Banking Sector Analysis

Group 4

Anuj Jindal 36Meenakshi Jain

103

Nitin Bighane

224

Nitin Sengar125

Ashish Jain241

Macro Economic Factors• Bank rate is the which central bank (RBI) lends money to other banks or

financial institutions. Affects loan market.

Cash Reserve Ratio is a percentage amount of total deposits of a bank which it maintains with central bank (RBI). Increase in this means lesser lending capability of banks

• Statutory Liquidity Ratio is ratio of total deposits maintained by bank at the closing hour of each day. Increase in this means lesser lending capability of banks

• Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive.  Hence banks find it difficult to lend and vice versa 

• Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI.  An increase in the reverse repo rate  means that the RBI is ready to borrow money from the banks at a higher rate  of interest.

1. State Bank of India

2. ICICI Bank Limited

3. Punjab National Bank

4. Canara Bank

5. Bank of Baroda

6. Bank of India

7. Industrial Development Bank of India

8. Union Bank of India

9. Central Bank of India

10.HDFC Bank Limited

11.Indian Overseas Bank

12.UCO Bank

13.Oriental Bank of Commerce

14.Syndicate Bank

15.Allahabad Bank

Major Banks(by Sales)

Capital Infusion:•Budget 2013-14 proposed to provide a sum of Rs 14,000 crore capital support to all public sector banks.

Insurance Brokers •Taking into account the wide network of bank branches and the low penetration of insurance in the country, •banks have been permitted to act as insurance brokers.

Women Bank•Budget proposes India's first Women's Bank as a public sector bank•It exclusively serves women and will be run predominantly by women.•An initial capital ofRs. 1,000 crore to be allotted for this purpose.

Shield against inflation:•Higher rate of inflation has eaten into domestic savings.•Hence, FM introduced inflation indexed bonds or inflation indexed national security.

Agriculture credit•Farmers who repay bank loans right in time normally pay a subsidised rate of interest just at 4%.•So far, all state-owned banks disburse such credit.•Now private sector banks  can also provide such loan s ,

A regulator for road construction - boon for banks•Constitution of a regulatory authority for the road sector to address Bottlenecks in road projects .•This is favourable for banks as lot of projects would now see fast-paced executions.

Impact of Budget on Banking Sector

Financial RatiosState Bank of India

Punjab National Bank

ICICI Bank

Preference on parameter

Current Ratio 0.29 0.33 0.59 ICICI

Quick Ratio 14.07 10.12 49.67 ICICI

Earnings per Share (Rs.)

206.20

134.31 72.17 SBI

Price-Earnings Ratio

10.05 5.34 14.48 ICICI

Debt-Equity Ratio 12.16 0.05 0.07 PNB

Return on Equity (%) 

11.61 16.48 13.10 PNB

Net Sales (Cr)

Net Interest Income ( INR

Billion)

Other income

(INR Billion)

PAT (INR Billion)

Total Assets (INR

Billion)

Gross Non Performing Assets

(Cr)

Net Non Performing Assets (INR

Billion)

CASA

SBI 1,19,657.10 433.00 144.00 117.00 13,355.00 4.44 1.82 46.64PNB 41,893.33 134.00 42.00 49.00 4,582.00 2.93 1.52 36.20

ICICI 40,075.60 107.00 75.00 65.00 4,736.00 3.62 0.73 43.50

SBI PNB ICICI

119,657.10

41,893.33 40,075.60

Net Sales (Cr)

SBI PNB ICICI

1.82

1.52

0.73

Net Non Perform-ing Assets (Cr)

SBI PNB ICICI

46.64

36.20

43.50

CASA

SBI PNB ICICI

117.00

49.00

65.00

PAT (INR Billion)

• Net Sales of SBI is highest, making it the biggest bank of India

• PNB though the second largest bank of India, lacks in the profitability compared to other

• PSU banks being more susceptible to Non Performing assets, a recent trend seen across banking sector, same is again prominant

• Higher CASA is preferred

• Can fix a lower base rate

• SBI and ICICI on the better side, typically 35 to 40% for most banks in India