PREPARED BY:

HSK

PUNJAB NATIONAL BANK

PUNJAB NATIONAL BANK

PUNJAB NATIONAL BANK HOLDS 38TH RANK IN TOP 100 COMPANIES OF INDIA BY CAPITALISATION
Prepared by HSK

PUNJAB NATIONAL BANK

PROFILE OF PUNJAB NATIONAL BANK

With over 56 million satisfied customers and 5002 offices including 5 overseas branches, PNB has continued to retain its leadership position amongst the nationalized banks. The bank enjoys strong fundamentals, large franchise value and good brand image. Besides being ranked as one of India's top service brands, PNB has remained fully committed to its guiding principles of sound and prudent banking. Apart from offering banking products, the bank has also entered the credit card, debit card; bullion business; life and non-life insurance; Gold coins & asset management business, etc.

Since its humble beginning in 1895 with the distinction of being the first Swadeshi Bank to have been started with Indian capital, PNB has achieved significant growth in business which at the end of March 2010 amounted to Rs 435931 crore. PNB is ranked as the 2nd largest bank in the country after SBI in terms of branch network, business and many other parameters. During the FY 2009-10, with 40.85% share of CASA deposits, the Bank achieved a net profit of Rs 3905 crore. Bank has a strong capital base with capital adequacy ratio of 14.16% as on Mar10 as per Basel II with Tier I and Tier II capital ratio at 9.15% and 5.01% respectively. As on March10, the Bank has the Gross and Net NPA ratio of 1.71% and 0.53% respectively. During the FY 2009-10, its ratio of Priority Sector Credit to Adjusted Net Bank Credit at 40.5% & Agriculture Credit to Adjusted Net Bank Credit at 19.7% was also higher than the stipulated requirement of 40% & 18% respectively.

Prepared by HSK

PUNJAB NATIONAL BANK

BOARD OF DIRECTORS OF PUNJAB NATIONAL BANK

Sh.K.R.Kamath Chairman & Managing Director

Sh. M.V.Tanksale Executive Director

Sh. Nagesh Pydah Executive Director

Prepared by HSK

PUNJAB NATIONAL BANK

Prepared by HSK

PUNJAB NATIONAL BANK

Profit & Loss account of Punjab National Bank

Particulars
Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalised Operating Expenses Provisions & Contingencies Total Expenses

---------------- in Rs. Cr. ---------------Mar '06

9,584.15 1,478.23 11,062.38 4,917.39 2,114.97 638.79 186.65 1,765.27 0.00 3,263.15 1,442.53 9,623.07

Mar '07
11,537.48 1,343.64 12,881.12 6,022.91 2,352.45 1,032.50 194.80 1,738.38 0.00 3,926.05 1,392.08 11,341.04

Mar '08
14,265.02 1,997.56 16,262.58 8,730.86 2,461.54 884.19 170.23 1,966.98 0.00 3,902.55 1,580.39 14,213.80

Mar '09
19,326.16 2,919.69 22,245.85 12,295.30 2,924.38 1,406.42 191.06 2,337.80 0.00 5,026.81 1,832.85 19,154.96

Mar '10
21,466.91 3,565.31 25,032.22 12,944.02 3,121.14 1,701.46 222.83 3,137.42 0.00 5,761.36 2,421.49 21,126.87

Particulars
Net Profit for the Year Extraordionary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer to Statutory Reserves Transfer to Other Reserves Proposed Dividend/Transfer to Govt Balance c/f to Balance Sheet Total

Mar '06
1,439.31 0.00 0.00 1,439.31 0.00 189.18 26.53 45.65 60.00 287.79 -1,512.23 2,552.34 215.71 183.49 1,439.31

Mar '07
1,540.08 0.00 183.49 1,723.57 0.00 409.89 63.11 48.84 100.00 321.65 435.06 800.00 473.00 15.52 1,723.58

Mar '08
2,048.76 0.00 15.52 2,064.28 0.00 409.89 69.66 64.98 100.00 341.98 596.14 988.59 479.55 0.00 2,064.28

Mar '09
3,090.88 0.00 0.00 3,090.88 0.00 630.61 107.17 98.03 200.00 416.74 1,155.46 1,190.00 737.78 7.64 3,090.88

Mar '10
3,905.36 0.00 7.64 3,913.00 0.00 693.67 116.43 123.86 220.00 514.77 1,532.46 1,570.44 810.10 0.00 3,913.00

Prepared by HSK

PUNJAB NATIONAL BANK

Balance Sheet of Punjab National Bank

Capital and Liabilities:
Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities

---------------- in Rs. Cr. ---------------Mar '06

315.30 315.30 0.00 0.00 8,758.68 302.38 9,376.36 119,684.92 6,687.18 126,372.10 9,518.93 145,267.39

Mar '07
315.30 315.30 0.00 0.00 9,826.31 293.85 10,435.46 139,859.67 1,948.86 141,808.53 10,178.51 162,422.50

Mar '08
315.30 315.30 0.00 0.00 10,467.35 1,535.70 12,318.35 166,457.23 5,446.56 171,903.79 14,798.23 199,020.37

Mar '09
315.30 315.30 0.00 0.00 12,824.59 1,513.74 14,653.63 209,760.50 4,374.36 214,134.86 18,130.13 246,918.62

Mar '10
315.30 315.30 0.00 0.00 15,915.63 1,491.99 17,722.92 249,329.80 19,262.37 268,592.17 10,317.69 296,632.78

Assets
Cash & Balances with RBI Balance with Banks, Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs)

Mar '06
23,394.56 1,397.14 74,627.37 41,055.31 2,106.92 1,076.69 1,030.23 0.00 3,762.79 145,267.40 39,860.40 18,878.91 287.79

Mar '07
12,372.03 3,273.49 96,596.52 45,189.84 2,247.74 1,237.92 1,009.82 0.00 3,980.80 162,422.50 52,884.89 21,815.59 321.65

Mar '08
15,258.15 3,572.57 119,501.57 53,991.71 3,699.64 1,384.12 2,315.52 0.00 4,380.84 199,020.36 80,606.88 23,448.99 341.98

Mar '09
17,058.25 4,354.89 154,702.99 63,385.18 3,930.36 1,533.25 2,397.11 0.00 5,020.20 246,918.62 79,270.65 31,941.43 416.74

Mar '10
18,327.58 5,145.99 186,601.21 77,724.47 4,215.21 1,701.74 2,513.47 0.00 6,320.07 296,632.79 68,124.47 33,215.78 514.77

Prepared by HSK

PUNJAB NATIONAL BANK

Cash Flow of Punjab National Bank

Particulars
Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents

---------------- in Rs. Cr. ---------------Mar '06

2033.87 14961.44 -465.64 -793.13 13702.66 11089.03 24791.69

Mar '07
2169.13 -10144.34 -159.41 1157.57 -9146.17 24791.69 15645.52

Mar '08
3295.91 1756.13 -444.46 1873.54 3185.21 15645.52 18830.72

Mar '09
4766.92 2105.16 -395.84 873.11 2582.42 18830.72 21413.14

Mar '10
5904.78 1835.99 -409.41 633.84 2060.42 21413.14 23473.56

CONCLUSION:
In 2006 cash flow from Operating Activities is Rs.14961.44 crores which has been decreased to Rs. -10144.34 crores in 2007 which is very low total which shows that bank is earning less through these activities. In 2008 the total has increased to Rs.1756.13 crores and it has increase to Rs.2105.16 crores in 2009 which indicates that the bank can recover its losses in this year. In 2010 the bank has increased its cash flows from operating activities to Rs.1835.99 crores.

In 2006 cash used Investing Activities is Rs. 465.64 crores which has been increased to Rs. 159.41 crores in 2007 which shows that bank is not earning through these activities. In 2008 the bank is again in losses as the cash outflow is now Rs. 444.46 crores and in 2009 also the outflow is of Rs. 395.84 crores which

Prepared by HSK

PUNJAB NATIONAL BANK

indicates that the bank has more outflows than inflows through Investing Activities. In 2010 also the cash is going out and is of Rs. 409.41 crores. This indicates that the bank is not having any proceeds from these activities from last 5 years.

In 2006 cash flow from Financing Activities is Rs.793.13 crores and in 2007 cash
outflow is of Rs. 1157.57 crores which shows that during this year bank has not earned any proceeds. In 2008 the total has been increased to Rs.1873.54 crores which indicates that bank has work efiiciently in this year. And in 2009 it has been reduced to Rs.873.11 crores and in 2010 total has decreased to 633.84 crores indicating that inflows are very few during this year.

Prepared by HSK

PUNJAB NATIONAL BANK

ACCOUNTING RATIOS
Meaning of Accounting Ratios:
As stated earlier, accounting ratios are an important tool of financial statement analysis. A ratio is a mathematical number calculated as a reference to relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, and a number of times. When the number is calculated by referring to two accounting numbers derived from the financial statements, it is termed as accounting ratio.

Objectives of Ratio Analysis:

Ratio analysis is indispensable part of interpretation of results revealed by the financial statements. It provides users with crucial financial information and points out the areas which require investigation. Ratio analysis is a technique.
To know the areas of the business which need more attention; To know about the potential areas which can be improved with the effort in the desired direction; To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the

business;
To provide information for making cross sectional analysis by comparing the performance with

the best industry standards; To provide information derived from financial statements useful for making projections and estimates for the future.

Prepared by HSK

PUNJAB NATIONAL BANK

Advantages of Ratio Analysis:
The ratio analysis if properly done improves the users understanding of the efficiency with which the business is being conducted. The numerical relationships throw light on many latent aspects of the business.
Helps understand efficacy of decisions
Simplify complex figures and establish relationships Helpful in comparative analysis Identification of problem areas Enables SWOT analysis Various comparisons

Limitations of Ratio Analysis:

Since the ratios are derived from the financial statements, any weakness in the original financial statements will also creep in the derived analysis in the form of limitations of the ratio analysis.
Ignores Price-level Changes Ignore Qualitative or Non-monetary Aspects Variations in Accounting Practices Forecasting

Types of Ratios:
There is a two way classification of ratios: (1) Traditional classification (2) Functional classification.

The traditional classification has been on the basis of financial statements to which the determinants of ratios belong. On this basis the ratios are classified as follows:

Prepared by HSK

PUNJAB NATIONAL BANK

I.

Income Statement Ratios: A ratio of two variables from the income statement is known as
Income Statement Ratio. For example, ratio of gross profit to sales known as gross profit ratio is calculated using both figures from the income statement.

II.

Balance Sheet Ratios: In case both variables are from balance sheet, it is classified as Balance
Sheet Ratios. For example, ratio of current assets to current liabilities known as current ratio is calculated using both figures from balance sheet.

III.

Composite Ratios: If a ratio is computed with one variable from income statement and another
variable from balance sheet, it is called Composite Ratio. For example, ratio of credit sales to debtors and bills receivable known as debtor turnover ratio is calculated using one figure from income statement (credit sales) and another figure from balance sheet (debtors and bills receivable).

Although accounting ratios are calculated by taking data from financial statements but classification of ratios on the basis of financial statements is rarely used in practice. As such, the alternative classification (functional classification) based on the purpose for which a ratio is computed, is the most

commonly used classification which reach as follows:

I.

Liquidity Ratios: To meet its commitments, business needs liquid funds. The ability of the
business to pay the amount due to stakeholders as and when it is due is known as liquidity, and the ratios calculated to measure it are known as Liquidity Ratios. They are essentially short -term in nature. The two ratios included in this category are Current Ratio and Liquid Ratio.

Current Ratio: Current ratio is the proportion of current assets to current liabilities. It is expressed as follows:

Prepared by HSK

Current Ratio = Current Assets : Current Liabilities PUNJAB NATIONAL BANK

Quick Ratio: It is the ratio of quick (or liquid) asset to current liabilities. It is expressed as follows:

Quick ratio = Quick Assets : Current Liabilities

II.

Solvency Ratios: Solvency of business is determined by its ability to meet its contractual
obligations towards stakeholders, particularly towards external stakeholders, and the ratios calculated to measure solvency position are known as Solvency Ratios. They are essentially long term in nature.

Debt-Equity Ratio: Debt Equity Ratio measures the relationship between long-term debt and equity. Normally, it is considered to be safe if debt equity ratio is 2:1. It is computed as follows:

Debt-Equity ratio = Long-term Debts/ Shareholders Fund

Debt Ratio: The Debt Ratio refers to the ratio of long-term debt to the total of external and internal funds (capital employed or net assets). It is computed as follows:

Debt ratio = Long-term Debt/Capital Employed (or Net Assets)

Proprietary Ratio: Proprietary ratio expresses relationship of proprietors (shareholders) funds to net assets and is calculated as follows :

Proprietary Ratio = Shareholders Funds/Capital employed (or net assets)

Total Assets to Debt Ratio: This ratio measures the extent of the coverage of long-term debt by assets. It is calculated as

Total assets to Debt Ratio = Total assets/Long-term debt

Prepared by HSK

PUNJAB NATIONAL BANK

Interest Coverage Ratio: It is a ratio which deals with the servicing of interest on loan. It is a measure of security of interest payable on long-term debt. It is calculated as follows:

Interest Coverage Ratio = Net Profit before Interest and Tax/ Interest on long term debt
III.

Activity (or Turnover) Ratios: This refers to the ratios that are calculated for measuring the
efficiency of operation of business based on effective utilisation of resources. Hence, these are also known as efficiency ratios.

Stock (or Inventory) Turnover Ratio: It determines the number of times stock is turned in sales during the accounting period under consideration. It expresses the relationship between the cost of goods sold and stock of goods. The formula for its calculation is as follows:

Stock Turnover Ratio = Cost of Goods Sold/ Average Stock

Debtors (Receivables) Turnover Ratio: It expresses the relationship between credit sales and debtors. It is calculated as follows :

Debtors Turnover ratio = Net Credit sales/ Average Accounts Receivable

Creditors (Payable) Turnover Ratio: Creditors turnover ratio indicates the pattern of payment of accounts payable. As accounts payable arise on account of credit purchases, it expresses relationship between credit purchases and accounts payable. It is calculated as follows :

Creditors Turnover ratio = Net Credit purchases/ Average accounts payable

Prepared by HSK

PUNJAB NATIONAL BANK

Investment (Net Assets) Turnover Ratio: It reflects relationship between employed in the business. Higher turnover means better liquidity and profitability. It is calculated as follows :

Investment (Net Assets) Turnover ratio

= Net Sales/Capital Employed

Capital turnover which studies turnover of capital employed (Net Assets) is analysed further by following two turnover ratios :

Fixed Assets Turnover : It is computed as follows:

Fixed asset turnover = Net Sales/Net Fixed Assets

Working Capital Turnover: It is calculated as follows :

Working Capital Turnover = Net Sales/Working Capital

IV.

Profitability Ratios: It refers to the analysis of profits in relation to sales or funds (or assets)
employed in the business and the ratios calculated to meet this objective are known as Profitability Ratios.

Gross Profit Ratio: Gross profit ratio as a percentage of sales is computed to have an idea about gross margin. It is computed as follows:

Gross Profit Ratio = Gross Profit/Net Sales 100

Operating Ratio: It is computed to analyse cost of operation in relation to sales. It is calculated as follows:

Operating Ratio = (Cost of Sales + Operating Expenses)/ Net Sales 100

Prepared by HSK

PUNJAB NATIONAL BANK

Operating Profit Ratio: It is calculated to reveal operating margin. It may be computed directly or as a residual of operating ratio.

Operating Profit Ratio = 100 Operating Ratio

Alternatively, it is calculated as under:

Operating Profit Ratio = Operating Profit/ Sales 100

Net Profit Ratio: Net Profit Ratio is based on all inclusive concept of profit. It relates sales to net profit after operational as well as non-operational expenses and incomes. It is calculated as under:

Net Profit Ratio

= Net profit / Sales 100

Return on Capital Employed or Investment (ROCE or ROI): It explains the overall utilisation of funds by a business enterprise. Capital employed means the long-term funds employed in the business and includes shareholders fund, debentures and long-term loans. Thus, it is computed as follows:

Return on Investment (or Capital Employed) = Profit before Interest and Tax/ Capital Employed 100
Return on Shareholders Fund : This ratio is very important from shareholders point of view in assessing whether their investment in the firm generates a reasonable return or not. It should be higher than the return on investment otherwise it would imply that banks funds have not been employed profitably. It is calculated as under :

Return on Shareholders Fund = Profit after Tax/ Shareholders Fund

Prepared by HSK

PUNJAB NATIONAL BANK

Earnings Per Share: The ratio is defined as

E P S = Profit available for equity shareholders/ No. of Equity Shares

In this context, earnings refer to profit available for equity shareholders which is worked out as Profit after Tax Dividend on Preference Shares.
Book Value Per Share: This ratio is calculated as

Book Value per share = Equity shareholders funds/No. of Equity Shares

Equity shareholder funds refer to Shareholders Funds Preference Share Capital.

Dividend Payout Ratio: This refers to the proportion of earning that are distributed against the shareholders. It is calculated as

Dividend Payout Ratio = Dividend Per Share/ Earnings Per Share

Price Earning Ratio: The ratio is defined as

P/E Ratio = Market price of a Share/Earnings per Share

P/E ratios vary from industry to industry and bank to bank in the same industry depending upon investors perception of their future.

Prepared by HSK

PUNJAB NATIONAL BANK

Key Financial Ratios of Punjab National Bank

Particulars
Investment Valuation Ratios:
Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital 10.00 6.00 57.00 310.53 69.61 -3.94 16.35 14.50 74.57 17.01 15.83 0.99 0.99 7.23 3.60 0.10 3.63 2.27 1.29 1.06 0.15 7.33 3.63 0.07 4.75 51.31 10.00 10.00 74.53 383.89 64.29 -4.40 14.10 12.53 80.76 16.03 15.17 321.65 330.97 7.88 3.96 0.12 3.92 2.43 1.53 1.00 0.14 8.00 3.92 0.08 5.48 52.20 10.00 10.00 109.81 505.09 63.79 -4.18 13.72 12.68 111.52 19.00 18.99 341.98 390.68 8.86 4.00 0.13 4.86 2.08 1.96 1.14 0.15 8.99 4.86 0.09 4.35 61.20 10.00 20.00 151.48 694.81 64.04 -4.18 14.60 13.76 129.83 23.52 23.50 416.74 464.75 9.89 4.34 0.25 5.55 2.18 2.32 1.40 0.16 10.14 5.55 0.10 5.64 63.62 10.00 22.00 191.63 777.82 63.79 -4.46 16.52 15.64 116.11 24.06 24.04 514.77 562.09 9.07 4.28 0.16 4.79 2.05 2.31 1.45 0.14 9.24 4.79 0.09 5.89 60.30

---------------- in Rs. Cr. ---------------Mar '06 Mar '07 Mar '08 Mar '09 Mar '10

Profitability Ratios:
Interest Spread Adjusted Cash Margin(%) Net Profit Margin Return on Long Term Fund(%) Return on Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations

Management Efficiency Ratios:

Interest Income / Total Funds Net Interest Income / Total Funds Non Interest Income / Total Funds Interest Expended / Total Funds Operating Expense / Total Funds Profit Before Provisions / Total Funds Net Profit / Total Funds Loans Turnover Total Income / Capital Employed(%) Interest Expended / Capital Employed(%) Total Assets Turnover Ratios Asset Turnover Ratio

Profit And Loss Account Ratios:

Interest Expended / Interest Earned

Prepared by HSK

PUNJAB NATIONAL BANK

Other Income / Total Income Operating Expense / Total Income Selling Distribution Cost Composition 1.33 31.00 0.20 11.95 64.26 60.60 41.16 14.74 13.19 1.39 1.33 0.03 10.69 14.98 13.26 84.99 86.72 73.73 1.52 30.36 0.14 12.29 72.04 65.97 33.23 13.78 13.79 1.42 1.29 0.03 11.10 30.71 27.26 69.28 72.73 80.65 1.43 23.10 0.14 13.46 76.19 70.55 32.38 9.02 15.44 1.42 1.25 0.02 9.40 23.40 21.61 76.59 78.38 75.05 2.46 21.53 0.14 14.03 80.15 72.88 31.20 8.59 15.96 1.43 1.27 0.02 9.75 23.86 22.47 76.12 77.51 63.95 1.75 22.19 0.16 14.16 77.31 74.34 30.74 7.71 15.36 1.50 1.32 0.02 20.47 20.74 19.62 79.25 80.37 60.43

Balance Sheet Ratios:

Capital Adequacy Ratio Advances / Loans Funds(%)

Debt Coverage Ratios:

Credit Deposit Ratio Investment Deposit Ratio Cash Deposit Ratio Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax

Leverage Ratios:
Current Ratio Quick Ratio

Cash Flow Indicator Ratios:

Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times

Mar '06
Earnings Per Share Book Value 45.65 287.79

Mar '07
48.84 321.65

Mar '08
64.98 341.98

Mar '09
98.03 416.74

Mar '10
123.86 514.77

Prepared by HSK

PUNJAB NATIONAL BANK

CONCLUSION:

Year Net profits

2006 2007 2008 2009 2010 1.06 1.00 1.14 1.40 1.45

By comparing the net profits of 2006 07 it is analysed that the bank is earning profit less than previous year with a difference of Rs. 0.06 crores. By comparing the net profits of 2007 08 it is analysed that the bank is earning profit with a difference of Rs. 0.14 crores .This shows that bank is performing good. By comparing the net profits of 2008 09 it is analysed that the bank is earning profit with a difference of Rs. 0.26 crores .This shows that bank is performing efficiently during this period. The profit has increased more than previous year. By comparing the net profits of 2009 10 it is analysed that the bank is earning profit with a difference of Rs. 0.05 crores. This shows that bank is earning profit at less rate.

Prepared by HSK