Financial Model of a Banking Industry- Itt

8/3/2019 Financial Model of a Banking Industry- Itt

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ICICI BANK Presented by: Nikita Wanwari & Binita Anchan


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CONTENTS

WHAT IS BANKING?

BANKING SYSTEM IN INDIA

ICICI

BUSINESS OBJECTIVES

BALANCE SHEET

TREND ANALYSIS

RATIO ANALYSIS

CURRENT RATIO

LIQUIDITY RATIO

EARNINGS PER SHARE

DIVIDEND PER SHARE

NET PROFIT RATIO DEBT-EQUITY RATIO

CREDIT DEPOSIT RATIO

CONCLUSION

SUGGESTIONS

BIBLIOGRAPHY


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INTRODUCTION OF BANKING

Definition Of Bank:

Banking Means "Accepting Deposits for the purpose oflending or Investment of deposits of money from thepublic, repayable on demand or otherwise and withdrawby cheque, draft or otherwise."

-Banking Companies

(Regulation) Act,1949


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Banking system inIndia

Without a sound and effective banking system in India itcannot have a healthy economy. The banking system ofIndia should not only be hassle free but it should be able to

meet new challenges posed by the technology and anyother external and internal factors.

For the past three decades India's banking system hasseveral outstanding achievements to its credit. The most

striking is its extensive reach. It is no longer confined toonly metropolitans or cosmopolitans in India. In fact, Indianbanking system has reached even to the remote corners ofthe country. This is one of the main reasons of India's

growth process.


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ICICI BANK

ICICI Bank (BSE: ICICI) (formerly Industrial Credit and InvestmentCorporation of India) is India's largest private sectorbank by marketcapitalization and second largest overall in terms of assets. ICICI Bankis also the largest issuer of credit cards in India. ICICI Bank has got itsequity shares listed on the stock exchanges at Kolkata and Vadodara,

Mumbai and the National Stock Exchange of India Limited, and itsADRs on the New York Stock Exchange (NYSE). The Bank isexpanding in overseas markets and has the largest internationalbalance sheet among Indian banks. ICICI Bank offers a wide range ofbanking products and financial services to corporate and retail

customers through a variety of delivery channels and specializedsubsidiaries and affiliates in the areas of investment banking, life andnon-life insurance, venture capital and asset management. (These dataare dynamic.) ICICI Bank is also the largest issuer of credit cards inIndia.
http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=ICICIhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Vadodarahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/American_Depositary_Receipthttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/American_Depositary_Receipthttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Vadodarahttp://en.wikipedia.org/wiki/Kolkatahttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Market_capitalisationhttp://en.wikipedia.org/wiki/Bankhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Indiahttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=ICICIhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchange


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Type Private

BSE & NSE:ICICI,NYSE: IBN

Industry Banking

InsuranceCapital Markets and allied industries

Founded 1955 (as Industrial Credit and Investment Corporation of )

Headquarters ICICI Bank Ltd.,,Bandra Kurla,Mumbai, India

Key people K.V. Kamath,ChairmanChanda Kochhar, Managing Director & CEOSandeep Bakhshi, Deputy Managing DirectorN.S. Kannan, Executive Director & CFOK. Ramkumar, Executive Director

Sonjoy Chatterjee, Executive Director

Products Loans, Credit Cards, Savings, Investment vehicles, Insurance etc.

Revenue USD 15.06 billion

Total assets USD 120.61 billion (at March 31, 2009.)

Website www.icicibank.com
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/ibn.htmlhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.iciciprulife.com/public/About-us/ProfileTeam-NSKannan.htm&ei=Hm15Sv_kCob6kAXMhZS7Bg&usg=AFQjCNGrNWm9KBeFK8ECi6w5fJ896TdmpA&sig2=xulVedKfizzwojKQN7-YlAhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=18&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/ramkumarresume.htm&ei=Xm15SsvHEIHs6APR74GlBQ&usg=AFQjCNF8v8x13iVBwIJflxdj3KFXCQiZmA&sig2=UjBAMVFDRl2e9JqC1kdC8Ahttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/SonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Websitehttp://www.icicibank.com/http://www.icicibank.com/http://en.wikipedia.org/wiki/Websitehttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/USDhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Product_(business)http://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/SonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/SonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/SonjoyChatterjeeresume.htm&ei=7215SouIJI6PkAWa_fi5Bg&usg=AFQjCNFLjYIJlKTZeC_Nfh5SzIKaKReSQA&sig2=PwAnEhYQsj--jud3ytWGCwhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=18&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/ramkumarresume.htm&ei=Xm15SsvHEIHs6APR74GlBQ&usg=AFQjCNF8v8x13iVBwIJflxdj3KFXCQiZmA&sig2=UjBAMVFDRl2e9JqC1kdC8Ahttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=18&url=http://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/ramkumarresume.htm&ei=Xm15SsvHEIHs6APR74GlBQ&usg=AFQjCNF8v8x13iVBwIJflxdj3KFXCQiZmA&sig2=UjBAMVFDRl2e9JqC1kdC8Ahttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.iciciprulife.com/public/About-us/ProfileTeam-NSKannan.htm&ei=Hm15Sv_kCob6kAXMhZS7Bg&usg=AFQjCNGrNWm9KBeFK8ECi6w5fJ896TdmpA&sig2=xulVedKfizzwojKQN7-YlAhttp://www.google.co.in/url?sa=t&source=web&ct=res&cd=1&url=http://www.iciciprulife.com/public/About-us/ProfileTeam-NSKannan.htm&ei=Hm15Sv_kCob6kAXMhZS7Bg&usg=AFQjCNGrNWm9KBeFK8ECi6w5fJ896TdmpA&sig2=xulVedKfizzwojKQN7-YlAhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://www.icicibank.com/pfsuser/aboutus/newsroom/executivebio/sandeepresume.htmhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Capital_Marketshttp://en.wikipedia.org/wiki/Insurancehttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Industryhttp://www.nyse.com/about/listed/ibn.htmlhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/Private_companyhttp://en.wikipedia.org/wiki/Types_of_business_entity


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BUSINESS OBJECTIVE

Vision

To be the leading provider of financial services in India and a major globalbank.

Mission

We will leverage our people, technology, speed and financial capital to: bethe banker of first choice for our customers by delivering high quality, world-class service.

Expand the frontiers of our business globally.

Play a proactive role in the full realization of Indias potential.

Maintain a healthy financial profile and diversify our earnings across

businesses and geographies. Maintain high standards of governance and ethics.

Contribute positively to the various countries and markets in which weoperate.

Create value for our stakeholders.


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PARTICULARS 2005-2006 2006-2007 2007-2008 2008-2009

Absolutechange

% ofchange

Absolutechange

% of change Absolutechange

% of change Absolutechange

% of change

CAPITAL ANDLIABILITIES:Capital 153.08 14 9.51 0.8 213.34 17 0.61 .04

Reserves andsurplus

9502.96 80 2097.76 10 21943.61 94 3062.2 7

Deposits 65264.39 65 65427.02 40 13920.86 6 (26083.23) (11)

Borrowings 4977.41 15 12734.12 33 14392.4 28 1675.26 2.5

Other Liabilitiesand Provisions

3831.71 18 13000.76 51.5 4666.75 12 851.04 2

TOTAL CAPITAL ANDLIABILITIES

83729.55 50 93269.17 37 55136.96 16 (20494.12) (5.1)

ASSETS:

Investments 21060.04 42 19710.45 27.5 20196.5 22 (8396.03) (7.5)

Advances 54757.96 60 49702.49 34 29750.48 15 (7305.23 (3.25)

Fixed assets (57.32) (1.4) (57.3) (1.4) 185.47 5 (307.27) (7.5)

Capital Work InProgress

51.64 54 41.72 28.2 (189.66) -100 0.00 0.00

Current assets 7917.23 37 23871.8 81 5194.17 10 (4485.58) (8)

TOTAL ASSETS: 83729.55 50 93269.16 37 55136.96 16 (20494.11) (5.1)

Comparative Balance Sheet Of ICICI Bank From 2005-2006 To 2008-2009


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2005 2006 2007 2008 2009

CAPITAL ANDLIABILITIES:

Total Share Capital 1086.75 1239.83 1249.34 1462.68 1463.29

Equity ShareCapital

736.75 889.83 899.34 1112.68 1113.29

Share ApplicationMoney

0.02 0.00 0.00 0.00 0.00

Preference ShareCapital

350.00 350.00 350.00 350.00 350.00

Reserves 11813.20 21316.16 23413.92 45357.53 48419.73

RevaluationReserves

0.00 0.00 0.00 0.00 0.00

Net Worth 12899.97 22555.99 24663.26 46820.21 49883.02

Deposits 99818.78 165083.17 230510.19 244431.05 218347.82

Borrowings 33544.50 38521.91 51256.03 65648.43 67323.69

Total Debt 146263.25 226161.17 306429.48 356899.69 335554.53

Other LiabilitiesAnd Provisions

21396.17 25227.88 38228.64 42895.39 43746.43

Total Liabilities 167659.42 251388.95 344658.12 399795.08 379300.96


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ASSETS:

Cash AndBalances WithRBI

6344.90 8934.37 18706.88 29377.53 17536.33

Balances WithBanks, Money AtCall

6585.07

8105.85

18414.45

8663.60

12430.23

Advances 91405.15 146163.11 195865.60 225616.08 218310.85

Investments 50487.35 71547.39 91257.84 111454.34 103058.31

Gross Block 5525.65 5968.57 6298.56 7036.00 7443.71

AccumulatedDepreciation

1487.61 1987.85 2375.14 2927.11 3642.09

Net Fixed Assets 4038.04 3980.72 3923.42 4108.89 3801.62

Capital Work In

Progress

96.30 147.94 189.66 0.00 0.00

Other Assets 8702.59 12509.57 16300.26 20574.63 24163.62

Total Assets 167659.40 251388.95 344658.11 399795.07 379300.96


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2005 2006 2007 2008 2009

INCOME:

Interest Earned 9409.90 13784.49 22994.29 30788.34 31092.55

Other Income 3416.14 4983.14 5929.17 8810.77 7603.72

Total Income 12826.04 18767.63 28923.46 39599.11 38696.27

EXPENDITURE:

InterestExpended

6570.89 9597.45 16358.50 23484.24 22725.93

Operating

Expenses

3299.15 4479.51 6690.56 8154.18 7045.11

Total Expenses 9870.04 14076.96 23049.06 31638.42 29771.04

Operating Profit 2956 4690.67 5874.40 7960.69 8925.23

Other ProvisionAndContigencies

428.80 1594.07 2226.36 2904.59 3808.26

Provision ForTax 522 556.53 537.82 898.37 1358.84

Net Profit 2005.20 2540.07 3110.22 4157.73 3758.13

ExtraordinaryItems

0.00 0.00 0.00 0.00 (0.58)

Profit B/F 53.09 188.22 293.44 998.27 2436.32

Total 2058.29 2728.29 3403.66 5156.00 6193.87


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Total 2058.29 2728.29 3403.66 5156.00 6193.87

PreferenceDividend

0.00 0.00 0.00 0.00 0.00

Equity Dividend 632.96 759.33 901.17 1227.70 1224.58

CorporateDividend Tax

90.10 106.50 153.10 149.67 151.21

Pershare Data

Eps(Rs.) 27.22 28.55 34.59 37.37 33.78

Equity

Dividend(%)

85.00 85.00 100.00 110.00 110.00

Book Value(Rs) 170.35 249.55 270.37 417.64 445.17

Appropriations

Transfer ToStatutory Reserve

547.00 248.69 1351.12 1342.31 2008.42

Transfer To OtherReserve

600.01 1320.34 0.00 0.01 0.01

ProposedDividend/TransferTo Govt

723.06 865.83 1054.27 1377.37 1375.79

Balance C/F ToBalance Sheet

188.22 293.44 998.27 2436.32 2809.65

Total 2058.29 2728.30 3403.66 5156.01 6193.87


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FINDINGS

Profit before tax for the year ended March 31, 2009 (FY2009) was Rs.5,117 crore (US$ 1,009 million), compared to Rs. 5,056 crore (US$ 997million) for the year ended March 31, 2008 (FY2008).

Profit after tax for FY2009 was Rs. 3,758 crore (US$ 741 million)compared to Rs. 4,158 crore (US$ 820 million) for FY2008 due to thehigher effective tax rate on account of lower proportion of income taxableas dividends and capital gains.

Net interest income increased 15% from Rs. 7,304 crore (US$ 1,440million) for FY2008 to Rs. 8,367 crore (US$ 1,650 million) for FY2009.While the advances declined marginally year-on-year, the net interestincome increased due to improvement in net interest margin from 2.2% inFY2008 to 2.4% in FY2009.

Operating expenses (including direct marketing agency expenses)decreased 14% to Rs. 6,835 crore (US$ 1,348 million) in FY2009 fromRs. 7,972 crore (US$ 1,572 million) in FY2008. The cost/average assetratio for FY2009 was 1.8% compared to 2.2% for FY2008.

The branch network of the Bank has increased from 755 branches atMarch 31, 2007 to 1,438 branches at April 24, 2009. The Bank is also inthe process of opening 580 new branches which would expand thebranch network to about 2 000 branches ivin the Bank a wide


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TREND ANALYSISParticulars

2005 2006 2007 2008 2009

Deposits

100

165

231

245

219

Advances 100 160 214 247 239

Net profit 100 127 155 207 187

Trend graph of ICICI Bank

0

50

100

150

200

250

300

2005 2006 2007 2008 2009

Years

percentage(%)

DEPOSITS

ADVANCES

NET PROFIT

There is a continuous increasein the deposits till the yearending 2008 followed by adownfall in the year ending2009 due to repayment ofdeposits in this year.Similarly advances also showsas increasing trend till the yearending 2008 followed by aslight downfall in the yearending 2009.There has been a substantialincrease in net profit till the yearyear ending 2008.In four yearsit has been more than double.The overall performance of the

bank is satisfactory.


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Ratio Analysis

Absolute figures expressed in financial statementsby themselves are meaningfulness. These figuresoften do not convey much meaning unless

expressed in relation to other figures. Thus, it canbe said that the relationship between two figures,expressed in arithmetical terms is called a ratio.


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LIQUID RATIO

Liquid ratio is also known as Quick or

Acid Test Ratio. Liquid assets refer to

assets which are quickly convertible into

cash. Current Assets other stock and

prepaid expenses are considered asquick assets.

YEAR TOTALQUICK

ASSETS

TOTALCURREN

TLIABILITIES

LIQUIDRATIO

2005 12929.97 21396.16 0.60

2006 17040.22 25227.88 0.67

2007 37121.33 38228.64 0.97

2008 38041.13 42895.38 0.88

Liquid Ratio of ICICI Bank for the period of 2005-2009

0.60.67

0.97

0.88

0.68

0

0.2

0.4

0.6

0.8

1

1.2

2005 2006 2007 2008 2009

Years

R

atio

Liquid Ratio

Though it is not equal tothe ideal liquid ratio of1:1 but it is still undercontrol. Thus it can be

concluded that theliquidity position of the

bank is quite satisfactory.

Quick Ratio = Total Quick AssetsTotal Current Liabilities

Quick Assets = Total Current AssetsInventory


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EARNING PER SHARE

Earning Per Equity Share = Net Profit after TaxPreferenceDividend

No. of Equity shares

The earning per share of the company helps indetermining the market price of the equity shares ofthe company. A comparison of earning per share of

the company with another will also help in decidingwhether the equity share capital is being effectivelyused or not. It also helps in estimating the companyscapacity to pay dividend to its equity shareholders.

Year Net Income No Of Equity EPS


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Earnings Per Share Ratio of ICICI Bank for the

period of 2005-2009

27.22 28.55

34.5937.37

33.78

0

5

10

15

20

25

30

35

40

2005 2006 2007 2008 2009Years

Ratio

Earnings Per Share

The earnings per share forthe period under study

shows a promisingincrease. it suggests that

bank has better profitability

position and in future it canbe a better or attractive

channel of investment forshareholders.

Year Net Income

Available For

Shareholders

(Rs. In crores)

No. Of Equity

Shares

(Rs. In crores)

EPS

2005 2005.2 73.6716 27.22

2006 2540.07 88.9823 28.55

2007 3110.22 89.9266 34.59

2008 4157.73 111.2687 37.37

2009 3758.13 111.325 33.78


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DIVIDEND PER SHARE

Dividend Per Share = Dividend Paid To EquityShareholders

No. Of Equity Shares

It is expressed by dividing dividend paid to equityshareholders by no. of equity shares. This showsthe per share dividend given to equity

shareholders. It is very helpful for potentialinvestors to know the dividend paying capacity ofthe company. It affects the market value of thecompany.

nce e v en per s are


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Dividend Per Share Ratio of ICICI Bank for the

period of 2005-2009

8.59 8.53

10.0211.03 11

0

2

4

6

8

10

12

2005 2006 2007 2008 2009

Years

Ra

tio

Dividend Per ShareRatio

nce e v en per s arehas shown a promising

increase for the period understudy. It shows that the bankis following a sound dividend

policy and is capable ofdistributing higher dividends.In this way the investors willfeel investing in capital of the

bank a much beneficialoption and will be reluctant

to withdraw capital for a longtime.

Year Debt

(Rs. In

crores)

Equity

(Rs. In

crores)

Debt

Equity

Ratio

2005 154759.45 12899.97 11.99

2006 228832.96 22555.99 10.14

2007 319994.86 24663.26 12.97

2008 352974.87 46820.21 7.53

2009 329417.94 49883.02 6.6

NET PROFIT RATIO


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NET PROFIT RATIO:Net Profit Ratio = Net Profit X 100

Net Sales

This ratio helps in determining the efficiency with which affairs of thebusiness are being managed. An increase in the ratio over the previousperiod indicates improvement in the operational efficiency of thebusiness. The ratio is thus on effective measure to check the profitability

of business.Year Net Profit(Rs. Incrores)

Sales(Rs. In

crores)

Net ProfitRatio

(in %)

2005 2005.2 9409.9 21.3

2006 2540.07 13784.49 18.42

2007 3110.22 22994.29 13.52

2008 4157.73 30788.34 13.5

2009 3758.13 31092.55 12.08

Net Profit Ratio of ICICI Bank for the period of 2005-2009

21.3

18.42

13.52 13.512.08

0

5

10

15

20

25

2005 2006 2007 2008 2009

Years

Ratio(%)

Net Profit Ratio

Although both the sales and net profithave increased during the above periodbut the Net Profit Ratio of the bank isdeclining continuously. This is becauseof the reason that net profits have notincreased in the same proportion as ofthat as sales.

RETURN ON CAPITAL EMPLOYED:


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RETURN ON CAPITAL EMPLOYED:It establishes relationship betweenprofit before interest and tax andcapital employed. It indicates thepercentage of return on the total capitalemployed in the business.This ratio is

also known as Return On Investment.It measures the overall efficiency andprofitabilityof the business in relation toinvestment made in business. It alsoshows how efficiently the resources areused in the business.comparison ofone unit with that of the other orperformance in one year with that ofthe same unit is possible. Return On Capital Employed of ICICI Bank for the

period of 2005-2009

6.22

5.61

6.52

7.998.29

0

1

2

3

4

5

6

7

8

9

2005 2006 2007 2008 2009

Years

Ratio

Return On Capital Employed

Year Net Profit Before

Interest And Tax(Rs. In crores)

Capital

Employed(Rs. In crores)

Return On

Capital

Employed (in

%)

2005 9098.09 146263.25 6.22

2006 12694.05 226161.17 5.61

2007 20006.54 306429.48 6.52

2008 28540.34 356899.69 7.99

2009 27842.9 335554.53 8.29

The above table exhibit thereturn on capital employed ratioof the bank for last fiveyears.This ratio measures theearning of the net assets of thebusiness. The ratio was 6.22%

in year 2005. After that it raisedto the tune of5.61%,6.52%,7.99% and 8.29%in year 2006, 2007, 2008 andyear 2009 respectively. It lead tothe conclusion bank rising butvery little proportion of return on

capital employed.

PROPRIETORY RATIO:


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PROPRIETORY RATIO:Proprietory Ratio = Shareholders Fund

Total Assets

It helps to determine the long-term solvency of a company.This ratiomeasures the protection available to the creditors.Higher theratio,lesser is the likelihood of insolvency in future,as the managementhas to use lessor debts and vice versa.Thus,this ratio is of greatimportance to the creditors. Proprietory Ratio of ICICI Bank for the period of

2005-2009

0.070.08

0.07

0.120.13

0

0.02

0.040.06

0.08

0.1

0.12

0.14

2005 2006 2007 2008 2009

Years

Ratio

Proprietory Ratio

Years Shareholder's Funds

(Rs. In crores)

Total Assets

(Rs. In crores)

Proprietory

Ratio

2005 12899.97 167659.4 0.07

2006 22555.99 251388.95 0.08

2007 24663.26 344658.11 0.07

2008 46820.21 399795.07 0.12

2009 49883.02 379300.96 0.13

It was 7% in 2005,After that was 8% in year 2006.Similarly it was once again reduced to 7 % in theyear 2007. After 2007 it registered increase and was12% and 13% in the year 2008 and 2009respectively. Hence it leads to the conclusion ownershave less than 13% stake in the total assets of thebank. It is not a good sign as far the long term

solvency is concerned.


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DEBT- EQUITY RATIO

The Debt-Equity ratio is calculated to find out the long-term financialposition of the firm. This ratio indicates the relationship betweenlong-term debts and shareholders funds. The soundness of long-term financial policies of a firm can be determined with the help ofthis ratio.Year Debt(Rs. In crores)

Equity(Rs. In crores)

Debt Equity

Ratio

2005 154759.45 12899.97 11.99

2006 228832.96 22555.99 10.14

2007 319994.86 24663.26 12.97

2008 352974.87 46820.21 7.53

2009 329417.94 49883.02 6.6

Debt Equity ratio of ICICI Bank for the period of

2005-2009

11.99

10.14

12.97

7.53

6.6

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009

Years

Ratio

Debt Equity Ratio

the Debt-Equity ratio for the above period isalways high. this shows that the bank is more

relying on outside funds as compared tointernal sources of capital, in its capital

structure. From the long-term lenders point of

view this ratio is not satisfactory.


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RATIO:Fixed Assets Turnover Ratio = Cost of goods sold or Sales

Net Fixed Assets

It measures the efficiency and profit earning capacity of the business.Higherthe ratio,greater is the intensive utilization of fixed assets and a lower ratioshows under utilization of the fixed assets.This ratio has a special importancefor manufacturing concerns where investment in fixed assets,is vey high andthe profitability is significantly dependent on the utilization of these assets.

Fixed assets Turnover Ratio of ICICI Bank for the

period of 2005-2009

2.33

3.46

5.86

7.498.17

0

1

2

3

4

5

6

7

8

9

2005 2006 2007 2008 2009

Years

Ratio Fixed assets Turnover

Ratio

Year Sales(Rs. In

crores)

NetFixed

Assets(Rs. Incrores)

FixedAssets

TurnoverRatio

2005 9409.9 4038.04 2.33

2006 13784.49 3980.72 3.46

2007 22994.29 3923.42 5.86

2008 30788.34 4108.89 7.49

2009 31092.55 3801.62 8.17

Here the fixed assets employed in the business shows adecreasing trend except in the year 2008 where fixed assetshave again increased.This may be due to increase in rate ofdepreciation in subsequent years. Neverthless,the fixedassets turnover ratio has been consistently increasing.Itindicates that fixed assets have been effectively used in thebusiness without much additional investment in the period of

study and also the capital is not blocked in fixed assets.

RETURN ON NET WORTH:


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RETURN ON NET WORTH:Return On Net Worth = Net Profit After Interest And Tax x 100

Shareholders Funds

It measures the profitability of the business in view of theshareholders. It judges the earning capacity of the company and theadequacy of return on proprietors funds. Shareholders and potential

investors are interested in this ratio.Return On Net Worth Ratio of ICICI Bank for the

period of 2005-2009

15.54

11.2612.61

8.88 7.53

0

2

4

6

810

12

14

16

18

2005 2006 2007 2008 2009

Years

Ratio

Return On Net Worth

Year Net Profit

After InterestAnd Tax(Rs. In crores)

Sharehold

er's Fund(Rs. Incrores)

Return On

Net Worth(in %)

2005 2005.2 12899.97 15.54

2006 2540.07 22555.99 11.262007 3110.22 24663.26 12.61

2008 4157.73 46820.21 8.882009 3758.13 49883.02 7.53

The net profit after interest and tax haveincreased slowly till the year 2008followed by a downfall due to highinterest payments, operating expensesand taxation liability. Consequently thenet worth ratio has declined considerably

and has reduced to more than half in theyear 2009 than it was in 2005.


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CREDIT-DEPOSIT RATIO:

This ratio is very important to assess the creditperformance of the bank. The ratio shows therelationship between the amount of deposit

generated by the bank has well as theirdeployment towards disbursement of loan andadvances. Higher credit deposit ratio showsoverall good efficiency and performance of any

banking institution.

Year Advances Deposits Credit Deposit Ratio


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Credit Deposit ratio of ICICI bank for the period of

2005-2009

0.91

0.880.84

0.92

0.99

0.75

0.8

0.85

0.9

0.95

1

1.05

2005 2006 2007 2008 2009

Years

Ratio

Credit Deposit ratio

High trends of credit

deposit ratio revealsthat bank has performedsatisfactorily as regardto granting loans andadvances to generate

income. It suggests that

credit performance isgood and the bank is

doing its business goodby fulfilling its major

objective as regards togranting loans and

accepting deposits.

Year Advances(Rs. In crores)

Deposits(Rs. In crores)

Credit Deposit Ratio(in%)

2005 91405.15 99818.78 91

2006 146163.11 165083.17 88

2007 195865.6 230510.19 84

2008 225616.08 244431.05 92

2009 218310.85 218347.82 99


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Conclusion

On the basis of various techniques applied for the financial analysis of ICICIBank we can arrive at a conclusion that the financial position and overallperformance of the bank is satisfactory. Though the income of the bank hasincreased over the period but not in the same pace as of expenses. But thebank has succeeded in maintaining a reasonable profitability position.

The bank has succeeded in increasing its share capital also which hasincreased around 50% in the last 5 years. Individuals are the majorshareholders. The major achievement of the bank has been a tremendousincrease in its deposits, which has always been its main objective. Fixed andcurrent deposits have also shown an increasing trend.

Equity shareholders are also enjoying an increasing trend in the return on theircapital. Though current assets and liabilities (current liquidity) of the bank isnot so satisfactory but bank has succeeded in maintaining a stable solvencyposition over the years. As far as the ratio of external and internal equity isconcerned, it is clear that bank has been using more amount of externalequity in the form of loans and borrowings than owners equity. Banksinvestments are also showing an increasing trend. Due to increase inadvances, the interest received by the bank from such advances is proving

to be the major source of income for the bank.

S ti


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Suggestions

Although the short term liquidity position is quite satisfactory as per revealed by liquidratio but the current ratio is below the ideal ratio of 2:1.So the bank should make effortsto increase its current assets to maintain a safety margin and to maintain a betterliquidity position.

The profitability of the bank for the period under study is not satisfactory. Profits areincreasing but not with same pace as of the expenditure due to higher reliance on debtcapital in the form of borrowings and loans for financing capital structure. So in order to

improve profitability, the bank should reduce its dependence on external equities formeeting capital requirements. Consequently, the interest expenses will decline andprofits will increase which is good for the bank. Similarly non productive expensesshould be curtailed to improve profitability.

Higher trend of credit deposit ratio reveals that the bank has performed satisfactorilyas regard to granting loans and advances to generate income. It suggests that thecredit performance of bank is good and it is performing its business well by fulfilling themajor objective of granting credit and accepting deposit. So in order to have more

creditability in the market the bank should maintain its credit deposit ratio. Though the bank has been successful in increasing its deposits but to further improve

upon such situation it can introduce some new and attractive schemes for public. Suchschemes can be in the form of higher rate of interest and shorter maturity period forFDs etc.

Bank should try to finance more and more projects. Financing will help it to earn higheramount of profits.

The bank is having a greater reliance on debt capital. The increasing reliance onexternal equities may prove hazardous in the long run. So in order to remedy this

BIBLIOGRAPHY


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BIBLIOGRAPHY

Www.Icicibank.Com

Www.Moneycontrol.Com

WWW.Money.Rediff.Com

Www.Wikipedia.Org

Www.Google.Com

Www.Scribd.Com
http://www.icicibank.com/http://www.moneycontrol.com/http://www.money.rediff.com/http://www.wikipedia.org/http://www.google.com/http://www.scribd.com/http://www.scribd.com/http://www.google.com/http://www.wikipedia.org/http://www.money.rediff.com/http://www.moneycontrol.com/http://www.icicibank.com/

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