Comparative Study on the Performance

of
RBL Bank and City Union Bank
Subject :- Management of Financial Institutions and
Banking Services

Semester :- 4

V/S
Presented To:- Dr. Ashish Mehta

Presented By:- Sagar Patel (17F33)

Shubham Raval (17F80)
 FLOW OF PRESENTATION
• INTRODUCTION TO RBL BANK
• INTRODUCTION TO CITY UNION BANK
• CAMELS APPROACH
– Capital Adequacy
– Assets quality
– Management Quality
– Earning Capacity
– Liquidity
– Sensitivity
• CASA RATIO AND DIVIDEND POLICY COMPARISON
• CONCLUSION
 INTRODUCTION TO RBL BANK
RBL BANK
Business Group Indian Private
Sector Banking
Incorporation Year 1943
Incorporation Date 14-Jun-1943
Chairman Prakash Chandra
Managing Director Vishwavir Ahuja
Company Secretary Vinay Tripathi
Registered Office 1st Lane Shahupuri,
Kolhapur, 416001,
Maharashtra
Website http://www.rblbank.com
Branches (Dec 2018) 342
Number of employees 5300
 INTRODUCTION TO RBL BANK
• RBL Bank, formerly Ratnakar Bank, is one of India's fastest growing private
sector banks with an expanding presence across the country.

• On 14 June 1943, Ratnakar Bank Limited was incorporated as a regional

bank in Maharashtra with two branches in Kolhapur and Sangli. It mainly
served small and medium enterprises (SMEs) and business merchants in
the Kolhapur-Sangli belt.

• In August 1959, the bank was categorized as a scheduled commercial bank

as per the Reserve Bank of India Act, 1934. In 1970, it received a banking
license from the Reserve Bank of India (RBI).

• The name of the bank was changed from Ratnakar Bank to its present
name RBL Bank pursuant to a fresh certificate of incorporation issued by
the RoC on 24 November 2014.
MANAGEMENT TEAM
 Awards and Recognition of RBL BANK
• FASTEST GROWING SMALL BANK , 2014 by Business World-
PWC Best Bank .
• INDIA’S BEST BANK AWARD in mid-size bank segment by
Business Today-KPMG for 4 consecutive year starting from
2014.
• BEST BANK AWARD FOR CYBER DEFENCE ,2016 by Asian
Banker Technology Implementation Agency.
• BEST IT RISK & CYBER SECURITY INITIATIVE + BEST PAYMENT
INITIATIVE,2017 by IBA Banking Technology.
• MOST PROMISING COMPANY OF THE YEAR,2018 by CNBC
TV18 India.
INTRODUCTION TO CITY UNION BANK
CITY UNION BANK
Business Group Indian Private
Sector Banking
Incorporation Year 1904
Incorporation Date 31-Oct-1904
Chairman S. Mahalingam
Managing Director Dr. N. Kamakodi

Company Secretary V. Ramesh

Registered Office 149, T.S.R (Big) Street,
Kumbakonam - 612001.
Tamilnadu
Website http://www.cityunionbank.com
Branches (Dec 2018) 600
Number of employees 5319
 INTRODUCTION TO CITY UNION BANK
• The City Union Bank Limited is an Indian bank. The Kumbakonam Bank
Limited, as it was at first called, was incorporated as a limited company on
31 October 1904. The bank, in the beginning, preferred the role of a
regional bank
• In April 1965, two other local banks, viz. "The City Forward Bank Limited"
and "The Union Bank Limited" were amalgamated with the bank.
Consequently, the bank's name was changed to 'Kumbakonam City Union
Bank Limited'.
• The first branch outside the state of Tamil Nadu was opened at Sultanpet,
Bangalore in Karnataka in September 1980.
• In tune with the national image attached to the bank, the bank's name
was changed to "City Union Bank Limited" with effect from December
1987.
• Reserve Bank of India have granted an "Authorised Dealers License" to
deal in Foreign Exchange business with effect from October 1990
MANAGEMENT TEAM
 Awards and Recognition of City Union
Bank Ltd BANK
• Best Mid-sized Bank on Profitability and Efficiency -
Business Today Survey Nov 2011
• City Union Bank Ltd received Industrial Economist
Excellence Award –2012
• Best Old Private Sector Bank by Financial Express for the
year of 2015-2016
• IDRBT Banking Technology Excellence Awards for the Year
2016-17
• Best Bank Award for Cyber Security and Defense among
Small Banks, 2018 Asian Banker Technology
Implementation Agency.
 CAMELS APPROACH

1. CAPITAL ADEQUACY
o Capital Adequacy’ is therefore the statutory minimum capital
reserve that a financial institution or investment firm must have
available and regulatory capital adequacy provisions thus require
relevant firms to maintain these minimum levels of capital,.
 Capital Adequacy Ratio
RBL Bank
RBL Bank
16.00%
15.50%
15.00% 15.33% As per RBI norms, Indian scheduled
14.50% commercial banks are required to
14.64%
14.00% maintain a CAR of 9% in Basel-II
13.50% 13.72% and 10.5% in Basel-III.
13.00%
13.13%
12.50% 12.94%
12.00%
11.50%
FY14 FY15 FY16 FY17 FY18
City Union Bank City Union Bank
17.00%

16.50% 16.72%
Indian public sector banks are
emphasized to maintain a CAR of 16.00% 16.22%
12%. 15.50% 15.80%
15.58%
Average capital adequacy ratio 15.41%
maintained by private banks in 15.00%

India was 16 and above 14.50%

FY14 FY15 FY16 FY17 FY18
 TIER 1 & TIER 2 Capital
Tier 2 Tier 1
16.00%
14.00% 13.64% 13.13% 14.17% Tier 1 Capital include share capital and
12.00% disclosed reserves. Since this capital is
11.54% 11.72%
10.00%
fully available to cover the core losses,
it is also called Core Capital. For this
8.00%
reason this is considered as the highest
6.00%
quality capital.
4.00%
2.00%
2.00% 1.40% 1.16%
0.00% 0.00%
0.00% City Union Bank
FY14 FY15 FY16 FY17 FY18 Tier 2 Tier 1
18.00%
16.00% 16.03% 15.81%
Tier 2 Capital is supplementary capital. It 14.61% 15.07% 15.27%
14.00%
include certain reserves and certain types 12.00%
of subordinated debt. 10.00%
8.00%
6.00%
Any loan which are repayable after other 4.00%
debts have been paid, it is called 2.00% 0.90% 0.69% 0.51% 0.53% 0.41%
subordinated debt 0.00%
FY14 FY15 FY16 FY17 FY18
 CAMELS APPROACH
2. ASSETS QUALITY
Asset quality is one of the most critical areas in determining the overall
condition of a bank. The primary factor affecting overall asset quality is the
quality of the loan portfolio and the credit administration program. Loans
typically comprise a majority of a bank's assets and carry the greatest amount of
risk to their capital. Securities may also comprise a large portion of the assets
and also contain significant risks.
 GROSS AND NET N.P.A.
Gross NPA Net NPA
1.60% From RBI Report, we found that
1.40% Average Gross NPA of Private banks
1.40%
1.20% have increased from 2.5% to 4 %
1.20% during 2015-18,whereas average Net
1.00%
0.80%
0.98% 0.74% NPA of Private banks also increased
0.64%
0.60%
0.79% 0.77% 0.59% from 1.22% to 2% during 2015-18.
0.40% 0.31% 0.27%
0.20% Gross NPA Net NPA
3.50%
0.00%
3.00%
FY14 FY15 FY16 FY17 FY18 3.03%
2.50% 2.83%
2.40%
2.00%
So we can say that Asset Quality of RBL 1.80% 1.90%
1.50%
Bank is far better than other private sector 1.50% 1.71% 1.70%
1.00% 1.20%
banks like City Union Bank. 1.30%
0.50%
0.00%
FY14 FY15 FY16 FY17 FY18
 SLIPPAGE RATIO
Slippage Ratio
RBL Bank
3.00%
Slippage is the Fresh accretion of NPAs
2.50%
2.51% during the year/Total standard assets
2.00% at the beginning of the year.
1.93%
1.50%
So lower the Slippage ratio indicates
1.38%
1.00% better asset quality.
1.00%
0.50%
0.48%
0.00%
FY14 FY15 FY16 FY17 FY18
Slippage Ratio City Union Bank
3.00%
2.50% 2.81%

In Normal Business Operations, Slippage 2.00% 2.35%

2.09% 1.99% 2.03%
Ratio of a Bank is 1.25%- 1.50%. 1.50%
1.00%
0.50%
0.00%
FY14 FY15 FY16 FY17 FY18
 BILLS COLLECTION TO TOTAL INCOME
Bills for collections to total income RBL Bank
30.00%
25.00%
25.43%
23.87%
20.00% 21.78%
15.00% 18.41%

10.00% 12.43%
5.00%
0.00%
FY14 FY15 FY16 FY17 FY18

City Union Bank

30.00%
25.00%
20.00% 24.06%
21.73%
19.49% 18.11%
15.00% 17.02%
10.00%
5.00%
0.00%
FY14 FY15 FY16 FY17 FY18
 CAMELS APPROACH
3. MANAGEMENT QUALITY
Assessment of management determines ability of an institution to diagnose
and react to financial stress. This component rating is reflected by the
management's capability to identify, measure, and control risks of the
institution's daily activities. It ensures safe operation of the institution with
effective policies and guidelines.
 REVENUE PER EMPLOYEE
Revenue per employees (In Rs crore) RBL Bank
350
Revenue per employee (also called sales
300 318 per employee) is a financial ratio that
250 268 measures the revenue generated by each
200 231 employee of the company on average. It
equals the company's total revenue
150 172 divided by the average number of
100 125 employees for the period
50
0
FY14 FY15 FY16 FY17 FY18 City Union Bank
120
100 113
98 101
Revenue per employee shows how effectively 80 89 92
an average employee of particular bank in
60
comparison to other Banks. Over a long run, it
shows the effectiveness of policies designed by 40
management. 20
0
FY14 FY15 FY16 FY17 FY18
 NET PROFIT PER EMPLOYEE
Net profit per employees (In Rs) RBL Bank
1400000
1200000
1191535 Net profit per employee (NIPE) is a
1000000 company's net profit divided by the
800000 909925 number of employees. This number
755579 shows the company how efficient it is
600000
597907 with its employees.
400000
200000 331200

0
Net profit per employee (in RS) City Union Bank
FY14 FY15 FY16 FY17 FY18
1400000
1200000
1203872
1000000 1072230 1112987
Both of the Bank’s Management 984487
800000 909972
is quite impressive in managing
their employees and fetching 600000

higher profit per employees. 400000

200000
0
FY14 FY15 FY16 FY17 FY18
 COST TO INCOME RATIO
Cost to Income Ratio (%)
RBL Bank
45.00%
40.00% The cost-to-income ratio shows a
35.00% 39.44% company’s costs in relation to its
30.00%
31.62% 31.93% 31.44%
34.25% income. To get the ratio, divide the
25.00% operating costs (administrative and
20.00% fixed costs, such as salaries and
15.00%
property expenses, but not bad debts
10.00%
5.00%
that have been written off) by
0.00% operating income.
FY14 FY15 FY16 FY17 FY18
Cost to… City Union Bank
46.00%
Industry standard cost to income is
around 40%. 44.00%
44.10%
42.00% 42.80%
Increase in the ratio can also highlight 40.00% 40.80%
potential problems: which could 40.00%
38.00%
suggest that the company has taken its 38.30%
36.00%
eye off the ball in the drive to attract
more business 34.00%
FY14 FY15 FY16 FY17 FY18
 CAMELS APPROACH
4. EARNING CAPACITY
Earnings are based on the financial institution's ability to create
returns on its assets. These returns enable the institution to expand,
retain competitiveness, and provide adequate capital. It can be
measured as the return on asset ratio. company's growth, stability,
valuation allowances, net interest margin, net worth level and the
quality of the company's existing assets are assessed to rate the
Earnings.
 NET PROFIT MARGIN
Net Profit Margin (%) RBL Bank
16.00%
14.00% Net Profit Margin (also known as
14.08%
12.00% “Profit Margin” or “Net Profit Margin
12.01% Ratio”) is a ratio used to calculate the
10.00% 10.60% 10.65%
8.00% percentage of profit a company
6.00%
produces from its total revenue.
6.85%
4.00%
2.00%
0.00%
FY14 FY15 FY16 FY17 FY18 City Union Bank
20.00%

In FY14, RBL Bank’s Net Profit Margin was any 17.39%

15.00%
6.85% and it was struggling to compete 15.84%
14.63% 15.10%
13.63%
against other banks. But after that RBL 10.00%
management changed their strategies to
focus on digital model and their efforts 5.00%
succeeded, After FY14, Net Profit Margin of
RBL Bank has been continually improving and 0.00%
reached at 14.08% in FY18. FY14 FY15 FY16 FY17 FY18
 RETURN ON EQUITY
ROE (%() RBL Bank
12.00%
The Return On Equity ratio essentially
10.00% measures the rate of return that the
10.29%
9.78% 9.50% owners of common stock of a company
8.00% 9.29%
receive on their shareholdings.
6.00%
Return on equity signifies how good the
4.00% 4.91%
company is in generating returns on the
2.00% investment it received from its
shareholders.
0.00% City Union Bank
FY14 FY15 FY16 FY17 FY18
14.80%
14.60%
14.65%
According to RBI annual report, 14.40%
14.57%
Average return earned on equity by
14.20%
private sector bank has come down 14.21% 14.20%
14.00% 14.08%
from 12.5% to 11% during 2015-18.
13.80%
13.60%
FY14 FY15 FY16 FY17 FY18
 RETURN ON ASSETS
ROA (%) RBL Bank
1.40%
1.20% Return on Assets also gives an idea as
1.20%
1.00% to how efficient management is at
using its assets to generate earnings.
0.80% 0.91%
ROA is the ratio of annual net income
0.76% 0.74%
0.60% to average total assets of a business
0.40% 0.50% during a financial year
0.20%
0.00%
City Union Bank
FY14 FY15 FY16 FY17 FY18
1.55%

1.50%
ROA of City Union Bank is always higher 1.50%
than RBL Bank in last Five Years. 1.48%
1.45%

ROA of RBL Bank show improvement of 1.40% 1.41%

1.42% 1.42%
140% in last five years, whereas ROA OF
City Union Bank raise only 7%. 1.35%
FY14 FY15 FY16 FY17 FY18
 NET INTEREST MARGIN
Net interest Margin(%) RBL Bank
3.00% Net interest margin (NIM) is a measure of
2.50%
2.85% the difference between the interest
2.50% income generated by banks or other
2.00% financial institutions and the amount of
2.08% 2.09%
1.87% interest paid out to their lenders (for
1.50%
example, deposits), relative to the amount
1.00% of their (interest-earning) assets
0.50%

0.00%
FY14 FY15 FY16 FY17 FY18 City Union Bank
4.50%
4.00%
3.50% 3.88%
Report shows that Net interest margin of 3.00% 3.39% 3.58%
3.13%
banking sector as a whole was remain 2.7%, 2.50% 2.89%
RBL Bank is performing good, but City 2.00%
Union Bank is performing even better than 1.50%
1.00%
RBL Bank by efficiently focusing on MSME. 0.50%
0.00%
FY14 FY15 FY16 FY17 FY18
 INTEREST INCOME TO TOTAL ASSETS
Interest Income to Total Assets (%) RBL Bank City Union Bank
7.80%
10.50%
7.60%
7.62% 10.00% 10.18%
7.40%
7.42% 9.50% 9.68%
7.20% 7.28% 9.42%
9.00%
7.20% 8.99%
7.00% 8.50%
7.00% 8.51%
6.80% 8.00%

6.60% 7.50%
FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18

This ratio measures the income from lending operations as a percentage of the total
Assets generated by the bank in a year.

Normally the higher this ratio the better indicating the bank is earning a high interest
rate or the proportion of interest earning assets (loans) to total assets is high or both of
these effects. Too high of interest income to total assets ratio would be attributed to the
high interest income (rate) derived from high risk loans (subject to default).
 EARNING PER SHARE
Earning per share ( in RS) RBL Bank
18.00
16.00 Earnings per share (EPS) is the portion
14.00 15.79
of a company's profit allocated to each
12.00 share of common stock.
12.59
10.00
8.00 9.60
Earnings per share serves as an
6.00 7.23 indicator of a company's profitability.
4.00
2.00 3.63
0.00
City Union Bank
FY14 FY15 FY16 FY17 FY18
10.00
8.00 9.18 9.35
8.39
6.00 7.44
Important factor need to consider here is that 6.82
Face Value of RBL Bank is Rs.10while Face 4.00
Value of City Union Bank is Rs.1
2.00
0.00
FY14 FY15 FY16 FY17 FY18
 CAMELS APPROACH
5. LIQUIDITY
To meet unexpected withdrawals from depositors without
affecting the daily operations, the bank must maintain liquid
cash and assets that can be easily converted into cash. The ratio
of liquid cash to asset ratio can be used as a parameter to
measure banks liquidity.
 CURRENT RATIO
CURRENT RATIO RBL Bank
0.06 Current ratio is a liquidity ratio that
0.05
measures a company's ability to pay short-
0.05 term obligations or those due within one
0.04 year. It tells investors and analysts how a
0.04
0.03 company can maximize the current assets
0.03 0.03 0.03 on its balance sheet to satisfy its current
0.02 debt and other payables.
0.01

0.00
FY14 FY15 FY16 FY17 FY18 City Union Bank
0.05
0.04
Current ratio of RBL Bank and City Union 0.04 0.04 0.04 0.04
Bank is somewhat same since last five 0.03
years. 0.03 0.03 0.03
0.02
0.02
Standard maintained by Banking Industry 0.01
for current ratio range from 0.04 to 0.06. 0.01
0.00
FY14 FY15 FY16 FY17 FY18
 CREDIT TO DEPOSIT RATIO
Credit/deposite ratio RBL Bank
94.00% Credit/ Deposit ratio is used in
92.00% determining the amount of loans that a
90.00%
91.70% bank has out versus the amount of current
deposits on hand at that same time.
88.00%
86.00% 87.20% This ratio is determined by dividing the
84.00% 84.80% 84.50% 85.10% bank's loan amounts by its total amount of
deposits. It is also known as Loan to
82.00%
Deposit Ratio.
80.00%
FY14 FY15 FY16 FY17 FY18 City Union Bank
86.00%
84.00%
82.00% 84.38%
Tradition and prudence indicate that the ideal 80.00%
loan-to-deposit ratio is 80 to 90 percent. The 78.00% 79.10%
76.00% 77.50%
loan-to-deposit ratio is used to assess a bank's 74.00%
74.60%
liquidity by comparing a bank's total loans to 72.00% 73.10%
its total deposits for the same period. 70.00%
68.00%
66.00%
FY14 FY15 FY16 FY17 FY18
 CASH TO DEPOSIT RATIO
Cash/deposite ratio RBL Bank
5.40% Cash Deposit ratio is the ratio of how
5.30% much a bank lends out of the deposits
5.31%
5.20% it has mobilised. It indicates how much
5.10% of a banks core funds are being used for
5.00% 5.07% lending, the main banking activity.
4.90% 4.97%
4.93% It can also be defined as Total of Cash in
4.80% 4.86%
hand and Balances with RBI divided by
4.70%
Total deposits.
4.60%
FY14 FY15 FY16 FY17 FY18 City Union Bank
9.00%
8.00% 8.49%
7.00%
Cash Deposit Ratio is the amount of cash 7.28% 7.05%
6.00% 6.74%
6.38%
balance branches maintain to meet their 5.00%
liabilities. It is usually 4.75% of total deposit. 4.00%
3.00%
2.00%
1.00%
0.00%
FY14 FY15 FY16 FY17 FY18
 Sensitivity to Market Risk
• Sensitivity to market risk reflects the degree to which
changes in interest rates, foreign exchange rates,
commodity prices, or equity prices can adversely
affect a financial institution's earnings or capital. For
most community banks, market risk primarily reflects
exposure to changing interest rates.
 CASA Ratio
30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
FY14 FY15 FY16 FY17 FY18
RBL Bank 20.40% 18.50% 18.60% 22% 24.30%
City Union Bank 17.80% 19.20% 20.40% 23.40% 24.20%
 Dividend Policy

RBL Bank City Union Bank

DPS (RS) Dividend(%) DPS (RS) Dividend(%)

FY 14 0.9 9% 1.1 110%

FY15 1.2 12% 1.2 120%

FY16 1.5 15% 1.3 130%

FY17 1.8 18% 0.3 30%

FY18 2.1 21% 0.3 30%

 CONCLUSION
• Although RBL Bank and City Union Bank is
performing well by focusing on Small and
Medium enterprises,

• RBL Bank has performed better than City Union

Bank in term of Assets Quality and Management,

• while Capital adequacy, Earning, profitability and

Liquidity is very well managed in City Union Bank
than RBL Bank