1. 1
EQUITY ANALYSIS WITH REPECT TO BANKING SECTOR
Submitted in partial fulfillment of PGDM
PGDM BATCH 2012-14
Submitted By
HIMANI P.PADIA
T-8032
Faculty Guide Director Academics
PROF. JAGADISH REDDY PROF. MIR IRFAN UL HAQUE
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Declaration
I hereby declare that the project titled “EQUITY ANALYSIS WITH RESPECT TO
BANKING SECTOR“is an original work undertaken by me, under the guidance of
Prof. JAGADISH REDDY. The report submitted is a bona-fide work of my own efforts
and has not been submitted to any institute/university/conference or published
before.
Signature of the student
(HIMANI P. PADIA)
PGDM 2012-14
T-8032
Date:
Place:
3. 3
Faculty Guide Certificate
I Prof. JAGADISH REDDY certify Ms. HIMANI P. PADIA the work done and the
training undertaken by her is genuine to the best of my Knowledge and is
acceptable.
Signature
Date :
4. 4
ACKNOWLEDGEMENT
I extent my sincere gratitude to Director IRFAN UAL HAQ, VISHWA VISHWANI
SCHOOL OF BUSINESS.
I wishto showmydeepsense of gratitude tomy corporate guide Mr. ATISH GUPTA,Chief Manager,
INDIABULLS SecuritiesLtd.forhissupportand guidance.Thanksandappreciationtothe helpful
employeesof Capital Firstespecially fortheirsupportandforprovidingnecessaryinformationduring
the projectwork.
I would like to I thank my Faculty Guide PROFESSOR JAGADISH REDDY for
continuous support for pursuing my project.
I render my whole hearted thanks to all the other respected faculties of the
management department, for their assistance and co-operation given to me in regard
to this work.
Finally, yet importantly, I would like to express my heart full thanks to my beloved
parents for their blessings, my friends and classmates for their help and cooperation
extended in this endeavor of mine and wish me for the successful completion of this
project.
HIMANI P.PADIA
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CHAPTER-1
INTRODUCTION
ABOUT THE TOPIC:
What is Equity?
Equity is the ownership interest of investors in a business firm. Investors can own
equity shares in a firm in the form of common stock or preferred stock. Equity
ownership in the firm means that the original business owner no longer owns 100%
of the firm but shares ownership with others. On a company's balance sheet, equity
is represented by the following accounts: common stock, preferred stock, paid-in
capital, and retained earnings. Equity can be calculated by subtracting total liabilities
from total assets.
EQUITY ANALYSIS:-
Stock analysis is a term that refers to the evaluation of a particular trading
instrument, an investment sector or the market as a whole. Stock analysts attempt to
determine the future activity of an instrument, sector or market. There are two basic
types of stock analysis: fundamental analysis and technical analysis. Fundamental
analysis concentrates on data from sources including financial records, economic
reports, company assets and market share. Technical analysis focuses on the study
of past market action to predict future price movement.
Equity Analysis on Banking Sector
The main aim of this project is to analyze current growth trend of scripts of
banking in equity market. Based on the study of Indian economy.
Research studies have proved that investments in some shares with a longer
tenure of investment have yielded far superior returns than any other investment.
However, this does not mean all equity investments would guarantee similar high
returns. Equities are high-risk investments. One needs to study them carefully
before investing.
Since 1990 till date, Indian stock market has returned about 17% to investors
on an average in terms of increase in share prices or capital appreciation annually.
Besides that on average stocks have paid 1.5 % dividend annually. Dividend is a
percentage of the face value of a share that a company returns to its shareholders
from its annual profits.
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Compared to most other forms of investments, investing in equity shares
offers the highest rate of return, if invested over a longer duration.
Each investment alternative has its own strengths and weaknesses. Some options
seek to achieve superior returns (like equity), but with corresponding higher risk.
Other provide safety (like PPF) but at the expense of liquidity and growth. Other
options such as FDs offer safety and liquidity, but at the cost of return. Mutual funds
seek to combine the advantages of investing in arch of these alternatives while
dispensing with the shortcomings. Indian stock market is semi-efficient by nature
and, is considered as one of the most respected stock markets, where information is
quickly and widely disseminated, thereby allowing each security’s price to adjust
rapidly in an unbiased manner to new information so that, it reflects the nearest
investment value. And mainly after the introduction of electronic trading system, the
information flow has become much faster. But sometimes, in developing countries
like India, sentiments play major role in price movements, or say, fluctuations, where
investors find it difficult to predict the future with certainty.
Banks are the major part of any economic system. They provide a strong base to
Indian economy as well. Even in the share markets, the performance of banks
shares is of great importance.
Thus, the performance of the share market, the rise and the fall of market is greatly
affected by the performance of the banking sector shares and this report revolves
around all factors, their understanding and a theoretical and technical analysis
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CHAPTER-2
COMPANY PROFILE
INTRODUCTION
Indiabulls is India’s leading Financial, Real Estate and Power Company with a wide
presence throughout India. They ensure convenience and reliability in all their
products and services. Indiabulls has over 640 branches all over India. The
customers of Indiabulls are more than 4,50,000 which covers from a wide range of
financial services and products from securities, derivatives trading, depositary
services, research & advisory services, consumer secured & unsecured credit, loan
against shares and mortgage & housing finance. The company employs around
4000 Relationship managers who help the clients to satisfy their customized financial
goals. Indiabulls entered the Real Estate business in the year 2005 with its group of
companies. Large scale projects worth several hundred million dollars are evaluated
by them.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange (NSE),
Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The market
capitalization of Indiabulls is around USD 2500 million (29thDecember, 2006).
Consolidated net worth of the group is around USD 700 million. Indiabulls and its
group companies have attracted USD 500 million of equity capital in Foreign Direct
Investment (FDI) since March 2000. Some of the large shareholders of Indiabulls are
the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs,
Merrill Lynch, Morgan Stanley and Farallon Capital.
Indiabulls Group is one of India’s top business houses with businesses spread over
Real Estate, Infrastructure, Financial Services, Securities, Retail, Multiplex and
Power sectors. The group companies are listed on important Indian and Overseas
markets. Indiabulls has been conferred the status of a “Business Superbrand” by
The Brand Council, Superbrands India.
VISION
To be the largest and most profitable financial services organization in Indian retail
market and become one stop shop for all non banking financial products and
services for the retail customers. To become the preferred long term financial partner
to a wide base of customers whilst optimizing stake holder’s value
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MISSION
Rapidly increase the number of client relationships by providing a broad array of
product offering to emerge as a clear market leader. To establish a base of 1 million
satisfied customers by 2010. We will create this by being a responsible and
trustworthy partner.
COMPANY’S HISTORY IN INDIA
In 1999, three IIT-Delhi alumni Sameer Gehlaut, Rajiv Rattan and Saurabh Mittal
acquired Orbis,a Delhi based stock broking company. Young entrepreneur Sameer
Gehlaut established Indiabulls in 2000, after acquiring orbis Securities, a stock
brokerage company in Delhi. The group started its operations from a small office
near Hauz Khas bus terminal in Delhi.The office had a tin roof and two computers.
The idea of leveraging technology for trading stocks led to the creation of Indiabulls
Incorporated on 10th January 2000, it was converted into a public limited company
on 27th February 2004.
Its original idea of leveraging technology bore fruit when Indiabulls was accorded
permission to conduct online trading on Indian stock exchanges.The company had
achieved the distinction of becoming only the second brokerage firm in India to be
granted this consent. The challenges facing it were immense – not least of all the
mind set of investors who were called to make the big leap from traditional stock
trading to a completely online interface. Having overcome this resistance, the
company later expanded its service portfolio to include equity, F&O, wholesale debt,
mutual fund distribution and equity research.
In 2003/04, Indiabulls ventured into insurance distribution and commodity trading. It
successfully floated its IPO in September 2004 and in the same year entered the
consumer finance segment. Real estate, the new sunrise industry, was the next
frontier for Indiabulls. In 2004/05, it entered this sector. But it wasn’t just real estate
that was booming. Opportunities were opening up in retail and infrastructure as well.
To cement its position in the Indian business and industry firmament, Indiabulls
acquired Pyramid Retail in 2007 and marked its presence in the power sector by
launching Indiabulls Power.
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Indiabulls Financial Services Limited
Indiabulls Financial Services Limited was incorporated on January 10, 2000 as
M/s Orbis InfoTech Private Limited at New Delhi under the Companies Act, 1956.
The name of company was changed to M/s. Indiabulls Financial Services Private
Limited on March 16, 2001. In the year 2004, Indiabulls came up with it own
public issue & became a public limited company on February 27, 2004. The
name of company was changed to M/s. Indiabulls Financial Services Limited.
The company was promoted by three engineers from IIT Delhi, and has attracted
more than Rs.700 million as investments from venture capital, private equity and
institutional investors and has developed significant relationships with large
commercial banks such as Citibank, HDFC Bank, Union Bank, ICICI Bank, ABN
Amro Bank, Standard Chartered Bank and IL&FS.
Brand Values
Indiabulls is amongst the largest non-banking financial services companies in India
and enjoys strong brand recognition and customer acceptance. The company
attributes its dominant position in the brokerage industry to the preferential status it
enjoys with investors Coupled with its forays into various segments; the Group
believes that the bulk of its brand story is yet to be written. Indeed, when a case
study on India’s youngest brands which have had a profound impact on the economy
is crafted, Indiabulls will feature prominently in it
INDIABULLS GROUP
Total Group Networth – Rs. 19,502 Cr
Total Group PAT for 9M FY 12-13 – Rs. 1,034 Cr.
Total Group Capital Expenditure – Rs. 6,200 Cr. (US $ 1.2 bn.) capex in FY
10-11. Planned capex of Rs. 29,000 (US $ 5.7 bn.) by FY 2014-15.
Focus on Execution and on ground results translating into profits.
For its ongoing projects Indiabulls Group consumes 385 MT of Steel,
550MT of Cement & 1,700 CUM of RMC on daily basis.
Creating Value for Shareholders – Dividend payout of Rs. 543.6 Cr. in 9M
FY12-13
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Products offered Equities and Derivatives
Offers purchase and sale of securities (stock, bonds, debentures etc.)
Broker assisted trade execution
Automated online investing
Access to all IPO's
Our Management Team:
Mr. Divyesh Shah ( Chief Executive Officer )
Mr. Sujitray chowdary ( Vice President )
Mr. R.Venkataraman (Executive Director)
The Board of Directors:
Mr. Sat Pal Khattar (Non Executive Director)
Mr. Sanjiv Ahuja (Independent Director)
Mr. Nilesh Vikamsey (Independent Director)
Mr. Kranti Sinha (Independent Director)
Milestones Achieved
Developed one of the first internet trading platforms in India
Amongst the first to develop in-house real-time CTCL (computer to computer
link) with NSE
Introduction of integrated accounts with automatic gateways to client bank
accounts
Development of products such as Power Indiabulls for high volume traders
Indiabulls Signature Account for self-directed investors
Indiabulls Group Professional Network for information and trading service
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STRATEGY AND FOCUS
Consolidation – aim to be among top 3 players in existing businesses within
next 3 years
No new products – focus on gaining size and scale in existing core areas
No capital market fund raising – all businesses are well funded to achieve
growth and size
Goal- FY 2013/14 – target of US $ 1.5 billion in cash generation from the 3
companies (Finance, Real Estate and Power)
.MAJOR COMPETITORS
KOTAK SECURITIES
SHAREKHAN
ANALYSING THE COMPETITORS STRENGTH & WEAKNESS :-
Competition, being an important market force needs to be tracked, analyzed
&preempted. Market leader always have a system to help them preempt
anycompetitive moves. For this, it is not just important to know competitor by name,
but also critical to understand its major strength & weaknesses.
A competitor’s strength may be its marketing systems, aggressive sales force, and it
srelationship with major external environmental variables like government &financial i
nstitute or a financial resources base. For the effective competitiveanalysis only
strength & weaknesses are not sufficient we need to consider other key factors like
market share of the company & 7p s of service marketing i.e.
Product
Price
Place
Promotion
Process
Physical evidence
People etc.
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SWOT ANALYSIS
Services: As products of Indiabulls is an extremely innovative product with
very less cost services like online trading facility, institutional and domestic
broking, customized research reports with almost 80% efficiency etc give
Indiabulls an edge over its competitors.
Exposure updating tie-ups with leading banks
Well diverse Investment portfolio
Indiabulls has presence in the Real Estate, Infrastructure, Financial Services,
Securities, Retail, Multiplex and Power sectors
Weaknesses
It should have its own mutual funds as it provides advises on mutual funds
Position to answer the question of the clients in their fields.
It does not provide indices on major world markets, ADR Prices of Indian
Scripts.
Lacks Banking arm.
Opportunities
ATM facility should be provided for easy withdrawals.
Tie-ups with third party companies for selling products.
High client base will help for cross sales of its products.
Threats
Companies like Sharekhan, ICICI Direct, Kotak Securities and Private brokers
are major threats.
Banks with Demat facilities are jockeying for position.
Local brokers capable of charging lower brokerage
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INDUSTRY PROFILE
INTRODUCTION
The banking section will navigate through all the aspects of the Banking System in
India. It will discuss upon the matters with the birth of the banking concept in the
country to new players adding their names in the industry in coming few years.
The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association
(IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. has been well
defined under three separate heads with one page dedicated to each bank.
However, in the introduction part of the entire banking cosmos, the past has been
well explained under three different heads namely:
History of Banking in India
Nationalisation of Banks in India
Scheduled Commercial Banks in India
The first deals with the history part since the dawn of banking system in India.
Government took major step in the 1969 to put the banking sector into systems and
it nationalised 14 private banks in the mentioned year. This has been elaborated in
Nationalisation of Banks in India. The last but not the least explains about the
scheduled and unscheduled banks in India. Section 42 (6) (a) of RBI Act 1934 lays
down the condition of scheduled commercial banks.
History of Banking in India
Without a sound and effective banking system in India it cannot have a healthy
economy. The banking system of India should not only be hassle free but it should
be able to meet new challenges posed by the technology and any other external and
internal factors.
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For the past three decades India's banking system has several outstanding
achievements to its credit. The most striking is its extensive reach. It is no longer
confined to only metropolitans or cosmopolitans in India. In fact, Indian banking
system has reached even to the remote corners of the country. This is one of the
main reasons of India's growth process.
The government's regular policy for Indian bank since 1969 has paid rich dividends
with the nationalization of 14 major private banks of India.
Not long ago, an account holder had to wait for hours at the bank counters for getting
a draft or for withdrawing his own money. Today, he has a choice. Gone are days
when the most efficient bank transferred money from one branch to other in two
days. Now it is simple as instant messaging or dial a pizza. Money have become the
order of the day.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the journey of Indian Banking System can be segregated into three distinct
phases. They are as mentioned below:
Early phase from 1786 to 1969 of Indian Banks
Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
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Phase I
The General Bank of India was set up in the year 1786. Next came Bank of
Hindustan and Bengal Bank. The East India Company established Bank of Bengal
(1809), Bank of Bombay (1840) and Bank of Madras (1843) as independent units
and called it Presidency Banks. These three banks were amalgamated in 1920 and
Imperial Bank of India was established which started as private shareholders banks,
mostly European shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians,
Punjab National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between
1906 and 1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank,
Indian Bank, and Bank of Mysore were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly
small. To streamline the functioning and activities of commercial banks, the
Government of India came up with The Banking Companies Act, 1949 which was
later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act No.
23 of 1965). Reserve Bank of India was vested with extensive powers for the
supervision of banking in India as the Central Banking Authority.
During those days public had lesser confidence in the banks. As an aftermath
deposit mobilisation was slow. Abreast of it the savings bank facility provided by the
Postal department was comparatively safer. Moreover, funds were largely given to
traders.
Phase II
Government took major steps in this Indian Banking Sector Reform after
independence. In 1955, it nationalized Imperial Bank of India with extensive banking
facilities on a large scale especially in rural and semi-urban areas. It formed State
Bank of India to act as the principal agent of RBI and to handle banking transactions
of the Union and State Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on
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19th July, 1969, major process of nationalization was carried out. It was the effort of
the then Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in
the country were nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in
1980 with seven more banks. This step brought 80% of the banking segment in India
under Government ownership.
The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country:
1949 : Enactment of Banking Regulation Act.
1955 : Nationalisation of State Bank of India.
1959 : Nationalisation of SBI subsidiaries.
1961 : Insurance cover extended to deposits.
1969 : Nationalisation of 14 major banks.
1971 : Creation of credit guarantee corporation.
1975 : Creation of regional rural banks.
1980 : Nationalisation of seven banks with deposits over 200 crore.
After the nationalization of banks, the branches of the public sector bank India rose
to approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
Phase III
This phase has introduced many more products and facilities in the banking sector in
its reforms measure. In 1991, under the chairmanship of M Narasimham, a
committee was set up by his name which worked for the liberalisation of banking
practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being
put to give a satisfactory service to customers. Phone banking and net banking is
introduced. The entire system became more convenient and swift. Time is given
more importance than money.
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The financial system of India has shown a great deal of resilience. It is sheltered
from any crisis triggered by any external macroeconomics shock as other East Asian
Countries suffered. This is all due to a flexible exchange rate regime, the foreign
reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.
Scheduled Commercial Banks In India
The commercial banking structure in India consists of:
Scheduled Commercial Banks in India
Unscheduled Banks in India
Scheduled Banks in India constitute those banks which have been included in the
Second Schedule of Reserve Bank of India(RBI) Act, 1934. RBI in turn includes only
those banks in this schedule which satisfy the criteria laid down vide section 42 (6)
(a) of the Act.
As on 30th June, 1999, there were 300 scheduled banks in India having a total
network of 64,918 branches. The scheduled commercial banks in India comprise of
State bank of India and its associates (8), nationalised banks (19), foreign banks
(45), private sector banks (32), co-operative banks and regional rural banks.
"Scheduled banks in India" means the State Bank of India constituted under the
State Bank of India Act, 1955 (23 of 1955), a subsidiary bank as defined in the State
Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959), a corresponding new bank
constituted under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970), or under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or any other bank
being a bank included in the Second Schedule to the Reserve Bank of India Act,
1934 (2 of 1934), but does not include a co-operative bank".
"Non-scheduled bank in India" means a banking company as defined in clause (c) of
section 5 of the Banking Regulation Act, 1949 (10 of 1949), which is not a scheduled
bank".
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The following are the Scheduled Banks in India (Public Sector):
State Bank of India
State Bank of Bikaner and Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Saurashtra
State Bank of Travancore
Andhra Bank
Allahabad Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
Indian Overseas Bank
Indian Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab and Sind Bank
Syndicate Bank
Union Bank of India
United Bank of India
UCO Bank
Vijaya Bank
The following are the Scheduled Banks in India (Private Sector):
ING Vysya Bank Ltd
Axis Bank Ltd
Indusind Bank Ltd
ICICI Bank Ltd
South Indian Bank
HDFC Bank Ltd
Centurion Bank Ltd
Bank of Punjab Ltd
IDBI Bank Ltd
Jammu & Kashmir Bank Ltd.
The following are the Scheduled Foreign Banks in India:
American Express Bank
Ltd.
ANZ Gridlays Bank Plc.
Bank of America NT &
SA
Bank of Tokyo Ltd.
Banquc Nationale de
Paris
Barclays Bank Plc
Citi Bank N.C.
Deutsche Bank A.G.
Hongkong and Shanghai Banking
Corporation
Standard Chartered Bank.
The Chase Manhattan Bank Ltd.
Dresdner Bank AG.
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Major Banks in India
ABN-AMRO Bank
Abu Dhabi Commercial Bank
American Express Bank
Andhra Bank
Allahabad Bank
Axis Bank (Earlier UTI Bank)
Bank of Baroda
Bank of India
Bank of Maharashtra
Bank of Punjab
Bank of Rajasthan
Bank of Ceylon
BNP Paribas Bank
Canara Bank
Catholic Syrian Bank
Central Bank of India
Centurion Bank
China Trust Commercial Bank
Citi Bank
City Union Bank
Corporation Bank
Dena Bank
Deutsche Bank
Development Credit Bank
Dhanalakshmi Bank
Federal Bank
HDFC Bank
HSBC
ICICI Bank
IDBI Bank
Indian Overseas Bank
IndusInd Bank
ING Vysya Bank
Jammu & Kashmir Bank
JPMorgan Chase Bank
Karnataka Bank
Karur Vysya Bank
Laxmi Vilas Bank
Oriental Bank of Commerce
Punjab National Bank
Punjab & Sind Bank
Scotia Bank
South Indian Bank
Standard Chartered Bank
State Bank of India (SBI)
State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Indore
State Bank of Mysore
State Bank of Saurastra
State Bank of Travancore
Syndicate Bank
Taib Bank
UCO Bank
Union Bank of India
United Bank of India
United Western Bank
Vijaya Bank
Kotak Mahindra Bank
Yes Bank
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Organizational Structure of Banks in India:
In India banks are classified in various categories according to differ rent criteria. The
following charts indicate the banking structure
Reserve Bank of India
Commercial Banks Co-operative Banks Development Banks
Nationalized Private Short-term
credit
Long-term
credit
Agricultural
Credit
Urban
Credit
EXIM Industrial Agricultural
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Broad Classification of Banks in India:
1) The RBI: The RBI is the supreme monetary and banking authority in the
country and has the responsibility to control the banking system in the
country. It keeps the reserves of all scheduled banks and hence is known as
the “Reserve Bank”.
2) Public Sector Banks:
State Bank of India and its Associates (8)
Nationalized Banks (19)
Regional Rural Banks Sponsored by Public Sector Banks (196)
3) Private Sector Banks:
Old Generation Private Banks (22)
Foreign New Generation Private Banks (8)
Banks in India (40)
4) Co-operative Sector Banks:
State Co-operative Banks
Central Co-operative Banks
Primary Agricultural Credit Societies
Land Development Banks
State Land Development Banks
5) Development Banks: Development Banks mostly provide long term finance
for setting up industries. They also provide short-term finance (for export and
import activities)
Industrial Finance Co-operation of India (IFCI)
Industrial Development of India (IDBI)
Industrial Investment Bank of India (IIBI)
Small Industries Development Bank of India (SIDBI)
National Bank for Agriculture and Rural Development (NABARD)
Export-Import Bank of India.
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Role of Banks:
Banks play a positive role in economic development of a country as repositories of
community’s savings and as purveyors of credit. Indian Banking has aided the
economic development during the last fifty years in an effective way. The banking
sector has shown a remarkable responsiveness to the needs of planned economy. It
has brought about a considerable progress in its efforts at deposit mobilization and
has taken a number of measures in the recent past for accelerating the rate of
growth of deposits. As recourse to this, the commercial banks opened branches in
urban, semi-urban and rural areas and have introduced a number of attractive
schemes to foster economic development.
The activities of commercial banking have growth in multi-directional ways as well as
multi-dimensional manner. Banks have been playing a catalytic role in area
development, backward area development, extended assistance to rural
development all along helping agriculture, industry, international trade in a significant
manner. In a way, commercial banks have emerged as key financial agencies for
rapid economic development.
By pooling the savings together, banks can make available funds to specialized
institutions which finance different sectors of the economy, needing capital for
various purposes, risks and durations. By contributing to government securities,
bonds and debentures of term-lending institutions in the fields of agriculture,
industries and now housing, banks are also providing these institutions with an
access to the common pool of savings mobilized by them, to that extent relieving
them of the responsibility of directly approaching the saver. This intermediation role
of banks is particularly important in the early stages of economic development and
financial specification. A country like India, with different regions at different stages of
development, presents an interesting spectrum of the evolving role of banks, in the
matter of inter-mediation and beyond.
Mobilization of resources forms an integral part of the development process in India.
In this process of mobilization, banks are at a great advantage, chiefly because of
their network of branches in the country. And banks have to place considerable
reliance on the mobilization of deposits from the public to finance development
programmes. Further, deposit mobilization by banks in India acquired greater
significance in their new role in economic development.Commercial banks provide
short-term and medium-term financial assistance. The short-term credit facilities are
granted for working capital requirements. The medium-term loans are for the
acquisition of land, construction of factory premises and purchase of machinery and
equipment. These loans are generally granted for periods ranging from five to seven
years. They also establish letters of credit on behalf of their clients favoring suppliers
of raw materials/machinery (both Indian and foreign) which extend the banker’s
assurance for payment and thus help their delivery. Certain transaction, particularly
those in contracts of sale of Government Departments, may require guarantees
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being issued in lieu of security earnest money deposits for release of advance
money, supply of raw materials for processing, full payment of bills on the assurance
of the performance etc. Commercial banks issue such guarantees also.
PRODUCTS AND SERVICES OFFERED BY BANKS
Products
Investment Banking
Consumer Banking
Commercial Banking
Retail Banking
Private Banking
Asset Management
Pensions
Mortgages
Credit Cards
Broad Classification of Products in a bank:
The different products in a bank can be broadly classified into:
Retail Banking.
Trade Finance.
Treasury Operations.
Retail Banking and Trade finance operations are conducted at the branch level while
the wholesale banking operations, which cover treasury operations, are at the hand
office or a designated branch.
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Retail Banking:
Deposits
Loans, Cash Credit and Overdraft
Negotiating for Loans and advances
Remittances
Book-Keeping (maintaining all accounting records)
Receiving all kinds of bonds valuable for safe keeping
Trade Finance:
Issuing and confirming of letter of credit.
Drawing, accepting, discounting, buying, selling, collecting of bills of
exchange, promissory notes, drafts, bill of lading and other securities.
Treasury Operations:
Buying and selling of bullion. Foreign exchange
Acquiring, holding, underwriting and dealing in shares, debentures, etc.
Purchasing and selling of bonds and securities on behalf of constituents.
The banks can also act as an agent of the Government or local authority. They
insure, guarantee, underwrite, participate in managing and carrying out issue of
shares, debentures, etc.
Apart from the above-mentioned functions of the bank, the bank provides a whole lot
of other services like investment counseling for individuals, short-term funds
management and portfolio management for individuals and companies. It undertakes
the inward and outward remittances with reference to foreign exchange and
collection of varied types for the Government.
Following Services Can Be Availed On The Internet:
Bill Payment
Funds Transfer
Special Promotions & Offers
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Ticket Booking
Online loans and credit cards
Online Shopping
Online Tax payment
Prepaid mobile recharge
Banks will expand In overseas market
In order to sustain the business growth amid highly competitive market and slowing
Indian economy, banks are likely to expand in the overseas market. They will try to
tap emerging opportunities by expanding into newer markets such as Africa, former
Soviet region and other South East Asian countries, in which India has maintained
good trade relations. They can set up captive operations or expand through
inorganic means by undergoing M&A (mergers and acquisitions) with banks in
foreign countries.
Passage of 'Banking Laws (Amendment) Bill' aimed at attracting more foreign
investments
With an aim to reform and strengthen India's banking sector, the Lok Sabha passed
the 'Banking Amendment Bill' in Dec 2012. Once, the bill is passed by Rajya Sabha
as well, it will pave way for RBI to issue new banking licenses to private sector and
attract more foreign investments in the sector.
The Bill also proposes to enhance the voting rights of investors in case of both public
sector and private sector banks from existing 1% to 10% of public sector banks and
from 10% to 26% of private sector banks. This move will attract more foreign
investment in the sector
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FACTORS AFFECTING BANKING SECTOR
Starting off with the project, in the initial phase of SIP, I learnt the basics of the stock
market. As I had to work here in this market for 3.5 months this was the basic
necessity. In that phase I had a nice exposure of how to deal with clients, how to
handle the queries of the investors, it was a practical exposure to learn the working
of the market, how the market moves and all about the corporate culture. Also I had
learnt what factors basically affect the equity market. Then I decided to limit my
project to just Banking Sector, because it is one of the most dynamic sector and also
availability of time was not permitting me to go beyond this. There are N numbers of
factors which affect the share prices. They can be broadly classified into two:
INTERNAL FACTORS
EXTERNAL FACTORS
INTERNAL FACTORS:
As the name suggests, Internal Factors are those which affect the share prices
internally, i.e. they are internal to the company or more specifically bank. Some of
the major internal factors that affect the share prices of a bank are as follows:
Earnings of the company:
How much Profit a company earns acts as a significant factor in price movements. If
the quarterly results are good for a bank, then the price goes up, and if the results
are not good, the investors show no interest in such bank’s share and thus price
falls. Investors invest money in the companies who earn well and in turn give good
return on investment. Thus, a wealthy and a profitable company have good investors
and thus have positive price movements. Price/Earnings Ratio also gives us idea
about the same.
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Market capitalization:
Generally we commit one mistake that we guess the company’s worth from the price
of its stock. It is the market capitalization of the company, rather than the stock price,
that is more
Important when it comes to determining the worth of the company. We need to
multiply the stock price with the total number of outstanding stocks in the market to
get the market capitalization of a company and that is the worth of the company.
Thus, a company or bank with high Market Capitalization turns out to be more
popular among investors. For example, HDFC BANK, ICICI BANK and SBI are more
popular among investors than other banks because they have huge market share
and market capitalization. As market capitalization increases, the share price tends
to increase and as market capitalization decreases, the share price tends to
decrease.
Price/earnings ratio:
Price/Earnings ratio or the P/E ratio gives us a fair idea of how a company's share
price compares to its earnings. If the price of the share is too much lower than the
earning of the company, the stock is undervalued and it has the potential to rise in
the near future. On the other hand, if the price is way too much higher than the
actual earning of the company and then the stock is said to overvalued and the price
can fall at any point. The earnings also have a direct relation with price which is
already explained above.
Internal affairs of the company:
Any happening inside the company or any internal news does affect its share price.
For example any key person moving out of the company, acquisition or takeover or
merger news, share split, employee strike and any other thing internal to the affairs
of the bank affects the share price. A positive note from the internal affairs takes the
price to new highs and a negative does vice versa.
Interest rates:
Interest rates play a major role in determining stock market trends. Bull markets
(those in an upward market) are usually associated with low interest rates and high
Capital Gains, and bear markets (those in a downward trend) with high interest rates
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and low Capital gains. Interest rates are determined by the demand for capital –
pushes them up and normally indicates that the economy is thriving and that shares
probably expensive. Low interest indicate low demand for capital, thus liquidity builds
up on the economy, driving share price down. Other interest rates like that of on
Deposits and Borrowings also have impact on share prices.
Other factors:
Other factors like Growth of the company, figures of deposits, advances, balance
sheet, Profit and Loss Account, etc. Also affect the share prices drastically. A
discussion for the same is done in later part of the report.
EXTERNAL FACTORS:
After studying the internal factors, let’s take a look at some External Factors which
affect the Share Prices.
Sentiments:
Investor sentiment is almost impossible to predict and can be infuriating if, for
example, you have bought shares in a company that you think is a good „buy‟ but
the price remains flat. Investor sentiment is influenced by a wide variety of factors.
Share prices can, for example, be flat during the summer simply because so many
major investors are on holiday or attending major sporting events such as Royal
Ascot and Wimbledon, hence the adage „sell in May and go away‟. Investor
sentiment can lead to irrational buying or selling of shares and result in bull and bear
markets. A bull market is when share prices rise while a bear market is when they
fall. In the technology boom of the late 1990s, for example, investors paid extremely
high prices for shares and ignored traditional valuation measures, such as P/E ratios.
This carried on until 2000 when investors belatedly realized these shares has risen
too far and resulted in a three year bear market in shares. Thus, Sentiments of
investors affect the share prices a lot and this is something unpredictable and
immeasurable factor, but still the most important one.
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Company news and other news:
The way investors interpret news coming out of companies is also a major influence
on share prices. If, for example, a company puts out a warning that business
conditions are tough, shares will often drop in value. If, however, a director buys
shares in the firm, it may be a signal that the company’s prospects are improving.
Companies put out a great deal of news and most of the major announcements are
covered by the financial press. But some announcements not regarded as so
important and sometimes, particularly among smaller firms that are monitored less
by investors and financial journalists, indicators of the company’s health can be
missed. Takeovers or even rumours of takeovers also have a big influence on prices.
This is because investors expect the bidder to pay a premium to shareholders. Also
any other news or speculation about factors like change in Repo Rate, Cash
Reserve Ratio, Reverse Repo Rate, any change or likely change in the policies of
government or RBI or SEBI, any new guidelines issued by the concerned authority,
etc. affect the price of the share. A positive news in any of these respects leads to a
rise in price and a negative takes it to the other side.
Thus, news in any respect is undoubtedly a huge factor when it comes to stock price.
Positive news about a company can increase buying interest in the market while a
negative press release can ruin the prospect of a stock. Having said that, we must
always remember that often times, despite amazingly good news, a stock can show
least movement. It is the overall performance of the company that matters more than
news. It is always wise to take a wait and watch policy in a volatile market or when
there is mixed reaction about a particular stock.
Demand and supply:
This fundamental rule of economics holds good for the equity market as well. The
price is directly affected by the trend of stock market trading. When more people are
buying a certain stock, the price of that stock increases and when more people are
selling the stock, the price of that particular stock falls. Now it is difficult to predict the
trend. Thus, we should be very careful while dealing in stocks as buying or selling
pressure may lead to steep rise or fall in price of the shares.
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Analysts’ reports:
Reports produced by independent analysts also influence share prices. If an analyst
changes their recommendation from „sell‟ to „buy‟, for example, the shares will often
rise in value. Analysts‟ reports are produced primarily by investment banks for
professional investors, although some stockbrokers will make their research
available to private investors. We may find summaries of some reports published on
financial news websites or in newspapers and magazines. Some investment banks
also publish their reports on their websites for free. We should remember that the
recommendation an analyst puts on a company will affect its share price very quickly
and can become irrelevant within hours. This is because the analyst will usually say
a stock is a „buy‟ within a particular price range. If the price moves above their
targets the improvements the analyst expects may be „priced in‟ and so the shares
are not worth buying. But analysts‟ reports are always worth reading, even if the
recommendation is out of date. The reports usually contain a great deal of useful
information on the company and how its business is developing. They also often look
at how the company rates against its competitors.
The economy:
The health of the global economy has a fundamental influence on share prices
because it is ultimately responsible for driving company profits. Broadly speaking, if
the economy is growing, company profits improve and shares will become more
highly valued. If the economy is weakening, company profits will fall and share prices
will go down. Investors look at a vast amount of data to try and work out what is
going to happen to the economy and shift their portfolios before the events occur.
This is why we will often see markets move well ahead of an actual event occurring.
For example, we could get little reaction from the stock market when interest rates
rise. This is because investors have already anticipated the shift months in advance
and adjusted their portfolios beforehand. We can usually assume that the stock
market will anticipate moves in the economy by around six to nine months. So if we
want to stay ahead of the game we need to follow economic data as closely as the
professionals. The kind of information we need to play close attention to is:
employment data, the reports put out by the Monetary Policy Committee (to get an
idea where interest rates are headed), trade with other countries, retail sales and
manufacturing. Sentiment surveys produced by trade bodies such as the
32. 32
Confederation of British Industry are also important indicators of where the economy
is heading.
It is not only news about the US and UK economy that will impact on share prices.
The signals coming out of other major economies, particularly the US and UK‟s
major trading partners, such as the Europe and Asia will also affect US and UK
shares as what happens in these economies will have an impact on our own. When
looking at economic data, we need to think not only how the wider economy will be
affected but whether certain areas will be more affected than others. A rise in interest
rates is, for example, often bad news for house builders as people feel less confident
about taking on debt. Retailers are often badly affected too as people spend less.
Pharmaceutical companies are, however, usually unaffected as people’s demand for
drugs is not influenced by the state of the economy. Companies whose profits are
closely tied to the health of the economy are known as “cyclical” stocks. Those
businesses that aren’t too affected by the economy are called “defensive” stocks. If
economic conditions deteriorate you will often see investors shift from cyclical stocks
to defensives. Thus, the economic health of an Economy affects the Share Prices.
Press and broking house recommendations:
The financial pages of most national newspapers and investment magazines usually
contain share tips. Like analysts‟ reports these tips can have a major influence on
share prices. If a journalist recommends a share, the price will usually rise and if they
write a negative story the price will fall. These moves usually happen very quickly so
if we follow the recommendation it often makes sense to do so as soon as possible.
The Broking House also recommends BUY or SELL for particular shares based on
their own research analysis. They display these recommendations in leading media
such as Television and News Papers. Thus, these recommendations affect the price
of shares and lead the market in the direction these recommendations take.
Technical influences:
Share prices can rise and fall for a variety of technical reasons that may have
nothing to do with the actual outlook for an individual company or the outlook for the
market. It is, for example, a common occurrence for share prices to drop back after a
strong rally. This happens because investors take profits on some of the shares that
have risen in value, protecting their gains just in case the shares start to slip back.
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Investors often refer to this as market consolidation. Another technical reason for
share prices to rise or fall is the quarterly adjustment in the FTSE 100™ index.
Shares that are expected to enter the FTSE 100™ may experience a sharper rise
than one would expect in the weeks beforehand while shares that leave the index
can fall more sharply. This happens because funds that simply track the index have
to match the composition of the index. Some professional fund managers who hold
the affected stocks also adjust their portfolios as they do not want their holding to be
too far above or below the company’s weighting in the index. Share prices can also
be affected by investors who use technical analysis to drive their investment
techniques. Technical analysis, also known as Chartism, is simply the study of past
share price movements and stock market index trends, which are then used to
forecast how shares and stock markets will behave in future. Market makers can
also influence prices. If they, for example, do not own enough shares to balance their
books they will have to buy more. Market makers also influence prices if the market
is looking flat, reducing prices to attract buyers. Thus, technical reasons can also be
a cause for the rise or fall in the prices of shares.
OTHER FACTORS:
Some other factors which influence share prices are as follows:
Change in rates by RBI:
Looking at the changing scenario, RBI keeps on changing rates like Repo Rate,
Reverse Repo Rate and Cash Reserve Ratio. These rates have a direct relation with
the Bank’s performance and in turn the share prices are linked with Bank’s
Performance. Thus, a change in these rates or even a speculation of change in
these rates affects share prices.
Global changes:
Any change in the global economy or in other words global changes also affects
Indian economy. Thus, the performance of an economy and its banks is affected by
these global changes. For example: The recession was first observed in the USA
and later on it caught its lead in other countries too. When it entered India, the share
market crashed literally. So, a careful and logical investor always keeps this in mind
34. 34
that what global changes affect the market and thus leads to rise or fall in share
prices.
Change in Government Policies:
Keeping in mind the progress and well wishes about the country, the government
takes desired steps and keeps on reviewing its policies, rules and regulations and
procedures. A change in FDI and FII inflow restrictions, entry exit barriers for foreign
banks in India, EXIM regulations, change in Basel Norms, etc form part of important
government policies. Thus, a change in these policies affects the market scenario.
For example: if government allows entry of foreign Banks in India, then the
competition would rise and it might happen that those foreign Banks may outperform
and leave our own banks far behind. Then in this case, the investors would be
interested in investing in those foreign Banks and a government would never like that
the funds are invested in some foreign banks rather than our own banks. Thus, some
restriction would follow and this will definitely affect the share prices.
35. 35
Literature review
A lot of investors trading in the financial markets with securities and stocks are trying
to foresee the market movements with the help of accessible information of the
press. This may concern the question will securities with higher prospective benefits
get greater revenues to securities with lower prospective benefits? These ideas can
be investigated using time research and deeper analysis. If a security is determined
precisely, the future return of the security will come to the beta at the securities
market line. Nevertheless, if it goes down that line then that states the security is
understated and it is overrated if it goes above the line. In any situation, regulations
have to be implemented.
Security market line is a line that shows the risks against revenue in the trading
market at a specified time and can expose all the securities that are in a good
demand. It is also called characteristic line or SML. Security market line really shows
the outcomes of the financial capital asset pricing model. It is also called CAPM
formula. Risk on the market is represented through the X-axis also called beta.
Prospective revenue is represented through the Y-axis. Securities risk premium is
identified with the help of security market line.
Security market line turns out to be an effective instrument in identifying if a security
involved in your Security market gives sensible prospective revenue for specified
risks. Your securities are represented on the chart with security market line. So, if the
securities risks against the prospective profits are situated above the line it is
undervalued security. It is so, as the trader supposes to get higher revenue for
specified risk. The asset that is situated below the line is overvalued. This can
happen when the trader can take less profit for the considered risk. Take this
effective knowledge for your consideration and use for earning profits.
36. 36
CHAPTER-3
RESEARCH METHODOLOGY
The process used to collect information and data for the purpose for making
business decisions. The methodology may include publication research ,
interviews , surveys and other research techniques, and could include present
and historical information.
The methodology of study consists of
• Source of data collection
• Statistical tools and techniques
Source of data collection:
The data has been collected through primary and secondary sources
primary data :-
Discussion with branch manager
Live trading in the market
secondary data:-
Books related to financial management
Web sites can be used as vital information source
Statistical tool and techniques:
The collected data needed for the analysis are:
• Comparative analysis of balance sheets
• Financial ratio’s
• The data has been analysed through different graphs for the selected banks.
37. 37
OBJECTIVES:
The major objectives of the study:-
• To study and compare the performance of the banks in the banking sector.
• To help the investors for choosing to make their investments in banking
sector.
• To calculate the risk-return stock of banking sector.
• To understand the concept of investing in equity shares.
• Comparative analysis of 4 selected banks.
SCOPE
The scopes of the project are limited to understanding the basics of fundamental
analysis and technical analysis and apply it to take a decision of investing in banking
sector
LIMITATIONS
The study is based on the data is given by the investors and the employee
which may not be 100% correct.
Moreover, very few investors and agents have a detail knowledge of the
study.
The study is confined to only one sector.
The project has been limited to investment analysis of banking sector only.
38. 38
CHAPTER-4
DATA COLLECTION
Fundamental Analysis:
Fundamental analysis refers to the study of the core underlying elements that
influence the economy of a particular entity. It is a method of study that attempts to
predict price action and market trends by analyzing economic indicators, government
policy and societal factors within a business cycle framework. The fundamental
analysis of a company involves the following parameters:
1. Macroeconomic Analysis
2. Industry Analysis
3.Company analysis
How does an investor determine if a stock is undervalued, overvalued, or trading at
fair market value? With fundamental analysis, this may be done by applying the
concept of intrinsic value. If all the information regarding a corporation's future
anticipated growth, sales figures, cost of operations, and industry structure, among
other things, are available and examined, then the resulting analysis is said to
provide the intrinsic value of the stock. To a fundamentalist, the market price of a
stock tends to move towards its intrinsic value. If the intrinsic value of a stock is
above the current market price, the investor would purchase the stock. However, if
the investor found through analysis that the intrinsic value if a stock was below the
market price for the stock, the investor would sell the stock from their portfolio or take
a short position in the stock.
1. Macroeconomic Analysis:
Change in rates by RBI:
Looking at the changing scenario, RBI keeps on changing rates such as Repo Rate,
Reverse Repo Rate and Cash Reserve Ratio. These rates have a direct relation with
Bank’s performance and in turn share prices are linked with bank’s performance.
Thus, a change in these rates or even a speculation of change in these rates affects
share prices.
39. 39
Global Analysis:
Any change in global economy or in other words, global changes also affects Indian
Economy. For example: The recession was first observed in USA and later on it
caught its lead in other countries too. When it entered India, the share market
crashed literally. It affected many banks as ICICI and others, resulting in loss of
people’s confidence towards banks.
Change in Governments Policy:
The government takes desired steps and keeps on reviewing its policies, rules,
regulations and procedures. A change in FDI and FII inflow restrictions, entry exit
barriers for foreign banks in India, EXIM regulations, change in Basel norms, etc.
form a part of important government policies. For example if government allows entry
of foreign banks in India, then competition would rise, and it may happen that those
foreign banks may outperform and leave our own banks far behind. Thus, some
restriction would follow and this will definitely affect share prices.
Effect of Inflation on banking operations:
Several economists have found that countries with high inflation rates have
inefficiently small banking sectors and equity markets. This effect suggests that
inflation reduces bank lending to the private sector, which is consistent with the view
that a sufficiently high rate of inflation induces banks to ration credit.
Effect of monetary policy on Banking Sector:
Monetary policy affects banking sector in many ways. One way is through credit
Markets. Because of imperfect information, incomplete contracts and imperfect
bankCompetition, monetary policy may affect banks’ loan supply. In particular,
expansive Monetary policy may increase banks’ loan supply directly (bank lending
channel), or Indirectly by improving borrowers’ net worth and, hence, by reducing the
agency costs of lending.
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2. Industry Analysis:
Life Cycle Analysis:
Bank plays an important role in the economic development of the country. The entire
commercial and industrial activities are well knitted with the banks. One cannot
imagine the cessation of the banking activities even for a day. There may be an
economic crisis in the country if the banks stop functioning for some days.
In the early days, the banking business was confined to receiving of deposits and
lending of money. But the modern bankers undertake wide variety of functions to
assist their customers. Banks are like any other business in that they produce goods
and services to customers. Like any other businesses, their products have life
cycles. Cheques are in a decline phase of their life cycle and use of cheques is
declining rapidly and being replaced by electronic bill pay and debit cards. Internet
Banking and Electronic Bill pay are in their growth phase as more and more
customers are using these services. Cards or Cheque Cards are in their maturity
phase as they are accepted by nearly everyone. So overall, the banking industry is in
a GROWTH PHASE, as new measures are being adopted overtime so as to make
transactions speedy and easy.
Porter’s five forces analysis:
1. Threat of New Entrants. The average person can't come along and start up a
bank, but there are services, such as internet bill payment, on which entrepreneurs
can capitalize. Banks are fearful of being squeezed out of the payments business,
because it is a good source of fee-based revenue. Another trend that poses a threat
is companies offering other financial services. Also, the possibility of a mega bank
entering into the market poses a real threat.
2. Power of Suppliers. The suppliers of capital might not pose a big threat, but the
threat of suppliers luring away human capital does. If a talented individual is working
in a smaller regional bank, there is the chance that person will be enticed away by
bigger banks, investment firms, etc.
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3. Power of Buyers. The individual doesn't pose much of a threat to the banking
industry, but one major factor affecting the power of buyers is relatively high
switching costs. If a person has a mortgage, car loan, credit card, checking account
and mutual funds with one particular bank, it can be extremely tough for that person
to switch to another bank. In an attempt to lure in customers, banks try to lower the
price of switching, but many people would still rather stick with their current bank. On
the other hand, large corporate clients have banks wrapped around their little fingers.
Financial institutions - by offering better exchange rates, more services, and
exposure to foreign capital markets - work extremely hard to get high-margin
corporate clients.
4. Availability of Substitutes. There are plenty of substitutes in the banking
industry. Banks offer a suite of services over and above taking deposits and lending
money, but whether it is insurance, mutual funds or fixed income securities, chances
are there is a non-banking financial services company that can offer similar services.
On the lending side of the business, banks are seeing competition rise from
unconventional companies. Sony, General Motors and Microsoft all offer preferred
financing to customers who buy big ticket items
5. Competitive Rivalry. The banking industry is highly competitive. The financial
services industry has been around for hundreds of years and just about everyone
who needs banking services already has them. Because of this, banks must attempt
to lure clients away from competitor banks. They do this by offering lower financing,
preferred rates and investment services. The banking sector is in a race to see who
can offer both the best and fastest services, but this also causes banks to
experience a lower ROA. They then have an incentive to take on high-risk projects.
In the long run, we're likely to see more consolidation in the banking industry. Larger
banks would prefer to take over or merge with another bank rather than spend the
money to market and advertise to people.
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DATA ANALYSIS
To study the financial performance of the following selected Banks:
1. STATE BANK OF INDIA
2. ICICI BANK LIMITED
3. PUNJAB NATIONAL BANK
4. CANARA BANK
5. BANK OF BARODA
6. BANK OF INDIA
State Bank of India
Company Profile
Company Information
Headquarters: Mumbai, India
Year of Incorporation: 1806
Base interest rate: 9.75%
No. of branches: Over 14,000
No. of ATMs: Over 10,000
State Bank of India (SBI) is the India’s oldest and largest bank by revenue,
assets and market capitalization. SBI has launched various cost-effective
channels, such as SBI Tiny Card (biometrically enabled card), Kiosk banking
(internet enabled kiosk/computer
with biometric validation) and cell phone messaging channel. The bank also has
more than 170branches in ~30 foreign countries, including multiple locations in the
US, Canada, and Nigeria.
“The objective of the lending rate cut is to improve demand for assets which in our
view could have a positive cascading effect on related industries”
KEY MANAGEMENT
MD & CEO: Mr. Pratip Chaudhari
Managing Director: Mr. Hemant G. Contractor
Managing Director: Mr. Diwakar Gupta
Managing Director: Mr. A. Krishna Kumar
43. 43
The State Bank Group includes a network of eight banking subsidiaries and several
nonbanking
Subsidiaries
The Eight Banking subsidiaries are as follows:
– State Bank of Bikaner and Jaipur (SBBJ)
– State Bank of Hyderabad (SBH)
– State Bank of India (SBI)
– State Bank of Indore (SBIR)
– State Bank of Mysore (SBM)
– State Bank of Patiala (SBP)
– State Bank of Saurashtra (SBS)
– State Bank of Travancore (SBT)
Banking segments of SBI
Treasury: Includes investment portfolio and trading in foreign exchange contracts
and derivative contracts.
Corporate/Wholesale: Comprises of lending activities of Corporate Accounts
Group, Mid Corporate Accounts Group and Stressed Assets Management Group.
Retail : Comprises of branches in National Banking Group, which includes personal
banking activities, including lending activities to corporate customers.
Other Services: NRI Services, ATM Services, Demat Services, E-Pay/E-Rail
Broking Services.
COMPANY PROFILE:
COMPANY INFORMATION:
Headquarters: Vadodra, India
Year of Incorporation: 1994
Base interest rate: 9.75%
No. of branches: Over 2,880
No. of ATMs: Over 10,0
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BUSINESS OVERVIEW:
ICICI Bank (Industrial Credit and Investment Corporation of India) was
originally promoted in 1994 by ICICI Ltd.,
an Indian financial institution ICICI acquired Bank of Rajasthan through a
share swap in a non-cash deal that valued the bank of Rajasthan at
aboutRs.3,000 crores on 2010. This merger added over 450 branches of
ICICI to the network
The bank is currently in talks with Vodafone to bring a concept of e-
money into play
“The strategy of focusing on profitability, growth and risk management for fiscal
2012 resulted in better than the
expected results.”
KEY MANAGEMENT:
MD & CEO: Ms. Chanda Kocchar
MD & CFO: Mr. N.S. Kannan
Executive Director: Mr. K. Ramkumar
Executive Director: Mr. Rajiv Sabharwal
Punjab National Bank
Company Profile
Company Information
Headquarters: New Delhi, India
Year of Incorporation: 1895
Base interest rate: 10.50%
No. of branches: Over 5,900
No. of ATMs: Over 6,000
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Business Overview:
Punjab National Bank (PNB) is the largest nationalized Bank in the
country in terms of its branch network, totalbusiness, advances,
operating profit and low cost CASA deposits
Apart from offering banking products, the bank has also taken up Wealth
Management Services such as credit card / debit card; bullion business;
life/non-life insurance PNB Prerna and PNB Pragati are two corporate
social responsibility initiatives undertaken by the bank.
“The status of the banking sector in 2013 will depend on how the economy
behaves over the next one year”
Key Management:
Chairman & MD: Mr. K. R. Kamath
Executive Director: Mr. Rakesh Sethi
Executive Director: Mr. Usha A Subramanian
Executive Director: Mr. S. R. Bansal
Canara Bank
Company Profile
Company Information:
Headquarters: Bangalore, India
Year of Incorporation: 1906
Base interest rate: 10.50%
No. of branches: Over 3,600
No. of ATMs: Over 3,100
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BUSINESS OVERVIEW:
Over the years, Canara Bank has been scaling up its market position to
emerge as a major 'Financial Conglomerate' with as many as nine
subsidiaries/sponsored institutions/joint ventures in India and abroad
Besides commercial banking, the Bank has also carved a distinctive mark in
various corporate social responsibilities areas, namely, serving national
priorities, promoting rural development and enhancing rural self-employment
through several training institutes
It is the first bank to introduce Centralized Solution for Service
Units(CSSU), developed in-house adopting the latest technology in the IT
Industry’
Key Management
Chairman &Managing Director: Mr. R. K. Dubey
Executive Director: Ms. Archana S. Bhargava
Executive Director: Mr. Ashok Kumar Gupta
COMPANY PROFILE
COMPANY INFORMATION:
Headquarters: Baroda, India
Year of Incorporation: 1908
Base interest rate: 10.50%
No. of branches: Over 4,000
No. of ATMs: Over 1,800
47. 47
BUSINESS OVERVIEW:
Bank of Baroda is a 103 year old State owned Bank with a good mix of
modern &contemporary personality, offering banking products and services to
large industrial, SME, retail & agricultural customers across the country
The Bank has developed an Integrated Global Treasury Solution in its major
territories such as the UK, UAE, Bahamas Bahrain, Honkong, Singapore,
Belgium, USA and India to reduce the cost of operations and improve funds
management.
“The Indian banking industry has always been resilient in facing challenges”
KEY MANAGEMENT:
Chairman & MD: Mr. M. D. Mallya
Executive Director: Mr. S. K. Jain
Executive Director: Mr. P. Srinivas
Executive Director: Mr. Ranjan Dhawan
BANK OF INDIA
COMPANY PROFILE
COMPANY INFORMATION:
Headquarters: Mumbai, India
Year of Incorporation: 1906
Base interest rate: 10.50%
No. of branches: Over 4,000
No. of ATMs: Over 3,000
BUSINESS OVERVIEW:
Bank of India was founded on 7thSeptember, 1906 by a group of eminent
businessmen from Mumbai. The Bank was under private ownership and
control till July 1969, after which it was nationalized along with 13 other
banks
48. 48
The Bank has a sizable presence abroad, with a network of 29 branches
(including five representative office) at key banking and financial centers
such as London, New York, Paris, Tokyo, Hong-Kong an Singapore.
International business accounts for around 17.82% of the Bank's total
business
The bank is always looking forward to being more consumers centric and
reaching out especially in the rural belts of the country.
KEY MANAGEMENT:
Chairman & MD: Mr. V. R. Iyer
Executive Director: Mr. N. Seshadri
Executive Director: Mr. M. S. Raghvan
Executive Director: Mr. B. B. Sharma
49. 49
DATA ANALYSIS AND INTERPRETATION
NET PROFIT MARGIN RATIO:
.TABLE 1.1
Profit margin ratio 2009 2010 2011 2012
STATE BANK OF
INDIA
12.03 10.54 8.55 9.73
ICICI BANK LTD 9.74 12.17 15.91 16.14
PNB BANK 13.76 15.64 14.56 12.09
CANARA BANK 9.61 10.89 13.77 15.65
BANK OF BARODA 12.86 15.37 17.18 15.37
BANK OF INDIA 13.96 15.89 8.59 10.25
50. 50
CHART 1.1 shows the net profit ratio of selected banks which are as follows:-
INTERPRETATION:
The net profit margin is a good way of comparing companies in the same industry,
since such companies are generally subject to similar business conditions. However,
the net profit margins are also a good way to compare companies in different
industries in order to gauge which industries are relatively more profitable. Also
called net margin. A higher profit margin indicates a more profitable company
that has better control over its costs compared to its competitors. Profit margin. The
profit margin ratio, also known as the operating performance ratio, measures the
company’s ability to turn its sales into net income. To evaluate the profit margin, it
must be compared to competitors and industry statistics. It is calculated by dividing
net income by net sales
0
2
4
6
8
10
12
14
16
18
20
STATE BANK
OF INDIA
ICICI BANK LTD PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
51. 51
STATE BANK OF INDIA: In table 1.1 chart shows decreasing trend till 2011 and
from 2012 it shows increasing trend .
ICICI BANK: Its shows increasing trend.In 2011 and 2012 it has
slightly increase which indicate more profit margin.
PUNJAB NATIONAL BANK : Every year its fluctuating but only in 2010 it increases.
CANARA BANK: It shows increasing trend at increasing rate.
BANK OF BARODA: It has increases till 2011 but in 2012 it has decreases.
BANK OF INDIA: Every year it has fluctuate.
DIVIDEND PAY OUT RATIO:
TABLE 1.2:-
DIVIDEND PAYOUT RATIO
NET PROFIT
2009 2010 2011 2012
STATE BANK OF INDIA 22.90 23.36 26.03 22.59
ICICI BANK LTD 36.60 37.31 35.23 32.82
PUNJAB NATIONAL BANK 23.86 20.74 18.27 17.75
CANNARA BANK 24.53 18.51 15.88 14.09
BANK OF BARODA 17.22 20.90 17.76 16.22
BANK OF INDIA 12.23 16.34 24.61 17.85
52. 52
Chart 1.2 which shows the dividend payout ratio of selected banks:-
INTERPRETATION:
The part of the earnings not paid to investors is left for investment to provide for
future earnings growth. Investors seeking high current income and limited capital
growth prefer companies with high Dividend payout ratio. However investors seeking
capital growth may prefer lower payout ratio because capital gains are taxed at a
lower rate. High growth firms in early life generally have low or zero payout ratios. As
they mature, they tend to return more of the earnings back to investors
STATE BANK OF INDIA: There is a slightly increase in year 2011 and decrease in
2012
ICICI BANK LTD: There is a decrease from year 2010 to 2012
PUNJAB NATIONAL BANK: There is decreasing trend in the following year
CANARA BANK: There is decreasing trend at faster rate
BANK OF BARODA: There is decrease in the year from 2010
BANK OF INDIA: There is increasing trend before the year 2011 but decrease in
year 2012.
0
5
10
15
20
25
30
35
40
STATE BANK OF
INDIA
ICICI BANK LTD PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
53. 53
EARNING PER SHARE:
TABLE 1.3 Shows the profitability ratios EPS
Earnings per share 2009 2010 2011 2012
STATE BANK OF
INDIA
143.67 144.37 116.07 174.15
ICICI BANK LTD 33.76 36.10 44.73 56.09
PUNJAB NATIONAL
BANK
98.03 123.86 139.94 144
CANARA BANK 38.17 50.55 73.69 90.88
BANK OF BARODA 61.14 83.96 108.33 121.79
BANK OF INDIA 57.26 33.15 45.54 46.66
Chart 1.3 shows the position of EPS ratio of selected banks which are as follows:
0
20
40
60
80
100
120
140
160
180
200
STATE BANK OF
INDIA
ICICI BANK PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
54. 54
INTERPRETATION:-
The portion of a company’s profit allocated to each outstanding share of common
stock. Earnings per share serves as an indicator of a company’s profitability.
Earnings per share is generally considered to be the single most important variable
in determining a share’s price. It is also a major component used to calculate the
price-to-earnings valuation ratio
This chart shows that all selected banks are increasing, STATE BANK OF INDIA
reduced 144 in year 2010 to 116 in yr 2011 then again by 58 in year 2012 . ICICI
BANK, PUNJAB NATIONAL BANK ,CANARA BANK , BANK OF BARODA Shows
increasing trend but again bank of India reduced in year 2010 then again increase
gradually from year 2011.
DIVIDEN PER SHARE:
. TABLE 1.4 SHOWS PROFITABILITY RATIOS OF SECLECTED
Dividend per share 2009 2010 2011 2012
STATE BANK OF
INDIA
29 30 30 35
ICICI BANK LTD 11 12 14 16.50
PUNJAB NATIONAL
BANK
20 22 22 22
CANARA BANK 8 8 10 11
BANK OF BARODA 9 15 16.50 17
BANK OF INDIA 4 8 7 7
55. 55
Chart 1.4 shows from the following:-
INTERPRETATION:
The sum of declared dividends for every ordinary share issued. Dividend per share
(DPS) is the total dividends paid out over an entire year (including interim dividends
but not including special dividends) divided by the number of outstanding ordinary
shares issued
This chart 1.4 indicates a positive trend as all are increasing except BANK OF
INDIA.
0
5
10
15
20
25
30
35
40
STATE BANK
OF INDIA
ICICI BANK LTD PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF
INDIA
2009
2010
2011
2012
56. 56
CURRENT RATIO:
TABLE 1.5 OF 6 SECLECTED BANKS ACCORDING TO INCOMEWISE ARE AS
FOLLOWS:
CURRENT RATIO 2009 2010 2011 2012
STATE BANK OF
INDIA
0.04 0.04 0.04 0.05
ICICI BANK LTD 0.13 0.14 0.11 0.13
PUNJAB
NATIONAL BANK
0.02 0.02 0.03 0.02
CANNARA BANK 0.02 0.02 0.01 0.02
BANK OF BARODA 0.02 0.02 0.02 0.03
BANK OF INDIA 0.02 0.03 0.02 0.04
CHART 1.5 SHOWS THE POSITION OF SECLECTED BANKS AS FOLLOWS:-
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
STATE BANK
OF INDIA
ICICI BANK PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
57. 57
INTERPRETATION:
A liquidity ratio measures a company’s ability to pay short-term obligations.
This chart 1.5 indicates that there is frequent fluctuations except State Bank Of
India and Bank Of Baroda which has gradually increase in year 2012.
QUICK RATIO:
TABLE 1.6 SHOWS THE quick ratio of selected banks which are as follows:-
QUICK RATIO 2009 2010 2011 2012
STATE BANK OF
INDIA
5.74 9.07 8.50 12.05
ICICI BANK LTD 5.94 14.70 15.86 16.71
P & B BANK 9.75 20.47 22.24 23.81
CANARA BANK 9.17 11.29 26.98 30.86
BANK OF
BARODA
9.62 21..88 26.38 28.00
BANK OF INDIA 11.63 12.30 22.15 19.06
58. 58
CHART 1.6 SHOWS the position of selected banks:-
INTERPRETATION:
An indicator of a company’s short-term liquidity. The quick ratio measures a
company’s ability to meet its short-term obligations with its most liquid assets. The
higher the quick ratio, the better the position of the company.
This chart 1.6 indicates increasing or positive trend except BANK OF INDIA which
shows the downfall in year 2012.
0
5
10
15
20
25
30
35
STATE BANK OF
INDIA
ICICI BANK LTD P & B BANK CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
59. 59
TABLE 1.7shows the gross non-performing assets: -
GROSS NON-
PERFORMING ASSETS
2009 2010 2011 2012
STATE BANK OF INDIA 15,714.00 19,534.89 25,326.29 39,676.46
ICICI BANK LTD 9,649.31 9,480.65 10,034.26 9,475.33
PUNJAB NATIONAL
BANK
2,506.90 3,214.41 4,379.39 8,719.62
CANARA BANK 2,167.97 2,590.31 3,137.36 4,031.75
BANK OF BARODA 1,842.92 2,400.69 3,152.50 4,464.75
BANK OF INDIA 2,470.88 4,882.65 4,811.55 5,893.97
CHART 1.7 shows the movements of bank positions below: -
DATA INTERPRETATION:-
A debt obligation where the borrower has not paid any previously agreed upon
interest and principal repayments to the designated lender for an extended period of
time. The nonperforming asset is therefore not yielding any income to the lender in
the form of principal and interest payments. Chart 1.7 shows a positive trend for
every selected banks except ICICI BANK LTD which shows fluctuations in every
year.
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
STATE BANK
OF INDIA
ICICI BANK LTD PUNJAB
NATIONAL
BANK
CANARA BANK BANK OF
BARODA
BANK OF INDIA
2009
2010
2011
2012
60. 60
CHAPTER-5
FINDINGS
From the data analysis and interpretations of the ratios of six selected banks the
following findings have been given:
1. State bank of India: - In net profit margin ratio 2011 it has decrease in year
2011 from 10.54 to 8.55 i.e 1.99 times and again it has increased in 2012 1.18 times.
In dividend payout ratio it has gradually increase in year 2010 by 0.46 times, in tear
2011 by 2.67 times which has reduced again in year 2012 by 3.47 times. Earnings
per share have increase in year 2012 by 58.08 times which has decrease in year
2011 by 28.30 times. Dividend per share and Non-performing assets has also
increase in every year. Current ratio has increase form 0.1 times in year 2012 and
quick ratio has also frequently increases.
2. ICICI BANK LTD: -net profit margin, it has gradually increases in every year. In
2010 dividend payout ratio increases by 1 times but again it slowly it starts
decreasing. Earnings per share, dividend per share & quick ratio increases
frequently in every year. Current ratio there is frequent fluctuations. Non-performing
assets fluctuates in every year.
3. PUNJAB NATIONAL BANK: - From year 2009 net profit margin has gradually
increase but in year 2012 it has reduced to 2.47 times. Dividend payout ratio has
decreased in every year frequently but Earning per share, Dividend per share , Quick
ratio & Non-performing assets has increase frequently in every year. Current ratio
has increase in year 2011 by 0.01 times and remains same in every 3 years.
61. 61
4. CANARA BANK: -net profit margin ratio, Earnings per share has frequently
increased in every year but dividend payout ratio has decreased gradually in every
year. Dividend per share increases by 1 times in year 2012. In 2011 current ratio has
decrease by 0.01 times and remains same in all the 3 years. Quick ratio has
increases slowly in every year.
5. BANK OF BARODA: -net profit margin ratio has slowly increases in year 2009
but in 2012 it has decreases by 2 times in year 2012.dividend payout ratio has
frequent fluctuates in every year. Earnings per share Quick ratio, dividend per share
& Non-performing assets has increases slowly in every year. Current ratio increases
in year 2012 by 0.01 times.
6. BANK OF INDIA: - Net profit margin ratio has gradually increase but in year 2011
it has reduced to 7 times and again it has increase. Dividend payout ratio has slowly
increased but in 2012 it decreases by 7 times. Earnings per share have decrease in
year 2010 by 24 times and again started increasing. Dividend per share has
increased by 4 times in year 2010and form year 2011 it started decreasing. Current
ratio has frequent fluctuations by 0.01 times and quick ratio has increases every year
slowly. Non – performing assets has increases in every year.
62. 62
SUGGESTIONS
High growth of Indian Economy:
The growth of the banking industry is closely linked with the growth of the overall
economy. India is one of the fastest growing economies in the world and is set to
remain on that path for many years to come. This will be backed by the stellar
growth in infrastructure, industry, services and agriculture. This is expected to
boost the corporate credit growth in the economy and provide opportunities to
banks to lend to fulfill these requirements in the future.
Rising per capita income:
The rising per capita income will drive the growth of retail credit. Indians have a
conservative outlook towards credit except for housing and other necessities.
However, with an increase in disposable income and increased exposure to a range
of products, consumers have shown a higher willingness to take credit, particularly,
young customers. A study of the customer profiles of different types of banks,
reveals that foreign and private banks share of younger customers is over 60%
whereas public banks have only 32% customers under the age of 40. Private Banks
also have a much higher share of the more profitable mass affluent segment.
New channel – Mobile banking is expected to become the second
largest channel for banking after ATMs:
New channels used to offer banking services will drive the growth of banking
industry exponentially in the future by increasing productivity and acquiring new
customers. During the last decade, banking through ATMs and internet has shown a
tremendous growth, which is still in the growth phase.
Financial Inclusion Program:
Currently, in India, 41% of the adult population doesn’t have bank accounts, which
indicates a large untapped market for banking players. Under the Financial Inclusion
Program, RBI is trying to tap this untapped market and the growth potential in rural
markets by volume growth for banks. Financial inclusion is the delivery of banking
services at an affordable cost to the vast sections of disadvantaged and low income
groups.
Investors shouldn’t be depending upon the rumors and TV news which might
affect the shares only for a short span of time.
The banks can expand its network by increasing its branches.Investments are
to be made in those banks which give fairly good returns, dividends every
year.
Financial inclusion initiatives also need to be taken care of as India fares very
poorly on this regard as half the population does not have access to banking
services.
63. 63
CONCLUSION
The economic growth of the country is an apt indicator for the growth of the
banking sector. The Indian economy is projected to grow at a rate of 5-6
percent 34 and the country’s banking industry is expected to reflect this
growth.
The onus for this lies in the capabilities of the Reserve Bank of India as an
able central regulatory authority, whose policies have shielded Indian banks
from excessive leveraging and making high risk investments.
During 2011-12, majority of public sector banks failed to meet the priority
sector target. Though at an aggregate level, foreign banks’ performance was
better as compared to domestic banks, bank-wise data revealed that some
foreign banks also failed to meet the priority sector lending target.
Performance of banks during 2011-12 was conditioned by slowdown in the
domestic economy coupled with higher interest rate environment.
There are emerging challenges, which appear in the forms of consolidation;
recapitalization, prudential regulation weak banks, and non-performing assets,
legal framework etc. needs urgent attention. The paper concludes that, from a
regulatory perspective, the recent developments in the financial sector have
led to an appreciation of the limitations of the present segmental approach to
financial regulation and favors adopting a consolidated supervisory approach
to financial regulation and supervision, irrespective of its structural design.
The Indian banking sector has been relatively well shielded by the central
bank and has managed to sail through most of the crisis. But, currently in light
of slowing domestic GDP growth, persistent inflation, asset quality concerns
and elevated interest rates, the investment cycle has been wavering in the
country.
64. 64
ANNEXURE
Balance Sheet of State
Bank of India
------------------- in Rs. Cr. -------------------
Mar '09 Mar '10 Mar '11 Mar '12
Capital and
liabilities 12 mths 12 mths 12 mths 12 mths
Total Share Capital 634.88 634.88 635.00 671.04
Equity Share
Capital
634.88 634.88 635.00 671.04
Share Application
Money
0.00 0.00 0.00 0.00
Preference Share
Capital
0.00 0.00 0.00 0.00
Reserves 57,312.82 65,314.32 64,351.04 83,280.16
Revaluation
Reserves
0.00 0.00 0.00 0.00
Net Worth 57,947.70 65,949.20 64,986.04 83,951.20
Deposits 742,073.13 804,116.23 933,932.81 1,043,647.36
Borrowings 53,713.68 103,011.60 119,568.96 127,005.57
Total Debt 795,786.81 907,127.83 1,053,501.77 1,170,652.93
Other Liabilities &
Provisions
110,697.57 80,336.70 105,248.39 80,915.09
Total Liabilities 964,432.08 1,053,413.73 1,223,736.20 1,335,519.22
Mar '09 Mar '10 Mar '11 Mar '12
Assets
12 mths 12 mths 12 mths 12 mths
Cash & Balances
with RBI
55,546.17 61,290.87 94,395.50 54,075.94
Balance with
Banks, Money at
Call
48,857.63 34,892.98 28,478.65 43,087.23
Advances 542,503.20 631,914.15 756,719.45 867,578.89
Investments 275,953.96 285,790.07 295,600.57 312,197.61
Gross Block 10,403.06 11,831.63 13,189.28 14,792.33
Accumulated
Depreciation
6,828.65 7,713.90 8,757.33 9,658.46
Net Block 3,574.41 4,117.73 4,431.95 5,133.87
Capital Work In
Progress
263.44 295.18 332.23 332.68
65. 65
Other Assets 37,733.27 35,112.76 43,777.85 53,113.02
Total Assets 964,432.08 1,053,413.74 1,223,736.20 1,335,519.24
Contingent
Liabilities
614,603.47 429,917.37 585,294.50 698,064.74
Bills for collection 152,964.06 166,449.04 205,092.29 201,500.44
Book Value (Rs) 912.73 1,038.76 1,023.40 1,251.05
Profit & Loss account of State
Bank of India
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Income
Interest Earned 106,521.45 81,394.36 70,993.92 63,788.43
Other Income 14,351.45 14,935.09 14,968.15 12,691.35
Total Income 120,872.90 96,329.45 85,962.07 76,479.78
Expenditure
Interest expended 63,230.37 48,867.96 47,322.48 42,915.29
Employee Cost 16,974.04 14,480.17 12,754.65 9,747.31
Selling and Admin Expenses 15,625.18 12,141.19 7,898.23 5,122.06
Depreciation 1,007.17 990.50 932.66 763.14
Miscellaneous Expenses 12,350.13 12,479.30 7,888.00 8,810.75
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00
Operating Expenses 37,563.09 31,430.88 24,941.01 18,123.66
Provisions & Contingencies 8,393.43 8,660.28 4,532.53 6,319.60
66. 66
Total Expenses 109,186.89 88,959.12 76,796.02 67,358.55
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 11,686.01 7,370.35 9,166.05 9,121.23
Extraordionary Items 21.28 0.00 0.00 0.00
Profit brought forward 6.05 0.34 0.34 0.34
Total 11,713.34 7,370.69 9,166.39 9,121.57
Preference Dividend 0.00 0.00 0.00 0.00
Equity Dividend 2,348.66 1,905.00 1,904.65 1,841.15
Corporate Dividend Tax 296.49 246.52 236.76 248.03
Per share data annualized
Earning Per Share (Rs) 174.15 116.07 144.37 143.67
Equity Dividend (%) 350.00 300.00 300.00 290.00
Book Value (Rs) 1,251.05 1,023.40 1,038.76 912.73
Appropriations
Transfer to Statutory Reserves 3,531.35 2,488.96 6,495.14
6,725.15
Transfer to Other Reserves 5,536.50 2,729.87 529.50
306.90
Proposed Dividend/Transfer to
Govt
2,645.15 2,151.52 2,141.41
2,089.18
Balance c/f to Balance Sheet 0.34 0.34 0.34 0.34
Total 11,713.34 7,370.69 9,166.39 9,121.57
67. 67
Balance Sheet of Punjab National
Bank
------------------- in Rs. Cr. -------------------
Capital and liabilities Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Total Share Capital 339.18 316.81 315.30 315.30
Equity Share Capital 339.18 316.81 315.30 315.30
Share Application Money 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00
Reserves 26,028.37 19,720.99 15,915.63 12,824.59
Revaluation Reserves 1,449.53 1,470.76 1,491.99 1,513.74
Net Worth 27,817.08 21,508.56 17,722.92 14,653.63
Deposits 379,588.48 312,898.73 249,329.80 209,760.50
Borrowings 37,264.27 31,589.69 19,262.37 4,374.36
Total Debt 416,852.75 344,488.42 268,592.17 214,134.86
Other Liabilities & Provisions 13,524.18 12,328.27 10,317.69 18,130.13
Total Liabilities 458,194.01 378,325.25 296,632.78 246,918.62
Mar '12 Mar '11 Mar '10 Mar '09
Assets 12 mths 12 mths 12 mths 12 mths
Cash & Balances with RBI 18,492.90 23,776.90 18,327.58 17,058.25
Balance with Banks, Money at Call 10,335.14 5,914.32 5,145.99 4,354.89
Advances 293,774.76 242,106.67 186,601.21 154,702.99
Investments 122,629.47 95,162.35 77,724.47 63,385.18
Gross Block 5,265.08 4,981.60 4,215.21 3,930.36
Accumulated Depreciation 2,096.22 1,876.01 1,701.74 1,533.25
Net Block 3,168.86 3,105.59 2,513.47 2,397.11
Capital Work In Progress 0.00 0.00 0.00 0.00
Other Assets 9,792.88 8,259.42 6,320.07 5,020.20
Total Assets 458,194.01 378,325.25 296,632.79 246,918.62
Contingent Liabilities
173,768.84 101,465.73 68,124.47 79,270.65
Bills for collection 50,981.22 37,449.53 33,215.78 31,941.43
Book Value (Rs) 777.39 632.48 514.77 416.74
68. 68
Profit & Loss account of Punjab
National Bank
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Income
Interest Earned 36,428.03 26,986.48 21,466.91 19,326.16
Other Income 4,202.60 3,612.58 3,565.31 2,919.69
Total Income 40,630.63 30,599.06 25,032.22 22,245.85
Expenses
Interest expended 23,013.59 15,179.14 12,944.02 12,295.30
Employee Cost 4,723.48 4,461.10 3,121.14 2,924.38
Selling and Admin Expenses 3,353.59 2,813.45 1,701.46 1,406.42
Depreciation 292.26 255.85 222.83 191.06
Miscellaneous Expenses 4,363.51 3,456.02 3,137.42 2,337.80
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00
Operating Expenses 9,405.85 8,367.96 5,761.36 5,026.81
Provisions & Contingencies 3,326.99 2,618.46 2,421.49 1,832.85
Total Expenses 35,746.43 26,165.56 21,126.87 19,154.96
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 4,884.20 4,433.50 3,905.36 3,090.88
Extraordionary Items 7.88 0.00 0.00 0.00
Profit brought forward 0.00 0.00 7.64 0.00
Total 4,892.08 4,433.50 3,913.00 3,090.88
Preference Dividend 0.00 0.00 0.00 0.00
Equity Dividend 746.19 696.99 693.67 630.61
Corporate Dividend Tax 121.05 113.07 116.43 107.17
Per share data annnualised
Earning Per Share (Rs) 144.00 139.94 123.86 98.03
Equity Dividend (%) 220.00 220.00 220.00 200.00
Book Value (Rs) 777.39 632.48 514.77 416.74
Appropriations
Transfer to Statutory Reserves 1,390.32 1,258.39 1,532.46 1,155.46
Transfer to Other Reserves 2,634.53 2,365.05 1,570.44 1,190.00
Proposed Dividend/Transfer to
Govt
867.24 810.06 810.10 737.78
69. 69
Balance c/f to Balance Sheet 0.00 0.00 0.00 7.64
Total 4,892.09 4,433.50 3,913.00 3,090.88
Balance Sheet of Canara Bank ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 443.00 443.00 410.00 410.00
Equity Share Capital 443.00 443.00 410.00 410.00
Share Application Money 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00
Reserves 20,181.82 17,498.46 12,129.11 9,629.61
Revaluation Reserves 2,065.14 2,098.36 2,132.68 2,168.16
Net Worth 22,689.96 20,039.82 14,671.79 12,207.77
Deposits 327,053.73 293,972.65 234,651.44 186,892.51
Borrowings 15,525.39 14,261.65 8,440.56 7,056.61
Total Debt 342,579.12 308,234.30 243,092.00 193,949.12
Other Liabilities & Provisions 8,891.12 7,804.64 6,977.30 13,488.91
Total Liabilities 374,160.20 336,078.76 264,741.09 219,645.80
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 17,795.14 22,014.79 15,719.46 10,036.79
Balance with Banks, Money at
Call
10,384.27 8,693.32 3,933.75 6,622.99
Advances 232,489.82 212,467.17 169,334.63 138,219.40
Investments 102,057.43 83,699.92 69,676.95 57,776.90
Gross Block 4,858.37 4,686.15 4,480.37 4,440.07
Accumulated Depreciation 2,000.84 1,841.74 1,620.99 1,510.61
Net Block 2,857.53 2,844.41 2,859.38 2,929.46
Capital Work In Progress 0.00 0.00 0.00 0.00
Other Assets 8,576.01 6,359.15 3,216.92 4,060.26
Total Assets 374,160.20 336,078.76 264,741.09 219,645.80
70. 70
Contingent Liabilities 166,419.96 111,805.73 110,627.02 136,851.39
Bills for collection 36,132.91 29,041.74 21,206.47 25,757.73
Book Value (Rs) 465.57 405.00 305.83 244.87
Profit & Loss account of
Canara Bank
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Income
Interest Earned 30,850.62 23,064.01 18,751.96 17,119.05
Other Income 2,949.75 2,826.98 3,000.82 2,427.10
Total Income 33,800.37 25,890.99 21,752.78 19,546.15
Expenditure
Interest expended 23,161.31 15,240.74 13,071.43 12,401.25
Employee Cost 2,973.09 2,954.84 2,193.70 1,877.15
Selling and Admin Expenses 2,245.56 1,817.82 2,164.65 1,540.27
Depreciation 156.89 151.36 155.13 173.64
Miscellaneous Expenses 1,980.82 1,700.34 1,146.44 1,481.42
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00
Operating Expenses 5,967.81 5,420.49 4,903.79 3,965.24
Provisions & Contingencies 1,388.55 1,203.87 756.13 1,107.24
Total Expenses 30,517.67 21,865.10 18,731.35 17,473.73
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 3,282.71 4,025.89 3,021.43 2,072.42
Extraordionary Items 0.00 0.00 0.00 0.00
Profit brought forward 0.00 0.00 0.00 0.00
Total 3,282.71 4,025.89 3,021.43 2,072.42
Preference Dividend 0.00 0.00 0.00 0.00
Equity Dividend 487.30 487.30 410.00 328.00
Corporate Dividend Tax 80.00 80.00 70.00 55.75
Per share data (annualised)
71. 71
Earning Per Share (Rs) 74.10 90.88 73.69 50.55
Equity Dividend (%) 110.00 110.00 100.00 80.00
Book Value (Rs) 465.57 405.00 305.83 244.87
Appropriations
Transfer to Statutory Reserves 1,530.15 1,765.29 1,676.35 1,508.64
Transfer to Other Reserves 1,185.26 1,693.30 865.08 180.03
Proposed Dividend/Transfer to
Govt
567.30 567.30 480.00 383.75
Balance c/f to Balance Sheet 0.00 0.00 0.00 0.00
Total 3,282.71 4,025.89 3,021.43 2,072.42
Balance Sheet of Bank Of
Baroda
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Capital and liabilities
Total Share Capital 412.38 392.81 365.53 365.53
Equity Share Capital 412.38 392.81 365.53 365.53
Share Application Money 0.00 0.00 0.00 0.00
Preference Share Capital 0.00 0.00 0.00 0.00
Reserves 27,064.47 20,600.30 14,740.86 12,470.01
Revaluation Reserves 0.00 0.00 0.00 0.00
Net Worth 27,476.85 20,993.11 15,106.39 12,835.54
72. 72
Deposits 384,871.11 305,439.48 241,044.26 192,396.95
Borrowings 23,573.05 22,307.85 13,350.09 5,636.09
Total Debt 408,444.16 327,747.33 254,394.35 198,033.04
Other Liabilities & Provisions 11,400.46 9,656.73 8,815.97 16,538.15
Total Liabilities 447,321.47 358,397.17 278,316.71 227,406.73
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 21,651.46 19,868.18 13,539.97 10,596.34
Balance with Banks, Money at Call 42,517.08 30,065.89 21,927.09 13,490.77
Advances 287,377.29 228,676.36 175,035.29 143,985.90
Investments 83,209.40 71,260.63 61,182.38 52,445.88
Gross Block 4,921.59 4,548.16 4,266.60 3,954.13
Accumulated Depreciation 2,580.09 2,248.44 1,981.84 1,644.41
Net Block 2,341.50 2,299.72 2,284.76 2,309.72
Capital Work In Progress 0.00 0.00 0.00 0.00
Other Assets 10,224.73 6,226.40 4,347.22 4,578.12
Total Assets
447,321.46 358,397.18 278,316.71 227,406.73
Contingent Liabilities 134,552.25 112,272.64 77,997.01 64,745.82
Bills for collection 40,717.28 33,735.67 27,949.60 22,584.64
Book Value (Rs) 668.34 536.16 414.71 352.37
73. 73
Profit & Loss account of Bank Of
Baroda
------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Income
Interest Earned 29,673.72 21,885.92 16,698.34 15,091.58
Other Income 3,422.33 2,809.19 2,806.36 2,757.66
Total Income 33,096.05 24,695.11 19,504.70 17,849.24
Expenditure
Interest expended 19,356.71 13,083.66 10,758.86 9,968.17
Employee Cost 2,985.58 2,916.78 2,350.88 2,348.13
Selling and Admin Expenses 2,589.44 1,885.00 1,627.56 885.24
Depreciation 276.57 243.04 230.86 230.50
Miscellaneous Expenses 2,880.80 2,324.94 1,478.21 2,189.99
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00
Operating Expenses 6,727.59 5,669.88 4,711.23 3,844.66
Provisions & Contingencies 2,004.80 1,699.88 976.28 1,809.20
Total Expenses 28,089.10 20,453.42 16,446.37 15,622.03
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 5,006.96 4,241.68 3,058.33 2,227.20
Extraordionary Items 0.00 0.00 0.00 0.00
Profit brought forward 0.00 0.00 0.00 0.00
Total 5,006.96 4,241.68 3,058.33 2,227.20
Preference Dividend 0.00 0.00 0.00 0.00
74. 74
Equity Dividend 812.29 753.35 639.26 383.56
Corporate Dividend Tax 0.00 0.00 0.00 0.00
Per share data annualised
Earning Per Share (Rs) 121.79 108.33 83.96 61.14
Equity Dividend (%) 170.00 165.00 150.00 90.00
Book Value (Rs) 668.34 536.16 414.71 352.37
Appropriations
Transfer to Statutory Reserves 1,740.81 1,387.87 1,162.07 1,136.23
Transfer to Other Reserves 2,453.86 2,100.46 1,257.00 707.41
Proposed Dividend/Transfer to
Govt
812.29 753.35 639.26 383.56
Balance c/f to Balance Sheet 0.00 0.00 0.00 0.00
Total 5,006.96 4,241.68 3,058.33 2,227.20
Balance Sheet of Bank Of India ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09
12 mths 12 mths 12 mths 12 mths
Capital and liabilities
