Banking

Annual review

November 2004

Contents Summary
The net profitability margin (NPM) of banks will rise from 1.36 per cent in end-March 2003 to 1.45 per cent by March 2006, despite a continuing decline in spreads, on account of the cost-control measures they have adopted. The business of the industry is expected to grow by 14.2 per cent CAGR between 2003-04 and 2005-06, led by continued growth in retail finance, recovery in commercial credit and growth in agricultural credit. Asset quality will also improve, with net NPAs expected to touch 2.54 per cent by 2005-06. Interest rates have started to harden during 2004-05, which will dramatically reduce un-booked profits from the investment portfolio.

Part A: Core business to drive profitability Executive summary Business Interest rate outlook and yields Profit and loss account Profitability Part B: State of the industry Overview Business Spreads & net profitability margin Profit and loss account Other income Operating expenses Important ratios Part C: Industry statistics Industry structure Financial system in India Industry performance (tables) Industry performance (graphs) Player profiles Part D: Annexure 123 129 137 161 173 289 61 67 89 99 103 109 121 1 9 37 49 57

Contact details
Analyst: Yatin Gupte (ygupte@crisinfac.com) Head of Research: Rajnish Rastogi (rrastogi@crisinfac.com) Client Servicing (clientservicing@crisinfac.com), 022-56913561

Opinion
Sections
Executive summary - Net profitability margin expected to rise - Business to grow by 14.2 per cent CAGR in 2003-04 to 2005-06 - Asset quality of banks to improve - Interest rates to harden from 2004-05 - Unbooked profits on investments to reduce dramatically - Key ratios: Return on assets to be under pressure due to slow growth in fee-based income - Challenges faced by banks in an increasing interest rate scenario Business - Business of scheduled commercial banks to grow at 14.2 per cent - Sources of funds: Deposits - Borrowings to grow at 7.1 per cent CAGR - Equity capital & reserve and surplus - Capital adequacy ratio - Advances - With the improvement of credit offtake, credit deposit ratio to touch 62% by 2005-06 - Increasing credit deposit ratio to slow down the growth rate of investments - Asset quality - Cash in hand and balances with RBI grew at a CAGR of 4.1 per cent from 1997-98 to 2002-03 Interest rate outlook and yields - Interest rates to harden in 2004-05 - Yields and cost of scheduled commercial banks - Yield on investments Profit and loss account - Interest earned - Interest expended - Fee-based income: Core and non-core - Profit on sale of investments - Operating expenses to grow 8.8 per cent - Provision & contingencies Profitability - Net profitability margin highly susceptible to changes in operating expenses - Other key ratios 1 1 2 4 6 7 7 8 9 9 10 16 17 19 20 29 29 30 35 37 37 41 43 49 49 50 51 52 54 55 57 57 58

1.0

2.0

3.0

4.0

Continued...

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...continued

Boxes
1.0 01 02 03 04 05 06 2.0 01 3.0 01 4.0 01 Business Alternative investment products Movement & stock of foodgrains at FCI Impact on the spreads of interest rate reduction on FCI credit Corporate Debt Restructuring Mechanism (CDR) Sector-wise NPA of scheduled commercial banks Recent guidelines issued by RBI pertaining to CRR Interest rate outlook and yields Fiscal deficit Profit and loss account Prudential norm on classification of investment portfolio of banks Profitability Net profitability margin 15 22 23 32 33 36

39

53

58

Figures
01 02 03 04 05 1.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 Executive summary Business of scheduled commercial banks Non-food credit Asset quality Non-performing assets Average yield on G-Sec Business Proportion of different sources of funds of SCBs Interest rate on deposits vs growth in term deposits Ownership of savings deposits Ownership of deposits within the household sector - 2002 Growth in saving deposits Ownership of current deposits with SCB Ownership of deposits within the household sector - 2002 Growth in borrowings Growth in borrowings (excluding ICICI Bank) CRAR of top six banks Food credit Agricultural credit Retail credit Operating rates Credit deposit ratio Investment-deposit ratio 2 3 4 5 7

10 12 13 13 13 14 14 16 16 19 20 24 25 27 29 30
continued...

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...continued

Figures
17 18 19 2.0 01 02 03 04 05 4.0 01 Asset quality Incremental NPA provision Comparison of CRR with proportion of cash in hand with T&DL Interest rate outlook and yields Average WPI-All commodities Weekly WPI inflation Yield on advance portfolio vis-a-vis benchmark 3-year G-Sec Yield on investment portfolio vis-a-vis benchmark 5-year G-sec yield Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield Profitability Spreads & NPM 30 34 35

40 40 42 44 16

58

Tables
01 02 1.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 Executive summary Net profitability margin (NPM) Key ratios 1 7

Business Business of scheduled commercial banks in India 9 Sources of funds of scheduled commercial banks 10 Deposits of scheduled commercial banks from 1999-00 to 2005-06 11 Share of deposits 11 Proportion of different categories of deposits in the incremental deposits 11 Growth of deposits 11 Share of different investment alternatives in incremental investible funds 15 Equity and reserve surplus 17 Distributions of scheduled commercial banks by CRAR 18 Assets of the scheduled commercial banks 20 Food and non-food credit of scheduled commercial banks 20 Movement - food grains by FCI (provisional) 22 Stock in Central pool as on 30/06/2004 22 Impact on yield on advances 23 Non-food credit growth 24 Projected investments 27 NPAs of scheduled commercial banks 31 Progress under CDR Scheme 33 Sector-wise composition of NPAs of public sector banks (1999-2003) 33 Impact of CRR rate reduction on yields 36
continued...

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...continued

Tables
2.0 01 02 03 04 05 06 07 08 09 10 3.0 01 02 03 04 05 06 4.0 01 02 03 04 Interest rate outlook and yields Average yields of government securities Projected interest rates of government securities Fiscal deficit and market borrowing Tax revenues and industrial growth Yields & costs of scheduled commercial banks Maturity profile of loans and advances of scheduled commercial banks Maturity profile of investments of scheduled commercial banks Maturity profile of term deposits of scheduled commercial banks Maturity profile of borrowings of scheduled commercial banks Average cost of borrowings of scheduled commercial banks Profit and loss account Profit and loss account Interest on borrowings of scheduled commercial banks Non-interest income - break-up SCBs: Unbooked appreciation Employee cost of scheduled commercial banks Provisions and contingencies of scheduled commercial banks Profitability Net profitability margin (NPM) Key ratios Projected profit and loss account of the scheduled commercial banks Projected balance sheet of all scheduled commercial banks 37 37 38 39 41 42 43 45 47 47

49 50 51 52 54 55

57 58 59 60

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1.0

Business

Business of scheduled commercial banks to grow at 14.2 per cent

Business of scheduled commercial banks in India
(Rs billion) Deposits Advances Business
1

Table 1
CAGR 2000-03 14.6 18.6 16.0 CAGR CAGR 2000-03 2003-06
1

1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F 9,325 4,559 13,884 10,935 5,407 16,343 12,472 6,635 19,107 14,045 7,599 21,644 15,688 8,703 24,392 17,658 10,372 28,030 19,929 12,300 32,229

13.7 16.0 14.5

12.4 17.4 14.2

E: Estimated F: Forecasted Excluding ICICI Bank Source: RBI and CRIS INFAC estimates

In the banking industry, business is defined as the sum of the deposits and advances as on a particular date. CRIS INFAC estimates that the business of scheduled commercial banks will grow from Rs 21,644 billion in 2002-03 to Rs 32,229 billion by 2005-06 at a CAGR of 14.2 per cent, led by continued growth in retail finance, gradual recovery in commercial credit, pick-up in agriculture credit and growth in deposits. During 2003-04 to 2005-06, their advances will grow by 17.4 per cent on the back of growth in retail finance, and commercial and agriculture credit. Deposits are expected to grow by 12.4 per cent CAGR. From 2000-01 to 2002-03, the business of the scheduled commercial banks grew by 16.0 per cent (14.5 per cent) CAGR. The 14.5 per cent CAGR growth in business was mainly driven by a 16 per cent CAGR growth in advances (excluding ICICI Bank). Due to the slowdown in industrial growth, many corporates restructured themselves to survive; hence, credit offtake was low. With reduced avenues for investment of surplus funds, banks turned to retail financing. The retail finance portfolio grew by around 27 per cent during the same period.

Due to the merger of ICICI Ltd with ICICI Bank on March 30, 2002, all the growth figures for scheduled commercial banks (SCBs) for the period 1999-00 to 2002-03 are distorted. Hence, for a better comparison, we have calculated the growth figures excluding ICICI Bank, which are indicated in brackets throughout this Annual Review.

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Sources of funds: Deposits Overview The main sources of funds for the banking sector are deposits and borrowings. In addition, internal accruals and funds raised through equity form part of the funds available to banks for meeting their funding requirements. CRIS INFAC expects no significant change in the funding pattern during 2003-04 to 2005-06
Sources of funds of scheduled commercial banks
(Rs billion) Capital Reserves and surplus Deposits Borrowings Total 1999-2000 205.60 446.75 9,324.68 491.15 2000-01 211.44 500.19 10,935.27 594.85 12,241.75 2001-02 236.16 645.70 12,472.39 1,117.05 14,471.30 2002-03 236.46 781.80 14,044.90 912.19 15,975.35 2003-04 F 246.46 950.80 15,688.27 945.09 17,830.62 2004-05 F 250.46 1,111.03 17,657.65 1,023.06 20,042.20

Table 2
2005-06 F 254.46 1,309.71 19,928.76 1,121.96 22,614.90

10,468.18 Source: RBI & CRIS INFAC

Proportion of different sources of funds of SCBs
(per cent) Reserves and surplus 5 Borrowings 4

Figure 1
(per cent)

1997-98
Capital 3

2002-03
Reserves and surplus 5 Borrowings 6 Capital 1

Deposits 88

Deposits 88

Source: CRIS INFAC

Deposits expected to grow at a CAGR of 12.4 per cent Deposits consist of demand deposits (current account deposits), savings deposits and term deposits. CRIS INFAC expects the deposits of all scheduled banks to grow from a level of Rs 14,045 billion as of March 2003 to Rs 19,929 billion as of March 2006 at a CAGR of 12.4 per cent. This will be driven by a growth of 8.5 per cent, 16.2 per cent and 11.7 per cent in demand deposits, savings deposits and term deposits, respectively. Time and demand deposits of all scheduled commercial banks have been growing a CAGR of 14.6 per cent (13.7 per cent) during 2000-01 to 2002-03, driven primarily by the growth in term deposits and savings deposits, which grew by a CAGR of 13.8 per cent and 16.7 per cent (excluding ICICI Bank), respectively.

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Deposits of scheduled commercial banks from 1999-00 to 2005-06
(Rs billion) 1999-2000 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F
1

Table 3
CAGR CAGR CAGR 2000-2003 2000-03 2003-2006 (per cent) (per cent) (per cent) 8.4 17.1 15.1 14.6 8.1 16.7 13.8 13.7 4.1 16.2 12.4 12.4

Demand deposits Savings bank deposits Term deposits Deposits E: Estimate; F: Forecast
1

1,308.6 2,012.9 6,003.3

1,414.7 2,335.5 7,185.1

1,550.3 2,734.2 8,187.9

1,668.1 3,228.0 9,148.8

1,739.0 3,760.6 10,188.7 15,688.3

1,821.6 4,362.3 11,473.7 17,657.7

1,880.8 5,060.3 12,987.7 19,928.8

9,324.7 10,935.3 12,472.4 14,044.9

Excluding ICICI Bank Source: RBI and CRIS INFAC Research

The proportion of term deposits in the total deposit mix has increased from 64 per cent in 1991-92 to around 66 per cent in 2002-03.
Share of deposits
(per cent) Demand deposits Savings bank deposits Term deposits Deposits E: Estimate; F: Forecast Source: RBI and CRIS INFAC Research 1997-98 14 22 64 6,663 1998-99 1999-2000 14 21 65 7,978 14 22 64 9,325 2000-01 13 21 66 10,935 2001-02 12 22 66 12,472 2002-03 12 23 65 14,045 2003-04 E 11 24 65 15,688 2004-05 F 10 25 65 17,658

Table 4
2005-06 F 9 25 65 19,929

On an incremental deposit basis, the proportion of term deposits dropped from 70 per cent in 1998-99 to 61 per cent in 2002-03 due to falling interest rates. In the next 3 years, the proportion of term deposits is likely to go up, albeit at a slow rate, due to the expected rise in the interest rates and the introduction of technology-driven products.
Proportion of different categories of deposits in the incremental deposits
(per cent) Demand deposits Savings bank deposits Term deposits Total Source: CRIS INFAC 1998-99 1999-2000 11.01 19.48 69.51 100.00 14.81 23.74 61.45 100.00 2000-01 6.59 20.03 73.38 100.00 2001-02 8.83 25.94 65.23 100.00 2002-03 2003-04 F 7.49 31.40 61.11 100.00 4.31 32.41 63.28 100.00 2004-05 F 4.19 30.55 65.25 100.00

Table 5
2005-06 F 2.61 30.73 66.66 100.00

Growth of deposits
(Per cent) Demand deposits Savings bank deposits 1998-99 1999-2000 15.01 17.83 17.98 18.88 15.99 2000-01 8.11 16.03 19.69 2001-02 9.59 17.07 13.96 2002-03 2003-04 F 7.60 18.06 11.74 4.25 16.50 11.37 2004-05 F 4.75 16.00 12.61

Table 6
2005-06 F 3.25 16.00 13.19

Term deposits 21.45 Source: RBI and CRIS INFAC

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Increase in interest rates to spur term deposits growth CRIS INFAC is of the view that term deposits will grow at a 12.4 per cent CAGR during 200304 to 2005-06, from Rs 9,148.8 billion as of March 2003 to Rs 12,737.9 billion as of March 2006 on the back of the expected increase in the interest rate of term deposits. From 2000-2003, term deposits recorded a growth of 15.1 per cent (13.8 per cent) CAGR on account of their perceived safety, in comparison to other investment instruments like equity and mutual funds. Term deposits have shown a strong correlation with the interest rates of deposits, with the coefficient of correlation at 0.82. For the purpose of our study, we have considered the interest rates offered on deposits with a 3-5 year tenure. CRIS INFAC believes that the interest rate offered on term deposits (3-5 year tenure) will rise from 5.25 per cent in 2003-04 to 6.15 per cent in 2004-05 (an increase of 90 bps) and go up further by 35 bps to 6.50 per cent in 2005-06. This will result in term deposits growing at 11.37 per cent, 12.61 per cent and 13.19 per cent in 2003-04, 2004-05 and 2005-06, respectively. Growth in term deposits moves in line with interest rate movement
Interest rate on deposits vs growth in term deposits
(per cent) 13.0 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04E 2004-05P 2005-06P growth in term deposits (%) 10.0 20.0

Figure 2
(per cent) 25.0

15.0

5.0

Interest rates on deposits (3-5 years maturity)

Source: RBI and CRIS INFAC

The regression equation y = 1.89 x

- 0.44. = interest rate on deposits (3 - 5 years maturity).

Where, y = growth rate of term deposits, x

Savings deposits to grow at 16.2 per cent from 2003-04 to 2005-06 CRIS INFAC estimates that savings deposits will grow at a CAGR of 16.2 per cent from Rs 3,228 billion as of end-March 2002 to Rs 5,060 billion as of March 2006. Savings deposits accounted for nearly 23 per cent of the total deposit base of scheduled commercial banks in India as on March 31, 2003.

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Ownership of savings deposits
(per cent) Govt. 6 Corporate sector 1

Figure 3

Ownership of deposits within the household sector -2002
(per cent) Trusts Associations Clubs etc. 1 Proprietary and Partnership 1 Individuals 90 Religious Institutions 1 Others(not elsewhere classified) 5

Figure 4

Foreign 5

Household 88

Source: RBI and CRIS INFAC Research

Source: RBI and CRIS INFAC Research

As on the last reporting Friday of March 2002, nearly 88 per cent of the total savings deposits of scheduled commercial banks were owned by the household sector. Of these around 90 per cent were owned by individuals. About 79 per cent of the savings deposits are owned by individuals and are, hence, considered as a stable source of funds.
Growth in saving deposits
(per cent)

Figure 5

21.00

17.00

13.00

9.00

5.00

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04 P

2004-05 P

2005-06 P

Source: CRIS INFAC Research

During 2000-01 to 2003-04, savings deposits registered a CAGR of 17.1 per cent (16.7 per cent). The year-on-year growth in savings deposits has remained more or less stable at 1617 per cent. This is primarily because Indians are generally inclined to save more, and growth in savings deposits is not very much driven by interest rate movement. Given the stable nature of these deposits and the ‘save more' mindset of the Indian public, CRIS INFAC expects the growth in savings deposits to be stable at 16.0-16.5 per cent CAGR during 2003-04 to 2005-06.
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Technology-driven products to taper growth in demand deposits CRIS INFAC estimates that demand deposits (current account) will grow at a CAGR of 4.1 per cent from Rs 1,668 billion as of March 2003 to Rs 1,881 billion by end-March 2006, due to the introduction of newer, technology-driven products/facilities. Firms maintain demand deposits to meet their day-to-day cash requirements. With the advent of new technology-driven products such as electronic fund transfers, Real Time Gross Settlements (RTGS) and Cash Management Systems (CMS), the clearing cycle has shortened. RTGS and CMS allow quick transfer of funds to and from any part of the country. This will encourage corporates/ firms to reduce their balances in demand deposits, and probably slow down their growth. Further, customer-friendly products that are introduced by banks with the aid of technology (swipe-in and swipe-out) will divert some portion of demand deposits towards fixed deposits. During 2000-01 to 2003-04, demand deposits have grown by a CAGR of 8.4 per cent (8.1 per cent) from Rs 1,308.6 billion as of March 2000 to Rs 1,668.1 billion as of March 2003. Demand deposits are the most volatile component of the deposits that banks have, and their year-on-year growth has shown an uneven trend over a 10-year period. During the last few years, a declining trend has been observed on account of the downturn in the industry.
Ownership of current deposits with SCB Figure 6
(per cent) Financial Sector 16

Ownership of deposits within the household sector - 2002
(per cent) Educational Institutions 3 Others 8

Figure 7

Traders 33

Corporate sector 16

Household 47

Proprietary and Partnership 33

Foreign 3 Govt. 18

Trusts Associations Clubs etc. 3

Other individuals 20

Source: RBI and CRIS INFAC Research

Source: RBI and CRIS INFAC Research

As on the last reporting Friday of March 2002, the corporate and the financial sectors together owned 32 per cent of the current deposits of scheduled commercial banks. Further, 47 per cent of the total current deposits were owned by the household sector, of which around 66 per cent were owned by traders and partnership firms together. Thus, close to 63 per cent of the demand deposits are owned by the business class, and are hence treated as the most volatile component of deposits.

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Alternative investment products
Overview

Box 1

Besides term deposits, investors have the option of investing in insurance, small savings schemes, mutual funds and the like. While the share of small savings schemes in total investments has remained more or less stable, the share of insurance and mutual funds in the total pie is increasing. This has led to a drop in the share of the bank liability product (term deposits + savings deposits) from 68 per cent in 1998-99 to 57 per cent in 2002-03. But, going forward, we expect it to increase marginally to 58 per cent by 2005-06. The following table indicates the share of various investment alternatives in the incremental inflows of investible money in the economy.

Share of different investment alternatives in incremental investible funds
Year

Table 7

1 998-99 1 999-00 2000-01 2001 -02 2002-03 2003-04 F 2004-05 F 2005-06 F

Life Share in Term Share in Savings Share in Small Share in M utual Share in insurance the deposits the Deposits the Savings the funds the premium incremental incremental incremental Schemes incremental incremental money money money money money supply (%) supply (%) supply (%) supply (%) supply (%) 22,806 1 3 91 9 ,41 53 25,626 1 5 28,541 1 7 2,695 2 27,462 34,898 50,094 55,738 60,755 65,676 70,463 1 4 1 5 21 22 22 20 1 9 82,738 1 8,1 1 86 1 00,274 96,092 96,062 1 ,31 21 3 1 ,532 41 42 50 42 38 35 38 39 31 ,964 32,262 39,870 49,381 53,262 60,1 70 69,797 1 6 1 4 1 7 1 9 1 9 1 9 1 9 32,21 4 37,577 37,769 40,602 49,534 59,441 71 ,329 1 6 1 6 1 6 1 6 1 8 1 8 1 9 22,1 7 1 1 ,1 1 35 8,024 1 3,480 1 6,850 1 65 5,1 1 2,890 1 1 5 3 5 6 5 4

F: Forecast Source: CRIS INFAC Estimates

Insurance sector The life insurance sector, which was earlier a monopoly of the Life Insurance Corporation of India (LIC), was opened up to the private sector in 1999-2000. From 1996-97 to 2002-03, the total insurance premium increased by a CAGR of 22.8 per cent from Rs 162 billion to Rs 557.3 billion in 2002-03. However, during 2000-01 to 2001-02, the removal of assured returns schemes across insurance products of the Life Insurance Corporation of India has resulted in their becoming less attractive to investors. Since LIC still accounts for a significant portion of the life insurance market, the drop in its growth will result in a marginal decline in the growth rate of insurance premiums. CRIS INFAC expects insurance premiums to grow at a CAGR of 8.04 per cent from 2002-03 to 200506. Mutual funds as an investment channel The performance of the mutual fund industry is dependent on the performance of the capital markets; hence, money would flow in the mutual funds during a boom, but would flow back to the banks during a downturn. Growth in small savings scheme to remain constant In the last 3 years, the interest rates on small savings schemes has come down by around 400 basis points. Despite this, the average post-tax returns on these schemes are higher than the post-tax returns on term and other deposits. But the higher lock-in period (of 6-7 years) of these schemes has mitigated their attractiveness, particularly since interest rates are expected to increase in the short to medium term. Consequently, CRIS INFAC expects small savings schemes to grow at a CAGR of around 7.5 per cent from 2003-04 to 2005-06.

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Borrowings to grow at 7.1 per cent CAGR CRIS INFAC estimates the borrowings of scheduled commercial banks to grow at a CAGR of 7.1 per cent from Rs 912 billion as of March 2003 to Rs 1,122 billion by end-March 2006, led by a strong growth in advances. During 2000-01 to 2002-03, borrowings of scheduled commercial banks grew by 22.9 per cent (5.4 per cent) CAGR.
Growth in borrowings
(per cent) 87.8 100.0 80.0 60.0 40.0 20.0 0.0 -20.0 -40.0 11.8

Figure 8

Growth in borrowings (excluding ICICI Bank) Figure 9
(per cent) 20.2 11.2 25.0 20.0 15.0 10.0

21.1

6.9

5.0

3.6

-18.3

8.3

9.7

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05

1999-2000

2000-01

2001-02

2002-03

2003-04 F

2004-05 F

2005-06 F

-5.0 -10.0 -15.0

Source: RBI and CRIS INFAC Research

Source: RBI and CRIS INFAC Research

In 2002-03, the borrowings of scheduled commercial banks recorded a negative growth rate of 18 per cent, primarily on account of: ICICI Bank replacing its high cost borrowings (of the erstwhile ICICI Limited) with term and savings account deposits. Excess liquidity prevailing in the system and lesser opportunity to invest the available funds. Banks taking advantage of reduced interest rates to prune their high-cost debt portfolio. CRIS INFAC estimates a marginal growth in borrowings in 2003-04. The liquidity position was comfortable throughout 2003-04, hence the demand for borrowings is expected to be low. Further, we also expect ICICI Bank to continue replacing its high cost borrowings with low cost deposits, but at a slower pace. However, as the demand for credit gradually increases, the demand for borrowings would increase, which will push up the growth in borrowings to 9 per cent in 200405 and 10 per cent in 2005-06

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2005-06

0.0

-8.9

8.0

9.0

10.0

Equity capital & reserve and surplus

Equity and reserve surplus
(Rs billion) 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F

Table 8
CAGR CAGR 1999-00 - 2003-04 2002-03 2005-06 4.8 20.5 2.5 17.7

New equity raised Reserve & surplus E: Estimates, F: Forecast

205.6 446.8

211.4 500.2

236.2 645.7

236.5 781.8

246.5 950.8

250.5 1100.7

254.5 1276.2

Source: RBI & CRIS INFAC estimates

Another source of funds for the banking sector is the equity capital. In the last 10 years, the total equity capital raised by banks has gone up, although it is not the main source of funds for banks. With stricter capital adequacy norms and the growing loan book size, banks will need to infuse more capital to maintain a healthy capital adequacy ratio. Many of the public sector banks have reduced the government stake by raising equity from the market. In 2002-03, the total amount raised by public sector banks through equity was approximately Rs 7.7 billion. In 2003-04, public sector banks are estimated to raise nearly Rs 6.0 billion. Hence, in order to maintain a healthy capital adequacy ratio, going forward, banks will embark on infusing more equity capital. CRIS INFAC estimates equity capital to grow at CAGR of 2.5 per cent in the next year. The retained earnings of banks have grown at a CAGR of 20.5 per cent from 1999-00 to 200203. This was primarily on account of the over 31.2 per cent CAGR growth in net profits in the same period. CRIS INFAC expects profits after tax to grow at a CAGR of 10.3 per cent during 2003-04 to 2005-06 and the dividend payout ratio to be at 18.5 per cent. We also expect addition to the reserves through an increase in share premium, which is expected to grow in line with the projected growth in the equity capital. CRIS INFAC expects retained earnings to grow at a CAGR of 18.8 per cent in the next 3 years, based on the above factors.

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18
Table 9
Old private sector banks 2001-02 0 1 2 19 19 6 6 33 36 81 2 1 1 2 0 7 0 2 2 1 2 0 4 87 2002-03 2001-02 2002-03 2001-02 2002-03 2001-02 2002-03 New private sector banks Foreign banks Total 1 1 2 15 18 1 0 0

Distributions of scheduled commercial banks by CRAR

State Bank Group

Nationalised banks

2001-02

2002-03

2001-02 2002-03

Below 4 per cent

Between 4-9 per cent

Between 9-10 per cent

Above 10 per cent

8

8

Source: Trends and Progress of Banking in India, 2002-03

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Capital adequacy ratio Capital to risk-weighted assets ratio (CRAR)

As of March 2003, all scheduled commercial banks, except two banks, had their CRAR above the stipulated norms. Between March 2002 and March 2003, we see a marked improvement in the nationalised banks, with all banks having capital adequacy above the stipulated norm of 9 per cent. This can be attributed to the increase in profitability and the fresh capital raised by many banks. With the likely implementation of new Capital Accord (Basel II), many banks, especially those having a global presence, have been holding capital in excess of the stipulated norm.
CRAR of top six banks
(per cent) 16.0

Figure 10

13.9

13.9

12.8

13.0

13.1

12.7

12.2

12.0

11.7

11.6

11.3

11.1

11.1

11.1

12.0

11.4

10.7

10.4

10.0

8.0

Bank Of Baroda

Bank Of India

H D F C Bank Ltd.

ICICI Bank Ltd

Punjab National Bank

10.2

10.7

12.0

Mar-01

Mar-02

Mar-03

Mar-04

Source: CRIS INFAC Research

From the sample of six banks listed above, we see that the capital adequacy ratio of all banks, except ICICI Bank, has improved. The capital adequacy ratio of PSBs has shown a significant improvement in comparison to that of the new private sector banks. This is on account of the aggressive lending strategy of new private sector banks in comparison to the aggressive capital raising strategy of the public sector banks. CRIS INFAC expects advances to grow faster than deposits. With the expected increase in credit demand, banks will prefer to increase their loan portfolio instead of investments. This will result in banks shifting their focus from investments towards advances. This shift from the risk free assets to risky assets and the impending implementation of the new Basel accord, which is expected to increase the risk weights of the assets, would require banks to raise capital to maintain CAR above the stipulated norm.

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12.8

State Bank Of India

13.4

14.0

13.5

13.5

19

Advances

Assets of the scheduled commercial banks
Assets cash and balances with RBI Balances with bank and money call and short notice Investments Advances Fixed assets Other assets Total assets P: Projected Source: RBI and CRIS INFAC Estimates 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P 869 961 4216 4559 155 765 11525 863 1246 5007 5407 163 759 13446 899 1385 5975 6635 202 827 15923 891 900 7100 7599 203 890 17585 943 976 7934 8703 205 897 19658 998 1121 8484 10372 207 905 22087 1056 1289 9150 12300 210 914 24919

Table 10
CAGR CAGR 2000-03 2001-04 0.9 -2.2 19.0 18.6 9.3 5.2 15.1 5.8 12.7 8.8 17.4 1.1 0.9 12.2

Advances to grow at CAGR of 17.4 per cent from 2003-04 to 2005-06 Advances are divided into food and non-food credit. Non-food credit is further divided into agricultural credit, retail credit and other commercial credit.
Food and non-food credit of scheduled commercial banks
(Rs billion) Food credit Non-food credit 1999-2000 2000-01 2001-02 2002-03 2003-04E 2004-05P 2005-06P 257 4300 400 5007 540 6095 495 7105 365 8338 427 9945 459 11841

Table 11
CAGR CAGR (2000-03) (2003-06) 24.42% 18.22% -2.45% 18.56%

Source: RBI and CRIS INFAC

Food credit to show a negative CAGR of 2.5 per cent

Food credit
(Rs billion) 600

Figure 11

500

400

300

200

100

0

1999-2000

2000-01

2001-02

2002-03

2003-04E

2004-05P

2005-06P

Source: RBI and CRIS INFAC Research

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CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Food credit includes banks' credit to the Food Corporation of India (FCI) for procuring foodgrains from the market, at the minimum support prices, to be distributed through the public distribution system. CRIS INFAC believes food credit will show a negative CAGR of 2.45 per cent during 200304 to 2005-06. In sharp contrast to the accelerated growth witnessed in 2001-02, food credit declined steeply by 26.2 per cent in 2003-04 after declining by 8.3 per cent in 2002-03. The steep decline in food credit was on account of lower procurement and higher offtake of food grains from the public distribution system. The government has emphasised the need to improve the functioning of the public distribution system. This, coupled with the drop in the stock levels of FCI due to higher offtake of foodgrains through the public distribution system in earlier years, should increase the FCI's procurement in 2004-05. However, its procurement is likely to be influenced by the availability of storage capacity at its various godowns. FCI has over 23 million tonnes (owned & hired) of storage capacity in over 1,700 godowns all over India. Higher procurement will lead to increased credit. However, recently, the Central government permitted FCI to raise money from the market to the tune of Rs 50 billion. Though banks can subscribe to these bonds, they will have to compete with other market players, which will reduce their food credit exposure. During the last quarter of 2003-04, banks had reduced the interest rate charged on the food credit by about 150 bps from a level of 10.95 per cent, which will have an impact of about 6.23 basis points (annualised) on the yield on advances. Further, if FCI decides to raise Rs 50 billion of its requirement from the market, the yield on advances would face a further impact of 2.28 basis points (annualised). CRIS INFAC expects food credit to grow at a rate of 17 per cent in 2004-05 but taper to 7 per cent in subsequent years.

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Movement & stock of foodgrains at FCI Movement - food grains by FCI (provisional) Table 12
(million tonnes) 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 Foodgrains 23.6 19.1 19.1 22.1 16.2 20.5 24.8 29.9 10.6 Upto July'04 Sugar 1.2 1.1 1.1 0.7 0.3 0.3 0.2 0.8 0.3 Total 24.8 20.2 20.2 22.8 16.5 20.8 25 29.98 10.63

Box 2

Source: Food Corporation of India

The total foodgrain stocks in the Central grain pool were estimated at around 29.9 million tonnes in the beginning of July. This comprised 19.15 million tonnes of wheat and 10.76 million tonnes of rice. The stock in the central pool as on June 30, 2004, is above the buffer stock norms

Stock in Central pool as on 30/06/2004
(million tonnes / Prov.) Rice Wheat Total
Buffer stock norms (million tonnes) Rice Wheat Total Source: FCI website 1st Jul 10.0 14.3 24.3 1st Oct 6.5 11.6 18.1 1st Jan 8.4 8.4 16.8

Table 13
Grand total 10.76 19.15 29.91
1st Apr 11.8 4.0 15.08

With FCI 8.92 7.17 16.09

With state govt. / agencies 1.85 11.97 13.82

A food ministry sponsored study has concluded that the foodgrain requirement of the public distribution system and welfare schemes can be met with lower grain procurement and stockholding than at present

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Impact on the spreads of interest rate reduction on FCI credit

Box 3

The total outstanding food credit as in March 2003 was Rs 495 billion, which amounted to 9 per cent of the outstanding loans and advances of public sector banks as on March 31, 2003. Banks were earning a yield 10.95 per cent on their FCI exposure till December 2003-quarter end. The rate of 10.95 per cent is based on the prime lending rate (PLR) of five large public sector banks: State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda and Bank of India. During 2001-02 to 2002-03, the range of decline of the average PLR of these public sector banks at 125 bps (12 to 10.75 per cent) has been much lower than the decline on the 10-year Government of India (GOI) securities, which has fallen by around 400 bps (April 2001 to March 2003) During the last quarter of 2003-04, banks agreed to reduce their lending rate to FCI by 150 bps to 9.45 per cent. Recently, the Centre allowed FCI to borrow up to Rs 50 billion from the bond market, which would reduce the banks’ exposure to FCI, as they would compete with other players in the open market. Till date, FCI has not raised any loans from the market. We have tried to calculate the impact of these significant developments on the yield on advances

Impact on yield on advances
(Rs million) Average food credit exposure (2004-05) Maximum refinance available Total advances (average) Original interest rate Reduced interest rate 2-year GOI security yield rate Original interest income on FCI exposure Revised interest income on FCI exposure Interest rate on G-Sec Loss of revenue Expected reduction in the yields (in bps) Source: CRIS INFAC estimates (5,943) (6.23) 43,381 37,439 4,725 2,550 (2,175) (2.28) 9,537,673 10.95% 9.45% 396,177 50,000 9,537,673 10.95% 9.45% 5.10%

Table 14
Current Refinancing Total Impact

9,537,673

43,381 35,264

(8,118) (8.51)

The impact of the reduction in the interest rate works out to 6.23 basis (annualised). If FCI were to access the bond market, banks can subscribe to these bonds, but would earn a low yield, because we believe the pricing of the paper would be at par with GOI paper of a similar duration., as the market borrowings would be backed with a GOI guarantee. Assuming an average G-Sec yield of 5.10 per cent during 2004-05 for 2-year paper, the impact on the spreads of banks is estimated to be 2.28 basis points (annualised). We have not factored in these developments in our projections. The total impact of the above-mentioned developments on the yield on carry business and spreads is estimated at around 8.5 basis points.

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23

Continued growth in the retail credit, coupled with the expected recovery in commercial credit, to drive growth in nonfood credit
Non-food credit growth
(Rs billion) Agri credit Retail credit Other credit Total non-food 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F 371 348 2,494 3,212 433 408 2,791 3,633 504 516 3,279 4,300 591 659 3,757 5,007 711 825 4,559 6,095 854 1,051 5,200 7,105 1,025 1,582 5,731 8,338 1,281 2,136 6,528 9,945 1,601 2,670 7,570 11,841

Table 15
CAGR CAGR 2000-03 2003-06 19 27 17 18 23 36 13 19

E: Estimates, F: Forecasted CAGR is in per cent Source: RBI and CRIS INFAC

Non-Food credit constitutes about 96 per cent of the total advances. CRIS INFAC estimates that non-food credit will grow at a CAGR of 18.6 per cent during 200304 to 2005-06, driven by the continued growth in retail finance and the expected pick-up in agricultural and industrial credit. During 2000-01 to 2003-04, non-food credit recorded a CAGR of 18.2 per cent, primarily due to increased demand for retail credit, which grew at a CAGR of 27 per cent during the same period. Government's directive to push agriculture credit growth

Agricultural credit
(Rs billion) 1800 1600 1400 1200 1000 800 600 400 200 0 433 504 591 711 854 1281 1025

Figure 12

1601

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04P

2004-05P

2005-06P

Source: RBI and CRIS INFAC

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Along with the direct finance to farmers, lending to allied farming activities (public and private), subscription to bonds issued by NABARD (national bank for Agricultural and Rural Development), loans to co-operative marketing societies, loans to co-operative banks of producers, etc are all classified as agriculture credit. Agriculture lending is classified as priority sector lending. Every scheduled commercial bank is expected to ensure that priority sector advance constitute 40 per cent of net bank credit (in case of foreign banks, the priority sector advance ratio is 3.2 per cent), which further has a sub-limit of 18 per cent towards agriculture credit. CRIS INFAC expects agriculture credit to grow from Rs 854 billion (March 2003 end) to Rs 1,601 billion (March 2006 end) at a CAGR of 23.31 per cent, driven by the government's emphasis on improving credit delivery to the agriculture sector. During 1999-2000 to 2002-03, agriculture credit recorded a CAGR of 19.2 per cent from Rs 504.3 billion as of end-March 2000 to Rs 853.8 billion as of end-March 2003. The growth in agriculture credit has been steady, due to low penetration of agricultural credit in the rural areas and uneven agriculture output over the years. The government has laid emphasis on improving the credit delivery to the agriculture sector and thus improving agriculture production in the country. The Ministry of Finance has advised all banks to increase their agriculture credit by 30 per cent over the next 3 years, from 200405 to 2007-08. Further, several measures have been initiated, like increasing the credit limit of the kisan credit card scheme, special agricultural credit plans, etc. The Reserve Bank of India has directed banks to restructure / reschedule the overdue agriculture loans, waive margin money requirement for agricultural loans up to Rs 50,000, etc. Agriculture credit had been growing between 17-18 per cent during the last few years. Several banks have started restructuring their operations to meet the targeted agricultural growth. Banks have set up strategic business unit to cater to the agriculture credit demand. However, we feel the projected growth rate of 30 per cent to be optimistic. CRIS INFAC expects the growth in agricultural advances to be around 23 per cent CAGR during the 2002-03 to 2005-06. Continued growth in housing finance to drive retail credit
Retail credit
(Rs billion) 3000 2670 2500 2136 2000 1582 1500 1051 1000 516 659 825 408

Figure 13

500

0

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04P

2004-05P

2005-06P

Source: RBI and CRIS INFAC
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

25

CRIS INFAC estimates the net outstanding retail finance portfolio of the banks to grow at a CAGR of 36 per cent during the period 2003-04 to 2005-06, from Rs 1,051 billion as of endMarch 2003 to Rs 2,670 billion as of end-March 2006, driven by continued growth in housing, commercial vehicles and car finance. The projected growth in the outstanding retail finance in the next 3 years would be mainly driven by the following factors. Continued growth expected in housing finance, and cars and commercial vehicles finance. Increasing market share of banks vis-à-vis NBFCs in the retail finance pie. Increasing tenures of the loans. During 2000-01 to 2002-03, the retail finance portfolio of banks has grown at a CAGR of 27 per cent from Rs 516.4 billion to Rs 1,051.4 billion. This steady growth in retail finance portfolio was mainly on account of the following factors: Focus of large public and private sector banks on disbursements to the household sector for housing loans, commercial vehicles, cars and two wheelers Increasing penetration of banks vis-à-vis NBFCs. Lower interest rates, contributing to increase in demand, and rising tenure of car, housing and commercial vehicle portfolio. We expect outstanding housing finance, which constitutes almost 52 per cent of the total retail finance, to grow at a CAGR of 40 per cent, while the outstanding car finance and commercial vehicle finance will grow at a CAGR of 35 per cent each, during 2003-04 to 2005-06. Car finance constitutes nearly 24 per cent of the retail finance portfolio. Banks, with their low cost funds advantage, will continue to dominate the retail finance market and CRIS INFAC expects banks to increase their market share in the retail finance market. Other commercial credit to grow at 13.3 per cent CAGR, driven by gradual pick-up in industrial credit Other commercial credit consists of the credit availed by large, medium and small-scale industries covering various sectors. CRIS INFAC estimates other commercial credit segment to grow from Rs 5,199.5 billion as of end-March 2003 to Rs 7,570.0 billion as at March 2006 at a CAGR of 13.3 per cent, led by the gradual upturn in the investment cycle in the manufacturing sector and a sustained growth in the service sector. Upturn in the investment cycle to boost credit from the manufacturing sector The manufacturing sector has not seen any major capacities being set up in the last 3 years. Consequently, many industries are reaching nearly full capacity utilisation levels. The present capacities are not sufficient to meet the expected growth in demand in various industries, which has increased the operating rates. Hence we expect capacity additions across all manufacturing sectors, which in turn would increase the demand for credit.

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Operating rates
(per cent) (per cent)

Figure 14
105 100 95 90 85 80 75 70 65

100 95 90 85 80 75 70 65 60 55 50 1998-99 2000-01 Steel 2002-03 Aluminium 2004-05 Paper 2006-07 Cement

60

1998-99

2000-01

2002-03

2004-05 Fibres

2006-07 Refining

Petrochemicals

Note The operating rates projected for the period 2003-04 to 2007-08 are without considering any capacity built up. Source: CRIS INFAC

Projected investments
(Rs billion) Steel Aluminium Paper Cement Petrochemicals MMF and FI Refining & Marketing Oil & Gas Total Source: CRIS INFAC 1998-03 50.00 19.25 32.00 63.00 20.00 7.00 187.64 397.50 776.39

Table 16
2003-08 60.00 98.00 80.00 120.00 60.00 91.50 622.00 807.50 1,939.00

A CRIS INFAC industry study has identified eight industries, which are listed above, where significant capital expenditure is projected. During 1998-99 to 2002-03, these sectors have made investment to the tune of Rs 776.39 billion. During the next 5-year period, these eight industries are projected to make investment to the tune of Rs 1,939 billion, which is 2.5 times the investments made by these industries in the last 5 years. Based on our study, these eight sectors account for almost 67 per cent of the total manufacturing sector (based on the capital expenditure), which gives a total capital expenditure requirement for the entire manufacturing sector of Rs 2,908.5 billion. Out of a capital expenditure of Rs 2,908.50 billion, almost Rs 349 billion would have taken place in 2003-04, while Rs 494 billion will occur in 2004-05 and Rs 756 billion in 200506. We estimate a total debt requirement of Rs 803.4 billion, to fund the capex requirement of the first 3 years (2003-04 to 2005-06). Of this, banks are expected to fund to the tune of Rs 281.2 billion, in the form of term loan.

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27

Short-term credit requirement for the manufacturing sector CRIS INFAC expects banks' short-term loan to the manufacturing industry to increase by Rs 541 billion during 2003-04 to 2005-06, driven by a 13.5 per cent growth in the topline of the manufacturing sector during the said period. CRIS INFAC, based on its study, expects the net sales of the manufacturing sector to grow at CAGR of 13.5 per cent between 2003-04 and 2005-06. Increase in sales would result in higher working capital requirement. But, due to better working capital management by corporates, we expect a marginal drop in the working capital requirements of the industry. The ratio of working capital gap to net sales has been showing an increasing trend. We believe this was due to companies changing their debt mix more towards short term to take advantage for the falling interest rates. But as the interest rates harden, firms would resort to long-term loans to lock their exposure at lower interest rates. Telecom, hotel industry to drive credit growth in service sector In 2002-03, the services sector accounted for around 51 per cent of the total GDP (at constant prices at factor cost). GDP in the service sector had clocked impressive growth rates of over 9 per cent during 1997-98 to 1999-2000. The services sector has grown at a steady pace, though there have been fluctuations in the growth in agricultural and industrial production. Crisil Centre of Economic Research (CCER) expects the services sector GDP to record a year on year growth of 8.4 per cent and 7.5 per cent in 2004-05 and 2005-06, respectively. Telecom, and hotel & tourism sectors constitute 45-50 per cent of the entire service sector in terms of bank finance (both short term and long term). As per our telecom industry study, the external funding requirement for the industry is almost Rs 414 billion during 2003-04 to 2005-06, of which, it is estimated that banks will fund Rs 145 billion in the form of term loans and working capital. As per CRIS INFAC's hotel industry study, we expect capital expenditure of Rs 31.20 billion during 2003-04 to 2007-08. Our analysis indicate that almost 80 per cent of the investment in the hotel industry is expected to place in the first 3 years (2003-04 to 2005-06). Analysing the funding pattern in the hotel industry, we expect banks to fund Rs 8.39 billion. With the expected revival of the hotel industry, and in view of new capacities, we expect the working capital requirement of the industry to grow from an average 23 per cent of sales to 26 per cent of sales over the 3-year period (2003-04 to 2005-06). The incremental net disbursement of working capital in the sector for 2003-05 to 2005-06 is estimated at Rs 19.37 billion. As mentioned earlier, hotel & tourism and telecom industry represent almost 45-50 per cent of the entire service sector. Hence, based on our estimate the incremental gross funding of banks to the service sector in next 3 years (2003-04 to 2005-06) is Rs 407 billion. Other sectors (including SSI credit) Based on our study, other industry represents approximately 25-30 per cent of the total small medium and large industry. CRIS INFAC estimates the gross disbursement to this sector during 2003-04 to 2005-06 to be Rs 822 billion.

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With the improvement of credit offtake, credit deposit ratio to touch 62% by 2005-06

Credit deposit ratio
(per cent) 65

Figure 15

62 60 59 55 53 50 50 48 45 49 49 54 55

40

1998

1999

2000

2001

2002

2003

2004 E

2005 P

2006 P

Source: CRIS INFAC

With industrial recession, and the resultant low demand for credit, the credit-deposit ratio had been as low as 48 per cent in 1999, but with the gradual recovery in the commercial credit and continued growth in the retail credit, we estimate total advance to grow at 17.4 per cent CAGR during 2003-04 to 2005-06. During the same period, total deposits will increase by 12.4 per cent. This would push up the credit deposit ratio to 62 per cent by end-March 2006, tightening the liquidity of the banking system. Increasing credit deposit ratio to slow down the growth rate of investments CRIS INFAC estimates the investments portfolio of banks to grow at CAGR of 8.8 per cent during 2003-04 to 2005-06. With low credit offtake, banks had no avenues to deploy funds. Hence they parked them in investments, both SLR and Non-SLR, or were holding on cash. The investment to deposit ratio grew from 42 per cent in 1998 to 51 per cent in 2003 and is estimated to have been 50.5 per cent in 2004. Going forward, with the expected increase in demand for commercial credit, banks would prefer lending to the industrial sector than invest in government securities, as the former yields higher returns. Further, to meet the demand for commercial credit, banks would prune their investment portfolio. With the estimated slow down in investments, the investment-deposit ratio is expected to taper to 46 per cent by March 2006.

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29

Investment-deposit ratio
(per cent) 55 51 50 48 45 43 40 42 46 45 51 48

Figure 16

46

35

30 1998 1999 2000 2001 2002 2003 2004 E 2005 P 2006 P

Source: CRIS INFAC

Asset quality

Asset quality
100

Figure 17

95

(per cent)

90

85

80

75 1999 2000 Standard 2001 2002 2003 2004 E Loss assets 2005 P 2006 P

Sub-standard assets

Doubtful assets

Source: RBI and CRIS INFAC estimate

The share of standard assets to increase With better credit management, restructuring of loan portfolios and higher provisions/write off, the share of standard assets has increased from 85.3 per cent in 1998-99 to 91.2 per cent in 2002-03; it is expected to grow further to 94.2 per cent by 2005-06. The share of substandard and doubtful assets has shrunk from 5.0 per cent and 7.8 per cent, respectively, in 1998-99 to 2.6 per cent and 5.1 per cent, respectively, in 2002-03; it is expected to drop further to 1.5 per cent and 3.3 per cent, respectively, by 2005-06.

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Net NPA expected to be around 2.5 per cent
NPAs of scheduled commercial banks
Basis Gross NPA Net NPA Gross NPA Net NPA Provision for NPA Provision cover Rs in Billion Rs in Billion per cent per cent Rs in Billion per cent 587.22 280.20 14.70 7.63 608.4 300.73 12.79 6.77 639.63 324.61 11.45 6.17 709.53 355.46 10.42 5.50 307.49 43.34 687.80 327.64 8.84 4.42 318.81 46.35 677.21 274.17 7.66 3.20 361.68 53.41 698.61 273.32 6.62 2.66 383.95 54.96

Table 17
728.09 309.59 5.82 2.54 377.16 51.80

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P

P: Projected Source: RBI and CRIS INFAC

CRIS INFAC estimates that by March 2006 the gross NPA will come down to 5.82 per cent as against as 8.84 per cent as of March 2003, while net NPA will drop to 2.54 per cent from 4.42 per cent during the same period. At the gross level, the gross NPAs, which stood at Rs 687.80 billion as on March 31, 2003, are expected to have fallen to Rs 669.15 billion as on March 31, 2004, but would rise thereafter to Rs 710.56 billion as in March 2006, with the growth in advances. CRIS INFAC estimates that gross NPAs will fall further to 5.84 per cent by end-March 2006. The prime drivers are expected to be: Credit administration: Improved credit management, by improving the process of credit appraisals, providing extensive training staff members undertaking appraisals, putting in place an effective system of post disbursement monitoring of accounts. Risk management: Increased focus on the improving risk management, with the aid of information technology. Improving corporate performance: Since March 2003, the corporate sector performance has improved significantly, and we expect it to continue improving its profitability in the current industrial upturn, which will help improve the risk profile of loans given to the industrial sector. Legal remedies: Banks would continue to take recourse to legal remedies such as DRT and SARFEASI, to pressurise defaulters to clear the overdues. The gross NPA of the scheduled commercial banks have fallen from 12.8 per cent as of endMarch 2000 to 8.8 per cent as of end-March 2003, while net NPAs had fallen from 6.8 per cent to 4.4 per cent during the same period. The primary drivers for the improvement are: Higher provisions: The falling interest rate and corresponding increase in profit on sale of investments provided banks enough room to increase their provisioning / write off of bad loans while maintaining profit growth. Regulatory measures: Regulators introduced various measures, such as One Time Settlement Scheme(OTS), Corporate Debt Restructuring (CDR) etc, which allowed banks to restructure the bad loans or settle the bad loans at a discount. It also prevented potential NPAs from becoming NPAs. Legal reforms: Reforms in the legal systems, in the form of strengthening the Debt Recovery Tribunal (DRT) and enactment of the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, enabling banks to pressurise the defaulters to clear the overdues, and thus clean their balance sheet. Best practices: Banks started adopting best practices, and building strong credit risk management to improve their loan portfolio
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31

Corporate Debt Restructuring Mechanism (CDR)
Objective:

Box 4

The objective of CDR is to ensure a timely and transparent mechanism for restructuring the corporate debts of viable entities, outside the purview of BIFR, DRTs and other legal proceedings, for all concerned. Structure: CDR will have a three-tier structure consisting of: (a) (a) CDR Standing Forum and its core group - CDR standing forum is a self empowered body, which lays down policies and guidelines, guides and monitors the progress of corporate debt restructuring. A CDR core group is carved out of the CDR standing forum to assist the standing forum in convening meetings and taking decision relating to policy, on behalf of the standing forum. The core group will consists of chief executives of IDBI, ICICI Bank, SBI, Bank of Baroda, Bank of India, Punjab National Bank, Indian Banks Association and a representative of the Reserve Bank of India. (b) CDR Empowered Group - The individual cases of corporate debt restructuring shall be decided by the CDR Empowered Group, consisting of ED level representatives of IDBI, ICICI Bank and SBI as standing members, in addition to ED level representatives of financial institutions and banks who have an exposure to the concerned company. The level of representations of banks/ financial institutions on the CDR Empowered Group should be at a sufficiently senior level to ensure that concerned banks/ FI abide by the necessary commitments including sacrifices, made towards debt restructuring. After the Empowered Group decides that restructuring of the company is prima-facie feasible and the enterprise is potentially viable in terms of the policies and guidelines evolved by the standing forum, the detailed restructuring package will be worked out by the CDR cell in conjunction will the lead institution. The empowered group has to examine the viability and rehabilitation potential of the company and approve the restructuring package within a specified time frame of 90 days or at best 180 days. The decision of the CDR Empowered group shall be final. If restructuring is not found viable, the creditors would then be free to take necessary steps for immediate recovery of dues and / or liquidation or winding up of the company, collectively or individually. (c) The CDR cell: The CDR Standing Forum and the CDR Empowered Group will be assisted by the CDR cell in all their functions. The CDR cell will make the initial scrutiny of the proposal received from borrowers/ lenders. If the rehabilitation is prima facie feasible, the CDR cell will proceed to prepare a detailed rehabilitation plan with the help of lenders and experts, if necessary. The salient features of the revised CDR scheme are as follows: It will cover only multiple banking accounts/ syndication / consortium accounts with outstanding exposure of Rs 20 crore and above. It will not apply to accounts involving only one financial institutions or one bank. It will be a voluntary system based on Debtor-Credit Agreement (DCA) and Inter-Creditor Agreement (ICA). The scheme will be applicable only to standard and sub-standard accounts. There would be no requirement of the account/ company being sick, NPA or being in default for a specified period before reference to the CDR Group. Request of any corporate indulging in wilful default or misfeasance will not be considered for restructuring under CDR. Reference to CDR could be triggered by (a) any or more of the secured creditors who have a minimum 20 per cent share in either working capital or term finance, or (b) by the concerned corporate, if supported by a bank or financial institution having stake as in (a) above. Lenders who do not wish to commit additional financing or wish to sell their existing stake will be provided with the exit options. ‘Stand-still' agreement binding for 90 days or 180 days by debtors and creditors respectively, under which both sides commit themselves not to take recourse to any legal action during the 'stand-still period'. If 75 per cent of the secured creditors by value, agree to a debt restructuring package, the same would be binding on the remaining secured creditors.
Continued...

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...continued

As on June 30, 2003, out of 57,915 cases (involving Rs 822.66 billion) filed by banks to the DRTs, 22,163 cases (involving Rs 196.33 billion) have been adjudicated and the amount recovered so far stood at Rs 57.87 billion.

Progress under CDR Scheme
(Rs billion) Cases refererred to CDR forum Final schemes approved Rejected Pending No. of Cases 71 41 18 12

Table 18
Amount Involved 537.36 386.38 72.52 78.46

Source: Report on Trends and Progress of Banking India, 2002-03

Sector-wise NPA of scheduled commercial banks

Box 5

While the gross NPA (as a percentage of advances) is falling in all the sectors, it is highest under the priority sector, with a drop of almost 10 percentage points. The NPAs under the public sector are the lowest, essentially due to the government backing. The NPAs are the highest under the priority sector because of the industries and sectors to which advance are given. Priority sector is more of directed lending, which puts pressure on the banks to meet the required target, which leads to some lapse in the credit assessment of the proposal. But, over the years, banks have improved their systems and, also with the restructuring of bad loans, NPAs are witnessing a declining trend.

Sector-wise composition of NPAs of public sector banks (1999-2003)
(Rs billion) 1999 2000 2001 2002 2003 Priority sector Advances 937 1082 1270 1476 1763 NPA per cent 226 237 242 252 249 0.47 24.12 21.92 19.02 17.04 14.15 Public sector Advances 395 465 710 914 924 NPA per cent 15 11 17 9 11 0.02 3.8 2.3 2.4 1.0 1.2 Advances 1642 1974 2166 2416 2807 NPA 276 285 273 284 268 0.51

Table 19
per cent 16.8 14.5 12.6 11.8 9.5

Non-priority sector

Source: Trends & progress of Banking in India 2002-03 and statistical tables

'Provision for NPA' charge to P&L expected to decrease With the expected fall in the profit on sale of investments, banks would have less leeway to make provisions for NPAs. We expect banks to have made the highest provisions during 2003-04, with the increase in the interest rates. Hence, the provision for NPA would have increased to Rs 178 billion in 2003-04. Since banks would have already made additional provisions in the previous years, the incremental provision are expected to be relatively smaller. Moreover, we expect banks to further strengthen their credit management, leading to an up gradation in the existing NPAs. This would lead to a reduction in the provision requirements for provision for NPAs' due to write back of the excess provisions made in the earlier years. These factors would reduce the provision for NPA charged to the P&L, from Rs 178 billion in FY 2004, to Rs 159 billion for 2004-05 and Rs 135 billion for 2005-06.
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Incremental NPA provision
(Rs billion)
200

Figure 18

160

178 159

120

132

135

80

40

0

2003

2004 P

2005 P

2006 P

Source: RBI and CRIS INFAC estimate

We do not expect the growth in agricultural credit to affect the NPA loans (declared/book) of the banks' assets, because of the following: Agriculture credit accounts for only 12 per cent of the total advances. Lenient norms for recognising NPA in the agriculture sector. Restructuring of old agricultural loans, as per the RBI's recent directives. Strategic business units (SBUs) set up by several banks, to cater to the agricultural credit demand. This focus approach would also help in better monitoring of these advances. Announcements made by banks to recruit agriculture specialist, for the agricultural credit division. CRIS INFAC expects the actual NPAs on the books of banks to be higher than the declared NPAs (book NPAs) on account of the following: Aggressive agriculture credit disbursement policies The aggressive agricultural credit disbursement policies pursed by banks under directives of RBI and the government will result in the inherent risk of an increase in the agricultural advances assets. Further, despite lenient NPA recognition norms historically, agricultural advances have higher NPA levels vis-à-vis non-priority sector advances. Unseasoned housing finance portfolio As per CRIS INFAC estimates, housing finance accounts for more than 50 per cent of the retail credit. Banks have aggressively pursued housing finance during the last 3 years (2000-01 to 2003-04), as a result of which the housing loan book size has more than quadrupled during this time of declining interest rates. The housing portfolio has not yet seasoned and has not been stress tested during a hardening interest rate environment. Therefore, the current NPA levels of this sector are expected to be understated.

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Cash in hand and balances with RBI grew at a CAGR of 4.1 per cent from 1997-98 to 200203 The cash and bank balances with the banks consist primarily of cash with branches, cash in ATMs and the remaining cash balances with the RBI for maintaining the CRR ratio. Given the view that banks are substantially stronger than they were in the early nineties, coupled with a view that CRR was not longer an effective tool in controlling inflation and credit offtake, the RBI decided to bring down the CRR levels on a deferred manner in 1997-98. Since then the CRR levels have come down from a high of 11 per cent in 1998-99 to the present level of 5 per cent, after touching a low of 4.5 per cent. Further, CRR was also required to strengthen the bank against large withdrawals that result in the bank not been in a position to pay its obligation. The RBI has raised the CRR levels from 4.5 per cent to 5.0 per cent in two stages. The hike in the CRR would increase the cash and bank balance. But, the RBI initiated measure is more from keeping the inflation under check, and as the inflation pressure subsides, the CRR would be reduced. The RBI has retained its medium term objective of gradually lowering the CRR to 3 per cent. The CRR reduction is part of the RBI's endeavour to make available more resources with bank to lend. CRIS INFAC expects the cash in hand and balances with the RBI to growth at a small rate of 5.8 per cent, as per the historical trend.

Comparison of CRR with proportion of cash in hand with T&DL
(per cent)

Figure 19

11.00 10.00 9.00 8.00 7.00 6.00 5.00 4.00 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Cash in hand and balance with RBI as a percentage of T &DL

CRR ratio

Source: RBI and CRIS INFAC estimate

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Recent guidelines issued by RBI pertaining to CRR

Box 6

The Reserve Bank of India has recently increased CRR of schedule commercial banks, by 50 basis points of their net demand and time liabilities, in two stages, effective from fortnight beginning from September 18, 2004 and October 2, 2004 to 4.75 per cent and 5.0 per cent respectively. Further, with effect from the fortnight beginning September 18, 2004, banks will be paid interest at the rate of 3.5 per cent per annum on their eligible cash balances maintained with RBI under CRR requirement as against the current practice of payment of interest at the Bank rate (6.0 per cent per annum).

Impact of CRR rate reduction on yields
(Rs million) D&T liabilities Average funds deployed in carry CRR requirement Interest rate Interest income Contirbution to yield on avg funds deployed (in bps) Loss of revenue Impact on yield (in basis points) Source: CRIS INFAC 2005 with CRR impact 18,680,707 19,480,370 5.00% 3.50% 12,360 6.7

Table 20
2005 without CRR impact 18,680,707 19,480,370 4.50% 6.00% 15,891 8.7 3,531 1.9

With the reduction in the rate of interest offered on the CRR deposits, we expect the banks to take an additional hit of 2 basis points (annualised) on their spreads.

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2.0

Interest rate outlook and yields

Average yields of government securities
(per cent) I year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 P 2005-06 P P: Projected 10.29 9.88 7.24 5.98 4.63 4.92 5.56 Tenure 3 year 10.62 10.07 7.48 6.19 4.80 5.32 6.07 5 year 10.88 10.33 7.74 6.43 4.93 5.61 6.52

Table 1
10 year 11.41 10.96 8.69 6.91 5.31 6.10 7.25

Source: Crisil Centre for Economic Research, CRIS INFAC

Projected interest rates of government securities Table 2
(per cent) I year March 31, 2003 March 31, 2004 March 31, 2005 P March 31, 2006 P P: Projected Source: RBI, Crisil Centre for Economic Research, CRIS INFAC 5.88 4.29 5.40 5.75 Tenure 3 year 6.42 4.59 5.93 6.20 5 year 6.35 4.78 6.36 6.67 10 year 6.47 5.17 7.00 7.50

Interest rates to harden in 2004-05 According to estimates by the CRISIL Centre for Economic Research (CCER) and CRIS INFAC, the benchmark 10-year yield on government securities is estimated to rise by 183 basis points (bps) during 2004-05 to 7.00 per cent by March 2005 from 5.17 per cent as of end-March 2004. The benchmark yield is expected to go up further by 50 bps during 2005-06 to touch 7.50 per cent by March 2006. Rising inflation and the gradual increase in credit demand has led to a hardening of interest rates. Banks have started moving to the short end of the curve with the rise in interest rates. As per CCER estimates, interest rates for corporate are expected to go up by an additional 40-50 bps over the corresponding G-Sec yield. In general, the movement of interest rates depends on: Growth in money supply Growth in credit offtake International interest rate. Expected rate of inflation Fiscal deficit, and the resultant borrowing programme of the government

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Tightening money supply The year-on-year growth in money supply (M3) was higher at 16 per cent in 2003-04, compared to 15 per cent in 2002-03. In its credit policy for 2004-05, the Reserve Bank of India (RBI) has projected the expansion of money supply at 14 per cent. CRIS INFAC estimates the credit deposit ratio to go up to 62 per cent as on March 31, 2006. With the changing rupee-dollar parity and the increase in forward premiums, foreign currency borrowings are likely to become costlier, which will slow down the growth in external commercial borrowings. The inflows from non-resident Indians (NRIs) and foreign institutional investors (FIIs) are also likely to be affected, with the expected recovery in the US economy and the corresponding increase in the interest rate. Recently, the RBI increased the limit of borrowings under the Market Stabilisation Scheme (MSS) from Rs 600 billion to Rs 800 billion; thus, an additional liquidity of Rs 200 billion would be absorbed from the banking system. Moreover, the 50 bps increase in the CRR limit in two stages is estimated to absorb another Rs 80 billion from the system. These factors are expected to put pressure on the liquidity in the system. Credit growth As explained in the previous chapter, non-food credit is estimated to grow at 18.56 per cent during 2003-04 to 2005-06, with the credit deposit ratio likely to touch 62 per cent by endMarch 2006. International interest rates The US Federal Department has increased the Fed Rate thrice in a span of three months, each time by 25 bps, to 1.75 per cent, indicating a revival of the US economy, and giving a direction to the interest rates. US short-term rates are expected to rise by another 100 bps over the next 12 months. This would lead to a further rise in the domestic interest rate. (The shortterm interest rates in India show a strong correlation with the short-term interest rates in the US.) Fiscal deficit

Fiscal deficit and market borrowing
Basis Fiscal deficit Actual market borrowings As a percentage of GDP Source: Budget Documents Rs in billion Rs in billion per cent Budgeted market borrowings Rs in billion 2001-02 Actuals 1409.55 773.5253 926.3 6.2 2002-03 Actuals 1450.73 958.59 1120.48 5.9 2003-04 RE 1321.03 1071.94 879.94 4.8 4.4

Table 3
2004-05 2004-05 BE CCER Est 1374.07 903.65 1574.07 1040 5.0

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The Central government's fiscal deficit is funded mainly through its market borrowings. Hence, with the increase in the fiscal deficit, the market borrowings would go up, leading to pressure on the interest rate. CCER estimates that the fiscal deficit will touch 5 per cent of GDP as against the budget estimates of 4.4 per cent, due to shortfall in the budgeted tax collections. With the expected increase in the fiscal deficit, CCER estimates the government's market borrowings to rise by Rs 136.35 billion, which will push the interest rate up.

Fiscal deficit

Box 1

The budget assumes a nominal GDP growth of 12.7 per cent for 2004-05. Assuming an inflation of 5.0-5.5 per cent, this translates into a high real growth of about 7.2-7.7 per cent. As per CCER's assessment, sustaining such a high growth over a strong base of 8.2 per cent growth in the previous year is unlikely. CCER expect real GDP growth of only 6.0-6.5 per cent even if the monsoons are normal. The central government has assumed a growth of 24.6 per cent in its gross tax revenues in 2004-05, over a high growth of 17.9 per cent in 2003-04. This translates into an increase in the tax/GDP ratio to 10.2 per cent in 2004-05 from 9.2 per cent in 2003-04. According to CCER, this projected growth in revenues is optimistic. The table below documents the expected shortfall in gross tax revenues under alternate assumptions of industrial growth. The estimates of gross tax revenues have been computed using the ratio of tax collections to nominal industrial GDP observed during 2003-04.

Tax revenues and industrial growth
Industrial growth (per cent) 6.5 7.0 8.0 9.0 Note 1) Rs in crores Sources: CRISIL Simulations Industrial inflation (per cent) 5.5 5.7 6.0 6.0 Nominal industrial growth (per cent) 12.0 12.7 14.0 15.0 2004-05BE Gross tax Gross tax revenue revenue (EST) (BE) 285,612 287,397 290,712 293,262 317,733 317,733 317,733 317,733

Table 4
Expected shortfall 32,121 30,336 27,021 24,471

If the tax/industrial GDP ratio of 2003-04 is assumed to hold in the current fiscal, we get a significant revenue shortfall, ranging from Rs 244.71 billion to Rs 303.36 billion. This is likely to be an overestimate of the shortfall because of some changes in the tax regime and imposition of new taxes. Even if we optimistically assume the benefits from new taxes and efficiency improvement in tax collections at Rs 100 billion, we end up with a shortfall of about Rs 200 billion under a realistic assumption for industrial growth. The Budget is thus relying upon the recovery of large arrears in direct and indirect taxes to meet the revenue targets. This expected revenue shortfall would increase the fiscal deficit to 5 per cent of the GDP from a projected 4.4 per cent of the GDP. For more details, please refer our Budget document.

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Average inflation in 2004-05 seen in 6.0-6.5 per cent range The expected increase in inflation results in an increase in interest rates. This is because lenders demand compensation for the fact that the future interest and principal they receive will not be worth as much as the money they lend, in terms of the goods and services it would purchase. CCER estimates that average inflation will be about 6.0-6.5 per cent in 2004-05. Surging international crude oil prices, the rainfall deficiency in some parts of the country and rising metal prices will all exert upward pressure on inflation. Basic metals, alloys and metal products remained the major contributor to the overall manufacturing inflation during the first quarter of 2004-05. High domestic and international coal prices and higher iron ore prices have put an additional upward pressure on steel prices (which is a major constituent of basic metals group). But global commodity prices are expected to soften. In addition, the government has reduced the excise and customs duties on commodities like oil, metals and sugar, which will result in lower prices. Moreover, the base effect will come to play from September onwards, softening the rate of inflation to some extent.
Average WPI-All commodities
(per cent)
7.0

Figure 1

Weekly WPI inflation
(per cent) 10.00 9.00

Figure 2

6.0

8.00 7.00 6.00 5.00 4.00

5.0

4.0

3.00 2.00

3.0

1.00 06/01/2001 06/04/2001 06/07/2001 06/10/2001 06/01/2002 06/04/2002 06/07/2002 06/10/2002 06/01/2003 06/04/2003 06/07/2003 06/10/2003 06/01/2004 06/04/2004 06/07/2004 0.00

2.0

2001-02

2002-03

2003-04

2004-05 E

2005-06 E

Source: CCER

Source: CCER

In 2003-04, average inflation was high at around 5.5 per cent, compared to 3.4 per cent in 2002-03 and 3.6 per cent in 2001-02. This was largely due to the rising inflationary trends in the second half of the financial year, largely due to rising manufacturing sector prices. Taking all these factors into consideration, CCER has forecast the average inflation for 200405 to be in the range of 6.0-6.5 per cent and nearly 5.0-5.5 per cent in 2005-06. For more details on inflation, please refer to CRISIL's EcoView of August 2004.

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Yields and cost of scheduled commercial banks
Yields & costs of scheduled commercial banks
(Per cent) Yield on advances (i) Yield on investments (ii) Yield on AFCB (iii) Cost of deposits (iv) Cost of borrowings (v) Interest Cost on FB (vi) Spreads (iii - vi) E: Estimate; F: Forecast AFCB: Average Funds in Carry Business FB: Funds Borrowed Source: CRIS INFAC estimates 12.30 12.05 11.15 8.03 11.59 7.96 3.19 11.71 11.85 10.77 7.68 11.73 7.68 3.10 11.46 11.28 10.61 7.35 12.32 7.41 3.19 10.19 10.75 9.88 7.14 8.53 7.06 2.82 9.93 9.80 9.52 6.46 11.13 6.63 2.89 9.37 8.49 8.78 5.82 9.80 5.91 2.87 9.32 8.07 8.47 5.59 9.58 5.67 2.80

Table 5
9.69 7.85 8.56 5.76 9.83 5.84 2.72

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F

Spreads Spreads are defined as the difference between the yield on carry business and the cost of borrowings. (The yield on carry business is the ratio of the total interest earned to the average funds deployed in the carry business. Carry business is the total funds deployed, excluding investments in shares, subsidiaries and others.) Generally, in an increasing interest rate regime, both yields and costs go up; conversely, in a declining interest rate scenario, both yields and costs go down. However, in a declining interest rate regime, the rate of decline in yields is faster than the rate of decline in costs. The converse is also true in a rising interest rate regime. We expect the interest rates to go up from 2004-05. The yield on carry business is mainly driven by the yield on investments and the yield on advances. Going forward, we expect the yield on investments to fall, despite an increase in the rate of interest, as securities are still being re-priced from historically higher interest rates to the relatively lower rates that are prevalent now. This is putting pressure on the yield on carry business and, in turn, on spreads. The spreads of the scheduled commercial banks have fallen from 3.19 per cent in 1998-99 to 2.89 per cent in 2002-03. They are expected to fall by an additional 0.17 percentage points to reach a level of 2.72 per cent in 2005-06. As has been explained in earlier sections, the developments pertaining to FCI would reduce the spreads for 2004-05 by 8.5 basis points (annualised) from an estimated 2.80 per cent to 2.72 per cent and the reduction of the interest rate offered on CRR deposits will further reduce the spreads by 2 bps (annualised) from 2.72 per cent to 2.70 per cent. We have not factored these developments in our projections. Hence, the combined effected of these developments is estimated to around 10 bps. Yield on carry business: The yield on carry business dropped to 9.52 per cent in March 2003 from 11.15 per cent in March 1999. As noted earlier, the yield on carry business is mainly influenced by the yield on advances and yield on investments. The continuous drop in the yield on carry business during this period was on account of the drop in both the yield on advances and yield on investments. CRIS INFAC expects the yield on carry business to drop sharply to 8.47 per cent in March 2005, but rise again to 8.56 per cent in March 2006. However, the rise will not be in line with the increase in interest rates because the yield on investments will continue to fall.
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Yield on advances 40 per cent of loans and advances are of short-term duration:
Maturity profile of loans and advances of scheduled commercial banks
(Per cent) <1 40.5 41.6 42.9 40.8 40.8 Years between 1 & 3 38.1 38.4 31.8 33.4 33.4 Between 3 & 5 11.7 7.4 11.2 11.1 11.1

Table 6
Above 5 9.7 12.6 14.1 14.7 14.7

2000 2001 2002 2003 2004 P

Source: RBI and CRIS INFAC estimates

Banks have predominantly been providers of working capital finance to the industry, which is reviewed and renewed every year and hence classified in the 'less-than-1-year' maturity bucket. This is indicated by a steady percentage of advances, approximately 40 per cent, being classified in the 'less-than-1-year' maturity bucket. With the merger of ICICI Ltd with ICICI Bank, the advances classified under the 'above-5-year' maturity bucket have increased from 9.7 per cent in 1999-00 to 14.1 per cent in 2001-02. Moreover, banks have started focusing on retail finance, which has also influenced the increase in the share of advances classified under various buckets above 1 year. The retail finance loans are generally in the nature of term loans, which have tenures of more than 3 years.
Yield on advance portfolio vis-a-vis benchmark 3-year G-Sec
(per cent) 14.0 12.3 12.0 11.4 10.0 10.6 10.1 7.5 6.2 4.8 5.3 4.0 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P 6.1 11.7 11.5 10.2 9.9 9.4 9.7

Figure 3

9.3

8.0

6.0

yield on advance portfolio

benchmark 3-year G-sec yields

E: Expected; P: Projected Source: CRIS INFAC

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The above graph compares the relationship between the average yield earned by the banks on their advance portfolio vis-à-vis the movement of the yield on the 3-year government securities. Based on the average duration of the loans and advances portfolio of scheduled commercial banks, we feel that the 3-year G-Sec paper is representative of the general interest rate scenario. Over the period 1999-2000 to 2002-2003, the yield on advances had fallen continuously with the general fall in the interest rates. Yield on advances dropped from 11.7 per cent in 199900 to 9.9 per cent in 2002-03, while the yield on the 3-year benchmark G-Sec dropped from 10.6 per cent in 1999-00 to 6.2 per cent in 2002-03. As per our study of the maturity profile of loans and advances, it is estimated that in any particular year, that year's disbursements accounted for about 48-50 per cent of the outstanding loans and advance portfolio. This indicated that every year approximately 50-52 per cent of the bank's loan yielded a higher rate of interest than the interest rates prevailing in that year. Further, the banks had not reduced their lending rate in line with drop in the interest rates. These factors led to a slower drop in the yield on advances vis-à-vis costs. With the continuing slide of the interest rate during 2003-04, we estimate the yield on advances to have declined to 9.4 per cent. The 3-year G-Sec yield is estimated to have dropped to its lowest level of 4.8 per cent in 2003-04. With the hardening of interest rates during 200405, banks are expected to start hiking the interest rate on the incremental advances, both fixed and floating, which would help in increasing the yields on advances. But, we expect the yield on advances to drop marginally to its lowest level of 9.3 per cent in 2004-05 before rising to 9.7 per cent in 2005-06, in spite of the increase in the interest rate, because part of the portfolio earning a higher yield (contracted at higher rates compared to prevailing rates) is getting re-priced at a comparatively lower rate of interest. However, in the subsequent years, as more advances get re-priced at higher interest rates, the yield on advances will go up. Yield on investments Maturity profile of investments

Maturity profile of investments of scheduled commercial banks
Per cent 2002 2003 2004 P <1 17.0 17.0 18.1 between 1 & 3 16.9 15.9 15.0 Years Between 3 & 5 17.3 14.3 13.8

Table 7
Above 5 51.1 52.0 53.1

Source: RBI and CRIS INFAC estimates

The above table indicates that almost two-thirds of the investment portfolio is more than 3 years.

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Yield on Investments

Yield on investment portfolio vis-a-vis benchmark 5-year G-sec yield
(per cent) 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 1999 2000 2001 2002 2003 2004 E 2005 P 7.7 6.4 4.9 5.6 12.0 11.7 11.8 11.3 10.3

Fig 4

10.7 9.8 8.5 8.1

10.9

7.8 6.5

2006 P

yield on investment portfolio

benchmark 5-year G-sec yields

E: Expected; P: Projected Source: CRIS INFAC

The above graph compares the relationship between the average yield earned by the banks on their investment portfolio vis-à-vis the movement of the yield on the 5-year government securities. Based on the average duration of the loans and advances portfolio of scheduled commercial banks, we feel that the 5-year G-Sec paper is representative of the general interest rate scenario. Assuming the maturity profile of investments to remain the same, yield on investments to have fallen sharply to 8.5 per cent during in 2002-2003. However, in the subsequent years, the decline would to the fall in 2004-05, as the incremental investments would get CRIS INFAC estimates the 2003-04 from 9.8 per cent be marginal in comparison invested at higher yields.

As per the maturity profile of investments as in March 2003, approximately 30 per cent of the outstanding investments portfolio is getting re-priced every year at the prevailing interest rates. Till the mid-1990s, interest rates were very high and stable. But then the interest rate started falling. However, as only 30 per cent of the outstanding investments are re-priced every year, only incremental investments are at new rates, hence the impact of falling interest rates would come with a lag effect. The average yield of the benchmark 10-year G-Sec, which was quoting 12.04 per cent in 1997-98, fell to 5.31 per cent in 2002-03. The interest rates have started to rise from such low levels. But the securities are still being re-priced from higher interest rates to comparatively lower interest rates, hence the yield would continue to fall. However, the net yield, although it will continue to decline, will drop less significantly in 2005-06, due to a combination of factors: the reduction in the percentage of securities being re-priced at comparatively lower rates, and some short end securities being re priced at higher interest rate. Hence, the yield will continue to fall until a substantial portion of the old investments is re-priced at higher rates. Beyond that, the yield will start increasing if the interest rates continue to rise. 44
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However, with rising interest rates, banks will try to reduce the duration of the investment portfolio by moving to the short end of the curve to avoid losses driven by higher interest rates. Interest cost The average interest cost of the scheduled commercial banks dropped to 6.63 per cent in March 2003 from 7.96 per cent in March 1999. The drop in the interest cost has been on account of the drop in both the cost of deposits and the cost of borrowings. CRIS INFAC estimates that interest cost will fall to 5.84 per cent in March 2006, after touching a low of 5.67 per cent in March 2005. The drop in the interest cost will be less than that on the yield on carry business, primarily because of slower drop in the cost of deposits. Cost of deposits Maturity profile of term deposits
Maturity profile of term deposits of scheduled commercial banks
Per cent <1 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 P 27.1 28.9 31.1 34.8 36.2 36.2 between 1 & 2 22.5 22.6 22.3 22.7 22.3 22.3 Years Between 2 & 3 15.8 15.6 14.9 13.7 13.5 13.5 Between 3 & 5 22.7 22.1 20.9 19.0 18.7 18.7 Above 5 11.8 10.8 10.7 9.8 9.4 9.2

Table 8

Source: RBI and CRIS INFAC

The maturity profile of term deposits is likely to remain stable, with around 36 per cent of the portfolio expected to mature every year. With interest rates moving southwards, banks had reduced the interest rates offered on term deposits and also reduced the spreads between the interest rate offered on the long tenure and short tenure deposits, which led to an increase in the share of deposits classified under up to 2-year maturity bucket. Going forward, in spite of the expected jump in the interest rate, banks will desist from making an immediate upward revision in the interest rate in the near future. But as the liquidity pressure mounts, they will start increasing the spread between the long tenure and short tenure deposit rates, which is likely to have impact on term deposits and, thereby, on its maturity profile.

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Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield

Average cost of deposits

Yield on deposits portfolio vis-a-vis benchmark 2-year G-Sec yield Figure 5
(per cent) 12.0 11.0 10.0 9.0 8.0 7.0 6.0 5.0 4.0 1999 2000 2001 2002 2003 4.7 2004 E

11.2 10.5 10.0

8.0

7.7 7.4

7.4 7.1 6.1 6.5 5.8 5.6 5.1 2005 P 2006 P 5.8 5.8

Yield on deposits portfolio

Benchmark 2-year G-sec yield

E: Expected; P: Projected Source: CRIS INFAC

The above graph compares the relationship between the average interest cost the banks pay on their deposits portfolio vis-à-vis the movement of the yield on the 2-year government securities. Based on the average duration of the deposits portfolio of the scheduled commercial banks, we feel the 2-year G-Sec paper is representative of the general interest rate scenario. Term deposits constitute around 65 per cent of total deposits. Further, as per the maturity profile of term deposits as on March 31, 2003, approximately 42 per cent of the outstanding deposits were re-priced. We do not expect any material change in the maturity pattern during 200304 to 2005-06. Only 30 per cent of the term deposits outstanding as on March 31, 2003 are maturing after 3 years and, hence, would get re-priced then, by when interest rates will already be high; the remaining 70 per cent would have re-priced much earlier. The yield on deposits had been falling consistently in line with the decline in the interest rates, but the drop is not as steep as that observed in government securities, indicating that deposits are generally showing a low elasticity to interest rates. The average cost of deposits had dropped from 8.0 per cent in 1998-99 to 6.5 per cent in 2002-03, while the yield on the 2-year benchmark G-Sec dropped from 11.2 per cent in 1998-99 to 6.5 per cent in 2002-03. We expect the average cost of deposits to fall further to 5.8 per cent in 2003-04, as compared to 6.5 per cent in 2002-03. The benefit of the drop in interest rate has been coming with a lag effect, driven by the maturity profile of the deposits. The other components of deposits, both savings account (interest rate on the same are administered) and current account, are not very sensitive to the interest rate movement. CRIS INFAC expects the cost of deposits to drop further in 2003-04 and 2004-05 to 5.8 per cent and 5.6 per cent, respectively. It will then rise marginally to 5.8 per cent in 2005-06

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due to the higher incremental pricing of the deposits. We expect the cost of deposits to rise further with the hardening of interest rates, but the rise would not be very steep as the interest rates are not expected to touch the historical highs prevailing in the late 1990s, and also because the cost of deposits have low elasticity to interest rates. Cost of borrowings Maturity profile of borrowings
Maturity profile of borrowings of scheduled commercial banks
Per cent <1 2002 2003 2004 P 63.1 71.7 67.4 between 1 & 3 20.2 20.2 20.8 Years Between 3 & 5 11.9 11.9 3.4 Above 5 4.9 4.9 4.1

Table 9

Source: RBI and CRIS INFAC estimates

Most of the borrowings raised by the banks are for the purpose of tying up the short-term liquidity mismatches and are, hence, generally of a short-term nature. The above table validates this; almost 67-70 per cent of the borrowings of the scheduled commercial banks are classified in the less than 1-year maturity bucket. Essentially, almost 70 per cent of the outstanding borrowings of the bank are re-priced at the prevailing interest rate. With such a maturity profile, the banks are likely to take a hit in a rising interest rate scenario. But borrowings constitute only 5 to 6 per cent of the total liability, hence there will not be any appreciable impact. Keeping in view the main purpose for which borrowings are raised, CRIS INFAC expects the same maturity profile to continue during 2003-04 to 2005-06. Average cost of borrowings
Average cost of borrowings of scheduled commercial banks
(Per cent) Including ICICI Bank Excluding ICICI Bank E: Estimated; F: Forecast Source: CRIS INFAC 1998-99 11.6 11.5 1999-00 11.7 11.6 2000-01 12.3 12.3 2001-02 8.5 11.8 2002-03 2003-04 E 2004-05 F 11.1 9.8 9.8 9.6

Table 10
2005-06 F 9.8

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47

With the liquidity overhang in the system, banks had reduced their borrowings. The drop in the interest rates also helped banks to cut their cost of borrowings, which is evident with the cost of borrowings (excluding ICICI) dropping to 9.8 per cent as in March 2003 from 12.3 per cent as in March 2001. We expect the cost of borrowings to fall in sharply in 2003-04 (inclusive of ICICI Bank) to 9.8 per cent from 11.1 per cent in 2002-03, It is expected to drop further to 9.6 per cent in 2004-05, but then go up to 9.8 per cent in 2005-06. The impact of the rise in interest rates is seen to be faster in the case of borrowings.

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3.0

Profit and loss account

Profit and loss account
(Rs billion) Interest earned Interest/discount on advances/bills Income on investments Other income Total income Interest expended Gross profit Operating profit Net profit Net profit margins (per cent) (incldg profit on sale of inv) P: Projected
1

Table 1
2000 2001 2002 2003 2004 P 2005 P 2006 P CAGR CAGR CAGR (2000 - 2003) (2000-2003) (2003 - 2006)
1

1,034.4 1,195.7 1,321.7 1,458.8 1,507.6 1,650.5 1,895.0 489.2 454.7 160.9 718.8 476.5 190.1 78.0 1.8 570.9 519.9 173.7 811.2 558.2 204.8 71.0 1.6 613.3 590.1 244.3 908.5 657.5 305.9 121.9 2.0 707.0 640.6 320.1 969.2 809.7 413.2 176.3 2.4 764.1 638.1 372.7 889.2 1,098.8 662.3 311.2 691.9 293.9

12.1 13.1 12.1 25.8 14.2 10.5 19.3 29.5 31.2

9.9 10.0 10.7 24.4 12.1 7.7

9.1 15.8 2.6 -2.8 7.2 7.0 7.3 6.0 10.3

1,195.3 1,369.4 1,565.9 1,778.9 1,880.4 1,961.7 2,188.9 955.5 1,026.0 1,187.3 924.9 487.4 191.7 2.5 935.7 1,001.6 462.2 189.2 2.0 491.6 236.4 1.8

Excluding ICICI Bank Source: RBI & CRIS INFAC Estimates

Interest earned CRIS INFAC estimates the total interest income to grow at a CAGR of 9.1 per cent during 2003-04 to 2005-06, with interest on advances expected to grow at a CAGR of 15.8 per cent. Between 2000-01 and 2002-03, the total interest income grew at a CAGR of 12.1 per cent (9.9 per cent), primarily led by 13.1 per cent (10.0 per cent) CAGR in the interest on advances. Interest on loans and advances The interest income from loans & advances is expected to grow at a CAGR of 15.8 per cent for the period 2003-04 to 2005-06, in comparison to 13.1 per cent (10.0 per cent) for the period 2000-01 to 2002-03. During the period 2000-01 to 2002-03, although advances grew by a CAGR of 18.6 per cent, the interest income on advances grew at a much lower figure of 13.1 per cent CAGR. This was due to general fall in the interest rates (yield on loans and advances dropped from 11.7 per cent in 1999-2000 to 9.9 per cent in 2002-03). The 13.1 per cent growth during 2000-01 to 2002-03 was led by a strong growth in the outstanding retail credit, which grew by around 28 per cent CAGR in the same period. During 2003-04 to 2005-06, advances are expected to grow by a CAGR of 17.4 per cent, while the interest on the loans and advances is estimated to grow at 15.8 per cent CAGR. The yield on loans and advances is expected to drop marginally from 9.9 per cent for 2002-03 to 9.7 per cent for 2005-06.

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49

Interest on investments CRIS INFAC estimates investments to grow at a CAGR of 8.8 per cent during 2003-2006 while the interest on investments is expected to grow only at a CAGR of 2.6 per cent. During the same period, the yield on investments is expected to fall to 7.8 per cent by end-March 2006 from 9.8 per cent as of end-March 2003. From 2000-01 to 2002-03, the interest on investment grew by 12.1 per cent (10.7 per cent), though the investments recorded a growth of 19 per cent CAGR. This is due to general drop in the interest rates. (The yield on investments dropped to 9.8 per cent by March 2003 from 11.8 per cent as of end-March 2000.) Interest expended Total interest expended is expected to grow at a CAGR of 7.2 per cent from 2003-04 to 2005-06, with interest on deposits expected to grow at 8.1 per cent, while the other interest component is expected to show a negative growth rate of 2.3 per cent. Interest on deposits CRIS INFAC expects total time and demand deposits to grow at 12.4 per cent CAGR during 2003-04 to 2005-06, while the interest on deposits is seen growing by only 8.1 per cent CAGR during the same period. The cost of deposits is expected to drop to 5.8 per cent by March 2006, from 6.5 per cent at March 2003. During 2000-01 to 2002-03, the interest on deposits grew at a rate of 8.8 per cent, though the deposits grew by 14.6 per cent. This is primarily due to the fall in the cost of deposits in line with the prevailing soft interest rate scenario. The cost of deposits dropped from 7.7 per cent as of March 2000 to 6.5 per cent as of March 2003. Interest on borrowings
Interest on borrowings of scheduled commercial banks
(Rs billion) Interest on total borrowings (All SCBs) Interest on total borrowings (ICICI Bank) Interest on total borrowings (All SCBs excluding ICICI Bank) Source: RBI, Statistical tables relating to Banks in India 42.3 0.5 41.8 54.6 0.9 53.7 66.9 1.1 65.7 73.0 1.7 71.3

Table 2
112.9 54.6 58.3

1998-99 1999-00 2000-01 2001-02 2002-03

From 2000-01 to 2002-03, the interest on borrowings recorded a CAGR of 27.4 per cent, although borrowings grew at a CAGR of 22.9 per cent. The cost of borrowings dropped from 11.7 per cent as of March 2000 to 11.1 per cent as of March 2003. The interest on borrowings is expected to show a negative growth of 2.3 per cent during 200304 to 2005-06.

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Fee-based income: Core and non-core Drop in treasury profits to hit other income growth

Non-interest income - break-up
(Rs billion)

Table 3
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

Commission, exchange and brokerage Net profit (loss) on sale of investments Others Total non-interest income
(Rs billion)

66 19 38 123

75 9 45 129

83 30 48 161

89 32 53 174

93 94 57 244

107 143 71 320

2003-04 E 2004-05 F

2005-06 F

CAGR CAGR 2000-03 2003-06 (per cent) (per cent) 9 68 14 26 12 -100 16 -7

Commission, exchange and brokerage Net profit (loss) on sale of investments Others Total non-interest income E: Estimate; F: Forecast Source: RBI and CRIS INFAC

127 160 86 373

138 60 98 295

149 0 110 258

Non-interest income is a source of incremental revenues for banks and helps in maintaining a stable bottomline, as it is not sensitive to interest rates and is, hence, less volatile. Banks generate fee-based income through the issuance of guarantees, letters of credit, drafts etc, and by other income in the form of exchange profits, processing fees, income from demat activity, income credit cards, and other routine banking business. Banks have started acting as corporate agents of various mutual funds and insurance companies by distributing their products through their branch networks. This gives them an opportunity to earn other income in the form of commissions. Further, banks are also contemplating foraying into activities such as advising clients on fund management and other value-added services. This will give them an opportunity to generate fee-based income in the form of commission and brokerage Another component of other income is profit on sale of investments. But with interest rates hardening, the profit from sale of investments will come down. CRIS INFAC expects non-interest income (excluding profit on sale of investments) to grow at CAGR of 13.0 per cent, driven by the greater thrust of banks on core fee-based income. The drastic fall that is expected in profits on sale of investments will take its toll on total other income, which is expected to a show a negative CAGR of 7 per cent during 2003-04 to 200506.

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52
Table 4
Unit Rs crore Rs crore Rs crore Rs crore Years Per cent Per cent Basis points Rs crore Rs crore 423 10,816 19,170 25,381 64,278 62,315 495 2,810 1,374 Rs crore 871 2,977 3,164 9,334 14,262 11,687 10,909 8,880 45,421 10,925 (150) (114) (75) (303) (60) (114) 26,528 16,000 2,581 75,425 11.68 10.55 9.80 6.76 6.16 5.02 13.19 11.68 10.55 9.80 6.76 6.16 4-5 4-5 4-5 4-5 4-5 4-5 4-5 5.02 6.36 134 (33,904) 3,000 (3,499) 35,022 230,687 285,777 350,593 410,362 532,533 653,244 715,479 31,117 40,794 55,090 64,816 59,769 122,171 120,711 31,117 189,893 230,687 285,777 350,593 410,362 532,533 653,244 715,479 11,202 44,809 771,490 4-5 6.36 6.67 31 (8,619) 0 (380) 26,023 1998-99 1999-2000 2000-01 2001-02 2002-03 E 2003-04 E 2004-05P 2005-06P

Profit on sale of investments Unbooked profit on investments to reduce dramatically

SCBs: Unbooked appreciation

Particulars

Op balance of investments

Net addition/(deletion) (fixed rate bonds)

Net addition/(deletion) (floating rate bonds)

Closing balance of investments

Duration of the investment portfolio

Opening duration matched average G-Sec yields

Closing duration matched average G-Sec yields (March 31)

Change in average G-Sec yields

Appreciation/(losses) on investments for the year

Income from sale of investments

Appreciation/(losses) earned on the opening unbooked appreciation Rs crore

Unbooked appreciation/(losses) at the end of the year

E: Estimates; P: Projections

Notes

1) CRIS INFAC has assumed repricing of the entire investment portfolio to be in line with G-Sec's repricing

2) Unbooked appreciation could be marginally higher than our estimates

3) Assumed that the SCB's investment portfolio has consistently remained in 4-5 year duration bucket

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Source: RBI and CRIS INFAC

In the last 3 years, interest rates fell by more than 550 basis points in a falling interest rates scenario. This enabled scheduled commercial banks to book huge gains, estimated at around Rs. 390.96 billion in the last 3 years (2000-01 to 2003-04), on their investment portfolio. As of March 2004, banks had unbooked profits of Rs 754.25 billion on their investment portfolio of government securities (which stood at Rs 6,532.4 billion). In 2004-05, we expect banks to book profits to the tune of 10 per cent of the unbooked profits. CRIS INFAC expects the yield on 5 year G-sec to rise by 165 bps to 6.67 per cent by the end of March 2006 from a level of 5.02 per cent as of March 2004. By this time, the investment book of SCBs is expected to rise by Rs 1,182 billion to Rs 7,715 billion. In recent times, the Reserve Bank of India (RBI) has been increasingly issuing floating rate long dated securities as part of the government of India's (GOI) borrowing programme. Between April 1, 2004 and September 10, 2004, the RBI raised Rs 540 billion through long dated GOI securities, of which approximately Rs 220 billion, nearly 40 per cent of the total debt raised, was through floating rate securities. Going forward, we expect this ratio to increase further. CRIS INFAC estimates that 50 per cent of RBI's borrowing during the financial year 2004-05 will be through floating rate government securities. This ratio is expected to rise further to 80 per cent in 2005-06. The floating rate bonds are generally priced as a 1-year security, hence the movement in the interest rate would have a lesser impact on the value of the security. Consequently, we expect the unbooked profit of the investment portfolio to provide a cushion of a further 83 basis points increase in interest rates, beyond the level prevailing by end of March 2006 (6.67 per cent). Thus, banks' investment portfolio can sustain an interest rate rise of 7.5 per cent on the 5 year G-Sec, which works out an increase of 248 basis points from an interest rate of 5.02 per cent prevailing in March 2004.

Prudential norm on classification of investment portfolio of banks

Box 1

A recent notification from the RBI regarding classification of the investment portfolio of banks allows the latter to exceed the present limit of 25 per cent of total investments under the held-to-maturity (HTM) category provided the excess comprises only of statutory liquid ratio (SLR) securities, and the total SLR securities held in the HTM category is not more than 25 per cent of their demand and time liabilities (DTL). Earlier, banks were allowed to shift SLR securities to the HTM category once in an accounting year. Under the new notification, banks will be allowed to shift SLR securities to the HTM category one more time (in addition to the one already allowed) any time during the current accounting year. Such shifting has to be done at the lower of the acquisition cost/ book value/market value on the date of transfer. The bank should fully provide for the depreciation, if any, on such a transfer. No fresh non-SLR securities are permitted to be included under the HTM category, while those already held as a part of the HTM category will continue. CRIS INFAC is of the view that this notification will help banks in reducing the negative impact of the rise in interest rates on their investment portfolio and help them postponing booking losses against the valuation of the portfolio. This step would have a positive impact on the bank's profit & loss account.

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Operating expenses to grow 8.8 per cent Wage cost to grow at 6.83 per cent

Employee cost of scheduled commercial banks
(Rs billion) Total staff Total employee cost Total business (deposits + advances) Business per empoyee (Rs in million) Offices Business per office n.a.: Not available Source: RBI, Statistical tables relating to Banks in India Basis Nos Nos Rs in billion Rs in million Nos Rs in million 1998 148 10,000 1.5 9.8 66,400 151 1999 175 11,780 1.5 11.6 67,453 175 2000 194 13,875 1.4 13.8 67,906 204 2001 243 16,343 1.5 17.6 67,896 241 2002 231 1.2 21.2 280 1,023,971 1,017,490 1,006,631 926,518 901,288

Table 5
2003 n.a. 250 1.2 316

19,107 21,644

Employee cost as percentage of business per cent

68,174 68,540

Since 1998, the number of employees in scheduled commercial banks has fallen by 12 per cent. During the same period, there has been a rapid improvement in the productivity in the banking system. This is evident from the steep increase in the business per employee, which stood at Rs 21.2 million in 2002 compared to Rs 9.8 million in 1998. During 2000-01, 26 out of the 27 public sector banks (PSBs) had introduced voluntary retirement schemes. RBI had permitted PSBs to amortise VRS-related expenditure over a period of 5 years. As on March 31, 2003, the total cost of the scheme amounted to Rs 123 billion, and the balance of unamortised amount was Rs 69.47 billion as on March 31, 2003, to be amortised over 2-3 years. From 2000-01 to 2003-04, staff costs grew by 8.89 per cent, but the staff cost net of VRS recorded a CAGR of 5.5 per cent. During this period, the business of the scheduled commercial banks grew at a CAGR of 16 per cent. With greater automation, the productivity can improve further. CRIS INFAC expects the staff cost to grow at a CAGR of 6.78 per cent from 2003-04 to 2005-06. Other expenses to rise because of increased automation and marketing CRIS INFAC estimates other expenses (excluding staff cost) to grow at a CAGR of 12 per cent during 2003-04 to 2005-06, in comparison with a 16 per cent CAGR (2000-01 to 2002-03) in the previous corresponding 3-year period. Printing and stationery, advertisement, postage and depreciation are the main drivers of growth in other expenses. Banks are aggressively advertising their products through various channels of communication, which will increase its outgo on this head. Moreover, with increasing automation in banking operations, and the usage of ATMs and Internet as channels for distribution of products, the charge on account of depreciation and rent is also likely to go up. Over the years, due to the pressure on spreads, banks had controlled costs by rationalising operations. Additionally, they will have to focus on operating expenses in order to maintain their profitability.

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Provision & contingencies

Provisions and contingencies of scheduled commercial banks
(Rs billion) Provision for NPA Provision for standard assets Provision for tax Other provisions Total Source: RBI and CRIS INFAC Estimates 2002-03 132 3 85 17 237 2003-04 P 178 3 97 17 296 2004-05 P 159 4 89 17 270

Table 6
2005-06 P 135 5 91 17 248

Provision and contingencies can be broadly divided into three categories: Provision for NPA and standard assets, provision for taxation, and other provisions. In the past 3 years, banks have increased their provisioning for non-performing assets. Although improving their loan portfolio was one of the key motives, the falling interest rate scenario and the corresponding increase in profit on sale of investments were key factors that led to this. CRIS INFAC estimates that banks will make higher provision for NPAs in 2003-04, but the same will decline in the subsequent years. As the banks have already made additional provisions in the earlier years, the incremental provisions come down in the subsequent years. Further, we also expect an improvement in the asset quality due to the strengthening of the credit management system in banks. This will further reduce the provision requirements with the reversal of excess provisions. As per norms, the banks have to make a provision of 0.25 per cent on standard assets. We believe that the provision for standard assets will grow at 13.3 per cent per over the next 3 years, with the expected improvement in the asset quality and rising share of standard assets in the total advances.

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4.0

Profitability

Net profitability margin highly susceptible to changes in operating expenses
Net profitability margin (NPM)
Interest yield on carry business (i) Interest cost (ii) Spreads ( iii = i - ii ) Op. Expenses/average funds deployed (iv) 11.15 7.96 3.19 3.15 10.77 7.68 3.10 2.91 10.61 7.41 3.19 3.06 9.88 7.06 2.82 2.56 9.52 6.63 2.89 2.53 8.78 5.91 2.87 2.50 8.47 5.67 2.80 2.40 1.04 1.44 0.45 1.90

Table 1
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 F 2005-06 F 8.56 5.84 2.72 2.28 1.01 1.45 0.15 1.60

Core fee-based income/average funds deployed (v) 1.32 1.20 1.10 0.98 1.00 1.06 Net profitability margin (vi = iii - iv +v) 1.36 1.39 1.24 1.24 1.36 1.44 Other Income (vii) 0.22 0.44 0.40 0.80 1.04 1.06 Total profit margin (viii = vi + vii) 1.59 1.82 1.64 2.04 2.40 2.50 F: Forecast; E: Estimates Note Carry business: Funds deployed less investment in shares, investments in subsidiaries and other investments. Other profit on sale of investments Source: CRIS INFAC

income, includes

Although spreads will decline, CRIS INFAC is of the opinion that the net profitability margins (NPM) of scheduled commercial banks will go up from 1.36 per cent in March 2003 to 1.45 per cent by March 2006. Going forward, we expect banks to continue to rein in their costs and bring the operating cost ratio (operating expenses/average funds deployed) down to 2.28 per cent by March 2006. With spreads still under pressure, we expect banks to retain their focus on curbing operating costs by streamlining and restructuring the operational processes, which will further reduce the operating expense cost ratio to 2.28 per cent in 2005-06, from 2.53 per cent in 2003-04. The net profitability margin of scheduled commercial banks has remained flat at 1.36 per cent from 1998-99 to 2002-03, despite a decline in the contribution of core fee-based income (this is actually a ratio - core fee-based income/average funds deployed) to the NPM from 97 per cent in 1998-99 to 74 per cent in 2002-03. This has been due to the banks' focus on controlling their operating expenses, which has led to a drop in the operating expense ratio from 3.15 per cent in 1998-99 to 2.53 per cent in 2002-03. As remarked earlier, we expect the NPM to increase to 1.45 per cent in 2005-06, as banks continue their focus on controlling operating costs, which will reduce the operating expense ratio to 2.28 per cent by 2005-06. However, the stable core-fee based income ratio will restrict the rise in NPM to some extent. Fee-based income is a high margin revenue stream and provides stability to the bottomline due to its insensitivity to interest rate movement. Although the share of core fee-based income in NPM shrank to 74 per cent in 2002-03, from 89 per cent in 2000-01, it still remains a major contributor. In future, we expect this declining trend to continue, reducing the share of core-fee based income from 73 per cent in end-March 2004 to 69 per cent by end-March 2006. Although the share of core fee-based income is expected to fall, it will still help banks to maintain a steady bottomline as it is insensitive to interest rate changes and forms a large component of the NPM.
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Net profitability margin

Box 1

CRISIL uses the net profitability margin (NPM) to measure the profitability of a lending business. In CRISIL’s opinion, the measure of profitability for a lending business should capture its ability to generate income by deploying borrowed funds. While such a measure should capture the cost of operations and core non-fund income of the business, it should not be influenced by the returns from the business funded by equity capital. In parametric definition, NPM is equivalent to the yield on the fund-based business less the cost of borrowings plus non-fund (fee) income less operating expenses.

Spreads & NPM
(per cent) 3.50

Figure 1

3.00

2.50

2.00

1.50

1.00 1999 2000 2001 Spreads 2002 NPM 2003 2004 P 2005 P 2006 P

Total profit margin

Source: CRIS INFAC

Total profit margin (including non-core fee-based income) The major component of non-core fee-based income is profit on sale of investments. With profit on sale of investments rising from 2001-02 to 2003-04, the total profit margin also began to rise, but with the expected drop in the profit on sale of investments from 2004-05, the total profit margin is seen declining to 1.01 per cent. Other key ratios

Key ratios
(Per cent) Return on assets Cost-to-income ratio (with profit on sale of investment) Cost-to-income ratio (w/o profit on sale of investment) Source: CRIS INFAC 1999 0.49 64.81 66.24 2000 0.68 60.10 64.13 2001 0.53 63.32 67.14 2002 0.77 53.47 62.48 2003 1.00 48.97 59.41 2004 0.98 47.30 57.20

Table 2
2005 0.80 51.48 55.07 2006 0.83 52.80 52.80

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The return on assets ratio, which had reached 1 per cent for March 2003, is expected to fall to 0.98 per cent for March 2004 and further to 0.80 per cent for March 2005. This drop can be attributed to the fall in other income, including profit on sale of investments, which is expected to fall with the hardening of interest rates. But the impact of the increase in interest rates on the spreads would come with a lag effect, which would then pull up the return on assets to 0.83 per cent by March 2006. The ongoing thrust of banks on controlling costs will lead to a drop in the cost-to-income ratio (without profit on sale of investments) during 2003-04 to 2005-06. The cost-to-income ratio (with profit on sale of investment) is estimated to increase due to the expected fall in the treasury profits.
Projected profit and loss account of the scheduled commercial banks
(Rs billion) Interest earned Interest/discount on advances/bills Income on Investments Other income Commission exchange and brokerage Net profit/ (loss) on sale of investments Others Total income Interest expended Interest on deposits Other interest Gross profit Operating expenses Operating profit Provisions and contingencies Provision for NPA Provision for tax Provision for standard assets Other provisions Net profit n.a.: Not available, P: Projected Source: RBI and CRIS INFAC estimates 1,034 489 455 161 83 30 48 1,195 719 664 55 477 286 190 112 n.a. n.a. n.a. n.a. 78 1,196 571 520 174 89 32 53 1,369 811 744 67 558 353 205 134 n.a. n.a. n.a. n.a. 71 1,322 613 590 244 93 94 57 1,566 908 835 73 657 352 306 184 n.a. n.a. n.a. n.a. 122 1,459 707 641 320 107 143 71 1,779 969 856 113 810 397 413 237 132 85 3 17 176 1,508 764 638 373 127 160 86 1,880 955 865 91 925 437 487 296 178 97 3 17 192 1,651 889 662 295 138 60 98 1,946 1,026 932 94 920 474 446 270 159 89 4 17 177

Table 3
1,895 1,099 692 258 149 0 110 2,153 1,187 1,082 105 966 510 456 248 135 91 5 17 208

1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P

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59

Projected balance sheet of all scheduled commercial banks
(Rs billion) Liabilities Capital Reserve and surplus Deposits Demand deposits Savings deposits Term deposits Borrowings Other liabilities and provisions Total liabilities Assets Cash and balances with RBI Balances with bank and money call and short notice Investments Advances Fixed assets Other assets Total assets P: Projected Source: RBI and CRIS INFAC Estimates 869 961 4,216 4,559 155 765 11,525 863 1,246 5,007 5,407 163 759 13,446 899 1,385 5,975 6,635 202 827 15,923 891 900 7,100 7,599 203 890 17,585 943 976 7,934 8,703 205 897 19,658 998 1,121 8,484 10,372 207 905 22,087 206 447 9,325 1,309 2,013 6,003 491 1,057 11,525 211 500 10,935 1,415 2,335 7,185 595 1,204 13,446 236 646 12,472 1,550 2,734 8,188 1,117 1,452 15,923 236 782 14,045 1,668 3,228 9,149 912 1,608 17,584 246 951 15,688 1,818 3,761 10,109 945 1,828 19,658 250 1,101 17,658 1,973 4,362 11,323 1,023 2,055 22,087

Table 4

1999-00 2000-01 2001-02 2002-03 2003-04 E 2004-05 P 2005-06 P 254 1,276 19,929 2,131 5,060 12,738 1,122 2,337 24,919

1,056 1,289 9,150 12,300 210 914 24,919

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State of the industry
Sections
1.0 Overview 61 - Spreads 61 - Net profitability margin (NPM) 62 - Outlook 63 - Business 64 - Investments 65 - Asset quality 66 - Overall assessment 67 Business 69 - Other scheduled commercial banks clocked the highest growth 69 - Advances 71 - Deposits 76 - Investments 79 - Non-performing assets 82 Spreads & net profitability margin 89 - Spreads 89 - Net profitability margin (NPM) 94 Profit and loss account 99 - Total interest income 99 - Interest expended 101 Other income 103 - Other income (excluding profit on sale of investment) as per cent of total income 103 - Profit on sale of investment 106 Operating expenses 109 - Staff cost 109 - Other operating expenses (Operating expenses excluding staff cost) 113 - Cost-income ratio 115 Important ratios 121 - Credit-deposit ratio 122

2.0

3.0

4.0

5.0

6.0

7.0

Continued...

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i

...continued

Figures
1.0 01 02 03 2.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 6.0 01 02 03 04 05 06 07 08 09 7.0 01 02 Overview Net profitability margin Group-wise business of banks 1998 to 2003 Group-wise SLR Securities to NTDL Business Group-wise business of banks 1998 to 2003 Share of bank groups Advances of OSCBs Advances of OSCBs (Ex ICICI Bank) Advances of nationalised banks Advances of SBI Group Foreign banks - outstanding advances Break-up of deposits - OSCBs Total deposits - OSCBs Deposits break-up - SBI & associates Total deposits - SBI & associates Break-up of deposits - Nationalised banks Total deposits - Nationalised banks Break-up of deposits - Foreign banks Total deposits - Foreign banks Statutory liquidity ratio - excluding gold Group-wise SLR Securities to NTDL Operating expenses Group-wise share of employee cost in operating cost SBI & associates: No of employees vs cost per employee Nationalised banks: No of employees vs cost per employee OSC banks: No of employees vs cost per employee Foreign banks: No of employees vs cost per employee SBI & associates: Cost-income ratio Nationalised banks: Cost-income ratio OSC banks: Cost-income ratio Foreign banks: Cost-income ratio Important ratios Credit-deposit ratio Investment-deposit ratio 62 64 65

69 71 72 72 72 73 74 76 76 77 77 78 78 78 78 80 80

109 110 111 112 113 116 117 118 119

122 122

continued...

ii

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...continued

Tables
1.0 01 2.0 01 02 03 04 05 06 07 08 3.0 01 02 03 04 05 06 07 08 4.0 01 02 03 04 05 06 07 08 5.0 01 02 03 04 05 Overview Spreads Business Advances to the priority sector by public sector banks Advances to the priority sector by private sector banks Advances to the priority sector by foreign banks SBI & associates Nationalised banks Other SCBs Other SCBs (net of ICICI Bank) Foreign banks Spreads & net profitability margin Spreads: SBI and associates Spreads: Nationalised banks Spreads: Other scheduled commercial banks Spreads: Foreign banks NPM: Foreign banks NPM: Nationalised banks NPM: SBI and associates NPM: Other scheduled commercial banks Profit and loss account OSC Banks: Interest income SBI and associates: Total interest income Nationalised banks: Interest income Foreign banks: Interest income OSC Banks: Interest expended SBI and associates: Total interest expended Nationalised banks: Interest expended Foreign banks: Interest expended Other income Other income (ex treasury profits) as per cent of total income Core fee income as per cent of other income Core fee-based income Share of profit on sale of investments in total income Profit on sale of investments 61

75 75 75 83 84 85 85 86

89 89 90 90 94 95 96 97

99 99 100 100 101 101 101 102

103 103 104 106 106

continued...

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iii

...continued

Tables
6.0 01 7.0 01 02 03 04 Operating expenses Other operating expenses Important ratios SBI & associates Nationalised banks Other scheduled commercial banks Foreign banks 113

121 121 121 121

1.0

Overview

Spreads
Spreads
1999 SBI and assoc Nationalised banks OSCBs Foreign banks Source: CRIS INFAC 3.01 3.27 2.60 3.74 2000 2.87 3.08 2.73 4.08 2001 2.81 3.32 2.78 4.03 2002 2.52 3.11 2.01 3.30

Table 1
2003 2.58 3.29 2.00 3.35

During 1998-99 to 2002-03, only the spreads of nationalised banks improved (by 2 basis points); spreads declined in all other categories. In 2002-03, foreign banks had the highest spreads, while other scheduled commercial banks (OSCBs) had the lowest spreads. The primary reason for the drop in the spreads was the faster decline in the yield on the carry business vis-à-vis interest cost, due to the decline in interest rates. As indicated in the earlier section, the yield on carry business is mainly influenced by the yield on advances and the yield on investments. Vis-à-vis other banks, public sector banks (nationalised banks and the SBI Group), because of their historically higher exposure to long tenure securities, have seen a slower drop in the yield on investments. Private sector banks (other scheduled commercial banks) and foreign banks have comparatively lesser exposure to long tenure securities, which increases their re-pricing ratio. Foreign banks recorded the highest drop in the yield on advances. These banks have a strong presence in trade finance and foreign currency lending. Trade finance advances are generally for the short term and hence get re-priced at a faster rate. The foreign currency loans also get re-priced as they carry a floating rate of interest. These factors pulled down the yield on advances for these banks at a faster rate. However, with hardening interest rates, the yield on advances will also rise. The decline in interest rates also resulted in a drop in the cost of deposits and, in turn, in the interest cost. But, as explained in the earlier section, because of the low elasticity of cost of deposits to interest rate movement, the drop in the cost of deposits was not steep. Foreign banks recorded the highest drop in the cost of deposits on account of the increased proportion of demand deposits in the low cost deposits (low cost deposits are made up of demand deposits and savings deposits), lower reliance on deposits and funding support from their parent companies. With the hardening of interest rates, we believe that the foreign banks' loans would get repriced at a faster rate, but the expected drop in the yield on the investments would restrict the rise in the yield on carry business. But since they continue to have the lowest cost of deposits, they will be able to maintain spreads. The spreads of public sector banks are expected to be under pressure during 2003-04 to 200506, as the continued drop in the yield on investments will restrict the rise in the yield on
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carry business. Despite the hardening interest rates, their yield on investments will continue to fall on account of higher exposure to long tenure securities. The securities would get re-priced from historical higher yields to lower yields, which will lower the yield on investments. Hardening interest rates will increase the cost of deposits (albeit at a steeper rate) and cost of borrowings. The spreads of private sector banks are also expected to reduce during 2003-04 to 2005-06, due to the expected fall in the yield on investments. The yield on advances is expected to improve with the gradual increase in demand from commercial credit. As ICICI Bank continues to replace its high cost borrowings with low cost deposits, the interest cost is expected to reduce, which will restrict the drop in spreads. Net profitability margin (NPM)
Net profitability margin
3.5

Figure 1

3.0

2.5

2.0

1.5

1.0

0.5 1999 SBI & assoc 2000 Nat banks 2001 OSCBs 2002 Foreign banks 2003 All SCBs

Source: CRIS INFAC

All segments, except OSCBs, either improved their NPM or at least maintained it during 199899 to 2002-03. In 2002-03, foreign banks had the highest NPM of 2.5 per cent, followed by the public sector banks with a NPM of 2.4 per cent. OSCBs had the lowest NPM of 0.79 per cent in 2002-03. Despite the decline in spreads and a reduction in the contribution of core fee income to the NPM (measured as a proportion of core fee income ratio to the NPM) there has been an improvement in NPM. This has been on account of cost control measures adopted by the banks, especially the public sector banks, which led to drop in the operating cost ratio (operating expenses as a per cent of average funds deployed). Contrary to the industry trend, other scheduled commercial banks witnessed a jump in the contribution of core fee income ratio to NPM. Public sector banks had introduced voluntary retirement schemes (VRS), which helped them to reduce manpower cost and increase productivity. This helped the segment in improving the operating expense ratio. Foreign banks have the highest operating expense ratio amongst all the bank groups because of their higher wage structure and investments in technology and infrastructure. But high spreads and support from core fee income help them in sustaining high costs. Private 62
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sector banks are expanding their operations, hence there was a marginal saving in their operating expense ratio during 1997-98 to 2002-03. Foreign banks had the highest core fee income ratio, on account of their strong presence in trade finance, correspondent banking services, treasury management and cash management services. This provides them with an opportunity to earn fee income without taking high exposure. Public sector banks had one off the blocks in venturing average funds base led to a banks had the lowest core of the lowest core fee income ratios, because they were not quick into new business areas to generate fee income; besides, a high low core fee income ratio. Of the public sector banks, nationalised fee income ratio during 2002-03.

Private banks (OSCBs), especially the new private sector banks, were amongst the first to foray into new business areas like credit cards, depository services and third party distribution, which helped them in generating fee income. Outlook CRIS INFAC is of the view that since spreads are under pressure all banks will have to concentrate on controlling their operating expenses and find new ways of generating fee income. Since manpower accounts for more than 70 per cent of the operating expense for the public sector banks, they need to control their staff cost by either increasing productivity or controlling cost. However, with public sector banks investing in technology and introducing new product delivery platforms, their other operating expenses are estimated to rise. The operating expense ratio may come under pressure in the short run, but it will fall as the benefits of investment in technology begin to accrue. However, in the short run, the pressure on the operating expense ratio will be reduced due to the expected demand for credit from the commercial sector. We expect the core fee income ratio to continue to decline because of increased competition. CRIS INFAC expects the NPM to be marginally under pressure in the next year, but improve afterwards, with increasing spreads and savings in operating expenses. Other scheduled commercial banks, especially the new private sector banks, are expanding their operations and are in their growth stage. Hence their operating expenses will increase, and the benefits of their investment will accrue, albeit only after a while. Till then the operating expense ratio may either remain stable or increase marginally, which can put pressure on the NPM. The core fee income ratio will continue to fall, but a slower pace, because of the increase in lending to the commercial sector and also due to the forays into new business activities. Foreign banks will continue have a high NPM on account of higher spreads and a high core fee income ratio. But as competition intensifies in areas where they are strong, their spreads and core fee income will reduce. Hence, we are of the view that foreign banks will have to control their operating expenses.

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Business

Group-wise business of banks 1998 to 2003
Rs/billion 8000 7000 6000 5000 4000 3000 2000 1000 0 SBI & ass Nat banks Other SCBs

Figure 2

Foreign banks

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

Source: CRIS INFAC

The business of other scheduled commercial banks (OSCBs) grew at 22 per cent (16 per cent) CAGR from 1999-00 to 2002-03, the highest amongst all the bank segments, driven by the strong growth in advances. The growth in advances was mainly driven by the growth in the retail credit. The business of the foreign banks grew by 12.7 per cent CAGR, which is lower than the industry average and also the lowest amongst all the bank groups. Both advances and deposits grew at a comparatively slower pace, in comparison to the peer groups. For all bank groups, except for the SBI Group, business growth had been primarily driven by the higher growth in advances. The deposits of the SBI Group grew at 15.1 per cent CAGR, in comparison to a 13.6 per cent CAGR growth in advances. The business of nationalised banks increased by 14.2 per cent CAGR during 1999-00 to 200203, driven by a 17.3 per cent CAGR growth in advances. The growth in advances was driven by the increase in commercial credit, which is contrary to what was witnessed in OSCBs. The share of OSCBs in the business increased from 13 per cent in 1999-00 to 16 per cent in 2002-03, due to their aggressive expansion strategy. The low cost deposit ratio was the highest in public sector banks and the lowest in OSCBs. However, during 1997-98 to 2002-03, the low cost deposit ratio went up for the private sector banks, while it fell for public sector banks, especially the SBI Group. Foreign banks had the highest proportion of demand deposits in the low cost deposits (no interest is paid on demand deposits), which contributed towards the lower cost of deposits.

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Investments

Group-wise SLR Securities to NTDL
50.0 45.0 40.0 35.0 30.0 25.0 20.0 1997-98 1998-99 1999-00 2000-01 2001-02

Figure 3

2002-03

SBI & associates Other SCBs (ex ICICI Bank)

Natonalised banks Foreign banks

Other SCBs SLR requirement

Source: CRIS INFAC

All bank groups increased their exposure to SLR securities, mainly during 2002-03, due to the slowdown in credit offtake. While this high exposure helped almost all the groups in booking healthy profits during a period of soft interest rates, it can lead to losses during a period of hardening interest rates (due to the mark-to-market valuation of the investment portfolio). The SBI Group continuously increased its exposure to SLR securities during 1998-99 to 200203 and has the highest SLR ratio (government and approved securities as a percentage of net time and demand liabilities). With the expect hardening of interest rates, the SBI Group will suffer losses on account of the valuation of these securities (as the portfolio carries a higher proportion of securities purchased during the last 2 years). However, on account of its high exposure towards SLR securities, we believe that the portfolio will carry sufficient unbooked profits to provide a cushion against rising interest rates. Nationalised banks, unlike the SBI Group, had a stable SLR ratio during 1998-99 to 2001-02, but the ratio increased in 2002-03 (to take advantage of the soft interest scenario and book high treasury gains). CRIS INFAC believes that the investment portfolio of nationalised banks will have unbooked profits (although it may be far lower than that of the SBI Group) to protect them against rising interest rates. Hence, of the two public sector bank groups, nationalised banks will have higher losses from the valuation of the investment portfolio and sale of investments. Private sector banks and foreign banks maintained the SLR ratio in the range of 26-27 per cent during 1998-99 to 2001-02, but increased their exposure during 2002-03, when the acquisition cost of the securities was high (because of low interest rates). However, with the hardening interest rates, the losses from the valuation of investments or sale of investments would be high. Further, because of this group's comparatively low exposure to securities, especially high tenure ones, we expect that unbooked profits in the investment portfolio will be only marginal, which will not provide much resistance against increasing interest rates and is likely to result in the booking of high treasury losses.

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All bank groups will book treasury losses, but we expect these to be lower for the SBI Group and higher for foreign banks. Banks, therefore, need to reduce their exposure to investment by reducing the duration of the investment portfolio. Asset quality Based on our study of the gross and net NPA ratios of various bank groups, we found that there was a marked improvement in the declared asset quality of the nationalised banks and the SBI Group, while it was only marginally better for OSCBs and foreign banks. The marked improvement in the case of public sector banks (nationalised and SBI Group) has been primarily due to higher provisions and write-offs. These banks recorded a healthy growth in the profit from sale of investments, which helped them in writing off bad loans and also making excess/additional provisions towards NPAs. However, the improvement observed in the case of SBI Group was more at the gross NPA level, whereas in the case of the other three groups, the improvement was more at the net NPA level. This indicates that the SBI Group improved its credit management to improve asset quality, while other bank groups increased their provisioning cover. A comparison of the share of gross NPA ratios and net NPA ratios of the various bank groups to the industry average, during the period 1999-00 to 2002-03, revealed that the SBI Group had increased its asset quality both at the gross level and the net level. There was a slight deterioration in the asset quality of the nationalised banks at the gross level, but there was an improvement at the net NPA level, due to higher provisioning cover. Foreign banks witnessed a marginal deterioration in the asset quality at both gross and net levels, but more at the net level due to the decrease in the provisioning cover. In case of other scheduled commercial banks, excluding ICICI Bank, the asset quality worsened at the gross level, but remained stable at the net NPA level on account of the higher NPA provision. Aggressive lending polices adopted by the private sector banks led to a worsening of the asset quality at the gross levels, but they were able to maintain the net NPA ratios with higher provisions. Including ICICI Bank, the asset quality worsened at both levels; gross and net. Other scheduled commercial banks, especially the new private sector banks, are aggressively increasing the loan book by compromising a little on the asset quality. But the group is making higher provisions in maintaining a stable net NPA. Nationalised banks and the SBI Group are concentrating more on improving the asset quality. While nationalised banks are focussing on improvement at the net levels, the SBI Group is concentrating on improvement at the gross levels. Both groups had reduced the provisioning covers. The healthy growth in treasury profits helped banks in increasing their provision cover, but there will not be much leeway in future to make higher provisions towards NPAs due to the expected fall in treasury profits. Hence banks need to improve their credit management to improve their asset quality

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Overall assessment Foreign banks During 1999-00 to 2002-03, foreign banks held on to their share of the business and also maintained the highest spreads. Greater spreads and a high core fee income ratio helped them in sustaining high operating expenses. The high proportion of short-term assets and the low reliance on term deposits will help these banks in improving spreads. They will continue to have a high core fee income ratio, but are likely to face competition from other bank groups, who are increasing their worldwide presence. Foreign banks have the lowest NPA ratios and, with their stringent credit assessment norms, will continue to maintain them. Other scheduled commercial banks Since these banks, especially the new private sector banks, are expanding their operations operating expenses will be high. But the benefits of these large investments will accrue to them in the near future. The yield on carry business is likely to improve with the gradual increase in credit demand from the commercial sector. However, the improvement could be restricted due to the expected drop in the yield on investments. Because of the aggressive lending strategy adopted by the new private sector banks, the asset quality may deteriorate, although the banks will try to maintain the net NPA ratio. Private sector banks have to concentrate on their credit management systems to improve the asset quality. OSCBs will continue to focus on retail finance. This, coupled with increased credit to the commercial sector, will enable a healthy growth in advances. Public sector banks (State Bank of India & associates, & nationalised banks) These banks need to rein in their operating costs by controlling manpower costs and rationalising operations. Investments in technology may result in surplus staff, which can affect productivity (if the excess manpower is not utilised properly). The gradual increase in commercial sector credit will enable a healthy growth in advances. Public sector banks need to reduce their exposure to investments by focusing on the core activity of lending. Moreover, these banks have started focusing on retail finance, which will contribute to the growth in advances, which will help in improving the yield on carry business, and thus spreads. In addition, they need to strengthen their interest rate risk management and credit risk management. We believe that the structure of pricing of loans needs to be reviewed. We also expect the asset quality of the public sector banks to improve on account of the expected improvement in credit management. But PSBs need to improve and be aggressive in their communication and business strategies to garner more customers, if they want to attain mass in the retail finance segment.

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2.0

Business

Other scheduled commercial banks clocked the highest growth
Group-wise business of banks 1998 to 2003
(Rs/billion) 8000 7000 6000 5000 4000 3000 2000 1000 0 SBI & ass. Nat banks Other SCBs Foreign banks

Figure 1

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

Source: CRIS INFAC

The business of all scheduled commercial banks grew at 16 per cent (14.5 per cent) CAGR from 1999-00 to 2002-03. During the same period, the business of other scheduled commercial banks (OSCBs) grew at 22 per cent (16 per cent) CAGR, the highest amongst all the bank segments, driven by a strong growth in advances. The business of foreign banks grew by 12.7 per cent CAGR, which is lower than the industry average and is also the lowest amongst all the bank groups. Both advances and deposits of foreign banks grew at a comparatively slower pace, in comparison with the other groups. For all the groups, except the SBI Group, business growth was primarily on the back of the higher growth in advances. The deposits of the SBI Group grew at 15.1 per cent CAGR, in comparison to a 13.6 per cent CAGR growth in advances.

Due to the merger of ICICI Ltd with ICICI Bank on March 30, 2002, the growth figures for the scheduled commercial banks (SCBs) for the period under consideration are slightly misleading. Hence, for a better comparison, we have also calculated the growth figures excluding ICICI Bank, which are indicated in brackets.

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Other scheduled commercial banks (OSCBs) Business grew by 22 per cent (16 per cent) CAGR from Rs 1,694 billion (Rs 1,559 billion) in March 2000 to Rs 3,446 billion (Rs 2,432 billion) as of March 2003, driven by a strong growth of 35.2 per cent (17.5 per cent) CAGR in advances. Deposits grew at 22.1 per cent (15.2 per cent) CAGR during 1999-00 to 2002-03. While the share of advances in funds deployed has gone up from 44.4 per cent (45.3 per cent) in 1998-99 to 50.7 per cent (47.8 per cent) in 2002-03, the share of investments increased from 37.8 per cent (37.4 per cent) in 1998-99 to 39.2 per cent (40.3 per cent) in 200203. The growth in advances was primarily driven by the focus on retail credit, especially by new private sector banks. State Bank of India & associates (SBI Group) The business of the SBI Group grew at 14.6 per cent CAGR from Rs 3,853 billion in March 2000 to Rs 5,802 billion in March 2003, driven by a 15.1 per cent CAGR growth in deposits. During the same period, advances grew at 13.6 per cent CAGR. The share of advances in funds deployed declined from 46.2 per cent in 1998-99 to 40.64 per cent in 2002-03, while the proportion of investments in the funds deployed increased from 34.4 per cent in 199899 to about 48 per cent in 2002-03. Nationalised banks The business grew at a 14.2 per cent CAGR from Rs 7,041 billion in March 2000 to Rs 10,485 billion in March 2003, driven by a 17.3 per cent CAGR growth in advances. Deposits grew at a slower rate of 12.7 per cent CAGR. The share of advances in funds deployed increased from 42.4 per cent in 1998-99 to 48 per cent in 2002-03, while the share of investment in funds deployed increased from 40.6 per cent in 1998-99 to 43 per cent in 2002-03. Foreign banks Foreign banks clocked the lowest growth in business amongst various bank categories, at a CAGR of 12.7 per cent during 1999-00 to 2002-03. The business grew from Rs 849 billion in March 2000 to Rs 1215 billion in March 2003, driven by 13.6 per cent CAGR growth in advances. Deposits grew at a slower rate of 12.0 per cent CAGR. The share of advances in the funds deployed increased from 42.6 per cent in 1998-99 to 50.2 per cent in 2002-03, while the share of investments in the funds deployed went up from 38.0 per cent in 1998-99 to 39.3 per cent in 2002-03.

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Share of bank groups
1999-2000
(per cent)
Other SCB 13 Forgn Banks 6 SBI & Ass 29

Figure 2
2002-03
(per cent)
Other SCB 16 Forgn Banks 6 SBI & Ass 28

Nat Bank 52

Nat Bank 50

Source: CRIS INFAC

Though the share of nationalised banks in the total business of scheduled commercial banks is reducing, it is still approximately 50 per cent. The share of other scheduled commercial banks has increased from 13 per cent in 1999-00 to 16 per cent in 2002-03, due to the aggressive growth strategy adopted by them. Advances Overview OSCBs recorded the highest growth in advances amongst all the bank groups, while the foreign banks, along with the SBI Group, recorded the lowest growth. For OSCBs, the high growth was due to the focus on retail credit. The advances of OSCBs grew at 35.2 per cent (17.5 per cent) CAGR during 1999-00 to 2002-03. The advances of nationalised banks also recorded a healthy growth of 17.2 per cent CAGR, driven by the growth in commercial credit and agriculture credit. For foreign banks and nationalised banks, the growth of advances was lower than that of the industry. Increased competition from new private sector banks, coupled with low credit demand from the large corporates, slowed down the growth of advances of foreign banks. For the SBI Group, the growth of advances was low on account of a less aggressive lending strategy and greater competition. A study of the composition of loans and advances indicates that the SBI Group and nationalised banks have, over the years, been providers of working capital finance to the industry. Going forward, with the increasing focus of these groups on retail credit, the proportion of term loans in working capital is expected to rise further. Other scheduled commercial banks The advances of OSCBs grew faster than the industry average of 16 per cent (excluding ICICI Bank). Advances grew from Rs 557 billion (Rs 521 billion) in 1999-00 to Rs 1,377 billion (Rs 844 billion) in 2002-03. Due to the slowdown in industrial activity, the demand for credit from the commercial sector was low. Hence all the banks directed their efforts towards retail credit. OSCBs, especially the new private sector banks - ICICI Bank, HDFC Bank, UTI Bank etc were amongst the first to shift their focus towards retail finance. This helped them to post a healthy growth in advances. Today ICICI Bank and HDFC Bank are the leaders in retail finance.
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Advances of OSCBs
(Rs/crores) 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1997-98 1998-99 1999-2000 2000-01 2001-02

Figure 3

Advances of OSCBs (Ex ICICI Bank)
(Rs/crores) 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000

Figure 4

2002-03

0 1997-98 Term loans 1998-99 1999-00 2000-01 2001-02 2002-03 Short term/ working capital loans

Term loans

Short term/working capital loans

Source: CRIS INFAC

Source: CRIS INFAC

The term loan of OSCBs grew at 75 per cent (34 per cent) CAGR from Rs 164 billion (Rs 161 billion) in 1999-00 to Rs 882.03 billion (Rs 385 billion) in 2002-03 on account of the enhanced focus on retail credit. Because of lower demand for credit from the commercial sector, working capital finance grew at a slower rate of 8 per cent (8.4 per cent) CAGR between 1999-00 and 2002-03. The share of term loans in total advances increased from 29 per cent (31 per cent) in 199900 to 64 per cent (46 per cent) in 2002-03. Nationalised banks The advances of nationalised banks also grew faster than that of the industry. Advances grew by 17.3 per cent CAGR from Rs 2,231 billion in 1999-00 to Rs 3,601 billion in 2002-03, on the back of a steady growth in both commercial and agricultural credit. As per our retail finance study, nationalised banks were slow to shift their focus towards retail finance in the initial years. However, many nationalised banks have now announced plans to focus on the retail finance portfolio.
Advances of nationalised banks
(Rs/crores)
400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03

Figure 5

term loans

short term/working capital loans

Source: CRIS INFAC

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Term loans grew at a CAGR of 19.5 per cent, from Rs 830.1 billion as of end-March 2000 to 1,416.43 billion as of end-March 2003. Working capital loans grew from Rs 1,401 billion in 1999-00 to Rs 2,185 billion in 2002-03 at 16 per cent CAGR. The share of term loans increased from about 37 per cent in 1999-00 to 39 per cent in 200203. With the slowdown in industrial activity there was less demand for working capital loans, which resulted in an increase in the share of term loans in total advances. State Bank of India & associates During 2000-01 to 2002-03, amongst the scheduled commercial banks, the SBI Group accounted for the second largest portfolio of advances after nationalised banks. In the same period, the SBI Group's advances grew from Rs 1,290 billion in 1999-00 to Rs 1,892 billion in 2002-03, at a CAGR of 13.6 per cent. This lower-than-industry growth in advances was on account of the lower growth in commercial credit. The group is also facing competition from the new private sector banks and nationalised banks. Although the group was not aggressive in retail finance earlier, SBI has now announced plans to increase its focus on retail finance. (SBI plans to have 60 branches totally dedicated towards retail lending.) These measures, coupled with the expected recovery in the commercial credit, will help the group in posting a healthy growth in advances.
Advances of SBI Group
(Rs/crores) 200,000 180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 1997-98 1998-99 Term loans 1999-00 2000-01 2001-02 2002-03

Figure 6

Short term/ working capital loans

Source: CRIS INFAC

Term loans of the group grew at 22 per cent CAGR from Rs 420 billion in 1999-00 to Rs 741 billion in 2002-03. The working capital loans grew at 11 per cent CAGR to Rs 1,151 billion in 2002-03 from Rs 871 billion in 1999-00. The share of term loans in total advances increased from 33 per cent in 1999-00 to 39 per cent in 2002-03. The increase in the share of term loans has been in line with the industry. The slow growth in working capital loans led to an increase in the share of term loans.

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Foreign banks The advances of foreign banks grew from Rs 356 billion in 1999-00 to Rs 522 billion in 200203 at 13.6 per cent CAGR, one of the lowest amongst all categories. Foreign banks, due to their limited reach, are not aggressive in retail finance. Further, most of the foreign banks prefer lending only to select large corporates. Hence, due to the lower demand for credit on account of general recession in the industrial activity, advances grew at a slower rate.
Foreign banks - outstanding advances
(Rs/crores) 60,000 50,000 40,000 30,000 20,000 10,000 0 1997-98 1998-99 Term loans 1999-00 2000-01 2001-02 2002-03

Figure 7

Short term/working capital loans

Source: CRIS INFAC

Among the scheduled commercial banks, foreign banks are the only group in which the term loans have recorded a lower CAGR than the short term/working capital loans. Term loans grew from Rs 173.9 billion in 1999-00 to Rs 249.7 billion in 2002-03 at a rate of 12.8 per cent CAGR, while working capital finance grew from Rs 182 billion in 1999-00 to Rs 272 billion in 2002-03 at rate of 14.3 per cent CAGR. Foreign banks, because of their worldwide network, are strong in trade finance; especially export finance and cash management systems, where the lending is of short duration. These activities drove the growth in working capital credit. The low demand for corporate credit, coupled with the limited presence of foreign banks in retail finance, restricted the growth in the term loans. Only a few of the foreign banks are aggressive in retail finance. In addition, foreign banks have a strong presence in foreign currency loans - FCNR (B) term loans or ECBs - which are generally of 3-5 years tenure and are classified under term loans. This contributes to a higher proportion of term loans in advances vis-à-vis that of public sector banks. The lower growth in the term loans vis-à-vis working capital finance led to the a drop in the share of term loans.

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Priority sector advances As per the directive of the Reserve Bank of India, all scheduled commercial banks, except foreign banks; have to lend 40 per cent of the net bank credit to the priority sector, with more focus on the weaker sections. Foreign banks operating in India are required to lend 32.0 per cent of their net bank credit towards the priority sector. Public sector banks (State Bank of India & associates, and nationalised banks) The outstanding priority sector advances of PSBs increased by 18.6 per cent during 2002-03. As on the last reporting Friday in March 2003, the priority sector lending constituted 42.5 per cent of the net bank credit. Funding to agriculture and self-help groups helped the public sector banks in achieving the target.
Advances to the priority sector by public sector banks
(as on the last reporting Firday) Priority sector lending As per cent of net bank credit Source: RBI Basis Rs in billion per cent Mar-00 1275 40.3 Mar-01 1491 43.7 Mar-02 1712 43.1

Table 1
Mar-03 2031 42.5

Other scheduled commercial banks The total priority sector advances extended by private sector banks rose as a proportion of net bank credit, with the priority sector growing by 43 per cent in 2002-03. During 200001, OSCBs did not achieve the prescribed priority sector targets as some of the new private sector banks had been allowed certain concessions for meeting priority sector norms. Housing finance was classified as a priority sector with a limit of Rs 10 lakh (in the mid-term credit policy 2004-05, this limit was raised to Rs 15 lakh); hence with the growth in housing finance, the group witnessed a sudden rise in the priority sector ratio during 2002-03.
Advances to the priority sector by private sector banks
(as on the last reporting Firday) Priority sector advance As per cent of net bank credit Source: RBI Basis Rs in billion per cent Mar-01 216 36.7 Mar-02 257 40.9

Table 2
Mar-03 367 44.4

Foreign banks

Advances to the priority sector by foreign banks
(as on the last reporting Firday) Priority sector advance As per cent of net bank credit Source: RBI Basis Rs in billion per cent Mar-01 116 33.5 Mar-02 134 34

Table 3
Mar-03 148 33.9

As on the last reporting Friday of March 2003, priority sector lending constituted 33.9 per cent of the net bank credit. Foreign banks have maintained the priority sector ratio at a level of 33.5-34 per cent. All the bank groups had met their overall priority sector lending targets.

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Deposits Overview Deposits with scheduled commercial banks are classified into three categories Current deposits: Current deposits are those maintained by business class to meet the short-term contingencies. No interest is payable on current deposits. Savings deposits: Savings deposits are the deposits maintained by the households. RBI administers the interest rate offered on these deposits. Term deposits: These are also knows as fixed deposits or time deposits and are generally payable at the end of a fixed period. Term deposits constituted 64-65 per cent of the total deposits during1997-98 to 2002-03. Summary OSCBs recorded the highest growth in deposits amongst all the bank groups. During 1999-00 to 2002-03, deposits grew at 22 per cent (15.2 per cent) CAGR, followed by the SBI Group, whose deposits grew at 15.1 per cent CAGR. The 12 per cent CAGR growth in deposits of foreign banks was the lowest amongst all the bank groups. The strong growth in deposits of OSCBs was due to the aggressive growth strategies adopted by the new private sector banks. The SBI Group's extensive branch expansion enabled it to achieve a healthy growth in term deposits. However, for foreign banks, their limited branch network acted as a hindrance in the growth of deposits. Moreover, foreign banks also offered lower interest rates on term deposits. Of the three categories of deposits, savings deposits recorded the highest growth in all the bank groups. The growth was the highest for OSCBs on the back of a relatively lower base and the aggressive marketing strategy they adopted. Nationalised banks and the SBI Group have the highest low cost deposit ratios (the proportion of demand deposits and savings deposits to total deposits) among all bank groups. As of March 2003, the low cost deposit ratio was nearly 37 per cent for the SBI Group, while it was approximately 36 per cent for nationalised banks. Though OSCBs have the lowest low cost deposit ratio, they are giving tough competition to the nationalised banks and the SBI Group by increasing their market share in low cost deposits. Among all the groups, foreign banks have the highest composition of demand deposits in low cost deposits. Other scheduled commercial banks (OSCBs)
Break-up of deposits - OSCBs
100%

Figure 8

Total deposits - OSCBs
(Rs/billion) 2500

Figure 9

90%
2000

80%
1500

70%
1000

60%
500

50% 1998
Term deposits

1999

2000

2001

2002

2003

0 1998 1999 2000 2001 2002 2003

Savings deposits

Demand deposits

Source: CRIS INFAC

Source: CRIS INFAC
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OSCBs recorded the highest growth of 22.1 per cent (15.2 per cent) CAGR in total deposits between 1999-00 and 2002-03, mainly due to the new private sector banks who are aggressively expanding their operations. The share of deposits of OSCBs in the deposits of all scheduled commercial banks went up between 1997-98 and 2002-03, while it fell for nationalised banks and foreign banks. OSCBs, especially the new private sector banks, had started introducing technologydriven customised products, which also helped in the impressive growth in deposits. Low cost deposits (demand and saving deposits) constituted 24 per cent of the total deposits, which is the lowest amongst all the scheduled commercial banks. OSCBs do not have a wide network of branches that provide support in garnering more low cost deposits. Moreover, the technology-driven customised products introduced by the new private sector banks allow customers to switch between savings and term deposits. State Bank of India and associates

Deposits break-up - SBI & associates
100%

Figure 10

Total deposits - SBI & associates
(Rs/billion) 4500

Figure 11

90%

4000 3500

80%

3000 2500 2000 1500 1000

70%

60%

50% 1998 1999 2000 Savings deposits 2001 2002 Demand deposits 2003

500 0 1998 1999 2000 2001 2002 2003

Term deposits

Source: CRIS INFAC

Source: CRIS INFAC

The total deposits of the SBI Group grew from Rs 2,563 billion in 1999-00 to Rs 3,910 billion in 2002-03 at a rate of 15.1 per cent, while the industry grew at a rate of 14.6 per cent (13.7 per cent). The SBI Group's wide branch network helped it to achieve a healthy growth in deposits. The India Millennium Deposit (IMD) also spurred the growth in deposits. SBI mobilised deposits worth Rs 257 billion through the IMD scheme. Low cost deposits constitute 37 per cent of the total deposits as of March 2003, which is the highest amongst all scheduled commercial banks. The group's wide branch network helped it in maintaining the low cost deposit ratio at a high level. However, the share of low cost deposits in the total deposits fell from 42.6 per cent in 1997-98 to 37.0 per cent in 2002-03, due to the increase in competition.

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Nationalised banks
Break-up of deposits - Nationalised banks Figure 12
100%

Total deposits - Nationalised banks
(Rs/billion)
8000

Figure 13

90%

7000 6000 5000

80%

70%

4000 3000

60%

2000 1000

50% 1998 1999 2000 Savings deposits 2001 2002 Demand deposits 2003

0 1998 1999 2000 2001 2002 2003

Term deposits

Source: CRIS INFAC

Source: CRIS INFAC

The total deposits of nationalised banks grew at 12.7 per cent CAGR, which was lower than that of the industry (all scheduled commercial banks). Total deposits grew from Rs 4,810 billion in 1999-00 to Rs 6,884 billion in 2002-03 on account of the low interest rates offered by the group on term deposits. Further, nationalised banks are facing stiff competition from the new private sector banks, who have capitalised on their technological edge and better service and increased their market share. Low cost deposits constituted 36 per cent of the total deposits. The share of term deposits had been stable at 36 per cent during 1999-00 to 2002-03. The term deposits of nationalised banks grew at 12.5 per cent CAGR during 1999-00 to 2002-03, which is lower than the industry average of 15.1 per cent (13.8 per cent). Foreign banks

Break-up of deposits - Foreign banks
100%

Figure 14

Total deposits - Foreign banks
(Rs/billion) 800 700 600

Figure 15

90%

80%

500 400 300

70%

60%

200 100

50% 1998 1999 2000 Saving deposits 2001 2002 Demand deposits 2003

0 1998 1999 2000 2001 2002 2003

Term deposits

Source: CRIS INFAC

Source: CRIS INFAC

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The total deposits of foreign banks grew from Rs 493 billion in 1999-00 to Rs 693 billion in 2002-03 at a CAGR of 12 per cent. Their limited branch network proved hindered the growth of deposits. The share of low cost deposits in total deposits increased from 31.5 per cent in 1999-00 to 33.8 per cent in 2002-03. Within low cost deposits, demand deposits have a higher share as foreign banks generally prefer to cater to corporate clients who maintain current account deposits, and also because they are strong in the cash management system. Generally foreign banks rely less on deposits to meet their funding needs. The funding requirements are met through the support of their parent organisations or by raising borrowings. Deposits constitute only about 70-75 per cent of the borrowed funds for foreign banks, while they constitute more than 95 per cent of the borrowed funds for public sector banks. Savings deposits of foreign banks grew at 23 per cent CAGR from a lower deposit base of Rs 49 billion in 1999-00 to Rs 90 billion in 2002-03. Foreign banks generally cater to high net worth individuals (HNIs) and NRI deposits. Further, only very few banks - such as HSBC, Standard Chartered Bank, Citibank and ABN Amro - are into the retail banking business. Many banks had hived off their retail business are concentrating on the institutional business. But of late, foreign banks (those who are active in the retail business) are also, with the aid of technology, luring customers to maintain low cost deposits with them. Of late a few foreign banks have started increasing their branch network, which is helping them in increasing their savings deposits. The lower deposit base, especially term loans, and their focus on HNIs and NRIs help them to keep the low cost deposit ratio at a very high level. Investments Under section 24 (b) of the Banking Regulation Act, 1949, every bank is required to maintain, at the close of business every day, a minimum proportion of its net demand and time liabilities (NDTL) as liquid assets in the form of cash and gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). In 1997-98, the Reserve Bank of India fixed the SLR to be maintained on all the demand and time liabilities, including inter-bank borrowings, at 25 per cent, which is applicable till date. Banks hold a major portion of their investments in government securities and other approved securities. The proportion of government securities, along with the approved securities, to the net demand and time liabilities has been over 30 per cent during 1997-98 to 2002-03 for all SCBs as a whole.

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Statutory liquidity ratio - excluding gold
(per cent ) 40.00

Figure 16

Group-wise SLR Securities to NTDL
(per cent) 50.0 45.0

Figure 17

35.00

40.0 35.0 30.0

30.00

25.00

25.0 20.0

20.00 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

SBI & associates Other SCBs Foreign banks

Natonalised banks Other SCBs (ex ICICI Bank) SLR requirement

GSEC + Other approved

SLR requirement

Source: CRIS INFAC

Source: CRIS INFAC

Public sector banks (nationalised banks and SBI Group) had been investing in SLR securities well above the RBI stipulated norm, vis-à-vis other scheduled commercial banks and the foreign banks. The SLR ratio (SLR securities to net time and demand liabilities) of OSCBs and foreign banks has been marginally above the stipulated norm during 1997-98 to 2000-01, indicating that they utilised their funds better. However, during 2002-03, with low demand for credit from the commercial sector and excess liquidity in the system, banks in all the groups had increased their exposure to the SLR securities. This increased exposure helped many banks in booking huge treasury profits during the soft interest rate scenario that prevailed then. But, with the hardening of interest rates, this high exposure could impact their bottom line. Further, there will be a drop in the yield on investments as the re-pricing would be from a historically higher interest rate to current lower yields. The higher the exposure, the higher would be the loss on valuation of the investments. Of the bank groups, the highest exposure to SLR investments was by the SBI Group (48 per cent of NTDL) followed by nationalised banks (36 per cent of NTDL) in 2002-03. OSCBs had the lowest exposure of 30 per cent of NTDL in 2002-03. Though the SBI Group has the highest exposure to SLR securities (as a per cent of net demand and time liabilities), we believe that the unbooked profit of the investment portfolio will offer a sufficient cushion against losses arising from the increase in interest rates. The investment portfolio of nationalised banks is also expected to have some cushion (on account of their historically higher exposure towards SLR securities), although it will be significantly lower than that of the SBI Group. Hence the impact would be more in the form of a drop in the yield on investments. Other scheduled commercial banks and foreign banks have a comparatively lower exposure to SLR securities, which should lead to a comparatively lower loss from the valuation of investment portfolio. However, we believe that their investment portfolio does not carry significant unbooked profits to mitigate the impact of the interest rate rise and its resultant impact on the bottomline. Further, we also expect the yield on investments to come down. 80
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CRIS INFAC believes that the impact of increasing interest rates on the investment portfolio will be the highest on foreign banks, followed by OSCBs and nationalised banks. The least impact will be on the SBI Group. State Bank of India & associates This group's investment in SLR securities rose continuously to touch a high of 48 per cent in 2002-03 from 34 per cent in 1997-98. The group recorded the highest growth rate in deposits amongst all the scheduled commercial banks, which, coupled with the low credit offtake, forced it to increase its exposure. During the period of falling interest rates, the group was continuously increasing its exposure to SLR securities. Such a high exposure would have led to an increase the acquisition cost of investments (cost of acquisition of the securities is inversely related to yield on the security)., In an increasing the interest rate scenario, such a high exposure will have a negative impact on the profit and loss account, both in the form of treasury losses (losses from mark-to-market valuation of the investment portfolio) and the drop in the yield on investments. We believe the outstanding portfolio as of March 2003 would include a high proportion of securities purchased during the last 3 years, whose cost of acquisition would have been high. Hence, in a hardening interest the group is expected to book treasury losses on account of mark-to mark valuation of securities. But, as noted earlier, we believe that the portfolio will have sufficient unbooked profits to cushion the impact of the interest rate rise and the drop in the yield on investments. Nationalised banks Nationalised banks maintained a stable exposure to SLR investments at 32-33 per cent of the net time & demand deposits during 1997-98 to 2001-02. But with low demand for credit from the commercial sectors during 2002-03, they increased the exposure to SLR securities to approximately 36 per cent. During 2002-03, interest rates were very low and almost touched rock bottom in 2003-04. This is likely to have increased the cost of acquisition of the investments. Further this would also increase the proportion of these securities in the total outstanding investment portfolio. Hence, with hardening of interest rates, nationalised banks are likely to face heavy losses on account of mark-to-market valuations. Further, we also expect a drop in the yield on investments. Nationalised banks, due to their historically high exposure to SLR securities, will have some cushion to withstand the impact of the rise in the interest rates and be able to reduce the losses from treasury operations, although this cushion will be lower than that of the SBI Group. Foreign banks The exposure of foreign banks in SLR securities was maintained at 27 per cent of the net time and demand deposits during 1997-98 to 2000-01, but in 2001-02, the ratio dropped to 24 per cent. During 2002-03, with low credit offtake, foreign banks significantly increased its exposure towards SLR securities. The proportion of SLR securities to net time and demand deposits touched 34 per cent in 2002-03. As explained earlier, the interest rates being low during 200203, the cost of acquisition of the investments is likely to be high. As the outstanding investment portfolio would have high proportion of securities acquired recently, it will increase the overall cost of the portfolio. With the hardening of interest rates, foreign banks are likely to see a negative impact on their bottomline on account of the reduced yield on investments and also suffer losses on account of valuation of the portfolio.
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We believe that due to historically lower exposure of this group towards SLR securities, their investment portfolio does not have sufficient unbooked profits to mitigate the effects of hardening interest rates. Other scheduled commercial banks A trend similar to that of foreign banks is seen in other scheduled commercial banks, both including and excluding ICICI Bank. OSCBs had kept a steady SLR of 25-27 per cent during 1997-98 to 2000-01, but it dropped to 25 per cent in 2001-02. In 2002-03, this increased to 30 per cent. This ratio was lowest amongst all bank groups, hence we believe that the impact of hardening interest rates should be comparatively lower on this group vis-à-vis other bank groups. We expect the impact to be two fold: one by way of dropping the yield on investments and second by way of losses on valuation of the investment portfolio. We believe the investment portfolio of OSCBs will not have any cushion to bear the impact of the hardening of interest rates, and that their bottomline will get impacted due to losses on account of investment portfolio. Non-performing assets The Indian banking industry had always been plagued with the problem of high levels of non performing assets, which can be attributed to factors like archaic policies, industrial inefficiency, lack of adequate legal recourse to the lenders, wilful defaulters etc. Based on the study of the gross and net NPA ratios of various bank groups, we find that there has been a marked improvement in the declared asset quality of the nationalised banks and the SBI Group, while there has been only a marginal improvement in the case of OSCBs and foreign banks. The marked improvement seen in the case of public sector banks (nationalised and SBI Group) was primarily due to higher provisions and write-offs. These banks accounted a healthy growth in the profit from sale of investments, which helped them in writing off bad loans and also making excess/additional provisions towards NPAs. Both the SBI Group and nationalised banks recorded a growth of 73 per cent CAGR and 54.5 per cent CAGR, respectively, in the profits from the sale of investments. The improvement observed in the case of the SBI Group has been more at the gross NPA level, whereas in the case of the other three groups, the improvement is more at the net NPA level. During 1999-00 to 2002-03, the provision cover for the SBI Group reduced by more than 100 bps, while it went up in the case of other bank groups. An improvement in the gross NPA generally indicates an improvement in the bank's systems and procedures, whereas an improvement in the net NPA indicates that the bank's balance sheet has the strength to sustain higher provisions. A comparison of the share of gross NPA ratios and net NPA ratio of the various groups to the industry average, during 1999-00 to 2002-03, reveals that the SBI Group has increased its asset quality both at the gross level and the net level. There has been a slight deterioration in the asset quality of the nationalised banks at the gross level, but it has improved at the net NPA level on account of higher provision cover. Foreign banks witnessed a marginal deterioration in the asset quality at both gross and net levels, but more at the net level, on account of the decrease in the provision cover. In case of other scheduled commercial banks, excluding ICICI Bank, the asset quality at the gross level worsened, but remained stable at the net NPA level, on account of higher NPA provisions. Aggressive lending polices adopted by the private sector banks led to worsening of 82
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the asset quality at the gross level, but, with higher provisions, they were able to maintain the net NPA ratios. Including ICICI Bank, the asset quality has worsened at both levels, gross and net. Take away Other scheduled commercial banks, especially the new private sector banks are aggressively increasing the size of their loan book, by compromising a little on the asset quality. But the group is making higher provisions in maintaining a stable net NPA. Nationalised banks and SBI Group are concentrating more on improving the asset quality. While nationalised banks are concentrating on an improvement in the net levels, the SBI Group is concentrating on an improvement at the gross levels. They had reduced the provision cover. State Bank of India and associates
SBI & associates
1999-00 2000-01 2001-02 2002-03 Gross NPAs (i) Net NPAs (ii) Gross NPA as % of gross advances (iii) Net NPAas % of net advances (iv) Provisioning cover % (v) Share of SBI in gross NPAs of all SCBs (vi) Share of SBI in net NPAs of all SCBs (vii) Share of SBI in net advances of all SCBs (viii) Share of SBI in gross advances of all SCBs (ix) Ratio of SBI shares in gross NPA to gr adv ( vi/ ix) Ratio of SBI shares in net NPA to net adv ( vii/ viii)
1 1 1

Table 4
CAGR (per cent) (1999-00 to 2002-03) -4.83 -3.78

19,773 8,752 14.08 6.77 55.74 32.79 29.80 29.10 29.63 1.11 1.02

20,593 9,450 12.73 6.27 54.11 32.29 29.76 28.61 28.96 1.12 1.04

19,451 8,968 11.23 5.45 53.89 27.87 24.99 25.49 25.90 1.08 0.98

17,044 7,796 8.68 4.12 54.26 24.86 22.99 25.59 25.27 0.98 0.90

Rs in crores Source: RBI & CRIS INFAC

The gross NPAs of the SBI Group declined from 14.08 per cent in 1999-2000 to 8.68 per cent in 2002-03 because the write offs/recoveries in the last 4 years were higher than the additions to gross NPAs, indicating an improvement in the NPA management systems over the last few years. In 2002-03, the additions to gross NPAs were Rs 5,791 crore while the deletion from gross NPAs was Rs 8,198 crore. Net NPAs declined in line with the drop in the gross advances. During 1999-00 to 2002-03, the ratio of net NPAs to net advances declined from 6.77 per cent in 1999-2000 to 4.12 per cent in 2002-03. During the same period, there was a drop in the NPA provision cover for the group as a whole, from 55.7 per cent in 1999-00 to 54.3 per cent in 2002-03, indicating a lower provision towards non-performing loans. This may be on account of the higher reversal of provisions for NPA due to the write-off and restructuring of NPAs. The share of SBI Group in gross advances of all scheduled commercial banks declined from 29.6 per cent in 1999-2000 to 25.3 per cent in 2002-03 while the share of gross NPAs has also declined at a faster rate from 32.8 per cent in 1999-00 to about 24.9 per cent in 200203. The ratio of share of gross NPAs of the SBI Group to all SCBs to the share of gross advances reduced from 1.11 per cent in 1999-00 to 0.98 per cent in 2002-03.
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The share of SBI Group in net advances of all scheduled commercial banks declined from 29.10 per cent in 1999-2000 to 25.59 per cent in 2002-03 while the share of net NPAs declined from 29.8 per cent to about 23.0 per cent. The ratio of share of net NPAs of the SBI Group to all SCBs to the share of net advances reduced from 1.02 per cent in 1999-00 to 0.90 per cent in 2002-03. The above ratios indicate improvement in the assets quality of the group, with more emphasis on an improvement in gross NPAs. Nationalised banks
Nationalised banks
1999-00 2000-01 2001-02 2002-03 Gross NPAs (i) Net NPAs (ii) Gross NPA as % of gross advances ( iii ) Net NPAas % of net advances (iv ) Provisioning cover % ( v ) Share of nationalised banks in gross NPAs of all SCBs ( vi ) Share of nationalised banks In net NPAs of all SCBs ( vii ) Share of nationalised banks in net advances of all SCBs ( viii ) Share of nationalised banks in gross advance ( ix) Ratio of nat. bank shares in gross NPA to gr adv ( vi/ ix) Ratio of nat. bank shares in net NPA to net adv ( vii/ viii)
1 1 1

Table 5
CAGR (per cent) (1999-00 to 2002-03) 3.47 1.45

33,260 17,048 13.91 7.8 43.93 55.15 58.04 50.30 50.45 1.09 1.15

34,180 17,993 12.16 7.01 42.35 53.60 56.66 50.27 50.32 1.07 1.13

36,706 19,298 11.01 6.01 45.41 52.59 53.77 48.95 49.86 1.05 1.10

36,849 17,799 9.72 4.77 50.93 53.74 52.50 48.72 48.79 1.10 1.08

Rs in crores Source: RBI & CRIS INFAC

The ratios of gross NPAs to gross advances declined from 13.91 per cent in 1999-2000 to 9.72 per cent in 2002-03, on account of recovery and write-offs of sticky assets. During 1999-00 to 2002-03, the gross NPAs increased from Rs 33,260 crore in 1999-00 to Rs 36,849 crore in 2002-03. The provisioning cover increased from 43.93 per cent in 1999-2000 to 50.93 per cent in 200203, which led to a drop in the net NPA ratio to 4.77 per cent in 2002-03 from 7.8 per cent in 1999-00. The huge profits from the sale of investment made by the nationalised banks, especially in 2001-02 and 2002-03, enabled them to increase their provisioning cover. The share of the nationalised banks in total gross advances of all scheduled commercial banks has declined from 50.5 per cent in 1999-2000 to 48.8 per cent in 2002-03; however, the proportion of gross NPAs of nationalised banks to gross NPAs of the all scheduled commercial banks declined at a marginally slower rate from 55.2 per cent to 53.8 per cent. But this improvement is not that significant when compared to the industry. The ratio of the nationalised banks' share of gross NPA to the gross advances of all SCBs, has remained stable at 1.1 per cent between 1999-98 and 2002-03, indicating a stable reported asset quality of the group. The credit management of the group needs to be improved to arrest the further rise in the NPAs. But on comparing the group's performance with the industry on a net NPA level, we find that the share of net advances of the nationalised banks has declined from 50.30 per cent in 1999-

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00 to 48.72 per cent in 2002-03; however, the proportion of net NPAs of nationalised banks to net NPAs of the all scheduled commercial banks declined drastically from 58.04 per cent to 52.50 per cent on account of higher provisions/ write-offs of sticky assets. This improvement, when compared to the industry, is marginal. The ratio of the nationalised banks' share of net NPA to the net advances has declined from 1.15 per cent in 1999-00 to 1.08 per cent in 2002-03, indicating a marginal improvement in the reported net asset quality of the group. The group had been making higher provision towards NPAs to improve the declared asset quality. Other scheduled commercial banks (private banks)
Other SCBs
1999-00 2000-01 2001-02 2002-03 Gross NPAs (i) Net NPAs (ii) Gross NPA as % of gross advances ( iii ) Net NPAas % of net advances ( iv ) Provisioning cover % ( v ) Share of other SCBs in gross NPAs of all SCBs (vi ) Share of Other SCBs In net NPAs of all SCBs ( vii ) Share of Other SCBs in net advances of all SCBs ( viii ) Share of other SCBs in gross advances of all SCBs Ratio of other SCBs shares in gross NPA to gr adv ( vi/ ix) Ratio of other SCBs shares in net NPA to net adv ( vii/ viii)
1 1 1

Table 6
CAGR (per cent) (1999-00 to 2002-03) 36.46 29.21

4,638 2,817 8.17 5.41 39.26 7.69 9.59 12.57 11.98 0.64 0.76

5,897 3,592 8.37 5.44 39.09 9.25 11.31 12.95 12.61 0.73 0.87

11,210 6,058 9.64 5.73 45.96 16.06 16.88 18.03 17.39 0.92 0.94

11,787 6,077 8.08 4.93 48.44 17.19 17.93 18.63 18.77 0.92 0.96

Rs in crores Source: RBI & CRIS INFAC

Other SCBs (net of ICICI Bank)
1999-00 2000-01 2001-02 2002-03 Gross NPAs (i) Net NPAs (ii) Gross NPA/Gross advances ( iii ) Net NPAas % of net advances ( iv ) Provisioning cover % ( v ) Share of other SCBs in gross NPAs of all SCBs (vi ) Share of other SCBs in net NPAs of all SCBs ( vii ) Share of other SCBs In net advances of all SCBs ( viii ) Share of other SCBs in gross advances (ix) Ratio of other SCBs shares in gross NPA to gr adv ( vi/ ix) Ratio of other SCBs shares in net NPA to net adv ( vii/ viii)
1 1 1

Table 7
CAGR (per cent) (1999-00 to 2002-03) 14.16 5.79

4,544 2,761 8.28 5.30 39.23 7.53 9.40 11.52 11.62 0.65 0.82

5,488 3,438 8.51 5.63 37.35 8.61 10.83 11.43 11.66 0.74 0.95

6,197 3,433 8.51 4.95 44.61 8.88 9.56 11.26 11.65 0.76 0.85

6,760 3,269 7.71 3.87 51.64 9.86 9.64 11.95 12.20 0.81 0.81

Rs in crores Source: RBI & CRIS INFAC

The private banks have seen their gross NPAs grow at a CAGR of 36.46 per cent (14.16 per cent) during 1999-2000 to 2002-03.The proportion of gross NPAs to gross advances declined from 8.17 (8.28 per cent) per cent to 8.08 per cent (7.71 per cent) during 1999-00 and 200203, which is a marginal improvement in comparison to that of the nationalised banks and the SBI Group. A significant increase in the gross NPA level in 2001-02 and 2002-03 is due to the merger of ICICI Ltd with ICICI Bank.
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During 1999-00 and 2002-03, the net NPAs as a proportion of net advances declined from 5.41 per cent (5.3 per cent) to 4.9 per cent (3.9 per cent) as the banks increased their provisioning cover from 39.26 per cent (39.23 per cent) in 1999-2000 to 48.44 per cent (51.64 per cent) in 2002-03. Increased treasury profits helped banks in making a higher provision. The marginal improvement witnessed in the gross NPAs, when compared to the industry performance, reveal a different picture altogether. The proportion of gross advances of the private banks in total net advances of all scheduled commercial banks increased from 12 per cent (11.6 per cent) in 1999-00 to 18.8 per cent (12.2 per cent) on 2002-03, while the proportion of gross NPAs of the private banks in the total net NPAs increased from 7.7 per cent (7.5 per cent) to 17.2 per cent (9.9 per cent). The ratio of the shares of gross NPAs to gross advances increased substantially from 0.64 in 1999-00 to 0.92 in 2002-03. The new private sector banks have been aggressive in their lending and have hence seen an increase in the gross NPAs. The group's share in the advances also went up substantially. Of all the bank groups, the private sector banks' performance as regards NPAs has been miserable. The group needs to tighten credit management policies to keep the NPAs under control. The proportion of net advances of private banks in the total net advances of all scheduled commercial banks increased from 12.57 per cent (11.52 per cent) in 1999-00 to 18.63 per cent (11.95 per cent) in 2002-03, while the proportion of net NPAs of the private banks in the total net NPAs increased from 9.59 per cent (9.40 per cent) to 17.93 (9.64) per cent. The ratio of the share of net NPAs to the share of net advances has also increased 0.76 per cent (0.82 per cent) in 1999-00 to 0.96 per cent (0.81 per cent) in 2002-03. In spite of the significant increase in the proportion of gross NPAs, we do not see a similar rise in the proportion of net NPA, which has been on account of higher provisions towards NPA. The group has been resorting to higher provisions to maintain a stable net NPA. Excluding ICICI Bank, the ratio of shares of net NPA to net advances has been stable between 1999-00 and 200203. Foreign banks
Foreign banks
1999-00 2000-01 2001-02 2002-03 Gross NPAs (i) Net NPAs (ii) Gross NPA as % of gross advances ( iii ) Net NPAas % of net advances ( iv ) Provisioning cover % ( v ) Share of foreign banks in gross NPAs of all SCBs ( vi ) Share of foreign banks in net NPAs of all SCBs ( vii ) Share of foreign banks in net advances of all SCBs ( viii ) Share of foreign banks in gross advances (ix ) Ratio of foreign banks shares in gross NPA to gr adv ( vi/ ix) Ratio of foreign banks share in net NPA to net adv ( vii/ viii)
1 1 1

Table 8
CAGR (per cent) (1999-00 to 2002-03) 3.33 7.06

2,633 757 6.99 2.41 71.25 4.37 2.58 8.03 7.95 0.55 0.32

3,100 723 6.84 1.82 76.68 4.86 2.28 8.18 8.11 0.60 0.28

2,460 827 5.38 1.89 66.38 3.52 2.35 7.53 6.84 0.52 0.31

2,905 929 5.22 1.76 68.02 4.24 2.85 7.06 7.16 0.59 0.40

Rs in crores Source: RBI & CRIS INFAC

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Foreign banks, due to their stringent risk management practices, have maintained the lowest NPA levels among all the scheduled commercial banks. The proportion of gross NPAs to gross advances declined from 6.99 per cent in 1999-2000 to 5.22 per cent in 2002-03, while the proportion of net NPAs to net advances declined from 2.41 per cent to 1.76 per cent. However, the drop in the net NPAs has not been in proportion with the drop in the gross NPAs on account of lower provision cover. The provision cover had dropped from 71.25 per cent in 1999-00 to 68.02 per cent in 2002-03. The share of foreign banks in gross advances of all scheduled commercial banks declined from 8.0 per cent in 1999-2000 to 7.2 per cent in 2002-03, and the share of net NPAs also declined from 8.03 per cent in 1999-00 to 7.06 per cent in 2002-03. The share of gross NPAs in all SCBs declined from 4.37 per cent in 1999-00 to 4.24 per cent with the decline in the share of gross NPAs. However, the share of net NPAs increased from 2.58 per cent to 2.85 per cent on account of lower provision cover. The drop in the share of gross NPAs in not in line with the drop in the share of gross advances, indicating a decline in the incremental asset quality. The share of foreign banks in net advances of all scheduled commercial banks declined from 8.03 per cent in 1999-2000 to 7.06 per cent in 2002-03; the share of gross NPAs also declined during this period. However the share of net NPAs grew from 2.58 per cent in 1999-00 to 2.85 per cent in 2002-03 on account of lower provisioning. The ratio of the group's share in the net NPAs to the share of net advances increased to 0.40 per cent in 2002-03 from 0.32 per cent in 1999-00. The performance of the group, quality. The ratio of the share in 1999-00 to 0.59 per cent in increased from 0.32 per cent when compared to the industry, indicates a decline in the asset of gross NPA to gross advances increased from 0.55 per cent 2002-03, while the ratio of shares of net NPA to net advances in 1999-00 to 0.40 per cent in 2002-03.

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Spreads & net profitability margin

Spreads The spreads of all bank groups, except nationalised banks, dropped during 1998-99 to 200203. In the case of nationalised banks, spreads improved by 2 basis points (bps) during the same period. Other scheduled commercial banks (OSCBs) witnessed the steepest decline in spreads. On an absolute level, foreign banks, with a spread of 3.35 per cent, were the leaders in 200203, followed by nationalised banks with a spread of 3.29 per cent. The primary reason for the drop in the spreads, across categories, was the sharper decline in the yield on carry business in comparison to the interest cost. As interest rates declined, the yield on advances and the yield on investments both fell faster than the cost of deposits, which mounted pressure on spreads. Compared to other segments, the decline in the yield on investments was higher in the case of OSCBs and foreign banks.
Spreads: SBI and associates
1999 Yield on carry business (I) Yield on advances Yield on investments Interest cost (II) Cost of deposits Cost of borrowings Spreads (II - I) Source: CRIS INFAC 10.79 11.32 12.06 7.78 8.11 10.98 3.01 2000 10.48 10.89 11.70 7.61 7.90 10.62 2.87 2001 10.21 10.75 10.68 7.39 7.58 12.43 2.81 2002 9.90 9.72 10.77 7.39 7.57 13.44 2.52

Table 1
2003 9.38 9.04 9.74 6.80 7.02 10.56 2.58

Spreads: Nationalised banks
1999 Yield on carry business (I) Yield on advances Yield on investments Interest cost (II) Cost of deposits Cost of borrowings Spreads (II - I) Source: CRIS INFAC 10.93 12.19 11.72 7.66 7.64 18.39 3.27 2000 10.70 11.80 11.72 7.61 7.51 20.31 3.08 2001 10.62 11.49 11.41 7.30 7.17 22.23 3.32 2002 10.19 10.56 11.02 7.08 6.95 22.22 3.11

Table 2
2003 9.61 9.82 10.18 6.33 6.21 19.57 3.29

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Spreads: Other scheduled commercial banks
1999 Yield on carry business (I) Yield on advances Yield on investments Interest cost (II) Cost of deposits Cost of borrowings Spreads (II - I) Source: CRIS INFAC 12.02 13.56 12.21 9.42 9.31 15.23 2.60 2000 11.01 12.26 11.46 8.28 8.11 13.29 2.73 2001 10.70 11.68 11.19 7.91 7.80 11.96 2.78 2002 8.54 8.75 9.18 6.53 7.34 3.30 2.01

Table 3
2003 9.73 10.93 8.96 7.73 6.62 12.55 2.00

Spreads: Foreign banks
1999 Yield on carry business (I) Yield on advances Yield on investments Interest cost (II) Cost of deposits Cost of borrowings Spreads (II - I) Source: CRIS INFAC 12.50 14.98 12.20 8.76 9.01 8.63 3.74 2000 11.49 13.09 11.78 7.41 7.23 8.46 4.08 2001 11.38 13.12 11.03 7.35 6.74 9.25 4.03 2002 9.91 11.64 10.36 6.61 6.08 8.10 3.30

Table 4
2003 8.69 10.70 8.26 5.34 5.31 5.76 3.35

Foreign banks Spreads Foreign banks had the highest spreads in 1998-99, but they declined to 3.35 per cent in 200203 due to the higher drop in the yield on carry business. Despite this, foreign banks had the highest spreads among all bank groups. Yield on carry business The yield on carry business dropped by 381 bps from 12.50 per cent in 1998-99 to 8.69 per cent in 2002-03. This was primarily due to a 428 bps drop in the yield on advances from 14.98 per cent in 1998-99 to 10.7 per cent in 2002-03, and a 394 bps drop in the yield on investments from 12.20 per cent in 1998-99 to 8.26 per cent in 2002-03. The loan books of foreign banks generally have a high proportion of short-term loans and advances, which led to a faster drop in the yield on advances. Moreover, foreign banks generally lend foreign currency loans and ECBs, which carry a floating rate of interest. With the drop in the global interest rate, the yield on advances suffered. Further, foreign banks also started facing competition from the new private sector banks, forcing them to reduce the rate of interest. With the hardening of interest rates, the yield on advances is expected to improve. Foreign banks have very little exposure to long tenure securities, and the re-pricing of securities they hold is faster than that of other bank groups, which resulted in a drop in the yield on investments. But, in 2002-03, these banks increased their exposure to SLR securities, when the 90
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acquisition cost of these securities was high. With the hardening of interest rates, this group will suffer from the drop in the yield on investments and also the losses arising from the markto-market valuation of the securities. Interest cost The interest cost dropped by 342 bps from 8.76 per cent in 1998-99 to 5.34 per cent in 2002-03, driven by a 370 bps drop in the cost of deposits, which fell from 9.01 per cent in 1998-99 to 5.31 per cent in 2002-03. Historically, the reliance of foreign banks on deposits has been lesser than that of the other bank groups. The interest rates that they offer on deposits are also lower than that offered by public sector banks. This, coupled with the increased share of low cost deposits, has helped them to achieve the highest drop in the cost of deposits during 1998-99 and 2002-03. Although the low cost deposit ratio of foreign banks is lesser than that of the public sector banks, the proportion of demand deposits in low cost deposits is higher than that of the public sector banks, which supported the drop in the cost of deposits. Borrowings constitute 25-30 per cent of the borrowed funds of the foreign banks. Borrowings are generally of short duration, hence the drop in the cost of borrowings has been in line with the general drop in the interest rates. Moreover, foreign banks also get funding support from their parent companies at a very low cost, and sometimes even free of cost. Nationalised banks Spreads The spreads of nationalised banks increased marginally by 2 bps from 3.27 per cent in 199899 to 3.29 per cent in 2002-03, driven by a 133 bps drop in the interest cost. The yield on carry business dropped by 131 bps to 9.61 per cent in 2002-03, on account of the slower drop in the yield on investments. Yield on carry business The yield on carry business fell from 10.93 per cent in 1998-99 to 9.61 per cent in 200203. The yield on advances dropped by 237 bps from 12.2 per cent in 1998-99 to 9.82 per cent in 2002-03, while the yield on investments slipped by just 153 bps from 11.72 per cent in 1998-99 to 10.18 per cent in 2002-03. The drop in the yield on advances was in line with the industry. Across all categories, the lowest drop in the yield on investment was witnessed in case of nationalised banks. This is due to the high exposure to long tenure securities, which lowered the re-pricing ratio, and also because the group maintained a steady SLR. Interest cost The cost of deposits of nationalised banks dropped by 143 bps from 7.64 per cent in 199899 to 6.21 per cent in 2002-03. Nationalised banks were quick to respond to the declining interest rates by revising downwards the interest rate on term deposits. Nationalised banks have one of the highest low cost deposit ratio of 36 per cent (next only to 37 per cent of the SBI Group). This helped banks in this category in lowering the cost of deposits.
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State Bank of India & associates Spreads The spreads of nationalised banks declined by 43 bps from 3.01 per cent in 1998-99 to 2.58 per cent in 2002-03. A faster decline was witnessed in both the yield on advances and the yield on investments, which pulled down the yield on carry business. A slower decline in the cost of deposits, vis-à-vis other bank groups, restricted the fall in the interest cost. Yield on the carry business The yield on carry business dropped by 141 bps from 10.8 per cent in 1998-99 to 9.4 per cent in 2002-03. During the same period, the yield on the advances fell by 228 bps from 11.32 per cent to 9.04 per cent and the yield on investments slipped by 232 bps from 12.06 per cent in 9.74 per cent. In 1998-99, this group enjoyed a higher yield on investments, compared to the nationalised banks, but in 2002-03, the yield on investments fell below that of the nationalised banks. We believe that this occurred due to the SBI Group's increasing exposure to SLR securities during 1998-99 to 2002-03, with the proportion of SLR securities to NTDL touching 46 per cent during 2002-03. With falling interest rates, every successive years' exposure to SLR securities was at a higher acquisition cost, which pulled down the yield. Further, the group had also booked healthy treasury profits by selling high-yield securities, which may have also contributed to the drop in the yield. In the case of the nationalised banks, the yield on investments was steady at 11.4-11.7 per cent during 1998-99 to 2001-02, but dropped to 10.2 per cent in 2002-03 when the group increased its exposure to SLR securities, with the SLR touching 36 per cent. Though nationalised banks also booked healthy profits on investments, the growth in treasury profits was less than that of the SBI Group. The yield on investments is higher than the yield on advances, which may be on account of the group's historically higher exposure to higher tenure government securities. The SBI Group has also shown a trend similar to that witnessed in the nationalised banks, with approximately 50 per cent of the loans and advances classified under 'more than 1 year' maturity bucket, and approximately 70 per cent of the investments being classified under 'more than 1 year' maturity buckets. The drop in the yield on advances has been in line with the industry. The 228 bps drop in the yield on advances has been the lowest amongst all the bank groups. For the SBI Group, the yield on advances in 2002-03 was lower than that of the nationalised banks, due to the lower lending rates that it offered on advances. Interest cost The interest cost declined by 133 bps from 7.66 per cent in 1998-99 to 6.33 per cent in 2002-03, with the cost of deposits dropping from 7.64 per cent in 1998-99 to 6.21 per cent in 2002-03. For this group, the proportion of low cost deposits to total deposits dropped to 37 per cent in 2002-03 from 43 per cent in 1997-98, but the ratio was still the highest amongst all the 92
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scheduled commercial banks. A study of the composition of low cost deposits reveals that the share of savings deposits in low cost deposits rose from 52 per cent in 1997-98 to 61 per cent in 2002-03. Further, the drop in the interest cost was restricted due to the higher interest obligation (on account of Resurgent India Bonds and India Millennium Deposits). The outstanding deposits under RIB/IMD stood at Rs 437.3 billion as on March 31, 2003, in the books of SBI. Excluding RIB/ IMD, the cost of deposits for SBI fell from 8.05 per cent in 1998-99 to 6.43 per cent in 2002-03. Borrowings are generally raised to meet mismatches in short-term liquidity and are a very small proportion of the banks' total borrowings. The change in the cost of borrowing has a minor impact on the interest cost Other scheduled commercial banks Spreads Spreads dropped by 60 bps from 2.60 per cent (2.57 per cent) in 1998-99 to 2.00 per cent (2.60 per cent) in 2002-03. The steeper fall in the yield on investment dragged down the yield on carry business, which in turn put pressure on the spreads. If we exclude ICICI Bank from the OSCBs group, we observe a 3 bps increase in spreads, to 2.60 per cent in 200203. Yield on carry business The yield on carry business declined by 229 bps (265 bps) from 12.02 per cent (12 per cent) in 1998-99 to 9.73 per cent (9.36 per cent) in 2002-03, after touching the lowest level of 8.5 per cent (10.3 per cent) in 2001-02. This sudden drop was due to the merger of ICICI with ICICI Bank. The yield on advances dropped to 10.9 per cent (10.2 per cent) in 2002-03 from 13.6 per cent (13.47 per cent) in 1997-98, while the yield on investments shrank to 9.0 per cent (9.38 per cent) in 2002-03 from 12.2 per cent (12.3 per cent) in 1997.98. The higher fall in the yield on investments was due to the group's lower exposure to high coupon securities. Further, based on a study of the maturity profile of a sample set of private sector banks, we find that, for this group, the re-pricing of securities took place at a faster rate as compared to the public sector banks. Securities maturing within 1 year were 38 per cent in case of the sample private sector banks, while it was 10 per cent and 20 per cent in the case of a sample set of nationalised banks and SBI group, respectively. The drop in the yield on advances was due to the aggressive lending strategy adopted by the group, especially the new private sector banks. Further, the drop has been in line with the industry. Interest cost The interest cost increased from 9.42 per cent (9.43 per cent) in 1998-99 to 7.73 per cent (6.76 per cent) in 2002-03, with cost of deposits dropping by 269 bps (262 bps) from 9.31 per cent (9.35 per cent) in 1998-99 to 6.62 per cent (6.73 per cent) in 2002-03.

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There was a 98 to 24 per from 47 per has been in

marginal improvement in the low cost deposit ratio from 22 per cent in 1997cent in 2002-03. However, the proportion of savings in low cost deposits increased cent in 1997-98 to 53 per cent in 2002-03. The fall in the cost of deposits line with general drop in the interest rate.

Many OSCBs, especially the old private sector banks, offer a high rate of interest on term deposits, as compared to the public sector banks (nationalised banks and SBI Group). The low cost of deposits, 24 per cent in 2002-03, was the lowest amongst all bank groups. Moreover, the technologydriven products introduced by many private sector banks (OSCBs) allow customers to switch between term and savings accounts; this increases the liability of term deposits. These factors contribute to the higher cost of deposits. The cost of borrowings dropped from a high of 15.23 per cent (14.57 per cent) in 199900 to 12.55 per cent (9.45 per cent) in 2002-03 after touching a low of 3.3 per cent (12.03 per cent) in 2001-02. This sudden spike was because of the merger of ICICI Ltd with ICICI Bank. ICICI Ltd's high cost deposits were merged with the banking system, which led to a sudden surge in the interest cost. With the ICICI Bank's focus on replacing its high cost borrowings with low cost of deposits, there will be a drop in the cost of borrowings and a reduction in the share of borrowings in total borrowings. Net profitability margin (NPM) All segments, except OSCBs, either improved their NPM or at least maintained it during 199899 to 2002-03. In 2002-03, foreign banks had the highest NPM of 2.5 per cent, followed by public sector banks with a NPM of 2.4 per cent. Foreign banks
NPM: Foreign banks
1999 Spreads ( I ) Operating expense as per cent of AFD (II) Core-fee-income as per cent of AFD (III) Net profitability margin (I - II + III) AFD: Average funds deployed Source: CRIS INFAC 3.74 4.05 2.74 2.43 2000 4.08 3.58 2.54 3.04 2001 4.03 3.70 2.47 2.81 2002 3.30 3.45 2.14 1.99

Table 5
2003 3.35 3.15 2.35 2.55

The NPM improved marginally to 2.55 per cent in 2002-03, from 2.43 per cent in 1998-99, despite the fall in the spreads. The operating expense ratio dropped by 90 bps to 3.1 per cent in 2002-03 from 4.05 per cent in 1998-99. However, the entire benefit could not be passed on to the NPM due to the drop in the core fee income ratio (also called core fee-based income ratio, which is core fee income as a percentage of average funds deployed), which dropped by 39 bps to reach 2.35 per cent by 2002-03 from 2.74 per cent in 1998-99. In spite of the sharpest decline (in percentage points) in the operating expense ratio (operating expense as a percentage of average funds deployed), foreign banks still continue to have a very high operating expense ratio amongst all bank groups. The high operating cost is on account of the heavy investments in infrastructure and technology, and staff cost. 94
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Foreign banks, due to their worldwide network, are strong in providing banking services like trade finance, custody and cash management services, due to which their fee-based income is high. They are also strong in treasury operations and foreign exchange remittances, which aid them in generating fee income in the nature of exchange gains. Though the ratio had been declining, foreign banks continued to enjoy the highest core fee income ratio amongst all the banking groups. Foreign banks lend foreign currency loans, and the syndication charges/processing charges recovered are high. They are also strong in trade finance and correspondent-banking services, where they earn fee-based income without taking exposure. This leads to a high core fee income ratio. The ratio of core fee income ratio to NPM dropped by 20 percentage points between 1998-99 and 2002-03, to 92 per cent in 2002-03, in line with the industry trend, yet it was a major factor in keeping the NPM stable. Greater spreads and high core fee based income help foreign banks in managing higher operating expenses and, thus, have a high NPM. The foreign banks' NPM of 2.55 per cent in 200203 was the highest amongst all scheduled commercial banks. But as more private sector banks venture into areas where foreign banks are strong, competition will increase, which will exert pressure on spreads and core fee income. Foreign banks will thus need to control to their operating costs to have a stable NPM. Nationalised banks
NPM: Nationalised banks
1999 Spreads ( I ) Operating expense as per cent of AFD (II) Core-fee-income as per cent of AFD (III) Net profitability margin (I - II + III) AFD: Average funds deployed Source: CRIS INFAC 3.27 3.07 0.99 1.20 2000 3.08 2.95 0.92 1.05 2001 3.32 3.15 0.86 1.03 2002 3.11 2.72 0.79 1.17

Table 6
2003 3.29 2.62 0.75 1.42

Despite stable spreads, the NPM of nationalised banks improved by 22 bps (the highest amongst all bank groups) to 1.42 per cent in 2002-03 from 1.20 per cent in 1998-99. This can be attributed to the savings in operating expenses. The operating expense ratio dropped to 2.6 per cent in 2002-03 from 3.1 per cent in 1998-99, after touching a high of 3.15 per cent in 2000-01. The sudden spike was on account of the voluntary retirement schemes (VRS) introduced by nationalised banks. The savings in manpower could be seen through 2001-02 and 2002-03, when the operating expenses ratio started declining to reach 2.62 per cent in 2002-03. However, the drop in the core fee-based income ratio restricted the increase in the NPM to 1.4 per cent. The ratio of core fee-based income to the average funds deployed had declined to 0.7 per cent in 2002-03 from 1.0 per cent in 1998-99, thereby reducing its contribution to the NPM to 53 per cent in 2002-03 from 0.83 per cent in 1998-99.

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Nationalised banks had the lowest core fee income ratio amongst all the SCBs. Further, the group's share in fee-based income reduced by about 5 percentage points during 1998-99 and 200203 to reach 34 per cent in 2002-03. Healthy spreads and control over operating costs helped the NPM to improve. Going forward, with the pressure on spreads as the yield on investments drop, the group needs to concentrate on increasing its core fee-based income and control operating expenses to maintain the growth in NPM. With staff cost accounting for more than 70 per cent of the operating expenses, the group needs to utilise manpower efficiently and improve productivity. To compete with the more aggressive private sector banks, the group will have to invest in technology, which will also increase the operating expense ratio and render some staff as excess. This can pull down the productivity. State Bank of India and associates
NPM: SBI and associates
1999 Spreads ( I ) Operating expense as per cent of AFD (II) Core-fee-income as per cent of AFD (III) Net profitability margin (I - II + III) AFD: Average funds deployed Source: CRIS INFAC 3.01 3.23 1.66 1.44 2000 2.87 2.89 1.44 1.42 2001 2.81 3.13 1.25 0.94 2002 2.52 2.36 1.15 1.31

Table 7
2003 2.58 2.34 1.11 1.35

The NPM declined by just 9 bps to 1.35 per cent in 2002-03 from 1.44 per cent in 199899, despite the 43 bps decline in spreads and the fall in the contribution of core fee-based income from more than 100 per cent (115 per cent) in 1998-99 to 82 per cent in 200203. This has been on account the SBI Group's focus on controlling operating expenses. The operating expense ratio declined by 89 bps from 3.23 per cent in 1998-99 to 2.34 per cent in 2002-03. During 2000-01, the operating expense ratio increased to 3.13 per cent from 2.89 per cent in 1999-00, because of impact of voluntary retirement scheme introduced by the group. The operating expense ratio of 2.34 per cent during 2002-03 is lower than that of the nationalised banks. The core fee income ratio declined by 55 bps from 1.66 per cent in 1998-99 to 1.11 per cent in 2002-03, in line with the industry trend. Although the share of core fee income shrank to 82 per cent in 2002-03, it still remains the major contributor to the NPM. The core fee income ratio at 1.11 per cent is better than that of nationalised banks and other scheduled commercial banks. Staff cost accounts for than 70 per cent of the operating expense, hence, with increasing pressure on the spreads, the group will have to control staff cost and improve productivity to maintain a stable NPM. The group has planned investments in technology to compete effectively with other players. This is likely to result in excess manpower, which need to be utilised effectively so that overall productivity can be improved. Along with controlling operating costs, the SBI Group also need to continue its focus on increasing core fee income, so that NPM is stable. 96
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Other scheduled commercial banks
NPM: Other scheduled commercial banks
1999 Spreads ( I ) Operating expense as per cent of AFD (II) Core-fee-income as per cent of AFD (III) Net profitability margin (I - II + III) AFD: Average funds deployed Source: CRIS INFAC 2.60 2.49 1.24 1.35 2000 2.73 2.26 1.11 1.59 2001 2.78 2.17 1.03 1.64 2002 2.01 1.93 0.78 0.86

Table 8
2003 2.00 2.25 1.04 0.79

With the drop in spreads, the NPM declined to 0.8 per cent (1.21 per cent) in 2002-03 from 1.4 per cent (1.26 per cent) in 1998-99. Further, the core fee income ratio declined by 20 bps (27 bps) from 1.24 per cent (1.22 per cent) in 1998-99 to 1.04 per cent (0.95 per cent) in 2002-03. However, the drop was restricted due to the marginal savings in the operating expenses ratio. The operating expenses ratio dropped to 2.25 per cent (2.33 per cent) in 2002-03 from 2.49 per cent (2.25 per cent) in 1998-99. But the operating expense ratio increased from 2.17 per cent (2.17 per cent) in 2000-01 to 2.25 per cent (2.33 per cent) in 2002-03 due to the aggressive branch expansion undertaken by this group, especially the new private sector banks - HDFC Bank, UTI Bank, ICICI Bank, IDBI Bank, Kotak Mahindra Bank etc. Many of the private sector banks are still in the growth stage and expanding their reach (new private sector banks), or are in the technology upgradation mode, the benefits of which are expected to accrue to them in later years. Contrary to the industry trend, the contribution of the core-fee income ratio to the NPM increased from 0.91 per cent (0.97 per cent) in 1998-99 to 1.32 per cent (0.78 per cent) in 200203. New private sector banks, especially ICICI Bank, have been pioneers in venturing into new business segments, which has helped them in generating higher fee-based income. ICICI Bank was among the first to venture into credit cards, providing depository services, third-party business (acting as corporate agents for distribution of mutual fund and insurance products of the leading mutual fund and insurance companies) and private banking services to their clients. Further, the huge thrust on retail credit also helped in the generation of fee-based income, in the form of processing fees. Since most of the banks in this group are in a growth phase, we believe that it will take some time for the operating expense ratio to stabilise. With spreads under pressure and operating expense ratio expected to increase, the group needs to increase its focus on improving the core fee income by venturing into new business areas.

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4.0

Profit and loss account

Total interest income Other scheduled commercial banks (OSCBs)
OSC Banks: Interest income
Rs billion

1997-98 46.3 28.5 3.6 0.4 78.8

1998-99 1999-00 2000-01 2001-02 53.0 38.4 6.9 1.7 100.0 60.3 50.0 7.1 1.3 118.7 72.3 63.1 8.4 1.1 145.0 80.7 73.9 9.7 1.2 165.5

2002-03 138.9 92.1 8.5 4.4 243.8

CAGR (per cent) (1997-98 to 2002-03)

Table 1

Interest/discount on advances/bills Income on Investments Int on bal with RBI and other inter-bank funds Other interest income Total interest income Source: RBI & CRIS INFAC research

24.5 26.5 18.9 58.7 25.3

Other scheduled commercial banks (OSCBs) recorded the highest growth in total interest income amongst all bank groups. The total interest income of OSCBs grew at a CAGR of 25.34 per cent (14.51 per cent) between 1997-98 and 2002-03, driven by a 24.54 per cent (11.87 per cent) CAGR growth in income from advances and 26.46 per cent (17.88 per cent) CAGR growth in income from investments. Between 1998-99 and 2002-03, the yield on advances declined by 264 (332) basis points, while the yield on investments declined by 325 (293) basis points. Advances grew by 31.18 per cent (19.72 per cent ) CAGR while investments went up by 32.0 per cent (22.7 per cent ) CAGR between 1998-99 and 2002-03. State Bank of India and associates
SBI and associates: Total interest income
Rs billion Interest/discount on advances/bills Income on Investments Int on bal with RBI and other inter-bank funds Other interest earned Total interest income Source: RBI & CRIS INFAC research 1997-98 108.1 84.4 8.0 11.5 212.1 1998-99 1999-00 2000-01 2001-02 116.6 101.2 13.4 20.1 251.3 129.3 126.6 18.3 17.6 291.9 150.2 148.6 19.6 21.8 340.2 153.1 184.6 33.7 16.1 387.5 2002-03 160.0 199.2 35.1 14.5 408.7

Table 2
CAGR (per cent) (1997-98 to 2002-03) 8.2 18.7 34.3 4.6 14.0

During 1998-99 to 2002-03, the total interest income of the SBI Group grew at a CAGR of 14 per cent, with income from advances, income from investments, and income from RBI & inter-bank funds growing at a CAGR of 8.6 per cent, 18.6 per cent and 34.3 per cent, respectively. The low growth in income from advances was mainly on account of falling interest rates (the yield on advances declined from 11.32 per cent to 9.04 per cent), coupled with poor credit offtake.

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Income on investments grew faster than income on advances, as the SBI Group substantially increased its exposure towards SLR securities during 1997-98 to 2002-03. Further, we believe that the SBI Group has a relatively high exposure to high coupon securities in its investment portfolio. Nationalised banks
Nationalised banks: Interest income
Rs billion Interest/discount on advances/bills Income on Investments Int on bal with RBI and other inter-bank Others Total interest income Source: RBI & CRIS INFAC research 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 188.0 166.9 19.7 4.0 378.6 214.1 196.9 24.6 7.9 443.5 243.0 230.9 24.1 4.8 502.7 280.0 256.2 28.8 4.6 569.7 306.3 278.3 30.8 4.4 619.8 332.0 300.8 21.2 9.2 663.2

Table 3
CAGR (per cent) (1997-98 to 2002-03) 12.0 12.5 1.5 18.4 11.9

Interest income grew at 11.87 per cent CAGR during 1997-98 to 2002-03, driven by a 12.5 per cent CAGR growth in income on investments. During the period under consideration advances grew at a CAGR of 17.28 per cent, while investments grew by a CAGR of 15.86 per cent. However, the interest on advances grew by only 12.1 per cent CAGR in comparison with a 12.5 per cent CAGR growth in the income on investments. This was primarily because, between 1998-99 and 2002-03, the decline in the yield on advances (237 basis points) was greater than the fall in the yield on investments (153 basis points), which offset the growth in the advances portfolio. The yield on advances is linked to the decline in the PLR (which dropped rapidly during 1998-2003) while the yield on investments depends on the composition of securities in the investment portfolio of the bank. Several nationalised banks carried high coupon securities in their portfolio. Foreign banks
Foreign banks: Interest income
Rs billion Interest/discount on advances/bills Income on Investments Int on bal with RBI and other inter-bank funds Other interest income Total interest income Source: RBI & CRIS INFAC research 1997-98 42.6 19.8 4.4 0.9 67.8 1998-99 1999-00 2000-01 2001-02 44.0 27.3 5.9 1.3 78.6 42.6 33.0 5.0 1.2 81.8 51.6 36.1 5.8 1.3 94.7 53.3 36.7 6.1 0.9 97.0 2002-03 53.9 31.4 3.0 1.4 89.7

Table 4
CAGR (per cent) (1997-98 to 2002-03) 4.8 9.6 -7.5 7.8 5.7

The total interest income of foreign banks grew at a CAGR of 5.74 per cent between 199798 and 2002-03, the lowest growth rate among all categories. Income from advances grew at a CAGR of 4.83 per cent and income from investments grew at a CAGR of 9.59 per cent. Advances grew at a CAGR of 12.2 per cent during the same period while investments grew at a CAGR of 17.3 per cent. Between 1998-99 and 2002-03, the yield on advances declined by 428 basis points while the yield on investments fell by 394 basis points. 100
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Interest expended Other scheduled commercial banks
OSC Banks: Interest expended
Rs billion Interest on deposits Interest on RBI/inter-bank borrowings Others Total interest expended Source: RBI & CRIS INFAC research 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 55.1 1.9 2.0 59.0 72.6 2.9 2.9 78.4 81.2 4.2 4.1 89.6 97.6 4.3 5.0 106.9 112.3 5.0 5.8 123.1 124.5 4.7 56.8 186.0

Table 5
CAGR (per cent) (1997-98 to 2002-03) 17.7 19.8 94.8 25.8

The total interest expended grew at a CAGR of 25.8 per cent (12.93 per cent) between 199798 and 2002-03. The interest on deposits and interest on RBI/interbank borrowings grew at a CAGR of 17.70 per cent (13.26 per cent) and 19.80 per cent (9.75 per cent) respectively. The steep growth in the ‘others' category was because ICICI Bank classified Rs 5,280 crore of interest on borrowings of the erstwhile ICICI as other interest expense. State Bank of India & associates
SBI and associates: Total interest expended
Rs billion Interest on deposits Interest on RBI/inter-bank borrowings Others Total interest expended Source: RBI & CRIS INFAC research 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 128.4 5.3 5.4 139.0 159.4 5.4 5.1 169.8 187.9 6.4 4.7 199.0 215.4 6.2 7.5 229.0 251.1 4.6 9.9 265.6 260.6 2.3 9.2 272.1

Table 6
CAGR (per cent) (1997-98 to 2002-03) 15.2 -15.7 11.4 14.4

During 1997-98 and 2002-03, total interest expended grew at a CAGR of 14.37 per cent, driven by a 15.21 per cent CAGR growth in interest on deposits. For SBI and associates, the cost of deposits had been higher than the average cost of deposits for all scheduled commercial banks due to the higher interest obligation (on account of Resurgent India Bonds and India Millennium Deposits). With excess liquidity and low demand for credit the borrowings of the bank group came down, which in turn led to a drop in the interest on RBI/ inter-bank borrowings. Nationalised banks
Nationalised banks: Interest expended
Rs billion Interest on deposits Interest on RBI/inter-bank borrowings(a) Others(b) Total interest expended Source: RBI & CRIS INFAC research 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 250.8 4.5 7.3 262.6 296.4 5.9 6.2 308.6 337.5 7.1 10.2 354.8 368.4 7.7 11.8 387.9 404.6 6.8 14.5 426.0 405.6 5.7 15.2 426.5

Table 7
CAGR (per cent) (1997-98 to 2002-03) 10.1 4.9 15.9 10.2

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Between 1997-98 and 2002-03, total interest expended grew at a CAGR of 10.18 per cent, with interest on deposits growing at a CAGR of 10.09 per cent. The slow growth in the interest on deposits was on account of a fall in the interest rate offered on term deposits. The cost of deposits dropped by approximately 140 basis points to 6.2 per cent in 2002-03, while total deposits grew by 14 per cent CAGR during 1997-98 to 2002-03. Foreign banks

Foreign banks: Interest expended
Rs billion Interest on deposits Interest on RBI/inter-bank borrowings(a) Others(b) Total interest expended Source: RBI & CRIS INFAC research 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 33.4 7.2 1.7 42.2 40.7 9.6 1.7 52.0 35.0 12.4 2.5 49.9 36.6 17.1 4.1 57.7 37.6 20.7 2.3 60.5 35.5 13.5 1.6 50.7

Table 8
CAGR (per cent) (1997-98 to 2002-03) 1.3 13.6 -0.9 3.7

Between 1997-98 and 2002-03, the total interest expended grew at a CAGR of 3.7 per cent while the interest on deposits grew at a CAGR of 1.3 per cent. However, during the same period, the interest on RBI/ inter bank borrowings grew at a CAGR of 13.6 per cent as the share of borrowings in the total liabilities went up from 15 per cent to 20 per cent. While the domestic banks focus on mobilising deposits to meet their funding requirements, foreign banks (on account of the restricted branch network) have a higher proportion of borrowings in their total borrowed funds vis-à-vis their domestic peers. This higher proportion of borrowings of foreign banks has resulted in an increase in their interest on borrowings.

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5.0

Other income

Besides interest income, banks also earn fee income from services such as issuing letters of credit, providing bank guarantees, bill collection, and cash management services, for which they charge commission or brokerage, income in the form of draft charges and bank charges. These sources of income together constitute the "other income" of a bank. Banks also earn income by way of profits on the sale of their investments, which is also classified as other income. Other income can be divided into two broad categories: core fee income, and other income. Core fee income is the income generated from the banks' core activities such as mobilising deposits, lending and other normal banking services. Income from other allied activities like credit cards, depository services and third-party distribution are also classified under core fee income. On the other hand, the profits on sale of investments, fixed assets and other miscellaneous income are classified as other income. Since these are not regular sources of income, banks need to concentrate on core fee income to maintain stable profitability. Other income (excluding profit on sale of investment) as per cent of total income

Other income (ex treasury profits) as per cent of total income Table 1
(per cent) SBI and assoc Nationalised banks OSCBs Foreign banks All SCBs Source: CRIS INFAC 1998 14.0 9.7 10.6 18.3 11.7 1999 14.1 9.5 10.8 18.2 11.6 2000 12.9 9.0 10.4 18.6 11.0 2001 11.8 8.5 10.0 18.0 10.4 2002 11.2 7.9 8.6 17.2 9.6 2003 10.9 7.8 10.2 21.4 10.0

During 1997-98 to 2002-03, the share of other income (excluding profit on sale of investment) in total income has decreased for all the categories, except foreign banks. To a certain extent, this decline is the result of an increase in the total income on account of an increase in the profit on sale of investments.
Core fee income as per cent of other income
(per cent) SBI and associates Nationalised banks OSCBs Foreign banks All SCBs Source: CRIS INFAC 1998 92.6 74.0 55.1 82.0 78.3 1999 94.1 79.8 73.3 93.6 85.6 2000 85.6 67.0 54.6 85.2 73.2 2001 80.4 66.1 69.2 82.7 73.2 2002 76.9 46.6 36.9 64.6 54.8

Table 2
2003 62.0 39.8 37.3 78.8 48.9

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Core fee-based income
(Rs in billion) SBI and associates Nationalised banks OSCBs Foreign banks All SCBs Source: CRIS INFAC 1997-98 1998-99 1999-00 2000-01 33.9 36.8 8.6 15.7 96.0 39.7 41.3 10.6 17.4 110.1 41.3 44.3 12.5 18.3 117.8 43.1 47.3 14.5 20.8 127.2 2001-02 2002-03 46.3 48.9 15.7 21.1 133.9 49.6 52.8 27.0 24.4 156.4

Table 3
CAGR % (1998-2003) 7.9 7.5 25.6 9.2 10.3

Foreign banks Foreign banks have the highest proportion of other income (other income excluding the profit on sale of investment) to the total income amongst all categories. The share of other income in total income increased from 18.3 per cent in 1997-98 to 21.4 per cent in 2002-03. During 1997-98 to 2001-02, the proportion of other income (excluding profit on sale of investments) in total income had been stable between 17 per cent and 18 per cent, but it jumped to 21.4 per cent in 2002-03, driven by an impressive 24 per cent growth in the profit from exchange transactions. Moreover, interest income recorded a negative growth of 7.6 per cent during the same period due to low credit offtake. The core fee income of foreign banks grew at 9 per cent CAGR during 1997-98 to 200203, driven by the 11 per cent CAGR growth in profit on exchange transactions. Foreign banks, due to their global presence, are strong players in foreign exchange transactions and trade finance transactions. Further, the syndication fee/processing fee on foreign currency lending, in which they are strong, help foreign banks in increasing their fee-based income. However, restrictive branch networks hampers their fee income in the form of commission and exchange income. State Bank of India & associates The share of other income (excluding profit on sale of investments) in total income has declined from a high of 14 per cent in 1997-98 to 10.9 per cent in 2002-03, primarily due to the increased profit on sale of investments. During 1997-98 to 2002-03, other income grew at 8.8 per cent CAGR, while total income grew at 14.5 per cent CAGR. During 1997-98 to 2002-03, commission exchange and brokerage grew at 8.4 per cent CAGR, while miscellaneous income went up from Rs 1.8 billion in 1997-98 to Rs 7.34 billion in 200203, a growth of 31 per cent CAGR. The growth in commission exchange and brokerage is on account the SBI Group's wide branch network. The growth of the SBI Group's other income is lower than that of OSCBs on account of the following factors. Higher base effect Its late entry into other areas that generate fee-based income

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Other scheduled commercial banks The proportion of other income to the total income declined marginally from 10.6 per cent (10.5 per cent) in 1997-98 to 10.2 per cent (9.2 per cent) in 2002-03, due to the increase in the profit on sale of investment. During 1997-98 to 2002-03, other income grew at 26 per cent (13 per cent) CAGR, while the total income grew at 27 per cent (16 per cent) CAGR. Other scheduled commercial banks recorded the highest growth in core fee income amongst all the scheduled commercial banks. During 1997-98 to 2002-03, core fee income of OSCBs grew by 25.6 per cent (13.8 per cent) CAGR, driven by a 30 per cent (18 per cent) CAGR growth in commission, exchange and brokerage and a 32 per cent (10 per cent) CAGR growth in other miscellaneous income. This growth can be attributed to the following factors: Increase in reach through branch expansion (especially new private sector banks). Higher service charged in comparison to the public sector banks (nationalised and SBI Group) The entry of new private sector banks into new areas that generate fee-based income, such as credit cards, depository services, and third-party distributions. Increased focus on retail finance, especially by new private sector banks, which aided in generating feebased income (in form of processing fees). Low base effect. We believe that the new private sector banks will continue to explore new avenues to increase other income, which will enable them to diversify their revenue stream and also provide stability to their bottomline. Nationalised banks The share of other income in the total income of nationalised banks dropped from 9.7 per cent in 1997-98 to 7.8 per cent in 2002-03 due to higher growth in the profit on sale of investments. Other income (excluding profit on sale of investments) grew at 8 per cent CAGR during 199798 to 2002-03, driven by an 8 per cent CAGR growth in commission, exchange and brokerage and a 15 per cent CAGR growth in miscellaneous income. During 1997-98 to 2002-03, total income grew at 13.2 per cent CAGR, with interest income growing at 11.9 per cent CAGR. In the case of nationalised banks, the trend that is observed is similar to that seen in the SBI Group, i.e., growth was slower because nationalised banks were slow in foraying into different areas to diversify their revenue stream.

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Profit on sale of investment

Share of profit on sale of investments in total income
(per cent) SBI and associates Nationalised banks OSCBs Foreign banks All SCBs Source: CRIS INFAC 1998 0.7 1.9 6.0 3.7 2.1 1999 0.3 1.0 1.8 1.0 0.8 2000 1.3 2.6 5.7 2.2 2.5 2001 1.8 2.6 2.7 2.9 2.3 2002 2.3 6.6 11.9 7.9 6.0

Table 4
2003 5.5 8.9 12.7 4.2 8.0

Profit on sale of investments
(Rs in billion) SBI and associates Nationalised banks OSCBs Foreign banks All SCBs Source: CRIS INFAC 1998 1.7 8.1 5.6 3.3 18.7 1999 0.9 4.8 2.1 1.0 8.7 2000 4.5 14.9 8.1 2.3 29.9 2001 7.0 16.8 4.4 3.5 31.7 2002 10.2 48.1 24.9 10.3 94.2 2003 26.7 70.8 40.0 5.1 142.6

Table 5
CAGR (per cent) 72.6 54.5 48.0 9.5 50.2

Profit on sale of investments increased substantially The share of profit on sale of investments in the total income has increased for all categories. The falling interest rate scenario has helped all groups to post a healthy growth in treasury profits. Nationalised banks Nationalised banks had recorded the highest increase in the share of profit on sale of investments in the total income; it went up from a mere 1.9 per cent in 1997-98 to 8.9 per cent in 2002-03. The high exposure of nationalised banks to high coupon securities gave them an opportunity to book healthy profits during the soft interest rates scenario prevalent then. Our study of the maturity profile of investments of a sample set of banks falling within this group reveals that approximately 65 per cent of the securities are classified in 'over the 3year' maturity bucket. (In a hardening interest rate scenario, however, the profit on sale of investments will come down). Other scheduled commercial banks The proportion of profit on sale of investments in the total income has gone up from 6.0 per cent (5.8 per cent) in 1997-98 to 12.7 per cent (12.1 per cent) in 2002-03. The OSCBs have the highest share of profit on sale of investments in the other income amongst all groups. Compared to public sector banks (SBI Group and nationalised banks), the share of interest income in the total income is lower for the OSCBs, as they focused on increasing their fee-based income by venturing into new business opportunities. Further, with the impressive growth in the profit on sale of investments, its proportion in total income increased.

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With the hardening of interest rates, as explained in the earlier chapters, banks in this group are expected to book losses from the sale of investments, which will pull down the proportion of profit on sale of investments in total income. State Bank of India & Associates The share of profit on sale of investments in the total income of the SBI Group had also gone up impressively, rising from a mere 0.7 per cent in 1997-98 to 5.5 per cent in 200203. The profit on sale of investments recorded a highest growth of 73 per cent CAGR during 1997-98 to 2002-03. With their strong core business, the SBI Group had, over the years, relied less on other income including profit on sale of investments. The soft interest rate scenario and the high exposure to high coupon SLR helped the group to post a healthy growth in the profit on sale of investments and thus increase the share of treasury profits in total income. Foreign banks Foreign banks had registered a marginal increase in the share of profit on sale of investments in the total income during the period under review. The share rose from 3.7 per cent in 199798 to 4.2 per cent in 2002-03. Foreign banks recorded the lowest growth of 10 per cent CAGR in the profit on sale of investments during 1997-98 to 2002-03. Since foreign banks had comparatively lesser exposure to high coupon securities, the profit on sale of investments was less. Our study of the maturity profile of investment as of March 31, 2003, of a sample set of foreign banks, reveals that 43 per cent of the securities are classified in the 'up to 1 year' maturity bucket. Lower profit on sale of investments led to a marginal growth in the share of profit on sale of investments in total income. Also, the higher growth in other income (excluding profit on sale of investments) in comparison to profit on sale of investments slowed down the increase the share of profit on sale of investments in total income. With the estimated loss on sale of investments, this share is expected to drop.

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6.0

Operating expenses

The staff cost accounts for a major portion of the operating expense for all the bank groups, particularly so in the case of public sector banks. Hence, all the players need to control their manpower costs to control their operating expenses. We have made an attempt to analyse the performance of the various categories in two areas: staff cost, and other operating expenses (i.e., operating expenses excluding staff cost). Staff cost
Group-wise share of employee cost in operating cost
(per cent) 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 SBI & associates Natonalised banks Other SCBs Foreign banks All SCBs

Figure 1

Source: CRIS INFAC and RBI

State bank of India and associates Highest proportion of staff cost in total operating expenses among all SCBs Among all the scheduled commercial banks, the proportion of staff cost in total operating expenses is highest for the SBI Group. Due to the high levels of recruitment in earlier years, the proportion of staff cost to the operating expense is high for these banks. Further, banks in this group spent very little on technology, and most of the work was carried out manually. Even today, not all branches of SBI are computerised. The proportion of staff cost in the total operating cost has, however, declined from about 75 per cent in 1997-98 to about 71 per cent in 2002-03, due to a reduction in the number of employees from about 308,817 in 1997-98 to 282,923 in 2002-03, coupled with an increase in the non-staff operating expenses (which grew at 14.1 per cent CAGR during the same period). The reduction in the staff strength is on account of the voluntary retirement schemes (VRS) launched by the group. The technology upgradation drive, along with the focus on computerisation of all branches, had contributed to the growth in non-staff expenditure, along with expenses on advertising and sales etc.
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Between 1997-98 and 2002-03, the SBI Group recorded a CAGR of 9.67 per cent in its staff cost while its cost per employee grew at a CAGR of 11.6 per cent. The group's cost per employee of Rs 0.262 million is the lowest amongst all scheduled commercial banks. Among the public sector banks, the SBI Group has in place a separate wage agreement. As of March 31, 2002, 25 per cent of the work force of this group constituted the management cadre, whereas it was 29 per cent in the case of nationalised banks.
SBI & associates: No of employees vs cost per employee
315,000 VRS Cost per employee (Rs) 305,000 Number of employees 275,000

Figure 2
325,000

295,000

225,000

285,000

175,000

275,000 1997-98 1998-99 1999-2000 2000-01 2001-02 Cost per employee 2002-03

125,000

Number Of employees

Source: CRIS INFAC and RBI

Nationalised banks The nationalised banks recorded a CAGR of 10.42 per cent in the staff cost between 199798 and 2002-03. The number of employees declined from 570,595 in 1997-98 to 472,514 in 2002-03, leading to a higher growth in the cost per employee. However, the staff cost as a percentage of total operating expenses reduced to 70.7 per cent for 2002-03 from 74 per cent in 1999-00 on account of VRS schemes and improved efficiencies. Akin to what was observed in the SBI Group, the legacy of heavy staff recruitment in the earlier years in this group has contributed to the higher share of staff cost. Moreover, lesser dependence on the technology and a wide branch network forced these banks to recruit more staff. Although, in 1997-98, the nationalised banks' cost per employee of Rs 0.139 million was lesser than that of the SBI Group, in 2002-03 it was higher than that of the latter, at Rs 0.276 million. This is despite the sharper drop in the number of employees. The staff cost of nationalised banks grew at 10.4 per cent CAGR during 1997-98 to 2002-03, possibly on account of the difference in the wage agreement for the two groups and also due to higher proportion of management staff in the total staff strength vis-à-vis the SBI group.

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Nationalised banks: No of employees vs cost per employee
600,000

Figure 3
325,000

VRS 500,000 225,000

450,000

175,000

400,000 1997-98 1998-99 1999-2000 Number of employees 2000-01 2001-02 Cost per employee 2002-03

125,000

Source: CRIS INFAC and RBI

Other scheduled commercial banks (OSCBs) The proportion of the staff cost in operating expenses declined sharply from about 49 per cent (50 per cent) in 1997-98 to about 36 per cent (44 per cent) in 2002-03, largely due to the focus of the private sector banks on automation, and advances in technology. For example, at the end of 2003, ICICI Bank had 1,675 ATM machines and about 70 per cent of its customerinduced transactions take place through electronic channels. The staff cost grew at a CAGR of 19.90 per cent between 1997-98 and 2002-03 while the cost per employee grew at a CAGR of 18.33 per cent from Rs 0.14 million in 1997-98 to 0.32 million in 2002-03. The private sector banks have been expanding aggressively and are still growing, hence their staff strength has gone up from about 61,700 in 1997-98 to about 66,000 in 2002-03. The cost of per employee for this group is higher than that of public sector banks, because of the higher salary structure. But the staff cost accounts for just 36 per cent of the total operating expense in comparison to 70-71 per cent observed in public sector banks. The branch network of new private sector banks is not as large as that of public sector banks. In addition, they have made massive investments in technology, which reduces their staff requirements. An ATM is manned by just one person and performs numerous basic banking operations. OSCBs make use of the DSA channel to source clients. Since their inception, the operations of OSCBs, especially the new private sector banks, are heavily technology-driven, hence the staff strength of these banks is not as high as that of public sector banks.

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Cost per employee (Rs)

550,000 Number of employees

275,000

111

OSC banks: No of employees vs cost per employee
80,000

Figure 4
375,000

75,000 Number of employees

ICICI Merger

325,000 Cost per employee (Rs)

70,000 275,000 65,000 225,000 60,000 175,000

55,000

50,000 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

125,000

Number of employees

Cost per employee

Source: CRIS INFAC and RBI

Foreign banks Many multinational banks have set up their operations in India. Today there are about 38 foreign banks operating in India. Foreign banks have seen the proportion of operating expenses in the total expenses rise from about 24 per cent in 1997-98 to about 32 per cant in 2002-03. Foreign banks have the lowest proportion of staff cost in total operating expenses among all scheduled commercial banks The proportion of staff costs in the operating expenses has remained stable at almost 32 per cent during 1997-98 to 2002-03. This is much lower than the average for all scheduled commercial banks as foreign banks spend huge amounts on non-staff expenses like technology, advertising, sales and marketing, apart from the expenses on employees. Between 1997-98 and 2001-02, the staff cost of foreign banks grew at 16 per while the cost per employee grew at a CAGR of about 19 per cent (from Rs in 1997-98 to Rs 0.8 million in 2001-02). The number of employees has declined in 1997-98 to 13,827 in 2001-02. During the same period, foreign banks recorded CAGR in the cost per employee among all the scheduled commercial banks, . cent CAGR 0.4 million from 15,354 the highest

In terms of cost per employee, the wide gap between foreign banks and other bank groups can be attributed to the following factors: Higher wage structure, as compared to the other bank groups. Drop in the staff strength. High investments in technology and infrastructure, which helps in reducing human intervention in routine banking operations. Low branch network, which reduces the need for high staff strength. Higher spreads and other income, which aid banks in sustaining high staff cost.

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Foreign banks: No of employees vs cost per employee
16,000

Figure 5
850,000

15,000 Number of employees

750,000 Cost per employee (Rs)

14,000 650,000 13,000 550,000 12,000 450,000

11,000

10,000 1997-98 1998-99 1999-2000 2000-01 Cost per employee 2001-02

350,000

Number of employees

Source: CRIS INFAC and RBI

Other operating expenses (Operating expenses excluding staff cost)
Other operating expenses
(Rs billion) SBI Group Nationalised banks Other SCBs Foreign banks Source: RBI 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 15.6 30.9 8.8 13.1 22.3 33.8 11.1 18.1 23.5 37.5 12.9 17.3 29.0 41.4 17.7 21.2 27.3 46.2 22.7 22.7 30.2 54.0 37.6 22.2

Table 1
CAGR 1998 to 2003 14.10 11.86 33.72 11.08

Other scheduled commercial banks During 1997-98 and 2002-03, the other scheduled commercial banks recorded a growth of 34 per cent (21 per cent) CAGR in other operating expenses, the highest amongst all bank groups. In terms of expense heads, repairs and maintenance recorded the highest growth with a growth of 51 per cent CAGR during 1997-98 to 2002-03. This may be on account of the renovations carried out on the existing branch to meet client aspirations, and an increase in the maintenance contracts entered into by the banks. ‘Depreciation', which constitutes a significant portion of operating expense, has grown at 35 per cent (20 per cent) CAGR during the period under review. The proportion of depreciation in the operating expenses has increased from 13.35 per cent to about 18 per cent during the above period, on account of the greater investment in technology. As the private sector continues to grow and expand its network the proportion of depreciation is expected to increase. Along with depreciation, advertisement, printing & stationery and postage & telephone charges have also recorded a substantial growth on account of the aggressive communication and promotion strategy that players have adopted.

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With the new private sector banks expanding their operations and the older private sector banks upgrading their technology, we expect other operating expenses of this group to increase, especially those relating to depreciation, advertisement and postage and telephone. SBI & associates As observed earlier, other operating expenses account for only 30 per cent of the total operating expense, but, going forward, we expect that to increase as the banks in the group embark on increasing their investments in technology to upgrade their branch networks. The other operating expense ratio increased at 14 per cent CAGR during 1997-98 to 200203, driven by a 25 per cent CAGR growth in depreciation, 17 per cent growth in the advertisement and 7 per cent CAGR growth in printing and stationery. Increased spending on technology led to a higher growth in depreciation charge. In 2002-03, SBI alone had computerised about 41 per cent of its total branches, constituting about 82 per cent of its business volumes A comparison between the other operating expenses of SBI Group and OSCBs reveals that the former are not aggressive in marketing and communications. To put the figures in perspective, the total advertisement and publicity expense for the SBI Group in 2002-03 was Rs 0.42 billion (a growth of 8 per cent CAGR), while it was Rs 1.36 billion for OSCBs. Similarly, postage, telegram and telephone expenses for the SBI group in 2002-03 was Rs 0.81 billion, while it was Rs 2.62 billion for OSCBs. This is probably because the OSCBs generally focus on retail finance, while the SBI Group's focus was on wholesale lending. With the SBI Group planning to focus on retail finance too, these expenses are expected to increase further. Nationalised banks Nationalised banks, with the largest network of 33,942 offices, have the highest operating expenses among the scheduled commercial banks. During 1997-98 to 2002-03, the number of offices of nationalised banks as a proportion of offices of all scheduled commercial banks had remained almost constant at 50 per cent, but the proportion of operating expenses of the nationalised banks in operating expenses of all scheduled commercial banks has declined from about 51 per cent to about 47 per cent. The aggressive expansion by the new private sector banks has resulted in a significant increase in the operating expenses for private banks, leading to a decline in the nationalised banks' share in total operating expenses. The other operating expense has increased at a CAGR of 11.9 per cent during 1997-98 to 2002-03, driven by a 20 per cent CAGR growth in depreciation, a 15 per cent CAGR growth in auditors fees and a 14 per cent CAGR growth in advertisement and publicity. The 20 per cent CAGR growth in depreciation is on account of the expenditure on technological upgradation of offices and branch expansion. The number of offices went up from 33,263 in 1997-98 to 33,942 in 2002-03.

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With nationalised banks starting to advertise their products through various media, their advertisement expenses have increased, although they are still less than the amount spent by OSCBs. A very similar trend is also seen in case of postage and telephone expenses. Nationalised banks had also adopted a business model similar to that of the SBI Group. With banks in this group increasing their focus on retail finance and also venturing into other areas for diversifying their income, their other operating expenses are expected to increase. Foreign banks High proportion of selling cost/ professional fees Other operating expenditure (total operating expenses less staff cost) grew at 11 per cent CAGR between 1997-98 and 2002-03, driven by a 21 per cent CAGR growth in law charges, a 12 per cent CAGR growth in depreciation and a 10 per cent CAGR growth in repairs and maintenance. Foreign banks recorded the lowest growth in the other operating expenses amongst all scheduled commercial banks. CRIS INFAC believes that foreign banks are not in an aggressive expansion mode, compared to OSCBs, and have the necessary technology in place. The operations of the foreign banks have also stabilised. These factors could lead to a comparatively lower growth in operating expenses. Among all scheduled commercial bank groups, the proportion of other operating expenditure in total operating expenses is the highest for this group, indicating a heavy investment in infrastructure. Vis-à-vis other bank categories, depreciation, for banks in this group, has grown at a slower pace as these banks already have a technology platform and continue to get support from their parent organisations. Foreign banks also invest heavily in advertising and postage and telephone to reach out to the customers. Cost-income ratio State Bank of India and Associates Marginal improvement in the operating efficiency The cost income ratio for SBI and its associates declined from about 57 per cent in 199798 to about 48 per cent in 2002-03. However, when we exclude the profit on sale of investments from the net income and recalculate the cost income ratio, there was a decline of only about 2.8 percentage points. There was a marginal improvement in the operating efficiency of the group during this period.

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SBI & associates: Cost-income ratio
(per cent) 70 65 60 55 50 45 40 1997-98 1998-99 1999-2000 2000-01 2001-02

Figure 6

2002-03

Cost income ratio with profit on sale of investments

Cost income ratio without profit on sale of investments

Source: CRIS INFAC and RBI

From the above graph, we observe that the cost-income ratio jumped in 2000-01 to 65.2 per cent from 58.6 per cent in 1999-00 and again slipped to 52.1 per cent in 2001-02, primarily on account of the VRS launched by the group in 2000-01. Further, the healthy growth in the profit on sale of investment, coupled with savings in staff cost from VRS, helped bring down the cost-income ratio. Excluding profit on sale of investments, the cost-income ratio remained almost stable in 200203, on account of slower growth in interest income and other income Low credit demand and declining interest rates restricted the growth in interest income. Further, operating expenses also went up mainly due to the growth in the staff cost (on account of higher contribution towards retirement benefits) and higher depreciation charges. Nationalised banks Highest improvement in efficiencies, cost-income ratio declines by 800 basis points (excluding the profit on sale of investments) Nationalised banks recorded the maximum improvement in operating efficiencies among all scheduled commercial banks between 1997-98 and 2002-03. The cost-income ratio of the nationalised banks (including profit on sale of investments) declined from about 67 per cent in 1997-98 to about 50 per in 2002-03. Apart from the improvement in operating efficiency, the huge profits from the sale of investments contributed to this sharp decline. The savings in staff cost has also helped the group to improve operating expenses. However, the cost-income ratio, when calculated after excluding the profit on sale of investments, declined from about 70 per cent in 1997-98 to about 62 per cent in 2002-03. With the expected increase in productivity, this ratio is expected to decline further.

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Nationalised banks: Cost-income ratio
(per cent) 80 75 70 65 60 55 50 45 1997-98 1998-99 1999-2000 2000-01 2001-02

Figure 7

2002-03

Cost income ratio with profit on sale of investments

Cost income ratio without profit on sale of investments

Source: CRIS INFAC and RBI

The above graph depicts a rise in the cost-income ratio in 2000-01 and then a sudden decline, from a high of 68.2 per cent in 2000-01 to 50 per cent in 2002-03. The rise was due to a charge arising due to VRS. Savings in staff cost, coupled with increased profit on sale of investments, helped in achieving a decline in the cost-income ratio. In 2002-03, however, despite the steep decline, the cost-income ratio, with and without profit on sale of investments, was still higher than the SBI Group. This is on account of historically higher operating costs and higher operational inefficiencies. Many branches of nationalised banks were reporting losses. But a comparison of the improvement in the ratios of both these sectors shows that nationalised banks recorded greater improvement, on account of higher efficiency and cost-control initiatives. Other scheduled commercial banks Operating efficiencies decline during 1997-98 and 2002-03 The private sector banks expanded aggressively during the period under consideration and are still on a growth path. Once this aggressive growth strategy slows down, the cost-income ratio will improve significantly and investments in technology and networks will bring about substantial savings. The cost-income ratio (including the profit on sale of investments) of private sector banks recorded a decline of 3.70 percentage points from 48.75 per cent in 1997-98 to 45.05 per cent in 2002-03. However, if the profit on sale of investments is excluded while calculating the costincome ratio, there was an increase in the cost-income ratio from about 58 per cent (58 per cent) in 1997-98 to about 65 per cent (63 per cent) in 2002-03.

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117

OSC banks: Cost-income ratio
(per cent) 70 65 60 55 50 45 40 1997-98 1998-99 1999-2000 2000-01 2001-02

Figure 8

2002-03

Cost income ratio with profit on sale of investments

Cost income ratio without profit on sale of investments

Source: CRIS INFAC and RBI

The cost-income ratio (without profit on sale of investment) of 65 per cent for the group for the period 2002-03 is the highest amongst all the bank groups. As the new private sector banks expanded their operations, the operating cost went up. This, coupled with the aggressive lending methods adopted by the big players, increased the pressure on spreads of banks in this category. With many banks still expanding their operations we expect this ratio to keep rising for the next 2 years. Foreign banks Lower growth in net total income increases cost income ratio of most efficient bank group Among all the scheduled commercial banks, foreign banks have the lowest cost-income ratio, indicating high operating efficiencies. Between 1997-98 and 2003-03, the net total income of foreign banks recorded a CAGR of 9.33 per cent, while the operating expenses posted a CAGR of 11.05 per cent. Consequently, the cost-income ratio for foreign banks (including profit on sale of investments) increased from 43.15 per cent in 1997-98 to 46.66 per cent in 2002-03. When the profit on sale of investments is excluded, the cost-income ratio increases from about 46 per cent in 199798 to about 50 per cent in 2002-03. Foreign banks were able to maintain healthy spreads and, hence, have been able to sustain a high operating cost. Further, their core-fee income ratio is also the highest amongst all bank groups, which helps them to have the lowest cost-income ratio amongst all categories. With foreign banks now aggressively competing with public sector and private banks, banks need to maintain their low cost-income ratio by controlling costs, for a stable NPM.

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Foreign banks: Cost-income ratio
(per cent) 60

Figure 9

55

50

45

40 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Cost income ratio with profit on sale of investments

Cost income ratio without profit on sale of investments

Source: CRIS INFAC and RBI

Highest operating and staff cost per office The cost-income ratio (without profit on sale 02 from 53 per cent in 2000-01. This was on excluding profit on sale of investment. The interest expended grew by 5 per cent in

of investments) shot up to 57.7 per cent in 2001account of slower growth in the net total income, interest income grew by 2.5 per cent, while the 2001-02 over 2000-01.

However, during 2002-03, the cost-income ratio fell steeply because of the increase in other income, coupled with lesser operating expenses, mainly driven by savings in staff expenses.

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7.0

Important ratios

SBI & associates
Important ratios Return on assets (per cent) Business per employees (Rs million) Operating profit per employees (Rs in lakh) Source: CRIS INFAC 1998-99 1999-2000 0.93 10.64 1.51 0.47 12.58 1.91 0.72 16.10 2.00

Table 1
2000-01 2001-02 0.52 18.15 3.07

Nationalised banks
Important ratios Return on assets (per cent) Business per employees (Rs million) Operating profit per employees (Rs in lakh) Source: CRIS INFAC 1998-99 1999-2000 0.4 10.6 1.05 0.5 12.5 1.30 0.4 14.6 1.62

Table 2
2000-01 2001-02 0.7 18.7 2.74

Other scheduled commercial banks
Important ratios Return on assets (per cent) Business per employees (Rs million) Operating profit per employees (Rs in lakh) Source: CRIS INFAC 1998-99 1999-2000 1.1 20.6 2.3 1.9 26.9 4.2 1.9 32.8 4.6

Table 3
2000-01 2001-02 2.4 39.1 6.3

Foreign banks
Important ratios Return on assets (per cent) Business per employees (Rs million) Operating profit per employees (Rs in lakh) Source: CRIS INFAC 1998-99 1999-2000 0.9 49.6 12.5 1.2 58.2 18.9 1.0 77.2 23.5

Table 4
2000-01 2001-02 1.3 81.8 25.4

Foreign banks continue to have high productivity ratios, both in terms of business and operating profits. The business per employee doubled between 1998-99 and 2001-02, and the operating profit per employee also doubled. Foreign banks are way ahead of other players in terms of productivity. This has been achieved by higher spreads and greater reliance on technology. In terms of productivity ratios, the performance of other scheduled commercial banks (OSCBs) has also been impressive. The business per employee has doubled, while the operating profit per employee has almost tripled during the period under consideration. Productivity will improve further due to the aggressive strategy being adopted by new private sector banks. On the other hand, productivity growth has been lower in public sector banks because a high staff base.

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Credit-deposit ratio

Credit-deposit ratio
80.0 75.0 70.0 65.0 60.0 55.0 50.0 45.0 40.0 35.0 1998 1999 SBI and Assoc OSCB All SCB 2000 2001 2002

Figure 1

Investment-deposit ratio
65.0 60.0 55.0 50.0 45.0 40.0 35.0

Figure 2

2003

1998

1999

2000

2001

2002

2003

Nationalised Banks Foreign Banks

SBI and Assoc OSCB All SCB

Nationalised Banks Foreign Banks

Source: CRIS INFAC

Source: CRIS INFAC

The movement in the credit-deposit ratio has been in line with the industry. The ratio has gone up for all the bank groups, except the SBI Group, which has witnessed a drop. For foreign banks, the credit-deposit ratio is high because of the low deposit base. The share of borrowings in the total liabilities is higher for foreign banks in comparison with the other bank groups. Due to the low credit offtake, banks had parked their funds in investments, which drove the growth in the investment-deposit ratio. For almost all banks, the growth in the investment-deposit ratio has been steep in comparison to the rise in the credit-deposit ratio.

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Industry statistics
Sections
1.0 2.0 3.0 4.0 5.0 Industry structure Financial system in India Industry performance (tables) Industry performance (graphs) Player profiles 123 129 137 161 173

Charts
1.0 01 02 2.0 01 Industry structure Evolution: Indian banking Banks and DFIs: Important activities Financial system in India Financial system in India: Overview 125 126

129

Figures
4.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Industry performance SCBs: Profits SCBs: NIM SCBs: Segment-wise NIM Advances, IIP and imports: Growth SCBs: Advances IIP and credit: Growth Advances: Average yields Outstanding loans and advances: Break-up by interest rates SCBs: Investments PSU banks: Number of banks achieving CRAR Gross NPAs and net NPAs Investment and advances: Average yield SCBs: Other income to total income M3 and deposits M3 and reserve money: Growth Deposits: Demand, savings and time deposits (excl RRBs) Incremental deposits: Break-up by deposit type (excl RRBs) 161 161 162 162 162 163 163 163 164 164 164 165 165 165 166 166 166
Continued...
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i

...continued

Figures
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 Deposits: Growth (excl RRBs) 167 NRI deposits: Growth 167 Deposits: Average costs 167 Term deposits: Interest rates (March 2003) 168 Incremental credit-deposit ratio 168 Incremental borrowing-deposit ratio 168 SCBs: Operating costs 169 SCBs: Segment-wise operating costs as a percentage of average assets 169 Overheads as a percentage of operating income 169 Overheads as a percentage of average assets 170 Operating costs: India vis-à-vis other countries 170 SCBs (excl RRBs): Number of branches 170 SCBs: Number of employees 171 Investments: Average yields 171 BSE volumes and capital issues 171

Tables

1.0 01 02 03 04 05 2.0 01 02 03 04 05 06 07 08 09 10

Industry structure Scheduled commercial banks: Progress since 1950 Financial markets: Total assets Indian banking system: Key financials Financial institutions: Financial performance Financial institutions: Liabilities and assets Financial system in India Household sector savings in financial and physical assets Proportion of gross household savings in financial assets Banks and financial institutions: Financial assets Indian financial system: Key financials Capital markets: Resources mobilised Mutual funds vis-à-vis bank deposits Incremental mutual fund collections to bank deposits Banks: Investments in shares NBFCs: Total assets and deposits NBFCs: Net owned funds vis-à-vis public deposits (excl RNBCs)

123 124 124 126 127

130 131 132 132 133 134 134 135 135 136

Continued...

ii

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...continued

Tables
3.0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 5.0 01 02 03 04 05 06 07 08 09 Industry performance 25 banks: Financials Public sector banks: Priority sector advances Banks: Capital adequacy ratio Public sector banks: Capital adequacy ratio Capital adequacy ratio: 2003-04 Scheduled commercial banks: Capital infusion (1991-92 to 2003-04) Public sector banks: Recapitalisation support by the government Public sector banks: Writing down of capital base Public sector banks: Amounts returned to the government Public sector banks: Public/rights issues Old private sector banks: Public/rights issues New private sector banks: Public issues Public sector banks: Government ownership Public sector banks: Net worth Scheduled commercial banks: Net worth NRI deposits (1991-2003) Commercial banks: Branch network Banks: Distribution of net NPAs as a percentage of net advances Banks: Segment-wise incremental ratio of gross and net NPAs Banks: Segment-wise incremental gross and net NPAs Scheduled commerical banks: Gross and net NPAs Public sector banks: Net NPAs as a percentage of net advances Public sector banks: Classification of loan assets New private sector banks: Key financial parameters (2003-04) Old private sector banks: Key financial parameters (2003-04) Select public sector banks: Key financial parameters (2003-04) Scheduled commercial banks: Segment-wise financial performance (2003-04) Scheduled commercial banks: Segment-wise financial ratios (2003-04) Scheduled commercial banks: Segment-wise share (2003-04) Player profiles Financial comparison of key banks: 2003-04 State Bank of India Bank of Baroda Bank of India Canara Bank Punjab National Bank Oriental Bank of Commerce Dena Bank Corporation Bank

137 137 138 140 140 140 141 142 142 143 144 145 145 146 146 146 147 147 148 149 149 150 150 151 152 156 158 159 160

173 175 180 185 190 195 200 205 210

continued...

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iii

...continued

Tables
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 State Bank of Travancore ICICI Bank HDFC Bank IndusInd Bank Global Trust Bank The Federal Bank Ltd Bank of Rajasthan Citibank HongKong Bank Standard Chartered Bank State Bank of Bikaner & Jaipur UTI Bank Ltd The South Indian Bank Ltd The Jammu & Kashmir Bank Ltd The Karnataka Bank Ltd 215 220 225 230 234 239 244 249 254 259 264 269 274 279 284

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1.0

Industry structure
Table 1
1992 276 60,570 35,269 11,356 8,279 5,666 14 49.5 2,738 3.9 2.2 47,318 36.0 55.4 38.0 18.2 1996 293 64,937 32,982 13,832 9,964 8,159 15 46.1 4,644 6.7 3.9 31.8 58.6 38.0 12.4 1999 301 67,157 32,859 14,462 10,841 8,995 15 50.3 7,359 10.8 5.5 34.2 51.1 35.3 9.4 2000 298 67,868 32,852 14,841 10,994 9,181 15 53.5 8,542 12.5 6.7 34.3 53.3 36.6 9.8 2001 300 67,937 32,585 14,843 11,193 9,316 15 56.0 9,770 14.6 7.8 34.4 53.5 37.1 8.4 2002 297 68,195 32,503 14,962 11,328 9,402 15 49.3 11,008 16.6 609,053 8.9 205,606 33.8 53.8 38.7 7.1 2003 292 68,561 32,406 15,090 11,553 9,512 16 51.8 12,253 18.7 729,214 10.6 n.a. n.a. 56.9 42.7 6.5 n.a.

Scheduled commercial banks: Progress since 1950
1951 1969 Number of commercial banks Total branches in India - Rural - Semi-urban - Urban - Metropolitan Population per branch (in '000) Deposits in India (Rs crore) Deposits as a percentage of national income Per capita deposits (Rs) Deposits per branch (Rs crore) Total bank credit (Rs crore) Credit per branch (Rs crore) Bank credit to priority sectors (Rs crore) Share of priority sector advances in gross credit Credit-deposit ratio (per cent) Investment-deposit ratio (per cent) Cash-deposit ratio (per cent) n.a.: Not available Source: Statistical Tables Relating to Banks in India 2002-2003 80.0 77.5 29.3 8.2 67.4 36.3 14.5 n.a. 89 1984

4,151 8,262 45,332 - 1,833 25,372 - 3,342 - 1,584 - 1,503 75 9.0 0 0.2 0.2 65 15.5 88 0.6 0.4 14.0 9,262 5,769 4,929 15 37.9 940 1.4 0.9 34.5

909 4,646 63,852 237,566 433,819 722,203 851,593 989,141 1,131,188 1,280,853

727 3,599 43,058 131,520 254,015 368,837 454,069 529,271 504 14,834 80,831 126,309 155,779 182,255

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123

Financial markets: Total assets
(Rs crore) All financial entities (A+B+C) 1 All banks (excl co-operative banks) (A) Commercial banks State Bank Group Nationalised banks Old private banks New private banks Foreign banks in India Regional rural banks All India financial institutions (B) NBFCs (C) n.a.: Not available
1 1

Table 2
2002-03 2001-02 2000-01 1999-2000 1998-99 Share of Growth assets1 (per cent) 100 91 87 25 41 5 10 6 3 9 n.a. n.a. 10.51 10.58 9.94 12.06 12.74 10.14 2.72 8.70 5.66 n.a. 987,508 950,718 285,835 484,310 65,475 38,531 76,567 36,790 205,502 47,049

1,944,410 1,825,416 1,643,939 1,431,256 1,240,059 1,760,659 1,593,226 1,343,543 1,147,888 1,698,916 1,536,424 1,294,974 1,105,464 493,954 791,281 105,110 192,170 116,401 61,743 183,751 449,289 706,109 93,229 174,477 113,321 56,802 173,900 58,290 402,877 626,892 84,605 78,776 101,824 48,569 246,518 53,878 336,394 554,206 73,123 58,931 82,810 42,424 232,043 51,324

NBFC data for 2002-03 is not available

Note All India financial institutions include IDBI, IFCI, IIBI, IDFC, TFCI, Exim Bank, NABARD, NHB and SIDBI. Source: CRIS INFAC

Indian banking system: Key financials
(Rs crore) Number Number of branches Total Total Total Profit Spread assets deposits income (per cent) 3.0 3.1 3.3 2.8 2.5 3.9 n.a. Gross NPA n.a. n.a. n.a. n.a. n.a. n.a. n.a. Gross NPA/ gross loans and advances

Table 3
Year

Scheduled commercial banks (excl RRBs) Public sector banks Nationalised banks State Bank Group OSCBs Foreign banks in India Regional rural banks

90 27 8 19 30 33 n.a.

54,275 1,975,020 1,575,145 183,767 22,273 48,150 1,471,428 1,226,838 137,603 16,547 34,411 13,739 5,903 222 n.a. 922,171 549,257 367,276 136,316 n.a. 793,947 432,891 268,550 79,757 n.a. 85,712 10,929 51,891 33,154 13,010 n.a. 5,618 3,484 2,242 n.a.

n.a. 2003-04 n.a. 2003-04 n.a. 2003-04 n.a. 2003-04 n.a. 2003-04 n.a. 2003-04 n.a. 2003-04

Figures exclude data of co-operative banks. Source: Trends and Progess of Banking in India

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Evolution: Indian banking
Period The British Raj 1800s 1896 1921 1934 1935 Event Commercial banks (entities with unlimited liability) established. Banks specialised in providing short-term credit for trade. The Presidency Act allowed the establishment of state partnered banks.

Chart 1

Four large banks were merged to form the Imperial Bank of India (which later became State Bank of India). The Reserve Bank of India Act was passed. The RBI came into existence. The proportion of industrial credit was higher than agricultural credit.

Post-Independence era The Indian banking system progressed in terms of functions and geographic coverage. 1949 After 1949 1955 1967 Jul 1969 1974 1980 Aug 1991 1992-93 1993 1994 The Banking Regulation Act 1949, gave RBI the powers to regulate, supervise and develop the banking system. There was consolidation in the banking industry, and large commercial banks emerged through mergers and amalgamations. The Imperial Bank of India was rescheduled as the State Bank of India. A scheme for social control on banks was introduced, in order to increase the availability of banking facilities, and change the uneven distribution of lending by banks. 14 major banks, each with deposits of over Rs 500 crore, were nationalised by the Ministry of Finance. Targets for priority sector lending were set. The government further nationalised six banks. The Narasimham Committee was formed, in order to re-examine the financial system. Income recognition and capital adequacy norms were introduced, and interest rates were rationalised. Losses of public sector banks amounted to Rs 3,648 crore. Public sector banks accounted for 93 per cent of the total branches in India, 87 per cent of the total deposits, and 89 per cent of the total loans. Private sector banks were permitted to commence operations. The interest rates on loans of over Rs 200,000 were deregulated, allowing banks to fix prime lending rates. Banks were allowed to issue capital, up to 49 per cent of the equity, from the capital markets, by amending the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970/80. 1995-96 1997 1998 19 of the 27 scheduled commercial banks were able to achieve the stipulated capital adequacy ratio. Limited and conditional autonomy was provided to public sector banks. The committee on financial sector reforms (Narasimham Committee II) reviewed the progress of reforms, and recommended a plan for the implementation of second generation reforms. Norms for capital adequacy and a reduction in non-performing assets were evolved. Interest rates on term deposits of over 15 days were deregulated. 1999 2000 Guidelines on asset-liability management and risk management were issued. In the Union Budget, the government announced its intention to reduce its equity in public sector banks to 33 per cent. HDFC Bank acquired Times Bank; the first private sector merger in India.
2001 2002 RBI issued licences to 2 new banks, Kotak Mahindra and Rabo Bank. FDI limit in the banking sector increased to 51 per cent. Union Government allows the conversion of the branch operations of foreign banks into subsidiaries. RBI approves the merger of ICICI and ICICI Bank, making it the second largest bank in India, in terms of assets. Kotak Mahindra Finance, an NBFC, announces its intention to convert itself into a bank. 2003 2004 Kotak Mahindra Bank commenced operations on March 24, 2003. HSBC acquired 20 per cent in UTI Bank. FDI limit in private banks increased from 49 per cent to 74 per cent. RBI placed moratorium on GTB's operations on 24th July 2004 RBI announced the merger of GTB with OBC on 26th July 2004 IDBI converted itself into a commercial bank from 1st October 2004. Source: CRIS INFAC
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125

Banks and DFIs: Important activities
Commercial banking or similar in nature Banks Accepting chequable deposits Granting loans and advances Investment banking Investments in securities Underwriting of issues Loan syndication

Chart 2
Other financial services Factoring Hire-purchase Leasing Merchant banking Credit cards Dealing in gold Mutual fund Housing finance Commercial banking Housing finance Credit rating Custodial services Brokerage Investor services Registrar’s services Project consultancy Debenture trusteeship

DFIs

Granting long-term loans and advances Underwriting and Granting short-term loans and advances / subscribing directly to working capital finance shares / debentures of Accepting term deposits and corporate bodies issuing CDs on prescribed terms and conditions

Note The activities are performed either directly or through subsidiaries. Source: RBI

Financial institutions: Financial performance
(Rs crore) Income Interest income Other income Expenditure Interest expended Provisions Other expenses -Wage bill Net profit Total assets Ratios (per cent) 1 Net profit Income Interest income Other income Expenditure Interest expended Other expenses Wages Provisions and contigencies Spread (net interest income)
1

Table 4
1999-2000 24,410 22,152 2,258 21,148 18,245 687 2,216 362 3,263 232,043 1.4 10.5 9.6 1.0 9.1 7.9 1.0 0.2 0.3 1.7 2000-01 25,867 23,519 2,348 23,748 19,567 1,579 2,602 476 2,119 246,518 0.9 10.5 9.5 1.0 9.6 7.9 1.1 0.2 0.6 1.6 2001-02 17,206 14,391 2,815 15,944 13,284 1,501 1,159 404 1,262 170,247 0.7 9.9 8.3 1.6 8.3 7.6 0.7 0.2 0.9 0.6 2002-03 15,822 13,194 2,628 14,130 11,825 947 1,358 391 1,692 182,223 0.9 8.6 7.2 1.4 7.2 6.4 0.7 0.2 0.5 0.7 Change (per cent) -8.0 -8.3 -6.6 -11.4 -11.0 -36.9 17.2 -3.2 34.1 7.0 -

1998-99 21,614 20,297 1,317 18,381 15,675 308 2,398 294 3,233 205,502 1.6 10.5 9.9 0.6 8.9 7.6 1.2 0.1 0.2 2.3

Ratios calculated as a percentage of total assets

Notes 1) For 1998-99 to 2000-01, financial institutions comprise IDBI, ICICI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI. 2) For 2001-02 and 2002-03, financial institutions comprise IDBI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI. Source: RBI's Report on Trend and Progress of Banking in India 2002-03

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Financial institutions: Liabilities and assets
1999-2000 Change1 100.0 3.7 9.9 48.8 11.0 11.9 14.7 100.0 4.4 11.8 74.5 0.9 1.6 6.8 5.7 42.4 0.4 4.0 -46.2 -7.4 41.5 -0.4 -10.4 33.5 7.2 8.5 -0.4 5.7 Rs crore Per cent 232,045 8,731 36,619 114,017 13,350 41,413 17,914 232,045 8,311 28,676 167,201 4,008 7,355 16,493 7.1 16,380 6.6 8,878 5.1 12,560 3.2 8,174 3.3 3,226 1.9 2,988 1.7 3,641 1.5 2,987 1.7 1,606 72.1 179,786 72.9 131,510 75.6 136,823 12.4 29,662 12.0 21,671 12.5 21,760 3.6 8,880 3.6 5,628 3.2 8,014 100.0 246,523 100.0 173,900 100.0 183,751 7.7 18,376 7.5 27,170 15.6 27,063 17.8 37,715 15.3 24,400 14.0 21,862 5.8 17,821 7.2 15,088 8.7 20,144 49.1 125,597 50.9 83,595 48.1 89,639 15.8 39,147 15.9 16,836 9.7 18,259 3.8 7,866 3.2 6,811 3.9 6,784 100.0 246,523 100.0 173,900 100.0 183,751 Rs crore Per cent Rs crore Per cent Rs crore Per cent (per cent) 2000-01 2001-02 2002-03

Table 5

1998-99

Rs crore Per cent

Liabilities

205,502

100.0

Capital

7,698

3.7

Reserves

20,519

10.0

Bonds and debentures

99,360

48.4

Deposits

10,581

5.1

Borrowings

41,305

20.1

Other liabilities

26,040

12.7

Assets

205,502

100.0

Cash and bank balance

11,338

5.5

Investment

22,969

11.2

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Loans and advances

146,353

71.2

Bills discounted/rediscounted

2,387

1.2

Fixed assets

8,291

4.0

Other assets

14,164

6.9

1

2002-03 over 2001-02

Notes

1) For 1998-99 to 2000-01, financial institutions comprise IDBI, ICICI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.

2) For 2001-02 and 2002-03, financial institutions comprise IDBI, TFCI, EXIM Bank, NABARD, SIDBI, IDFC, IFCI, NHB and IIBI.

Source: RBI's Report on Trend and Progress of Banking in India 2002-03

127

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2.0

Financial system in India

Financial system in India: Overview

Chart 1

Ministry of Finance Reserve Bank of India (RBI) Securities and Exchange Board of India (SEBI)

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Pension funds, Provident funds Commercial banks Non-banking finance companies (NBFCs) Capital markets

Financial institutions

Mutual funds

Term-lending institutions IDFC IFCI IIBI

Sectoral institutions TFCI EXIM PFC NABARD

State level institutions SFCs SIDC

Stock exchange Merchant bankers Underwriters Stock brokers FIIs Retail investors

IDFC: Infrastructure Development Finance Corporation of India

PFC: Power Finance Corporation NABARD: National Agricultural Bank for Reconstruction & Development SFC: State Finance Corporation SIDC: State Industrial Development Corporation FII: Foreign Institutional Investor

IFCI: Industrial Finance Corporation of India

IIBI: Industrial Investment Bank of India

TFCI: Tourism Finance Corp of India

EXIM: Export Import Bank of India

129

Source: CRIS INFAC

Household sector savings in financial and physical assets
(Rs crore) GDP at market prices Gross domestic savings Percentage of GDP Household savings Percentage of GDP - Financial assets (net) Percentage of GDP - Physical assets Percentage of GDP Private corporate sector Percentage of GDP Public sector Percentage of GDP P: Provisional; E: Estimate Source: Handbook of Statistics on the Indian Economy, 2002 1997-98 1,522,547 352,178 23.1 268,437 17.6 146,777 9.6 121,660 8.0 63,486 4.2 20,255 1.3 1998-99 1999-2000 1,740,985 374,659 21.5 326,802 18.8 180,346 10.4 146,456 8.4 65,026 3.7 -17,169 -1.0 1,936,831 468,681 24.2 404,401 20.9 205,743 10.6 198,658 10.3 84,329 4.4 -20,049 -1.0 2000-01 2001-02 P 2,089,499 495,986 23.7 458,215 21.9 222,721 10.7 235,494 11.3 86,142 4.1 -48,371 -2.3 2,282,143 535,185 23.5 519,040 22.7 254,304 11.1 264,736 11.6 78,849 3.5 -62,704 -2.7

Table 1
2002-03 E 2,469,564 597,697 24.2 559,258 22.6 254,407 10.3 304,851 12.3 84,169 3.4 -45,730 -1.9

130

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Proportion of gross household savings in financial assets
2003-041 10.1 42.9 40.5 0.2 2.3 -0.1 1.4 0.7 0.0 -0.5 0.0 1.8 17.9 1.7 14.0 13.6 11.2 0.3 0.6 22.4 100.0 22.8 100.0 12.9 0.2 0.5 19.3 100.0 5.8 12.1 14.2 13.5 0.3 0.4 16.1 100.0 0.0 1.3 18.6 4.3 14.3 15.5 14.8 0.2 0.5 14.3 100.0 0.0 -0.4 0.0 1.1 17.7 4.0 13.7 14.9 14.5 0.1 0.3 13.0 100.0 8.2 6.3 41.0 32.5 2.9 5.6 0.1 4.1 3.1 0.0 -0.4 0.1 1.3 15.7 -0.6 0.1 1.5 0.8 2.7 1.6 -2.1 -0.1 3.6 3.7 2.6 1.6 35.3 36.3 39.4 41.5 9.7 8.5 42.5 33.6 7.5 3.2 -1.7 17.2 8.4 0.1 7.0 0.1 1.6 4.9 0.0 4.9 8.8 8.0 0.2 0.6 18.4 100.0 100.0 100.0 100.0 100.0 100.0 16.7 14.7 18.0 19.2 18.8 0.5 0.5 0.5 0.4 0.4 0.5 0.2 0.2 0.3 0.3 0.3 0.3 8.0 7.2 10.4 9.5 10.6 10.6 8.7 7.8 11.2 10.2 11.3 11.3 12.1 5.9 9.0 7.4 7.0 11.3 13.0 11.3 0.4 0.1 0.4 0.4 1.6 0.7 0.9 6.3 9.1 7.7 7.4 12.9 13.6 12.3 1.2 1.1 0.3 0.3 1.1 0.8 3.4 0.5 0.1 0.1 0.1 0.1 0.0 0.1 4.3 2.7 0.2 2.4 0.3 0.9 0.8 0.1 0.1 0.1 0.1 0.1 0.1 0.0 7.5 8.0 6.6 3.6 1.3 1.5 3.4 13.5 11.9 7.3 6.6 2.9 3.4 7.7 -1.1 -0.8 -0.2 -0.4 -0.4 -3.3 -0.4 5.2 3.0 5.8 6.4 5.3 4.6 4.3 10.6 7.9 10.6 16.4 3.9 3.8 1.7 27.9 35.3 26.3 25.7 37.8 33.7 30.8 42.6 45.5 42.5 48.1 46.6 38.8 36.3 12.2 10.9 13.3 8.6 7.4 10.5 8.8

Table 2

(per cent)

1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02P 2002-03P

Currency

10.6

12.0

Deposits

33.3

28.9

With banks

27.2

21.3

With non-banking companies

2.2

3.3

With co-operative banks and societies

4.7

5.0

Trade debt (net)

-0.8

-0.6

Shares and debentures

14.3

23.3

Private corporate business

4.1

6.0

Co-operative banks and societies

0.2

0.1

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Units of UTI

5.8

13.3

PSU bonds

0.8

0.8

Mutual funds (other than UTI)

3.3

3.1

Claims on government

13.5

7.2

Government securities

0.2

-0.4

Small savings

13.2

7.6

Insurance fund

9.5

10.3

Life insurance fund

8.5

9.4

Postal insurance

0.2

0.2

State insurance

0.7

0.7

Provident and pension fund

18.9

18.3

Total

100.0

100.0

1

Preliminary

P: Provisional

Source: RBI Annual Report 2003-04

131

Banks and financial institutions: Financial assets
(Rs crore) 1990-91 I. Banks Scheduled commercial banks Non-scheduled commercial banks Total commercial banks State co-operative banks II. Financial institutions Term-lending institutions (All-India) State-level institutions Other institutions Total P: Provisional
1 4 2 3 1

Table 3
As at the end of March 1998-99 7,61,326 7,26,129 7,26,129 35,197 4,60,758 2,05,817 21,629 2,27,023 6,289 1999-00 8,88,781 8,51,100 851,100 37,681 522,079 2,22,790 24,518 2,67,817 6,954 14,10,860 2000-01 P 2001-02 P 10,50,276 10,09,150 10,09,150 41,126 5,75,346 2,40,530 24,992 3,01,870 7,954 16,25,622 12,69,034 12,23,008 12,23,008 46,026 5,54,393 1,70,247 25,012 350,538 8,596 18,23,427 2002-03 P 14,44,993 13,98,967 1398967 46,026 567,296 182,223 25,012 350,538 9,523 2,012,289

1997-98 6,54,406 6,28,332 6,28,332 26,074 4,00,418 1,74,980 21,203 1,97,321 6,914

2,32,786 2,22,613 77 2,22,690 10,096 1,27,975 57,372 10,049 58,566 1,988 3,60,761

Investment institutions

10,54,824 12,22,084

Term-lending institutions include IDBI, NABARD, ICICI, IFCI, EXIM Bank, IIBI, NHB, IDFC, and SIDBI. From the end of March 2002 the data does not include ICICI, as it was merged with ICICI Bank.
2 3 4

Includes SFCs and SIDCs Includes UTI, LIC, and GIC and its former subsidiaries

Includes DICGC and ECGC Source: Trends and Progress of Banking in India, 2003

Indian financial system: Key financials
(Rs crore) Number Number of branches Total Total Total Profit Spread Gross Gross NPA assets deposits income (per cent) NPA / loans and advances 3.05 3.10 0.70 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Table 4
Year

Scheduled commercial banks Regional rural banks Financial institutions NBFCs (excl RNBCs) RNBCs n.a.: Not available

90 196 9 905 5

54,275 1,975,020 1,575,145 183,767 22,273 14,777 n.a. n.a. n.a. 63,614 183,751 39,832 18,458 48,346 20,144 5,933 12,889 5,931 15,882 5,357 n.a. 524 1,693 -212 n.a.

n.a. 2003-04 n.a. 2002-03 n.a. 2002-03 n.a. 2001-02 n.a. 2001-02

Source: Trends and Progress of Banking in India, 2003

132

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Capital markets: Resources mobilised
1995-96 32,650 13,361 9,290 4,071 16,998 1,476 1,000 15,998 11,877 150 3,970 2,291 5,044 496 496 0 4,548 -5,833 -2,037 4,064 2,695 22,117 11,135 10,003 14,557 3,485 n.a. n.a. n.a. 10,120 1,651 48 0 n.a. n.a. n.a. 1,625 4,330 2,105 n.a. n.a. n.a. 3,276 4,378 2,105 3,487 4,197 n.a. n.a. n.a. n.a. n.a. 4,583 13,279 18,935 5,590 n.a. n.a. n.a. n.a. 3,394 2,983 4,363 8,697 16,632 14,436 7,529 4,233 1,972 2,391 2,401 2,140 4,832 1,418 75 4 60 0 142 0 0 0 1,251 12,536 n.a. n.a. n.a. n.a. n.a. 47,684 6,101 1,162 2,563 2,753 2,608 860 460 1,959 10,410 3,138 5,013 5,153 4,890 5,692 1,878 3,210 650 43 0 0 0 n.a. n.a. n.a. 4,352 2,551 1,472 n.a. n.a. n.a. 11,060 4,657 9,365 7,704 6,362 5,692 1,878 3,210 2,493 9,202 16,998 19,404 23,106 28,620 25,077 14,866 12,573 20,896 32,681 41,856 44,731 36,256 41,871 44,349 15,066 30,099 49,679 61,259 67,836 64,876 66,948 59,215 29,520 37,738 63,407 77,660 74,199 70,568 68,826 62,425 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 P 2003-04 P

Table 5

(Rs crore)

1994-95

Primary capital markets (debt and equity)

30,375

Private placement

n.a.

Public sector

n.a.

Private sector

n.a.

Prospectus and rights / IPO

27,305

Banks and FIs in the public sector

Government companies

888

Non-government public companies

26,417

- Equity shares

17,414

- Preference shares

131

- Debentures

8,871

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

PSU bonds

3,070

International capital markets

9,348

Euro-issues

6,110

GDR

5,027

FCCB

1,083

ECB

3,238

Mutual funds

11,275

n.a.: Not available

P: Provisional

Source: Handbook of Statistics on Indian Economy

133

Mutual funds vis-à-vis bank deposits
(Rs crore) 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
1 1

Table 6
Bank deposits (excl RRBs) 264,991 299,602 349,345 403,403 457,639 537,557 643,743 766,814 896,728 1,055,233 1,205,930 1,355,880 1,575,140 Mutual funds to bank deposits (per cent) 14.3 15.9 17.9 18.1 16.2 13.1 9.2 9.2 11.5 8.6 8.3 8.1 8.9

Net assets of mutual fund 37,973 47,734 62,430 72,967 74,315 70,197 58,918 70,624 103,453 90,587 100,594 109,299 139,616

Mutual funds: The 2002-03 figure includes Rs 29,835 crore assets under management of the Specified Undertaking of the Unit Trust of India

Source: Report on Trend and Progress of Banking in India and AMFI

Incremental mutual fund collections to bank deposits
(Rs crore) 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 P 2003-04 P P: Provisional Note Mutual fund 13,021 11,243 11,275 -5,833 -2,037 4,064 2,695 22,117 11,135 10,120 4,583 47,684 Bank deposits 34,611 49,743 54,058 54,236 79,918 106,186 123,071 129,914 158,505 150,697 149,950 219,260

Table 7
Mutual fund/bank deposits (per cent) 37.6 22.6 20.9 -10.8 -2.5 3.8 2.2 17.0 7.0 6.7 3.1 21.7

Figures for mutual fund collections during the 1998-99 to 2000-01 period are provisional. Source: Handbook of Statistics on Indian Economy

134

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Banks: Investments in shares
(Rs crore) Investments in shares Deposits Per cent of deposits 1997-98 3,565 666,306 0.5 1998-99 4,741 797,828 0.6 1999-2000 6,128 932,469 0.7 2000-01 4,840 1,093,527 0.4 2001-02 6,194 1,247,239 0.5

Table 8
2002-03 6,774 1,404,490 0.5

Source: Statistical Tables Relating to Banks in India

NBFCs: Total assets and deposits
(Rs crore) 1997-98 NBFCs of which RNBCs Number of reporting companies Total assets Public deposits Net owned funds Note Figures are as of end March. Source: Report on Trend and Progress of Banking in India 2002-03 34,790 13,572 8,573 10,718 10,249 -1,085 47,049 20,429 9,118 11,081 10,644 -666 51,324 19,342 6,223 11,317 11,004 -443 53,878 18,084 4,943 16,244 11,625 -179 58,290 18,822 4,383 1,420 9 1998-99 NBFCs of which RNBCs 1,547 11 1999-2000 NBFCs of which RNBCs 1,005 9 2000-01 NBFCs of which RNBCs 981 7 NBFCs 910

Table 9
2001-02 of which RNBCs 5 18,458 12,889 111

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

135

NBFCs: Net owned funds vis-à-vis public deposits (excl RNBCs)
(Rs crore) 1998-99 No of Net Public Public deposits reporting owned deposits as a multiple of companies funds NOF Up to 0.25 0.25-0.5 0.5-5 5-10 10-50 50-100 100-500 Over 1,000 Total
(Rs crore)

Table 10
1999-2000

No of Net Public Public deposits reporting owned deposits as a multiple of companies funds NOF 205 360 314 43 46 9 19 996 -215 116 502 294 1,060 628 4,280 6,666 395 194 363 202 2,773 878 3,533 8,338 -1.8 1.7 0.7 0.7 2.6 1.4 0.8 1.3

736 319 332 55 64 11 18 1 1,536

38 70 443 336 1,285 787 3,946 1,121 8,027

650 116 1,068 265 2,107 1,271 4,287 22 9,785
2000-01

17.1 1.6 2.4 0.8 1.6 1.6 1.1 0.0 1.2

2001-02 No of Net Public Public deposits reporting owned deposits as a multiple of companies funds NOF 214 300 298 30 38 11 14 905 -1,351 103 477 204 798 798 3,243 4,272 1,120 128 361 80 718 846 2,680 5,933 1.2 0.8 0.4 0.9 1.1 0.8 1.4

No of Net Public Public deposits reporting owned deposits as a multiple of NOF companies funds Up to 0.25 0.25-0.5 0.5-5 5-10 10-50 50-100 100-500 Over 1,000 Total NOF: Net owned funds Notes 1) Figures are as of end March. 225 346 305 34 37 12 14 1 974 -859 116 498 224 775 804 3,063 501 5,122 807 188 692 94 777 924 2,299 679 6,460 1.6 1.4 0.4 1.0 1.1 0.8 1.4 1.3

2) In 1999-2000, there were no reporting companies with net owned funds over Rs 1,000 crore. Source: Report on Trend and Progress of Banking in India 2002-03

136

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

3.0

Industry performance

25 banks: Financials
(Rs crore) Income Interest earned Other income Expenditure Interest expended Operating expenses Provisions and contingencies Operating profit Net profit Net interest spread H1: First half; 9M: Nine months
1

Table 1
2003-04 H1 64,234.3 50,164.4 14,069.9 56,562.9 32,249.1 13,671.8 10,642.0 18,313.4 7,671.4 17,915.3 2002-03 H1 58,957.9 49,167.0 9,790.9 53,434.2 33,923.0 11,931.1 7,580.0 13,103.7 5,523.7 15,244.0 2003-04 Q3 30,934.5 25,169.8 5,764.7 25,259.2 15,426.0 7,136.8 2,696.4 8,371.6 5,675.2 9,743.8 2002-03 Q3 30,172.9 24,732.1 5,440.7 25,219.5 16,828.6 6,208.3 2,182.6 7,135.9 4,953.3 7,903.5 2003-04 9M 95,168.7 75,334.2 19,834.6 81,822.1 47,675.1 20,808.6 13,338.3 26,685.0 13,346.6 27,659.0 2002-03 9M 73,899.1 15,231.7 50,751.6 18,139.5 9,762.6 20,239.7 10,477.1 23,147.5 2003-04
1

2002-03

89,130.8 123,579.7 121,470.0 97,536.7 26,043.0 60,678.1 28,261.0 19,584.3 34,640.6 15,056.3 36,858.6 99,617.4 21,852.5 67,424.2 25,770.5 16,429.9 28,275.3 11,845.4 32,193.3

78,653.7 108,523.4 109,624.6

Excludes Indusind Bank and Global Trust Bank

Note These 25 banks comprise 70 per cent of the total deposits of scheduled commercial banks in India. Source: Press releases

Public sector banks: Priority sector advances
(Rs crore) Agriculture Small-scale industry Other priority sectors Total priority sector Net bank credit
(Rs crore) Agriculture Small-scale industry Other priority sectors Net bank credit Note The figures under the column 'Per cent' indicate the share in net bank credit. Source: RBI's Report on Trend and Progress of Banking in India 2002-03

Table 2
1998-99 Rs crore Per cent 40,078 42,674 24,448 107,200 246,203
2002-03 Rs crore Per cent 73,507 52,988 71,448 203,095 477,899 15.4 11.1 15.0 42.5 100.0 15.9 12.5 13.5 43.1 100.0

1968-69 Rs crore Per cent 162 257 22 441 3,016 5.4 8.5 0.7 14.6 100.0

1997-98 Rs crore Per cent 34,305 38,109 18,881 91,319 218,219 15.7 17.5 8.7 41.8 100.0

1999-2000 Rs crore Per cent 45,296 46,045 30,816 127,478 316,427
2003-04 Rs crore 90,541 65,855 107,438 263,834 763,855 Per cent 11.9 8.6 14.1 34.5 100.0

16.3 17.3 9.9 43.5 100.0

14.3 14.6 9.7 40.3 100.0

2000-01 Rs crore Per cent 53,571 48,400 40,791 341,291 15.7 14.2 12.0 43.7 100.0

2001-02 Rs crore Per cent 63,082 49,743 53,712 171,185 396,954

Total priority sector 149,116

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

137

Banks: Capital adequacy ratio
1999-2000 2002-03 Tier I Tier II Total 8.8 10.4 9.8 6.8 10.5 7.2 11.7 9.4 6.4 8.2 8.1 7.6 5.9 7.9 9.6 17.9 3.3 0.9 6.2 9.6 6.4 10.2 3.8 3.7 6.2 7.0 8.0 4.7 3.4 3.5 11.7 9.1 10.9 10.4 11.5 6.3 8.5 4.9 6.2 8.8 8.9 4.7 1.4 4.3 4.4 3.7 4.8 4.9 3.2 3.4 7.6 1.7 10.8 11.0 10.7 10.7 12.1 9.6 11.1 12.0 12.3 5.7 17.3 5.3 7.5 5.8 10.7 6.1 7.1 7.7 5.2 6.9 12.6 7.4 5.4 4.6 4.5 5.9 4.7 4.9 1.2 4.0 3.3 5.5 3.3 4.3 4.9 3.3 4.9 5.6 2.5 5.2 4.8 3.7 13.1 11.2 13.6 12.7 12.0 11.8 12.5 10.5 18.5 9.3 10.9 11.3 14.0 10.4 12.0 11.0 10.0 12.4 15.2 12.7 2.0 13.7 4.4 11.6 2.6 13.1 9.0 7.2 11.0 8.3 6.3 8.2 8.5 7.5 7.0 7.8 6.2 16.5 5.2 7.7 6.7 9.9 6.4 7.0 6.8 6.1 6.5 15.0 8.4 4.5 11.3 6.2 5.0 14.8 8.4 5.9 5.1 3.9 4.4 3.5 4.1 6.3 5.5 5.4 5.5 4.9 7.8 6.2 3.6 4.3 5.2 5.8 4.6 4.7 6.1 4.7 5.8 5.9 2.0 5.7 3.2 13.6 9.9 3.7 4.7 13.5 8.3 5.2 13.5 13.6 14.3 11.4 12.9 11.5 14.5 12.4 12.5 13.7 13.9 13.0 11.9 15.6 12.4 20.1 9.5 12.8 12.5 14.5 11.1 13.1 11.5 11.9 12.3 17.0 14.1
Continued...

Table 3
2000-01 2003-04 Tier I Tier II Total Tier I Tier II Total 8.6 10.7 9.6 7.7 11.6 6.8 13.7 9.1 6.7 9.8 8.5 7.6 6.4 7.3 5.7 13.0 4.4 - ve 5.8 11.5 6.9 6.8 7.9 5.4 3.4 4.6 11.4 0.4 11.8 4.4 10.2 - ve 0.9 3.4 7.7 4.4 0.3 13.3 16.8 1.1 4.3 10.0 5.2 4.4 2.5 9.8 8.1 3.8 11.9 4.3 10.6 6.6 4.6 11.2 4.6 12.2 6.4 4.3 10.7 4.3 12.8 7.6 3.8 11.3 3.6 13.4 8.8 3.8 12.6 3.8 10.5 6.2 4.4 10.6 3.6 12.7 8.2 4.6 12.8 0.2 13.9 12.1 1.1 13.2 4.4 11.2 6.7 5.1 11.8 0.8 12.4 10.9 1.4 12.3 4.1 11.8 7.8 4.8 12.5 2.7 12.3 9.5 4.2 13.7 1.7 12.4 10.0 2.6 12.6 4.2 12.8 9.2 4.1 13.4 Tier I Tier II Total 2001-02 Tier I Tier II Total 14.6 13.2 10.8 11.5 10.7 11.6 18.1 9.8 11.6 12.4 12.1 9.1 10.9 9.5 10.4 16.9 11.9 1.4 9.3 15.3 11.4 8.8 10.5 9.1 10.9 8.4 10.3 10.0 6.0 4.6 10.6 9.6 8.2 1.4 9.6 10.1 6.7 4.8 11.4 9.6 6.6 2.6 9.2 9.6 7.2 4.2 11.5 10.8 6.7 3.6 10.3 10.9 7.5 4.1 11.6 14.1 12.5 0.2 12.7 10.2 5.2 4.0 9.2 - ve - ve - ve 11.1 7.1 4.6 11.6 13.2 12.7 0.1 12.8 11.9 6.7 4.5 11.2 11.0 7.8 1.9 9.6 9.8 6.9 4.8 11.7 10.6 6.9 3.7 10.6 13.3 8.9 3.2 12.1 11.0 10.0 3.4 13.4 10.4 7.1 4.4 11.5 12.4 8.6 2.7 11.3 14.4 14.1 0.4 14.5 10.2 7.4 4.1 11.5 12.3 11.1 1.3 12.4 10.3 7.5 3.6 11.1 10.7 9.3 1.6 10.9 12.5 10.8 1.8 12.6 12.5 8.3 3.2 11.5

138

(per cent)

1995-96 1996-97 1997-98 1998-99

Public sector banks

State Bank of India

11.6

12.2

State Bank of Patiala

9.5

11.3

State Bank of Hyderabad

9.9

10.8

State Bank of Travancore

9.4

8.2

State Bank of Bikaner & Jaipu

9.3

8.8

State Bank of Mysore

8.8

10.8

State Bank of Saurashtra

12.4

12.1

State Bank of Indore

8.8

9.3

Allahabad Bank

10.8

11.0

Andhra Bank

5.1

12.1

Bank of Baroda

11.2

11.8

Bank of India

8.4

10.3

Bank of Maharashtra

8.5

9.1

Canara Bank

10.4

10.2

Central Bank of India

2.6

9.4

Corporation Bank

11.3

11.3

Dena Bank

8.3

10.8

Indian Bank

- ve

-18.8

Indian Overseas Bank

6.0

10.1

Oriental Bank of Commerce

17.0

17.5

Punjab and Sind Bank

5.5

9.2

Punjab National Bank

8.2

9.2

Syndicate Bank

8.4

8.8

UCO Bank

7.8

3.2

Union Bank of India

9.5

10.5

United Bank of India

3.5

8.2

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Vijaya Bank

0.0

11.5

...continued

(per cent)
2002-03 Tier I Tier II Total 8.9 14.9 6.7 6.6 6.4 1.1 0.0 9.5 7.1 6.0 8.5 25.7 6.4 10.1 4.1 3.6 5.1 0.3 4.5 2.1 1.6 0.0 0.0 11.1 11.1 9.6 13.6 26.0 10.9 12.1 0.9 2.0 3.08 0.0 8.03 6.09 5.84 7.74 14.64 6.44 8.91 3.8 10.2 5.33 3.2 9.8 n.a. 4.6 11.2 6.26 5.22 n.a. 4.8 4.41 0.0 3.63 4.27 4.54 4.9 0.61 4.77 3.84 2.1 17.0 15.1 2.01 2.4 11.3 8.35 2.83 11.18 17.11 11.48 n.a. 10.13 7.5 0.0 11.7 10.4 10.4 12.6 15.3 11.2 12.8 Tier I Tier II Total 2003-04

1995-96 1996-97 1997-98 1998-99 Tier I Tier II Total 5.5 14.5 9.4 12.5 9.9 2.6 10.3 13.9 13.5 16.3 17.9 8.6 9.8 9.1 9.3 9.0 9.7 9.8 9.9 9.3 9.9 0.2 10.1 9.4 9.3 8.2 1.9 10.1 9.5 9.5 10.4 0.0 10.4 12.5 0.2 1.9 0.2 9.3 12.4 0.5 12.9 12.5 0.5 13.0 12.7 11.4 9.6 8.3 6.0 3.5 9.5 6.7 2.9 9.6 9.0 6.0 5.0 10.9 6.9 5.6 12.5 9.3 5.7 4.6 10.3 8.6 3.7 12.4 7.5 6.5 6.9 13.5 13.7 11.2 10.3 10.0 7.0 3.6 10.6 7.9 3.3 11.2 8.4 2.7 3.5 6.5 2.4 7.6 0.9 2.0 0.4 15.2 12.1 1.2 13.2 12.6 2.4 15.0 10.5 2.1 6.4 4.2 10.7 12.5 11.0 10.9 13.1 9.3 21.1 14.6 13.2 10.7 30.5 0.0 30.5 13.2 9.8 0.0 9.8 8.5 2.5 11.0 8.5 4.4 12.8 6.4 3.2 9.6 11.1 17.4 2.2 19.6 10.4 1.2 11.6 7.5 4.0 11.4 11.9 9.6 2.6 12.2 8.7 2.4 11.1 10.8 3.1 13.9 12.0 9.9 3.8 13.7 8.8 3.9 12.7 7.4 3.8 11.2 1.6 4.2 11.6 8.6 3.4 11.9 6.6 3.0 9.6 7.0 2.8 9.8 10.6 8.2 4.0 12.2 8.4 3.6 12.1 8.0 3.6 11.6 10.3 7.7 3.6 11.3 7.7 2.6 10.3 7.0 3.7 10.6 14.5 14.5 0.7 15.2 15.1 0.4 15.6 15.6 1.3 16.9 0.8 5.1 0.6 5.7 8.9 1.7 10.6 10.0 2.1 12.1 Tier I Tier II Total Tier I Tier II Total

1999-2000

2000-01

2001-02

Old private sector banks

Bank of Rajasthan

11.1

10.1

Karur Vysya Bank

10.9

12.8

Federal Bank

8.4

9.2

Vysya Bank

11.9

14.2

United Western Bank

10.7

10.2

New private sector banks

Centurion Bank

Global Trust Bank

9.4

10.2

HDFC Bank

23.5

13.5

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

ICICI Bank

17.5

13.0

IDBI Bank

-

-

Bank of Punjab

35.0

18.7

Kotak Mahindra Bank

-

-

UTI Bank

-

-

IndusInd Bank

18.2

12.9

Foreign banks
8.4 14.5 n.a. 6.8 13.7 15.2 10.7 10.5 2.9 3.6 n.a. 3.8 7.4 2.2 1.9 0.4 11.3 18.1 n.a. 10.6 21.1 17.4 12.6 10.9 8.79 11.17 n.a. 7.11 15.68 9.32 11.49 10.34 2.32 3.37 n.a. 3.76 7.24 5.1 1.99 0.4 11.11 14.54 n.a. 10.87 22.92 14.42 13.48 10.74

Citibank

10.1

9.5

Hongkong Bank

11.7

11.9

ANZ Grindlays Bank

9.5

9.0

Standard Chartered Bank

13.8

8.6

Bank of America

8.7

8.4

Deutsche Bank

8.5

9.3

ABN Amro Bank

8.2

9.2

American Express Bank

9.0

10.4

n.a.: Not available

Source: IBA' Performance Highlights of Public, Private & Foreign Banks in India

139

Public sector banks: Capital adequacy ratio
Number of banks 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 2003-04
1 2

Table 4
8-10 per cent 4 8 13 9 7 4 4 2 2 1
2 2 2 2

0-4 per cent 11 3 5 2 1 1 1 1 1 0 0

4-8 per cent 8 11 3 0 0 0 0 1 1 1
1 1 1 1

Over 10 per cent 4 5 6 16 19 22 22 23 23 25 26

Total 27 27 27 27 27 27 27 27 27 27 27

0

1

4-9 per cent

9-10 per cent Source: IBA' Performance Highlights of Public, Private & Foreign Banks in India

Capital adequacy ratio: 2003-04
Number of banks SBI SBI associates Nationalised banks Old private sector banks New private sector banks Foreign banks Total n.a. Not available Less than 4 per cent 0 n.a. n.a. 0 4-9 per cent 0 n.a. 1 n.a. 1 9-10 per cent 1 n.a. n.a. 1 Over 10 per cent 1 7 18 n.a. 7 n.a. 33

Table 5
Total 1 7 19 n.a. 8 n.a. 35

Source: IBA' Performance Highlights of Public, Private & Foreign Banks in India

Scheduled commercial banks: Capital infusion (1991-92 to 2003-04)
(Rs crore) Public sector banks - Recapitalisation support by government Public sector banks - Public and right issues Old private sector banks - Capital issues New private sector banks - Capital issues Total
1 1

Table 6
22,516 9,428 1,043 2,987 35,974

Figures for 2002-03 Source: CRIS INFAC

140

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Public sector banks: Recapitalisation support by the government
1995-96 160 80 72 172 256 110 850 1,509 2,700 302 54 350 338 100 200 400 0 150 0 1,750 100 1,300 1,300 500 600 770 770 563 2,287 746 1,078 1,798 110 354 4,746 1,453 183 127 704 580 1,368 332 1,808 2,257 555 22,516 165 588 879 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 Total 356 109 848 240 632 6 231 259 116 279 471 280 62 3,889 473 925 236 67 89 133 181 72 95 348 76 102

Table 7

(Rs crore)

Upto 1992-93 Jan 1994 Dec 1994 Feb 1995 Mar 1995

Allahabad Bank

171

90

Andhra Bank

89

150

Bank of Baroda

163

400

Bank of India

455

635

Bank of Maharashtra

182

150

Canara Bank

113

365

Central Bank of India

176

490

Corporation Bank

65

45

Dena Bank

146

130

Indian Bank -

194

220

Indian Overseas Bank

357

705

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

New Bank of India

183

Oriental Bank of Commerce

77

50

Punjab and Sind Bank

206

160

Punjab National Bank

165

415

Syndicate Bank

149

680

Union Bank of India

132

200

United Bank of India

360

215

United Commercial Bank

492

535

Vijaya Bank

126

65

Total

4,000

5,700

Source: CRIS INFAC

141

Public sector banks: Writing down of capital base
(Rs crore) Allahabad Bank Andhra Bank Bank of India Bank of Maharashtra Canara Bank Central Bank of India Dena Bank Indian Overseas Bank Punjab and Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank Vijaya Bank Total 425 425 1,370 136 1,506 532 1,000 1,532 507 507 243 418 462 943 2,067 297 297 48 48 681 681

Table 8
50 277 1,665 58 2,050

1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Source: RBI's Report on Trend and Progress of Banking in India

Public sector banks: Amounts returned to the government
(Rs crore) Andhra Bank Bank of Baroda Bank of India Canara Bank Corporation Bank Punjab National Bank Vijaya Bank Union Bank Total Source: CRIS INFAC 1996-97 381 93 30 504 1997-98 138 138 2000-01 48 48 2001-02 150 25 175

Table 9
2002-03 50 278 58 386

142

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Public sector banks: Public/rights issues
(Rs crore) Public issue State Bank of India Oriental Bank of Commerce Dena Bank State Bank of India Bank of Baroda Bank of India Corporation Bank State Bank of Bikaner and Jaipur State Bank of Travancore Syndicate Bank Vijaya Bank Andhra Bank Indian Overseas Bank Union Bank Of India Allahabad Bank Canara Bank Indian Overseas Bank Uco Bank Vijaya Bank Bank of Maharashtra Rights issue State Bank of India State Bank of India State Bank of Bikaner and Jaipur State Bank of Indore State Bank of Mysore State Bank of Travancore
1

Table 10
Period Dec 1993 Oct 1994 Dec 1996 Oct 1996 Dec 1996 Feb 1997 Oct 1997 Nov 1997 Jan 1998 Oct 1999 Dec 2000 Feb 2001 Feb 2001 Aug 2002 Oct 2002 Nov 2002 Sep 2003 Sep 2003 Oct 2003 Feb 2004 Dec 1990 Jan 1994 Feb 1996 Feb 1996 Feb 1996 Feb 1996 Amount 2,212.2 360.0 180.0 1,270.4
1

Issue price 90 50 20 233 75 35 70 440 500 10 10 10 10 16 10 35 24 12 24 23 260 60 400 600 350 550

850.0 675.0 304.0 73.4 90.0 125.0 100.0 150.0 111.2 288.2 100.0 385.0 240.0 240.0 240.0 230.0 130.0 792.0 62.4 52.5 84.0 82.5

GDR issue Source: RBI's Report on Trend and Progress of Banks in India

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

143

Old private sector banks: Public/rights issues
(Rs crore) Public issue Nedungadi Bank United Western Bank Federal Bank Sangli Bank Karnataka Bank Dhanalaxmi Bank Jammu & Kashmir Bank City Union Bank South Indian Bank Rights issue Karur Vysya Bank Nedungadi Bank Federal Bank Bank of Rajasthan Karnataka Bank United Western Bank Lakshmi Vilas Bank Vysya Bank Bank of Madura Federal Bank Nedungadi Bank Lord Krishna Bank Catholic Syrian Bank Bank of Rajasthan Bharat Overseas Bank Ganesh Bank of Kurundwad Nainital Bank Ratnakar Bank Sangli Bank Vysya Bank
1

Table 11
Amount 1.4 6.0 31.9 37.5 54.1 41.4 70.3 21.0 51.2 3.0 1.0 9.3 10.0 27.0 71.6 20.0 46.3 33.0 111.2 20.4 25.5 15.7 67.3 10.5 0.5 2.5 5.9 3.2 75.5 35.8 36.0 27.5 33.6 36.0 Issue price 10 20 90 100 120 50 38 35 32 60 10 35 20 60 40 35 35 70 150 30 17 32 15 n.a. n.a. n.a. n.a. n.a. n.a. 10 12 15 25 60

Period Jan 1992 Jan 1994 Mar 1994 Dec 1994 Oct 1995 Mar 1996 May 1998 Jun 1998 Sep 1998 Nov 1991 Jan 1992 Mar 1993 Jul 1994 Oct 1995 Oct 1995 Nov 1995 Jan 1996 Feb 1996 Feb 1996 Feb 1996 Feb 1998 Dec 1998 Oct 1999 1999-2000 1999-2000 1999-2000 1999-2000 1999-2000 2000-01 2000-01 2001-02 2001-02 2002-03 2002-03

Bank of Rajasthan Lord Krishna Bank Dhanalaxmi Bank Karnataka Bank Karur Vysya Bank
1

Preference issue to foreign collaborators

n.a.: Not available Source: CRIS INFAC

144

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New private sector banks: Public issues
(Rs crore) Bank of Punjab Global Trust Bank HDFC Bank ICICI Bank IndusInd Bank UTI Bank UTI Bank IDBI Bank Times Bank Centurion Bank Global Trust Bank HDFC Bank ICICI Bank HDFC Bank UTI Bank IDBI Bank
1 2 3 4 4

Table 12
Amount 95.0 95.8 90.0 144.4
1

Period Mar 1995 Aug 1994 Mar 1995 Aug 1997 Nov 1997 Sep 1998 Sep 1998 Feb 1999 Jul 1999 Sep 1999 1999-2000 1999-2000 Mar 2000 Jul 2001 Sep 2001 Sep 2003

Issue price 10 10 10 35 45 21 21 18 10 10 85 94 240 217 34 22

180.0 31.5 42.0
1

72.0 35.0 33.8 125.8 186.2 763.4
2 2 3

780.7 157.6

154.2

Offer for sale by promoters ADR issue Private placement of shares

Rights issue Source: CRIS INFAC

Public sector banks: Government ownership
(per cent) Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank Syndicate Bank Union Bank of India United Bank of India UCO Bank Vijaya Bank Note 1998-99 1999-2000 2000-01 100 100 66 77 100 100 100 68 71 100 100 67 100 100 100 100 100 100 100 100 100 66 77 100 100 100 68 71 100 100 67 100 100 74 100 100 100 100 100 67 66 77 100 100 100 68 71 100 75 67 100 100 74 100 100 100 72 2001-02 100 67 66 69 100 100 100 57 71 100 75 67 100 100 74 100 100 100 70

Table 13
2002-03 71 63 66 69 100 73 100 57 71 100 75 67 100 100 74 61 100 100 70

In 2000-01 and 2001-02, government ownership was lowered in Andhra Bank, Indian Overseas Bank, Vijaya Bank and and Punjab National Bank. Source: IBA' Performance Highlights of Public Sector Banks in India

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

145

Public sector banks: Net worth
Rs lakh Capital Reserves and surplus Total
Rs lakh Capital Reserves and surplus Total

Table 14
1992-93 4,499 5,127 9,626 1993-94 10,259 8,721 18,980 1994-95 14,689 11,358 26,047 1995-96 14,132 14,267 28,399 1996-97 13,870 19,389 33,259
2002-03 14,175 51,407 65,583

1991-92 3,925 3,888 7,813

1997-98 16,071 24,698 40,769
2003-04 14676 64,549 79,225

1998-99 1999-2000 14,405 27,447 41,852 14,234 31,819 46,052

2000-01 14,547 35,358 49,905

2001-02 15,013 42,276 57,289

Source: IBA' Performance Highlights of Public Sector Banks in India

Scheduled commercial banks: Net worth
1991-92 Capital Reserves and surplus Total 4,053 4,979 9,032 1992-93 4,673 7,189 11,862 1993-94 10,548 11,750 22,298 1994-95 15,225 15,643 30,868 1995-96 16,261 20,504 36,765 1996-97 16,873 26,874 43,747

Table 15
1997-98 19,363 34,000 53,363

1998-99 1999-2000 Capital Reserves and surplus Total
1

2000-01 19,095 48,647 67,741

2001-02 20,949 62,555 83,504

2002-03 21,594 76,274 97,868

2003-041 22,322 94,246 116,568

18,166 36,791 54,957

18435.2 43451.87 61887.07

excluding RRBs Source: IBA' Performance Highlights of Public Sector Banks in India

NRI deposits (1991-2003)
($ million) FCNR(A) FCNR(B) NR(E)RA NR(NR)RD FC(O)N FC(B&O)D Total Change 1991 10,103 3,618 265 1992 3,025 732 -437 1993 2,740 621 1,037 1,466 1994 9,300 1,108 3,523 1,754 12 533 1,215 1995 7,051 3,063 4,556 2,486 10 936 1996 4,255 5,720 3,916 3,542 13 280 1997 2,306 7,496 4,983 5,604 4 2,947 1998 1 8,467 5,637 6,262 2 -24 1999 8,323 6,220 6,758 932 2000 8,172 6,758 6,754 383 2001 9,076 7,147 6,849 1,388 2002 9,792 10,617

Table 16
2003 2004 -

9,673 10,199 10,961 8,449 14,923 20,559 7,052 2,102 3,407 3,355 1,746 4,737

13,986 13,549 15,015 16,230 17,166 17,446 20,393 20,369 21,301 21,684 23,072 25,174 28,529 33,266

FC(B&O)D: Foreign currency (bank and other) deposits; FC(O)N: Foreign currency (ordinary) non-repatriable deposits; FCNR(A): Foreign currency non-resident (accounts); FCNR(B): Foreign currency non-resident (banks); NR(E)RA: Non-resident (external) rupee accounts; NR(NR)RD: Non-resident (non-repatriable) rupee deposits. Note Figures are as at the end of March. Source: RBI Annual Report

146

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Commercial banks: Branch network
(nos) Rural Semi-urban Urban Metro Total Note Figures are for June. Source: RBI's Report on Trend and Progress of Banking in India 2002-03 1969 1,860 3,344 1,456 1,661 8,321 1984 1991 1996 1997 1998 1999 2000 2001 25,372 35,187 33,000 32,918 9,262 11,269 13,586 13,783 5,769 4,929 7,615 6,119 9,116 7,403 9,379 7,573

Table 17
2002 2003 32,386 14,830 10,650 8,648 66,514 32,857 32,791 32,649 32,631 32,434 13,985 14,205 14,431 14,509 14,742 9,692 7,816 9,931 10,130 10,219 10,493 8,069 8,346 8,441 8,590

45,332 60,190 63,105 63,653

64,350 64,996 65,556 65,800 66,259

Banks: Distribution of net NPAs as a percentage of net advances
(nos) Public sector banks Up to 10 per cent Over 10 and up to 20 per cent Over 20 per cent Old private sector banks Up to 10 per cent Over 10 and up to 20 per cent Over 20 per cent New private sector banks Up to 10 per cent Over 10 and up to 20 per cent Over 20 per cent Foreign banks in India Up to 10 per cent Over 10 and up to 20 per cent Over 20 per cent Total 27 19 6 2 25 22 3 0 9 9 0 0 31 30 1 0 92 27 17 9 1 25 22 3 0 9 9 0 0 39 36 1 2 100 27 17 9 1 25 21 4 0 9 9 0 0 42 34 6 2 103 27 18 8 1 25 17 5 3 9 9 0 0 41 27 11 3 102 27 22 5 0 24 18 5 1 8 8 0 0 42 31 7 4 101 27 22 5 0 23 16 4 3 8 8 0 0 42 31 6 5 100

Table 18
27 24 3 0 22 17 3 2 8 8 0 0 40 26 5 9 97 27 25 2 0 21 19 1 1 9 8 1 0 36 28 4 4 93

1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Source: RBI's Report on Trend and Progress of Banking in India 2002-03

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

147

Banks: Segment-wise incremental ratio of gross and net NPAs
Incremental ratio of net NPAs to Total assets Net advances -1.3 2.7 3.6 4.8 1.6 0.8 0.3 -0.2 -0.7 2.4 -0.1 3.7 6.2 3.1 0.1 -0.2 9.2 5.6 -3.8 0.8 3.2 -3.5 -4.8 0.7 2.7 0.9 -4.1 2.3 1.5 1.0 3.3 1.5 -0.3 2.9 0.0 -4.4 1.6 1.3 0.0 0.6 -1.1 2.8 2.9 1.2 2.9 2.6 -2.9 1.3 1.3 1.3 -1.8 0.1 -5.6 -2.4 2.4 3.3 Total assets 1999-2000 2000-01 2001-02 2002-03 -1.7 -2.3 -2.1 -2.6 -2.3 2.7 -0.1 1999-2000 2000-01 2001-02 2002-03 1999-2000 2000-01 2001-02 2002-03 1.1 1.1 0.3 2.2 0.4 0.4 4.1 2.4 -3.4 3.4 5.4 5.3 5.8 1.2 -1.9 1.3 3.4 1.3 1.4 1.8 3.0 -2.2 -3.5 0.3 -11.0 -3.9 2.1 2.9

Table 19

148
5.8 2.7 5.0 -6.4 -7.3

(per cent)

Incremental ratio of gross NPAs to

Gross advances

1999-2000 2000-01 2001-02 2002-03

Scheduled

2.2

4.2

commercial banks

- Public sector banks

2.4

2.8

- Nationalised banks

0.6

2.2

- State Bank Group

5.3

3.8

- Old private sector banks

0.5

14.0

11.7

- New private sector banks

0.9

7.8

11.4

- Foreign banks in India

4.0

5.7

Source: RBI's Report on Trend and Progress of Banking in India 2002-03

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Banks: Segment-wise incremental gross and net NPAs
(Rs crore) Scheduled commercial banks - Public sector banks - Nationalised banks - State Bank Group - Old private sector banks - New private sector banks - Foreign banks in India 7,908 6,058 2,939 3,119 990 479 381 Incremental gross NPAs 1998-99 1999-2000 2000-01 2001-02 2002-03 1,686 1,322 190 1,132 31 75 257 3,475 1,740 920 819 605 674 457 7,120 1,801 2,681 -880 505 5,195 -380 -2,147 -2,387 119 -2,506 -283 421 103 4,260 2,979 1,297 1,683 760 320 200

Table 20
Incremental net NPAs 1998-99 1999-2000 2000-01 2001-02 2002-03 2,053 1,976 1,641 335 61 27 -11 2,394 1,781 1,089 693 377 291 -55 3,093 -19 468 -487 243 2,734 135 -2,790 -2,995 -1,822 -1,173 -272 479 -2

Source: RBI's Report on Trend and Progress of Banking in India 2002-03

Scheduled commerical banks: Gross and net NPAs
(Rs crore) Gross advances 301,698 352,696 399,436 475,113 558,766 680,958 778,043 Gross NPAs 47,300 50,815 58,722 60,408 63,741 70,861 68,714 Change
1

Table 21
Net advances 276,421 325,522 367,012 444,292 526,328 645,859 740,473 Net NPAs 22,340 23,761 28,020 30,073 32,461 35,554 32,764 Change
1

Gross NPAs as a percentage of gross advances 15.7 14.4 14.7 12.7 11.4 10.4 8.8

Net NPAs as a percentage of net advances 8.1 7.3 7.6 6.8 6.2 5.5 4.4

1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03
1

5,639 3,515 7,907 1,686 3,333 7,120 -2,147

4,043 1,421 4,259 2,053 2,388 3,093 -2,790

Change in NPAs over the previous year Source: RBI's Report on Trend and Progress of Banking in India 2002-03

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

149

Public sector banks: Net NPAs as a percentage of net advances
(per cent) Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab and Sind Bank Punjab National Bank State Bank of India State Bank of Bikaner and Jaipur State Bank of Hyderabad State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03 16.0 3.3 8.2 7.0 9.4 7.5 13.5 2.3 7.3 23.9 8.6 3.6 10.3 12.7 6.6 6.1 9.9 9.6 8.6 6.6 5.7 7.4 8.4 11.4 5.9 23.3 11.9 14.8 4.1 7.5 6.9 9.7 9.3 14.4 3.6 9.4 25.2 7.6 5.6 12.0 10.4 7.3 8.0 11.4 11.3 11.0 5.9 6.1 8.8 7.5 13.7 7.0 19.2 9.6 15.1 2.9 6.6 7.3 8.7 7.5 12.2 2.9 8.3 26.0 6.3 4.5 10.8 9.6 6.1 7.1 10.9 11.0 10.8 7.0 6.6 12.2 5.8 11.1 7.7 14.1 7.6 12.5 4.3 7.7 7.3 8.7 7.1 9.8 2.0 7.7 21.7 7.3 4.5 10.5 9.0 7.2 10.5 8.8 10.1 10.6 8.2 7.7 10.8 3.9 10.8 8.7 14.7 6.7 12.2 3.5 7.0 8.6 7.0 5.3 9.8 1.9 13.8 16.2 7.7 3.6 9.4 8.5 6.4 10.1 7.3 7.6 8.1 6.1 7.9 8.8 3.2 8.8 8.0 12.9 6.6 11.2 3.0 6.8 6.7 7.4 4.8 9.7 2.0 18.3 10.1 7.0 3.6 12.3 6.7 6.0 7.8 7.8 5.9 7.7 4.9 6.9 7.8 4.1 6.4 6.9 10.5 6.2 11.1 2.5 5.0 6.0 5.8 3.9 8.0 2.3 16.3 8.3 6.3 3.2 11.7 5.3 5.6 5.0 5.0 3.6 7.4 2.9 5.0 5.7 4.6 5.5 6.3 7.9 6.0 7.1 1.8 3.7 5.6 4.8 3.6 6.7 1.7 11.8 6.2 5.2 1.4 10.9 3.9 4.5 4.1 3.3 2.7 5.2 1.5 3.5 3.1 4.3 4.4 4.9 5.5 2.6

Table 22
2003-04 2.4 0.9 3.0 4.5 2.5 2.9 5.6 1.8 9.4 2.7 2.9 0.0 9.6 1.0 3.5 1.2 0.7 0.0 3.0 0.0 0.0 1.4 2.6 3.7 2.9 3.8 0.9

Source: IBA' Performance Highlights of Public Sector Banks in India

Public sector banks: Classification of loan assets
(percentage of advances) Standard assets Total NPAs - Sub-standard assets - Doubtful assets - Loss assets Total advances (Rs crore) Note The figures are as at end March. Source: RBI's Report on Trend and Progress of Banking in India 2002-03 1997 82.2 17.9 5.1 10.7 2.1 1998 84.0 16.1 5.1 9.1 1.9 1999 84.1 15.9 4.9 9.0 2.0 2000 86.0 14.0 4.3 8.0 1.7 2001 87.6 12.4 3.3 7.6 1.5 2002 88.9 11.1 3.1 6.6 1.4

Table 23
2003 90.6 9.4 2.6 5.6 1.2 2003 92.2 7.8 2.6 4.3 0.9

244,214 284,971 325,328 380,077 442,134 509,369 577,813 661,975

150

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New private sector banks: Key financial parameters (2003-04)
Unit Branches
1 1

Table 24
Kotak Mahindra 4 545 384 127 79 5817 2097 2883 4459 60 606 9.63 7.2 2.4 6.5 3.0 3.5 1.2 4.4 2.0 4.3 14.6 0.6 n.a. n.a. n.a. 274.75 24.62 64.2
102 284 1694 2.79 2.63 13.23 21.51

ICICI Bank 446 10617 11959 2372 1637 125229 62096 42743 68109 966 8011 10.3 7.7 2.6 8.3 6.0 2.2 0.6 1.9 1.4 1.6 6.1 4.3 n.a. n.a. n.a. 955.52 13.00 108.0
130 217 13395 1.67 5.08 26.56 8.18

HDFC UTI Bank IndusInd Centurion IDBI Bank Bank of Bank Bank Bank Punjab 231 4791 3029 1008 510 42307 17745 19257 30409 285 2693 8.3 7.0 1.3 5.6 3.3 2.2 1.4 2.4 1.4 3.7 8.0 3.6 n.a. n.a. n.a. 712.40 14.51 96.9
95 304 8659 3.22 3.51 17.89 17.00

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore
Rs Rs Rs crore times times Rs times

140 2338 2127 686 278 24150 9363 7793 20954 232 1138 2.9 7.3 2.5 6.6 4.7 1.9 1.9 2.8 1.3 2.6 6.4 4.8 n.a. n.a. n.a. 1032.70 17.54 121.2
49 93 2158 1.90 9.71 12.02 7.75

53 941 1331 445 262 15086 7812 3972 11200 290 800 10.7 7.9 2.8 7.1 5.4 1.7 1.5 4.8 2.1 2.5 8.9 3.8 n.a. n.a. n.a. 1482.01 34.46 162.2
36 30 658 0.82 17.02 11.90 2.51

60 945 397 12 -105 3549 1556 1004 3029 57 62 11.4 9.6 1.8 11.1 5.9 5.2 3.4 0.1 -3.0 3.7 3.1 4.4 n.a. n.a. n.a. 438.99 2.30 47.2
1 12 654 10.62 4.63 -1.85 -6.22

97 1453 947 285 132 13002 7399 3914 10048 214 618 9.0 7.0 2.0 6.3 3.9 2.5 1.5 3.2 1.3 3.2 5.8 4.5 n.a. n.a. n.a. 712.83 11.02 62.2
29 37 795 1.29 12.64 6.18 6.00

107 1158 472 103 37 4839 2353 1572 4137 105 244 10.6 7.7 2.9 8.1 4.6 3.5 1.4 1.9 0.8 3.1 7.7 4.9 n.a. n.a. n.a. 465.18 9.41 33.5
23 24 248 1.02 16.66 3.53 6.71

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income/ average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity 1 Business per employee Profit per employee Deposits per branch
Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE
1

Operating expenses / average assets per cent

n.a.: Not available For the year 2002-03 Source: IBA's Performance Highlights of Private Sector Banks

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151

Old private sector banks: Key financial parameters (2003-04)
Unit

Table 25

Jammu & ING Vysya Federal Karnataka United South Indian Kashmir Bank Bank Bank Bank Western Bank Bank 454 7,112 1,823 628 406 21206 9285 8451 18661 48 1,594 9.6 8.0 1.6 6.3 4.7 1.5 1.2 3.3 2.1 3.3 13.0 3.9 n.a. n.a. n.a. 287.00 5.00 32.3 329 296 1,436 0.9 13 83.8 3.5 371 4,969 1,287 262 59 13198 7047 4085 10478 23 747 10.4 7.5 2.9 8.3 5.5 2.8 1.6 2.1 0.5 2.0 6.1 4.9 n.a. n.a. n.a. 242.42 1.69 24.8 277 363 na 1.3 na 25.4 14.3 420 6,217 1,490 437 136 15114 7701 5507 13477 22 649 10.9 8.7 2.2 7.7 5.6 2.1 2.2 3.2 1.0 3.1 6.3 5.2 n.a. n.a. n.a. 270.00 1.69 26.1 293 201 446 0.7 30 61.5 3.3 360 4,320 1,119 330 133 10577 4668 4879 9407 40 698 11.3 8.6 2.7 8.0 6.4 1.6 2.0 3.3 1.3 2.2 10.5 2.6 n.a. n.a. n.a. 275.32 2.55 23.0 173 92 371 0.5 25 32.9 2.8 231 3,275 596 133 31 7139 3744 2413 6430 30 304 9.1 7.1 2.0 7.1 5.2 1.9 1.6 2.0 0.5 1.9 5.3 4.8 n.a. n.a. n.a. 242.00 0.83 23.3 94 29 86 0.3 75 10.4 2.8 391 3,550 915 242 84 9254 4197 3962 8280 36 395 10.8 8.1 2.8 8.0 5.7 2.3 1.9 2.9 1.0 2.4 5.8 5.5 n.a. n.a. n.a. 265.00 2.04 17.5 110 61 219 0.6 38 23.6 2.6
Continued...

Branches

1 1

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

Operating expenses / average assets per cent

152

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

Unit

Karur Vysya Bank of Development Tamilnad Catholic Bank Rajasthan Credit Bank Mercantile Bank Syrian Bank 214 2,833 722 215 161 7107 4023 2173 5911 18 712 10.9 9.7 1.1 7.6 5.3 2.4 0.8 3.2 2.4 4.5 15.1 2.0 n.a. n.a. n.a. 288.00 4.41 23.9 1,187 283 170 0.2 35 268.4 1.1 336 4,207 680 185 69 8455 2432 4353 7406 108 329 9.3 6.9 2.4 6.8 4.3 2.5 1.6 2.5 0.9 2.6 8.4 2.8 n.a. n.a. n.a. 164.64 1.63 15.8 29 30 321 1.0 23 6.4 4.7 59 1,327 441 54 17 5393 2440 2084 4474 39 290 9.0 7.2 1.8 7.9 5.2 2.7 0.7 1.1 0.4 2.0 8.9 5.4 n.a. n.a. n.a. 463.00 2.60 62.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 606 170 81 5089 2114 2354 4404 28 224 12.3 11.0 1.4 8.9 6.6 2.3 1.8 3.5 1.6 4.4 17.4 3.7 n.a. n.a. n.a. 270.83 2.88 2.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 476 123 56 4307 1898 1819 3880 11 194 11.7 8.7 2.9 8.6 5.8 2.9 1.6 3.0 1.4 3.0 7.0 4.3 n.a. n.a. n.a. 164.94 1.57 1.2 n.a. n.a. n.a. n.a. n.a. n.a. n.a.
continued...

Branches

1 1

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

Operating expenses / average assets per cent

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

153

...continued

Unit

Lakshmi Bharat City Union Sangli Bank Dhanalakshmi Vilas Bank Overseas Bank Bank Bank 216 1,983 373 91 41 3821 2039 1338 3296 12 227 10.6 8.1 2.5 8.0 5.8 2.3 1.4 2.6 1.2 2.4 8.5 5.3 n.a. n.a. n.a. 228.00 1.72 12.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 80 1,029 230 57 35 8455 1392 936 2472 16 127 4.2 3.6 0.6 3.2 2.1 1.1 0.4 1.0 0.6 1.6 9.8 6.5 n.a. n.a. n.a. 317.00 2.77 26.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 123 1,408 343 118 57 3191 1547 1279 2847 24 203 11.8 9.5 2.3 7.7 6.2 1.5 2.1 4.0 2.0 3.3 10.7 2.6 n.a. n.a. n.a. 230.05 2.37 18.8 85 58 138 0.7 21 23.8 2.4 184 2,026 165 28 12 1992 648 1080 1859 22 86 8.7 7.1 1.6 7.2 4.3 2.9 0.8 1.5 0.6 2.8 11.0 2.7 n.a. n.a. n.a. 91.31 0.59 9.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 159 1,305 249 67 17 2445 1139 895 2156 32 134 11.0 8.4 2.6 8.0 5.3 2.7 2.2 2.9 0.8 3.0 8.6 4.9 n.a. n.a. n.a. 222.06 1.15 11.6 n.a. n.a. n.a. n.a. n.a. n.a. n.a.
continued...

Branches

1 1

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

Operating expenses / average assets per cent

154

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

Unit

Lord Krishna Bank n.a. n.a. 235 48 26 2605 1118 1047 2311 57 137 10.5 7.5 3.1 8.3 5.9 2.4 1.0 2.2 1.2 1.5 10.1 6.5 n.a. n.a. n.a. 264.17 2.36 1.8 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Nainital Bank 59 646 83 21 12 854 236 410 759 15 67 10.2 8.6 1.6 7.7 4.6 3.1 1.0 2.5 1.5 4.1 14.3 4.3 n.a. n.a. n.a. 115.38 1.17 11.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Ratnakar Bank 71 531 77 14 8 815 346 258 715 18 54 9.9 8.4 1.5 8.1 5.5 2.6 0.7 1.8 1.1 2.9 13.5 3.1 n.a. n.a. n.a. 179.73 1.81 9.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

SBI Ganesh Bank Commercial of Kurundwad 2 111 60 26 18 489 121 143 373 100 100 11.1 7.3 3.8 6.3 4.8 1.5 1.5 4.8 3.3 2.5 28.8 1.7 n.a. n.a. n.a. 621.78 -7.71 247.2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 29 240 23 2 1 222 97 78 208 2 11 10.8 8.7 2.1 9.9 7.5 2.4 0.3 0.9 0.6 1.2 7.9 4.1 n.a. n.a. n.a. 126.52 1.39 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Branches

1 1

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

Operating expenses / average assets per cent

n.a.: Not available
1

For the year 2002-03 Source: Performance Highlights of Private Sector Bank

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

155

Select public sector banks: Key financial parameters (2003-04)
Unit Branches
1 1

Table 26
Canara Bank 2,424 47,566 9,080 2,859 1,338 99,539 47,639 35,793 86,345 410 5,252 10.0 7.7 2.3 6.9 4.8 2.1 1.7 3.1 1.5 3.0 7.8 7.8 n.a. n.a. n.a. 236.65 4.20 29.7 125 122 4,988 1.0 17 32.6 3.7 Corporation Bank 684 10,729 2,718 907 504 29,154 13,890 10,685 23,191 143 2,769 9.8 7.9 1.9 6.5 4.5 2.1 1.5 3.3 1.8 3.5 16.5 3.6 n.a. n.a. n.a. 314.60 6.29 31.8 193 214 3,076 1.1 8 35.1 6.1
Continued...

Andhra Bank 1,100 12,991 2,799 930 464 27,009 12,885 10,317 22,941 400 1,453 11.2 8.6 2.6 7.6 5.1 2.5 1.8 3.6 1.8 3.5 8.2 5.5 n.a. n.a. n.a. 250.75 5.81 19.1 36 42 1,693 1.2 14 11.6 3.7

Bank of Baroda 2,753 40,313 7,359 2,485 967 85,109 35,601 38,019 72,967 295 5,131 9.7 7.6 2.1 6.7 4.4 2.2 1.9 3.1 1.2 3.2 8.5 5.4 n.a. n.a. n.a. 252.50 4.26 24.1 175 169 4,960 1.0 15 33.0 5.1

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Operating expenses / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

156

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

Unit Branches
1 1

OBC 989 13,507 4,022 1,533 686 41,007 19,681 16,794 35,674 193 2,677 10.7 8.8 1.9 6.6 4.9 1.7 2.3 4.1 1.8 3.9 9.9 4.6 n.a. n.a. n.a. 336.76 24.46 30.1 139 208 4,002 1.5 9 35.6 5.8

Punjab National Bank 4,037 58,981 9,647 3,121 1,109 102,332 47,225 42,125 87,916 265 4,955 10.2 8.3 2.0 6.9 4.4 2.5 2.1 3.3 1.2 3.8 7.0 6.1 n.a. n.a. n.a. 196.74 3.90 18.8 175 204 5,411 1.2 16 41.8 4.9

Union Bank of India 2,020 25,706 5,348 1,483 712 58,317 29,426 22,442 50,559 460 3,087 9.8 8.3 1.5 7.1 5.1 2.0 1.4 2.7 1.3 3.2 6.5 5.9 n.a. n.a. n.a. 273.33 5.07 22.2 57 44 2,023 0.8 25 15.5 2.8

State Bank of India 9081 208,998 38,073 7,775 3,105 407,815 157,934 185,676 318,619 526 20,231 9.7 7.8 1.9 7.3 4.9 2.4 1.5 2.0 0.8 2.9 8.3 5.2 n.a. n.a. n.a. 207.60 3.72 32.6 384 468 24,608 1.2 13 59.0 7.9

nos nos Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore Rs crore per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent per cent Rs crore per cent per cent Rs lakhs Rs lakhs Rs crore Rs Rs Rs crore times times Rs times

Number of employees Total income Operating profit Net profit Total assets Advances Investments Deposits Paid-up equity capital Net worth

Income / average assets Interest earned / average assets Other income / average assets Expenditure / average assets Interest expended / average assets Operating expenses / average assets Provisions and contingencies / average assets Operating profit / average assets Return on assets Net interest margin Capital adequacy CRAR- Total CRAR- Tier-I Asset quality Net NPA Net NPAs / net advances Net NPA / net worth Productivity1 Business per employee Profit per employee Deposits per branch Valuation Book value Stock price Market capitalisation Price / book value Deposits / market capitalisation EPS Current PE

n.a.: Not available
1

For the year 2002-03

Source: Performance Highlights of Public Sector Bank

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157

Scheduled commercial banks: Segment-wise financial performance (2003-04)
(Rs crore) Banks (nos) Branches
1 1

Table 27
Other Scheduled C i l 30 4,749 71,071 33,154 25542 7,612 29,670 17,529 4,727 7,414 2,574 3,484 8,211 8,013 367,278 2.2 2.0 0.7 0.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 516.8 618.3 46.6 4.9 3.6 15.0 54.2 Foreign banks in I di 33 184 11,785 13,010 8990 4020 10,768 4272 2744 3752 1200 2,242 4,986 4,718 136,316 3.5 2.8 0.9 1.6 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1156.7 1,190.2 110.4 19.0 10.2 64.0 652.2

Total (excl Public sector Nationalised State Bank RRBs) banks banks Group 90 51,685 835,716 183,767 144,028 39,739 161,494 87,567 30,400 43,527 26,195 22,273 52,673 56,461 1,975,023 2.9 2.2 1.3 1.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1 1

27 46,752 752,860 137,603 109,496 28,107 121,056 65,766 22,929 32,361 22,421 16,547 39,476 43,730 1,471,429 3.0 2.2 1.5 1.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 195.4 247.0 18.3 2.2 3.0 16.1 48.0

19 33,130 471,471 85,712 68,540 17,172 74,783 40,370 14,184 20,229 14,068 10,929 25,113 28,170 922,171 3.1 2.2 1.5 1.2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 195.6 255.8 18.2 2.3 3.0 14.2 42.5

8 13,622 281,389 51,891 40,956 10,935 46,273 25,396 8,745 12,132 8,353 5,618 14,363 15,560 549,258 2.8 2.2 1.5 1.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 195.2 232.2 18.4 2.0 3.0 20.7 61.3

Number of employees Income Interest income Other income Expenditure Interest expended

Provisions and contingencies Operating expenses -Wage bill Net profit Operating profit Spread Total assets Spread (percentage of total assets) Operating expenses (percentage of total assets) Wage bill (percentage of total assets) Profit (percentage of total assets) Gross NPA Net NPA Gross NPAs / gross advances (per cent) Gross NPAs / total assets (per cent) Net NPAs / net advances (per cent) Net NPAs / total assets (per cent) Net NPA / net worth (per cent) Asset per employee (Rs lakhs) Business per employee (Rs lakhs) Income per employee (Rs lakhs) Profit per employee (Rs lakhs) Employee per branch (Nos)
1 1 1 1 1

236.3 291.9 22.0 2.7 0.0 16.2 0.0

Wages per employee (Rs lakhs)

Wage costs per branch (Rs lakhs)
1

NPA: Non-performing asset; n.a.: Not available For the year 2002-03 Source: RBI's Trend and Progress of Banking in India and Statistical Tables Relating to Banks in India

158

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Scheduled commercial banks: Segment-wise financial ratios (2003-04)
(Rs crore) Total Public Nationalised sector banks banks 27 1,471,429 14,676 64,549 1,226,838 30,736 134,630 1,471,429 84,242 57,449 625,678 632,740 11,527 59,793 83 20.9 1.12 19 922,171 13,640 37,835 793,947 13,921 62,828 922,171 58,080 30,115 377,903 412,224 8,178 35,671 86 21.2 1.19 State Bank Group 8 549,258 1,036 26,714 432,891 16,815 71,802 549,258 26,162 27,334 247,775 220,516 3,349 24,122 79 20.2 1.02 Other Scheduled Commercial Banks 30 367,278 3,002 19,496 268,550 40,366 35,864 367,278 21,725 15,116 134,802 170,896 7,926 16,813 73 15.5 0.95

Table 28
Foreign banks in India 33 136,316 4,645 10,200 79,757 25,389 16,325 136,316 7,277 9,661 41,586 60,507 1,950 15,335 59 15.1 1.64

Banks (nos) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Assets Cash and bank balances with RBI Balances with banks and money at call and short notice Investments Advances Fixed assets Other assets Key ratios Deposits/Total liabilities (per cent) RONW (per cent) ROA (per cent)

90 1,975,023 22,323 94,245 1,575,145 96,491 186,819 1,975,023 113,244 82,226 802,066 864,143 21,403 91,941 80 19.1 1.13

NPA: Non-performing asset; ROA: Return on assets; RONW: Return on net worth Source: RBI's Trend and Progress of Banking in India

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

159

Scheduled commercial banks: Segment-wise share (2003-04)
(per cent) Scheduled commercial banks Share of total (per cent) Public sector banks - Nationalised banks - State Bank Group Other Scheduled Commercial banks Foreign banks in India
(per cent) Scheduled commercial banks Share of total (per cent) Public sector banks - Nationalised banks - State Bank Group Other Scheduled Commercial banks Foreign banks in India n.a.: Not available
1

Table 29
Total Deposits Advances Investments assets 864,143 73.22 47.70 25.52 19.78 7.00 802,066 78.01 47.12 30.89 16.81 5.18
Spread 56,461 77.45 49.89 27.56 14.19 8.36

Number Number of Employees of banks branches1 90 27 19 8 30 33
Net worth 116,558 67.96 44.16 23.80 19.30 12.74

1

51,685 90.46 64.10 26.36 9.19 0.36
Gross NPA n.a. n.a. n.a. n.a. n.a. n.a.

833,261 1,975,020 1,575,145 90.66 56.71 33.95 7.90 1.44
Net NPA Total income

74.50 46.69 27.81 18.60 6.90
Wage bill 26,195 85.59 53.70 31.89 9.83 4.58

77.89 50.40 27.48 17.05 5.06

Net Operating profit profit 22,273 74.29 49.07 25.22 15.64 10.07 52,673 74.95 47.68 27.27 15.59 9.47

n.a. 183,767 n.a. n.a. n.a. n.a. n.a. 74.88 46.64 28.24 18.04 7.08

Figures for the year 2002-03 Source: CRIS INFAC

160

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

4.0

Industry performance
Figure 1

SCBs: Profits
(Rs crore) 60,000 50,000 40,000 30,000 20,000 10,000 0 -10,000 199192

199293

199394

199495

199596

199697

199798

199899

19992000

200001

200102 Spread

200203

200304

Net profit

Operating profit

Source: CRIS INFAC

SCBs: NIM
(Rs crore) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 199192 199293 199394 199495 199596 199697 199798 199899 19992000 200001 200102

Figure 2

200203

200304

NIM (NII as a percentage of avg assets)

Operating profit to avg assets

Source: Statistical Tables Relating to Banks in India

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

161

SCBs: Segment-wise NIM
(per cent) 5

Figure 3

4

3

2

1 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99

19992000

2000-01 2001-02 2002-03 2003-04

Private banks

Foreign banks

Public sector banks

Source: CRIS INFAC

Advances, IIP and imports: Growth
(per cent) 30 25 20 15 10 5 0 -5

Figure 4

1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04 2000 Advances IIP Imports

Source: Report on Trend and Progress of Banking in India & Statistical Tables Relating to Banks in India

SCBs: Advances
2003-04 2002-03 2001-02 2000-01 1999-2000 1998-99 1997-98 1996-97 1995-96 1994-95 1993-94 1992-93 1991-92 0% 20% 40% Term loans 60% 80% Cash credit, overdraft

Figure 5

100%

Bills purchases and discounted

Source: Report on Trend and Progress of Banking in India

162

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IIP and credit: Growth
(per cent) 30 25 20 15 10 5 0 Apr-95

Figure 6

Apr-96

Apr-97

Apr-98

Apr-99 IIP

Apr-00

Apr-01 Credit

Apr-02

Apr-03

Apr-04

Source: CSO, RBI’s Weekly Statistical Supplement

Advances: Average yields
(per cent) 16

Figure 7

14

12

10

8

6 1992-93 1994-95 1996-97 1998-99 2000-01 2002-03

Source: Statistical Tables Relating to Banks in India

Outstanding loans and advances: Break-up by interest rates Figure 8
(per cent) 30

25

20

15

10

5

0 <6 6-9 10-11 12-13 14-<15 15- <16 16 - <17 17 - <18 18 - 19 20>

Source: Statistical Tables relating to Banks in India
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

163

SCBs: Investments
(Rs crore) 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1991-92

Figure 9

1993-94

1995-96 Total investments

1997-98

1999-2000

2001-02

2003-04

Government securities in India

Source: Report on Trend and Progress of Banking in India

PSU banks: Number of banks achieving CRAR
(nos) 30 25 20 15 10 5 0 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 19992000

Figure 10

2000-01 2001-02 2002-03 2003-04

Source: IBA’ Performance Highlights of Public, Private & Foreign Banks in India

Gross NPAs and net NPAs
(per cent) 19 17 15 13 11 9 7 5 3 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02

Figure 11

2002-03

Gross NPAs to gross advances

Net NPAs to net advances

Source: RBI

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Investment and advances: Average yield
(per cent) 18 16 14 12 10 8 6 1992-93

Figure 12

1994-95

1996-97 Average yield of investments

1998-99

2000-01

2002-03

Average yield on advances

Source: Statistical Tables Relating to Banks in India

SCBs: Other income to total income
(per cent) 22 20 18 16 14 12 10 1991-92

Figure 13

1993-94

1995-96

1997-98

1999-2000

2001-02

2003-04

Source: CRIS INFAC

M3 and deposits
(Rs crore) 2,500,000

Figure 14

2,000,000

1,500,000

1,000,000

500,000

0 1991-92

1993-94

1995-96

1997-98

1999-2000 M3

2001-02

2003-04

Total deposits

Source: CRIS INFAC
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165

M3 and reserve money: Growth
(per cent) 30 25 20 15 10 5 0 1991-92

Figure 15

1993-94

1995-96

1997-98

1999-2000

2001-02

2003-04

M3 growth

Reserve money growth

Source: CRIS INFAC

Deposits: Demand, savings and time deposits (excl RRBs)
(per cent) 70 60 50 40 30 20 10 0 1991-92 1993-94 1995-96 1997-98 Savings deposits 1999-2000 2001-02

Figure 16

2003-04

Demand deposits

Term deposits

Source: Report on Trend and Progress of Banking in India

Incremental deposits: Break-up by deposit type (excl RRBs) Figure 17
(per cent) 100

80

60

40

20

0 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999- 2000-01 2001-02 2002-03 2003-04 2000 Demand deposits Savings deposits Term deposits

Source: Report on Trend and Progress of Banking in India

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Deposits: Growth (excl RRBs)
(per cent) 25

Figure 18

20

15

10

5

0 1992-93 1994-95 Demand deposits 1996-97 1998-99 2000-01 Term deposits 2002-03

Savings bank deposits

Source: Report on Trend and Progress of Banking in India

NRI deposits: Growth
($ million) 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 -500 -1,000 -1,500 199192 199293 199394 199495 199596 199697 199798 199899 19992000 200001

Figure 19

200102

200203

Source: RBI’s Handbook of Statistics on the Indian Economy

Deposits: Average costs
(per cent) 10 9 8 7 6 5 4 1992-93

Figure 20

1994-95

1996-97

1998-99

2000-01

2002-03

Source: CRIS INFAC
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

167

Term deposits: Interest rates (March 2003)
(per cent) 40 35 30 25 20 15 10 5 0 <6 6-8 8-9 9-10 10-11 11-12 12-13

Figure 21

> 13

Source: Basic statistical returns (RBI)

Incremental credit-deposit ratio
(per cent) 100

Figure 22

80

60

40

20

0 1997-98

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04

Source: RBI and CRIS INFAC Research

Incremental borrowing-deposit ratio
(per cent) 40 30 20 10 0 -10 -20 1997-98

Figure 23

1998-99

1999-2000

2000-01

2001-02

2002-03

2003-04

Source: RBI and CRIS INFAC Research

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SCBs: Operating costs
(Rs crore) 50,000

Figure 24

40,000

30,000

20,000

10,000

0 1991-92

1993-94

1995-96

1997-98

1999-2000 Salaries

2001-02

2003-04

Operating expenses

Source: CRIS INFAC

SCBs: Segment-wise operating costs as a percentage of average assets
(per cent) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1992-93

Figure 25

1994-95

1996-97

1998-99 Foreign banks

2000-01

2002-03

Private banks

Public sector banks

Source: CRIS INFAC

Overheads as a percentage of operating income
(per cent) 32 30 28 26 24 22 20 1991-92

Figure 26

1993-94

1995-96

1997-98

1999-2000

2001-02

2003-04

Overheads as a percentage of operating income

Spreads as a percentage of operating income

Source: CRIS INFAC
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

169

Overheads as a percentage of average assets
(per cent) 4.4 4.0 3.6 3.2 2.8 2.4 2.0 1991-92

Figure 27

1993-94

1995-96

1997-98

1999-2000

2001-02

2003-04

Overheads as a percentage of avg assets

Spread as a percentage of avg assets

Source: CRIS INFAC

Operating costs: India vis-à-vis other countries
(per cent) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 India USA Germany UK France Italy Spain Canada

Figure 28

Sweden

Japan

Source: Report on Trend and Progress of Banking in India

SCBs (excl RRBs): Number of branches
(nos)
53,000 52,000 51,000 50,000 49,000 48,000 47,000 46,000 45,000 199192 199293 199394 199495 199596 199697 199798 199899 19992000 200001

Figure 29

200102

200203

Source: CRIS INFAC

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SCBs: Number of employees
(nos) 980,000 960,000 940,000 920,000 900,000 880,000 860,000 840,000 820,000 800,000 1991-92

Figure 30

1993-94

1995-96

1997-98

1999-2000

2001-02

Source: CRIS INFAC

Investments: Average yields
(per cent) 14.0

Figure 31

13.0

12.0

11.0

10.0

9.0 1992-93

1994-95

1996-97

1998-99

2000-01

Average yield of investments

Interest rate on Central govt securities

Source: Statistical Tables Relating to Banks in India and Handbook of Statistics Relating to Indian Economy

BSE volumes and capital issues
(Rs crore) 1,200,000 1,000,000 800,000 600,000 400,000 200,000 0 1991-92 1993-94 1995-96 1997-98 1999-2000 2001-02

Figure 32

2003-04

Turnover BSE

Capital issues-equity

Source: RBI, CMIE
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5.0

Player profiles
Table 1
Public sector banks SBI BoB 85,109 2,730 39,803 7.2 2.0 4.2 2.1 1.1 1.1 0.7 0.5 3,980 1,761 3.0 13.9 1.9 3.5 4.8 8.6 8.3 0.7 9.8 26.0 15 31.2 2.1 BOI 80,577 2,562 42,977 7.2 2.2 4.5 2.2 1.0 1.3 0.5 0.8 433 1,234 4.5 13.0 1.8 3.2 4.6 8.0 7.5 7.6 10.8 11.2 17 31.5 1.9 Canara Bank 99,539 2,469 47,796 7.0 2.1 4.3 1.9 1.2 1.3 0.3 1.0 3,127 1,378 2.9 12.7 1.5 2.9 5.2 9.0 8.7 17.7 19.8 17.5 19 40.3 2.1 PNB 102,332 4,022 58,839 7.6 1.8 4.1 2.3 1.3 1.1 0.6 0.4 4,670 449 1.0 13.1 1.9 3.8 4.8 9.7 8.9 17.4 16.0 23.8 15 25.4 1.7 OBC 41,007 1,013 13,602 8.0 1.8 4.5 1.4 0.9 6.3 1.1 5.2 1,211 0 0.0 14.0 2.6 3.7 5.5 10.3 9.0 25.5 19.7 13.6 13 40.5 3.0 Dena Bank 10,081 1,130 10,957 17.2 6.1 11.3 4.7 3.6 2.6 1.2 1.4 1,484 884 9.4 9.5 1.0 2.7 6.1 9.5 9.2 11.6 11.3 14.5 10 8.9 0.9

Financial comparison of key banks: 2003-04
(per cent)

Average assets (Rs crore) Branches (nos) Employees (nos) Interest earned Other income
1 1 1 1 1

407,815 9,093 207,039 7.5 1.9 4.7 2.3 1.1 0.9 0.4 0.5 12,667 5,442 3.5 13.5 1.2 2.6 5.9 8.8 7.6 14.6 7.6 7.7 23 44.8 2.0

Interest expended

Operating expenses Profit before taxes
1 1

Provisions (excluding taxes) Provision for taxes Profit after taxes1 Gross NPA (Rs crore) Net NPA (Rs crore) Quality of assets Net NPAs to advances Capital adequacy Profitability Net Profitability Margin Spreads Average cost of deposits

Average yield on investments Average yield on advances Growth Growth in advances Growth in deposits Growth in investments Productivity Employee per branch (nos) Assets per branch (Rs crore) Assets per employee (Rs crore)

Continued...

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173

...continued

(per cent)

New private sector banks ICICI HDFC IndusInd Bank Bank 125,229 42,307 413 13,609 7.1 2.4
1 1 1

Old private sector banks South Federal Bank of Indian Bank Rajasthan Bank 8,441 410 3,534 8.1 2.8 5.7 2.3 0.9 1.0 0.9 0.1 328 190 4.6 11.3 0.32 2.21 6.15 8.88 9.17 16.2 20.7 32.1 9 20.6 2.4 13,658 432 6,363 8.7 2.2 5.6 2.1 1.7 1.0 0.5 0.4 601 223 2.9 11.5 1.60 3.00 5.92 8.68 10.26 23.9 23.1 21.0 15 31.6 2.1 7,292 354 n.a. 6.9 2.4 4.3 2.5 1.2 0.9 0.4 0.6 237 73 3.0 11.2 3.81 3.45 4.86 8.04 8.48 9.5 39.8 64.7 n.a. 20.6 n.a.

Foreign banks Citibank HongKong Standard Bank Chartered Bank 27,418 20 n.a. 8.3 3.2 3.4 3.7 1.0 2.1 1.5 0.6 393 214 1.4 11.1 4.15 5.06 4.16 7.75 9.93 20.8 15.3 -4.9 n.a. 1370.9 n.a. 23,133 38 n.a. 6.1 3.0 3.1 2.7 0.9 1.7 0.8 0.9 419 68 0.7 14.5 2.42 3.08 3.45 6.58 8.40 17.4 27.1 26.7 n.a. 608.8 n.a. 31,829 66 n.a. 7.9 2.2 3.4 2.4 1.7 1.8 0.8 1.0 482 84 0.5 10.9 4.66 5.42 3.77 6.77 10.47 23.8 10.8 -1.4 n.a. 482.3 n.a.

Average assets (Rs crore) Branches (nos) Employees (nos) Interest earned Other income
1 1

9,318 69 n.a. 10.6 3.7 7.2 2.3 1.9 5.5 0.1 5.4 259 212 2.7 12.8 1.45 2.70 5.05 8.00 10.59 46.1 30.3 56.7 n.a. 135.0 n.a.

312 5,673 6.0 1.1 2.9 1.9 0.7 3.9 0.5 3.4 336 28 0.2 11.7 3.12 4.24 3.93 8.10 7.52 51.0 35.9 43.8 18 135.6 7.5

Interest expended

5.6 2.1 0.4 1.3 0.2 1.1 3,048 2,037 2.2 10.4 0.43 1.40 5.20 6.22 10.53 16.5 41.4 20.5 33 303.2 9.2

Operating expenses Profit before taxes Profit after taxes
1 1

Provisions (excluding taxes) Provision for taxes
1

Gross NPA (Rs crore) Net NPA (Rs crore) Quality of assets Net NPAs to advances Capital adequacy Profitability Net Profitability Margin Spreads Average cost of deposits Average yield on investments Average yield on advances Growth Growth in advances Growth in deposits Growth in investments Productivity Employee per branch (nos) Assets per branch (Rs crore) Assets per employee (Rs crore)
1

as per cent of average assets

n.a. - not available Source: CRIS INFAC

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State Bank of India
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total Secured Government guarantee Unsecured Total 0 8,403 7,338 15,093 30,834 10,354 493 6,656 38,472 17,105 62,233 53,277 7,805 1,151 62,233 0 8,755 7,620 14,505 30,880 12,906 508 7,933 43,553 22,750 74,237 62,787 9,097 2,353 74,237 555 10,796 10,101 12,533 33,986 16,894 498 7,741 45,991 28,627 82,360 69,122 8,169 5,068 82,360 0 10,563 13,081 19,615 43,259 18,345 558 9,235 54,979 33,888 98,102 83,668 8,494 5,940 98,102 0 13,598 16,966 18,068 48,632 17,628 868 12,840 61,197 39,553 113,590 90,358 8,703 14,530 113,590 4,722 13,875 19,286 15237 53,120 20,820 1,053 11,555 64,178 45,073 120,806 98,526 6,307 15,974 120,806 3,685 14,036 20,060 15,465 53,246 11,602 1,136 12,405 69,117 56,237 137,758 109,924 9,185 18,650 137,758 0 0 883 6,077 6,960 0 0 837 7,256 8,093 0 0 1,076 8,003 9,079 670 0 1,670 6,938 9,278 0 0 2,537 8,185 10,722 0 0 2,153 7,170 9,323 0 0 1,572 7,732 9,304 110,701 25,647 24,028 61,026 110,701 27,814 29,208 74,070 131,091 123548.7 7543 131,091 30,692 34,321 104,029 169,042 160,255 8,787 169,042 36,182 41,507 119,132 196,821 187,639 9,182 196,821 40,328 47,893 154,607 242,828 234,896 7,932 242,828 42,313 56,396 171,851 270,560 262,549 8,011 270,560 44,772 65,783 185,568 296,123 7,257 296,123 10,847 16,906 46,828 62,233 1,171 18,488 156,473 13,415 19,231 54,982 74,237 1,506 16,301 179,673 17,392 35,820 71,287 82,360 2,194 13,456 222,509 18,903 28,233 91,879 98,102 2,478 21,910 261,505 18,496 42,213 122,876 113,590 2,593 15,875 315,644 21,873 43,058 145,142 120,806 2,415 14,934 348,228 12,738 32,443 172,348 137,758 2,389 18,201 375,877 526 7,450 110,702 6,960 30,835 156,473 526 9,082 131,091 8,093 30,880 179,673 526 9,876 169,042 9,079 33,986 222,509 526 11,621 196,821 9,278 43,259 261,505 526 12,935 242,828 10,722 48,632 315,644 526 14,698 270,560 9,324 53,120 348,228 526 16,677 296,123 9,304 53,246 375,876 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 20002-03

Table 2
2003-04 526 19,705 318,619 13,431 55,534 407,815 19,041 24,525 185,676 157,934 2,645 17,994 407,815 50,291 79,596 188,732 318,619 8820 318,619 0 0 1,365 12,066 13,431 5,823 15,665 17,428 16,618 55,534 17,756 1,285 14,859 69,329 73,746 157,934 119,388 11,937 26,608 157,934

288,866 309798.2

continued...

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175

...continued

(Rs crore) Priority sector Public sector Banks Others Total domestic advances Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries - Others Total Total investm ents Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest discount on advances and bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from subsidiaries Lease Income Miscellaneous income Total Total income

1996-97 16,945 10,064 225 27,788 55,022 7,211 62,233 1,115 33,973 7,472 514 2,858 874 22 45,713 46,828

1997-98 19,523 12,088 785 31,744 64,140 10,097 74,237 2,221 39,025 7,158 694 4,132 987 765 52,761 54,982

1998-99 1999-2000 23,090 13,465 470 34,234 71,259 11,101 82,360 2,690 51,568 6,464 1,014 6,658 1,043 1,849 68,596 71,287 25,878 9,490 361 49,808 85,537 12,564 98,102 3,200 67,747 5,914 1,155 9,820 1,111 2,932 88,679 91,879

2000-01 30,153 20,271 442 48,372 99,239 14,351 113,590 3,961 96,127 5,705 984 1,173 3,815 118,916 122,876

2001-02 20002-03 31,591 21,990 185 53,764 107,530 13,276 120,806 4,669 117,029 5,220 950 1,186 3,293 140,473 145,142 35,112 24,783 86 63,869 123,850 13,909 137,758 4,462 143,727 4,527 993 16,166 1,189 1,283 167,886 172,348

2003-04 42,706 25,875 2,277 71,169 142,026 15,907 157,934 3,992 157,738 4,194 902 15,875 1,436 1,539 181,684 185,676

11,111 12794.04

n.a. n.a. n.a. n.a.
n.a.

n.a. n.a. n.a. n.a.
n.a.

n.a. n.a. n.a. n.a.
n.a.

14,065 3,681 2,500 15,246 6,284

15,246 4,352 3,724 15,875 6,856

15,875 4,170 4,559 15,486 6,810

15,486 4,889 6,668 13,506 6,183

13,506 5,721 6,560 12,667 5,442

8,137 5,521 722 570 14,950 1,805 26 0 0 0 699 40 0 73 2,643 17,593

7,829 6,392 632 1,027 15,879 2,038 117 0 0 0 505 50 0 110 2,820 18,699

8,581 7,585 1,101 1,840 19,108 2,379 73 0 0 -1 569 62 0 203 3,285 22,392

9,554 9,506 1,573 1,567 22,201 2,567 269 0 0 1 329 65 0 338 3,569 25,770

11,143 11,230 1,703 1,927 26,003 2,632 477 0 0 0 304 77 0 528 4,018 30,021

11,063 14,272 3,055 1,420 29,810 2,817 352 0 15 -19 408 103 267 234 4,174 33,985

11,229 15,258 3,274 1,327 31,087 2,977 1,695 0 0 -5 464 137 221 252 5,740 36,827

11,267 15,716 2,499 978 30,460 3,121 3,073 0 0 -1 503 161 172 582 7,612 38,073

continued...

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provison for doubtful debts Provision for wealth tax and interest tax Provision for depreciation on investments Provision for income tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1996-97 8,301 482 808 9,591 3,323 1,281 0 4,604 2,048 16,243 1,350 3,398 209 15 14,138 10,736 2,705 11,742 2,854 42,399 833 205 4 925 81 2,048

1997-98 9,586 481 406 10,473 3,558 1,163 0 4,721 1,644 16,838 1,861 3,505 247 8 32,005 9,283 5,211 10,830 2,370 59,954 1,300 127 -964 1,001 180 1,644

1998-99 1999-2000 12,197 474 373 13,044 4,140 1,756 0 5,897 2,424 21,365 1,027 3,451 324 6 38,518 9,251 6,033 9,786 2,497 66,415 1,423 140 15 383 463 2,423 14,397 557 319 15,273 4,478 1,818 0 6,296 2,151 23,719 2,051 4,202 331 6 49,065 9,036 5,763 12,942 5,239 82,383 1,264 161 -538 979 285 2,151

2000-01 16,643 521 591 17,756 6,012 2,287 0 8,299 2,363 28,417 1,604 3,967 245 69 48,157 8,706 6,175 12,895 7,422 83,669 1,470 0 -116 971 37 2,363

2001-02 20002-03 19,554 364 810 20,729 5153 1,633 425 7,211 4,013 31,952 2,032 6,045 391 9 53,447 11,726 3,369 12,591 20,679 102,213 2,153 0 198 1,603 58 4,013 20,174 195 740 21,109 5689 1,760 494 7,942 5,870 34,922 1,905 7,775 451 44 52,326 9,249 5,771 15,868 22,398 106,106 2,592 0 420 2,149 709 5,870

2003-04 18,123 161 990 19,274 6448 2,099 698 9,245 6,213 34,732 3,341 9,553 764 67 58,720 11,012 5,195 21,119 15,015 111,892 3694 45 508 1,566 400 6,213

15 14 13 16 23 22 55

18 8 22 21 21 22 57

29 10 18 40 18 20 62

16 18 21 15 18 21 61

23 11 15 30 17 20 64

11 11 18 11 16 21 64

9 5 17 8 15 22 63

8 6 21 2 16 25 59

continued...

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177

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income

1996-97 0.9 20.1 18.6 72.2 15.0 26.2 4.2 25.7 57.5 57.7 n.a. 8.0 13.2 n.a. 12.2 13.3 n.a. n.a. n.a. n.a. 10.6 12.2 60.3 30.5 56 17 6 0 42 21 93 4 15 7 n.a. 2 15

1997-98 1.1 21.2 17.7 75.4 15.1 25.2 3.6 35.4 57.4 58.2 7.64 7.9 11.8 10.90 12.6 11.5 3.25 3.2 1.7 1.8 16.1 14.6 46.9 18.7 57 59 6 0 42 40 95 19 18 17 7 13 6

1998-99 1999-2000 0.5 10.3 20.4 70.2 14.7 26.3 3.5 19.5 63.1 63.6 7.74 8.1 9.9 10.69 12.0 11.0 2.95 3.2 1.7 1.4 17.5 12.5 70.2 24.2 49 21 5 0 42 43 95 11 29 30 16 17 20 0.8 18.2 20.5 71.1 13.9 24.4 3.2 39.0 60.0 61.5 7.53 7.9 9.5 10.35 11.7 10.6 2.82 2.8 1.4 1.4 19.9 11.5 51.2 19.1 50 57 5 0 47 74 96 19 16 29 8 8 16

2000-01 0.6 12.5 22.4 72.4 13.4 27.6 3.4 30.5 67.7 70.4 7.34 7.6 11.1 10.08 10.5 10.5 2.74 3.1 1.2 0.8 22.0 12.8 59.6 18.5 47 34 4 0 51 67 96 16 23 34 34 3 17

2001-02 20002-03 0.6 14.2 21.9 71.5 12.3 21.2 2.7 38.6 54.4 55.9 7.39 7.6 11.7 9.81 10.6 9.4 2.41 2.3 1.1 1.2 25.6 13.4 66.4 26.4 44.7 26.0 3 0 54 80 97 6 11 18 -14 7 15 0.5 11.8 20.8 71.6 15.6 21.6 2.7 36.2 50.5 56.6 6.88 7.1 10.0 9.31 9.6 8.7 2.42 2.3 1.0 1.1 30.4 13.5 75.5 34.1 46.5 66.3 3 0 58 106 97 14 9 19 10 6 4

2003-04 0.9 17.8 19.2 69.7 20.0 24.3 2.9 63.5 49.2 58.8 5.78 5.9 10.1 8.38 8.8 7.6 2.61 2.5 1.1 1.2 27.0 13.5 65.0 30.7 49.6 89.7 4 0 58 59 97 15 8 8 13 5 -2

continued...

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...continued

(Rs crore) Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others Abroad Share of advances (per cent) Bills Cash credits Term loans Share of advances (per cent) Secured Government guaranteed Unsecured Share of investments (per cent) Government securities Other approved securities Shares and debentures Debentures Subsidiaries Others Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 8,888 7.00 0.52 236,204 0.07 5.29 85 4 10 27 16 0 45 12 11 62 27 86 13 3 73 16 1 6 2 0 16.0 7.3

1997-98 8,925 8.32 0.53 239,649 0.08 5.26 85 3 11 26 16 1 43 14 11 59 31 85 12 3 71 13 1 8 2 1 14.1 6.1

1998-99 1999-2000 8,982 9.17 0.66 237,504 0.09 5.41 85 3 11 28 16 1 42 13 9 56 35 84 10 3 72 9 1 9 1 3 n.a. 7.2 9,043 10.85 0.70 233,433 0.11 5.76 86 1 10 26 10 0 51 13 9 56 35 85 9 4 74 6 1 11 1 3 14.3 6.4

2000-01 9,078 12.51 0.91 212,649 0.14 4.99 87 1 9 27 18 0 43 13 11 54 35 80 8 4 78 5 1 9 1 3 12.9 6.0

2001-02 20002-03 9085 13.30 0.79 209462 0.16 6.60 88 1 8 26 18 0 45 11 10 53 37 82 5 13 81 4 1 9 1 2 n.a. 5.6 9081 15.17 0.87 208998 0.18 6.47 84 1 8 25 18 0 46 10 9 50 41 80 7 14 83 3 1 9 1 1 n.a. 4.5

2003-04 9093 17.37 1.02 207039 0.18 5.90 80 1 8 27 16 1 45 10 9 44 47 76 8 17 85 2 0 9 1 1 n.a. 3.5

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

179

Bank of Baroda
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bonds/Debentures Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1,364 11,190 3,978 16,532 1,422 13,370 5,011 19,803 1,365 13,177 6,550 21,092 1,438 14,969 7,986 24,393 1,536 16,654 9,231 27,421 2,002 19,602 12,059 33,663 2,339 19,537 13,473 35,348 885 281 1,989 3,155 2,833 215 0 0 500 873 340 2,363 3,576 3,448 217 0 1,100 872 418 2,951 4,241 3,437 248 0 1,099 782 501 2,411 3,694 3,238 268 0 1,200 702 518 3,824 5,044 4,015 355 0 1,200 1,004 494 1,887 4,585 2,253 328 0 1,200 1,256 326 2,189 4,971 3,048 402 0 7 322 0 329 0 4 473 0 476 0 17 433 29 479 0 6 363 0 479 0 1 850 85 936 140 167 386 0 693 0 12 613 0 625 4,190 6,423 21,544 32,157 27,995 4,162 32,157 4,689 7,802 26,635 39,126 33,536 5,590 39,126 5,243 9,107 30,264 44,614 38,904 5,710 44,614 5,525 10,842 34,941 51,308 44,957 6,351 51,308 5,625 12,185 36,176 53,986 47,869 6,117 53,986 6,328 14,047 41,429 61,804 54,532 7,272 61,804 6,039 16,419 43,983 66,441 59,402 7,040 66,441 3,048 4,683 10,927 16,532 570 1,880 37,640 3,665 6,721 13,359 19,803 581 1,712 45,842 3,684 8,335 15,905 21,092 597 2,619 52,232 3,506 8,971 18,557 24,393 608 2,571 58,605 4,370 2581.068 8,067 19,857 27,421 647 2,961 63,322 6,366 23,833 33,663 692 3,774 70,910 3,466 3,351 30,179 35,348 697 3,383 76,425 254 1,733 32,157 340 3,156 37,640 293 2,370 39,126 476 3,576 45,842 294 2,604 44,614 479 4,241 52,232 294 2,940 51,308 479 3,694 58,605 294 3,062 53,986 936 5,044 63,322 294 3,533 61,804 693 4,585 70,910 294 4,093 66,441 625 4,971 76,425 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 3
2003-04 295 4,836 72,967 875 6,135 85,109 3,057 4,210 38,019 35,601 815 3,407 85,109 6,772 19,780 46,415 72,967 64,346 8,621 72,967 0 9 225 640 875 308 1,500 1,032 366 2,929 6,135 2,655 418 2,496 18,394 14,711 35,601

Continued...

180

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Profit/Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1996-97 13,653 613 2,266 16,532 4,921 1,582 18 7,897 14,418 2,114 16,532 511 6,843 1,845 225 1,268 102 134 10,417 10,928

1997-98 17,052 815 1,937 19,803 5,739 2,689 20 8,952 17,401 2,402 19,803 610 8,342 1,778 235 1,921 152 321 12,749 13,359

1998-99 1999-2000 19,031 329 1,732 21,092 6,057 2,785 9 9,358 18,209 2,882 21,092 908 9,719 1,717 222 2,553 174 611 14,997 15,905 22,660 585 1,148 24,393 6,592 2,670 84 12,063 21,409 2,984 24,393 1,172 11,052 1,736 249 2,866 187 1,275 17,385 18,556

2000-01 23,920 785 2,716 27,421 6,660 3,400 398 12,970 23,429 3,992 27,421 1,395 11,610 1,648 299 3,300 155 1,450 18,463 19,857

2001-02 28,326 1,581 3,756 33,663 7,677 5,785 503 14,152 28,116 5,547 33,664 1,946 14,327 1,596 332 3,834 215 1,582 21,887 23,833

2002-03 29,113 1,777 4,459 35,348 9176.21 5,160 530 14,049 28,914 6,434 35,348 1,802 21,348 1,460 412 4,400 236 520 28,377 30,179

2003-04 28,501 2,802 4,298 35,601 9,925 3,577 466 15,228 29,197 6,404 35,601 1,963 27,372 1,396 517 4510 255 2,007 36,056 38,019

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

3,686 829 617 3,897 1,686

3,897 1,124 836 4,186 1,851

4186 1035 731 4489 1913

4489 717 1039 4168 1700

4168 1078 1266 3980 1761

2,237 1,149 324 52 3,762
244 14 0 1 0 85 4 0 111 459 4,221

2,235 1,510 408 18 4,171
235 71 -2 0 0 136 5 0 98 543 4,714

2,385 1,744 558 135 4,821
247 33 0 0 0 142 3 0 154 578 5,400

2,591 1,993 493 143 5,220
280 86 0 0 0 131 4 0 140 641 5,862

2,938 2,151 613 55 5,757
298 102 -13 62 134 1 0 170 755 6,512

3,060 2,368 429 99 5,956
305 415 0 1 0 117 5 0 149 993 6,949

3,066 2,703 230 98 6,098
344 631 0 0 0 138 6 0 141 1,262 7,359

2,800 2,932 197 217 6,146
344 1018 0 1 0 170 11 0 176 1,720 7,866

continued...

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181

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/Inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provison for NPAs/Stadard assets Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 2,374 21 157 2,552 606 254 32 892 500 3,944 277 777 389 9 4,327 2,317 1,022 1,775 348 10,187 298 87 52 63 500

1997-98 2,676 44 118 2,838 652 383 35 1,071 347 4,255 459 806 487 0 6,600 2,857 785 2,091 298 13,118 323 -245 258 12 347

1998-99 1999-2000 3,079 69 100 3,248 845 321 41 1,207 572 4,978 421 945 265 0 7,621 2,337 848 1,796 347 13,215 361 15 147 49 572 3,251 80 175 3,507 896 354 52 1,303 549 5,359 503 1,052 153 0 7,518 2,126 1,199 1,740 568 13,304 342 -33 240 0 549

2000-01 3,581 75 163 3,820 1,146 385 77 1,608 780 6,189 323 1,085 238 0 13,313 2,007 1,443 2,122 596 19,720 509 58 185 27 780

2001-02 3,848 72 156 4,076 1,056 416 91 1,563 763 6,403 546 1,309 152 1 8,875 3,261 1,986 641 14,916 482 -14 250 45 763

2002-03 3,775 65 154 3,994 1,129 431 89 1,648 944 6,586 773 1,717 343 0 17,616 2,060 1,425 2,527 448 24,419 464 1 398 81 944

2003-04 3,365 49 162 3,575 1,253 477 76 1,805 1,518 6,899 967 2,485 828 0 22,309 2,156 1,202 2,754 1,069 30,318 968 -101 566 86 1,518

13 12 14 13 13 20 67 87 13

22 12 21 24 12 20 68 86 14

14 12 17 14 12 20 68 87 13

15 5 19 15 11 21 68 88 12

5 2 12 4 10 23 67 89 11

14 12 15 15 10 23 67 88 12

8 -5 17 6 9 25 66 89 11

10 12 20 6 9 27 64 88 12

continued...

182

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...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos)

1996-97 0.8 14.9 17.9 70.5 10.9 20.4 2.7 10.9 53.4 53.9

1997-98 1.1 19.7 16.2 63.0 11.5 22.0 2.6 15.7 57.1 59.3 7.68

1998-99 1999-2000 0.9 15.2 17.0 72.5 10.7 21.6 2.6 14.3 56.1 56.9 7.51 7.4 35.3 10.79 11.9 11.7 3.28 2.61 1.01 1.68 87.6 13.3 55.4 18.1 47 23 1 1 36 46 90 7 14 19 30 5 16 2,573 8.20 0.47 46,187 0.9 16.4 17.1 71.7 10.9 21.3 2.4 17.1 55.3 57.4 7.12 6.8 53.3 10.48 11.6 11.4 3.36 2.50 0.92 1.79 100.1 12.1 52.2 17.0 48 49 1 1 36 40 91 16 15 17 6 13 8 2,652 9.20 0.49 47,054

2000-01 0.5 9.8 17.9 74.9 11.6 23.5 2.8 11.0 59.7 62.0 7.06 6.8 33.7 10.57 11.2 11.3 3.51 2.79 0.90 1.61 74.4 12.8 70.2 22.7 51 113 2 1 37 49 91 12 5 7 28 6 10 2,669 10.27 0.60 46,360

2001-02 0.8 15.2 17.5 67.6 14.3 22.5 2.5 18.5 54.4 63.6 6.84 6.6 28.0 10.03 10.8 7.8 3.18 2.48 0.79 1.49 71.1 11.3 58.3 19.9 54 80 1 4 39 51 92 23 14 20 -8 3 3 2,679 12.57 0.58 38,899

2002-03 1.0 18.8 16.4 68.5 17.1 22.4 2.5 26.3 49.0 60.3 6.06 5.9 33.2 9.26 10.0 7.8 3.20 2.38 0.80 1.62 97.3 12.7 55.0 21.5 53 36 1 5 45 137 93 5 8 27 7 13 2 2,753 12.84 0.60 40,313

2003-04 1.2 20.3 15.6 69.4 21.9 22.9 2.5 32.8 42.1 55.2 4.99 4.8 28.1 8.45 8.6 8.3 3.45 2.36 0.79 1.88 92.9 13.9 61.1 29.6 49 4 1 4 52 120 94 1 10 26 11 0 1 2,730 13.04 0.66 39,803

7.8 23.2 11.2 13.7

7.5 40.2 10.91 12.4 12.3 3.23 2.72 1.07 1.57

39.4 11.8 64.4 25.2 51 14 1 1 34 35 87 3 13 14 10 -28 7 2,493 6.63 0.36 45,759

88.5 12.1 43.1 13.0 51 47 1 1 34 35 89 20 22 22 8 -4 11 2,522 7.85 0.42 45,935

Income per employee (Rs crore) Income/employee expenses (times)

0.09 6.97

0.10 7.23

0.12 6.39

0.12 6.54

0.14 5.68

0.18 6.58

0.18 6.52

0.20 6.28

continued...

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183

...continued

(Rs crore) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved Shares Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 89 2 6 30 10 0 48 13 8 68 24 83 4 14 66 18 2 12 1 1 0.05 17.2 8.9

1997-98 88 3 5 29 14 0 45 12 7 68 25 86 4 10 65 14 2 14 1 3 0.05 14.6 6.6

1998-99 1999-2000 89 3 5 29 13 0 44 14 6 62 31 90 2 8 65 11 1 16 1 4 0.06 16.0 7.7 89 2 5 27 11 0 49 12 6 61 33 93 2 5 64 10 1 15 1 7 0.06 14.7 7.0

2000-01 88 2 5 24 12 1 47 15 6 61 34 87 3 10 63 9 2 17 1 8 0.07 14.1 6.8

2001-02 86 2 6 23 17 1 42 16 6 58 36 84 5 11 60 7 1 16 1 7 0.08 n.a. 5.0

2002-03 83 2 9 26 15 1 40 18 7 55 38 82 5 13 75 5 1 15 1 2 0.06 n.a. 3.7

2003-04 78 2 13 28 10 1 43 18 7 52 41 80 8 12 76 4 1 12 1 6 0.05 n.a. 3.0

184

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Bank of India
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposit of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1,838 12,971 3,528 18,337 1,774 13,704 6,543 22,021 1,642 13,410 9,275 24,327 1,796 13,424 10,011 25,231 2,649 16,295 12,879 31,823 3,318 19,311 15,683 38,311 3,990 23,753 14,891 42,633 480 720 123 1,258 2,581 2,040 241 0 1,147 140 1,840 3,127 2,932 199 630 838 153 2,486 4,107 3,437 202 44 902 166 2,822 3,934 3,028 201 14 933 186 2,271 3,404 3,665 172 163 854 186 2,700 3,902 3,438 194 139 866 226 3,397 4,628 3,131 219 0 242 658 553 1,453 235 191 794 338 1,558 586 220 1,690 483 2,979 766 275 796 39 1,876 505 699 493 101 1,798 235 1,093 513 1,507 3,348 0 832 473 2,722 4,027 5,385 6,155 20,433 31,973 26,240 5,733 31,973 5,094 7,303 26,941 39,339 31,369 7,970 39,339 5,976 8,516 29,938 44,430 35,089 9,341 44,430 6,093 9,916 31,735 47,744 38,526 9,218 47,744 5,896 11,165 34,618 51,679 42,882 8,796 51,679 7,194 12,885 39,632 59,711 49,236 10,475 59,711 5,350 15,000 43,749 64,098 53,675 10,424 64,098 2,281 4,195 10,671 18,337 516 1,946 37,946 3,131 3,646 13,030 22,021 696 3,813 46,338 3,639 7,206 15,282 24,327 710 2,760 53,923 3,229 5,664 16,666 25,231 741 4,534 56,065 3,836 2,588 18,225 31,823 763 2,331 59,567 3,632 2,973 22,084 38,311 705 2,102 69,806 3,350 3,648 24,435 42,633 737 1,492 76,294 597 1,342 31,973 1,453 2,581 37,946 638 1,677 39,339 1,557 3,127 46,338 638 1,768 44,430 2,979 4,107 53,923 638 1,873 47,744 1,876 3,934 56,065 638 2,048 51,679 1,798 3,404 59,567 488 2,357 59,711 3,348 3,902 69,806 488 3,053 64,098 4,027 4,628 76,294 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 4
2003-04 488 3,522 71,003 4,521 5,326 84,860 4,231 4,327 27,163 45,856 799 2,485 84,860 5,839 18,062 47,102 71,003 59,715 11,288 71,003 0 481 948 3,092 4,521 149 835 244 4,099 5,326 3,977 254 4,063 23,825 17,967 45,856

Continued...

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185

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries - Others Total Total investments Movement in NPA Gross NPAs Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of land, buildings Loss on revaluation of investments Profit on forex transactions Income from subsidiaries Lease income Miscellaneous income Total Total income

1996-97 13,898 2,604 1,835 18,337 4,746 1,192 44 7,917 13,899 4,438 18,337 1,518 7,052 1,296 770 21 14 9,153 10,671

1997-98 15,979 2,257 3,784 22,021 5,761 2,195 104 8,578 16,637 5,383 22,021 2,205 7,929 1,277 299 1,205 21 94 10,825 13,030

1998-99 1999-2000 17,975 2,051 4,301 24,327 6,272 2,228 1 9,669 18,171 6,156 24,327 2,707 1,089 1,204 267 1,517 21 83 4,181 6,889 18,833 2,930 3,468 25,231 6,593 2,589 6 9,909 19,098 6,133 25,231 2,816 10,640 1,138 289 1,517 76 190 13,850 16,666

2000-01 23,112 4,327 4,384 31,823 7,599 3,390 7 12,663 23,660 8,163 31,823 3,338 11,859 1,136 173 1,401 171 147 14,887 18,225

2001-02 25,388 6,063 6,860 38,311 9,181 4,661 6 14,683 28,531 9,779 38,311 5,337 13,536 992 231 1,668 173 146 16,747 22,084

2002-03 27,597 6,187 8,849 42,633 11,534 4,812 234 14,827 31,407 11,226 42,633 6318.4 14,843 926 182 1,845 181 140 18,116 24,435

2003-04 31,436 6,048 8,372 45,856 12,873 5,505 6 16,635 35,019 10,837 45,856 4,580 17,583 868 179 2,783 173 998 22,583 27,163

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

3,032 1,304 872 3,464 2,206

3,464 911 941 3,434 2,138

3434 1355 1067 3722 2304

3772 1226 1144 3804 2286

3804 1204 1274 3734 2062

2,234 1,096 141 42 3,513
255 10 0 74 3 0 148 490 4,003

2,461 1,264 174 37 3,936
272 56 32 110 0 0 111 580 4,516

2,627 1,513 164 287 4,591
284 8 1 120 1 0 160 574 5,164

2,750 1,673 187 128 4,737
293 167 0 112 2 0 212 786 5,522

3,129 1,806 358 25 5,317
324 196 0 105 2 235 862 6,179

3,293 1,919 349 48 5,609
324 427 0 124 2 0 226 1,103 6,712

3,563 2,023 262 80 5,928
359 858 26 142 48 236 1,668 7,596

3,309 2,072 219 196 5,796
376 946 11 213 18 229 1,792 7,588

continued...

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and Contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 2,231 140 2 2,373 714 289 48 1,051 219 3,643 360 579 7 8 11,676 1,916 294 2,995 1,298 18,194 4 98 115 2 219

1997-98 2,469 182 0 2,651 770 330 67 1,167 333 4,151 365 697 13 1 18,032 1,793 695 2,777 1,500 24,811 316 -122 116 22 333

1998-99 1999-2000 2,900 280 0 3,181 924 288 67 1,279 504 4,963 201 705 19 0 14,164 1,767 788 2,428 2,553 21,720 352 0 110 42 504 3,062 310 71 3,443 999 336 61 1,396 510 5,350 173 683 25 0 17,738 2,276 406 2,309 3,401 26,156 386 -43 77 90 510

2000-01 3,216 344 103 3,663 1,339 343 74 1,744 520 5,927 252 772 24 0 30,788 2,440 404 2,904 4,984 41,545 351 67 66 36 520

2001-02 3,314 316 138 3,769 1,087 370 68.23 1,531 903 6,203 509 1,412 612 0 36,954 2,818 517 2,826 7,254 50,981 642 0 191 136 903

2002-03 3,413 326 153 3,892 1,126 436 87 1,649 1,179 6,720 876 2,055 417 0 34,162 2,987 747 3,633 10,228 52,174 682 25 338 347 1,179

2003-04 3,087 316 192 3,594 1,172 491 88 1,752 1,234 6,580 1,008 2,242 184 0 41,738 3,211 916 3,797 15,877 65,723 634 42 399 433 1,234

16 29 11 15 17 19 64 82 18

23 -5 19 32 13 19 68 80 20

13 12 17 13 13 24 67 79 21

7 10 -1 7 13 26 66 81 19

8 11 -5 8 11 26 67 83 17

16 15 19 16 12 26 66 82 18

7 9 0 7 8 28 68 84 16

11 11 8 11 8 30 66 84 16

continued...

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187

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit deposit ratio Incremental C/D ratio Borrowings to total deposits Cash deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (number) Advances per branch (Rs crore) Operating expenses/branch (Rs crore) Employees (number)
Income per employee (Rs crore) Income/employee expenses (times)

1996-97 1.0 22.5 18.6 67.9 12.2 26.3 3.3 6.0 64.5 64.9

1997-98 0.9 17.1 19.0 66.0 12.8 25.9 3.0 5.7 62.6 64.5 6.96

1998-99 1999-2000 0.4 8.5 21.4 72.2 11.1 24.8 2.9 3.1 64.5 64.7 7.05 6.9 12.4 10.60 10.7 11.3 3.56 2.77 1.05 1.83 18.5 10.6 71.5 21.3 55 45 7 0 34 44 73 10 13 17 20 4 17 2,515 9.67 0.51 53,047
0.10 5.59

2000-01 0.4 9.7 21.2 76.8 13.9 28.2 3.4 3.9 69.3 75.2 6.98 6.5 24.3 10.63 10.4 11.0 3.65 3.25 1.02 1.41 27.1 12.2 67.4 20.0 62 168 3 0 35 40 76 26 8 9 34 11 12 2,534 12.56 0.69 44,052
0.14 4.61

2001-02 0.8 18.4 23.5 71.0 16.4 22.8 2.6 10.4 52.0 60.8 6.37 6.0 17.7 9.86 9.5 9.4 3.49 2.48 0.91 1.92 21.6 12.23 64.0 32.7 64 81 6 0 37 48 83 20 16 21 -19 0 5 2548 15.04 0.60 43420
0.15 6.18

2002-03 1.2 27.5 20.5 68.3 22.0 21.7 2.6 18.0 44.5 57.9 5.86 5.5 13.0 9.24 8.7 8.8 3.38 2.34 0.88 1.92 16.8 12.02 57.4 36.9 67 99 6 0 38 54 86 11 7 11 4 11 6 2559 16.66 0.64 43141
0.18 6.75

2003-04 1.3 26.7 20.2 66.9 23.6 23.1 2.5 20.7 43.9 57.5 4.95 4.6 11.9 8.11 8.0 7.5 3.17 2.25 0.90 1.82 15.8 13.01 55.0 32.7 65 47 6 0 38 40 88 8 11 11 4 5 -2 2562 17.90 0.68 42977
0.18 6.47

0.3 7.0 21.3 71.6 14.2 25.3 2.9 2.7 67.2 73.0 6.97 6.6 15.7 9.99 10.5 11.1 3.02 2.76 1.01 1.27 19.0 10.6 74.7 20.7 53 27 4 0 35 42 75 4 7 9 8 3 3 2,532 9.96 0.55 52,428
0.11 5.53

7.5 9.0 10.8 13.2

6.9 12.1 10.76 10.7 12.2 3.80 3.02 1.13 1.91

18.8 10.2 37.8 13.7 57 62 5 1 33 24 69 18 16 11 9 8 22 2,475 7.41 0.42 53,295
0.08 5.61

23.7 9.1 47.7 15.6 56 50 4 1 33 32 72 20 23 22 8 7 12 2,495 8.83 0.47 52,518
0.09 5.86

continued...

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...continued

(Rs crore) Total income (per cent) Interest forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 88 2 0 26 7 0 43 24 10 71 19 76 14 10 66 12 0 7 0 0 14 11.8 6.9

1997-98 87 2 1 26 10 0 39 24 8 62 30 73 10 17 61 10 2 9 0 1 17 11.6 7.3

1998-99 1999-2000 89 2 0 26 9 0 40 25 7 55 38 74 8 18 16 17 4 22 0 1 39 n.a. 7.3 86 2 3 26 10 0 39 24 7 53 40 75 12 14 64 7 2 9 0 1 17 n.a. 8.6

2000-01 86 2 3 24 11 0 40 26 8 51 40 73 14 14 65 6 1 8 1 1 18 n.a. 6.7

2001-02 84 2 6 24 12 0 38 26 9 50 41 66 16 18 61 4 1 8 1 1 24 n.a. 6.7

2002-03 78 2 11 27 11 1 35 26 9 56 35 65 15 21 61 4 1 8 1 1 26 n.a. 5.4

2003-04 76 3 12 28 12 0 36 24 9 52 39 69 13 18 65 3 1 10 1 4 17 n.a. 4.5

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

189

Canara Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Unsecured redeemable bonds Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1,941 8,732 3,740 14,413 1,480 10,901 4,443 16,825 2,339 11,415 5,777 19,530 2,712 12,949 7,885 23,547 2,416 16,686 8,730 27,832 2,987 19,849 10,290 33,127 3,494 23,546 13,431 40,472 56 0 958 24 667 1,705 3,985 251 0 0 1,269 31 966 2,267 3,781 272 0 500 1,025 53 1,287 2,866 3,797 298 0 500 999 52 1,431 2,981 3,516 322 0 800 1,328 26 1,735 3,889 3,473 413 0 1,250 1,116 75 1,925 4,366 7,364 496 0 1,750 1,607 69 2,292 5,717 5,133 475 0 0 459 0 459 0 0 498 0 498 375 0 507 0 882 530 0 294 0 824 430 0 236 0 666 0 0 267 0 267 0 5 34 56 94 5,722 6,705 19,018 31,445 30,568 877 31,445 6,283 8,077 23,686 38,045 36,981 1,064 38,045 5,897 9,543 26,518 41,959 40,895 1,064 41,958 7,104 11,129 29,768 48,001 46,716 1,285 48,001 7,847 12,786 38,436 59,070 57,662 1,407 59,070 7,148 14,511 42,370 64,030 62,486 1,544 64,030 7,837 17,260 46,998 72,095 70,818 1,277 72,095 4,236 2,688 12,280 14,413 419 1,622 35,657 4,054 3,667 16,031 16,825 430 2,106 43,112 4,094 4,085 17,357 19,530 550 2,504 48,120 3,838 3,707 20,023 23,547 560 2,728 54,402 3,886 9,285 21,445 27,832 650 3,341 66,439 7,860 4,638 23,220 33,127 659 2,632 72,135 5,608 2,090 30,458 40,472 660 2,768 82,055 485 1,564 31,445 459 1,705 35,657 578 1,725 38,045 498 2,267 43,112 578 1,835 41,959 1,382 2,366 48,119 578 2,018 48,001 1,324 2,481 54,402 578 2,237 59,070 1,466 3,089 66,439 578 2894 64030 267 4366 72,135 410 3739 72095 94 5717 82,055 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 5
2003-04 410 4842 86345 755 7188 99,539 6,891 5,136 35,793 47,639 680 3,401 99,539 8,654 20,512 57,179 86,345 84,376 1,968 86,345 0 297 13 445 755 158 2,000 1,540 97 3,393 7,188 6,287 604 4,089 24,307 19,243 47,639

Continued...

190

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/discount on advances/bills Income on investments Interest on balances with RBI Others Total

1996-97 12,233 1,187 993 14,413 5,267 1,344 25 7,586 14,222 191 14,413 77 6,824 1,827 133 2,636 132 651 12,203 12,280

1997-98 13,921 1,417 1,487 16,825 6,006 1,721 123 8,655 16,505 319 16,825 91 9,394 1,809 204 3,600 138 795 15,940 16,031

1998-99 1999-2000 15,832 1,594 2,104 19,530 6,271 2,911 96 9,795 19,071 459 19,530 300 9,955 1,683 246 3,978 134 1,059 17,056 17,356 18,062 2,359 2,127 22,547 6,807 4,702 95 11,511 23,115 432 23,547 402 11,775 1,627 256 4,940 135 889 19,621 20,023

2000-01 21,379 1,965 4,487 27,832 8,069 6,205 98 12,997 27,369 463 27,832 499 14,449 1,549 200 4,390 132 226 20,946 21,445

2001-02 21826 6311 4989 33,127 9288 7375 138 15610 32,411 716 33,127 527 16572 1246 236 4215 132 292 22,693 23,220

2002-03 32178 2579 5715 40,472 12170 7592 450 19694 39,906 566 40,472 520 23307 865 221 4975 132 438 29,938 30,458

2003-04 38654 2366 6619 47,639 16152 7774 511 22690 47,127 512 47,639 547 28133 878 236 4926 132 941 35,246 35,793

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

2,100 750 835 2,015 1,244

2,334 793 884 2,243 1,346

2150 652 690 2112 1,288

2112 1228 865 2475 1,454

2475 1890 1238 3127 1,378

1,972 1,220 215 7 3,414

2,015 1,527 258 24 3,824

2,283 2,070 303 0 4,657

2,488 2,042 321 1 4,852

2,920 2,234 463 0 5,618

3130 2497 708 36 6,371

3591 2686 414 0 6,692

3818 2994 143 52 7,007

Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from Investments Lease Income Miscellaneous income Total Total income 96 455 3,869 156 608 4,432 179 663 5,319 234 836 5,687 239 918 6,536 313 1,429 7,799 291 1,478 8,170 288 2,073 9,080 0 0 81 9 0 0 92 5 1 0 92 32 1 0 97 52 1 0 124 30 1 0 129 0 1 0 133 53 0 0 152 46 246 22 254 100 297 61 320 133 323 201 322 663 360 640 381 1207

continued...

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191

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - in India - outside India Acceptances and endorsements Others Total Provisions and contingencies Provision for NPAs Depreciation on investments Taxation Contingencies Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 2,148 54 76 2,278 641 251 45 937 507 3,721 147 654 150 5 8,196 3,401 22 1,945 373 14,091 260 -25 124 148 507

1997-98 2,604 20 124 2,748 691 268 51 1,010 469 4,228 204 674 199 0 10,632 3,394 21 1,893 338 16,477 398 -90 80 82 470

1998-99 1999-2000 2,993 13 124 3,131 880 296 55 1,231 732 5,094 225 957 483 0 8,505 3,645 10 1,877 299 14,820 506 0 100 126 732 3,234 19 162 3,414 951 323 75 1,350 687 5,451 236 923 730 0 14,800 4,145 40 2,498 225 22,438 466 0 121 100 687

2000-01 3,575 29 132 3,735 1,253 351 66 1,670 846 6,251 285 1,131 688 0 27,515 4,425 34 2,471 69 35,202 409 8 191 239 846

2001-02 4350 22 178 4,550 1123 377 93 1,593 915 7,058 741 1,656 0 0 26895 5413 59 2954 704 36,024 386 13 310 207 915

2002-03 4224 9 191 4,424 1162 477 109 1,748 978 7,150 1,020 1,999 597 0 39686 7019 76 3790 9 51,177 476 18 300 184 978

2003-04 4121 13 189 4,324 1273 510 114 1,897 1,521 7,741 1,339 2,860 627 0 36109 9422 81 6198 3 52,441 1239 18 330 -66 1,521

20 20 16 21 18 21 60 97 3

21 10 20 25 17 21 62 97 3

10 -6 18 12 14 23 63 97 3

14 20 17 12 15 23 62 97 3

23 10 15 29 13 22 65 98 2

8 -9 13 10 11 23 66 98 2

13 10 19 11 11 24 65 98 2

20 10 19 22 10 24 66 98 2

continued...

192

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...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore)
Income/employee expenses (times)

1996-97 0.4 7.4 16.4 71.9 11.8 23.1 2.8 3.0 58.9 59.7 7.4 12.8 10.6 14.3 28.4 10.2 77.5 24.7 46 25 1 1 39 n.a. 76 10 20 15 n.a. 0 16 2,262 6.37 0.41 54,316 0.07
6.04

1997-98 0.5 9.4 17.7 68.4 13.7 22.8 2.7 3.5 60.0 63.8 7.56 7.5 30.2 10.63 10.8 12.9 3.06 2.72 1.14 1.48 72.6 9.5 69.7 20.4 44 37 1 1 42 57 75 17 21 31 8 3 12 2,312 7.28 0.44 54,703 0.08
6.41

1998-99 1999-2000 0.5 9.5 18.9 71.5 12.5 23.1 2.9 3.9 56.3 57.9 7.48 7.5 14.6 11.27 12.4 12.6 3.78 2.88 1.12 2.02 42.5 11.0 76.5 30.4 47 69 3 1 41 34 76 16 10 8 27 17 22 2,379 8.21 0.52 55,097 0.10
6.05

2000-01 0.5 10.5 22.6 75.1 14.0 25.5 2.8 4.9 59.6 64.2 6.74 6.7 11.5 10.14 10.8 11.4 3.40 2.94 1.00 1.46 38.4 9.8 74.8 30.1 47 39 2 1 36 13 79 18 23 7 32 1 16 2,405 11.57 0.69 48,257 0.14
5.22

2001-02 1.1 23.6 19.8 70.5 18.3 20.4 2.5 12.8 49.0 61.6 7.20 7.1 23.0 9.87 11.2 10.3 2.68 2.43 0.93 1.18 71.0 11.88 55.2 26.4 52 107 0 1 36 36 83 19 8 8 -10 0 13 2409 13.75 0.66 47796 0.16
6.95

2002-03 1.3 26.8 18.8 66.5 18.1 21.4 2.4 24.9 46.7 56.3 6.36 6.2 110.6 9.23 10.0 9.8 2.88 2.37 0.87 1.37 376.9 12.5 49.0 23.6 56 91 0 1 42 90 90 22 13 31 4 12 5 2424 16.70 0.72 47566 0.17
7.03

2003-04 1.5 28.5 18.0 67.1 22.8 20.9 2.2 32.7 39.9 53.4 5.32 5.2 47.8 8.20 9.0 8.7 2.88 2.18 0.78 1.47 186.7 12.66 53.2 29.0 55 50 1 1 41 37 92 18 20 18 10 6 5 2469 19.29 0.77 47796 0.19
7.13

0.5 9.4 20.0 70.5 14.7 23.7 2.8 4.1 59.4 63.1 7.29 7.2 13.3 10.46 10.9 11.6 3.17 2.81 1.11 1.47 33.2 9.6 74.4 26.5 49 66 3 1 42 44 78 21 14 15 8 8 4 2,397 9.82 0.56 55,363 0.10
5.98

continued...

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193

...continued

(Rs crore) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares and debentures Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 88 2 6 37 9 0 53 1 13 61 26 85 8 7 56 15 1 21 1 5 1 20.3 9.3

1997-98 86 2 6 36 10 1 51 2 9 65 26 83 8 9 59 11 1 22 1 5 1 18.7 7.5

1998-99 1999-2000 88 2 6 32 15 0 50 2 12 58 30 81 8 11 57 10 1 23 1 6 2 n.a. 7.1 85 2 6 29 20 0 49 2 12 55 33 80 10 9 59 8 1 25 1 4 2 n.a. 5.3

2000-01 86 2 5 29 22 0 47 2 9 60 31 77 7 16 67 7 1 20 1 1 2 n.a. 4.8

2001-02 82 2 4 28 22 0 47 2 9 60 31 66 19 15 71 5 1 18 1 1 2 n.a. 3.9

2002-03 82 2 4 30 19 1 49 1 9 58 33 80 6 14 77 3 1 16 0 1 2 n.a. 3.6

2003-04 77 2 4 34 16 1 48 1 9 51 40 81 5 14 79 2 1 14 0 3 2 n.a. 2.9

194

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Punjab National Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1,378 8,894 3,795 14,067 1,364 9,845 4,833 16,042 1,490 10,824 6,734 19,047 1,903 12,686 7,983 22,572 2,427 15,730 9,872 28,029 2,460 18,748 13,431 34,639 2,879 20,901 16,448 40,228 251 838 201 1,259 2,549 3,359 295 138 878 459 1,201 2,676 4,590 310 463 632 696 1,629 3,419 4,678 338 333 706 319 2,352 3,710 5,049 428 117 745 374 2,796 4,032 4,920 445 66 866 453 3,617 5,002 4,371 578 34 948 493 4,238 5,713 5,940 629 0 27 307 11 345 0 7 246 12 265 0 5 173 19 197 513 11 132 6 662 300 44 322 7 673 269 32 103 4 409 0 184 377 101 662 3,270 9,435 18,101 30,806 30,806 0 30,806 3,772 11,564 19,838 35,174 35,174 0 35,174 4,846 13,679 22,252 40,777 40,777 0 40,777 5,437 15,875 26,171 47,483 47,483 0 47,483 6,311 18,530 31,290 56,131 56,131 0 56,131 6,758 21,664 35,701 64,123 64,123 0 64,123 9,888 25,648 40,277 75,814 75,814 0 75,814 3,655 961 13,977 14,068 586 1,796 35,043 4,900 561 15,907 16,043 595 1,762 39,768 5,016 824 18,573 19,047 617 2,246 46,323 5,477 753 22,099 22,572 681 2,547 54,129 5,366 704 25,128 28,029 724 3,555 63,505 5,102 1,297 28,207 34,369 796 3,144 72,915 6,569 1,509 34,030 40,228 885 3,002 86,222 351 991 30,806 345 2,550 35,043 212 1,442 35,174 265 2,675 39,768 212 1,718 40,777 197 3,419 46,323 212 2,060 47,483 662 3,710 54,129 212 2,457 56,131 673 4,032 63,505 377 3,004 64,123 409 5,002 72,915 265 3,768 75,813 662 5,713 86,222 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 6
2003-04 265 4,747 87916 1289 8114 102,332 6742 2078 42125 47225 900 3261 102,332 9,900 30,423 47,593 87,916 87,916 0 87,916 4 572 49 663 1,289 374 1,396 462 5,883 8,114 6,043 700 2,803 21,812 22,609 47,225

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

195

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1996-97 13,306 618 143 14,067 4,380 1,495 52 8,140 14,067 0 14,067 0 8,974 2,886 62 1,623 149 282 13,976 13,976

1997-98 14,991 919 132 16,042 5,275 1,745 12 9,010 16,042 0 16,042 0 10,106 3,041 99 2,317 189 154 15,906 15,906

1998-99 1999-2000 18,336 458 254 19,047 6,595 2,417 12 10,023 19,047 0 19,047 9 12,326 2,827 364 2,698 227 122 18,564 18,573 21,634 335 602 22,572 8,323 3,065 10 11,173 22,572 0 22,572 9 16,089 2,624 325 2,651 254 146 22,090 22,099

2000-01 26,503 387 1,139 28,029 10,857 4,408 28 12,736 28,029 0 28,029 9 18,437 2,501 257 3,306 213 406 25,120 25,128

2001-02 32,601 493 1,275 34,369 13,441 6,225 237 14,466 34,369 0 34,369 10 19,304 2,459 344 5,383 212 495 28,197 28,207

2002-03 36,714 662 2,852 40,228 16,034 6,860 237 17,097 40,228 0 40,228 9 25,338 2,409 270 5,458 220 326 34,021 34,030

2003-04 42,123 364 4,737 47,225 20,735 6,519 205 19,766 47,225 0 47,225 9 33,069 2,343 267 5,766 206 465 42,116 42,125

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

2,832 868 574 3,127 1,917

3,127 865 531 3,460 1,871

3460 1180 500 4140 1810

4140 1546 706 4980 1527

4980 1044 1354 4670 449

1,954 1,525 169 6 3,654
248 35 0 0 0 73 7 0 106 469 4,123

1,961 1,821 164 46 3,992
280 237 0 1 0 62 25 0 32 637 4,629

2,182 1,976 182 108 4,448
328 79 0 1 0 74 15 0 48 545 4,993

2,514 2,417 172 52 5,155
382 215 0 1 0 76 20 0 34 728 5,882

2,824 2,742 152 146 5,863
419 242 0 0 -26 94 3 0 45 778 6,642

3,318 3,003 228 99 6,648
434 447 -9 0 -58 92 28 0 43 978 7,625

3,712 3,298 179 296 7,485
480 677 -5 0 -70 95 24 0 49 1,250 8,735

3,876 3,681 113 110 7,780
552 1,265 -29 0 -118 106 30 0 60 1,867 9,647

continued...

196

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 2,343 6 90 2,439 811 224 29 1,064 382 3,885 238 620 714 1 2,131 1,784 336 1,594 96 6,656 194 0 123 65 382

1997-98 2,540 3 156 2,699 871 222 35 1,128 324 4,151 478 802 895 1 3,628 2,133 583 1,634 131 9,005 337 -333 276 44 324

1998-99 1999-2000 2,677 12 106 2,795 1,069 267 40 1,376 449 4,621 372 821 831 1 3,190 2,075 535 1,692 130 8,454 240 0 159 51 449 3,367 29 142 3,538 1,184 297 43 1,524 412 5,474 408 820 929 0 3,942 1,947 613 1,978 155 9,564 249 -8 124 47 412

2000-01 3,609 39 176 3,825 1,459 338 75 1,872 482 6,178 464 945 585 0 12,619 2,119 431 2,441 13 18,208 341 20 111 10 482

2001-02 4122 48 183 4,353 1,316 398 85 1,799 911 7,063 562 1,473 558 0 16431 2616 449 2807 21 22,885 631 -35 199 116 911

2002-03 4,163 8 191 4,361 1,476 469 129 2,074 1,475 7,910 825 2,300 195 0 16,364 3,151 382 3,376 102 23,571 833 133 341 168 1,475

2003-04 3,926 13 215 4,155 1,654 535 181 2,371 2,012 8,538 1,109 3,121 252 0 19,543 3,995 1,131 7,168 140 32,230 1194 -31 661 188 2,012

14 5 14 15 11 31 59 100 0

14 15 23 10 11 33 56 100 0

16 28 18 12 12 34 55 100 0

16 12 16 18 11 33 55 100 0

18 16 17 20 11 33 56 100 0

14 7 17 14 11 34 56 100 0

18 46 18 13 13 34 53 100 0

16 0 19 18 11 35 54 100 0

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

197

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos)

1996-97 0.7 19.0 25.1 78.4 11.4 25.1 3.4 6.8 63.2 64.5 n.a. 8.1 11.5 n.a. 11.8 14.6 n.a. n.a. n.a. n.a. 34.8 9.2 61.6 28.5 46 38 1 1 45 55 74 11 14 17 7 19 15 3,765 3.74 0.28 67,616

1997-98 1.3 31.9 23.0 77.2 13.8 24.4 3.2 22.5 58.4 66.6 7.90 7.7 52.1 11.55 12.2 13.0 3.65 3.22 1.02 1.45 108.2 8.8 40.4 19.6 46 45 1 1 45 44 87 14 14 14 7 13 9 3,793 4.23 0.30 66,599

1998-99 1999-2000 0.9 20.8 23.0 77.7 10.9 27.6 3.4 17.5 62.6 64.9 7.17 7.0 51.3 11.16 11.5 12.4 3.99 3.40 1.05 1.64 164.2 10.8 54.7 23.3 47 54 0 1 46 48 89 19 16 17 23 17 11 3,822 4.98 0.36 65,705 0.8 19.4 22.8 77.7 12.4 25.9 3.2 19.2 65.0 71.6 7.82 7.6 39.9 11.10 11.9 12.1 3.27 3.23 1.01 1.05 102.6 10.3 50.2 18.1 48 53 1 1 47 53 91 19 16 19 11 16 16 3,853 5.86 0.40 64,733

2000-01 0.8 18.8 22.8 78.0 11.7 28.2 3.3 21.8 66.4 72.7 7.19 7.0 32.3 10.81 11.6 11.2 3.62 3.40 0.97 1.19 77.6 10.2 50.9 18.0 50 63 1 1 45 35 92 24 18 14 23 10 14 3,879 7.23 0.48 58,309

2001-02 0.8 18.6 20.6 73.2 12.8 23.6 2.8 14.9 55.0 63.7 7.08 6.9 42.7 10.53 11.3 10.6 3.45 2.81 0.85 1.50 111.2 10.7 61.9 27.0 54 79 1 1 44 39 89 23 14 12 -10 3 13 3,857 8.91 0.47 57,859

2002-03 1.0 22.3 20.4 71.2 14.3 23.7 2.7 31.1 47.4 56.1 6.11 5.9 37.1 10.02 10.6 9.9 3.91 2.74 0.79 1.96 130.7 12.0 64.1 36.6 53 50 1 1 45 50 93 17 18 21 12 11 13 4,037 9.96 0.51 58,981

2003-04 1.2 24.5 19.4 69.8 19.4 24.6 2.7 41.8 43.2 56.1 4.95 4.8 23.4 8.71 9.7 8.9 3.76 2.63 0.76 1.89 83.9 13.1 64.5 40.1 54 58 1 1 48 67 95 17 16 24 12 15 4 4,022 11.74 0.59 58,839

Income per employee (Rs crore) Income/employee expenses (times)

0.06 5.08

0.07 5.31

0.08 4.67

0.09 4.97

0.11 4.55

0.13 5.79

0.15 5.92

0.16 5.83

continued...

198

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...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 89 2 6 31 11 0 58 0 10 63 27 95 4 1 64 21 0 12 1 2 0 16.3 10.4

1997-98 86 1 6 33 11 0 56 0 9 61 30 93 6 1 64 19 1 15 1 1 0 14.5 9.6

1998-99 1999-2000 89 1 7 35 13 0 53 0 8 57 35 96 2 1 66 15 2 15 1 1 0 n.a. 9.0 88 1 6 37 14 0 49 0 8 56 35 96 1 3 73 12 1 12 1 1 0 n.a. 8.5

2000-01 88 1 6 39 16 0 45 0 9 56 35 95 1 4 73 10 1 13 1 2 0 n.a. 6.7

2001-02 87 1 6 39 18 1 42 0 7 54 39 95 1 4 68 9 1 19 1 2 0 n.a. 5.3

2002-03 86 1 5 40 17 1 42 0 7 52 41 91 2 7 74 7 1 16 1 1 0 n.a. 3.9

2003-04 81 1 6 44 14 0 42 0 6 46 48 89 1 10 79 6 1 14 0 1 0 n.a. 1.0

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

199

Oriental Bank of Commerce
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 451 2,982 1,453 4,886 611 3,902 1,806 6,318 751 4,637 2,319 7,708 681 5,548 3,097 9,326 672 6,715 3,690 11,076 691 7,546 5,921 14,158 905 7,739 7,032 15,677 145 121 64 128 458 140 961 230 105 56 150 542 1,432 148 249 150 60 181 640 1,818 205 87 122 68 226 504 2,046 229 121 137 70 288 616 1,817 212 118 227 70 896 1,311 2,152 199 132 159 89 534 914 1,686 210 0 3 82 22 107 0 2 60 38 99 0 0 56 52 108 100 3 398 13 514 0 0 177 49 226 0 1 816 0 817 0 0 998 168 1,166 1,217 1,935 6,902 10,054 10,054 0 10,054 1,379 2,418 9,261 13,058 13,058 0 13,058 1,537 2,981 12,287 16,805 16,805 0 16,805 1,884 3,657 16,554 22,095 22,095 0 22,095 2,070 4,249 18,362 24,680 24,680 0 24,680 2,307 4,848 21,334 28,488 28,488 0 28,488 2,744 5,762 21,302 29,809 29,809 0 29,809 1,101 635 4,388 4,886 76 472 11,559 1,580 322 5,957 6,318 121 482 14,782 2,022 370 7,839 7,708 140 705 18,784 2,275 358 11,560 9,326 135 888 24,541 2,028 621 12,298 11,076 130 918 27,072 2,351 981 13,698 14,158 143 906 32,237 1,896 628 14,781 15,677 145 872 33,999 193 749 10,054 107 456 11,559 193 889 13,058 99 542 14,780 193 1,039 16,805 108 640 18,784 193 1,236 22,095 514 504 24,541 193 1,356 24,680 227 616 27,072 193 1,427 28,488 817 1,311 32,237 193 1,917 29,809 1,166 914 33,999 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 7
2003-04 193 2,484 35,674 1,100 1,556 41,007 2,634 967 16,794 19,681 162 770 41,007 3,113 7,074 25,487 35,674 35,674 0 35,674 0 0 527 573 1,100 172 207 85 1,092 1,556 2,424 210 869 8,135 10,678 19,681

Continued...

200

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balances Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from Investments Lease income Miscellaneous income Total Total income

1996-97 4,194 593 99 4,886 1,958 244 24 2,660 4,886 0 4,886 0 2,760 439 21 1,124 0 44 4,388 4,388

1997-98 5,448 787 83 6,318 2,474 325 31 3,488 6,318 0 6,318 0 2,965 444 127 2,323 0 98 5,957 5,957

1998-99 1999-2000 6,596 963 148 7,708 3,061 336 29 4,281 7,708 0 7,708 0 4,069 498 176 2,990 0 105 7,839 7,839 7,645 1,305 375 9,326 3,702 536 0 5,088 9,326 0 9,326 0 6,564 472 252 4,069 0 204 11,560 11,560

2000-01 8,946 1,533 597 11,076 4,293 661 25 6,098 11,076 0 11,076 0 7,363 499 159 3,904 0 374 12,298 12,298

2001-02 10,483 2,207 1,468 14,158 5,455 879 30 7,794 14,158 0 14,158 0 8,552 498 143 4,183 0 322 13,698 13,698

2002-03 12,089 1,929 1,660 15,677 6,028 1,471 3 8,175 15,677 0 15,677 0 10,157 491 133 3,732 0 267 14,781 14,781

2003-04 14,942 1,563 3,175 19,681 7,488 3,241 1 8,950 19,681 0 19,681 0 12,451 459 124 3,546 0 214 16,794 16,794

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

498 237 207 528 336

528 446 388 586 397

586 601 235 952 436

952 630 435 1146 225

1146 527 462 1211 0

708 494 36 13 1,251
66 2 0 0 0 29 1 0 6 104 1,355

739 669 43 7 1,458
72 15 0 0 0 33 5 14 138 1,596

933 847 70 23 1,873
82 23 0 0 0 36 14 0 18 174 2,046

1,011 1,367 79 2 2,458
96 58 0 0 0 34 19 15 221 2,679

1,203 1,441 94 21 2,759
96 99 -4 1 -10 38 16 0 31 268 3,027

1,416 1,546 81 6 3,049
102 316 -5 0 -28 39 9 0 41 474 3,523

1,536 1,613 88 68 3,304
106 393 -20 0 -26 47 10 0 32 541 3,845

1,591 1,633 71 5 3,301
114 511 -7 0 -5 59 0 0 50 722 4,022

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

201

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 782 7 12 801 154 87 12 253 121 1,175 180 301 72 1 253 774 7 292 21 1,420 52 2 66 0 120

1997-98 939 11 9 959 185 98 17 301 127 1,386 210 337 100 1 562 1,041 25 271 17 2,017 77 4 46 0 127

1998-99 1999-2000 1,270 10 9 1,290 217 127 26 371 156 1,816 230 386 177 8 537 852 20 354 16 1,963 101 0 52 3 156 1,718 15 12 1,745 231 155 42 428 227 2,401 279 506 200 0 599 949 24 406 12 2,189 127 0 60 40 227

2000-01 1,937 12 20 1,968 315 168 41 524 331 2,824 203 534 259 0 594 1,029 28 428 14 2,352 274 -30 79 9 331

2001-02 2,030 10 29 2,068 288 162 39 490 597 1,086 2,437 3,033 198 0 1,020 1,249 48 464 12 2,990 139 16 249 193 597

2002-03 2,032 3 55 2,090 348 152 42 541 706 1,247 2,598 3,304 280 0 1,015 1,478 64 489 5 3,331 328 -6 279 105 706

2003-04 1,786 6 53 1,845 366 177 50 594 847 1,441 2,581 3,428 147 0 2711 1844 76 1746 2 6,525 89 0 460 298 847

15 18 18 14 12 19 69 100 0

30 13 25 34 11 19 71 100 0

29 11 23 33 9 18 73 100 0

31 23 23 35 9 17 75 100 0

12 10 16 11 8 17 74 100 0

15 11 14 16 8 17 75 100 0

5 19 19 0 9 19 71 100 0

20 13 23 20 9 20 71 100 0

continued...

202

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos)

1996-97 1.6 20.4 11.3 61 8 19 3 9.3 45.7 45.8 n.a. 8.3 n.a. n.a. 12.4 14.8 n.a. n.a. n.a. n.a. 27.5 17.5 40.2 12.9 49 16 1 10 44 n.a. 80 5 15 22 9 1 22 755 6.47 0.34 13,580

1997-98 1.6 20.8 12.7 62 9 19 2 10.9 47.1 48.2 8.14 8.1 19.4 11.71 12.9 13.2 3.57 2.39 0.89 2.07 111.9 15.3 37.8 11.8 48 48 1 1 46 52 82 29 30 36 20 9 17 841 7.51 0.36 14,238

1998-99 1999-2000 1.4 19.9 14.3 58 8 18 2 12.0 49.0 50.5 8.51 8.5 18.9 11.85 12.3 13.3 3.34 2.31 0.79 1.83 143.9 14.1 40.4 12.7 46 37 1 1 47 50 84 22 29 32 17 14 28 899 8.57 0.41 14,447 1.3 20.9 16.2 54 8 16 2 14.5 45.8 48.9 8.77 8.8 8.7 12.07 14.1 11.9 3.30 2.07 0.66 1.90 62.5 12.7 44.9 15.9 42 31 2 1 52 70 87 21 31 47 7 17 31 915 10.19 0.47 14,398

2000-01 0.8 13.6 16.5 60 9 17 2 10.5 49.5 54.6 8.24 8.3 8.4 11.36 12.1 11.8 3.12 2.12 0.61 1.61 63.1 11.8 62.0 21.4 45 68 1 1 50 29 88 19 12 6 36 0 12 932 11.88 0.56 13,588

2001-02 8 154 19 59 13 14 2 126.6 33.7 43.0 7.58 7.6 7.3 10.85 12 11 3.27 1.71 0.56 2.12 50.9 11.0 19.7 36.8 50 81 3 8 48 37 88 28 15 11 -8 6 11 967 15 0.51 13589

2002-03 8 139 15 64 14 14 2 134.9 30.8 39.7 6.89 7.0 5.8 10.44 11 10 3.55 1.69 0.53 2.39 29.4 14.5 21.4 33.5 53 115 4 6 50 82 91 11 5 8 21 4 8 989 16 0.55 13507

2003-04 7 108 14 62 18 15 2 134.1 27.3 35.7 5.42 5.5 5.2 9.13 10 9 3.71 1.63 0.54 2.63 28.9 14.0 24.7 31.6 55 68 3 7 47 34 93 26 20 14 5 7 0 1013 19 0.59 13602

Income per employee (Rs crore) Income/employee expenses (times)

0.10 8.80

0.11 8.63

0.14 9.44

0.19 11.58

0.22 9.60

0.26 12.21

0.28 11.06

0.30 10.98

continued...

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203

...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of advances (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 92 2 5 40 5 0 54 0 9 61 30 86 12 2 63 10 0 26 0 1 0 7.4 5.6

1997-98 91 2 5 39 5 0 55 0 10 62 29 86 12 1 50 7 2 39 0 2 0 6.2 4.5

1998-99 1999-2000 92 2 4 40 4 0 56 0 10 60 30 86 12 2 52 6 2 38 0 1 0 n.a. 4.5 92 1 4 40 6 0 55 0 7 59 33 82 14 4 57 4 2 35 0 2 0 n.a. 3.8

2000-01 91 1 3 39 6 0 55 0 6 61 33 81 14 5 60 4 1 32 0 3 0 n.a. 3.6

2001-02 87 1 3 39 6 0 55 0 5 42 42 74 16 10 62 4 1 31 0 2 0 n.a. 3.2

2002-03 86 1 3 38 9 0 52 0 6 45 45 77 12 11 69 3 1 25 0 2 0 n.a. 1.4

2003-04 82 1 3 38 16 0 45 0 4 54 54 76 8 16 74 3 1 21 0 1 0 n.a. 0.0

204

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Dena Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1996-97 207 296 7,861 111 1,239 9,714 801 353 3,719 4,043 154 644 9,714 1,120 2,170 4,571 7,861 7,861 0 7,861 0 3 109 0 112 0 320 501 417 1,238 723 78 479 2,222 1,343 4,044 1997-98 207 339 10,115 179 1,424 12,264 1,395 478 4,601 5,147 163 480 12,264 1,101 2,483 6,530 10,115 10,115 0 10,115 0 0 179 0 179 0 272 552 600 1,424 1,310 85 588 2,788 1,772 5,147 1998-99 1999-2000 207 489 11,795 586 1,766 14,843 1,314 487 5,646 6,396 289 710 14,843 1,219 2,910 7,666 11,795 11,795 0 11,795 230 169 186 0 586 0 332 735 699 1,766 1,222 92 563 3,429 2,402 6,395 207 620 13,287 755 1,983 16,851 1,251 318 6,915 7,118 335 914 16,851 1,599 3,350 8,338 13,287 13,287 0 13,287 367 50 337 0 755 0 255 931 797 1,983 1,140 111 605 3,997 2,515 7,118 2000-01 207 574 14,573 377 2,177 17,909 1,198 1,033 6,816 7,002 327 1,533 17,909 1,633 3,951 8,989 14,573 14,573 0 14,573 187 0 190 0 377 0 298 1,054 826 2,177 1,095 102 537 3,418 3,046 7,002 266 0 306 1,013 926 2,245 1082 151 546 3,591 3,386 7,523 2001-02 207 770 15,355 266 2,245 18,842 1,024 509 7,648 7,523 316 1,823 18,842 1,682 4,362 9,311 15,355 15,355 0 15,355 103 0 164 2002-03 207 792 16,491 228 2,444 20,162 1,115 337 8,500 8,436 296 1,478 20,162 1,699 4,854 9,938 16,491 16,491 0 16,491 0 0 132 96 228 0 261 1,064 1,120 2,444 981 134 668 4,058 3,710 8,436

Table 8
2003-04 207 848 18,349 308 2,447 22,160 1,233 218 9,736 9,412 294 1,266 22,160 1,941 5,680 10,728 18,349 18,349 0 18,349 0 0 93 216 308 23 177 997 1,250 2,447 908 116 687 3,699 5,026 9,412

Continued...

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205

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Advances Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total Investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from Investments Lease income Miscellaneous income Total
Total income

1996-97 3,157 587 300 4,044 1,629 306 4 2,105 4,044 0 4,044 0 2,503 343 35 697 10 131 3,719 3,719

1997-98 4,324 758 65 5,147 2,183 460 12 2,492 5,147 0 5,147 0 2,976 344 58 1,202 16 6 4,601 4,601

1998-99 1999-2000 5,282 948 164 6,395 2,669 496 2 3,227 6,395 0 6,395 0 3,409 605 43 1,523 19 47 5,646 5,646 5,981 952 185 7,118 2,855 743 28 3,492 7,118 0 7,118 0 4,313 287 59 2,161 22 64 6,906 6,906

2000-01 5,915 899 188 7,002 2,739 852 49 3,362 7,002 0 7,002 0 4,285 276 120 2,049 22 64 6,816 6,816

2001-02 7,079 163 281 7,523 2,828 1,360 0 3,334 7,523 0 7,523 0 5,256 294 127 1,909 22 39 7,648 7,648

2002-03 7,342 461 633 8,436 3,167 1,408 0 3,861 8,436 0 8,436 0 5,979 315 145 1,800 22 239 8,500 8,500

2003-04 8,188 527 697 9,412 3,815 1,497 0 4,100 9,412 0 9,412 0 7,601 298 113 1,503 22 200 9,736 9,736

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

858 785 244 1,400 983

1400 788 259 1,928 1,280

1928 496 428 1966 1,227

1996 294 673 1617 997

1617 459 591 1484 884

580 406 27 1 1,014 59 11 -5 0 0 19 0 0 27 111
1,125

678 512 24 3 1,216 71 61 0 0 0 19 0 0 34 184
1,400

799 641 44 8 1,492 71 16 0 0 0 35 0 0 30 153
1,645

832 715 32 8 1,587 86 74 0 0 0 20 0 0 32 212
1,799

839 816 39 22 1,716 84 37 0 0 0 16 3 0 59 199
1,916

810 825 59 15 1,708 78 202 0 0 0 16 4 0 53 353
2,062

872 836 45 18 1,772 77 240 0 0 0 19 15 0 86 437
2,209

817 868 45 6 1,735 82 443 -2 0 0 24 9 0 61 617
2,353

continued...

206

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provision for NPAs Provision for depreciation in the value of inves Provision towards income tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 579 14 47 640 212 71 8 291 121 1,052 73 194 14 11 408 725 691 137 1,986 68 0 17 36 121

1997-98 735 3 52 790 245 82 10 337 169 1,296 105 274 84 0 480 740 753 165 2,223 141 0 24 4 169

1998-99 1999-2000 958 10 83 1,051 276 88 14 378 106 1,535 110 216 70 0 715 808 728 180 2,501 93 8 5 1 106 1,043 29 98 1,169 293 101 18 411 156 1,736 63 219 54 0 1,369 619 798 146 2,986 166 -38 25 3 156

2000-01 1,139 28 100 1,267 434 124 21 580 334 2,182 -266 68 101 0 3,014 783 0 512 524 4,933 290 41 0 3 334

2001-02 1,166 21 79 1,266 323 90 24 437 324 2,026 35 359 68 0 573 1,052 0 507 59 2,259 316 5 19 -16 324

2002-03 1,125 3 76 1,204 366 89 28 483 380 2,067 142 522 127 0 1,180 1,035 0 662 147 3,151 270 9 50 51 380

2003-04 1,071 3 69 1,143 339 105 28 472 480 2,095 258 738 157 0 3,548 1,188 0 875 71 5,840 206 0 121 153 480

21 26 14 24 14 28 58 100 0

29 -2 14 43 11 25 65 100 0

17 11 17 17 10 25 65 100 0

13 31 15 9 12 25 63 100 0

10 2 18 8 11 27 62 100 0

5 3 10 4 11 28 61 100 0

7 1 11 7 10 29 60 100 0

11 14 17 8 11 31 58 100 0

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

207

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos)

1996-97 0.8 18.7 18.3 72.9 9.9 25.9 3.7 3.5 60.0 61.4 n.a. 8.1 16.7 n.a. 12.5 15.6 n.a. n.a. n.a. n.a. 19.6 10.8 62.4 24.1 51 46 1 1 47 n.a. 59 19 21 35 14 -2 24 1,143 3.54 0.25 15,610

1997-98 1.0 20.0 21.5 72.6 13.1 24.1 3.3 5.1 55.2 61.3 8.38 8.2 38.0 11.99 12.3 14.7 3.62 3.28 1.04 1.38 62.0 11.9 61.6 30.9 51 49 2 1 45 39 62 27 29 24 15 20 20 1,156 4.45 0.29 15,109

1998-99 1999-2000 0.8 17.8 20.3 73.0 9.3 23.0 3.2 5.3 63.6 65.4 9.03 8.7 24.3 11.81 12.5 13.8 2.78 2.97 0.95 0.76 28.7 11.1 49.0 15.2 54 74 5 1 48 62 70 24 17 23 13 0 23 1,166 5.49 0.32 14,881 0.4 8.3 19.4 71.2 11.8 22.9 3.1 3.0 65.3 74.0 8.66 8.3 18.8 10.88 11.4 12.3 2.22 2.79 0.83 0.25 18.7 11.6 71.2 18.8 54 48 6 1 52 85 75 11 13 22 6 21 6 1,170 6.08 0.35 14,412

2000-01 -1.5 -33.1 21.9 74.9 10.4 30.3 4.0 -12.9 89.5 94.9 8.58 8.2 22.6 10.97 11.9 11.9 2.39 3.66 0.82 -0.46 24.6 7.7 490.2 42.8 48 -9 3 1 47 -8 74 -2 10 -1 48 -2 8 1,175 5.96 0.49 10,947

2001-02 0.2 4.0 18.3 73.9 17.1 21.2 2.8 1.7 54.8 73.4 8.12 7.8 30.9 10.56 11.4 11.1 2.44 2.67 0.74 0.51 46.5 7.6 90.1 33.2 49 67 2 1 50 106 79 7 5 12 -26 -7 0 1,135 6.63 0.38 10,700

2002-03 0.7 14.4 19.2 75.7 19.8 21.9 2.9 6.9 48.1 63.2 7.32 7.1 32.2 10.27 10.4 10.9 2.96 2.75 0.79 1.00 64.4 6.0 72.7 38.0 51 80 1 1 52 75 79 12 7 11 13 -1 4 1,135 7.43 0.43 10,553

2003-04 1.2 25.1 20.0 71.8 26.2 20.0 2.6 12.5 39.0 61.5 6.38 6.1 26.9 9.08 9.5 9.2 2.69 2.42 0.70 0.97 64.9 9.5 65.0 45.5 51 53 2 1 53 67 80 12 11 15 -7 6 -2 1,130 8.33 0.42 10,957

Income per employee (Rs crore) Income/employee expenses (times)

0.07 5.31

0.09 5.72

0.11 5.97

0.12 6.14

0.17 4.41

0.19 6.39

0.21 6.04

0.21 6.95

continued...

208

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...continued

(Rs crore) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 90 2 5 40 8 0 52 0 12 55 33 78 15 7 67 9 1 19 0 4 0 15.1 9.4

1997-98 87 1 5 42 9 0 48 0 11 54 34 84 15 1 65 7 1 26 0 0 0 13.7 8.3

1998-99 1999-2000 91 2 4 42 8 0 50 0 9 54 38 83 15 3 60 11 1 27 0 1 0 n.a. 7.7 88 1 5 40 10 0 49 0 9 56 35 84 13 3 62 4 1 31 0 1 0 n.a. 13.5

2000-01 90 1 4 39 12 1 48 0 8 49 44 84 13 3 63 4 2 30 0 1 0 n.a. 18.4

2001-02 83 1 4 38 18 0 44 0 7 48 45 94 2 4 69 4 2 25 0 1 0 n.a. 16.3

2002-03 80 1 4 38 17 0 46 0 8 48 44 87 5 8 70 4 2 21 0 3 0 n.a. 11.8

2003-04 74 1 3 41 16 0 44 0 7 39 53 87 6 7 78 3 1 15 0 2 0 n.a. 9.4

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

209

Corporation Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1996-97 82 318 6,673 271 810 8,154 804 601 3,287 3,015 64 383 8,154 1,472 1,096 4,105 6,673 6,673 0 6,673 0 233 38 0 271 166 390 28 226 810 741 62 279 1,621 1,115 3,015 1997-98 120 729 9,352 70 943 11,214 1,004 1,156 4,154 4,303 92 505 11,214 1,443 1,316 6,593 9,352 9,352 0 9,352 0 0 70 0 70 205 347 40 350 943 936 68 547 2,187 1,569 4,303 1998-99 1999-2000 120 855 12,601 198 1,209 14,983 1,220 1,228 5,511 6,286 117 622 14,983 1,647 1,600 9,355 12,601 12,601 0 12,601 134 0 63 0 198 239 509 51 410 1,209 1,124 91 441 2,888 2,957 6,286 120 1,025 14,280 296 1,042 16,762 1,162 1,120 5,962 7,777 143 597 16,762 1,910 1,958 10,412 14,280 14,280 0 14,280 146 0 150 0 296 193 361 63 424 1,042 1,065 91 455 3,055 4,268 7,777 2000-01 120 1,228 16,560 595 1,200 19,703 1,088 2,097 6,860 8,666 155 837 19,703 2,137 2,247 12,177 16,560 16,560 0 16,560 210 130 255 0 595 0 639 79 483 1,200 980 102 594 4,153 3,918 8,666 2001-02 143 1,903 18,924 1,424 1,210 23,604 1,336 2,010 8,056 10,987 199 1,015 23,604 2,314 2,609 14,001 18,924 18,924 0 18,924 351 510 563 0 1,424 0 583 56 572 1,210 1,215 121 610 5,824 4,553 10,987 2002-03 143 2,227 21,725 803 1,374 26,272 1,284 1,145 10,670 12,029 233 911 26,272 2,922 3,276 15,527 21,725 21,725 0 21,725 25 170 509 99 803 0 710 47 616 1,374 1,130 154 811 6,041 5,177 12,029

Table 9
2003-04 143 2,625 23191 934 2,260 29,154 1,694 1,142 10,685 13,890 249 1,493 29,154 3,559 4,324 15,308 23,191 23,191 0 23,191 0 7 41 886 934 0 1,130 54 1,076 2,260 1,449 245 1,098 6,028 6,764 13,890

Continued...

210

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1996-97 2,281 448 286 3,015 952 412 4 1,647 3,015 0 3,015 0 1,713 338 38 675 0 523 3,287 3,287

1997-98 3,196 477 630 4,303 1,257 431 2 2,613 4,303 0 4,303 0 2,114 351 81 1,065 3 540 4,154 4,154

1998-99 1999-2000 4,606 621 1,060 6,286 1,873 588 90 3,736 6,286 0 6,286 0 2,945 335 72 1,605 10 543 5,511 5,511 5,733 919 1,126 7,777 2,257 1,628 22 3,870 7,777 0 7,777 0 3,700 321 84 1,501 85 271 5,962 5,962

2000-01 7,145 328 1,194 8,666 2,869 1,576 0 4,221 8,666 0 8,666 0 4,612 307 44 1,532 88 278 6,860 6,860

2001-02 7,221 1,476 2,290 10,987 3,052 2,938 31 4,967 10,987 0 10,987 0 5,866 243 55 1,658 115 120 8,057 8,057

2002-03 9,895 392 1,742 12,029 3,970 2,095 232 5,731 12,029 0 12,029 0 8,346 188 55 1,788 115 179 10,670 10,670

2003-04 11,549 530 1,811 13,890 4,979 1,123 230 7,557 13,890 0 13,890 0 8,671 181 59 1,542 115 117 10,685 10,685

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

433 136 85 485 171

485 246 143 587 253

587 177 107 657 198

657 162 227 722 250

403 366 40 20 829 73 2 0 0 0 13 0 0 23 111
940

427 522 48 30 1,028 95 1 0 0 22 0 0 26 144
1,171

608 634 93 20 1,356 125 11 0 2 0 29 0 0 31 198
1,555

806 689 94 15 1,604 130 58 0 0 0 35 9 0 39 271
1,875

934 744 94 33 1,805 131 67 0 0 0 37 11 0 47 292
2,097

997 824 91 34 1,946 124 135 0 0 0 53 18 0 52 382
2,328

1,020 965 65 52 2,103 117 266 0 0 0 40 37 0 71 532
2,634

991 1,094 44 73 2,201 131 224 0 1 0 27 33 0 101 517
2,718

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

211

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against the banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provision for NPAs Provision for depreciation in the value of inves Provision towards income tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Share of deposits (per cent) Domestic Abroad

1996-97 493 2 16 511 114 57 12 183 121 815 125 246 13 10 1,261 365 7 262 20 1,938 35 2 83 120

1997-98 623 3 13 639 129 86 15 230 136 1,005 167 303 36 0 2,100 564 13 259 14 2,987 47 3 85 2 136

1998-99 1999-2000 961 6 11 978 165 87 18 271 114 1,363 192 306 49 19 1,654 813 21 293 20 2,870 46 0 67 1 114 1,116 17 13 1,146 177 105 22 304 193 1,643 232 425 45 0 2,066 831 34 411 10 3,397 70 8 105 9 193

2000-01 1,184 20 20 1,223 200 120 22 341 270 1,835 262 532 50 0 3,832 994 23 443 23 5,364 99 29 135 8 270

2001-02 1,285 19 17 1,320 214 269 32 515 315 2,150 177 492 50 0 2665 0 0 466 27 3,208 129 23 152 0 315

2002-03 1,270 16 24 1,310 256 344 49 648 437 2,395 239 675 39 0 4485 0 0 668 18 5,211 174 42 211 0 437

2003-04 1,190 18 29 1,237 284 229 60 574 403 2,214 505 908 44 0 4,267 1,548 62 1,353 46 7,320 106 12 267 0 403

16 23 20 13 22 16 62 100 0

40 -2 20 61 15 14 70 100 0

35 14 22 42 13 13 74 100 0

13 16 22 11 13 14 73 100 0

16 12 15 17 13 14 74 100 0

14 8 16 15 12 14 74 100 0

15 26 26 11 13 15 71 100 0

7 22 32 -1 15 19 66 100 0

continued...

212

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore)

1996-97 1.7 34.4 19.4 62.3 11.8 19.5 2.7 15.2 42.7 42.9 n.a. 7.9 6.9 n.a. 13.5 14.8 n.a. n.a. n.a. n.a. 23.6 11.3 49.2 30.3 45 61 4 1 49 n.a. 80 23 16 54 21 20 24 507 5.95 0.36 9,379 0.10

1997-98 1.7 26.7 12.2 56.1 12.3 19.6 2.5 13.9 43.1 43.2 7.47 7.8 9.5 11.99 14.0 11.7 4.52 2.51 1.42 3.43 46.9 16.9 44.9 16.0 46 48 1 1 44 32 86 43 40 26 13 30 24 581 7.41 0.40 9,615 0.12

1998-99 1999-2000 1.5 21.1 14.4 60.9 12.8 17.4 2.1 16.0 46.9 47.9 8.48 8.8 12.6 11.49 13.1 11.5 3.01 2.18 1.36 2.20 81.9 13.2 37.3 11.7 50 61 2 1 44 42 88 46 35 33 28 31 32 617 10.19 0.44 10,182 0.15 1.5 21.9 13.6 58.3 14.4 16.2 2.1 19.4 41.7 45.3 8.12 8.3 12.3 10.99 12.0 11.5 2.87 2.01 1.22 2.09 54.5 12.8 45.3 16.8 54 89 2 1 42 27 90 24 13 8 7 4 18 648 12.00 0.47 10,587 0.18

2000-01 1.4 21.0 13.6 58.6 13.9 16.3 2.1 21.8 39.1 42.3 7.47 7.7 8.8 10.65 11.6 11.4 3.18 1.97 1.10 2.31 34.6 13.3 50.8 20.0 52 39 4 1 41 39 91 11 16 15 13 0 12 652 13.29 0.52 10,837 0.19

2001-02 0.8 10.5 10.5 41.5 16.4 22.1 2.7 12.4 51.1 59.0 6.82 7.2 3.5 9.63 11.0 10.1 2.81 2.51 0.99 1.29 17.6 17.9 64 15.4 58 98 8 1 43 51 93 27 14 17 7 -5 8 659 17 0.78 10801 0.22

2002-03 1.0 10.8 10.1 39.5 20.2 24.6 3.0 16.7 49.0 61.3 5.93 6.2 3.6 8.97 10.3 8.9 3.04 2.73 0.81 1.12 18.3 18.5 65 18.4 55 37 4 1 49 93 94 9 15 32 20 -5 8 684 18 0.95 10729 0.25

2003-04 1.8 19.6 9.5 49.6 19.0 21.1 2.5 35.2 38.7 45.6 5.10 5.3 5.4 8.48 10.2 7.6 3.38 2.18 0.80 1.99 25.9 20.1 44 14.6 60 127 4 1 46 1 95 15 7 0 11 12 5 717 19 0.80 10734 0.25

Income/employee expenses (times)

8.25

9.09

9.43

10.58

10.48

10.88

10.29

9.56

continued...

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213

...continued

(Rs crore) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares and debentures Debentures Subsidiary Others Outside India Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 88 1 8 32 14 0 55 0 9 54 37 76 15 9 52 10 1 21 0 16 0 9.9 3.6

1997-98 88 2 8 29 10 0 61 0 13 51 36 74 11 15 51 8 2 26 0 13 0 7.6 2.9

1998-99 1999-2000 87 2 8 30 9 1 59 0 7 46 47 73 10 17 53 6 1 29 0 10 0 n.a. 2.0 86 2 7 29 21 0 50 0 6 39 55 74 12 14 62 5 1 25 1 5 0 n.a. 1.9

2000-01 86 2 6 33 18 0 49 0 7 48 45 82 4 14 67 4 1 22 1 4 0 n.a. 2.0

2001-02 84 2 5 28 27 0 45 0 6 53 41 66 13 21 73 3 1 21 1 1 0 n.a. 2.31

2002-03 80 2 4 33 17 2 48 0 7 50 43 82 3 14 78 2 1 17 1 2 0 n.a. 1.65

2003-04 81 1 5 36 8 2 54 0 8 43 49 83 4 13 81 2 1 14 1 1 0 n.a. 1.8

214

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State Bank of Travancore
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total Secured Government guarantee Unsecured Total 0 304 426 296 1,026 746 32 242 2,629 789 3,659 3,270 298 92 3,659 18 334 545 291 1,187 609 33 358 2,822 821 4,001 3,510 290 201 4,001 328 376 693 346 1,742 597 34 428 2,896 928 4,252 3,639 340 273 4,252 236 355 669 497 1,757 531 35 406 3,401 1,324 5,131 4,139 551 441 5,131 631 179 841 706 2,357 663 41 691 4,164 1,543 6,397 4,985 546 867 6,397 189 410 953 808 2,360 936 57 506 4,894 2,035 7,436 4969 1155 1311 7,436 270 384 958 724 2,336 790 39 856 5,240 3,074 9,171 7238 750 1183 9,171 732 1,313 4,419 6,464 6,464 0 6,464 0 0 75 17 92 969 1,582 4,917 7,468 7,468 0 7,468 0 0 70 55 126 931 1,995 5,725 8,650 8,650 0 8,650 0 0 61 79 140 1,047 2,328 6,808 10,183 10,183 0 10,183 16 0 45 0 61 1,247 2,654 7,671 11,573 11,573 0 11,573 8 0 38 0 46 1,217 3,084 9,158 13,460 13,460 0 13,460 40 0 24 0 64 1,109 3,869 10,948 15,926 15,926 0 15,926 0 1 5 43 48 777 350 2,626 3,659 44 333 7,790 642 819 3,301 4,001 47 324 9,133 631 1,132 4,384 4,252 45 470 10,914 566 1,339 4,872 5,131 52 475 12,435 705 1,201 5,453 6,397 67 660 14,483 994 998 6,372 7,436 69 625 16,493 829 413 8,039 9,171 72 509 19,033 35 174 6,464 92 1,026 7,790 50 302 7,468 126 1,187 9,133 50 331 8,650 140 1,743 10,914 50 384 10,183 61 1,757 12,435 50 465 11,573 38 2,357 14,483 50 560 13,460 64 2,360 16,493 50 673 15,926 48 2,336 19,033 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 10
2003-04 50 875 19,721 271 3,086 24,003 958 449 10,778 11,132 106 580 24,003 1,494 4,758 13,470 19,721 19,721 0 19,721 0 0 4 267 271 595 401 1,058 1,031 3,086 919 39 1,279 5,662 4,191 11,132 8793 855 1484 11,132

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

215

...continued

(Rs crore) Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1996-97 1,209 538 0 1,777 3,525 134 3,659 0 2,133 291 143 0 59 2,626 2,626

1997-98 1,302 618 2 2,078 4,001 0 4,001 0 2,711 293 183 158 0 114 3,459 3,459

1998-99 1999-2000 1,409 677 0 1,965 4,051 0 4,051 0 3,824 259 231 200 0 70 4,584 4,584 1,705 962 7 2,457 5,131 0 5,131 0 4,185 237 370 336 0 79 5,207 5,207

2000-01 2,016 1,313 2 2,648 5,978 0 5,978 0 4,818 212 30 348 0 45 5,453 5,453

2001-02 20002-03 2260 1732 1 3442 7436 0 7436 0 5815 186 36 288 0 48 6,372 6,372 3081 1248 28 4813 9171 0 9171 0 7445 162 34 358 0 40 8,039 8,039

2003-04 4143 1570 131 5288 11132 0 11132 0 10145 153 36 419 0 24 10,778 10,778

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

886 244 318 811 452

474 256 309 758 496

758 205 235 718 425

728 133 225 635 280

635 257 230 662 154

600 269 21 19 909 88 1 0 0 0 32 0 0 3 124 1,033

553 372 19 38 982 93 14 0 0 0 34 0 0 7 149 1,130

475 470 18 56 1,019 111 6 0 0 0 25 0 0 10 153 1,172

515 560 23 61 1,160 129 25 0 0 0 28 5 0 7 195 1,354

621 611 19 64 1,315 123 30 0 0 0 26 5 0 10 194 1,509

683 680 41 50 1,454 118 75 0 1 0 25 5 0 7 230 1,684

790 725 51 18 1,584 132 130 0 0 0 26 5 0 7 300 1,885

868 828 31 13 1,740 141 269 0 1 0 37 5 0 17 470 2,210

continued...

216

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provision for NPAs Provision for depreciation in the value of inves Provision towards income tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1996-97 604 18 39 661 167 47 7 221 110 993 40 151 17 1 395 471 9 371 150 1,413 61 15 34 0 110

1997-98 659 22 33 714 152 58 8 217 137 1,067 63 200 18 0 476 395 18 252 151 1,310 138 -69 67 33 137

1998-99 1999-2000 724 26 31 781 173 67 0 240 107 1,129 43 150 24 0 798 387 20 288 231 1,747 109 -6 14 -62 107 823 25 30 878 221 73 0 294 116 1,288 66 182 27 0 1,941 382 3 310 214 2,878 84 -4 38 22 116

2000-01 859 36 25 920 277 69 14 359 133 1,412 97 230 42 0 2937 380 3 347 261 3,969 94 9 25 -8 133

2001-02 958 2 70 1,029 245 55 17 317 200 1,412 97 230 47 0 4,252 352 9 314 133 5,107 143 4 47 7 200

2002-03 1002 2 57 1,062 269 59 20 348 284 1,412 97 230 13 0 7,279 462 1 421 316 8,493 160 9 101 14 284

2003-04 996 1 60 1,057 317 68 34 419 456 1,412 97 230 1 0 10,061 677 3 544 112 11,398 262 5 143 46 456

19 38 7 21 11 20 68

16 32 21 11 13 21 66

16 -4 26 16 11 23 66

18 12 17 19 10 23 67

14 19 14 13 11 23 66

16 -2 16 19 9 23 68

18 -9 25 20 7 24 69

24 35 23 23 8 24 68

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

217

...continued

(Rs crore) Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to Borrowings(times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income 9 19 -22 22 9 19 83 57 30 1 0 41 52.8 n.a. 10.2 60.8 n.a. 12.0 17.1 n.a. n.a. n.a. n.a. n.a. 8.2 73.3 0.6 19.7 36.3 75.6 12.0 21.4 3.4 11.5 59.5 59.6

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

0.7 22.6 25.0 69.8 13.2 19.2 2.9 12.7 52.1 53.9 9.65 9.5 50.0 12.41 12.5 14.4 2.76 2.68 1.62 1.70 64.02 11.5 68.3 38.9 54 34 2 0 44 67 86 9 16 -10 -9 6 8

0.4 11.8 27.6 72.1 13.0 20.5 2.8 8.6 61.5 62.5 9.14 9.0 42.6 10.98 12.2 11.5 1.84 2.51 1.47 0.81 60.54 n.a. 71.3 28.1 49 21 2 0 51 92 87 6 16 10 14 19 4

0.6 16.3 27.7 75.2 14.4 21.7 2.9 13.3 61.8 65.2 8.88 8.7 54.4 10.76 12.1 11.0 1.88 2.64 1.44 0.68 93.35 11.1 63.5 26.7 50 57 1 0 48 32 88 21 18 15 28 16 14

0.7 20.5 27.1 77.1 12.9 23.8 3.1 19.4 61.0 64.3 8.22 7.9 113.3 10.47 11.8 10.8 2.25 2.80 1.20 0.65 219.25 11.8 57.7 25.8 55 91 0 0 47 42 90 25 14 6 25 -5 13

0.6 17.3 26.0 77.3 13.7 18.8 2.4 19.4 48.4 54.6 8.00 7.7 130.3 9.89 11.5 9.9 1.89 2.14 0.99 0.74 246.10 12.5 67.3 32.8 55 55 0 0 47 49 92 16 16 0 -12 -4 11

0.5 14.6 25.3 77.4 15.9 18.5 2.2 19.4 42.3 50.3 7.01 6.8 106.2 9.29 10.1 9.5 2.29 2.03 0.94 1.20 261.51 11.3 74.5 39.3 58 70 0 0 50 68 93 23 18 8 10 12 9

0.5 11.8 24.9 75.6 21.3 19.0 2.1 19.4 36.3 47.3 5.75 5.6 37.9 8.36 8.8 8.5 2.61 2.01 0.89 1.50 111.75 11.4 82.4 49.3 56 52 1 0 55 72 95 21 24 18 18 7 10

Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) 654 5.60 0.34 12,990 0.08 6.18 660 6.06 0.33 13,049 0.09 7.46 664 6.40 0.36 13,234 0.09 6.76 667 7.69 0.44 12,953 0.10 6.11 671 9.53 0.54 12,172 0.12 5.45 674 11.03 0.47 12137 0.14 6.87 671 13.67 0.52 12005 0.16 7.00 668 16.67 0.63 12007 0.18 6.98

continued...

218

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...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 88 3 8 33 15 0 49 4 7 72 22 89 8 3 81 11 0 5 0 2 8.8

1997-98 87 3 8 33 15 0 52 0 9 71 21 88 7 5 78 8 5 5 0 3 12.2

1998-99 1999-2000 87 2 9 35 17 0 49 0 10 68 22 86 8 6 83 6 5 4 0 2 10.8 86 2 10 33 19 0 48 0 8 66 26 81 11 9 80 5 7 6 0 2 8.6

2000-01 87 2 8 34 22 0 44 0 11 65 24 78 9 14 88 4 1 6 0 1 7.8

2001-02 86 2 7 30 23 0 46 0 7 66 27 67 16 18 91 3 1 5 0 1 5.7

2002-03 84 1 7 34 14 0 52 0 9 57 34 79 8 13 93 2 0 4 0 0 3.1

2003-04 79 2 6 37 14 1 48 0 11 51 38 79 8 13 94 1 0 4 0 0 1.4

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

219

ICICI Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Unsecured redeemable bonds Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchased and discounted Cash credit and overdraft Term loans Total 76 632 89 798 141 842 145 1,128 455 1,384 272 2,110 701 2,578 378 3,657 1,087 4,971 974 7,031 1,654 2,403 42978 47,035 438 3,134 49,708 53,279 85 159 148 3 66 191 303 7 97 232 457 9 390 566 690 31 577 1,013 1,131 101 0 69 6 0 108 18 0 112 23 0 142 34 0 381 56 33 817 2,290 9,751 3,349 16,208 1529 246 0 1,031 1,619 9,750 4,658 17,057 4550 336 316 50 982 1,348 1,348 0 1,348 0 80 13 0 93 363 104 2,162 2,629 2,629 0 2,629 0 29 163 0 192 577 227 5,269 6,073 6,073 0 6,073 148 42 10 0 200 1,587 533 7,745 9,866 9,866 0 9,866 219 192 81 0 491 2,622 1,881 11,876 16,378 16,378 0 16,378 301 398 325 9 1,033 2,736 2,497 26,852 32,085 32,085 0 32,085 141 2,688 39,114 7,276 49,219 3,689 3,793 40,687 48,169 48,169 0 48,169 0 2,447 25,964 5,892 34,302 150 223 435 798 96 79 1,782 310 563 1,023 1,128 184 72 3,279 466 1,172 2,861 2,110 200 172 6,982 722 2,693 4,417 3,657 222 361 12,073 1,232 2,362 8,187 7,031 381 543 19,737 1,774 11,012 35,891 47,035 4,239 4,155 104,106 4,886 1,603 35,463 53,279 4,061 7,521 106,812 150 32 1,348 93 159 1,782 165 102 2,629 192 191 3,279 165 143 6,073 200 401 6,982 197 953 9,866 491 566 12,073 220 1,092 16,378 1,033 1,013 19,737 963 5,632 32,085 49,219 16,208 104,106 963 6,321 48,169 34,302 17,057 106,812 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 11
2003-04 966 7,394 68,109 30,740 18,019 125,229 5,408 3,062 42,743 62,096 4,057 7,863 125,229 7,260 8,372 52,477 68,109 68,109 0 68,109 0 1,657 21,309 7,774 30,740 342 1,685 1,356 9,106 5,872 18,020 4961 447 1,231 6,098 54,767 62,096

Continued...

220

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Additions -from Bank of Mathura Reductions Closing balances Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total

1996-97 771 0 27 798 219 0 15 564 798 0 798 0 313 0 10 69 0 42 435 435

1997-98 1,057 6 64 1,128 329 0 0 799 1,128 0 1,128 0 705 0 47 217 0 55 1,023 1,023

1998-99 1999-2000 1,825 58 227 2,110 478 4 0 1,628 2,110 0 2,110 0 1,527 0 138 667 0 529 2,861 2,861 2,806 98 753 3,657 497 104 15 3,040 3,657 0 3,657 0 2,815 0 161 1,137 0 304 4,417 4,417

2000-01 4,947 449 1,635 7,031 1,185 844 91 4,912 7,031 0 7,031 8 4,070 41 125 3,070 0 872 8,179 8,187

2001-02 44,604 1,029 1,401 47,035 1,986 4,356 179 40,451 46,973 62 47,035 12 22,722 70 1,909 6,436 607 4,134 35,879 35,891

2002-03 50,068 1,700 1,511 53,279 8,938 1,897 101 42,289 53,226 54 53,279 9 25,549 34 1,642 5,690 781 1,758 35,454 35,462

2003-04 56,801 615 4,679 62,096 14,531 707 43 45,751 61,032 1,064 62,096 361 29,888 30 1,684 5,549 1,104 4,127 42,382 42,743

n.a. n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a. 60

101 68 0 75 95 56

95 128 238 51 409 154

409 4877 0 274 5013 2720

5013 1194 0 1179 5027 3151

5027 1419 0 3399 3048 2037

134 55 3 3 195

143 81 32 4 260

226 208 109 0 544

348 410 95 1 853

571 556 109 7 1,242

772 1,234 123 24 2,152

6,016 2,910 236 206 9,368

6,074 2,432 211 178 8,894

Other income Commission exchange and brokerage Profit on sale of investments Profit on sale of fixed assets Profit on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income 15 11 0 2 9 0 0 6 43 238 25 35 0 1 17 0 0 7 85 345 37 12 0 0 34 0 0 5 89 633 67 101 0 0 22 0 0 4 194 1,047 140 19 0 14 42 0 0 6 220 1,462 230 306 0 -15 37 0 0 17 574 2,726 792 492 -7 0 10 109 0 570 1,968 11,336 1,072 1,221 0 0 193 0 0 579 3,065 11,959

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

221

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees in India outside India Liability on account of outstanding derivative Acceptances, endorsements Currency swaps Others Total Provisions and contingencies Provision for NPAs Provision for depreciation Provision towards income tax Other provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1996-97 97 5 27 129 6 26 8 40 28 198 40 68 0 1 1,047 186 0 0 251 0 11 1,496 2 5 17 4 28

1997-98 162 10 15 187 12 31 14 58 50 295 50 101 1 0 2,353 265 0 0 287 0 2 2,907 14 14 23 0 50

1998-99 1999-2000 372 20 33 426 18 47 18 83 61 569 64 125 0 4 3,967 463 0 0 559 0 22 5,014 32 -5 34 0 61 581 24 63 667 36 92 25 153 121 941 105 227 25 0 7,355 756 0 0 849 766 29 9,780 76 13 33 0 121

2000-01 725 32 80 838 52 246 36 334 129 1,301 161 290 55 34 8,847 1,346 0 0 1,287 871 271 12,711 64 -6 65 7 129

2001-02 1,389 48 122 1,559 147 423 53 623 287 2,468 258 545 1,023 262 15,255 9,352 0 0 1,739 2,041 11,817 41,488 274 -16 121 -93 287

2002-03 2,480 183 5,281 7,944 403 1,417 191 2,012 1,365 11,321 15 1,380 2,025 180 25,103 10,635 0 0 4,325 2,901 44,268 89,438 1321 309 -426 160 1,365

2003-04 3,023 229 3,763 7,015 546 1,764 261 2,571 735 10,322 1,637 2,373 2,502 124 55,704 12,029 0 0 6,514 4,448 121,620 202,942 384 -10 265 96 735

85 69 168 87 23 4 73

95 15 109 120 14 4 82

131 59 119 144 9 4 87

62 175 135 47 16 5 79

66 65 253 53 16 11 73

96 65 33 126 9 8 84

50 35 52 52 8 8 84

41 97 121 29 11 12 77

continued...

222

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...continued

(Rs crore) Financial parameters Profitability (per cent) Return on assets Return on net worth Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)

1996-97

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

2.7 23.7 8.8 15.2 14.2 95.0 3.0 2.7 37.4 41.9 n.a. 9.4 21.4 n.a. 15.7 18.5 n.a. n.a. n.a. n.a. 6.9 13.0 40.7 15.2 59 24 7 0 32 18 23 85 66 38 58 68 22 36.27 1.84

2.0 22.4 11.3 21.3 8.1 67.7 2.2 3.0 36.4 46.9 8.4 8.1 17.3 11.6 11.1 14.9 3.2 2.49 1.97 2.7 13.9 13.5 50.0 18.8 43 26 7 0 39 46 38 41 95 135 99 69 33 33 34.18 1.75

1.2 22.2 21.6 22.0 5.8 92.8 1.4 3.9 39.8 42.4 9.1 8.5 27.4 12.3 10.7 14.0 3.1 1.72 1.54 3.0 22.2 11.1 49.0 19.9 35 29 3 0 47 53 46 87 131 180 48 49 110 55 38.37 1.50

1.1 14.4 9.5 23.7 1.8 79.0 1.6 5.4 40.3 55.0 7.9 7.3 25.0 10.1 11.3 12.1 2.2 1.69 1.01 1.5 23.1 19.6 53.5 10.6 37 41 5 0 45 41 83 73 62 54 100 79 57 81 45.15 1.89

1.0 13.1 14.0 15.5 2.7 151.9 2.0 7.3 53.5 55.2 5.9 5.5 14.7 8.6 8.8 10.7 2.7 2.21 1.22 1.7 17.2 11.6 44.5 9.8 43 52 6 1 50 58 83 92 66 85 42 108 46 389 18.08 0.86

0.4 6.5 14.8 23.6 3.0 108.4 1.9 2.7 53.3 72.2 3.1 5.7 0.7 4.0 5.6 2.9 0.9 1.09 0.48 0.3 1.0 11.4 52.6 4.3 147 255 153 1 112 176 85 569 96 338 185 65 73 358 131.38 1.74

0.0 0.2 13.7 20.0 29.0 102.2 4.2 0.2 59.3 69.4 9.6 6.2 13.1 10.4 8.2 12.0 0.8 2.11 1.14 -0.2 1.0 11.1 98.9 18.7 111 39 71 1 74 -3 87 13 50 -1 174 245 335 446 119.46 4.51

1.4 20.9 14.0 21.2 18.9 83.9 3.8 17.0 52.0 69.1 7.6 5.2 12.3 9.0 6.2 10.5 1.4 2.47 1.49 0.43 1.8 10.4 31.0 8.8 91 44 45 1 63 37 88 17 41 21 35 35 -5 413 150.35 6.23

Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

445 0.53 38.52

603 0.57 28.12

889 0.71 34.83

1,344 0.78 28.78

4,491 0.33 28.28

7,726 0.35 18.52

10,617 1.07 28.13

13,609 0.88 21.90

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

223

...continued

(Rs crore) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guaranteed Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 82 4 6 27 0 2 71 0 10 79 11 97 0 3 72 0 2 16 0 10 0 1.7

1997-98 75 5 7 29 0 0 71 0 12 75 13 94 1 6 69 0 5 21 0 5 0 1.1

1998-99 1999-2000 86 5 6 23 0 0 77 0 22 66 13 87 3 11 53 0 5 23 0 18 0 1.8 81 2 6 14 3 0 83 0 19 70 10 77 3 21 64 0 4 26 0 7 0 1.1

2000-01 85 3 10 17 12 1 70 0 15 71 14 70 6 23 50 1 2 38 0 11 0 1.4

2001-02 79 1 8 4 9 0 86 0 4 5 91 95 2 3 63 0 5 18 2 12 0 5.5

2002-03 83 1 7 17 4 0 79 0 1 6 93 94 3 3 72 0 5 16 2 5 0 5.2

2003-04 74 2 9 23 1 0 74 2 2 10 88 91 1 8 70 0 4 13 3 10 1 2.2

224

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HDFC Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchased and discounted Cash credit and overdraft Term loans Total 44 226 305 575 275 235 332 842 295 503 603 1,401 571 1,468 1,323 3,362 716 1,377 2,544 4,637 1,325 1,738 3,751 6,814 2,623 2,608 6,524 11,755 0 30 11 52 93 174 5 0 58 37 103 198 201 11 0 244 50 220 513 276 16 0 372 105 482 959 809 41 0 511 296 796 1,603 929 57 0 867 417 1,075 2,359 1098.32 113 0 851 688 2,172 3,712 1,915 167 409 69 802 1,279 1,279 0 1,279 0 115 82 2 199 673 177 1,341 2,192 2,192 0 2,192 0 0 48 7 55 982 347 1,587 2,915 2,915 0 2,915 124 98 205 21 448 2,780 1,125 4,523 8,428 8,428 0 8,428 205 765 440 18 1,429 2,856 1,903 6,899 11,658 11,658 0 11,658 163 407 655 8 1,233 4,220 2,957 10,476 17,654 17,654 0 17,654 97 920 806 0 1,823 4,951 4,663 12,762 22,376 22,376 0 22,376 13 1,407 657 8 2,085 178 85 730 575 99 148 1,815 212 329 1,121 842 110 215 2,830 292 248 1,904 1,401 132 375 4,350 850 768 5,748 3,362 237 691 11,656 986 1,625 7,145 4,637 290 934 15,617 1,211 2,247 12,004 6,814 371 1,140 23,787 2,082 1,087 13,388 11,755 529 1,583 30,424 200 44 1,279 199 93 1,815 200 85 2,192 55 298 2,830 200 139 2,915 448 648 4,350 257 508 8,428 1,579 885 11,656 254 669 11,658 1,433 1,603 15,617 281 1,670 17,654 1,823 2,359 23,787 282 1,970 22,376 2,085 3,712 30,424 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 12
2003-04 285 2,409 30,409 2,308 6,897 42,307 2,542 1,116 19,257 17,745 617 1,031 42,307 8,835 7,804 13,769 30,409 30,409 0 30,409 0 1,556 92 660 2,308 0 3,667 417 2,813 6,897 2,288 254 3,194 3,741 10,810 17,745

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

225

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Additions due to amalgmation Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1996-97 359 87 129 575 130 73 0 372 575 0 575 0 365 9 0 310 0 46 730 730

1997-98 535 78 229 842 126 7 121 588 842 0 842 0 573 0 22 482 0 45 1,121 1,121

1998-99 1999-2000 753 122 525 1,401 199 26 108 1,067 1,401 0 1,401 0 868 0 147 859 0 31 1,904 1,904 2,958 199 205 3,362 586 12 169 2,595 3,362 0 3,362 0 3,217 12 257 1,866 0 396 5,748 5,748

2000-01 3,944 10 683 4,637 668 505 447 3,017 4,637 0 4,637 0 3,413 12 197 2,578 1 944 7,145 7,145

2001-02 6186 51 577 6,814 732 911 188 4,982 6,814 0 6,814 0 5,295 12 145 4,268 1 2,283 12,004 12,004

2002-03 9991 94 1670 11,755 1,422 852 22 9,459 11,755 0 11,755 0 6,356 12 108 4,167 2 2,743 13,388 13,388

2003-04 15277 117 2351 17,745 2,498 335 11 14,900 17,745 0 17,745 0 11,531 7 107 4,045 2 3,566 19,257 19,257

n.a. n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a. n.a.

39 48 62 27 122 37

122 40 0 15 147 21

147 91 0 15 223 34

223 106 0 64 265 43

265 119 0 37 336 28

92 62 0 8 162 21 5 0 0 0 6 0 0 0 32
193

118 104 19 1 241 30 21 0 0 0 11 0 0 0 62
303

143 182 50 0 376 41 15 0 0 0 12 0 0 0 68
444

267 367 46 0 680 83 21 0 0 0 21 0 0 0 125
805

493 636 131 0 1,259 134 12 -1 0 0 40 0 0 1 186
1,445

624 864 214 1 1,703 164 104 0 -1 0 39 0 0 27 333
2,036

777 1,113 120 3 2,014 236 132 0 1 -2 45 0 0 53 466
2,479

1,109 1,322 111 7 2,549 320 38 0 0 -11 74 0 0 59 480
3,029

continued...

226

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India outside Inida Liability on account of outstanding derivative Acceptances, endorsements Currency Swaps Others Total Provisions and contingencies Provision for NPAs Provision for depreciation in the value of inves Provision towards income tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1996-97 71 16 0 87 10 26 6 42 23 153 41 64 0 0 3,736 507 0 182 686 190 5,302 4 2 18 0 23

1997-98 104 32 2 138 15 37 11 63 39 240 63 103 0 0 3,489 1,024 0 423 837 156 5,928 7 1 31 0 39

1998-99 1999-2000 176 40 13 229 22 52 15 89 44 362 82 126 4 0 5,471 1,056 0 445 1,066 380 8,422 8 1 35 0 44 287 65 23 374 49 96 26 171 140 685 120 260 2 0 7,858 1,593 0 980 956 245 11,633 54 6 75 5 139

2000-01 639 95 20 754 78 178 54 310 172 1,235 210 382 2 0 8,677 1,741 0 2,952 1,172 468 15,011 53 13 105 0 172

2001-02 916 133 25 1,074 109 240 69 418 247 1,739 297 545 2 0 11,985 1,695 0 5,303 944 399 20,328 86 19 128 14 247

2002-03 1,063 103 25 1,192 152 334 106 592 323 2,106 373 695 51 0 19,773 1,425 0 18,605 1,172 535 41,560 88 50 184 0 323

2003-04 1,038 144 29 1,211 204 480 126 810 498 2,519 510 1,008 99 0 39,444 1,642 0 38,940 1,892 100 82,117 178 93 210 17 498

87 80 297 82 32 5 63

71 65 158 67 31 8 61

33 46 95 18 34 12 54

189 183 225 185 33 13 54

38 3 69 53 24 16 59

51 48 55 52 24 17 59

27 17 58 22 22 21 57

36 78 67 8 29 26 45

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

227

...continued

(Rs crore) Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)
Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

1996-97

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

2.9 17.4 6.4 24.2 16.3 21.8 3.3 2.0 39.7 41.5 n.a. 7.2 13.1 n.a. 11.9 19.5 n.a. n.a. n.a. n.a. 8.0 13.5 36.7 9.6 45 35 16 0 57 n.a. 18 56 87 132 118 188 41 15 38.35 2.81
514 0.38 18.97

2.7 23.9 8.9 23.7 20.5 20.7 2.9 3.2 37.9 43.5 7.22 6.0 26.5 12.16 11.2 16.6 4.95 3.08 2.02 3.89 13.7 13.9 38.4 13.8 38 29 2 1 51 43 30 46 71 54 46 45 49 33 25.51 1.90
660 0.46 20.39

2.3 26.4 11.8 24.8 15.3 20.0 3.0 4.1 41.3 44.4 7.75 6.9 21.2 12.32 12.0 12.8 4.57 2.80 1.67 3.44 10.2 11.9 34.7 12.9 48 77 15 1 65 108 41 66 33 70 49 34 56 57 24.57 1.56
984 0.45 20.13

1.5 21.7 14.2 28.3 15.6 21.3 2.0 4.7 39.8 41.8 5.41 5.1 9.3 9.89 9.6 11.2 4.48 2.35 1.43 3.56 6.0 12.2 53.8 18.2 40 36 19 0 68 70 66 140 189 202 120 103 81 111 30.29 1.54
1,992 0.40 16.59

1.5 24.9 15.9 25.2 12.8 21.4 2.7 8.3 44.8 45.5 6.38 6.4 8.6 10.80 9.9 12.3 4.42 2.46 1.39 3.34 7.5 11.9 44.9 18.6 40 39 12 0 61 43 72 38 38 24 61 61 85 131 35.39 2.36
2,751 0.53 18.53

1.5 20.7 11.2 26.1 16.4 20.5 2.4 10.6 43.4 48.7 6.36 6.2 10.4 10.29 9.0 10.9 3.93 2.28 1.18 2.83 9.6 13.9 45.4 12.7 39 36 10 1 68 81 86 47 51 68 40 23 35 171 39.85 2.44
3742 0.54 18.64

1.4 17.7 12.5 25.7 18.8 23.9 2.6 13.2 46.0 51.3 5.22 5.3 6.6 8.89 8.8 8.4 3.67 2.34 1.22 2.54 10.2 11.1 46.4 14.3 53 105 9 1 60 29 87 73 27 12 39 44 18 231 50.89 2.56
4,791 0.52 16.32

1.4 20.6 14.7 25.2 15.9 26.7 2.7 17.9 44.5 45.5 3.93 3.9 7.9 8.16 8.1 7.5 4.24 2.35 1.23 3.12 12.0 11.7 49.4 18.5 58 75 8 1 63 73 89 51 36 44 34 36 27 312 56.87 2.60
5,673 0.53 14.84

continued...

228

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 84 3 11 23 13 0 65 0 8 39 53 62 15 22 50 1 0 42 0 6 0.0

1997-98 80 4 10 15 1 14 70 0 33 28 39 64 9 27 51 0 2 43 0 4 1.4

1998-99 1999-2000 85 3 9 14 2 8 76 0 21 36 43 54 9 38 46 0 8 45 0 2 1.3 84 3 10 17 0 5 77 0 17 44 39 88 6 6 56 0 4 32 0 7 0.8

2000-01 87 3 9 14 11 10 65 0 15 30 55 85 0 15 48 0 3 36 0 13 0.3

2001-02 84 2 8 11 13 3 73 0 19 26 55 91 1 8 44 0 1 36 0 19 0.5

2002-03 81 2 10 12 7 0 80 0 22 22 56 85 1 14 47 0 1 31 0 20 0.4

2003-04 84 2 11 14 2 0 84 0 18 21 61 86 1 13 60 0 1 21 0 19 0.2

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

229

IndusInd Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Unsecured non-convertible redeemable debentures Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchased and discounted Cash credit and overdraft Term loans Total 102 1,661 164 1,928 311 1,810 330 2,451 457 1,732 473 2,662 562 2,351 764 3,677 897 2,465 874 4,237 1360 3314 900 5574 994 3063 1291 5348 0 37 46 0 37 120 242 2 2 48 63 0 63 177 326 4 2 48 66 0 99 215 368 7 0 81 82 50 153 366 360 10 0 81 76 102 250 509 376 10 0 68 71 0 245 383 491 19 49 157 0 0 258 464 554 21 0 53 16 0 68 0 20 43 0 63 263 31 112 0 405 271 34 246 0 551 160 0 252 0 412 209 260 391 0 859 0 33 170 34 237 212 27 2,855 3,093 3,093 0 3,093 342 44 3,887 4,273 4,273 0 4,273 560 94 4,364 5,018 5,018 0 5,018 871 135 5,541 6,546 6,546 0 6,546 651 143 6,393 7,187 7,187 0 7,187 916 172 7312 8400 8400 0 8400 822 225 7551 8598 8598 0 8598 244 132 1,055 1,928 100 103 3,561 330 257 1,696 2,451 127 165 5,026 375 567 2,095 2,662 124 344 6,168 370 724 2,732 3,677 112 383 7,997 385 963 2,494 4,237 96 477 8,653 510 983 2485 5574 87 566 10205 575 576 2535 5348 110 757 9901 120 159 3,093 68 121 3,561 158 355 4,273 63 177 5,026 159 371 5,018 405 215 6,168 159 374 6,546 551 366 7,997 159 385 7,187 412 509 8,653 159 403 8400 859 383 10205 219 383 8598 237 464 9901 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 13
2003-04 290 510 11200 2310 775 15086 1335 918 3972 7812 298 751 15086 857 395 9949 11200 11200 0 11200 0 1458 692 160 2310 0 72 66 0 638 775 1311 24 622 3175 4015 7812

Continued...

230

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balances Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/ Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Miscellaneous income Total Total income

1996-97 1,682 25 221 1,928 488 20 25 1,395 1,928 0 1,928 0 725 17 272 0 41 1,055 1,055

1997-98 2,137 141 172 2,451 584 25 0 1,842 2,451 0 2,451 0 1,264 26 9 382 0 14 1,696 1,696

1998-99 1999-2000 2,251 219 192 2,662 654 27 68 1,914 2,662 0 2,662 0 1,497 26 17 533 0 21 2,095 2,095 3,196 180 302 3,677 742 164 167 2,605 3,677 0 3,677 0 2,088 26 22 569 0 26 2,732 2,732

2000-01 3,321 171 744 4,237 705 640 463 2,429 4,237 0 4,237 0 1,827 26 8 605 0 29 2,494 2,494

2001-02 4438 504 632 5574 948 930 463 3233 5574 0 5574 0 1954 26 3 482 0 19 2485 2485

2002-03 3711 1047 589 5348 1000 764 932 2652 5348 0 5348 0 2020 26 9 415 1 65 2535 2535

2003-04 6552 371 889 7812 2515 869 437 3991 7812 0 7812 0 3770 23 11 164 3 0 3972 3972

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

224 132 91 265 220

265 145 148 262 223

262 366 212 417 367

417 209 360 266 227

266 498 505 259 212

302 101 7 0 409 31 11 0 0 11 0 28 82 491

343 191 14 2 551 36 85 0 0 10 0 24 155 706

352 216 26 0 594 35 3 0 15 0 29 83 676

325 284 29 0 637 33 66 0 0 10 0 36 144 782

372 327 30 0 729 33 25 0 8 13 0 38 117 845

428 255 27 0 710 26 121 0 0 14 0 24 184 894

467 244 31 0 743 23 193 0 0 14 0 28 258 1001

697 260 28 0 986 21 227 -6 0 11 0 92 345 1331

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

231

...continued

(Rs crore) Interests expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Provisions and contingencies Provisions for non-performing assets Provision towards Income/Interest tax Net Provision for depreciation on investments Others Total Financial analysis Share of deposits (per cent) Demand Savings Term Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD

1996-97 230 11 69 310 4 39 13 56 52 418 73 125 7 30 14 0 52

1997-98 370 16 43 429 7 52 17 76 110 615 91 201 9 35 23 42 110

1998-99 1999-2000 430 15 34 479 11 55 21 87 74 640 37 110 25 10 -2 41 74 446 29 25 501 12 57 22 90 135 726 56 190 92 6 21 16 135

2000-01 508 26 36 569 13 62 28 103 132 805 41 173 111 15 -2 8 132

2001-02 470 29 48 547 20 54 21 95 202 844 51 252 162 27 8 4 202

2002-03 511 11 37 558 28 64 25 118 234 911 90 324 230 5 0 0 234

2003-04 500 93 76 669 50 130 37 217 183 1069 262 445 161 9 -3 16 183

7 1 92

8 1 91

11 2 87

13 2 85

9 2 89

11 2 87

10 3 88

8 4 89

2.7 28.7 11.7 7.5 16.7 11.4 1.8 6.1 31.0 33.0 n.a. 10.2 71.9 n.a. 14.3 19.8 n.a. n.a. n.a.

2.1 23.0 8.8 9.9 21.9 10.7 1.8 5.8 27.4 39.5 11.3 10.1 89.3 13.7 13.9 15.7 2.4 1.9 1.4

0.7 7.1 10.6 12.9 12.2 12.9 1.7 2.3 44.1 44.8 9.7 9.2 21.0 11.4 11.4 13.8 1.7 1.7 1.3

0.8 10.5 14.0 13.3 18.5 11.5 1.4 3.5 32.1 42.0 7.9 7.7 11.4 9.7 11.8 10.2 1.8 1.4 0.9

0.5 7.5 14.9 13.0 13.8 12.2 1.4 2.5 37.4 41.0 7.7 7.4 12.8 9.4 12.5 9.4 1.7 1.3 0.8

0.5 9.2 17.2 21.4 20.6 10.6 1.1 3.2 27.3 41.8 6.4 6.0 12.2 8.1 10.2 8.7 1.6 1.1 0.6

0.9 15.5 15.4 24.0 25.8 11.8 1.4 4.1 26.7 47.3 6.1 6.0 8.7 8.0 9.7 8.6 1.9 1.3 0.6

2.1 37.4 17.8 23.2 25.9 16.3 1.9 9.0 32.8 49.9 5.9 5.1 13.3 8.6 8.0 10.6 2.7 1.9 0.7

Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth

n.a. 45.2 12.9 41.3 18.5

2.0 68.3 17.9 54.7 21.5

1.3 12.4 15.2 66.7 13.9

1.4 11.9 13.2 70.8 25.3

1.3 17.4 15.0 76.5 24.3

1.2 9.8 12.51 79.9 35.9

1.2 36.3 12.13 72.2

1.4 4.8 12.75 41.1

38.9 22.8 continued...

232

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Liquidity (per cent) Credit-deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Securities transaction Commission and brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Outside India Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 62 2 0.07 34 57 n.a. n.a. n.a. n.a. n.a. 18 107.09 3.12 251 1.96 116.11 83 2 2 6 25 1 1 72 0 5 86 9 69 2 0 26 0 4 0 2.1

1997-98 57 1 0.09 40 69 27 38 61 13 35 21 116.70 3.61 351 2.01 94.48 78 1 12 5 24 1 0 75 0 13 74 13 75 2 1 23 0 1 0 4.0

1998-99 1999-2000 53 8 0.15 42 70 9 17 24 -1 8 26 102.39 3.35 508 1.33 60.02 88 2 0 5 25 1 3 72 0 17 65 18 71 1 1 25 0 1 0 7.2 56 8 0.15 42 70 38 30 30 -7 7 27 136.19 3.34 513 1.52 65.31 82 1 8 4 20 4 5 71 0 15 64 21 76 1 1 21 0 1 0 6.0

2000-01 59 6 0.14 35 71 15 10 -9 1 14 32 132.40 3.22 581 1.45 63.12 86 2 3 4 17 15 11 57 0 21 58 21 73 1 0 24 0 1 0 5.3

2001-02 66 10 0.23 30 72 32 17 0 -20 -3 40 139.36 2.37 738 1.21 44.08 79 2 14 3 17 17 8 58 0 24 59 16 79 1 0 19 0 1 0 6.6

2002-03 62 3 0.24 29 64 -4 2 2 -11 5 53 100.90 2.22 941 1.06 35.40 74 1 19 2 19 14 17 50 0 19 57 24 80 1 0 16 0 3 0 4.3

2003-04 70 21 0.21 35 64 46 30 57 -10 33 61 128.07 3.56 n.a. n.a. 26.43 74 1 17 2 32 11 6 51 0 8 41 51 95 1 0 4 0 0 0 2.7

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

233

Global Trust Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total Secured Government guarantee Unsecured Total 464 819 180 1,462 1,200 184 78 1,462 420 911 424 1,756 1,459 226 71 1,756 510 1,051 557 2,118 1,881 167 71 2,118 595 1,817 799 3,211 3,090 105 17 3,211 636 2,151 1,313 4,100 3,454 19 627 4,100 480 1381 1171 3033 2629 8 396 3,033 428 1,094 1,754 3,276 2,742 94 440 3,276 0 19 39 40 98 249 4 0 40 49 129 218 301 5 0 55 41 234 330 466 7 0 93 44 269 406 505 9 0 123 68 358 550 644 22 0 60 39 307 406 436 48 0 67 33 351 451 638 89 50 0 37 4 91 0 0 15 21 36 100 185 173 25 483 60 75 174 89 399 0 192 349 59 600 0 0 28 36 64 0 0 14 12 26 174 23 2,082 2,279 214 47 3,024 3,285 380 124 3,594 4,097 845 294 5,059 6,199 624 407 6,703 7,734 653 480 5310 6,443 753 549 5,619 6,921 253 26 662 1,462 124 124 2,652 306 87 1,215 1,756 276 141 3,781 474 107 1,962 2,118 327 213 5,200 514 224 2,926 3,211 338 318 7,531 666 69 3,865 4,100 379 393 9,472 484 128 2,900 3,033 320 443 7,308 727 78 2,499 3,276 301 786 7,666 104 80 2,279 91 98 2,652 104 138 3,285 36 218 3,781 104 186 4,097 483 330 5,200 121 407 6,199 399 406 7,531 121 467 7,734 600 550 9,472 121 273 6,443 64 406 7,308 121 146 6,921 26 451 7,666 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 14
2003-04 121 146 6,399 9 528 7,203 644 433 2,118 2,246 271 1,491 7,203 969 717 4,713 6,399 0 0 4 5 9 0 96 39 393 528 559 85 290 705 1,250 2,246 2,023 18 205 2,246

Continued...

234

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...continued

(Rs crore) Priority sector Public sector Banks Others Total Advances outside India Investments outside India Investments in India Government securities Other approved securities Shares and debentures Units of UTI (MF) Subsidiaries/JV Others Total Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/ bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed asets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1996-97 453 18 0 991 1,462 0 0 622 6 31 2 0 0 662

1997-98 555 29 0 1,172 1,756 0 0 804 6 388 17 0 0 1,215

1998-99 1999-2000 513 0 4 1,601 2,118 0 0 1,074 6 870 0 0 12 1,962 703 10 0 2,498 3,211 0 0 1,742 6 1,155 0 0 34 2,937

2000-01 795 36 49 3,220 4,100 0 0 2,293 6 1,544 0 0 59 3,902

2001-02 664 7 0 2361 3033 0 0 1896 6 996 0 0 2 2,900

2002-03 865 15 0 2,397 3,276 0 0 1,886 6 607 0 0 0 2,499

2003-04 626 0 6 1,614 2,246 0 0 1,544 5 569 0 0 0 2,118

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. 28

49 208 19 238 154

238 536 344 430 280

430 762 277 916 n.a.

916 620 219 1,317 n.a.

285 68 2 1 357 45 9 0 0 0 17 0 0 18 90 447

269 117 7 1 394 40 40 0 0 0 23 2 0 22 127 521

292 182 14 3 491 31 36 0 0 0 18 10 0 52 146 638

380 247 13 6 646 36 60 0 0 0 21 0 49 67 233 879

490 377 21 9 897 42 27 0 0 0 24 0 0 71 164 1,062

396 310 14 0 721 45 109 0 20 0 13 0 0 42 229 950

321 0 207 11 1 540 43 103 0 0 -1 15 0 0 31 191 731

243 0 94 11 6 354 43 57 0 13 1 18 0 0 29 161 515

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

235

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Financial parameters (per cent) Profitability (per cent) Return of assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest)

1996-97 251 36 3 290 6 28 20 53 46 390 57 104 n.a. n.a. n.a. n.a. n.a.

1997-98 303 14 6 323 9 35 27 71 47 441 80 127 20 6 22 0 47

1998-99 1999-2000 409 15 15 438 13 44 38 95 34 567 71 105 8 5 15 5 34 444 26 38 507 18 64 42 124 139 770 109 248 93 0 40 6 139

2000-01 634 17 46 697 30 88 46 164 120 982 80 200 81 27 11 2 120

2001-02 579 15 42 636 36 83 51 170 108 913 36 144 159 25 -75 -1 108

2002-03 480 1 36 517 42 90 45 177 309 1,004 -273 36 118 81 0 111 309

2003-04 382 1 53 435 37 87 35 159 734 1,328 -812 -79 440 164 25 104 734

72 17 95 79 8 1 91

44 23 108 45 7 1 92

25 78 161 19 9 3 88

51 123 138 41 14 5 82

25 -26 38 32 8 5 87

-17 5 18 -21 10 7 82

7 15 14 6 11 8 81

-8 29 31 -16 15 11 74

2.4 35.3 13.4 18.5 20.2 7.6 1.5 5.5 33.9 36.1

2.5 37.7 14.6 20.1 24.4 8.5 1.3 7.7 35.9 45.1

1.6 26.6 16.9 23.1 22.9 8.9 1.4 6.8 47.5 57.8

1.7 26.5 13.3 22.1 26.5 9.3 1.3 9.0 33.3 39.7

0.9 14.3 15.1 25.8 15.5 11.1 1.5 6.6 45.0 48.6

0.4 7.4 17.5 30.1 24.1 12.5 1.8 3.0 54.1 82.9

-3.6 -82.4 27.7 31.7 26.2 18.1 1.9 -22.5 82.9 160.8

-10.9 -303.8 25.9 30.1 31.3 24.0 1.9 -66.9 198.4 686.1

continued...

236

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others

1996-97

1997-98 11.2

1998-99 1999-2000 11.0 11.1 11.3 12.3 11.5 15.1 1.3 2.4 1.9 0.8 14.2 12.0 32.2 11.6 52 45 12 0.18 48 92 64 21 25 61 -21 25 63 33.63 1.50 748 0.85 48.45 77 3 5 24 0 0 76 9.0 8.6 14.4 11.3 10.1 14.3 2.3 2.1 2.4 2.6 11.7 13.7 56.2 26.4 52 52 6 0.15 47 46 77 52 51 49 16 32 74 43.39 1.67 939 0.94 48.51 74 2 4 22 0 0 78

2000-01 9.2 9.1 12.7 11.6 11.1 13.4 2.4 2.1 1.3 1.6 14.0 12.7 60.1 20.5 53 58 8 0.28 50 61 79 28 25 32 16 39 79 51.89 2.08 1,173 0.90 34.87 85 2 4 19 1 1 79

2001-02 8.5 8.2 17.2 9.5 9.2 11.1 1.0 2.2 1.0 -0.2 21.4 11.21 74.8 27.3 47 83 1 0.75 45 75 69 -26 -17 -25 8 -20 84 36.10 2.02 1,147 0.83 26.64 76 1 5 22 0 0 78

2002-03 7.6 7.2 82.0 8.2 7.7 10.2 0.6 2.7 1.1 -1.0 147.4 0 848.4 115.6 47 51 0 1.28 36 -84 55 8 7 -14 -6 -25 87 37.66 2.04 1,314 0.56 17.39 74 2 6 26 0 0 73

2003-04 6.4 5.7 303.4 5.9 4.1 8.8 -0.5 2.6 1.3 -1.9 376.8 0 -931.0 274.5 35 197 0 1.34 33 73 55 -31 -8 -15 0 -34

13.9 10.1 13.5 20.1

10.9 31.5 13.7 12.4 16.7 2.4 2.5 2.6 2.5

4.7 10.2 44.7 25.3 64 9 4 0.19 29 33 43 6 72 90 12 109 22 66.48 2.43 429 1.04 71.40 80 4 10 31 1 0 68

43.8 10.3 36.9 19.4 53 29 1 0.16 37 55 57 20 44 84 -12 10 40 43.90 1.78 532 0.98 58.68 76 4 8 32 2 0 67

#DIV/0! #DIV/0! #DIV/0! 13.84 69 4 8 28 0 0 72

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

237

...continued

(Rs crore) Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares and debentures Subsidiary Others Gross NPAs (per cent) Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 32 56 12 82 13 5 94 1 5 0 3.7 2.4

1997-98 24 52 24 83 13 4 66 0 32 0 2.1 1.4

1998-99 1999-2000 24 50 26 89 8 3 55 0 44 1 n.a 2.2 19 57 25 96 3 1 59 0 39 1 n.a 0.9

2000-01 16 52 32 84 0 15 59 0 40 2 n.a 3.8

2001-02 16 46 39 87 0 13 65 0 34 0 n.a 9.2

2002-03 13 33 54 84 3 13 75 0 24 0 n.a 19.8

2003-04 13 31 56 90 1 9 73 0 27 0 n.a 28.0

238

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

The Federal Bank Ltd
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1996-97 22 309 4603 287 241 5,462 345 285 1456 2999 134 241 5,462 265 584 3754 4,603 4603 0 4,603 67 75 145 0 287 0 114 27 101 241 294 52 954 1,456 590 2,999 1997-98 22 352 6,424 232 281 7,311 423 228 2,366 3,921 156 216 7,311 328 663 5,434 6,424 6,424 0 6,424 8 55 168 0 232 0 112 45 123 281 365 59 1,404 1,741 776 3,921 1998-99 1999-2000 21 301 6,782 488 481 8,074 446 274 2,602 4,228 155 370 8,074 432 847 5,503 6,782 6,782 0 6,782 33 161 294 0 488 0 150 34 297 481 389 57 1,297 1,932 999 4,228 22 340 6,463 380 398 7,603 390 119 2,666 4,036 145 247 7,603 437 1,000 5,026 6,463 6,463 0 6,463 111 0 269 0 380 84 41 22 251 398 330 61 673 2,144 1,218 4,036 2000-01 22 394 7,665 344 396 8,820 262 215 3,035 4,854 133 320 8,820 654 1,146 5,866 7,665 7,665 0 7,665 81 0 263 0 344 53 47 19 276 396 198 65 857 2,462 1,535 4,854 2001-02 22 427 8,865 374 456 10,145 460 219 3,756 5,189 133 388 10,145 674 1,342 6,850 8,865 8,865 0 8,865 38 120 209 7 374 80 66 17 293 456 384 76 860 2,624 1,705 5,189 2002-03 22 508 10947 85 640 12,202 609 299 4552 6218 162 362 12,202 588 1727 8632 10,947 10,947 0 10,947 0 0 85 0 85 121 37 19 463 640 522 87 963 2,842 2,412 6,218

Table 15
2003-04 22 627 13477 127 862 15,114 726 566 5507 7701 176 439 15,114 700 2412 10365 13,477 13,477 0 13,477 0 0 18 109 127 83 147 24 608 862 604 121 1133 3521 3047 7,701

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

239

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1996-97 2,317 295 387 2,999 697 57 287 1,959 2,999 0 2,999 0 986 75 362 15 18 1,456 1,456

1997-98 2,474 1,114 333 3,921 943 95 100 2,783 3,921 0 3,921 0 1,535 78 125 602 15 12 2,366 2,366

1998-99 1999-2000 2,857 915 456 4,228 1,228 175 0 2,825 4,228 0 4,228 0 1,732 75 140 626 15 15 2,602 2,602 3,286 622 128 4,036 1430 160 0 2,446 4,036 0 4,036 0 1,776 66 126 662 15 21 2,666 2,666

2000-01 3,791 694 369 4,854 1,565 146 1 3,142 4,854 0 4,854 0 1,883 61 112 977 1 2 3,035 3,035

2001-02 4,168 709 312 5,189 1,657 303 5 3,224 5,189 0 5,189 0 2,625 55 82 991 1 2 3,756 3,756

2002-03 4,988 732 498 6,218 1,952 226 0 4,040 6,218 0 6,218 0 3,456 51 83 926 1 35 4,552 4,552

2003-04 6007 837 857 7,701 2412 220 0 5068 7,701 0 7,701 0 4455 31 88 851 1 82 5,507 5,507

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

479 153 142 490 345

490 314 163 642 489

642 191 195 638 446

638 117 227 528 308

528 218 145 601 223

385 151 46 7 588
22 6 0 0 0 13 3 0 28 72 659

428 239 31 4 702
27 33 0 -1 0 11 5 0 17 93 794

505 324 27 3 859
38 28 0 0 0 15 10 0 22 113 972

529 318 21 13 882
48 34 0 0 0 15 7 0 28 132 1,014

561 336 13 9 919
45 20 0 0 2 13 16 0 29 125 1,044

636 385 20 1 1,042
45 131 0 0 -4 13 7 0 29 220 1,263

660 423 28 1 1,111
50 144 0 0 -8 17 6 0 26 234 1,346

714 437 30 11 1,192
59 174 0 0 -1 19 4 0 42 298 1,490

continued...

240

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Liability on account of outstanding derivative Acceptances and endorsements Currency Swaps Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1996-97 456 4 13 472 67 26 19 113 28 613 46 74 7 0 1494 152 8 0 128 19 1,808 16 2 2 9 28

1997-98 536 11 17 564 79 40 19 138 42 744 50 93 12 0 2553 154 5 0 133 27 2,883 38 2 3 0 42

1998-99 1999-2000 742 6 24 772 93 39 20 151 47 970 3 49 66 0 890 184 0 0 189 34 1,364 39 -23 0 31 47 629 14 59 701 118 42 18 177 89 968 46 136 53 0 1,056 226 0 0 211 41 1,588 72 0 8 9 89

2000-01 613 20 48 682 111 46 18 175 126 983 61 187 105 0 2,871 270 5 0 229 33 3,512 102 0 23 1 126

2001-02 705 11 51 766 121 52 18 191 223 1,181 82 305 67 0 2650 286 0 0 304 24 3,332 154 20 44 5 223

2002-03 729 4 39 772 139 63 19 222 246 1,241 105 351 132 0 3,906 377 0 0 349 17 4,782 160 9 71 6 246

2003-04 723 2 46 770 178 81 24 283 300 1,354 136 437 77 0 4199 0 400 0 0 534 9 5,220 208 5 75 13 300

25 -8 13 30 6 13 82

40 23 14 45 5 10 85

6 32 28 1 6 12 81

-5 1 18 -9 7 15 78

19 50 15 17 9 15 77

16 3 17 17 8 15 77

23 -13 29 26 5 16 79

23 19 40 20 5 18 77

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

241

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos)

1996-97

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

0.94 16.79 15.52 59.8 10.86 17.1 2.5 21.46 60.3 62.5 n.a. 10.98 5.88 n.a. 11.57 14.71 n.a. n.a. n.a. n.a. 14.97 9.23 37.49 8.41 65 85 6 1 32 34 93 35 25 27 17 39 377 7.96 0.30 6,094

0.79 14.3 18.5 57.3 11.7 17.3 2.1 1.4 59.7 69.8 9.58 8.3 8.0 12.22 1.6 12.4 2.65 2.29 0.77 1.13 21.3 9.4 45.8 11.3 61 51 4 1 37 50 94 31 40 62 17 25 19 395 9.93 0.35 6,138

0.03 0.7 24.1 61.2 11.6 15.6 2.2 0.1 75.4 87.4 10.88 8.1 9.6 12.13 1.1 12.4 1.26 2.09 0.89 0.05 18.3 10.3 94.8 14.6 62 86 7 1 38 66 93 8 6 10 17 40 23 401 10.54 0.38 6,443

0.59 13.6 20.0 66.7 13.0 17.5 2.7 1.4 56.7 63.6 9.81 9.5 16.8 12.22 0.8 12.8 2.42 2.40 1.05 1.07 15.3 11.3 65.8 24.6 62 60 6 1 41 -20 94 -5 -5 2 27 28 3 404 9.99 0.44 6,421

0.74 15.7 20.2 63.4 12.0 16.8 2.3 1.6 48.3 51.1 9.13 8.7 19.0 12.01 11.8 12.6 2.88 2.25 0.94 1.57 19.5 10.3 67.4 30.3 63 68 4 1 40 31 95 20 19 14 -6 -6 4 411 11.81 0.43 6,313

0.86 19.0 21.6 63.2 17.5 15.1 2.2 1.9 38.5 52.2 8.83 8.5 17.0 11.72 11.4 12.7 2.89 2.13 0.81 1.57 23.0 10.6 73.1 49.8 59 28 4 1 42 60 95 7 16 24 9 -1 13 412 12.59 0.46 6,240

0.94 21.5 22.0 62.8 17.4 16.5 2.0 2.1 38.7 51.7 7.58 7.4 18.8 10.54 10.2 11.6 2.96 2.09 0.75 1.62 43.2 11.2 70.1 46.6 57 49 1 1 42 38 96 20 23 21 15 10 7 420 14.80 0.53 6,217

1.00 23.1 22.3 63.0 20.0 19.0 2.1 2.2 39.3 51.9 6.21 5.9 44.7 9.21 8.7 10.3 3.00 2.16 0.76 1.60 115.5 11.5 68.8 46.3 57 59 1 1 41 38 97 24 23 21 28 20 7 432 17.83 0.65 6363

Income per employee (Rs crore) Income/employee expenses (times)

0.11 9.78

0.13 10.06

0.15 10.50

0.16 8.59

0.17 9.42

0.20 10.44

0.22 9.65

0.23 8.36

continued...

242

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...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 89 2 3 23 2 10 65 0 32 49 20 77 10 13 68 5 0 25 1 1 4.9

1997-98 88 1 3 24 2 3 71 0 36 44 20 63 28 8 65 3 5 25 1 0 5.3

1998-99 1999-2000 88 2 4 29 4 0 67 0 31 46 24 68 22 11 67 3 5 24 1 1 7.5 87 2 5 35 4 0 61 0 17 53 30 81 15 3 67 2 5 25 1 1 8.6

2000-01 88 1 4 32 3 0 65 0 18 51 32 78 14 8 62 2 4 32 0 0 10.1

2001-02 83 1 4 32 6 0 62 0 17 51 33 80 14 6 70 1 2 26 0 0 8.6

2002-03 83 1 4 31 4 0 65 0 15 46 39 80 12 8 76 1 2 20 0 1 5.0

2003-04 80 1 4 31 3 0 66 0 15 46 40 78 11 11 81 1 2 15 0 1 2.9

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

243

Bank of Rajasthan
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total Secured Government guarantee Unsecured Total 164 856 478 1,498 1,160 185 154 1,498 158 884 438 1,480 1,177 176 127 1,480 178 801 509 1,487 1,193 182 113 1,487 190 994 544 1,728 1,377 229 122 1,728 226 1,059 582 1,867 1,407 358 101 1,867 180 1076 700 1956 1508 281 167 1956 222 1048 951 2221 1665 300 256 2,221 21 47 123 57 248 345 48 19 46 219 69 354 267 35 32 55 280 105 471 304 39 38 54 395 117 605 305 52 25 66 410 114 615 373 50 34 50 334 162 580 309 44 19 61 243 205 528 315 63 0 1 25 6 31 0 0 38 2 40 0 0 25 3 28 0 0 20 5 26 0 0 17 1 18 0 0 29 1 30 0 0 17 0 17 522 442 1,975 2,939 480 516 1,831 2,827 534 622 1,829 2,985 616 698 1,928 3,242 680 794 2,059 3,533 755 944 2261 3960 832 1079 3388 5299 393 201 1,110 1,498 93 111 3,406 302 251 1,089 1,480 84 204 3,411 343 268 1,090 1,487 80 403 3,671 357 290 1,245 1,728 72 437 4,129 423 282 1,569 1,867 75 128 4,344 353 366 1884 1956 62 183 4803 379 628 2643 2221 80 179 6,130 18 169 2,939 31 248 3,406 18 173 2,827 40 353 3,411 18 169 2,985 28 471 3,671 63 194 3,242 26 605 4,129 100 78 3,533 18 615 4,344 100 133 3960 30 580 4803 106 179 5299 17 528 6,130 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 16
2003-04 108 222 7406 176 544 8,455 326 1050 4353 2432 101 194 8,455 931 1273 5201 7406 2879 104 0 44 3,027 20 56 233 234 544 236 90 164 1132 1136 2432 1939 326 166 2,432

Continued...

244

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...continued

(Rs crore) Priority sector Public sector Banks Others Total Investments in India Government securities Other approved securities Shares Debentures Subsidiaries/JV Others Total Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Miscellaneous income Total Total income Interests expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation

1996-97 551 139 3 805 1,498 606 240 166 8 91 1,110

1997-98 490 182 1 808 1,480 629 237 8 112 3 100 1,089

1998-99 1999-2000 532 192 2 762 1,487 708 230 4 122 4 21 1,090 506 203 19 1,000 1,728 806 223 5 163 4 44 1,245

2000-01 517 276 0 1,073 1,867 846 216 10 282 4 210 1,569

2001-02 560 293 0 1102 1956 1177 210 10 336 4 146 1,884

2002-03 496 252 0 1474 2,221 1885 203 13 370 0 172 2,643

2003-04 782 209 1 1440 2,432 3614 166 33 327 0 213 4,353

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

360 55 52 363 170

363 50 56 357 n.a.

357 85 108 333 173

333 40 107 266 151

266 70 99 237 73

217 125 19 4 365 20 0 -1 0 0 5 0 18 43 408 262 2 2 266 53 23 13

198 136 16 0 350 23 1 0 0 0 5 0 16 45 396 265 4 0 269 62 24 12

182 131 25 12 350 20 3 0 1 0 5 0 16 44 394 282 4 0 286 82 26 12

204 150 26 19 400 23 9 0 0 0 3 0 17 53 453 303 3 0 306 90 26 12

220 178 33 12 442 24 10 0 0 0 3 0 19 56 499 307 0 2 309 87 33 12

220 190 39 4 453 20 57 0 0 0 4 0 17 97 550 320 0 3 323 94 40 11

212 232 22 7 473 23 84 0 0 0 5 0 15 126 599 287 2 3 292 104 46 9

197 281 24 0 503 22 128 0 0 0 5 0 22 177 680 309 1 3 313 116 53 12

Total Provisions and contingencies Total expenses including provisions

89 45 400

98 117 484

119 56 461

129 6 441

132 25 467

145 41 510

159 80 531

182 116 611

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

245

...continued

(Rs crore) Profit for the year Profits inclusive of provisions Contingent Liabilities Claims against the banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provision for Non-performing assets Depreciation in value of investments Income-tax Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Financial parameters (per cent) Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest)

1996-97 8 53 6 10 165 116 0 153 56 505 33 2 9 0 45

1997-98 -88 29 5 0 250 171 0 127 73 626 94 14 7 1 117

1998-99 1999-2000 -67 -11 12 0 192 135 0 123 102 563 55 0 0 2 56 12 18 62 0 189 169 0 103 55 579 8 0 -1 -1 6

2000-01 32 58 78 0 92 92 0 82 31 376 22 -1 1 3 25

2001-02 40 81 0 0 266 101 0 122 98 586 22 3 14 3 41

2002-03 68 149 0 0 141 170 0 138 94 544 31 0 42 7 80

2003-04 69 185 0 0 316 181 0 98 96 690 22 0 28 66 116

17 -10 12 29 18 15 67

-4 -8 17 -7 17 18 65

6 11 21 0 18 21 61

9 15 12 5 19 22 59

9 10 14 7 19 22 58

12 11 19 10 19 24 57

34 10 14 50 16 20 64

40 12 18 54 13 17 70

0.2 4.3 17.2 59.8 10.5 21.8 3.0 4.4 62.9 62.9

-2.6 -46.5 16.9 63.0 11.5 24.7 3.5 -49.0 77.2 77.7

-1.9 -35.5 18.6 68.5 11.2 30.2 4.0 -37.4 110.2 112.9

0.3 5.4 15.1 70.3 11.8 28.4 4.0 1.9 87.5 93.5

0.8 14.8 23.3 65.7 11.3 26.4 3.7 3.2 69.6 73.6

0.9 19.6 19.6 64.8 17.7 26.4 3.7 4.0 64.1 85.4

1.3 26.4 20.5 65.4 21.1 26.5 3.0 6.5 51.6 71.0

0.9 22.5 24.7 64.0 26.0 26.7 2.5 6.4 49.5 76.0

continued...

246

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...continued

(Rs crore) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incremental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter-bank Others

1996-97 n.a. 9.6 4.2 n.a. 12.5 15.2 n.a. n.a. n.a. n.a. 29.0 10.1 84.9 23.9 51 32 1 2 38 51 90 10 17 25 -6 25 298 5.03 0.30 4,472 0.09 7.67 90 1 5 37 9 0 54

1997-98 9.08 9.2 10.8 11.46 12.4 13.3 2.38 3.09 1.14 0.43 80.4 5.5 404.8 61.3 52 16 1 1 39 19 91 -1 -4 -2 14 -4 302 4.90 0.32 4,388 0.09 6.43 89 1 6 33 12 0 55

1998-99 1999-2000 9.57 9.7 12.2 11.35 12.0 12.3 1.79 3.78 1.04 -0.96 84.7 0.8 -507.7 30.0 50 5 1 1 37 0 90 0 6 0 -14 0 306 4.86 0.39 4,378 0.09 4.83 89 1 5 36 13 0 51 9.58 9.7 10.3 11.89 12.8 12.7 2.31 3.78 1.03 -0.45 115.6 5.7 34.3 2.5 53 94 1 2 38 60 76 16 9 14 16 14 310 5.58 0.41 4,344 0.10 5.01 88 1 5 29 12 1 58

2000-01 8.91 9.1 10.8 11.83 12.6 12.2 2.91 3.40 0.95 0.46 155.8 10.6 44.2 14.3 53 48 1 1 44 111 44 8 9 26 4 11 309 6.04 0.43 4,288 0.12 5.76 89 1 5 28 15 0 57

2001-02 8.45 8.5 14.6 10.89 12.7 11.5 2.44 3.34 0.75 -0.15 156.6 12.07 50.5 17.6 49 21 1 1 48 74 57 5 12 20 -17 2 314 6.23 0.46 4282 0.13 5.85 82 1 4 29 15 0 56

2002-03 6.20 6.2 19.2 9.37 10.2 10.1 3.18 3.04 0.67 0.81 196.3 11.29 53.9 28.1 42 20 0 1 50 57 63 14 34 40 13 4 336 6.61 0.47 4207 0.14 5.77 79 3 4 22 11 0 66

2003-04 3.95 4.9 4.5 7.39 8.0 8.5 3.45 2.59 0.54 1.40 65.6 11.18 62.7 35.3 33 10 2 1 59 81 67 9 40 65 -2 6 354 6.87 0.51 n.a. n.a. 5.85 74 3 3 32 9 0 59

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

247

...continued

(Rs crore) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Others Subsidiaries/JV Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 11 57 32 77 12 10 55 22 0 15 8 1 8.5

1997-98 11 60 30 80 12 9 58 22 1 10 9 0 9.1

1998-99 1999-2000 12 54 34 80 12 8 65 21 0 11 2 0 9.5 11 57 31 80 13 7 65 18 0 13 4 0 9.7

2000-01 12 57 31 75 19 5 54 14 1 18 13 0 12.0

2001-02 9 55 36 77 14 9 63 11 1 18 8 0 8.9

2002-03 10 47 43 75 14 12 71 8 0 14 7 0 6.8

2003-04 7 47 47 80 13 7 83 4 1 8 5 0 3.0

248

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Citibank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with banks and call money Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1996-97 204 868 7,204 622 959 9,652 485 1,902 2,329 3,984 211 741 9,652 1,462 236 5,505 7,203 7,203 0 7,203 177 255 162 27 621 271 275 88 324 958 469 15 196 581 3,208 3,985 1997-98 228 984 7,551 1,265 998 10,798 475 1,972 2,557 4,767 237 791 10,798 1,262 231 6,058 7,551 7,551 0 7,551 141 845 266 13 1,265 312 265 119 302 998 454 21 200 712 3,855 4,767 1998-99 1999-2000 252 879 9,437 1,412 1,160 12,888 663 2,215 3,774 5,000 443 793 12,888 1,890 342 7,204 9,437 9,437 0 9,437 644 559 198 12 1,412 40 435 106 578 1,160 634 29 264 1,543 3,192 5,000 293 991 10,203 1,623 1,354 14,172 747 1,152 4,230 6,620 425 998 14,172 2,343 590 7,270 10,203 10,203 0 10,203 521 609 490 2 1,623 34 349 91 880 1,354 716 32 645 1,673 4,302 6,620 2000-01 365 1,244 14,052 2,668 1,432 19,466 921 2,298 5,603 9,273 503 867 19,466 2,858 846 10,347 14,052 14,052 0 14,052 812 1,343 510 3 2,668 0 350 182 580 1,112 866 54 1,032 2,086 6,155 9,273 2001-02 167 1567 15242 3022 1497 21,497 1162 1517 6007 11385 502 923 21,497 3048 1605 10589 15242 15242 0 15242 274 1853 889 6 3022 29 488 166 814 1497 1099 63 1128 2603 7654 11,385 2002-03 167 1960 17743 3388 1982 25,240 1233 2590 7036 12629 526 1227 25,240 3626 2295 11821 17743 17743 0 17743 0 1310 331 1748 3388 2 731 143 1106 1982 1179 54 1110 2860 8659 12,629

Table 17
2003-04 167 2528 20465 3503 2933 29,597 3497 1711 6690 15259 514 1927 29,597 5968 3478 11020 20465 20465 0 20465 0 433 523 2548 3503 1 808 158 1966 2933 3433 64 1203 3631 10425 15,259

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

249

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1996-97 2,180 15 1,789 3,984 529 27 0 3,428 3,984 0 3,984 0 1,809 36 0 345 0 138 2,328 2,328

1997-98 2,778 0 1,989 4,767 544 8 0 4,215 4,767 0 4,767 0 2,107 36 0 320 0 94 2,557 2,557

1998-99 1999-2000 2,472 330 2,197 5,000 760 8 0 4,232 5,000 0 5,000 0 2,787 48 0 860 0 79 3,774 3,774 3,021 0 3,599 6,620 1,240 44 0 5,336 6,620 0 6,620 0 3,271 34 3 849 0 74 4,230 4,230

2000-01 4,395 0 4,878 9,273 1,926 146 91 7,110 9,273 0 9,273 0 4,585 19 3 950 0 46 5,603 5,603

2001-02 5166 2213 4006 11385 2497 418 0 8471 11,385 0 11,385 0 4814 17 4 1172 0 0 6,007 6,007

2002-03 6045 2130 4454 12629 2684 94 47 9804 12,629 0 12,629 0 5663 17 4 1281 0 72 7,036 7,036

2003-04 8611 14 6634 15259 3435 102 121 11601 15,259 0 15,259 0 5288 15 4 1363 0 19 6,690 6,690

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

152 8 39 120 70

121 24 18 127 65

127 48 68 107 65

107 187 46 248 147

248 205 60 393 214

729 281 97 13 1,120 276 30 0 0 44 0 0 3 353
1,473

786 299 100 2 1,187 299 68 0 0 48 0 0 6 420
1,607

823 408 104 10 1,345 323 97 0 -1 0 107 0 0 0 526
1,871

911 494 72 12 1,489 302 14 0 -1 0 68 0 0 6 388
1,877

1,124 501 123 3 1,750 343 96 0 -3 0 80 0 0 6 522
2,272

1313 511 87 0 1910 338 303 0 2 0 129 0 0 30 803
2713

1361 503 106 10 1979 401 143 0 -2 0 199 0 0 14 756
2735

1385 749 143 3 2280 462 93 0 0 0 304 0 0 28 887
3167

continued...

250

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provisions for non-performing assets Provision towards Income/Interest tax Net Provision for depreciation on investments Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Operating expenses to total income
Operating expenses to deposits Operating expenses to deposits Cost to income ratio Cost to income ratio (w/o profit on invest)

1996-97 534 37 90 661 73 275 21 369 388 1,418 55 443 112 0 11,001 471 178 938 6 12,706 47 329 12 0 388

1997-98 552 89 72 713 78 303 32 414 361 1,488 119 481 2 0 27,887 476 223 1,168 139 29,894 84 248 30 0 361

1998-99 1999-2000 808 81 17 907 101 305 45 452 396 1,754 117 513 2 0 27,031 536 113 1,344 168 29,194 117 294 -16 0 395 704 93 49 846 106 339 55 500 280 1,626 251 531 2 0 30,903 573 44 1,063 575 33,159 87 231 -38 0 280

2000-01 770 132 76 979 139 395 67 601 408 1,987 285 693 15 0 43,566 884 783 1,357 440 47,045 77 345 -14 0 408

2001-02 921 140 41 1103 163 533 62 757 527 2,388 325 853 0 0 60858 0 1558 351 996 9957 73,720 79 448 0 0 527

2002-03 886 102 42 1030 189 581 67 837 477 2,344 392 868 0 0 69753 0 1753 130 1284 15268 88,188 137 350 0 -10 477

2003-04 794 87 42 924 252 684 74 1010 662 2,595 572 1,233 0 0 130413 2372 82 1251 1249 135,369 165 399 1029 -9 662

6 70 10 -3 20 3 76

5 -14 -2 10 17 3 80

25 50 48 19 20 4 76

8 24 72 1 23 6 71

38 22 43 42 20 6 74

8 7 90 2 20 11 69

16 19 43 12 20 13 67

15 65 52 -7 29 17 54

0.6 5.3 8.2 19.8 24.0
25.1 5.1 45.47 47.21

1.2 10.4 8.1 18.9 26.1
25.7 5.5 46.26 50.04

1.0 9.9 10.6 22.4 28.1
24.1 4.8 46.84 52.10

1.9 20.8 10.3 21.2 20.7
26.6 4.9 48.51 49.18

1.7 19.7 11.3 23.2 23.0
26.5 4.3 46.45 50.19

1.6 19.5 11.4 21.5 29.6
27.9 5.0 47.04 57.96

1.7 20.3 10.9 22.5 27.6
30.6 4.7 49.10 53.61

2.1 23.7 10.0 25.0 28.0
31.9 4.9 45.01 46.96

continued...
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

251

...continued

(Rs crore) Financial management (per cent) Iinterest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission and brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad

1996-97 n.a. 7.6 16.0 n.a. 9.7 19.5 n.a. n.a. n.a. n.a. 8.8 9.5 87.6 36.2 55 118 9 0 32 15 6 1 40 27 27 6 664.00 61.50 1,479 1.00 20.17 76 3 19 13 1 86 86 0

1997-98 8.30 7.5 17.0 13.02 9.1 18.0 4.72 4.48 3.79 4.03 7.8 8.6 75.2 29.8 63 225 17 0 34 20 5 10 7 8 6 7 680.97 59.10 1,537 1.05 20.55 74 3 19 11 0 88 88 0

1998-99 1999-2000 8.91 9.5 7.4 12.66 9.6 16.8 3.75 4.22 4.01 3.55 6.3 10.0 77.3 35.0 53 12 15 0 40 5 25 48 30 8 13 8 624.94 56.46 1,537 1.22 18.46 72 6 17 15 0 85 85 0 7.21 7.2 9.3 12.28 10.7 15.7 5.07 4.10 3.05 4.02 6.5 10.6 52.7 21.8 65 211 16 0 41 32 8 12 5 -7 11 11 601.83 45.47 1,308 1.43 17.71 79 4 16 19 1 81 81 0

2000-01 6.69 6.3 9.7 11.40 8.2 14.1 4.70 3.90 2.76 3.57 5.7 11.2 58.8 25.3 66 69 19 0 40 40 38 32 31 14 18 15 618.19 40.07 1,476 1.54 16.32 77 4 15 21 2 77 77 0

2001-02 6.16 6.3 6.4 10.02 6.7 12.7 3.87 3.97 2.53 2.42 5.1 11.04 61.8 30.4 75 177 20 0 39 23 8 7 17 -2 9 18 632.51 42.08 1470 1.85 16.69 70 5 12 22 4 74 74 0

2002-03 5.07 5.4 4.5 9.11 5.5 11.3 4.03 3.84 2.79 2.98 5.1 11.3 54.9 22.4 71 50 19 0 40 11 16 17 16 19 4 20 631.43 41.87 1614 1.69 14.49 72 7 15 21 1 78 78 0

2003-04 3.96 4.2 3.8 9.02 7.8 9.9 5.06 3.99 3.08 4.15 5.5 11.11 53.7 24.5 75 97 17 0 33 21 15 -5 34 15 15 20 762.96 50.48 n.a. n.a. 12.56 72 10 15 23 1 76 76 0

continued...

252

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 5 15 81 55 0 45 78 2 0 15 0 6 0.6

1997-98 4 15 81 58 0 42 82 1 0 13 0 4 0.6

1998-99 1999-2000 5 31 64 49 7 44 74 1 0 23 0 2 2.1 10 25 65 46 0 54 77 1 0 20 0 2 1.1

2000-01 11 22 66 47 0 53 82 0 0 17 0 1 0.7

2001-02 10 23 67 45 19 35 80 0 0 20 0 0 0.4

2002-03 9 23 69 48 17 35 80 0 0 18 0 1 1.2

2003-04 8 24 68 56 0 43 79 0 0 20 0 0 1.4

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

253

HongKong Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others(including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 771 4,527 16 479 5,792 361 437 1,860 2,219 401 514 5,792 1,143 592 2,792 4,527 4,527 0 4,527 0 10 3 3 16 32 146 209 92 479 347 14 318 552 1,349 2,219 845 5,493 398 682 7,418 502 780 2,221 2,808 410 696 7,418 1,167 650 3,676 5,493 5,493 0 5,493 72 224 87 15 398 50 138 241 252 682 487 15 287 1,134 1,387 2,808 782 6,386 1,118 913 9,199 524 1,301 3,465 2,795 466 648 9,199 1,255 863 4,268 6,386 6,386 0 6,386 323 656 126 14 1,118 0 210 247 456 913 502 23 286 778 1,731 2,795 837 8,755 1,934 1,140 12,666 506 1,584 4,919 4,302 502 853 12,666 1,616 1,178 5,960 8,755 8,755 0 8,755 296 1,117 519 0 1,932 0 349 297 493 1,140 480 25 689 588 3,025 4,302 1,091 9,951 3,238 1,314 15,594 559 1,708 5,792 6,246 499 789 15,594 1,639 1,446 6,866 9,951 9,951 0 9,951 137 2,713 353 35 3,238 0 310 451 537 1,298 559 46 740 1,672 3,835 6,246 1996-97 1997-98 1998-99 1999-2000 2000-01 2001-02 0 1231 12341 3659 1908 19139 628 2678 6274 7836 554 1169 19,139 1989 1781 8571 12,341 12341 0 12341 0 3180 466 12 3659 0 438 532 939 1908 572 56 1179 3223 3434 7,836 2002-03 715 1583 12801 3172 2639 20910 917 265 8870 8202 512 2144 20,910 2100 2241 8461 12,801 12801 0 12801 0 2874 56 242 3172 0 403 496 1739 2639 852 66 1230 3959 3013 8,202

Table 18
2003-04 715 1738 16270 2539 4095 25357 731 716 10395 9628 439 3447 25,357 4415 3107 8747 16,270 16270 0 16270 0 1502 0 1038 2539 0 476 496 3123 4095 660 71 956 4753 3919 9,628

Continued...

254

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1996-97 1,820 187 212 2,219 537 1 0 1,681 2,219 0 2,219 0 1,268 81 4 256 0 251 1,860 1,860

1997-98 2,118 177 514 2,808 581 0 0 2,227 2,808 0 2,808 0 1,663 63 1 435 0 59 2,221 2,221

1998-99 1999-2000 2,167 324 304 2,795 683 0 0 2,112 2,795 0 2,795 0 2,104 63 0 1,191 0 104 3,462 3,462 2,664 486 1,153 4,302 776 0 0 3,526 4,302 0 4,302 0 2,866 80 3 1,723 0 246 4,918 4,918

2000-01 3,841 761 1,644 6,246 1,253 233 0 4,760 6,246 0 6,246 0 3,556 80 3 1,994 0 159 5,792 5,792

2001-02 4945 1064 1827 7,836 1276 274 73 6212 7,836 0 7,836 0 4453 79 4 1734 0 5 6,274 6,274

2002-03 5243 852 2107 8,202 1305 30 6 6862 8,202 0 8,202 0 7147 74 4 1606 0 38 8,870 8,870

2003-04 5962 654 3012 9,628 1417 0 5 8206 9,628 0 9,628 0 0 8833 66 4 1470 0 23 10,395 10,395

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

253 231 43 441 45

441 97 98 440 60

440 335 329 447 60

447 203 214 435 85

435 178 194 419 68

372 198 26 1 597 85 1 -1

342 224 63 1 630 97 20 0 0 0

369 323 69 2 763 102 10 0 0 0 76 0 0 2 191
954

399 524 68 2 993 123 43 0 0 0 74 0 0 15 256
1,248

603 630 86 2 1,320 176 79 0 0 0 95 0 0 46 396
1,716

711 728 58 2 1,499 196 96 0 -1 0 99 0 0 89 478
1,978

770 665 37 8 1,480 213 89 0 0 0 109 0 0 72 482
1,962

749 634 24 6 1,414 262 153 0 3 0 179 0 0 108 705
2,119

51 0 0 4 141
738

83 0 0 2 202
832

continued...

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255

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against the banks Currency Options Single Currency Interest Rate swaps Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances, endorsements Others Total Provisions and contingencies Provison for bad and doubtful debts Provision for taxation Net Provision for depreciation on investments Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses
Non-fund income to total income Operating expenses to total income Operating expenses to deposits Cost to income ratio Cost to income ratio (w/o profit on invest)

1996-97 378 6 1 385 56 84 22 163 101 649 88 190

1997-98 366 13 0 379 72 105 24 201 180 760 73 252

1998-99 1999-2000 460 55 0 516 98 134 26 258 127 900 54 181 532 95 17 645 101 165 32 298 183 1,126 122 305

2000-01 656 166 26 848 148 217 49 415 252 1,515 201 452

2001-02 695 275 26 997 155 286 62 502 312 1,811 167 478

2002-03 598 253 27 878 234 313 67 614 319 1,812 150 470

2003-04 502 190 30 723 231 334 59 624 378 1,726 394 772

n.a. n.a. n.a. n.a. n.a. n.a. 15 105 -20 1 101

n.a. n.a. n.a. n.a. n.a. n.a. 44 121 8 6 135

27,571 966 195 756 121 29,609 43 84 0 0 84

30,050 1,119 82 922 2,757 34,930 32 147 4 0 151

41,511 1,379 75 1,515 406 44,886 15 230 0 6 252

60,190 1,417 186 1,282 411 63,486 0 184 0 128 312

93,434 1,274 521 2,619 409 98,256 0 173 0 146 319

131483 1521 961 2957 247 137,169 0 178 46 154 378

18 44 16 10 25 13 62

21 2 10 32 21 12 67

16 8 33 16 20 14 67

37 29 36 40 18 13 68

14 1 23 15 16 15 69

24 21 23 25 16 14 69

4 6 26 -1 16 18 66

27 110 39 3 27 19 54

1.2 12.3 6.5 34.5
19.1 22.1 3.6 46.22 46.35

1.1 9.0 7.8 36.0
24.3 24.1 3.7 44.35 46.41

0.6 6.6 10.8 37.9
20.0 27.0 4.0 58.79 60.21

1.1 15.1 14.1 33.9
20.5 23.9 3.4 49.40 53.21

1.4 20.8 13.3 35.7
23.1 24.2 4.2 47.86 52.68

1.0 14.3 14.5 30.8
24.2 25.4 4.1 51.23 56.79

0.8 8.5 8.1 38.1
24.6 31.3 4.8 56.67 61.75

1.7 16.6 9.3 37.1
33.3 29.5 3.8 44.70 50.20

continued...

256

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...continued

(Rs crore) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad

1996-97

1997-98 7.08

1998-99 1999-2000 7.50 7.7 7.3 10.72 11.4 13.2 3.22 3.58 2.49 2.13 7.8 9.3 70.3 16 44 -2 18 0 54 0 16 23 35 6 21 25 111.79 10 2,723 0.35 9.76 80 8 11 24 0 0 76 0 6.88 7.0 7.4 10.42 12.5 11.2 3.55 3.08 2.11 2.58 5.0 10.3 60.0 22 49 64 22 0 56 54 37 76 3 20 30 26 165.48 11 2,780 0.45 12.36 80 6 10 18 0 0 82 0

2000-01 6.92 7.0 7.4 10.48 11.8 11.4 3.56 3.24 2.29 2.61 3.6 12.4 55.6 23 63 162 33 0 58 45 14 35 47 43 33 28 223.07 15 3,023 0.57 11.56 77 6 10 20 4 0 76 0

2001-02 6.66 6.2 8.7 9.51 12.1 10.1 2.84 3.17 2.14 1.82 3.2 11.04 65.2 25 63 67 30 0 51 25 24 0 4 11 14 30 261.19 17 3355 0.59 12.79 76 5 10 16 3 1 79 0

2002-03 5.35 4.8 8.2 8.31 8.8 9.6 2.96 3.44 2.00 1.52 3.7 11.3 68.0 14 64 80 25 1 69 5 4 13 52 8 -1 33 248.55 19 3339 0.59 8.38 75 6 11 16 0 0 84 0

2003-04 4.05 3.5 7.7 7.13 6.6 8.4 3.08 3.14 2.49 2.43 5.1 14.54 49.0 15 59 41 16 0 64 17 27 27 -1 23 -4 38 253.37 16 n.a. n.a. 9.16 67 8 12 15 0 0 85 0

9.0 4.7 11.9 17.1

7.3 6.5 11.59 11.0 13.6 4.51 3.59 3.23 4.15

27.9 11.9 53.4 13 49 11 0 0 41 3 18 -13 6 36 12 21 105.68 8 2,357 0.31 13.11 81 7 12 24 0 0 76 0

24.2 9.8 71.2 21 51 61 7 0 40 27 21 0 28 13 6 21 133.73 10 2,512 0.33 11.53 76 10 12 21 0 0 79 0

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

257

...continued

(Rs crore) Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1996-97 14 25 61 82 8 10 68 4 0 14 0 13 1.8

1997-98 10 40 49 75 6 18 75 3 0 20 0 3 2.0

1998-99 1999-2000 10 28 62 78 12 11 61 2 0 34 0 3 0.9 16 14 70 62 11 27 58 2 0 35 0 5 1.0

2000-01 12 27 61 61 12 26 61 1 0 34 0 3 1.0

2001-02 15 41 44 63 14 23 71 1 0 28 0 0 2.3

2002-03 15 48 37 64 10 26 81 1 0 18 0 0 1.0

2003-04 10 49 41 62 7 31 85 1 0 14 0 0 0.7

258

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

Standard Chartered Bank
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1998-99 1999-2000 0 580 5,352 1,616 608 8,156 662 231 2,720 3,381 266 897 8,157 894 563 3,896 5,353 5,353 0 5,353 111 1,264 233 8 1,616 0 47 344 217 608 641 21 192 1,427 1,763 3,381 0 717 5,006 2,597 787 9,107 543 132 3,140 4,319 208 765 9,107 1,134 559 3,312 5,006 5,006 0 5,006 129 2,013 449 6 2,597 0 34 274 479 787 506 37 216 2,934 1,169 4,319 2000-01 0 766 5,088 5,601 879 12,334 390 289 5,401 5,187 173 894 12,334 1,336 570 3,182 5,088 5,088 0 5,088 73 4,748 780 0 5,601 0 40 367 278 684 371 19 569 3,271 1,348 5,187 2001-02 374 1,147 7,244 9,312 835 18,911 595 616 7017 9,033 166 1,483 18,911 2024 709 4511 7,244 7,244 0 7,244 271 8821 198 23 9,312 0 1 259 575 835 569 26 1290 2448 5295 9,033 2002-03 515 2,285 18,003 4,834 3,675 29,312 1,158 212 10,223 13,042 574 4,103 29,312 3,692 2,935 11,376 18,003 18,003 0 18,003 300 2,398 139 1,997 4,834 0 268 284 3,124 3,675 926 232 725 4,315 8,002 13,042

Table 19
2003-04 515 2,218 19,949 6,124 5,539 34,345 1,036 620 10,079 16,152 438 6,021 34,345 5,125 3,819 11,005 19,949 19,949 0 19,949 0 1,738 1,802 2,584 6,124 0 354 289 4,895 5,539 953 83 993 7,800 7,359 16,152

Continued...

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259

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Profit on revaluation of investments Profit on forex transactions Income on investments Lease income Miscellaneous income Total
Total income

1998-99 1999-2000 1,931 358 1,093 3,381 841 1 0 2,539 3,381 0 3,381 0 1,613 44 25 978 0 61 2,720 2,720 2,700 149 1,469 4,319 910 21 0 3,387 4,319 0 4,319 0 1,906 44 3 1,174 0 14 3,140 3,140

2000-01 2,394 350 2,443 5,187 1,433 46 0 3,708 5,187 0 5,187 0 3,104 43 3 2,252 0 0 5,401 5,401

2001-02 4573 426 4033 9,033 1839 135 0 7059 9,033 0 9,033 0 4045 6 214 2737 0 15 7,017 7,017

2002-03 7,773 414 4,855 13,042 2,767 216 0 10,059 13,042 0 13,042 0 6,548 26 324 3,325 0 0 10,223 10,223

2003-04 10,315 762 5,075 16,152 3,976 144 0 12,032 16,152 0 16,152 0 6,998 26 430 2,625 0 0 10,079 10,079

n.a. n.a. n.a. n.a. n.a.

310 162 -106 366 88

366 203 -147 421 79

421 87 186 322 36

322 242 137 427 41

427 215 160 482 84

528 258 53 37 876 143 6 0 4 0 57 0 0 4 215
1,091

545 367 42 14 967 167 9 0 -4 0 56 0 0 1 229
1,196

697 383 42 3 1,126 181 21 0 0 0 75 0 0 24 301
1,426

997 622 24 2 1,645 272 118 0 0 0 110 0 0 17 517
2161

1461 758 27 41 2,287 349 30 0 2 0 174 0 0 6 561
2848

1529 893 28 74 2,523 371 64 0 6 0 224 0 0 35 699
3223

continued...

260

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI /Inter-bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against the banks Liability for partly paid investments Single Currency Interest Rate swaps Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances, endorsements Others Total Provisions and contingencies Provisions for non-performing assets Provision towards Income/Interest tax Net Provision for depreciation on investments Others Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term Financial parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Cost to income ratio Cost to income ratio (w/o profit on invest)

1998-99 1999-2000 501 83 0 585 90 172 10 252 86 922 169 255 9 0 0 17,759 1,856 0 626 62 20,312 89 2 -6 0 85 419 147 11 577 74 232 23 284 151 1,011 185 336 9 0 890 22,477 2,179 0 664 91 26,311 125 25 0 0 151

2000-01 353 285 27 666 99 229 45 373 202 1,241 185 387 9 0 4,814 47,098 2,602 0 492 97 55,112 -2 205 -1 0 202

2001-02 359 549 25 933 143 292 15 450 15 1,398 763 778 0 0 0 59929 2638 1602 1307 24878 90,353 0 1 0 14 15

2002-03 840 292 21 1153 165 380 34 579 260 1,993 855 1,115 0 0 0 57629 3793 2040 2921 44291 110,674 0 84 5 171 260

2003-04 715 210 146 1071 220 497 58 775 792 2,638 585 1,377 0 0 0 93216 3286 2195 1944 86324 186,964 0 266 207 319 792

n.a. n.a. n.a. n.a. 17 11 73

-6 27 -1 -15 23 11 66

2 18 2 -4 26 11 63

42 51 24 42 28 10 62

149 82 314 152 21 16 63

11 39 30 -3 26 19 55

n.a. n.a. 13.1 35.7 19.7 23.1 15.6 49.7 50.3

2.1 5.9 11.7 26.2 19.2 23.7 10.9 45.8 46.4

1.7 25.0 15.1 26.6 21.1 26.2 6.7 49.1 50.4

4.9 66.8 11.4 31.7 23.9 20.8 4.8 36.6 40.5

3.5 39.6 9.5 28.5 19.7 20.3 12.0 34.2 34.8

1.8 21.1 11.6 28.4 21.7 24.0 12.7 36.0 37.1

continued...

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261

...continued

(Rs crore) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental C/D ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times) Total income (per cent) Interest Forex Commission, and brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad

1998-99 1999-2000 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 8.3 33.6 1.4 63 n.a. 38 1 63 n.a. n.a. n.a. n.a. n.a. n.a. 24 11.08 10.48 2,666 0.41 12.13 80 5 13 25 0 75 75 0 7.87 8.1 7.5 12.87 10.4 14.1 5.00 3.75 2.95 4.20 2.5 9.5 44.8 2.6 86 -271 30 1 86 28 -6 15 -17 16 10 18 11.54 15.75 1,623 0.74 16.12 81 5 14 21 0 78 78 0

2000-01 7.25 7.0 7.6 11.62 9.2 14.7 4.37 3.85 2.76 3.28 1.2 9.6 52.1 3.4 102 1052 16 0 102 20 2 72 34 9 16 19 9.10 19.65 1,654 0.86 14.38 79 5 13 28 1 71 71 0

2001-02 6.84 5.8 7.7 11.6 8.6 14.0 4.78 3.15 2.74 4.37 1 9 2 0.2 125 178 9 0 125 74 42 -89 44 50 46 19 8.73 23.67 2142 1.01 15.16 76 1 13 20 1 78 78 0

2002-03 5.82 6.7 4.4 11.1 11.1 13.2 5.25 2.76 2.51 4.99 2 11 23 1.3 72 37 76 5 72 44 149 1559 16 28 39 65 8.83 8.91 3673 0.78 17.25 80 0 12 21 2 77 77 0

2003-04 4.32 3.8 6.5 9.7 6.8 10.5 5.42 2.95 2.33 4.80 3 11 58 3.6 81 160 90 1 81 24 11 -1 33 6 10 66 6.64 11.74 n.a. n.a. 14.62 78 1 11 25 1 74 74 0

continued...

262

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...continued

(Rs crore) Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Govt. guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1998-99 1999-2000 6 42 52 57 11 32 59 2 1 36 0 2 3.2 5 68 27 63 3 34 61 1 0 37 0 0 2.0

2000-01 11 63 26 46 7 47 57 1 0 42 0 0 1.5

2001-02 14 27 59 51 5 45 58 0 3 39 0 0 0.4

2002-03 6 33 61 60 3 37 64 0 3 33 0 0 0.3

2003-04 6 48 46 64 5 31 69 0 4 26 0 0 0.5

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

263

State Bank of Bikaner & Jaipur
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total Secured Government guarantee Unsecured Total 50 294 6,525 112 1,542 8,523 767 625 2,827 3,660 46 597 8,523 1,117 1,698 3,711 6,525 6,525 0 6,525 0 1 13 98 112 69 453 520 500 1,542 745 23 304 2,489 867 3,660 3,030 426 205 3,660 50 369 7,741 101 1,967 10,228 1,262 378 3,802 3,841 95 850 10,228 1,317 2,065 4,359 7,741 7,741 0 7,741 0 2 10 88 101 801 21 640 506 1,967 1,235 27 240 2,688 914 3,841 3,250 447 144 3,841 50 473 9074 95 2,777 12,469 1,248 1,028 4,846 4,401 92 854 12,469 1,367 2,413 5,294 9,074 9,074 0 9,074 0 4 9 82 95 585 58 846 1,289 2,777 1,219 29 290 3,030 1,082 4,401 3,819 415 167 4,401 50 559 10,326 69 2,883 13,888 1,341 1,090 5,325 5,168 90 874 13,888 1,621 2,869 5,836 10,326 10,326 0 10,326 0 1 7 61 69 528 446 887 1,023 2,883 1,306 35 442 3,462 1,263 5,168 4,262 679 226 5,168 50 702 11,661 23 3,116 15,552 908 1,069 6,305 5,931 91 1,248 15,552 1,774 3,290 6,597 11,661 11,661 0 11,661 0 1 5 17 23 103 755 883 1,375 3,116 860 49 451 3,903 1,578 5,931 4,712 829 390 5,931 50 853 13,280 311 3,495 17,989 879 904 7,679 6,773 102 1,651 17,989 2,340 3,893 7,047 13,280 13,280 0 13,280 0 0 2 308 311 117 1,077 978 1,322 3,495 834 1,209 663 4,118 1,992 6,773 5,288 922 563 6,773 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 20
2003-04 50 1,099 15,642 616 2,850 20,256 1,261 607 8,430 8,597 113 1,248 20,256 2,302 4,817 8,524 15,642 15,642 0 15,642 0 0 1 614 616 197 896 935 821 2,850 45 51 797 4,837 2,963 8,597 6,880 859 857 8,597

Continued...

264

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...continued

(Rs crore) Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1997-98 1,438 472 3 1,748 3,660 0 3,660 0 2,050 391 56 330 1 0 2,827 2,827

1998-99 1999-2000 1,629 547 5 1,660 3,841 0 3,841 0 2,932 364 20 413 1 71 3,802 3,802 1,827 607 6 1,961 4,401 0 4,401 0 4,004 329 20 410 1 81 4,846 4,846

2000-01 2,047 917 4 2,201 5,168 0 5,168 0 4,483 303 12 466 1 60 5,325 5,325

2001-02 2,407 1,095 8 2,421 5,931 0 5,931 0 5,439 274 25 519 1 47 6,305 6,305

2002-03 2,923 1,114 6 2,730 6,773 0 6,773 0 6,785 228 26 505 1 43 7,587 7,587

2003-04 3,771 968 3 3,854 8,597 0 8,597 0 7,770 201 25 390 1 135 8,523 8,523

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

675 196 98 773 453

733 169 228 715 410

715 119 218 616 342

585 167 172 580 282

580 96 192 484 107

457 331 24 38 851 124 12 0 0 0 27 0 0 0 163 1,013

460 420 38 45 964 136 0 0 0 0 19 0 3 5 164 1,127

482 522 37 75 1,116 168 22 0 0 0 23 0 8 0 220 1,336

549 580 48 89 1,267 191 18 0 0 0 23 0 7 0 239 1,506

605 647 54 51 1,357 196 77 0 0 0 21 0 7 0 301 1,658

653 716 58 11 1,438 193 107 0 0 0 24 0 6 11 340 1,778

691 824 35 24 1,574 216 227 0 0 0 25 0 6 17 491 2,065

continued...

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265

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Acceptances and endorsements Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1997-98 506 3 28 537 215 60 6 281 n.a. 818 196 196 10 0 213 327 0 439 86 1,075 n.a. n.a. n.a. n.a. n.a.

1998-99 1999-2000 597 6 31 634 251 70 11 332 109 1,075 53 162 15 0 43 332 0 378 83 851 85 0 23 1 109 692 12 39 742 266 79 12 356 166 1,264 72 238 11 0 157 345 0 386 71 970 80 0 73 12 166

2000-01 764 10 37 811 328 60 12 400 163 1,374 132 295 11 0 458 314 0 369 73 1,226 81 5 71 6 163

2001-02 834 5 28 867 289 123 15 427 226 1,520 138 364 21 0 638 291 0 353 159 1,462 64 13 172 -22 226

2002-03 866 1 19 887 320 107 24 450 238 1,575 203 441 21 0 1,811 274 63 399 261 2,829 104 -3 124 12 238

2003-04 839 7 11 857 361 130 36 527 380 1,764 302 681 21 0 3,395 339 20 517 241 4,533 108 -4 199 77 380

n.a. n.a. n.a. n.a. 17 26 57

19 18 22 17 17 27 56

17 4 17 21 15 27 58

14 19 19 10 16 28 57

13 9 15 13 15 28 57

14 32 18 7 18 29 53

18 -2 24 21 15 31 54

continued...

266

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

5 n.a. 24 76 16 28 4 39 58.9 60.4 15.14 n.a. n.a. 21.75 n.a. n.a. 6.61 7.12 3.82 3.31 n.a. 10.7 n.a. n.a. 56.1 n.a. 1.7 0.3 43.3 n.a. 85.5 n.a. n.a. n.a. n.a. n.a. n.a. 767 4.77 0.37

1 14 23 76 15 29 4 11 67.2 67.2 8.47 8.4 34.5 11.33 12.7 12.3 2.86 3.87 1.84 0.83 67.1 12.3 67.5 26.1 49.6 14.8 1.3 0.3 49.1 80.2 88.1 4.9 18.6 34.5 17.0 10.1 13.3 780 4.92 0.43

1 15 23 75 16 27 4 14 59.9 62.2 8.69 8.2 51.8 10.83 12.1 11.7 2.14 3.42 1.83 0.55 85.9 12.4 69.6 31.7 48.5 42.0 1.0 0.3 53.4 78.3 90.4 14.6 17.2 27.5 5.8 23.2 15.8 787 5.59 0.45

1 23 22 82 16 27 4 26 57.6 59.2 8.08 7.9 57.0 10.44 11.4 11.5 2.36 3.28 1.75 0.83 118.4 12.4 55.3 26.7 50.0 61.3 0.7 0.3 51.6 38.3 91.8 17.4 13.8 9.9 23.6 13.7 13.5 792 6.53 0.51

1 20 20 68 18 26 4 28 54.0 59.8 7.45 7.6 73.0 10.06 11.1 10.9 2.61 3.15 1.60 1.06 239.5 13.4 62.1 30.1 50.9 57.2 0.2 0.4 54.1 73.4 93.4 14.8 12.9 18.4 -11.9 2.6 7.2 792 7.49 0.54

1 25 19 71 19 25 3 41 50.5 57.4 6.54 6.9 12.3 9.49 10.2 10.3 2.95 2.96 1.46 1.44 74.8 13.2 53.9 26.3 51.0 52.0 2.3 9.1 57.8 84.9 94.5 14.2 13.9 21.8 10.6 -1.6 5.9 793 8.54 0.57

2 29 17 68 24 25 3 60 43.6 53.7 5.39 5.8 3.9 9.02 10.2 9.0 3.63 3.00 1.42 2.05 31.2 12.9 55.7 33.1 55.0 77.2 3.9 0.3 53.9 31.8 95.6 26.9 17.8 9.8 12.8 12.1 9.4 801 10.73 0.66

Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

15,046 0.07 4.72

14,970 0.08 4.49

14,778 0.09 5.03

13,392 0.11 4.59

13293 0.12 5.74

13,209 0.13 5.56

13,054 0.16 5.73

continued...

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267

...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1997-98 84.0 2.7 12.2 39.3 12.9 0.1 47.7 0.0 8.3 68.0 23.7 82.8 11.6 5.6 72.5 13.8 2.0 11.7 0.0 0.0 7.13

1998-99 1999-2000 85.5 1.7 12.1 42.4 14.2 0.1 43.2 0.0 6.2 70.0 23.8 84.6 11.6 3.7 77.1 9.6 0.5 10.9 0.0 1.9 10.45 83.5 1.7 12.6 41.5 13.8 0.1 44.6 0.0 6.6 68.8 24.6 86.8 9.4 3.8 82.6 6.8 0.4 8.5 0.0 1.7 10.14

2000-01 84.1 1.5 12.7 39.6 17.7 0.1 42.6 0.0 8.6 67.0 24.4 82.5 13.1 4.4 84.2 5.7 0.2 8.8 0.0 1.1 7.83

2001-02 81.9 1.3 11.8 40.6 18.5 0.1 40.8 0.0 7.6 65.8 26.6 79.4 14.0 6.6 86.3 4.4 0.4 8.2 0.0 0.7 5.72

2002-03 80.9 1.3 10.8 43.2 16.4 0.1 40.3 0.0 9.8 60.8 29.4 78.1 13.6 8.3 89.4 3.0 0.3 6.7 0.0 0.6 4.13

2003-04 76.2 1.2 10.4 43.9 11.3 0.0 44.8 0.0 9.3 56.3 34.5 80.0 10.0 10.0 91.2 2.4 0.3 4.6 0.0 1.6 1.24

268

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UTI Bank Ltd
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 9 50 14 90 148 329 9 1,401 586 183 2,170 3 64 3 112 178 377 24 1,996 1,154 357 3,507 0 93 50 133 226 833 68 1,655 2,113 1,053 4,821 1 102 16 124 227 1,055 48 166 2,597 2,590 5,352 0 233 21 777 1,010 1,487 113 210 3,061 3,909 7,180 43 306 171 0 521 80 151 300 0 531 72 505 569 0 1,146 51 465 730 0 1,246 0 247 411 62 719 365 147 2,529 3,041 3,041 0 3,041 666 306 4,748 5,720 5,720 0 5,720 829 569 7,694 9,092 9,092 0 9,092 1,151 876 10,260 12,287 12,287 0 12,287 2,486 1423.24 13,056 16,965 16,965 0 16,965 338 158 1,101 2,170 69 79 3,915 401 492 2,065 3,507 85 119 6,669 881 331 4,193 4,821 234 306 10,766 1,123 628 6,630 5,352 260 380 14,375 1,600 1,970 7,841 7,180 306 717 19,613 132 74 3,041 521 148 3,915 132 108 5,720 531 178 6,669 132 170 9,092 1,146 226 10,766 192 423 12,287 1,246 227 14,374 230 689 16,965 719 1,010 19,613 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 21
2003-04 232 906 20954 528 1530 24,150 3777 1886 7793 9363 435 896 24,150 5,394 2,585 12,976 20,954 20,954 0 20,954 0 98 303 127 528 0 439 31 1,092 1,530 3,624 153 259 3,120 5,985 9,363

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

269

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total
Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total Total income

1998-99 1999-2000 936 1,233 1 2,170 235 21 25 1,890 2,170 0 2,170 0 771 0 70 138 0 122 1,101 1,101 1,624 1,533 349 3,507 303 93 0 3,111 3,507 0 3,507 0 1,368 0 118 243 0 336 2,065 2,065

2000-01 3,024 732 1,066 4,821 348 430 0 4,043 4,821 0 4,821 0 2,427 0 192 1026 0 548 4,193 4,193

2001-02 4,226 67 1,060 5,352 868 13 3 4,468 5,352 0 5,352 0 3,649 0 197 1,805 0 979 6,630 6,630

2002-03 6,317 58 804 7,180 1,639 111 0 5,429 7,180 0 7,180 0 4,648 0 205 2,960 0 27 7,841 7,841

2003-04 8,239 88 1,036 9,363 2,456 15 0 6,892 9,363 0 9,363 0 5,056 0 190 2,539 0 8 7,793 7,793

n.a. n.a. n.a. n.a. n.a.

157 63 27 194 165

194 48 16 226 181

226 200 143 282 185

282 86 139 229 162

229 241 195 275 112

237 117 18 2 373
33 6 0 0 0 5 0 1 2 47 420

297 157 25 5 483
45 40 0 0 0 5 0 0 2 91 574

474 374 40 2 890
86 64 0 0 0 5 0 6 2 163 1,053

540 603 31 7 1,180
98 305 0 -1 0 9 0 4 1 416 1,595

736 576 37 116 1,465
144 246 0 -2 0 17 0 4 1.46 410 1,875

768 639 33 147 1,587
182 321 0 -1 0 28 0 2 9 540 2,127

continued...

270

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...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Liability on account of outstanding derivative contracts Acceptances and endorsements Currency Swaps Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1998-99 1999-2000 262 15 24 301 12 29 10 51 37 389 31 68 26 0 1,758 197 0 0 387 0 6 2,375 13 4 15 18 37 340 24 29 393 15 39 11 65 65 523 51 116 26 0 3,409 290 0 0 267 0 12 4,005 9 2 28 35 65

2000-01 704 33 54 791 29 79 22 129 46 967 86 133 26 0 4,821 727 0 0 484 0 15 6,073 19 -2 18 30 46

2001-02 857 53 70 980 50 119 37 205 276 1,461 134 410 36 0 5780 865 0 0 528 0 9 7,219 59 0 79 197 276

2002-03 1,057 27 59 1,142 85 189 49 323 218 1,683 192 410 36 0 11,176 984 0 0 872 0 1 13,068 90 5 109 13 218

2003-04 934 19 68 1,021 121 236 62 419 408 1,849 278 686 40 0 34,622 1,222 0 0 1,535 0 21 37,440 244 4 151 9 408

n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

88 82 108 88 12 5 83

59 25 86 62 9 6 85

35 39 54 33 9 7 84

38 116 63 27 15 8 77

24 117 82 -1 26 12 62

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

271

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)
Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

1.6 30.1 18.0 23.6 11.1 12.2 1.7 4.2 42.79 45.24 n.a. 17.2 14.8 n.a. 21.2 21.8 n.a. n.a. n.a. n.a. 5.8 11.6 54.5 18.0 71 n.a. 17 0 36 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 35 61.99 1.46
521 0.81 34.93

1.0 22.9 26.8 23.6 15.9 11.4 1.1 4.7 36.02 46.10 7.92 7.8 10.1 10.08 9.9 10.5 2.17 1.28 0.99 1.88 8.3 11.4 56.2 27.2 61 50 9 0 36 36 45 62 88 88 28 37 29 49 71.56 1.33
739 0.78 37.23

1.0 31.8 34.7 22.1 15.5 12.2 1.4 5.1 49.28 65.20 9.51 9.5 10.5 11.48 11.9 11.4 1.97 1.54 1.18 1.61 8.8 9.0 35.0 15.4 53 39 13 1 46 63 56 37 59 103 85 93 84 86 56.06 1.50
1,185 0.89 36.91

1.1 29.3 22.4 24.1 26.1 12.9 1.7 3.2 33.39 66.29 8.18 8.0 10.3 10.70 11.1 10.6 2.52 1.72 0.92 1.73 8.9 10.7 67.3 44.9 44 17 10 0 54 76 69 11 35 58 74 13 33 139 38.51 1.48
1,721 0.93 32.18

1.1 25.1 20.3 26.4 21.9 17.2 1.9 2.8 44.05 66.33 7.24 7.2 8.7 9.48 8.0 11.7 2.23 2.00 1.02 1.26 14.9 10.9 53.1 23.7 42 39 4 1 46 26 75 34 38 18 72 47 24 192 37.40 1.68
2,338 0.80 22.00

1.3 27.1 20.2 28.9 25.4 19.7 2.0 3.1 37.92 53.43 5.13 4.9 14.0 7.74 8.2 9.3 2.62 2.02 1.05 1.64 30.4 11.2 59.4 35.8 45 55 3 1 37 -1 80 30 24 -1 42 27 8 188 49.80 2.23
3,447 0.62 17.54

continued...

272

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...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1998-99 1999-2000 89 1 8 11 1 1 87 0 65 27 8 43 57 0 70 0 6 12 0 11 6.3 84 1 8 9 3 0 89 0 57 33 10 46 44 10 66 0 6 12 0 16 4.5

2000-01 85 0 8 7 9 0 84 0 34 44 22 63 15 22 58 0 5 24 0 13 3.4

2001-02 74 1 6 16 0 0 83 0 3 49 48 79 1 20 55 0 3 27 0 15 2.7

2002-03 78 1 8 23 2 0 76 0 3 43 54 88 1 11 59 0 3 38 0 0 2.4

2003-04 75 1 9 26 0 0 74 0 3 33 64 88 1 11 65 0 2 33 0 0 1.3

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

273

The South Indian Bank Ltd
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 175 731 559 1,466 18 40 28 97 183 9 43 35 101 188 233 32 185 829 651 1,665 10 53 46 167 276 245 47 194 1,038 790 2,021 20 47 32 166 265 250 45 257 1,265 947 2,468 16 72 34 178 299 247 54 355 1,673 1,203 3,231 15 60 32 245 352 337 59 393 1,588 1,632 3,613 0 0 28 2 30 84 0 18 6 108 0 0 10 85 96 52 5 0 7 64 17 2 0 42 61 0 81 0 14 95 169 371 2,199 2,738 2,738 0 2,738 193 483 2,447 3,123 3,123 0 3,123 238 613 3,034 3,885 3,885 0 3,885 227 718 3,724 4,669 4,669 0 4,669 291 831 4,797 5,920 5,920 0 5,920 328 988 5,545 6,861 6,861 0 6,861 267 199 1,006 1,466 24 101 3,064 265 305 1,200 1,665 28 120 3,582 292 227 1,749 2,021 34 121 4,444 295 282 1,998 2,468 36 137 5,216 301 620 2,181 3,231 44 179 6,555 396 384 2,999 3,613 54 182 7,629 19 93 2,738 30 183 3,064 35 128 3,123 108 188 3,582 36 151 3,885 96 276 4,444 36 183 4,669 64 265 5,216 36 239 5,920 61 299 6,555 36 285 6,861 95 352 7,629 1997-98 1998-99 1999-2000 2000-01 2001-02 2002-03

Table 22
2003-04 36 359 8280 79 500 9,254 405 401 3962 4197 66 223 9,254 398 1,339 6,544 8,280 8,280 0 8,280 0 4 0 75 79 5 82 38 375 500 332 73 509 1,546 2,142 4,197

Continued...

274

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...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1997-98 1,291 15 159 1,466 388 10 0 1,067 1,466 0 1,466 0 654 99 19 205 2 28 1,006 1,006

1998-99 1999-2000 1,456 42 166 1,665 473 10 0 1,182 1,665 0 1,665 0 824 94 22 226 3 31 1,200 1,200 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 0 2,021 0 1,391 92 23 221 2.82 20 1,749 1,749

2000-01 2,132 88 248 2,468 734 77 0 1,658 2,468 0 2,468 0 1,668 90 14 220 0 6 1,998 1,998

2001-02 2,557 264 410 3,231 919 414 0 1,898 3,231 0 3,231 0 1,866 80 12 216 0 7 2,181 2,181

2002-03 2,763 229 621 3,613 1,004 292 68 2,249 3,613 0 3,613 0 2,614 71 13 240 0 62 2,999 2,999

2003-04 3,308 300 589 4,197 1,291 464 66 2,376 4,197 0 4,197 0 3,580 56 10 201 0 116 3,962 3,962

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

257 114 35 336 213

336 108 982 346 216

346 134 152 328 190

204 126 0 8 339 12 2 0 0 0 5 0 0 7 26
365

237 148 0 15 400 15 3 0 0 0 8 0 0 10 37
437

264 188 18 0 469 20 33 0 0 0 8 0 13 0 75
543

303 218 0 19 540 24 25 0 0 0 8 0 0 15 73
613

360 236 0 20 615 24 86 0 0 0 10 0 0 18 139
754

374 262 0 21 657 19 133 0 0 0 10 0 0 18.96 180
838

358 309 0 13 680 20 187 0 0 0 9 0 0 18 235
915

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

275

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Liability on account of outstanding derivative contracts Acceptances and endorsements Currency Swaps Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1997-98 249 1 11 261 54 17 2 73 19 354 11 30 9 0 80 75 0 0 70 0 0 234 9 0 7 4 19

1998-99 1999-2000 295 4 13 312 64 23 3 90 31 433 4 35 19 0 173 152 0 0 125 0 0 469 27 1 0 3 31 332 6 13 351 86 23 3 113 54 518 26 80 0 0 153 111 0 0 172 0 23 459 25 0 24 5 54

2000-01 370 6 16 391 85 27 3 115 65 571 41 107 26 0 140 103 0 0 158 0 0 428 39 0 25 1 65

2001-02 449.2 3 8 460 84 32 4 121 110 692 62 173 15 0 222 157 0 0 191 0 0 586 52 0 61 -2 110

2002-03 469 0 11 479 94 41 7 142 144 765 72 216 17 0 389 138 0 0 161 0 1 706 94 1 72 -23 144

2003-04 465 0 14 480 131 52 10 193 158 831 84 242 16 0 457 150 0 0 179 0 1 802 108 0 77 -28 158

n.a. n.a. n.a. n.a. 6 14 80

14 14 30 11 6 15 78

24 23 27 24 6 16 78

20 -5 17 23 5 15 80

27 29 16 29 5 14 81

16 13 19 16 5 14 81

21 21 35 18 5 16 79

continued...

276

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

n.a. n.a. 26.2 73.5 7.1 20.1 2.7 1.1 71.0 72.4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 9.4 64.6 17.1 54 1 0 37 83 n.a n.a n.a n.a n.a n.a 354 4.14 0.21

0.12 2.8 20.9 71.0 8.4 20.6 2.9 0.3 71.9 73.6 10.25 10.1 23.9 12.76 13.4 15.1 2.51 2.82 0.90 0.58 42.6 10.4 88.9 19.1 53 52 3 1 38 50 78 14 14 19 18 28 18 361 4.61 0.25

0.64 14.8 22.8 76.7 13.7 20.7 2.9 1.7 58.4 70.6 9.66 9.5 18.6 12.31 12.7 14.3 2.65 2.91 1.07 0.80 34.5 10.4 67.8 29.1 52 47 2 1 45 72 81 21 24 46 35 31 17 n.a. n.a. n.a.

0.86 20.5 22.9 74.1 11.8 18.8 2.5 2.3 51.8 58.5 8.91 7.8 26.8 11.66 11.6 13.5 2.75 2.47 0.85 1.13 53.6 11.2 61.2 30.0 53 57 1 1 43 32 84 22 20 14 -1 21 15 372 6.64 0.31

1.06 25.3 22.9 69.8 18.4 16.0 2.0 2.6 41.2 58.3 8.50 7.0 17.5 10.86 11.3 12.6 2.36 2.13 0.76 0.99 84.4 11.2 63.9 40.2 55 61 1 1 37 15 87 31 27 9 -1 -1 14 380 8.50 0.32

1.02 24.3 22.8 66.5 21.5 16.9 2.1 2.5 39.6 62.8 7.34 7.3 13.9 9.64 10.1 10.9 2.31 2.07 0.56 0.80 81.8 10.8 66.6 44.9 53 41 1 1 44 87 89 12 16 38 12 -18 7 391 9.24 0.36

1.00 23.6 22.4 67.6 25.7 21.1 2.3 2.3 44.4 78.0 6.21 6.1 16.7 8.42 8.9 9.2 2.21 2.36 0.47 0.32 86.8 11.3 65.2 39.9 51 41 1 1 48 68 91 16 21 32 39 5 3 410 10.24 0.47

Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

3,770 0.10 6.76

3,785 0.12 6.85

n.a. n.a. 6.30

3,739 0.16 7.19

3,697 0.20 8.93

3,350 0.25 8.88

3,534 0.26 7.00

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

277

...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1997-98 93 1 3 26 1 0 73 0 12 50 38 88 1 11 65 10 2 20 0 3 n.a.

1998-99 1999-2000 92 2 3 28 1 0 71 0 11 50 39 87 3 10 69 8 2 19 0 3 n.a. 86 2 4 n.a. n.a. n.a. n.a. 0 10 51 39 n.a. n.a. n.a. 80 5 1 13 0 1 n.a.

2000-01 88 1 4 30 3 0 67 0 10 51 38 86 4 10 83 5 1 11 0 0 7.1

2001-02 82 1 3 28 13 0 59 0 11 52 37 79 8 13 86 4 1 10 0 0 6.6

2002-03 78 1 2 28 8 2 62 0 11 44 45 76 6 17 87 2 0 8 0 2 6.0

2003-04 74 1 2 31 11 2 57 0 12 37 51 79 7 14 90 1 0 5 0 3 4.6

278

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

The Jammu & Kashmir Bank Ltd
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1997-98 30 245 4,882 12 425 5,596 883 261 2,061 2,158 38 195 4,712 802 1,042 3,039 4,882 4,882 0 4,882 0 2 10 0 12 61 184 32 149 425 837 46 68 1,485 605 2,158 1998-99 1999-2000 48 381 6,444 209 438 7,519 773 567 2,951 2,951 63 214 7,519 1143 1,216 4,085 6,444 6,444 0 6,444 0 2 206 2 209 37 189 45 166 438 716 57 161 1,695 1,096 2,951 48 480 9,422 21 590 10,561 1,402 894 4,254 3,518 107 386 10,561 1,821 1,596 6,005 9,422 9,422 0 9,422 0 0 15 5 21 92 237 67 195 590 1,337 65 218 1,891 1,409 3,518 2000-01 48 651 11,168 177 675 12,719 1,088 970 5,425 4,763 131 344 12,719 1,566 1,873 7,729 11,168 11,168 0 11,168 0 0 167 10 177 147 194 84 249 675 1,027 60 241 2,220 2,302 4,763 2001-02 48 889 12,911 185 666 14,699 1,016 952 5,752 6,424 167 387 14,699 2,037 2,359 8,515 12,911 12,911 0 12,911 0 0 175 10 185 20 216 88 342 666 947 69 288 2,969 3,167 6,424 2002-03 48 1194 14,675 216 661 16,794 721 800 6,738 8,011 172 352 16,794 2088 2812 9775 14,675 14,675 0 14,675 0 150 45 21 216 0 186 89 386 661 635 85 571 3,512 3,928 8,011

Table 23
2003-04 48 1545 18661 297 654 21,206 1535 1382 8451 9285 196 357 21,206 2176 3471 13,014 18,661 18,661 0 18,661 0 200 36 61 297 11 236 71 335 654 1,439 96 347 3,858 5,080 9,285

Continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

279

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bills Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income
Miscellaneous income Total Total income

1997-98 1,125 1,015 18 2,158 356 1,210 1 591 2,158 0 2,158 0 1,418 177 11 391 6 58 2,061 2,061

1998-99 1999-2000 1,701 1,187 63 2,951 610 1,714 34 593 2,951 0 2,951 0 1,913 250 24 702 6 56 2,951 2,951 1,954 1,348 216 3,518 812 1424 2 1,280 3,518 0 3,518 0 2,358 235 128 1,286 10 238 4,254 4,254

2000-01 3,202 1,216 345 4,763 1,179 1,717 3 1,864 4,763 0 4,763 0 3,209 221 108 1,761 10 64 5,374 5,374

2001-02 4,351 1,594 479 6,424 1,317 2,233 240 2,634 6,424 0 6,424 0 3,468 141 95 1,877 10 161 5,753 5,753

2002-03 5,680 1,554 777 8,011 1,506 2,327 311 3,867 8,011 0 8,011 0 3,816 134 82 2,388 10 309 6,738 6,738

2003-04 6,306 2,237 742 9,285 1,966 2,955 200 4,164 9,285 0 9,285 0 5,041 118 78 2,696 10 509 8,451 8,451

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. 112

244 67 73 238 113

238 80 75 243 117

243 70 76 237 121

237 87 71 253 127

253 143 110 286 138

259 249 23 531 13 20 0 0 0 5 0 0
20 58 588

341 316 36 694 15 10 0 0 0 6 0 0
12 43 737

381 441 63 885 20 61 0 0 0 1 0 0
24 105 990

435 568 73 1,077 21.95 0 0 0 20 4 0 0
36 81 1,157

640 652 63 1,354 28 182 0 0 19 4 0 0
23 257 1,611

760 625 42 1,427 35 214 0 0 0 5 2 0
32 287 1,715

821 664 36 1,521 41 226 0 0 0 5 2 0
27 302 1,823

continued...
CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

280

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Liability on account of outstanding derivative Acceptances and endorsements Currency Swaps Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1997-98 328 1 0 329 59 35 4 98 111 538 50 161 6 1 554 14 2 0 0 0 23 600 0 7 48 56 111

1998-99 1999-2000 429 2 0 431 85 41 8 134 86 651 85 172 7 0 292 28 3 0 9 0 16 355 22 5.13 45 14 86 573 26 0 598 90 59 11 159 112 870 120 232 10 0 122 33 0 0 8 0 15 187 20.77 13 57 21 112

2000-01 713 4 3 720 96 52 17 165 105 990 168 273 9 0 1,745 188 10 0 307 0 7 2,266 21.12 0 65 19 105

2001-02 879.44 26 10 915 144 66 24 234 210 1,360 251 461 11 0 1324 316 12 0 282 0 5 1,949 27.38 6 119 59 210

2002-03 856 25 10 892 158 72 30 260 214 1,366 349 563 10 0 1,880 364 8 0 481 0 4 2,747 13 13 134 54 214

2003-04 876 15 10 901 168 88 37 293 222 1,417 406 628 9 0 2,856 304 4 0 843 0 2 4,017 30 0 170 22 222

n.a. n.a. n.a. n.a. 16 21 62

32 43 17 34 18 19 63

46 59 31 47 19 17 64

19 -14 17 29 14 17 69

16 30 26 10 16 18 66

14 2 19 15 14 19 67

27 4 23 33 12 19 70

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

281

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos)

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

n.a. n.a. 19.3 60.0 9.8 16.7 2.0 2.1 37.8 40.9 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 20.5 68.7 40.2 44 0 1 42 89

1.40 24.3 16.6 63.5 5.8 18.2 2.1 2.2 43.8 45.3 7.23 7.6 1.9 12.00 12.6 13.4 4.77 2.28 0.46 2.95 51.1 24.5 50.3 20.2 46 51 3 1 46 57 89 37 32 43 45 12 31

1.33 25.1 19.0 56.4 10.6 16.1 1.7 2.5 40.7 48.2 7.24 7.2 22.2 10.50 12.2 11.8 3.26 1.84 0.38 1.79 69.0 18.8 48.2 21.2 37 19 0 1 45 44 91 19 46 44 6 32 28

1.44 27.3 17.2 58.1 7.0 14.2 1.5 2.6 37.7 37.7 6.78 6.9 6.4 9.90 11.7 10.5 3.11 1.48 0.39 2.03 104.2 17.4 38.6 15.0 43 71 2 1 49 67 93 35 19 28 7 11 22

1.83 30.6 14.7 61.6 16.0 14.5 1.8 2.8 33.7 45.7 7.37 7.3 19.9 10.44 11.7 11.4 3.07 1.78 0.33 1.63 66.5 15.5 45.6 22.5 50 95 1 1 45 19 95 35 16 6 50 28 26

2.21 32.0 12.5 61.0 16.8 15.2 1.8 2.9 31.6 42.7 6.28 6.2 17.7 9.60 10.0 10.5 3.31 1.71 0.37 1.97 68.8 16.5 38.0 17.2 55 90 1 1 46 56 96 25 14 17 10 24 5

2.14 28.7 12.3 57.4 16.5 16.1 1.6 2.6 31.8 42.2 5.26 5.3 9.8 8.47 8.7 9.5 3.21 1.59 0.32 1.95 65.0 16.9 35.3 13.9 50 32 2 1 45 43 97 16 27 25 6 18 7

370 5.83 0.26 5,689 0.10 9.99

389 7.59 0.34 6,254 0.12 8.66

404 8.71 0.39 6,278 0.16 11.02

426 11.18 0.39 6,470 0.18 12.08

441 14.57 0.53 6,495 0.25 11.17

454 17.65 0.57 7,112 0.24 10.82

475 19.55 0.62 7,085 0.26 10.83

Advances per branch (Rs crore) Operating expenses per branch (Rs crore) Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

continued...

282

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1997-98 90 1 2 17 56 0 27 0 3 69 28 52 47 1 69 9 1 19 0 3 4.6

1998-99 1999-2000 94 1 2 21 58 1 20 0 5 57 37 58 40 2 65 8 1 24 0 2 3.8 89 0 2 56 38 6 36 0 6 54 40 56 38 6 55 6 3 30 0 6 3.2

2000-01 93 0 2 25 36 0 39 0 5 47 48 67 26 7 60 4 2 33 0 1 2.5

2001-02 84 0 2 21 35 4 41 0 4 46 49 68 25 7 60 2 2 33 0 3 1.9

2002-03 83 0 2 19 29 4 48 0 7 44 49 71 19 10 57 2 1 35 0 5 1.6

2003-04 83 0 2 21 32 2 45 0 4 42 55 68 24 8 60 1 1 32 0 6 1.5

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

283

The Karnataka Bank Ltd
(Rs crore) Liabilities Capital Reserves and surplus Deposits Borrowings Other liabilities and provisions Total Assets Cash and balances with RBI Balances with bank and money at call Investments Advances Fixed assets Other assets Total Deposits Demand Savings Term Total Deposits of branches in India Deposits of branches abroad Total Borrowings RBI Other banks Other institutions and agencies Forex borrowings Total Other liabilities and provisions Inter-office adjustments Bills payable Interest accrued Others (including provisions) Total Balance with RBI Cash in hand Advances Bills purchases and discounted Cash credit and overdraft Term loans Total 1997-98 13 214 3,408 92 131 3,860 417 208 1,258 1,818 65 94 3,860 252 452 2,705 3,408 3,408 0 3,408 0 0 92 0 92 9 26 14 83 131 n.a. n.a. 210 1,223 385 1,818 1998-99 1999-2000 13 248 4,382 125 100 4,869 455 413 1,775 2,047 74 105 4,869 299 557 3,527 4,382 4,382 0 4,382 49 0 76 0 125 12 43 9 36 100 410 45 230 1,368 449 2,047 13 298 5,174 134 122 5,742 528 498 2,063 2,451 72 130 5,742 402 694 4,078 5,174 5,174 0 5,174 87 0 47 0 134 17 40 14 52 122 41 487 276 1,596 580 2,451 2000-01 13 336 6,076 130 121 6,677 394 451 2,787 2,828 77 140 6,677 395 795 4,886 6,076 6,076 0 6,076 92 0 38 0 130 18 42 16 46 121 346 48 259 1,875 694 2,828 2001-02 13 428 7,001 97 223 7,763 342 301 3,467 3,418 74 161 7,763 400 908 5,693 7,001 7,001 0 7,001 63 0 34 0 97 4 89 14 116 223 296 46 257 2,368 793 3,418 2002-03 40 543 8,292 165 224 9,265 437 199 4,433 3,900 79 218 9,265 466 1070 6756 8,292 8,292 0 8,292 20 1 110 34 165 88 2 16 118 224 393 44 277 2,490 1,133 3,900

Table 24
2003-04 40 658 9407 183 288 10,577 389 361 4879 4668 93 187 10,577 569 1339 7,499 9,407 9,407 0 9,407 0 0 27 157 183 124 3 22 139 288 393 56 301 2,813 1,554 4,668

Continued...

284

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Secured Government guarantee Unsecured Total Priority sector Public sector Banks Others Total Advances outside India Total Investments Investments outside India Investments in India - Government securities - Other approved securities - Shares - Debentures - Subsidiaries/JV - Others Total Total investments Movement in NPA Gross NPA Opening balance Additions Reductions Closing balance Net NPA-Closing balance Profit and loss statement Interest earned Interest/Discount on advances/bils Income on investments Interest on balances with RBI Others Total Other income Commission exchange and brokerage Profit on sale of investments Loss on sale of investments Profit on sale of fixed assets Loss on revaluation of investments Profit on forex transactions Income from investments Lease income Miscellaneous income Total
Total income

1997-98 1,528 253 37 1,818 694 6 0 1,118 1,818 0 1,818 0 946 61 18 189 0 44 1,258 1,258

1998-99 1999-2000 1,649 359 38 2,047 781 6 0 1,259 2,047 0 2,047 0 1,149 64 28 484 0 49 1,775 1,775 1,954 424 73 2,451 916 12 1 1,523 2,451 0 2,451 0 1,326 63 31 550 0 93 2,063 2,063

2000-01 2,297 430 101 2,828 953 12 0 1,862 2,828 0 2,828 0 2,162 63 25 477 0 60 2,787 2,787

2001-02 2,638 436 344 3,418 1,195 2 0 2,221 3,418 0 3,418 0 2,815 59 14 486 0 93 3,467 3,467

2002-03 2,971 602 327 3,900 1,501 65 70 2,263 3,900 0 3,900 0 3,368 48 5 982 0 30 4,433 4,433

2003-04 3,492 760 417 4,668 1,910 276 102 2,379 4,668 0 4,668 0 2,970 39 10 1,767 0 93 4,879 4,879

n.a. n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a. n.a.

169 82 28 223 140

223 121 228 321 196

321 84 317 374 201

374 218 54 538 286

538 132 72 598 231

257 161 10 2 430 25 9 0 0 0 8 0 5 1 48
478

272 191 28 0 491 30 1 0 0 0 11 0 5 2 48
540

302 243 32 1 578 40 16 0 0 0 10 0 4 2 72
650

302 243 32 1 578 40 16 0 0 0 10 0 4 2 72
650

347 259 41 7 654 46 180 0 0 0 10 0 2 3 241
895

400 390 19 3 811 48 174 0 0 0 12 0 2 3 239
1,051

417 405 18 8 848 53 196 0 0 0 14 0 2 5 270
1,119

continued...

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

285

...continued

(Rs crore) Interest expended Interest on deposits Interest on RBI/inter bank Others Total Operating expenses Salaries Others Depreciation Total Provisions and contingencies Total expenses including provisions Profit for the year Profits inclusive of provisions Contingent liabilities Claims against banks Liability for partly paid investments Liability for outstanding forex contracts Guarantees - In India - Outside India Liability on account of outstanding derivative contracts Acceptances and endorsements Currency swaps Others Total Provisions and contingencies Provison for NPAs Depreciation in values of investments Provision for taxation Other Provisions Total Financial analysis Growth in deposits (per cent) Overall Demand Savings Term Share of deposits (per cent) Demand Savings Term

1997-98 276 3 13 292 61 18 6 84 44 420 58 102 7 0 1587 84 0 0 80 0 13 1,771 20 -7 31 0 44

1998-99 1999-2000 357 6 12 375 64 21 7 92 30 497 42 72 7 0 1,210 117 0 0 126 0 30 1,489 17 0 13 0 30 447 9 8 464 75 24 8 106 23 592 58 81 7 0 2,642 158 0 0 170 0 35 3,013 23 -18 17 0 23

2000-01 447 9 8 464 72 25 9 105 40 609 41 81 7 0 2,642 158 0 0 170 0 35 3,013 23 0 17 0 40

2001-02 489.9 7 5 502 89 30 12 131 91 723 172 262 7 0 1421 104 0 0 117 0 63 1,712 37 38 15 0 91

2002-03 645 8 4 657 89 37 15 141 143 941 110 253 8 0 881 193 0 0 203 0 124 1,408 81 0 62 0 143

2003-04 622 7 5 635 94 43 17 154 197 986 133 330 10 0 1,163 248 0 0 284 0 145 1,850 128 0 68 0 197

n.a. n.a. n.a. n.a. 7 13 79

29 19 23 30 7 13 80

18 35 25 16 8 13 79

17 -2 15 20 6 13 80

15 1 14 17 6 13 81

18 16 18 19 6 13 81

13 22 25 11 6 14 80

continued...

286

CRIS INFAC BANKING ANNUAL REVIEW: NOVEMBER 2004, 291 PAGES

...continued

(Rs crore) Financial Parameters Profitability (per cent) Return on assets Return on equity Gearing (times) Staff costs to operating expenses Non-fund income to total income Operating expenses to total income Operating expenses to deposits Earning per share (Rs) Cost to income ratio Cost to income ratio (w/o profit on invest) Financial management (per cent) Interest cost Average cost of deposits Average cost of borrowings Yield on carry business Average yield on investments Average yield on advances Spreads Operating expenses to AFD Core fee income to AFD Net Profitability Margin Deposits to borrowings (times) Capital adequacy Provisions as a percentage of profit before provisions Provisions as a percentage of networth Liquidity (per cent) Credit-deposit ratio Incremental credit deposit ratio Borrowings to total deposits Cash-deposit ratio Investment-deposit ratio Incemental I/D ratio Reserves as a percentage of net worth Growth (per cent) Advances Deposits Investments Salaries cost Commission and fee Interest income Others Branches (nos) Advances per branch (Rs crore) Operating expenses per branch (Rs crore)
Employees (nos) Income per employee (Rs crore) Income/employee expenses (times)

1997-98

1998-99 1999-2000

2000-01

2001-02

2002-03

2003-04

3.01 51.0 15.9 72.0 10.0 17.6 2.5 2.7 45.2 47.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 37.0 13.2 43.0 19.3 53 n.a. 3 n.a. 37 n.a. 94 n.a. n.a. n.a. n.a. n.a. n.a. 324 5.61 0.26
3,925 0.12 7.89

0.97 17.3 17.6 69.7 8.9 17.1 2.1 1.7 56.0 56.3 9.29 9.2 16.7 11.91 12.6 14.1 2.62 2.20 1.11 1.53 35.9 10.9 41.3 11.4 47 23 3 1 41 53 95 13 29 41 6 21 14 338 6.06 0.27
3,929 0.14 8.40

1.10 20.3 17.4 71.3 11.1 16.2 2.0 2.0 56.7 62.0 9.37 9.3 13.3 11.53 12.7 13.4 2.15 2.07 1.07 1.16 37.0 11.0 27.9 7.2 47 51 3 9 40 36 96 20 18 16 17 32 18 347 7.06 0.30
4,075 0.16 8.64

0.66 12.4 18.1 68.1 11.1 16.2 1.7 1.2 56.5 61.9 8.00 7.9 13.1 9.80 10.0 11.4 1.80 1.76 0.91 0.96 42.6 11.0 49.5 11.5 47 42 2 1 46 80 96 15 17 35 -5 0 0 354 7.99 0.30
4,084 0.16 9.06

2.38 43.4 16.6 68.1 26.9 14.6 1.9 4.0 33.2 61.2 7.47 7.5 10.6 9.48 1.3 11.1 2.01 1.87 0.86 1.00 57.6 11.4 34.5 20.5 49 64 1 1 50 73 97 21 15 24 24 14 13 357 9.57 0.37
4,144 0.22 10.06

1.29 21.5 14.9 63.4 22.8 13.4 1.7 2.0 35.7 63.9 8.39 8.4 9.2 9.92 9.9 10.9 1.53 1.71 0.78 0.60 58.3 13.4 56.6 24.6 47 37 2 1 53 75 93 14 18 28 0 6 24 360 10.83 0.39
4,320 0.24 11.78

1.34 20.8 14.1 61.0 24.2 13.8 1.6 2.0 31.9 53.6 7.03 7.0 7.1 8.87 8.7 9.7 1.84 1.60 0.74 0.98 50.8 11.0 59.6 28.2 50 69 2 1 52 40 94 20 13 10 5 11 5 370 12.62 0.42
4,300 0.26 11.90

continued...

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(Rs crore) Total income (per cent) Interest Forex Commission, brokerage Share of advances (per cent) Priority Public Inter bank Others Abroad Share of advances (per cent) Bills Cash credit Term loans Share of advances (per cent) Secured Government guarantee Unsecured Share of investments (per cent) Government securities Other approved securities Shares Debentures Subsidiary Others Net NPAs (per cent) n.a.: Not available Source: CRIS INFAC

1997-98 90 2 5 38 0 0 61 0 12 67 21 84 14 2 75 5 1 15 0 4 3.1

1998-99 1999-2000 91 2 6 38 0 0 62 0 11 67 22 81 18 2 65 4 2 27 0 3 5.0 89 2 6 37 0 0 62 0 11 65 24 80 17 3 64 3 1 27 0 5 5.7

2000-01 89 2 6 34 0 0 66 0 9 66 25 81 15 4 78 2 1 17 0 2 5.7

2001-02 73 1 5 35 0 0 65 0 8 69 23 77 13 10 81 2 0 14 0 3 6.9

2002-03 77 1 5 38 2 2 58 0 7 64 29 76 15 8 76 1 0 22 0 1 7.4

2003-04 76 1 5 41 6 2 51 0 6 60 33 75 16 9 61 1 0 36 0 2 5.0

288

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Annexure
Section
Glossary 289

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i

Glossary

Interest cost:

The ratio of total interest paid to average borrowed funds.

Borrowed funds: The total of deposits, borrowings and bills payable. Yield on carry business: Defined as the total interest cost upon the average funds in carry business. Funds in carry business: Funds deployed less investment in shares, investments in subsidiaries and joint ventures and other miscellaneous investments; invested within India and outside India. Funds deployed: The funds deployed is defined as the total asset of the bank excluding fixed assets and other assets. Spreads: Spreads are defined as the difference between the yield on carry business less interest cost. Net profitability margin (NPM): NPM is defined as spreads add core fee income ratio less operating expense ratio. Relationship between the interest rate and spreads: Generally, when interest rates are on the rise, both yields and costs go up; conversely, in a declining interest rate scenario, both yields and costs go down. However, in a declining interest rate regime, yields go down faster than costs do. The converse is true in a rising interest rate regime. Operating expense ratio: The ratio of total operating expense to the average funds deployed. Core fee income ratio (or core fee-based income ratio): The ratio of the core fee income to the average funds deployed. Core fee income (or core fee-based income): Core fee income is total other income excluding profit on sale of investments, sale of fixed assets and 50 per cent of the miscellaneous income. Other income: Other income includes income from profit on sale of investments, profit on sale of assets and half of the miscellaneous income. Cost-income ratio: Cost-income ratio is the ratio of total operating expenses to the difference of total income and interest expended. Cost-income ratio (without profit on sale of investment): Cost-income ratio, when calculated without considering profit of sale of investments in the net income.
Continued...
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Net interest income (NII): The difference between the total interest income and total interest expended. Net interest margin (NIM): The ratio of net interest income to average total assets. Business per employee: The ratio of business to number of employees as at end-March. Operating profit per employee: The ratio of operating profit (i.e., profit before provisioning and tax) to the total number of employees as at end-March. Business: Business is defined as the summation of the advances and deposits for the bank. Current deposits: Current deposits are those maintained by business class to meet the shortterm contingencies. No interest is payable on current deposits. Savings deposits: Savings deposits are the deposits maintained by the households. RBI administers the interest rate offered on these deposits. Term deposits: These are also knows as fixed deposits or time deposits and are generally payable at the end of a fixed period. Low cost deposits: Demand deposits and saving deposits together form low cost deposits Low cost deposit ratio: The ratio of low cost deposits to the total deposits is termed as low cost deposit ratio. Food credit: Food credit is the loan/advance given by the banks to the FCI for procurement of food from the open market to be distributed through public distribution system Non-food credit: Non-food credit is the total credit excluding food credit. Capital adequacy ratio: is the ratio of total risk weighted assets of the bank to the eligible capital. Minimum stipulated norm is 9 per cent. Statutory liquidity ratio: Under section 24 (b) of the Banking Regulation Act, 1949, every bank is required to maintain, at the close of business every day, a minimum proportion of its net demand and time liabilities (NDTL) as liquid assets in the form of cash and gold and un-encumbered approved securities. The ratio of liquid assets to demand and time liabilities is known as Statutory Liquidity Ratio (SLR). Gross NPAs: Total of the non-performing assets, before making any provisions. Net NPAs: Non-performing assets net of provisions and amount collected from the NPAs and kept in suspense.
continued...
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Gross NPA ratio: The ratio of gross NPAs to gross advances Net NPA ratio: The ratio of net NPAs to net advances. Basis points: One basis point is one hundredth of a percent. Return on assets: The ratio of profit after tax to average total assets (includes fixed assets and other assets) Credit-deposit ratio: The ratio of total net advances to total deposits. Investment-deposit ratio: The ratio of total investments to total deposits. Cost per employee: The ratio of total wage cost for the bank to total number of employees as at end-March.

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