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BANKING STRUCTURE IN INDIA The banking institutions in the organized sector, commercial banks are the oldest institutions, some them having their origin in the nineteenth century. Initially they were set up in large numbers, mostly as corporate bodies with shareholding with private individuals. Today 27 banks constitute a strong Public Sector in Indian Commercial Banking. Commercial Banks operating in India fall under different sub categories on the basis of their ownership and control over management;

Public Sector Banks

Public Sector Banks emerged in India in three stages. First the conversion of the then existing Imperial Bank of India into State Bank of India in 1955, followed by the taking over of the seven associated banks as its subsidiary. Second the nationalization of 14 major commercial banks in 1969and last the nationalization of 6 more commercial Bank in 1980. Thus 27 banks constitute the Public Sector Banks.

New Private Sector Banks After the nationalization of the major banks in the private sector in 1969 and 1980, no new bank could be setup in India for about two decades, though there was no legal bar to that effect. The 21 Narasimham Committee on financial sector reforms recommended the establishment of new banks of India. RBI thereafter issued guidelines for setting up of new private sector banks in India in January 1993. These guidelines aim at ensuring that new banks are financially viable and technologically up to date from the start. They have to work in a professional manner, so as to improve the image of commercial banking system and to win the confidence of the public. Eight private sector banks have been established including banks sector by financially institutions like IDBI, ICICI, and UTI etc.

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Local Area Banks Such Banks can be established as public limited companies in the private sector and can be promoted by individuals, companies, trusts and societies. The minimum paid up capital of such banks would be 5 crores with promoters contribution at least Rs. 2 crores. They are to be set up in district towns and the area of their operations would be limited to a maximum of 3 districts. At present, four local area banks are functional, one each in Punjab, Gujarat, Maharashtra and Andhra Pradesh. Foreign Banks Foreign commercial banks are the branches in India of the joint stock banks incorporated abroad. There number was 38 as on 31.03.2009. Scheduled Commercial Banks in India The commercial banking structure in India consists of: Scheduled Commercial Banks in India Unscheduled Banks in India

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Introduction Banking in Indian economy in the modern sense originated in the last decades of the 18th century. The first banks were Bank of Hindustan (1770-1829) and The General Bank of India, established 1786 and since defunct. The largest bank, and the oldest still in existence, is the State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay and the Bank of Madras, all three of which were established under charters from the British East India Company. The three banks merged in 1921 to form the Imperial Bank of India, which, upon India's independence, became the State Bank of India in 1955. For many years the presidency banks acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935. In 1969 the Indian government nationalized all the major banks that it did not already own and these have remained under government ownership. They are run under a structure known as 'profit-making public sector undertaking' (PSU) and are allowed to compete and operate as commercial banks. The Indian banking sector is made up of four types of banks, as well as the PSUs and the state banks, they have been joined since 1990s by new private commercial banks and a number of foreign banks. Banking in India was generally fairly mature in terms of supply, product range and reach-even though reach in rural India and to the poor still remains a challenge. The government has developed initiatives to address this through the State bank of India expanding its branch network and through the National Bank for Agriculture and Rural Development with things like microfinance.

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Overview of Banking Sector in India

Banking sector has played a crucial role in the economic development of India. It has helped in developing financial intermediaries and markets. The corporate sector depends heavily on banks for their financial needs. Banks also serves the saver from households who want safety of funds and easy liquidity. In FY12, deposit growth turned out to be 14.5%, much lower than credit growth of 18.9%. If the trend continues, the banking supply constraint will not be supportive of economic growth and the government will find itdifficult to raise money from the market to bridge its fiscal deficit.

Main functions of banking sector:

Functions
Financial Intermediation

Payments

Financial Services

1. Payment System- Banks is at the core of the payments system in the economy. Banks help accomplish financial transactions by issuing and paying cheques issued on behalf of customers. Nowadays, with the advancements of technology it is done through internet, mobiles, credit cards etc. 2. Financial Intermediation - Banks accepts deposits and lends that money in the form of loan. Deposits are the liability of the banks and loans and investments made by the banks acts as the assets. The loans and investments are channeled through banks in profitable and socially productive way. 3. Financial Services - Other financial services that banks offers are investment banking, insurance related services, government related business, foreign exchange businesses, wealth management services etc. Income from such services increases the profitability.

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Regulators of banking sector: The Reserve Bank of India is the central banking and monetary authority of India, and also acts as the regulators and supervisors of the commercials banks. The Reserve Bank of India was established in the year 1935. The Government of India came up with the Banking Companies Act, 1949 to streamline the functioning and activities of commercial banks. This was later changed to Banking Regulation Act 1949 as per the amendment act of 1965. After independence the government took major steps in banking sector reforms. Internationalized many banks and formed State Bank of India to act as the principal agent of RBI to handle banking transactions all over the country

As the central bank of India RBI performs the following functions; Acts as the currency authority. Manages foreign exchange. Controls money supply and credit. Serves as the banker to the government. Supervises banks.

Builds up and strengthens the countrys financial infrastructure.

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Scheduled Banking Structure in India: Scheduled banks in India are those that are listed in the Second Schedule of the Reserve Bank of India Act, 1934 and satisfy the criteria as laid down in the act.

Figure-1, Banking Structure in India

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Banking sector in global economy In the 1970s, a number of smaller crashes tied to the policies put in place following the depression, resulted in deregulation and privatization of government-owned enterprises in the 1980s, indicating that governments of industrial countries around the world found private-sector solutions to problems of economic growth and development preferable to state-operated, semisocialist programs. This spurred a trend that was already prevalent in the business sector, large companies becoming global and dealing with customers, suppliers, manufacturing, and information centers all over the world. Global banking and capital market services proliferated during the 1980s and 1990s as a result of a great increase in demand from companies, governments, and financial institutions, but also because financial market conditions were buoyant and, on the whole, bullish. Interest rates in the United States declined from about 15% for two-year U.S. Treasury notes to about 5% during the 20-year period, and financial assets grew then at a rate approximately twice the rate of the world economy. Such growth rate would have been lower, in the last twenty years, were it not for the profound effects of the internationalization of financial markets especially U.S. Foreign investments, particularly from Japan, who not only provided the funds to corporations in the U.S., but also helped finance the federal government; thus, transforming the U.S. stock market by far into the largest in the world. Nevertheless, in recent years, the dominance of U.S. financial markets in the world of banking has been disappearing and there has been an increasing interest in foreign stocks. The extraordinary growth of foreign financial markets results from both large increases in the pool of savings in foreign countries, such as Japan, and, especially, the deregulation of foreign financial markets, which has enabled them to expand their activities. Thus, American corporations and banks have started seeking investment opportunities abroad, prompting the development in the U.S. of mutual funds specializing in trading in foreign stock markets. Such growing internationalization and opportunity in financial services has entirely changed the competitive landscape, as now many banks have demonstrated a preference for the universal or world banking model prevalent in Europe. Universal banks are free to engage in all forms of

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financial services, make investments in client companies, and function as much as possible as a one-stop supplier of both retail and wholesale financial services. Many such possible alignments could be accomplished only by large acquisitions, and there were many of them in the world banking history. By the end of 2000, a year in which a record level of financial services transactions with a market value of $10.5 trillion occurred, the top ten banks commanded a market share of more than 80% and the top five, 55%. Of the top ten banks ranked by market share, seven were large universal-type banks (three American and four European), and the remaining three were large U.S. investment banks who between them accounted for a 33% market share. This growth and opportunity also led to an unexpected outcome: entrance into the market of other financial intermediaries: nonbanks. Large corporate players were beginning to find their way into the financial service community, offering competition to established banks. The main services offered included insurances, pension, mutual, money market and hedge funds, loans and credits and securities. Indeed, by the end of 2001 the market capitalization of the worlds 15 largest financial services providers included four nonbanks. In recent years, the process of financial innovation has advanced enormously increasing the importance and profitability of nonbank finance. Such profitability priory restricted to the nonbanking industry, has prompted the Office of the Comptroller of the Currency (OCC) to encourage banks to explore other financial instruments, diversifying banks business as well as improving banking economic health. Hence, as the distinct financial instruments are being explored and adopted by both the banking and nonbanking industries, the distinction between different financial institutions is gradually vanishing.

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History Overview of ICICI:

INDUSTRIALISATION
1955-1964 Era of rapid Industrialisation ICICI-Important Foreign Curreny Loans in India

REORGANISATION
1965-1974 Focus shifted to other sectors ICICI started export finance, concessional funding in industrially backward areas and loans for small enterprises

CONSOLIDATION
1975 - 1984 Set up state-level financial and technical institutions and the country's first specialized housing finance institution First financial institutions to harness the power of IT

LIBERALISATION
1985-1994 ICICI set up the country's first rating agency and the first venture capital company, and entered into asset management

Figure-2, History of ICICI Bank

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ICICI Bank: The Industrial Credit and Investment Corporation of India Limited (ICICI) was created in the year 1955 with an joint initiative of the World Bank, the Government of India, and representatives of Indian industry, for a common objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Besides funding from the World Bank and other multi-lateral agencies, ICICI was the major source of foreign currency loans to the Indian industry. Apart from this ICICI was also among the first Indian companies to raise funds from international markets. In 1977, ICICI sponsored the formation of Housing Development Finance Corporation. ICICI was also the first Indian institution to receive ADB loans and in In 1999, through an issue of American Depository Shares, ICICI was listed on the New York Stock Exchange. With the new regulations in the banking industry and increasing opportunities for retail banking, ICICI set up ICICI Bank in 1994. Later in 2000, ICICI Bank acquired Bank of Madura and in 2002, ICICI Ltd., along with two other group companies, was merged with ICICI Bank. Through these mergers, and reorganization, ICICI Bank emerged as a formidable force in the banking industry. The Bank has a network of 2,529 branches and about 6,102 ATMs in India, and has a presence in 19 countries, including India. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia ICICI Bank provides a wide array of banking products and financial services to its retail and corporate customers. It has a wide variety of delivery channels and specialized affiliates and subsidiaries that ensure the flow of its offerings in the areas like investment banking, venture capital, life and non-life insurance and asset management. This bank is also India's largest credit card issuer. ICICI Bank also has the largest international balance sheet among all the banks in India.
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State Bank of India State Bank of India (SBI) is a multinational banking and financial services company based in India. It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. As of December 2012, it had assets of US$501 billion and 15,003 branches, including 157 foreign offices, making it the largest banking and financial services company in India by assets. 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 presidencies banks Bank of Calcutta and Bank of Bombayto form the Imperial Bank of India, which in turn became the State Bank of India. Government of India nationalized the Imperial Bank of India in 1955, with 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 a regional banking behemoth and has 20% market share in deposits and loans among Indian commercial banks.

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History of state bank of India

The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of the royal charters. These three banks received the exclusive right to issue paper currency till 1861 when with the Paper Currency Act, the right was taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921, and the re-organized banking entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint stock company but without Government participation.

Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the Imperial Bank of India became the State Bank of India. The government of India recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority.

In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made eight state banks associates of SBI. A process of consolidation began on 13 September 2008, when the State Bank of Saurashtra merged with SBI.

SBI has acquired local banks in rescues. The first was the Bank of Behar (est. 1911), which SBI acquired in 1969, together with its 28 branches. The next year SBI acquired National Bank of Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired KrishnaramBaldeo Bank, which had been established in 1916 in Gwalior State, under the patronage of Maharaja MadhoRaoScindia. The bank had been the DukanPichadi, a small moneylender, owned by the Maharaja. The new banks first manager was Jall N. Broacha, a Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in Kerala.

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The State Bank of India and all its associate banks are identified by the same blue keyhole logo. The State Bank of India wordmark usually has one standard typeface, but also utilizes other typefaces. On October 7, 2013, Arundhati Bhattacharya became the first woman to be appointed Chairperson of the bank.

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Products OF ICICI bank:

Personal Banking Privilege Banking Business Banking

ICICI BANK
Wealth Management Corporate Banking

Private Banking

NRI Banking

Figure-3, Products

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Personal Banking

Privilege Banking

Private Banking Banking

Corporate Banking Commercial Banking

NRI Banking Bank Accounts

Business Banking Current Account and Services

Account & Deposits

Dedicated Service Area

Cards

Priority Services

Insurance

Global Markets

Money Transfer

Business Loans

Loans

Privilege Delights

Investment Products Advisory

Investment Banking

Loans

Trade Services

Insurance

Weekend Gateways

FI, Capital Markets Investment & Custodial s Services

Advisory Services

DEMAT

Account Deposits

and Investment Banking Real Services Estate

Project Finance

Insurance

Investments

Cards

Agri& Rural

Loans

Privileges

Internet Banking Mobile Banking

Insurance Investments

Table 2 : ICICI bank products

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Figure 4: organization chart

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DEPOSIT

LOANS

CARDS

DIFFERENT CREDIT CARDS

Saving Account

Home Loans

Consumer Cards

SBI

International Cards

Life Plus Senior Citizens Saving Account

Loan Against Property Personal Loans

Credit Card

SBI GOLD Cards

Fixed Deposits

Travel Card

SBI Gold Master Cards

Security Deposits Recurring Deposits

Car Loan Loan Against Securities

Debit Cards Commercial Cards

Your City Your Cards

Tax Saver Fixed Deposit Salary Account

Two Wheeler Preapproved Loans

Corporate Cards Prepaid Card

Partnership Cards

Advantage Woman Saving Account

Retail Asset

Purchase Card

SBI Employee Cards

Rural Saving Account PeoplesSaving Account

Farmer Finance Business Installment Loans

Distribution Cards Business Card SBI Advantage Cards

Freedom

Flexi Cash

Merchant

TABLE: 3 SBI products

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Literature review

This paper investigates the relationship between accounting information and stock returns of selected Indian stocks pertaining to Information Technology, Banking and Pharmacy sectors over the past tenyears starting from 2001 to 2010. In this research work a simple financial score is designed to captureshort term changes in firms operating efficiency, Profitability and Financial policy. Investigatingaccounting information and stock returns is a method adopted in Fundamental analysis, which ishelpful in predicting future stock returns and for explaining the momentum phenomenon in stockprices. For the purpose of this research work were chosen from Banking, Pharmacy and InformationTechnology. For a period of ten years the data pertaining to operating efficiency, profitability andfinancial policy was ascertained. All this data is then put into F SCORE as developed by Piotroski in theyear 2000. The score values and market returns as provided by the companies were correlated toinvestigate the relationship between the score and the market adjusted returns. The goal of this paperis to show that investors can create a stronger value portfolio by using simple historical financial performance.By :Venkates CK1*, Dr.Madhu Tyagi2, Dr.Ganesh L(1(Research Scholar, IGNOU, MaidanGhari, New Delhi) Assistant Professor, GFGC, Kadugudi, Bangalore) Indian economy has been recording impressive growth rates since 1991. The main thrust of the Financial sector reforms has been the creation of efficient and stable financial institutions and development of the markets, especially the money and government securities market. In addition, Fiscal correction was undertaken and reforms in the banking and external sector were also Initiated. The year 1991-92 is the year of remarkable initiatives taken by the Government of India affecting the various facets of the Indian economy. Considering the scenario in which Banking sector was in the year 1990-91, a number of initiatives were taken by the Reserve Bank of India for improving the efficiency of the banking sector and for opening up the banking Sector. Taking this as a base, the author intends to examine the impact of the reforms on Credit Deposit ratio, Credit to GDP ratio, Investment in Government securities to deposits, share of Business of public sector banks, the proportion of various types of advances etc. Further, it goes On to examine the difference in various aspects of the working results of the Public sector banks And private banks when compared with foreign banks.By:KARAN WALIA(Asian Journal of Research in Banking and FinanceVol.2 Issue 4, April 2012, ISSN 2249 7323)
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/this article reports the results of a questionnaire survey in September, October/November 2010 on the use of Fundamental and Technical analysis by brokers/fund managers in Indian stock market to form their forecasts of share price movements. The findings of the research reveal that more than 85 percent of the respondents rely upon both Fundamental and Technical analysis for predicting future price movements at different time horizons. This paper envisages on different trends of the stock market and it relates the trends towards the usage of Fundamental and Technical analysis. The results show that when the market is bullish participants rely more upon Technical analysis and when the market is bearish it is the other way round the participants rely upon the Fundamental analysis. This paper gives special emphasis on the usage of these tools while taking positions in Large Cap, Mid cap and Small Cap companies. For this purpose various companies across the sectors were chosen, which includes, Banking, Information Technology, Manufacturing, Pharma etc. The study covers different Organizational set ups such as, Licensed Broking firms, Licensed Banks, Mutual Fund Companies, Equity research firms and others. The study was conducted in all major Indian cities by serving a structured questionnaire to individuals such as, Directors, Fund Managers, Research Analysts, Senior Brokers, Junior Brokers, Portfolio managers and others.( BY:Venkatesh. C. K. and MadhuTyagi (BANGLADESH RESEARCH PUBLICATIONS JOURNAL ISSN: 1998-2003, Volume: 5, Issue: 3, Page: 167-174, May -June, 2011) Indian economy has been recording impressive growth rates since 1991. The main thrust of the financial sector reforms has been the creation of efficient and stable financial institutions and development of the markets, especially the money and government securities market. In addition, fiscal correction was undertaken and reforms in the banking and external sector were also initiated. The year 199192 is the year of remarkable initiatives taken by the Government of India affecting the various facets of the Indian economy. Considering the scenario in which banking sector was in the year 199091, a number of initiatives were taken by the Reserve Bank of India for improving the efficiency of the banking sector and for opening up the banking sector. Taking this as a base, the author intends to examine the impact of the reforms on Credit Deposit ratio, Credit to GDP ratio, Investment in Government securities to deposits, share of business of public sector banks, the proportion of various types of advances etc. Further, it goes on to examine the difference in various aspects of the working results of the Public sector banks and private banks when compared with foreign banks.(By:Walia Karan (M.M. Institute of
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Management, Maharishi Markandeshwar University, Mullana, Ambala))Investment decisions, in all sectors, have been gaining paramount importance, warranting the investors to be continuously cautious of risk and return involved in the same. The faculty investment analysis calls for planned and meaningful appraisal of both internal and external factors affecting the returns. Ever since Indian economy opened its doors to MNCs, the Indian banking sector has been witnessing bizarre changes in terms of new products and services and stiff competition as well. The sort of IPOs that have been taking place in banking sector are amazing. In the light of these recent developments, a careful analysis of the profitability of Indian banking sector is inevitable. The present study attempts to analyze the profitability of the three major banks in India: SBI, ICICI, and HDFC. The variables taken for the study are Operating Profit Margin (OPM), Net Profit Margin (NPM), Return on Equity (RoE), Earnings per Share (EPS), Price Earnings Ratio (PER), Dividends per Share (DPS), and Dividends Payout Ratio (DPR). The study brings out the comparative efficiency of SBI, ICICI, and HDFC.( By: P JanakiRamudu , S DurgaRao)

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Background of the study

What is analysis? The examination and evaluation of the relevant information to select the best course of action from among various alternatives. The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movement in the market.

What is technical analysis? Technical analysis is a method of evaluating securities by analyzing the statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.

What is fundamental analysis? Fundamental Analysis involves examining the economic, financial and other qualitative and quantitative factors related to a security in order to determine its intrinsic value. It attempts to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies). Fundamental analysis, which is also known as quantitative analysis, involves delving into a companys financial statements (such as profit and loss account and balance sheet) in order to study various financial indicators (such as revenues, earnings, liabilities, expenses and assets). Such analysis is usually carried out by analysts, brokers and savvy investors. Many analysts and investors focus on a single number--net income (or earnings)--to evaluate performance. When investors attempt to forecast the market value of a firm, they frequently rely on earnings. Many institutional investors, analysts and regulators believe earnings are not as relevant as they once were. Due to nonrecurring events, disparities in

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measuring risk and management's ability to disguise fundamental earnings problems, other measures beyond net income can assist in predicting future firm earnings.

Two Approaches of fundamental analysis While carrying out fundamental analysis, investors can use either of the following approaches: 1 .Top-down approach: In this approach, an analyst investigates both international and national economic indicators, such as GDP growth rates, energy prices, inflation and interest rates. The search for the best security then trickles down to the analysis of total sales, price levels and foreign competition in a sector in order to identify the best business in the sector. 1. Bottom-up approach: In this approach, an analyst starts the search with specific businesses, irrespective of their industry/region. How does fundamental analysis works? Fundamental analysis is carried out with the aim of predicting the future performance of a company. It is based on the theory that the market price of a security tends to move towards its 'real value' or 'intrinsic value.' Thus, the intrinsic value of a security being higher than the securitys market value represents a time to buy. If the value of the security is lower than its market price, investors should sell it. The steps involved in fundamental analysis are: 1. Macroeconomic analysis, which involves considering currencies, commodities and indices. 2. Industry sector analysis, which involves the analysis of companies that are a part of the sector. 3. Situational analysis of a company. 4. Financial analysis of the company. 5. Valuation The valuation of any security is done through the discounted cash flow (DCF) model, which takes into consideration: 1. Dividends received by investors 2. Earnings or cash flows of a company 3. Debt, which is calculated by using the debt to equity ratio and the current ratio (current assets/current liabilities)

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Fundamental Analysis Tools These are the most popular tools of fundamental analysis. Earnings per Share EPS Price to Earnings Ratio P/E Projected Earnings Growth PEG Price to Sales P/S Price to Book P/B Dividend Payout Ratio Dividend Yield Book Value Return on Equity Ratio analysis Financial ratios are tools for interpreting financial statements to provide a basis for valuing securities and appraising financial and management performance. A good financial analyst will build in financial ratio calculations extensively in a financial modeling exercise to enable robust analysis. Financial ratios allow a financial analyst to: Standardize information from financial statements across multiple financial years to allow comparison of a firms performance over time in a financial model. Standardize information from financial statements from different companies to allow apples to apples comparison between firms of differing size in a financial model. Measure key relationships by relating inputs (costs) with outputs (benefits) and facilitates comparison of these relationships over time and across firms in a financial model. In general, there are 4 kinds of financial ratios that a financial analyst will use most frequently, these are: Performance ratios Working capital ratios Liquidity ratios Solvency ratios

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These 4 financial ratios allow a good financial analyst to quickly and efficiently address the following questions or concerns: Performance ratios What return is the company making on its capital investment? What are its profit margins? Working capital ratios How quickly are debts paid? How many times is inventory turned? Liquidity ratios Can the company continue to pay its liabilities and debts? Solvency ratios (Longer term) What is the level of debt in relation to other assets and to equity? Is the level of interest payable out of profits?

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WHY ONLY FUNDAMENTAL ANALYSIS Long-term Trends Fundamental analysis is good for long-term investments based on long-term trends, very long-term. The ability to identify and predict long-term economic, demographic, technological or consumer trends can benefit patient investors who pick the right industry groups or companies. Value Spotting Sound fundamental analysis will help identify companies that represent a good value. Some of the most legendary investors think long-term and value. Graham and Dodd, Warren Buffett and John Neff are seen as the champions of value investing. Fundamental analysis can help uncover companies with valuable assets, a strong balance sheet, stable earnings, and staying power. Business insights One of the most obvious, but less tangible, rewards of fundamental analysis is the development of a thorough understanding of the business. After such pains taking research and analysis, an investor will be familiar with the key revenue and profit drivers behind a company. Earnings and earnings expectations can be potent drivers of equity prices. Even some technicians will agree to that. A good understanding can help investors avoid companies that are prone to shortfalls and identify those that continue to deliver. In addition to understanding the business, fundamental analysis allows investors to develop an understanding of the key value drivers and companies within an industry. A stock's price is heavily influenced by its industry group. By studying these groups, investors can better position themselves to identify opportunities that are high-risk (tech), low-risk (utilities), growth oriented (computer), value driven (oil), non-cyclical (consumer staples), cyclical (transportation) or income-oriented (high yield). Knowing Who's Who Stocks move as a group. By understanding a company's business, investors can better position themselves to categorize stocks within their relevant industry group. Business can change rapidly and with it the revenue mix of a company. This has happened with many of the pure internet retailers, which were not really internet companies, but plain retailers. Knowing a company's business and being able to place it in a group can make a huge difference in relative valuations. The charts of the technical analyst may give all kinds of profit alerts, signals and alarms, but theres little in the charts that tell us why a group of people make the choices that create the price patterns.

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Problem of the study:

What is the impact of macroeconomic factors/variables on the share performance of Private and public sector banks? What is the relationship between the macro economic factors/variables share prices of SBI and ICICI banks? How companys financial data are affecting to the stock market?

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Objective of the study To analyze economy by using some economic indicators like GDP, and inflation rate etc for the selected period of 5 years. To analyze the industry especially private and Public bank industry and for the selected period of 5 years. To carry out financial and non-financial analysis of ICICI bank And SBI bank as a whole for the selected period. To analysis how banking sector manages the risk. To know with help of fundamental analysis which stock is better? Either ICICI or SBI?

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Research methodology: Research methodology is a way to systematically solve the research problem. The research methodology using for find out the solution of the research problem is analytical research methodology and some extend descriptive research methodology

3.1 Research Design: Causal study Experiment Study involving the manipulation or control of one or more variables to determine the effect on another variable. Ex Post Facto study After-the-fact report on what happened to the measured variable

3.2 Data sources: Secondary data has been collected from various sources to analyze the fundamentals. The secondary data has been collected from Annual reports ACE equity database Internet-websites Journals 5.3 Data collection method: Data was collected as a survey using a internet and annual data of the banks.

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Banking industry analysis An industry analysis helps inform business managers about the viability of their current strategy and on where to focus a business among its competitors in an industry. The analysis examines factors such as competition and the external business environment, substitute products, management preferences, buyers and suppliers. Industry analysis involves reviewing the economic, political and market factors that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers, the condition of competitors. And the likelihood of new market entrants. Data needs for industry analysis Industry analysis requires a variety of quantitative and qualitative data. Though one single source for all the data needs might not found, industry associates, business publications and the department of economic analysis perform a comprehensive industry analysis. A suggestive list of data categories that are utilized for performing industry analysis is listed below. Product lines Product growth Complementary product Economics of scale Suppliers Labors Substitute products Buyers and their behavior Product pattern (cyclical, seasonal) Cost structure

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Tools for industry analysis Cross-sectional industry Industry performance over time Differences in industry risk Prediction about market behavior Competitors over the industry life cycle

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Proposed Research work for semester 4 Data Analysis and Interpretation Economic analysis
Inflation factor National income distribution Growth rate of gross domestic product Industrial growth rate Saving and investments Government budget and deficit Interest rate Inflation rate Balance of payment,forex reserves and exchange rate

Industry analysis Industry life cycle

Pioneering stage Rapid growth stage Maturity and stabilization stage Decline stage

Porter 5 forces model Study of the structure and characteristics of an industry Company analysis Strategy analysis Financial analysis Ratio analysis Profit and loss a/c analysis Balance sheet analysis Results and Findings Limitations of the Study Conclusion/Suggestions

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Bibliography
http://en.wikipedia.org/wiki/History_of_banking http://en.wikipedia.org/wiki/State_Bank_of_India http://en.wikipedia.org/wiki/Banking_in_India http://en.wikipedia.org/wiki/ICICI_Bank http://mpra.ub.uni-muenchen.de/11510/1/IJMRT-2008.pdf http://en.wikipedia.org/wiki/Imperial_Bank_of_India

http://www.hoffmanlabs.com/vmsfaq/vmsfaq.pdf http://www.tridentindia.com/Pdf/InvestorsDesk_AnnualReport_202006-7.pdf

http://ir.lib.sfu.ca/retrieve/3836/etd2519.pdf http://www.era.lib.ed.ac.uk/bitstream/1842/3277/1/Di Guo PhD thesis 2008.pdf http://www.eSocialSciences.com/data/articles/Document12362008210.2715876.pdf http://en.wikipedia.org/wiki/Economic_development_in_India http://en.wikipedia.org/wiki/Finance_in_India

http://129.3.20.41/eps/mac/papers/9706/9706004.pdf http://129.3.20.41/eps/mac/papers/9706/9706004.ps.gz

http://en.wikipedia.org/wiki/Stock_selection_criterion

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Page 39 of 98

Analysis of Indian Economy

India's economy expanded 8.8% in the second quarter from a year earlier, compared to an 8.6% on-year expansion in the first, lifted by robust activity in manufacturing. Agricultural output along with strong development in the Industrial, Mining and banking sector have helped to boost the Indian economy. Agricultural output raised 2.8 per cent y-o-y thanks to improved harvests. Industrial production increased by 12% and in the mining sector by 9%. According to 2010 data the shares of banking sector value add in GDP has been increased 7.7% from 2.5%.The forecasters have assigned highest 29.6 per cent chance that it will fall in 6.0-6.9 per cent in 201011. They raised their forecasts slightly for agriculture growth to 4.0 percent from 3.5 percent, for industry to 9.0 percent from 8.1 percent and for services it was steady at 9.0 percent. The survey showed the economists expect GDP growth in the April-June quarter to be 8.1 percent up from 7.9 percent in the last survey. For the July-September quarter, GDP growth is placed at 8.3 percent. The Reserve Bank of India has stated that it had seen an annual growth of 8.5% steadily. The main priority of the Reserve Bank is to curb the ongoing inflation, which peaked at 11% last month. Interest rates have been increased by the banks to contain the inflation, but it could slow down the growth of the Indian economy in the coming months. But even thought there has been a rise in the interest rates there hasnt been much change in the distribution of loans, the Indian customer is hardly affected with the hiked interest rates. Almost every sector of the economy is poised to grow faster and a 9 per cent growth in 2010-11 is not difficult if domestic policies and external factors do not come in the way. Expert expects that India s economy to grow by 8.1% in 2010 based on a steep gain in industrial output and resurgent private consumption investment and exports. Were these scenarios to continue growth would lift further to 8.3% in 2011 said Chief Economist. They also expect the Reserve Bank of India (RBI) to continue gradually raising interest rates and to keep a tight leash on liquidity to tame inflation. Recently RBI changed the repo rate from 5.75% to 6% and reverse repo rate 4.5% to 5%. CRR rate they keeping unchanged. This six time I a year they revise key parameter to control inflation. In April, the World Bank had projected India's GDP would grow at 6.1 per cent in the current financial year and at 6.7 per cent the following year.

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 THE International Monetary Fund (IMF), in its World Economic Outlook, projected an average growth rate of about 3.75 per cent in market prices for India in 2013-14, which is expected to pick up to 5.1 per cent next year. India's GDP growth slowed to 5 per cent in the year ended March from an average of 8 per cent over the past decade. The World Bank said the pace of economic activity in 2013-14 will be hampered by a weak outturn during the first quarter. In addition, two consecutive months (July-August) of negative business sentiment and higher interest rates may curb the potential for recovery in the second quarter of 2013-14 even after manufacturing output rebounded in July. "Although output growth in the first quarter of the current fiscal year fell to 4.4 per cent, growth is expected to rebound strongly in the second half of 2013-2014 with core inflation trending down, a bumper crop expected in agriculture, and exports likely to benefit substantially from the rupee's depreciation,"

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The economic analysis aims at determining if the economic climate is conclusive and is capable of encouraging the growth of business sector, especially the capital market. When the economy expands, most industry groups and companies are expected to benefit and grow. When the economy declines, most sectors and companies usually face survival problems. Hence, to predict share prices, an investor has to spend time exploring the forces operating in overall economy. Exploring the global economy is essential in an international investment setting. The selection of country for investment has to focus itself to examination of a national economic scenario. It is important to predict the direction of the national economy because economic activity affects corporate profits, not necessarily through tax policies but also through foreign policies and administrative procedures.

Tools for Economy Analysis The most used tools for performing economic analysis are:
Gross Domestic Product (GDP) Monetary policy and Liquidity Inflation Interest rates International influences. Fiscal policy Influences on long term expectations Influences on short term expectations

1)

Gross Domestic product :

GDP is one measure of economic activity. This is the total amount of goods and services produced in a country in a year. It is calculated by adding the market values of all the final goods and services produced in a year. It is a gross measurement because it includes the total amount of goods and services produced, of which some merely replace goods that have depreciated or have worn out. It is domestic production because it includes only goods and services produced within the country.

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2) Inflation Inflation can be defined as a trend of rising prices caused by demand exceeding supply. Over time, even a small annual increase in prices of say 1 % will tend to influence the purchasing power of the nation. In others word, if prices rise steadily, after a number of years, consumers will be able to buy only fewer goods and services assuming income level does not change with inflation.

3) Interest rate
Interest rate is the price of credit. It is the percentage fee received or paid by individual or organization when they lend and borrow money. In general, increases in interest rate, whether caused by inflation, government policy, rising risk premium, or other factors, will lead to reduced borrowing and economic slowdown.

4) International influences
Rapid growth in overseas market can create surges in demand for exports, leading to growth in export sensitive industries and overall GDP. In contrast, the erection of trade barriers, quotas, currency restrictions can hinder the free flow of currency, goods, and services, and harm the export sector of an economy.

5) Fiscal policy
The fiscal policy of the government involves the collection and spending of revenue. In particular, fiscal policy refers to the efforts by the government to stimulate the economic directly, through spending. .

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1) GDP (Growth rate of gross domestic product):

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP

NX

where: "C" is equal to all private consumption, or consumer spending, in a nation's economy "G Is the sum of government spending "I" is the sum of all the country's businesses spending on capital "NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

YEAR 2013 2012 2011 2010 2009

RATE 4.40% 6.50% 6.80% 10.10% 7.40%

12 GDP RATE (%) 10 8 6 4 2 0 2009 2010 2011 YEAR 2012 2013 Series1

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As, seen the above chart, we can see that GDP is in the moderate stage so; it will help to growing economy. Indian GDP is a stable. It cannot be falling under 4% .so it is good for economy.
2) INFLATION RATE: The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.
year 2009 2010 2011 2012 2013
16 14 12 inflation rate(%) 10 8 6 4 2 0 2009 2010 2011 year 2012 2013 Series1

Inflation rate 14.97 9.47 6.49 11.17 9.13

Interpretation Inflation is a state of the economy in which the prices are raising and the value of money is falling. When the inflation rate is high, it will have harmful efforts to .here, though, the inflation rate is moderate, it good for economy .as, a investor prevailing rate of inflation in the economy in the past, its trend and its likely course of movement in the future.

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3) INTEREST RATE:
Interest is charged by lenders as compensation for the loss of the asset's use. In the case of lending money, the lender could have invested the funds instead of lending them out. With lending a large asset, the lender may have been able to generate income from the asset should they have decided to use it themselves.

YEAR 2009 2010 2011 2012 2013

9 8 7 6 5 4 3 2 1 0 2009

INTREST RATE 4.8 4.6 6.5 8.5 8

INTREST RATE(%)

Series1

2010

2011 YEAR

2012

2013

Interpretation Interest rate that prevails in the economy is low; it makes cheaper credit available to the companies operating in the economy. Interest rate is high; cost of credit will also be high. Which will affect the profitability of the company? If lower the cost of int. lowers the cost of production. And higher profitability of the company. If higher the profitability, higher the intrinsic value shares of the company.

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4) NATIONAL INCOME: National income refers to, the market value of goods and services, produced by an economy during the period of one year. Per capita income= national income of the year Population of the year
year 2009 2010 2011 2012 2013 In trillion 3.707 4.133 4.497 4.749 4.85

6 national income(in trillion) 5 4 3 2 1 0 2009 2010 2011 year 2012 2013 Series1

Interpretation National income data of a country provides a summary statement of the economic activity of the country .national income of a country is expressed in monetary terms. a study of the national income statistics of a country will give an idea about the economic health of the country. Hence, here is a national income is growing so that, it should be consider under the healthy economy.

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5) POPULATION
The total number of person inhabiting a country or any distintic area.
Year Population(million) 2009 1166.079 2010 1173.108 2011 1189.173 2012 1205.074 2013 1217.075

Interpretation The domestic demand for a product/service depends upon the size of the population of the country. When the population grows the demand for all goods and services grows, further, high growth in population leads to the availability of cheaper labor which has a direct influence on the cost of production. Increase in the population coupled with purchasing power increases the size of the market.

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Page 49 of 98

RATIO ANALYSIS It refers to the systematic use of ratios to interpret the financial statements in terms of the operating performance and financial position of a firm. It involves comparison for a meaningful interpretation of the financial statements.

A. Earnings Per share ratio: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. EPS indicates the profitability of a company. Earnings per Share are the single most popular variable in dictating a shares price. Earnings per Share are the Net Income (profit) of a company divided by the number of outstanding shares. And here EPS of the company increasing. This shows that company is earning profit. Calculated as:

B. Dividend Per Share Ratio: The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. DPS can be calculated by using the following formula:

D - Sum of dividends over a period (usually 1 year) SD - Special, one time dividends S - Shares outstanding for the period

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C. Debt Equity Ratio: Debt equity ratio shows the relative claims of creditors (Outsiders) and owners (Interest) against the assets of the firm. Thus this ratio indicates the relative proportions of debt and equity in financing the firms assets. It can be calculated by dividing outsider funds (Debt) by shareholder funds (Equity).Debt / Equity is a measure of all of a company's future obligations on the balance sheet relative to equity. Debt equity ratio = Outsider Funds (Total Debts) Shareholder Funds or Equity The outsider fund includes long-term debts as well as current liabilities. The shareholder funds include equity share capital, preference share capital, reserves and surplus including accumulated profits. However fictitious assets like accumulated deferred expenses etc should be deducted from the total of these items to shareholder funds. The shareholder funds so calculated are known as net worth of the business. D. Proprietary Ratio: This ratio indicates the proportion of total assets financed by owners. If the ratio is high, this indicates that a company has a sufficient amount of equity to support the functions of the business, and probably has room in its financial structure to take on additional debt, if necessary. Conversely, a low ratio indicates that a business may be making use of too much debt or trade payables, rather than equity, to support operations (which may place the company at risk of bankruptcy). It is calculated by dividing proprietor (Shareholder) funds by total assets.

E. Net profit Ratio: It measures the relationship between net profit and sales of a firm. It indicates managements efficiency in manufacturing, administrating, and selling the products. It is calculated by dividing net profit after tax by sales. Net profit margin or ratio = Earnings after tax X 100 Net Sales F. Return On Equity: Of all the fundamental ratios that investors look at, one of the most important is return on equity. It's a basic test of how effectively a company's management uses investors' money - ROE shows whether management is growing the company's value at an acceptable rate. ROE is calculated as:

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G. Return On Assets: Return on assets, which, offering a different take on management's effectiveness reveals how much profit a company earns for every dollar of its assets. Assets include things like cash in the bank, accounts receivable, property, equipment, inventory and furniture. ROA is calculated like this:

H. Current Ratio: The current ratio measures the short-term solvency of the firm. It establishes the relationship between current assets and current liabilities. It is calculated by dividing current assets by current liabilities.

Current assets include cash and bank balances, marketable securities, inventory, and debtors, excluding provisions for bad debts and doubtful debtors, bills receivables and prepaid expenses. Current liabilities includes sundry creditors, bills payable, short- term loans, income-tax liability, accrued expenses and dividends payable. I. Liquid Ratio: It has been an important indicator of the firms liquidity position and is used as a complementary ratio to the current ratio. It establishes the relationship between quick assets and current liabilities. It is calculated by dividing quick assets by the current liabilities.

Quick assets are those current assets, which can be converted into cash immediately or within reasonable short time without a loss of value. These include cash and bank balances, sundry debtors, bills receivables and short-term marketable securities.

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J. Total Assets Turnover Ratio: This ratio shows the firms ability to generate sales from all financial resources committed to total assets. Asset turnover ratio is the ratio of a company's sales to its assets. It is an efficiency ratio which tells how successfully the company is using its assets to generate revenue. If a company can generate more sales with fewer assets it has a higher turnover ratio which tells it is a good company because it is using its assets efficiently. A lower turnover ratio tells that the company is not using its assets optimally. Total asset turnover ratio is a key driver of return on equity as discussed in the DuPont analysis. It is calculated by dividing sales by total assets.

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Balance sheet of ICICI bank

(Rs. In crore..)

Mar '13

Mar '12

Mar '11

Mar '10

Mar '09

12 mths 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 1,153.64 1,153.64 4.48 0.00 65,547.84 0.00 66,705.96 292,613.63 145,341.49 437,955.12 32,133.60 536,794.68 Mar '13 12 mths 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) 19,052.73 22,364.79 290,249.44 171,393.60 4,647.06 0.00 4,647.06 0.00 29,087.07 536,794.69 802,383.84 0.00 578.65

12 mths

12 mths

12 mths

12 mths

1,152.77 1,152.77 2.39 0.00 59,250.09 0.00 60,405.25 255,499.96 140,164.91 395,664.87 32,998.69 489,068.81 Mar '12 12 mths

1,151.82 1,151.82 0.29 0.00 53,938.82 0.00 55,090.93 225,602.11 109,554.28 335,156.39 15,986.35 406,233.67 Mar '11 12 mths

1,114.89 1,114.89 0.00 0.00 50,503.48 0.00 51,618.37 202,016.60 94,263.57 296,280.17 15,501.18 363,399.72 Mar '10 12 mths

1,463.29 1,113.29 0.00 350.00 48,419.73 0.00 49,883.02 218,347.82 67,323.69 285,671.51 43,746.43 379,300.96 Mar '09 12 mths

20,461.29 15,768.02 253,727.66 159,560.04 4,614.69 0.00 4,614.69 0.00 34,937.10 489,068.80 923,037.16 0.00 524.01

20,906.97 13,183.11 216,365.90 134,685.96 4,744.26 0.00 4,744.26 0.00 16,347.47 406,233.67 931,651.64 0.00 478.31

27,514.29 11,359.40 181,205.60 120,892.80 7,114.12 3,901.43 3,212.69 0.00 19,214.93 363,399.71 694,948.84 38,597.36 463.01

17,536.33 12,430.23 218,310.85 103,058.31 7,443.71 3,642.09 3,801.62 0.00 24,163.62 379,300.96 803,991.92 36,678.71 444.94

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Profit & Loss account of ICICI Bank

(Rs. In crore)

Mar '13

Mar '12

Mar '11

Mar '10

Mar '09

Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative ExpCapitalised Operating Expenses Provisions & Contingencies Total Expenses 26,209.18 3,893.29 0.00 490.16 9,503.20 0.00 9,012.89 4,873.76 40,095.83 Mar '13 22,808.50 3,515.28 0.00 42.26 8,214.12 0.00 7,850.44 3,921.22 34,580.16 Mar '12 16,957.15 2,816.93 0.00 483.52 7,212.96 0.00 6,617.24 3,896.17 27,470.56 Mar '11 17,592.57 1,925.79 6,056.48 619.50 2,780.03 0.00 10,221.99 1,159.81 28,974.37 Mar '10 22,725.93 1,971.70 5,977.72 678.60 4,098.22 0.00 10,795.14 1,931.10 35,452.17 Mar '09 40,075.60 8,345.70 48,421.30 33,542.65 7,502.76 41,045.41 25,974.05 6,647.89 32,621.94 25,706.93 7,292.43 32,999.36 31,092.55 8,117.76 39,210.31

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

8,325.47 0.00 7,054.23 15,379.70 0.00 2,307.23 292.16 72.22 200.00 578.65 2,878.03 0.00 2,599.39 9,902.29 15,379.71

6,465.26 0.00 5,018.18 11,483.44 0.00 1,902.04 220.35 56.09 165.00 524.01 2,306.49 0.33 2,122.39 7,054.23 11,483.44

5,151.38 0.00 3,464.38 8,615.76 0.00 1,612.58 202.28 44.73 140.00 478.31 1,782.45 0.26 1,814.86 5,018.18 8,615.75

4,024.98 -0.09 2,809.65 6,834.54 0.00 1,337.86 164.04 36.10 120.00 463.01 1,867.22 1.04 1,501.90 3,464.38 6,834.54

3,758.13 -0.58 2,436.32 6,193.87 0.00 1,224.58 151.21 33.76 110.00 444.94 2,008.42 0.01 1,375.79 2,809.65 6,193.87

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Financial ratio of ICICI bank

RATIO Per Share Ratios EPS DPS Leverage Ratio Debt Equity Ratio Proprietary Ratio Profitability ratios NP Ratio ROE ROA Liquidity Ratios Current Ratio Quick Ratio Activity Ratio Total Assets Turnover 2013 2012 2011 2010 2009

72.22 20.00 2.18 0.12

56.09 16.50 2.32 0.12

44.73 14.00 1.98 0.14

36.10 12.00 1.83 0.14

33.76 11.00 1.36 0.13

17.19 7.22 0.015

15.75 5.61 0.013

15.79 4.47 0.012

12.17 3.61 0.011

9.74 3.37 0.009

0.98 10.53 0.08

1.00 9.37 0.08

0.96 15.86 0.07

0.14 14.70 0.10

0.13 5.94 0.11

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1) Earnings per share:

YEAR 2009 2010 2011 2012 2013

RATIO 33.76 36.1 44.73 56.09 72.22

EPS
80 70 60 50 40 30 20 10 0 2009 2010 2011 YEAR 2012 2013

Interpretation: EPS is the profitability of the firm measures in terms of number of equity shares, which is derived by dividing the profit after tax by the number of equity shares. EPS calculation in a time series analysis indicates whether the firm EPS is increasing or decreasing. Over the years EPS of the firm is increasing which indicates that per share earnings of thefirm has increased, but this increase in EPS is invalid in the sense that the real earnings (ROE) have not increased.

RATIO

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2) Dividend per share:

YEAR 2009 2010 2011 2012 2013

RATIO 11 12 14 16.5 20

DPS
20 15 RATIO 10 5 0 2009 2010 2011 YEAR 2012 2013

Interpretation: sometimes the equity shareholders may not be interested in the EPS but in the return which they are actually receiving from the firm in the form of dividends. The amount of profits distributed to shareholders per share is known as DPS and it is calculated by dividing total profits distributed by number of equity share. Dividend per share over the years has increased which indicates that the amount of dividend distributed towards the shareholder has increased.

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3) Net profit Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 9.74 12.17 15.79 15.75 17.19

NP Ratio
20 15

RATIO

10 5 0 2009 2010 2011 YEAR 2012 2013

Interpretation: the NP ratio establishes the relationship between the net profits (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has increased over the years which mean that the overall profitability of the firm has increasingly year to year.

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4) Return on Equity:

YEAR 2009 2010 2011 2012 2013

RATIO 3.37 3.61 4.47 5.61 7.22

ROE
8 7 6 5 4 3 2 1 0 2009 2010 2011 YEAR 2012 2013

Interpretation: ROE examines profitably from the perspective of equity investors by relating profits available for the equity share holders with the book value of equity investments. The return from the point of view of equity shareholders may becalculated by comparing the net profit less preference dividend with their total contribution to the firm. Over the years ROE of the firm have increase which indicates that the funds of the owner have been used properly by the firm, and the firm has been able to earn satisfactory return for the owner.

RATIO

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5) Return on Asstes:

YEAR 2009 2010 2011 2012 2013

RATIO 0.009 0.011 0.012 0.013 0.015

ROA
0.016 0.014 0.012 0.01 0.008 0.006 0.004 0.002 0 2009 2010 2011 YEAR 2012 2013

Interpretation: ROA measures a profitability of the firm in terms of assets employed in the firm. ROE is calculated by establishing the relationship between the profits and the assists employed to earn that profit. ROA shows as to how much is the profit earn by the firm per rupee of assets used. ROA of the firm over the year is almost stable.

RATIO

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6) Current Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 0.13 0.14 0.96 1 0.98

Current Ratio
1 0.8 RATIO 0.6 0.4 0.2 0 2009 2010 2011 YEAR 2012 2013

Interpretation: current ratio shows the firms ability to pay its current liability out of its current assets. Generally a current ratio of 2:1 is considered to be satisfactory but sometimes it varies from industry to industry therefore the firms current ratio should be compared with the standard for the specific industry only. Current ratio of the firm has increased over the year which indicates that the firm has enough current assets to pay off its current liability.

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7) Quick Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 5.94 14.7 15.86 9.37 10.53

Quick Ratio
16 14 12 10 8 6 4 2 0 2009 2010 2011 YEAR 2012 2013

Interpretation: this ratio establishes the relationship between quick current assets and current liabilities. Quick current assets excludes inventory and prepaid expenses from current assets as they are potentially illiquid. This calculated by dividing quick assets by total current liabilities. Generally a quick ratio of 1:1 is considered to be satisfactory. Quick ratio of the firm is much higher than the ideal and its increasing over the years which means that the firm has enough quick assets to pay off its current liability.

RATIO

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8) Debt Equity Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 1.36 1.83 1.98 2.32 2.18

Debt Equity Ratio

2.5 2 RATIO 1.5 1 0.5 0 2009 2010 2011 YEAR 2012 2013

Interpretation:

Thus this ratio indicates the relative proportions of debt and equity in financing the firms assets. year to year debt equity ratio is increasing that shows the more leveraged the company and the greater its financial risk. It indicates what proportion of equity and debt the company is using to finance its assets.

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9) Proprietary Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 0.13 0.14 0.14 0.12 0.12

Proprietary Ratio
0.14 0.135 RATIO 0.13 0.125 0.12 0.115 0.11 2009 2010 2011 YEAR 2012 2013

Interpretation: This ratio used to determine the financial stability of the concern in general.
The proprietary ratio (also known as the equity ratio) is the proportion of shareholders' equity to total assets, and as such provides a rough estimate of the amount of capitalization currently used to support a business

Before 2011, ratio is increasing that shows bank have sufficient amount of equity to support the business activity. After 2011 proprietary ratio is constant that shows that a bank may be
making use of too much debt or trade payables, rather than equity, to support operations

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10) Total Assets Turnover:

YEAR 2009 2010 2011 2012 2013

RATIO 0.11 0.1 0.07 0.08 0.08

Total Assets Turnover Ratio

0.12 0.1

RATIO

0.08 0.06 0.04 0.02 0 2009 2010 2011 YEAR 2012 2013

Interpretation:

This ratio shows the firms ability to generate sales from all financial resources committed to total assets. The total asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales. Total assets turnover ratio is decreasing year to year that shows Company is not using its assets optimally.

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Balance Sheet of SBI Bank

(Rs. In crore)
Mar '13 Mar '12 Mar '11 Mar '10 Mar '09

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 684.03 684.03 0.00 0.00 98,199.65 0.00 98,883.68 1,202,739 .57 169,182.7 1 1,371,922 .28 95,455.07 1,566,261 .03 Mar '13 671.04 671.04 0.00 0.00 83,280.16 0.00 83,951.20 1,043,647.36 127,005.57 1,170,652.93 80,915.09 1,335,519.22 Mar '12 635.00 635.00 0.00 0.00 64,351.04 0.00 64,986.04 933,932.81 119,568.96 1,053,501.77 105,248.39 1,223,736.20 Mar '11 634.88 634.88 0.00 0.00 65,314.32 0.00 65,949.20 804,116.23 103,011.60 907,127.83 80,336.70 1,053,413.73 Mar '10 634.88 634.88 0.00 0.00 57,312.82 0.00 57,947.70 742,073.13 53,713.68 795,786.81 110,697.57 964,432.08 Mar '09

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 65,830.41 48,989.75 1,045,616 .55 350,927.2 7 6,595.71 0.00 6,595.71 409.31 47,892.03 1,566,261 .03 993,018.4 5 0.00 1,445.60 54,075.94 43,087.23 867,578.89 312,197.61 5,133.87 0.00 5,133.87 332.68 53,113.02 1,335,519.24 94,395.50 28,478.65 756,719.45 295,600.57 4,764.19 0.00 4,764.19 0.00 43,777.85 1,223,736.21 61,290.87 34,892.98 631,914.15 285,790.07 11,831.63 7,713.90 4,117.73 295.18 35,112.76 1,053,413.74 55,546.17 48,857.63 542,503.20 275,953.96 10,403.06 6,828.65 3,574.41 263.44 37,733.27 964,432.08

Contingent Liabilities Bills for collection Book Value (Rs)

899,565.18 0.00 1,251.05

790,389.59 0.00 1,023.40

429,917.37 166,449.04 1,038.76

614,603.47 152,964.06 912.73

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Profit & Loss account of ICICI Bank

(Rs. In crore) Particulars Mar-13 Mar-12 Mar-11 Mar-10 Mar-09

INCOME : Interest Earned 119,657.10 106,521.45 81,394.36 70,993.92 63,788.43 Other Income 16,034.84 14,351.45 15,824.60 14,968.15 12,694.31 135,691.94 120,872.90 97,218.96 85,962.07 76,482.74 Total I II. Expenditure Interest expended 75,325.80 63,230.37 48,867.96 47,322.48 42,915.29 Payments to/Provisions for Employees 18,380.90 16,974.04 15,211.62 12,754.65 9,747.31 Operating Expenses & Administrative 5,489.37 4,564.82 4,089.86 3,598.09 2,927.84 Expenses Depreciation 1,139.61 1,007.17 990.49 932.66 763.14 Other Expenses, Provisions & 15,405.37 16,613.19 13,104.80 7,428.11 5,948.51 Contingencies Provision for Tax 5,953.88 6,320.09 5,712.89 6,167.78 5,972.52 Fringe Benefit tax 0.00 0.00 0.00 0.00 142.00 Deferred Tax -107.97 455.93 976.82 -1,407.75 -1,055.10 121,586.96 109,165.61 88,954.44 76,796.02 67,361.51 Total II III. Profit & Loss Reported Net Profit 14,104.98 11,707.29 8,264.52 9,166.05 9,121.23 Extraordinary Items -22.96 -27.93 -10.23 -5.83 -1.71 Adjusted Net Profit 14,127.94 11,735.22 8,274.75 9,171.88 9,122.94 Prior Year Adjustments 0.00 5.71 -894.17 0.00 0.00 Profit brought forward 0.34 0.34 0.34 0.34 0.34 IV. Appropriations Transfer to Statutory Reserve 4,417.86 3,516.98 2,479.36 6,381.09 5,291.79 Transfer to Other Reserves 6,472.43 5,550.87 2,739.47 643.56 1,740.26 Trans. to Government /Proposed Dividend 3,214.69 2,645.15 2,151.52 2,141.40 2,089.18 Balance carried forward to Balance Sheet 0.34 0.34 0.34 0.34 0.34 Equity Dividend % 415.00 350.00 300.00 300.00 290.00 Earnings Per Share-Unit Curr 200.71 170.05 126.27 140.65 139.76 Earnings Per Share(Adj)-Unit Curr 200.71 170.05 126.27 140.65 139.76 Book Value-Unit Curr 1,445.60 1,251.06 1,023.40 1,038.77 912.73

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Financial ratio of SBI bank

RATIO Per Share Ratios EPS DPS Leverage Ratio Debt Equity Ratio Proprietary Ratio Profitability ratios NP Ratio ROE ROA Liquidity Ratios Current Ratio Quick Ratio Activity Ratio Total Assets Turnover 2013 2012 2011 2010 2009

206.20 41.50 1.71 0.06

174.46 35.00 1.51 0.06

116.07 30.00 1.84 0.05

144.37 30.00 1.56 0.06

143.67 29.00 0.93 0.06

10.39 20.65 0.009

9.68 17.49 0.008

8.50 13.03 0.006

10.54 14.45 0.008

12.03 14.37 0.009

0.84 12.15 0.09

0.82 12.05 0.09

0.77 8.50 0.08

0.04 9.07 0.09

0.04 5.74 0.10

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1) Earnings per share:

YEAR 2009 2010 2011 2012 2013

RATIO 143.67 144.37 116.07 174.46 206.2

EPS
250 200 RATIO 150 100 50 0 2009 2010 2011 YEAR 2012 2013

Interpretation: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a companys profitability. Over the years EPS of the firm is increasing which indicates that per share earnings of the firm has increased up to 206.20 and this is the highest EPS of last 5 years.

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2) Dividend per share:

YEAR 2009 2010 2011 2012 2013

RATIO 29 30 30 35 41.5

DPS
50 40 RATIO 30 20 10 0 2009 2010 2011 YEAR 2012 2013

Interpretation: The sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. Dividend per share over the years has increased which indicates that the companys profitability is very good; they also have good liquid so they pay to their shareholders good amount of dividend.

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3) Net profit Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 12.03 10.54 8.5 9.68 10.39

NP Ratio
14 12 10 RATIO 8 6 4 2 0 2009 2010 2011 YEAR 2012 2013

Interpretation: the NP ratio establishes the relationship between the net profits (after tax) of the firm and the net sales. Its measures the efficiency of the management in generating additional revenue over and above the total cost of operations. Net profit ratio has decreased over the years which mean that the overall profitability of the firm has fallen down.Which is not good sign for any company.

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4) Return on Equity:

YEAR 2009 2010 2011 2012 2013

RATIO 14.37 14.45 13.03 17.49 20.65

ROE
25 20 RATIO 15 10 5 0 2009 2010 2011 YEAR 2012 2013

Interpretation: Of all the fundamental ratios that investors look at, one of the most important is return on equity. It's a basic test of how effectively a company's management uses investors' money - ROE shows whether management is growing the company's value at an acceptable rate. Over the years ROE of the firm have increase which indicates that the funds of the owner have been used properly by the firm, and the firm has been able to earn satisfactory return for the owner

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5) Return on Asstes:

YEAR 2009 2010 2011 2012 2013

RATIO 0.009 0.008 0.006 0.008 0.009

ROA
0.009 0.008 0.007 0.006 RATIO 0.005 0.004 0.003 0.002 0.001 0 2009 2010 2011 YEAR 2012 2013

Interpretation: Return on assets, which, offering a different takes on management's effectiveness reveals how much profit a company earns for every dollar of its assets. Assets include things like cash in the bank, accounts receivable, property, equipment, inventory and furniture. ROA of the firm over the year is almost stable.

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6) Current Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 0.04 0.04 0.77 0.82 0.84

Current Ratio
1 0.8 RATIO 0.6 0.4 0.2 0 2009 2010 2011 YEAR 2012 2013

Interpretation: current ratio shows the firms ability to pay its current liability out of its current assets. Generally a current ratio of 2:1 is considered to be satisfactory but sometimes it varies from industry to industry. Current ratio of the firm is high of the last 5 years which shows that the firm have enough assets to pay the liability.

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7) Quick Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 5.74 9.07 8.5 12.05 12.15

Quick Ratio
14 12 10 RATIO 8 6 4 2 0 2009 2010 2011 YEAR 2012 2013

Interpretation: this ratio establishes the relationship between quick current assets and current liabilities. Quick current assets excludes inventory and prepaid expenses from current assets as they are potentially illiquid. Generally a quick ratio of 1:1 is considered to be satisfactory. Quick ratio of the firm is much higher than the ideal and its increasing over the years which means that the firm has enough quick assets to pay off its current liability.

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8) Debt Equity Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 0.93 1.56 1.84 1.51 1.71

Debt Equity Ratio

2 1.5 RATIO 1 0.5 0 2009 2010 2011 YEAR 2012 2013

Interpretation:

Thus this ratio indicates the relative proportions of debt and equity in financing the firms assets. year to year debt equity ratio is incresing that shows the more leveraged the company and the greater its financial risk. it indicates what proportion of equity and debt the company is using to finance its assets.

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9) Proprietary Ratio:

YEAR 2009 2010 2011 2012 2013

RATIO 0.06 0.06 0.05 0.06 0.06

Proprietary Ratio
0.06 0.05 RATIO 0.04 0.03 0.02 0.01 0 2009 2010 2011 YEAR 2012 2013

Interpretation: This ratio used to determine the financial stability of the concern in general.
The proprietary ratio (also known as the equity ratio) is the proportion of shareholders' equity to total assets, and as such provides a rough estimate of the amount of capitalization currently used to support a business. From the above chart we can conclude that in compare to other years in 2011 ratio of proprietary ratio decrease which shows low that indicates a business may be making use too much debt or trade payables, rather than equity to support operations.

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10) Total Assets Turnover:

YEAR 2009 2010 2011 2012 2013

RATIO 0.1 0.09 0.08 0.09 0.09

Total Assets Turnover

0.1 0.08 RATIO 0.06 0.04 0.02 0 2009 2010 2011 YEAR 2012 2013

Interpretation:

This ratio shows the firms ability to generate sales from all financial resources committed to total assets.total asset turnover ratio measures the ability of a company to use its assets to efficiently generate sales. From the above graph in 2009 there is a highest ratio after that decreasing the ratio but in 2013 ratio is 0.09 that indicates it has a higher turnover ratio which tells it is a good company because it is using its assets efficiently.

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BANKING INDUSTRY LIFE CYCLE:

The industry life cycle is made up of the following stages:

1. 2. 3. 4. 5.

Pioneering Phase Growth Phase Mature Growth Phase Stabilization/Maturity Phase Deceleration/Decline Phase

1)Pioneering Phase This phase is characterized by low demand for the industry's product and large upstart costs. Industries in this phase are typically start-up firms, with large upfront costs and few sales. 2) Growth Phase After the pioneering phase, an industry can transfer into the growth phase. The growth phase is characterized by little competition and accelerated sales. Industries in this phase have typically survived the pioneering phase and are beginning to recognize sales growth.

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3) Mature Growth Phase After the growth phase, an industry will reach the mature growth phase. The mature growth phase is characterized above average growth, but no longer accelerating growth. Industries in this phase now face increasing competition and, as a result, profit margins begin to erode. 4) Stabilization/Maturity Phase After the growth phases, an industry will enter in the stabilization/maturity phase. The stabilization/maturity phase is characterized by growth that is now average. Industries in this phase have significant competition and the return on equity is now more normalized. This is typically the longest phase an industry will go through. 5) Deceleration/Decline Phase The deceleration follows the growth and maturity phases. The deceleration/decline phase is characterized by declining growth as demand shifts to other substitute (new) products. LIFE CYCLE OF CUSTOMER NEED

Banking industry fall under the growing stage. Because banking industry starts in 1947.after 1996 banking industry growing rapidly. So we can say that banking industry comes under growing stage.

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1. SWOT Analysis of Banking Industry: STRENGTHS Valuable contributor to GDP Regulatory environment Government Support WEAKNESSES Increasing NPA Low penetration Lack of product differentiation

OPPORTUNITIES Modern Technology Untapped Rural Market Globalization

THREATS Unorganized money lending market Customer dissatisfaction Rise of monopolistic structures

Source: - www.scribd.com/doc/140606276/1659808644-Indian-Banking-Industry

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2. Porter Five Force of Banking Industry: Banking is mainly a client oriented business. A high-quality of services to the client is crucial for the growth and stability of any bank. A wider distribution and access of financial services helps both consumers and producers to raise their welfare and productivity. Such access is especially powerful for the poor as it provides them opportunities to build savings, make investments, avail credit, and more important, insure themselves against income shocks and emergencies. To survive in an increasingly competitive environment, bank need to come up with various facilities like Internet banking, mobile

banking etc. With the onset of mobile banking, the

industry finds itself at the threshold of the next major technological leap.

Source: - www.scribd.com/doc/140606276/1659808644-Indian-Banking-Industry

Buyer Power High bargaining power of customers on account of banks renders uniform services to the clients. Now a days almost all banks would like to provide requisite information very easily by way to Internet, Mobile banking to the clients

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Supplier Power Low bargaining power of suppliers on account of RBI regulatory benchmarks. Banks have to meet numerous regulatory standards created by RBI

Competitive RivalryHigh competition of account of number of prominent public, private, foreign along with cooperative banks

Availability of Substitutes High menace from substitutes like NBFCs, Mutual funds, Government securities and T-bills Threat of new entrants Low threat of new entrants on account of banking regulations. Before setting up of a new bank, it is essential to take the consent of RBI.

3. PEST Analysis of Banking Industry: POLITICAL ANALYSIS

Source:-www.scribd.com/doc/140606276/1659808644-Indian-Banking-Industry

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MONETARY POLICY Monetary policy becomes more restrictive over the past years. Inflation has remained a policy headache for the government and the central bank for the past two years. Inflation was a

primary concern among the policy makers during 2010-11. Inflation, which remained at elevated levels for a large part of FY11, was largely driven by food and fuel items and later on transmitted to manufacturing products to become a general phenomenon. The

average inflation rate in India was 7.99% between 1969 and 2010.

The Reserve Bank of India (RBI) in its annual monetary policy for 2012-13 on March 17, 2012 slashed the policy rates by 50 basis points. The repo rate at which banks borrow money from the RBI now stands at 8% from 8.50% earlier. Similarly, the reverse repo rate at which RBI borrows money from banks is now at 7% from 7.50% earlier. The cash reserve ratio (CRR) was left unchanged at 4.75%.

The Reserve Bank of India reduced the Cash Reserve Ratio (CRR) by 75 basis points from 5.5% to 4.75 % with effect from March 10, 2012. This reduction will inject around Rs.48,000 crore of primary liquidity into the banking system to ensure smooth flow of credit to productive sectors of the economy. Earlier, RBI in its third quarter review in January 2012 reduced the CRR by 50 basis points from 6% to 5.5% injecting a liquidity of Rs.31,500 crore into the banking system to mitigate the tight liquidity conditions, which was the first move in the CRR since it was increased to 6% in April 2010. REGULATION The expected integration of various intermediaries in the financial system would require a strong regulatory framework. It would also require a number of legislative changes to enable the banking system to remain contemporary and competitive.

ECONOMIC ANALYSIS The Indian economy has recorded remarkable growth over the past decade. India's economic growth is expected to robust in 2012 and 2013. The International Monetary Fund (IMF) has pared Indias economic growth projection to 6.9% in 2012 from its January estimate of 7%, the
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only emerging economy for which it has done so. Banks provide capital formation t o vari ous s e c t o r s which di re ct l y h e l p in t h e growth of Indian economy SOCIAL ANALYSIS Indian banking system has been progressing rapidly. There are ample opportunities for the banks to cover untapped rural market. Yet, banking facilities are not available in many rural areas. Many farmers are taking loan from moneylender at a very high rate of interest. Smallscale industries would remain important for banks. Changes could be expected in near future for unorganized sectors. TECHNOLOGICAL ANALYSIS In recent time, Indian banking industry has been consistently working towards the development of technological changes and its usage in the banking operations for the improvement of their efficiency. With the application of new and improved technologies banks expected to reduce costs, time and give customer satisfaction. Core banking has changed the face of banking by offering value added services. Core banking applications helps to provide complete front and backend automation of banks. Technological developments would render flow of information and data faster leading to faster appraisal and decisionmaking. This would enable banks to make credit management more effective, besides leading to an appreciable reduction in transaction cost.

Internet banking or banking via the Internet can be considered a remarkable development in the banking sector. The ability to carry out banking transactions through the Internet has empowered customers to execute their financial transactions within the comfort of their homes and offices. In todays busy world, when people do not have much time even for personal work, Internet banking appears as a boon.

Internet Banking helped give the customer's anytime access to their banks. But for Internet banking there is a requirement of a PC / Laptop with an Internet connection. Mobile usage has seen an explosive growth in economies like India. India has reached 893.84 million mobile subscriber mark (Source: TRAI, Dec 2011) for a population of 1.21 billion.

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Mobile Banking, customer can check their account balance, transfer funds 24 x 7, bills payments, booking of bus / flight tickets, recharge prepaid mobile and do a lot more effortlessly and securely. Banking through cell phone benefit the banks too. It cuts down on the cost of telebanking and is more economical.

ATM (Automated Teller Machine) is electronic machine, which is operated by a customer himself to deposit or to withdraw cash from bank. ATMs reduce the work pressure on bank's staff and avoid queues in bank premises. ATMs are of great help to travellers. They need not carry large amount of cash with them. They can withdraw cash from any city or state, across the country and even from outside the country with the help of ATM

KEY PLAYERS OF BANKING SECTOR

ANDHRA BANK ALLAHABAD BANK PANJAB NATIONAL BANK UTI KOTAK MAHINDRA BANK CITI BANK HSBC BANK American express bank

SBI BANK VIJYA BANK HDFC BANK CENTURIAN BANK OF PANJAB ICICI BANK STANDARD CHARTERD BANK BANK OF MYSURE ABN

OPPORTUNITIES AND CHALLENGES FOR PLAYERS The bar for what it means to
be a successful player in the sector has been raised. Four challenges must be addressed before success can be achieved. First, the market is seeing discontinuous growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the wholesale banking side. These require new skills in sales & marketing, credit and operations. Second, banks will no longer enjoy windfall treasury gains that the decade-long secular decline in interest rates provided. This will expose the weaker banks. Third, with increased interest in India, competition from foreign banks will only intensify. Fourth, given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks.
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Growth in the Indian banking industry

The growth in the Indian Banking Industry has been more qualitative than quantitative and it is expected to remain the same in the coming years. Based on the projections made in the "India Vision 2020" prepared by the Planning Commission and the Draft 10th Plan, the report forecasts that the pace of expansion in the balance-sheets of banks is likely to decelerate. The total assets of all scheduled commercial banks by end-March 2010 are estimated at Rs 40, 90,000 crores That will comprise about 65 per cent of GDP at current market prices as compared to 67 per cent in 2002-03. Bank assets are expected to grow at an annual composite rate of 13.4 per cent during the rest of the decade as against the growth rate of 16.7 per cent that existed between 1994-95 and 2002-03. It is expected that there will be large additions to the capital base and reserves on the liability side.

COMPETITION ANALYSIS
LAST PRICE MARKET CAP (CRORE) NET INTEREST INCOME (CRORE) ICICI 1225.05 141417.23 40,075.60 8,325.47 536,794.69 NET PROFIT (CRORE) TOTAL ASSETS (CRORE)

HDFC SBI AXIS

725 1966.95 1447.40

173,571.30 35,064.87 146,638.15 119,657.10 68,023.34 27,182.57

6,726.28 14,104.98 5,179.43

400,331.90 1,566,261.03 340,560.66

KOTAK MAHINDRA ING VAISYA BANK YES BANK

778.95

60,003.38

8,042.49

1,360.72

83,693.68

584.40

11,081.75

4168.58

612.96

54,836.45

410.55

14,880.69

8,294.00

1,300.68

99,104.12

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NET PROFIT
173,571.30 141417.23 146,638.15

68,023.34

60,003.38 11,081.75 14,880.69

ICICI

HDFC

SBI

AXIS KOTAK MAHINDRA ING VAISYA BANK YES BANK

MARKET CAP
173,571.30 141417.23 146,638.15

68,023.34

60,003.38

11,081.75 14,880.69 ICICI HDFC SBI AXIS KOTAK MAHINDRA ING VAISYA BANK YES BANK

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Banks - Private Sector Net Sales as per the latest Profit & Loss Account available.
Company Name Last Price Change % Change Net Sales
(Rs. cr)

ICICI Bank HDFC Bank Axis Bank Yes Bank Kotak Mahindra IndusInd Bank JK Bank ING Vysya Bank South Ind Bk Karur Vysya Karnataka Bank City Union Bank Lakshmi Vilas Dhanlaxmi Bank DCB Bank

1,223.05 723.55 1,441.95 408.30 780.30 486.50 1,676.90 584.40 23.65 364.50 117.85 54.60 79.80 39.80 61.90

5.00 0.15 -3.80 -11.20 -10.75 2.35 42.50 1.85 -1.00 -6.45 -2.05 -0.40 -1.50 -1.05 -3.85

0.41 0.02 -0.26 -2.67 -1.36 0.49 2.60 0.32 -4.06 -1.74 -1.71 -0.73 -1.85 -2.57 -5.86

40,075.60 35,064.87 27,182.57 8,294.00 8,042.49 6,983.23 6,136.80 4,861.58 4,434.29 4,242.43 3,764.29 2,188.75 1,760.55 1,308.00 916.10

http://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/banks-private-sector.html as on 16th april,2014 at 1.30 pm

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Banks - Public Sector

Net Sales as per the latest Profit & Loss Account available.

Company Name Change Net Sales (Rs. cr) SBI 1,968.00 4.5 0.23 119,657.10 PNB 771.25 8.25 1.08 41,893.33 Bank of Baroda 765 12.4 1.65 35,196.65 Bank of India 214.45 -6.8 -3.07 31,908.93 Union Bank 146.65 -4.85 -3.2 25,124.70 IDBI Bank 65.4 -0.95 -1.43 25,064.30 Central Bank 49.95 -1.05 -2.06 21,860.65 IOB 51.3 -0.35 -0.68 20,676.72 Oriental Bank 216.9 -3.8 -1.72 17,704.78 Allahabad Bank 92 -1.4 -1.5 17,435.69 Syndicate Bank 97.35 -2.1 -2.11 17,120.69 UCO Bank 73.3 -1 -1.35 16,751.71 Corporation Bank 278 -6.6 -2.32 15,334.08 Indian Bank 130 0.05 0.04 13,892.64 Andhra Bank 63.5 -0.6 -0.94 12,909.69 Bank of Maharashtra 37.5 -1 -2.6 9,613.43 United Bank 31.2 -0.7 -2.19 9,251.49 Vijaya Bank 39.8 -0.55 -1.36 9,051.88 Dena Bank 60 -1.35 -2.2 8,899.39 State Bank Traven 423 -0.45 -0.11 8,634.84 State B Bikaner 341.4 -8.6 -2.46 7,498.19 Punjab & Sind 46.35 -0.6 -1.28 7,340.12 State Bank Mysore 418 -2.6 -0.62 5,962.85 http://www.moneycontrol.com/stocks/top-companies-in-india/net-sales-bse/banks-public-sector.html as on 16th april, 2014 at 2.30pm

Last Price

% Change

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SNAPSHORT OF ICICI BANK LTD

ICICI BANK PRICE V/S SENSEX

Company Details Industry Chairman Managing Director Company Secretary ISIN Bloomberg Code Reuters Code Bank Private K V Kamath Chanda D Kochhar Sandeep Batra INE090A01013 ICICIBC IN ICBK.BO

Registered Office

Company Address Landmark,Race Course Circle,Vadodara,390007,Gujarat

Phone Fax Website Email

91-0265-6617200/3983200 91-0265-2339926 www.icicibank.com investor@icicibank.com

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Price Information
Latest Date Latest Price (Rs) Previous Close (Rs) 1 Day Price Var% 1 Year Price Var% 52 Week High (Rs) 52 Week Low (Rs) Face Value (Rs) Industry PE 16-APRIL-2014 1227.45

1218.05
2.36 11.9
1272.90 758.80

10

17.54

Share holding pattern as on 16-APRIL-2014 Promoter No of shares 0 Promoter % 0 FII No of Shares 1,008 FII % 54.19 Total No of Shares 443,181,249 beta 1.4927 Free Float % 100

Company Size (Standalone) Market Cap(Rs Crore) 144,510.26 Latest no. of shares 1153581715

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Intrinsic value of ICICI Bank Year 2009 2010 2011 2012 2013 EPS 33.76 36.10 44.73 56.09 72.22 P/E 24.67 20.64 23.54 12.23 15.26

1) Based on the past 5 year EPS data, estimated growth % can be determine. And the estimated growth rate is 16.93% 2) Now, by using the current EPS we can compound it with the estimated growth i.e. 16.93% 3) Current EPS is 72.22 compounding of the EPS is 72.22+(72.22*.1693)=84.46 4) Now, based on the past 5 year P/E take the average of P/E value which is 19.268 5) Now multiply the step 3 & 4 and we will get the estimated share price. 6) Estimated share price is 1627.37 and current share price is 1249 which is lower than the estimated its means that share price is undervalued and investor should buy the shares for short term.

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Interpretation
BETA: A measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected return of an asset based on its beta and expected market returns. Here beta is more than 1 (1.4927) beta of greater than 1 indicates that the securitys price will be more volatile than the market. Stocks beta is 1.4927; its theoretically 49.27% more volatile than the market. EPS: EPS indicates the profitability of a company. Earning per Share is the single most popular variable in dictating a shares price. Earnings per Share is the Net Income (profit) of a company divided by the number of outstanding shares. And here EPS of the company increasing. This shows that company is earning profit. P/E: price-to-earnings ratio (P/E) is probably the most widely used and thus misused investing metric. Its easy to calculate, which explains its popularity. The most common way to calculate : P/E = share price divided by earnings per share DPS: The the sum of declared dividends for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. Dividends are a form of profit distribution to the shareholder. Having a growing dividend per share can be a sign that the companys management believes that the growth can be sustained. Here dividend is highest in last 5 years; it indicates that company is growing YOY. ICICI is having highest market capital, net profit and assets value as compared to competitors this indicates that ICICI is most favorable company for investors.

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SBI BANK V/S SENSEX

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