Sbi and Icici

SRMSCET

A RESEARCH project REPORT

ON

A COMPARETIVE ANALYSIS OF SBI AND ICICISession:2014-2015

Submitted for the partial fulfillment of the requirement for the award of degree Of MASTER OF BUSINESS ADMINISTRATION

SUBMITTED TO:

Gautam BuddhTechnical University, LucknowSubmitted to:Dr.Ritesh Agarwal

SUBMITTTED BY:SHAYRA KHATUNMBA IV SEM

Certificate

This is to certify that Ms.ShayraKhatun, a student of MBA IV Semester has completed her Research Project Report titledA comparative analysis of financial performance of SBI AND ICICIassigned by MBA Department and under my supervision.

It is further certified that she has personally prepared this report that is the result of her personal survey/observation. It is of the standard expected to MBA student and hence recommended for evaluation.

Signature of the Supervisor (Dr.RiteshAgarwal )

ACKNOWLEDGEMENTSomeone has rightly said, No one can live in isolation. It is true that everyindividual needs the help of others in every work he does.No task is single mans effort. Any job in this world however trivial ortough cannot be accomplished without the assistance of others. Anassignment puts the knowledge and experience of an individual to litmus test. There is always a sense of gratitude that one likes it express towards thepersons who helped to change an effort in a success. The opportunity toexpress my indebtedness to people who have helped me to accomplish thistask.First of all I would like to express my gratitude to Head of Department and my faculty Ms. RichaMurti who guided me with her knowledge and skill and helped me in successful completion of the work.I thank my institute who has given me an opportunity to show my skills. I also thank my nearer and dearer ones without whose support this project would not been possible.I extent my sincere gratitude towards my parents, who have always encouraged me and gave suggestions. They always stand by me. Their support has always motivated me.

DECLARATION

I Manpreet Kaurstudent of SRMSWCET Bareilly has completed my Dissertation Report at Bareilly, my project title is A comparative analysis of financial performance of SBI AND ICICI. All the work is original and has been done during my research.

PREFACESomeone rightly said that practical experience is for better and closer to the real world then mere theoretical exposure. The research work constitutes the back bone of any management education programme. A management student has to do research work quite frequently during his entire span. This report is helpful to enhance the knowledge in analyzing the financial performance of the Banks. The report on the financial performance helped me to find out the various techniques used to evaluate the financial results of the banking financial statements. The report is a analysis of its true financial results and it is helpful tool for the understanding the evaluation techniques. The research work is titled A comparative analysis of financial performance of Bank of Baroda and HDFC Bank.

CHAPTER-1INTRODUCTION & SCOPE1.1:-Introduction:-

After preparation of the financial statements, one may be interested in knowing the position of an enterprise from different points of view. This can be done by analyzing the financial statement with the help of different tools of analysis such as ratio analysis, funds flow analysis, cash flow analysis, comparative statement analysis, etc. Here I have done financial analysis through ratios. In this process, a meaningful relationship is established between two or more accounting figures for comparison Financial ratios are widely used for modeling purposes both by practitioners and researchers. The firm involves many interested parties, like the owners, management, personnel, customers, suppliers, competitors, regulatory agencies, and academics, each having their views in applying financial statement analysis in their evaluations. Practitioners use financial ratios, for instance, to forecast the future success of companies, while the researchers' main interest has been to develop models exploiting these ratios. Many distinct areas of research involving financial ratios can be discerned. Historically one can observe several major themes in the financial analysis literature. There is overlapping in the observable themes, and they do not necessarily coincide with what theoretically might be the best founded areas. Before understanding the meaning of analysis of financial statements, it is necessary to understand the meaning of analysis and financial statements. Analysis means establishing a meaningful relationship between various items of the two financial statements with each other in such a way that a conclusion is drawn. By financial statements, we mean two statements- (1) profit & loss a/c (2) balance sheet. These are prepared at the end of a given period of time. They are indicators of profitability and financial soundness of the business concern Financial statements are those statements which provide information about profitability and financial position of a business. It includes two statements, i.e., profit & loss a/c or income statement and balance sheet or position statement. The income statement presents the summary of the income earned and the expenses incurred during a financial year. Position statement presents the financial position of the business at the end of the year. .Thus, analysis of financial statements means establishing meaningful relationship between various items of the two financial statements, i.e., income statement and position statement

Parties interested in analysis of financial statements:-Analysis of financial statement has become very significant due to widespread interest of various parties in the financial result of a business unit. The various persons interested in the analysis of financial statements are:- Short- term creditors:-They are interested in knowing whether the amounts owing to them will be paid as and when fall due for payment or not. Long term creditors:-They are interested in knowing whether the principal amount and interest thereon will be paid on time or not. Shareholders:-They are interested in profitability, return and capital appreciation. Management:-The management is interested in the financial position and performance of the enterprise as a whole and of its various divisions. Trade unions:-They are interested in financial statements for negotiating the wages or salaries or bonus agreement with management. Taxation authorities:-These authorities are interested in financial statements for determining the tax liability. Researchers :-They are interested in the financial statements in undertaking research in business affairs and practices. Employees:-They are interested as it enables them to justify their demands for bonus and increase in remuneration. Thus we see that different parties are interested in the results reported in the financial statements. These results are reported by analyzing financial statements through the use of ratio analysis.1.2 Scope of the study:-This study contains a wide scope in measuring financial analysis of two banks, of which one bank is private bank and second bank is public bank.SBI is a public bank and ICICI is a private bank. By this study I shall be able to measure the financial performance of both the banks in terms of their profitability. I shall be use different ratio analysis to find out the financial performance and viability of the study.1.3 Objectives:-Analysis of financial statements is an attempt to assess the efficiency and performance of an enterprise. For that there are some objectives which are described as under. 1. To analyze the deposit performance of SBI and ICICI bank:-This objective is defined to understand the deposit performance of both the banks and compare it. This objective in my research process would be achieved by interpretation of secondary data. 2. To analyze the lending function of SBI and ICICI:- This objective is defined the lending function of both the banks and the differences in loan procedures of both the banks.3. To analyze the profitability segment of SBI and ICICI bank:- This objective is defined the earning capacity of both the banks. It also helps in knowing the capacity to pay the interest and dividend. It should be calculated with the help of ratio analysis, by which comparison of profitability and financial soundness can be made between one industry and another. 4. To compare the total financial performance of SBI and ICICI bank:- This objective is defined with the help of different ratio analysis. This objective defines the overall financial performance of both the banks. Ratio analysis discloses the position of business with different viewpoint. It discloses the position of business with liquidity viewpoint, solvency view point, profitability viewpoint, etc. with the help of such a study, we can draw conclusion regarding the financial health of business enterprise.

CHAPTER-2LITERATURE REVIEW2.1:-State bank of India:-

State bank of India is a type of public bank with (BSE, NSE, SBI) & (LSE: SBID). It was founded as bank of Calcutta in 1806 in Calcutta. The headquarter is situated in corporate centre, madam came road, Mumbai 400021 India. The key people is MR. Pratip Chaudheri who is a chairman of state bank of India.State Bank of India (SBI) (LSE: SBID) is the largest bank in India. It is also, measured by the number of branch offices and employees, the second largest bank in the world. The bank traces its ancestry back through the Imperial Bank of India to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the Government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network in India and overseas, including products aimed at NRIs. With an asset base of $126 billion and its reach, it is a regional banking behemoth. SBI has laid emphasis on reducing the huge manpower through Golden handshake schemes and computerizing its operations. The State Bank Group, with over 16000 branches, has the largest branch network in India. It has a market share among Indian commercial banks of about 20% in deposits and advances International presence.

As of December 31, 2009, the bank had 157 overseas offices spread over 32 countries. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Tehran, Johannesburg, London, Los Angeles, and Male in the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. It also has an ADB in Boston, USA.SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India (Mauritius).In 1982, the bank established a subsidiary, State Bank of India (California), which now has ten branches nine branches in the state of California and one in Washington, D.C. The 10th branch was opened in Fremont, California on 28 March 2011. The other eight branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego, Tustin and Bakersfield.The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches, four in the Toronto area and three in British Columbia.In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now has five branches in Nigeria.In Nepal, SBI owns 55% of Nepal SBI Bank, which has branches throughout the country. In Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex.The State Bank of India already has a branch in Shanghai and plans to open one in Tianjin In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for US$8 million in October 2005..The State Bank of India (with 74% of the total capital) along with the largest global banking groupBNP Paribas (with 26% of the remaining capital) headquartered in Parisformed a joint venture which established India's most reputed and trusted life insurance company named SBI Life Insurance company Ltd. in March 2001.As of March 2011, it had assets of US$370 billion with over 13,000 outlets including 150 overseas branches and agents globally. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into the other two presidency banksBank of Calcutta and Bank of Bombayto form the Imperial Bank of India, which in turn became the State Bank of India. The Government of India nationalized the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the government took over the stake held by the Reserve Bank of India. SBI is ranked #292 globally in Fortune Global 500 list in 2011. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at non-resident Indians (NRIs). The State Bank Group, with over 16,000 branches, has the largest banking branch network in India. SBI has 14 local head offices situated at Chandigarh, Delhi, Luck now, Patna, Kolkata, Guwahati (North East Circle), Bhubaneswar, Hyderabad, Chennai, Trivandrum, Bangalore, Mumbai, Bhopal & Ahmadabad and 57 Zonal Offices that are located at important cities throughout the country. It also has around 130 branches overseas.SBI is a regional banking behemoth and is one of the largest financial institutions in the world. It has a market share among Indian commercial banks of about 20% in deposits and loans. The State Bank of India is the 29th most reputed company in the world according to Forbes. Also, SBI is the only bank featured in the coveted "top 10 brands of India" list in an annual survey conducted by Brand Finance and The Economic Times in 2010.The State Bank of India is the largest of the Big Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bankits main competitors.The government of India is the largest shareholder in SBI. The bank has 52 branches, agencies or offices in 32 countries. It has branches of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs, Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in Bhutan and Cape Town. SBI operates several foreign subsidiaries or affiliates. In 1990 it established an offshore bank, State Bank of India (Mauritius). It has two subsidiaries in North America, State Bank of India (California), and State Bank of India (Canada). In 1982, the bank established its California subsidiary, which now has seven branches. The Canadian subsidiary was also established in 1982 and also has seven branches, four in the greater Toronto area, and three in British Columbia. In Nigeria, it operates as INMB Bank. This bank was established in 1981 as the Indo-Nigerian Merchant Bank and received permission in 2002 to commence retail banking. It now has five branches in Nigeria. In Nepal SBI owns 50% of Nepal SBI Bank, which has branches throughout the country. In Moscow SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In Indonesia it owns 76% of PT Bank Indo Monex. State Bank of India already has a branch in Shanghai and plans to open one up in Tianjin. Board of directors:-1. Pratip Chaudhuri (Chairman)2. Hemant G. Contractor (Managing Director)3. Diwakar Gupta (Managing Director)4. A Krishna Kumar (Managing Director)5. Dileep C Choksi (Director)6. S. Venkatachalam (Director)7. D. Sundaram (Director)8. Parthasarathy Iyengar (Director)9. G. D. Nadaf (Officer Employee Director)10. Rashpal Malhotra (Director)11. D. K. Mittal (Director)12. Subir V. Gokarn (Director)

2.2:- Industrial Credit & Investment Corporation of India (ICICI):-ICICI was formed in 1955 at the initiative of the World Bank, the government of India and Indian industry representatives. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. Until the late 1980s, ICICI primarily focused its activities on project finance, providing long-term funds to a variety of industrial projects. With the liberalization of the financial sector in India in the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services provider that, along with its subsidiaries and other group companies, offered a wide variety of products and services. As Indias economy became more market-oriented and integrated with the world economy, ICICI capitalized on the new opportunities to provide a wider range of financial products and services to a broader spectrum of clients. ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Banks initial equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the merger of SCICI into ICICI, ICICI Bank became a wholly-owned subsidiary of ICICI. ICICIs holding in ICICI Bank reduced due to additional capital rising by ICICI Bank and sale of shares by ICICI, pursuant to the requirement stipulated by the Reserve Bank of India that ICICI dilute its ownership of ICICI Bank. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an old private sector bank, in an all-stock merger. The issue of universal banking, which in the Indian context means the conversion of long-term lending institutions such as ICICI into commercial banks, had been discussed at length over the past several years. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and offer a wider range of products and services, and greater opportunities for earning non-fund based income in the form of banking fees andcommissions. ICICI Bank also considered various strategic alternatives in the context of the emerging competitive scenario in the Indian banking industry. ICICI Bank identified a large capital base and size and scale of operations as key success factors in the Indian banking industry. In view of the benefits of transformation into a bank and the Reserve Bank of Indias pronouncements on universal banking, ICICI and ICICI Bank decided to merge.ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. BOARD OF DIRECTORS:-1.N. Vaghul, Chairman

2. Sridar Iyengar

3. L. N. Mittal

4. Narendra Murkumbi

5. Anupam Puri

6. Arun Ramanathan

7. M. K. Sharma

8. P. M. Sinha

9. Marti G. Subrahmanyam

10. T. S. Vijayan

11. V. Prem Watsa

12. K. V. Kamath, Managing Director

CHAPTER-3RESEARCH DESIGN3.1-Introduction: - Research is defined as human activity based on intellectual application in the investigation of matter. The primary aim for applied research is discovering, interpreting, and the development of methods and the system for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. The term "research design" refers to how a researcher puts a research study together to answer a question or a set of questions. Research design works as a systematic plan outlining the study, the researchers' methods of compilation, details on how the study will arrive at its conclusions and the limitations of the research. Research design is not limited to a particular type of research and may incorporate both quantitative and qualitative analysis. When defining research design to an audience, there are a few things one will need to make clear, while avoiding the use of scientific terms that may lose your audience.3.2: Types of research:-There are four main types of researches. Such as: Qualitative, Quantitative, Pragmatic (mixed) and Advocacy/participatory research.1) Qualitative Research: - Qualitative research is the approach usually associated with the social constructivist paradigm which emphasizes the socially constructed nature of reality. It is about recording, analyzing and attempting to uncover the deeper meaning and significance of human behavior and experience, including contradictory beliefs, behaviors and emotions. Researchers are interested in gaining a rich and complex understanding of peoples experience and not in obtaining information which can be generalized to other larger groups.2) Quantitative Research: - Quantitative research is generally associated with the positivist/post positivist paradigm. It usually involves collecting and converting data into numerical form so that statistical calculations can be made and conclusions drawn.3) Pragmatic Research (mixed research): -The pragmatic approach to science involves using the method which appears best suited to the research problem and not getting caught up in philosophical debates about which is the best approach. Pragmatic researchers therefore grant themselves the freedom to use any of the methods, techniques and procedures typically associated with quantitative or qualitative research. They recognize that every method has its limitations and that the different approaches can be complementary. They may also use different techniques at the same time or one after the other. For example, they might start with face-to-face interviews with several people or have a focus group and then use the findings to construct a questionnaire to measure attitudes in a large scale sample with the aim of carrying out statistical analysis. Depending on which measures have been used, the data collected is analyzed in the appropriate manner. However, it is sometimes possible to transform qualitative data into quantitative data and vice versa although transforming quantitative data into qualitative data is not very common. 4) Advocacy/participatory research: - To some degree, researchers adopting an advocacy/participatory approach feel that the approaches to research described so far do not respond to the needs or situation of people from marginalized or vulnerable groups. As they aim to bring about positive change in the lives of the research subjects, their approach is sometimes described as emancipator. It is not a neutral stance. The researchers are likely to have a political agenda and to try to give the groups they are studying a voice. As they want their research to directly or indirectly result in some kind of reform, it is important that they involve the group being studied in the research, preferably at all stages, so as to avoid further marginalizing them. The researchers may adopt a less neutral position than that which is usually required in scientific research. This might involve interacting informally or even living amongst the research participants (who are sometimes referred to as co-researchers in recognition that the study is not simply about them but also by them). The findings of the research might be reported in more personal terms, often using the precise words of the research participants. Whilst this type of research could by criticized for not being objective, it should be noted that for some groups of people or for certain situations, it is necessary as otherwise the thoughts, feelings or behavior of the various members of the group could not be accessed or fully understood3.3: Types of data: - There are two types of data. Such as:1) Primary Data:-Primary data are data that has not been previously published, i.e. the data is derived from a new or original research study and collected at the source, e.g., in marketing, it isinformation that is obtained directly from first-hand sources by means of surveys, observation or experimentation. Primary research entails the use of immediate data in determining the survival of the market. The popular ways to collect primary data consist of surveys, interviews and focus groups, which shows that direct relationship between potential customers and the companies. Primary data is more accommodating as it shows latest information. Primary data are accumulated by the researcher particularly to meet up the research objective of the subsisting project.2) Secondary Data: - These are sources containing data that have been collected and compiled for another purpose. The secondary sources consist of readily available compendia and already compiled statistical statements and reports whose data may be used by researches for their studies.Secondary sources consist of not only published records and reports, but also unpublished records. The latter category includes various records and registers maintained by firms and organizations, e.g., accounting and financial records, personnel records, register of members, minutes of meetings, inventory records, etc. Features of Secondary Sources: Though secondary sources are diverse and consist of all sorts of materials, they have certain common characteristics. First, they are readymade and readily available, and do not require the trouble of constructing tools and administering them. Others shape both the form and the content of secondary sources. Finally, secondary sources are not limited in time and space. That is, the researcher using them need not have been present when and where they were gathered. But in this research work I have used only Secondary data.3.4- Research Tool: The data required for the study have been collected from annual reports of respective banks, journals and reports on trends, and websites of respective banks.3.5:Mode of data collection: In my research report I have used only secondary data and for which I took help of balance sheet of the respective banks

CHAPTER-4DATA ANALYSIS AND INTERPRATATION4.1: Introduction: - Data analysis is a body of methods that help to describe facts, detect patterns, develop explanations, and test hypotheses. It is used in business, in administration, and in policy.The numerical results provided by a data analysis are usually simple: It finds the number that describes a typical value and it finds differences among numbers. Data analysis finds averages, like the average income or the average temperature, and it find differences like the difference in income from group to group or the differences in average temperature from year to year. Fundamentally, the numerical answers provided by data analysis are that simple.4.2: Analysis of data:-1) Capital deposit ratio: - The traditional function of bank capital is to protect bank depositors against loss. Bank capital is in effect, a first line of deposit guarantee; supervisory authorities have come to apply the proportion of a bank capital to its deposit as a measure to its capital position.The capital deposit standard frequently is cited in a very precise and concrete form, that is one to ten. There appears to be no scientific basis for this particular ratio. It is simply a good round decimal, easy to calculate at a glance.The circumstances that have decreased capital deposit ratios are well known. Deposits have grown very considerably, not so much as a result of an increase in earning assets, as of a growth in cash holdingsCapital deposit ratios from 2007-2011:-Table 4.1:-capital deposit ratioSr.no.Banks name20072008200920102011

1SBI12.3413.4714.2513.3911.98

2ICICI11.6913.9715.3319.4119.54

Figure-4.1 capital deposit ratioInterpretation:-It shows that in 2007 capital deposit ratio is higher in case of SBI than ICICI but after that the capital deposit ratio is higher in case of ICICI as compared to SBI. In 2011 capital deposit ratio of ICICI is much higher than SBI .So in 2011 ICICI is much capable of protecting their capital against bank depositors. 2)Loan deposit ratio:-The loan to deposit ratio is used to calculate a lending institution's ability to cover withdrawals made by its customers. A lending institution that accepts deposits must have a certain measure of liquidity to maintain its normal daily operations. Loans given to its customers are mostly not considered liquid meaning that they are investments over a longer period of time. Although a bank will keep a certain level of mandatory reserves, they may also choose to keep a percentage of their non-lending investing in short term securities to ensure that any monies needed can be accessed in the short term.The formula for the loan to deposit ratio is exactly as its name implies, loans divided by deposits.Loan deposit ratio=loan/depositLoans in the numerator of the formula are investments or assets for a bank. Deposits in the denominator of the formula can be considered the same as debt as the individual depositors are essentially granting monies to the bank with a return equal to the deposit rates and that can be called upon at any time. In these respects, the loan to deposit ratio is similar to a liquidity ratio and debt ratio.The loan to deposit ratio can be used by investors and internally by the company to determine the financial institutions short term viability. Although many depositors may not be as concerned when a financial institution is insured, the loan to deposit ratio may be used to ensure that any money needed is immediately available. Banking insurance companies may also find this ratio or some variation of it of use when underwriting the policy to determine insurability.

Loan deposit ratios from 2007-2011:-Table 4.2:-Loan deposit ratioSr. no.Bank name20072008200920102011

1SBI73.4477.5174.9775.9679.90

2ICICI83.8384.9991.4490.0487.81

Figure 4.2:-Loan deposit ratioInterpretation:-In comparison of SBI and ICICI the loan deposit ratio of ICICI is high in comparison of SBI. It means that ICICI insured that to investor when they required money it is available to him. So lending function of ICICI is better than ICICI. But in last three years the loan deposit ratio of SBI increases whereas the loan deposit ratio of ICICI decreases.3) Cash deposit ratio:- The amount of money a bank should have available as a percentage of the total amount of money its customers have paid into the bank. This amount is calculated so that customers can be sure that they will be able to take their money out of the bank if they want to.Cash deposit ratio is with reference to a bank's the ratio of average cash balance held against total deposits of a particular branchCash deposit ratio= total cash balance/depositsCash deposit ratio plays a crucial role in banking operations. The banks try to fine-tune it. They do not want to hold more than necessary cash reserves because in that case they lose some of the profit, which they can otherwise earn. Similarly, they cannot afford to have a lower than necessary cash reserve ratio because that can result in their failure to meet their payment obligations. If a bank false to honour its commitment to pay in time, the customers lose confidence in its ability (or willingness) to pay. As a result, all of them rush to the bank and demand payment. And the bank, by the very nature of its balance sheet, is never able to meet this demand in full. It can go bankrupt.

Cash deposit ratios from 2007-2011:-Table 4.3:-cash deposit ratioSR NO.BANKS NAME20072008200920102011

1SBI6.228.298.377.568.96

2ICICI6.9910.1210.1410.7211.32

Figure 4.3:- Cash deposit ratioInterpretation:-The cash deposit ratio of ICICI is better than SBI. In 2007 there did not have too much differences between two bank but after that cash deposit ratio of ICICI went at rapid pace as compare to SBI. 4) Investment deposit ratio:-This ratio shows the comparison of investments and deposits. This is calculated asInvestment deposit Ratio=Investment/deposits

Table 4.4:-investment deposit ratioSr no.Banks name20072008200920102011

1SBI38.2234.8136.3836.3333.45

2ICICI41.1542.6846.3553.2859.77

Figure 4.4:- investment deposit ratioInterpretation:-From above table and graph it is very much clear that ICICI are using their deposit very efficiently. And earning high profits. The ratio has an upward trend, which shows theperformance of ICICI is very good. But in the case of SBI the trend is downward since 2009 so they focus on long term goals rather than earnings high profits. 5) Interest paid to total revenue:-It shows the interest paid over the total revenue earned by both the banks. Interest paid to total revenue=interest /total revenueTable 4.5:-interest paid to total revenueSR.NO.BANK NAME20072008200920102011

1SBI8.278.828.888.528.39

2ICICI9.5510.609.828.828.41

Figure 4.5:-interest paid to total revenueInterpretation:-In the year of 2007-2009 the interest paid to total revenue were high in the case of ICICI but after that in 2010 and 2011 there were not too much difference between both the banks. 6) Salaries to total revenue:-This ratio shows the relation between the salaries and the total revenue.Table 4.6:-salaries to total revenueSR.NO.BANK NAME20072008200920102011

1SBI8.468.968.998.628.48

2ICICI9.6510.829.908.908.41

Figure 4.6:-salaries to total revenueInterpretation:-It shows that the salaries to total revenue of SBI is better than ICICI in 2011 but in the year of 2007-2010 ICICI is much better than SBI .7) Operating expenses to total revenue:- The operating margin is another measurement of managements efficiency. It compares the quality of a companys activity to its competitors. A business that has a higher operating margin than others in the industry is generally doing better as long as the gains didn't come by piling on debt or taking highly risky speculations with shareholders' money. The most common reason for high operating margins relative to competitors is a low-cost operating model, which means that a company can deliver merchandise or services to customers at much cheaper prices than competitors and still make moneyTo calculate the operating margin, divide operating income by the total revenue. Operating Income Sales = Operating MarginOperating expenses, or OpEx, are the recurring expenses and costs associated with the day-to-day activities of the business, such as research and development expenses and sales and administration expenses that are essential to the continuous operation and maintenance of a property but not directly associated with production. In short, this is the money the business spends in order to turn inventory into throughput Operating expenses are also called non-manufacturing expenses and are usually subdivided into Research and Development Expenses, Selling, General, and Administrative expenses and Depreciation and Amortization. In general it includes expenses such as payroll, sales commissions, employee benefits and pension contributions, transportation and travel, amortization, rent, repairs, and taxes, etc. Operating expenses do not include items such as mortgage payments and capital expenditures, but do include depreciation of plants and machinery used for business purposes. "Operating expenses" as shown in a Company's Financial statements (Income Statement) corresponds to the sum of the company's operating expenses for a certain period of time, such as a month(usually a quarter) or year(annual operating expenses). The annual operating expenses shown below are the actual costs it takes to run the property, such as property tax, insurance, maintenance, repairs, management fees, utilities, and supplies(as mentioned above) for the corresponding fiscal year.

Table 4.7:-Operating expenses to total revenueSR.NO.BANK NAME20072008200920102011

1SBI28.924.1322.9127.6131.51

2ICICI28.8726.0026.2229.0524.81

Figure 4.7:-operating expenses to total revenueInterpretation:-The operating expenses to total revenue ratio is higher in case of SBI as compare to ICICI in 2011 but from 2007-2010 the operating expenses to total revenue is higher in case of ICICI as compare to SBI.8)Gross margin ratio:- A company's total sales revenue minus itscost of goods sold, divided by the total sales revenue, expressed as a percentage. The gross margin represents thepercent oftotal sales revenuethat the company retains after incurring the direct costs associated with producing the goods and services sold by a company. The higher the percentage, the more the company retains on each dollar of sales to service its other costs and obligations.GROSS MARGIN RATIO=REVENUE-COST OF GOOD SOLD/REVENUEThis number represents the proportion of each rupee of revenue that the companyretains as gross profit. For example, if a company's gross margin for the most recent quarter was 35%, it would retain Rs 0.35 from each rupee of revenue generated, to be put towards paying off selling, general andadministrative expenses, interest expenses and distributions to shareholders. A company should be continuously monitoring its gross margin ratio to be certain it willresult in agross profit that will be sufficient to cover its selling and administrative expenses.The gross profit margin ratio measures how efficiently a company uses its resources, materials, and labor in the production process by showing the percentage of net sales remaining after subtracting the cost of making and selling a product or service. It is usually expressed as a percentage, and indicates the profitability of a business before overhead costs. A high gross profit margin ratio indicates that a business can make a reasonable profit on sales, as long as overheads do not increase. Investors pay attention to the gross profit margin ratio because it tells them how efficient your business is compared to competitors. It is sensible to track gross profit margin ratios over a number of years to see if company earnings are consistent, growing, or declining.For businesses, knowing your gross profit margin ratio is important because it tells you whether your business is pricing goods and services effectively. A low margin compared to your competitors would suggest you are under-pricing, while a high margin might indicate over-pricing. Low profit margin ratios can also suggest the business is unable to control production costs, or that a low amount of earnings are generated from revenues.

Table 4.8:-Gross margin ratioSR.NO.BANK NAME20072008200920102011

1SBI16.3518.0918.4815.8815.93

2ICICI11.4112.9912.3615.0621.06

Figure 4.8:-Gross margin ratioInterpretation:-From 2007-2010 the gross profit margin ratio of SBI is high as compare to ICICI but in the year of 2011 the gross profit margin ratio of ICICI is high as compare to SBI. Thus we can say that from 2007-2009 SBI can make a reasonable profit on sale but in 2010 & 2011 SBI not able to generate the earning from revenue. In the case of ICICI the gross profit margin ratio increased every year so ICICI make a reasonable profit on sale.9) Net profit margin:- For a business to survive in the long term it must generate profit. Therefore the net profit margin ratio is one of the key performance indicators for your business. The net profit margin ratio indicates profit levels of a business after all costs have been taken into account. It is worth analyzing the ratio over time. A variation in the ratio from year to year may be due to abnormal conditions or expenses. Variations may also indicate cost blowouts which need to be addressed. A decline in the ratio over time may indicate a margin squeeze suggesting that productivity improvements may need to be initiated. In some cases, the costs of such improvements may lead to a further drop in the ratio or even losses before increased profitability is achieved. The calculation used to obtain the ratio is: Net Profit Margin = Net Profit x 100/ Sales

Table 4.9:-Net profit margin

SR.NO.BANK NAME20072008200920102011

1SBI10.1211.6512.0310.548.55

2ICICI10.8110.519.7412.1715.91

Figure 4.9:- Net profit marginInterpretation:-From the year of 2007-2009 the net profit margin ratio of SBI was increased whereas the net profit margin ratio of ICICI decreases so we can say that from 2007-2009 SBI indicates higher profit after deducting all the expenses as compare to ICICI but in 2010 & 2011 the net profit margin ratio of ICICI increases while in the case of SBI it decreases. So previous two years ICICI generating higher profit. 10) Debt equity ratio: - A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt cost (interest), then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing.Table 4.10:- Debt equity ratioSR.NO.BANK NAME20072008200920102011

1SBI13.9110.9612.8112.1914.37

2ICICI9,505.274.423.914.10

Figure 4.10:- Debt equity ratioInterpretation:-This ratio indicates what proportion of equity and debt the company is using to finance its assets. From above diagram we can say that SBI has a high debt-equity ratio means it is aggressive in financing its growth with debt. Than after ICICI has a low debt-equity ratio as comparison with SBI in debt-equity ratio.

11) Capital adequacy ratio:- A measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures. This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world. Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors. Table 4.11:-capital adequacy ratioSR.NO.BANK NAME20072008200920102011

1SBI12.3413.4714.2513.3911.98

2ICICI11.6913.9715.5319.4119.54

Figure:-4.11:-capital adequacy ratioInterpretation:-From the above table it is clearly state that the capital adequacy ratio of ICICI is much better than SBI. So ICICI is more capable to protect depositors and promote the stability and efficiency of the financial system4.3:-Findings:-From this research report I have found that-

1) ICICI is much capable bank to protect their capital against bank depositors as compare to SBI.2) Lending function of ICICI is better than SBI but in last 3 years SBI increases their lending function.3) Cash deposit ratio of ICICI is much better than SBI.4) The focus of ICICI is to earning high profit whereas SBI focuses on long term goals rather than earning high profit.5) The interest paid to total revenue is almost same of both the banks in last two years.6) Salaries to total revenue of SBI is better than ICICI.7) From 2007-2009 SBI can make a reasonable profit on sale but in 2010-2011 SBI not able to generate the earning from revenue.8) From 2007-2009 SBI indicate higher profit after deducting all the expenses but in 2010-2011 ICICI generate higher profit.9) SBI is aggressive in financing its growth with debt as compare to ICICI.10) ICICI is more capable to protect depositors and promote the stability and efficiency of the financial system.

CHAPTER-5LIMITATIONSThe ratios analysis is one of the most powerful tools of financial management. Though ratios are simple to calculate and easy to understand, they suffer from serious limitations. 1. Limitations of financial statements: Ratios are based only on the information which has been recorded in the financial statements. Financial statements themselves are subject to several limitations. Thus ratios derived, there from, are also subject to those limitations. For example, non-financial changes though important for the business are not relevant by the financial statements. Financial statements are affected to a very great extent by accounting conventions and concepts. Personal judgment plays a great part in determining the figures for financial statements. 2. Comparative study required: Ratios are useful in judging the efficiency of the business only when they are compared with past results of the business. However, such a comparison only provide glimpse of the past performance and forecasts for future may not prove correct since several other factors like market conditions, management policies, etc. may affect the future operations. . 3. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There are no well accepted standards or rule of thumb for all ratios which can be accepted as norm. It renders interpretation of the ratios difficult. 4. Limited use of single ratios: A single ratio, usually, does not convey much of a sense. To make a better interpretation, a number of ratios have to be calculated which is likely to confuse the analyst than help him in making any good decision. 5. Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios have to interpret and different people may interpret the same ratio in different way. 6. Incomparable: Not only industries differ in their nature, but also the firms of the similar business widely differ in their size and accounting procedures etc. It makes comparison of ratios difficult and misleading.

CHAPTER-6CONCLUSIONRatios make the related information comparable. A single figure by itself has no meaning, but when expressed in terms of a related figure, it yields significant interferences. Thus, ratios are relative figures reflecting the relationship between related variables. Their use as tools of financial analysis involves their comparison as single ratios, like absolute figures, are not of much use.Ratio analysis has a major significance in analyzing the financial performance of a company over a period of time. Decisions affecting product prices, per unit costs, volume or efficiency have an impact on the profit margin or turnover ratios of a company. Financial ratios are essentially concerned with the identification of significant accounting data relationships, which give the decision-maker insights into the financial performance of a company. The analysis of financial statements is a process of evaluating the relationship between parts of financial statements to obtain a better understanding of the firms position and performance. The first task of financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statements. The second step is to arrange the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation and evaluation. Ratio analysis in view of its several limitations should be considered only as a tool for analysis rather than as an end in itself. The reliability and significance attached to ratios will largely hinge upon the quality of data on which they are based. They are as good or as bad as the data itself. Nevertheless, they are an important tool of financial analysis.

BIBLIOGRAPY

Web sites:

1)www.sbi.com 2)www.icici.com 3)www.investopedia.com

Books referred:

Basic Financial Management- M Y Khan P K Jain Financial Management-Prasanna Chandra

ANNEXUREBalance sheet(ICICI)Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 07

Sources of funds

Owner's fund

Equity share capital1,151.821,114.891,113.291,112.68899.34

Share application money0.29----

Preference share capital--350.00350.00350.00

Reserves & surplus53,938.8250,503.4848,419.7345,357.5323,413.92

Loan funds

Secured loans-----

Unsecured loans2,25,602.112,02,016.602,18,347.822,44,431.052,30,510.19

Total2,80,693.052,53,634.962,68,230.842,91,251.262,55,173.45

Uses of funds

Fixed assets

Gross block9,107.477,114.127,443.717,036.006,298.56

Less : revaluation reserve-----

Less : accumulated depreciation4,363.213,901.433,642.092,927.112,375.14

Net block4,744.263,212.693,801.624,108.903,923.42

Capital work-in-progress----189.66

Investments1,34,685.961,20,892.801,03,058.311,11,454.3491,257.84

Net current assets

Current assets, loans & advances27,630.4129,997.2334,384.0631,129.7723,551.85

Less : current liabilities & provisions15,986.3515,501.1843,746.4342,895.3838,228.64

Total net current assets11,644.0614,496.05-9,362.37-11,765.62-14,676.78

Miscellaneous expenses not written-----

Total 1,51,074.281,38,601.5497,497.561,03,797.6280,694.15

Notes:

Book value of unquoted investments-----

Market value of quoted investments-----

Contingent liabilities9,31,638.847,33,546.208,40,670.634,01,114.911,99,771.41

Number of equity sharesoutstanding (Lacs)11517.7211148.4511132.5111126.878992.67

(Rs crore)

Profit loss account(ICICI)Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 07

Income

Operating income32,369.6932,747.3638,250.3939,467.9228,457.13

Expenses

Material consumed-----

Manufacturing expenses-----

Personnel expenses2,816.931,925.791,971.702,078.901,616.75

Selling expenses305.79236.28669.211,750.601,741.63

Adminstrative expenses4,909.007,440.427,475.636,447.324,946.69

Expenses capitalised-----

Cost of sales8,031.729,602.4910,116.5410,276.828,305.07

Operating profit7,380.825,552.305,407.915,706.853,793.56

Other recurring income7.26305.36330.6465.58309.17

Adjusted PBDIT7,388.085,857.665,738.555,772.434,102.73

Financial expenses16,957.1517,592.5722,725.9323,484.2416,358.50

Depreciation562.44619.50678.60578.35544.78

Other write offs-----

Adjusted PBT-10,131.51-12,354.42-17,665.985,194.083,557.95

Tax charges1,609.331,600.781,830.511,611.73984.25

Adjusted PAT5,110.213,890.473,740.624,092.122,995.00

Non recurring items41.17134.5217.5165.61115.22

Other non cash adjustments-2.17--0.58--

Reported net profit5,149.214,024.983,757.554,157.733,110.22

Earnigs before appropriation8,613.596,834.636,193.875,156.003,403.66

Equity dividend1,612.581,337.951,224.581,227.70901.17

Preference dividend-----

Dividend tax202.28164.04151.21149.67153.10

Retained earnings6,798.735,332.634,818.073,778.632,349.39

Balance sheet(SBI)Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 07

Sources of funds

Owner's fund

Equity share capital635.00634.88634.88631.47526.30

Share application money-----

Preference share capital-----

Reserves & surplus64,351.0465,314.3257,312.8248,401.1930,772.26

Loan funds

Secured loans-----

Unsecured loans9,33,932.818,04,116.237,42,073.135,37,403.944,35,521.09

Total9,98,918.868,70,065.438,00,020.825,86,436.604,66,819.65

Uses of funds

Fixed assets

Gross block13,189.2811,831.6310,403.068,988.358,061.92

Less : revaluation reserve-----

Less : accumulated depreciation8,757.337,713.906,828.655,849.135,385.01

Net block4,431.964,117.723,574.413,139.222,676.91

Capital work-in-progress332.23295.18263.44234.26141.95

Investments2,95,600.572,85,790.072,75,953.961,89,501.271,49,148.88

Net current assets

Current assets, loans & advances43,777.8535,112.7637,733.2744,417.0325,292.31

Less : current liabilities & provisions1,05,248.3980,336.701,10,697.5783,362.3060,042.26

Total net current assets-61,470.54-45,223.94-72,964.30-38,945.27-34,749.95

Miscellaneous expenses not written-----

Total 2,38,894.222,44,979.032,06,827.501,53,929.481,17,217.80

Notes:

Book value of unquoted investments-----

Market value of quoted investments-----

Contingent liabilities7,90,386.795,96,366.417,67,567.528,29,740.483,29,954.73

Number of equity sharesoutstanding (Lacs)6349.996348.836348.806314.705262.99

Profit loss account(SBI)Mar ' 11Mar ' 10Mar ' 09Mar ' 08Mar ' 07

Income

Operating income95,525.5885,909.3674,880.7656,821.5543,860.57

Expenses

Material consumed-----

Manufacturing expenses-----

Personnel expenses14,480.1712,754.659,747.317,785.877,932.58

Selling expenses257.88224.05251.23173.2388.43

Adminstrative expenses15,702.3311,029.667,361.985,970.474,628.38

Expenses capitalised-----

Cost of sales30,440.3824,008.3517,360.5213,929.5712,649.38

Operating profit16,217.2414,578.5414,604.9410,962.907,774.36

Other recurring income1,065.141,051.15894.26901.331,008.35

Adjusted PBDIT17,282.3915,629.6915,499.2011,864.238,782.71

Financial expenses48,867.9647,322.4842,915.2931,929.0823,436.82

Depreciation990.50932.66763.14679.98602.39

Other write offs-----

Adjusted PBT-32,576.07-32,625.4514,736.06-20,744.838,180.32

Tax charges5,709.546,166.626,115.123,929.203,083.77

Adjusted PAT8,283.039,176.519,124.186,718.084,529.18

Non recurring items-912.68-10.46-2.9511.0412.13

Other non cash adjustments-----

Reported net profit7,370.359,166.059,121.236,729.124,541.31

Earnigs before appropriation7,370.699,166.399,121.576,729.464,541.65

Equity dividend1,905.001,904.651,841.151,357.66736.82

Preference dividend-----

Dividend tax246.52236.76248.03165.87125.22

Retained earnings5,219.177,024.997,032.385,205.943,679.61