CHAPTER:1

INTRODUCTION

1.1ABOUT THE PROJECT

Generally banking System is the backbone of every country’s economy. It is generally agreed that a strong
and healthy banking system is a prerequisite for sustainable economic growth the banking system of India is
featured by a large network of banks, serving many kinds of financial needs of the people.

The Punjab National Bank popularly is one of the leading banks in India with number of branches and
variety of products. The investigation in this study is the financial performance of the bank. The study will
mainly explore the financial tools to measure and interpret a performance.

The main objective of any company is the creation of wealth for its stakeholders although this mostly
applies market facts This means that progress needs to be measured to show the bank return in total by
highlighting the major strengths and opportunities of the bank and on the other hand, weaknesses and
threats facing the bank. also, an analysis indicates the level of efficiency, liquidity, debt management and
adequate cash flow. No research is completed until it has formulated a specific problem. The problem of the
study is to analyse the financial status of Punjab National Bank.

The banking sector is one of the most important instruments of the national market, market liberalization,
economic reforms have witnessed important changes in banking industry leading to incredible
competitiveness and technological sophistication leading to a new era of in banking. Since then, every bank
is relentless in their endeavour to become financially strong and operationally efficient development,
occupies a unique place in a nation’s economy. Economic development of the country is evident through the
soundness of the banking system. Deregulation in the financial and effective.

Indian banks are the dominant financial intermediaries in India and have made good progress during the
global financial crisis; it is evident from its annual credit growth and profitability. the growth is possible in
two ways, organic or inorganic. Organic growth is also referred as internal growth, occurs when the
company grows from its own business activity using funds from one year to expand the company the
following year. Such growth is a gradual process spread over a few years but firms want to grow faster.
Inorganic growth is referred as external growth and considered as a faster way to grow which is most
preferred Inorganic growth occurs when the company grows by merger or acquisition of another business.

1
The main motive behind the Merger is to create synergy, that is one plus one is more than two and this
rationale beguile the companies for merger at tough times. Merger and Acquisitions help the companies in
getting the benefits of greater market share and cost efficiency. For expanding the operations and cutting
costs, Banks are using Merger and Acquisitions as a strategy for achieving larger size, increased market
share, faster growth, and synergy for becoming more competitive through economies of scale. Today a large
section of people, who have minimal financial literacy, are need to know the financial performance status of
the banks where their deposits are vested. They may be as an investor, manager, employee, owner, lender,
customer, government and public at large.

Financial performance is not available from the records and files in any organisation. It has to be derived by
the usage of financial statement analysis techniques. The selection and usage of technique is subject to the
option of the user. Some of the important and commonly used techniques are: Ratio Analysis, Cross section
analysis Comparative statement analysis, Time series analysis, Common size analysis. The usefulness of
ratios depends on skilful interpretation and intelligence of the user.

The present study is devoted to analysis the financial ratios of PNB by using ratio analysis with a view to
give meaningful interpretations for the users. Financial Ratios are used in the evaluation of the financial
condition and profitability of a company. The ratios are calculated from the financial information provided
in the balance sheet and income statements. While analysing the financial statements you should keep in
mind the principles/practices that accountants use in preparing statements to examine at the financial
condition and preference of a company.

Ratio Analysis is one of the techniques of financial analysis where ratios are used to evaluating the financial
condition and performance of a firm. Analysis and interpretation of various accounting ratios gives a skilled
and experienced analyst a better understanding of the financial condition and performance of the firm.
1.2 INTRODUCTION TO RATIO

Financial analysis is the process of identifying the financial strength. And weakness of the firm by properly
establishing relationship between the items of the balance sheet and the profit and losses account. Ratio
analysis is a powerful tool of financial analysis useful for measuring the performance of an organization.

Ratio analysis is a process of comparison of one figure against another, which make a ratio, and the
appraisal of the ratio to make proper analysis about the strength and weakness of the operations of an
enterprise.

A ratio is defined as, “a fraction whose numerator is the ‘antecedent’ and denominator the ‘consequences’.
‘It is simply an expression of one number in terms of another.

Ratios: are the simplest mathematical (statistical) tools that reveal significant relationships hidden in mass of
data, and allow meaningful comparisons. Some ratios are expressed as fractions or-decimals, and some as
percentages. Major types of business ratios include Efficiency, Liquidity, Profitability, and Solvency ratios.

A financial ratio or accounting ratio is a relative magnitude of two selected numerical values taken from an
enterprise's financial statements. Often used in accounting, there are many standard ratios used to try to
evaluate the overall financial condition of a corporation or other organization. Financial ratios may be used
by managers within a firm, by current and potential shareholders (owners) of a firm, and by a firm's
creditors. Financial analysts use financial ratios to compare the strengths and weaknesses in various
companies. If shares in a company are traded in a financial market, the market price of the shares is used in
certain financial ratios.

Ratios can be expressed as a decimal value, such as 0.10, or given as an equivalent percent value, such as
10%. Some ratios are usually quoted as percentages, especially ratios that are usually or always less than 1,
such as earnings yield, while others are usually quoted as decimal numbers, especially ratios that are usually
more than 1, such as P/E ratio; these latter are also called multiples. Given any ratio, one can take its
reciprocal; if the ratio was above 1, the reciprocal will be below 1, and conversely. The reciprocal expresses
the same information, but may be more understandable: for instance, the earnings yield can be compared
with bond yields, while the P/E ratio cannot be: for example, a P/E ratio of 20 corresponds to an earnings
yield of 5%.
1.3 DEFINITION AND MEANING OF RATIO’S

• Ratio analysis is the process of examining and comparing financial information by calculating meaningful
financial statement figure percentages instead of comparing line items from each financial statement.

• A ratio analysis is a quantitative analysis of information contained in a company’s financial statements.

Ratio analysis is used to evaluate various aspects of a company’s performance. The relationship between two
accounting variables, expressed mathematically is known as an accounting ratio.

MODES OF

• PURE RATIO

• PERCENTAGE

• NUMBER OF TIMES

• NUMBER OF DAYS/WEEKS/MONTHS .

Pure ratio: In this case one number is divided by another number so as to express the ratio in a pure ratio
form.

2. Percentage: In order to express the ratio in percentage, one number is taken as the numerator, another
as the denominator and multiplied by 100.

3. Times: Certain items of financial statement can be better expressed in the form of a rate.

4. Days/weeks/months: Certain items of financial statement can be better expressed in the form of days
or weeks or months.

1.4 CLASSIFICATION OF RATIOS

Accounting Ratios are classified on the basis of the different parties interested in making use other ratios. A
very large number of accounting ratios are used for the purpose of determining the financial position of a
concern for different purposes. Ratios may be broadly classified in to:

•Classification of Ratios on the basis of Balance Sheet.

•Classification of Ratios on the basis of Profit and Loss Account.

•Classification of Ratios on the basis of Mixed Statement (or) Balance Sheet and Profit and Loss a/c.

To meet the objective the study groups ratios and divides three main parts which are Liquidity ratios,
profitability ratios, and asset management ratios.
1.4.1 LIQUIDITY RATIO

The scope to which there is quick convertibility of assets in to money, for the purpose of paying obligation
of short-term nature can be termed as liquidity. Apropos to obtaining an indication of a firm’s ability to meet
its current liabilities, the utility of the liquidity ratios is instrumental. As a flip side, however, it does not
bring to the light, the effectiveness of the optimal management of cash resources. It is also termed as Short-
Term Solvency Ratios. To measure the liquidity of a firm, the following Liquidity ratios are commonly
used:

1) CURRENT RATIO:

The relationship between current assets and current liabilities is established by Current Ratios. It attempts to
measure the ability of a firm to meet its current obligations. Current assets and current liabilities comprise of
two pivotal components of this ratio. Assets that can be easily converted into cash, within the time frame of
less than a year, can be termed as current assets. While, conversely, current liabilities encompass those
liabilities which can be paid off with in a year.

The ideal current ratio is 2: 1. It is a stark indication of the financial soundness of a business concern. When
Current assets double the current liabilities, it is considered to be satisfactory. Higher value of current ratio
indicates more liquid of the firm’s ability to pay its current obligation in time.

❖ FORMULA = CURRENT ASSETS/CURRENT LIABILITY

Along with knowing how to analyse and improve current ratio, it is important to know the advantages
and disadvantages of using current ratio

ADVANTAGES OF CURRENT RATIO:

• It measures the liquidity of the firm

• It represents the working capital position of a firm

• It represents the liquidity of a company

• It represents margin of safety

• It tells us the short-term solvency of a firm.

DISADVANTAGES OF CURRENT RATIO:

• Its accuracy can be deterred as, pertaining to different businesses, depending on a variant of factors

• Over-valuation of stock also contributes to its tipping accuracy

• It measures the firm liquidity on the basis of quantity and not quality, which comes across as a crude
method.

• Using this ratio on a standalone basis may not be sufficient to analyse the liquidity position of
the company as it relies on the amount of current assets instead of the quality of the asset.

• In companies where sales are seasonal; you may see a reduced current ratio in some months and increased
ratio in the other.

2) CASH POSITION RATIO

Cash ratio is the ratio of cash and cash equivalents of a bank to its current liabilities. It is an extreme
liquidity ratio since only cash and cash equivalents are compared with the current liabilities. It measures the
ability of a business to repay its current liabilities by only using its cash and cash equivalents and nothing
else.

The cash ratio is the ratio of a bank's total cash and cash equivalents (CCE) to its current liabilities. The
metric calculates a company's ability to repay its short-term debt; this information is useful to creditors when
deciding how much debt, if any, they would be willing to extend to the asking party. The cash ratio is
generally a more conservative look at a company's ability to cover its liabilities than many other liquidity
ratios because other assets, including accounts receivable, are left out of the equation.

❖ CASH POSITION RATIO = CASH/CURRENT LIABILITY

3)DEBTTO EQUITY RATIO

The debt to equity ratio is a financial, liquidity ratio that compares a company’s total debt to total equity.
The debt to equity ratio shows the percentage of company financing that comes from creditors and investors.
A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than investor
financing (shareholders).

❖ DEBT TO EQUITY RATIO=TOTAL LIABILIY/TOTAL EQUITY

1.4.2 PROFITABILITY RATIO

Profitability ratios designate a bank's overall efficiency and performance. It measures how to use assets and
how to control its expenses to generate an acceptable rate of return. It also used to examine how well the
bank is operating or how well current performance compares to past records of bank.

These ratios are intended to reflect the overall efficiency of the organisation, its ability to earn a reasonable
return on capital employed or on shares issued and the effectiveness of its investment policies.

Profitability ratios are a class of financial metrics that are used to assess a business's ability to generate
earnings relative to its associated expenses. For most of these ratios, having a higher value relative to a
competitor's ratio or relative to the same ratio from a previous period indicates that the company is doing
well.

1. NET PROFIT MARGINS RATIO

Different profit margins are used to measure a company's profitability at various cost levels, including gross
margin, operating margin, pre-tax margin and net profit margin. The margins shrink as layers of additional
costs are taken into consideration, such as cost of goods sold (COGS), operating and non-operating
expenses, and taxes paid. Gross margin measures how much a company can mark up sales above COGS.
Operating margin is the percentage of sales left after covering additional operating expense. The pre-tax
margin shows a company's profitability after further accounting for non-operating expense. Net profit
margin concerns a company's ability to generate earnings after taxes.

❖ NET PROFIT MARGIN=NET PROFIT / NET REVENUE

Net margin measures the overall profitability of a company. It considers all the operating and financing
expenses by the company in its daily operations. In other words, it tells us how much of the revenue
generated by the company is left for 9 various corporate activities. For example, Company X has 40% of its
revenue left to be utilized either to pay back the shareholders or to reinvest in the business.
1) RETURN ON EQUITY

ROE is a ratio that concerns a BANK's equity holders the most, since it measures their ability of earning
return on their equity investments. ROE may increase dramatically without any equity addition when it can
simply benefit from a higher return helped by a larger asset base. As a company increases its asset size and
generates better return with higher margins, equity holders can retain much of the return growth when
additional assets are the result of debt use.

❖ RETURN ON EQUITY = NET PROFIT / EQUITY.

ADVANTAGES OF EQUITY RATIO

Equity ownership provides the highest rate of return in the long run; more than bonds and cash. Common
stocks have provided over a 6% real rate of return in the long run, providing one of the best means to stay
ahead of inflation.

Stock ownership is one of the foundations of capitalism and a free enterprise system. Common stock
provides benefits to the issuer, shareholder, and society in general.

The issuer raises capital for producing goods or services. The shareholder receives the fractional benefits of
an enterprise that is much larger than they would normally be able to participate in. Society enjoys the
benefits of the goods and services of the issuing company as well as the jobs produced by the company. And
let’s not forget the taxes paid by both the company and shareholders.
RISK OF EQUITY

Owners of common stock have no guarantees, but are accepting the risk in exchange for potential greater
gains than other safer investments. However, the shareholder’s liability is limited to the price paid for the
common stock. Common stock can be very volatile and is generally considered a high-risk investment class.
In the case of liquidation of the business, owners of common stock are last in line behind creditors,
bondholders, and preferred stockholders.

2) RETURN ON ASSETS

Profitability is assessed relative to costs and expenses, and it is analysed in comparison to assets to see how
effective a company is in deploying assets to generate sales and eventually profits. The term return in the
ROA ratio customarily refers to net profit or net income, the amount of earnings from sales after all costs,
expenses and taxes. The more assets a company has amassed, the more sales and potentially more profits the
company may generate. As economies of scale help lower costs and improve margins, return may grow at a
faster rate than assets, ultimately increasing return on assets.

❖ RETURN ON ASSETS = NET INCOME / TOTAL ASSETS ADVANTAGES

1. As mention above, Return on Assets is used to measure efficiency of assets using to generate the Net
Income, and this is the Financial Indicators which normally use in the manufacturing industry.

2. This Return on Assets is normally benchmark with the industry average, competitor, and previous year.
For better analysis, the trend of this ratio for at least three years would be more benefit.

3. There are advantages and disadvantages of using ROA as performance indicator in order to assess
company’s performance as well as to reward management.
DISADVANTAGES

1. ROA using accounting information for calculation and it is commonly affected by management judgement.

2. Accounting policies is one among those factors. ROA use percentage but it does not show the real value
added to the shareholders or the company.

3. The serious disadvantages of ROA are it motivates management to use the old assets and discourage them
not to invest in the new assets.

1.4.3 ASSETS MANAGEMENT RATIO

Asset management ratios are most notable ratios of financial ratios analysis. It measures how effectively any
organization uses and controls its assets. It is analysis how a company quickly converted to cash or sale on
their resources. It is also called Turnover ratios because it indicates the asset converted or turnover in to
sales.

Asset Management Ratios attempt to measure the firm's success in managing its assets to generate sales. For
example, these ratios can provide insight into the success of the firm's credit policy and inventory
management. These ratios are also known as Activity or Turnover Ratios.
1) CURRENT ASSETS TURNOVER RATIO

Current Asset Turnover It can be calculated by dividing the firm's net sales by its average current assets, and
it shows the number of turns made by the current assets of the enterprise. The values may vary between
businesses and industries, and the normative value is absent.

Current Asset Turnover - an activity ratio measuring firm’s ability of generating sales through its current
assets (cash, inventory, accounts receivable, etc.). It can be calculated by dividing the firm's net sales by its
average current assets, and it shows the number of turns made by the current assets of the enterprise.

❖ CURRENT ASSETS TURNOVER RATIO = SALES/CURRENT ASSETS

Resolving the problems with the current asset turnover exceeding the normative range: In case the current
asset turnover value is low there are following ways to increase it:

• decreasing the inventory stock to the minimum level, which would allow the continuous operational
process;

• sales promotion and decreasing the finished goods stock;

• Activation of the accounts receivable collection process, etc.

2) FIXED ASSETS TURNOVER RATIO

Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets (on the
balance sheet). It indicates how well the bank is using its fixed assets to generate sales.

The fixed asset turnover ratio is an efficiency ratio that measures a bank’s return on their investment in
property, plant, and equipment by comparing net sales with fixed assets. In other words, it calculates how
efficiently a company is a producing sale with its machines and equipment.

❖ FIXED ASSETS TRUNOVER RATIO= SALES/FIXED ASSETS

3) TOTAL ASSETS TURNOVER RATIO

The total asset turnover ratio compares the sales of a banks to its asset base. The ratio measures the ability of
an bank to efficiently produce sales, and is typically used by third parties to evaluate the operations of a
business. Ideally, a company with a high total asset turnover ratio can operate with fewer assets than a less
efficient competitor, and so requires less debt and equity to operate. The result should be a comparatively
greater return to its shareholders.

❖ TOTAL ASSETS TURNOVER RATIO = SALES / TOTAL ASSETS

4) DEBT RATIO

Debt ratio is a solvency ratio that measures a bank’s total liabilities as a percentage of its total assets. In a
sense, the debt ratio shows a bank’s ability to pay off its liabilities with its assets. In other words, this shows
how many assets the bank must sell in order to pay off all of its liabilities.

This ratio measures the financial leverage of a company. Companies with higher levels of liabilities
compared with assets are considered highly leveraged and more risky for lenders.

❖ FORMULA = TOTAL LIABILITIES/TOTAL ASSETS

5) LOANS AND ADVANCES RATIO

Money provided by the bank to entities for fulfilling their short-term requirements is known as Advances.
The loan is a kind of debt while Advances are credit facility granted to customers by banks. Loans are
provided for a long duration which is just opposite in the case of Advances.

❖ LOANS AND ADVANCES= (LOANS AND ADVANCES / TOTAL ASSETS)*100

1.5 PARTIES INTERESTED IN RATIO ANALYSIS RESULT

Analysis of financial statement has become very significant due to widespread interest of various parties in
the financial results of a business unit. The various person interested in the analysis of financial statement are:
-

a) Short – term creditors They are interested in knowing whether the amounts owing to them will be paid as
and when fall due for payment or not.

b) Long – term creditors They are interested in knowing whether the principle amount and interest
thereon will be paid on time or not.

c) Shareholders They are interested in profitability, return and capital appreciation.

d) Management The management is interested in the financial position and performance of the enterprise
as a whole of its various division.

e) Trade union They are interested in financial statement for negotiating the wages or salaries or bonus
agreement with management.

f) Taxation authorities The authorities are interested in financial statement for determining the tax liability.

g) Researcher They are interested in the financial statement in undertaking research in business affairs and
practices.

h) Employee They are interested in enables them to justify their demands for bonus and increase in
remuneration. You have seen that different parties are interested in the result reported in the financial
statement. These results are reported by analysing financial statement thought the use of the ratio
analysis.
1.6 IMPORTANCE OF RATIO

The ratio analysis is one of the most powerful tools of financial analysis. It is used as a device to analyse and
interpret the financial health of enterprise. A ratio is known as a symptom like blood pressure, the pulse rate
of the temperature of an individual. It is with help of ratios that the financial statements can be analysed
more clearly and decision made from such analysis.

The use of ratios is not analysis for knowing financial position of a firm like supplier, banks, investors,
shareholders, financial institutions etc. The ratio analysis provides guides and clues especially in spotting
trends towards better or poor performance. In the words of J. Batty “ratio can also assist management in its
basic functions of foresting, planning, co-ordination control and communication.” The important / objectives
of ratios analysis is discussed below:

With the help of ratio analysis meaningful information can be communicated to the user of accounting
information and as a result the analyst can draw right decision.

1. SIMPLIFICATION

Accounting figures in many cases fail to provide information in a desired way. Ratios simplify, summarize
and systematize accounting figures which can easily be understood by those do not know the language of
accounting.

2. MEASURES LIQUIDITY POSITION

Ratio analysis helps in measuring the liquidity position of the firm. Liquidity position of firm is said to be
satisfactory if it is able to meet its current obligation as and when they mature. Various liquidity ratios are
used for the purpose of credit analysis by banks and short-term lenders. Long term benefits Ratio analysis is
equally important in evaluating the long-term solvency of the firm. It is measured by capital structure of
leverage ratios.

3. MEASURING CORPORATE SICKNESS

Undoubtedly, ratio analysis helps us to measure the corporate sickness well. In advance so that the
management, shareholders and other interested partiesmay. Take proper step to avoid such a situation.
4. MEASURES OPERATIONAL EFFICIENCY

Ratios are useful tools in the hands of management to evaluate the firm’s performance over a period of time
by comparing the present ratios with the past ratios. Various activity or turnover ratio measure the
operational efficiency of the firm. These ratios are used, in general, by bankers, investors and other supplier
of credit.

5. MEASURES PROFITABILITY

The management as well as owners of firm is primarily concerned with the overall profitability of the firm.
Profit and loss amount reveal the profit earned or loss incurred during a period but fails to convey the
capacity of the firm to earn in terms of per rupee invested or per rupee of sales. By calculating various
profitability ratios an analyst can measure earning capacity of the firm.

6. FACILITIES INTER FIRM AND INTRA FIRM COMPOSITIONS

Ratio analysis is the basis for comparing the efficiency of various firms in the industry and various division
of a business firm.

7. TREND ANALYSIS

Ratio analysis enables a firm to take the time dimensions into account. Trend analysis of ratios revels
whether financial position of the firm is improving or deteriorating over years. With the help of such
analysis, one can ascertain whether the trend is favourable or adverse. For example, any particular ratio may
be less than general ratio but the trend may be increasing. On the contrary, present level may be satisfactory
but trend may be declining.

8. MANAGERIAL USES

Ratio analysis is an invaluable aid to management is discharging its basis function such as planning,
communication, control co-ordination and decision making.

9. FORMULATING GOVERNMENT POLICES

Since ratios are the tools to measure industrial efficiency and performance the government takes various
financial policies on the basis of the result of various related ratio analysis.
10. TIME DIMENSION BY TREND ANALYSIS

It helps to take time dimension into account by trend analysis i.e. whether the firm is improving or
deteriorating over a number of years that can easily be studied by the trend analysis. So, comparison can be
made without difficulty by the analyst and to see whether the said ratio is high or low in comparison with
the standard or normal ratio.

11. MEASUREMENT OF DEGREE OF EFFICIENCY

It throws light on the degree of efficiency of the management and utilization of assets and that is why it is
called surveyor of efficiency. 12. ANALYSIS AND SCRUTINY OF THE PAST RESULT It helps to
analyse the probable causal relation among different items after analysing and scrutinizing the past result.
13. PREPARATION OF BUDGETS The ratio that are derived after analysing and scrutinizing the past
result helps the management to prepare budgets and estimates, to formulate policy, and to prepare the future
plan of action and, thus among different items for preparing budgets.
 COMPANY PROFILE

Punjab National Bank, abbreviated as PNB, is a Banking and Financial service bank owned by
the Government of India with its headquarters is in New Delhi, India. The bank was founded in 1894 and is
the second largest public sector bank (PSB) in India, both in terms of business and its network. The bank has
over 180 million customers, 10,910 branches and 13,000+ ATMs post merger with United Bank of
India and Oriental Bank of Commerce, effective from 1 April 2020.

Punjab National bank (PNB) is a state-owned commercial bank located in New Delhi. PNB is one

Of the leading commercial bank in India. They offer banking products, and also operate credit and debit card
business, bullion business, life insurance business, and gold coins and assets

Management business. They are recognized as the bank offering highest levels of customer satisfaction in
Delhi and Chennai.

Punjab National Bank was incorporated in the year 1985 at Lahore, undivided India. The bank has the
distinction of being the first Indian bank to have been started solely with Indian capital.

In the year 1951 they acquired the 39 branches of Bharat bank and in the year 1961 they acquired universal
bank of India.

Punjab national bank was nationalised in July 1969 along with 13 other banks. In the year 1986 they
acquired Hindustan commercial, which added Hindustan’s 142 branches to the bank’s network. In the year
1993 they acquired New Bank of India which the GOI.During the year 1996

They developed a packaged for corporate customer for fast remittance of fund form different up-country
branches. In the year they set up a representative office in Almaty Kazakhstan.

In the year 2000 the Bank has introduced a scheme for providing finance against mortgage of immovable
property. In September 2000 they commenced with their gold business in the form of gold import scheme.
In November 2000, they launched an international Co-branded Credit card of Punjab National bank and
Honk Kong & Shanghai banking corporation (HSBC) in new Delhi.
 SERVICES

 Punjab National Bank (PNB) is one of India's largest nationalized banks, with some 5,000 locations. The
financial institution offers services in personal and corporate banking, including industrial, agricultural, and
export finance, as well as international banking. Its personal lending services include loans for housing,
autos, and education.

INTERNATIONAL BUSINESS

At present Bank has its overseas presence in 6 Countries by way of 2 branches (1 at Hong Kong and 1 at
Dubai), 2 Subsidiaries (London and Bhutan), 1 Associate (Kazakhstan), 1 Joint Venture(Nepal).

RETAIL BANKING

In the retail category, the bank offers services such as lending to individuals and small

businesses subject to the orientation, product and granularity criterion, along with

liability products, card services, Internet banking, automated teller machines (ATM)

services, depository, financial advisory services, and Non-resident Indian (NRI)

services. PNB is a participant in RBI's NEFT enabled participating banks list.

CORPORATE BANKING

Credit: The Bank offers various loan and fee-based products and services to large and mid-corporate
customers and small and medium Enterprise (SME) businesses. These products and services include cash
credit facilities, demand and short-term loans, project finance, export credit, factoring, channel financing,
structured products, discounting of bills, documentary credits, guarantees, foreign exchange and derivative
products. Liability products including current accounts, certificates and deposits and time deposits are also
offered to large and mid-corporate segments.

TRANSACTION BANKING:

TX provides integrated products and services to customers in areas of current accounts, cash management
services, capital market services, trade, foreign exchange and derivatives, cross-border trade and
correspondent banking services and tax collections on behalf of the Government and various State
Governments in India.

TREASURY

The treasury manages the funding position of the Bank and also manages and maintains its regulatory
reserve requirements. It invests in sovereign and corporate debt instruments and engages in proprietary
trading in equity and fixed income securities, foreign exchange, currency futures and options. It also invests
in commercial papers, mutual funds and floating rate instruments as part of the management of short-term
surplus liquidity. In addition, it also offers a wide range of treasury products and services to corporate
customers.

INVESTMENT BANKING AND TRUSTEE SERVICES

The bank provides investment banking and trusteeship services through its owned subsidiaries. PNB
Capital Limited provides investment banking services relating to equity capital markets, institutional stock
broking besides M&A advisory. PNB Trustee Services Limited is engaged in trusteeship activities, acting
as debenture trustee and as trustee to various securitizations trusts.
INITIATIVES

PNB PAY

The newly introduced UPI will facilitate banking transactions using only a single 'Virtual Payment Address.
While transferring money to an account, the sender will not be forced to feed the slew of details like the
account number and bank's IFSC Code, but can transact using only the virtual payment address.

PING PAY

The bank launched Ping Pay in 2015, which is a multi-social payment solution that allows customers to
transfer funds using their smart phones to both PNB Bank accounts and other banks' account holders.

AUGMENTED REALITY

PNB Bank augmented reality feature within its mobile app which lists all the dining destinations, property
lists, shopping centres, bank ATMs, branches and many other things not only as a location on GPS but
also in real life pictures along with distance and directions.

INSTA PERSONAL LOAN

PNB Bank provides a ‘24X7 Instant Personal Loan’ on smart phones and ATM kiosks. Customers can get
instant loan approval and disbursement, which gets credited directly into their account.

LOCKER BOOKING

The bank has launched an online locker booking facility through the mobile app to allow customers to check
availability from their homes and book instantly.
MICROFINANCE INSTITUTIONS (MFI) LENDING

A new tablet-based loan origination system developed to digitize the entire lending process of MFI business.
This will replace the existing paper-based loan sanctioning process.

ISIC FOREX CARD

ISIC Forex card for students is the first photo travel currency card available in USD, EUR, GBP and AUD
currencies. It can be used across 34 million merchant locations and at over 2 million MasterCard ATMs
globally.

eKYC

eKYC is an online, paperless Aadhaar card-based process for fulfilling KYC requirements to start investing
in mutual funds without submission of any documents.

SEBI has recently in 2017, allowed Aadhaar-based KYC to be used for MF investments, for the convenience
of investors.

SUBSIDIARIES

 PNB Housing Finance Ltd.

 PNB MetLife India Insurance Company Co. Ltd.

 PNB Investments Services Ltd.

 PNB (International) Ltd.

 PNB Gilts Limited
BANK PRODUCTS AND SERVICES

✓ PNB Business Loan.

✓ PNB Car Loan.

✓ PNB Credit Card.

✓ PNB Debit Card.

✓ PNB Education Loan.

✓ PNB FD Rates.

✓ PNB Gold Loan.

✓ PNB Home Loan

LISTING AND SHAREHOLDING

PNB's equity shares are listed on Bombay Stock Exchange and the National Stock Exchange of India. It is a
constituent of the CNX Nifty at the NSE.

SHAREHOLDERS (AS ON 31 DEC 2019) Shareholding

Promoter Group (Govt Of India) 83.2%
FIs/Bank/Insurance 5.6%
Resident Individual 5.7%
Mutual Funds 2.3%
Foreign Institutional Investors (FIIs) 2.2%
Others 1.1%
Total 100.0%
HISTORY

Punjab National Bank is a PSU working under Central Government of India regulated by Reserve Bank of
India Act, 1934 and Banking Regulation Act, 1949. Punjab National Bank was registered on 19 May 1894
under the Indian Companies Act, with its office in Anarkali Bazaar, Lahore, in present-day Pakistan. The
founding board was drawn from different parts of India professing different faiths and of varying back-
ground with, the common objective of creating a truly national bank that would further the economic interest
of the country. PNB's founders included several leaders of the Swadeshi movement such as Dyal Singh
Majithia and Lala Harkishen Lal, Lala Lalchand, Kali Prosanna Roy, E. C. Jessawala, Prabhu Dayal, Bakshi
Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was actively associated with the management of the
Bank in its early years. The board first met on 23 May 1894. The bank opened for business on 12 April 1895
in Lahore

PNB is the first Indian bank to have been started solely with Indian capital that survives to the present – the
earlierOudh Commercial Bank was established in 1881, but failed in 1958.

Mahatma Gandhi, Jawahar Lal Nehru, Lal Bahadur Shastri, Indira Gandhi and the Jalianwala
Bagh Committee have held PNB accounts.

VISION

To be the profred financial solution provider excelling in customer delivery through insight empowered
employees and smart use of technology. Over the last 25 years, the foundation of PNB BANK has been built
on its core values - Customer Centricity, Ethics, Transparency, Teamwork and Ownership, and by doing the
right thing for its stakeholders. At the heart of our approach is the belief that our long-term success depends
on the progress of the communities we serve and protection of the environment we live in. As one of India’s
largest financial institutions, we remain cognizant of our responsibility and are committed to helping
individuals, communities, and businesses achieve real progress in their lives.
CORE VALUES

• Customer Centricity

• Ethics

• Transparency

• Teamwork

• Ownership

SWOT ANALYSIS OF PUNJAB NATIONAL BANK

STRENGTHS

1.Diversified operations with 5100 branches

2.Strong I. T support with “best fit” approach

3.Schemes for small and medium scale businesses

4.It is the second largest state-owned commercial bank in India with about 5000 branches across 764 cities

5.Its 56,000+ workforce serves over 37 million...

WEAKNESSES

1. Less penetration in the urban areas.

2. Inadequate advertising and branding as compared to other banks

3. Legal issues regarding employees caused a bad name of PNB

OPPORTUNITIES

1.Punjab National Bank competitors and includes Punjab National Bank target market,

2. Segmentation, positioning & Unique Selling Proposition (USP).

THREATS

1.Economic crisis and economic fluctuations.

2.Highly competitive environment.

3.Stringent Banking Norms by the RBI and the Govts.

 CHAPTER=2

RESERCHMETHODOLOGY

INTRODUCTION

The researcher adopted the analysis of data in a manner that to combine relevance to purpose with economy
in procedure. Researcher design is the based define of a research problem. The preparation of the design of
the project is standard analytical of researcher favourite.

It was used in secondary data that was published already as annual report of the bank in bank website,
journals, machine and newspapers and other secondary data sources. This secondary data may be already
collected and analysed but gap in period of the study and variables which we want to know.

The study mainly connected annual financial report that are last three years company final accounts (balance
sheet and profit and loss account)

2.1 OBJECTIVE OF THE STUDY

 To know the liquidity position and solvency

 To study the profitability of PNB BANK

 To find financial performance and efficiency use of capital .

 To Determine the Profitability, Liquidity, ratios.

 To study the present and past financial system of PNB BANK.

2.2 HYPOTHESIS

H0:- The Financial performance of PNB Bank is Improved in last Four year’s.

H1:- The Financial Performance of PNB Bank is not Improved in last Four year’s.

2.3 SCOPE OF THE STUDY

The current study chooses one private sector bank to evaluate the financial performance the main scope
of the study was to put into practical the aspect of the study into real life work experience. The study
applies Ratio analysis based on last 5 years Annual financial reports of PNBing India.

❖ The study has great significance and provides benefits to various parties whom directly

❖ Or indirectly interact with the bank.

❖ It is beneficial to management of the bank by providing crystal clear picture regarding

❖ Important aspect like liquidity, leverage, activity and profitability.

❖ The study is also beneficial to employees and offers motivation by shoving how actively they
are contributing for bank growth.

❖ The investors who are interested in investing in the bank’s shares will also get benefited Going by going
through the study and can easily take decision whether to invest or not to

❖ To know whether the bank is growing or incurring losses or it is stagnant in its performance.
2.4 LIMITATION OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from certain limitations. Some of these
are mentioned here under so that the findings of the study may be understood in a proper perspective. The
limitations of the study are:

•The study is based on the secondary data and the limitation of using secondary data may affect the results.

•The secondary data was taken from the five years annual reports of the PNB. It may be possible that which
does not effectively show the actual fluctuation of the bank profitability. the data shown in the annual
reports may be limited period of time which does not effectively show the actual fluctuation of the bank
profitability.

• Difference in definitions

• Limitations in accounting records

• Lack of proper standards

• No allowances for price level changes

• Changes in accounting procedure

• Quantitative factors are ignored

• Limited use of single ratio

• Background is over looked

• Limited use

1.LIMITED USE OF A SINGLE RATIO

A single ratio would not be able to convey anything, as the single ratio in itself is meaningless, it does not
furnish a complete picture. Neither it can be explained, nor can any decision be taken on this basis. Hence,
it is essential to ponder over all relating ratios while drawing inferences.
2.LACK OF STANDARD RATIOS

In practice, there is no uniformity in the definition of various terms used in ratio analysis. For example, some
companies treat net current assets (current assets- current liabilities) as working capital, while others only
current assets. There are no well accepted standard or rules of thumb for all ratios which can be accepted as
norms.

3. INHERENT LIMITATIONS OF ACCORDING

Ratios are calculated from accounting records which are subject to accounting principles, conventions,
concepts and personal judgments. Any ratio based on the facts and figures of such financial statements
suffers from inherent limitations.

4. WINDOW DRESSING

Windows dressing means manipulation of accounts in a way so as to present a better picture than what is
actually it. By doing so, it is possible to cover up bad financial 34 position. One should be very careful
in making a decision from ratios calculated from such financial statements.

5. DIFFERENCE IN ACCOUNTING METHODS AND SYSTEMS

Comparability of financial statements is affected when differences are traced out in accounting methods and
systems followed by different firms.

6. PRICE LEVEL CHANGE

Changes in price level affect the comparability of ratios. A change in price level can seriously affect
the validity of comparison of ratio for different years.

7. PERSONAL BIAS

Ratios have to be interpreted, but different people may interrupt the same ratios in different way. Ratios are
only meaning of financial analysis, but not an end in them. It should be clearly noted that ratios are only
tools and personal judgment of the analyst is more important.
8. NO SUBSTITUTE FOR SOUND JUDGMENT

Ratios analysis is one of the methods of interpretation and drawing inferences. It only provides little
information for decision making conclusions drawn from ratio analysis are not sure indicators of bad or
good management.

9. QUALITATIVE FACTORS IGNORED

Ratios are arithmetical expressions, so the qualitative aspects cannot be presented through ratios. Normally
qualitative factors that may influence the conclusion drawn are ignored while computing ratios.

10. INCOMPARABLE

Not only industries differ in their nature but also the firms of the similar business widely differ in their size
and accounting procedure etc. It makes comparison of ratios difficult and misleading.

11.PROPER COMPARISON NOT POSSIBLE

Comparison between two variables proves worthwhile provided their basis of valuation is Identical. But, in
reality, it is not possible, such as methods of valuation of stock-in-trade or charging Different methods of
depreciation on fixed assets etc. That is, if different methods are followed by different firms for their
valuation, then comparison will practically be of no vies.

12.UNRELIABLE DATA

Ratio depends on figures of the Financial Statement. But in most cases, the figures are window-dressed. As a
result, the correct picture cannot be drawn up by the ratio analysis, although certain structure defects can be
detected. Moreover, manipulation made thought time of reporting which may lead manipulate the ratio
analysis as well.

13.TREND ANALYSIS NOT ALWAYS POSSIBLE

Ratio analysis becomes more meaningful and significance if trend analysis (i.e. the analysis over a number
of years) is possible instead of analysing the result of a particular year. But in practice, it is not always
possible.
14. NOT HELPFUL FOR PREPARING BUDGETS

Ratios are computed on the basis of past result. It does not help properly to predict the future, to
prepare budgets and estimates since the business policies are constantly changing.

Financial analysis is mainly done to compare the growth, profitability and financial soundness of bank by
diagnosing the information contained in the financial statements. Financial ratio analysis is done to identify
the financial strengths and weaknesses of the bank by properly establishing relationship between the items of
Balance Sheet and Profit & Loss Account for period of five years.

It helps in better understanding of bank financial position, growth and performance by analysing the
financial statements with various tools and evaluating the relationship between various elements of financial
statements.

2.5 NEED OF THE STUDY

The financial parameters are the ultimate performance indicator of any bank. This is because invariability all
costs and efficiency activities and solvency position of the bank will reflect the financial status of the bank.

The following are stated to be in the need for the study.

➢ To know the financial performance of the bank

➢ To know the liquidity position of the bank

➢ To know the operating efficiency of the bank.

➢ To understand the variation in ratios over a period of time.

➢ To know the reason for the variation in the ratio.

Financial ratios quantify many aspects of a business and are an integral part of the financial statement
analysis. Financial ratios are categorized according to the financial aspect of the business which the ratio
measures. Liquidity ratios measure the availability of cash to pay debt. Activity ratios erasure how quickly a
firm converts non-cash assets to cash assets. Debt measure the firm's ability to repay long-term debt

Profitability ratios measure the firm's use of its assets and control of its expenses to generate an acceptable
rate of return. Market ratios measure investor response to owning a company's stock and also the cost of
issuing stock. These are concerned with the return on investment for shareholders, and with the relationship
between return and the value of an investment in company's shares.

Financial ratios allow for comparisons

• Between companies

• Between industries

• Between different time periods for one company

• Between a single company and its industry average

Ratios generally are not useful unless they are benchmarked against something else, like past performance or
another company. Thus, the ratios of firms in different industries, which face different risks, capital
requirements, and competition, are usually hard to compare.
2.6 DATA COLLECTION

Main data of this study is based to the annual financial report’s PNB from in 2010 to 2018. also, researcher
used four main financial statements for ratio analysis of bank such as; balance sheets, an income statement,
cash flow statement; statement of shareholder’s equity although study strongly emphasis the first main
reports.

2.7 SECONDARY DATA (METHODOLOGY)

The major source of data for this project was collected through Balance sheet and Profit and loss of PNB
account of 4-year period from 2017-2020 Descriptive research is used in this study because it will ensure the
minimization of bias and maximization of reliability of data collected.

The fact and information already available through financial statements of earlier years and analyse these to
make critical evaluation of the available material. Hence by making the type of the research conducted to be
both Descriptive and Analytical in nature.
2.8 DATA ANALYSIS

The study used all important tools of ratio analysis for profitability evaluation of bank. It indicates the
different steps such Selection of financial report, Identification of balance sheet, income statement and
cash flow statement, ratio analysis, mathematical calculation, statistical analysis of bank financial report
year by year comparison and among industry First step of model, we do a selection of financial report that
means a choose of annual financial report.

The annual financial report presents financial data of a company's position, operating performance, and
funds flow for an accounting period. We use the annual reporting of bank in 2010 to 2018. Second step of
model, researcher identify the balance 38 sheet, income statement, cash flow statement from the annual
financial report. study used some data from balance sheets for different kind of ratio such as liquidity ratios,
asset management ratios, debt management ratios

In contrast, we were used some sources from income statement. When analysis the ratio of profitability
and debt management ratio employment of bank income statement and balance sheet is must. However, the
use of some data from the cash flow statement for ratio analysis such as market value ratio is also possible.

The third step of model, study identify the suitable ratio for profitability analysis and evaluation the ratio
such as current ratio, liquidity ratio, asset management ratio, profitability ratio, debt coverage ratio, market
value etc. All types of ratio are most important for how well a bank to generate its assets, liquidity,
revenue, expense, shareholder equity profit or loss are also here.

The Forth step of model, study used the Mathematical calculation of bank. Some figure from the income
statement and balance sheet. Financial calculators were used to determine the results a f financial ratio
calculation a graphical analysis for evaluation of bank using Microsoft excel is employed and finally study
compares the results to manipulate objectives.

2.9 RESEARCH INSTRUMENT

Study used secondary data collected from publishers of the bank final accounts.
 CHAPTER = 3

REVIEW OF LITRETURE

1.Corporate liquidity can be examined along two basic dimensions: static and dynamic (Uyar, 2009). Static
analysis is focused on traditional ratios (current and quick ratios) based on the data from the balance sheet.
These ratios assess to what extent current liabilities are covered by current assets. Dynamic analysis is
based on cash outflows and inflows and uses cash conversion cycle (CCC) to measure effectiveness of a
company’s ability to generate cash. It comprises both balance sheet and income statement data to create a
measure with a time dimension (cash flow within the operating cycle of the firm). To conduct a
comprehensive liquidity analysis both types of ratios are used. the essential partin management of working
capital liesin maintaining liquidity in day-to-day operations is to ensure smooth running of the business and
that it meets its obligations.

2. (Deloof, 2003). Liquidity management, which refers to management of current assets and liabilities, plays
an important role in the successful management of a business and secures future growth. The liquidity
position of a business is about the degree in which it can dispose money. Liquidity management is necessary
for all businesses, small, medium or large. Nevertheless, this is not an effortless task because managers must
ensure that the firm is running in an efficient and profitable manner and in most cases; there are high
possibilities of mismatch of current assets and current liabilities during this process. If this happens and
firm’s manager failed to manage it properly then it will affect firm’s growth and profitability which will
further lead to financial distress and finally firms can go bankrupt.
3. Qassim&Ramiz (2011) indicate the fact that liquidity refers to the available cash for the near future, after
taking into account the financial obligations corresponding to that period. Liquidity risk consist in the
probability that the organization should not be able to make its payments to creditors, as a result of the
changes in the proportion of long-term credits and short-term credits and the un correlation with the structure
of organization's liabilities. Further, Qazim and Ramiz (2011) posit that liquidity management is very
important for every organization that means to pay current obligations on business that include operating and
financial expenses that 40 are short term. Liquidity is particularly important to shareholders, long-term
lenders and creditors, as it provides information about a particular business’s safety margins afforded to
creditors and its ability to repay loans. The levels of inventory, credit, accounts payable and cash that form
part of the overall cash flow of a business dependent variable (profitability) was measured in terms of return
on investment ROI established a negative association between ROI and the current ratio, cash turnover ratio.

4. (Maness, 1994). Affect the liquidity of the firm by maintaining an appropriate level of liquidity, a business
should be in a position to survive down turns and moreover, it may be able to exploit profitable opportunities
as they arise. On the other hand, as asserted by Cooper, illiquidity, unless remedied, will give rise to
insolvency and eventually bankruptcy as the Business’s liabilities exceed its assets. Excessive debt exposes
the business to potentially large interest costs and the risk of potential bankruptcy. Shareholders, long term
lenders and creditors evaluate the level of risk they bear, and require compensation for the risks, which arise
from a business's capital structure. The proportion of assets financed by creditors are of particular
importance to shareholders, since creditors have a prior claim on the Liquidity ratios measure a business'
ability to meet the payment obligations by comparing the cash and near-cash with the payment obligations.
If the coverage of the latter by the former is insufficient, it indicates that the business might face difficulties
in meeting its immediate financial obligations. This can, in turn, affect the company's business operations
and profitability. The Liquidity versus Profitability Principle: There is a trade-off between liquidity and
profitability; gaining more of one ordinarily means giving up some of the other.

5. Morris and Shin (2010) conceptually defines the liquidity ratio as “realizable cash on the balance sheet to
short term liabilities.” In turn, “realizable cash” is defined as liquid assets plus other assets to which a
haircut has been applied. Ration analysis is one of the conventional ways that use financial statements to
evaluate the company and create standards that have simply interpreted financial sense.
6. Raheman and Nasr (2007) in their study in which average collection period, inventory turnover in days,
average payment period, CCC, current ratio, debt ratio, size of the firm, and financial assets to total assets
ratio were the selected independent 41 variables and net operating profit was the dependent variable found
a strong negative relationship between the current ratio and debt ratio and profitability of the firms. The
study also established a negative relationship between liquidity and profitability. Furthermore, they found
out a significant negative relationship between debt used by the firm and its profitability.

7. Benjamin and Kamalavali (2006) in their study in which the independent variables used were current
ratio, quick ratio, inventory turnover ratio, working capital turnover ratio, debtor’s turnover ratio, ratio of
current asset to total asset, ratio of current asset to operating income, comprehensive liquidity index, net
liquid balance size and leverage and growth while dependent variable (profitability) was measured in terms
of return on investment ROI established a negative association between ROI and the current ratio, cash
turnover ratio, current asset to operating income and leverage. On the other hand, they established a positive
association between ROI and the quick ratio, debtor’s turnover ratio, current asset to total asset and growth
rate.

8. Dong (2010) in his study that focused on the variables that include profitability, conversion cycle and its
related elements and the relationship that exists between them reported that the firms’ profitability and
liquidity are affected by working capital management. The relationship among these variables was found to
be strongly negative. This denote that decrease in the profitability occur due to increase in cash conversion
cycle. It is also found that if the number of days of account receivable and inventories are diminished then
the profitability will increase numbers of days of accounts receivable and inventories.

9. Saswata Chatterjee (2010) focused on the importance of the fixed and current assets in the successful
running of any organization. It poses direct impacts on the profitability and liquidity. There have been a
phenomenon observed in the business that most of the companies increase the margin for the profits
and losses because this act shrinks the size of working capital relative to sales. But if the companies
want to increase or improve its liquidity, then it has to increase its working capital.
10. Islam et al. (2009) conducted a research on financial diagnosis of the financial institutions of
Bangladesh: A comparative study on IPDC, IDLC andICB and through 42 ratio analysis they measured the
financial health of the financial institutions and concluded that financial institutions play a key role in the
economic development of capital market of the country.

11.Hassan and Habib (2010) usedfinancialratios for conducting a research on performance evaluation of the
pharmaceutical companies in Bangladesh. They revealed that the financial performance-of Beximco
Pharmaceuticals Ltd. is better than Square Pharmaceuticals Ltd.

12.Also,Salauddin(2001) examined the profitability of the pharmaceutical companies of Bangladesh. By

adopting ratio analysis, mean, standard deviation and co-efficient of variation, he found that the profitability
of the pharmaceutical sector was very satisfactory in terms of the standard norms of return on investment.

13.Raheman andMohamed (2007) studied the effectof average collection period, inventory turnover in days,
average payment period, cash conversion cycle, and current ratio on the net operating profitability of
Pakistani firms. They found that as the cash conversion cycle increases, it leads to decreasing profitability of
the firm and managers can create a positive value for the shareholders by reducing the cash conversion
cycle to a possible minimum level.

14. Reilly and Brown (2005) stated that financial statement analysis seeks to evaluate managerial
performance in several important areas including profitability, efficiency and risk. The ultimate goal of that
analysis is to provide insights that will help us project future managerial performance. They also suggest
that financial ratios should be examined relating to the economy, the firm’s industry, firm’s main
competitors and the firm’s past relative ratios. the issue of trade-off between liquidity and profitabilityhas
been discussed intensively sincethisit's crucially important for companies.
15. Ross (2000) and Myers (2003) mention that excess liquidity is an expense for the company. Money tied
up in current assets can be alternatively deposited or invested and generate interest income. Thus, the price
of working capital over financing is the interest rate. In the case of liquidity deficit, the company must either
attract short term. oan or sell some liquid assets, which is also an expense. Only the optimal level of liquidity
benefits profitability.

16. Taping and Stephan (2008) in their research on profit determinants found that liquidity of Ukrainian
firms, measured by current ratio, has a significant positive influence on profitability. One can name the size
of the company, intangible assets and liquidity among other important determinants of profitability for
companies operating in the emerging markets. Therefore, liquidity has a considerable impact on firm’s
profitability and that is why it requires proper management. Banking Sector plays an important role in
economic development of a country. The banking system of India is featured by a large network of bank
branches, serving many kinds of financial services of the people. The State Bank of India, popularly
known

as SBI is one of the leading banks of public sector in India. SBI has 14 Local Head Offices and 57 Zonal
Offices located at important cities throughout the country. ICICI Bank is second largest and leading bank of
private sector in India. The Bank has 2,533 branches and 6,800 ATMs in India. The purpose of the study is
to examine the financial performance of SBI and ICICI Bank, public sector and private sector respectively.
The research is descriptive and analytical in nature. The data used for the study was entirely secondary in
nature. The present study is conducted to compare the financial performance of SBI and ICICI Bank on the
basis of ratios such as credit deposit, net profit margin etc. The period of study taken is from the year 2007-
08 to 2011-12. The study found that SBI is performing well and financially sound than ICICI Bank but in
context of deposits and expenditure ICICI bank has better managing efficiency than SBI (DR. ANURAG,
2012).

17. Reddy K. Sriharsha (2012) analysed relative performance of of banks in India using CAMEL
approach. It is found that public sector banks have appreciably improved indicating positive impact of the
reforms in liberalizing interest rates, rationalizing directed credit and Investments and increasing
competition.

18. Singh A.B., Tendon P. (2012) examined the financial performance of SBI and ICICI Bank, public sector
and private sector respectively. The study found that SBI is performing well and financially sound than
ICICI Bank but in context of deposits and expenditure ICICI bank have better managing efficiency than
SBI.
19. Srinivas K., Saroja L. (2013) compared and analyzed the Financial Performance of HDFC and ICICI
Bank. For the purpose of analysis of comparative financial performance of the selected banks using
CAMELS model with test. The result showed that there is no significance difference between the ICICI
and HDFC bank’s financial performance but the ICICI bank performance is slightly less compared with
HDFC. Determinants of bank profitability can be split between those that are internal and those that are
external. Internal determinants of bank profitability can be defined as those factors that are influenced by
the banks management decisions and policy objectives. Management effects are the results of differences in
bank management objectives, policies, decisions, and actions reflected in differences in bank operating
results, including profitability.

20. Zimmerman (1996) found that management. decisions, especially regarding loan portfolio concentration,
were an important contributing factor in bank performance. Researchers frequently attribute good bank
performance to quality management. Management quality is assessed in terms of senior officer’s awareness
and control of the banks policies and‟ performance. 21. Haslem (1968, 1969) computed balance sheet and
income statement ratios for all the member banks of the US Federal Reserve System in a two-year study. His
results indicated that most of the ratios were significantly related to profitability, particularly capital
ratiosinterest paid and received, salaries and wages. a number of studies have concluded that expense control
is the primary determinant of bank profitability. Expense management offers a major and consistent
opportunity for profitability improvement. With the large size and the large differences in salaries and
wages, the efficient use of labour is a key determinant of relative profitability. Staff expenses, as
conventional wisdom proposes, is expected to be inversely related to profitability because these costs reduce
the „bottom line or the total operations of the bank. The level of staff‟ expenses appear to have a negative
impact on banks ROA in the study of Bourke (1989).

22. ‟ However, Molyneux (1993) found a positive relationship between staff expenses and total profits. As
he suggests high profits earned by firms in a regulated industry may be appropriated in the form of higher
payroll expenditures.
23. Manish Mittal and ArunnaDhademade (2005) they found that higher profitability is the only major
parameter for evaluating banking sector performance from the shareholders point of view. It is for the
banks to strike a balance between commercial and social objectives. They found that public sector banks
are less profitable than private sector banks. Foreign banks top the list in terms of net profitability. Private
sector banks earn higher non-interest income than public sector banks, because these banks offer more and
more fee-based services to business houses or corporate sector. Thus, there is urgent need for public sector
banks to provide such services to stand in competition with private sector banks.

24. I.M. Pandey (2005): An efficient allocation of capital is the most important financial function in modern
times. It involves decision to commit the firm's funds to the long-term assets. The firm’s value will increase
if investments are profitable and add to the shareholders wealth. Financial decisions are important to
influence the firm’s growth and to involve commitment of large amount of funds. The types of investment
decisions are expansion of existing business, expansion of new business and replacement and
modernization. The capital budgeting decisions of a firm has to decide the way in which the capital project
will be financed. The financing or capital structure decision. The assets of a company can be financed either
by increasing the owners claims on the creditors’ claims. The various means of financing represent the
financial structure of an enterprise.

25. MedhatTarawneh (2006) financial performance is a dependent variable and measured by Return on
Assets (ROA) and the intent income size. The independent variables are the size of banks as measured by
total assets of banks, assets management measured by asset utilization ratio (Operating income divided by
total assets) operational efficiency measured by the operating efficiency ratio (total operating expenses
divided by net income)
27. K. C. Sharma (2007) Banking has entered the electronic era. This has been due to reforms introduced
under the WTO compliances. Private sector banks have been permitted to open their shops in the country.
These banks are either foreign or domestic banks with foreign partnerships. Some of them have been set
up by Development Financial Institutions in order to embrace concept of universal banking, as practiced in
advanced countries. The private sector on the other hand have begun 46 their high-tech operations from the
initial stage and made the elite of the country to taste the best banking practices that happens in the western
countries. They have foreseen the digital world and have seen the emerging electronic market, which has
encouraged them to have a better customer service strategy that would be able to deliver the things as per
customer’s requirement.

28. Hr Machirajn international publishers (2009): Efficiency can be considered from technical, economical
or empirical considerations. Technical efficiency implies increase in output. In the case of banks defining
inputs and output is difficult and hence certain ratios of costs to assets or operating revenues are used to
measure banks efficiency. In the Indian context public sector banks accounts for a major portion of banking
assets, it is necessary to evaluate the financial decisions of these banks and compare them with private sector
banks to know the quality of financial decisions on its impact or performance of banks in terms of
efficiency, profitability, competitiveness and other economic variables.

29. DR.S. Gurusamy (2009): One of the key elements of importance for shaping the financial system of a
country is the pension fund. The fund contributes to the development of social security systems of a country
is the pension fund. The fund contributes to the development of social security system of a country. A fund
is established by private employers, governments, or unions for the payment of retirement benefits. Pension
funds are designed to provide for poverty relief, consumption smoothing etc. Pension funds not only provide
compensation for the loyal service rendered in the past, but in a broader significance. Works as a measure of
socio- economic justice. Pension system refers to the framework of arrangement under which individuals
gain specified entitlements to a regular income in retirement called pension.

30. Dangwal and Kapoor (2010) also undertook the study on financial performance of nationalized banks
in India and assessed the growth index value of various parameters through overall profitability indices.
They found that out of 19 banks, four banks had excellent performance, five banks had good performance
and six banks had poor performance. Thus, the performance of nationalized banks differs widely.
31. Prasana Chandra (2010): Fundamental of financial management covers all the aspects of the subject
from the basics overview of the financial environment to the financial analysis and financial planning. The
basic consists of forms of business organization which gives detailed information about the financial
management of the organization. After the analysis part budgeting of capital and fundamental valuation of
concept is in detail. It provides an introduction to the financial management and to the financial
environment. The fundamental of financial management provides a good coverage of the basic concepts
relating to the financial environment. The topics are explained with various examples like the tax system,
financial institution, banking arrangement & the regulatory framework. All the concepts are explained using
numerous examples & illustration besides the illustration given within the chapter, additional concepts, tools
& technique with illustration are provided at the end of chapter section. The book takes an analytical
approach and explains the various analytical methods in context.

32. Jha DK and D S Sarangi (2011): The financial performance of seven public sector and private sector
banks during the period 2009-10. They used three sets of ratios, operating performance ratio, financial
ratio and Efficiency ratio. The study revealed that PNB was on the top of these banks followed by ICICI,
BOT, PNB, SBI, IDBI and HDF

33. NeeruMundrai, KamniTandon, Nidhi Malhotra (2011) excel books found that there is significant
impact on the SBI’s performance due to entry of new private sector banks as the new banks are profit
oriented institutions while traditional banks are operating with the shackles of social responsibility towards
the society. The other reasons that can be attributed are slow technological up gradation, poor staffing and
employment practices which affect long term profitability of public sector banks. The study revealed that
profitability of SBI is lower than that of private sector banks even predicting of private sector banks
(business per employee) is higher than state banks.

34. Fernando Ferreng (2012) it is generally agreed that recent economic crisis intensified worldwide
competition among financial institution. This competition has direct impact on how bank deal with their
customer and achieve its objectives performance evaluation of banks is the key function for improving banks
48 performance. Banks profitability and success to a large extent depends on bank branch financial
performance
35. RamchandanAzhagasahi and SandanvnGejalakshmi (2012): In their study found the impact of assets
management operational efficiency and bank size on the financial performance of the public sector and
private sector bank. The research revealed that bank with higher total capital deposits and total assets do
not always mean that they have better financial performance. The overall banking sector is strongly
influenced by assets utilization, Operational efficiency and interest income

36. NutanTroke and P K Pachorkar (2012): The study related that the private sector banks the percentage of
other income in the total income is higher than public sector bank. Public sector bank depends on intent
income for their efficiency and performance. The operational efficiency of private sector banks is better
than public sector banks. Private sector bank uses their assets quality better than public sector banks.

37. Dr.Dhanabhakyam& M. kavitha (2012) in their research used some important ratio to analyses the
financial performance of selected public sector banks such as ratio of advances to assets, ratio of capital to
deposit, ratio of capital to working fund, ratio of demand deposit to total deposit, credit deposit ratio, return
on average net worth ratio, ratio of liquid assets to working fund etc. The ratio of advances to assets shows
an increasing trend for most of the public sector bank. It shows aggressiveness of bank in lending which
ultimately result in high profitability. The ratio of capital to deposit also indicates an increasing trend in the
capital of banks. This ratio enables the bank to meet the contingencies of repayment of deposit. The ratio of
capital to deposit in decline. The ratio capitals to working fund also indicate that the overall efficiency of
the selected public sector banks is good. On the other hand, the ratios of demand depart to total deposit is
declining. This indicates better liquidity position of bank. The credit deposit ratio of most of the bank shows
an increasing trend. It shows that the profitability of the banks in government. The return on average net
worth also shown an increasing trend
38. Debashish Sur (2012) a financial statement is a collection of data organized interim's of some laid down
accounting procedures. Financial statements are blue 49 print of the working or performance of any
organization. The users of financial statements are direct users and indirect users.

The direct users are

➢ Owners of bushiness

➢ Management

➢ Creditors

➢ Tax authorities

➢ Customers

The Indirect users are

➢ Stock exchanges

➢ Financial analysis

➢ Trade associations

➢ Competitors

➢ Financial press

➢ General public

39. Ravinder Kaur (May 2012): A comparative study of SBI and ICICI Bank, the author has written an
International Multidisciplinary Research Journal. Due to globalization, banking sector has developed a lot.
The banking sector in India has very large network. One of the popular banks is the State Bank of India. The
SBI has over 16,000 branches over a wide range of banking. The main objective of study is to examine the
financial performance of SBI and ICICI Bank. SBI is a public sector bank and ICICI bank is a private sector
bank. Ratio analysis was applied to analyze and to compare the trends in banking business and financial
performance.
40. Dr. Anurag B Singh and Ms. Priyanka Tandon (2012): The researcher has mentioned the importance of
the banking sector in the economic development of the country. In India banking system is featured by
large network of Bank branches, serving many kinds of financial services of the people. The research
Methodology used by there is a comparative analysis of both the banks based on the mean and compound
growth rate (CGR). The study is based on secondary data collected from 50 magazines, journals & other
published documents. Which was a limitation since it’s difficult to prove the geniuses of the data.

41. PawankumarAvdhanam and SriniwasKolluru, RamkrishneFonnd, (2013) in their study that state bank
group other than SBI home finance has performed better throughout the period of study. Though there was
a decline in PAT for the year 2000- 01 but then there was continuous rise in PAT. Most public sector banks
have performed better over year.

42. Vasant Desai, (2013): The performance of a bank can be assessed in their broad dimension viz.
business development, customer service and housekeeping. The resources that a branch has are manpower,
premises, planning, system procedure, organizational structure and general administration. The efficiency
of a branch would be measured by the extent which it has balanced between three parameters.

43. William George A J and Dr. Manoj P K (2013): This research paper is a study of the modern
management philosophy of customer relationship management which deals with the maintenance of a
sound relationship with the customers. The study is carried out in the Kerala based commercial banks. Also,
this study compares the CRM between the public and private sector banks of the same region. Kerala has
been very conducive and of great benefit for the development of banking sector. The Indian banking sector
is undergoing many changes and the banks are facing many challenges. Customers switch banks and go to
other banks where they find better services and thus the find it difficult to retain their old customers.

46. E. Gordon and K. Natrajan (2014): The economic development of any country depends on the
existence of a well-organized financial system. It includes financial markets and financial institutions
which support the system. Financial system provides the intermediation between savings and investment
and promoters faster economic development.
47. GarimaChoudhary (2014): used network of banks, productivity of banks, capital adequacy ratio, and
growth of banks as an indicator of measuring banks performance. The study related that private sector
banks have expanded faster than public sector banks. The capital adequacy of new private sector banks is
above RBI minimum 51 requirements. However, the assets base of public sector banks rises faster than
private sector banks.

49. RenuBagoria (2014): The main objective of this paper is to make a comparative study between private
sector banks and public sector banks and the adoption of various services provided by this bank. The
different services provided by these banks are M-Banking, Net banking, ATM, etc. One of the services
provided by the bank i.e. Mobile banking helps us to conduct numerous financial transactions through
mobile phone or personal digital assistant (pda). Data analysis had been made in private sector banks like
ICICI Bank, INDUSSIND Bank, HDFC Bank, PNB and public sector banks like SBI Bank, SBBJ, IDBI and
OBC Bank. These banks also provide Mobile Banking service. The overall study showed that the transaction
of Mobile banking through public sector bank is higher than private sector.

50. AlpeshGajera (2015) in his research article a financial performance evaluation of private and public
sector banks found that there in significance difference in the financial performance of these banks and
private sector banks are performed better than public sector banks in respect of capital adequacy ratio
and financial performance,
51. Dr Richa Jain, Prof.Mitali Amit Shelankar& Prof Bharti SumitMirchandani, (2015) Tools /
Techniques of financial statement analysis: - The various tools and techniques of financial statement
analysis are

• Trend Percentage Analysis: It is also known as Intra firm comparison in which the financial statements of
the same company for few years are compared for some important series of information.

• Comparative Statement: These are the statement of financial positions at different periods of time. The
financial position is shown in a comparative form over two period of time.

• Common Size Statements: The common size statements, balance sheet and income statements are shown in
terms of percentages. The data is shown as percentage of total assets, liabilities and sales.

• Ratio Analysis: It is a technique of analysis and interpretation of financial statements. It is the process
of establishing and interpreting various financial ratios for helping in taking decisions.

• Cash Flow Statements: It shows the changes in cash flow between two periods.

52. Bollen (1999) conducted a study on Ratio Variables on which he found three different uses of ratio
variables in aggregate data analysis: (1) as measures of theoretical concepts, (2) as a means-to control an
extraneous factor, and (3) as a correction for heterosexuality. In the use of ratios as indices of concepts, a
problem can arise if it is regressed on other indices or variables that contain a common component. For
example, the relationship between two per capitalmeasures may be confounded with the common
population component in each variable. Regarding the second use of ratios, only under exceptional
conditions will ratio variables be a suitable means of controlling an extraneous factor. Finally, the use of
ratios to correct for heteroscedasticity is also often misused. Only under special conditions will the common
form with and evaluated.
 CHAPTER: -4

DATA ANALYSIS AND INTERPRATATION AND PRESENTATION

4.1 CASH POSITION RATIO

Cash ratio Position is the ratio of cash and cash equivalents of a bank to its current liabilities.
It is an extreme liquidity ratio since only cash and cash equivalents are compared with the current liabilities.
It measures the ability of a business to repay its current liabilities by only using its cash and cash equivalents
and nothing else.

Table no. 4.1

CASH POSITION RATIO

CURRENT
LIABILITY
YEAR CASH RATIO

2016-2017 252099957 6374697482 0.040

2017-2018 287890324 6639050504 0.043

2018-2019 321291338 6908364221 0.047

2019-2020 383978504 7180829963 0.053

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.1

Sources: - Done By Researcher

Interpretation: -
Table 4.1 present cash ratio of four year from 2017 to 2020 in the above ratio the bank
cash position ratio of 2017 is 0.039 ,2018 is 0.043, 2019 is 0.046, 2020 is 0.053.
It shows us that bank liquidity is normally good but there is little
increase in current liability in recent years.
4.2 BANKS DEBT RATIO

Debt ratio is a solvency ratio that measures a bank’s total liabilities as a percentage of its total assets. In a
sense, the debt ratio shows a bank’s ability to pay off its liabilities with its assets.
In other words, this shows how many assets the bank must sell in order to pay off all of its liabilities

Table no. 4.2

BANKS DEBT RATIO

TOTAL
YEAR LIABILITY TOTAL ASSETS RATIO

2016-2017 6782330836 7203305484 0.94

2017-2018 7247557984 7658301045 0.95

2018-2019 3379985162 7749494617 0.44

2019-2020 7683084255 8306659117 0.93

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.2

BANKS DEBT RATIO

1.00

0.90

0.80

0.70

0.60

0.50

0.40

0.30

0.20

0.10

0.00

2016-2017 2017-2018 2018-2019 2019-2020

Source :-Done by researcher.

Interpretation: -

Table 4.2 present BANKS DEBT RATIO of four year from 2017 to 2020 in the above ratio the bank
Bank Debt ratio of 2017 is 0.94 ,2018 is 0.95, 2019 is 0.44, 2020 is 0.93.
It shows us that bank liquidity is normally good but there is little
decrease in banks debt ratio in 2019.
4.3 NET PROFIT MARGIN RATIO

Different profit margins are used to measure a company's profitability at various cost levels, including gross
margin, operating margin, Pre-tax margin and net profit margin. Net margin measures the overall
profitability of a BANK.

Table no. 4.3

NET PROFIT MARGIN RATIO

YEAR NET PROFIT NET REVENUE RATIO

2016-2017 13248018 562273647 0.02

2017-2018 -122828202 568766353 -0.22

2018-2019 -99754860 586876606 -0.17

2019-2020 3361944 630741614 0.01

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.3

NET PROFIT MARGIN RATIO

0.05

0.02
0.01
0.00
2019-2020
2016-2017 2017-2018 2018-2019

-0.05

-0.10

-0.15

-0.17

-0.20

-0.22

-0.25

Source :-Done by researcher.

Interpretation:-

Table 4.3 present net profit margin ratio of four year from 2017 to 2020 in the above ratio the bank
Bank net profit margin ratio of 2017 is 0.02 ,2018 is -0.22, 2019 is -0.17, 2020 is 0.
It shows us that bank net profit margin ratio is not good in recent years PNB tries to stabilize its
Net profit margin ratio.
4.4 BANK's DEBT TO EQUITY RATIO
The debt to equity ratio is a financial, liquidity ratio that compares a company’s total debt to total equity.

The debt to equity ratio shows the percentage of company financing that comes from creditors and investors.

A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than investor
financing (shareholders).

Table no. 4.4

BANK's DEBT TO EQUITY RATIO

TOTAL TOTAL
YEAR RATIO
LIABILITY EQUITY

2016-2017 6782330836 4255937 15.93

2017-2018 7247557984 5521146 13.12

2018-2019 3379985162 9208094 36.70

2019-2020 7683084255 13475132 0.57

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.4

BANK's DEBT TO EQUITY RATIO

2019-20200.57

2018-2019 36.70

2017-2018 13.12

2016-2017 15.93

0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00

Interpretation:-
Table 4.4 present banks debt to equity ratio of four year from 2017 to 2020 in the above ratio is
Banks debt to equity ratio of 2017 is 15.93 ,2018 is 13.12, 2019 is 36.70, 2020 is 0.57.

It shows us that A higher debt to equity ratio indicates that more creditor financing (bank loans) is used than
investor financing (shareholders). That is in the year 2017 to 2019 banks debt to equity ratio is not good in
the year 2020 they maintain good debt to equity ratio.
4.5 RETURN ON EQUITY

ROE is a ratio that concerns a BANK's equity holders the most, since it measures their ability of earning
return on their equity investments. ROE may increase dramatically without any equity addition when it can
simply benefit from a higher return helped by a larger asset base . As a BANK increases its asset size and
generates better return with higher margins, equity holders can retain much of the return growth when
additional assets are the result of debt use.

Table no. 4.5

RETURN ON EQUITY

YEAR NET PROFIT EQUITY RATIO

2016-2017 13248018 4255937 3.11

2017-2018 -122828202 5521146 -22.25

2018-2019 -99754860 9208094 -10.83

2019-2020 3361944 13475132 0.25

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.5

RETURN ON EQUITY

3.11
5.00
0.25
RATIO
0.00
2016-2017 2017-2018 2018-2019 2019-2020
-5.00

-10.00
-10.83
-15.00

-20.00
-22.25
-25.00

Interpretation: -

Table 4.5 shows return on EQUITY of last four years from 2017 to 2020 in the above ratio the banks return on EQUITY
ratio of 2017 is 3.11, 2018 is -22.25, 2019 is -10.83, and 2020 is 0.25.It shows that banks profitability in the not
satisfactory and it decreased in 2018 and 2019 year and in 2020 it shows positive return on equity.
4.6 TOTAL ASSETS TURNOVER RATIO
The total asset turnover ratio compares the sales of a banks to its asset base. The ratio measures the
ability of an bank to efficiently produce sales, and is typically used by third parties to evaluate the operations
of a business.

Table no. 4.6

TOTAL ASSETS TURNOVER RATIO

YEAR SALES TOTAL ASSETS RATIO

2016-2017 562273647 7203305484 0.08

2017-2018 568766353 7658301045 0.07

2018-2019 586876606 7749494617 -10.83

2019-2020 630741614 8306659117 0.25

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.6

TOTAL ASSETS TURNOVER RATIO

0.08 0.07 0.25

2016-2017 2017-2018 2018-2019 2019-2020

-10.83

INTREPRETATION: -

Table 4.6 shows the total assets turnover ratio of last four years from 2017 to 2020.In the above ratio banks total
assets turnover ratio of 2017 is 0.08, 2018 is 0.07, 2019 is -10.83, and 2020 is 0.25.It shows that banks total assets
turnover ratio of 2019 is not good i.e. -10.83 as compared to other three years.
4.7 FIXED ASSETS TURNOVER RATIO

Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed assets (on the
balance sheet). It indicates how well the bank is using its fixed assets to generate sales.

Table no. 4.7

FIXED ASSETS TURNOVER RATIO

YEAR SALES FIXED ASSETS RATIO

2016-2017 562273647 62732484 8.96

2017-2018 568766353 63493272 8.96

2018-2019 586876606 62248473 9.43

2019-2020 630741614 72390682 8.71

(SOURCES:- Secondary Data from Financial Statements of PNB)

 Graph no 4.7

FIXED ASSETS TURNOVER RATIO

9.60

9.40

9.20

9.00

8.80

8.60

8.40

8.20
2016-2017 2017-2018 2018-2019 2019-2020

INTREPRETATION: -

Table 4.7 shows the fixed assets turnover ratio of last four years from 2017 to 2020.In the above ratio banks fixed
assets turnover ratio of 2017 is 8.96 , 2018 is 8.96, 2019 is 9.43, and 2020 is 8.71 .It shows that banks fixed assets
turnover ratio of 2019 is good i.e. 1.53 as compared to other four years.
4.8 RETURN ON ASSETS

Profitability is assessed relative to costs and expenses, and it is analysed in comparison to assets to see how
effective a company is in deploying assetsto generate sales and eventually profits. The term return in the
ROA ratio customarily refers to net profit or net income, the amount of earnings from sales after all costs,
expenses and taxes.

Table no. 4.8

RETURN ON ASSETS RATIO

YEAR NET PROFIT TOTAL ASSETS RATIO

2016-2017 13248018 7203305484 0.0180

2017-2018 -122828202 7658301045 -0.16

2018-2019 -99754860 7749494617 -0.012

2019-2020 3361944 8306659117 4.047

Sources: - Secondary data from financial statement of PNB bank.

 Graph no 4.8

RETURN ON ASSETS RATIO

4.047
4.5000
4.0000
3.5000
3.0000
2.5000
2.0000
1.5000 -0.012
1.0000
0.5000 -0.1569
0.0180
0.0000 RATIO
-0.5000
2016-2017 2017-2018 2018-2019 2019-2020

INTREPRETATION: -

Table 4.8 shows return on assets ratio of last four years from 2017 to 2020 in the above ratio the banks return on
assets ratio of 2017 is 0.018, 2018 is -0.15, 2019 is -0.012, and 2020 is 4.047. It shows that banks profitability is
satisfactory in the year 2020 and it increased in recent years.
 Table no.4.9

PNB Profit And Loss Account for The Year Ended 31 March (Rs.cr)

1. PARTICULARS 2017 2018 2019 2020

1. INCOME
Interest earned 472759924 479957663 513102483 538000337

Other income 89513723 88808690 73774123 92741277

TOTAL INCOME 562273647 568766353 586876606 630741614

2.EXPENSES
Interest expended 322828208 330733643 341539370 363622425
Operating expenses 93793837 135090730 115384806 119733704
Provisions 132403584 225770182 229707290 144023541
&contingencies
TOTAL EXPENSES 549025629 691594555 686631466 627379670

3.net profit for the year 13248018 -122828202 -99754860 3361944

(1-2)

Balance 0 0 0 0
in P&L
A/C

Brought
forward
from
previous
year.

Total 13248018 -122828202 -99754860 3361944

 Table no.4.10
PNB Limited - Balance Sheet Balance Sheet As At 31 March, (Rs in Cr.)

PARTICULARS SN. AMT AMT AMT AMT

2017 2018 2019 2020
CAPITAL AND
LIABILITIES

Capital 1 4255937 5521146 9208094 13475132

Reserves & 2 416718711 405221915 4360301361 610099730
Surplus
Deposits 3 6217040164 6422261919 6760301361 7038463206
Borrowings 4 407633354 608507480 393259151 502254292

Other Liabilities 5 157657318 216788585 148062860 142366757

and Provisions
TOTAL 7203305484 7658301045 7749494617 8306659117
ASSETS

Cash and 6 252099957 287890324 321291338 383978504

Balances with
Reserve Bank of
India
Balances with 7 631216513 666729711 431589174 375951792
Banks and
Money at Call
and Short Notice

Investments 8 1867254395 2003059816 2021282198 2404656414

Advances 9 4194931496 4337347213 4582492041 4718277227

Fixed Assets 10 62732484 63493272 62248473 72390682

Other assets 11 195070639 299780709 330591493 351404498

TOTAL 7203305484 7658301045 7749494617 8306659117

Contingent 12 3328313334 3041276977 3054001291 2108007358
liability
Bills for 13 257791254 278586121 273358976 280499136
collection
 CONCLUSION AND SUGGESTION

The study of ratio BNP bank reveals the performance of the bank in terms of financial aspects. It is found
that there is an increase in current ratio of PNB Bank , and cash position of the bank is also it is increased
year by year.

The Return on Equity of BNP Bank is fluctuating and its decreasing in 2018 and 2019.The net profit margin
ratio is goes decreasing over the period of 2018 and 2019. It shows that the bank profit is declines in the year
2018 and in 2019.The BNP Bank deposits and borrowing are increasing over the period because of it the
debt ratio of bank increasing so it is effecting the growth and profit of the bank. It shows us that bank
liquidity is normally good but there is little decrease in banks debt ratio in 2019.

The Total asset Turnover Ratio of 2019 is not good i.e. -10.83 as compared to other three years i.e 2017
2018 and 2020.Banks fixed assets turnover ratio of 2019 is good i.e. 1.53 as compared to other four years.
Fixed Assets Turnover Ratio of bank is satisfactory. The low turnover indicates that the bank isn’t using its
assets effectively. The PNB Bank Return on Assets is declining returns on assets are low during the 2017 to
2019 years .
 SUGGESTION

It is recommended that bank to use more ratios, especially those in the study which are so significant as
improvement of their financial performance measures. axis bank should probably consider the use of the
fund to invest other opportunities to get a profit, since they seem to be paying or expending more interest not
only for the majority of participants, but for businesses in general.

It is also recommended that axis bank owners/ managers request more research study and financial analysis
to their financial staff and also external examiner on bankruptcy prediction models at relevant institutions
such as universities. The few models presented in this study may be used by axis bank as well, since they
are simple and important to know financial health of the bank.

The axis bank should have increased its current assets than its current liabilities to make positive working
capital. The bank should have decreased its current liabilities by paying through the profit which is being
made. The debt should been minimized to keep debt ratio and debt-equity ratio to a minimum value
efficiency use of asset good as liquidity measures of Asset accounts such us total asset turnover of the bank
are significant increase in positive account side but decreases some accounts the point is that there is no
proper efficiency use of asset so axis bank executive have to consider best asset position use
 BIBLIOGRAPHY

https://en.wikipedia.org/wiki/Financial_ratio

htpp//en.wikipedia.org/wiki/financial ratio

https://www.edupristine.com/guides/accountancy/accounting_ratio/meaning_objectives-
advanatges-and-limitation.

www.bseindia.com

http://economics.india times.com/

https://www.bseindia.com/bseplus/AnnualReport/532461/5324610317.pdf

https://www.bseindia.com/bseplus/AnnualReport/532461/5324610318.pdf

https://www.bseindia.com/bseplus/AnnualReport/532461/5324610319.pdf

https://www.bseindia.com/bseplus/AnnualReport/532461/5324610320.pdf

https://www.screener.in/company/PNB/consolidated/

Advance Financial Accounting M com II Semester III /edition 2017/author CA (Dr.)

Varsha Ainapure CA. Mukund Ainapure.