Professional Documents
Culture Documents
ANALYSIS OF FINANCIAL
PREPARED BY:
VIPUL
BBA(GEN)
ENROLL NO.
1
CERTIFICATE
The work has not been anywhere else for the award of
degree. All source of information have been duly
mentioned.
(Project Guide)
MAIMS
2
ACKNOWLEDGEMENT
VIPUL
3
TABLE OF CONTENT
ACKNOWLEDGEMENT
1 EXECUTIVE SUMMARY
2 INTRODUCTION
Objective Of Study
Company Profile
3 RESEARCH METHODOLOGY
Statement of the problem
Research Design
Sampling Technique
Sample size
Sources Of Data Collection
Data Collection Instrument
Data Analysis Technique
Limitation Of The Study
4 DATA ANALYSIS
5 FINDINGS
7 BIBLIOGRAPHY
8 ANNEXURE
4
EXECUTIVE
SUMMARY
5
EXECUTIVE SUMMARY
In any organization, the two important financial statements are the Balance
sheet & Profit and loss account of the business. Balance sheet is a statement of
the financial position of an enterprise at a particular point of time. Profit and
loss account shows the net profit or net loss of a company for a specified period
of time. When these statements of the last few year of any organization are
studied and analyzed, significant conclusions may be arrived regarding the
changes in the financial position, the important policies followed and trends in
profit and loss etc. Analysis and interpretation of the financial statement has
now become an important technique of credit appraisal. The investors, financial
experts, management executives and the bankers all analyze these statements.
Though the basic technique of appraisal remains the same in all the cases but
the approach and the emphasis in analysis vary. A banker interprets the financial
statement so as to evaluate the financial soundness and stability, the liquidity
position and the profitability or the earning capacity of borrowing concern.
Analysis of financial statement is necessary because it help in depicting the
financial position on the basis of past and current records. Analysis of financial
statement helps in making the future decision and strategies. Therefore, it is
very necessary for every organization whether it is a financial or manufacturing
etc. to make financial statement and to analyse it.
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INTRODUCTION
Objective Of Study
Company Profile
7
Objective Of Study
To study about ICICI BANK and its related aspects like its
products & services, history, organizational structure,
subsidiary companies etc.
To analyse the financial statement i.e P&L account and
Balance sheet of ICICI BANK.
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Company Profile
ICICI BANK
ICICI Bank is India’s second-largest bank with total assets of 3,997.95 billion
(US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the
year ended March 31, 2008. ICICI Bank is the most valuable bank in India in terms
of market capitalization and is ranked second amongst all the companies listed
on the Indian stock exchanges. In terms of free float market capitalization*.
The Bank has a network of about 1308 branches and 3,950 ATMs in India and
presence in 18 countries. ICICI Bank offers a wide range of banking products
and financial services to corporate and retail customer through a variety of
delivery channels and through its specialized subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and
asset management. The Bank currently has subsidiaries in the United Kingdom,
Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and
Dubai International Finance Center and representative offices in the United
States, United Arab Emirates, China, South Africa, Bangladesh, Thailand,
Malaysia and Indonesia. UK subsidiary has established a branch in Belgium.
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE) of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).
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3.1.1HISTORY
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly owned subsidiary. ICICI's shareholding
in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in
fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
at the initiative of the World Bank, the Government of India and representatives
of Indian industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a diversified financial
services group offering a wide variety of products and services, both directly
and through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the first Indian company and the first bank or financial institution
from non-Japan Asia to be listed on the NYSE.
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Audit Committee Board Governance & Remuneration
Committee
Mr. Sridar Iyengar Mr. N. Vaghul
Mr. Narendra Murkumbi Mr. Anupam Puri
Mr. M. K. Sharma Mr. M. K. Sharma
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam
Committee of Directors -
Mr. K. V. Kamath
Ms. Chanda D. Kochhar
Ms. Madhabi Puri-Buch
Mr. Sonjoy Chatterjee
Mr. V. Vaidyanathan
Mission
We will leverage our people, technology, speed and financial capital to:
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ICICI Bank’s organisation structure is designed to be flexible and customer-
focused, while seeking to ensure effective control and supervision and
consistency in standards across the organisation and align all areas of operations
to overall organisational objectives. The organisation structure is divided into
six principal groups – Retail Banking, Wholesale Banking, International
Banking, Rural (Micro-Banking) and Agriculture Banking, Government
Banking and Corporate Center.
RETAIL BANKING
The Retail Banking Group is responsible for products and services for retail
customers and small enterprises including various credit products, liability
products, distribution of third party investment and insurance products and
transaction banking services.
WHOLESALE BANKING
The Wholesale Banking Group is responsible for products and services for large
and medium-sized corporate clients, including credit and treasury products,
investment banking, project finance, structured finance and transaction
banking services.
INTERNATIONAL BANKING
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RURAL AND AGRICULTURAL BANKING
GOVERNMENT BANKING
CORPORATE CENTER
BUSINESS REVIEW
During fiscal 2008, the Bank continued to grow and diversify its asset base and
revenue streams by leveraging the growth platforms created over the past few
years. We maintained our leadership position in retail credit, achieved robust
growth in our fee income from both corporate and retail businesses,
strengthened our deposit franchise and significantly scaled up our corporate and
international banking operations.
RETAIL BANKING
We are the largest provider of retail credit in India. Our total retail portfolio was
Rs. 1,316.63 billion at March 31,2008, constituting 58% of our total loans at
that date.
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During fiscal 2008, we continued our focus on strengthening our retail deposit
franchise to create a stable funding base. Our current and savings account
(CASA) deposits as a percentage of total deposits increased from 22% at March
31, 2007 to 26% at March 31, 2008, with savings account deposits increasing by
36% during fiscal 2008.
During the year, we have expanded our branch network substantially. At March
31, 2008, we had 1,262 branches & extension counters compared to 755
branches & extension counters at March 31, 2007, including the addition of
about 200 branches through the merger of Sangli Bank. Our branch network has
further increased to 1,367 as of May 31, 2008. We continued to expand our
electronic channels, namely internet banking, mobile banking, call centres,
point of sale terminals and ATMs, and migrate customer transaction volumes to
these channels. We increased our ATM network to 3,881 ATMs at March 31,
2008 from 3,271 ATMs at March 31, 2007.
During fiscal 2008, our small enterprises customer base increased by 26% to
about 1.1 million accounts. We have introduced our service offerings in over
400 new branches, increasing our coverage to over 1,000 branches. During the
year, we have focused on product specialisation including investment banking
for SMEs. We have continued to focus on shaping the small and medium
enterprises sphere in India through initiatives such as the “Emerging India
Awards”, the SME CEO Knowledge Series - a platform to mentor and assist
SME entrepreneurs, and the “SME Dialogue” - a weekly feature in a leading
financial newspaper sharing SME best practices and success stories. During the
year, we have launched several new products and services like the SME toolkit
– an online business and advisory resource for SMEs.
.
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CORPORATE BANKING
RURAL BANKING
It’s rural strategy is based on enhancing value at every level of the supply chain in all
important farm and non-farm sectors. Towards this end, it offer a range of financial products
and services that cater to the rural masses in all the important sectors like infrastructure,
horticulture, food processing, dairy, poultry, seeds, fertiliser and agrochemical industries.
Customised financial solutions are offered to individual customers, agri small & medium
enterprises, agri corporates and members of their supply chains. On the rural retail side, the
Bank offers crop loans, farm equipment financing, commodity-based loans, working capital
loans for agri-enterprises, microfinance loans, jewel loans as well as savings, investment and
insurance products. In addition bank is introducing products like rural housing finance to
cater to the needs of rural customers.
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INTERNATIONAL BANKING
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3.1.5 PRODUCTS AND SERVICES
BANKING ACCOUNTS
ICICI Bank offers a wide range of banking accounts such as Current, Saving,
Life Plus Senior, Recurring Deposit, Young Stars, Salary Account etc. tailor-
made for every customer segments, from children to senior citizens.
Convenience and ease to access are the benefits of ICICI Bank accounts.
BANK@CAMPUS
This student banking services gives students access to their account details at
the click of a mouse. Plus, the student gets a cheque book, debit card and
annual statements.
SAVINGS ACCOUNTS
Convenience is the name of the game with ICICI bank’s savings account.
whether it is an ATM/debit card, easy withdrawal, easy loan options or
internet banking, ICICI bank’s saving account always keep you in touch of
money.
FIXED DEPOSITS
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INSURANCE
The ICICI group offers a range of insurance products to cover varying needs
ranging from life, pensions and health, to home, motor and travel insurance. The
products are made accessible to customers through a wide network of
advisors, banking partners, Corporate agents and brokers with the added
convenience of being able to buy online.
LIFE INSURANCE
The ICICI group provides the many life insurance product through ICICI
Prudential Life Insurance Company.
GENERAL INSURANCE
The ICICI group provides the many general insurance products like motor,
travel and home insurance through ICICI Lombard General Insurance
Company.
LOANS
ICICI bank offers a range of deposits solutions to meet varying needs at every
stage of life. It offers a range of tenures and other features to suit all
requirements.
HOME LOAN
The No. 1 Home Loans Provider in the country, ICICI Bank Home Loans
offers some unbeatable benefits to its customers - Doorstep Service,
Simplified Documentation and Guidance throughout the Process. It's
really easy !
PERSONAL LOAN
ICICI Bank Personal Loans are easy to get and absolutely hassle free.
With minimum documentation you can now secure a loan for an amount
upto Rs. 15 lakhs.
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VEHICLE LOANS
The No. 1 financier for car loans in the country. Network of more than
2500 channel partners in over 1000 locations. Tie-ups with all leading
automobile manufacturers to ensure the best deals. Flexible schemes &
quick processing are the main advantages are here. Avail attractive
schemes at competitive interest rates from the No 1 Financier for Two
Wheeler Loans in the country . Finance facility upto 90% of the On
Road Cost of the vehicle, repayable in convenient repayment options and
comfortable tenors from 6 months to 36 months
CARDS
ICICI Bank offers a variety of cards to suit different transactional needs. Its
range includes Credit Cards, Debit Cards and Prepaid cards. These cards offer
you convenience for financial transactions like cash withdrawal, shopping and
travel. These cards are widely accepted both in India and abroad.
CREDIT CARD
ICICI Bank Credit Cards give you the facility of cash, convenience and a
range of benefits, anywhere in the world. These benefits range from life
time free cards, Insurance benefits, global emergency assistance service,
discounts, utility payments, travel discounts and much more.
DEBIT CARD
The ICICI Bank Debit Card is a revolutionary form of cash that allows
customers to access their bank account around the clock, around the
world. The ICICI Bank Debit Card can be used for shopping at more than
3.5 Lakh merchants in India and 24 million merchants worldwide.
TRAVEL CARD
ICICI Bank Travel Card. The Hassle Free way to Travel the
world. Traveling with US Dollar, Euro, Pound Sterling or Swiss Francs;
Looking for security and convenience; take ICICI Bank Travel Card.
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Issued in duplicate. Offers the Pin based security. Has the convenience of
usage of Credit or Debit card.
MOBILE BANKING
Bank on the move with ICICI Bank Mobile Banking. With ICICI Bank,
Banking is no longer what it used to be. ICICI Bank offers Mobile Banking
facility to all its Bank, Credit Card, Demat and Loan customers.
ICICI Bank Mobile Banking can be divided into two broad categories of
facilities:
Alert facility : ICICI Bank Mobile Banking Alerts facility keeps you
informed about the significant transactions in yits Accounts. It keeps you
updated wherever you go.
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TRADE-SERVICES: ICICI Bank offers online remittances as well as
online processing of letters of credit and bank guarantees.
ATMs: With more than 2500 ATMs across the country, ICICI Bank has one of
the largest ATM networks in India
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NRI-BANKING: A gamut of services to take care of all NRI banking
needs including deposits, money transfers and private banking.
PROPERTY: For millions of home buyers across the country, ICICI Bank
offers not just great deals on home loans but also a wealth of expert advice.
ICICI Bank offers home search service which can help a customer identify the
property of his choice based on his budget and other requirements.
MICROFINANCE: ICICI Bank assists over 2.5 million low income clients
to build livelihoods by partnering With over 100 microfinance institutions.
CREDIT RISK
Credit risk is the risk that a borrower is unable to meet its financial obligations
to the lender. Bank measure, monitor and manage credit risk for each borrower
and also at the portfolio level. Bank has standardized credit-approval processes,
which include a well-established procedure for comprehensive credit appraisal
and rating. ICICI Bank has well developed internal credit rating methodologies
for rating obligors. The rating factors in quantitative, qualitative issues and
credit enhancement features specific to the transaction. The rating serves as a
key input in the approval as well as post-approval credit processes. Industry
knowledge is constantly updated through field visits and interactions with
clients, regulatory bodies and industry experts. In retail credit operations, the
Board or a Board Committee approves all products, policies and authorizations.
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Credit approval authority lies only with the credit officers who are distinct from
the sales team. Credit scoring models are used in the case of certain
products like credit cards. External agencies such as field investigation agencies
and credit processing agencies are used to facilitate a comprehensive due
diligence process including visits to offices and homes in the case of loans to
individual borrowers.
MARKET RISK
Market risk is the risk of loss resulting from changes in interest rates, foreign
currency exchange rates, equity prices and commodity prices. The objective of
market risk management is to minimize the impact of losses on earnings and
equity capital due to market risk. Market risk policies include the Investment
Policy and the Asset-Liability Management (ALM) Policy. The policies are
approved by the Board of Directors. The Asset Liability Management
OPREATIONAL RISK
Operational risk is the risk of loss that can result from a variety of factors,
including failure to obtain proper internal authorizations, improperly
documented transactions, failure of operational and information security
procedures, computer systems, software or equipment, fraud, inadequate
training and employee errors. Bank’s approach to operational risk management
is designed to mitigate operational risk by maintaining a comprehensive system
of internal controls, establishing systems and procedures to monitor
transactions, maintaining key back-up procedures and undertaking regular
contingency planning. Effective operational risk management system would
ensure that bank has sufficient information to make appropriate decisions about
additional controls, adjustments to controls, or other risk responses. Operational
risk management policy aims at minimizing losses and customer dissatisfaction
due to failure in processes, focusing on flaws in products and their design that
can expose the bank to losses due to fraud, analyzing the impact of failures in
systems, developing mitigants to minimize the impact and developing plans to
meet external shocks that can adversely impact continuity in the bank’s
operations.
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DOMESTIC SUBSIDIARIES
ICICI Home Finance Company Limited
ICICI Investment Management Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Prudential Life Insurance Company Limited
ICICI Securities Limited
ICICI Trusteeship Services Limited
ICICI Venture Funds Management Company Limited
ICICI Securities Primary Dealership Limited
ICICI Prudential Asset Management Company Limited
ICICI Prudential Trust Limited
INTERNATIONAL SUSIDIARIES
ICICI Bank Canada
ICICI Bank Eurasia Limited Liability Company
ICICI International Limited
ICICI Securities Holding Inc
ICICI Securities Inc
ICICI Bank Uk Limited
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ICICI PRUDENTIAL INSURANCE COMPANY
ICICI Life continued to maintain its market leadership among private sector life
insurance companies with a market share of 12.71% on the basis of weighted
received premium. Life insurance companies worldwide make losses in the
initial years, in view of business set-up and customer acquisition costs in the
initial years as well as reserving for actuarial liability. While the growing
operations of ICICI Life had a negative impact of Rs. 10.31 billion on the
Bank’s consolidated profit after tax in FY2008 on account of the above reasons,
the company’s unaudited New Business Achieved Profit (NBAP) for FY2008
was Rs. 12.54 billion as compared to Rs. 8.81 billion in fiscal 2007.
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required to expense upfront, on origination of a policy, all sitscing expenses
related to the policy. While ICICI General’s profit after tax for Rs. 1.03 billion
in fiscal 2008,a growth of 50.5% over fiscal 2007.The combined ratio is the sum
of net claims and expenses as a percentage of premiums and indicates the
surplus generated on an annualised basis from the business written during a
period (excluding investment income).
ICICI Venture Funds Management Company Limited (ICICI Venture) strengthened its
leadership position in privateequity in India, with funds under management of about Rs.
95.50 billion at year-end fiscal 2008. ICICI Venture achieved a profit after tax of Rs. 0.90
billion in fiscal 2008 compared to Rs. 0.70 billion in fiscal 2007.
of India
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The Bank received several awards during fiscal 2008, including the
following:
Awards 2007
“Most Preferred Brand” for home loans, auto loans, credit cards
METHODOLOGY
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LIMITATIONS
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DATA
ANALYSIS
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4.1 STUDY OF PROFIT& LOSS A/C
4.1.3 FORMAT: The Companies act does not provide any specific format
for this account. However it is required to be prepared on the basis of the
instructions given in part ii of schedule (vi) of the companies act.
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Preliminary expenses: Such expenses include the costs of formation of a
company and since their amount is usually large, it is not desirable to
write off them in one year.
Provision for taxation: The profit and loss account of a company must
be debited with the estimated liabilities for tax on the current profits at
current rates of taxation.
Unclaimed dividends: It is shown on the liabilities side of the balance
sheet under the heading ‘current liabilities ‘.
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4.2 STUDY OF BALANCE SHEET
Inventories: Your inventories are your goods that are available for sale,
products that you have in a partial stage of completion, and the materials
that you will use to create your products. The costs of purchasing
merchandise and materials and the costs of manufacturing your various
product lines are accumulated in the accounting records and are identified
with either the cost of the goods sold during the fiscal period or as the
cost of the inventories remaining.
Prepaid expenses: These expenses are payments made for services that
will be received in the near future. Strictly speaking, your prepaid
expenses will not be converted to current assets in order to avoid
penalizing companies that choose to pay current operating costs in
advance rather than to hold cash. Often your insurance premiums or
rentals are paid in advance.
Investments: Investments are cash funds or securities that you hold for a
designated purpose for an indefinite period of time. Investments include stocks
or the bonds you may hold for another company, real estate or mortgages that
you are holding for income-producing purposes. Your investments also include
money that you may be holding for a pension fund.
Plant Assets: Often classified as fixed assets, or as plant and equipment, your
plant assets include land, buildings, machinery, and equipment that are to be
used in business operations over a relatively long period of time. It is not
expected that you will sell these assets and convert them into cash. Plant assets
simply produce income indirectly through their use in operations.
Intangible Assets: Your other fixed assets that lack physical substance are
referred to as intangible assets and consist of valuable rights, privileges or
advantages. Although your intangibles lack physical substance, they still hold
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value for your company. Sometimes the rights, privileges and advantages of
your business are worth more than all other assets combined.
Other Assets: During the course of preparing your balance sheet you will
notice other assets that cannot be classified as current assets, investments, plant
assets, or intangible assets. These assets are listed on your balance sheet as other
assets. Frequently, your other assets consist of advances made to company
officers, the cash surrender value of life insurance on officers, the cost of
buildings in the process of construction, and the miscellaneous funds held for
special purposes.
Long-Term Liabilities: Your debts that are not due until more than a year from
the balance sheet date are generally classified as long-term liabilities. Notes,
bonds and mortgages are often listed under this heading. If a portion of your
long-term debt is due within the next year, it should be removed from the long-
term debt classification and shown under current liabilities.
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Deferred Revenues: Your customers may make advance payments for
merchandise or services. The obligation to the customer will, as a general rule,
be settled by delivery of the products or services and not by cash payment.
Advance collections received from customers are classified as deferred
revenues, pending delivery of the products or services.
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Assets
Current Assets
Cash and cash equivalents
Inventories
Account receivable
Non-Current Assets
Property, plant and equipment
Goodwill
Investment in associates
Miscellaneous Expenditure
Revaluation reserve
Translation reserve
Retained earnings
Minority interest
Non-Current Liabilities
Bank loan
Issued debt securities
Current Liabilities
Accounts payable
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Current income tax liability
Short-term provisions
XYZ CORPORATION
BALANCE SHEETS
December 31, 2008
Format: There are two basic ways that balance sheets can be arranged. In
Account Form, your assets are listed on the left-hand side and totaled to
equal the sum of liabilities and stockholders' equity on the right-hand
side. Another format is Report Form, a running format in which your
assets are listed at the top of the page and followed by liabilities and
stockholders' equity. Sometimes total liabilities are deducted from total
assets to equal stockholders' equity.
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Captions: Captions are headings within your statement that designate
major groups of accounts to be totaled or subtotaled. Your balance sheet
should include three primary captions: Assets, Liabilities and
Stockholders' Equity. In the report form of presentation, the placement of
your primary captions would be as follows: 2006 ASSETS, LIABILITIES
AND STOCKHOLDER’S EQUITY.
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4.3 STUDY OF CASH FLOW STATEMENT
4.4.2 PURPOSE: The main purpose of analyzing the financial statement are
the following:-
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4.4.3 TOOLS FOR ANALYSING
1.PERCENTAGE CALCULATION
There are two popular methods by which we can analyze the financial
statement by calculating percentage as taking a common base.
Horizontal Analysis
When an analyst compares financial information for two or more years
for a single company, the process is referred to as horizontal analysis,
since the analyst is reading across the page to compare any single line
item, such as sales revenues. In addition to comparing dollar amounts, the
analyst computes percentage changes from year to year for all financial
statement balances, such as cash and inventory. Alternatively, in
comparing financial statements for a number of years, the analyst may
prefer to use a variation of horizontal analysis called trend analysis.
Trend analysis involves calculating each year's financial statement
balances as percentages of the first year, also known as the base year.
When expressed as percentages, the base year figures are always 100
percent, and percentage changes from the base year can be determined.
If we want to calculate % change in sales then we apply the following
formula:
Percentage=change in sales /Base Year Sales*100
Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single
financial statement as a percentage of a total. The term vertical analysis
applies because each year's figures are listed vertically on a financial
statement. The total used by the analyst on the income statement is net
sales revenue, while on the balance sheet it is total assets. This approach
to financial statement analysis, also known as component percentages,
produces common-size financial statements. Common-size balance
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sheets and income statements can be more easily compared, whether
across the years for a single company or across different companies.
If we want to calculate % change of current assets then we apply the
following formula:
Percentage: current assets/total assets*100
2.RATIO ANALYSIS
Financial ratio analysis uses formulas to gain insight into the company
and its operations. For the balance sheet, using financial ratios (like the
debt-to-equity ratio) can show you a better idea of the company’s
financial condition along with its operational efficiency. It is important to
note that some ratios will need information from more than one financial
statement, such as from the balance sheet and the income statement. Ratio
analysis facilitates inter-firm and intra-firm comparison.
Ratios are often classified using the following terms:
LIQUIDITY RATIO
Liquidity ratios are measures of the short-term ability of the company to
pay its debts when they come due and to meet unexpected needs for cash.
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Quick ratio= (cash + marketable securities +
Receivables)/current
liabilities
SOLVENCY RATIO
Solvency ratios indicate the ability of the company to meet its long-term
obligations on a continuing basis and thus to survive over a long period of
time.
Debt/Worth Ratio: This ratio expresses the relationship between capital
contributed by creditors and that contributed by owners. It expresses the
degree of protection provided by the owners for the creditors. The higher
the ratio, the greater the risk being assumed by creditors. The lower the
ratio, the greater the long-term financial safety. A firm with a low
debt/worth ratio usually has a greater flexibility to borrow in the future. A
more highly leveraged company has a more limited debt capacity.
PROFITABILITY RATIO
Profitability ratios are gauges of the company's operating success for a
given period of time.
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Fixed/Worth Ratio: This ratio measures the extent to which owner’s
equity (capital) has been invested in plant and equipment (fixed assets). A
lower ratio indicates a proportionately smaller investment in fixed assets
in relation to net worth and a better cushion for creditors in case of
liquidation. Similarly, a higher ratio would indicate the opposite situation.
The presence of substantial leased fixed assets (not shown on the
balance-sheet ) may deceptively lower this ratio.
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FINDINGS
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5.1 MANAGEMENT DISCUSSION & ANALYSIS
Summary
Profit before provisions and tax increased by 35.5% to Rs. 79.61 billion in
fiscal 2008 from Rs. 58.74 billion in fiscal 2007 primarily due to an increase
in net interest income by 29.6% to Rs. 73.04 billion in fiscal 2008 from Rs.
56.37 billion in fiscal 2007 and an increase in non-interest income by 27.2%
to Rs.88.11 billion in fiscal 2008 from Rs. 69.28 billion in fiscal 2007, offset,
in part, by an increase in non-interest expenses by 21.9% to Rs. 81.54 billion
in fiscal 2008 from Rs. 66.91 billion in fiscal 2007. Provisions and
contingencies (excluding provision for tax) increased by 30.5% during fiscal
2008 primarily due to a higher level of specific provisioning on non-
performing loans, offset, in part by a reduction in general provision on loans.
Profit before tax increased by 38.6% to Rs. 50.56 billion in fiscal 2008 from
Rs. 36.48 billion in fiscal 2007. Profit after tax increased by 33.7% to Rs.
41.58 billion in fiscal 2008 from Rs. 31.10 billion in fiscal 2007.
Net interest income increased by 29.6% to Rs. 73.04 billion in fiscal 2008
from Rs. 56.37 billion in fiscal 2007, reflecting an increase of 27.6% or Rs.
711.07 billion in the average volume of interest-earning assets and an
increase in net interest margin to 2.22% in fiscal 2008 compared to 2.19% in
fiscal 2007.
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Provisions and contingencies (excluding provision for tax) increased to Rs.
29.05 billion in fiscal 2008 from Rs. 22.26 billion in fiscal 2007 primarily
due to higher level of specific provisioning on retail loans due to change in
the portfolio mix towards non-collateralised loans and seasoning of the loan
portfolio, offset in part by a reduction in general provision on loans due to
lower growth in the loan portfolio relative to fiscal 2007.
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5.2 COMPARATIVE INCOME STATEMENT
TREND ANALYSIS
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By anlysing the summarized profit & loss account of ICICI Bank, the following trends are
presented:
Operating profit increased to Rs. 79.61 Billion for FY2008 from Rs. 58.74 Billion for
FY2007 which is less than as compared to increased to Rs. 5,874 crore for FY2007
from Rs. 3,888 crore for FY2006
Profit after tax increased to Rs. 41.58 Billion for FY2008 from Rs. 31.10 Billion for
FY2007 which is less than as compared to increased to Rs 3,110 crore for FY2007
from Rs. 2,540 crore for FY2006.
Profit before tax increased to Rs. 50.56 Billion for FY2008 from Rs. 36.48 Billion
for FY2007 which is also less than as compared to increased to Rs. 3,648 crore for
FY2007 from Rs. 3,097 crore for FY2006.
Total interest income increased by 37.8% to Rs. 316.86 billion in fiscal 2008 from Rs.
229.94 billion in fiscal 2007 and interest income, net of amortisation on Government
securities, increased by 40.0% to Rs. 307.88 billion in fiscal 2008 from Rs. 219.95
billion in fiscal 2007 primarily due to an increase of 27.6% in the average interest
earning assets and an increase of 83 basis points.
Fee income increased by 32.2% to Rs. 66.27 billion in fiscal 2008 from Rs. 50.12
billion in fiscal 2007 primarily due to growth in fee income from structuring and
advisory fees, fees from international operations, third party distribution fees.
Total non-interest expense increased by 21.9% to Rs. 81.54 billion in fiscal 2008 from
Rs. 66.91 billion in fiscal 2007 primarily due to a 28.6% increase in employee
expenses and 31.6% increase in other administrative expenses.
Interest income is increased at a higher rate than the previous year i.e. 47% in 2007 to
61% in 2008.
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Provisions and contingencies (excluding provision for tax) increased to Rs. 29.05
billion in fiscal 2008 from Rs. 22.26 billion in fiscal 2007
TREND ANALYSIS
SUMMARIZED BALANCE-SHEET
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By anlysing the balance sheet of ICICI Bank, the following
trends are presented:
Our total assets increased by 16.0% to Rs. 3,997.95 billion at year-end
fiscal 2008 from Rs. 3,446.58 billion at year-end fiscal 2007.
Increase in cash balance with bank in 2008 is more than in the previous
year 2007. In 2007 it is Rs.371.21 Billion and in 2008 it is Rs.380.41
Billion
But increase in SLR investment in 2008 is also more than the previous
year. In 2007 it is 673.68 Billion and in 2008 it is 750.31 Billion.
Increase in fixed and other assets is also less than in 2008 from 2007 i.e
23% as compared to 30% in 2007 from 2006.
Increase in net worth is also less than from previous year in 2008 i.e 80%
in 2007 to 9% in 2008.
Our equity share capital and reserves at year-end fiscal 2008 increased to
Rs. 464.71 billion as compared to Rs. 243.13 billion at year-end fiscal
2007
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Total deposits increased by 6.0% to Rs. 2,444.31 billion at year-end fiscal
2008 from Rs. 2,305.10 billion at year-end fiscal 2007.
Increase in other liabilities is more in 2008 than in 2007 i.e from 14% in
2007 to 25% in 2008.
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5.4 RATIO ANALYSIS
1) CURRENT RATIO:
In 2008:
Current Ratio=2636.57/1109.9=2.4:1
In 2007:
Current Ratio=2329.87/920.36=2.6:1
2) QUICK RATIO:
In 2008:
Current Liabilities=1109.9billion
Quick Ratio=380.41/1109.9=0.40:1
In 2007:
Current Liabilities=920.30billion
Quick Ratio=371.21/920.30=0.40:1
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3) RETURN ON AVERAGE ASSETS:
average assets= total assets at the beginning + total assets at the end/2
average equity= total equity at the beginning + total equity at the end/2
5) FIXED/WORTH RATIO:
In 2008:
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In 2007:
In 2008:
Average assets=2095.24
In 2007:
Average assets=2980.84
(approximately)
The above table shows that:- both current ratio and quick ratio is liquidity ratio.
The ideal ratio for current ratio is 2:1 and ideal ratio for quick ratio is 1:1. In
these table current ratio of both year is higher than the ideal ratio which shows
that there is enough current assets which make the bank able to pay its current
liabilities on time but quick ratio is lower than the ideal ratio which shows that
bank have not enough liquid assets to pay their current liabilities. Therefore
bank should keep some assets in the form of liquid assets such as cash,
marketable securities etc.
Return on equity, return on assets and operating profit to working funds are
profitability ratio. The higher the profitability ratio of any organization is show
the better position of that organization. The profitability ratio of ICICI bank is
very low. It is deceasing from the previous year.
Fixed/worth ratio measures the extent to which owner’s equity has been
invested in plant and equipment . A lower ratio indicates a proportionately
smaller investment in fixed assets. This ratio shows that bank has invested more
in current assets than the fixed assets. It could be a good position in case of
liquidation.
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CONCLUSION
AND
SUGGESTIONS
CONCLUSION
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The balance-sheet along with the income statement is an important tools for
investors and many other parties who are interested in it to gain insight into a
company and its operation. The balance sheet is a snapshot at a single point of
time of the company’s accounts- covering its assets, liabilities and shareholder’s
equity. The purpose of the balance-sheet is to give users an idea of the
company’s financial position along with displaying what the company owns and
owes. It is important that all investors know how to use, analyze and read
balance-sheet. P & L account tells the net profit and net loss of a company and
its appropriation.
In the case of ICICI Bank, during fiscal 2008, the bank continued to grow and
diversify its assets base and revenue streams. Bank maintained its leadership in
all main areas such as retail credit, wholesale business, international operation,
insurance, mutual fund, rural banking etc. Continuous increase in the number of
branches, ATM and electronic channels shows the growth take place in bank.
Trend analysis of profit & loss account and balance sheet shows the % change
in items of p & l a/c and balance sheet i.e. % change in 2006 from 2005 and %
change in 2007 from 2006. It shows that all items are increased mostly but
increase in this year is less than as compared to increase in previous year. In p &
l a/c, all items like interest income, non-interest income, interest expenses,
operating expenses, operating profit, profit before tax and after tax is increased
but in mostly cases it is less than from previous year but in some items like
interest income, interest expenses, provision % increase is more. Some items
like tax, depreciation, lease income is decreased. Similarly in balance sheet all
items like advances, cash, liabilities, deposits is increased except borrowings
which is decreased. % increase in some item is more than previous year and in
some items it is less.
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Ratio analysis of financial statement shows that bank’s current ratio is better
than the quick ratio and fixed/worth ratio. It means bank has invested more in
current assets than the fixed assets and liquid assets. Bank have given more
advances to its customer and they have less cash in their hand. Profitability
ratio of bank is lower than as compared to previous year. Return on equity is
better than the return on assets.
The cash flow statement shows that net increase in cash generated from
operating and financing activities is much more than the previous year but cash
generated from investing activities is negative in both year. There is increase of
159,708,479 thousand RS. in Increase in cash & cash equivalents from previous
year. Therefore analysis of cash flow statement shows that cash inflow is more
than the cash outflow in ICICI Bank.
Thus, the ratio analysis and trend analysis and analysis of cash flow statement
shows that ICICI Bank’s financial position is good. Bank’s profitability is
increasing but not at high rate. Bank’s liquidity position is fair but not good
because bank invest more in current assets than the liquid assets. As we all
know that ICICI Bank is on the first position among all the private sector bank
of India in all areas but it should pay attention on its profitability and liquidity.
Bank’s position is stable.
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SUGGESTIONS
Some of the recommendation and suggestion are as follows:
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BIBLOGRAPHY
73
BIBLOGRAPHY
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ANNEXURE
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PROFIT AND LOSS A/C
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BALANCE-SHEET
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