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A comparative analysis of banks

Written by Vertical Grass Friday, 24 February 2012 00:00

Banking sector is going to be the most watched sector in the coming quarters. There are reasons for this. RBI has hinted that it will reduce the CRR rate and repo rates. Kingfisher airline has impacted few banks and it will play its own part. NPAs of banks have gone up recently. The debt/GDP ratio of the Government is scary at 80% essentially meaning that the Government cannot borrow much without jeopardizing stability of banking sector. In this backdrop, we studies 10 banks on various parameters which are important for banks to track. These parameters impact the outlook of banks. RESULT FOR Q3 FY 2011 - 12 Parameters CAR (%) NIM(%) GROSS NPA(%) NET NPA(%) CASA (%) SBI 11.6 4.05 4.61 2.22 48.95 ICICI 18.88 2.7 0.7 43.6 Axis 11.78 3.75 1.1 0.39 42.2 HDFC 16.3 4.1 1.1 0.2 47.7 BoI 11.18 2.55 2.74 1.78 32.41 BoB 13.45 3.44 1.48 0.51 35 PNB 11.48 3.85 2.42 1.11 36.2 Can Bank 13.22 2.52 1.81 1.49 25 UBI 11.72 3.31 3.33 1.88 32.54 IDBI 13.53 1.89 2.94 1.96 19.67

Capital adequacy ratio (CAR) is fine with all the banks. All of them are adequately secured on this front. SBI is the one of PSU bank with high CASA ratio giving it the advantage to collect low cost deposit from people. This essentially reduces the cost of money for SBI which it can lend at higher rate to borrowers thus pocketing the difference as their profit. HDFC is equally strong when it comes to CASA ratio. This is surprising though. ICICI and Axis banks have done very well on this front too. IDBI has shown good improvement in last few quarters. The management of IDBI started focusing on retail investors recently and it will take some time before they catch up with big banks. NIM (net interest margin) the most important number for banks is best for SBI. This conforms to the observation that SBI has highest CASA ratio. A high CASA ratio gives SBI enormous flexibility. This, in turn, results into higher NIM. HDFC is once again is equally good on NIM. IDBI, Bank of India, Canara Bank, and ICICI bank need to work on this front. IDBIs aggressive foray into retail banking is costing it in terms of NIM. Gross NPA, even though net NPA is not scary, should be a cause of concern for SBI, IDBI, and BoI. Banks typically turn very liberal when it comes to calculating net NPA. Hence people should look at gross NPA first and then the net NPA. If there is huge difference (such as net NPA is 50% of gross NPA), it is time to see how the banks have defined NPA. Net NPA, ratio which scares banks, is highest for SBI. This could be the result of teaser loans offered by it and also economic slowdown which has hit the industry hard. Since SBI has significant exposure to companies, its net NPA is showing high number. Lets take a look at profit margin.

Clearly, SBI has to work on its net margin. Axis Bank, Canara Bank, Bank of Baroda, and HDFC Bank have maintained lead in profitability. Lets take a look at profit margin.

Clearly, SBI has to work on its net margin. Axis Bank, Canara Bank, Bank of Baroda, and HDFC Bank have maintained lead in profitability. Lets take a look at profit margin.

Clearly, SBI has to work on its net margin. Axis Bank, Canara Bank, Bank of Baroda, and HDFC Bank have maintained lead in profitability.
Are you looking for a home loan? Here is some useful information to help you to choose the right bank. The following table shows EMI pay per month for Rs. 1 Lakh of home loan with floating interest rates. EMI for loans up to Rs. 25 Lakhs 1,015 1,084 998 1,032 1,049 1,066 EMI for loans up to Rs. 30 Lakhs 1,032 1,084 1,032 1,084 1,049 1,066 EMI for loans up to Rs. 50 Lakhs 1,032 1,136 1,032 1,084 1,066 1,084 EMI for loans up to Rs. 75 Lakhs 1,032 1,136 1,032 1,084 1,066 1,084

Bank/Institute Name Axis Bank Bank Of Baroda ICICI Bank IDBI Indian Bank Indian Overseas Bank Punjab National Bank Housing Finance Limited State Bank of Travencore Vijaya Bank

EMI for loans more than Rs. 75 Lakhs 1,015 1,084 998 1,032 1,049 1,066

1,015 1,049 1,119

1,015 1,049 1,119 Home Loans For 5 Years Home Loans For 10 Years Home Loans For 15 Years Home Loans For 20 Years

1,032 1,066 1,172

1,032 1,066 1,172

1,015 1,049 1,119

Q1. From how many years you are the customer of IDBI Bank? a. From 0-2 Years b. From 3 to 5 Years c. More than 5 Years Q2. Your Occupation ? a. Service b. Business c. Retired d. Others

Q3. Your Income ? a. 10000-15000 b. 15001-25000 c. Above 25000 Q4. Are you having Saving / Current Account in IDBI Bank ? a. Yes b. No Q5. Reason for using Saving / Current Account Services offered by IDBI Bank? a. Near to Home b. Convenient To Do Transactions c. Brand Name of the bank d. Services of the Bank is attractive e. Other Reason Q6. Reason for not having Saving / Current Account in IDBI Bank ? a. Other banks are Providing Better Services b. Interest Rates are not attractive c. Charges for non maintenance of minimum Balance d. Other Reasons Q7 From which source did you know about Saving / Current Account of IDBI Bank? a. Friends & Relatives b. Colleagues c. Marketing Executives d. Other Sources Q8 How do you rate the charges for non maintenance of minimum balance in Saving Account of IDBI Bank ? a. Low b. Medium c. High Q9. How do you rate the Customer Support offered in Saving / Current Account of IDBI Bank? a. Highly Satisfactory b. Satisfactory c. Average d. Dissatisfactory e. Highly Dissatisfactory Q10. How do you rate the Fund Transfer Facility from IDBI Bank Saving / Current Account to Other Banks Account? a. Good b. Average c. poor Q11. How do you rate the Value added services like mobile banking, net banking, customer support, etc? a. Good b. Average c. poor Q12. Are you satisfied with Saving / Current Account Services offered by IDBI Bank? a. Yes b. No

Sample Bank Customer Satisfaction Questionnaire


Name: ______________ Account number: ___________ Account type: _________ Address: ___________________ Residential contact number: _____________ Mobile number: _______________ Email id: _________________ 1. How satisfied are you with the services provided by the bank? a) Very satisfied b) Satisfied c) Somewhat satisfied d) Dissatisfied 2. Do you feel that the procedure to open an account with the bank was difficult? a) Yes, to a certain extent b) No, it was easy 3. Do you always get prompt service whenever you visit the branch? a) Always b) Often

c) Sometimes d) Rarely e) Never 4. Do you agree that minimum account limit is not high and easy to maintain? a) Strongly agree b) Agree c) Somewhat agree d) Disagree e) Strongly disagree 5. Are you satisfied with your financial transactions with the bank? a) Very satisfied b) Satisfied

c) Somewhat satisfied d) Dissatisfied 6. According to you which service provided by the bank is best? _________________________ 7. Would you like suggest any changes or improvement in any service or any feature of the bank? ___________________________

Bank Survey Questionnaire:


Name of the respondent: __________________________________ Work Phone: ____________________ Email id:______________________ Age: __________ Gender: ______________ Bank Account Number: _____________________ Bank Branch: _________________ Q1. How long have you been associated with the Bank? a) New account holder b) 1-6 months c) Less than a year

d) 1-5 years e) More than 5 years Q2. Which of the following associations do you have with the bank? a) Banking b) Credit Cards c) Loans d) Investing e) Business Q3. Which of the following type of banking accounts do you have? a) Savings account b) Basic checking account c) Interest bearing checking account d) Money market deposit account e) Certificate of deposit

f)

Business/Corporate account

g) Tax-exempt special savings account h) Tax-free savings account i) j) Transaction deposit Current account

k) Joint account Q4. Are you greeted by the bank personnel when you visit your bank branch? a) Always b) Once in a while c) Seldom d) Never Q5. Is your business handled by banking executives in a timely and efficient manner? a) Always b) Once in a while c) Seldom d) Never Q6. Are you able to access your banking accounts online? a) Yes b) No Q7. Are you able to use various online banking facilities? a) Yes b) No

Q8. What improvements according to you should be initiated by the bank?

Bank Customer Survey Questionnaire:


Name of the Customer: __________________________________ Bank Account Number: _____________________ Bank Branch: _________________ Work Phone: ____________________ Email id:______________________ Age: __________ Gender: ______________ Q1. What type of banking account is owned by you? a) Savings account b) Checking account c) Loan account d) Numbered bank account e) No cost account f) Interest bearing checking account

g) Money market deposit account h) Certificate of deposit i) j) Tax-free savings account Transaction deposit

k) Nostro and vostro accounts l) Current account

m) Joint account Q2. How long have you had these accounts in the bank?

a) Less than a year b) 1-3 years c) 3-8 years d) More than 8 years Q3. Are you satisfied with the current service offerings of the bank? a) Yes

b) No Q4. Are you able to use banking services online? a) Yes b) No Q5. What is your feedback regarding the banks Customer Service Representatives? Please use yes or no a) Answer calls quickly b) Dont put you on hold for long c) Knowledge about banking products d) Knowledge about banking services e) Banking issues handled quickly f) Regular follow-up by banking executives

g) Good communication skills h) Good etiquettes i) Friendly service

Q6. How many times have you faced a problem related to your banking account in the last 1 year? a) Once b) 1-5 times c) 5-10 times d) More than 10 times e) Never Q7. How quickly were your banking problems and issues addressed by the bank staff? a) Immediately b) Within 24 hours c) Within 48 hours d) Within 3-5 business days e) More than a week f) Some issues are still pending

1.

Since how long are you using the online banking system provided by our bank? 1. 2. 3. 4. Below 1 month 1 6 months 6 months 1 year Above 1 year

1.

What is the major purpose for which you use the online banking? 1. Online Ticket Booking 2. Online Bill Payments 3. Balance Check 4. Request for a cheque book 5. Others. Please specify ___________________________

1.

Have you ever used the third party transfer of the online banking? 1. 2. Yes No

If Yes, for how many times during the last 1 year?

1. 2. 3. 4.

Only once 1 3 times 3 5 times More than 5 times

1.

Do you think that the third party transfer system in particular and the entire online banking web site provides you enough security? 1. Yes 2. No

If No, please provide your inputs how can the same be bettered. ________________________________________________________________________________________________________

1.

Have you ever visited your bank branch since the time you started using online banking? 1. Yes 2. No

If yes, please mention the specific reasons for which you required to visit the branch despite of the online banking facility__________________________________________________________________________________________

1.

Is there any changes or improvements which you would like to see in our online banking system?

1. The functions and operating modes of conventional banks are based on fully manmade principles. 2. The investor is assured of a predetermined rate of interest.

1. The functions and operating modes of Islamic banks are based on the principles of Islamic Shariah. 2. In contrast, it promotes risk sharing between provider of capital (investor) and the user of funds (entrepreneur). 3. It also aims at maximizing profit but subject

3. It aims at maximizing profit without any restriction.

to Shariah restrictions. 4. In the modern Islamic banking system, it has become one of the service-oriented functions of the Islamic banks to be a ZakatCollection Centre and they also pay out

4. It does not deal with Zakat. 5. Lending money and getting it back with compounding interest is the fundamental function of the conventional banks.

their Zakat. 5. Participation in partnership business is the fundamental function of the Islamic banks. So we have to understand our customers business very well. 6. The Islamic banks have no provision to charge any extra money from the defaulters. Only small amount of compensation and these proceeds is given to charity.

6. It can charge additional money (penalty and compounded interest) in case of defaulters. 7. Very often it results in the banks own interest becoming prominent. It makes no effort to ensure growth with equity. 8. For interest-based commercial banks, borrowing from the money market is relatively easier. 9. Since income from the advances is fixed, it gives little importance to developing expertise in project appraisal and evaluations. 10. The conventional banks give greater emphasis on credit-worthiness of the clients. 11. The status of a conventional bank, in relation to its clients, is that of creditor and debtors.

Rebates are give for early settlement at the Banks discretion.

7. It gives due importance to the public interest. Its ultimate aim is to ensure growth with equity. 8. For the Islamic banks, it must be based on a Shariah approved underlying transaction. 9. Since it shares profit and loss, the Islamic banks pay greater attention to developing project appraisal and evaluations. 10. The Islamic banks, on the other hand, give greater emphasis on the viability of the projects. 11. The status of Islamic bank in relation to its clients is that of partners, investors and trader, buyer and seller. 12. Islamic bank can only guarantee deposits for deposit account, which is based on the principle of alwadiah, thus the depositors are guaranteed repayment of their funds, however if the account is based on the mudarabah concept, client have to share in a loss

12. A conventional bank has to guarantee all its deposits.

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