A Project Report on Financial Performance Based on Ratios at HDFC Bank

Contents Contents S

Sll..NNoo.. TTiittlleess PPaaggeeNNoo.. II

_{Chapter 1}

_{Chapter 1}

 Executive summaryExecutive summary  IntroductionIntroduction

 Statement of the ProblemStatement of the Problem  Purpose of the StudyPurpose of the Study  Scope of the studyScope of the study  b!ectives of the Studyb!ectives of the Study II

II

_{Chapter "}

_{Chapter "}

 rgani#ation Profilergani#ation Profile  $ata Collection %ethod$ata Collection %ethod  %easuring tools%easuring tools

III

III

_{Chapter &}

_{Chapter &}

 'nalysis and interpretation'nalysis and interpretation  (indings(indings  SuggestionsSuggestions  ConclusionConclusion I) I)

_{Chapter *}

_{Chapter *}

E,EC-TI)E S-%%'/

E,EC-TI)E S-%%'/

Finance is a life blood of business it is required from the establishment of the Finance is a life blood of business it is required from the establishment of the  business to liquidity or winding up o

 business to liquidity or winding up of a business, so financial institutions played af a business, so financial institutions played a

very important role on the operation o

very important role on the operation of the business.f the business.

In the early days banking business was been confined to receiving of deposits and In the early days banking business was been confined to receiving of deposits and lending of money. But now a modern banker under take wide variety of functions lending of money. But now a modern banker under take wide variety of functions to

to assassist ist thetheir ir cuscustomtomersers. . hehey y proprovidvide e varvariouious s facfaciliilitieties s to to cuscustomtomers ers whiwhichch makes the transaction easy and comfortable.

makes the transaction easy and comfortable. Fin

Financiancial al insinstitituttutionions s sucsuch h as as bankbanks, s, finfinancancial ial serservicvice e comcompanipanies, es, insinsuraurancence com

compapaninieses, , sesecurcurititieies s fifirmrms s and and crcrediedit t uniunionons s havhave e vevery ry didiffffererenent t wayways s of of  reporting financial information. !unning a bank is "ust difficult as analy#ing it for  reporting financial information. !unning a bank is "ust difficult as analy#ing it for  investment purposes.

investment purposes.

In this report I made an effort to know the financial position of the $%F& In this report I made an effort to know the financial position of the $%F& Bank .'y topic is () study of financial performance based on ratio analysis* Bank .'y topic is () study of financial performance based on ratio analysis* which means that a process to identify the financial performance of a firm by which means that a process to identify the financial performance of a firm by  properly

 properly establishing establishing the the relationship relationship between between the the items items of of balance balance sheet sheet andand  profit or loss account. hus,

 profit or loss account. hus, we can say we can say that, Financial )nalysis is a starting pointthat, Financial )nalysis is a starting point for making plans before using any

for making plans before using any sophisticated forecasting and planning.sophisticated forecasting and planning.

Introduction

Introduction

hen we observed the financial statement comprising the balance sheet and profit or loss account is that they do not give all the information related to financial operations of firm, they can provide some e-tremely useful information to the e-tent that the balance sheet shows the financial position on a particular date in terms of structure of assets, liabilities and owners equity and profit or loss account shows the results of operation during the year. hus the financial statements will provide a summari#ed view of the firm. herefore in order to learn about the firm the careful e-amination of an valuable reports and statements through financial analysis or ratio is required.

%eaning and $efinition

!atio analysis is one of the powerful techniques which are widely used for interpreting financial statements. his technique serves as a tool for assessing the financial soundness of the business. it can be used to compare the risk and return relationship of firms of different si#es. he term ratio refers to the numerical or quantitative relationship between two items/ variables.

he idea of ratio analysis was introduced by )le-ander all for the first time in 1010. !atios are quantitative relationship between two or more variables taken from financial statements.

!atio analysis is defined as, (the systemic use of ratio to interpret the financial statement so that the strength and weakness of the firm a well as its historical  performance and current financial condition can be determined.

In the financial statement we can find many items are corelated with each other for e-ample current assets and current liabilities, capital and long term debt, gross profit and net profit purchase and sales etc

+asis of comparison

!atios are relative figures reflecting the relationship between variables. hey enable analysts to draw conclusions regarding financial operations. he use of the ratios, as a tool of financial analysis involves their comparison, for a single ratio like absolute figures, fails to reveal the true position. For e- ample, if in the case of  a firm, the return on capital employed is 13 percent in a particular year, what does it indicate4 5nly if the figure is related to the fact that in the preceding year the relevant return was 12 per cent or 16 percent, it can be inferred whether the  profitability of the firm has declined or improved. )lternatively, if we know that the return for the industry as a whole is 17 percent or 27 percent, the profitability of the firm in question can be evaluated. &omparison with related facts is, therefore, the basis of ratio analysis. Four types of comparison are involved

i. Trend ratio

rend ratios involve a comparison of the ratios of a firm over time, that is, present ratios are compared with the past ratio of the same firm. rend ratio indicates the direction of change in the performance, improvement, deterioration or constancy over the years. his kind of ratio particularly applicable to the items of profit and loss account. It is advisable that trends of  the sales and the net income may be studied in the light of two factors8 the rate of fi-ed e-pansion or secular trend in the growth of the business and the general price level. it might be found in practice that a number of firms would show a persistent growth over the period of the years.

Intra firm comparison involving comparison of the ratio of the firm with those of the others in the same line of business or for the industry as a whole reflects its performance in relation to its competitors.

iii. comparison of items 0ithin a single years financial statement of a firm

iv. Comparison 0ith standard or plans.

ST'TE f T2E P+3E%

Importance of the ratio analysis

)s a tool of financial management, ratios are of crucial significance. he importance of the ratio analysis lies in the fact that it presents facts on a comparative basis and enables the drawing of inference regarding the  performance of a firm. !atio analysis is relevant in assessing the performance of a

firm in respect of the following aspects

1. li4uidity position

ith the help of ratio analysis conclusion can be drawn regarding the liquidity position of the firm. he liquidity position of the firm would be satisfactory if it is able to meet its current obligation when they become due. a firm can be said to have the ability to meet its short term liabilities if it has sufficient liquidity funds to pay the interest on its short maturing debts usually within a year as well as to repay the principal.

!atio analysis is equally useful for assessing the long term viability of a firm. his aspect of the financial position of a borrower is of concern to long term creditor, security analysts and the present and potential owners of a  business. he long term solvency is measured by the leverage/ capital

structure profitability ratio which focus on earning power and operating efficiency. !atio analysis reveals the strength and weakness of the firm in this respect.

&. perating efficiency

:et another dimension of the usefulness of the ratio analysis, relevant from the view point of the management, is that it throws light on the degree of  the efficiency in the management and utili#ation of its assets. he various activity ratios measure this kind of operational efficiency. In fact, the solvency of a firm is, in the ultimate analysis, dependent upon the sales generated by the use of its assetstotal as well as its components.

*. verall profitability

;nlike the outside parties which are interested in one aspect of the financial position of a firm, the management is constantly concerned about the overall profitability of the enterprise. hat is, they are concerned about the ability of the firm to meet its short term as well as long term obligations to its creditors, to ensure a reasonable return to its owners and secure optimum utili#ation of the assets of the firm. his is possible if an integrated view is taken and all the ratios are considered together.

5. Inter6firm comparison

!atio analysis not only throws the light on the financial position of a firm but also serves as a stepping stone to remedial measures. his is made

 possible due to interfirm comparison and comparison with the averages. ) single figure of a particular ratio is meaningless unless it is related to some standard or norm. 5ne of the popular techniques to compare the ratio of the firm with the industry average. It should be reasonably e-pected that the  performance of a firm should be in broad conformity with that of the industry to which it belongs. )n interfirm comparison would demonstrate the firms  position vis=vis its competitors.

7. Trend analysis

Finally, ratio analysis enables a firm to take the time dimension into account. In other words, whether the financial position of a firm is improving or deteriorating over the years. his is made possible by the use of the trend analysis. he significance of a trend analysis of the ratio lies in the fact that the analyst can know the direction of movement, that is, whether the movement is favourable or unfavourable.

8uidelines for the financial statement analysis

1. ;se ratio to get clues to ask the right questions8 By themselves ratios rarely  provide answers, but they definitely help you to raise the right questions. 2. Be selective in the choice of the ratios you can compute scores of the

different ratios and easily drown yourself into the confusion. For most  purposes a small set of the ratios three to seven would suffice. Few ratios, aptly chosen, would capture most of the information that you can derive from the financial statements.

+. >mploy proper benchmarks8 It is a common practice to compare the ratios ?calculated from the set of financial statements@ against some benchmarks. his benchmark may be the average ratios of the industry or the ratios of the industry leaders or the historic ratios of the firm itself.

. Anow the tricks used by accountants since firms tend to manipulate the reported income, you should learn about the devices employed by them.

3. !ead the footnotes8 Footnotes sometimes contain valuable information. hey may reveal the things that the management may try to hide. he more difficult it to read a footnote, the more information laden it may be.

9. !emember that financial statement analysis is an odd mi-ture of art and science financial statement analysis cannot be regarded as a simple, structured e-ercise. It is a process requiring care, thought, common sense, and  business "udgment  a process for which there are no mechanical substitutes.

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'dvantages9

 Simplifies financial statements8 !atio )nalysis simplifies the comprehension of financial statements. !atios tell the story of changes in financial condition of the business.

 (acilitates inter firm comparison9 !atio analysis provides data for  inter company comparison. !atio highlights the association with successful and unsuccessful firms. hey also reveal strong and weak  companies, overvalued and undervalued companys.

 %a:es intra firm comparison possible9  !atio analysis also makes  possible comparison of the performance of different division of the

company. he ratio helpful in deciding about their efficiency.

 2elps in planning9 !atio )nalysis helps in planning and forecasting over period of time a company develops certain norms that may indicates future success/ failure. If relationship changes in firms data

over different time periods. he ratio may provide clues on trends and future problems.

 3i4uidity position9 ith the help of ratio analysis conclusions can be drawn regarding liquidity position of the company. he liquidity  position of a company could be satisfactory if it is able to meet its

current obligations when they become due.

 3ong term solvency9 !atio analysis equally useful for assessing the longterm financial viability of a firm. he longterm solvency is measured by the leverage / capital structure and profitability ratios, which focus on earning power and operating efficiency.

$isadvantages9

!atio analysis is a widely used tool of financial analysis. :et, it suffers from various limitations. he operational implication of this is that while using ratios, the conclusion should not been taken on their face value. Come of the limitation which characteri#e ratio analysis are

1. $ifficulty in comparison

5ne serious limitation of ratio analysis arises out of the difficulty associated with their comparability. 5ne technique that is employed is interfirm comparison. But such comparisons are vitiated by different  procedures adopted by various firms. he difference may relate to

• %ifference in the basis of inventory valuation

• %ifferent depreciation methods ?i.e. straight line vs. written down

 basis@

• >stimated working life of the assets, particularly of plant and

equipment

• )morti#ation of deferred revenue e-penditure such as preliminary

e-penditure and discount on issue of shares

• &apitali#ation of lease

• reatment of e-traordinary items of income and e-penditure and so

on

Cecondly, apart from different accounting procedures, companies may have different accounting periods, implying differences in the composition of the assets, particularly the current assets. For these reasons, the ratios of two firms may not be strictly comparable.

". Impact of inflation

he second ma"or limitation of the ratio analysis as a tool of financial analysis is associated with price level changes. his, in fact is a weakness of  the traditional financial statement which are based on historical cost. )n implication of this feature of the financial statement as regards ratio analysis is that assets acquired at different periods are, in effect, shown at different prices in the balance sheet, as they are not ad"usted for changes in the price level. )s a result, ratio analysis will not yield strictly comparable and therefore, dependable results.

&. Conceptual $iversity

:et another factor which affects the usefulness of ratios is that there is difference of opinion regarding the various concepts used to compute the ratios. there is scope for diversity of opinion as to what constitutes shareholders equity, debt, asset, profit and so on. %ifferent firms may use these terms in different senses or the same firm may use them to mean different things at different times.

!eliance on a single ratio for a particular purpose may not be a conclusive indicator. for instance, the current ratio alone is not a adequate measure of shortterm financial strengthD it should be supplemented by the

acid test ratio, debtors turnover ratio and inventory and inventory turnover  ratio to have a real insight into the liquidity aspect.

Classification of ratio 1. Profitability atios

a. !atio of profit to total income  b. !atio of profit to deposits

c. !eturn on equity d. !eturn on &apital

e. !atio of return on assets f. Eet interest margin

g. !atio of interest income to average working fund h. !atio of noninterest income

i. &ash dividend

 ". >C

". perating atios

a. !atio of interest earned to interest paid  b. ratio of interest paid to total income

c. !atio of staff e-penses to total e-penses d. !atio of total e-penses to total income.

e. !atio of operating e-penses to average working fund f. !atio of interest e-penses to average working fund

&. Solvency ratios

a. ratio of cash to deposit

 b. ratio of investment to deposits c. &redit deposit ratio

d. ratio of fi-ed assets to net worth e. &urrent assets ratio

f. Guick ratio

*. Safety ratio

a. ratio of Eet E) to Eet advance  b. &apital adequacy ratio

$ESI8N ( T2E ST-$/

Title of the pro!ect9

() Ctudy of Financial erformance Based 5n !atios* at $%F& Bank Belgaum

Statement of the problem

!atios are very useful to draw the conclusion so management wants to know what are the factor contributing for the future growth and also wants to maintain the same in the longer run and also improve the profitability and liquidity of the organi#ation.

esearch problem

o know the financial performance of the organi#ation through ratio analysis, by comparing three years financial performance of the bank 

Purpose of the study

) financial services sector plays a critical role in fulfilling the needs of growing and increasingly diverse economy, offering high quality services to business and individual alike. hough Indian banking system registered commendable progress in terms of geographical and functional coverage, its performance in terms of  operational efficiency and viability still leaves considerable room for  improvement

) banks balance sheet and income statement are valuable information sources for identifying risk taking and assessing risk management effectiveness. )lthough amounts found on these statements does not provide valuable insights of performance so ratio analysis is required for determining good or bad performance of bank and also for determining its causes. he study includes the calculation of different financial ratios. It compares three years financial statements of the company to know its performance in these different years.

Scope of the study

he scope of the study is limited to financial aspects of $%F& bank 

+;ECTI)ES ( ST'TE%ENT

H o know the financial performance of the organi#ation

H o study different ratios in $%F& bank 

H o determine the profitability and liquidity of the bank through ratios

analysis

'NIS'TIN P(I3E

2$(C  is Indias premier housing finance company and en"oys an impeccable

track record in India as well as in international markets. Cince its inception in 10<<, the &orporation 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. $%F& has developed significant e-pertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. ith its e-perience in the financial markets, a strong market reputation, large shareholder   base and unique consumer franchise, $%F& was ideally positioned to promote a  bank in the Indian environment.

he $ousing %evelopment Finance &orporation Jimited ?$%F&@ was amongst the first to receive an in principle approval from the !eserve Bank of India ?!BI@ to set up a bank in the private sector, as part of the !BIs liberali#ation of the Indian Banking Industry in 100. he bank was incorporated in )ugust 100 in the name of $%F& Bank Jimited, with its registered office in 'umbai, India.

$%F& Bank commenced operations as a Ccheduled &ommercial Bank in Kanuary 1003.

+'$ 'E'S IN <2IC2 IT PE'TES

  he Bank operates in three segments8 retail banking, wholesale banking and treasury services. he retail banking segment serves retail customers through a  branch network and other delivery channels. he wholesale banking provides

loans and transaction services to corporate and institutional customers. he treasury services segment undertakes trading operations on the proprietary account, foreign e-change operations and derivatives trading. he Bank operates in India.

etail +an:ing

his segment raises deposits from customers and makes loans and provides advisory services to such customers. he ob"ective of the !etail Bank is to  provide its target market customers a range of financial products and banking services, giving the customer a onestop window for all his/her banking requirements. he products are backed by service and delivered to the customers through the growing branch network, as well as through alternative delivery

channels like automated teller machines ?)'s@, phone banking, net banking and mobile banking.

he $%F& Bank referred program for high net worth individuals, the $%F& Bank lus and the Investment )dvisory Cervices programs have been designed keeping in mind needs of customers who seek distinct financial solutions, information and advice on various investment avenues. he Bank also has an array of retail loan products, including auto loans, loans against marketable securities, personal loans and loans for twowheelers. It is also a provider of  depository participant ?%@ services for retail customers, providing customers the facility to hold their investments in electronic form.

$%F& Bank has launched an international debit card in association with LIC) ?LIC) >lectron@ and also issues the 'aster&ard 'aestro debit card. he Bank  launched its credit card business during the fiscal year ended 'arch +1, 2771. By Ceptember +7, 2773, the bank had a total card base ?debit and credit cards@ of 3.2 million cards. he Bank is also engaged in the merchant acquiring business with over 37,777 pointofsale ?5C@ terminals for debit/credit cards acceptance at merchant establishments.

<holesale +an:ing

, he Banks target market ranges from large, bluechip manufacturing companies in the Indian corporate to small and midsi#ed corporates and agribased  businesses. For these customers, the Bank provides a range of commercial and transactional banking services, including working capital finance, trade services, transactional services and cash management. he bank is also a provider of  structured solutions, which combine cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. It provides cash management and transactional banking solutions to corporate customers

Treasury Services

ithin this business, the bank has three main product areas8 Foreign >-change and %erivatives, Jocal &urrency 'oney 'arket M %ebt Cecurities, and >quities. !isk management information, advice and product structures, as well as fine  pricing on various treasury products are provided through the Banks reasury

team. he reasury business is responsible for managing the returns and market risk on this investment portfolio.

%ISSIN

$%F& Banks mission is to be (a orld&lass Indian Bank* which is  benchmarked against international standards and best practices in terms of   product offerings, technology, service levels, risk management and audit

compliance.

b!ectives of 2$(C ban: 

he ob!ective 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. he bank is committed to maintain the highest level of  ethical standards, professional integrity, corporate governance and regulatory compliance. $%F& Banks business philosophy is based on four core values  5perational >-cellence, &ustomer Focus, roduct Jeadership and eople.

+-SINESS ST'TE8/

 Increase our market share in Indias e-panding banking and financial

services industry by following a disciplined growth strategy and delivering high quality customer service.

 Jeverage our technology platform and open, scaleable systems to deliver 

more products to more customers and to control operating costs.

 'aintain our current high standards for asset quality through disciplined

credit risk management.

 %evelop innovative products and services that attract our targeted

customers and address inefficiencies in Indian financial sectors.

 &ontinue to develop products and services that reduce our cost of funds

and

 Focus on healthy earnings growth with low volatility.

C'PIT'3 ST-CT-E

)uthori#ed capital of $%F& Bank is !s.37 crore ?!s..3 billion@. he paidup capital is !s.+11.0 crore ?!s.+.1 billion@. he $%F& Nroup holds 22.1O of the  banks equity and about 10.O of the equity is held by the )%C %epository ?in

respect of the banks )merican %epository Chares ?)%C@ Issue@. !oughly +1.+O of the equity is held by Foreign Institutional Investors ?FIIs@ and the bank has about 107,777 shareholders. he shares are listed on the he Ctock >-change, 'umbai and the Eational Ctock >-change. he banks )merican %epository Chares are listed on the Eew :ork Ctock >-change ?E:C>@ under the symbol P$%B

)'I-S SE)ICES

(E, 'N$ T'$E SE)ICES

., $%F& Bank has a range of products and services that one can choose from to transact smoothly.

he following are different methods of transacting in foreign e-change and remitting money.

 ravelers cheques

 Foreign currency cash.

 Foreign currency drafts

 &heque deposits

 !emittances

 &ash to master 

 rade services

 Foreign services branch locator 

Important guidelines and schedules

)ll Foreign >-change transactions are conducted by strictly adhering to !BI guidelines. %epending on the nature of your transaction or point of travel, you will need to understand your Foreign >-change limits.

LOANS

 $ome Joans

 ersonal Joans



  Eew &ar Joans Eew &ar Joans



 ;sed &ar Joans;sed &ar Joans



 5verdraft )gainst &ar 5verdraft )gainst &ar 



 >-press Joans>-press Joans



 Joans )gainst CecuritiesJoans )gainst Cecurities



 Joans )gainst ropertyJoans )gainst roperty

PESN'3 +'N=IN8 PESN'3 +'N=IN8 Savings 'ccounts

Savings 'ccounts

hese )ccounts are primarily meant to inculcate a sense of saving for the future, hese )ccounts are primarily meant to inculcate a sense of saving for the future, accumulating funds over a period of time. hatever may be the occupation, bank  accumulating funds over a period of time. hatever may be the occupation, bank  is

is confident that customer confident that customer will find twill find the perfect banking soluthe perfect banking solution. 5pen an accountion. 5pen an account in your name ?customers name@ or register for one "ointly with a family member  in your name ?customers name@ or register for one "ointly with a family member  today.

today.

Current 'ccounts Current 'ccounts

 Eow, with an $%F& Bank

 Eow, with an $%F& Bank &urrent )ccount, e-perience the &urrent )ccount, e-perience the freedom of multicityfreedom of multicity  bankingQ

 bankingQ &ustomer &ustomer can can have have the the power power of of multilocation multilocation access access to to his his accountaccount from any of ban

from any of banks 377 brancks 377 branches in 227 citihes in 227 cities. Eot onles. Eot only that, he y that, he can do most of can do most of  his

his banking transactions banking transactions from the from the comfort of comfort of his offhis office or ice or home without home without steppingstepping out.

out.

)t $%F& Bank, it understands that running a business requires time and money, )t $%F& Bank, it understands that running a business requires time and money, also that customers business needs are constantly evolving. hats where it comes also that customers business needs are constantly evolving. hats where it comes in. It provides him with a choice of &urrent )ccount options to e-clusively suit in. It provides him with a choice of &urrent )ccount options to e-clusively suit his business  whatever the si#e or scope.

his business  whatever the si#e or scope.

(ixed $eposits (ixed $eposits

Jongterm investments form the chunk

Jongterm investments form the chunk of everybodys future plans. )n alternativeof everybodys future plans. )n alternative

to simply applying for loans, fi-ed deposits allow the customer to borrow from his to simply applying for loans, fi-ed deposits allow the customer to borrow from his

own funds for a limited period, thus fulfilling his needs as well as keeping his own funds for a limited period, thus fulfilling his needs as well as keeping his savings secure.

savings secure. )s

)s per per the the finanfinance ce ?Eo ?Eo 2@ 2@ )ct )ct 277, 277, all all fees fees M M chargcharges es mentimentioned oned in in thethe a

ariffriffs, s, &harg&harges es or or Fees Brochures will Fees Brochures will attrattract act CerviCervice ce aa- - R17O M R17O M >ducat>ducationion &ess R2O of the service ta- amount effective 17th Ceptember 277. he same &ess R2O of the service ta- amount effective 17th Ceptember 277. he same will appear as separate debits in the statements.

will appear as separate debits in the statements.

PI)'

PI)'TE +'TE +'N=IN8N=IN8

$%F& Bank offers rivate Banking services to high net worth individuals and $%F& Bank offers rivate Banking services to high net worth individuals and ins

institituttutionions. s. BanBanks ks teateam m of of seaseasonsoned ed finfinancancial ial and and invinvestestmement nt proprofesfessiosionalnalss  provide

 provide ob"ective ob"ective guidance guidance backed backed by by thorough thorough research research and and indepth indepth analysisanalysis keeping in mind customers financial goals.

keeping in mind customers financial goals.

%ultiple ecognition from Euro mone %ultiple ecognition from Euro moneyy )t

)t $%F& Bank, $%F& Bank, they have they have alwayalways s stristrived towards providing e-ceptionaved towards providing e-ceptional l serviservicece to each of their esteemed customers. )s testament to this dedication, they have to each of their esteemed customers. )s testament to this dedication, they have earned the following ranks in a

earned the following ranks in a recently conducted >uromoney Curvey.recently conducted >uromoney Curvey.



 ated as the best private ban: in the super effluent category in Indiaated as the best private ban: in the super effluent category in India

$%

$%F& F& BaBank nk InInveveststmmenent t ))dvdvisisorory y CeCervrvicices es   $e$elplpining g yyou ou tatake ke yyouour r  Investment portfolio further 

Investment portfolio further ..



 $edicated investment advisor$edicated investment advisor

  $%F& rivate Banking service involves a high degree of personali#ation.   $%F& rivate Banking service involves a high degree of personali#ation. hen customer avail of this facility, a dedicated Investment )dvisor serves hen customer avail of this facility, a dedicated Investment )dvisor serves him. his seasoned finance professional adds value to his portfolio by keeping him. his seasoned finance professional adds value to his portfolio by keeping

%-T-'3 (-N$S P$-CTS SC2E%ES %-T-'3 (-N$S P$-CTS SC2E%ES E4uity fund

E4uity fund

$%F& growth fund $%F& growth fund

$%F& long term )dvantage fund $%F& long term )dvantage fund $%F& Inde- fund

$%F& Inde- fund

$%F& &apital Builder fund $%F& &apital Builder fund $%F& ta- saver 

$%F& ta- saver  $%F& top 277 funds $%F& top 277 funds

$%F& core M satellite fund $%F& core M satellite fund $%F& premier multi&ap fund $%F& premier multi&ap fund $%F& long term equity fund $%F& long term equity fund

+alanced (und +alanced (und

$%F& &hildrens gift fund investment plan $%F& &hildrens gift fund investment plan $%F& childrens gift fund saving plan $%F& childrens gift fund saving plan $%&F Balanced Fund

$%&F Balanced Fund $%&F rudence Fund $%&F rudence Fund

$ebt (und $ebt (und

$%&F Income fund $%&F Income fund $%&F liquid fund $%&F liquid fund

$%&F gift fund short term plan $%&F gift fund short term plan $%&F gift fund long term plan $%&F gift fund long term plan $%&F short term plan

$%&F short term plan

$%&F floating rate income fund short term plan $%&F floating rate income fund short term plan $%&F floating rate income fund long term

$%&F liquid fund premium plan $%&F liquid fund premium plus plan $%&F high interest fund

$%&F high interest fund short term plan $%&F cash management fund saving plan $%&F cash management fund call plan $%&F 'F monthly plan

P'/%ENT SE)ICES

ith $%F& Banks payment services, one can bid goodbye to queues and paper  work. Its range of payment options make it easy for customer to pay for a variety of utilities and services.

 )erified by visa

If one wants to be worry free for his online purchases. Eow he can shop securely online with his e-isting Lisa %ebit/&redit card.

 Net safe

 Eow shop online without revealing your ?customers@ $%F& Bank &redit &ard number.

 Prepaid refill

If a person is a $%F& Bank )ccount holder and a prepaid customer, he can now refill his repaid 'obile card with this service.

 +ill pay

5ne can pay his telephone, electricity and mobile phone bills at his convenience. hrough the Internet, )'s, his mobile phone and telephone  with Bill ay, banks comprehensive bill payments solution

 )isa +ill Pay

5ne can pay his utility bills from the comfort of his homeQ ay using his $%F& Bank Lisa credit card and forget long queue and late payments forever 

 Insta pay

 5ne can ay his bills, make donations and subscribe to maga#ines without going through the hassles of any registration.

 $irect pay

Chop or ay bills online without cash or card. %ebit your?customers @ account directly with banks %irect ay serviceQ

 Smart pay>0ith credit cards?

ith Cmart ay, paying customers electricity, telephone, mobile phone, water   bills, gas and insurance premia payments becomes easy like never before.

 5ne can transfer funds to any Lisa &ard ?debit or credit@ within India at his own convenience through $%F& Banks Eet Banking facility.

 e6%onies Electronic (unds Transfer

ransfer funds from customers account toany account in any +an:  in India

at 13 locations  (EE of cost@

 nline payment of excise and service tax

 5ne can make his >-cise and Cervice a- payments at his own convenience.

PE((EE$AC3'SSIC +'N=IN8

If a customer e-pects more from everything, even $%F& bank, will invite him into the world of e-clusive banking. here he will never again have to wait to  be served. ith $%F& Bank referred rogramme, his comfort always comes

first.

Ideal for seasoned professionals or businessmen, this programme will provide him with a banker dedicated to take care of all his banking and investment needs. It also means he get preferential rates on various banking products and other e-clusive benefits.

2$(C +'N= C3'SSIC +'N=IN8

If a person wants to e-perience banking beyond the ordinary, our $%F& Bank  &lassic rogramme is "ust for him. Becoming an $%F& Bank &lassic customer entitles him to a host of benefits, including a bouquet of   preferentially priced products and speciali#ed wealth management solutions.

'<'$S 'N$ 'C2IE)%ENTS

$%F& Bank began operations in 1003 with a simple mission8 to be a Porldclass Indian BankP. hey reali#ed that only a singleminded focus on product quality

and service e-cellence would help them get there. oday, they are proud to say that they are well on the way towards that goal.

2779

Business oday Best Bank in India.

Forbes 'aga#ine 5ne of )sia acifics Best 37 companies.

Businessworld Best listed Bank of India.

he )sset

'aga#ines riple ) &ountry )wards

Best %omestic Bank.

)siamoney )wards Best Jocal &ash 'anagement Bank in Jarge and 'edium segments.

>uromoney )wards PBest BankP in India.

2773

)sia money )wards Best %omestic &ommercial Bank )sia money )wards Best &ash 'anagement Bank  India . he )sian Banker 

>-cellence

!etail Banking !isk 'anagement )ward in India.

$ong Aongbased

Finance )sia

maga#ine

Best Bank India

>conomic imes

)wards

P&ompany of the :earP )ward for &orporate >-cellence.

Best Jocal &ash 'anagement Bank in India 277  ;CS11177m Best Jocal &ash 'anagement Bank in India 277  T;CS371m

Best Jocal &ash 'anagement Bank in India 1060277 ?poll of polls@ Best 5verall %omestic rade Finance Cervices in India 277

'ost Improved company for Best 'anagement ractices in India 277

he Business odayA'N Curvey published in the leading Indian business maga#ine Business oday has named $%F& Bank PBest Bank in IndiaP for the third consecutive year in 2773.

he )sset maga#ine named $%F& Bank PBest &ash 'anagement BankP and PBest rade Finance BankP in India, in 2779.

$%F& Bank named the P'ost &ustomer !esponsive &ompany  Banking and Financial Cervices in he >conomic imes  )vaya Nlobal &onnect &ustomer  !esponsiveness )wards 2773P

$%F& Bank has been named Best %omestic Bank in India in he )sset riple ) &ountry )wards 2773.

$%F& Bank has been named Best %omestic Bank in India !egion in he )sset riple ) &ountry )wards 277 and 277+.

In 277, $%F& Bank was selected by Businessorld as P5ne of Indias 'ost !espected &ompaniesP as part of he Business orld 'ost !espected &ompany )wards 277.

In 277, Forbes Nlobal again named us in its listing of Best ;nder a Billion, 177 Best Cmaller Ci#e >nterprises in )sia/acific and >urope, in its Eovember 1, 277 issue.

In 277, $%F& Bank won the award for P5perational >-cellence in !etail Financial CervicesP  India as part of the )sian Banker )wards 277+.

In 277+, Forbes Nlobal named us in its ranking of PBest ;nder a Billion, 277 Best Cmall &ompanies for 277+P.

Jeading business newspaper he Financial >-press named $%F& Bank the PBest  Eew rivate Cector Bank 277+P in the F>>rnst M :oung Best Banks Curvey

277+.

Jeading ersonal Finance 'aga#ine in India 5utlook 'oney named $%F& Bank  the PBest Bank in the rivate CectorP for the year 277+.

Jeading Indian business maga#ine Business oday in a survey rated us PBest Bank in IndiaP 277+, and PBest rivate Cector BankP in India in 1000.

 E)CC&5' and economictimes.com have named us the Best I ;ser in Banking at the I ;sers )wards 277+.

There have been some other proud moments as 0ell9

Jondonbased >uromoney maga#ine gave us the award for PBest Bank  IndiaP in 1000, PBest %omestic BankP in India in 2777, and PBest Bank in IndiaP in 2771 and 2772

)siamoney maga#ine has named us PBest &ommercial Bank in India 2772P. For our use of information technology we have been recogni#ed as a P&omputerworld $onors JaureateP and awarded the 21st &entury )chievement )ward in 2772 for Finance, Insurance M !eal >state category by &omputerworld, Inc., ;C).

5ur technology initiative has been included as a case study in their online global archives.he >conomic imes has conferred on us he >conomic imes )wards for &orporate >-cellence as the >merging &ompany of the :ear 

277771.

Jeading Indian business maga#ine Business India named us PIndias Best BankP in 2777.

In the year 2777, leading financial maga#ine Forbes Nlobal named us in its list of Phe +77 Best Cmall &ompaniesP in the world and as one of the P27 for  2771P best small companies in the world.

CP'TE 8)EN'CE

$%F& Bank recogni#es the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organi#ational efficiency. his &orporate Novernance olicy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance.

 %r. ;agdish Capoor,Chairman  %r. 'ditya Puri B %anaging $irector  %r. =e:i %istry

 $r. >%rs.? 'mla Samanta  %r.'nil 'hu!a

 $r. )en:at ao 8ad0ai  %r.)ineet ;ain

 enu =arnad  %r.'ravind Pande

 %r. an!an =anpur>0.e.f ;anuary B "DD*?  %r. +obby Pari:h >0.e.f.;anuary B"DD*?

)ICE PESI$ENT>3E8'3? C%P'N/ SECET'/  %r. San!ay $ongre '-$ITTS  %r. P.C. 2ansotiaCo >Chartered accountants?  E8ISTEE$ ((ICE 2$(C +'N= 2ouse Senapati +apat %arg 3o0er Parel

%umbai *DDD1& Tel No9 575"1DDD (ax No9 "*7DF&

%ethodology

$ata Collection method

H rimary %ata 8 he information &ollected from ersonnel Interaction with

manager and other staff

H Cecondary8 )nnual report of $%F& bank and websites

%easurement techni4ueA Statistical tool

1. )ccounting ratio

2. Financial statement of the company

Ctatistical technique used for calculation of ratios is in terms of percentage method.

I. Profitability atio

his ratio shows the earning ability of organi#ation. he operating efficiency of the firm and its ability to ensure adequate return to its shareholders depends ultimately on the profits earned by it. he profitability of the firm can be measured by its profitability ratio. In other words profitability ratios designed to  provide answers to questions such as

a@ Is profit earned by the firm adequate4  b@ hat rate of return does it represents4

c@ hat is the rate of profit for various divisions and segments of the firm4 d@ hat is the rate of return to equity shareholders4

1. atio of Net profit to total income

his ratio implies that the percentage of profit earned by the organi#ation

5ut of its income.

U Eet profit

V 177 otal income

  ?!upees

:ear 2779277< 277<2776 27762770

rofit ?!s@ 37037 99339 6<7<6

otal income?!s@ +72609 +<6+ 3300+2

!atio ?O@ 19.62O 1<.<O 13.33O

Interpretation

he ratio of profit to total income in the first year ?27797<@ was 19.6O and in 7<76 ratio increased 1<.<O due to increase in interest income and non interest

income but in 277670 ratio decreased 13.33O because there was loss on revaluation of investment and increase in e-penses.

". atio of Net profit to total deposit

his ratio shows organi#ation earning on deposits

?!upees in lakhs@

:ear 2779277< 277<2776 27762770

rofit ?!s@ 37037 99339 6<7<6

Ratio of Net profit to total income

16.82% 17.70% 15.55% 14.00% 15.00% 16.00% 17.00% 18.00% 2006-2007 2007-2008 2008-2009 year        P     e      r      c      e      n       t     a     g      e Ratio (%)

otal %eposit ?!s@ +77669 +9+323 33<0962

!atio ?O@ 1.9<O 1.6+O 1.39O

Interpretation

he ratio of profit to deposits in the year 797< was 1.9<O it was increased in 7< 76 by 1.6+O and it decreased to 1.39O compared to last year it was more. his shows that the deposits have increased at a faster rate than income.

&. atio of return on e4uity

his ratio measures the return on the owners ?both equity and preference shareholders@ invested in the firm.

U )

Eet worth ?rupees in lakhs@

:ear 2779277< 277<2776 27762770

 rofit ?!s@ 37037 99339 6<7<6

 Eet worth ?!s@ 161367 +72+6 633

!atio ?O@ 26.73O 10.39O 10.3<O

Ratio of net profit to total deposit

1.67% 1.83% 1.56% 1.40% 1.50% 1.60% 1.70% 1.80% 1.90% 2006-2007 2007-2008 2008-2009 year       p      e      r      c      e      n       t     a      g      e Ratio (%)

Interpretation

!eturn on equity in the first year was 26.73O it has decreased to 10.39O to 10.3<O in the year 7<76 and 7670 compared to first year. !eturn on equity is constant for the year. his indicates generation of return for capital invested by owner of the company is constant for last two year. 'a"or portion of net profit is transfer to general reserve which leads to decrease in the return of shareholder.

*. eturn on 'sset

)n indicator of how profitable a company is relative to its total assets. !5) gives an idea as to how efficient management is at using its assets to generate earnings. &alculated by dividing net income by its total assets

U Eet income

otal )ssets ?rupees in lakhs@

:ear 2779277< 277<2776 27762770

 rofit ?!s@ 37037 99339 6<7<6

otal )ssets ?!s@ 2+7900 312077 <+379+0

!atio ?O@ 1.27O 1.20O 1.16O

Return on equity 28.05% 19.56% 19.57% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 2006-2007 2007-2008 2008-2009 year       p      e      r      c      e      n       t     a      g      e Ratio (%)

Interpretation

!atio of return on asset in first year was 1.27O and in second year it increased to 1.20O it indicates that company is better at converting its investment into profit  but in third year earning generated from invested capital has been reduced to

1.16O this indicates company is slow in converting its investment into profit.

5. eturn on capital employed

his ratio shows the return on capital employed ?share capital, reserve, retained earning and long term borrowings@ used in the organi#ation.

U B ?profit before ta-@

&apital employed ?rupees in

lakhs@ :ear 2779277< 277<2776 27762770  B ?!s@ <1609 0<60 123+31 &apital employed ?!s@ 12+92 6102+0 <+7<7+

!atio ?O@ 1<.+O 11.0O 1<.13O

Ratio of return on assets

1.20% 1.29% 1.18% 1.10% 1.15% 1.20% 1.25% 1.30% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

Interpretation

!eturn on capital for the first year 797< was 1<.+O which was decline in second year and increased in third year by 1<.13O. his indicates that earning capacity of the capital employed is satisfactory because of borrowing and long term debts are increased.

7. Net interest %argin

 Eet interest margin is the gross margin on a banks lending and investment activities. It tells you the average interest margin that the bank is receiving by  borrowing and lending funds. It is determined as.

Eet interest income U total interest income total interest e-pense

U Eet interest income V 177

otal earning assets

:ear 2779277< 277<2776 27762770

 Eet interest

income ?!s@

1++<66 1<<<0+ 2336

otal asset ?!s@ 2+7900 312077 <+379+0

!atio ?O@ +.19O +.3O +.9O

Ratio of return on capital employed 17.43% 11.94% 17.15% 0.00% 5.00% 10.00% 15.00% 20.00% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

Interpretation

!atio of net interest margin in first year was +.19O it has increased in constant rate by +.3O and +.9O in second and third year. his indicates that average interest margin the bank is receiving by borrowing and lending fund is constant and satisfactory.

F. atio of interest income to average 0or:ing fund

It is a ratio of interest income to average working fund. It shows how income is earned from average asset.

)verage working fundU opening total asset W closing total asset / 2

Interest income

U V 177

)verage working fund

?!upees in lakhs@

Net interest margin

3.16% 3.45%   3.46% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

Interest income?!s@ 2360+ +70+0 <3+ )verage working fund ?!s@ +9+933+.3 969<00.3 929<90.3

!atio ?O@ <.7O 9.9O <.19O

Interpretation

!atio of interest income to )F in first year was <.7O in second year it was 9.97O and it increased in third year by <.19O compared to previous year. Increase in interest income due to increase in interest/ discount on advance, income from investment. his also indicates interest earned is more.

H. atio of non6interest income to 'verage 0or:ing fund

his ratio is determined by dividing noninterest income by )F. his tells how much is the noninterest income ?other income@ from average working fund.

U Eoninterest income V 177

)verage working fund Ratio of interest income to AWF

7.00% 6.60% 7.16% 6.20% 6.40% 6.60% 6.80% 7.00% 7.20% 7.40% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

?!upees in lakhs@ :ear 2779277< 277<2776 27762770  Eon interest income?!s@ 677+ 931+ 112+06 )F ?!s@ +9+933+.3 969<00.3 929<90.3

!atio ?O@ 1.+2O 1.+6O 1.<0O

Interpretation

!atio of non interest income to )F in 797< was 1.+2O and it increased to 1.+6O to 1.<0O in 7<76 and 7670 because of increase in profit on sale of  investment, commission, e-change M brokerage, 'iscellaneous income etc.increase in non interest income increase the profitability of the firm. here is significant growth in non operating income in year 2770.

Ratio of non interest income to AWF

1.!" 1.#" 1.$%" &.&&" &.'&" 1.&&" 1.'&" !.&&"

!&&()!&&$ !&&$)!&&# !&&#)!&&% year       p      e      r      c      e      n       t     a      g      e Ratio *"+

. atio of Cash $ividend to Net income

) cash dividend to net income indicates how much of earnings are paid out to shareholders. &onversely, it indicates how much of earnings are retained to build the banks capital account. Cmaller banks, because they have limited capital market access, tend to rely more heavily on earnings retention to build capital.

&ash %ividend Eet income ?!upees in lakhs@ :ear 2779277< 277<2776 27762770 &ash dividend ?!s@ XX 29 XX    Eet income?!s@ 37037 99339 6<7<6 !atio ?O@ XX XX  

&ash dividend for 797< is not paid. %ividend of previous is paid in 7<76 29Jac is paid out of net income. In 27762770 dividend is not declared

1D. EPS >earning per share?

It measures the profit available to equity shareholders on a per share  basis, that is, the amount that they can get on every share held. It is calculated  by dividing the profits available to shareholders by the number of outstanding shares. he profits available to the ordinary shareholders are represented by net profits after ta-es and preference dividend. hus

>C U ) ?profit after ta-@

 Eumber of shares outstanding

:ear 2779277< 277<2776 27762770  ) ?!s@ 37037 99339 6<7<6  Eo. of shares outstanding ?!s@ 26+6793+6 207+6+09 +110+0+99 !atio ?!s@ 1<.03 22.01 2<.01 Interpretation

>arning per share in 797< was 1<.03 !s. it increased by 22.01 and 2<.01 !s. for  last two years. >C simply shows the profitability of the firm on a per share basis.

II. perating ratio

,arning per s-are

17.95 22.91 27.91 0 5 10 15 20 25 30 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (Rs)

his ratio gives the operation efficiency of the organi#ation. he efficiency can be determined by following ratios.

1. atio of interest earned to interest paid

his ratio shows the percentage of interest earned on loans and advances and interest paid on deposits.

U Interest earned Interest paid ?!upees in lakhs@ :ear 2779277< 277<2776 27762770 Interest earned ?!s@ 2360+ +70+0 <3+ Interest paid ?!s@ 121173 1+1339 102037 !atio ?times@ 2.17 2.+3 2.+1 Interpretation

!atio of interest earned to interest paid in first was 2.17O that was very less compared to second year it grew to 2.+3O and third year decline by O because interest paid on borrowing was more. Firms earning capacity is satisfactory.

Ratio of interest earned to interest paid

2.1 2.35 2.31 1.95 2 2.05 2.1 2.15 2.2 2.25 2.3 2.35 2.4 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (times)

". atio of interest paid to total income

his ratio shows the percentage of interest paid to deposits accepted.

U interest paid V 177 otal income ?!upees in lakhs@ :ear 2779277< 277<2776 27762770 Interest paid ?!s@ 121173 1+1339 102037 otal income ?!s@ +72609 +<6+ 3300+2

!atio ?O@ +0.06O +3.1+O +.3O

Interpretation

!atio of interest paid on total income in first year was +0.06O and second and third year was constant. In first interest paid on borrowing was more by this even the interest earned was decline. Cecond and third year, firms interest  paid is constant it is satisfactory.

&. atio of staff expense to total expense

his ratio shows the percentage of staff e-pense to total e-pense.

U Ctaff e-pense

Ratio of interest paid on total income

39.98% 35.13% 34.45% 30.00% 32.00% 34.00% 36.00% 38.00% 40.00% 42.00% 2006-2007 2007-2008 2008-2009  Year       p      e      r      c      e      n       t     a      g      e Ratio (%)

otal e-pense   ?!upees in lakhs@ :ear 2779277< 277<2776 27762770 Ctaff e-penses ?!s@ 2770 2<99< 6962 otal e-penses ?!s@ 23109 +7<02< <263

!atio ?O@ 6.17O 6.06O 17.20O

Interpretation

!atio of staff e-penses to total e-penses in the year 797< was 6.17O it has been increased to 6.06O to 17.20O in the last two year. his indicates payment for the employees are increasing. $ence profit per employee is increasing.

*. atio of total expenditure to total income

his shows the percentage of total e-penses to total income Ratio of staff epenses to total

epenses 8.10%   8.98% 10.29% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2006-2007 2007-2008 2008-2009  Year       p      e      r      c      e      n       t     a      g      e Ratio (%)

U otal e-penditure V 177 otal income :ear 2779277< 277<2776 27762770   otal e-penditure ?!s@ 23109 +7<02< <263 otal income ?!s@ +72609 +<6+ 3300+2

!atio ?O@ 6+.1<O 62.22O 6.O

he ratio of total e-penditure to total income in the year 797< was 6+.1<O and it was decreased in the second year by 62.22O but in third year total e-penditure increased to 6.O because of increase in interest e-penses , operating e-penses and there was loss on revaluation of investments.

5. atio of operating expenses to 'verage 0or:ing fund

5perating e-pense are those e-penses which are connected to running of the organi#ation it includes staff salary, rent, ta-es, printing and stationary, advertisement etc. this ratio shows the percentage of operating e-penses to )F.

U 5perating >-penses V 177

)verage working fund

:ear 2779277< 277<2776 27762770 5perating e-penses?!s@ 61777 17637 190170 )verage working fund ?!s@ +9+933+.3 969<00.3 929<90.3

Interpretation

!atio of operating e-penses to )F in first year was 2.22O it has increased to 2.+1O to 2.<7O in 7<76 and 7670 due to increase in !ent, ta-es, lightning,  printing M stationary, )dvertisement and publicity, !epairs and maintenance etc.)long with interest income and non interest income even operating e-penses is growing year by year. By this percentage of profit will decrease.

Ratio operating epense to AWF

2.22%   2.31% 2.70% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

7. atio of interest expenses to 'verage 0or:ing fund

his ratio is determined by dividing interest e-penses to )F. It indicates what percentage or rate of interest is paid from working fund.

U Interest >-penses V 177

)verage working fund

:ear 2779277< 277<2776 27762770

Interest e-p?!s@ 121173 1+1339 102037

)verage working fund ?!s@

+9+933+.3 969<00.3 929<90.3

Interpretation

!atio of interest e-penses to )F in 797< was +.++O and in second year it decrease to 2.67O and in third year it increased to +.76O compared to last year  due to increase in interest e-penses and operating e-pense. If we compare interest income and interest e-pense, the percentage of interest paid is more than interest earned so it is unfavorable.

III. Solvency ratio

his ratio helps to know the liquidity of the firm i.e. ability to meet its short term obligations or current liabilities. he solvency of the firm can be determined in the following ratios.

1. atio of Total cash to total deposits

his ratio helps to find what e-tent the deposits used and cash balance in hand. he conversion into cash while payment of deposits is very important for  any bank. If there is more need of deposit liquidity the bank as to keep more funds in cash. his ratio can be calculated with the following formula.

Ratio of interest epenses to AWF 3.33% 2.80% 3.08% 2.40% 2.60% 2.80% 3.00% 3.20% 3.40% 2006-2007 2007-2008 2008-2009 year       p      e      r      c      e      n       t     a      g      e Ratio (%)

U otal &ash V 177 otal deposits   ?!upees in lakhs@ :ear 2779277< 277<2776 27762770  otal cash ?!s@ 23106 29371+ ++7991 otal deposits ?!s@ +77669 +9+323 33<0962

!atio ?O@ 6.+3O <.26O 3.02O

Interpretation

!atio of cash to total deposits in the first year 797< was 6.+3O it was decreased  by <.26O to 3.02O in 7<76 and 7670. &ompared to the first year ratio has

reduced year by year it indicates that firm has no idle fund in bank. But still firm has to maintain cash reserve to meet its current obligation.

Ratio of total cas- to total deposits 8.35% 7.28% 5.92% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 2006-2007 2007-2008 2008-2009  Year       p      e      r      c      e      n       t     a      g      e Ratio (%)

". atio of investment to total deposits

his ratio shows at what e-tent the firm invested its deposits on securities from its total deposits.

U otal investment V 177 otal deposits :ear 2779277< 277<2776 27762770 otal investment ?!s@ 10+9+9 10+061 26+0+09 otal deposits ?!s@ +77669 +9+323 33<0962

Interpretation

!atio of total investment to total deposits for the first year stood at healthy i.e. 9+.+2O and in second and third year it decreased to 3+.22O to 37.66O because of decreased shares received, other approved securities and decreased in certificate of deposits.

&. Credit deposits ratio

his ratio shows the percentage of loans and advances provided by bank  from its deposits. his ratio is purely depending upon the lending policy of the  bank and also the loan requirements of bank customer. If there is increase in loans demand higher then the likely rise in deposits the bank has to keep more of its funds in liquid assets to meet the increase in the loan demand and this is also depending upon the nature of loan and type of deposit of the bank.

U loans and advances

otal deposits

:ear 2779277< 277<2776 27762770

Joan and 1<<31 23399+7 +379129

Ratio of total in/estment to total deposits 63.32% 53.22% _50.88% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 2006-20072007-20082008-2009  Year       p      e      r      c      e      n       t     a      g      e Ratio (%)

advance ?!s@ otal deposits ?!s@ +77669 +9+323 33<0962 !atio ?times@ 7.36 7.<7 7.92 Interpretation

!atio of credit to deposits in 797< was 7.36 times and it was increased in 7< 76 by 7.<7 times but in 7670 it decreased to 7.92 times compare to previous year it was more. his indicates that banker has lag behind in the loan and advances. herefore measures are to taken to increase the loan and advance to the customer.

credit deposit ratio

0.58 0.7 0.62 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (times)

*. atio of loans to Total assets

he loans to total assets ratio measures the total loans as a  percentage of total assets. he higher this ratio indicates a bank is loaned up and

its liquidity is low. he higher the ratio more risky the bank may be to higher 

defaults

.

U Joans V 177

otal asset

:ear 2779277< 277<2776 27762770

 otal loan ?!s@ 13373 270179+ ++960

otal )ssets ?!s@ 2+7900 312077 <+379+0

Interpretation

!atio of loans to total assets in first year was +.+0O it increased to 7.93O to 3.62O in last two year. Increase in loan out of total asset indicates bank is loaned up and its liquidity is low. his show that bank is at risk side by this  E) also increases over a period of time. his may also affect the earning of 

the bank and bank may not be able to recover interest and principal amount. Ratio of total loans to total assets

34.39% 40.65% 45.82% 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 2006-2007 2007-2008 2008-2009 year       p      e      r      c      e      n       t     a      g      e Ratio (%)

5. atio of provision for loan losses to 'verage assets

he provision for loan losses to average assets is a charge to current earnings to build the allowance for loan and lease losses. he )JJ is a general reserve kept by the bank to absorb loan losses. his important figure is a reserve account to cover une-pected default on loans by borrowers. hese are generally referred to as nonperforming loans.

U rovision for loan loss V 177

)verage assets :ear 2779277< 277<2776 27762770 rovision for  loan loss ?!s@ 1<626 1<922 <0<9 )verage )ssets?!s@ +9+933+.3 969<00.3 929<90.3

Interpretation

!atio of provision for loan loss to average asset in 797< was 7.0O and in second year it was 7.+<O and it increased in third year by o.<9O loan loss on average assets ?its means if one $undred !upees is average asset 7.<9 paise is loan loss@. 'oreover, there is sufficient loan loss reserve to absorb probable loan losses.

I). Safety atio

1. atio of Net NP' to Net 'dvances

Ratio of pro/ision for loan loss to A/erage asset

0.49% 0.37% 0.76% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)

he ratio of E)s to advances reflects the quality of a banks loan  portfolio. ) distinction is often made between gross E) and net E). Eet E), which is obtained by deducting from gross E) items like interest due but not recovered, part payment received and kept in suspense account, etc. is internationally accepted as the more relevant indicator of financial health of   banks. If the E) is increasing it shows Bad sign to the organi#ation.

U Eet E) V177

Eet advances

:ear 2779277< 277<2776 27762770

 Eet E) ?!s@ 2<03 979+ 13316

 Eet )dvances?!s@ 1<<31 23399+7 +379129

!atio ?O@ 7.13O 7.2+O 7.O

Interpretation

!atio of Eet E) to Eet )dvances in 797< was 7.13O and in second and third year 

Ratio of net NPA to net Ad/ance

0.15% 0.23% 0.44% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 0.40% 0.45% 0.50% 2006-2007 2007-2008 2008-2009  Year        P     e      r      c      e      n       t     a      g      e Ratio (%)