public bank data interpritation (autosaved)

7/28/2019 Public Bank Data Interpritation (Autosaved)

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1) C CAPITAL ADEQUACY

Capital adequacy is stipulated by Bank for International Settlements (BIS) at Basle to

ensure that the banks have enough capital to absorb losses from assets which turn bad. The

norms are fixed as a percentage of risk weighted assets i.e. assets are, weighted on the basis of

the risk involved in their realization. For example, cash is given a risk weightage of 0% and

higher weightage for assets secured by goods, mortgage etc. In India Narasimham Committee

recommendations have stipulated that Indian Banks particularly those with International

Presence must have a capital adequacy of 8%. Capital adequacy reflects the overall financial

condition of the banks and also the ability of the management to meet the need for additional

capital. It includes the following

Capital adequacy ratio Tier I Debt to Equity Ratio Advance to assets


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Capital Adequacy Ratio (CAR)

Capital Adequacy Ratio or Total Capital Ratio measures a bank's capital position and is expressed as a

ratio of its capital to its assets. It determines the capacity of the bank of meeting the time liabilities and

other risks such as operational risk, credit risk etc. Capital Adequacy Ratio below the minimum statutory

level indicates that the bank is not sufficiently capitalized to expand its operations. The ratio describe

that the banks do not expand their business without having adequate capital.

Formula:

(Tier 1 Capital + Tier 2 Capital)Capital Adequacy Ratio = ------------------------------------

Risk Based Assets

Where,

Tier 1 Capi. = Total Equity - Revaluation Reserves

Tier 2 Capi. = Revaluation Reserves + Hybrid Capital + Subordinated Debt + Provisions including

Deferred Tax+ Total Loan Loss & Other Reserves.

Total equity = Equity Reserves + Total Share Capital

IDBI BOB SBI BOI PNB

Capital Funds 17573.99 27476.85 83951.2 19725.9 26367.55Risk Weighted

Assets

120534.9 187299.60 614127.28 165070.29 208769.20

Ratio 14.60 14.67 13.86 14.58 12.63

Rank 2 1 4 3 5

Interpretation of the Capital Adequacy Ratio

The minimum CAR as per RBI norms is 9 % at Present. In fact, Raj Bank has always shown a healthy and

improved margin of over 9 % which is stipulated by RBI, from the above bank higest car is BOB bank is

14.67% and lowest for PNB bank is 12.63% .This is due to steady rise in the Risk Weighted Assets. The

main reason for the rise in Risk Weighted Assets and decline in CAR is constant increase in advances

over the above bank.


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Debt Equity Ratio:

Debt Equity Ratio indicates the relationship between long-term liabilities and shareholders

funds. It helps to appraise the ability of the firm to meet its long-term obligations. This ratio is

calculated to determine long-term solvency of the firm. Debt-Equity ratio is arrived at by

dividing Total debt to total equity share capital.

The higher the ratio, the greater the proportion of debtbut also the greater the risk. The

debt/equity ratio discloses the proportion of debt and equity a company is using to finance to

business. It also measures a banks borrowing capacity.

Also called leverage ratio or gearing ratio.

Formula:

Total debt

Debt to Equity Ratio = ---------------------

Total Equity


Debt 263970.20 408444.16 1170652.93 350330.26 416852.75

Equity 22034.20 29153.75 94179.64 21719.17 28948.10

Ratio 11.98 14.01 12.43 16.13 14.40

Rank 5 3 4 1 2

Interpretation of the Debt Equity Ratio

The higher the ratio, the greater the proportion of debtbut also the greater the risk. From the

above bank the highest debt equity ratio of BOI is a 16.13% and lowest ratio is SBI bank is

12.43%. The lowest Ratio is best because that is less debt to the bank. Therefore, the bank has

maintain his debt component on their capital structure.


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Advances to Assets:

Total Advances also includes receivables. The value Total Assets is excluding revaluation of all

the assets.it is calculate on the base of total advance divided by total assets of the bank.it givethe capital adequacy of the bank in a way to timely arrange fund.

Formula:

Total advance

Advance to assets = ------------------

Total Assets

IDBI BOB SBI BOI PNBTotal

advance

181158.43 287377.29 867578.89 248833.34 293774.76

Total assets 290837.23 447321.46 1335519.24 384535.47 458194.01

Ratio 62.29 64.24 64.96 64.71 64.12

Rank 3 4 1 2 5

Interpretation of the Advances to Assets

This ratio shows the total advances as a percentage of total assets, which can give the capital

adequacy of the firm. It shows the ability of firm to meet capital need. Here, we see that the

lowest ratio is PNB is 64.12 and highest ratio is a SBI bank is 64.96.

Table-1

Capital Adequacy Parameter -Group Ranking


Capital adequacy ratio Tier I 2 1 4 3 5

Debt to Equity Ratio 5 3 4 1 2

Advance to assets 3 4 1 2 5

Average 3.33 2.67 3.00 2.00 4.00

Rank 4 2 3 1 5


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2) A ASSET QUALITY

The prime motto behind measuring the asset quality is to ascertain the quality of assets

and majority of ratios in this segment are related to non-performing assets i.e. NPA. A credit

facility is treated as past due when it remains outstanding for 30 days beyond the due date. An

NPA is defined generally as a credit facility in respect of which interest or instalment of principal

is in arrears for two quarter or more. This segment contain following ratio

Gross NPAs to total assets Ratio Gross NPAs to Net Advances Ratio

Total Investments to Total Assets:


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Gross NPAs to Total Assets:

Gross NPAs are gross provisions on NPAs and Total Assets considered are net of revaluation

reserves. Gross NPA is an advance which is consider ire recovered for which bank has madeprovision and which is still held in banks books of account. Bank has made specific amount of

fund against to this.

Formula:

Gross NPAs

Gross NPAs to total assets Ratio = ----------------- X 100

Total Assets


GROSS NPAs 2784.73 3152.5 25326.29 4811.55 4379.39

ASSETS 290837.23 447321.46 1335519.24 384535.47 458194.01

Ratio 0.96 0.70 1.90 1.25 0.94

Rank 4 1 5 4 2

Interpretation of the Gross NPAs to Total Assets

The quality of loan is one of the crucial aspects of that decide the health of banks. This ratio

indicates the percentage of gross NPAs to total assets. Ratio does not give any tolerable ordesirable limit. But it should be below 10 %. Going by this norm, all the banks ratio below 10 %

which shows that it has the lowest gross NPAs in relation to their total assets.


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Gross NPAs to Net Advances:

Net Advances are net of bills rediscounted and specific loan loss provision. The lowest is the

best because it is less provision keep against to NPAs. Net NPA is Gross NPA less interestdebited to borrowed account and not recovered or recognized as income.

Formula:

Gross NPAs

Gross NPAs to Net Advances Ratio = ------------------ X 100

Net Advances


GROSS NPAs 2784.73 3152.5 25326.29 4811.55 4379.39Total

advance

181158.43 287377.29 867578.89 248833.34 293774.76

Ratio 1.54 1.10 2.92 1.93 1.49

Rank 3 1 5 4 2

Interpretation of the Gross NPAs to Net Advance

Gross NPAs as a percentage of net advances is most standard measure of asset quality. A ratio

of below 1 % is considered as a tolerable limit. The gross NPAs of bank stand below 1 % to net

advances. From the above the highest ratio of SBI bank is 2.92 and lowest ratio is PNB bank is

1.49. The lowest ratio is the best of the bank.


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Total Investments to Total Assets:

This ratio is used as a tool to measures the percentage of total assets locked up in

investments. And also described the investment agents the total assets of the bank.

Formula:

Total Investments

Total Investments to Total Assets Ratio = ----------------------- X 100

Total Assets


Total

Investments

83175.36 83209.40 312197.61 68753.59 122629.47

Total Assets 290837.23 447321.46 1335519.24 384535.47 458194.01

Ratio 28.60 18.60 23.38 17.88 26.76

Rank 1 4 3 5 2

Interpretation of the Total Investments to Total Assets

Total investments to total assets indicate the extent of deployment of assets in investments as

against advances. The higher level of investment indicates the lack of credit off-take in the

market. . From the above the highest ratio of IDBI bank is 228.60 and lowest ratio is BOI bank is

17.88. The lowest ratio is the best for the bank.

Table-2

Asset Quality Parameter Group Ranking


Gross NPAs to total assets

Ratio 4 1 5 4 2

Gross NPAs to Net

Advances Ratio3 1 5 4 2

Total Investments to Total

Assets:1 4 3 5 2

Average 2.67 2.00 4.33 4.33 2.00

Rank 3 2 5 5 2


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3) M MANAGEMENT

Management is the most important ingredient that ensures sound functioning of banks.

With increased competition in the Indian banking sector, efficiency and effectiveness havebecome the rule as banks constantly strive to improve the productivity of their employees. The

major improvements in the style of management and productivity have come about in the all

sectors of banks. Today, it is not uncommon to see the extended working hours, flexible time

schedules, outsourcing marketing, etc. to attract and retain customers. The parameters used to

assess the quality of management gives the measurement of the efficiency and effectiveness of

management. The ratios of this segment are:

Total advances to Total Deposits Net Profit per Employee Business Per Employee Return onNet Worth


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Total advances to Total Deposits:

This ratio measures the efficiency of the management in converting deposits into advances.

Total deposits include demand deposits, saving deposits, term deposits and deposits of other

banks. Total advances also include the receivables.

Formula:

Total advances

Total advances to Total Deposits = -------------------- X 100

Total Deposits

IDBI BOB SBI BOI PNBTotal

advance

181158.43 287377.29 867578.89 248833.34 293774.76

Total

deposits

210492.56 384871.11 1043647.36 318216.03 379588.48

Ratio 86.06 74.67 83.13 78.20 77.39

Rank 1 5 2 3 4

Interpretation of the Total advances to Total Deposits

As it said above it measures the efficiency of the management in converting deposits intoadvances. From the above bank the lowest ratio is BOI bank is 74.67 the highest ratio of IDBI

bank is 86.06 this can be analyzed from the chart shown above.


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Net Profit per Employee:

It is arrived at by dividing the Net profit earned by the bank by total number of employees.

Higher the ratio, higher the efficiency of management.

Formula:

Net Profit

Net Profit per Employee = ----------------------

No. of Employee


Net profit 1894.34 5006.96 11686.11 2677.52 4884.20

No. of

employee

14952 35799 292215 24350 62127

Ratio 1,26,69,475.7 1,39,86,312 39,99,148 1,09,95,975 78,61,638

Rank 2 1 5 3 4

Interpretation of the Net Profit per Employee

The net profit per employee ratio of the above banks which is show the effective management

of the bank which can be observe from the table and the figures quoted above. The most

effective management of BOB bank because the ratio is highest from them is 1,39,86,312.


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Business per Employee:

Its shows the total business of the bank per employee. It is arrived at by dividing total business

by total number of employees. Business includes the sum total advances and deposits in aparticular year.

Formula:

Total Business

Business per Employee = ----------------------

No. of Employee


Total

business

391650.99 672248.4 1355844.97 567049.37 4020201.76

No. of

employee

14952 35799 292215 24350 62127

Ratio 26,19,38,864.4 18,77,84,128 4,6398,883.36 23,28,74,484.6 64,70,94,139.4

Rank 2 4 5 3 1

Interpretation of the Business per Employee

Business per employee indicates the labour productivity of long term viability of the bank. From

the figures shown above we see that the business per employee of IDBI bank is 26,19,38,864.4

BOB bank is 18,77,84,128 SBI bank is 4,6398,883.36 BOI bank is 23,28,74,484.6 PNB bank is

64,70,94,139.4


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Return on Net worth:

It is a measure of the profitability of a company. PAT is expressed as a percentage of Average

Net Worth. It is the ratio of net profit to investment. It is the relationship between net profit

and shareholder's fund. This ratio establishes the profitability from the share holders' point of

view. This ratio is generally calculated in base of percentage.

It is a measure of the profitability of a company. PAT is expressed as a percentage of Average

Net Worth.

Formula:

Net Profit

Return on Net Worth = --------------- X 100

Net Worth


Net profit 1894.34 5006.96 11686.11 2677.52 4884.20

Net worth 14427.92 27476.83 83951.20 20961.29 27817.08

Ratio 11.56 18.22 13.94 13.57 18.52

Rank 5 2 3 4 1

Interpretation of the Return on Net worth

This ratio expresses the net profit in terms of net worth. This ratio is an important yardstick of

performance for equity shareholders since it indicates the return on the funds employed by

them. The highest ratio is PNB bank is 18.52% and lowest ratio of IDBI bank is 11.56%.

Table-3

Management Quality Parameter Group Ranking


Total advances to Total

Deposits1 5 2 3 4Net Profit per Employee 2 1 5 3 4

Business Per Employee 2 4 5 3 1

Return on Net Worth 5 2 3 4 1

Average 2.5 3 3.75 3.25 2.5

Rank 3 4 5 1 3


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4) E EARNINGS QUALITY

Investing additional funds forms an important part of the banking function along with

lending. In the recent past, banks have been criticized for making most of their money from

treasury operation and other investment rather than from core lending operation. Even as fee-

based operations still account for a minority of the banks revenues, the share of non-interest

income is higher. The ratio of this section, assesses the quality of income in terms of income

generated by core activities i.e., income from lending operations. This segment contains the

following;

Net Profit to Average Assets

Interest income to total income Non-Interest income to total income


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Net Profit to Average Assets:

This ratio measures return on assets employed or the efficiency in utilization of the assets. It is

arrived at by dividing the Net Profit by Average Assets, which is the average of total assets in

the current year and previous year. It is most often used by banks and other financial

institutions as a means to gauge their performance.

Formula:

Net Profit

Net Profit to Average Assets = --------------------- X 100

Average Assets


Net profit 1894.34 5006.96 11686.11 2677.52 4884.20

Average

assets

272107.105 402859.32 1279927.72 367854.01 418259.63

Ratio 0.70 1.24 0.91 0.73 1.17

Rank 5 1 3 4 2

Interpretation of the Net Profit to Average Assets

The profitability of the firm is measured by establishing relation of net profit with the total

assets of the organization. This indicates the efficiency of utilization of assets in generating

revenue. And the highest ratio is the beneficial to the bank and highest ratio of BOB bank is

1.24%.


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Non Interest Income / Total Income:

This measures the income from operations, other than lending as a percentage of total income.

Non-interest income is the interest income earned by the banks excluding income on advancesand deposits with RBI.

Formula:

Non-Interest Income

Non-Interest Income to Total Income = ---------------------------- X 100

Total Income


Non-Interest

Income

2009.54 3422.33 14351.45 3321.17 4202.60

Total Income 25379.47 33096.05 120872.90 31801.84 40630.63

Ratio 7.92 10.32 11.87 10.44 10.34

Rank 5 4 1 2 3

Interpretation of the Non Interest Income / Total Income

It expresses the income from operations as a percentage of total income of the bank to the

amount of deposits with RBI and advances. From the above banks the highest ratio of SBI bank

is 11.87% and lowest ratio of IDBI bank is 7.92%.the high ratio means bank has keep more

deposits and advance with RBI.


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Interest Income / Total Income:

This ratio measures the income from lending operations as a percentage of total income

generated by the banks in a year. Interest income includes income on advances, interest on

deposits with RBI.

Formula:

Interest Income

Interest Income to Total Income = --------------------- X 100

Total Income


Interest

Income

23369.93 29673.72 106521.43 28480.67 36428.03

Total Income 25379.47 33096.05 120872.90 31801.84 40630.63

Ratio 92.08 89.68 88.13 89.56 89.66

Rank 1 3 2 5 4

Interpretation of the Interest Income / Total Income

From the above banks the highest ratio of IDBI bank is 92.08% and lowest ratio of BOI bank is

89.56%.This ratio expresses the income from lending operations. It mainly generates from the

deposits and advances. It is earn from the efforts of the bank to give the loan, advance and

deposits to the public.

Table-4

Earnings Quality Parameter Group Ranking


Net Profit to Average

Assets 5 1 3 4 2

Interest income to total

income 1 3 2 5 4Non-Interest income to

total income 5 4 1 2 3

Average 3.67 2.67 2.00 3.67 3.00

Rank 5 2 1 5 3


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5)L LIQUIDITY

The business of banking is all about borrowing and lending money. Timely repayment of

deposits is of crucial importance to avoid a run on a bank. With co-operative banks going under

frequently and with the recent collapse of GTB (Global Trust Bank) investors have become

extremely sensitive. They are alert; they rush to the bank to withdraw money at the slightest

hint of trouble. In such a scenario, even false rumours could wreck havoc with a bank. Hence,

banks have to ensure that they always maintain enough liquidity. Through mandatory Statutory

Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR), RBI ensures that banks maintain ample

liquidity. In fact, over the last few years banks have been awash with liquidity. It contains the

following;

Liquid assets to total assets Liquidasset to total deposit


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Liquid Assets to Total Deposits:

Liquid assets are measured as percentage of Total Deposits of banks. Liquid Assets include cash

in hand, balance with RBI, balance with other banks, and money at call and short notice. Total

Deposits include demand deposits, saving deposits, term deposits and deposits of otherfinancial institutions and banks.

Formula:

Liquid Assets

Liquid Assets to Total Deposits = ------------------- X 100

Total Deposits


Liquid Assets 196248.34 309028.67 921654.83 263819.75 278694.76

Total

deposits

210492.56 384871.11 1043647.36 318216.03 379588.48

Ratio 93.23 80.29 88.31 82.91 73.42

Rank 1 4 2 3 5

Interpretation of the Liquid Assets / Demand Deposits

Liquid assets as a percentage of demand deposits are one of the most important measures of

the liquidity position of the bank. From the above banks the highest ratio of IDBI bank is 93.23%

and lowest ratio of PNB bank is 73.42%.


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Liquid Assets / Total Assets:

Liquidity ratios is a set of ratios or figures that measure a bank s ability to pay offits short-term

debt obligation. This is done by measuring a companys liquid assets (including those that might

easily be converted into cash) against its short-term liabilities.

Liquid Assets as measured as percentage of Total Assets.

Formula:

Liquid Assets

Liquid Assets to Total assets = ------------------- X 100

Total assets


Liquid Assets 196248.34 309028.67 921654.83 263819.75 278694.76

Total Assets 290837.23 447321.46 1335519.24 384535.47 458194.01

Ratio 67.48 69.08 69.01 68.61 60.82

Rank 4 1 2 3 5

Interpretation of the Liquid Assets / Total Assets

Liquid assets as a percentage of total assets measures of the liquidity position of the bank to

meet the amount of total assets. From the above bank IDBI is 67.48, BOB is 69.08, SBI is 69.01,

BOI is 68.61, and PNB is 60.82.

Table-5

Liquidity Parameter Group Ranking


Liquid assets to total assets 4 1 2 3 5

Liquid asset to total deposit 1 4 2 3 5

Average 2.5 2.5 2 3 5

Rank 3 3 1 4 5


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Table-6

OVERALL GRAND RANKING BASED ON THE CAMEL PARAMETER


Capital Adequacy

Parameter -Group Ranking 4 2 3 1 5

Asset Quality ParameterGroup Ranking 3 2 5 5 2

Management Quality

Parameter Group Ranking 3 4 5 1 3

Earnings Quality Parameter

Group Ranking 5 2 1 5 3

Liquidity Parameter Group

Ranking 3 3 1 4 5

Average3.6 2.6 3 3.2 3.6

Rank (Small Number

represents good

Performance)

5 1 2 3 4

Conclusion

Here we have obtained a ranking of various Indian public sector banks in terms of their CAMEL variable

values. Asking the banks is difficult to the extent that any type of ranking is subject to criticism as the

ratios used for the purpose of ranking can be interpreted in the way one likes. This method of analysis

provides a simplistic, reader friendly version of presenting complex data regarding performance of a set

of players in the banking industry. The ranking system makes judging and analyzing the financial data of

banks much simpler for the common man. Thus through this particular data set, it can be established

that BOB bank at the top of the list with their performances in terms of soundness being the best. While

banks like IDBI Bank and PNB have taken a backseat and display low economic soundness in comparison.

This implies that the Government needs to focus more on this bank order to increase the net profit to

average.

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