comparative analysis between private and public bank using ration analysis

2.  Executive summary
 Introduction
 Industry profile
 Aim and Objective
 Methodology
 Finding and analysis
 Suggestion
 Conclusion
 Bibliography

3.  Project was mainly based on determining the
trends in ratios of public and private sector
banks.
 To see for all 8 ratios which sector and banks
are doing well and which two banks out of this
banks are more profitable .
 To analyze the performance ratio analysis
method is used.

4.  Banks are considered key financial
intermediaries or institutions that serve as
“middle man”.
 The banking sector is considered to be an
important source of financing for most
businesses.
 They make funds available to meet the needs of
individuals, businesses and the government

5.  The profitability of the Indian banking sector is
projected to decline sharply.
 Banks have estimated deteriorating in key
performance indicators including Credit Growth, Net
Interest Income, Growth in Profit After Tax (PAT)
and Return on Equity.
 Rise in NPA level are raising concerns in banking
industry.

6. Aim
 To Compare and analyze the performance of Public sector
Banks and Private Sector Banks in India
Objective
 To identify the one best performing bank in each sector
and compare them on basis of their profitability ratios.
 To determine which of the Banks have highest Non-
performing assets Ratio and suggest ways to overcome it.

7.  Secondary Data
Financial Websites
 Primary Data
Ratio analysis
 Sample Size
Five major public sector and private sector banks are
selected on the basis of their Total Assets from the
year 2009 to 2013

9. NIM years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 2.49 2.77 2.7 2.8 2.83 2.718 0.121885192
HDFC bank 4.04 3.76 3.8 3.6 3.9 3.82 0.146424042
ICICI Bank 2.2 2.23 2.21 2.19 2.58 2.282 0.149586096
kotak Mahindra 1.7 2.1 2.4 2.4 2.6 2.24 0.313687743
yes bank 2.23 2.16 2.11 2.19 2.23 2.184 0.045431267
PSU
SBI 2.16 2.24 2.65 3.24 2.84 2.626 0.397371363
IDBI 0.76 0.97 1.7 1.56 1.66 1.33 0.388123692
PnB 2.84 2.87 3.12 2.92 3.1 2.97 0.117303026
BOB 2.25 2.13 2.45 2.3 2.06 2.238 0.135852862
BOI 3.7 2.09 2.22 2.16 1.9 2.414 0.651938647

10. Credit deposit years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 69.48 73.84 75.25 77.12 77.97 74.732 2.994484
HDFC bank 69.2 75.16 76.69 79.21 80.91 76.234 4.038815
ICICI Bank 99.9 89.6 95.9 99.3 99.1 96.76 3.841666
kotak Mahindra 106.2 86.9 100.2 101.4 94.9 97.92 6.579179
yes bank 76.7 82.81 74.8 77.28 70.19 76.356 4.075952
PSU
SBI 73.1 78.58 81.02 83.12 86.93 80.55 4.624145
IDBI 92.01 82.42 87.04 86.06 86.43 86.792 3.068233
PnB 73.75 74.84 77.37 77.39 78.84 76.438 1.861369
BOB 74.83 72.61 74.86 74.66 69.25 73.242 2.167297
BOI 75.33 73.33 71.29 78.19 75.78 74.784 2.332943

11. debt/equity years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 12.4 9.87 11.3 7.67 13 10.848 1.913127283
HDFC bank 9.6 8.3 8.7 9.04 9.09 8.946 0.432462715
ICICI Bank 5.72 5.73 6.08 6.55 6.56 6.128 0.371989247
kotak Mahindra 5.51 6.6 5.9 6.9 7.5 6.482 0.708305019
yes bank 11.3 10.21 13.87 13.53 15.13 12.808 1.792455299
PSU
SBI 13.73 13.75 16.21 13.94 13.87 14.3 0.958123165
IDBI 16.6 21.1 15.9 13.5 13.7 16.16 2.749254444
PnB 14.16 15.15 16.01 14.98 13.19 14.698 0.955895392
BOB 15.43 16.84 15.57 14.87 15.65 15.672 0.644496703
BOI 14.76 17.72 18.56 16.71 17.44 17.038 1.283750755

12. Current ratio years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 0.03 0.03 0.74 0.77 0.77 0.468 0.357793236
HDFC bank 0.04 0.03 0.73 0.76 0.78 0.468 0.353915244
ICICI Bank 0.13 0.14 0.96 1 0.98 0.642 0.414169048
kotak Mahindra 0.09 0.05 0.95 1 0.94 0.606 0.438296703
yes bank 0.07 0.04 0.05 0.08 0.72 0.192 0.264378517
PSU
SBI 0.04 0.04 0.077 0.82 0.84 0.3634 0.381269249
IDBI 0.04 0.03 0.02 0.02 0.86 0.194 0.333082572
PnB 0.02 0.02 0.03 0.03 0.8 0.18 0.310032256
BOB 0.02 0.02 0.75 0.75 0.69 0.446 0.348516858
BOI 0.03 0.02 0.04 0.03 0.76 0.176 0.292068485

13. ROA years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 0.3 0.4 0.5 0.6 0.6 13.8 0.116619
HDFC bank 1.2 1.3 1.4 1.5 1.6 37.4 0.141421
ICICI Bank 0.9 1.1 1.23 1.32 1.5 34.55 0.202386
kotak Mahindra 1.05 1.27 1.42 1.48 1.55 36.22 0.177831
yes bank 1.32 1.31 1.23 1.32 1.31 31.38 0.034293
PSU
SBI 0.94 0.87 0.6 0.87 0.9 21.28 0.120764
IDBI 0.49 0.44 0.65 0.65 2.82 58.63 0.908911
PnB 1.2 1.3 1.17 1.06 0.99 24.53 0.108554
BOB 0.9 1.09 1.18 1.19 0.8 20.36 0.155872
BOI 1.3 0.7 0.6 0.6 14.6 0.291548

14. ROE
Banks years Mean SD
Private 2009 2010 2011 2012 2013
Axis bank 10.11 12.41 16.5 20.53 22.13 16.336 4.590501498
HDFC bank 10.55 12.7 16.8 21.9 28.2 18.03 6.391838546
ICICI Bank 6.75 7.2 8.9 11.21 14.43 9.698 2.837092878
kotak mahindra 1.7 2.7 3.9 5.2 6.9 4.08 1.833466662
yes bank 2.04 2.81 4.1 5.5 7.2 4.33 1.855435259
PSU
SBI 28.7 28.8 23.2 34.8 41.2 31.34 6.146088187
IDBI 2.36 2.84 3.35 2.96 2.82 2.866 0.316834342
PnB 19.6 24.7 27.9 28.8 26.8 25.56 3.279390187
BOB 12.18 16.73 21.5 24.2 21.2 19.162 4.234715575
BOI 11.43 6.6 9.09 9.32 9.21 9.13 1.531992167

15. net profit margin years Mean SD
Banks 2009 2010 2011 2012 2013
Private
Axis bank 13.21 16.13 17.12 15.47 15.35 15.456 1.174671585
HDFC bank 11.33 14.6 16.1 15.8 16.04 14.774 1.648490218
ICICI Bank 9.5 12.1 15.7 15.7 17.1 14.02 2.557603045
kotak Mahindra 9.4 12.9 14.62 13.6 14 12.904 1.678705851
yes bank 12.4 16.2 15.5 13.63 13.61 14.268 1.263584847
PSU
SBI 11.9 10.6 7.6 9.6 10.3 10 1.289702808
IDBI 6.5 5.8 7.9 7.4 6.6 6.84 0.669825848
PnB 13.89 15.6 14.48 12.02 10.29 13.256 1.718493526
BOB 12.47 15.67 17.17 15.1 11.51 14.384 1.908381513
BOI 15.5 8.4 10.2 8.41 7.7 10.042 2.603180106

16. CAR
Banks years Mean SD
Private 2009 2010 2011 2012 2013
Axis bank 13.69 15.8 12.68 13.66 17 14.566 1.586966918
HDFC bank 15.69 17.44 16.22 16.52 16.8 16.534 0.583561479
ICICI Bank 15.53 19.4 19.5 18.5 18.7 18.326 1.450484057
kotak mahindra 20.01 18.35 19.92 17.52 16.05 18.37 1.496489225
yes bank 16.6 20.6 16.5 17.9 18.3 17.98 1.487817193
PSU
SBI 14.25 13.39 11.98 13.86 12.92 13.28 0.78854296
IDBI 11.57 11.31 13.64 14.58 13.13 12.846 1.241395988
PnB 14.27 14.82 12.42 13.12 13.16 13.558 0.865433995
BOB 14.05 14.36 14.52 14.67 13.3 14.18 0.485674788
BOI 13.01 12.94 12.17 11.95 11.02 12.218 0.729092587

17. NPA
Banks years Mean SD
Private 2009 2010 2011 2012 2013
Axis bank 0 0 0.26 0.25 0.32 0.166 0.137637
HDFC bank 0 0 0.2 0.2 0.2 0.12 0.09798
ICICI Bank 0 0 1.11 0.73 0.77 0.522 0.446202
kotak mahindra 0 0 0.72 0.61 0.64 0.394 0.323704
yes bank 0 0 0.03 0.05 0.01 0.018 0.019391
PSU
SBI 0.02 0.04 0.077 0.82 0.84 0.3594 0.38473
IDBI 0 0 0.65 1.52 2.35 0.904 0.913162
PnB 0 0 1.06 1.61 1.58 0.85 0.721055
BOB 0 0 0.35 0.54 1.28 0.434 0.471322
BOI 0 0 0.91 1.47 2.06 0.888 0.811157

18.  NIM ratio is almost the same in all banks except HDFC which is very
high 3.82 which is very good because here interest received is more
than it is paid.
 IDBI Credit/deposit ratio is higher but its return are very low and it has
low liquidity.
 BOI and IDBI has highest D/E compared to other banks which is
considered unhealthy it has more liabilities whereas other banks have
comparatively low ratio value. Liabilities are more in public sector
banks than Private Sector.
 With respect to current ratio the trend in both the sectors is same
which ranges from 0.4 to 0.1.Here the value should be more than
1which indicates that company’s assets are utilized efficiently. No one
of the bank has value more than 1.

19.  Axis bank BOI has very low ROA ratio which 13 and 14
respectively compared to other banks which ratios are above
20.
 Yes bank .kotak Mahindra and IDBI has very low ROE which
means their shareholders investment is very low.
 CAR ratios are higher in private sector bank then public sector
ability to meet the risk is higher here in private bank then public.
 There is increasing in NPA from the year 2009 to 13 from 0 to
0.9 which says that there are rise in non-performing loans every
year which can affect the profitability of the banks.

20.  Spread ratio = Interest earned ratio –
Interest paid ratio
 Burden ratio = Other operating expenses
ratio – Non–interest Income
 Profitability ratio = Spread ratio – Burden
ratio

24.  Maintain healthy NIM ratio .
 Kotak Mahindra and ICICI should maintain their liquidity and D/E ratio
in the same range where other banks have maintained.
 Increase in ROA in the banks.
 Kotak Mahindra, IDBI ,Yes Bank, BOI this banks ROE is less than 10
% which is very less they should start increasing their shareholders
value by attracting new investments to their company
 Maintain CAR ratio which should be always higher than 9percent.
 Effective and regular follow-up.

25.  Maintain Healthy relationship with borrowers.
 Use well-functioning Asset reconstruction/Recovery
mechanism .
 Commercial Banks should be allowed to come up
with their own measures to address the problem of
NPAs.

26.  The trends in ratios in both the sectors are different from
each other.
 NPA level is more in public sector banks than in private
sector and it is increasing rapidly in both of this sectors.
 From the comparison of two banks it is revealed that
HDFC’s profitability is more than that of SBI.
 SBI as a public sector bank play a vital role in the
development of the banking base in the country.