"Comparative Study of Financial Report of Top Three Banks of India" - 106468456 PDF

A
PROJECT REPORT
ON
“COMPARATIVE STUDY OF FINANCIAL REPORT
OF
TOP THREE BANKS OF INDIA”
SUBMITTED TO TILAK MAHARASHTRA UNIVERSITY
IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE
MASTER OF BUSINESS ADMINISTRATION
(MBA)
Submitted By:
KAAT RAFIK O.
(Batch 2008-09)
Guided By:
Prof.R.GANESHAN
MAHARASHTRA COSMOPOLITAN EDUCATION SOCIETY‟S
PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE
CAMP- PUNE-411001
1
CERTIFICATE
This is certify that KAAT RAFIK OSMAN BHAI student of PAI international centre for
management excellence, Maharashtra Cosmopolitan Education society, Pune has completed

his
field work report on the topic of COMPARATIVE STUDY OF FINANCIAL REPORT OF TOP
THREE BANKS OF INDIA and has submitted the field work report in partial fulfillment of MBA
of the college for the academic year

2008-2009.
He has worked under our guidance and direction. The said report is based on
bonafide
information.
Project guide name Prof. R Ganesan
Designation Director
2
PAI INTERNATIONAL CENTRE
FOR
MANAGEMENT EXCELLENCE
Maharashtra Cosmopolitan Education

Society
DECLARATION
I hereby declare that project titled “COMPARATIVE STUDY OF FINANCIAL REPORT
OF TOP THREE BANKS OF INDIA” is an original piece of research work carried out by me
under the guidance and supervision of prof. R Ganesan. The information has been collected
from
genuine &authentic sources. The work has been submitted in partial fulfillment of the
requirement
of MBA to our college.
Place: Signature:
Date: Name of the students:
3
ACKNOWLEDGEMENT
“Perseverance inspiration and motivation have always played a key role in success of
any
venture”. I hereby express my deep sense of gratitude to all the personalities involved directly
and
indirectly in my project work.
I would thank to God for their blessing and my parents also for their valuable
suggestion
and support in my project report.
I would also like to thank our friends and those who have helped us during this project
directly or indirectly.
Last but not the least; I would like to express my sincere gratitude to all the faculty
members
who have taught me in my entire MBA curriculum and our Director Prof.R.GANESAN who
has
always been a source of guidance, inspiration and motivation. However, I accept the sole
responsibility for any possible errors of omission and would be extremely grateful to the
readers of
this project report if they bring such mistakes to my

notice.
KAAT RAFIK O.
4
INDEX No
1. Introduction
Sr.No Subjects
Page 2. Bank Profile
10 i.
SBI
11 ii.
ICICI
14 iii.
PNB
17
3. Products & Services
21
4. Balance Sheet
36
5. Ratio Analysis
40
6. Objectives
62
7. Importance
64
8. Advantages, Limitations
5
6
6 6 9. Conclusion
69
10.
Bibliography
71
INTRODUCTIO
N
INRTODUCTION
❖ After preparation of the financial statements, one may be interested in knowing the
position
of an enterprise from different points of view. This can be done by analyzing the
financial
statement with the help of different tools of analysis such as ratio analysis, funds flow
analysis, cash flow analysis, comparative statement analysis, etc. Here I have done
financial
analysis by ratios. In this process, a meaningful relationship is established between

two or
more accounting figures for

comparison.
❖ 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. Historically one can
observe
several major themes in the financial analysis literature. There is overlapping in the
observable themes, and they do not necessarily coincide with what theoretically might
be
the best founded

areas.
❖ Financial statements are those statements which provide information about profitability
and
financial position of a business. It includes two statements, i.e., profit & loss a/c or
income
statement and balance sheet or position

statement.
❖ The income statement presents the summary of the income earned and the expenses
incurred
during a financial year. Position statement presents the financial position of the
business at
the end of the year.

7
❖ Before understanding the meaning of analysis of financial statements, it is necessary to
understand the meaning of „analysis‟ and „financial
statements‟.
❖ Analysis means establishing a meaningful relationship between various items of the

two
financial statements with each other in such a way that a conclusion is drawn. By
financial
statements, we mean two statements- (1) profit & loss a/c (2) balance sheet. These
are
prepared at the end of a given period of time. They are indicators of profitability and
financial soundness of the business

concern.
❖ Thus, analysis of financial statements means establishing meaningful relationship

between
various items of the two financial statements, i.e., income statement and position
statement
❖ Parties interested in analysis of financial

statements
Analysis of financial statement has become very significant due to widespread interest
of
various parties in the financial result of a business unit. The various persons interested in the
analysis of financial statements

are:-
➢ Short- term creditors
They are interested in knowing whether the amounts owing to them will be paid
as and
when fall due for payment or not.

➢ Long –term creditors
They are interested in knowing whether the principal amount and interest thereon
will be
paid on time or not.
➢ Shareholders
They are interested in profitability, return and capital

appreciation.
➢ Management
The management is interested in the financial position and performance of the

enterprise as
a whole and of its various divisions.
➢ Trade unions
They are interested in financial statements for negotiating the wages or salaries or
bonus
agreement with
management.
8
➢ Taxation authorities
These authorities are interested in financial statements for determining the tax
liability.
➢ Researchers
They are interested in the financial statements in undertaking research in business

affairs
and practices.
➢ Employees
They are interested as it enables them to justify their demands for bonus and
increase in
remuneration.
You have seen that different parties are interested in the results reported in the
financial
statements. These results are reported by analyzing financial statements through the use
of ratio
analysis.
9
BANK PROFILE
11
1. STATE BANK OF INDIA
Type- Public (BSE, NSE:SBI) &
(LSE:SBID)
Founded- Calcutta, 1806 (as Bank of Calcutta)

Corporate Centre,
Headquarters-
Mumbai 400 021 India
Key people- Om Prakash Bhatt, Chairman

State Bank of India (SBI) (LSE: SBID) is the largest bank in India. It is also, measured
by
the number of branch offices and employees, the second largest bank in the world. The bank
traces
its ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of
Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government
of
India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a
60%
stake, and renamed it the State Bank of India. In 2008, the Government took over the stake
held by
the Reserve Bank of India.
SBI provides a range of banking products through its vast network in India and
overseas,
including products aimed at NRIs. With an asset base of $126 billion and its reach, it is a
regional
banking behemoth. SBI has laid emphasis on reducing the huge manpower through Golden
handshake schemes and computerizing its

operations.
The State Bank Group, with over 16000 branches, has the largest branch network in
India. It
has a market share among Indian commercial banks of about 20% in deposits and
advances.
12
International presence
Regional office of the State Bank of India (SBI), India's largest bank, in Mumbai. The
government of India is the largest shareholder in

SBI.
The bank has 52 branches, agencies or offices in 32 countries. It has branches of the
parent
in Colombo, Dhakka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los
Angeles,
Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking
units
in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape
Town.
SBI operates several foreign subsidiaries or affiliates. In 1990 it established an

offshore
bank, State Bank of India (Mauritius). It has two subsidiaries in North America, State Bank of
India
(California), and State Bank of India (Canada). In 1982, the bank established its California
subsidiary, which now has seven branches. The Canadian subsidiary was also established in
1982
and also has seven branches, four in the greater Toronto area, and three in British Columbia.
In
Nigeria, it operates as INMB Bank. This bank was established in 1981 as the Indo-Nigerian
Merchant Bank and received permission in 2002 to commence retail banking. It now has five
branches in Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches
throughout
the country. In Moscow SBI owns 60% of Commercial Bank of India, with Canara Bank
owning
the rest. In Indonesia it owns 76% of PT Bank Indo Monex. State Bank of India already has a
branch in Shanghai and plans to open one up in

Tianjin.
13
BOARD OF DIRECTORS
1 Shri O.P. Bhatt(Chairman)
2 Shri S.K. Bhattacharyya(MD & CC&RO)
3 Shri Suman Kumar Bery
4 Dr. Ashok Jhunjhunwala
5 Shri Dileep C. Choksi
6 Shri S. Venkatachalam
7 Dr. Deva Nand Balodhi
8 Prof. Mohd. Salahuddin Ansari
9 Dr.(Mrs.) Vasantha Bharucha
10 Shri Arun Ramanathan
11 Smt. Shyamala Gopinath

14
2. INDUSTRIAL CREDIT & INVESTMENT CORPORATION
OF INDIA (ICICI)
ICICI was formed in 1955 at the initiative of the World Bank, the government of India
and
Indian industry representatives. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian businesses.
Until
the late 1980s, ICICI primarily focused its activities on project finance, providing long-term
funds
to a variety of industrial projects. With the liberalization of the financial sector in India in the
1990s, ICICI transformed its business from a development financial institution offering only
project
finance to a diversified financial services provider that, along with its subsidiaries and other
group
companies, offered a wide variety of products and services. As India‟s economy became
more
market-oriented and integrated with the world economy, ICICI capitalized on the new
opportunities
to provide a wider range of financial products and services to a broader spectrum of

clients.
ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Bank‟s initial
equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified
finance
and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the
merger of SCICI into ICICI, ICICI Bank became a wholly-owned subsidiary of ICICI. ICICI‟s
holding in ICICI Bank reduced due to additional capital raising by ICICI Bank and sale of
shares by
ICICI, pursuant to the requirement stipulated by the Reserve Bank of India that ICICI dilute its
ownership of ICICI Bank. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an
old
private sector bank, in an all-stock

merger.
The issue of universal banking, which in the Indian context means the conversion of
long-
term lending institutions such as ICICI into commercial banks, had been discussed at length
over
the past several years. Conversion into a bank offered ICICI the ability to accept low-cost
demand
deposits and offer a wider range of products and services, and greater opportunities for
earning non-
fund based income in the form of banking fees and commissions. ICICI Bank also considered
various strategic alternatives in the context of the emerging competitive scenario in the Indian
banking industry. ICICI Bank identified a large capital base and size and scale of operations
as key
success factors in the Indian banking industry. In view of the benefits of transformation into a
bank
and the Reserve Bank of India‟s pronouncements on universal banking, ICICI and ICICI
Bank
decided to merge.
15
At the time of the merger, both ICICI Bank and ICICI were publicly listed in India and
on
the New York Stock Exchange. The amalgamation was approved by each of the boards of
directors
of ICICI, ICICI Personal Financial Services, ICICI Capital Services and ICICI Bank at their
respective board meetings held on October 25, 2001. The amalgamation was approved by
ICICI
Bank‟s and ICICI‟s shareholders at their extraordinary general meetings held on January 25,
2002
and January 30, 2002, respectively. The amalgamation was sanctioned by the High Court of
Gujarat
at Ahmedabad on March 7, 2002 and by the High Court of Judicature at Bombay on April 11,
2002.
The amalgamation became effective on May 3, 2002. The date of the amalgamation for
accounting
purposes under Indian GAAP was March 30,

2002.
The Sangli Bank Limited, an unlisted private sector bank merged with ICICI Bank with
effect from April 19, 2007. On the date of acquisition, Sangli Bank had over 190 branches and
extension counters, total assets of Rs. 17.6billion (US$ 440 million), total deposits of Rs. 13.2
billion (US$ 330 million), total loans of Rs. 2.0 billion (US$
50million).
16
BOARD OF DIRECTORS
1. N. Vaghul, Chairman
2. Sridar Iyengar
3. L. N. Mittal
4. Narendra Murkumbi
5. Anupam Puri
6. Arun Ramanathan
7. M. K. Sharma
8. P. M. Sinha
9. Marti G. Subrahmanyam
10. T. S. Vijayan
11. V. Prem Watsa
12. K. V. Kamath, Managing Director & CEO
17
3. PUNJAB NATIONAL BANK (PNB)
Punjab National Bank (PNB) was registered on May 19, 1894 under the Indian
Companies
Act with its office in Anarkali Bazaar Lahore. The Bank, founded by Dyal Singh Majithia and
Lala
Harkishen Lal, is the second largest government-owned commercial bank in India with about
4,500
branches across 764 cities. It serves over 37 million customers. The bank has been ranked
248th
biggest bank in the world by Bankers Almanac, London. Total Business of the bank for
financial
year 2007 is estimated to be approximately US$60 billion. It has a banking subsidiary in the
UK, as
well as branches in Hong Kong and Kabul, and representative offices in Almaty, Shanghai,
and
Dubai.
We are a leading public sector commercial bank in India, offering banking products
and
services to corporate and commercial, retail and agricultural customers. Our banking
operations for
corporate and commercial customers include a range of products and services for large
corporations, as well as small and middle market businesses and government entities. We
offer a
wide range of retail credit products including housing loans, personal loans and automobile
loans.
We cater to the financing needs of the agricultural sector and have created innovative
financing
products for farmers. We also provide significant financing to other priority sectors including
small
scale industries. Through our treasury operations, we manage our balance sheet, including
the
maintenance of required regulatory reserves, and seek to maximize profits from our trading
portfolio by taking advantage of market

opportunities.
Our revenue, which is referred to herein and in our financial statements as our income,
consists of interest income and other income. Interest income consists of interest on
advances
(including the discount on bills discounted) and income on investments. Income on

investments
consists of interest and dividends from securities and our other investments and interest from
interbank loan and cash deposits we keep with the RBI. Our securities portfolio consists
primarily
of Government of India and state government securities. We meet our statutory liquidity
reserve
ratio requirements through investments in these and other approved securities. We also hold
debentures and bonds issued by public sector undertakings and other corporations,
commercial
paper, equity shares and mutual fund

units.
Our interest expense consists of our interest on deposits as well as borrowings. Our
interest
18
Income and expense are affected by fluctuations in interest rates as well as the volume of
activity.
Our interest expense is also affected by the extent to which we fund our activities with low
interest
or non-interest deposits, and the extent to which we rely on

borrowings.
Our non-interest expense consists principally of operating expenses such as expenses

for
wages and employee benefits, rent paid on premises, insurance, postage and
telecommunications
expenses, printing and stationery, depreciation on fixed assets, other administrative and other
expenses. Provisioning for non-performing assets, depreciation on investments and income

tax is
included in provisions and contingencies
We use a variety of indicators to measure our performance. These indicators are

presented in
tabular form in the section titled “Selected Statistical Information” on page [·]. Our net interest
income represents our total interest income (on advances and investments) net of total
interest
expense (on deposits and borrowings). Net interest margin represents the ratio of net interest
income to the monthly average of total interest earning assets. Our spread represents the
difference
between the yield on the monthly average of interest earning assets and the cost of the
monthly
average of interest bearing liabilities. We calculate average yield on the monthly average of
advances and average yield on the monthly average of investments, as well as the average
cost of
the monthly average of deposits and average cost of the monthly average of borrowings. Our
cost of
funds is the weighted average of the average cost of the monthly average of interest bearing
liabilities. For purposes of these averages and ratios only, the interest cost of the unsecured
subordinated bonds that we issue for Tier 2 capital adequacy purposes (“Tier 2 bonds”) is
included
in our cost of interest bearing liabilities. In our financial statements, these bonds are
accounted for
as “other liabilities and provisions” and their interest cost is accounted for under other interest
expenses. Since 1969, when we became a public sector bank, we have managed to continue
to grow
our business while maintaining a strong balance sheet. As of September 30, 2004, our total
deposits
represented 85.9% of our total liabilities. On average, interest free demand deposits and low
interest
savings deposits represented 43.8% of these deposits in the first six months of fiscal
2005.These
low-cost deposits led to an average cost of funds excluding equity for the first six months of
fiscal
2005 of 4.7%. As of September 30, 2004, our gross and net non-performing assets
constituted
7.65% and 0.30% of our gross and net advances, respectively. In fiscal 2004 our total income
was
Rs. 96.5 billion and our net profit was Rs. 11.1 billion before adjustment and Rs. 10.6billion
after
adjustment as part of the restatement of our financial statements for this Issue. In the first six
months of fiscal 2005 our total income was Rs. 51.9 billion and our net profit was Rs.
7.4billion.
Between fiscal 2002 and 2004, our total income grew at a compound annual rate of12.5%,
our
19
unadjusted and adjusted net profit grew at a compound annual rate of 40.4% and37.4%,
respectively, and our total deposits and total advances grew at a compound annual growth
rate of
17.1% and 17.2%, respectively.
We intend to maintain our position as a cost efficient and customer friendly institution
that
Provides comprehensive financial and related services. We seek to achieve this by continuing
to
adopt technology which will integrate our extensive branch network. We intend to grow by
cross
selling various financial products and services to our customers and by expanding
geographically in
India and internationally. We are committed to excellence in serving the public and also
maintaining high standards of corporate responsibility. In line with our philosophy of aiding
India‟s
development we have opened branches in many rural

areas.
20
BOARD OF DIRECTORS
1. Dr K.C Chakrabarty
2. Smt. Ravneet Kaur
3. Shri L.M.Fonseca
4. Shri. S.R.Khurana
5. Shri P.K. Nayar
6. Shri Mohan Lal Bagga
7. Shri Mushtaq A Antulay
8. Shri Gautam P. Khandelwal
9. Shri Vinod Kumar Mishra
10. Shri Tribhuwan Nath Chaturvedi
11. Shri G R Sundaravadivel
12. Shri Devinder Kumar Singla

21
PRODUCT
S
&
SERVICE
S
22
1. SBI BANKING
➢ Personal Banking
➢ Agricultural & Rural Banking
➢ NRI Services
➢ International Banking
➢ Corporate Banking
➢ Services
➢ Govt. Business
➢ SME
Personal Banking International

Deposit Schemes Trade Finance
Personal Finance Merchant Banking
Corp Salary Correspondent
Package Banking
Services
NRI Services
Type of Accounts
Services
Internet Banking
Mobile Banking
ATM Services
Agricultural
Group
Agricultural
Project Finance
Agricultural
Agricultural
Banking
Micro Credit
Govt.
Regional Rural
Business
Banks
Govt.
Corporate Banking Accounts.

SME
Corporate Accounts SME
Mid Corporate
Services
23
Demat Services Public
❖ PERSONALBANKING
Fund.
SBI Term Deposits SBI Loan For Pensioners
SBI Recurring Deposits Loan Against Mortgage Of

Property
SBI Housing Loan Loan Against Shares & Debentures
SBI Car Loan Rent Plus Scheme
SBI Educational Loan Medi-Plus Scheme
SBI Personal Loan Rates Of Interest
❖ AGRICULTURA
L State Bank of India Caters to the needs of agriculturists and landless agricultural
labourers
through a network of 6600 rural and semi-urban branches. There are 972 specialized
branches
which have been set up in different parts of the country exclusively for the development of
agriculture through credit deployment .These branches include 427 Agricultural Development
Branches (ADBs) and 547 branches with Development Banking Department (DBDs) which
cater to
agriculturists and 2 Agricultural Business Branches at Chennai and Hyderabad catering to the
needs
of hi tech commercial agricultural

projects.
Our branches have covered a whole gamut of agricultural activities like crop production
,
horticulture , plantation crops, farm mechanization, land development and reclamation,

digging of
wells, tube wells and irrigation projects, forestry, construction of cold storages and godowns,
processing of agri-products, finance to agri-input dealers, allied activities like dairy , fisheries,
poultry, sheep-goat, piggery and rearing of silk

worms.
The branch also has farmer's meet in villages to explain to farmers about various
schemes
offered by the bank. To give special focus to agriculture lending Bank has set up agri
business unit.
Bank has also agri specialists in various disciplines to handle projects/ guide farmers in their
agri
24
ventures. Advances are given for very small activity covering poorest of the poor to hi-tech
activities involving large fund outlays.
We are the leaders in agri finance in the country with a portfolio of Rs. 18,000 cars in
agri
advances to around 50 lac

farmers.
❖ NRI SERVICES
World Class Services from a Bank you can Trust Indians everywhere should become
enlightened International citizens. Wherever you are, whichever country you live, enrich that
nation, not only in financial terms, but also with your sweat knowledge and dignity since that
is the
tradition of the country from where you came. At the same time, remember we have a
common
umbilical connectivity to our motherland, India.
❖ INTERNATIONAL BANKING
International banking services of State Bank of India are delivered for the benefit of its
Indian customers, non-resident Indians, foreign entities and banks through a network of 84
offices/branches in 32 countries as on 31 March 2008, spread over all time zones. The
network is
augmented by a cluster of Overseas and NRI branches within India and correspondent links
with
over 522 banks, the world over. Bank's Joint Ventures and Subsidiaries abroad further
underline the
Bank's international
presence.
The services include corporate lending, loan syndications, merchant banking, handling
Letters of Credit and Guarantees, short-term financing, collection of clean and documentary
credits
and remittances.
The Bank has carved a niche for itself in the Euro land with branches located in Antwerp,
Paris and
Frankfurt. Indian banks and corporates are able to avail single-window Euro services from the
Bank's Frankfurt branch.

❖ CORPORATE BANKING
SBI is a one shop providing financial products / services of a wide range for large, medium
and
small customers both domestic and

international.
25
Working Capital Financing
• Assistance extended both as Fund based and Non-Fund based facilities to

Corporate,
Partnership firms, Proprietary

concerns
• Working Capital finance extended to all segments of industries and services

sector
such as IT Term Loans
to support capital expenditures for setting up new ventures as also for

expansion,
renovation etc.
Deferred Payment
Guarantees
to support purchase of capital

equipments.
Corporate Loans
For a variety of business related purposes to

corporate.
Export Credit
To Corporate / Non Corporate
Strategic Business Units
(i) Corporate Accounts Group (CAG)
(ii)Project Finance
(iii) Lease Finance
for loans payable beyond one

year.
❖ SERVICES
Listed on the left are Services, SBI offers to its

customers.
▪ DOMESTIC TREASURY
▪ SBI VISHWA YATRA FOREIGN TRAVEL CARD
▪ BROKING SERVICES
▪ REVISED SERVICE CHARGES
▪ ATM SERVICES
Exclusive set up for handling large ticket
leases.
Pricing
An exclusive unit providing one s shopping to
Corporate
A dedicated set up specialised in financing of infrastructure and other large

projects
SBI's Prime Lending Rates (PLR) is among the

lowest
Presently Bank has two PLR's
SBAR for loans payable on demand and up to one

year
26
▪ INTERNET BANKING
▪ E-PAY
▪ E-RAIL
▪ RBIEFT
▪ SAFE DEPOSIT LOCKER
▪ GIFT CHEQUES
❖ GOVERNMENT BUSINESS
State Bank of India's linkage with Government business is widespread. No wonder that
out
of 9315 branches in India, about 7000 branches are conducting Government Business. The
large
network of our branches provides easy access to the common man to deposit the
following Government dues and pension

payments.
❖ SME (small scale industries)
State Bank of India has been playing a vital role in the development of small scale
industries
since 1956.The Bank has financed over 8 lakhs SSI units in the country. It has 55 specialised
SSI
branches, 99 branches in industrial estates and more than 400 branches with SIB
divisions.
The Bank finances for Small Business activities which are of special significance to a large
number of people as many of these activities can be started with relatively lower investment
and
with no special skills on the part of the

entrepreneurs.
27
2. ICICI BANKING
➢ PERSONAL
BANKING
Safety, Flexibility,
Liquidity, Returns!
ICICI Bank offers a wide
Variety of Deposit
Products to suit your
banking requirements.
Simplified Documentation,
Quick Processing, Hassle
Free!!!
Exclusive, Economical,
Expert Advice!!!
ICICI Bank's power-packed,
feature-rich investment
options for meeting all your
investment needs.
28
World Class Service and

Acceptance!!!
A truly world class service as
ICICI Bank cards have both
national and international
acceptance.
Secure, Reliable,
Convenient!!!
Convenience has always
been synonymous with
ICICI Bank and keeping in
line we offer the facility of
buying Insurance policies
online.
29
• INTERNATIONAL BANKING
In 2001, we identified international banking as a key opportunity, aiming to cater to the
cross-border needs of clients and leveraging our domestic banking strengths to offer products
internationally. We have made significant progress in the international business since we set
up our
first overseas branch in Singapore in 2003. ICICI Bank currently has subsidiaries in the
United
Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka, Dubai
International Finance Centre, Qatar Financial Centre and the United States and
representative
offices in the United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and
Indonesia. The Bank‟s wholly owned subsidiary ICICI Bank UK PLC has nine branches in the
United Kingdom and a branch each in Belgium and Germany. ICICI Bank Canada has eight
branches including three in Toronto. ICICI Bank Eurasia LLC has six branches including three
branches in Moscow and one in St.

Petersburg.
Banking at your fingertips!!!
Why be inline when you can
be online for paying your
utility bills, mobile bills,
prepaid mobile recharge,
Shopping, Credit card,
insurance premium and lots
more.
30
Our international strategy is focused on building a retail deposit franchise, diverse

wholesale
funding sources and strong syndication capabilities to support our corporate and investment
banking business; achieving the status of a non-resident Indian (NRI) community bank in key
markets; and expanding private banking operations for India-centric asset classes. During
fiscal
2008, we focused on deepening our presence in existing overseas locations and expanding
our
operations in key markets. In line with our strategy to establish a presence in large markets
with
significant savings pools, we entered into Germany through a branch established by ICICI
Bank UK
PLC. We have been able to successfully leverage our technology advantage to create a
growing
international deposit base. Total deposits of ICICI Bank UK PLC and ICICI Bank Canada
increased
by 76.0% from Rs. 191.28billion at March 31, 2007 to Rs. 335.86 billion at March 31, 2008.
We
also received approval for and commenced branch operations in the United
States.
We have established a strong franchise among NRIs by offering a comprehensive

product
suite, technology enabled access, a wide distribution network in India and alliances with local
banks
in various markets. Currently, we have over 500,000 NRI customers. We have undertaken
significant brand-building initiatives in international markets and have emerged as a well-
recognised financial services brand for NRIs. We continue to maintain a market share of 25%
in
inward remittances to India. During fiscal 2008, we launched innovative products like instant
money transfer and enhanced our focus on customer relationship management and process
automation. Additionally, we also undertook the development of low cost remittance products
in
non-India geographies with correspondent tie-ups for disbursements in over 100 such
geographies.
Through our international private banking services, we offer various products to mass
affluent and high net worth clients based on their financial needs and risk appetite. The
offerings
range from simple deposits and loans to more sophisticated structured products, private
equity and
products giving exposure to the real estate sector in

India.
• CORPORATE BANKING
Our corporate banking strategy is based on providing comprehensive and customised
financial solutions to our corporate customers. We offer a complete range of corporate

banking
products including rupee and foreign currency debt, working capital credit, structured
financing,
syndication and transaction banking products and

services.
31
Our corporate and investment banking franchise is built around a core relationship
team that
has strong relationships with almost all of the country‟s corporate houses. The relationship
team is
product agnostic and is responsible for managing banking relationships with clients. We have
also
put in place product specific teams with a view to focus on specific areas of expertise in
designing
financial solutions for clients. Through our relationship teams working in tandem with product
solution teams, we have deepened our client relationships across our product portfolio or
esulting in
significant growth in income and wallet share among all our top corporate clients, as
compared to
the previous year.

We have created an integrated Global Investment Banking Group, which is responsible
for
working with the relationship team in India and our international subsidiaries and branches,
for
origination, structuring and execution of investment banking mandates on a global basis. We

have
also restructured our delivery team for transaction banking products by creating dedicated
sales
teams for trade services and transaction banking products. This has been done with the intent
to
increase our market share from transaction banking products, which will translate into
recurring fee
income for the Bank. We have also focused on increasing market share in trade finance by
leveraging and further strengthening correspondent banking

relationships.
• SME BANKING
During fiscal 2008, our small enterprises customer base increased by 26% to about 1.1
million accounts. We have introduced our service offerings in over 400 new branches,
increasing
our coverage to over 1,000 branches. During the year, we have focused on product
specialisation
including investment banking for SMEs. We have continued to focus on shaping the small
and
medium enterprises sphere in India through initiatives such as the Emerging India Awards”,
the
SME CEO Knowledge Series - a platform to mentor and assist SME entrepreneurs, and the
“SME
Dialogue” - a weekly feature in a leading financial newspaper sharing SME best practices and
success stories. During the year, we have launched several new products and services like
the SME
toolkit – an online business and advisory resource for

SMEs.
32
• RURAL BANKING AND AGRI-BUSINESS
We believe the rural economy has high growth potential and offers large credit growth
opportunities. Towards this end, our suite of products and services is targeted to address the
needs
of both the farm and non-farm sectors. Our retail product suite encompasses loans for crop
production, purchase of farm equipment; commodity based finance as well as various

savings,
investment and insurance products. We also offer micro-finance and jewel loans. We have
also
focused on enhancing credit to farmers by leveraging on corporate partnerships. For

example, we
have partnered with various dairies to provide financing to farmers for purchase of milch
cattle. We
also provide credit and banking services to SMEs active in the agricultural value chain. To
enhance
our service quality and product delivery capabilities we have developed a large network of
rural
branches which is further augmented by non-branch
channels.
Rural banking in India is still at a nascent stage and the deployment of technology
channels
and modern banking methods for rural lending continues to be an evolving process. In line
with our
learning from our rural banking operations, we undertook a comprehensive review of and
realigned
our channel architecture, credit underwriting processes and account management systems.
We have
put in place a robust risk management structure to Mitigate and manage credit, operational
and
fraud risks. Through this, we aim to create a strong foundation for scaling up of our rural
business.
33
3.PNB BANKING
• CORPORATE AND COMMERCIAL SECTOR LENDING ACTIVITIES
❖ Term loans
❖ Cash credit and other working capital

facilities
❖ Bill discounting
❖ Export credits
❖ Other credit and financing products
• SERVICES TO NON-RESIDENT INDIANS
We provide personal financial services for NRIs. We have established a branch in

Kabul and
Representative offices in other cities overseas in order to facilitate services being provided to
NRIs.
We offer foreign currency accounts to NRIs under our Foreign Currency Non-Resident
Scheme and
rupee accounts for NRIs under our Non-Resident External and Non-Resident Ordinary
Schemes.
We have introduced our Global Foreign Currency Scheme and Global Rupee Deposit
Scheme,
which offer benefits and concessions to NRIs and their relatives provided a minimum balance
of
Rs. 250,000 or US$5,000 is maintained in the account. We also offer various products for
facilitating remittances from NRIs to India. We recently entered into an arrangement to

facilitate
money transfers through Western Union, which is a global leader in money transfer services.
We
have also entered into an agreement with Times Online Money Ltd., a Times of India group
company, with a view to establishing an internet based international remittance service. In

addition,
we also provide housing loans to

NRIs.
• RETAIL BANKING
In retail banking, our principal competitors are the large public sector banks, as well as
existing and new private sector banks and foreign banks in the case of retail loan products.
The
other public sector banks have large deposit bases and large branch networks, including the
State
Bank of India which has 13,593 branches. Private sector and foreign banks compete
principally by
offering a wider range of products as well as greater technological sophistication in some

cases.
34
Foreign banks, while having a small market penetration overall, has a significant presence
among
non-resident Indians and also competes for non-branch based products such as auto loans
and credit
cards.
In particular, we face significant competition primarily from private sector banks and to a
lesser degree from other public sector banks, in the housing, auto and personal loan
segments. In
mutual fund sales and other investment related products, our principal competitors are
brokers,
foreign banks and new private sector

banks.
• PRODUCTS AND SERVICES FOR AGRICULTURE

CUSTOMERS
Agriculture contributes 22% to India‟s GDP and supports approximately two-thirds of
India‟s population. In fiscal 2004, we surpassed the stated national goal that banks should
provide at
least18% of their net bank credit (which is gross credit minus Foreign Currency Non-Resident
Bank
deposits) to this segment, for which we received an award from India‟s Finance Minister. Our
average credit growth rate in this segment has been 32.2% over the last four years. As of the
last
reporting Friday of September 2004, agricultural loans constituted 18.8% of our net bank
credit.
• SMALL SCALE INDUSTRIES
We provide financing to “small scale industries” or “SSIs”. SSIs are defined as
manufacturing, processing and servicing businesses with up to Rs. 50 million invested in plant
and
machinery for certain industries such as hosiery, hand tools, drugs and pharmaceuticals and
stationery items and up to Rs. 10 million invested in plant and machinery for other small scale
industries. SSIs are also considered a priority sector for directed lending purposes. See the
section
titled “Business-Directed Lending” below. As of the last reporting Friday in September 2004,
SSI
loans constituted 11.3% of our net bank credit. As of the last reporting Friday in September,
2004
we had an outstanding loan portfolio of Rs. 57.3 billion in this segment compared to Rs. 48.5
billion
as of the last reporting Friday in September 2003, representing growth of approximately

18.1%.We
have also received awards and recognition from the Government of India relating to our
efforts in
financing SSI businesses.
35
BALANCE
SHEET
36
1. STATE BANK OF INDIA
BALANCE SHEET
AS ON
31-MARCH-20
0.
Assets Rs(mn) %BT
Net Own Assets 33291.42 0.46
Net Lease Assets(After Lease Adj A/c) 443.39 0.01

Investment 1895012.71 26.26
Advances 4167681.96 57.76
Cash & Money at call 674663.35 9.35
Other Current Assets 443749.84 6.15
Balance Sheet Total(BT) 7215263.12 100.00
Liabilities Rs(mn) %BT
Equity Share Capital 6314.70 0.09
Reserves 484011.91 6.71
Deposits 5374039.41 74.48
Borrowings 517274.11 7.17
Other Cash liab/prov. 833622.98 11.55
Non Performing Assets(NPA) % 1.87 -
Capital Adequacy Ratio(CAR) % 13.47 -
37
2. ICICI
BALANCE SHEET
AS ON 31-MARCH-2008
Assets Rs(mn) %BT
Investment 1114543.42 27.88
Advances 2256160.83 56.43
Reserves 453575.31 11.35
Deposits 2444310.50 61.14
Borrowings 656484.34 16.42

38
3. PUNJAB NATIONAL BANK
BALANCE SHEET
AS ON 31-MARCH-2008
Assets Rs(mn) %BT
Investment 539917.05 27.34
Advances 1195015.66 60.51

Reserves 104673.49 5.30
Deposits 1664572.26 84.29
Borrowings 54465.60 2.76
39
RATIO
ANALYSIS
40
❖ PROFITABILITY RATIO
A class of financial metrics that are used to assess a business's ability to generate
earnings as
compared to its expenses and other relevant costs incurred during a specific period of time.
For
most of these ratios, having a higher value relative to a competitor's ratio or the same ratio
from a
previous period is indicative that the company is doing

well.
Some examples of profitability ratios are profit margin, return on assets and return on
equity. It is important to note that a little bit of background knowledge is necessary in order to
make relevant comparisons when analyzing these

ratios.
For instances, some industries experience seasonality in their operations. The retail
industry,
for example, typically experiences higher revenues and earnings for the Christmas season.
Therefore, it would not be too useful to compare a retailer's fourth-quarter profit margin with
its first-quarter profit margin. On the other hand, comparing a retailer's fourth-quarter profit
margin with the profit margin from the same period a year before would be far more
informative.
➢ OPERATING MARGIN
A ratio used to measure a company's pricing strategy and operating efficiency.

Operating
margin is a measurement of what proportion of a company's revenue is left over after paying
for
variable costs of production such as wages, raw materials, etc. A healthy operating margin is
required for a company to be able to pay for its fixed costs, such as interest on debt. It Is Also
known as "operating profit margin."
Calculated as:
41
Operating margin gives analysts an idea of how much a company makes (before
interest and
taxes) on each dollar of sales. When looking at operating margin to determine the quality of a
company, it is best to look at the change in operating margin over time and to compare the
company's yearly or quarterly figures to those of its competitors. If a company's margin is
increasing, it is earning more per dollar of sales. The higher the margin, the better.
For example, if a company has an operating margin of 12%, this means that it makes
$0.12
(before interest and taxes) for every dollar of sales. Often, nonrecurring cash flows, such as
cash
paid out in a lawsuit settlement, are excluded from the operating margin calculation because
they
don't represent a company's true operating

performance.
RATIO AT 31-MARCH 2008
Sr.No. Name of Bank Percentage
1 SBI 22.69 %
2 ICICI 14.45 %
3 PNB 21.47 %
42
• INTERPRETATION
It shows that operating efficiency of SBI is better than PNB and ICICI. While operating
efficiency of ICICI is lower than PNB and SBI. So rank of operating efficiency of banks can be
given as SBI, PNB and ICICI.
➢ GROSS PROFIT MARGIN
A financial metric used to assess a firm's financial health by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold. Gross profit margin
serves as the source for paying additional expenses and future savings. It is also known as
"gross
margin". Calculated
as:
BAR-GRAPH
43
For example, suppose that ABC Corp. earned $20 million in revenue from producing
widgets and incurred $10 million in COGS-related expense. ABC's gross profit margin would
be
50%. This means that for every dollar that ABC earns on widgets, it really has only $0.50 at
the end
of the day.
This metric can be used to compare a company with its competitors. More efficient
companies will usually see higher profit

margins.
1 SBI 21.49 %
2 ICICI 12.99 %
3 PNB 20.67%
44
• INTERPRETATION
This ratio shows financial position of company. Here, financial position of SBI is better
than
PNB and ICICI. So SBI is at first rank by its financial position than PNB and
ICICI.
➢ NET PROFIT MARGIN
For a business to survive in the long term it must generate profit. Therefore the net
profit
margin ratio is one of the key performance indicators for your

business.
The net profit margin ratio indicates profit levels of a business after all costs have been
taken
into account. It is worth analysing the ratio over time. A variation in the ratio from year to year
may
be due to abnormal conditions or expenses. Variations may also indicate cost blowouts which
need
to be addressed.
A decline in the ratio over time may indicate a margin squeeze suggesting that
productivity
improvements may need to be initiated. In some cases, the costs of such improvements may
lead to
a further drop in the ratio or even losses before increased profitability is

achieved.
BAR-GRAPH
45
The calculation used to obtain the ratio
is:
Net Profit Margin = Net Profit x 100
Sales
1 SBI 11.67 %
2 ICICI 10.51 %
3 PNB 12.68 %
46
• INTERPRETATION
This ratio is key performance indicators for business. Key performance means the
profit
level of company; from above graph we can say that performance of PNB is better than SBI
and
ICICI. So profit level of PNB is at first rank than comes SBI and
ICICI.
➢ RETURN ON NETWORTH
Return on Net worth (RONW) is used in finance as a measure of a company‟s
profitability.
It reveals how much profit a company generates with the money that the equity shareholders
have
invested. Therefore, it is also called „Return on Equity‟
(ROE)
• It is expressed as:-
Net Income
RONW = ------------------------------------------- X 100
Shareholder‟s Equity
The numerator is equal to a fiscal year‟s net income (after payment of preference
share
dividends but before payment of equity share dividends).The denominator excludes

preference
BAR-GRAPH
47
shares and considers only the equity shareholding. So, RONW measures how much return
the
company management can generate for its equity

shareholders.
RONW is a measure for judging the returns that a shareholder gets on his investment
as a
shareholder, equity represents your money and so it makes good sense to know how well
management is doing with it.
1 SBI 13.72 %
2 ICICI 8.94 %
3 PNB 19.00 %
BAR-GRAPH
48
• INTERPRETATION
This ratio is useful for comparing the profitability of a company to that of other firms in
the
same industry. Here, profitability of PNB is more than SBI and PNB. So we can say that PNB
is at
first rank by its profitability than comes SBI and

ICICI.
❖ LEVERAGE RATIO
Any ratio used to calculate the financial leverage of a company to get an idea of the
company's methods of financing or to measure its ability to meet financial obligations. There
are
several different ratios, but the main factors looked at include debt, equity, assets and interest
expenses.
A ratio used to measure a company's mix of operating costs, giving an idea of how
changes
in output will affect operating income. Fixed and variable costs are the two types of operating
costs;
depending on the company and the industry, the mix will

differ.
The most well known financial leverage ratio is the debt-to-equity ratio. For example, if
a
company has $10M in debt and $20M in equity, it has a debt-to-equity ratio of 0.5
($10M/$20M).
Companies with high fixed costs, after reaching the breakeven point, see a greater increase
in
operating revenue when output is increased compared to companies with high variable costs.
The
reason for this is that the costs have already been incurred, so every sale after the breakeven
transfers to the operating income. On the other hand, a high variable cost company sees little
increase in operating income with additional output, because costs continue to be imputed
into the
outputs. The degree of operating leverage is the ratio used to calculate this mix and its effects
on
operating income.
➢ DEBT-EQUITY RATIO
A measure of a company's financial leverage calculated by dividing its total

liabilities by stockholders' equity.
49
Note: Sometimes only interest-bearing, long-term debt is used instead of total liabilities in the
calculation. It is also known as the Personal Debt/Equity Ratio, this ratio can be applied to
personal
financial statements as well as

companies'.
A high debt/equity ratio generally means that a company has been aggressive in
financing its
growth with debt. This can result in volatile earnings as a result of the additional interest
expense.
If a lot of debt is used to finance increased operations (high debt to equity), the
company
could potentially generate more earnings than it would have without this outside financing. If
this
were to increase earnings by a greater amount than the debt cost (interest), then the
shareholders
benefit as more earnings are being spread among the same amount of shareholders.
However, the
cost of this debt financing may outweigh the return that the company generates on the debt
through
investment and business activities and become too much for the company to handle. This can
lead
to bankruptcy, which would leave shareholders with

nothing.
The debt/equity ratio also depends on the industry in which the company operates. For
example, capital-intensive industries such as auto manufacturing tend to have a debt/equity

ratio
above 2, while personal computer companies have a debt/equity of

under 0.5.
1 SBI 10.96 %
2 ICICI 5.27 %
3 PNB 15.44 %
50
• INTERPRETATION
This ratio indicates what proportion of equity and debt the company is using to finance its
assets. From above diagram we can say that PNB has a high debt-equity ratio means it is
aggressive
in financing its growth with debt. Than after SBI has a low debt-equity ratio as comparison
with
PNB and ICICI comes at third rank in debt-equity

ratio.
• FIXED ASSETS TURNOVER RATIO
Measure of the productivity of a firm, it indicates the amount of sales generated by each
dollar spent on fixed assets, and the amount of fixed assets required to generate a specific
level of
revenue. Changes in the ratio over time reflect whether or not the firm is becoming more
efficient in
the use of its fixed assets. Formula: Sales revenue ÷ average fixed
assets.
BAR-GRAPH
51
1 SBI 6.31 %
2 ICICI 5.61 %
3 PNB 4.35 %
BAR-GRAPH
52
• INTERPRETATION
This ratio shows specific level of revenue by the amount of fixed assets. SBI has a
high
level of revenue in comparison with ICICI and PNB. After SBI, ICICI has a high level of
revenue
and than comes PNB at last.
❖ LIQUIDITY RATIO
A class of financial metrics that is used to determine a company's ability to pay off its
short-
terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of
safety that the company possesses to cover short-term
debts.
Common liquidity ratios include the current ratio, the quick ratio and the operating cash
flow ratio. Different analysts consider different assets to be relevant in calculating liquidity.
Some
analysts will calculate only the sum of cash and equivalents divided by current liabilities
because they feel that they are the most liquid assets, and would be the most likely to be
used to
cover short-term debts in an

emergency.
A company's ability to turn short-term assets into cash to cover debts is of the utmost
importance when creditors are seeking payment. Bankruptcy analysts and mortgage
originators
frequently use the liquidity ratios to determine whether a company will be able to continue as
a
going concern.
➢ CURRENT RATIO
This ratio is a rough indication of a firm's ability to service its current obligations.
Generally, the higher the current ratio, the greater the "cushion" between current obligations
and
your Company's ability to pay them. The composition and quality of current assets is a critical
factor in the analysis of your Company's liquidity. It is calculated as Total current assets
divided by
total current liabilities.
53
1 SBI 0.07 %
2 ICICI 0.10 %
3 PNB 0.02 %
BAR-GRAPH
54
• INTERPRETATION
Current ratio of ICICI is higher than SBI and PNB, means ICICI has a high ability to
pay for
its liabilities, and than secondly comes SBI and PNB has a low ability to pay for liabilities in
comparison with ICICI and PNB.

➢ QUICK RATIO
It is also known as the "Acid Test" ratio; it is a refinement of the current ratio and is a
more
conservative measure of liquidity. The ratio expresses the degree to which your current
Company's
current liabilities are covered by the most liquid current assets. Generally, any value of less
than 1
to 1 implies a "dependency" on inventory or other current assets to liquidate short-term

debt.
It is calculated as Cash plus trade receivables divided by total current

liabilities.

55
• INTERPRETATION
1 SBI 6.15 %
2 ICICI 6.42 %
3 PNB 9.40 %
BAR-GRAPH
56
PNB has a high quick ratio means it has enough current assets to cover its current
liabilities,
while SBI and ICICI have a low quick ratio in comparison with
PNB.
❖ PAYOUT RATIOS
The amount of earnings paid out in dividends to shareholders. Investors can use the payout
ratio
to determine what companies are doing with their

earnings.
Calculated as:
For example, a very low payout ratio indicates that a company is primarily focused on
retaining its earnings rather than paying out dividends. The payout ratio also indicates how
well
earnings support the dividend payments: the lower the ratio, the more secure the dividend
because
smaller dividends are easier to pay out than larger

dividends.
➢ DIVIDEND PAYOUT RATIO
Dividend payout ratio is the fraction of net income a firm pays to its stockholders in
dividends:
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. Note that dividend payout ratio is a reciprocate ratio to dividend cover,
which is
calculated as EPS/DPS.
57
• INTERPRETATION
ICICI has a high dividend payout ratio, so the Investors who are seeking high current
income and limited capital growth should be invest in ICICI bank. PNB and SBI have a low
dividend payout ratio, so investors who are seeking capital growth should be invest in PNB
and SBI
because capital gains are taxed at a lower

rate.
22.64 %
1 SBI
2 ICICI 33.12 %
3 PNB 23.40 %
BAR-GRAPH
58
➢ EARNING RETENTION RATIO
The percent of earnings credited to retained earnings. In other words, the proportion of net
income
that is not paid out as dividends.
Calculated as:
It can also be calculated as one minus the dividend payout
ratio.
1 SBI 77.33 %
2 ICICI 66.35 %
3 PNB 76.59 %
BAR-GRAPH
59
• INTERPRETATION
Earning retention ratio is the opposite of the dividend payout ratio. SBI and PNB have a high
earning retention ratio, so the Investors who are seeking high current income and limited
capital growth should be invest in SBI and PNB. ICICI has a low earning retention ratio, so the
investors who are seeking capital growth should be invest in ICICI BANK.
❖ PERSHARE RATIOS
➢ EARNIG PER SHARE
The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's

profitability.
Calculated as:
When calculating, it is more accurate to use a weighted average number of shares
outstanding over the reporting term, because the number of shares outstanding can change
over
time. However, data sources sometimes simplify the calculation by using the number of
shares
outstanding at the end of the

period.
60
Diluted EPS expands on basic EPS by including the shares of convertibles or warrants
outstanding in the outstanding shares

number.
Earnings per share are 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.
For example, assume that a company has a net income of $25 million. If the company
pays
out $1 million in preferred dividends and has 10 million shares for half of the year and 15
million
shares for the other half, the EPS would be $1.92 (24/12.5). First, the $1 million is deducted
from
the net income to get $24 million, and then a weighted average is taken to find the number of
shares
outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M).
An important aspect of EPS that's often ignored is the capital that is required to generate the
earnings (net income) in the calculation. Two companies could generate the same EPS
number, but
one could do so with less equity (investment) - that company would be more efficient at using
its capital to generate income and, all other things being equal, would be a "better" company.
Investors also need to be aware of earnings manipulation that will affect the quality of the
earnings
number. It is important not to rely on any one financial measure, but to use it in conjunction
with
statement analysis and other

measures.

1 SBI 117.33 %
2 ICICI 42.56 %
61
• INTERPRETATION
This ratio is an indicator of a company's profitability. From above graph we can say that SBI
has a
high profitability than PNB and ICICI. So, PNB comes at second position and ICICI comes at
third
position in profitability.
3 PNB 70.38 %
BAR GRAPH
62
OBJECTIVE
S
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.
1. EARNING CAPACITY OR PROFITABILITY

The overall objective of a business is to earn a satisfactory return on the funds
invested in it.
Financial analysis helps in ascertaining whether adequate profits are being earned on the
capital
invested in the business or not. It also helps in knowing the capacity to pay the interest and
dividend.
2. COMPARATIVE POSITION IN RELATION TO OTHER FIRMS

The purpose of financial statements analysis is to help the management to make a
comparative study of the profitability of various firms engaged in similar business. Such
63
comparison also helps the management to study the position of their firm in respect of sales
expenses, profitability and using

capital.etc.
3. EFFICIENCY OF MANAGEMENT
The purpose of financial statement analysis is to know that the financial policies
adopted by
the management are efficient or not. Analysis also helps the management in preparing
budgets by
forecasting next year‟s profit on the basis of past earnings. It also helps the management to
find out
shortcomings of the business so that remedial measures can be taken to remove these
shortcomings.
4. FINANCIAL STRENGTH
The purpose of financial analysis is to assess the financial potential of business.
Analysis
also helps in taking decisions;
(a) Whether funds required for the purchase of new machinery and equipments are provided
from
internal resources of business or

not.
(b) How much funds have been raised from external

sources.
5.SOLVECNY OF THE FIRM

The different tools of analysis tells us whether the firm has suffucient funds to meet its
short-
term and long-term liabilities or not.

64
IMPORTANCE
65
IMPORTANCE
Ratio analysis is an important technique of financial analysis. It is a means for judging

the
financial health of a business enterprise. It determines and interprets the
liquidity,solvency,profitability,etc. of a business
enterprise.
• It becomes simple to understand various figures in the financial statements through the
use of
different ratios. Financial ratios simplify, sumarise, and systemise the accounting
figures
presented in financial
statements.
• With the help of raito analysis, comparision of profitability and financial soundness can
be
made between one industry and another. Similarly comparision of current year figures
can
also be made with those of previous years with the help of ratio analysis and if some
weak
points are located, remidial masures are taken to correct

them.
• If accounting ratios are calculated for a number of years, they will reveal the trend of
costs,
sales, profits and other important facts. Such trends are useful for
planning.
• Financial ratios, based on a desired level of activities, can be set as standards for
judging
actual performance of a business. For example, if owners of a business aim at earning

profit
@ 25% on the capital which is the prevailing rate of return in the industry then this rate
of
25% becomes the standard. The rate of profit of each year is compared with this
standard
and the actual performance of the business can be judged

easily.
• Ratio analysis discloses the position of business with different viewpoint. It discloses the
position of business with liquidity viewpoint, solvency view point, profitability viewpoint,
etc. with the help of such a study, we can draw conclusion regardings the financial
health of
business enterprise.
66
ADVANTAGES
&
LIMITATIONS
67
ADVANTAGES
Ratio analysis is an important and age-old technique of financial analysis. The following are
some
of the advantages of ratio

analysis:
1. Simplifies financial statements: It simplifies the comprehension of financial statements.
Ratios tell the whole story of changes in the financial condition of the
business.
2. Facilitates inter-firm comparison: It provides data for inter-firm comparison. Ratios
highlight the factors associated with with successful and unsuccessful firm. They also
reveal
strong firms and weak firms, overvalued and undervalued

firms.
3. Helps in planning: It helps in planning and forecasting. Ratios can assist management,
in its
basic functions of forecasting. Planning, co-ordination, control and

communications.
4. Makes inter-firm comparison possible: Ratios analysis also makes possible comparison
of
the performance of different divisions of the firm. The ratios are helpful in deciding
about
their efficiency or otherwise in the past and likely performance in the

future.
5. Help in investment decisions: It helps in investment decisions in the case of investors

and
lending decisions in the case of bankers

etc.
68
LIMITATIONS
The ratios analysis is one of the most powerful tools of financial management. Though ratios
are
simple to calculate and easy to understand, they suffer from serious

limitations.
1. Limitations of financial statements: Ratios are based only on the information which has
been
recorded in the financial statements. Financial statements themselves are subject to

several
limitations. Thus ratios derived, there from, are also subject to those limitations. For
example, non-financial changes though important for the business are not relevant by
the
financial statements. Financial statements are affected to a very great extent by

accounting
conventions and concepts. Personal judgment plays a great part in determining the
figures
for financial statements.
2. Comparative study required: Ratios are useful in judging the efficiency of the business
only
when they are compared with past results of the business. However, such a
comparison only
provide glimpse of the past performance and forecasts for future may not prove correct
since
several other factors like market conditions, management policies, etc. may affect the
future
operations.
3. Problems of price level changes: A change in price level can affect the validity of ratios
calculated for different time periods. In such a case the ratio analysis may not clearly
indicate the trend in solvency and profitability of the company. The financial
statements,
therefore, be adjusted keeping in view the price level changes if a meaningful

comparison is
to be made through accounting

ratios.
4. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There
are no
well accepted standards or rule of thumb for all ratios which can be accepted as norm.
It
renders interpretation of the ratios difficult.
5. 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.
6. 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.
69
7. 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.

CONCLUSION
70

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A

“COMPARATIVE STUDY OF FINANCIAL REPORT

TOP THREE BANKS OF INDIA”

SUBMITTED TO TILAK MAHARASHTRA UNIVERSITY

IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE

MASTER OF BUSINESS ADMINISTRATION

MAHARASHTRA COSMOPOLITAN EDUCATION SOCIETY‟S

PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE

management excellence, Maharashtra Cosmopolitan Education society, Pune has completed

of the college for the academic year

Maharashtra Cosmopolitan Education

I hereby declare that project titled “COMPARATIVE STUDY OF FINANCIAL REPORT

of MBA to our college.

indirectly in my project work.

and support in my project report.

this project report if they bring such mistakes to my

3. ​Products & Services

analysis by ratios. In this process, a meaningful relationship is established between

more accounting figures for

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

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

the best founded

statement and balance sheet or position

the end of the year.

❖ Analysis means establishing a meaningful relationship between various items of the

financial soundness of the business

❖ Thus, analysis of financial statements means establishing meaningful relationship

❖ Parties interested in analysis of financial

analysis of financial statements

➢ Short- term creditors

when fall due for payment or not.

paid on time or not.

They are interested in profitability, return and capital

The management is interested in the financial position and performance of the

a whole and of its various divisions.

They are interested in the financial statements in undertaking research in business

1. STATE BANK OF INDIA

Type- Public (BSE, NSE:SBI) &

Founded- Calcutta, 1806 (as Bank of Calcutta)

Mumbai 400 021 India

Key people- Om Prakash Bhatt, Chairman

the Reserve Bank of India.

handshake schemes and computerizing its

government of India is the largest shareholder in

SBI operates several foreign subsidiaries or affiliates. In 1990 it established an

branch in Shanghai and plans to open one up in

2 Shri S.K. Bhattacharyya(MD & CC&RO)

3 Shri Suman Kumar Bery

4 Dr. Ashok Jhunjhunwala

5 Shri Dileep C. Choksi

7 Dr. Deva Nand Balodhi

8 Prof. Mohd. Salahuddin Ansari

9 Dr.(Mrs.) Vasantha Bharucha

10 Shri Arun Ramanathan

11 Smt. Shyamala Gopinath

2. INDUSTRIAL CREDIT & INVESTMENT CORPORATION

to provide a wider range of financial products and services to a broader spectrum of

private sector bank, in an all-stock

purposes under Indian GAAP was March 30,

11. V. Prem Watsa

12. K. V. Kamath, ​Managing Director & CEO

portfolio by taking advantage of market

(including the discount on bills discounted) and income on investments. Income on

3. Products & Services

12. K. V. Kamath, Managing Director & CEO

▪ SBI VISHWA YATRA FOREIGN TRAVEL CARD

▪ REVISED SERVICE CHARGES

▪ SAFE DEPOSIT LOCKER