Financial analysis

Of
ICICI Group

By:
Mamta Goel
MBA (Final)
Roll No. 18
 Contents
• Objective of the study
• Industry profile
• Company Profile
• About the topic
• Research methodology
• Comparative financial statements
• Ratio analysis
• Trend analysis
• Findings
• Suggestions
• Limitation
• Conclusion

•
Objective of the

study
1.Primary Objective


• To study about ICICI BANK and its related aspects like its products &
services, history, organizational structure, Subsidiary companies
etc.

• To analyze the financial statements of the corporation to its true

financial position.


2. Secondary objectives


• To inform the management about the financial condition of ICICI.

• To determine changes in financial conditions of business. to evaluate

the financial soundness ,stability and liquidity Of ICICI BANK.
 Industry
Profile
ØThe General Bank of India was the first joint stock bank to be established in
the year 1786
From 1786 till today, the journey of Indian Banking System can be segregated
into three distinct phases. They areas mentioned below:
ØEarly phase from 1786 to 1969 of Indian Banks
ØNationalization of Indian Banks and up to 1991 prior to Indian banking
sector Reforms.
ØNew phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
üTotal asset size : INR 60 trillion
üTotal deposit size : INR 45 trillion
Ø
 Continue …..
Institution Assets
SCBs 86.45%
Regional Rural Banks 2.41%
Local Area Banks 0.01%
Cooperative Banks 9.55%
NBFC 1.58%

üAsset size of SCBs (Scheduled Commercial Bank) : INR 52

trillion
üAsset size of Private SCBs : INR 11 trillion
üTotal SCB branches : 64608
üTotal SCB ATMs : 43651
•
•
Company Profile
ü ICICI Limited was established by the Government of India in the 1955
as (Industrial Credit & Investment Corporation of India), a
Financial Institution like (IDBI) to finance large industrial
projects.

ü ICICI founded a separate legal entity and named it "ICICI Bank“ in

1994.

ü ICICI Bank (BSE: ICICI) is India's largest private sector bank by

market capitalization having market share of 30% and second
largest overall in terms of assets

ü ICICI Bank now has wholly-owned subsidiaries, branches and

representatives offices in 18 countries like IN UK, RUSSIA,
CANADA, SINGAPORE etc
•
•
 Continue
……..
üThe Bank has a network of 2,016 branches and about 5,219 ATMs in India.
üLaunched private banking in 2002.
üICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
üICICI Bank is India's second-largest bank with total assets of Rs. 3,634.00 billion
(US$ 81 billion) at March 31, 2010 and profit after tax Rs. 40.25 billion (US$ 896
million) for the year ended March 31, 2010.
üThe Bank's capital adequacy ratio of 15.6% is among the 7 highest levels of capital
adequacy in large Indian banks and much higher than the regulatory requirement of
9.0%.
Subsidiaries
Products &
Services

9
 About the topic
 Meaning of financial statements
ü Financial statements refer to such statements which contains financial
information about an enterprise.
ü They report profitability and the financial position of the business at
the end of accounting period.
ü The two statements are:
 The Balance sheet
 The Profit And Loss Account
 Financial
Analysis
The term financial analysis is also known as ‘analysis and interpretation of
financial statements’ refers to the process of determining financial strength and
weakness of the firm by establishing strategic relationship between the items of
the Balance Sheet, Profit and Loss account and other operative data

Procedure of financial Analysis

Contrive
Determine Collect Analyze
analysis Conclude
objective data data
scheme
 Methods of
Financial
Analysis
ü Comparative Financial Statements
ü Common size statements
ü Ratio Analysis
ü Trend Analysis
ü Cash Flow statement


•
 Research
ØSample methodology

Three years balance sheet and profit & loss A/C.

Ø Research design used


Descriptive & analytical

Ø Data Collection
 Mainly secondary in nature from audited annual reports of company &
official website of ICICI. Primary data has been collected from officials of
company.

Ø Analytical tools used

 Comparative statements
 Trend analysis
 ratio analysis

 Comparative
Financial
Statements
 When financial statements
 figures for two or more years are placed
 side-side to facilitate comparison, these are called
 ‘comparative Financial Statements’. Such statements not only
 show the absolute figures of various years

but also show percentage change .
Comparati
ve
Particulars As on As on Absolute %age
Mar.31,2009 Mar.31,2010 changes change
Assets (in crore)
Gross Block 7,443.71 7,114.12
Accumulated Depreciation 3,642.09 3,901.43

Net Block (A) 3,801.62 3,212.69 (588.93) (15.50)

Investments (B) 103,058.31 120,892.80 17834.49 17.30
Current assets & loan &
advances (c)
Cash & Balances with RBI 17,536.33 27,514.29 9977.96 56.9%

Balance with Banks, Money at 12,430.23 11,359.40

Call
Other Assets 24,163.62 19,214.93
Total Current Assets 54,130.18 58,088.62 3778.40 6.98
Advances 218,310.85 181,205.60 (37105.25) (17)
Total Assets (A+B+C) 379,300.96 363,399.71 (15901.23) (4.20)
 As on Mar.2009 As on Absolute %age
Mar.31,2010
Capital & Liabilities changes changes
Total Share Capital ( I ) 1,463.29 1,114.89 (348.4) (23.80)

Equity Share Capital 1,113.29 1,114.89

Preference Share Capital 350.00 0.00

Reserves (I I ) 48,419.73 50,503.48 203.75 .42

Net Worth (I +I I ) (A) 49,883.02 51,618.37

Deposits (B) 218,347.82 202,016.60 (16331.22) (7.48)

Secured Loans (Borrowings) (c) 67,323.69 94,263.57 26939.82 40

Other Liabilities & Prov. (D) 43,746.43 15,501.18 (28245.25) (64.56)

Total Liabilities (A+B+C+D) 379,300.96 363,399.72 (15901.23) (4.20)

 Comparati
ve Income
Statement
Particulars 2008-2009 2009-2010 Absolute %age
changes changes
INCOME: (in crore)
Interest Earned 31092.55 25706.93 (5,385.62) (17.32%)
Other Income 7603.72 7477.65 (126.07) (1.66%)
Total Income 38696.27 33,184.58 (5,511.69) (14.24%)
EXPENDITURE:
Interest Expended 22725.93 17,592.57 (5,133.36) (22.6%)
Operating Expenses 7045.11 5859.83 (1,185.28) (16.82%)
Total Expenses 29771.04 23452.40 (6,318.64) (21.23%)
Operating Profit 8925.23 9732.18 807.57 9.05%
Other Provision And 5167.10 5707.20 540.1 10.45%
Contingencies
Net Profit 3758.13 4024.98 266.85 7.1%
Extraordinary Items (0.58) 0.00 0.58
Profit B/F 2436.32 2809.65 377.33
Total Profit & Loss 6193.87 6834.63 640.76 10.34%
 Ratio Analysis

Long - term
Profitabil debt -
ity Activity Liquidity paying Market
analysis analysis analysis ability Strength
analysis
Current Ratio = Current asset/Current Liabilities
Liquid ratio = Quick asset / current liabilities
Fixed asset turnover = Net sales/ Fixed asset
 Net Profit Ratio = Net profit / Sales *100
Operating profit ratio = Operating profit /sales *100
Proprietary Ratio = Shareholder’s fund /Total asset *100
Debt equity ratio = Long term debts / Shareholder’s fund
 Return on net worth = Net profit after interest & tax /shareholder’s fund *100
Return on capital employed = Net profit before interest & tax / capital employed*100
Earning per share =Net profit after tax – Preference dividend / No. of equity share
Dividend per share = dividend paid to equity shareholder /no. of equity share
Credit deposit ratio = Credit or Advances / deposit *100
 Trend
Analysis
v These indicate the direction of movement over a long time and
help an analyst of financial statements to form an opinion as
to whether favorable or unfavorable tendencies have
developed.

v Forecasting is concerned with mainly two tasks:-

1) The determination of best basis available
for formation of intelligent managerial expectations.
 2) Handling of uncertainty about future.

 Findings
• Net interest is increasing in 2009 but decreasing in 2010. thus
there is no stability in growth of company.

• In 2010 it has current asset thrice the current liability & liquid
asset twice the current liability which shows that liquidity
position is quite satisfactorily.

• ICICI group is focusing on improving operating efficiency, As a

result of this, total operating expenses have declined by more
than 25% over the last two years.

• There has been a consistent decline in fixed assets mainly due to

increase in rate of depreciation in subsequent years.

•

• Continue
The earning per share is increasing which shows that it has better

….
profitability position & will be a attractive channel of investment for
shareholders.

• The credit performance of ICICI is good by fulfilling it’s major objective of

granting loan & accepting deposits.

• The bank continues to invest in expansion of it’s branch network to enhance

it’s deposit franchise .

• ICICI instituted a four C’s strategy of CASA deposit growth, cost control,
credit quality improvement & capital conservation to position itself.

• The financial system has been designed by delegating the adequate powers
to each manager or officer.
 Suggestions
ü Though the bank has been successful in increasing its deposits
but to further improve upon such situation it can introduce
some new and attractive schemes for public. Such schemes
can be in the form of higher rate of interest and shorter
maturity period for FD’s etc.

ü The bank is having a greater reliance on debt capital. The

increasing reliance on external equities may prove hazardous
in the long run. So in order to remedy this situation bank
should increase its focus on internal equities and other
sources of internal financing.
 Continue …
…
üTo achieve the objective of Rural development it should open more
and more branches in different rural areas of the country. Bank
can appoint commission agents for different area who can encourage
general public to invest in the capital of the bank and make more
deposits in ICICI Bank.
üI found that ICICI generates its major revenue from domestic
market. It should increase its operation outside India also.
 Limitations
of the study
üLack of knowledge about conducting the research.
üDon’t having any practical knowledge of doing financial analysis
üThe analysis and interpretation are based on secondary data contained in the
published annual reports of ICICI group for the study period.
ü Due to the limited time available at the disposable, the study has been confined
for a period of 3 years (2007-2010).
ü Ratio itself will not completely show the company’s good or bad financial
position.
ü Inter firm comparison was not possible due to the non availability of
competitors data.
ü The study of financial performance can be only a means to know about the
financial condition of the company and cannot show a through picture of the activities
of the company
ü
 Conclusion
• On the basis of various techniques applied for the financial analysis of
ICICI Bank we can arrive at a conclusion that the financial position
and overall performance of the bank is satisfactory. The bank has
succeeded in maintaining a reasonable profitability position. The
bank has succeeded in increasing its share capital also which has
increased around 50% in the last 5 years.
• As far as the ratio of external and internal equity is concerned, it is clear
that bank has been using more amount of external equity in the form
of loans and borrowings than owner’s equity
 Bibliogra
phy
Books Referred:
üAccountancy. R.K. Mittal, A.K.Jain.
üFinancial Management- Theory and Practice. I.M.Pandey
üFinancial management by P.K.Jain & M.Y.Khan
üEssentials of Corporate Finance 2nd edition, Irwin /McGraw-Hill. Ross,
S.A.,R.W. Westerfield and B.D. Jordan.
üBasic Financial Management ,8th edition, Prentice -Hall,Inc. Scott, D.F., J.D
Martin, J.W. Petty and A.Keown.
üCiaran Walsh, Key Management Ratios, Macmillan India Ltd., NEW DELHI
 Continue ….
Internet websites:
vWww.Icicibank.Com
vWww.Moneycontrol.Com
vWWW.Money.Rediff.Com
vWww.Wikipedia.Org
vWww.Scribd.Com
vWww.Managementparadise.Com
vwww.icicidirect.com
HR manual
Financial reports for the last three years
Any Query
Thank You