational structure,
subsidiary companies etc.
 To analyse the financial statement i.e P&L account and
Balance sheet of ICICI BANK.
 To learn about P&L Account, Balance-sheet and
different type of Assets& Liabilities.
 To understanding the meaning and need of Balance Sheet
and profit and loss account.
 The purpose is to portray the financial position of ICICI
BANK with the help of balance sheet and profit and loss
account.
 To evaluate the financial soundness ,stability and liquidity
of ICICI BANK.
1.3 ICICI BANK
ICICI Bank is India’s second-largest bank with total assets of Rs.
3,446.58 billion (US$ 79 billion) at March 31, 2007 and profit after tax
of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable
bank in India in terms of market capitalization and is ranked third
amongst all the companies listed on the Indian stock exchanges. In terms of
free float market capitalization*. The Bank has a network of about 950
branches and 3,300 ATMs in India and presence in 17 countries. ICICI
Bank offers a wide range of banking products and financial services to
corporate and retail customer through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and

8. asset management. The Bank currently has subsidiaries in the United
Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong
Kong, Sri Lanka and Dubai International Finance Center and
representative offices in the United States, United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
UK subsidiary has established a branch in Belgium.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE) of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).
1.3.1HISTORY
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed
on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura
Limited in an all-stock amalgamation in fiscal 2001, and secondary market
sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI
was formed in 1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal objective was to
create a development financial institution for providing medium-term and
long-term project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first

9. Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create
the optimal legal structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for
ICICI Bank shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the
vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of
Directors of ICICI and ICICI Bank approved the merger of ICICI and two of
its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Citst of Gujarat at Ahmedabad in March 2002, and by the
High Citst of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.

10. ICICI Bank has formulated a Code of Business Conduct and Ethics for its
directors and employees.
1.3.2 BOARD OF DIRECTORS
 MR. N.Vaghul (CHAIRMAN)
 MR. Sridar Iyengar
 MR. Lakshmi N. Mittal
 MR. Narendra Murkumbi
 MR. Anupam Puri
 MR. Vinod Rai
 MR. M. K. Sharma
 MR. P.M. Sinha
 Prof. Marti G. Subrahmanyam
 MR. T. S. Vijayan
 MR. V. Prem Wasta
 MR. K. V. Kamath (MANAGING DIRECTOR & CEO)
 MR. Chanda Kochhar (JOINT MANAGING DIRECTOR)
 MR. Nachiket Mor (DEPUTY MANAGING DIRECTOR)
 MR. V. Vaidyanathan, (EXECUTIVE DIRECTOR)
 MR. Sonjoy Chatterjee (EXECUTIVE DIRECTOR)
1.3.3 BOARD COMMITTEES

11. Audit Committee Board Governance &
Mr. Sridar Iyengar Remuneration Committee
Mr. Narendra Murkumbi Mr. N. Vaghul
Mr. M. K. Sharma Mr. Anupam Puri
Mr. M. K. Sharma
Mr. P. M. Sinha
Customer Service Committee Prof. Marti G. Subrahmanyam
Mr. N. Vaghul
Mr. Narendra Murkumbi
Credit Committee
Mr. M.K. Sharma
Mr. P.M. Sinha Mr. N. Vaghul
Mr. K. V. Kamath Mr. Narendra Murkumbi
Mr. M .K. Sharma
Mr. P. M. Sinha
Fraud Monitoring Committee Mr. K. V. Kamath
Mr. M. K. Sharma
Mr. Narendra Murkumbi Risk Committee
Mr. K. V. Kamath
Mr. N. Vaghul
Ms. Chanda D. Kochhar
Mr. Sridar Iyengar
Mr. V. Vaidyanathan
Prof. Marti G. Subrahmanyam
Mr. V. Prem Watsa
Mr. K. V. Kamath
Share Transfer &
Shareholders/ Investors
Asset-Liability Management
Grievance Committee
Committee
Mr. M. K. Sharma
Ms. Chanda D. Kochhar
Mr. Narendra Murkumbi
Dr. Nachiket Mor
Ms. Chanda D. Kochhar
Ms. Madhabi Puri-Buch
Ms. Madhabi Puri-Buch
Mr. V. Vaidyanathan
Committee of Directors -
Mr. K. V. Kamath
Ms. Chanda D. Kochhar
Dr. Nachiket Mor
Ms. Madhabi Puri-Buch
Mr. V. Vaidyanathan

12. 1.3.4 ORGANISATIONAL STRUCTURE OF ICICI
BANK
ICICI Bank’s organisation structure is designed to be flexible and customer-
focused, while seeking to ensure effective control and supervision and
consistency in standards across the organisation and align all areas of
operations to overall organisational objectives. The organisation structure is
divided into six principal groups – Retail Banking, Wholesale Banking,
International Banking, Rural (Micro-Banking) and Agriculture
Banking, Government Banking and Corporate Center.
RETAIL BANKING
The Retail Banking Group is responsible for products and services for
retail customers and small enterprises including various credit
products, liability products, distribution of third party investment and
insurance products and transaction banking services.
WHOLESALE BANKING
The Wholesale Banking Group is responsible for products and services
for large and medium-sized corporate clients, including credit and
treasury products, investment banking, project finance, structured
finance and transaction banking services.
INTERNATIONAL BANKING
The International Banking Group is responsible for its international
operations, including operations in various overseas markets as well as

13. its products and services for non-resident Indians and its international
trade finance and correspondent banking relationships.
RURAL AND AGRICULTURAL BANKING
The Rural, Micro-Banking & Agri-Business Group is responsible for
envisioning and implementing rural banking strategy, including
agricultural banking and micro-finance.
GOVERNMENT BANKING
The Government Banking Group is responsible for government banking
initiatives.
CORPORATE CENTER
The Corporate Center comprises the internal control environment functions
(including operations, risk management, compliance, audit and legal);
finance (including financial reporting, planning and strategy, asset liability
management, investor relations and corporate communications); human
resitsces management; and facilities management & administration.

14. BUSINESS REVIEW
During fiscal 2007, the Bank continued to grow and diversify its asset base
and revenue streams by leveraging the growth platforms created over the
past few years. It maintained its leadership position in retail credit, achieved
robust growth in its fee income from both corporate and retail customers,
grew its deposit base and significantly scaled up its international operations
and rural reach.
RETAIL BANKING
ICICI is the largest provider of retail credit in India. ICICI’s total retail
disbursements in fiscal 2007 were approximately Rs. 777.00 billion,
compared to approximately Rs. 627.00 billion in fiscal 2006. It’s total
retail portfolio increased from Rs. 921.98 billion at March 31, 2006 to
Rs. 1,277.03 billion at March 31, 2007, constituting 65% of it’s total
loans at that date. It continued its focus on retail deposits to create a
stable funding base. At March 31, 2007 it had more than 25 million
retail customer accounts.
During fiscal 2007, it expanded its branch network. At March 31, 2007,
it had 755 branches and extension counters compared to 614 branches
and extension counters at March 31, 2006. Pursuant to the
amalgamation of The Sangli Bank Limited with it effective April 19,
2007, it acquired over 190additional branches and extension counters. It
continued to expand its electronic channels, namely internet banking,
mobile banking, call centres, point of sale terminals and ATMs, and
migrate customer transaction volumes to these channels. During fiscal

15. 2007, over 80% of customer induced transactions took place through
these electronic channels. It increased its ATM network to 3,271 ATMs.
SMALL AND MEDIUM ENTERPRISES
In this segment it’s strategy has been focused around customer
convenience in transaction banking services, and working capital loans
to suppliers or dealers of large corporations and clusters of small
enterprises that have a homogeneous profile. During fiscal 2007, it’s
customer base increased by more than 50% to over 900,000 transaction
banking customers. These customers are serviced by over 580 branches
of the Bank, covering over 200 locations. During fiscal 2007, the
Emerging India Award entered in the Limca Book of Records as the
biggest business award in India.
CORPORATE BANKING
It’s corporate banking strategy is based on providing comprehensive and
customized financial solutions to its corporate customers. It offer a complete
range of corporate banking products including rupee and foreign currency
debt, working capital credit, structured financing, syndication and
transaction banking products and services.
Fiscal 2007 saw continuing demand for credit from the corporate sector,
with growth and additional investment demand in almost all sectors. It is
now a preferred partner for Indian companies for syndication of external
commercial borrowings and other fund raising in international markets.

16. RURAL BANKING
It’s rural strategy is based on enhancing value at every level of the supply
chain in all important farm and non-farm sectors. Towards this end, it offer a
range of financial products and services that cater to the rural masses in all
the important sectors like infrastructure, horticulture, food processing, dairy,
poultry, seeds, fertiliser and agrochemical industries. Customised financial
solutions are offered to individual customers, agri small & medium
enterprises, agri corporates and members of their supply chains. On the rural
retail side, the Bank offers crop loans, farm equipment financing,
commodity-based loans, working capital loans for agri-enterprises,
microfinance loans, jewel loans as well as savings, investment and insurance
products. In addition bank is introducing products like rural housing finance
to cater to the needs of rural customers. During fiscal 2007, it introduced
loans to rural educational institutions for expansion of their facilities.
it have developed a hybrid distribution channel strategy, a combination of branch and non-branch channels (credit access points). It
has embarked on a “no white spaces” strategy wherein it aim to setup an ICICI Bank touch point within 10 km of any customer. The
amalgamation of Sangli Bank would extend its outreach in rural areas. During fiscal 2007, a provision of Rs. 0.9 billion (USS$ 22
million) was made on account of identified frauds in warehouse receipt financing business of agricultural credit.
INTERNATIONAL BANKING
ICICI Bank has established a strong franchise among non-resident
Indians (NRI). It has established strong customer relationships by
offering a comprehensive product suite, technology-enabled access for
overseas customers, a wide distribution network in India and alliances
with local banks in various markets. It has over 450,000 NRI customers.
It has undertaken significant brand-building initiatives in international
markets and have emerged as a well-recognised financial services brand
for NRIs. It’s market share in inward remittances into India has

17. increased to over 25%. It has consolidated it’s global remittance
initiative, targeting non-Indian communities, by leveraging it’s core
capabilities of technology-based service delivery. A large number of
remittance products were introduced to complement the existing suite of
products. The business focus has been on rolling out successful products
across multiple geographies and getting into high volume correspondent
arrangements.
1.3.5 PRODUCTS AND SERVICES
BANKING ACCOUNTS
ICICI Bank offers a wide range of banking accounts such as Current, Saving, Life Plus Senior, Recurring Deposit, Young Stars,
Salary Account etc. tailor-made for every customer segments, from children to senior citizens. Convenience and ease to access are the
benefits of ICICI Bank accounts.
 YOUNG STARS ACCOUNT
A special portal for children to learn banking basics, manage personal
finances and have a lot of fun.
 BANK@CAMPUS
This student banking services gives students access to their account
details at the click of a mouse. Plus, the student gets a chequebook, debit
card and annual statements.
 SAVINGS ACCOUNTS
Convenience is the name of the game with ICICI bank’s savings account.
whether it is an ATM/debit card, easy withdrawal, easy loan options or
internet banking, ICICI bank’s saving account always keep you in touch
of money.
 FIXED DEPOSITS

18. ICICI Bank offers a range of deposit solutions to meet varying needs at
every stage of life. It offers a range of tenures and other features to suit
all requirements.
INSURANCE
The ICICI group offers a range of insurance products to cover varying needs ranging from life, pensions and health, to home, motor
and travel insurance. The products are made accessible to customers through a wide network of advisors, banking partners,
Corporate agents and brokers with the added convenience of being able to buy online.
 LIFE INSURANCE
The ICICI group provides the many life insurance product through
ICICI Prudential Life Insurance Company.
 GENERAL INSURANCE
The ICICI group provides the many general insurance products like
motor, travel and home insurance through ICICI Lombard General
Insurance Company.
LOANS
ICICI bank offers a range of deposits solutions to meet varying needs at
every stage of life. It offers a range of tenures and other features to suit all
requirements.
 HOME LOAN
The No. 1 Home Loans Provider in the country, ICICI Bank
Home Loans offers some unbeatable benefits to its customers -

19. Doorstep Service, Simplified Documentation and Guidance
throughout the Process. It's really easy !
 PERSONAL LOAN
ICICI Bank Personal Loans are easy to get and absolutely hassle
free. With minimum documentation you can now secure a loan
for an amount upto Rs. 15 lakhs.
 VEHICLE LOANS
The No. 1 financier for car loans in the country. Network of more
than 2500 channel partners in over 1000 locations. Tie-ups with
all leading automobile manufacturers to ensure the best deals.
Flexible schemes & quick processing are the main advantages are
here. Avail attractive schemes at competitive interest rates from
the No 1 Financier for Two Wheeler Loans in the country . Finance
facility upto 90% of the On Road Cost of the vehicle, repayable in
convenient repayment options and comfortable tenors from 6
months to 36 months
CARDS
ICICI Bank offers a variety of cards to suit different transactional
needs. Its range includes Credit Cards, Debit Cards and Prepaid cards.
These cards offer you convenience for financial transactions like cash
withdrawal, shopping and travel. These cards are widely accepted both
in India and abroad.
 CREDIT CARD
ICICI Bank Credit Cards give you the facility of cash,
convenience and a range of benefits, anywhere in the world. These
benefits range from life time free cards, Insurance benefits, global

20. emergency assistance service, discounts, utility payments, travel
discounts and much more.
 DEBIT CARD
The ICICI Bank Debit Card is a revolutionary form of cash that
allows customers to access their bank account around the clock,
around the world. The ICICI Bank Debit Card can be used for
shopping at more than 3.5 Lakh merchants in India and 24
million merchants worldwide.
 TRAVEL CARD
ICICI Bank Travel Card. The Hassle Free way to Travel the
world. Traveling with US Dollar, Euro, Pound Sterling or Swiss
Francs; Looking for security and convenience; take ICICI Bank
Travel Card. Issued in duplicate. Offers the Pin based security.
Has the convenience of usage of Credit or Debit card.
MOBILE BANKING
Bank on the move with ICICI Bank Mobile Banking. With ICICI Bank,
Banking is no longer what it used to be. ICICI Bank offers Mobile
Banking facility to all its Bank, Credit Card, Demat and Loan
customers.
ICICI Bank Mobile Banking can be divided into two broad categories of
facilities:
Alert facility : ICICI Bank Mobile Banking Alerts facility keeps you
informed about the significant transactions in yits Accounts. It keeps
you updated wherever you go.
Request facility : ICICI Bank Mobile Banking Requests facility enables
you to query for yits account balance.

21. INVESTMENT PRODUCTS: Along with Deposit products and Loan
offerings, ICICI Bank assists you to manage yits finances by providing
various investment options ranging from ICICI Bank Tax Saving Bonds
to Equity Investments through Initial Public Offers and Investment in
Pure Gold. ICICI Bank facilitates following investment products:
• ICICI Bank Tax Saving Bonds
• Government of India Bonds
• Investment in Mutual Funds
• Initial Public Offers by Corporates
• Investment in "Pure Gold"
• Foreign Exchange Services
• Senior Citizens Savings Scheme, 2004
TRADE-SERVICES: ICICI Bank offers online remittances as well as
online processing of letters of credit and bank guarantees.
ASSET-MANAGEMENT: Prudential ICICI Asset Management Company
offers a wide range of retail mutual fund products tailored to suit varied risk
and maturity profiles.

22. CASH MANAGEMENT: ICICI Bank offers a complete range of
highly customized solutions for managing both the collections and payments
requirements of clients by leveraging technology. Daily customized
transactions reports and real time web-enabled downloads, provide on-tap
information facilitating effective working capital management.
CORPORATE BANKING: ICICI Bank offers comprehensive and
customized financial solutions for its corporate clients, including
rupee and foreign currency debts, working capital credit, structured
financing syndication and transaction banking products and services.
INTERNET BANKING: Internet banking is available to all ICICI bank
savings and deposit account holders, credit card, demat and loan
customers. Internet banking service offers customers a world of
convenience with services such as balance enquiry, transaction
history, account statement, bill payments, fund transfers and
accounts related service requests.
ATMs: With more than 2500 ATMs across the country, ICICI Bank has one
of the largest ATM networks in India

23. PHONE BANKING: Phone banking offers 24*7 service across
liability, asset and investment products to both retail and corporate
customers.
NRI-BANKING: A gamut of services to take care of all NRI banking
needs including deposits, money transfers and private banking.
MONEY2INDIA: A complete range of online and offline money
transfer solutions to send money to India.
PROPERTY: For millions of home buyers across the country, ICICI Bank offers not just great deals on home loans but also a wealth
of expert advice. ICICI Bank offers home search service which can help a customer identify the property of his choice based on his
budget and other requirements.
DEMAT ACCOUNTS: ICICI Bank’s demat services after unique features
like e-constructions, consolidation, digitally signed statements, mobile
requests and corporate benefit tracking.
RURAL-BANKING: Bank offers technology-based solutions, financial
innovations and multiple delivery channels to meet the financial needs of
rural areas.
MICROFINANCE: ICICI Bank assists over 2.5 million low income clients
to build livelihoods by partnering With over 100 microfinance institutions.
BRANCHES: ICICI Bank has a network of over 630 branches ( of which
51 are extension counters) across the country. The network puts a wide

24. range of banking products and financial services with in easy reach of retail
and corporate customers.
1.3.6 RISK ASPECTS OF ICICI BANK
RISK MANAGEMENT
Risk is an integral part of the banking business and bank aim at
delivering superior shareholder value by achieving an appropriate
trade-off between risk and returns. Bank is exposed to various risks,
including credit risk, market risk and operational risk. Bank’s risk
management strategy is based on a clear understanding of various risks,
disciplined risk assessment and measurement procedures and
continuous monitoring. The policies and procedures established for this
purpose are continuously benchmarked with international best
practices. Bank has two dedicated groups, the RISK MANAGEMENT
GROUP (RMG) and COMPLIANCE & AUDIT GROUP (CAG) which
is responsible for assessment, management and mitigation of risk in
ICICI Bank. These groups from part of the corporate center are
completely independent of all business operations and are accountable
to the Risk and Audit committees of the Board of directors. RMG is
further organized into the Credit Risk Management group, Market
Risk Management group, Retail Risk Management group and
Operational Risk Management group. CAG is further organised into
the Credit Policies, RBI Inspection & Anti-Money Laundering Group
and the Internal Audit Group.
CREDIT RISK
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. Bank measure, monitor and manage
credit risk for each borrower and also at the portfolio level. Bank has standardized credit-approval processes, which include a well-
established procedure for comprehensive credit appraisal and rating. ICICI Bank has well developed internal credit rating

25. methodologies for rating obligors. The rating factors in quantitative, qualitative issues and credit enhancement features specific to the
transaction. The rating serves as a key input in the approval as well as post-approval credit processes. Industry knowledge is
constantly updated through field visits and interactions with clients, regulatory bodies and industry experts. In retail credit operations,
the Board or a Board Committee approves all products, policies and authorizations. Credit approval authority lies only with the credit
officers who are distinct from the sales team. Credit scoring models are used in the case of certain products like credit cards.
External agencies such as field investigation agencies and credit processing agencies are used to facilitate a comprehensive due
diligence process including visits to offices and homes in the case of loans to individual borrowers.
MARKET RISK
Market risk is the risk of loss resulting from changes in interest rates, foreign currency exchange rates, equity prices and commodity
prices. The objective of market risk management is to minimize the impact of losses on earnings and equity capital due to market risk.
Market risk policies include the Investment Policy and the Asset-Liability Management (ALM) Policy. The policies are approved by
the Board of Directors. The Asset Liability Management
Committee (ALCO) of the Board of Directors stipulate liquidity and interest rate risk limits, monitors adherence to limits, articulates
the organisation’s interest rate view and determines the strategy in light of the current and expected environment. These policies and
processes are articulated in the ALPM policy. The investment policy addresses issues related to investment in various trading
products. RMG exercises independent control over the process of market risk management and recommends changes in process and
methodologies for measuring market risk Interest rate risk is measured through the use of re-pricing gap analysis and duration
analysis. Liquidity risk is measured through gap analysis. Bank ensure adequate liquidity at all time through systematic funds planning
and maintenance of liquid investment as well as focusing on more stable funding sitsces such as retail deposits. ICICI Bank limit
exposure to exchange rate risk by stipulating position limits. The treasury Middle Office Group monitors the asset-liability position
under the supervision of the ALCO. The Treasury Middle Office Group is also responsible for processing treasury transactions,
tracking the daily funds position and complying with all treasury related management and regulatory reporting requirements.
OPREATIONAL RISK
Operational risk is the risk of loss that can result from a variety of
factors, including failure to obtain proper internal authorizations,
improperly documented transactions, failure of operational and
information security procedures, computer systems, software or
equipment, fraud, inadequate training and employee errors. Bank’s
approach to operational risk management is designed to mitigate
operational risk by maintaining a comprehensive system of internal
controls, establishing systems and procedures to monitor transactions,
maintaining key back-up procedures and undertaking regular
contingency planning. Effective operational risk management system
would ensure that bank has sufficient information to make appropriate

26. decisions about additional controls, adjustments to controls, or other
risk responses. Operational risk management policy aims at minimizing
losses and customer dissatisfaction due to failure in processes, focusing
on flaws in products and their design that can expose the bank to losses
due to fraud, analyzing the impact of failures in systems, developing
mitigants to minimize the impact and developing plans to meet external
shocks that can adversely impact continuity in the bank’s operations.
1.3.7 SUBSIDIARY COMPANIES
• DOMESTIC SUBSIDIARIES
 ICICI Home Finance Company Limited
 ICICI Investment Management Company Limited
 ICICI Lombard General Insurance Company Limited
 ICICI Prudential Life Insurance Company Limited
 ICICI Securities Limited
 ICICI Trusteeship Services Limited
 ICICI Venture Funds Management Company Limited
 ICICI Securities Primary Dealership Limited
 ICICI Prudential Asset Management Company Limited
 ICICI Prudential Trust Limited
• INTERNATIONAL SUSIDIARIES
 ICICI Bank Canada
 ICICI Bank Eurasia Limited Liability Company
 ICICI International Limited
 ICICI Securities Holding Inc

27.  ICICI Securities Inc
 ICICI Bank Uk Limited
1.3.8 KEY GROUP COMPANIES
ICICI PRUDENTIAL INSURANCE COMPANY
ICICI Life continued to maintain its market leadership among private
sector life insurance companies with a market share of 29% on the basis
of weighted received premium. Life insurance companies worldwide
make losses in the initial years, in view of business set-up and customer
acquisition costs in the initial years as well as reserving for actuarial
liability. While the growing operations of ICICI Life had a negative

28. impact of Rs. 480 crore (US$ 110 million) on the Bank’s consolidated
profit after tax in FY2007 on account of the above reasons, the
company’s unaudited New Business Achieved Profit (NBAP) for
FY2007 was Rs. 881 crore (US$ 203 million) as compared to Rs. 528
crore (US$ 121 million) in FY2006.
ICICI LOMBARD GENERAL INSURANCE COMPANY
ICICI Lombard General Insurance Company (ICICI General) enhanced its
leadership position with a market share of about 35% among private sector
general insurance companies and an overall market share of about 12.4%
during April 2006-February 2007. ICICI General’s gross written premium
grew by 89% from Rs. 1,592 crore (US$ 366 million) in FY2006 to Rs.
3,004 crore (US$ 691 million) in FY2007. ICICI General is required to
expense upfront, on origination of a policy, all sitscing expenses related to
the policy. While ICICI General’s profit after tax for FY2007 was Rs. 68
crore (US$ 16 million), its combined ratio for FY2007 was 97%. The
combined ratio is the sum of net claims and expenses as a percentage of
premiums and indicates the surplus generated on an annualised basis from
the business written during a period (excluding investment income). The
surplus based on the combined ratio, and investment income aggregated Rs.
180 crore (US$ 41 million) on a pre tax basis in FY2007.
ICICI PRUDENTIAL AMC & TRUST
At March 31, 2007, ICICI Prudential Asset Management Company (ICICI
AMC) was among the top two asset management companies in India with
assets under management of over Rs. 37,900 crore (US$ 8.7 billion). ICICI

29. AMC’s profit after tax increased by 55% to Rs. 48 crore (US$ 11 million) in
FY2007 from Rs. 31 crore in FY2006 (US$ 7 million).
ICICI SECURITIES LIMITED
The securities and primary dealership business of the ICICI group have been
reorganised. ICICI Securities Limited has been renamed as ICICI Primary
Dealership Limited. ICICI Brokerage Services Limited has been renamed as
ICICI Securities Limited and has become a direct subsidiary of ICICI Bank.
Erstwhile ICICI Webtrade Limited was amalgamated with ICICI Securities
Limited during fiscal 2007. ICICI Securities achieved a profit after tax of
Rs. 0.63 billion and ICICI Securities Primary Dealership achieved a profit
after tax of Rs. 1.33 billion, in fiscal 2007.
ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED
ICICI Venture Funds Management Company Limited (ICICI Venture)
strengthened its leadership position in private equity in India, with funds
under management of about Rs. 98.00 billion at year-end fiscal 2007. ICICI
Venture achieved a profit after tax of Rs. 0.70 billion in fiscal 2007
compared to Rs. 0.50 billion in fiscal 2006.
1.3.9 PUBLIC RECOGNITION

30. During fiscal 2007, ICICI Bank received several prestigious
award in recognition of overall business strategies, specific
objectives and technology focus:
 Bank of the Year 2006 India by The Banker
 Best Transaction Bank in India by Asset Triple AAA
 Best Trade Finance in India by Asset Triple AAA
 Best Domestic Custody in India by Asset Triple AAA
 Best Bank of the Year 2006 by Business India
 Business Leadership Award in the Banking category by NDTV
Profit
 National Award for Excellence in Energy Management by CII
 Most Admired Bank by Business Baron
 Best Integrated Consumer Bank Site in Asia by Global Finance
 Best Presentment and Payment in Asia by Global Finance
 Best Consumer Internet Bank in India by Global Finance
 Best Corporate/Institutional Internet Bank in India by Global
Finance
 Best Retail Bank India by Asian Banker
 Excellence in Multi Channel Distribution by Asian Banker
 Excellence in Automobile Lending Award by Asian Banker
 Most Trusted Brand Award by Readers Digest

31. CHAPTER-2
STUDY
OF
FINANCIAL STATEMENT
AND IT’S ANALYSIS

32. 2.1 STUDY OF PROFIT& LOSS A/C
MEANING: It is a financial statement, which shows net loss of a company for a specified period. The accounting year means
calendar year of 12 months or less or more than 12 months.
CONTENTS: This presents the revenues and expenses of a company and shows the excess of revenues over expenses for profit and
vice versa for a loss.
FORMAT: The Companies act does not provide any specific format for this
account. However it is required to be prepared on the basis of the
instructions given in part ii of schedule (vi) of the companies act.
MAIN ITEMS OF PROFIT AND LOSS ACCOUNT
Turnover or sales: The aggregate amount of sales and connected items with
the sales such as commission paid to sole-selling agents and other selling
agents and brokerage and discounts on sales other than usual trade discount.
Depreciation: The amount of depreciation of fixed assets and the arrears of
depreciation as per section 205(2) shall be disclosed by way of foot-note.
Interest on loans and debentures: Interest on loans and debentures has to
be stated separately. It will include the amount of interest paid as well as
outstanding.
Miscellaneous expenses: In this head items such as rates and taxes,
insurance premium etc., must be stated separately.
Preliminary expenses: Such expenses include the costs of formation of a
company and since their amount is usually large, it is not desirable to write
off them in one year.
Provision for taxation: The profit and loss account of a company must be
debited with the estimated liabilities for tax on the current profits at current
rates of taxation.

33. Unclaimed dividends: it is shown on the liabilities side of the balance sheet under the
heading ‘current liabilities ‘.
Interim dividends: It is an item of appropriation. It is transferred to the
debit side of the Profit and loss appropriation account.
Final dividend as an item of the trial balance: This is shown in the debit side of the
appropriation section of the profit and loss account.
Proposed dividend or final dividend proposed: Since it is an adjustment
item, it has to be shown at two places- In the debit side of the profit and loss
appropriation account and on the liabilities side of the balance sheet under
the head ‘current liabilities and provisions’.
Political donations: It must be shown as a separate item in the profit and
loss account.
Dividend on interest income: This item is transferred to the credit side of the profit
and loss account.
Payment to auditors: It must be stated separately. This will include
consultancy fee, auditing fees management services etc.
Managerial remuneration: This includes the payments made to managerial
remuneration director’s fee, pension, other allowances and commission.
2.2 STUDY OF BALANCE SHEET
MEANING: The balance sheet is a financial snapshot of a company's
condition at a single point in time. A balance sheet contains a listing of the
company's asset, liability and Capital accounts. When someone, whether a
creditor or investor, asks you how your company is doing, you'll want to
have the answer ready and documented. The way to show off the success of
your company is a balance sheet. A balance sheet is a documented report of
your company's assets and obligations, as well as the residual ownership

34. claims against your equity at any given point in time. It is a cumulative
record that reflects the result of all recorded accounting transactions since
your enterprise was formed. You need a balance sheet to specifically know
what your company's net worth is on any given date. With a properly
prepared balance sheet, you can look at a balance sheet at the end of each
accounting period and know if your business has more or less value, if your
debts are higher or lower, and if your working capital is higher or lower. By
analyzing your balance sheet, investors, creditors and others can assess
your ability to meet short-term obligations and solvency, as well as your
ability to pay all current and long-term debts as they come due. The balance
sheet also shows the composition of assets and liabilities, the relative
proportions of debt and equity financing and the amount of earnings that
you have had to retain. Collectively, external parties to help assess your
company’s financial status, which is required by both lending institutions
and investors before they will allot any money toward your business, will
use this information.
LEARN THE DIFFERENT ASSETS
Current assets: Current assets include cash and other assets that in the
normal course of events are converted into cash within the operating cycle.
For example, a manufacturing enterprise will use cash to acquire inventories
of materials. These inventories of materials are converted into finished
products and then sold to customers. Cash is collected from the customers.
This circle from cash back to cash is called an operating cycle. In a
merchandising business one part of the cycle is eliminated. Materials are not
purchased for conversion into finished products. Instead, the finished
products are purchased and are sold directly to the customers. Several

35. operating cycles may be completed in a year, or it may take more than a year
to complete one operating cycle. The time required to complete an operating
cycle depends upon the nature of the business. It is conceivable that almost
all of the assets that are used to conduct your business, such as buildings,
machinery, and equipment, can be converted into cash within the time
required to complete an operating cycle. However, your current assets are
only those that will be converted into cash within the normal course of your
business. The other assets are only held because they provide useful services
and are excluded from the current asset classification. If you happen to hold
these assets in the regular course of business, you can include them in the
inventory under the classification of current assets. Current assets are usually
listed in the order of their liquidity and frequently consist of cash, temporary
investments, accounts receivable, inventories and prepaid expenses.
Cash: Cash is simply the money on hand and/or on deposit that is available
for general business purposes. It is always listed first on a balance sheet.
Cash held for some designated purpose, such as the cash held in a fund for
eventual retirement of a bond issue, is excluded from current assets.
Marketable Securities: These investments are temporary and are made
from excess funds that you do not immediately need to conduct operations.
Until you need these funds, they are invested to earn a return.
Accounts Receivable: Simply stated, accounts receivables are the amounts
owed to you and are evidenced on your balance sheet by promissory notes.
Accounts receivable are the amounts billed to your customers and owed to
you on the balance sheet's date. You should label all other accounts
receivable appropriately and show them apart from the accounts receivable

36. arising in the course of trade. If these other amounts are currently collectible,
they may be classified as current assets.
Inventories: Your inventories are your goods that are available for sale,
products that you have in a partial stage of completion, and the materials that
you will use to create your products. The costs of purchasing merchandise
and materials and the costs of manufacturing your various product lines are
accumulated in the accounting records and are identified with either the cost
of the goods sold during the fiscal period or as the cost of the inventories
remaining.
Prepaid expenses: These expenses are payments made for services that will
be received in the near future. Strictly speaking, your prepaid expenses will
not be converted to current assets in order to avoid penalizing companies
that choose to pay current operating costs in advance rather than to hold
cash. Often your insurance premiums or rentals are paid in advance.
Investments: Investments are cash funds or securities that you hold for a
designated purpose for an indefinite period of time. Investments include
stocks or the bonds you may hold for another company, real estate or
mortgages that you are holding for income-producing purposes. Your
investments also include money that you may be holding for a pension fund.
Plant Assets: Often classified as fixed assets, or as plant and equipment,
your plant assets include land, buildings, machinery, and equipment that are
to be used in business operations over a relatively long period of time. It is
not expected that you will sell these assets and convert them into cash. Plant
assets simply produce income indirectly through their use in operations.

37. Intangible Assets: Your other fixed assets that lack physical substance are
referred to as intangible assets and consist of valuable rights, privileges or
advantages. Although your intangibles lack physical substance, they still
hold value for your company. Sometimes the rights, privileges and
advantages of your business are worth more than all other assets combined.
Other Assets: During the course of preparing your balance sheet you will
notice other assets that cannot be classified as current assets, investments,
plant assets, or intangible assets. These assets are listed on your balance
sheet as other assets. Frequently, your other assets consist of advances made
to company officers, the cash surrender value of life insurance on officers,
the cost of buildings in the process of construction, and the miscellaneous
funds held for special purposes.
LEARN THE DIFFERENT LIABILITIES
Current Liabilities: On the equity side of the balance sheet, as on the asset
side, you need to make a distinction between current and long-term items.
Your current liabilities are obligations that you will discharge within the
normal operating cycle of your business. In most circumstances your current
liabilities will be paid within the next year by using the assets you classified
as current. The amount you owe under current liabilities often arises as a
result of acquiring current assets such as inventory or services that will be
used in current operations. You show the amounts owed to trade creditors
that arise from the purchase of materials or merchandise as accounts
payable. If you are obligated under promissory notes that support bank loans
or other amounts owed, your liability is shown as notes payable. Other
current liabilities may include the estimated amount payable for income

38. taxes and the various amounts owed for wages and salaries of employees,
utility bills, payroll taxes, local property taxes and other services.
Long-Term Liabilities: Your debts that are not due until more than a year
from the balance sheet date are generally classified as long-term liabilities.
Notes, bonds and mortgages are often listed under this heading. If a portion
of your long-term debt is due within the next year, it should be removed
from the long-term debt classification and shown under current liabilities.
Deferred Revenues: Your customers may make advance payments for
merchandise or services. The obligation to the customer will, as a general
rule, be settled by delivery of the products or services and not by cash
payment. Advance collections received from customers are classified as
deferred revenues, pending delivery of the products or services.
Owner's Equity: Your owner's equity must be subdivided on your balance
sheet: One portion represents the amount invested directly by you, plus any
portion of retained earnings converted into paid-in capital. The other portion
represents your net earnings that are retained. This rigid distinction is
necessary because of the nature of any corporation. Ordinarily, stockholders,
or owners, are not personally liable for the debts contracted by a company. A
stockholder may lose his investment, but creditors usually cannot look to his
personal assets for satisfaction of their claims. Under normal circumstances,
the stockholders may withdraw as cash dividends an amount measured by
the corporate earnings. The distinction in this rule gives the creditors some
assurance that a certain portion of the assets equivalent to the owner's
investment cannot be arbitrarily withdrawn. Of course, this portion could be
depleted from your balance sheet because of operating losses. The owner's

39. equity in an unincorporated business is shown more simply. The interest of
each owner is given in total, usually with no distinction being made between
the portion invested and the accumulated net earnings. The creditors are not
concerned about the amount invested. If necessary, creditors can attach the
personal assets of the owners.
Basis of balance-sheet: Assets = Liability + Equity
BALANCE-SHEET STRUCTURE
The following Balance sheet structure is just an example. It does not show
all possible kind of assets, equity and liabilities, but it shows the most usual
ones. It could be a consolidated balance sheet. Monetary values are not
shown and summary (total) rows are missing as well.
Assets
Current Assets
Cash and cash equivalents
Inventories
Account receivable
Investment held for trading
Other current assets
Non-Current Assets
Property, plant and equipment
Goodwill
Other intangible fixed assets
Investment in associates
Deferred tax assets

40. Miscellaneous Expenditure
Equity And Liabilities
Capital & Reserve
Share capital reserve
Revaluation reserve
Translation reserve
Retained earnings
Minority interest
Non-Current Liabilities
Bank loan
Issued debt securities
Deferred tax liability
Current Liabilities
Accounts payable
Current income tax liability
Short-term part of bank loans
Short-term provisions
Other current liabilities
EQUITY VALUATION:The real value to a purchaser of the business or a
shareholder may be different from the net assets shown by the balance sheet.
This is because factors that affect the value of a business may not be
recorded yet. For example, a purchaser will be interested in the future
earnings of the business, whether assets such as property have been revalued

41. recently, and whether there are potential liabilities in the future such as
lawsuits. The value of the assets in the balance has also been based on the
assumption that the business is a going concern, otherwise the break-up
value of the assets may be far less than the value in the balance sheet.
PREPAIRING A BALANCE-SHEET
Title and Heading: In practice, the most widely used title is Balance Sheet;
however Statement of Financial Position is also acceptable. Naturally, when
the presentation includes more than one time period the title "Balance
Sheets" should be used.
Heading: In addition to the statement title, the heading of your balance
sheet should include the legal name of your company and the date or dates
that your statement is presented. For example, a comparative presentation
might be headed:
XYZ CORPORATION
BALANCE SHEETS
December 31, 2006
Format: There are two basic ways that balance sheets can be arranged. In
Account Form, your assets are listed on the left-hand side and totaled to
equal the sum of liabilities and stockholders' equity on the right-hand side.
Another format is Report Form, a running format in which your assets are
listed at the top of the page and followed by liabilities and stockholders'
equity. Sometimes total liabilities are deducted from total assets to equal
stockholders' equity.
Captions: Captions are headings within your statement that designate major
groups of accounts to be totaled or subtotaled. Your balance sheet should

42. include three primary captions: Assets, Liabilities and Stockholders' Equity.
In the report form of presentation, the placement of your primary captions
would be as follows: 2006 ASSETS, LIABILITIES AND
STOCKHOLDER’S EQUITY.
Except in certain specialized industries your balance sheet should include
the following secondary captions:
CURRENT ASSETS
CURRENT LIABILITIES
Order of Presentation of Captions: First, start with items held primarily
for conversion into cash and rank them in the order of their expected
conversion. Then, follow with items held primarily for use in operations but
that could be converted into cash, and rank them in the order of liquidity.
Finally, finish with items whose costs you will defer to future periods or that
you cannot convert into cash. Following these guidelines, your major assets
should normally be presented in the following order:
• Cash
• Short-term marketable securities
• Trade notes and accounts receivable
• Inventories
• Long-term investments
• Property and equipment
• Intangible assets
• Deferred charges
Liabilities are ordinarily presented in the order of maturity as follows:

43. • Demand notes
• Trade accounts payable
• Accrued expenses
• Long-term debt
• Other long-term liabilities
Components of stockholders' equity are usually presented the following
order:
• Preferred stock
• Common stock
• Additional paid-in capital
• Retained earnings
• Accumulated other comprehensive income
• Treasury stock
2.3 STUDY OF CASH FLOW STATEMENT
MEANING: Cash flow statement or statement of cash flows is a financial
statement that shows a company's incoming and outgoing money (sources
and uses of cash) during a time period (often monthly or quarterly). The
statement shows how changes in balance sheet and income accounts affected
cash and cash equivalents, and breaks the analysis down according to
operating, investing, and financing activities. As an analytical tool the
statement of cash flows is useful in determining the short-term viability of a
company, particularly its ability to pay bills.
PURPOSE: The cash flow statement reflects a firms liquidity or solvency.
The main purpose to make cash flow statement are as follows:

44. 1. provide information on a firm's liquidity and solvency and its ability
to change cash flows in future circumstances
2. provide additional information for evaluating changes in assets,
liabilities and equity
3. improve the comparability of different firms' operating performance
by eliminating the effects of different accounting methods
4. indicate the amount, timing and probability of future cash flows
ACTIVITIES INVOLVED IN CASH FLOW: The cash flow statement is
partitioned into cash flow resulting from operating activities, cash flow
resulting from investing activities, and cash flow resulting from financing
activities.
Operating activities: Operating activities include the production, sales and
delivery of the company's product as well as collecting payment from its
customers. This could include purchasing raw materials, building inventory,
advertising.
Investing activities: Investing activities focus on the purchase of the long-
term assets a company needs in order to make and sell its products, and the
selling of any long-term assets.
Financing activities: Financing activities include the inflow of cash from
investors such as banks and shareholders, as well as the outflow of cash
to shareholders as dividends as the company generates income. Other
activities which impact the long-term liabilities and equity of the
company are also listed in the financing activities section of the cash
flow statement.
Analysis of cash flow statement is necessary for every organisation to depict its cash inflow and outflow.

45. 2.4 FINANCIAL STATEMENT ANALYSIS
MEANING:
Financial statement analysis is the process of examining relationships among
financial statement elements and making comparisons with relevant
information. It is a valuable tool used by investors and creditors, financial
analysts, and others in their decision-making processes related to stocks,
bonds, and other financial instruments. With a great understanding of the
balance sheet & p&l account and how it is constructed, we can look at some
techniques to analyze the information contained within the balance sheet &
p&l account.
PURPOSE:
The main purpose of analyzing the financial statement are the
following:-
 To assess past performance and current financial position.
 To make predictions about the future performance of a company.
TOOLS FOR ANALYSING
1. PERCENTAGE CALCULATION
There are two popular methods by which we can analyze the
financial statement by calculating percentage as taking a common
base.
Horizontal Analysis
When an analyst compares financial information for two or more
years for a single company, the process is referred to as horizontal
analysis, since the analyst is reading across the page to compare
any single line item, such as sales revenues. In addition to

46. comparing dollar amounts, the analyst computes percentage
changes from year to year for all financial statement balances,
such as cash and inventory. Alternatively, in comparing financial
statements for a number of years, the analyst may prefer to use a
variation of horizontal analysis called trend analysis. Trend
analysis involves calculating each year's financial statement
balances as percentages of the first year, also known as the base
year. When expressed as percentages, the base year figures are
always 100 percent, and percentage changes from the base year
can be determined.
If we want to calculate % change in sales then we apply the
following formula:
Percentage=change in sales /Base Year Sales*100
Vertical Analysis
When using vertical analysis, the analyst calculates each item on a
single financial statement as a percentage of a total. The term
vertical analysis applies because each year's figures are listed
vertically on a financial statement. The total used by the analyst
on the income statement is net sales revenue, while on the balance
sheet it is total assets. This approach to financial statement
analysis, also known as component percentages, produces
common-size financial statements. Common-size balance sheets and
income statements can be more easily compared, whether across
the years for a single company or across different companies.
If we want to calculate % change of current assets then we apply
the following formula:

47. Percentage: current assets/total assets*100
2. RATIO ANALYSIS
Financial ratio analysis uses formulas to gain insight into the company and its
operations. For the balance sheet, using financial ratios (like the debt-to-equity
ratio) can show you a better idea of the company’s financial condition along
with its operational efficiency. It is important to note that some ratios will need
information from more than one financial statement, such as from the balance
sheet and the income statement. Ratio analysis facilitates inter-firm and intra-
firm comparison.
Ratios are often classified using the following terms:
LIQUIDITY RATIO
Liquidity ratios are measures of the short-term ability of the company to pay its
debts when they come due and to meet unexpected needs for cash.
• Current Ratio: The current ratio is a rough indication of a firm ability to
service its current obligations. Generally, the higher the current ratio, the greater
the cushion between current obligations and a firm ability to pay them. The
stronger ratio reflects a numerical superiority of current assets over current
liabilities Current ratio is calculated as follows:
Current ratio= Current Assets/Current Liabilities
• Quick Ratio: It is also known as the “acid test” ratio, this is a refinement of
the current ratio and is a more conservative measure of liquidity. The quick ratio
expresses the degree to which a company’s current liabilities are recovered by the
most liquid current assets. quick ratio is calculated as follows:

48. Quick ratio= (cash + marketable securities +
Receivables)/current
liabilities
SOLVENCY RATIO
Solvency ratios indicate the ability of the company to meet its long-term
obligations on a continuing basis and thus to survive over a long period of time.
• Debt/Worth Ratio: This ratio expresses the relationship between
capital contributed by creditors and that contributed by owners. It
expresses the degree of protection provided by the owners for the
creditors. The higher the ratio, the greater the risk being assumed by
creditors. The lower the ratio, the greater the long-term financial
safety. A firm with a low debt/worth ratio usually has a greater
flexibility to borrow in the future. A more highly leveraged company
has a more limited debt capacity.
Debt/worth ratio=Total Liabilities / Tangible Net Worth
PROFITABILITY RATIO
Profitability ratios are gauges of the company's operating success for a given
period of time.
• Return On Assets: Return on assets is a measure of how effectively the
firm’s assets are being used to generate profit. It is calculated as follows:
Return On Assets= Net Income/Total Assets

49. • Return On Equity: Return on equity is the bottom line measure for the
shareholders, measuring for the profits earned for each rupee invested in
business. It is calculated as follows:
Return on Equity= Net income/shareholder’s equity
Fixed/Worth Ratio: This ratio measures the extent to which owner’s
equity (capital) has been invested in plant and equipment (fixed assets).
A lower ratio indicates a proportionately smaller investment in fixed
assets in relation to net worth and a better cushion for creditors in case
of liquidation. Similarly, a higher ratio would indicate the opposite
situation. The presence of substantial leased fixed assets (not shown on
the balance-sheet ) may deceptively lower this ratio.
Fixed Worth Ratio=Net Fixed Assets/ Tangible Net Worth

50. CHAPTER-3
ANALYSIS OF
FINANCIAL STATEMENT
OF
ICICI BANK

51. 3.1 MANAGEMENT DISCUSSION & ANALYSIS
SUMMARY:
• Profit before provisions and tax increased 51.1% to Rs. 58.74 billion
in fiscal 2007 from Rs. 38.88 billion in fiscal 2006 primarily due to an
increase in net interest income by 40.9% to Rs. 66.36 billion in fiscal
2007 from Rs. 47.09 billion in fiscal 2006 and an increase in non-
interest income by 39.4% to Rs. 59.14 billion in fiscal 2007 from Rs.
42.42 billion in fiscal 2006, offset, in part, by an increase in non-
interest expenses by 33.8% to Rs. 66.91 billion in fiscal 2007 from Rs.
50.01 billion in fiscal 2006.
• Provisions increased significantly during fiscal 2007 due to higher
provisions created on standard assets and lower level of write-backs.
Profit before general provisioning and tax increased 27.4% to Rs.
43.79 in fiscal 2007 from Rs. 34.36 billion in fiscal 2006. Profit after
tax increased 22.4% to Rs. 31.10 billion in fiscal 2007 from Rs. 25.40
billion in fiscal 2006.
• Net interest income increased 40.9% to Rs. 66.36 billion in fiscal
2007 from Rs. 47.09 billion in fiscal2006, reflecting an increase of
49.8% in the average volume of interest-earning assets.

52. • Non-interest income increased by 39.4% to Rs. 59.14 billion in fiscal
2007 from Rs. 42.42 billion in fiscal 2006 primarily due to a 45.4%
increase in fee income.
• Non-interest expenses increased 33.8% to Rs. 66.91 billion in
fiscal 2007 from Rs. 50.01 billion in fiscal 2006 primarily due to
49.4% increase in employee expenses and 41.9% increase in other
administrative expenses.
• Provisions and contingencies (excluding provision for tax) increased
to Rs. 22.26 billion in fiscal 2007 from Rs. 7.92 billion in fiscal 2006
primarily due to higher provisions created on standard assets in
accordance with the revised guidelines issued by RBI, a higher level
of specific provisioning on retailloans due to change in the portfolio
mix towards non collateralised loans and seasoning of the loan
portfolio and lower level of write-backs.
• Total assets increased 37.1% to Rs. 3,446.58 billion at year-end
fiscal 2007 from Rs. 2,513.89 billion at year-end fiscal 2006
primarily due to an increase in loans by 34.0% and an increase in
investments by 27.5%.
• FEE INCOME
Fee income increased by 45.4% to Rs. 50.12 billion in fiscal 2007
from Rs. 34.47 billion in fiscal 2006 primarily due to growth in fee
income from retail products and services, including fee arising from

53. retail assets products and retail liability related fee income like
account servicing charges and third party distribution fees. Fees from
corporate banking and international business also witnessed a strong
growth.
• TREASURY INCOME
The gross treasury income increased to Rs. 10.14 billion in fiscal 2007
from Rs. 7.40 billion in fiscal 2006 primarily due to higher level of gains
from equity divestments, offset in part by 24.6% increase in premium
amortisation on Government securities to Rs. 9.99 billion in fiscal 2007
from Rs. 8.02 billion in fiscal 2006 and lower profits on proprietory
trading as a result of the sharp fall in the equity markets in May 2006 and
adverse conditions in debt markets. The amortisation of premium on
Government securities which was earlier shown as provisions and
contingencies has been reclassified under income from treasury-related
activities as per the revised guidelines of RBI.
• LEASE & OTHER INCOME
Lease income decreased by 34.1% to Rs. 2.38 billion in fiscal 2007
from Rs. 3.61 billion in fiscal 2006 primarily because of a decrease in
leased assets to Rs. 10.03 billion at year-end fiscal 2007 compared to
Rs. 11.74 billion at year-end fiscal 2006 since we are not entering into
new lease transactions. Other income increased by 53.0% to Rs. 6.64
billion for fiscal 2007 compared to Rs. 4.34 billion in fiscal 2006
primarily due to increase in income by way of dividend from our

54. subsidiary companies and increase in profit on sale of land, buildings
and other assets.
• PROVISIONS AND TAX
Provisions and contingencies (excluding provision for tax) increased
to Rs. 22.26 billion in fiscal 2007 from Rs. 7.92 billion in fiscal 2006
primarily due to higher provisions created on standard assets, in
accordance with the revised guidelines issued by RBI, a higher level
of specific provisioning on retail loans due to change in the portfolio
mix towards non collateralised loans and seasoning of the loan
portfolio and lower level of write-backs.
• It’s total assets increased by 37.1% to Rs. 3,446.58 billion at year-end
fiscal 2007 from Rs. 2,513.89 billion at year-end fiscal 2006 primarily
due to increase in advances and investments. Net advances increased
by 34.0% to Rs. 1,958.66 billion at year-end fiscal 2007 from Rs.
1,461.63 billion at year-end fiscal 2006 primarily due to increase in
retail advances in accordance with our strategy of growth in our retail
portfolio, offset, in part, by reduction in advances due to repayments
and securitisation. Retail advances increased 38.5% to Rs. 1,277.03
billion at year-end fiscal 2007 from Rs. 921.98 billion at year-end
fiscal 2006.
• Total investments at year-end fiscal 2007 increased by 27.5% to Rs.
912.58 billion compared to Rs. 715.47 billion at year-end fiscal 2006
primarily due to 31.9% increase in investment in Government and

55. other approved securities in India to Rs. 673.68 billion at year-end
fiscal 2007 from 510.74 billion at year-end fiscal 2006 in line with the
increase in our net demand and time liabilities. Banks in India are
required to maintain a specified percentage, currently 25.0%, of their
net demand and time liabilities by way of liquid assets like cash, gold
or approved unencumbered securities. Other investments (including
debentures and bonds) increased by 16.7% to Rs. 238.90 billion at
year-end fiscal 2007 compared to Rs. 204.73 billion at year-end fiscal
2006, reflecting an increase in investments in insurance and
international subsidiaries, pass through certificates and credit linked
notes. Total assets (gross) of overseas branches (including overseas
banking unit in Mumbai) increased by 90.2% to Rs. 524.71 billion at
year-end fiscal 2007 from Rs. 275.86 billion at year-end fiscal 2006.
• It’s equity share capital and reserves at year-end fiscal 2007 increased
to Rs. 243.13 billion as compared to Rs. 222.06 billion at year-end
fiscal 2006 primarily due to retained earnings for the year and
exercise of employee stock options.
• As per the transition provision of Accounting Standard 15 - (Revised)
on
“Accounting for retirement benefits in financial statements of
employer”, the difference in the liability on account of retirement
benefits created by the Bank at March 31, 2006 due to the revised
standard have been adjusted in “Reserves and Surplus”. Total deposits
increased 39.6% to Rs. 2,305.10 billion at year end fiscal 2007 from
Rs. 1,650.83 billion at year-end fiscal 2006. This is commensurate

56. with our focus of increased funding through deposits. Our savings
account deposits increased to Rs. 288.38 billion at year-end fiscal
2007 from Rs. 209.37 billion at year-end fiscal 2006, while current
deposits increased to Rs. 213.76 billion at year-end fiscal 2007 from
Rs. 165.73 billion at year-end fiscal 2006. Term deposits increased by
41.3% to Rs. 1,802.96 billion at year-end fiscal 2007 from Rs.
1,275.73 billion at yearend fiscal 2006. Total deposits at year-end
fiscal 2007 constituted 76.5% of our funding (i.e. deposit, borrowings
and subordinated debts). Borrowings (including subordinated debt)
increased to Rs. 706.61 billion at year-end fiscal 2007 from Rs.
486.66 billion at year-end fiscal 2006 primarily due to increase in
borrowings of foreign branches.
• Contingent liabilities increased by 42.5% or Rs. 1,679.25 billion to
Rs. 5,629.60 billion at year-end fiscal 2007 from Rs. 3,950.35 billion
at year-end fiscal 2006 primarily due to a 35.4% increase in interest
rate swaps and currency options and a 45.0% increase in liability on
account of outstanding forward exchang econtracts.
• NPAS (NON PERFORMING ASSETS)
The ratio of net non-performing assets to net customer assets
increased to 0.98% at year-end fiscal 2007 compared to 0.71% at
year-end fiscal 2006. At year-end fiscal 2007, the gross non-
performing assets (net of write-offs and unpaid interest) were Rs.
41.68 billion compared to Rs. 22.73 billion at year end fiscal 2006.
Gross of technical write-offs, the gross non-performing assets at year-
end fiscal 2007 were Rs. 48.50 billon compared to Rs. 29.63 billion at

57. year-end fiscal 2006. The coverage ratio (i.e. total provisions and
technical write-offs made against non-performing assets as a
percentage of gross non performing assets) at year-end fiscal 2007
was 58.37% compared to 63.72% at year-end fiscal 2006. In addition,
total general provision made against standard assets was Rs. 12.95
billion at year-end fiscal 2007. Our investments in security receipts
issued by Asset Reconstruction Company (India) Limited, a
reconstruction company registered with RBI were Rs. 25.38 billion at
year-end fiscal 2007. Our net restructured standard loans decreased
from Rs. 53.16 billion at year-end fiscal 2006 to Rs. 48.83 billion at
year-end fiscal 2007.
• The effective tax rate of 14.7% for fiscal 2007 was lower compared to
the statutory tax rate of 33.66% primarily due to concessional rate of
tax on capital gains, exemption of dividend income, deduction
towards special reserve and deduction of income of offshore banking
unit.
(RS. IN BILLION)
YEAR ENDED March 31,
2005
March 31,
2006
March 31,
2007
GROSS NPA 34.37 22.73 41.68
NET NPA 19.83 10.75 20.19
NET CUSTOMER 978.94 1,520.07 2,053.74
ASSETS

58. % OF NET NPA TO 2.03% 0.71% 0.98%
NET CUSTOMER
ASSETS
• DIVIDEND
The Board has recommended a higher dividend of 100%
for FY2007 i.e. Rs. 10 per equity share (equivalent to US$
0.46 per ADS) as compared to 85% for FY2006 primarily
due to higher provisions created on standard assets ,a
higher level of specific provisioning on retail loans.
• CONSOLIDATED PROFIT
The consolidated profit after tax increased 14% to Rs. 2,761 crore
(US$ 635 million) in FY2007 from Rs. 2,420 crore (US$ 557 million)
in FY2006. The consolidated profit was lower than the standalone
profit due to the accounting losses of ICICI Prudential Life Insurance
Company (ICICI Life). Its profit under US GAAP accounts was Rs.
31.27 billion as compared to consolidated profit of Rs. 27.61 billion
under Indian GAAP in fiscal 2007.
3.2 COMPARATIVE INCOME STATEMENT
TREND ANALYSIS
SUMMARISED PROFIT & LOSS A/C
(ON 31 MARCH, 2007)
(RS. IN BILLION)
PARTICULARS 2005 2006 2007 %Change %Change
(RS.) (RS.) (RS.) (2006) (2007)
Interest income 94.10 143.06 229.94 46.5% 60.7%
Interest expense 65.71 95.97 163.8 46.1% 70.4%

59. Net interest income 28.39 47.09 66.36 47.5% 40.9%
Non-interest income 27.05 42.42 59.14 49.9% 39.4%
– Fee income 20.98 34.47 50.12 55.3% 45.4%
– Lease income 4.01 3.61 2.38 (10.0) (34.1)
– Others 2.06 4.34 6.64 111.2% 53.0%
Core operating income 55.44 89.51 125.50 48.7% 40.2%
Operating expenses 25.17 35.47 49.79 40.9% 40.3%
Direct marketing agency 4.85 11.77 15.24 35.1% 29.5%
(DMA) expense
Lease depreciation, net of 2.97 2.77 1.88 (6.7) (31.9)
lease equalization
Core operating profit 22.45 39.50 58.59 67.6% 48.3%
Net treasury income - (0.62) 0.15 - -
Operating profit 29.56 38.88 58.74 58.7% 51.1%
Provisions, net of write- 4.29 7.92 22.26 84.61% 181.1%
backs
Profit before tax 25.27 30.97 36.48 22.6% 17.8%
Tax, net of deferred tax 5.22 5.56 5.38 6.7% (3.2)
Profit after tax 20.05 25.40 31.10 26.7% 22.4%
By anlysing the summarized profit & loss account of ICICI
Bank, the following trends are presented:
 Operating profit increased 51% to Rs. 5,874 crore for FY2007
from Rs. 3,888 crore for FY2006 which is less than as compared
to increased 58.7% to Rs. 3,888 crore for FY 2006 from Rs. 2,956
crore for FY2005.
 Profit after tax increased 22% to Rs. 3,110 crore for FY2007
from Rs. 2,540 crore for FY2006 which is less than as compared
to increased 26.7% to Rs. 2,540 crore for FY2006 from Rs. 2,005
crore for FY2005.

60.  Profit before tax increased 18% to Rs. 3,648 crore for FY2007
from Rs. 3,097 crore for FY2006 which is also less than as
compared to increased to 22.6 % to Rs. 3,097 crore for FY2006
fom Rs. 2,527 crore for FY2005.
 Net interest income increased 41% to Rs. 6,636 crore for FY2007
from Rs. 4,709 crore for FY2006 which is less than as compared
to increased 47.5% to Rs. 4,709 crore for FY2006 from Rs. 2,839
crore for FY2005.
 Fee income increased 45% in 2007 which is less than as compared
to 55.3% increased in 2006
 Interest expenses increased at a very high rate from 46.1% in
FY2006 to 70% in FY2007.
 Interest income is increased at a higher rate than the previous
year i.e. 47% in 2006 to 61% in 2007.
 Increase in non-interest income is less than in 2007 49% as
compared to increase in 2006 39%.
 Provision is increased at a high rate as compared to previous
years 85% in 2006 to 181% in 2007.
3.3 COMPARATIVE FINANCIAL POSITION
STATEMENT
TREND ANALYSIS
SUMMARIZED BALANCE-SHEET

61. (ON MARCH 31, 2007)
(RS. In crore)
PARTICULARS 2005 2006 2007 %Change %Change
(RS.) (RS.) (RS.) (2006) (2007)
Cash balance with 47,412 68,115 104,489 43.7% 53%
banks & SLR
-Cash & bank balances 12,930 17,040 37,121 31.8% 118%
-SLR investment 34,482 51,075 67,368 48.1% 32%
Advances 91,405 146,163 195,866 59.9% 34%
Other Investment 2,854 20,473 23,890 41.9% 17%
Fixed and other Assets 12,836 16,638 20,413 29.61% 23%
TOTAL ASSETS 167,659 251,389 344,658 49.9% 37%
Net Worth 12,550 22,206 24,313 76.9% 9%
-Equity Capital 737 890 899 20.8% 1%
-Reserves 11,813 21,316 23,414 80.4% 10%
Preference Capital 350 350 350 - -
Deposits 99,819 165,083 230,510 65.4% 40%
Erstwhile ICICI 19,348 13,190 10,837 (31.16%) (18%)
Borrowings
Other Borrowings 22,405 35,477 59,823 58.2% 69%
Other Liabilities 13,187 15,083 18,824 14.4% 25%
TOTAL 167,659 251,389 344,658 49.9% 37%
LIABILITIES
By anlysing the balance sheet of ICICI Bank, the following
trends are presented:
 Total assets and total liabilities are increased in 2007
from Rs. 251389 crore to Rs. 344658 Crore i.e. 37%
which is less than as compared to increase in 2006 from
Rs. 167659 crore to Rs. 251389 crore i.e. 49.9%.

62.  Increase in cash balance with bank in 2007 is more than
in the previous year 2006. In 2006 it is 32% and in 2007 it
is 118%.
 But increase in SLR investment in 2007 is less than the
previous year. In 2006 it is 48% and in 2007 it is 32%.
 Increase in advances in 2007 is 60% from 2006 which is
less than as compared to increase in advances in 2006 is
34% from 2005.
 Increase in fixed and other assets is also less than in
2007 from 2006 i.e 23% as compared to 30% in 2006 from
2005.
 Erstwhile ICICI borrowings is decreasing in both years but
rate of decreasing is less in 2007 i.e. 18% but in 2006 it is
31%.
 Increase in net worth is also less than from previous year
in 2007 i.e 80% in 2006 to 9% in 2007.
 Increase in equity capital is only 1% in 2007 whereas in
2006 it is 21% and increase in reserve in 2007 is very less
as compared to increase in 2006 i.e. from 10% to 80%.

63.  40%Deposits is increased in 2007 from 2006 which is less
than as compared to 65% increase in deposits in 2006
from 2005.
 Increase in other liabilities is more in 2007 than in 2006
i.e from 14% in 2006 to 25% in 2007.
 69%borrowing is increased in 2007 from 2006 which is
more than as compared to 58% increase in borrowing in
2006 from 2005.
3.4 RATIO ANALYSIS
1) CURRENT RATIO:
Current Ratio= Current Assets/Current Liabilities
In 2006:
Current Assets=170.40+1461.63=1632.03 billion (cash +
advances)
Current Liabilities=165.73+354.77+131.90=652.40billion
(short-term deposits+ borrowings)
Current Ratio=1632.03/652.40=2.5:1
In 2007:
Current Assets=371.21+1958.66=2329.87billion (cash +
advances)
Current Liabilities=213.76+108.37+598.23=920.36 billion
(short-term deposits+ borrowings)
Current Ratio=2329.87/920.36=2.6:1
2) QUICK RATIO:

64. Quick Ratio=Quick Assets/Current Liabilities
In 2006:
Quick Assets=170.40billion (cash in hand and other bank)
Current Liabilities=652.40billion
Quick Ratio=170.40/652.40=0.26:1
In 2007:
Quick Assets=371.21billion (cash in hand and other bank)
Current Liabilities=920.30billion
Quick Ratio=371.21/920.30=0.40:1
3) RETURN ON AVERAGE ASSETS:
Return on average assets= Net income/average assets*100
average assets= total assets at the beginning + total
assets at the end/2
In 2006: net income=25.40 billion
Average assets= (1676.59+ 2513.89)/2= 2095.24
Return on average assets= 25.40/2095.24*100 = 1.21%
In 2007: net income= 31.10 billion
Average assets= (2513.89+ 3446.58)/2= 2980.24
Return on average assets= 31.10/2980.24*100=1.04%
4) RETURN ON AVERAGE EQUITY:
Return on average equity = Net income/average
equity*100
average equity= total equity at the beginning + total
equity at the end/2
In 2006: net income=25.40 billion

65. Average equity= (129.00+225.56)/2= 177.28
Return on average equity= 25.40/177.28*100 = 17.54%
In 2007: net income= 31.10 billion
Average equity= (225.56+246.63)/2= 236.10
Return on average equity = 31.10/236.10*100=13.17%
5) FIXED/WORTH RATIO:
Fixed Worth Ratio=Net Fixed Assets/ Tangible Net Worth
In 2006:
Net Fixed Assets= 39.80 billion
Tangible Net Worth= 225.55 billion
Fixed Worth Ratio=39.80/225.55= 0.18:1
In 2007:
Net Fixed Assets= 39.23 billion
Tangible Net Worth= 246.62 billion
Fixed Worth Ratio=39.23/246.62 = 0.16:1
6) OPERATING PROFIT TO WORKING FUNDS
Operating Profit To Working Funds=operating profit/
average assets*100
In 2006:
Operating profit=38.80 billion
Average assets=2095.24
Operating profit to working fund=38.80/2095.24*100= 1.85%
In 2007:
Operating profit=58.84 billion
Average assets=2980.84
Operating profit to working fund=58.84/2980.84*100= 1.98%

66. (approximately)
RATIOS IN 2006 IN 2007
Current Ratio 2.5:1 2.6:1
Quick Ratio 0.26:1 0.40:1
Return On Assets 1.21% 1.04%
Return On Equity 17.54% 13.17%
Fixed/worth Ratio 0.18:1 0.16:1
Operating profit to working funds 1.85% 1.98%
The above table shows that:- both current ratio and quick ratio
is liquidity ratio. The ideal ratio for current ratio is 2:1 and ideal
ratio for quick ratio is 1:1. In these table current ratio of both
year is higher than the ideal ratio which shows that there is
enough current assets which make the bank able to pay its
current liabilities on time but quick ratio is lower than the ideal
ratio which shows that bank have not enough liquid assets to
pay their current liabilities. Therefore bank should keep some
assets in the form of liquid assets such as cash, marketable
securities etc.
Return on equity, return on assets and operating profit to
working funds are profitability ratio. The higher the profitability
ratio of any organization is show the better position of that
organization. The profitability ratio of ICICI bank is very low. It
is deceasing from the previous year.
Fixed/worth ratio measures the extent to which owner’s equity
has been invested in plant and equipment . A lower ratio
indicates a proportionately smaller investment in fixed assets.
This ratio shows that bank has invested more in current assets

67. than the fixed assets. It could be a good position in case of
liquidation.
3.5 CASH FLOW STATEMENT
(AS ON YEAR ENDED ON 31ST MARCH, 2007) (rs. In “000’s)
PARTICULARS FY2007
FY2006
Cash flow from operating activities
Net profit before taxes . 36,480,391 30,966,076
Adjustments for:
Depreciation and amortisation 7,639,002 9,021,206
Net (appreciation) / depreciation on 9,918,419 8,301,403
investments
Provision in respect of non-performing 21,592,999 7,947,244
assets
Provision for contingencies & others 251,311 226,801
Dividend from subsidiaries (4,484,915) (3,386,929)
(Profit) / Loss on sale of fixed assets (1,152,224) (71,222)
70,244,982 53,004,579
Adjustments for:
(19,666,157) (141,019,247)
Increase/decrease in investments
Increase/decrease in advances (511,255,267) (552,112,941)
Increase/decrease in borrowings 57,039,927 65,476,052
Increase/decrease in deposits 654,270,149 652,643,939
Increase/decrease in other assets (28,758,999) (36,704,232)
Increase/decrease in other liabilities and 26,886,199 13,861,469
provisions
178,515,85 2,145,040
2
(18,141,312) (8,620,283)
Refund/(payment) of direct taxes
Net cash generated from operating 230,619,52 46,529,336
activities(A) 2
Cash flow from investing activities

68. Investments in subsidiaries and/or joint (15,758,166) (8,509,194)
ventures
Income received on above investments 4,484,915 3,386,929
Purchase of fixed assets (4,924,623) (5,474,001)
Proceeds from sale of fixed assets 4,347,300 942,843
(Purchase)/sale of held to maturity (171,776,134) (69,286,381)
securities
Net cash generated from investing (183,626,70 (78,939,804)
activities(B) 8)
Cash flow from financing activities
Proceeds from issue of share capital 2,074,414 79,813,833
Net proceeds/(repayment) of bonds 160,717,380 869,592
Dividend and dividend tax paid (8,646,021) (7,174,390)
Net cash generated from financing 154,145,77 73,509,035
activities(C) 4
Effect of exchange fluctuation on (327,587) 3,955
translation reserve(D)
Net increase/(decrease) in cash and cash 200,811,00 41,102,522
equivalents)(A+B+C+D) 1
Cash and cash equivalents at 1st April 170,402,245 129,299,723
Cash and cash equivalents at 31st March 371,213,247 170,402,245

69. CHAPTER-4
CONCLUSION

70. The balance-sheet along with the income statement is an
important tools for investors and many other parties who are
interested in it to gain insight into a company and its operation.
The balance sheet is a snapshot at a single point of time of the
company’s accounts- covering its assets, liabilities and
shareholder’s equity. The purpose of the balance-sheet is to give
users an idea of the company’s financial position along with
displaying what the company owns and owes. It is important
that all investors know how to use, analyze and read balance-
sheet. P & L account tells the net profit and net loss of a
company and its appropriation.
In the case of ICICI Bank, during fiscal 2007, the bank
continued to grow and diversify its assets base and revenue
streams. Bank maintained its leadership in all main areas such
as retail credit, wholesale business, international operation,
insurance, mutual fund, rural banking etc. Continuous increase
in the number of branches, ATM and electronic channels shows
the growth take place in bank.

71. Trend analysis of profit & loss account and balance sheet
shows the % change in items of p & l a/c and balance sheet i.e.
% change in 2006 from 2005 and % change in 2007 from 2006.
It shows that all items are increased mostly but increase in this
year is less than as compared to increase in previous year. In p
& l a/c, all items like interest income, non-interest income,
interest expenses, operating expenses, operating profit, profit
before tax and after tax is increased but in mostly cases it is
less than from previous year but in some items like interest
income, interest expenses, provision % increase is more. Some
items like tax, depreciation, lease income is decreased.
Similarly in balance sheet all items like advances, cash,
liabilities, deposits is increased except borrowings which is
decreased. % increase in some item is more than previous year
and in some items it is less.
Ratio analysis of financial statement shows that bank’s current
ratio is better than the quick ratio and fixed/worth ratio. It
means bank has invested more in current assets than the fixed
assets and liquid assets. Bank have given more advances to its
customer and they have less cash in their hand. Profitability
ratio of bank is lower than as compared to previous year.
Return on equity is better than the return on assets.

72. The cash flow statement shows that net increase in cash
generated from operating and financing activities is much more
than the previous year but cash generated from investing
activities is negative in both year. There is increase of
159,708,479 thousand RS. in Increase in cash & cash
equivalents from previous year. Therefore analysis of cash flow
statement shows that cash inflow is more than the cash outflow
in ICICI Bank.
Thus, the ratio analysis and trend analysis and analysis of
cash flow statement shows that ICICI Bank’s financial position
is good. Bank’s profitability is increasing but not at high rate.
Bank’s liquidity position is fair but not good because bank
invest more in current assets than the liquid assets. As we all
know that ICICI Bank is on the first position among all the
private sector bank of India in all areas but it should pay
attention on its profitability and liquidity. Bank’s position is
stable.

73. CHAPTER-5
RECOMMENDATION
&
SUGGESTION

74. Some of the recommendation and suggestion are as follows:
o The attention is required on the areas of growth,
profitability ,service level and building talent.
o To increase the profit of bank, bank should decrease their
operating expenses and increase their income.
o To increase its liquidity, bank should keep some more
cash in its hand instead of giving more and more
advances.
o Introduce quality consciousness and standardization of the work
system and procedures.
o Make manager competitive and introduce spirit of market-orientation
and culture of working for customer satisfaction.
o There is need to build the knowledge and skill base among the
employees in the context of technology.
o Performance measure should not only cover financial aspects i.e.
quantitatively aspects but also the qualitative aspects.
o It is high time to focus on work than the work-achieved.
o Bank should increase its retail portfolio.

75. o Bank should manage its all risk such as credit, market and operational
risk properly and should be managed by a person who are highly
skilled and qualified.
Bank should pay attention on its subsidiary “ICICI Prudential Life Insurance
Company Limited
BIBLIOGRAPHY
REFERENCE BOOKS
 P.N. VARSHNEY “Banking Law And Practices” Sultan Chand &
Sons
 SUNDRAM & VARSHNEY “Banking, Theory Law And Practices”
Sultan Chand & Sons
 DR. S. N. MAHESHWARI “Principles Of Accounting” Sultan Chand
& Sons
WEBSITES
 www.icicibank.com
 www.pruicici.com
 www.investopedia.com

76. (I) PROFIT AND LOSS A/C
For The Year Ended March 31,2007
(RS. IN ‘000S)
PARTICULARS AS ON AS ON
SCHE- 31.03.2007 31.03.2006
DULE
I. INCOME
Interest earned 13 229,942,916 143,061,325
Other income 14 59,291,686 41,808,859
289,234,602 184,870,184
TOTAL INCOME
II. EXPENDITURE
Interest expended 15 163,584,984 95,974,483
Operating expenses 16 66,905,564 50,011,537
Provision and contingencies 17 27,641,854 13,483,417
258,132,402 159,469,437
TOTAL EXPENDITURE
III. PROFIT/LOSS
Net profit for the year 31,102,200 25,400,747
Profit brought forward 2,934,416 1,882,221
TOTAL PROFIT/(LOSS) 34,036,616 27,282,221

77. IV. APPROPRIATIONS/ TRANSFERS
7,800,000 6,360,000
Transfer to Statutory reserve
Transfer to reserve fund 1,168 222
Transfer to capital reserve 1,210,000 680,000
Transfer to investment fluctuation - 5,900,000
reserve
Transfer from investment fluctuation - (13,203,350)
reserve
Transfer to special reserve 4,500,000 2,750,000
Transfer to revenue and other reserves - 13,203,350
Proposed equity share dividend 9,011,694 7,593,326
Proposed preference share dividend 35 35
Corporate dividend tax 1,530,978 1,064,969
Balance carried over to balance sheet 982,741 2,934,416
34,036,616 27,282,968
TOTAL
18
Significant policies& notes to accounts
EARNING PER SHARES
Basic(rs.) 34.84 32.49
Diluted(rs.) 34.64 32.15
Face value per share(rs.) 10.00 10.00
(II) BALANCE-SHEET
(Balance sheet of ICICI bank as on March 31,2007)
(Rs. In ‘000’s)
Particulars Schedule As on As on
31.03.2007 31.03.2006
(RS.) (RS.)
CAPITAL & LIABILITIES
1 12,493,437 12,398,345
Capital
Reserve & Surplus 2 234,139,207 213,161,571

78. Deposits 3 2,305,101,863 1,650,831,713
Borrowings 4 512,560,263 385,219,136
Other liabilities & provisions 5 382,286,356 252,278,777
3,446,581,126 2,513,889,542
TOTAL CAPITAL &
LIABILITIES
ASSETS
Cash and Balance with Reserve 6 187,068,794 89,343,737
Bank Of India
Balances with banks and money at 7 184,1441452 81,058,508
calls and short notice
Investment 8 912,578,418 715,473,944
Advances 9 1,958,655,996 1,461,631,089
Fixed Assets 10 39,234,232 39,807,115
Other Assets 11 164,889,234 126,575,149
3.446,581,126 2,513,889,542
TOTAL ASSETS
Contingent Liabilities 12 5,629,594,060 3,950,336,655
Bills for Collection 40,465,610 43,384,648
Significant accounting policies and 18
notes to accounts
(The Schedule refer to above form an integral part of balance sheet)