The importance of financial performance evaluation of sector of banks in all societies and economic systems, due to the lack of economic and financial resources compared to big it needs. One of the most important challenges faced by the banks is how to best use financial resources available to them the best use.
Reflected the goal of analyzing and evaluating the financial performance of companies and various institutions in the provision of financial information for each interested parties whether to internal users as managers or the external users like investors and Lenders and depositors creditors, government, stock exchanges, suppliers, financial analysts. to assess the strengths and weaknesses in it.
Financial Analysis is the process of assessing the financial position of a company by analyzing its stability, viability, profitability and identifies a firm’s relative strengths and weaknesses.
Financial analysis studies of the relationships between financial statements that change over the time according to the effectiveness of the operation.
Financial indicators is one of the most common and widely used analytical tools in the evaluation of overall and micro performance of organizations, and can be done through the comparison between the financial indicators of one organization during a specific period of time, or comparing the average financial indicators for the Group organizations with the industry standard for similar organizations in the same activity or sector.
the objectives of financial analysis are to recognize changes in financial trends, to help measure the return and risk and the progress made by an enterprise and identify a relationship to draw a logical conclusion on the financial performance of the company . also financial analysis use to a competitive position in monetary terms .
This study will provide us with a comprehensive analysis of the financial statements of ICICI bank as much as possible of the financial performance evaluation use ratio analysis, in comparison with the selected privet sector banks.
1.2. LITERATURE REVIEW
The survey of related literature covers many studies that were done here.This study covers some of them as follows:
Singh, J. P. , Seth, M. (2017)Conduced study in An Inclusive Study on Capital Adequacy performance of Selected Public Sector and Private Sector Banks in India. For the purpose of comparing capital adequacy , they have selected samples of four public and four private sector banks as per market capitalization by applying CAMEL analysis technique. Only one parameter Capital Adequacy of CAMEL has been selected for research from the Capital Adequacy, Asset Quality, Management Quality, Earning Quality and Liquidity. The data of the sample banks for a period of 2006-2015 have been collected from the annual reportsof the banks. Through this model, it is highlighted that the position of the banks under study is sound and reasonable so far as their capital adequacy is concerned.
Jaiswal, A., Jain, C. (2016)The study is an attempt to analyze the financial performance of SBI and ICICI banks. The State Bank of India, popularly known as SBI is one of the leading bank of public sector in India. SBI has 14 Local Head Offices and 57 Zonal Offices located at important cities throughout the country. ICICI bank is the second largest, leading bank of private sector in India. The Bank has 2,533 branches and 6,800 ATMs inIndia. The study is descriptive and analytical in nature. The collected data was secondary in nature and collected from various reportsissued by these banksthrough internet. The comparison of financial performance of these two banks was made on the basis of ratio analysis. The results indicated that the SBI is performing well and financially sound than ICICI Bank. Also the market position of SBI is better than ICICI in terms to earning per share, price ratio per share and dividend payout ratio, but on the other hand ICICI bank is performing well in terms of NPA and provision for NPA in comparison of SBI bank.
Prakash, P.,Sundararajan, S. (2016) This quantitative analytical research was intended to analyze the Indian banking industry in the view of its feasibility as a venture option. A detailed analysis of the Indian banking industry is covered in high opinion of the past growth and performance. The fundamental analysis is done which analyzes the economy in the broader intelligence. The technical analysis is also finished for the stocks using some technical indicators. For the study ICICI bank has been chosen. The research is based on the secondary data and the research design is also analytical in nature as it deals with facts and figures. The tools used for the study are the Ratio Analysis, Beta Analysis (?), Relative Strength Index (RSI) and Rate of Change (ROC). The suggestion to ICICI Bank is the calculated value of ROC and RSI shows more buying opportunity than the selling opportunity.So the investor should buy the shares as the price may increase in the future. Based on the analysis the future price directions are determined and recommendations are given to make the research meaningful. The conclusion is that knowledge of the stock market is the key to success and emphasis should be on managing trading risk while the fundamental and technical analysis can help the investors to control them. So the fundamental ; technical analysis gives clue to buy/sell a stock with adequate justification.
Srinivasan, P.,Saminathan, Y. P. (2016) In the present study, an attempt has been made to rank the various commercial banks operating in India. The banks in India have been categorized into Public sector, Private sector, and Foreign banks. The sample of selected banks consists of 25 Public Sector, 18 Private Sector, and 8 Foreign banks. For the purpose of ranking, Camel model approach has been applied, incorporating important parameters like Capital Adequacy, Assets Quality, Management Efficiency, Earnings Quality and Liquidity. The finding of the study shows that public sector banks, viz. Andhra Bank, Bank of Baroda, Allahabad Bank, Punjab National Bank, IDBI Bank, State Bank of Bikaner and Jaipur and UCO Bank has been ranked at the top five positions in their financial performance during the study period. The private sector banks, namely, TamilnadMerchantile Bank, KOTAK Mahindra Bank, HDFC Bank, Axis Bank, KarurVysya Bank, ICICI Bank, Citi Union Bank and IndusInd Bank shared the top five positions. The foreign banks such as Bank of Bahrain ; Kuwait, HSBC Bank, The Royal Bank of Scotland, Deutsche Bank, CTBS Bank, Citi Bank, DBS Bank and Royal Bank of Scotland secured the top five positions during the study period.
Srinivasan, P., ;Saminathan, Y. P. (2016)conducted a study in A Camel Model Analysis of Public, Private and Foreign Sector Banks in India. In this study, an attempt has been made to rank the various commercial banks operating in India.The Populations were Public, Private and Foreign banks and the Samplingwas selected banks consists of 25 Public Sector, 18 Private Sector, and 8 Foreign banks. This study covers the years of 2012,2013and 2014. Researcher found that CAMEL approach is a significant tool to assess the relative financial strength of a bank and to suggest necessary measures to improve weaknesses of a bank. In India, RBI adopted this approach in 1996 following on the recommendations of Padmanabham Working Group (1995) committee. In the present study, an attempt has been made to rank the various commercial banks operating in India. The banks in India have been categorized into Public sector, Private sector, and Foreign banks. The sample of selected banks consists of 25 Public Sector, 18 Private Sector, and 8 Foreign banks. For the purpose of ranking, CAMEL MODEL approach has been applied, incorporating important parameters like Capital Adequacy, Assets Quality, Management Efficiency, Earnings Quality and Liquidity. The finding of the study shows that public sector banks, viz. Andhra Bank, Bank of Baroda, Allahabad Bank, Punjab National Bank IDBI Bank, State Bank of Bikaner and Jaipur and UCO Bank has been ranked at the top five positions in their financial performance during the study period. The private sector banks, namely, TamilnadMerchantile Bank, KOTAK Mahindra Bank, HDFC Bank, Axis Bank, KarurVysya Bank, ICICI Bank, Citi Union Bank and IndusInd Bank shared the top five positions. The foreign banks such as Bank of Bahrain ; Kuwait, HSBC Bank, The Royal Bank of Scotland, Deutsche Bank, CTBS Bank, Citi Bank, DBS Bank and Royal Bank of Scotland secured the top five positions during the study period. The empirical results show that there is a statistically significant difference between the CAMEL ratios of the selected Public Sector Banks, Private Sector Banks and Foreign Banks in India.
Malhotra, N. (2015)In this context this paper told the financial soundness of three top performers of Indian banking sector. The present research aims at comparison of financial soundness among SBI, ICICI and Standard Chartered Bank. Secondary data is used for the study. This topic includes data of last three financial years i.e., 2010-11 to 2012–13. Different analytical techniques such as tables and ratios are used to analyze data. The study reveals that growth of assets is highest in case of ICICI bank where as SBI leads the sample in case of growth of both advances and deposits. ICICI bank leads in case of credit deposit ratio and interest income to total income ratio. Standard Chartered Bank has been more successful in controlling its Expenditure in relation to Income as compared to other two banks. StandardChartered Bank is far ahead the other two banks as per business per employee and business per office is concerned. This study recommends that the state owned SBI must take allthe necessary steps immediatelyin order to improve its financial position as compared to the other two banks in study.
Selvakuma, C.(2015)Conducted study in Comparative Study Of The Financial Performance Of private sector banks.The objectives were to know the origin, growth and historical perspectives andcomparative financial performance of old and new era private sector banks in India. Then to study the financial soundness in terms of profitability, liquidity and solvency.The researcher has selected 10 old era private sector banks and 9 new era private sector banks are listed in Indian stock exchanges.This Study was confined for 10 years from 1st April 2001 to 31st March 2011.The study indicated that average performance of old and new era pvt sector banks based on all indicators during the study period was relatively better. But it could not be concluded as evidence of improvement in terms of various parameters. With supported relative information a correct position can be identified. The policy makers can use the findings of the study as a base for framing policies implement in banking sector especially in old and new pvt sector banks. Also it identifies the areas of improvement for better profitability and performance for the banks. The investors could decide their investments in the service sector and the researchers can base this study for their future research activities in the area of banking sector. Thus, put in a nutshell, the banks for this study showed a satisfactory position and in certain area; they have to concentrate to cope the existing among the banking industry by adhering the suggestions pointed out by the researcher.
Rajasekar T, Rameshkumar S. (2015)conducted study in Analysis of Financial Health of the New Private Sector Banks in India through CAMEL Rating System. The major objectives of the study were as follows: To understand the various theoretical aspects relating to the measurement of financial soundness of the commercial banks. To analyze the financial soundness of the new private sector banks in india. The period of study covered a period of eight years, that is, from 2005-06 to 2012.New private sector banks are playing an important role in the overall development of a nation. In the competitive business environment, measurement of financial soundness of the banks has grown in significance. The measurement and analysis of financial health of the India’s new private sector banks reveals thatKOTAK Mahindra Bank is at the top position under the capital adequacy parameter, while the Development Credit Bank (DCB) at the bottom. Under the asset quality parameter, the YES Bank holds the top rank while the DCB holds the lowest rank. Under the management efficiency parameter, top rank is achieved by AXIS Bank and the lowest rank by DCB. In terms of earning quality parameter the ICICI Bank is on top, while the DCB at bottom. Under the liquidity parameter, the KOTAK Mahindra Bank stands on the top position and the ICICI Bank is on the lowest position. It is important to note that the YES Bank is at the first position with overall composite ranking average of 2.5 closely followed by the AXIS Bank with overall composite ranking average of 3.1. The DCB holds the bottom rank with overall composite ranking average of 6.4.
Sneha S. S., (2015)conducted study inAnalyzing Financial Strength of Public and Private Sector Banks: A CAMEL Approach.The aims were an attempt to evaluate the performance & financial soundness of various public & private sector banks using CAMEL approach. The period of study covered a period from2010-13. Researcher selected Sample a) Public Banks 1) Bank of Baroda2) IDBI Bank3) PNB Bank b) Private Banks: 1) Axis Ban 2) ICICI Bank 3) HDFC Bank. Conclusion: In the process of evaluation of performance of various banks, he concluded that, different banks have obtained different performances with respect to CAMEL ratios. Thestudy also concluded the following:
• The HDFC Bank & BOB stood at top position in terms of capital adequacy.
• In terms of asset quality, the HDFC Bank was at top most position.
• In context of management quality, HDFC Bank &ICICI Bank positioned at first
In terms of earnings quality, HDFC Bank, ICICI Bank & IDBI Bank obtained the top position.
• The ICICI Bank was ranked top in liquidity criterion.
• The overall performance table shows that, HDFC Bank is ranked first followed by ICICI Bank & Bank of Baroda.
Most of these banks, including HDFC, ICICI, IDBI, lie in a similar rank region. However, these banks’ assets etc. vary a great deal and they cannot be judged solely based on the absolute values of the CAMEL ratios. Looking at the trend, we can say that private banks are growing at a faster pace than public sector banks.
Singh, A. K., (2015)conducted study in An analysis of profitability position of private bank in India.The objectives were To analysis the profitability position of some selected private sector banks like AXIS, ICICI ,KarurVysya bank (KVB) ,Yes Bank , and highlight the overall profitability of bank (i.e.) Interest spread, Net profit margin, Return on long term fund, Return on net worth ; Return on assets, Adjusted cash margin. The study covers a period of 5 years from 2010-11 to 2014-15.The study Population: private banks:Sampling : AXIS, ICICI, KVB and YES bank.
Researcher found that,Interest spread shows that Yes bank has 10.72 percentages at the end of March 2014 and also Yes bank has low percentage of 3.21 at the end of March 2011. To conclude that the hypothesis there is no significant relationship between interest spread of (Axis, ICICI, KVB ; Yes) private sector banks in India.
– Net profit margin reveals that Axis bank has highest percentage of 18.58 at the end of March 2012 and KVB has low percentage of 7.56 at the end of March 2015. To conclude that the hypothesis there is no significant relationship between net profit margin of (Axis, ICICI, KVB ; Yes) private sector banks in India.
– Return on long term fund of selected banks for research the overall percentage of Yes bank has 137.76 at the end of March 2014 and ICICI bank has low percentage of 43.05 at March 2012. To conclude that the hypothesis there is significant relationship between return on long term fund of (Axis, ICICI, KVB ; Yes) private sector banks in India.
-Return on net worth shows that Yes bank has highest percentage of 22.71 at the end of March 2015 and ICICI bank has low percentage of 7.79 at the end of March 2011. To conclude that the hypothesis there is significant relationship between return on net worth of (Axis, ICICI, KVB ; Yes) private sector banks in India.
– Return on assets shows the clear picture of Axis bank has highest percentage of 813.47 at the end of March 2015 and Yes bank has very low percentage of 90.96 at the end of March 2011. To conclude that the hypothesis there is significant relationship between return on assets of (Axis, ICICI, KVB ; Yes) private sector banks in India.
– Adjusted cash margin shows the detail of all private sector banks ICICI has 19.02 percentages at the end of March 2015 and KVB has 12.92 percentages at the end of March 2014. To conclude that the hypothesis there is no significant relationship between adjusted cash margin of (Axis, ICICI, KVB ; Yes) private sector banks in India.
Sharma, R., Goswami, A., ; Kumar, P. (2014)The main idea of this article was to make an evaluation of the financial performance of Indian private sector banks. Indian banking system has under gone a various reforms since liberalization. The new generation private sector bank has best used the technology, exploit the manpower in an effective manner. They are managed by professionals. These have made them attract more customers and made them growfaster and stronger.
Chandran, D., Francis, P. (2014) In this context, the present study has attempted to analyze the relationship between inflation rate and prime lending rate in India. The study was mainly limited to the prime lending rates of SBI and ICICI Bank. The time period of the study is from 2004 to 2011. For the purpose of analysis, the inflation rate was compared with the prime lending rates of SBI and ICICI Bank with the help of correlation, regression, and ANOVA tools. The analysis leads to the finding that for most of the years, inflation and prime lending rates of the 2 banks were negatively correlated. However, after testing the fit of the regression line, a conclusion arrived at that there was no significant relationship between inflation rates and SBAR; whereas, there was a significant relationship between inflation rates and IBAR. Thus, the study tries to provide necessary guidance regarding the relationship between the inflation rates and the prime lending rates.
Parmar, R. (2014)Inthis paper an attempt has been made to study the trend of Total advances,Net profit, Gross NPA,Net NPA of SBI and ICICI Bank.During last three years total advances and net profit has shown growing trendin both banks but compared to SBI,NPA in ICICI bank has shown downward trend because of effective NPA management.It also highlights the relationship between Net Profit and Net NPA, while SBI has shown positive relationship between Net Profit and Net NPA,negative relationship has been found in ICICI between Net Profit and Net NPA. Conclusion: The management of nonperforming assets is a daunting task for every Bank in the Banking industry. The very important reason and necessity for management of NPA is due to their multi dimensionalaffect on the operations, performance and position of bank. Results of study throw light on the level of nonperforming assets of SBI and ICICI Bank. It is found that level of NPAs both gross and net is on an average in upward trend in SBI but downward trend for ICICI Bank for one year then upward trend in second year.The non performing asset is a major problem and hurdlefaced by banking industry. Willful defaults, improper processing of loan proposals, poor monitoring and so on are the causes for RajeshwariParmar
Biswal, B. P., Gopalakrishna, R. (2014) This paper examines the possible determinants and their effects on banking profitability as estimated by Net Interest Margin. Using secondary data from 2008-13, the study classifies banks operating in India under high CD ratio and low CD ratio. CD ratio represents the proportion of loan asset created from deposits. An Incremental Credit Deposit Ratio (ICDR) going beyond 100%, for a prolonged period, is a cause for concern to Central Bank, banking system, and other market participants as these are the first signs of pressure on resources and capital adequacy. Savers with the banking system are seeking alternative investment avenues for real positive returns. The study tries to analyze if the NIM, ICDR and Cost of Funds of banks with high and low CD ratio vary significantly. The results show that determinants of bank profitability have varied impact for banks under high CD ratio and low CD ratio categories.
Neha Rani, Dinesh Gaba, (2014)conducted study in Analysis of Profitability and Efficiency : A Comparison of HDFC and ICICIThe objectives were: To study the Income and Expenditure pattern of ICICI bank and HDFC bank in India and; To analyze the profitability performance of ICICI and HDFCbank on the basis of net profit. Population and sampling were ICICI and HDFC. This study covers a period of seven years from 2006-07 to 2012-13 Theyfound That the average growth rate of total income is higher in HDFC bank than that of ICICI bank. The average growth rate is 34% in HDFC and 16.6% in ICICI bank.
And the average growth rate of total expenditure in HDFC bank is 25.2% which is higher than the ICICI bank which is 16.42%. Also, average growth rate of net profit is higher in HDFC bank than that of ICICI bank. The average growth rate of net profit is 34% in HDFC bank and 19.4% in ICICI bank. Hence it is concluded that the total performance and efficiency of HDFC bank is better than that of ICICI bank.
Gupta, Shikha (2014 )conduct study inAn Empirical Study Of Financial Performance Of ICICI Bank- A comparative Analysis.The objectives were To know the growth rate of the company in terms of turnover, share capital, PAT, net worth, nets assets and investments during the study period; To assess the profitability; To assess short and long-term solvency; To judge the utilization of its resources period of the study. This study covers a period of 2009-10 to 2013-14 Researcher found that the liquidity position of the bank is not good. The current ratio is below 1 (current liabilities exceed current assets).
– The DER is quite high viz. worrisome, as it indicates a precarious amount of leverage. To address this concern, bank can also analyze the firm’s interest coverage ratio, which is the company’s operating income divided by debt service payments. A high operating income will allow even a debt-burdened firm to meets its obligations.
– A consistent improvement in the EPS figure year after year from 36.10 to 84.94 is the indication of continuous improvement in the earning power of the bank. This increasing EPS is the sign of higher earnings, strong financial position and, therefore, a reliable firm to invest money.
– Asset turnover ratio should be looked at together with the company’s financing mix and its profit margin for a better analysis. A lower turnover ratio means that the company is not using its assets optimally. Total asset turnover ratio is a key driver of return on equity which is quite constant.
– There should be a steady stream of sustainable dividends from a company, the dividend payout ratio analysis is important. A consistent trend in this ratio is usually more important than a high or low ratio. Bank has fallen a percentage each year for the last five years might indicate that the company can no longer afford to pay such high dividends. This could be an indication of poor operating performance.The researcher concludes that the bank has to take an appropriate measure to keep current ration and Quick ratio on par with the norms. The NPAs of the ICICI bank is more than one per cent, hence should control NPAs otherwise it affects the asset quality in long run. Proper control over leverage should be taken in order to magnify DP ratio. The spread of theICICI bank should becontroled otherwise the income of the bank is eaten away by the interest expenses in the long-run. The Earning per share is however long standing.
Nagarkar, J., J., (2014)conducted paper in analysis of financial performance of banks in India.The aims of thispaper was an attempt to analyze performance of five major public, private and foreign sector banks with principle component analysis on the financial parameters. The weights are assigned on the basis of importance of the parameters on financials Populations were (Public, Private and Foreign Banks)and the Sampling were First 5 banks from each category on the basis of total funds. The banks considered for the study are SBI, PNB, BOB, BOI, Canara bank from Public sector banks. ICICI, HDFC, AXIS, DCB and IndusInd Bank from private sector banks. CITI, SCB, HSBC, DBS and Deutsche bank from foreign sector banks, : This study covers a period from 2003 to 2013.Researcher found that Commercial banks depend on deposits received from all types of depositors. Achieving and maintaining faith of depositors is a key to bank’s success. Commercial banks need to check credit appraisal process to reduce the non-performing assets. It has been seen that couple of banks depend on borrowing for giving advances. Banks are better if they depend on deposit money rather than borrowed money for disbursing advances. It was seen that though the overall deposits of commercial banks have gone down. The credit growth has slowed down. This is not reflected in the banks analyzed for the study. This is because large national level banks are able to withstand business cycles better than regional banks. The objective of government to create bigger national level banks by merging smaller banks is justified by this study.
Chandani, A., Mehta, M., Chandrasekaran, K. B. (2014)conducted study inA Working Paper on the Impact of Gender of Leader on theFinancial Performance of the Bank: A Case of ICICI Bank.The objectives were to compute the CAMEL score of ICICI bank led by man and woman , then To analyse the difference in the CAMEL score of ICICI banks.This study covers the years starting from 2005-2006 till 2012-2013 .They were selected a case of ICICI banks.Researcher found that though the Indian society gave due importance to the women in the ancient and medieval period, the Indian women had risen to the position which were considered to be highest and prime. Due to the attack on the Indian culture by the invaders from various part of the globe, the importance seems to be losing of late. In Post-independence, the things have transformed and women again started to regain the position in the society. The government of India has also been trying, through various programmes and policies, to uplift the position of women in the society. The overall education system also changed and the perspectives of the parents also changed towards the girl and they also started giving equal importance and started encouraging them for education which resulted in girl going for the job. During the 1990 when the government started the liberalization policy and this resulted in the flow of jobs and in the increasing number of women going for the job and taking career seriously and to join hands in the family earning.
Though the women entered the traditional job such as teaching, nursing but nevertheless there were women who were venturing into non-traditional jobs such as aviation, petroleum and banking. These sectors were considering the play area of the muscle and entry of the woman was more or less restricted. The women broke that myth and took up the jobs and moved to a sector called banking, financial services and insurance (BFSI). The women climbed the ladder to enter the elite class of Board of Directors and finally to become the CEO of the organization.
This paper, with the help of a tool called CAMEL, has tried to compare the CAMEL score of the bank between two periods where man was CEO and woman is CEO to draw the meaningful conclusion. The bank is currently headed by women and the women leadership started approximately in April 2009.
The CAMEL score of these leaders are calculated using different ratios under five heads, as defined by the word CAMEL, and the proper weight is given to all the ratios according to their importance.
Table 3: CAMEL score of ICICI Bank
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
36.02 42.33 37.68 39.77 38.23 37.49 40.23 40
The final CAMEL score was arrived which showed that the score has gone down since woman became CEO but it started gaining again though it did not touch the highest point of 42.33 which was during the regime of man CEO.
The CAMEL score was 40.23 in the year 2011-12 and 40 in the recent year, which is good score comparing the fact that it was less than 40 during the period of man CEO barring year 2006-07.
It is credible that the woman has come to a level where she is not less than man and has shown the CAMEL score which is comparable to the man CEO. The paper has tried to explore whether woman is able to perform as good as man or not and the tool used for measuring the financial performance was CAMEL score. It has been seen that the CAMEL score has not shown a remarkable jump per se, but the score is slightly bettered which can help the researchers to conclude that the women are not less than man and able to perform as efficiently as man.
Ayyappan, S., Sivaraman, K., ;Sakthivadivel, M. M., (2014)conducted a study on the financial performance analysis of selected BSE listed private sector banks in india.Objectives were to calculate the trend, to predict the future financial position of selected financial parameters of selected private sector banks in India .(AXIS , DHFC , ICICI) .The period of study covered a period from 2004 to 2013
The conclusion shows that indian banking system has under gone a drastic change since liberalization. With the increasing levels of globalization, liberalisation, privatisation and new reforms of the indian banking sector, competition will intensify further and the new generation private sector bank has best used the technology and manpower in effective and efficient way. these have made them attract more customers and made them grow faster and stronger. the study reveals that the private banking sector has very sound financial position especially in terms of networth , reserves and deposit and they contribute very much to the overall development of economy.
Kumar, J., Selvan T. R. (2014)conducted study in Capital Adequacy Determinants and Profitability of Selected Indian Commercial Banks .The objectives of the study were to find the impact of Capital Adequacy method and To evaluate the relative profitability of selected Indian commercial banks. Commercial Banks BOB, ICICI,PNB,BOI,CB, HDFC, AXIS.Period of studycovered a period of eight years, that is, from 2009-2010 to 2013-2014.TheTheconclusion shows that In the capital adequacy model that ICICI Bank has the most favored capital adequacy ratio compared to other various banks. All the commercial banks maintained the RBI requirements norms of 10%. The debt equity ratio is high; the banking institution highly levered from other firms and fund coming from deposits. The higher ratio indicates less protection for the creditors and depositors in the banking system. The Bank of India and Bank of Baroda are most expanding business. The advances to Assets the State Bank of India is better profitability satisfactory. All the banks had more than 55% of their investment as Government securities. The ICICI bank lowest ratio implies the major part of its funds was diverted. The earning capacity method, Spread to Total Assets the HDFC Bank higher spread indicates better earning capacity of the bank. The Net Profit to Average Assets the HDFC Bank higher ratio shows the earnings capacity of the assets and Canara Bank the inefficient and incompetent performance of the bank. All the banks performance is satisfactory in their Interest Income to Total Income. The Non-Interest Income to Total Income Axis Bank the higher percentage ratio. It helps to determine the ability of the bank to earn revenue from other than the core activities of banks. We conclude that the commercial banks in India overall are performing well.
Makkar, A., Singh, S. (2013) The present study was a comparative analysis of the financial performance of Indian commercial banks. The study considered a sample of 37 banks (22 public sector banks and 15 private sector banks) for the period from 2006-07 to 2010-11. CAMELS rating methodology was used in the study to measure the performance of the considered banks. The study found that the IDBI Bank was the best performing bank followed by KOTAK Mahindra Bank and ICICI Bank. Dhanalaxmi Bank had the worst performance followed by J;K Bank and Karnataka Bank Ltd. The results of the ‘t’ – test disclosed that there is a significant difference in the Capital Adequacy, Asset Quality and Earning Capacity of public and private sector banks in India, while there is no significant difference in the Management, Liquidity Position and Sensitivity to market risk of the two different banks groups. The study concluded that on an average, there is no statistically significant difference in the financial performance of the public and private
Nagarajan, G., Ali, A. A., Sathyanarayana, N. (2013) The purpose of the study was to analyse the financial performance of SBI and ICICI Bank, public sector and private sector respectively. The research was descriptive and analytical in nature. The present study has used only secondary data for analysing and comparing the performance of SBI and ICICI Bank. The period of the study taken was from 2003-04 to 2012-13. The study found the financial performance of ICICI sounds better than SBI compared to all the five financial indicators. It is also found that, there is a significant impact of income on profitability of SBI and ICICI banks.
Tirkey, M. R. ; Salem S. E. A. (2013)conducted study in A comparative study of financial statement of ICICI bank and HDFC through ratio analysis .The objectives were to study the financial performance of ICICI and HDFC. Then to compare the financial performance of ICICI with HDFC.Population and sampling were ICICI and HDFC. The period of this study covered a period of 2009-2012,They found that it is clear that position of ICICI is better in comparison to HDFC. As in current ratio, quick ratio, credit, deposit ratio, and Cash deposit ratio the ICICI bank performance is better.In the case of earning per share the ICICI bank increasing continuously while HDFC bank earnings per share goes down in the last year.
Pooja Sharma (2014)conducted study in Financial Performance of ICICI Bank and SBI bank: A Comparative Analysis.Objective of the study was to compare the financial performance of SBI and ICICI. In the present study, an attempt has been made to evaluate and compare the financial performance of SBI and ICICIfor a period of five years, that is, from 2008-2009 TO 2012-2013.
Results reveal that over the course of five financial periods of the study the Credit Deposit Ratio in ICICI was higher (99.25%) than in SBI (85.17%) in 2012-13. This shows that ICICI Bank has created more loan assets from its deposits as compared to SBI. It is also revealed that the ratio of operating funds to the total funds of ICICI was varied from 1.94 percent to 1.76 percent. It was 1.58 percent in 2009-10; lowest among five years again it increased to 1.72 percent in 2010-11. But the operating funds ratio in case of SBI has increased over the five years. It was at its lowest in 2008-09 (1.86%), after that it has shown almost increment in operating funds. The ratio of net profits to total funds of ICICI was varied from 0.96 percent to 1.62 percent. It increased to 1.62 percent from 0.96 percent in 2008-09. But the net profit in case of SBI has decreased to 0.73 percent in 2010-11 from 1.08 percent in 2008-09; it further increases to 0.97 percent in 2012-13. However, the net profit margin was higher in ICICI (1.62%) as compared to SBI (0.97%) during the period of study. Thus, the ICICI has shown comparatively lower operational expenses than SBI. The Cash Deposit Ratio in ICICI and SBI was highest in 2010-11. In both SBI ;ICICI the cash deposit ratio has decreased in period 2011-13. Return on Equity in SBI bank has decreased to 12.62% in year 2010-11 from 17.05% in 2008-09 while in ICICI bank ROE has continuously increased in last five years ranges from 7.83% to 13.1%. In SBI bank ROE shows a growth sign in the years 2011-13 but it’s slower in comparison to ICICI bank’s ROE. Hence it depicts that ICICI bank has been successful in generating returns on the shareholders’ capital more than SBI bank. Hence, on the basis of the above study or analysis ICICI bank is performing well in comparison to SBI.
Kandasamy, C., Indirani, C. (2013)conducted A Study on Financial Performance of New Generation Private Sectors Commercial Banks in india .The main objectives framed for the present study are as follows:
To study the growth of New Generation private sector commercial banks.
To examine the growth of deposit and advances of selected banks.
To ascertain the profitability of chosen banks.
Period of study:covered a period 2003-2004 TO 2012-2013 .This research was aimed at studying the financial performance of new generation private sector commercial banks. Private sector banks play an important role in the development of Indian economy. After introduction of new generation private sector banks, the banking industry underwent major changes. The Indian banking industry was dominated by public sector banks. But now the situation has changed: private sector banks with use of technology and professional management has gained a reasonable position in the banking industry. Banking constitutes an important link in several socio-economic activities. Therefore, the banking industry must be on a sound footing, while in India, there is stress on the social responsibility of banks, the significance of liquity and profitability is not to be neglected. The financial viability of the banking system is certainly essential; not only to instill public confidence but also to make banks capable of discharging their social responsibilities.
V., Brindadevi. (2013)conducted A Study on Profitability Analysis of Private Sector Banks In India Objectives Of The Study were a) To highlight the various profitability analysis of some selected private sectors banks (i.e.,) AXIS, ICICI. Karurvysya bank (KVB), South India bank (SIB). b); To analyze the overall profitability of banks (i.e.,) Interest spread, Net profit margin, Return on Long term fund , Return on Net worth, & Return on asset. Period of 10 years from 2002- 2003 to 2011-2012 is taken for the study.Researcher selected sampling : AXIS,ICICI,KVB,SIB. Findings a) Interest spread of all selected banks SIB has high percent of 6.73 at the end of March 2009 and ICICI has low percent of 2.77 at the end of March 2003. b) Net profit margin of different banks shows that net increasing the period of March 2003 KVB has highest percent of 22.12 and compared to other banks SIB has low percent of 1.25. c) Return on long term fund reveals that 186.55 percent over all private sectors banks SIB has highest in the period of March 2003 and ICICI at the end of March 2011 sudden decreasing to 42.97 percent. d) Return on net worth shows that high percent of AXIS has 26.39 at the end of March 2004 and compared to all other remaining banks SIB has lowest percent of 2.05 at the end of March 2005. e) Return on asset gives the clear picture of 551.99 percent has highest in the period of March 2012 and SIB has very low percent of 0.09 at the end of March 2005. Conclusion, Profitability of private sector banks in India plays major role in banking sector without profit the investors cannot invest in this business. A strong financial system promotes investment by financing productive business opportunities, mobilizing savings, efficiently allocating resources and makes easy the trade of goods and services. To conclude there is difference among the mean value of interest spread, net profit margin, return on long term fund and return on net worth and there is no difference among the mean value of return on asset of private banks. So profitability ratios are employed by the management in order to assess how efficiently they carry on their business operations and also it is suggested for the entire bank to take effective steps to improve the operating efficiency of the business.
Mishra, K. M. (2013).Conducted study in On the basis of SBI and ICICI Bank financial performance through the CAMEL Model the various ratio relating to capital, Assets, liabilities, management efficiency, and earning capacity. The objectives of the present research were to study the financial performance of public and private sector banks in Post Liberalization era:to study the financial performance of SBI &ICICI Bank using CAMEL model; to understand the financial performance of the Indian banks;to describe the CAMEL model of ranking;andto analyse the performance of Indian Banks through CAMEL model and give suggestions for improvement if necessary. The period covered ten years from 2000 to 2009. It can be concluded that both banks have shown remarkable progress in post liberalization era with respect to Banks deposits advances, profits but still one of the aspect of ICICI Bank has lodged the performance is the ability to raise their funds at lower cost even though the interest income are increased. The overall finding in post liberalization era with respect to the Indian banking sector with regard to the efficiency it has shown remarkable growth with more deregulation in the banking sector. The commercial banks would need to devise the imaginative ways to increase the income in order to garner more profits. The reporting accounting standards, an improvement of accounting standards and disclosed practices would enhance transparency in financial market.
Singh, A., &Tandon, P. (2012)conducted study to examine the financial performance of SBI and ICICI Bank, public sector and private sector respectively. The research was descriptive and analytical in nature. The data used for the study was entirely secondary in nature. The present study is conducted to compare the financial performance of SBI and ICICI Bank on the basis of ratios such as credit deposit, net profit margin etc. The period of study taken is from the year 2007-08 to 2011-12. The study found that SBI is performing well and financially sound than ICICI Bank but in context of deposits and expenditure ICICI bank has better managing efficiency than SBI.
D.Padma and V.Arulmathi (2012)conducted study set out to apply Profitability ratios, Solvency ratios and Management efficiency ratios on SBI and ICICI Bank in order to compare their efficiency and solvency position. On basis of the analysis, it has been found that both the banks are maintaining the required standards and running profitably. This comparative study of SBI and ICICI Bank demonstrates that there are significant differences on the performance of SBI and ICICI Bank in terms of Deposits, Advances, Investments, Net profit, and Total assets. Based on the study, it can be said that SBI have an extensive operation than ICICI Bank.
Balasubramaniam, C. S. (2012)conducted study in non performing assets and profitability of commercial banks in india: assessment and emerging issues.The Objectives of this paper attempts to analyze the trend of the NPA of the banks in recent decade since 2000. Population and sampling ; COMMERCIAL BANKS .This study covers a period of the recent decade since 2000. Researcher found that:
1. The Indian Banks have overall demonstrated a trend of continued good performance and profitability despite rising interest rates, increase in operating costs and the spillover effects of recent global financial crisis .This is reflected in higher credit growth deposit record, better return on assets, and return on equities. (ROE) The capital position improved significantly as the banks were able to mobilize substantial funds.
2. The level of NPAs is high with all banks currently and the banks would be expected to bring down their NPA. This can be achieved by good credit appraisal procedures, effective internal control systems along with their efforts to improve asset quality in their balance sheets.
3. However, maintaining profitability is a challenge to commercial banks especially in a highly competitive era and opening up of banking business to NBFC and foreign banks in general. This assumes significance in a period of rising interest rates and operating costs of borrowers in general.
4. Banks would make efforts to mobilise funds in order to comply with provisioning norms and capital adequacy requirements while meeting Basel III standards which will be brought in by RBI shortly. However, the Capital requirements would be large considering the varied structure of banks and financial institutions operating in the economy and their NPA levels. The capital market environment currently prevailing in the economy would pose problems for the capital mobilization by the banks.
5. Finally , it is significant to note that new and private sector banks led by ICICI Bank and HDFC Bank , with their high capital adequacy ratios, enhanced proportion of common equity and better IT and other modern financial skills of the personnel, are well placed to comply with Basel III norms in general. PSU banks although dominant banks in the Indian financial system may take more time and face challenges in following the Basel III guidelines in the ensuing years.
Reddy Sriharsha K, (2012)conducted study inrelative performance of commercial banks in India using camel approach.The Aim of the study was to evaluate relative performance of banks in India using CAMEL approach. Population and sampling was COMMERCIAL BANKS This study covers a period after first phase of reforms (i.e., 1999) and after second phase of reforms (i.e., 2009)1. Researcher found that CAMEL approach is significant tool to assess the relative financial strength of a bank and to suggest necessary measures to improve weaknesses of a bank. In India, RBI adopted this approach in 1996 followed on the recommendations of Padmanabham Working Group (1995) committee. In the present study, modified version of CAMEL ranking approach is used to assess relative positions of commercial banks. It is found that during the year 2009 the top three performing banks in all the categories of CAMEL are Mashreq Bank, China Trust Commercial Bank and Bank of Ceylon because of high capital adequacy, and liquidity. The worst three performers are American Exprss Bank, Development Credit Bank and Catholic Syriyan Bank during the study period because of low capital adequacy, low assets and earnings quality and poor management quality. Further, Mashreq Bank, Indian Bank, Oman International Bank,Punjab & Sind Bank,Abu Dhabi Bank, United Bank of India, Ratnakar Bank, China Trust Commercial Bank, Uco Bank are very progressive banks with high Progress Ratios during 1999- 2009. UTI Bank, Jammu & Kashmir Bank, IndusInd Bank, Development Credit Bank ,American Express Bank, Sonali Bank are Very bad Progressive banks with low Progress Ratios during 1999-2009 . Public sector banks have significantly improved indicating positive impact of the reforms in liberalizing interest rates, rationalizing directed credit and Investments and increasing competition.
Singh, A., &Tandon, P. (2012)conducted study in financial performance: a comparative analysis of SBI and ICICI bank.Objectives wereto study the financial performance of SBI and ICICI Bank. Then compared the financial performance of SBI and ICICI Bank for a period covered from 2007-2008 to 2011-2012 .The study found that the mean of Credit Deposit Ratio in ICICI was higher (89.302 %) than in SBI (76.184%). This shows that ICICI Bank has created more loan assets from its deposits as compared to SBI. The share of interest expenses in total expenses is higher in ICICI (63.36 %) as compare to SBI (59.99 %) and the proportion of interest income to total income was higher in case of SBI(84.49 % ) as compared to ICICI (78.84%), which shows that people prefer ICICI to invest their savings and SBI to take loans & advances.
The ratio of other income to total income was relatively higher in ICICI (21.44 %) as compared to SBI (15.22 %). The Net Profit Margin of ICICI is higher (14.37 %) whereas in SBI it was (10.99 %), which shows that ICICI has shown comparatively better operational efficiency than SBI. The growth rate of net profit is 73.97% in SBI which is higher than ICICI which is 55.49%. This shows that SBI performed well as compared to ICICI. The mean value of total income was higher in SBI (87,598.58) as compared to that in ICICI (37,282.114). Net worth ratio was also higher in SBI (14.11 %) than ICICI (8.87 %), which revealed that SBI has utilized its resources more efficiently as compared to ICICI. The mean value of total expenditure was higher in SBI (Rs. 78,784.06 crores) as compared to that in ICICI (Rs.32,570.61) and the combined growth rate of expenditure was negative (-1.47%) in the case of ICICI whereas in SBI it is 111.52%. Deposits in SBI were continuously increased. However deposits in ICICI were decreased (with a declining trend) till 2009-10 but these were increased in the subsequent years. In case of SBI Advances were continuously increased (with a decreasing trend) with the combined growth rate of (108.16 %), However Advances in ICICI were decreased (with a declining trend) till 2009-10 but these were increased thereafter with combined growth rate of (12.45 %). It shows that ICICI has suffered with funds or avoid providing advances through 2007-08 to 2009-10. Hence, on the basis of the above study or analysis banking customer has more trust on the public sector banks as compared to private sector banks.
Prasad, K.V.N. And Ravinder, G. (2011)conducted study which analyzed the profitability of four major banks in India, i.e., State Bank of India, Punjab National Bank, ICICI Bank and HDFC Bank for the period 2005-06 to 2009-10. Statistical tools like arithmetic mean, one-way ANOVA, Tukey HSD Test have been employed for the purpose of study. The profitability of these banks have been evaluated by using various parameters like Operating Profit Margin, Gross Profit Margin, Net Profit Margin, Earning per Share, Return on Equity, Return on Assets, Price Earning Ratio and Dividend Payout Ratio. The study revealed that State Bank of India performed better in terms of earning per share and dividend payout ratio, while Punjab National Bank performed better in terms of operating profit margin and return on equity. The study found that HDFC Bank outperformed in terms of gross profit margin, net profit margin, return on assets and price earning ratio. The study evidenced that ICICI Bank paid highest portion of earning as dividends to shareholders. Analysis ranked HDFC Bank on the top position followed by Punjab National Bank, State Bank of India and ICICI Bank.
1.3 RESEARCH GAP
There are researchers, mentioned above, conducted studies in the financial analysis field of ICICI bank and also selected private sector banks. Some of them studied performance and profitability situation, growth and liquidity of the banks’ sector and the other studied some of the relationships between banks dealt sector but still a gap exists in this area in the following sides:
TIME: all previous research dealt with the evaluation of a former financial performance financial data,\.Hence there are up to the date of this research financial information which was not included in the previous studies.
COMPARISON: all previous research focused on the comparison with the SBI or HDFC bank and ignored that the large banks in term of total assets and market capitalization within one comparison with ICICI bank that’s as far as I know.
DIFFERENCES: There is no recent research conducted to study the mean differences of performance among selected private sector banks that’s as far as I know.
1.4.STATEMENT OF THE PROBLEM
Right decisions depend on useful and proper information. Thus financial analysis can provide such useful and proper financial information which helps stakeholders to make proper decisions in general.
The objective of the studyis to evaluate the financial performance ofICICI bank because there is no research study conducted in financial position and financial performance of ICICI bank compared with three largest banks in private sector banks. So this represented by answering the following statement:
1- To identify the indicators and techniques that help to understand and read financial statement a proper understanding.
2- What is financial position of the ICICI bank in comparison with selected private sector banks?
3- What is the level of the financial performance of the ICICI in comparison with selected private sector banks?
4- What is the level difference on the performance of the ICICI bank with selected private sector banks?
1.5.OBJECTIVES OF THE STUDY
This study aims to achieve the following objectives:
1- To study the financial performance of ICICI bank and selected private sector banks.
2- To compare the financial performance of ICICI Bank in comparison with selected private sector banks.
3- To analyze and identify if there is any difference between financial performances of ICICI Bank with selected private sector banks.
4- To analyze the variance of mean among selected private sector bank.
1.6.HYPOTHESES OF THE STUDY
The present study addresses the following hypotheses.
H0:?1=?2=?3=?4 : There is no significant difference between net profit margin among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant difference between net profit margin among different selected private sector banks in India.
H0:?1=?2=?3=?4 : There is no significant differencebetween Return on net worth among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant differencebetween Return on net worth among different selected private sector banks in India.
H0:?1=?2=?3=?4 : There is no significant different between Return on assets among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant differencebetween Return on assets among different selected private sector banks in India .
H0:?1=?2=?3=?4 : There is no significant differencebetween interests spread among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant differencebetween interests spread among different selected private sector banks in India .
H0:?1=?2=?3=?4 : There is no significant differencebetween credit deposit ratio among different selected private sector banks in India .
H1:?1??2??3??4: There is a significancedifferencebetween credit deposit ratio among different selected private sector banks in India .
H0:?1=?2=?3=?4 : There is no significantdifferencebetween cash deposit ratio among different selected private sector banks in India .
H1:?1??2??3??4: There is a significantdifferencebetween cash deposit ratio among different selected private sector banks in India .
H0:?1=?2=?3=?4 : There is no significantdifferencebetween asset turnoverratio among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant differencebetween asset turnoverratio among different selected private sector banks in India .
H0:?1=?2=?3=?4 : There is no significant differencebetween liquid assets to demand deposit among different selected private sector banks in India .
H1:?1??2??3??4: There is a significant differencebetween liquid assets to demand deposit among different selected private sector banks in India .
1.7.SCOPE OF THE STUDY
The border of study
1-objective limits: Consisting of comparing and analysis of variances.
2-Applied border: Consisting of profitability,liquidity,activity and leverage ratios of (ICICI, HDFC,AXIS and KOTAKbanks).
3- Temporal boundaries: five years from 2011-2012 to 2015-2016.
1.8.SIGNIFICANCE OF THE STUDY
Human in nature always want their money in a safe place so there lies the importance of this study in that they are looking at the process of financial analysis of the banks which trading its shares on the stock exchange.
Performance of banks affects a large segment of people interested, were customers in the financial market or have the intention of time in the future benefit of evaluating the performance of banks and investors drive both current , stocks and prospective
So financial analysis is an important technique of financial statement analysis.It’s useful for understanding the financial position for the company. Investors, management, bankers and creditors use the financial analysis to analyze and judging the company’s efficiency, locating weakness of the company’s operations even though its overall performance may be quite good. Although financial analysis is used to analyze the company’s past financial performance, they can also be used to establish future trends of its financial performance. As a result, investors can predict the company’s performance over the coming years and then facilitates comparison to make the suitable investment decisions.
1.9.METHODOLOGY OF THE STUDY
1 – RESEARCH DESIGN
Researcher adopted some of the following research approaches:
1 – Comparative: at nature to compare the financial performance of ICICI bank with the performance of selected private sector banks.
2- Experimental: to study the differences between financial performance of ICICI bank with the performanceof selected private sector banks.
3- Deductive: to identify the nature of the analysis and formulate hypotheses.
4 – Inductive: to test the hypotheses.
5 – Descriptive analysis: To learn the tools and techniques of readingfinancial analysis and role of financial analysis therein.
6 – Historical: previous studies and previous data.
2 – SAMPLING DESIGN
The study population comprise of ICICIbank withselected private sector banks of India (HDFCBANK, AXIS BANK,KOTAK MAHINDRA) that dominated in private sector banks in term of total assets and markets capitalization.
3 – PERIOD OF STUDY:
This study Covering a five- financial years from 2011-2012to 2015-2016.
4 – SOURCES OF DATA
The data is based on secondary data:
Financial statement published for period of five years from 2010-2011 to 2015-2016.
Specialist books and magazines.In addition to theses written on this subject, which has been utilized in the preparation of the theoretical part of this study.
Websites alsoused to collect information from the authorities, sites and specialized organizations such as the Reserve Bank of India and financial markets.
5 – METHODS OF ANALYSIS AND INTERPETATION
The analysis and interpretation of the financial statements are used to determine the financial performance. The following are the tools that are used for analyzing the financial statement of the ICICI bank in comparison with selected private sector banks.
1-financial tools – ratio analysis.
Following Ratios are selectedfor this Study.
Net profit margin.
Return on net worth.
Total assets turnover ratio
Return on assets
Credit deposit ratio
Cash deposit ratio
Liquid assets to demand deposit
– Statistical tools
Coefficient of variance
ANOVA and post hoc test.
1.10. LIMITATION OF THE STUDY
The study suffers from certain limitations:
This study exclusively depends on the published financial data, so it is subject to all limitations that are inherent in the published financial statements.
It is only re-arrangement of data given in financial statements, analysis and discussions are based on the available data.
Inter-private sector banks comparison is not possible because of short time so the study covers only ICICI bank in comparison with selected privet sector banks (HDFCBANK, AXIS BANK, andKOTAK MAHINDRA BANK).