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CHAPTER-IV ANALYSIS OF DATA Enhancing efficiency and performance of Public sector banks (PSBs) is a key objective of economic reforms in many countries including India. It is believed that private ownership helps in improving efficiency and performance. Accordingly, the Indian government started diluting its equity in PSBs from early 1990s in a phased manner. It has to be analysed whether the partial privatization of Indian banks had really helped them in improving their efficiency and performance. The present research seeks to asses the financial performance of the public and private sector Banks operating in India in post liberalization era. The Indian banking sector has been dominated by public sector bank in number of branches and assets. The Indian banking sector (comprise of 28 public sector bank with majority of government owned banks, 23 banks operating in private sector and 27 foreign banks. It is observed that the public sector bank has remained unchanged in terms of number over the last decades. In the era of liberalization where the Indian Banks are trying to compete with global banks, it is the need of the hour to study the efficiency and their [118] performance in the post liberalization period. It is in this context that the present research has been undertaken. "The public sector banks constitute about 27% of the total commercial banking assets. It is glaring to note that the assets share of public sector banks have decline from 90% in 1980 to 68% in 2007".1 Though the number of domestic private banks had decline since 1980, but the assets of these banks have gone upto 20% in 2007. The total banking assets constitute more than 92% of GDP at the end of March 2008, and the commercial banking assets constitute more than 95% of total banking assets. Even though the number of foreign banks have gone up significantly the assets share had not increased correspondingly. "The total assets of public sector bank in 1980 was Rs. 1649.56 billion, which increased to Rs. 5638.22 billion in 2000."2 and further to "12,206.56 billion in 2007. During the financial reform the total assets of banking sector had recorded higher growth, and since 1999 the total assets of the banking sector has gone significantly. The total commercial banking assets in 1999 was Rs. 6531.37 billion was increased to Rs. 17854.76 billion".3 In case of private sector banks the "total assets was Rs. [119] 90.26 billion which increased to Rs. 686.30 billion in 1993 and further to Rs. 3728.88 billion in 2007".4 CAMEL MODEL "CAMEL is basically a ratio-based model for evaluating the performance of banks".5 Various ratios forming this model are available as follows:C: Capital Adequacy A: Assets Quality M: Management Efficiency E: Earning Quality - Capital Adequacy Ratio - Debt-Equity Ratio - Advances to Assets - Govt. Securities to Total investment - Gross NPA to Net Advances - Net NPAs to Net Advances - Total Investments to Total Assets - Net NPAs to Total Assets. - Total Advances to Total Deposits - Business per Employee - Profit per Employee - Operating Profits to Average Working Funds. L: Liquidity - Spread to Total Assets - Net Profit to Average Assets - Interest Income to Total Income. - Non-Interest Income to Total Income - Liquid Assets to Total Assets - Govt. Securities to Total Assets - Liquid Assets to Demand Deposits - Liquid Assets to Total Deposits [120] 8.3 CONSTITUENTS OF CAMEL MODEL (i) CAPITAL ADEQUACY It is important for a bank to maintain depositor's confidence and preventing the bank from going bankrupt. Capital is seen as a cushion to protect the depositors and to promote the stability and efficiency of financial system around the world. Capital adequacy reflects the overall financial condition of the banks and also the ability of the management to meet the need for additional capital. It also indicates whether the bank has enough capital to absorb unexpected losses. Capital adequacy ratio acts as an indicator of bank leverage. The following ratios measure Capital Adequacy: (A) Capital Adequacy Ratio : The banks are required to maintain the Capital Adequacy Ratio (CAR) as specified by RBI from time to time. As per the latest RBI norms, the banks in India should have a CAR of 9%. It is arrived at by dividing the sum of Tier-I & Tier-II capital by aggregate of Risk Weighted Assets (RWA) Symbolically CAR = (Tier I + Tier-II) / RWA • Tier - I capital includes equity capital & free reserves • Tier - II capital comprise of subordinate debt of 5-7 years tenure, revaluation reserves, general provisions and loss [121] reserves, hybrid debt capital instruments and undisclosed reserves and cumulative perpetual preference shares. (B) Debt-Equity Ratio: The ratio indicates the degree of leverage of a bank. It indicates the extent of the bank business which is financed through debt and equity. This is calculated as the proportion of total outside liability to net worth. 'Outside Liabilities' includes total borrowings, deposits and other liabilities. 'Net Worth' includes equity capital and reserves & surplus. Higher ratio indicates less protection for the creditors and depositors in the banking system. (C) Advances to Assets: Advances to Assets is the ratio of the total advances to total assets. This ratio indicates a bank's aggressiveness in lending which ultimately results in better profitability. Higher ratio of advance/deposits (assets) is preferred to a lower one. Total advances also include receivables. The value of total assets excludes the re-valuation of all the assets. (D) Govt Securities (G-Secs) to Total Investments: The percentage of investment in government securities to total investments is a very important indicator, which shows the risktaking ability of the bank. It indicates a bank's strategy as being [122] high profit-high risk or low profits-low risk. It also provides a view as to the availability of alternative investment opportunities. Government securities are generally considered as the most safe debt instrument, which, as a result, carries the lowest return. As government securities are risk-free, the higher the G-Secs to investment ratio, the lower the risk involved in bank's investments. (ii) ASSETS QUALITY: The quality of assets is an important parameter to gauge the strength of the bank. The prime motto behind measuring the assets quality is to ascertain the component of non-Performing Assets (NPA) as a percentage of the total assets. This indicates the models of advances which the bank has made to generate interest income. Thus, assets quality indicates the type of the debtors the bank is having. The following ratios are necessary to assess the asset quality: (A) Gross NPAs to Net Advances: It is a measure of the quality of assets in a situation, where the management has not provided for loss on NPAs. The Gross NPAs are measured as a percentage of Net Advances. The lower the ratio betters the quality of advances. [123] (B) Net NPAs to Net Advances: It is the most standard measure of assets quality. In this ratio, Net NPAs are measured as a percentage of Net Advances. Net NPAs are gross NPAs net of provision on NPAs and interest in suspense account. (C) Total Investments to Total Assets Ratio: Total investments to total assets indicate the extent of deployment of assets in investment as against advances. The ratio is applied as a tool to measure the percentage of total assets locked up in investments, which, by conventional definition, does not form part of the core Income of the bank. A higher level of investment lack of credit off-take in the economy. The ratio is calculated by dividing total investments by total assets of the bank. A higher ratio indicates that the bank has conservatively kept a high cushion of investment to guard against NPAs. However, this also affects its profitability adversely. (D) Net NPAs to Total Assets: This ratio indicates the efficiency of the bank in assessing credit risk and, to an extent, recovering the debts. The ratio is arrived by dividing the Net NPAs by Total Assets. Total assets considered are net of revolution reserves. Lower the ratio better is the performance of the Bank. [124] (iii) MANAGEMENT EFFICIENCY: Management efficiency is another important element of the CAMEL model. The ratios in this element involve subjective analysis to measure the efficiency and effectiveness of management. The management of the bank takes crucial decisions depending on its risk perception. It sets vision and goals for the organization and sees that it achieves them. This parameter is used to evaluate management efficiency as to assign premium to better quality banks and discount poorly managed ones. The ratios that are used to evaluate management efficiency are:(A) Total Advances to Total Deposits: This ratio measures the efficiency and ability of the bank's management in converting the deposits available with the bank (excluding other funds like equity capital, etc.) into high earnings advances. Total Deposits include demand deposits, saving deposits, term deposits and deposits of other banks. Total Advances also include the receivables. (B) Business Per Employee: This ratio shows the productivity of human forces of the bank. It is used as a tool to measure the efficiency of all the employees of a bank in generating business [125] for the bank. It is arrived at by dividing the total business by total number of employees. Higher the ratio, the better it is for the bank. Business, per employee relates to the sum of Total Deposits and Total Advances in a particular year. (C) Profit Per Employee: This ratio indicates the surplus earned per employee. It is arrived at by dividing the Profit after Tax (PAT) earned by the bank by the total number of employees. The higher the ratio, the higher the efficiency of the management. (iv) EARNING QUALITY The quality of earnings is an important criterion that determines the ability of a bank to earn consistently, going into the future. It basically determines the profitability of the banks. It also explains the sustainability and growth in earnings in the future. The parameter gains importance in the light of the argument that a large part of a bank's income is earned through non core activities like investments, treasury operations, and corporate advisory services and so on. The following ratios try to assess the quality of income in terms of income generated by core activity- income from lending operations: [126] (A) Operating Profits to Average Working Funds Ratio: This ratio indicates how much a bank can perform its operations net of the operating expenses for every rupee spent on working funds. This is arrived at by dividing the operating profits by average working funds. Average Working Funds (AWF) are the total resources (total assets/liabilities) employed by a bank. It is daily average of total assets/liabilities during a year. The higher the ratio, the better it is. This ratio determines the operating profits generated out of working funds employed. The better utilization of funds will result in higher operating profits. Thus, this ratio will indicate how a bank has employed its working funds in generating profits. Banks, which use their assets efficiently, will tend to have a better average than the industry average. (B) Spread or Net Interest Margin (NIM) to Total Assets: NIM, being the difference between the interest income and the interest expended as a percentage of total assets, shows the ability of the bank to keep the interest on deposits low and interest on advance high. It is an important measure of a bank's core income (income from lending operations). A higher spread indicates the better earnings given the total assets. The interest [127] income includes dividend income and interest expended includes interest paid on deposits, loan from the RBI, and other shortterm and long-term loans. (C) Net Profit to Average Assets: Profit to average assets indicates the efficiency of the banks in utilizing their assets in generating profits. A higher ratio indicates the better income generating capacity of the assets and better efficiency of management. It is arrived at by dividing the net profit by average assets, which is the average of total assets in the current year and previous year. Thus, the ratio measures the return on assets employed. Higher ratio indicates better earnings potential in the future. (D) Interest Income to Total Income : Interest income is a basic source of revenue for banks. The interest income to total income indicates the ability of the bank in generating income from its lending. In other words, this ratio measures the income from lending operations as a percentage of the total income generated by the bank in a year. Interest income includes income on advances, interest on deposits with the RBI, and dividend income. (E) Non-Interest Income to Total Income: Fee based income accounts for a major portion of a bank's other incomes. [128] The bank generates higher fee income through innovative products and adapting the technology for sustained service levels. The stream of revenue is not dependent on the bank's capital adequacy and consequent potential to generate income is immense. Thus, this ratio measures the income from operations, other than lending, as a percentage of the total income. Non interest income is the income earned by the banks excluding income on advance and deposits with the RBI. The higher ratio of non-interest income/total income indicates the increasing proportion of fee-based income. (V) LIQUIDITY Liquidity is am important aspect for any organization dealing in money. Banks have to take proper care in hedging liquidity risk while at the same time ensuring that a good percentage of funds are invested in higher return generating investment, so that banks can generate profit while at the same time provide liquidity to the depositors. Among a bank's assets, cash investments are the most liquid. The ratios suggested to measure liquidity under CAMEL Model are as follows; (A) Liquid Assets to Total Assets: Liquid assets include cash in hand, balance with the RBI, balance with other banks (both in India and abroad) and money at call and short notice. Total assets include the revaluations of all the assets. The proportion [129] of liquid assets to total assets indicates the overall liquidity position of the bank. (B) G-Secs to Total Assets: Government securities are the most liquid and safe investments. This ratio measures the GSecs as a proportion of total assets. Banks invest in government securities primarily to meet their SLR requirements, which are around 25% of net demand and time liabilities. This ratio measures the risk involved in the assets held by a bank. (C) Liquid Assets to Demand Deposits: The ratio measures the ability of a bank to meet the demand from deposits in a particular year. It is arrived at by dividing the liquid assets by total demand deposits. The demand deposits offer high liquidity to the depositors and hence banks have to invest these assets in a highly liquid form. The liquid assets include cash in hand, balance with the RBI, balance with other banks (both in India and abroad), and money at call and short notice. (D) Liquid Assets to Total Deposits: This ratio measures the liquidity available to the deposits of a bank. Total deposits include demand deposits, saving deposits, term deposits and deposits of other financial institutions. Liquid assets include cash in hand, balance with RBI, balance with other banks, and money at calls and short notice. [130] DEPOSITS: Deposits play a very important role in analyzing the financial performance of any bank. Deposit is one of the important function of commercial bank. On the basis of deposits banks generates loans and advances to the various sector of the economy and thereby generates profit. The total deposits of the commercial banks had significantly increased since 1990. It has been observed and that majority of the banks whether operating public private or foreign banks had recorded higher deposits specially after 1990. "In the case of public sector banks the total deposits was Rs. 1227.23 billion in 1980 which increase to Rs. 4217.06 billion in 1999 and further to Rs. 6169.36 billion in 2003. By end of 2007 the total deposits of public sector bank amounted to Rs. 9975.96 billion. In case of private bank the total deposit was 70.81 billion, which increases 572.81 billion in 1999 and further to 1182.58 billion in 2003 and Rs. 2761.31 billion in 2007. The total deposits of all bank comprising of public private, foreign and regional rural banks increases to Rs. 1397.57 billion in 2007 which was only Rs. 5283.27 billion in 1999 and Rs. 1342.81 billion in 1980".6 In case of SBI the total deposit was Rs. 43521 crores in [131] 2007 which increased to Rs. 537404 crore in 2008 showing increase of 23.3%. Regarding the ICICI bank the total deposit was Rs. 230510 crores which increased to Rs. 244431 crore in 2008 indicating a 6% increase since it can be analyize that deposits of SBI is 4 times the total deposits of ICICI Bank. This reason that could be attributed was due to the larger no. of branches and also due to a larger number of customers. The increase in deposits can lead to the generation of larger profit. Total Deposits (In Rs.) 800000 700000 600000 500000 400000 SBI 300000 ICICI Bank 200000 100000 0 2007 2008 2009 Years Total Deposits (Fig. 4.1) Earning Per Share (EPS): Earning Per share (EPS) is an importance aspect. The portion of company's profit allocated to each outstanding shares of common stock. Earning per share serves as an indication of a company's profitability. It is calculated as: "EPS = Net Income-Dividends on Preferred stock/Average outstanding shares."7 [132] Return on Assets (ROA): Return on Assets (ROA) is a ratio indication of how profitable a company is relative to its total assets. It is calculated by dividing a company's annual earnings by its total assets, and is represented as a percentage. ROA is also referred as 'Return on Investment. The formula for return on assets is: "ROA = Net Income/Total Assets."8 TOTAL INCOME: Income plays a very important role in banking sector as this factor leads to the determination of profit. The income comprises of interest income and other income like, commission brokerage etc. "The interest income of the State Bank of India in 2007 was Rs. 37242 crore which increased to Rs. 48950 crore in 2008 and further to Rs. 63788 crore while the other income in 2007 was Rs. 6765 crore which increased to Rs. 8695 crore and further to 12691 in 2009. Hence the total income in 2007 of State Bank of India was 44008 crore which increased to 57645.24 crore showing an increase of 31%. In case of ICICI Bank the interest income was Rs. 21995 crore which increased to 30,788 crore in 2008 and further to Rs. 31,092".9 [133] "The total income of ICICI Bank was Rs. 28,923 crore in 2007 which increased to Rs. 39,599 crore in 2008 showing a increase 37%"10. The increase in interest of Private Sector Bank as compare to SBI could be attributed to the fact that interest rate on advance and other income was more as compare to public sector bank. Interest Income (In Rs.) 70000 60000 50000 40000 SBI ICICI Bank 30000 20000 10000 0 2007 2008 Year 2009 Interest Income (Fig. 4.2.1) Other Income (In Rs.) 14000 12000 10000 8000 SBI 6000 IC IC I B a n k 4000 2000 0 2007 2008 2009 Year Other Income (Fig. 4.2.2) [134] Operating Ratio: Operating ratio is an important ratio that explains the changes in net profit margin ratio. The higher operating ratio is unfavorable since it is believed that a small amount of operating income will not be able to meet interest, dividend etc. The operating ratio is a field of operating efficiency but is should be used continuously. The ratio effected by a number of external uncontrollable factors, internal factor employees and management efficiency or inefficiency which are difficult to analyze. Further the operating ratio can not be used as test of financial condition in case of firm, where non operating revenue and expenses form a substantial part of total income. The operating ratio indicates the average aggregate variation in expenses where some of the expenses may increase or decrease over the years. "The operating profit of State Bank of India in 2007 was Rs. 10,000 crore which increased to Rs. 13,108 crore in 2008 and further to Rs. 17,915 crore showing an increase of 31% in the year of 2007-08. In case of ICICI Bank the operating profit in 2007 was Rs. 5874 crores which increased to Rs. 7960 crore an increase of 35.5% and further to Rs. 8925.23 crore."11 [135] Operating profit (In Rs. Crore) 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 SBI ICICI Bank 2007 2008 2009 Year Operating Profit (Fig. 4.3) Net Profit: Net profit is obtained when operating expenses and taxes are deducted from gross profit. "The net profit in State Bank of India was Rs. 4541 crore in 2007, which increased to Rs. 6729 crore showing an increase of 48%, while in case of ICICI Bank the net profit of Rs. 3110.22 crore which increased to Rs. 4157.73 crore indicate the growth rate of 33.78%."12 Credit Deposit Ratio:Credit deposit ratio reflects the management performance of Bank often the financial liberalization majority of bank have shown higher credit deposit ratio. One of the glaring observation seen in India during the years is that the credit deposit ratio has highest in case of foreign bank and lowest in case of public sector bank. [136] The over all commercial sector bank witnessed an increase in credit deposit ratio in 1980. The credit deposit ratio of all commercial bank was 63% which increased to 73% in 2007. In case of State Bank of India the credit deposit ratio was 77.46% which increased to 77.55% and further to 73.11 in 2009. While in case of ICICI Bank Credit Deposit Ratio 84.97% in 2007 which further increased to 92.30% in 2008 and further 99.80% in 2009. It is seen that the credit deposit ratio has shown improvement in Private Sector Bank as compare to public Credit Deposit Ratio (in %age) sector bank which shown in declining. 100 90 80 70 60 50 40 30 20 10 0 SBI ICICI Bank 2007 2008 2009 Year Credit Deposit Ratio (Fig. 4.4) Total Advances Credit: The advances in case of SBI was Rs. 337336 crore in 2007 crore which increased to Rs. 41676 crore in 2008 which in case [137] of ICICI Bank the advance in 2007 was Rs. 195865.6 crore which increased to Rs. 225616.08 crore in 2008 and further to Rs. 218310.8 crore in 2009. The total advance in public sector bank had significantly improved in case of public and private sector banks. "In case of public sector bank the total advances was Rs. 779.47 crore which increased to Rs. 2228.26 crore the 2000 and Rs. 7204 crore in 2007 while in case of public sector Bank the total advance was Rs. 38.13 crore 2000 and Rs. 2074 crore in 2007. Since 2003, advances of all commercial bank have been more than double. In 2007 the all banks advances aggregated Rs. 4344.5 crore which increase to Rs. 10147.7 crore Total Advance Credit (In Rs.) in 2007"13. 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 SBI ICICI Bank 2007 2008 Year Total Advance Credit (Fig. 4.5) Asset Quality: The asset quality reflects the structured soundness of the [138] banking sector. The ratio of contingent liability shows that foreign banks are more exposed to default which indicate that these banks provide more significant services. The reason that could be given in this context us that foreign banks concentrate more in urban areas and mostly have big clients. The contingent liability Asset ratio of the total commercial bank showed decline from 1980 to 2007. The private sector Banks are exposed to more losses in case of default than public sector Bank. "The ratio of contingent liability to asset in case of public sector bank have decline from 14% in 2000 to 12% in 2004 but again increased to 14% in 2007 while in case of private sector bank this ratio was 11% in 2000 which increased to 24% in 2003 and further declined to 19% in 2007"14. This indicate that private sector banks are exposed to more losses as compared to public sector Bank. Profitability: Profitability can be measured with two indicator viz. Return on asset (ROA) and Return on Equity (ROE). The ROA is defined as ratio of net profit to average assets. In the port financial reform period the Banking Sector had showing more profitability. The domestic private bank had shown larger profit as compared [139] to public sector bank. After liberalization the public sector bank recorded higher rate of return on assets. During the early phase of reform the ROA was negative but with the passage of time it converted itself to positive. "In case of State Bank of India the ROA was 0.84% in 2007 which increased to 1.01% in 2008 and further to 1.40% in 2009 while in case of ICICI Bank it was 1.09% in 2007 which increased to 1.12% in 2008 and decline to 0.98% in 2009"15. [140] RESULT AND ANALYSIS: Table - 4.6 Capital Adequacy (In %) Ratios Banks Capital Adequacy Ratio (CAR) Debt-Equity Ratio Advances to Assets G-Securities Investment Source: 1. 2. 3. to Total 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 SBI 12.79 13.35 13.50 13.53 12.45 11.88 12.34 13.54 12.97 ICICI Bank 11.57 11.44 11.10 10.36 11.78 13.35 11.70 14.92 15.92 SBI 18.84 18.38 17.75 16.41 16.04 13.75 13.92 10.96 12.81 ICICI Bank 13.27 12.32 11.32 11.82 10.34 7.45 9.50 5.27 4.22 SBI 35.99 34.69 36.65 38.73 44.01 53.00 59.50 57.80 56.30 ICICI Bank 35.62 45.18 49.88 49.59 54.52 58.00 50.00 56.43 57.55 SBI 78.47 80.83 83.61 84.85 87.24 86.00 82.12 76.34 83.94 ICICI Bank 49.71 63.31 72.05 69.96 68.31 72.00 77.65 71.70 67.79 SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of Engineering & Tech. [141] Table - 4.6.1 Capital Adequacy Ratio Ratios Capital Adequacy Ratio (CAR) Debt-Equity Ratio Advances to Assets G-Securities to Total Investment Banks Mean Ratio Standard Deviation C.V. SBI 12.93 0.06 0.46 ICICI Bank 12.46 1.76 14.13 SBI 15.43 2.72 17.63 ICICI Bank 9.50 3.01 31.68 SBI 46.30 9.71 20.97 ICICI Bank 50.75 6.72 13.24 SBI 82.60 3.34 04.44 ICICI Bank 68.05 7.45 10.95 [142] A- Capital Adequacy: The ratios used in measuring capital adequacy are Capital Adequacy Ratio (CAR), Debt Equity Ratio, Advance to Assets and Government Security to Total Investment. In Case of State Bank of India (SBI) and Investment Credit and Industrial Corporation of India (ICICI) Bank. These ratios are depicted in Table 4.6 and 4.6.1. It is observed from these tables that SBI and ICICI Bank have maintained the average capital adequacy ratio at 12.93% and 12.46% respectively between 2000-01 to 2008-09. This indicates that both the banks have maintained higher CAR than the prescribed level. "According to the norms of RBI, each bank in India has to maintain 8% of their risk weighted assets as capital with effect from March 2000" However the coefficient of variance of ICICI was 14.13 in respect to SBI 0.46%, which indicates that SBI is in better position, in respect to capital adequacy than ICICI Bank due to less fluctuation. Debt-Equity Ratio is also an important ratio to measure the capital adequacy. Higher ratio indicates less protection for the creditors and depositors in the banking system. The average Debt Equity Ratio of SBI and ICICI Bank from 2000-01 to 20082009 are 15.43% and 9.50% respectively. The coefficient of variance (CV) of SBI was 17.63 as against 31.68 of ICICI Bank. [143] This figure shows that instead of higher Debt-Equity Ratio SBI had low fluctuation but the Debt-Equity Ratio in ICICI Bank was better. Advances to Assets indicates the bank aggressiveness in lending. Higher ratio indicates higher investment which results in higher profitability. The average Advances to Asset ratio in 2000-01, 2008-09 are 46.30% and 50.75% of SBI and ICICI Bank respectively. The CV of SBI and ICICI Bank are 20.97 and 13.24 respectively as shown in table 4.6.1. The ratios indicates that ICICI has shown better profitability than SBI. Government Security to Total Investment indicates the risk-taking ability of the bank. It indicates a bank strategy as being high profit - high risk and law profit law risk. The average ratios from 2000-01 to 2008-09 are 82.60% and 68.05 and the CV is 4.44 and 10.95 of SBI and ICICI Banks respectively. The high ratios indicates the low risk and low ratios indicates high risk due to investing in others risky and high return securities. The low ratio of ICICI Bank shows higher profit. [144] Table - 4.7 Assets Quality Ratio (In %) Ratios Gross NPAs to net Advances Net NPAs to Net Advances Total Investments to Total Assets Net NPAs to Total Assets Source: 1. 2. 3. Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 SBI 13.98 12.82 9.80 8.02 6.15 4.86 2.96 2.52 2.98 ICICI Bank 5.82 10.66 9.44 4.91 3.03 1.55 2.13 3.36 4.32 SBI 6.03 5.63 4.50 3.48 2.65 1.88 1.56 1.78 1.76 ICICI Bank 2.19 5.48 5.21 2.21 1.65 0.72 1.02 1.55 2.09 SBI 38.93 41.68 45.85 45.53 42.86 32.90 26.33 26.26 28.61 ICICI Bank 41.48 34.47 33.20 34.13 30.11 19.54 26.29 27.88 24.64 SBI 2.17 1.96 1.64 1.33 1.16 1.13 0.93 1.03 0.88 ICICI Bank - - 2.64 1.17 0.90 0.43 0.58 0.87 1.20 SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of Engineering & Tech. [145] Table - 4.7.1 Assets Quality Ratio Ratios Gram NPAs to net Advances Net NPAs to Net Advances Total Investments to Total Assets Net NPAs to Total Assets Banks Mean Ratio Standard Deviation C.V. SBI 7.90 3.78 47.85 ICICI Bank 5.02 8.92 177.69 SBI 3.25 1.62 49.85 ICICI Bank 2.46 4.91 199.59 SBI 36.55 7.64 20.90 ICICI Bank 30.19 6.10 20.20 SBI 1.36 0.45 33.09 ICICI Bank 1.11 0.67 60.36 [146] B. Assets Quality The Assets Quality is an important element in measuring the performance of the assets in Banks. The ratio used to measure Assets quality are the Gross NPAs to net Advances, Net NPAs to net advances, total investment to total assets and net NPAs to total assets. Gross NPAs to Net Advances is the measure of the quality of assets in a situation, where the management has not provided for loss of NPAs. Hence the Gross NPAs are measured as a percentage of Net Advances. A low ratio is better for a bank. Table 4.7.1 indicates the average ratio of Gross NPAs to net advances of SBI and ICICI Bank from 2000-01 to 2008-09. The mean ratios are 7.90 and 5.02 of SBI and ICICI bank respectively. The ratio depicts that ICICI bank is in better position than SBI. Net NPAs to Net Advances is the most standard measure of assets quality. Net NPAs and gross NPAs net of provision on NPAs and interest in suspense account. The ratios and coefficient of variance of SBI and ICICI Banks are 3.25, 2.46 and 49.85, 99.59 respectively. The ratios indicate that ICICI Bank is in better position in assets management. Total Investment to Total Assets ratios indicate the extent [147] of deployment of assets in investment as against advances. A higher level of investment means lack of credit of - take in the economy but increase the profitability. The average total investment to total assets from 2000-01 to 2008-09 is 36.55 and 30.19 and C.V. of SBI and ICICI Bank and 20.90 and 20.20. This indicate the fluctuation in both bank is approximately same but the investment of SBI is higher means getting high profit than ICICI Bank. Net NPAs to Total Assets Ratios indicates the efficiency of the bank in assessing credit risk and to some extent, recovering the debts. The average of ratios from 2000-01 to 2008-09 are 1.36 and 1.11 of SBI and ICICI Banks respectively. The coefficient of variance are 33.09 and 60.36 of SBI and ICICI Bank respectively. The ratio shows that ICICI Bank has lower ratio of Net NPAs to total Assets which indicates that the Bank has been able to manage advances is better way as compare & SBI. [148] Table - 4.8 Management Efficiency Ratios Banks Total Advances to Total Deposits (In %) Business Per Employee (Rs. Lakh) Profit per Employee (Rs. Lakh) Source: 1. 2. 3. 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 SBI 46.78 44.65 46.52 49.57 55.14 68.89 77.46 77.55 73.11 ICICI Bank 42.93 146.59 110.61 91.17 91.57 88.54 74.38 92.30 99.98 SBI 136.58 173.01 190.77 211.00 243.08 299.23 357.00 456.00 55.60 ICICI Bank 815.22 486.49 1120.00 1010.00 880.00 905.00 1027.00 1008.00 1154.00 SBI 0.70 1.16 1.48 2.00 2.07 2.16 2.37 3.73 4.74 ICICI Bank 10.45 5.33 11.00 12.00 11.00 10.00 9.00 10.00 11.00 SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of Engineering & Tech. [149] Table - 4.8.1 Management Efficiency Ratio Ratios Total Advances to Total Deposits (In %) Business Per Employee (Rs. Lakh) Profit per Employee (Rs. Lakh) Banks Mean Ratio Standard Deviation C.V. SBI 59.96 13.28 22.19 ICICI Bank 93.12 31.45 33.77 SBI 235.81 113.57 48.16 ICICI Bank 933.97 184.96 19.77 SBI 2.27 1.20 52.86 ICICI Bank 9.98 1.83 18.34 [150] C. Management Efficiency: The Management Efficiency is another important element of camel model which is calculated on the basis of total advances to total deposits, business per employee and profit per employee. Total Advances to Total Deposits measures the efficiency and ability of the bank's management in converting the deposits available with the bank in to advances. The table 4.8.1 shows the average ratios and C.V. from 2000-01 to 2008-09. The average total advances to total deposits of SBI and ICICI Bank are 59.96 and 93.12 respectively and SD are 13.28 and 31.45 of SBI and ICICI Bank respectively. The ratios indicates that ICICI Bank is efficiently converting their advances into deposits. Business Per Employee indicate the productivity of human forces of the bank. It is used as a tool to measure the efficiency of all the employees of a bank in generating business for the bank. It is arrived at by dividing the total business by total number of employees. The average business per employee of SBI and ICICI Bank from 2000-01 to 2008-09 are (Rs. Lakh) 235.81 and 933.97 and SD of these banks are 113.57 and 184.96 respectively. This shows that ICICI Bank have the letter productivity human forces of the bank. Profit Per Employee shows the surplus earned per employees. The average profit per employees of SBI and ICICI Bank are 2.27 and 9.98 (Rs. in Lakh) respectively. The SD of SBI and ICICI Banks are 1.20 and 1.83. The ratio shows that the ICICI Bank profit per employee is higher than the SBI and high variance, it is good for the ICICI Bank. [151] Table - 4.9 Earning Quality (In %) Ratios Banks Operating profit to Average working Funds Spread to Total Assets Net Profit to Average Assets Interest Income Income to Total Non Interest Income to Total Income Source: 1. 2. 3. 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 SBI 1.33 1.83 2.27 2.5 2.61 2.27 1.86 1.96 2.05 ICICI Bank 2.35 2.14 2.49 2.09 2.18 1.98 2.05 2.14 2.33 SBI 2.61 2.61 2.65 2.74 3.03 3.16 2.66 2.36 2.16 ICICI Bank 2.05 0.57 1.33 1.50 1.69 1.87 1.93 1.83 2.21 SBI 0.56 0.73 0.86 0.97 0.99 0.89 0.84 1.01 1.04 ICICI Bank 1.01 0.42 1.14 1.41 1.37 1.30 1.10 1.10 1.0 SBI 86.62 87.72 87.41 80.00 82.00 82.87 84.63 87.92 83.41 ICICI Bank 84.96 78.91 74.78 74.37 73.37 77.38 79.50 78.52 79.56 SBI 13.38 12.28 15.59 20.00 18.00 17.13 16.63 15.08 16.59 ICICI Bank 15.05 21.09 25.22 25.63 26.63 22.95 20.75 22.25 19.65 SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of Engineering & Tech. [152] Table - 4.9.1 Earning Quality Ratio Ratios Operating profit to Average working Funds Spread to Total Assets Net Profit to Average Assets Interest Income to Total Income Non Interest Income to Total Income Banks Mean Ratio Standard Deviation C.V. SBI 2.08 0.37 17.79 ICICI Bank 2.19 0.24 10.96 SBI 2.66 0.86 32.33 ICICI Bank 1.66 0.49 29.52 SBI 0.87 0.14 16.09 ICICI Bank 1.09 0.83 76.15 SBI 84.06 2.09 2.49 ICICI Bank 77.93 3.33 4.27 SBI 16.08 2.20 13.68 ICICI Bank 22.14 3.37 15.22 [153] D. Earnings Quality: The Earning Quality determines the profitability, of the banks. It explains the sustainability and growth in earnings in the future. It is assessed on the basis of (a) Operating Profits to Average Working Funds Ratio (b) Spread or Net Interest Margin (NIM) to Total Assets (c) Net Profit to Average Assets (d) Interest Income to Total Income and (e) Non Interest Income to Total Income. The Operating Profits to Average Working finds. The ratio indicates the extent which a bank can form its operations, net of the operating expenses for the every rupee spent on working funds. The higher the ratio is better. The average ratio of last ten years from 2000-01 to 2008-09 show higher ratio of ICICI Banks. The average ratio are 2.08 and 2.18 and S.D. are 0.37 and 0.24 of SBI and ICICI Bank respectively. Spread or Net Interest Margin (NIM) to total assets (NIM) is an important measure of a bank's core income (income from lending operations). A higher spread indicates the better earnings given by the total assets. The table 4.9.1 indicates the average ratio from 2000-01 to 2008-09 are 2.66 and 1.66 of SBI and ICICI Banks respectively. The S.D. of these banks are 0.86 and 0.49 respectively. This shows that SBI is better than ICICI Bank. [154] Net Profit to Average Assets indicates the efficiency of the banks in utilizing their assets in generating profits. A higher ratio indicates better income generating capacity of the assets and better efficiency of management the average ratios of the SBI and ICICI Banks from 2000-01 to 2008-09 are (Rs. in Lakhs) 0.87 and 1.09 and the S.D. are 0.14 and 0.83 respectively. It shows that the ICICI is better bank than SBI in this term. Interest Income to Total Income measures the income from lending operations as a percentage of the total income generated by the bank in a year. Its average between 2000-01 and 2008-09 are 84.06 and 77.93 and the S.D. are 2.09 and 3.33 respectively. These figures indicates that SBI is in better position. Non Interest Income to Total Income measures the income from operations, other than lending, as a percentage of the total income. The higher ratio of non-interest income/total income indicates the increasing proportion of fee-based income. The average non-interest income to total income from 2000-01 to 2008-09 are 16.08 and 22.14 and S.D. and 2.20 and 3.37 of SBI and ICICI Bank respectively. These values indicates that the ICICI Bank non-interest income against total income is higher than SBI during the period. [155] Table - 4.10 Liquidity (In %) Ratios Banks Liquid Assets to Total Assets G-secs Total Assets Liquid Assets to Deposits Liquid Assets Deposits Source: 1. 2. 3. to Total 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 SBI 19.23 18.65 12.02 10.68 8.55 6.14 6.46 1.66 8.33 ICICI Bank 18.21 12.28 6.08 6.76 7.71 4.23 6.05 7.65 1.16 SBI 30.55 33.69 38.34 38.63 37.39 27.25 20.77 19.51 23.46 ICICI Bank 20.63 21.82 23.92 23.88 20.57 20.32 19.55 18.85 16.71 SBI 150.54 153.45 100.91 86.63 69.46 44.61 44.61 63.91 72.56 ICICI Bank 137.07 467.36 175.9 116.7 100.72 64.22 97.51 78.24 28.07 SBI 25.00 24.00 15.26 13.67 10.71 7.98 8.40 11.54 10.83 ICICI Bank 21.94 39.85 13.47 12.44 12.95 6.45 9.04 12.51 10.05 SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09 Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of Engineering & Tech. [156] Table - 4.10.1 Liquidity Ratio Ratios Liquid Assets to Total Assets G-secs Total Assets Liquid Assets to Deposits Liquid Assets to Total Deposits Banks Mean Ratio Standard Deviation C.V. SBI 10.19 5.44 53.39 ICICI Bank 7.79 4.63 59.44 SBI 29.95 7.13 23.81 ICICI Bank 20.69 2.17 10.49 SBI 87.41 38.49 44.03 ICICI Bank 140.64 122.18 86.87 SBI 14.15 5.90 41.70 ICICI Bank 15.31 9.04 59.05 [157] E. Liquidity: Liquidity is one of the vital elements for organization dealing with finance. The ratio suggested to measure liquidity under CAMEL model are (a) Liquid Assets to Total Assets (b) GSecurities to Total Assets (c) Liquid Assets to Demand Deposits (c) Liquid Assets to Total Deposits. The Liquid Assets to Total Assets are the proportion of liquid assets to total assets indicates the overall liquidity position of the bank. The average ratio from 2000-01 to 2008-09 are 10.19 and 7.79 and S.D. are 5.44 and 4.63 of SBI and ICICI Banks respectively. It shows that inspite of higher mean ratio the SBI kept more fluctuations. ICICI Bank investing more and getting higher profit than SBI. Government securities to Total Assets measures the G. Securities as a proportion of total assets. Banks invest in government securities primarily to meet their SLR requirements, which are 25 of net demand and time liabilities. This ratio measures the risk involved in the assets held by a bank. The average of it from 2000-01 to 2008-09 is 29.95 and 20.69 and S.D. of it is 7.13 and 2.17 of SBI and ICICI Bank respectively. Liquid Assets to Demand Deposits ratio measures the ability of a bank to meet the demand from deposits in a [158] particular year. The demand deposits offer high liquidity to the depositors and hence banks have to invest these assets in a highly liquid form. The average of it from 2000-01 to 2008-09 is 87.41 and 140.64 and S.D. is 38.49 and 122.18 of SBI and ICICI Bank respectively. Liquid Assets to Total Deposits ratio measures the liquidity available to the deposits of a bank. The high ratio indicates the conservating investment policy of the bank and getting law risk and low return. The average ratio of the banks from 2000-01 to 2008-09 are given in table 4.10.1. The average ratios are 14.15 & 15.31 and standard aviation is 5.90 and 9.04 of SBI and ICICI banks respectively. This indicates that shows the private banks are using aggressive policy and getting high risk and return.17 Overall Ranking: The CAMEL model is used for rating of banks according their performance. Hence, an attempt has been made to rank the two banks under consideration Table 5.11,19 the reveals that, on the whole, ICICI bank has fared well than it's public sector competitor SBI. [159] Table 4.11 : Ranking of SBI and ICICI Bank According to average of CAMEL Model Ratios for the Period 2000-01 to 2008-09. Camel Ratio C: Capital Adequacy Bank SBI ICICI Bank Capital Adequacy Ratio Debt Equity Ratio Advances to Assets G-Security to total Investment A: Assets Quality M: Management Efficiency E: Earning Quality Gross NPAs to Net Advances Net NPAs to Net Advances Total Investments to Total Assets Net NPAs to Total Assets Total Advances to Total Deposits Business per Employees Profit per Employees Operating profit working funds. to average Spread to Total Assets Net Profit to Average of Assets Interest Income to Total Income Non interest income C: Liquidity Income to total Liquid Assets to Total Assets G-Securities to Total Assets Liquid Assets Deposits to Demand Liquid Assets to total Deposits Note: indicate the superiority of a bank over the other bank in terms of the concerning ratios. From the above analysis, it is obvious that both SBI and ICICI are performing ungallantly since the beginning of the 21st century. In the respect of some of the parameters in which SBI [160] has outperformed ICICI bank are government securities to total investment, spread to Total Assets, Interest to total Assets, GSecs to total assets etc. In contrast, ICICI has done better than SBI in regard to the advances to Assets, Total Advances to Deposits, Business per Employee; Profit per Employee, NonInterest income to total income, liquid assets to Total Deposits etc. On the whole, ICICI bank has performed better than SBI. The performance of the Public and Private Sector Banks also may be checked through the ranking of CAMEL model on the basis of recommendation of the Padmanabhan Committee Report. CAMEL Rating System: The CAMEL rating system is based upon an evaluation of five critical elements of a credit union's operations Capital Adequacy, Asset Quality, Management, Earnings and Asset/liability Management. This rating system is designed to take into account and referential significant financial and operational factors examiners assess in their evaluation of a credit union's performance. Credit unicons are stated using a combination of financial ratios and examiner judgments. [161] Since the composite CAMEL rating is an indicator of the visibility of a credit union, it is important that examiners rate credit unions based on their performance in absolute terms rather than against peer averages or predetermined benchmarks. The examiner must use professional judgment and consider both qualitative and quantitative factors when analyzing a credit unions performance. Since members are often lagging indicators of a credit unions condition, the examiner must also conduct a qualitative analysis of current and projected operations when assigning CAMEL ratings. Although the CAMEL composite rating should normally be based on close relationship to the component ratings. The examiner should not derive the composite rating solely by computing an arithmetic average of the component ratings. Following are general definitions the examiner should use for assigning the crolx unions CAMEL composite rating. Need of CAMEL Rating System in Banks: In 1979, the bank regulatory agencies created the Uniform Financial Institutions Rating System (LFIRS). Under the original LFIRS a bank was assigned ratings based on performance in five areas the adequacy of Capital, the quality of Assets, the capability of Management, the quality and level of Earnings and the adequacy of Liquidity. [162] CAMEL ratings reflect the excellent banking condition and performance over the last several years. There is a need for bank employees to have sufficient knowledge of the rating system in coder to guide the banking growth rate in the positive direction. Lack of knowledge among employees regarding banking performance indicators affects banks negatively as these are the bases for any banking action. Reasons for Weightage: 1. Capital: In Capital ratios we have given 0.5 to capital adequacy ratio as it is the most important ratio which has significant impact on capital of the basis. Second most important ratio which affects the capital ratio is debit - enquiry ratio and rest of then are of low impact. 2. Assets: In assets Ratio, we have highest importance to Net NPA which shows clear picture how well company is performing with its assets. Secondly Gross NPA is given is not given so much importance compared to Net NPAs. Other ratios like Net NPA to Total Assets, Total Investment to Total Asset. 3. Management: In management ratios there is no specific ratio which has specific importance. All ratios have equal impact so here we have equal weightage to all the ratios. [163] 4. Earnings: In Earnings ratios there is no specific ratio which has specific importance. All ratios have equal impact so here we have equal weightage to all the ratios. 5. Liquidity: In liquidity ratios, there is no specific ratio which has specific importance. All ratios have impact so here we have equal weightage to all the ratios. Table - 4.12 CAPITAL RATIOS CAPITAL RATIOS Particulars Capital Adequacy Ratio Debt Equity Ratio Advances to Assets Securities to Total Investments State Bank of India 12.93 15.43 46.30 82.60 ICICI Bank 12.46 9.50 50.75 68.05 Weightage 0.5 0.3 0.1 0.1 Total State Bank of India 6.47 4.63 4.63 8.26 23.99 ICICI Bank 6.23 2.85 5.08 6.81 20.97 90 80 70 60 50 40 30 20 10 0 State Bank of India (Fig. 4.12.1) [164] Securities to Total Investments Advances to Assets Debt Eqiutiy Ratio Capital Adequacy Ratio ICICI Bank Table-4.13 ASSETS RATIOS ASSETS RATIOS Particulars Gross NPA to Net Advances Net NPA to Net Advances Total Investment to Total Assets State Bank 7.90 of India 3.25 36.55 1.36 ICICI Bank 5.02 2.46 30.19 1.11 Weightage 0.1 0.5 0.2 0.2 Total State Bank 0.79 of India 1.63 7.31 0.27 10.00 ICICI Bank 1.23 6.04 0.22 7.99 0.50 Net NPA to total Assets 40 35 30 25 State Bank of India ICICI Bank 20 15 10 5 0 Gross NPA to Net Advances Net NPA to Net Advances Total Net NPA to Investment Total Assets to Total Assets (Fig. 4.13.1) [165] Table-4.14 MANAGEMENT RATIOS MANAGEMENT RATIOS MANAGEMENT RATIOS Particulars MANAGEMENT RATIOS Total Advances to Total Deposits Business Per Employee (In Lacs) Profit Per Employee (In Lacs) State Bank of India 59.96 235.81 2.27 ICICI Bank 93.12 933.997 9.98 Weightage 0.33 Total 0.33 0.33 Total %age State Bank of India 19.79 19.79 77.82 0.75 78.57 20.14 ICICI Bank 30.73 30.73 308.21 3.29 311.5 79.86 Particulars Total 1 Total 2 Final Total State Bank of India 19.79 20.14 39.93 ICICI Bank 30.73 79.86 110.59 1000 900 800 700 State Bank of India 600 500 ICICI Bank 400 300 200 100 0 Total Business Advances to Per Total Employee Deposit (In Lacs) Profit Per Employee (In Case) (Fig. 4.14.1) [166] Table - 4.15 EARNINGS RATIOS EARNINGS RATIOS Particulars Operating Profit to Average Working Funds Spread to Total Assets Net Profit to Average Assets Interest Income to Total Income NonInterest Income to Total Income State Bank of India 2.08 2.66 0.87 84.06 16.08 ICICI Bank 2.19 1.66 1.09 77.93 22.14 Weightage 0.2 0.2 0.2 0.2 0.2 Total State Bank of India 0.42 0.53 0.17 16.81 3.22 21.15 ICICI Bank 0.44 0.33 0.22 15.59 4.43 21.01 90 80 70 60 State Bank of India ICICI Bank 50 40 30 20 10 0 Operating Profit to Average Working Funds Spread to Net Profit to Total Assets Average Assets Interest Income to Total Income (Fig. 4.15.1) [167] Non-Interest Income to Total Income Table - 4.16 LIQUIDITY RATIOS LIQUIDITY RATIOS Particulars Liquid Assets to Total Assets Government Securities to Total Assets Liquid Assets to Demand Deposits Liquid Assets to Total Deposits State Bank of India 10.19 29.95 87.41 14.15 ICICI Bank 7.79 20.69 140.64 15.31 Weightage 0.25 0.25 0.25 0.25 Total State Bank of India 2.55 7.49 21.85 3.54 35.43 ICICI Bank 1.95 5.17 35.16 3.83 46.11 160 140 120 100 State Bank of India 80 ICICI Bank 60 40 20 0 Liquid Government Assets to Securities to Total Assets Total Assets Liquid Assets to Demand Deposits Liquid Assets to Total Deposits (Fig. 4.16.1) [168] TABLE 4.17 SHOWING CAMEL RATING COMPARSION CAMEL RATING Particulars Assets ICICI Bank 23.99 10.00 39.93 21.15 20.97 7.99 110.59 0.2 0.2 4.80 4.19 Weightage Total Rank 35.43 - - 21.01 46.11 - - 0.2 0.2 0.2 - - 2.00 7.99 4.23 7.09 26.11 2 1.60 22.12 4.20 9.22 41.11 1 of ICICI Bank 120 100 80 State Bank of India ICICI Bank 60 40 20 (Fig. 4.17.1) [169] ty Li qu id i ni ng s Ea r t m en ag e M an A ss l et s 0 ita State Bank India Manage- Earnings Liquidity ment of C ap State Bank India Capital Interpretation: Here ICICI Bank got Rank I which indicates strong performance and risk management practices that consistently provide for safe and sound operations. The historical trend and projections for key performance measures are consistently positive. It is not performing well in liquidity ratio but it performs strong in other ratios which covered up its weak performing area. The performance of ICICI Bank is better than State Bank of India through CAMEL model. Hence the hypothesis is proved. [170] REFERENCE 1. "Business Standard" Subscribers copy, Banking annual Dec. 2008. 2. Ibid. 3. Report of Committee on Financial System 1991- a summary; Reserve Bank of India, 2010. 4. http://scribd.com, March-April 2010. 5. Kumar, Satish, B. "Financial Performance of Private Sector Bank in India, Coimbatore, Tamilnadu, India - An Evaluation, 2009. 6. "Business Standard" Subscribers copy, Banking annual Dec. 2008. 7. http://www.investopedia.com/terms/e/eps.asp, Dec. 2008 8. www.investopedia.com/terms/r/returnonassts.asp. 9. "Business Standard" Subscribers copy, Banking annual Dec. 2008. 10. Ibid. 11. Ibid. 12. www.iba.org.in, Jan.-April 2010. 13. Ibid. [171] 14. Annual Report of SBI and ICICI Bank of 2000, 07, 08, 09. 15. Ibid. 16. Graewal Lovely, "A project on CAMEL Framework as a tool of performance evaluation for banking" Som Institute, Ahmedabad, 2010. 17. SBI Annual Report and ICICI Bank Annual Report of 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09. 18. Graewal Lovely, "A project on CAMEL Framework as a tool of performance evaluation for banking" Som Institute, Ahmedabad, 2010. 19. http://en:wikipedia.org/wiki/CAMELS-ratings, Feb. 2010. [172]