PERFORMANCE MANAGEMENT

DIGITAL ASSIGNMENT II
Slot: B2+TB2

Rahul R
17BBA0054
INDIAN OVERSEAS BANK

INTRODUCTION:
Type Public

Traded as BSE: 532388

NSE: IOB

Industry Banking
capital markets

Founded 10 February 1937; 82 years ago

Founder M. Ct. M. Chidambaram Chettyar

Headquarters Chennai, Tamil Nadu, India

Number of locations 3557

 T. C. A. Ranganathan
Key people
(Non-Exe Chairman)[1]
 Karnam Sekar
(MD & CEO) [2][3]
Products Loans, credit cards, savings, investment vehicles etc.

Revenue ₹23,517.29 crore (US$3.4 billion) (2016)[4]

Operating income ₹3,629.08 crore (US$520 million) (2018)[5]

Net income ₹21,662 crore (US$3.1 billion) (2018)[6]

Total assets ₹274,436.76 crore (US$40 billion) (2016)[7]

Owner Government of India

Number of employees 31,846 (2016)[8]

Capital ratio 9.66% (2016)[9]

Website www.iob.in
 Indian Overseas Bank (IOB) is a major public
sector bank based in Chennai (Madras). 3700 domestic branches,
including 1150 branches in Tamil Nadu, 3 extension counters, and eight
branches and offices overseas. Indian Overseas Bank has branches in
Singapore, Hong Kong, Colombo, Seoul, and Bangkok. It has
representative offices in Guangzhou, Vietnam and Dubai. Indian
Overseas Bank also is part owner of a joint-venture bank in Malaysia.
Indian Overseas Bank was founded on 10 Feb 1937
and has the distinction of 3 branches at Chennai, Karaikudi and
Rangoon simultaneously commencing business on the inaugural day.
It was founded with twin objectives of specializing in foreign exchange
business and overseas banking.
Indian Overseas Bank (IOB) is a major bank based
in Chennai (Madras), with about 3350 domestic branches, 3 extension
counters and six branches overseas. Indian Overseas Bank has an ISO
certified in Information Technology department, the bank has achieved
100% networking status as well as 100% CBS status for its 3350
branches. IOB also has a network of about 3000 ATMs all over India
and IOB's International VISA Debit Card is accepted at all ATMs
belonging to the Cash Tree and NFS networks. IOB offers internet
Banking (E-See Banking) & Mobile Banking and is one of the banks
that the Govt. of India has approved for online payment of taxes. The
bank's business more than doubled in the last four years.

OBJECTIVES OF STUDY:
The objectives of our study are as follows:
 To assess part and current performance of the bank.
 To study liquidity and solvency position.
 To study the financial performance of IOB in general by
conducting ratio analysis of last 5 years.
 To study profitability of IOB.
Vision:
"To be among the top five nationalised banks in terms of business
volumes and sustained profitability with global recognition guided by
high standards of governance and ethics; and emerge as the "Most
Preferred Banking Partner" to unlock value to all its stakeholders.

Mission:
 Deliver the best of competitive products in terms of quality,
range, utility and cost effectiveness Optimize our HR resources
through training, exposure, mentoring and incentive, relying on
the "soft touch" instead of the "big stick".
 Develop quality bankers who would rise to be future leaders of
the industry.
 Contribute to country's economic growth through dedicated
efforts and customer focus.
 Streamline the process of service delivery from time to time to
meet emerging requirements.
 Nurture a climate of creative problem-solving to resolve
customers' grievances with alacrity ensuring that the Bank is
regarded as Customer Centric.
 Emphasize a policy-oriented and rule-driven culture of
compliance to meet evolving requirements.
 Adopt a multi-disciplinary approach to facilitate future growth
through the evolution of "banks within the Bank.
Liquidity Ratios:
1. Current Ratio :
It compares a firm’s current assets to its current liabilities, and is
expressed as follow:

Current Ratio = Current Assets/Current Liabilities

2. Quick Ratio :
It measures the ability of a company to use its near cash or quick assets
to extinguish or retire its current liabilities immediately.
Quick Ratio = Current Assets- Inventory – Prepaid expenses/
Current liability – Bank OD
3. Fixed Asset Turnover Ratio:
Fixed asset turnover ratio is the ratio of sales to the value of fixed assets.
It indicates how well the business is using its fixed asstes to generate
sales.
Fixed Asset Turnover Ratio = Net Sales/ Book value of Fixed
Assets.
Profitability Ratios:
1. Operating Profit Margin:
Operating Profit Margin is the ratio of operating income to net sales,
usually presented in percent. Net Profit measures the profitability of
ventures after accounting for all costs.
Operating Profit Margin = Operating Profit/ Net Sales X 100

2. Adjusted Cash Margin:

Adjusted Cash Margin is a calculation used to determine the
profitability of a product, product line or company. Adjusted Cash
Margin goes one step further than gross margin because it includes
these inventory carrying costs, which greatly affect the bottom line of
a product’s profitability.
3. Long Term Debt Equity Ratio:
The long-term debt to equity ratio is a method used to determine the
leverage that a business has taken on. To derive the ratio, divide the
long term debt of an entity by the aggregate amount of its common
stock and preferred stock. The formula is:

Long-term debt ÷ (Common stock + Preferred stock) = Long-

term debt to equity ratio

4. Fixed Asset Turnover Ratio:

The fixed asset turnover ratio compares net sales to net fixed assets.
It is used to evaluate the ability of management to generate sales
from its investment in fixed assets. A high ratio indicates that a
business is:

 Doing an effective job of generating sales with a relatively

small amount of fixed assets.
 Outsourcing work to avoid investing in fixed assets.
 Selling off excess fixed asset capacity.

Balance Sheet of Indian Overseas Bank:

Profit & Loss Account of Indian Overseas Bank:

Cash Flow Statement:
Conclusion:
This project makes an attempt to study the performance of Indian
Overseas Bank. We have used ratio analysis method for analyzing and
evaluating the performance of the bank. The highlights of the bank
financial performance during the study period are outlined below:
1. Total income of the bank is continuously increasing this is due to
tremendous increase in the business of the bank. The number of
branches stood at 3350 as on 31-03-14.
2. The bank signed a joint venture agreement with Bank of Baroda and
Andhra bank to open a banking subsidiary in Malaysia.
3. Generally, most banks earn a large portion of their total income
through interest on advances. In Indian Overseas Bank also their major
share of total income is occupied by interest earned on advances. A
lower interest earned ratio means less earnings are available to meet
banks interest payments and other expenditures.
4. The interest expended on deposit to total expenses is showing quite
a high percentage. Actually, the lower the percentages the better. A
higher ratio than indicates that bank is spending too much of its
earnings on paying interest on borrowed money out of the total
expenses.
5. To conclude we can say that IOB bank is emerging as a very good
bank in the banking sector. The bank also focuses on providing
agricultural finance and helps in development of weaker sections of the
society. Bank is continuously opening new branches and is becoming
stronger year by year.