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Getting a project ready requires the work and effort of many people. I
would like to pay my sincere gratitude and thanks to those people, who
directed me at every step in this project work. The present report is based
on “ ANALYSIS OF FINANCIAL STATEMENT- CASE STUDY OF
ICICI BANK”.
I extended my sincere thank and gratitude to Miss.Divya Devasiya,
internal faculty, for her help and valuable support throughout the
term of the project. It was a learning experience to work under her
guidance.
I am also thankful to my parents, all my friends and other sources
CHAPTER-1
INTRODUCTION
1.1 A BRIEF INTRODUCTION
In any organization, the two important financial statements are the Balance
sheet & Profit and loss account of
the business. Balance sheet is a
statement of the financial position of an enterprise at a particular point of
time. Profit and loss account shows the net profit or net loss of a company
for a specified period of time. When these statements of the last few year of
any organization are studied and analyzed, significant conclusions may be
arrived regarding the changes in the financial position, the important policies
followed and trends in profit and loss etc. Analysis and interpretation of the
financial statement has now become an important technique of credit
appraisal. The investors, financial experts, management executives and the
bankers all analyze these statements. Though the basic technique of
appraisal remains the same in all the cases but the approach and the
emphasis in analysis vary. A banker interprets the financial statement so as
to evaluate the financial soundness and stability, the liquidity position and
the
profitability or the earning capacity of borrowing concern. Analysis of
financial statement is necessary because it help in depicting the financial
position on the basis of past and current records. Analysis of financial
statement help in making the future decision and strategies. Therefore, it is
very necessary for every organization whether it is a financial or
manufacturing etc. to make financial statement and to analyse it
.
1.2 OBJECTIVE
The main objective of this report are the following:
To study about ICICI BANK and its related aspects like its products & services, history, organizational structure,
subsidiary companies etc.
To analyse the financial statement i.e P&L account and
Balance sheet of ICICI BANK.
To learn about P&L Account, Balance-sheet and
different type of Assets& Liabilities.
To understanding the meaning and need of Balance
Sheet and profit and loss account.
The purpose is to portray the financial position of ICICI
BANK with the help of balance sheet and profit and
loss account.
To evaluate the financial soundness ,stability and
liquidity of ICICI BANK.
1.3 ICICI BANK
ICICI Bank is India’s second-largest bank with total assets of Rs.
3,446.58 billion
(US$ 79 billion) at March 31, 2007 and profit after tax
of Rs.
31.10
billion for fiscal 2007. ICICI Bank is the most valuable
bank in India in terms of market capitalization and is ranked
third
amongst all the companies listed on the Indian stock exchanges.
In terms of
free float market capitalization*. The Bank has a network of about
950
branches
and
3,300 ATMs
in India and presence in 17 countries. ICICI
Bank offers a wide range of banking products and financial services to
corporate and retail customer through a variety of delivery channels
and through its specialized subsidiaries and affiliates in the areas of
investment banking, life and non-life insurance, venture capital and
asset management. The Bank currently has subsidiaries in the United
Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong
Kong, Sri Lanka and Dubai International Finance Center and
representative offices in the United States, United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia.
UK
subsidiary has established a branch in Belgium.
ICICI Bank's
equity shares are listed in India on Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE) of India Limited and its
American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange
(NYSE).
1.3.1HISTORY
ICICI Bank was originally promoted in
1994 by ICICI Limited
, an Indian
financial institution, and was its wholly owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed
on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura
Limited in an all-stock amalgamation in fiscal 2001, and secondary market
sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI
was formed in 1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal objective was to
create a development financial institution for providing medium-term and
long-term project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first
Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create
the optimal legal structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for
ICICI Bank shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the
vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of
Directors of ICICI and ICICI Bank approved the merger of ICICI and two of
its wholly-owned retail finance subsidiaries, ICICI Personal Financial
Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Citst of Gujarat at Ahmedabad in March 2002, and by the
High Citst of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
ICICI Bank has formulated a Code of Business Conduct and Ethics for its
directors and employees.
1.3.2 BOARD OF DIRECTORS
MR. N.Vaghul (CHAIRMAN)
MR. Sridar Iyengar
MR. Lakshmi N. Mittal
MR. Narendra Murkumbi
MR. Anupam Puri
MR. Vinod Rai
MR. M. K. Sharma
MR. P.M. Sinha
Prof. Marti G. Subrahmanyam
MR. T. S. Vijayan
MR. V. Prem Wasta
MR. K. V. Kamath (MANAGING DIRECTOR & CEO)
MR. Chanda Kochhar (JOINT MANAGING DIRECTOR)
MR. Nachiket Mor (DEPUTY MANAGING DIRECTOR)
MR. V. Vaidyanathan, (EXECUTIVE DIRECTOR)
MR. Sonjoy Chatterjee (EXECUTIVE DIRECTOR)
1.3.3 BOARD COMMITTEES
Audit Committee Board Governance
& Remuneration
Committee
Mr. Sridar Iyengar
Mr. N. Vaghul
Mr. Narendra Murkumbi
Mr. Anupam Puri
Mr. M. K. Sharma
Mr. M. K. Sharma
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam
Credit Committee
Customer Service Committee
Mr. N. Vaghul
Mr. N. Vaghul
Mr. Narendra Murkumbi
Mr. Narendra Murkumbi
Mr. M.K. Sharma
Mr. M .K. Sharma
Mr. P.M. Sinha
Mr. P. M. Sinha
Mr. K. V. Kamath
Mr. K. V. Kamath
Risk Committee
Fraud Monitoring Committee
Mr. M. K. Sharma
Mr. N. Vaghul
Mr. Narendra Murkumbi
Mr. Sridar Iyengar
Mr. K. V. Kamath
Prof. Marti G. Subrahmanyam
Ms. Chanda D. Kochhar
Mr. V. Prem Watsa
Mr. V. Vaidyanathan
Mr. K. V. Kamath
Share Transfer &
Asset-Liability Management
Shareholders/ Investors
Committee
Grievance Committee
Mr. M. K. Sharma
Ms. Chanda D. Kochhar
Mr. Narendra Murkumbi
Dr. Nachiket Mor
Ms. Chanda D. Kochhar
Ms. Madhabi Puri-Buch
Ms. Madhabi Puri-Buch
Mr. V. Vaidyanathan
Committee of
-
Directors
Mr. K. V. Kamath
Ms. Chanda D. Kochhar
Dr. Nachiket Mor
Ms. Madhabi Puri-Buch
Mr. V. Vaidyanathan
1.3.4 ORGANISATIONAL STRUCTURE OF ICICI
BANK
ICICI Bank’s organisation structure is designed to be flexible and customer-
focused, while seeking to ensure effective control and supervision and
consistency in standards across the organisation and align all areas of
operations to overall organisational objectives. The organisation structure is
divided into six principal groups –
Retail Banking, Wholesale Banking,
International Banking, Rural (Micro-Banking) and Agriculture
Banking, Government Banking and Corporate Center.
RETAIL BANKING
The Retail Banking Group is responsible for products and services for
retail customers and small enterprises including various credit
products, liability products, distribution of third party investment and
insurance products and transaction banking services.
WHOLESALE BANKING
The Wholesale Banking Group is responsible for products and services
for large and medium-sized corporate clients, including credit and
treasury products, investment banking, project finance, structured
finance and transaction banking services.
INTERNATIONAL BANKING
The International Banking Group is responsible for its international
operations, including operations in various overseas markets as well as
its products and services for non-resident Indians and its international
trade finance and correspondent banking relationships.
RURAL AND AGRICULTURAL BANKING
The Rural, Micro-Banking & Agri-Business Group is responsible for
envisioning and implementing rural banking strategy, including
agricultural banking and micro-finance.
GOVERNMENT BANKING
The Government Banking Group is responsible for government banking
initiatives.
CORPORATE CENTER
The Corporate Center comprises the internal control environment functions
(including operations, risk management, compliance, audit and legal);
finance (including financial reporting, planning and strategy, asset liability
management, investor relations and corporate communications); human
resitsces management; and facilities management & administration.
BUSINESS REVIEW
During fiscal 2007, the Bank continued to grow and diversify its asset base
and revenue streams by leveraging the growth platforms created over
the past few years. It maintained its leadership position in retail
credit, achieved robust growth in its fee income from both corporate
and retail customers, grew its deposit base and significantly scaled
up its international operations and rural reach
.
RETAIL BANKING
ICICI is the largest provider of retail credit in India. ICICI’s total retail
disbursements in fiscal 2007 were approximately Rs. 777.00 billion,
compared to approximately Rs. 627.00 billion in fiscal 2006. It’s total
retail portfolio increased from Rs. 921.98 billion at March 31, 2006 to
Rs. 1,277.03 billion at March 31, 2007, constituting 65% of it’s total
loans at that date. It continued its focus on retail deposits to create a
stable funding base. At March 31, 2007 it had more than 25 million
retail customer accounts.
During fiscal 2007, it expanded its branch network. At March 31, 2007,
it had 755 branches and extension counters compared to 614 branches
and extension counters at March 31, 2006. Pursuant to the
amalgamation of The Sangli Bank Limited with it effective April 19,
2007, it acquired over 190additional branches and extension counters. It
continued to expand its electronic channels, namely internet banking,
mobile banking, call centres, point of sale terminals and ATMs, and
migrate customer transaction volumes to these channels. During fiscal
2007, over 80% of customer induced transactions took place through
these electronic channels. It increased its ATM network to 3,271 ATMs.
SMALL AND MEDIUM ENTERPRISES
In this segment it’s strategy has been focused around customer
convenience in transaction banking services, and working capital loans
to suppliers or dealers of large corporations and clusters of small
enterprises that have a homogeneous profile. During fiscal 2007, it’s
customer base increased by more than 50% to over 900,000 transaction
banking customers. These customers are serviced by over 580 branches
of the Bank, covering over 200 locations. During fiscal 2007, the
Emerging India Award entered in the Limca Book of Records as the
biggest business award in India.
CORPORATE BANKING
It’s corporate banking strategy is based on providing comprehensive and
customized financial solutions to its corporate customers. It offer a complete
range of corporate banking products including rupee and foreign currency
debt, working capital credit, structured financing, syndication and
transaction banking products and services.
Fiscal 2007 saw continuing demand for credit from the corporate sector,
with growth and additional investment demand in almost all sectors. It is
now a preferred partner for Indian companies for syndication of external
commercial borrowings and other fund raising in international markets.
RURAL BANKING
It’s rural strategy is based on enhancing value at every level of the supply
chain in all important farm and non-farm sectors. Towards this end, it offer a
range of financial products and services that cater to the rural masses in all
the important sectors like infrastructure, horticulture, food processing, dairy,
poultry, seeds, fertiliser and agrochemical industries. Customised financial
solutions are offered to individual customers, agri small & medium
enterprises, agri corporates and members of their supply chains. On the rural
retail side, the Bank offers crop loans, farm equipment financing,
commodity-based loans, working capital loans for agri-enterprises,
microfinance loans, jewel loans as well as savings, investment and insurance
products. In addition bank is introducing products like rural housing finance
to cater to the needs of rural customers. During fiscal 2007, it introduced
loans to rural educational institutions for expansion of their facilities.
it have developed a hybrid distribution channel strategy, a combination of branch and non-branch channels (credit access points). It
has embarked on a “no white spaces” strategy wherein it aim to setup an ICICI Bank touch point within 10 km of any customer. The
amalgamation of Sangli Bank would extend its outreach in rural areas. During fiscal 2007, a provision of Rs. 0.9 billion (USS$ 22
million) was made on account of identified frauds in warehouse receipt financing business of agricultural credit.
INTERNATIONAL BANKING
ICICI Bank has established a strong franchise among non-resident
Indians (NRI). It has established strong customer relationships by
offering a comprehensive product suite, technology-enabled access for
overseas customers, a wide distribution network in India and alliances
with local banks in various markets. It has over 450,000 NRI customers.
It has undertaken significant brand-building initiatives in international
markets and have emerged as a well-recognised financial services brand
for NRIs. It’s market share in inward remittances into India has
increased to over 25%. It has consolidated it’s global remittance
initiative, targeting non-Indian communities, by leveraging it’s core
capabilities of technology-based service delivery. A large number of
remittance products were introduced to complement the existing suite of
products. The business focus has been on rolling out successful products
across multiple geographies and getting into high volume correspondent
arrangements.
1.3.5 PRODUCTS AND SERVICES
BANKING ACCOUNTS
ICICI Bank offers a wide range of banking accounts such as Current, Saving, Life Plus Senior, Recurring Deposit, Young Stars,
Salary Account etc. tailor-made for every customer segments, from children to senior citizens. Convenience and ease to access are the
benefits of ICICI Bank accounts.
(II)
BALANCE-SHEET
(Balance sheet of ICICI bank as on March 31,2007)
(Rs. In ‘000’s)
Particulars
Schedule
As on
As on
31.03.2007
31.03.2006
(RS.)
(RS.)
CAPITAL & LIABILITIES
1
12,493,437
12,398,345
Capital
Reserve & Surplus 2
234,139,207
213,161,571
Deposits
3
2,305,101,863
1,650,831,713
Borrowings 4
512,560,263
385,219,136
Other liabilities & provisions 5
382,286,356
252,278,777
3,446,581,126
2,513,889,542
TOTAL CAPITAL &
LIABILITIES
ASSETS
Cash and Balance with Reserve
6
187,068,794
89,343,737
Bank Of India
Balances with banks and money at
7
184,1441452
81,058,508
calls and short notice
Investment 8
912,578,418
715,473,944
Advances 9
1,958,655,996
1,461,631,089
Fixed Assets 10
39,234,232
39,807,115
Other Assets 11
164,889,234
126,575,149
2,513,889,542
TOTAL ASSETS 3.446,581,126
Contingent Liabilities 12 5,629,594,060 3,950,336,655
Bills for Collection 40,465,610 43,384,648
Significant accounting policies and
18
notes to accounts
(The Schedule refer to above form an integral part of balance sheet)