fa project icici

8/8/2019 Fa Project Icici

1/33

PROJECT REPORTON

FINANCIAL ANALYSISOF

ICICI

Bank

Submitted by: Submitted

to:Yogesh Goyal Dr.Ritesh Srivastva

Purti Tiwari

Akhil Shrivastav

Nancy Bhandari

Shams Shabat

Bhibu Parsad


2/33

Definition Of Bank:-

Banking Means "Accepting Deposits for the purpose of lending or

Investment of deposits of money from the public, repayable ondemand or otherwise and withdraw by cheque, draft or otherwise."

-Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD BANK:-

The origin of the word bank is shrouded in mystery. According toone view point the Italian business house carrying on crude fromof banking were called banchi bancheri" According to another

viewpoint banking is derived from German word "Branck" whichmean heap or mound. In England, the issue of paper money by thegovernment was referred to as a raising a bank.

Banking system in India:-

Without a sound and effective banking system in India itcannot have a healthy economy. The banking system ofIndia should not only be hassle free but it should be able tomeet new challenges posed by the technology and anyother external and internal factors.For the past three decades India's banking system hasseveral outstanding achievements to its credit. The moststriking is its extensive reach. It is no longer confined toonly metropolitans or cosmopolitans in India. In fact,

Indian banking system has reached even to the remotecorners of the country. This is one of the main reasons ofIndia's growth process.


3/33

INTRODUCTION OF ICICI BANK:-

ICICI Bank is India's second-largest

bank with total assets of Rs. 3,634.00 billion (US$ 81billion) at March 31, 2010 and profit after tax Rs. 40.25billion (US$ 896 million) for the year ended March 31,2010. The Bank has a network of 2,016 branches and about5,219 ATMs in India and presence in 18 countries. ICICIBank offers a wide range of banking products and financialservices to corporate and retail customers through a variety

of delivery channels and through its specializedsubsidiaries in the areas of investment banking, life andnon-life insurance, venture capital and asset management.The Bank currently has subsidiaries in the UnitedKingdom, Russia and Canada, branches in United States,Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar andDubai International Finance Centre and representativeoffices in United Arab Emirates, China, South Africa,

Bangladesh, Thailand, Malaysia and Indonesia. Our UKsubsidiary has established branches in Belgium andGermany. There are more than 35000 employees working& head office is in Mumbai.

ICICI Bank's equity shares are listed in India onBombay Stock Exchange and the National Stock Exchange

of India Limited and its American Depositary Receipts(ADRs) are listed on the New York Stock Exchange(NYSE).ICICI Bank is one of the Big Four Banks of India withState Bank of India, Axis Bankand HDFC Bank.
http://en.wikipedia.org/wiki/Big_four_bankshttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Big_four_bankshttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Axis_Bankhttp://en.wikipedia.org/wiki/HDFC_Bank


4/33

HISTORY:-

In 1955, The Industrial Credit andInvestment Corporation of India Limited (ICICI) wasincorporated at the initiative of World Bank, theGovernment of India and representatives of Indian industry,with the objective of creating a development financialinstitution for providing medium-term and long-term project financing to Indian businesses. In 1994, ICICIestablished Banking Corporation as a banking subsidiary.

Formerly known as Industrial Credit and InvestmentCorporation of India, ICICI Banking Corporation was laterrenamed as 'ICICI Bank Limited'.Mr.A.Ramaswami Mudaliar elected as the first Chairmanof ICICI Limited.ICICI Bank Board appoints Mr K. V. Kamath as non-executive Chairman and Ms Chanda Kochharas Managing

Director & CEO effective May 1, 2009.

ICICI Bank


5/33

Type Public(BSE: 532174,NYSE:IBN)

IndustryBanking

Financial services

Founded 1955

Headquarters Mumbai,Maharashtra, India

Key people

K.V. Kamath

(Chairman)

Chanda Kochhar

(MD&CEO)

N. S. Kannan

(CFO)

Products

Investment BankingCommercial Banking

Retail Banking

Private Banking

Asset Management

Mortgages

Credit Cards

Revenue 59,599.77 crore (US$ 12.93 billion)

(2009)[1]

Operating income 6,578.64 crore (US$1.43 billion)

(2010)[1]

Profit 4,843.41 crore (US$1.05 billion)

(2010)[1]

Total assets US$ 100.10 billion (2010)[2]

Employees 35,000+ (2009)

Website ICICIBank.com

Products & Services:-

Personal Banking:
http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=532174http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/quickquote.html?ticker=ibnhttp://www.nyse.com/about/listed/quickquote.html?ticker=ibnhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Financial_servicehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/CFOhttp://en.wikipedia.org/wiki/CFOhttp://en.wikipedia.org/wiki/CFOhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Investment_Bankinghttp://en.wikipedia.org/wiki/Commercial_Bankinghttp://en.wikipedia.org/wiki/Retail_Bankinghttp://en.wikipedia.org/wiki/Private_Bankinghttp://en.wikipedia.org/wiki/Asset_Managementhttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-iciciprulife1-1%23cite_note-iciciprulife1-1http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.icicibank.com/http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Public_companyhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/stockreach/stockreach.htm?scripcd=532174http://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://www.nyse.com/about/listed/quickquote.html?ticker=ibnhttp://en.wikipedia.org/wiki/Industryhttp://en.wikipedia.org/wiki/Bankinghttp://en.wikipedia.org/wiki/Financial_servicehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/K.V._Kamathhttp://en.wikipedia.org/wiki/Chairmanhttp://en.wikipedia.org/wiki/Chanda_Kochharhttp://en.wikipedia.org/wiki/Managing_Directorhttp://en.wikipedia.org/wiki/CEOhttp://en.wikipedia.org/wiki/CFOhttp://en.wikipedia.org/wiki/Product_(business)http://en.wikipedia.org/wiki/Investment_Bankinghttp://en.wikipedia.org/wiki/Commercial_Bankinghttp://en.wikipedia.org/wiki/Retail_Bankinghttp://en.wikipedia.org/wiki/Private_Bankinghttp://en.wikipedia.org/wiki/Asset_Managementhttp://en.wikipedia.org/wiki/Mortgageshttp://en.wikipedia.org/wiki/Credit_Cardhttp://en.wikipedia.org/wiki/Revenuehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Earnings_before_interest_and_taxeshttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/United_States_dollarhttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-financialtables-0%23cite_note-financialtables-0http://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/ICICI_Bank#cite_note-iciciprulife1-1%23cite_note-iciciprulife1-1http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Websitehttp://www.icicibank.com/


6/33

Deposits Loans Cards Investments Insurance Demat Services Wealth Management

NRI Banking:

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

Business Banking:

Corporate Net Banking

Cash Management

Trade Services FX Online

SME Services

Online Taxes

Custodial Services

PRODUCT:

ICICI Bank offers wide variety ofDeposit Products to suit your requirements. Coupled


7/33

with convenience of networked branches/ ATMs andfacility of E-channels like Internet and MobileBanking, ICICI Bank brings banking at your doorstep.

Select any of its deposit products and provide yourdetails online and their representative will contact youfor Account Opening.

SAVING ACCOUNTS:

ICICI Bank offers customers a power packedSavings Account with a host of convenient

features and banking channels to transactthrough. So now customers can bank at theirconvenience, without the stress of waiting in

queues.

LIFE PLUS Senior citizens savingsaccount:

LIFE PLUS, a special savings accountfor senior citizens from ICICI Bank ispacked with a host of benefits, designedkeeping your unique financial

requirements in mind.

Young Stars Account:


8/33

Young Stars is a banking service forchildren, aged 1day -18 years, brought to you by ICICI Bank to

help the parents meet the present andfuture aspirations that they hold for their child.

Advantage woman savings account:

The ICICI Bank Advantage WomanAccount enables todays independentwomen to enjoy hassle-free banking

services. Besides the core ICICI Bankadvantage, the Advantage Woman Savings Account ispacked with special benefits for our women customers.

Current Accounts:

Every business requires efficient banking facilities tosupport its business activities. A Current Account is one

that is required by Businessman, Joint stock companies, Institutions, Public authorities, publiccorporations etc.

Allows running account supporting unlimitedwithdrawals and deposits.

Is meant for convenience and not to save money.

Fixed deposits:


9/33

Fixed deposits are options which helpyou grow your money thus creatingwealth in a safer and secure way.

ICICI provides a Fixed Depositthat allows customers to deposit

their money for just as long as you wish.

Recurring Deposits:

ICICI BankRecurring Deposits are an ideal way to invest

small amounts of money every month and end up with alarge kitty on maturity.

LOANS:-

HOME LOAN:

ICICI Home Finance will not onlyfinance the balance amount of outstandingloan but also your prepayment charges tothe old housing finance company.

PERSONAL LOANS:

ICICI Bank Personal Loans are easy to get

and absolutely hassle free. With minimumdocumentation you can now secure a loanfor an amount up to Rs.15 lakh.

CAR LOAN:


10/33

The NO. 1 financier for car loans in thecountry. Network of more than 1500channel partners in over 780 locations.

Tie-ups with all leading automobilemanufacturers to ensure the best deals.

FARM EQUIPMENT LOANS:

ICICI is the preferred financier for

almost all leading tractor manufacturers in the country.

ICICI finances farm equipments inover 381 locations spread across the

country.

CREDIT CARDS:

ICICI Bank Credit Cards give you thefacility of cash, convenience and a rangeof benefits, anywhere in the world. Thesebenefits range from life time free cards,

Insurance benefits, global emergency assistance service,discounts, utility payments, travel discounts and muchmore.

DEBIT CARDS:


11/33

The ICICI Bank Debit Card is arevolutionary form of cash that allowscustomers to access their bank account

around the clock, around the world. TheICICI Bank Debit Card can be used for shopping at morethan 100,000 merchants in India and 13 million merchantsworldwide.

INVESTMENTS:-

ICICI Bank cares about allneeds. Along

with Deposit products and Loan offerings, ICICI Bankassists people to manage their finances by providingvarious investment options ranging from ICICI BankTax Saving Bonds to Equity Investments through InitialPublic Offers and Investment in Pure Gold. ICICI Bank

facilitates following investment products:

ICICI Bank Tax Saving Bonds

Government of India Bonds

Investment in Mutual Funds

Initial Public Offers by Corporate

Investment in "Pure Gold"

Foreign Exchange Services

Senior Citizens Savings Scheme, 2004

Customers can invest in above products through any ofICICI bank branches. For select products ICICI Bank also


12/33

provides the ease of investing through electronic channelslike ATMs and Internet (ICICIdirect.com)

All ICICI Bank Bonds have been rated "AAA" by CAREand "LAAA" by ICRA indicating the highest degree ofsafety for your money.Investment in ICICI Bank Bonds are eligible for tax rebateunder Sec 88 to the full extent possible.

Meaning Of Financial Statements:-

Financial statements refer to such statements whichcontains financial information about an enterprise. Theyreport profitability and the financial position of the businessat the end of accounting period. The team financialstatement includes at least two statements which theaccountant prepares at the end of an accounting period. Thetwo statements are: -

The Balance Sheet

Profit And Loss Account

Meaning Of Financial Analysis:-

The term financial analysis is also known as analysis andinterpretation of financial statements refers to the

process of determining financial strength and weakness ofthe firm by establishing strategic relationship between theitems of the Balance Sheet, Profit and Loss account andother operative data.


13/33

Features of Financial Analysis:

o To present a complex data contained in the financial

statement in simple and understandable form.

o To classify the items contained in the financial

statement in convenient and rational groups.

Operating results data:-


14/33

The following table sets forth, for the periods indicated, theoperating results data.

Rs. in billion, except percentages

Fiscal 2009 Fiscal 2010 %change

Interest income Rs. 310.93 Rs. 257.07 (17.3)

Interest expense 227.26 175.93 (22.6)

Net interest income 83.67 81.14 (3.0)

Non-interest income 76.03 74.78 (1.6)

- Fee income1 65.24 56.50 (13.4)

- Treasury income 4.43 11.81 166.6

- Lease income 2.33 1.57 (32.6)- Others 4.03 4.90 21.6

Operating income 159.70 155.92 (2.4)

Operating expenses 63.06 55.93 (11.3)

DMA expense2 5.29 1.25 (76.4)

Lease depreciation 2.10 1.42 (32.4)

Operating profit 89.25 97.32 9.0

Provisions, net of write 38.08 43.87 15.2Backs

Profit before tax 51.17 53.45 4.5

Tax, net of deferred tax 13.59 13.20 2.9

Profit after tax Rs. 37.58 Rs. 40.25 7.1

Interpretation:-

The net profit increased by 7.1% in 2009-10.this may

be due to decline in operating expenses, DMAexpenses and lease deprecation. Decrease tax liabilityin the year 2009-10.


15/33

Financial Condition :-The following table sets forth, for the periods indicated, thesummarised balance sheet.

Rs. in billion, exceptpercentages

March 31,2009 March 31,2010 % change

Assets:Cash, balances with RBI and other banks and Statutory LiquidityRatio (SLR) investments Rs. 933.53 Rs. 1,072.77 14.9

Cash and balanceswith RBI and banks 299.66 388.73 29.7

SLR investments 633.87 684.04 7.9

Advances 2,183.11 1,812.06 (17.0)Debentures, bonds andother investments 396.71 524.89 32.3Fixed assets (including leased assets) 38.02 32.13 (15.5)Other assets 241.64 192.15 (20.5)

Total Assets Rs. 3,793.01 Rs. 3,634.00 (4.2)

Liabilities:Equity capital and reserves Rs. 495.33 Rs. 516.18 4.2

Equity capital 11.13 11.15 0.2

Reserves 484.20 505.03 4.3Deposits 2,183.48 2,020.17 (7.5)

Savings deposits 410.36 532.18 29.7 Current deposits 216.32 309.98 43.3 Term deposits 1,556.80 1,178.01 (24.3)Preference capital 3.50 3.50 Borrowings 673.24 609.47 9.5

Domestic 138.56 140.21 1.2 Overseas 534.68 469.26 12.2Subordinated debt 2254.82 329.67 29.4

Domestic 237.66 314.47 32.3 Overseas 17.16 15.20 (11.4)Other liabilities 182.64 155.01 (15.1)

Total liabilities Rs. 3,793.01 Rs. 3,634.00 (4.2)


16/33

SCHEDULE:-

Balance SheetAt march 31,2010 (Rs. in 000s)Schedule At

At31.03.2010

31.03.2009CAPITAL AND LIABILITIES

Capital 1 11,148,892 11,132,898Reserves and surplus 2 505,034,767 484,197,292

Deposits 3 2,020,165,972 2,183,478,249Borrowings 4 942,635,686 931,554,542Other liabilities and provisions 5 155,011,834 182,646,642TOTAL CAPITAL AND LIABILITIES 3,633,997,151 3,793,009,623

ASSETS

Cash and balances withReserve Bank of India 6 275,142,920 175,363,342Balances with banks and moneyat call and short notice 7 113,594,020 124,302,296

Investments 8 1,208,928,005 1,030,583,080Advances 9 1,812,055,971 2,183,108,492Fixed assets 10 32,126,899 38,016,209Other assets 11 192,149,336 241,636,204TOTAL ASSETS 3,633,997,151 3,793,009,623Contingent liabilities 12 7,270,840,587 8,346,830,027Bills for collection 64,749,539 60,004,383

Interpretation:-

The capital of bank increased by 0.14% in 2009-10. In 2009-10 deposits decrease by 8.5% this shows that

the bank has repaid its deposits in this year.

Increase in borrowings shows the dependence onoutside debt.


17/33

The investments are also increasing.

Profit and Loss Accountfor the year ended March 31, 2010 (Rs. in000s)

schedule Year ended Year ended 31.03.2010 31.03.2009I. INCOME

Interest earned 13 257,069,331 310,925,484Other income 14 74,776,500 76,037,271TOTAL INCOME 331,845,831 386,962,755

II. EXPENDITUREInterest expended 15 175,925,704227,259,343

Operating expenses 16 58,598,327 70,451,137Provisions and contingencies 17 57,071,971 51,670,943TOTAL EXPENDITURE 291,596,002 349,381,423

III. PROFIT/LOSS

Net profit for the year 40,249,829 37,581,332Profit brought forward 28,096,510 24,363,159TOTAL PROFIT/(LOSS) 68,346,339 61,944,491

IV. APPROPRIATIONS/TRANSFERS

Transfer to Statutory Reserve 10,070,000 9,400,000Transfer to Reserve Fund 2,170 4,221Transfer to Capital Reserve 4,440,000 8,180,000Transfer to Investment Reserve Account 1,160,000 Transfer to General Reserve 10,369 Transfer to Special Reserve 3,000,000 2,500,000Dividend (including corporate dividend tax)for the previous year paid during the year 929 5,811

Proposed equity share dividend 13,378,604 12,245,771Proposed preference share dividend 35 35Corporate dividend tax 1,640,425 1,512,143Balance carried over to balance sheet 34,643,807 28,096,510TOTAL 68,346,339 61,944,491

Significant accounting policies and notes to accounts 18 & 19


18/33

Earnings per share (Refer note 19.4)

Basic (Rs) 36.14 33.76Diluted (Rs.) 35.99 33.70Face value per share (Rs.) 10.00 10.00

CASH-FLOW STATEMENT:-A cash flow statement is a statement showing inflows(receipts) and outflows (payments) of cash during aparticular period. In other words, it is a summary of sourcesand applications of each during a particular span of time.

Cash Flow Statementfor the year ended March 31, 2010 (Rs. in 000s)PARTICULARS Year Ended Year Ended

31.03.2010 31.03.2009Cash flow from operating activities

Net profit before taxes 53,453,218 51,169,693Adjustments for:

Depreciation and amortization 7,550,323 8,576,435Net (appreciation)/depreciation on investment

6,242,75513,371,083

Provision in respect of non-performing assets (including prudentialprovision on standard assets) 43,621,629 37,500,259Provision for contingencies & others 273,494 (395,005)Income from subsidiaries, joint ventures andConsolidated entities (3,933,959) (3,636,999)(Profit)/loss on sale of fixed assets (1,345,173) (175,113)

105,862,287 106,410,353

Adjustments for:

(Increase)/decrease in investments (243,844,179) 26,560,241

(Increase)/decrease in advances 327,300,630 34,618,121Increase/(decrease) in borrowings (17,220,942) 32,785,480Increase/(decrease) in deposits (163,312,277) (260,832,253)(Increase)/decrease in other assets 54,586,538 (33,283,816)Increase/(decrease) in other liabilities (28,694,588)(32,683,319)


19/33

(71,184,818)

(232,835,546)Refund/(payment)of direct tax(15,985,360) (15,459,704)Net cash generated fromoperating activities (A)18,692,109 (141,884,897)

Cash flow from investing activitiesInvestments in subsidiaries and/or joint ventures(including application money) (1,113,156)(42,016,414)

Income from subsidiaries,joint ventures and consolidated entities 3,933,9593,636,999

Purchase of fixed assets (5,101,617)(10,568,742)

Proceeds from sale of fixed assets 3,164,763667,236

(Purchase)/sale of held to securities 60,623,37586,859,726

Net cash generated frominvesting activities (B)61,507,324 38,578,805Cash flow from financing activitiesProceeds from issue of share capital (including ESOPs) net ofissueexpenses 610,429452,464

Net proceeds/(repayment) of bonds 26,946,78029,492,463

Dividend and dividend tax paid (13,731,041)(13,691,338)

Net cash generatedfrom financing activities (C) 13,826,16816,253,589

Effect of exchange fluctuation on


20/33

translation reserve (D)(4,954,299) 6,306,853Net increase/(decrease) in cash andcash equivalents (A)+(B)+(C)+(D)89,071,302 (80,745,650)Cash and cash equivalents atApril 1299,665,638 380,411,288Cash and cash equivalents atMarch 31388,736,940 299,665,638

Ratio Analysis:-

Meaning :

Absolute figures expressed in financial statements bythemselves are meaningfulness. These figures often do notconvey much meaning unless expressed in relation to otherfigures. Thus, it can be say that the relationship betweentwo figures, expressed in arithmetical terms is called a ratio

TYPES OF RATIOS:

Proportion or Pure Ratio or Simple ratio.

Rate or so many Times.

Percentage

Fraction.

Classification of Ratio:

Liquidity Ratios Long-term

Solvency and

Leverage Ratios

Activity Ratios Profitability

Ratios

-Current Ratio Financial Inventory In Relation to


21/33

-Liquid Ratio(Acid) Test orQuick Ratio.-Absolute liquidor-Cash Ratio.-DebtorsTurnover Ratio-CreditorsTurnoverRatio-InventoryTurnover ratio

Operating

Composite

-Debt. EquityRatio-Debt to TotalCapital Ratio-InterestCoverage Ratio-Capital GearingRatio

Turnover Ratio.DebtorsTurnover RatioFixed AssetsTurnover RatioTotal AssetTurnover RatioWorking CapitalTurnover Ratio.PayablesTurnover RatioCapitalEmployed

Turnover Ratio

Sales.Gross ProfitRatio.Operating Ratio.Operating ProfitRatio.

Net Profit Ratio.Expenses RatioIn relation to

investments

Return onInvestments.Return on capital.

Return on EquityCapital.Return on totalResourcesEarning per share.Price EarningRatio.

CURRENT RATIO:

An indication of a company's ability to meet short-termdebt obligations; the higher the ratio, the more liquid thecompany is. Current ratio is equal to current assets dividedby current liabilities. If the current assets of a company aremore than twice the current liabilities, then that company is

generally considered to have good short-term financialstrength. If current liabilities exceed current assets, then thecompany may have problems meeting its short-termobligations.


22/33

CURRENT RATIO = CURRENT ASSETS / CURRENTLIABILITYCurrent liabilities=saving deposit+ current deposit+other liabilitiesYEAR CURRENT ASSET CURRENT LIABILITY CURRENT RATIO (Rs. In 000s) (Rs. In 000s)

2009 541301842 809326642 0.67

2010 580886276 997171834 0.58

Interpretation:

An ideal current ratio is 2. The ratio of 2 is considered as asafe margin of solvency due to the fact that if current assetsare reduced to half (i.e.) 1 instead of 2, then also thecreditors will be able to get their payments in full.But herethe current ratio is less than 2 which shows that the bankhave current assets less than current liabilities which is notsatisfactory as the safety margin is very less.

LIQUID RATIO:

Liquid ratio is also known as Quick or Acid TestRatio. Liquid assets refer to assets which are quicklyconvertible into cash. Current Assets other than stock andprepaid expenses are considered as quick assets.

Quick Ratio = Total Quick Assets

Total Current Liabilities

Quick Assets = Total Current Assets Inventory


23/33

YEAR QUICK ASSET CURRENT LIABILITY QUICK RATIO (Rs. In 000s) (Rs. In 000s)

2009 299665638 809326642 0.37

2010 388736940 997171834 0.39

Interpretation:

A quick ratio of 1:1 is considered favorable because forevery rupee of current liability, there is at least one rupee ofliquid assets. A higher value of ratio is consideredfavorable. Here this ratio is less than 1 in 2009 & 2010.This means the bank has not managed its funds properly inthis particular period.

EARNING PER SHARE:

The earning per share of the company helps in determiningthe market price of the equity shares of the company. Acomparison of earning per share of the company with

another will also help in deciding whether the equity sharecapital is being effectively used or not. It also helps inestimating the companys capacity to pay dividend to itsequity shareholders.

Earning Per Equity Share = Net Profit after Tax Prefrence Dividend


24/33

No. of Equity shares

YEAR NET INCOME AVAILABLE NO. OF EQUITY EPS

FOR SHAREHOLDER SHARE

(Rs. In 000s) (Rs. In 000s)

2009 37581332 1113289 33.75

2010 40249829 1114889 36.10

Interpretation:

Earning Per Share is the most commonly used data whichreflects the performance and prospects of the company. Itaffects the market price of shares.Here the Earning Per Share shows a persistent increase in2010 because of increase in profits.

DIVIDEND PER SHARE :-

It is expressed by dividing dividend paid to equityshareholders by no. of equity shares. This shows the pershare dividend given to equity shareholders. It is veryhelpful for potential investors to know the dividend paying

capacity of the company. It affects the market value of thecompany.

Dividend Per Share = Dividend Paid To Equity Shareholders


25/33

No. Of Equity Shares

YEAR DIVIDEND PAID TO NO. OF EQUITY DPS

SHAREHOLDER SHARE(Rs. In 000s) (Rs. In 000s)

2009 12245800 1113289 11.00

2010 13378600 1114889 12.00

Interpretation:-

Here the Dividend Per Share is increasing in 2010 year.The dividend per share ratio of the bank is quitesatisfactory which shows the bank has a good dividendpaying capacity.

NET PROFIT RATIO:-

This ratio helps in determining the efficiency with whichaffairs of the business are being managed. An increase inthe ratio over the previous period indicates improvement inthe operational efficiency of the business. The ratio is thuson effective measure to check the profitability of business.

This ratio indicates the Net margin on a sale of Rs.100. It iscalculated as follows:

Net Profit Ratio = Net Profit X 100


26/33

Net Sales

YEAR NET PROFIT SALES NET PROFIT RATIO (Rs. In 000s) (Rs. In 000s) (in %)

2009 37581332 310925484 12.08

2010 40249829 257069331 15.65

Interpretation:

In 2010 the sales declined and net profit increased so theNet Profit Ratio of the bank is more than previous year2009. It is good sign for bank to grow up in banking sector.

OPERATING PROFIT RATIO:-

The difference between net profit ratio and net operatingprofit ratio is that net operating profit is calculated withoutconsidering non-operating expenses and non-operatingincomes. If we deduct this ratio from 100,the result will beoperating ratio. Higher operating profit ratio enable the

organization to recoup non-operating expenses out ofoperating profits and provide reasonable return.

Operating Profit Ratio = Operating Profit X100

Net Sales


27/33

YEAR OPERATING PROFIT SALES OPERATING PROFIT

RATIO (Rs. In 000s) (Rs. In 000s) (in %)

2009 89251332 310925484 28.702010 97329829 257069331 37.86

Interpretation:

In the year 2009 & 2010 the operating profit ratio is28.70% & 37.86% respectively. It shows that operating

profit ratio of 2010 is more than year 2009. So operatingexpenses have been decreased in 2010 more as compared toprevious year.

RETURN ON NET WORTH:-

It measures the profitability of the business in view of theshareholders. It judges the earning capacity of the companyand the adequacy of return on proprietors funds.Shareholders and potential investors are interested in thisratio.RETURN ON NET WORTH= NET PROFIT X 100

SHAREHOLDERS FUND

YEAR NET PROFIT SHAREHOLDERS FUND RETURN ON NET WORTH (Rs. In 000s) (Rs. In 000s) (in %)

2009 37581332 495332457 7.58

2010 40249829 516189331 7.79


28/33

Interpretation:

The net profit after interest and tax have increased in 2010

followed by 2009 because of less operating expenses andtaxation liability. Consequently the net worth ratio hasincreased in 2010.

RETURN ON CAPITAL EMPLOYED:-

It establishes relationship between profit before interest andtax and capital employed. It indicates the percentage ofreturn on the total capital employed in the business. Thisratio is also known as Return On Investment. It measuresthe overall efficiency and profitability of the business inrelation to investment made in business. It also shows howefficiently the resources are used in the business.

Comparison of one unit with that of the other or performance in one year with that of the same unit ispossible.It is calculated as below:ROI= NET PROFIT BEFORE INTEREST AND TAX X 100


29/33

CAPITAL EMPLOYED

YEAR NET PROFIT BEFORE INT.& TAX CAPITAL EMPLOYED

ROI

(Rs. In 000s) (Rs. In 000s) (in %)

2009 51171332 335725484 15.24

2010 53459829 330569331 16.17

Interpretation:

The above table exhibit the return on capital employed ratio

of the bank for last two years.. The ratio was 15.24% inyear 2009. After that it raised to the tune of 16.17% in year2010. It lead to the conclusion bank rising but very littleproportion of return on capital employed.

DEBT- EQUITY RATIO:-

The Debt-Equity ratio is calculated to find out the long-

term financial position of the firm. This ratio indicates therelationship between long-term debts and shareholdersfunds. The soundness of long-term financial policies of afirm can be determined with the help of this ratio.It helps to assess the soundness of long-term financialpolicies of a business. It also helps to determine the relativestakes of outsiders and shareholders. Long-term creditors

can assess the security of their funds in a business. Itindicates to what extent a firm depends upon lenders tomeet its long-term financial requirements. A low Debt-Equity ratio is considered better from the point of view ofcreditors.


30/33

YEAR DEBT EQUITY DEBT-EQUITY

RATIO (Rs. In 000s) (Rs. In 000s)

2009 3298581332 495335484 6.65

2010 3118249829 516189331 6.04

Interpretation:The ratio shows the extent to which funds have beenprovided by long-term creditors as compared to the fundsprovided by the owners. Here the Debt-Equity ratio for theabove period is always high. This shows that the bank is

more relying on outside funds as compared to internalsources of capital, in its capital structure. From the long-term lenders point of view this ratio is not satisfactory.

PROPRIETORY RATIO:-

It is also called shareholders equity to total equity ratio or

net worth to total assets ratio or equity ratio. It comparesthe shareholders funds to total assets. It is calculated bydividing shareholders funds by total assets.

Proprietory Ratio = Shareholders Fund

Total Assets

YEAR SHAREHOLDER FUND ASEETS PROPRIETORY


2009 495331332 3793015484 0.13

2010 516189829 3634069331 0.14


31/33

Interpretation:

Above table exhibits the proprietary ratio of the bank forlast two years . It was 13% and 14 in the year 2009 and2010 respectively. Hence it leads to the conclusion ownershave less than 14% stake in the total assets of the bank. It isnot a good sign as far the long term solvency is concerned.

FIXED ASSETS TURNOVER RATIO:-

It is also called as Sales to Fixed Assets Ratio. It measures

the efficient use of fixed assets. This ratio is a measure ofefficient use of fixed assets. It is calculated as:Fixed Assets Turnover Ratio = Cost of goods sold or Sales

Net Fixed Assets

It measures the efficiency and profit earning capacity ofthe business. Higher the ratio, greater is the intensiveutilization of fixed assets and a lower ratio shows under

utilization of the fixed assets. This ratio has a specialimportance for manufacturing concerns where investmentin fixed assets, is very high and the profitability issignificantly dependent on the utilization of these assets.

YEAR SALES FIXED ASSET FIXED ASSET TURNOVER


32/33


2009 310925482 38022548 8.17

2010 257069331 32136931 8.00

Interpretation:Here the fixed assets employed in the business shows adecreasing in the year 2010.This may be due to decrease insales in year 2010. Fixed asset turnover ratio indicates thatfixed assets have been effectively used in the business

without much additional investment in the period of studyand also the capital is not blocked in fixed assets.

Conclusion

On the basis of various techniques applied for the financial

analysis of ICICI Bank we can arrive at a conclusion thatthe financial position and overall performance of the bankis satisfactory. Though the income of the bank hasincreased over the period but not in the same pace as ofexpenses. But the bank has succeeded in maintaining areasonable profitability position.The bank has succeeded in increasing its share capital alsowhich has increased around 50% in the last 5 years.

Individuals are the major shareholders. The majorachievement of the bank has been a tremendous increase inits deposits, which has always been its main objective.


33/33

Fixed and current deposits have also shown an increasingtrend.Equity shareholders are also enjoying an increasing trend in

the return on their capital. Though current assets andliabilities (current liquidity) of the bank is not sosatisfactory but bank has succeeded in maintaining a stablesolvency position over the years. As far as the ratio ofexternal and internal equity is concerned, it is clear thatbank has been using more amount of external equity in theform of loans and borrowings than owners equity. Banks

investments are also showing an increasing trend. Due toincrease in advances, the interest received by the bank fromsuch advances is proving to be the major source of incomefor the bank.

fa project icici

Documents