a study of financial performance of reputed …a study of financial performance of reputed public...

IRJC Asia Pacific Journal of Marketing & Management Review Vol.1 No. 3, November 2012, ISSN 2319-2836

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A STUDY OF FINANCIAL PERFORMANCE OF REPUTED PUBLIC

BANK IN INDIA DURING 2006 TO 2010

M. GANGU NAIDU*

*Research Scholar,

K L University.

ABSTRACT

This paper attempts to analyze the financial performance of Andhra bank in India. Andhra bank

form major part of total banking system in India and Andhra Pradesh so there is a need to

evaluate the performance of this bank. The study is based upon secondary data covering the

period from 2006-2010. For analyzing the performance Compound Annual Growth rate and

Coefficient of Variation of, total expenditure, total assets, total liabilities, interest earned to total

fund, interest expended to total assets, spread as percentage of total fund, Interest earned, non

interest expenditure, net profit to total funds percentage, and profit before provisions to total

assets percentage , and spread are calculated. It is concluded the CAGR of various variables have

shown in Andhra bank. Andhra bank has shown CAGR in case of interest earned, expenditure,

Burdon, total liability, total assets, and Interest expended/total funds.

KEYWORDS: Andhra Bank, Compound Annual Growth rate, Coefficient of Variation,

Financial analysis, Ratio Analysis.

________________________________________________________________________

INTRODUCTION

The banking system is an integral part of any economy. It is one of the many institutions that

impinges on the economy and affect its performance. Economists have expressed a variety of

opinions on the effectiveness of the banking systems in promoting or facilitating economic

development. As an economic institution, the bank is expected to be more directly and more

positively related to the performance of the economy than most non-economic institutions.

Banks are considered to be the mart of the world, the nerve centre of economies and finance of a

nation and the barometer of its economic perspective. They are not merely dealers in money but

are in fact dealers in development. The role of banks in accelerating the economic development

of a country like India has been increasingly recognized following the nationalization of fourteen

major commercial banks in July 1969 and six more banks in April 1980. With nationalization,

the concept of banking has undergone significant changes. Banks are no longer viewed as mere

lending institutions. They are to serve the society in a much bigger way with a socio-economic

Development oriented outlook. They are specially called up onto use their resources to attain

social upliftment and speedier economic development.


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REVIEW OF LITERATURE

Luther (1976) chaired the committee appointed by Reserve Bank of India to study the

productivity, efficiency and profitability of commercial banks. The committee analyzed the

various issues related to the planning, budgeting and marketing in commercial banks.

Varghese (1983) analyzed the profits and profitability of commercial banks in India from 1970 to

1979, by using the operating profits operating margins, growth yield on assets and the spread

relation ratios.

Amandeep (1991) attempted to estimate profit and profitability of Indian Nationalized banks and

to study the impact of priority sector lending, credit policies, geographical expansion, industrial

sickness, competition, deposit composition, establishment expenses, ancillary income, spread

and burden on bank profitability. For this purpose, trend analysis, ratio analysis and regression

analysis were used.

Swamy (2001) studied the comparative performance of different bank groups since 1995-96 to

1999-2000. An attempt was made by researcher to identify factors which could have led to

changes in the position of individual banks in terms of their share in the overall banking industry.

He analyzed the share of rural branches , average branch size, trends in bank’s profitability, share

of public sector assets, share of wages in expenditure, provision and contingencies, net non

performance assets in net advances, spread, has been calculated.

Petya Koeva (July 2003), His study on The Performance of Indian Banks, During Financial

Liberalization states that new empirical evidence on the impact of financial liberalization on the

performance of Indian commercial banks. The analysis focuses on examining the behaviour and

determinants of bank intermediation costs and profitability during the liberalization period. The

empirical results suggest that ownership type has a significant effect on some performance

indicators and that the observed increase in competition during financial liberalization has been

associated with lower intermediation costs and profitability of the Indian banks.

Roma Mitra, Shankar Ravi (2008), A stable and efficient banking sector is an essential

precondition to increase the economic level of a country. This paper tries to model and evaluate

the efficiency of 50 Indian banks. The Inefficiency can be analyzed and quantified for every

evaluated unit. The aim of this paper is to estimate and compare efficiency of the banking sector

in India. The analysis is supposed to verify or reject the hypothesis whether the banking sector

fulfils its intermediation function sufficiently to compete with the global players. The results are

insightful to the financial policy planner as it identifies priority areas for different banks, which

can improve the performance. This paper evaluates the performance of Banking Sectors in India.

Yogesh Puri (2012) examined the study of financial performance of nationalized banks, the data

taken was for five years (1998-2002) and it was analyzed by using difference of means test. The

banking sector in India includes domestic banks (privately owned, partially privatized banks,

fully PSB’s) as well as foreign banks, and objective of this study is to study the impact of

nationalizes banks in Indian economy.


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Most of the studies were concerned of commercial banks as a whole and we recovering

very limited number of years. PSB’s maintained its dominance in the banking system. Keeping

into consideration the research gaps an endeavour is made in the present study to examine the

performance of PSB’s by calculating various ratios and their Compound Annual Growth Rates

(CAGRs) and Coefficient of Variation (CV).

RESEARCH METHODOLOGY

The study is based upon secondary data covering the period from 2006-2010.The study is related

to Andhra bank. The proposed study will aim at examining the performance of Andhra bank in

India. The data on the variables selected like total expenditure, total assets, total liabilities,

interest earned to total fund, interest expended to total assets, spread as percentage of total fund,

Interest earned, non interest expenditure, net profit to total funds percentage, and profit before

provisions to total assets percentage for analysis from RBI website www.rbi.org.in and website

of Indian Banker Association and Andhra bank website. We have computed Return on Assets,

and Interest Expended to Total Assets, Interest Earned to Total Assets, Spread Ratio and profit

before provisions to total assets percentage. These computed ratios were further analyzed by

computing compound annual growth rates (CAGRs) and coefficient of Variation (CV).

OBJECTIVE OF STUDY

The present study has the following major objectives:

1. To evaluate the financial performance of Andhra bank in India, through the spread

burden, and the profitability ratios.

2. To appraise the profitability of this bank through overall –profitability indices.

3. To enlighten on the establishment of public sector banks.

SIGNIFICANCE OF THE STUDY

The performance effectiveness of the nationalized banking industry that controls more than 90

percent of the banking business in India is an issue of serious concern to the Government of

India, the national and international monetary authorities such as the Reserve Bank of India, the

World Bank, the International Monetary Fund and so on: it is a seriously debating topic among

academicians and public at large. Andhra bank is playing main role in India and Andhra Pradesh

and the study of the performance effectiveness of this bank from 2006 to 2010. Andhra Bank

(BSE: 532418) is a medium-sized public sector bank (PSB), with a network of 1,712 branches,

15 extension counters, 38 satellite offices and 1056 automated teller machines (ATMs) as on

March 31, 2012. Andhra Bank was founded by the eminent freedom fighter, Dr. Bhogaraju

Pattabhi Sitaramayya. The Government of India owns 51.55% of its share capital and is going to

increase it to 58% by infusing 1100 crore. The state owned Life Insurance Corporation of India

holds 10% of the shares. The bank has done a total business of Rs. 1, 90,535 crore as on

31.03.2012. Though a number of studies are available on banking industry, there is dearth of a

comprehensive academic study on the performance effectiveness and managerial efficiency of

the Andhra bank. A review of the available literature on banking reveals that no exclusive study


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on the performance effectiveness of bank has so far been attempted in India. In this context the

present study may fill the gap to a certain extent.

PUBLIC SECTOR BANKS – EVOLUTION

Public sector in the banking industry emerged with the nationalization of Imperial Bank

of India (1921) and creating the State Bank of India (1955) as a part of integrated scheme of rural

credit proposed by the All India Rural Credit Survey Committee (1951). The Bank is unique in

several respects and it enjoys a position of pre-eminence as the agent of RBI wherever RBI has

no branches. It is the single largest bank in the country with large international presence, with a

network of 48 overseas offices spread over 28 countries covering all the time zones. One of the

objectives of establishing the SBI was to provide extensive banking facilities in rural areas by

opening as a first step 400 branches within a period of 5 years from July 1, 1955. In 1959, eight

banking companies functioning in formerly princely states were acquired by the SBI, which later

came to be known as Associate Banks. Later, two of the subsidiary banks', viz., the State Bank of

Bikaner and Jaipur were merged to form the State Bank of Bikaner and Jaipur, thus form eight

banks in the SBI group then making banks in the state bank group.

The Public sector in the Indian banking got widened with two rounds of nationalization-first in

July 1969 of 14 major private sector banks each with deposits of Rs. 50 crore or more, and

thereafter in April 1980, 6 more banks with deposits of not less than Rs. 2 Crore each. It resulted

in the creation of public sector banking with a market share of 76.87 per cent in deposits and

72.92 per cent of assets in the banking industry at the end of March 2003. With the merger of

'New Bank of India' with 'Punjab National Bank' in 1993, the number of nationalized banks

became 19 and the number of public sector banks 27. The number of branches of public sector

banks, which was 6,669 in June 1969, increased to 41874 by Mach 1990 and again to 46,752 by

March 30, 2003. The public sector banks thus came to occupy a predominant position in the

Indian banking scene. It is however, important to note that there has been a steady decline in the

share of PSB's in the total assets of SCB's during the latter - half of 1990s. While their share was

84.5 per cent at the end of March 1996, it declined to 81.7 per cent in 1998 and further to 81 per

cent in 1999. The share of the banking sector held by the public banks continued to grow through

the 1980s, and by 1991 the public sector banks accounted for 90% of the banking sector. A year

later, in March, 1992, the combined total of branches held by public sector banks was 60,646

across India, and deposits accounted for Rs. 1,10,000 crore. The majority of these banks were

profitable, with only one out of the 27 public sector banks reporting a loss, with nationalised

banks reporting a combined loss of Rs. 1160 crores. However, the early 2000s saw a reversal of

this trend, such that in 2002-03 a profit of Rs. 7780 crores by the public sector banks: a trend that

continued throughout the decade, with a Rs. 16856 crore profits in 2008-2009.

Public sector banks are the ones in which the government has a major holding. They are

divided into two groups i.e. Nationalized Banks and State Bank of India and its associates.

Among them, there are 19 nationalized banks and 8 State Bank of India associates. Public Sector

Banks dominate 75% of deposits and 71% of advances in the banking industry. Public Sector

Banks dominate commercial banking in India. These can be further classified into:


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1) State Bank of India

2) Nationalized banks

3) Regional Rural Banks

FINANCIAL PERFORMANCE OF ANDHRA BANK

Andhra Bank was founded by Dr. Bhogaraju Pattabhi Sitaramayya in 1923 in

Machilipatnam, Andhra Pradesh. The founder Dr. Bhogaraju Pattabhi Sitaramayya was an

eminent freedom fighter and a multifaceted genius. The Bank was registered on November 20,

1923 and commenced business on 28 November 1923 with a paid up capital of Rs 1.00 lakh and

an authorised capital of Rs 10.00 lakhs. In 1956, linguistic division of States was promulgated

and Hyderabad was made the capital of Andhra Pradesh. The registered office of the Bank was

subsequently shifted to Andhra Bank Buildings, Sultan Bazar, Hyderabad, and Andhra Pradesh.

In the second phase of nationalization of commercial banks commenced in April 1980, the bank

became a wholly owned Government bank. In 1964, the bank merged with Bharat Lakshmi Bank

and further consolidated its position in Andhra Pradesh. Andhra Bank opened a representative

office in Dubai in May, 2006 and another at Jersey City, New Jersey (USA), in June 2009. A

foothold in New Jersey is strategic for the bank as the state has a large number of Indians from

Andhra Pradesh. In 2010 Malaysia awarded a commercial banking license to a locally

incorporated bank to be jointly owned by Bank of Baroda, Indian Overseas Bank and Andhra

Bank. The new bank, India BIA Bank (Malaysia), will have its headquarters in Kuala Lumpur,

which has a large population of Indians. Andhra Bank will hold a 25% stake in the joint-venture.

Bank of Baroda will own 40% and IOB the remaining 35%. Andhra Bank received the MSME

National Award for the year 2009-10 for Andhra Bank's outstanding performance in PMEGP

Scheme in National Awards Presentation function, Andhra Bank has won the Banking

Excellence Award for the Best Public Sector Bank, instituted by the State Forum of Bankers

Clubs Kerala on 13.11.2010; it received the "BEST BANK" award - for the Quality of Assets

awarded by BUSINESS TODAY on 08.12.2010 at Mumbai.

DATA COLLECTION

The study is based on the secondary data obtain from the various sources, viz, the IBA bulletins

(annual issue), statistical table related to Andhra bank annual report of financial performance,

banks in India performance highlights of public sector banks , and the RBI reports on trends and

progress of banking in India.

ANALYSIS AND INTERPRETATION THROUGH RATIOS

Ratios are used to evaluate the performance of your business and identify potential

problems. Each ratio informs you about factors such as the earning power, solvency, efficiency,

and debt load of your business. They are used to measure the relationship between two or more

components of the financial statements and have greater meaning when the results are compared

to industry standards for businesses of similar size and activity.


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Ratios are effective performance indicators when results for the current period are compared to

the past performance over several periods. For example, by examining the inventory turnover

over more than one fiscal year, you can compare the rate at which inventory turns over to the

year before. You can also determine whether or not sales of inventories are still growing and at

what rate. This is referred to as horizontal or trend analysis, as data is compared for multiple

consecutive periods to determine if the business's performance is following a predictable course.

A dramatic upward or downward trend can signify areas requiring attention, permitting you to

forecast future results. Following and reacting to these trends is your first line of strategic

defence.

The performance of the business should also be compared to that of competitors or other

businesses of comparable size and activity. If your business experiences a downturn in its Net

Profit Margin by 6% but the competitors experience an average downturn of 21%, this indicates

that your business is performing better than the industry as a whole. Nonetheless, it is still

necessary to analyze the underlying data to establish the cause of the downturn in the Net Profit

Margin and to take effective measures.

When you compare ratios with those of other companies, it is important to ensure you are using

the same equation in your calculation.

Financial ratios are one of the many tools used in financial analysis. A ratio may vary in

importance depending on the business type, the industry category it belongs to, or its location.

For example, regional differences such as labour or shipping costs can affect the result of a ratio.

Sound financial analysis always requires scrutinizing the data used with the ratios and examining

the circumstances that generated the results

SPREAD TO TOTAL ASSETS RATIO: Spread is the difference between interest earned and

Interest paid. The higher the difference the better it will be for the bank. Thus spread ratio

Measures the proportion of spread to total assets of a bank. Following factors are considered to

calculate spread. (i) Interest earn as percent of total assets, (ii) Interest expenditure as percent of

total assets. (iii) Spread as percent of total assets.

BURDEN RATIOS: Burden ratios are calculated as difference of non interest expenditure and

non interest income. Following points are taken into consideration during calculation of burden

ratios. (i) Non interest expenditure, (ii) Noninterest income (iii) Difference between a. and b. as

burden.

PROFITABILITY RATIOS: for calculating the profitability ratios following points are taken

into consideration, (i) Operating profits as percentage of total assets, (ii) Net profits as percent of

total assets.

PERFORMANCE INDICES: for analyzing the performance of nationalized banks eights

profitability ratios are calculated.

Average ratio for the bank concern

Index = ----------------------------------------------------

Average ratio for the aggregate of all banks


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CALCULATING GROWTH RATES: It's common to calculate period growth rates for

historical figures. For calculating growth from a single start time and a single end time it's

sufficient. In other words, if we have a value for revenue in Year 1 and a revenue figure for Year

10 and we aren't concerned about the years between we would set up the spreadsheet shown

below, given that the formula is:

CAGR: =((End Value/Start Value)^(1/(Periods - 1)) -1

Year 1 110.06

Year 10 260.83

=((B3/B2)^(1/9))-1 ==> 10.06%

COEFFICIENT OF VARIATION

In probability theory and statistics, the coefficient of variation (CV) is a normalized measure of

dispersion of a probability distribution. It is also known as unitized risk or the variation

coefficient. The absolute value of the CV is sometimes known as relative standard deviation

(RSD), which is expressed as a %. CV should not be used interchangeably with RSD (i.e. one

term should be used consistently)

The coefficient of variation (CV) is defined as the ratio of the standard deviation to the mean

:

Which is the inverse of the signal-to-noise ratio? It shows the extent of variability in relation to

mean of the population.


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The coefficient of variation should be computed only for data measured on a ratio scale, which are measurements that can only take

non-negative values. The coefficient of variation may not have any meaning for data on an interval scale. For example, most

temperature scales are interval scales (e.g. Celsius, Fahrenheit etc.), they can take both positive and negative values. The Kelvin scale

has an absolute null value, and no negative values can naturally occur. Hence, the Kelvin scale is a ratio scale. While the standard

deviation (SD) can be derived on both the Kelvin and the Celsius scale (with both leading to the same SDs), the CV is only relevant as

a measure of relative variability for the Kelvin scale. Often, laboratory values that are measured based on chromatographic methods

are log-normally distributed. In this case, the CV would be constant over a large range of measurements, while SDs would vary

depending on typical values that are being measured.

On the basis of these studies following tables, graphs and conclusion were drawn.

FINANCIAL ANALYSIS AND DISCUSSION

The study seeks to assess the relative performance of the Andhra bank in various years, with respect to the above mentioned

indicators. The relevant information is shown in bellow tables.

INTEREST EARNED BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 1

BANK YEAR CAGR MEAN S.D C.V

2006 2007 2008 2009 2010

ANDHRABANK

2,675.12

3,315.33

4,209.56

5,374.62

6,372.87

24.23614

4389.5

1343.84

0.306149


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2675.12

3315.33

4209.56

5374.62

6372.87

2006

2007

2008

2009

2010

INTEREST EARNED

FIGURE: 01

INTERPRETATION: INTEREST EARN: The above table shows the interest earn by the various public sector banks, and

calculated all years of Mean and CAGR. If we observe above table and diagram interest earning is increasing when compare from

2006 to 2010

EXPENDITURE BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 02


2006 2007 2008 2009 2010

ANDHRABANK

1,506.15

1,897.79

2,870.00

3,747.71

4,178.13

29.05607

2839.956

1027.847

0.361923


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1506.15

1897.79

2870

3747.71

4178.13

2006

2007

2008

2009

2010

EXPENDITURE

FIGURE: 02

INTERPRETATION: EXPENDITURE: The above table shows the Expenditure by Andhra bank the various years. Above table

shows expenditure in different years when we study the above table in 2006 Andhra bank expenditure is Rs. 1506.15 and 2010

expenditure is 4178.13, we can understand through that data it is growing very fast.

SPREAD SHARE IN PUBLIC SECTOR MARKET BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 03


2006 2007 2008 2009 2010

ANDHRA

BANK

1,168.97

1,417.54

1,339.56

1,626.91

2,194.74

17.05634

1549.544

354.5753

0.228826


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1168.97

1417.54

1339.56

1626.61

2194.74

2006

2007

2008

2009

2010

SPREAD SHARE IN PUBLIC SECTOR MARKET

FIGURE: 03

INTERPRETATION: Spread: The below table shows the spread share in public sector market in India by Andhra bank. Here we can

understand Andhra bank has spread share in public sector market, in 2006 it market share is 1168.97 and 2010 market share is 2194.94

when we compare with all public sector banks in india.

BURDON BY THE ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 04


2006 2007 2008 2009 2010

683.47

Formatted: Centered


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ANDHRABANK 879.64 763.99 973.86 1,148.89 13.86487 889.97 162.9092 0.18305

683.47

879.64

763.99

973.86

1148.89

2006

2007

2008

2009

2010

BURDON IN INTEREST RATE

FIGURE: 04

INTERPRETATION: BURDON: the above table shows the BURDON by Andhra bank in the various years.

1. Andhra Bank is having highest interest earn share in 2010 when we compare with public sector market followed by above

table.

2. GROWTH RATE of Andhra bank is higher when we compare from 2006 to 2010.

3. Above table is showing maximum consistency in term of Burdon in 2008.

NON INTEREST EXPENDITURE BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 05


2006 2007 2008 2009 2010


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ANDHRABANK 1,147.85 1,466.02 1,409.25 1,756.09 2,154.85 17.05312 1586.812 343.5488 0.216503

1147.85

1466.02

1409.25

1756.09

2154.85

2006

2007

2008

2009

2010

NON INTEREST EXPENDITURE

FIGURE: 05

INTERPRETATION: NON INTEREST EXPENDITURE: The above table shows the non interest expenditure by the various

public sector banks. In public sector banks if we observe Andhra bank non interest expenditure from 2006 to 2010, is decreased in

2008 but it is increased slowly Andhra Bank is having highest Non interest expenditure share in public sector market in 2010

PROFIT BEFORE PROVISION/ TOTAL ASSETS BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 06


2006 2007 2008 2009 2010


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ANDHRABANK 1.9 2.3 2 2.1 2.3 17.05312 1586.812 343.5488 0.216503

1.9

2.32 2.1

2.3

0

0.5

1

1.5

2

2.5

2006 2007 2008 2009 2010

PROFIT BEFORE PROVISION/ TOTAL ASSETS

PROFIT BEFORE PROVISION/ TOTAL ASSETS

FIGURE: 06

INTERPRETATION: PROFIT BEFORE PROVISIONS / TOTAL ASSETS (%): the above table shows the Profit before

Provisions / Total Assets (%) by the Andhra bank. Andhra bank is having highest Profit before Provisions / Total Assets (%) share in

public sector market in 2007 and 2010.

NET PROFIT/TOTAL ASSETS ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 07


2006 2007 2008 2009 2010


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ANDHRABANK

1.3

1.2

1.1

1

1.3

0

1.18

0.116619

0.09883

1.31.2

1.11

1.3

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2006 2007 2008 2009 2010

NET PROFIT/TOTAL ASSETS

NET PROFIT/TOTAL ASSETS

FIGURE: 07

INTERPRETATION: Net Profit / Total funds (%): The above table shows the Net Profit / Total funds (%) by the various public

sector banks. Andhra Bank is having highest Net Profit / Total funds (%) share in 2007 and 2010.

OTHER INCOME / TOTAL INCOME (%) BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 08


2006 2007 2008 2009 2010


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ANDHRABANK

14.8

15

13.3

12.7

13.6

-2.09175

13.88

0.884081

0.063695

2006, 14.8

2007, 15

2008, 13.32009, 12.7 2010, 13.6

11.5

12

12.5

13

13.5

14

14.5

15

15.5

2006 2007 2008 2009 2010

OTHER INCOME / TOTAL INCOME %

FIGURE: 08

INTERPRETATION: other income / total income (%): the above table shows the Other Income / Total Income (%) by Andhra

banks. Andhra bank was showing maximum consistency in term of other income / total income (%), When we study above table from

2006 to 2010.

TOTAL ASSETS BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 09


2006 2007 2008 2009 2010


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ANDHRA

BANK

40,673.27

47,557.90

56,624.34

68,529.21

90,430.81

22.11017

60763.11

17524.8

0.288412

40673.27

47557.9

56624.34

68529.21

90430.81

2006

2007

2008

2009

2010

TOTAL ASSETS

FIGURE: 09

INTERPRETATION: Total assets: the above table shows the Total assets by the various public sector banks. If we see above table,

Andhra bank total assets are increasing, in 2006 bank total assets value is Rs. 40673.27 and 2010 total assets value is 90430.81

TOTAL LIABILITIES BY THE ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 10


2006 2007 2008 2009 2010


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ANDHRA

BANK

40,673.27

47,557.90

56,624.34

68,529.21

90,430.81

22.11017

60763.11

17524.8

0.288412

40673.27

47557.9

56624.34

68529.21

90430.81

2006

2007

2008

2009

2010

TOTAL LIABILITIES

FIGURE: 10

INTERPRETATION: Total liabilities: the above table shows the Total liabilities by the various public sector banks. If we observe

above table Andhra bank liabilities share in public sector bank is increasing when we compare from 2006 to 2010

SPREAD AS PERCENT OF TOTAL FUND BY ANDHRA BANK DURING THE PERIOD (2006-2010)

TABLE: 11


2006 2007 2008 2009 2010


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ANDHRA

BANK

3.2

3.8

2.6

2.6

2.7

-4.15853

2.98

0.466476

0.156536

2006, 3.2

2007, 3.8

2008, 2.6 2009, 2.6 2010, 2.7

0

0.5

1

1.5

2

2.5

3

3.5

4

2006 2007 2008 2009 2010

SPREAD AS PERCENTAGE OF TOTAL FUND

FIGURE: 11

INTERPRETATION: Spread as percent of total fund: the above table shows the spread as percent of total fund by the various public

sector banks. The conclusions drawn are as follows, Andhra bank funds are spread in public sector banks in India in 2007 percentage

is 3.8 and 2006 percentage is 3.2.

LIMITATIONS

There are some limitations were faced during the analysis period they are as follows:


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1. As growth rate are calculated on max and min value of the extreme years its value become zero if there are no change between

the values.

2. Different website contains different values of the same year hence reference is taken from single website.

3. Ratios are calculated approximate values hence there is not 100% reliability.


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CONCLUSION

As per the analysis performed it has been found that the ratios like interest earn ,total expenditure

, net profit to total funds have recorded a downfall leading to decrease in the profitability while

decrease in the ratios interest expenditure leading to increase the Burdon ratios. Hence this leads

to increase in the profitability indices. The bank has to re-orient their strategies in the light of

their own strengths and the kind of market in which they are likely to operate on. In the

perspective of this domestic and international development, the banking sector has to chart out a

perfect path for the development in its own.

REFERENCES

1. Amandeep. 1991, Profit and Profitability of Indian Nationalized Banks, Ph.D. Thesis, Punjab

University, Chandigarh.

2. Janki, B. 2002.Unleashing employ productivity; A need for a paradigm shift.Indian Banking

association bulletin, XXIV (3): 7-9.

3. Justin.Paul&Padmalatha Suresh.2006. Management of Banking and Financial Services, New

Delhi, Pearson Education

4. Luther, J.C.1976. Report of JC Luther, Committee on Productivity, Efficiency & Profitability

in Commercial banks, Bombay 1976.

5. MilindSathya .2005. Privatization, Performance, and Efficiency: A study of Indian

Banks.Vikalpa,( 1):23-28.

6. Mukherjee, A, Nath, P & Pal, MN .2002. Performance Benchmarking and Strategic

Homogeneity of Indian Banks. International Journal of Bank Marketing,20 (3):122-139.

7. Pal Ved& Malik N.S .2007.A Multivariate Analysis of the financial characteristics of

Commercial Banks in India.The Icfai Journal of Bank Management .VI (3).

8. Ramanathan Ramakrishnan.2007.Performance of Banks in Countries of the Gulf Cooperation

Council. International Journal of Productivity and Performance Management, 56(2): 137-

154.

9. Swamy, B.N.A.2001, New Competition, Deregulation and Emerging Changes in Indian

Banking. Bank Quest The Journal of Indian Institute of Bankers, 729(3): 3-22.

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