CAMEL ANALYSIS OF BIG FOUR BANKS IN INDIA

This report will help in knowing the best performer among the big four bank of India on the basis of five factors.

1. CAMEL ANALYSIS OF BIG FOUR BANKS IN INDIA By Pradeep Kumar Center for business administration Central university of Jharkhand

2. INDIAN BANKING INDUSTRY

3. INTRODUCTION Big Four Banks The Big Four is the colloquial name for the four main  banks   of a nation. The big four banks of India are:- 1) State Bank of India 2) Punjab National Bank 3) ICICI Bank 4) Bank of Baroda What is CAMEL Analysis? CAMEL analysis was used for the first time by the FEDERAL RESERVE, in 1980s. C apital adequacy A SSET QUAILITY M ANAGEMENT EFFICIENCY E ARNING L IQUIDITY

4. RESEARCH METHODOLOGY Research objective Comparative financial analysis between the big four banks and to find out the relative position between them. Type of research Analytical Sample bank State Bank of India, Bank of Baroda, Bank of India, ICICI bank. Hypothesis of the study There is no significant difference between the financial performance of the Big four banks in I ndia. There is a significant difference between the financial performance of the Big four banks in India.  

5. Sources of Data Collection The database of RBI, which is available in its official website. Annual reports of the bank Website, such as moneycontrol.com Approach of the Study 1 st - Finding out the key ratios for analyzing the 5 dimensions of bank. 2 nd - 5-year’s ratios & average calculation. 3 rd - Ranking the big four bank, separately for each dimensions of CAMEL model, on the basis of average. 4 th -finding the composite ranking. Limitation of the Study Not considered ‘S’ of the CAMELS(sensitivity to market risk). The last year financial data had not been analysed because the company had not revealed its annual report, till yet. Result are subjective to nature.

6. CAPITAL ADEQUACY Banks AVG. RANK AVG. RANK AVG. RANK AVG. RANK SBI 13.02 2 63.16 1 76.72 3 2.00 1 BOB 12.51 4 61.84 2 83.95 1 2.33 2 ICICI 19.04 1 49.96 4 41.30 4 3 4 PNB 12.84 3 52.74 3 81.56 2 2.67 3 C.A.R. (%, as per BASEL-II) Advance/asset ratio(%) G-sec /total investment (%) OVERALL RANK Average from FY 2010 to 2014

7. ASSET QUALITY Banks AVG. RANK AVG. RANK AVG. RANK AVG. RANK SBI 0.08 2 1.99 4 2.26 2 2.67 3 BOB 0.072 3 0.81 1 1.99 1 1.67 1 ICICI 0.07 4 1.12 2 2.26 2 2.67 3 PNB 0.09 1 1.62 3 3.18 3 2.33 2 TOTAL ASSETS TURNOVER RATIO NET N.P.A RATIO (%) GROSS N.P.A. RATIO (%) OVERALL RANK Average from FY 2010 to 2014

8. MANAGEMENT EFFICIENCY Banks AVG. RANK AVG. RANK AVG. RANK AVG. RANK AVG. RANK SBI 8.25 3 5.02 4 13.91 3 9.31 1 2.75 3 BOB 1.44 1 10.11 2 17.13 2 8.71 2 1.75 1 ICICI 7.41 4 11.92 1 11.19 4 8.65 3 3 4 PNB 1.08 2 7.486 3 18.28 1 8.71 2 2 2 BUSINESS PER EMPLOYEE (in crore ) NET PROFIT PER EMLOYEE ( in lakhs) RETURN ON EQUITY (%) ASSET UTILISATION RATIO ( %) OVERALL RANK Average from FY 2010 to 2014

9. EARNING Bank avg. rank avg. rank avg. rank avg. rank avg. rank avg. rank avg. rank SBI 3.02 2 0.82 4 8.21 4 165.12 1 6.00 3 9.95 2 2.67 3 BOB 2.77 3 1.08 3 13.95 2 105.24 3 16.98 2 7.77 4 2.83 4 ICICI 2.71 4 1.48 1 15.77 1 58.94 4 25.03 1 11.79 1 2 1 PNB 3.66 1 1.12 2 12.01 3 126.89 2 3.53 4 7.96 3 2.5 2 Net interest margin (%) Return on assets (%) Net profit ratio (%) Earnings per share Net Profit Growth Total Income / Capital Employed (%) OVERALL RANK Average from FY 2010 to 2014

10. LIQUIDITY Bank AVG. RANK AVG. RANK AVG. RANK SBI 6.89 2 45.44 4 3 3 BOB 4.77 4 27.25 1 2.5 2 ICICI 8.80 1 43 3 2 1 PNB 5.92 3 38.42 2 2.5 2 Cash-deposit ratio (% ) Demand liabilities to total liabilities OVERALL RANK Average from FY 2010 to 2014

11. HYPOTHESIS TESTING ANOVA   Sum of Squares df Mean Square F Sig. Between Groups .461 3 .154 .873 .475 Within Groups 2.818 16 .176     Total 3.279 19       Since the F-value is greater than the sigma value, therefore alternative hypothesis ‘ ’ is accepted and the null hupothesis ‘ ’ is rejected. Hence, there is no significant relationship between the financial performance of the big four banks in India .  

12. COMPOSITE RANKING: OVERALL PERFORMANCE   Banks C A M E L AVG. RANK SBI 1 3 3 3 3 2.6 2 BOB 2 1 1 4 2 3.33 3 ICICI 4 3 4 1 1 2.6 2 PNB 3 2 2 2 2 2.2 1

13. CONCLUSION For the time period of 5 year, i.e. from FY 2010 to FY 2014, There is a significant difference between the financial performance of the big four banks in India. Punjab national bank is the best performance among the sample banks. In context of capital adequacy, State Bank of India ranks first. In terms of asset quality and management efficiency, Bank of Baroda is in the top position. ICICI bank rated top in case of earnings and short- term solvency.

14. Bibliography Aspal, S. K. (2013). A Camel Model Analysis of State Bank Group. World Journal of Social Sciences , 3 (4), 36 – 55. Economic milestone : Nationalisation of banks. ( n.d. ). Retrieved 04 01, 2015, from http://forbesindia.com: http://forbesindia.com/article/independence-day-special/economic-milestone-nationalisation-of-banks-%281969%29/38415/1 Hirtle, B. a. ( n.d. ). Mishra Aswini Kumar, G. S. (2012). Analyzing Soundness in Indian Banking: A CAMEL Approach. Research Journal of Management Sciences , 1(3) . Rakshit , I. G. (2014). THE FINANCIAL PERFORMANCE OF. the management accountant , 01.