NAME : ANKUSH GOEL

ROLL NO : 11001532006

PROJECT TITLE : ANALYSIS OF FINANCIAL STATEMENT OF TOP 3 INDIAN BANKS

SUBJECT AREA : FINANCE

NAME OF THE GUIDE : Dr. SATPAL

Signature of the Student- _______________________

Signature of the Guide- ________________________

FOR OFFICE USE ONLY

SYNOPSIS GUIDE

APPROVED APPROVED

NON APPROVED NON APPROVED

COMMENT/ SUGGESTION FOR REFORMATION OF PROJECTS

SIGNATURE:

DATE:

INTRODUCTION

The banking system is an integral part of an economy. It is one of the many institutions that

impinges on the economy and affect its performance. Economists have expressed a variety

of opinions on the effectiveness of the banking systems in promoting or facilitating

economic development. As an economic institution. the bank is expected to be more directly

and more positively related to the performance of the economy than most non-economic

institutions. Banks are considered to be the nerve centre of economies and finance of a

nation and the barometer of its economic perspective. They are not merely dealers in money

but are in fact dealers in development. Banks are important agencies for the generation of

Savings of the community. They are also the main agents of credit. They divert and employ

the funds to make possible fuller utilization of the resources of a nation

Under this I have done the comparative analysis of financial statement of top 3 Indian banks

that are SBI, ICICI and PNB.

In this I have done analysis of various ratios

Profitability ratio

Leverage ratio

Payout ratio

Liquidity ratio

Financial ratios are widely used for modeling purposes both by practitioners and

researchers. The firm involves many interested parties, like the owners, management,

personnel, customers, suppliers, competitors, regulatory agencies, and academics, each

having their views in applying financial statement analysis in their evaluations. Practitioners

use financial ratios, for instance, to forecast the future success of companies, while the

researchers' main interest has been to develop models exploiting these ratios. Many distinct

areas of research involving financial ratios can be discerned

LITERATURE REVIEW:-

1. DR. K. SRIHARSHA REDDY (March 2012)

In the present study an attempt is made to evaluate relative performance of banks in India using CAMEL

approach. It is found that public sector banks have significantly improved indicating positive impact of the

reforms in liberalizing interest rates, rationalizing directed credit and Investments and increasing

competition.

2. Jain (2006)

. The author classified the various ratios under three categories, viz. Costing Ratio, Returns /

Yield Ratio and Spread Ratios. Such ratios can be used to understand a bank’s financial

condition, its operation and attractiveness as an investment. He explained that such ratio

analysis can be used to make an inter-branch comparison for investigating the strengths and

weaknesses of individual bank’s and to enable them to take strategic decisions and initiate

necessary corrective actions . Apart from profitability ratios, the author mentioned the

following categories of ratios for undertaking comparative performance of banks, viz.

Productivity Ratios, NPA Ratio, Efficiency Ratio, Ratios on Shares (Shareholders front).

3. Singla (2008)

The author examined how financial management plays a crucial role in the growth of

banking. During 2005-06, bank credits witnessed a strong expansion and a steady growth in

deposits was also observed. The study is conducted by examining the profitability of the

selected sixteen banks (BANKEX-based) for the period of six years (2000-01 to 2006-07). For

this purpose, the researcher computed various (Nine) ratios, which throw light on the various

dimensions of the business. The study revealed that the profitability position was reasonable

during the period of study when compared with previous years. Return on investment (ROI)

proved that the overall profitability and the position of the selected banks were sustained at

a moderate rate. Finally, the researcher predicted that with the increasing level of

globalization of Indian banking industry and the evolution of universal banks, competition in

the banking industry would intensify further.

4. DR.D.GURUSWAMY (January 2012)

On the basis of analysis of profitability ratio it is printout that the profit in relation to working fund shows

fluctuating trend during the study period in all the banks. The analysis reveals that associate banks has

outstanding performance in respect of earning profits in relation to working fund compared to SBI. Further,

there is no significant difference in profit after tax in relation to working fund ratio between the years and

banks as per the ANOVA.

5. V K Gupta , Monika Aggarwal (2012)

Overall performance index revealed that new private sector banks occupied the top position in 1995-96

and 1999-2000 and thereafter they occupied the second slot and that foreign banks maintained their top

position in 1991-92, 2003-04 and 2007-08. The performance of SBI group, nationalized banks and old

private banks were below the mean value of 246.01 in all the selected years. Only new private banks and

foreign banks were above the mean ratio.

6. Kewaljeet (1999)

The author made an attempt to analyze the profitability performance of State Bank of Patiala

keeping in mind the changing economic reward. According to the author, percentage in

growth in gross income after the reform process started in1991-92 decreased from a growth

of 201.92 per cent during 1985-86 to 1989-90 to a growth of 74.80 per cent during 1990-91

to 1994-95 (the period of liberalization). As a result of liberalization, there is continuous

decline in the profits of commercial banks.

7. Brinda and Dubey (2007)

They studied the performance of PSBs vis-à-vis other bank groups, i.e., private sector banks

and foreign banks present in India. They tested the performance of different bank groups on

different profitability and efficiency parameters and through econometric model. In their

paper, they tested the hypothesis that government ownership per se makes public

enterprises inefficient. For evaluating a bank’s performance, they have used the two

profitability measures, i.e., return on assets (ROA) and operating profit ratio (OPR). The

above observations support the econometric findings of their study that PSBs are not

inherently less efficient than private sector banks and foreign banks, given the regulatory

environment

8. Prasantha (1997)

He has evaluated the performance of SBH by selecting certain parameters like deposit

mobilisation, analysis of advances, credit deposit ratios, interest spreads, employee

productivity,customer services, profit as a percentage of working funds etc. One major

conclusiondrawn by the researcher is that the profits of SBH showed an increasing

trend,indicating a more than a proportionate increase in spread, than in burden. It has

beenbrought out that there is a gradual increase in the percentage of profit on the

workingfunds over the study period. According to the study, there is decline in operating

costs,responsiveness of the SBH during the study period which is a clear symptom of cost

effectiveness/ productivity which has resulted in a profit

9. Pathak (2003)

while comparing the financial performance of private sector banks since 1994-95, explained

that the private sector banks have delivered a new banking experience. Looking to the

growing popularity of services provided by them, their public sector counterparts have

started emulating them. He studied the performance of these banks in terms of financial

parameters like deposits, advances, profits, return on assets and productivity.In this paper,

the author made an attempt to have an insight into the financial operation of these

institutions. A sample of 5 banks has been taken for financial analysis. Financial track record

of all these banks was evaluated, and their financial performance was compared. The

working of all the constituents was satisfactory but the HDFC Bank emerged as a top

performer among them followed closely by the ICICI Bank.

10. Arora and Kaur (2006)

They made an attempt to review the performance of banking sector in India during the post-

reforms period. Banking sector being an integral part of Indian financial system has

undergone dramatic changes reflecting the ongoing economic and financial sector reforms.

The main objective of these reforms has been to strengthen the banking system amongst

international best practices and standards, which will have lasting effect on the entire fabric

of Indian financial system. These financial sector reforms have stimulated greater

competition convergence and consolidation in Indian banking sector. For the purpose of

analysis, banks have been broadly categorized into fourcategories, i.e., private sector,

foreign banks, nationalized banks, and SBI and itsassociates. They made a comparative

appraisal of banks on the basis of seven keyperformance measures such as returns on assets

(ROA), capital asset, risk weightedratio, NPA to net advances, business per employee, net

profitability ratio, NPA leveland off-balance-sheet operations of commercial banks for a time

period of 9 years, i.e.,1996-2005.

OBJECTIVES

Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise. For that there are some objectives which are described as under

EARNING CAPACITY OR PROFITABILITY

COMPARATIVE POSITION IN RELATION TO OTHER FIRMS

EFFICIENCY OF MANAGEMENT

FINANCIAL STRENGTH

SOLVECNY OF THE FIRM

RESEARCH METHODOLOGY:-

1. RESEARCH DESIGN

Descriptive research design will be used in this research. It includes fact

finding inquiries of different kinds. The major purpose of descriptive research is

description of the state of the affairs, as it exists at present. 

2. SOURCES OF DATA COLLECTION

This study involves the secondary data . sources of the secondary data are the concerned

websites , news paper.

3. SAMPLING DESIGN

Sampling may be defined as the selection of some part of an aggregate or totality on

the basis of which a judgment or inference about the aggregate or totality is made. In simple words, it is the process of obtaining information about the population by examining only a part of it.  

a. Sampling Technique –convenience sampling.  b. Sample Size –three banks (PNB, ICICI and SBI).

LIMITATIONS

Limitations of financial statements - Ratios are based only on the information

which has been recorded in the financial statements

Lack of adequate standard- No fixed standard can be laid down for ideal ratios

Limited use of single ratios- A single ratio, usually, does not convey much of a

sense. To make a better interpretation, a number of ratios have to be calculated which

is likely to confuse the analyst than help him in making any good decision

Personal bias - Ratios are only means of financial analysis and not an end in itself.

Ratios have to interpret and different people may interpret the same ratio in different

way.

Incomparable - Not only industries differ in their nature, but also the firms of the

similar business widely differ in their size and accounting procedures etc. It makes

comparison of ratios difficult and misleading

Study confined only to 3 banks

CHAPTERISATION

Introduction

Review of literature

Bank profile

Research methodology

Objective

Analysis

Conclusions

Recommendations

Limitations

Bibliography

Annexure

REFERENCES

Dr. k. sriharsha Reddy “Relative Performance of Commercial banks in India using CAMEL Approach” ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 3, March 2012, ISSN 2231 5780.

Jain, V. (2006), “Ratio Analysis: An Effective Tool for Performance Analysis inBanks”, PNB Monthly Review, November, pp.27-29.

Singla, H. (2008), “Financial Performance of Banks in India”, The ICFAI Journal ofBank Management, Vol.7, No.1, February, pp.50-62.

Dr. D. Guruswamy, “ Analysis of Profitability Performance Of SBI and its Associates”, ZENITH International Journal of Business Economics & Management Research Vol.2 Issue 1, January 2012, ISSN 2249 8826.

V K Gupta , Monika Aggarwal (2012), “Performance Analysis of Banks in India - Pre and Post World Trade Organization (General Agreement on Trade in Services)”, European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839.

Kewaljeet (1999), “Profitability Performance of Nationalised Banks: Some Issues

Brinda, J.; and Dubey, A. K. (2007), “Performance of Public Sector Banks: An

Econometric Analysis”, The Indian Banker, Vol.2, No.12, pp. 26-34.

Prasantha (1997), “Performance of Public Sector Commercial Banks: A Case Study of State

Bank of Hyderabad”, Indian journal of commerce, L 196,Part I March 1992.

Pathak, B. (2003), “A Comparison of the Financial Performance of Private Sector

Banks”, Finance India, Vol.17, No.4, pp.1345-1356.

Arora, S.; and Kaur, S. (2006), “Financial Performance of Indian Banking Sector inPost-Reform Era”, The Indian Journal of Commerce, Vol.59, No.1, pp.96-105.