116

Chapter – IV

Comparison of ICICI Bank

with other Private Sector Banks

117

CHAPTER - IV

COMPARISON OF ICICI BANK WITH OTHER PRIVATE SECTOR BANKS

S. No Particulars Page

No

4.1 Introduction 116

4.2 Introduction of AXIS Bank 119

4.3 Introduction of HDFC Bank 120

4.4 Introduction of YES Bank 124

4.5 Introduction of ING VYSYA Bank in India 127

4.6 Introduction of KOTAK MAHINDRA Bank 130

Growth of ICICI with HDFC, AXIS, ING VYSYA, KOTAK 4.7

MAHINDRA AND YES Bank 133

4.8 Deposits 134

4.9 Credit Deployment 135

4.10 Borrowings 137

4.11 Growth in ATM Machines 137

4.12 Number of Branches 140

4.13 Number of Employees 142

4.14 Capital Adequacy 144

4.15 Earnings per Share 145

4.16 Net Profit Margin 147

4.17 Credit Deposit Ratio 148

4.18 Conclusion 150

118

CHAPTER – IV

COMPARISON OF ICICI BANK WITH OTHER

PRIVATE SECTOR BANKS

4.1 INTRODUCTION

In India the banks are being segregated in different groups. Each group has their own

benefits and limitations in operating in India. Each has their own dedicated target market.

Few of them work in rural sector while others in both rural as well as urban. Some are of

Indian origin and some are foreign players. All these details and many more are discussed

over here.

Indian Banking Sector: Challenges Ahead

India's banking industry is at a watershed. It has met and successfully overcome

several challenges over the last decade. But bigger challenges lie ahead. Some of these lie in

the distance which Indian banking has still to go, before it can claim to be at the top of the

Asia-Pacific region. Indian banks, the dominant financial intermediaries in India, have made

good progress over the last five years; it is evident from several parameters, including annual

credit growth, profitability, and trend in gross non-performing assets (NPAs). While the

annual rate of credit growth clocked 23% during the last five years, profitability (average

Return on Net Worth) was maintained at around 15% during the same period, and gross

NPAs fell from 3.3% as on March 31, 2006 to 2.3% as on March 31, 2011.1

Good internal capital generation, reasonably active capital markets, and governmental

support ensured good capitalization for most banks during the period under study, with

overall capital adequacy touching 14% as on March 31, 2011. At the same time, high levels

of public deposit ensured most banks had a comfortable liquidity profile. While banks have

benefited from an overall good economic growth over the last decade, implementation of

SARFAESI2, setting up of credit information bureaus, internal improvements such as upgrade

of technology infrastructure, tightening of the appraisal and monitoring processes, and

strengthening of the risk management platform have also contributed to the improvement.

1

Indian Banking Sector: Challenges unlikely to derail the progress made June 2011 2

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

119

Significantly, the improvement in performance has been achieved despite several hurdles

appearing on the way, such as temporary slowdown in economic activity (in the second half

of 2008-09), a tightening liquidity situation, increases in wages following revision, and

changes in regulations by the Reserve Bank of India (RBI), some of which prescribed

higher credit provisions or higher capital allocations.

Currently, Indian banks face several challenges, such as increase in interest rates on

saving deposits, possible deregulation of interest rates on saving deposits, a tighter monetary

policy, a large government deficit, increased stress in some sectors (such as, State utilities,

airlines, and microfinance), restructured loan accounts, unamortized pension/gratuity

liabilities, increasing infrastructure loans, and implementation of Basel III.

The Indian financial sector (including banks, non-banking financial companies

( NBFCs), and housing Finance companies (HFCs) reported a compounded annual growth

rate (CAGR) of 19% over the last three years and their credit portfolio stood at close

to ` 49 trillion (around 62% of 2010-11 GDP) as on March 31, 2011. Banks accounted to

nearly 86% of the total credit, NBFCs for around 10%, and HFCs for around 4%. Within

banks, public sector banks (PSBs), on the strength of their country-wide presence,

continued to be the leader, accounting for around 76% of the total credit portfolio, while

within the NBFC sector, large infrastructure financing institutions3

accounted for more

than half the total NBFC credit portfolio; NBFCs that are into retail financing took up the

rest.

While the Indian banking sector features a large number of players competing

against each other, the top 10 banks accounted for a significant 57% share of the total credit

as on March 31, 2011

3 Such as Power Finance Corporation, Rural Electrification Corporation, and other infrastructure

NBFCs

120

Table 4.1

Table showing the Key Players in Indian Banking Sector

Name of Bank

Credit

Portfolio as

in March

2011 (` billion)

Market

Share

(%)

NIMs

(2010-11)

Tier-I

Capital

% as in

March

2011

Return

On Net

Worth

(2010-11)

Gross NPA

% as in

March

2011

State Bank of India 7,567 18% 2.9% 7.8% 13% 3.3%

Bank of Baroda 2,287 5% 2.8% 10.0% 24% 1.4%

ICICI Bank 2,164 5% 2.3% 13.2% 10% 4.5%

Bank of India 2,131 5% 2.5% 8.3% 17% 2.2%

Canada Bank 2,125 5% 2.6% 10.9% 26% 1.5%

HDFC Bank 1,600 4% 4.2% 12.2% 17% 1.1%

IDBI Bank 1,571 4% 1.8% 8.1% 16% 1.8%

Axis Bank 1,424 3% 3.1% 9.4% 19% 1.1%

Central Bank of India 1,297 3% 2.7% 6.4% 18% 2.2%

Total banking sector4

42,874 100% 2.9% 9.7% 17% 2.3%

Source: Annual reports of banks, RBI, ICRA Research

On asset quality, public sector banks (PSBs) report some deterioration while private

banks show improvement.

The Gross NPA percentage of SCBs did not increase by the extent that the stress in

the Indian market during 2008-09 would warrant because of large loan restructuring over last

2-3 years (4-5% of total advances); Gross NPAs declined marginally from 2.4% as in March

2010 to 2.3% as in March 2011. However, higher provisioning led to a reduction in Net

NPAs from 1.1% as in March 2010 to 0.9% as in March 2011.

Table 4.2

Table showing the Trend in Asset Quality Indicators of SCBs

SCBs FY06 FY07 FY08 FY09 FY10 FY115

Gross NPAs (%) 3.3 2.5 2.3 2.3 2.4 2.3

Net NPAs (%) 1.2 1.0 1.0 1.1 1.1 0.9

Fresh NPA Generation Rate (%) 2.0 1.7 1.8 2.1 2.2 2.0

Net NPAs/Net Worth (%) 10.1 9.2 7.8 8.6 9.1 10.0

PSBs FY06 FY07 FY08 FY09 FY10 FY11

Gross NPA (%) 3.6 2.7 2.2 2.0 2.2 2.3

Net NPA (%) 1.3 1.1 1.0 0.9 1.1 1.1

Net NPAs/Net Worth (%) 13.1 12.1 11.2 11.4 13.5 13.4

Private banks FY06 FY07 FY08 FY09 FY10 FY11

Gross NPAs (%) 2.1 2.1 2.4 2.9 2.7 2.3

Net NPAs (%) 0.9 0.9 1.1 1.3 1.0 0.6

Net NPAs/Net Worth (%) 6.3 7.8 6.1 7.5 5.3 3.2 Source: Annual reports of banks, RBI, ICRA Research

4The data pertains to SCBs, except for NIMs and Returns on Net Worth, which are for select

Public Sector Banks + Private Sector Banks covering more than 90% of the universe.

121

Over the last two years, PSBs‟ Gross NPAs rose from 2% to 2.3%, while private

banks NPAs declined from 2.9% to 2.3%. The Gross NPA percentage of the PSBs

got impacted by slippages from restructured accounts, “Agri Debt Relief”, and

slippages because of automation of asset classification.

Better provisioning coverage and a stronger capitalization profile allowed private

banks report better solvency (Net NPA/Net Worth) than PSBs during last few years.

4.2 INTRODUCTION OF AXIS BANK

Axis Bank was the first of the new private banks to have begun operations in 1994,

after the Government of India allowed new private banks to be established. The Bank was

promoted jointly by the Administrator of the specified undertaking of the Unit Trust of India

(UTI - I), Life Insurance Corporation of India (LIC) and General Insurance Corporation of

India (GIC) and other four PSU insurance companies, i.e. National Insurance Company Ltd.,

The New India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United

India Insurance Company Ltd. The Bank as on 31st March, 2012 is capitalized to the extent

of ` 413.20 crores with the public holding (other than promoters and GDRs) at 54.08%. The

Bank's Registered Office is at Ahmedabad and its Central Office is located at Mumbai. The

Bank has a very wide network of more than 1600 branches (including 169 Service

Branches/CPCs as on 31st March, 2012). The Bank has a network of over 10000 ATMs (as

on 31st March, 2012) providing 24 hrs a day banking convenience to its customers. This is

one of the largest ATM networks in the country.5

The Bank has strengths in both retail and

corporate banking and is committed to adopting the best industry practices internationally in

order to achieve excellence.

To be the preferred financial solutions provider excelling in customer delivery

through insight, empowered employees and smart use of technology.

Key Executives

Chairman Adarsh Kishore

Managing Director & CEO Shikha Sharma

Director Rama Bijapurkar

Nominee K N Prithviraj

5

Axis bank annual report and director summary, 2011

122

Banking made convenient

They have made everyday-banking as easy and convenient as possible so customer

can focus on what's more important - the business.

Current Accounts

Salary Accounts

Prepaid Cards

Debit Cards

Finance & funding customized for customer

Simple finance businesses are:

Credit for Corporates

Financing for Small & Medium Enterprises

Capital Market Solutions

Manage risk, Maximize liquidity

Walking the line of risk and liquidity can be challenging for any business.

Explore the Treasury Management Solutions

Payment & collection made easy

Quick and efficient transactions are always one of the hallmarks of a flourishing

business. And facilitating them is just another day in the office for us.

Cash Management Services

Government Business Solutions

Merchant Solutions

4.3 INTRODUCTION OF HDFC BANK

The Housing Development Finance Corporation Limited (HDFC) was amongst the

first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a

bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in

1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with

its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled

Commercial Bank in January 1995. MD received the Asian Banker Best Bank in India Award

at a function on March 23, 2012 at Singapore. Mr. Puri is flanked by Mr. Emmanuel Daniel,

CEO, The Asian Banker, on his right and Mr.Philippe Paillart, Chairman, Advisory Council.

123

Key Executives

Director Ashim Samanta

Chairman (Non-Executive) C M Vasudev

Director Pandit Palande

Managing Director Aditya Puri

Banking Services

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class

Indian Bank". They realised that only a single-minded focus on product quality and service

excellence would help us get there. Today, they are proud to say that they are well on the way

towards that goal. It is extremely gratifying that the efforts towards providing customer

convenience have been appreciated both nationally and internationally.6

Promoters

HDFC is India's premier housing finance company and enjoys an impeccable track

record in India as well as in international markets. Since its inception in 1977, the

Corporation has maintained a consistent and healthy growth in its operations to remain the

market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling

units. HDFC has developed significant expertise in retail mortgage loans to different market

segments and also has a large corporate client base for its housing related credit facilities.

With its experience in the financial markets, a strong market reputation, large shareholder

base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the

Indian environment.

Business Focus

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build

sound customer franchises across distinct businesses so as to be the preferred provider of

banking services for target retail and wholesale customer segments, and to achieve healthy

growth in profitability, consistent with the bank's risk appetite. The bank is committed to

maintain the highest level of ethical standards, professional integrity, corporate governance

and regulatory compliance. HDFC Bank's business philosophy is based on four core values -

Operational Excellence, Customer Focus, Product Leadership and People.

6 Annual report of HDFC bank, 2011

124

Capital Structure

As on 31st March, 2012 the authorized share capital of the Bank is ` 550 crore. The

paid-up capital as on the said date is ` 469,33,76,540 (234,66,88,270 equity shares of ` 2/-

each). The HDFC Group holds 23.15% of the Bank's equity and about 17.29 % of the equity

is held by the ADS / GDR Depositories (in respect of the bank's American Depository Shares

(ADS) and Global Depository Receipts (GDR) Issues). 30.68 % of the equity is held by

Foreign Institutional Investors (FIIs) and the Bank has 4,47,924 shareholders.

The shares are listed on the Bombay Stock Exchange Limited and the National Stock

Exchange of India Limited. The Bank's American Depository Shares (ADS) are listed on the

New York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global

Depository Receipts (GDRs) are listed on Luxembourg Stock Exchange under ISIN No

US40415F2002.

Centurion Bank of Punjab amalgamation with HDFC

On May 23, 2008, the amalgamation of Centurion Bank of Punjab (CBoP) with

HDFC Bank was formally approved by Reserve Bank of India to complete the statutory and

regulatory approval process. As per the scheme of amalgamation, shareholders of CBoP

received 1 share of HDFC Bank for every 29 shares of CBoP. The merged entity will have a

strong deposit base of around ` 1, 22,000 crores and net advances of around ` 89,000 crores.

The balance sheet size of the combined entity would be over ` 1, 63,000 crores. The

amalgamation added significant value to HDFC Bank in terms of increased branch network,

geographic reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited

(another new private sector bank promoted by Bennett, Coleman & Co. / Times Group) was

merged with HDFC Bank Ltd., effective February 26, 2000. This was the first merger of two

private banks in the New Generation Private Sector Banks. As per the scheme of

amalgamation approved by the shareholders of both banks and the Reserve Bank of India,

shareholders of Times Bank received 1 share of HDFC Bank for every 5.75 shares of Times

Bank.

Distribution Network

HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable

network of 2,544 branches spread in 1,399 cities across India. All branches are linked on an

online real-time basis. Customers in over 500 locations are also serviced through Telephone

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Banking. The Bank's expansion plans take into account the need to have a presence in all

major industrial and commercial centres where its corporate customers are located as well as

the need to build a strong retail customer base for both deposits and loan products. Being a

clearing/settlement bank to various leading stock exchanges, the Bank has branches in the

centres where the NSE/BSE has a strong and active member base. The Bank also has 8,913

networked ATMs across these cities. Moreover, HDFC Bank's ATM network can be

accessed by all domestic and international Visa/MasterCard, Visa Electron/Maestro,

Plus/Cirrus and American Express Credit/Charge cardholders.

Business

HDFC Bank offers a wide range of commercial and transactional banking services

and treasury products to wholesale and retail customers. The bank has three key business

segments:

Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing companies in

the Indian corporate to small & mid-sized corporate and agri-based businesses. For these

customers, the Bank provides a wide range of commercial and transactional banking services,

including working capital finance, trade services, transactional services, cash management,

etc. The bank is also a leading provider of structured solutions, which combine cash

management services with vendor and distributor finance for facilitating superior supply

chain management for its corporate customers. Based on its superior product delivery /

service levels and strong customer orientation, the Bank has made significant inroads into the

banking consortia of a number of leading Indian corporates including multinationals,

companies from the domestic business houses and prime public sector companies. It is

recognised as a leading provider of cash management and transactional banking solutions to

corporate customers, mutual funds, stock exchange members and banks.

Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a full range

of financial products and banking services, giving the customer a one-stop window for all

his/her banking requirements. The products are backed by world-class service and delivered

to customers through the growing branch network, as well as through alternative delivery

channels like ATMs, Phone Banking, Net Banking and Mobile Banking. The HDFC Bank

Preferred program for high net worth individuals, the HDFC Bank Plus and the Investment

126

Advisory Services programs have been designed keeping in mind needs of customers who

seek distinct financial solutions, information and advice on various investment avenues.

The Bank also has a wide array of retail loan products including Auto Loans, Loans

against marketable securities, Personal Loans and Loans for Two-wheelers. It is also a

leading provider of Depository Participant (DP) services for retail customers, providing

customers the facility to hold their investments in electronic form. HDFC Bank was the first

bank in India to launch an International Debit Card in association with VISA (VISA

Electron) and issues the Master card Maestro debit card as well. The Bank launched its credit

card business in late 2001. By March 2010, the bank had a total card base (debit and credit

cards) of over 14 million. The Bank is also one of the leading players in the “merchant

acquiring” business with over 90,000 Point-of-sale (POS) terminals for debit / credit cards

acceptance at merchant establishments. The Bank is well positioned as a leader in various net

based B2C opportunities including a wide range of internet banking services for Fixed

Deposits, Loans, Bill Payments, etc.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities. With the

liberalisation of the financial markets in India, corporates need more sophisticated risk

management information, advice and product structures. These and fine pricing on various

treasury products are provided through the bank's Treasury team. To comply with statutory

reserve requirements, the bank is required to hold 25% of its deposits in government

securities. The Treasury business is responsible for managing the returns and market risk on

this investment portfolio.

4.4 INTRODUCTION OF YES BANK

YES BANK is a state-of-the-art high quality, customer centric, service driven, private

Indian Bank catering to the “Future Businesses of India”, and is an outcome of the

professional & entrepreneurial commitment of Rana Kapoor, Founder, Managing Director &

CEO. As the Professionals‟ Bank of India, YES BANK has exemplified „creating and sharing

value‟ for all its stakeholders, and has created a differentiated Banking Paradigm. Since

inception, YES BANK has tried to play a catalytic role in bridging the infrastructure and

knowledge gap in various Sunrise sectors of the economy. As part of the differentiated

127

strategy, YES BANK has had a strong focus on Development Banking, as is evident from the

cutting-edge work that the Bank has done in the area of Food & Agribusiness, Infrastructure,

Microfinance, and Sustainability which in most cases have been first-of-its kind in India. The

focus on Governance and Good Corporate Citizenship, actualized through YES BANK‟s

Responsible Banking approach, stands evidence to YES BANK‟s strategic vision.

Since inception in 2004, YES BANK has fructified into a „“Full Service Commercial

Bank” that has steadily built Corporate and Institutional Banking, Financial Markets,

Investment Banking, Corporate Finance, Branch Banking, Business and Transaction

Banking, and Wealth Management business lines across the country and is well equipped to

offer a range of products and services to corporate and retail customers. YES BANK offers a

full-range of client-focused corporate banking services, including working capital finance,

specialized corporate finance, trade and transactional services, treasury risk management

services, investment banking solutions and liquidity management solutions among others to a

highly focused client base.

The Bank also has a widespread branch network of over 350 branches across 200

cities, with over 600 ATM's and 2 National Operating Centres in Mumbai and Gurgaon.

Since inception, YES BANK has adopted innovative and creative technologies that facilitate

robust systems and processes and facilitate in the delivery of world-class banking solutions

that significantly improve the business and financial efficiency of the clients.

YES BANK has been recognized amongst the Top and the Fastest Growing Bank in

various Indian Banking League Tables by prestigious media houses and Global Advisory

Firms, and has received national and international honours for the various Businesses

including Corporate Finance, Investment Banking, Treasury, Transaction Banking, and

Sustainable practices through Responsible Banking. The Bank has received several

recognitions for the world-class IT infrastructure, and payments solutions, as well as

excellence in Human Capital. The sustained growth of YES BANK is based on the key pillars

of Growth, Trust, Technology, Human Capital, Transparency and Responsible Banking. YES

BANK is committed towards building the “Best Quality Bank of the World in India” –

resting on the strengths of its six key pillars and differentiation built through exemplary

Customer Service, to ensure that it provides the finest Banking Experience to its customers.7

7 Yes bank annual report of 2011

128

Brand Vision & Strategy

YES BANK is pursuing a Brand strategy to build one of the finest financial brands in

India. YES BANK believes that differentiation begins with its service and trust mark

embedded in „YES‟, which represents the Bank‟s fundamental goal of being a highly service-

oriented Financial Institution. The Endeavour at YES BANK is to provide an unprecedented

Delightful Banking Experience to all its customers.

The name YES signifies-

The essence of the brand completely by conveying all the values and characteristics -

Attractive, Smart, Simple, Serious, Reliable, Trustworthy, Optimistic, Positive,

Efficient, Universal

Clutter breaking in the banking environment, and affirmative with target clients across

business and market segments.

Brand Vision and Commitment

To be recognized as the WORLD‟s BEST QUALITY BANK IN INDIA.

To provide a Delightful Banking Experience to all its customers.

To be a long term partner with all stakeholders particularly customers by creating &

sharing value.

To be a solid and trusted financial trust mark backed by two professional promoters

and an exceptional management team

Brand Pillars

The YES BANK brand is being built around 6 Key Brand Pillars, which epitomize the

growing strengths of the Bank. All communication and advertising has been created around

these key Brand Pillars.

Growth: YES BANK's core promise is growth, for its internal and external

stakeholders symbolize in Say YES to Growth!

Trust: YES BANK's Promoters, Investors and Top Management team, are all of the

highest pedigree with a demonstrated track record, thus inspiring and establishing a

Trust Mark - Say YES to Trust!

Knowledge Driven Human Capital: YES BANK has adopted a knowledge driven

entrepreneurial approach to Banking and offers Financial Solutions beyond the

traditional realm of banking. YES BANK's top quality Human Capital represents the

finest talents in Indian banking mobilized from India and abroad.

129

Technology: YES BANK is establishing the highest standards in customer service by

adopting cutting-edge Innovative Technology. The only thing constant about YES

BANK's Technology is Evolution.

Transparency and Responsible Banking: YES BANK holds Transparency and

Accountability above all else. The Bank has established the most stringent

Corporate Governance norms, and is also committed to Responsible Banking by

focusing on Sustainability and Social Responsibility.

YES BANK will continue to declare its Promise through consistent communication

activities under the Brand Slogans "Experience our Expertise" and "YES for YOU".

Key Executives

Managing Director & CEO Rana Kapoor

Director S L Kapur

Director Ajay Vohra

Director Bharat Patel

4.5 INTRODUCTION OF ING VYSYA IN INDIA

In India, ING is present in all three fields of banking, insurance and asset management

in the form of ING, ING Vysya Life Insurance and ING Investment Management

respectively. The presence in all three fields signifies the importance that the group attaches

to the Indian markets and the group's operations here, as well as its bullish future outlook on

the country. ING and ING Vysya Life Insurance are headquartered at Bangalore, while the

corporate office of ING Investment Management is situated at Mumbai. The synergies arising

out of the three distinct but complimentary businesses are bound to be an asset to the group in

the changing market dynamics of the future. The first such signs are already visible on the

horizon with combined products being successfully launched by the different entities of the

group in conjunction with each other.

The origin of ING Group

On the other hand, ING group originated in 1990 from the merger between Nationale

– Nederlanden NV the largest Dutch Insurance Company and NMB Post Bank Groep NV.

Combining roots and ambitions, the newly formed company called “Internationale

130

Nederlanden Group”. Market circles soon abbreviated the name to I-N-G. The company

followed suit by changing the statutory name to “ING Group N.V.”

Profile ING has gained recognition for its integrated approach of banking, insurance and

asset management. Furthermore, the company differentiates itself from other financial service

providers by successfully establishing life insurance companies in countries with emerging

economies, such as Korea, Taiwan, Hungary, Poland, Mexico and Chile. Another

specialization is ING Direct, an Internet and direct marketing concept with which ING is

rapidly winning retail market share in mature markets. Finally, ING distinguishes itself

internationally as a provider of „employee benefits‟, i.e. arrangements of nonwage benefits,

such as pension plans for companies and their employees.

Mission

ING`s mission is to be a leading, global, client-focused, innovative and low-cost

provider of financial services through the distribution channels of the client‟s preference in

markets where ING can create value.8

The new identity

The immediate benefit to the bank, ING Vysya Bank, has been the pride of having

become a Member of the global financial giant ING. As at the end of the year December

2008, ING's total assets exceeded 1332 billion Euros, employed over 125000 people, and

served over 85 million customers, across 50 countries. This global identity coupled with the

backup of a financial power house and the status of being the first Indian International Bank,

would also help to enhance productivity, profitability, to result in improved performance of

the bank, for the benefit of all the stake holders.

ING ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile,

Vysya Bank Ltd, a premier bank in the Indian Private Sector and a global financial

powerhouse, ING of Dutch origin, during Oct 2002. The origin of the erstwhile Vysya Bank

8

ING Vysya Bank annual report of 2011

131

was pretty humble. It was in the year 1930 that a team of visionaries came together to found a

bank that would extend a helping hand to those who weren't privileged enough to enjoy

banking services. It's been a long journey since then and the Bank has grown in size and

stature to encompass every area of present-day banking activity and has carved a distinct

identity of being India's Premier Private Sector Bank.

In 1980, the Bank completed fifty years of service to the nation and post 1985; the

Bank made rapid strides to reach the coveted position of being the number one private sector

bank. In 1990, the bank completed its Diamond Jubilee year. At the Diamond Jubilee

Celebrations, the then Finance Minister Prof. Madhu Dandavate, had termed the performance

of the bank „Stupendous‟. The 75th anniversary, the Platinum Jubilee of the bank was

celebrated during 2005.

Key Executives

Managing Director & CEO Shailendra Bhandari

Director Aditya Krishna

Part Time Chairman Arun Thiagarajan

Director Lars Kramer

An outlet comprises of 441 branches, 37 ECs, 28 Satellite Offices and 351 ATMs as

of March 31st 2009. Additionally bank also has Internet Banking, mi-bank and Customer

Service Line for Phone Banking Service.

The long journey of seventy-five years has had several milestones…

1930 Set up in Bangalore

1948 Scheduled Bank

1985 Largest Private Sector Bank

1987 The Vysya Bank Leasing Ltd. Commenced

1988 Pioneered the concept of Co branding of Credit Cards

1990 Promoted Vysya Bank Housing Finance Ltd.

1992 Deposits cross `1000 crores

1993 Number of Branches crossed 300

1996 Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem & Jewellery Export Promotion Council for excellent performance in Export

132

Promotion

1998

Cash Management Services, & commissioning of VSAT. Golden Peacock Award - for the best HR Practices by Institute of Directors. Rated as Best

Domestic Bank in India by Global Finance (International Financial Journal -

June 1998)

2000 State-of-the-art Date Centre at I.T.P.L. Bangalore. RBI clears setting up of ING Vysya Life Insurance Company.

2001 ING-Vysya commenced life insurance business.

2002

The Bank launched a range of products & services like the Vys Vyapar Plus, the range of loan schemes for traders, ATM services, Smartserv, personal assistant

service, Save & Secure, an account that provides accident hospitalization and

insurance cover, Sambandh, the International Debit Card and the mi-bank net

banking service.

2002 ING takes over the Management of the Bank from October 7th , 2002

2002 RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 10.12.02

2003 Introduced customer friendly products like Orange Savings, Orange Current and Protected Home Loans

2004 Introduced Protected Home Loans - a housing loan product

2005 Introduced Solo - My Own Account for youth and Customer Service Line – Phone Banking Service

2006 Bank has networked all the branches to facilitate „AAA‟ transactions i.e. Anywhere, Anytime & Anyhow Banking.

4.6 INTRODUCTION OF KOTAK MAHINDRA BANK

Established in 1985, The Kotak Mahindra group has long been one of India's most

reputed financial organizations. In February 2003, Kotak Mahindra Finance Ltd, the group's

flagship company was given the license to carry on banking business by the Reserve Bank of

India (RBI). This approval creates banking history since Kotak Mahindra Finance Ltd. is the

first company in India to convert to a bank.

The complete bank

At Kotak Mahindra Bank, address the entire spectrum of financial needs for

individuals and corporates. They have the products, the experience, the infrastructure and

most importantly the commitment to deliver pragmatic, end-to-end solutions that really work.

A license authorizing the bank to carry on banking business has been obtained from the

Reserve Bank of India in terms of Section 22 if the Banking Regulation Act, 1949. It must be

distinctly understood, however, that in issuing the license, the Reserve Bank of India does not

undertake any responsibility for the financial soundness of the bank or the correctness of any

133

of the statements made or opinion expressed in this connection.

Established in 1985, the Kotak Mahindra group has been one of India's most reputed

financial conglomerates. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship

company was given the license to carry on banking business by the Reserve Bank of India

(RBI). This approval created banking history since Kotak Mahindra Finance Ltd. is the first

non-banking finance company in India to convert itself in to a bank as Kotak Mahindra Bank

Ltd. Today, this is one of the fastest growing bank and among the most admired financial

institutions in India.

Bank Reach

Kotak Mahindra Bank has over 357 branches and 866 ATMs, which are spread all

over India, not just in the metros but in Tier II cities and rural India as well, bank are

redefining the reach and power of banking.

The Offerings

Kotak Mahindra Bank caters to the myriad needs of Resident Individuals, NRIs and

Businesses. Kotak Mahindra Bank offer complete financial solutions for infinite needs of all

individual & non-individual customers depending on the customer's need - delivered through

a state of the art technology platform. Investment products like Mutual Funds, Life Insurance,

retailing of gold coins and bars etc are also offered. The Bank follows a mix of both open and

closed architecture for distribution of the investment products. All this is backed by strong,

in-house research on Mutual Funds.

The Savings Account goes beyond the traditional role of savings, and allows putting

aside a lot more than just money. The worry-free features of the Savings Account provides a

range of services from funds transfer, bill payments, 2-way sweep through the Active Money

feature & much more. Customer can place standing instructions for investment options that

can be booked through Internet or through Phone banking services. The Savings Account

thus provides for attractive returns earned through a comprehensive suite products and

services that offer investment options, all delivered seamlessly to the customer by well

integrated technology platforms. Apart from Phone banking and Internet banking, the Bank

offers convenient banking facility through Mobile banking, SMS services, Netcard, Home

banking and Pay Bill facility among others.

134

Depository services offered by the Bank allows the customers to hold equity shares,

government securities, bonds and other securities in electronic or Demat forms. The Salary to

Wealth offering provides comprehensive administrative solutions for Corporates with

features such as easy and automated web based salary upload process thereby eliminating the

paper work involved in the process, a dedicated relationship manager to service the corporate

account, customized promotions and tie - ups and many such unique features. The whole

gamut of investment products and investment advisory services is available to the salary

account holders as well.

For the business community, bank offer comprehensive business solutions that

include the Current Account, Trade Services, Cash Management Service and Credit

Facilities, keeping in mind the myriad needs of the business. Wholesale banking products

offer business banking solutions for long-term investments and working capital needs, advice

on mergers and acquisitions and equipment financing. To meet special needs of the rural

market, banks have dedicated business offerings for agricultural financing and infrastructure.

Agriculture Finance division delivers customised products for capital financing and

equipment financing needs of the rural customers. For financial liquidity bank offer the loans

that meet personal requirements with quick approval and flexible payment options. To

complete the personal financial offerings space, bank now offer Kotak Credit Card which is a

hassle-free, transparent product that also happens to be the first vertical credit card in the

industry. Kotak Mahindra Bank addresses the entire spectrum of financial needs of Non-

Resident Indians. Bank tie-up with the Overseas Indian Facilitation Centre (OIFC) as a

strategic partner gives us a platform to share the comprehensive range of banking &

investment products and services for Non Resident Indians (NRIs) and Persons of Indian

Origin (PIOs). Online Account Opening facility and Live Chat service helps to get in touch

with us at the comfort of customers‟ homes. These offerings are specifically designed to suit

the overseas Indian's personal financial needs and give the global Indians a near to home feel.

Businesses

Multiple businesses. One brand. Kotak Mahindra is one of India's leading banking

and financial services groups, offering a wide range of financial services that encompass

every sphere of life.

Kotak Mahindra Bank Ltd

135

Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers

personal finance solutions of every kind from savings accounts to credit cards, distribution of

mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking,

operates lending verticals, manages IPOs and provides working capital loans. Kotak has one

of the largest and most respected Wealth Management teams in India, providing the widest

range of solutions to high net worth individuals, entrepreneurs, business families and

employed professionals.9

Kotak Mahindra Old Mutual Life Insurance Ltd

Kotak Securities Ltd

Kotak Mahindra Capital Company (KMCC)

Kotak Mahindra Prime Ltd (KMPL)

Kotak International Business

Kotak Mahindra Asset Management Company Ltd (KMAMC)

Kotak Private Equity Group (KPEG)

Kotak Realty Fund

Key Executives

Part Time Chairman Shankar Acharya

Executive Vice Chairman & MD Uday Kotak

Director Asim Ghosh

Joint Managing Director C Jayaram

4.7 GROWTH OF ICICI with HDFC, AXIS, ING VYSYA, KOTAK

MAHINDRA AND YES BANK

Financial analysis is mainly done in order to judge the growth of the banks but

diagnosing the information contained in the financial statements. Financial analysis is done

to identify the financial strengths and weaknesses of banks by properly establishing

relationship between the items of balance sheet and profit and loss account. It helps in better

understanding of banks financial position, growth and performance by analyzing the financial

statements with various tools and evaluating the relationship between various elements

of financial statements.

The term “financial statement analysis” includes both “analysis” and

“interpretation”. The term “analysis” is used to mean the generalization of data given in the

financial statements by systematic arrangements and classification of data and

9 Kotak Mahindra Bank annual report of 2011

136

“interpretation” means explaining the meaning and significance of the data so simplified.

However both analysis and interpretation are interlinked and complimentary to each other. In

this paper an attempt has been made to study the growth of HDFC, AXIS, ING VYSYA

KOTAK MAHINDRA AND YES BANK.

For analyze the growth of the selected banks under study for the period of 2005-2006

to 2010-2011. To attain the purpose the following parameters have been taken.

1. Growth of deposits

2. Branch expansion

3. Number of employees

4. Credit deployment

5. Borrowings

4.8 DEPOSITS

Deposits serve as the basis for capital formation and facilitate the process of economic

development. Deposits are one of the important growth oriented functions of banking

industry. The great emphasis has been placed on deposits mobilization by banks in the

country. Banks obtain a major amount of their working capital from deposits. As their

lending and profit earning capacities depend upon deposits. The management of banks is

always engaged in working out plans and schemes to mobilize deposits. The total deposits

depend upon the no. of factors like the monetary policy and deposit mobilization by other

commercial banks. The above said bank‟s deposits are shown in the following table.

Table 4.3

Table showing the Growth in Deposits (` In crores)

YEAR

ICICI

HDFC

AXIS KOTAK

MAH

YES ING

VYSYA

2005-2006 165083.17 55796.82 40113.53 6565.92 2910.38 13335.26

2006-2007 230510.19 68297.94 58785.60 11000.09 8220.39 15418.59

2007-2008 244431.05 100768.59 87626.22 16423.65 13273.16 20457.56

2008-2009 218347.83 142811.58 117374.11 15644.00 16169.42 24889.47

2009-2010 202016.60 167404.44 141300.22 23886.47 26798.56 25865.30

2010-2011 225602.11 208586.41 189237.80 29260.97 45938.93 30194.25

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

The above table shows that the deposits of ICICI bank have been increased from

137

` 165083.17 crores in the year 2005 to ` 225,602.11 crores in the year 2011. Further the

deposits of HDFC have been increased from ` 55,796.82 crores to ` 208,586.41 crores. The

following chart shows that all other banks show the rising trend but there is more growth in

deposits in ICICI Bank as compared to the HDFC, AXIS, ING VYSYA KOTAK

MAHINDRA AND YES BANK.

4.9 CREDIT DEPLOYMENT

Lending or advancing loan is one of the main functions of all the banks. A bank

provides loan directly or indirectly. Lending is done on the basis of funds raised by accepting

deposits from the public. Advances provide income to the banks in t h e form of interest

and discount on the one hand and promote economic development of the country by meeting

financial needs of industries and commercial establishment on the other hand. Credit

deployment of both the banks is shown in table.

The following table 4.4 depicts that the total advances of ICICI bank has been

increased ` 146163.11 crores in the year 2005 to ` 216,365.90 crores in year 2011. Further in

case of HDFC the advances are increased from Rs 35,061.26 crores i n t h e year 2005 to

Rs 159,982.67 crores in the year 2011. It is cleared that the growth rate of ICICI is more as

compared to all other HDFC, AXIS, ING VYSYA KOTAK MAHINDRA AND YES BANK.

But all five banks show a rising trend in advances.

Table 4.4

Table showing the Credit Deployment (` in crores)

YEAR

ICICI

HDFC

AXIS KOTAK

MAH

YES ING

VYSYA

2005-2006 146163.11 35061.26 22314.23 6348.31 2407.09 10231.53

2006-2007 195865.60 46944.78 36876.48 10924.07 6289.74 11976.16

2007-2008 225616.08 63426.90 59661.15 15552.22 9430.27 14649.55

2008-2009 218310.85 98883.05 81556.76 16625.34 12403.09 16756.38

2009-2010 181205.60 125830.59 104340.95 20775.05 22193.12 18507.19

2010-2011 216365.90 159982.67 142407.83 29329.31 34363.64 23602.14

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011.

138

CHART 4.1

Chart showing the Growth in Deposits

300000

250000

200000

150000

100000

50000

0

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

ICICI HDFC AXIS KOTAK MAHINDRA YES ING VYSYA

Chart 4.2

Chart showing the Credit Deployment

250000

200000

150000

100000

50000

0

ICICI HDFC AXIS KOTAK MAH

YES ING VYSYA

2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

139

4.10 BORROWINGS

Borrowings are the amount that the general public deposits in the banks in their

accounts. Banks use these deposits as their resources to advance money to the borrowers

with the help of cash credit. Growth in borrowings of the ICICI bank and all other private

banks has been shown in table 4.5.

Table 4.5

Table showing the Borrowings (` in crores)

YEAR

ICICI

HDFC

AXIS KOTAK

MAH

YES ING

VYSYA

2005-2006 38521.91 2858.48 2680.93 1609.23 464.76 1107.45

2006-2007 51256.03 2815.39 5195.60 5099.75 867.32 843.55

2007-2008 65648.43 4594.92 5624.04 5119.25 986.21 1249.80

2008-2009 93155.45 9163.64 15519.87 6734.01 3701.68 3185.32

2009-2010 94263.57 12915.69 17169.55 6140.51 4749.08 3671.39

2010-2011 109554.28 14394.06 26267.88 11723.95 6690.91 4146.91

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

Table 4.5 depicts that the borrowings of ICICI bank has increased from ` 38,521.91

crores in year 2005 to ` 109,554.28 crores. in year 2011. Further in case of the borrowings

are increased from 2005 to 2010 of all other five banks HDFC, AXIS, ING VYSYA KOTAK

MAHINDRA AND YES BANK.

4.11 GROWTH IN ATM MACHINES

Automated Teller Machine (ATM) is a computerized machine that provides the

customers of banks the facility of accessing their accounts for dispensing cash and to carry

out other financial transactions without the need of actually visiting a bank branch. The most

frequent point of interaction with the Bank is ATM facility, the Account holders whether

in Private/Foreign sector or public sector have been provided with ATM facility by their

respective Banks. ICICI Bank has installed its first talking ATM in 2003. Over the years, the

bank has also ensured that the basic banking facilities can be used by physically handicapped

people, "The country has 10.6 million visually challenged people and it is the duty of the

banks to help these people to meet their banking needs," ICICI Bank's Chief Executive

Officer and Managing Director Chanda Kochhar told.

140

Table 4.6

Table showing the Growth in ATM Machines (No. of machines)

YEAR 2005 2006 2007 2008 2009 2010 2011

ICICI 1910 2200 3271 3881 4713 5219 6425

AXIS 1599 1891 2341 2764 3595 4293 6871

HDFC 1147 1323 1605 1977 3295 4232 5998

ING 79 114 158 203 351 357 409

YES 30 40 75 150 200 213 261

KOTAK - - 135 314 387 429 725

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

To judge the performance level of any Bank today it is crucial that the ATM service

of the Bank be studied, this includes not only the number of ATM machines installed by the

Bank, but also how technologically advanced the machines are (number of transaction that

can be done with the ATM Facility), IC IC I b a n k takes effort to maintain the machines and

also the overall experience of the Account holder with the service.

141

Chart 4.3

Chart showing the Borrowings (`in crores)

ING VYSYA

YES

KOTAK MAH

AXIS

HDFC

ICICI

0 20000 40000 60000 80000 100000 120000

2010-2011 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006

Chart 4.4

Chart showing the Growth in ATM Machine (No. of machines)

2011

2010

2009

2008

2007

2006

2005

0 1000 2000 3000 4000 5000 6000 7000 8000

KOTAK YES ING HDFC AXIS ICICI

142

4.12 NUMBER OF BRANCHES

The branch expansion policy seeks to achieve to broad objectives (a)

narrowing down regional imbalance and (b) providing banking facilities to rural and

neglected areas. The policy mainly emphasize on opening more offices in rural and semi-

urban areas and centers which have few or no branches without jeopardizing branch

expansion in urban and metropolitan cities. The main emphasis of branch licensing

policy is on areas where population per branch is higher than the national average. The

number of branches of above said private banks are given in the table 4.7.

Table 4.7

Table showing the Number of Branches

YEAR

2005

2006

2007

2008

2009

2010

2011

ICICI 562 614 755 1262 1419 1707 2529

AXIS 256 355 508 651 835 1035 1390

HDFC 467 535 684 761 1412 1725 1820

ING 370 377 400 407 441 468 510

YES 30 40 67 117 123 150 214

KOTAK - - 105 178 217 249 321

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

Table 4.7 indicates that the number of branches of ICICI bank is increased from 562

in year 2005 to 2529 in year 2011; the major growth was in the year 2008 -2009. Further

there is uprising trend in case of HDFC. It increases from 467 in the years 2005 to 1820 in

years 2011. But the growth in HDFC is not much higher as compared to ICICI. All other

banks are gradually increasing in there number of branches year after year from 2005 to

2011.

143

Chart 4.5

Chart showing the Number of Branches

2011

2010

2009

2008

2007

2006

2005

0 500 1000 1500 2000 2500 3000

KOTAK YES ING HDFC AXIS ICICI

144

4.13 NUMBER OF EMPLOYEES

Unemployment is one of the main problem for a under developed country and

developing country. Generating employment is another criterion on which the working of

the banks can be evaluated. However employment so generated should improve the business

of banks and the quality of service they provide.

Table 4.8

Table showing the number of employees

YEAR

ICICI

HDFC

AXIS KOTAK

MAH

YES

ING VYSYA

2005

18000

9465

4761

-

207 4963

2006

25384

14878

6553

3600

627 5312

2007

33321

21477

9980

5400

2443 5341

2008

34021

37386

14739

5577

3150 5852

2009

34821

52687

20624

8400

4050 6227

2010

41068

51888

77983

8800

5167 6249

2011

56969

55752

65378

11000

12000 7041

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

Table 4.8 shows that the number of employees in ICICI bank increased from

18000 in year 2005 to 56969 in the year 2011. Further in case of AXIS there is an increasing

trend the number increase from 4761 in the year 2005 to 77983 in the year 2010. But in

2011 there is a slightly decrease in number of employees to 65378. The number of employees

in IC ICI bank leads to control in productivity because there is no much increase in profits

and business according to the growth in number of employees.

145

Chart 4.6

Chart showing the Number of Employees

80000

70000

60000

50000

40000

30000

20000

10000

0

2005 2006 2007 2008 2009 2010 2011

ICICI HDFC AXIS KOTAK MAH YES ING VYSYA

146

4.14 CAPITAL ADEQUACY

Table 4.9

Table showing the Capital Adequacy (%)

Particulars 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

ICICI 13.35 11.69 13.97 15.53 19.41 19.54

AXIS 11.08 11.57 13.73 13.69 15.80 12.65

HDFC 11.41 17.44 15.69 13.60 13.08 16.22

ING VYS 10.67 10.56 10.20 11.65 14.91 12.94

KOTAK 11.27 13.46 18.65 20.01 18.35 19.92

YES 16.43 13.60 13.60 16.60 20.60 16.50

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

Interpretation

Reserve Bank of India prescribes Banks to maintain a minimum Capital to risk-

weighted Assets Ratio (CRAR) of 9 percent with regard to credit risk, market risk and

operational risk on an ongoing basis, as against 8 percent prescribed in Basel Documents.

Capital adequacy ratio of the ICICI Bank was well above the industry average of 18.69%

CAR of HDFC bank is below the ratio of ICICI bank. HDFC Bank‟s total Capital Adequacy

stood at 16.22% as on March 31, 2011.

ICICI CAR is gradually increased over the last 5 year and the capital adequacy ratio

of Axis bank is increasing by every 2 year. But ING VYSYA should reconsider their business

as its CAR is falling. Higher the ratio the banks are in a comfortable position to absorb losses.

So ICICI and HDFC are on a strong base to absorb their loses.

147

4.15 EARNINGS PER SHARE

EPS is o f t e n c o n s i d e r e d t h e s i n g l e m o s t i m p o r t a n t m e t r i c to determine

company‟s profitability. It is also a major component of another important metric, price

per earnings ratio (P/E). Analysis should look for a positive trend of EPS in order to make

sure that the company is finding more ways to make more money. HDFC is also

showing the positive trend over last 5 year. AXIS bank must be attracted by investors as

positive growth in EPS is highest among peers who show its ability to generate profit for

shareholders. ICICI has not any remarkable performances in EPS. There were so many

up‟s and downs in IC IC I business performance during economic crises which is

reflected in its EPS.

Table 4.10

Table showing the Earnings per Share

Particular 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI 28.55 34.59 37.37 33.76 36.10 44.73

AXIS 17.41 23.40 29.94 50.57 62.06 82.54

HDFC 35.64 43.29 44.87 52.77 64.42 84.40

ING VYS 1.00 9.78 15.12 18.40 20.19 26.34

KOTAK 3.82 4.33 8.53 7.99 16.12 11.10

YES 2.05 3.37 6.76 10.23 14.06 20.95

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

148

RA

TIO

%

RA

TIO

%

Chart 4.7

Chart showing the Capital Adequacy

120

100

80

60

40

20

0

2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI AXIS HDFC ING VYS KOTAK YES

Chart 4.8

Chart showing the Earnings per Share

300

250

200

150

100

50

0

2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI AXIS HDFC ING VYS KOTAK YES

149

To calculate this ratio, simply divide the company‟s net income by the number of

shares outstanding during the period. If the number of shares out in the market has

changed during that period (ex. a share buyback), a weighted average of the quantity of

shares is used.

Importance of EPS

The significance of EPS is obvious, as the viability of any business depends on the

income it can generate. A money losing business will eventually go bankrupt, so the only way

for long term survival is to make money. Earnings per share allow us to compare different

companies‟ power to make money. The higher the earnings per share with all else equal, the

higher each share should be worth.

4.16 NET PROFIT MARGIN

Table 4.11

Table showing the Net Profit Margin (%)

Particular 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI 14.12 10.81 10.51 9.74 12.17 15.91

AXIS 13.47 12.01 12.22 13.31 16.1 17.2

HDFC 15.55 13.57 12.82 11.35 14.76 16.09

ING VYS 0.66 5.57 7.45 6.77 8.48 9.56

KOTAK 12.97 8.84 10.37 8.35 15.23 17.19

YES 19.08 12.06 12.01 12.35 16.3 15.56

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

Net Profit margin is a key method of measuring profitability. It can be interpreted as

the amount of money the company gets to keep for every dollar of revenue. That is, Net

Profit Margin = Net Income ÷ Net Sales.

Interpretation

Profit margins can be useful metrics, but typically require some specific

circumstances to really have significance. Suppose it have Company A from above (15%

profit margins) and Company B (with 20% profit margins). If A and B are in the same

industry and, indeed, are competitors, then B may be more intelligent in investment.

150

If, however, companies A and B are not in the same space, then the differences in

profit margins may not be so insightful. Suppose A is in an industry where profit margins are

typically less than 10%, and B is in an industry where margins are typically greater than 25%,

then A is probably a higher quality.

group.

AXIS bank shown its performance in Net Profit Margin as it is highest among the

HDFC’s NPM is better but it decreased in first 4 year (2006-09) and then in 2009-10

its rises.

KOTAK is slightly low as compared to HDFC but its performance is constant.

ICICI in 2005-06 has highest NPM (18.43%) but it decreased to 12 % in 2008-09.

ICICI has incurred huge losses in financial crisis but in 2009-10 it again shows its ability to

perform and achieve 15.91%.

4.17 CREDIT DEPOSIT RATIO

Table 4.12

Table showing the Credit Deposit Ratio (%)

Particulars 2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI 87.59 83.83 84.99 91.44 90.04 87.81

AXIS 52.79 59.85 65.94 68.89 71.87 74.65

HDFC 65.79 66.08 65.28 66.64 72.44 76.02

ING VYS 74.55 77.23 74.13 69.18 69.47 75.12

KOTAK 95.4 98.33 96.55 100.34 94.61 94.27

YES 88.66 78.13 73.14 74.16 80.52 77.75

Source: A nnual reports of both the banks for the period 2005-2006 to 2010-2011

151

RA

TIO

%

RA

TIO

%

Chart 4.9

Chart showing the Net Profit Margin

100

90

80

70

60

50

40

30

20

10

0

2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI AXIS HDFC ING VYS KOTAK YES

Chart 4.10

Chart showing the Credit Deposit Ratio

120

100

80

60

40

20

0

2005 - 06 2006 - 07 2007 - 08 2008 - 09 2009 - 10 2010-11

ICICI AXIS HDFC ING VYS KOTAK YES

152

Interpretation

It is the proportion of loan-assets created by banks from the deposits received. The

higher the ratio, the higher the loan-assets created from deposits.

Now, the Indian government is the largest borrower in the domestic credit market. The

government borrows by issuing securities (G-secs) through auctions held by the RBI. If the

money so released is large, ``too much money will chase too few goods'' in the economy

resulting in higher inflation levels. This would prompt investors to demand higher returns on

debt instruments. In other words, the interest rates are high.

HDFC and AXIS bank has CDR in equal range for last 5 year. IDBI has highest CDR

all 5 year but a good thing is that it gradually falls. ICICI bank‟s CDR is slightly higher than

AXIS and HDFC, but it also maintained its CDR

4.18 CONCLUSION

The selected banks have shown growth in terms of deposits, number of branches,

employees, credit deployment and borrowings. But the growth of ICICI bank is higher

as compared to HDFC, AXIS, ING VYSYA KOTAK MAHINDRA AND YES bank. For the

past three decades India's banking system has several outstanding achievements to its credit.

The most striking is its extensive reach. It is no longer confined to only metropolitans or

cosmopolitans in India. In fact, Indian banking system has reached even to the remote

corners of the country. This is one of the main reasons of India's growth process. So a public

and private sector bank plays a crucial role in the economy.

Ratios make the related information comparable. A single figure by itself has no

meaning, but when expressed in terms of a related figure, it yields significant

interferences. Thus, ratios are relative figures reflecting the relationship between

related variables. Their use as tools of financial analysis involves their comparison as

single ratios, like absolute figures, are not of much use.

Ratio analysis has a major significance in analyzing the financial

performance of a company over a period of time. Decisions affecting product prices,

per unit costs, volume or efficiency have an impact on the profit margin or turnover

ratios of a company.

153

Financial ratios are essentially concerned with the identification of significant

accounting data relationships, which give the decision-maker insights into the

financial performance of a company.

The analysis of financial statements is a process of evaluating the relationship

between component parts of financial statements to obtain a better understanding of

the firm‟s position and performance.

The first task of financial analyst is to select the information relevant to the

decision under consideration from the total information contained in the financial

statements. The second step is to arrange the information in a way to

highlight significant relationships. The final step is interpretation and drawing of

inferences and conclusions. In brief, financial analysis is the process of

selection, relation and evaluation.

Ratio analysis in view of its several limitations should be considered only as a tool

for analysis rather than an end by itself. The reliability and significance attached

to ratios will largely hinge upon the quality of data on which they are based. They

are as good as or as bad as the data itself. Nevertheless, they are an important tool of

financial analysis.