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1) Sources of funds for the banks: The major sources of funds for a bank are from deposits, borrowings

, share capital, reserves and surplus. The proportion of deposits and borrowings of the total liabilities for the banks chosen is as follows Union Bank of India: 91% City Union Bank: 91% Standard charted: 63% The equity base is very low for banks and hence the financial leverage is very high. This is risky and can lead to financial volatility. 2) Proportion of Equity, Capital and Reserves: Bank Union Bank Of India City Union Bank Standard Charted Proportion 5.6 6.7 11.6

3) Comparison of liability composition: The liability composition of CUB and UBI are more or less the same. Standard charted has a lesser proportion in terms of deposits and borrowings. This shows that CUB and UBI are financially riskier than SC. They would require more liquidity. KPI UBI (Public) 0.05912234 Standard Chartered (Foreign) 0.07172329 0.048187872 CUB (Private)

Cost of funds

Also if we look at the cost of funds ratio SC has a lower ratio when compared to the other three banks which shows the variable cost for funds by this bank is lower.

41 Over 3 yrs and upto 5 years 19463.73% 3.67% 4.92 57369470 55568820 13.16 222869 UBI CUB SC 3369.02% 11355. CUB and UBI show a higher percentage of advances indicating a more risky deployment of funds.71% 0. This is because the rates on deposits are fixed.42 123070387 790.6 45.85% 19.80% 8.31 57136123 22593.83% 12.37 77162613 5260.14% 5.93% 10.7% of investments.53 132.95% 69.36% 0.49% 611.11 164257 32. Bank Investments Advances 66 67. The cost structure of CUB and SC is better than UBI.6 Fixed assets 0. 5) Uses of funds Among the three banks the use of investments as a source of income is found to be lower.06% 2.28% 16340.89% 1.9 Over 1 year and upto 3 years 44458.27 6476135 8.47% In case of UBI long term deposits for a major proportion while in case of CUB and SC medium term deposits form a major proportion of the total deposits.76 639646971 0.01% 0.96 25. Fixed assets form a very meagre part of the uses of funds.1 625. However among the three banks Standard Chartered has a higher percentage of fixed assets.15% 1.4) Maturity pattern of deposits Percentage to total deposits UBI CUB SC 1.39 1636.2 Standard Chartered 22.26 130.24% 5.03% Duration Day 1 2-7 days 8-14 days 15 to 28 days 29 days to 3 mnths Over 3 months and upto 6 months 12625.53 0.07 CUB 25 UBI 24.4 6) Vulnerabilities of uses of funds For CUB the investments made in short term securities (overnight up to one year) formed 65.81% 10.97% 8.89 191203507 19.09 Over 5 years Total 71949.69% 29.89 2.94% 3.8% and 71.14 6623276 8262.14% 1.04% 3.84% 8.59 956. If any measure is taken by the RBI to reduce these rates then the impact on banks which have larger quantity of long term deposits is that their income will decline along with the interest rates.72% 10.7% .74% 76.94 64872383 4313.96 Over 6 months and upto 1 year 30572.51% 0. The same figure for UBI and Standard Chartered are 10.

0435 0.66311442 0. The sharp contrast in numbers indicates that UBI invests in high risk investments compared to the other two banks. Standard Chartered-0.0068 0.653418551 0. high liquidity policy whereas UBI has a rather low liquidity.0273 1.9191 0.164224085 0.1143 Equity multiplier Equity ratio Capital adequacy ratio Adjusted capital adequacy Provision ratio Net NPA to assets ratio Net NPA to equity ratio Average risk-weighted assets Incremental risk of asset portfolio Equity multiplier Equity ratio Capital adequacy ratio UBI 17.0677 0.1115 0.0313 1.6040 0. Standard Chartered 8. In this case UBI and Standard Chartered follow a safe.91911 14. This could be riskier for the bank Ratios Credit-asset ratio Net loans-asset ratio Short term investments total assets ratio UBI Standard Chartered 0. Ideally ROA should be high and EM should be low.0025 0.9191 0.22545 0.respectively.433950674 0.0029 0.76205 8.01547696 0.12214 0.0001 0.1143 0.1023 0.456669077 0.0227). .0114 0.12273 Comments The equity multiplier for SC is almost half of the other two banks.0032 0.7620 0.01527 0.5156 0.1185 0.1257 0. Profitability of the bank The profitability ratios of all the three banks have been calculated in the excel sheet. CUB-0.7620 0.211063778 CUB From the ratio analysis it was observed that UBI and CUB have similar type of credit-ratio indicating advances which have higher default risk compared to Standard Chartered. All the three banks are found to have healthier credit portfolio since the difference between credit-asset ratio and net loans-asset ratio is low (UBI-0.67629423 0.0115 0. Short term investments .0000 0. 8. So the deviation in returns is assets ratio.1207 0.60401 ROE(=ROA*EM) 0.00682 0.1257 UBI CUB SC ROA 0.6040 0.0006 0.008.2067 0.01426 Equity Multiplier 17.1706 8.1257 14.0001 17.0114 0. Higher liquidity at the cost of profitability could be detrimental to the bank.0677 0.013.1185 CUB 14.661418264 0.0006 assets ratio indicates that UBI has lower liquidity and higher profitability compared to CUB and Short term investments .

CUB – 717 crores 11. 2. The risks of SC and CUB look similar. c) Exposure to the real estate sector : I. Vulnerabilities of the banks a) The NPAs to net advances(%) is high for UBI – 1. asset utilization. Example: Some banks are opposing the Basel 3 norms because they think the amount of capital reserves required under it would be unreasonable especially during an economic slowdown.44%. Threats to bank’s profitability The threats to all the three banks are almost common and can be summarized as follows: 1. we can say that UBI being a public sector has done well in terms of high operating efficiency.70% up from 0. c) Risk: Based on the ratios (equity multiplier. Priority sector mandatory lending can also be seen as a threat especially for private sector banks (CUB) where the operating costs (in certain areas) are much higher than the returns.000 crores UBI and 119 crores for SC. low cost of funds. Increase in NPAs brings down the profitability of the bank. Increase in CRR also leads to reducing the bank’s profitability as no interest is earned on that money. International regulations can be the biggest threat. 4. The same value for SC is 0. average risk weighted assets) under this section we can say that UBI is taking more risks than SC and CUB.203 crores III. 10.9. b) While unsecured advances for CUB it NIL.27% last year. UBI – 20580 crores II. ROA. net NPA to assets ratio. Profits if UBI and SC are comparable in terms of the ratios. we can say that SC needs higher liquidity that CUB which in turn needs higher liquidity than UBI. lower overhead efficiency burden ratio. yield on assets show that CUB is make better profits that SC and UBI. . demand deposit ratio. b) Liquidity: Based on demand-to-time deposit ratio. provision ratio. it is 38. capital adequacy ratio. SC . non deposit borrowing ratio. profit margin. d) Profitability: Ratios like ROE. Overall assessment of the three banks The overall assessment of the three banks can be summarized as follows: a) Efficiency and Expense control: Based on the KPIs under this section.5. 3. But income productivity per employee and breakeven volume of incremental cost per employee is better for foreign and private banks.70 % compared to CUB – 0.