banking project v

8/8/2019 Banking Project V

1/19

On Tue, Aug 3, 2010 at 11:39 AM, Jags wrote:

Key Financial Ratios of UCO Bank ------------------- in Rs. Cr. -------------------

Mar

'06Mar '07 Mar '08 Mar '09 Mar '10

Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share -- 1.00 1.00 1.00 1.50

Operating Profit Per Share (Rs) 4.73 3.65 3.08 12.04 17.01

Net Operating Profit Per Share (Rs) 55.06 66.77 85.98 159.93 182.05

Free Reserves Per Share (Rs) 9.07 10.56 13.00 22.63 32.56

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Interest Spread 3.05 3.14 3.29 3.43 3.72

Adjusted Cash Margin(%) 6.96 5.96 6.72 7.01 10.44

Net Profit Margin 4.29 5.68 5.75 6.10 9.72

Return on Long Term Fund(%) 154.91178.02 220.99 203.74 178.21

Return on Net Worth(%) 9.89 14.29 16.58 19.95 28.02

Adjusted Return on Net Worth(%) 13.87 12.25 16.58 19.95 28.02

Return on Assets Excluding Revaluations 0.32 0.42 0.46 50.88 65.74

Return on Assets Including Revaluations 0.32 0.42 0.46 59.29 73.91

Management Efficiency Ratios

Interest Income / Total Funds 7.61 7.86 8.39 8.76 8.06


2/19

Net Interest Income / Total Funds 2.79 2.52 2.26 2.30 2.26

Non Interest Income / Total Funds 0.30 0.32 0.36 0.35 0.32

Interest Expended / Total Funds 4.82 5.34 6.13 6.46 5.81

Operating Expense / Total Funds 2.13 2.10 1.96 1.64 1.50

Profit Before Provisions / Total Funds 0.88 0.66 0.57 0.93 1.02

Net Profit / Total Funds 0.34 0.47 0.50 0.56 0.82

Loans Turnover 0.14 0.13 0.13 0.14 0.13

Total Income / Capital Employed(%) 7.91 8.18 8.75 9.11 8.39

Interest Expended / Capital Employed(%) 4.82 5.34 6.13 6.46 5.81

Total Assets Turnover Ratios 0.08 0.08 0.08 0.09 0.08

Asset Turnover Ratio 4.46 4.78 5.67 6.56 7.14

Profit And Loss Account Ratios

Interest Expended / Interest Earned 64.04 68.13 77.14 79.75 75.60

Other Income / Total Income 3.81 3.93 4.07 3.83 3.86

Operating Expense / Total Income 26.97 25.60 22.42 18.04 17.92

Selling Distribution Cost Composition 0.19 0.23 0.16 0.21 0.18

Balance Sheet Ratios

Capital Adequacy Ratio 11.12 11.56 10.09 11.93 13.21

Advances / Loans Funds(%) 70.75 76.27 73.96 74.82 71.44

Debt Coverage Ratios

Credit Deposit Ratio 62.52 70.66 70.51 68.78 67.96

Investment Deposit Ratio 37.21 32.80 30.24 29.78 32.75

Cash Deposit Ratio 4.82 4.88 6.56 6.82 6.21

Total Debt to Owners Fund 27.45 29.33 32.16 36.11 34.21

Financial Charges Coverage Ratio 1.20 1.14 1.11 1.16 1.19


3/19

Financial Charges Coverage Ratio Post Tax 1.09 1.10 1.10 1.10 1.15

Leverage Ratios

Current Ratio 0.02 0.02 0.02 0.02 0.02

Quick Ratio 11.57 10.72 11.91 14.25 26.89

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit -- 28.83 22.69 12.63 14.68

Dividend Payout Ratio Cash Profit -- 24.19 19.40 10.98 13.68

Earning Retention Ratio 100.0066.37 77.31 87.37 85.32

Cash Earning Retention Ratio 100.0072.52 80.60 89.02 86.32

AdjustedCash Flow Times 171.12195.61 165.80 156.29 112.69

Mar

'06Mar '07 Mar '08 Mar '09 Mar '10

Earnings Per Share 2.46 3.95 5.16 10.15 18.42

Book Value 24.86 27.66 31.08 50.88 65.74

Please go through it and complete ur work and submit it on Wednesday evening which is last date. After

that no individual submissions will be accepted.

Regards,

Jagat Nagar


4/19

Previous Years

Balance Sheet of UCO Bank ------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 799.36 799.36 799.36 1,249.36 1,699.3

Equity Share Capital 799.36 799.36 799.36 549.36 549.36

Share Application Money 0.00 0.00 0.00 0.00 0.00

Preference Share Capital 0.00 0.00 0.00 700.00 1,150.0

Reserves 1,187.77 1,411.88 1,685.17 2,245.71 3,062.1

Revaluation Reserves 475.40 450.84 441.79 461.98 449.06

Net Worth 2,462.53 2,662.08 2,926.32 3,957.05 5,210.5

Deposits 54,543.73 64,860.01 79,908.94 100,221.57 122,415

Borrowings 1,352.79 2,465.86 1,715.95 2,062.42 6,263.8

Total Debt 55,896.52 67,325.87 81,624.89 102,283.99 128,679

Other Liabilities & Provisions 3,480.35 4,875.94 5,243.73 5,423.14 3,429.5

Total Liabilities 61,839.40 74,863.89 89,794.94 111,664.18 137,319



Assets


5/19

Cash & Balances with RBI 2,032.15 3,794.27 5,702.72 6,588.85 7,242.7

Balance with Banks, Money at Call 1,311.08 2,420.26 2,400.80 4,264.59 861.60

Advances 37,377.58 46,988.91 55,081.89 68,803.86 82,504.

Investments 19,636.31 19,524.87 24,249.63 29,384.78 43,521.

Gross Block 987.36 1,115.89 1,211.73 1,339.17 1,401.2

Accumulated Depreciation 378.92 449.19 527.39 620.59 691.40

Net Block 608.44 666.70 684.34 718.58 709.85

Capital Work In Progress 0.00 0.00 0.00 0.28 0.18

Other Assets 873.84 1,468.88 1,675.55 1,903.22 2,479.1

Total Assets 61,839.40 74,863.89 89,794.93 111,664.16 137,319

Contingent Liabilities 12,849.20 17,499.93 24,507.59 45,276.80 31,810.

Bills for collection 5,076.31 3,704.70 5,894.71 6,031.97 8,321.8

Book Value (Rs) 24.86 27.66 31.08 50.88 65.74

Previous Years

Profit & Loss account of UCO Bank ------------------- in Rs. Cr. -------------------



Income

Interest Earned 4,354.59 5,317.84 6,508.56 8,121.38 9,526.32


6/19

Other Income 463.73 550.43 772.13 1,019.89 965.93

Total Income 4,818.32 5,868.27 7,280.69 9,141.27 10,492.2

Expenditure

Interest expended 2,788.84 3,623.16 5,020.81 6,476.68 7,202.20

Employee Cost 879.94 833.13 894.54 997.54 1,057.62

Selling and Admin Expenses 325.30 454.93 561.89 489.48 612.22

Depreciation 43.03 60.56 69.87 83.61 74.19

Miscellaneous Expenses 584.56 580.40 321.41 536.25 533.85

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Operating Expenses 1,358.64 1,482.82 1,675.99 1,731.40 1,938.23

Provisions & Contingencies 474.19 446.20 171.72 375.48 339.65

Total Expenses 4,621.67 5,552.18 6,868.52 8,583.56 9,480.08



Net Profit for the Year 196.65 316.10 412.16 557.72 1,012.19

Extraordionary Items 0.00 0.00 0.00 0.00 0.00

Profit brought forward 153.26 286.12 405.27 600.23 804.80

Total 349.91 602.22 817.43 1,157.95 1,816.99

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 0.00 79.94 79.94 60.22 127.03

Corporate Dividend Tax 0.00 11.21 13.59 10.23 21.59


7/19

Per share data (annualised)

Earning Per Share (Rs) 2.46 3.95 5.16 10.15 18.42

Equity Dividend (%) 0.00 10.00 10.00 10.00 15.00

Book Value (Rs) 24.86 27.66 31.08 50.88 65.74

Appropriations

Transfer to Statutory Reserves 59.74 105.80 123.67 282.69 318.26

Transfer to Other Reserves 4.06 0.00 -0.01 0.00 1.13

Proposed Dividend/Transfer to Govt 0.00 91.15 93.53 70.45 148.62

Balance c/f to Balance Sheet 286.12 405.27 600.23 804.80 1,348.98

Total 349.92 602.22 817.42 1,157.94 1,816.99

Previous Years

Cash Flow of UCO Bank ------------------- in Rs. Cr. -------------------

Mar '06 Mar '07 Mar '08 Mar '09 Mar '

12 mths 12 mths 12 mths 12 mths 12 mt

Net Profit Before Tax 212.57 358.50 470.02 570.35 1049.

Net Cash From Operating Activities -3819.05 2415.01 2038.00 2500.57 -4061

Net Cash (used in)/from

Investing Activities-28.90 -66.34 -74.23 -59.65 -44.40

Net Cash (used in)/from Financing

Activities671.37 533.06 -39.99 235.21 1406.


8/19

Net (decrease)/increase In Cash and Cash

Equivalents-3171.12 2871.31 1888.99 2749.92 -2749

Opening Cash & Cash Equivalents 6514.35 3343.23 6214.53 8103.52 10853

Closing Cash & Cash Equivalents 3343.23 6214.53 8103.52 10853.45 8104.


9/19

Capital Adequacy Ratio

Mar'06 Mar'07 Mar'08 Mar'09 Mar'10

11.12 11.56 10.09 11.93 13.21

Interpretation:

Capital adequacy ratio (CAR) is a ratio of a bank's capital to its risk. National

regulators track a bank's CAR to ensure that it can absorb a reasonable amount of

loss and are complying with their statutory Capital requirements. The formula for

Capital Adequacy Ratio is, (Tier 1 Capital + Tier 2 Capital)/Risk WeightedAssets.Capital adequacy ratio is the ratio which determines the capacity of the

bank in terms of meeting the time liabilities and other risks such as credit risk,

operational risk, etc. In the most simple formulation, a bank's capital is the

"cushion" for potential losses, which protects the bank's depositors or other

lenders. Here , incase of UCO Bank we can see that its CAR showed a sudden dip

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10/19

in the year 2008 but after that it has shown a steady rise for the next 2 years

which is a good sign for its depositors and investors.

Debt-Equity Ratio

Mar

'06

Mar

'07

Mar

'08

Mar '09 Mar '10

69.93 84.22 102.11 186.19 234.24

0.00

50.00

100.00

150.00

200.00

250.00



11/19

Interpretation:

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion

of shareholders' equity and debt used to finance a company's assets. Here, in case

of UCO Bank we can see that the Debt-Equity ratio has increased over the years.

This is because its equity capital showed no growth from the year 2006 to 2008

and it decreased by around Rs250 crore in 2009 and remained the same for the

year 2010. But its debt capital has shown a steady increase over the past 5 years.

From this we can infer that since UCO Bank is a public sector undertaking it

depends much more on debt capital ruther than equity capital.

Advances to Assets

Mar

'06

Mar

'07

Mar

'08

Mar '09 Mar '10

0.60 0.63 0.61 0.62 0.60


12/19

Interpretation:

Advances to Assets is also a good indicator of a firms Capital Adequacy. A high

ratio of Advances to Assets would mean that the chances of Non Preforming

Assets formation are also high which is not a good scenario for a bank. This would

mean the credibility of its assets would go down. In case of UCO Bank we can see

that it is able to maintain a pretty steady ratio of its Advances to Assets whichmeans the credibility of its assets is good.

0.59

0.59

0.60

0.60

0.61

0.61

0.62

0.62

0.63

0.63



13/19

Government Securities to Total Investments

Mar

'06

Mar

'07

Mar

'08

Mar

'09

Mar

'10

0.81 0.83 0.83 0.86 0.86

Interpretation:

The ratio of Government Securities to Total investments shows how safe are the

companys investments. Here, in case of UCO Bank we can see that its ratio of

investments in Government Securities to Total Investments is very high and it has

remained quite steady over the years with minimal fluctuations. The high ratio

tells that UCO Banks investment policy is conservative and their investments are

safe.

0.79

0.80

0.81

0.82

0.83

0.84

0.85

0.86

0.87



14/19

Return on Equity (ROE)

Mar

'06

Mar

'07

Mar

'08

Mar

'09

Mar

'10

0.25 0.40 0.52 1.02 1.84

Interpretation:

Return on equity (ROE) measures the rate of return on the ownership interest

(shareholders' equity) of the common stock owners. It measures a firm's

efficiency at generating profits from every unit of shareholders' equity (also

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0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00



15/19

known as net assets or assets minus liabilities). ROE shows how well a company

uses investment funds to generate earnings growth. The formula for ROE is

Net Income/ Average Total Equity. UCO Banks ROE has always shown a growth

over the past 5 years and it has grown at a very fast rate from the year 2008 to

2009 and from the year 2009 to 2010. This is because in the last 5 years its equity

share capital has never increased, rather it decreased from Rs799.36 crore to

Rs549.36 crore from the year 2008 to 2009. On the other hand its Net Income has

always increased over the past 5 years and the jump from 2009 to 2010 was very

high. The high growth in ROE from 2008 to 2009 is not only because its Net

Income increased but also because its Equity Share Capital decreased but the high

growth from 2009 to 2010 is due to the fact that its Net Income almost doubled in

this period.

Return on Assets (ROA)

Mar

'06

Mar

'07

Mar

'08

Mar

'09

Mar '10

0.0032 0.0042 0.0046 0.0050 0.0074


16/19

Interpretation:

The formula for Return on Assets (ROA) is Net Income/ Average Total Assets. It

shows how profitable a companys assets are in generating revenue.The number

tells you what the company can do with what it has, i.e. how many rupees of

earnings it derives from each rupee of assets it controls. In case of UCO Bank we

can see that its ROA has increased over the years, especially from the year 2009

to 2010. This is because though its Total Assets has increased over the years, its

Net Income has also increased accordingly and at a faster rate. The cause for the

big jump in the ROA from the year 2009 to 2010 is due the fact that its Net

Income almost doubled in this time from Rs557.72 crore to Rs1,012.19 crore the

change in its Total Assets during this period was Rs111,664.16 crore to

Rs137,319.47 crore. With the increase in ROA we can conclude that UCO Bank is

utilizing its assets well for generating revenue.

Equity Multiplier

0.0000

0.0010

0.0020

0.0030

0.0040

0.0050

0.0060

0.0070

0.0080



17/19

Mar

'06

Mar

'07

Mar

'08

Mar

'09

Mar

'10

77.36 93.65 112.33 203.26 249.96

Interpretation:

The formula for Equity Multiplier is Total Assets/Total Equity. It is a measure of

the banks financial leverage. A higher leverage works in the banks favour when

the by boosting the ROE when the earnings are positive. But it is a double-edged

sword because when the bank records negative earnings the fall in ROE is greater.

Here, in case of UCO Bank we can see that its Equity Multiplier has shown a

steady growth from the year 2006 to 2010. If we observe more closely we can

also see that the jump from 2008 to 2009 is very high. So, it can be concluded thatthe risk in UCO Banks equity has gradually increased over the years as the

chances of fluctuations in its ROE has increased.

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18/19

The DuPont Analysis

The DuPont formula, also known as the strategic profit model, is a common way

to break down ROE into three important components. Essentially, ROE will equal

the net margin multiplied by asset turnover multiplied by financial leverage.

Splitting return on equity into three parts makes it easier to understand changes

in ROE over time. For example, if the net margin increases, every sale brings in

more money, resulting in a higher overall ROE. Similarly, if the asset turnover

increases, the firm generates more sales for every unit of assets owned, again

resulting in a higher overall ROE. Finally, increasing financial leverage means that

the firm uses more debt financing relative to equity financing. Interest payments

to creditors are tax deductible, but dividend payments to shareholders are not.

Thus, a higher proportion of debt in the firm's capital structure leads to higher

ROE. Financial leverage benefits diminish as the risk of defaulting on interest

payments increases. So if the firm takes on too much debt, the cost of debt rises

as creditors demand a higher risk premium, and ROE decreases. Increased debt

will make a positive contribution to a firm's ROE only if the matching Return on

assets (ROA) of that debt exceeds the interest rate on the debt.

The DuPont formula is :

The DuPont Analysis of UCO Bank is as follows:

Year Net

Income/Revenue

i.e. Asset

Utilization

A

Revenue/Total

Assets i.e.

Margin

B

Total

Assets/Average

Shareholder

Equity i.e.

Equity

Multiplier

C

AxBxC

i.e.Return on

Equity(ROE)

2006 .041 .078 77.36 .25

2007 .054 .078 93.65 .40

2008 .057 .081 112.33 .52


19/19

2009 .061 .082 203.26 1.02

2010 .096 .076 249.96 1.84

In case of UCO Bank we can see that its Asset Utilization has shown a steady

increase over the 5 years, especially in the last year i.e. 2010 there was a big jump

due to the fact that its Net Income almost doubled in this year. So, we can infer

that the Asset Utilization of UCO Bank is on the right track over the past % years.

The Revenue to Total Assets ratio i.e. the margin grew steadily from 2006 to 2009,

but in the year 2010 it dropped by .006 which is a bad sign for the bank. The

Equity multiplier grew steadily from 2006 to 2008, then there was a huge jump as

the Equity Capital of UCO Bank decreased by Rs250 crore and its Total Assets also

increased by around Rs21869.23 crore. It aslo grew in the year 2010. In 2010,while calculating ROE, though the margin for the bank decreased it was more

than compensated by the increase in the Asset Utilization by the bank. So, we can

see that the ROE of UCO Bank has always increased over the years for the last 5

years though its margin dropped in the year 2010.

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