ACKNOWLEDGEMENT

I express my sincere gratitude to my faculty guide Mrs. Ritu Sharma, for her able guidance, continuous support and cooperation throughout my dissertation without which the present work would not have been possible. Also I am thankful to my other faculty of my institute, for continued guidance and invaluable encouragement.

Signature

Diwakar Srivastava

DISSERTATION SUBMITTED TOWARDS THE FULFILLMENT OF POST GRADUATE DEGREE IN FINANCIAL MANAGEMENT

“A STUDY ON THE PERFORMANCE OF PUBLIC SECTOR BANKS PRE & POST FINANCIAL CRISIS”
SUMITTED BY DIWAKAR SRIVASTAVA ENR.NO. A30101908020
SEC. A

SUBMITTED TO MRS. RITU SHARMA

AMITY GLOBAL BUSINESS SCHOOL, NOIDAAMITY UNIVERSITY – UTTAR

PRADESH

2

Sr.No. CONTENTS
1 2 3 4 5 6 7 8 9 10 OBJECTIVE. INTRODUCTION. REVIEW OF LITERATURE. INDUSTRY PROFILE. COMPANY PROFILE. STATE BANK OF INDIA. PUNJAB NATIONALBANK. ANALYSIS AND INTERPRETATION WITH FOOT NOTE. CONCLUSION. BIBLIOGRAPHY.

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they are also permitted to do other types of business referred to as Utility Services for their customers (Banking Regulation Act."accepting deposits of money from public for the purpose of lending or investing. In the process of doing the above-mentioned primary functions.INTRODUCTION Banking in India was defined under Section 5(A) as "any company which transacts banking. repayable on demand through cheque/draft or otherwise". 4 . 1949). business" and the purpose of banking business defined under Section 5(B).

Banking performance is the mirror reflection of an economy. What was their strategy to fight the global recession and also to compete the private sector banks with better products and services.OBJECTIVE To learn how the Indian banks were performing before the financial crisis and how they performed during and after crisis. 5 . So long as banks do their primary function of banking by lending to the constituents of economy. they stand a chance of nudging ahead.

Total deposits. adequate capitalisation. With in the group of banks.REVIEW OF LITERATURE INTRODUCTION ON PUBLIC SECTOR BANKS Indian Banking sector is dominated by Public sector banks (PSBs) which accounted for 72.4% of total deposits). Minister Pranab Mukherjee may announce on Monday recapitalization of public sector banks to help them meet the credit demand of productive sectors. In FY09. The government had announced its intend to retain majority stake in public sector banks in its budget early this month.5 billion rupees more by the end of September.6%.5 billion rupees of capital into three public sector banks and is expected to infuse 21. as was seen in the western world in mid FY09. Peculiar characteristic of Indian banks unlike their western counterparts such as high share of household savings in deposits (57. advances and net profit grew at CAGR of 19. foreign and private sector banks grew at higher rate than the industry from FY03 to FY08 primarily because of lower base effect and rapid expansion undertaken by these banks. Although there is a restrictive entry/expansion for private and foreign banks in India.4% and 20. Banking sector recorded credit growth of 33.3% in FY05 which was highest in last 2 and half decades and credit growth in excess of 30% for three consecutive years from FY04 to FY07. Crisil said in a statement. the government infused 16. which is best in the banking industry so far. overall growth in credit and deposits was led by PSBs. The Scheduled Commercial Banks (SCBs) in India have shown an impressive growth from FY04 to the mid of FY09. In fiscal 2009. 6 . PSBs have rapidly expanded their foot prints after nationalization of banks in India in 1969 and further in 1980. stricter regulations and lower leverage makes them less prone to financial crisis. 27.2% respectively from FY03 to FY08. especially those hit hard by the global financial meltdown. reversing its earlier plans of reducing the shareholding to 33 percent while retaining management control.6% of total advances for all SCBs as on 31st March 2008. growth of private and foreign banks was significantly lower in FY09 due to their high exposure to stressed sectors and problem at parent level for foreign banks. Increase in economic activity and robust primary and secondary markets during this period have helped the banks to garner larger increase in their fee based incomes. these banks have increased their presence and business over last 5 years. However.

who are intrusted with its management.. they stand a chance of nudging ahead.5-9. the United Bank of India Ltd. a Government of India Undertaking offers Domestic. Public Sector bank means any Government Sector Bank/Institute that goes public. During 2007-08. (1918). United Bank of India is one of the 14 major banks which were nationalized on July 19. While lending rates rose to 12. in making advances of money.. The overall stance of RBIs monetary and credit policy during the year was to ensure price stability and financial system stability along with continuation of the growth momentum. PLRs and deposit rates of rnajor banks were hiked during the year. the Bank Rate. 1969.50%. 7 . deposit rates (for more than one year maturity) rose to 8. So long as banks do their primaryfunction of banking by lending to the constituents of economy. RBI raised the Cash Reserve Ratio four times: in April. Repo and Reverse Repo rates were kept unchanged. to keep up the growth momentum in the economy. means that issues it share to general public. and they elect from their own body a certain number.. some banks announced cuts in their PLR and interest rate on housing loans below Rs. Comilla Banking Corporation Ltd. The business of banking consists chiefly in receiving deposits of money. OBC is implementing a GRAMEEN PROJECT in Defraud District (UP) and Hanumangarh District (Rajasthan) disbursing small loans. despite the rash of privatizations of the last 10 years and including the pickup in the last five years.0% from 7.25-9.INDUSTRY PROFIL Banking performance is the mirror reflection of an economy. Comilla Union Bank Ltd. emphasis on credit quality and credit delivery including financial inclusion.50%. and in affecting the transmission of money from one place to another. Among the Public Sector Banks in India.2512. Bengal Central Bank Ltd. A public sector bank also looks for funding developmental work in the country as the government has a majority share in it A public bank is that in which there are numerous partners or shareholders. principally in the way of discounting bills. To manage the liquidity in the economy. (1914). (1932). August and November 2007 from 6% to 7.0% in the previous financial year. upon which interest may or may not be allowed. in the month of February 2008. It also has a greater share of government (more than 50%) so that the main motto of social welfare other than maximizing Profit remains. However. NRI and Commercial banking services. (1922) and Hooghly Bank Ltd.20 lakh.75% from 12. in the Public Sector Banks. In line with liquidity tightening. Its predecessor.25-12. Public banks still dominate the banking systems serving the majority of people in developing countries. This Public Sector Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs. was formed in 1950 with the amalgamation of four banks viz. Oriental Bank of Commerce (OBC).

The following are the list of Public Sector Banks in India                     Allahabad Bank Andhra Bank Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Corporation Bank Dena Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab & Sind Bank Punjab National Bank Syndicate Bank UCO Bank Union Bank of India United Bank of India Vijaya Bank 8 .

COMPANY PROFILE REFORMS IN BANKING SECTOR CAMELS stands for Capital Adequacy. It is recorded that SBI has about 10000 branches. Liquidity and Systems with reference to reforms in Banking Sector. In order to cater to different functions. State Bank of India owns and operates the following subsidiaries and Joint Ventures The corporate center of SBI is located in Mumbai. Efficiency. The eight banking subsidiaries are: • • • • • • • • State Bank of Bikaner and Jaipur (SBBJ) State Bank of Hyderabad (SBH) State Bank of India (SBI) State Bank of Indore (SBIR) State Bank of Mysore (SBM) State Bank of Patiala (SBP) State Bank of Saurashtra (SBS) State Bank of Travancore (SBT) 9 . the premier Nationalized Indian Bank. there are several other establishments in and outside Mumbai. Asset Quality. The bank boasts of having as many as 14 local head offices and 57 Zonal Offices. State Bank of India is India's largest bank amongst all public and private sector banks operating in India. located at major cities throughout India. apart from the corporate center. BANKS CHOSEN FOR ANALYSIS For the purpose of analyzing the financial performance of public sector banks . well networked to cater to its customers throughout India. I have hereby chosen two major public sector banks namely State Bank Of India and Punjab national bank STATE BANK OF INDIA Introduction State Bank of India or SBI Bank . State Bank of India is actively involved since 1973 in non-profit activity called Community Services Banking. Management.

PRODUCTS AND SERVICES Personal Banking • • • • • SBI Term Deposits SBI Loan For Pensioners SBI Recurring Deposits Loan Against Mortgage Of Property SBI Housing Loan Loan Against Shares & Debentures SBI Car Loan Rent Plus Scheme SBI Educational Loan Medi-Plus Scheme Other Services • • • • • • • • • • • • • • Agriculture/Rural Banking NRI Services ATM Services Demat Services Corporate Banking Internet Banking Mobile Banking International Banking Safe Deposit Locker RBIEFT E-Pay E-Rail SBI Vishwa Yatra Foreign Travel Card Broking Services 10 .

31 Mar '08 Mar '09 634.727.697.538.34 475.325.88 0 0 57.06 912.819.385.09 39.687.417.32 55.66 537.988.86 21.751.25 259.73 2.91 6.92 5.59 93.91 141.31 386.574.42 121.56 Mar '06 Mar '07 526.26 0 31.641.403.77 202.62 15.526.44 37.545.25 Mar '07 Mar '08 631.087.84 4.17 48.503.401.08 Mar '09 16.84 49.14 367.47 0 0 48.131.3 526.097.09 4.224.652.15 594.67 2.676.68 795.713.534.10 457.380.432. Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets 526.82 0 57.390.57 70.22 234.27 18.3 526.652.20 189.79 0 27.576.13 53.772.69 736.FINANCIAL PERFORMANCE OF STATE BANK OF INDIA AND PUNJAB NATIONAL BANK State Bank of India Balance Sheet ------------------.703.869.3 526.27 337.857.907.24 410.061.3 0 0 27.94 51.88 8.964.43 22.24 7.54 29. ------------------Mar '05 Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities Assets Cash & Balances with RBI Balance with Banks.424.047.81 110.13 3.24 51.30 55.374.117.56 435.33 22.947.534.073.828.06 6.49 149.08 Contingent Liabilities Bills for collection Book Value (Rs) 131.032.35 83.70 742.19 0 49.114.231.578.810.41 263.65 3.565.27 8.565.432. Cr.11 79.148.71 459.40 44.44 525.042.48 614.30 721.953.72 416.88 634.931.046.89 459.869.336.47 152.34 57.3 0 0 30.57 964.403.89 776.70 22.84 0 24.641.072.673.96 10.35 5.53 19.849.546.691.06 30.63 542.312.27 964.26 566.786.298.139.892.076.618.82 22.20 275.09 380.17 493.45 197.526.733.43 60.53 162.41 589.292.95 25.31 566.73 11 .03 721.603.768.882.39 191.in Rs.501.644.47 631.536.794.521.87 Mar '05 Mar '06 526.84 493.26 44.882.511.418.3 0 0 23.01 2.30 261.184.362.

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03 7.682.67 0 0.87 4.69 -0.304.75 0 14.123.73 3.932.00 7.446.82 0 11.14 8.34 12 mths 4.31 0 0.69 43.04 5. ------------------Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 12 mths Income Interest Earned Other Income Total Income Expenditure Interest expended Employee Cost Selling and Admin Expenses Depreciation Miscellaneous Expenses Preoperative Exp Capitalized Operating Expenses Provisions & Contingencies Total Expenses 12 mths 12 mths 12 mths 12 mths 32.98 7.78 42.634.12 0 0.89 0.872.541.84 35.86 0 657.23 0 0.69 106.52 0 0.75 12 mths 4.35 2.205.950. Cr.619.25 86.29 9.032.159.251.90 39.90 18.121.609.785.01 2.06 763.436.39 83.32 729.841.776.243.01 0 736.853.93 7.08 7.16 3.66 165.94 679.34 4.929.56 215 776.62 63.481.18 5.278.691.483.62 20.66 6.744.29 8.304.119.428.251.03 81.57 0 1.407.479.99 51.88 42.55 Mar '05 Mar '06 Mar '07 Mar '08 Mar '09 12 mths Net Profit for the Year Extraordinary Items Profit brought forward Total Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualized) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) Appropriations Transfer Reserves to Statutory 3.810.29 140 594.15 -2.491.53 7.22 12 mths 6.915.541.34 4.82 103.183.15 248.87 12 mths 9.937.62 .87 93.396.64 752.93 39.14 602.31 9.58 3.55 5.04 0.15 0 11.912.058.75 38.89 6.82 7.51 0 14 840.40 35.79 125 457.43 12.319.566.080.31 5.38 6.74 31.67 290 912.1 1.34 6.794.122.76 46.18 Transfer to Other Reserves Proposed Dividend/Transfer to Govt 751.707.747.552.34 4.75 0 18.406.123.46 0 1.465.48 48.388.34 9.88 862.35 76.729.348.788.13 7.43 58.121.357.398.48 143.165.089.State Bank of India Profit & Loss account ------------------.523.82 125.78 5.60 67.55 0 13.65 0 736.01 4.907.04 1.in Rs.729.73 140 525.21 6.358.173.79 23.547.39 7.

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14 -1134.8 -969.1 -284.7 10438.9 -856. Cr.State Bank of India Cash Flow ------------------.86 39322.7 -498.18 69524.5 104403.1 6837.08 -1776.2 51968.93 5097.6 39322.6 -2780.3 14180.in Rs.89 44560 51968.64 29479. ------------------- Jun '08 Sep '08 Dec '08 Mar '09 Jun '09 16 . Cr.98 5108. ------------------- Mar '05 12 mths Mar '06 12 mths Mar '07 12 mths Mar '08 12 mths Mar '09 12 mths Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Investing Activities Net Cash (used in)/from Financing Activities Net (decrease)/increase In Cash and Cash Equivalents Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 6521.36 6039.38 32925.56 9494.8 43566.in Rs.8 State Bank of India Quarterly Results ------------------.7 67466.2 461.11 7383.1 15716.73 -1651.25 -4248.87 -2798 19371.1 44560 7625.

401.412.060.640.27 --------15.343.51 5.557.19 10.00 .54 2.90 4.76 3.799.472.79 Prior Years Income/Expenses -Depreciation for Previous Years Written Back/ Provided -Dividend Dividend Tax Dividend (%) Earnings Per Share Book Value Equity Reserves Face Value ---25.88 48.203.20 2.14 17.807.39 1.225.394.22 22.88 57.14 --3.56 21.87 Depreciation -Depreciation On Revaluation Of Assets -PBT Tax Net Profit 2.111.403.88 48.77 11.94 12.990.79 --4.478.37 -----36.61 5.981.697.399.54 -- 15.401.42 -----39.15 3.330.00 17 18.04 -634.582.808.45 3.681.19 -634.60 --3.87 16.350.322.88 48.38 --------16.84 -634.215.949.312.693.75 21.72 -----35.447.79 1.332.00 Profit On Sale Of Investments -Gain/Loss On Foreign Exchange -VRS Adjustment -Other Extraordinary Income/Expenses -Total Extraordinary Income/Expenses -Tax On Extraordinary Items -Net Extra Ordinary Income/Expenses -Gross Profit Interest PBDT 11.81 10.501.500.14 1.Sales Turnover Other Income Total Income Total Expenses Operating Profit Profit On Sale Of Assets 13.312.81 10.75 10.092.742.380.84 12.899.77 2.899.00 17.566.285.08 2.88 2.50 2.19 10.49 12.07 4.39 --3.02 12.00 17.34 3.041.96 13.39 4.62 --------16.342.909.255.59 -634.87 772.15 4.31 -----43.60 1.568.582.88 57.71 -634.41 8.170.88 3.412.272.37 2.64 4.259.66 8.501.19 10.030.157.718.61 --------13.89 11.08 1.401.660.285.

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541.33 crore to Rs.999. declined to 6. Dividend The Bank has increased dividend to 215%. This resulted in increase in the average cost of deposits from 4. registering a growth of 48.04% and Other Income increased by 28.64%.4.08%. 48.14 crore in 2006-07 to Rs.242. This was due to growth in interest income on advances. Net Interest Income The Net Interest Income of the Bank registered a growth of 13.162.15. Interest income on advances at foreign offices also increased due to higher volumes. The Bank has posted a Net Profit of Rs 6729. This was mainly due to higher interest income on advances.52%.68 crore in 2007-08 due to higher volumes.69% in 2006-07 to 5.55crore as compared to Rs.058. which was 6.66 crore in 2006-07 to Rs 32. The Net Interest Margin was at a healthy 3.23 crore in 2007-08. Interest expenses on deposits in India during 2007-08 recorded an increase of 45. 17. Also average yield on domestic advances increased from 8.107.07% in 2007-08.03% despite decline in average yield mainly due to higher average resources deployed.021.31 crore in 2006-07.56% compared to the previous year. The gross interest income from global operations rose from Rs 37. Interest income on advances in India registered an increase from Rs. 13.94 crore in 2006-07.90% in 2007-08.09%.92% in 2007-08. Income from resources deployed in Treasury operations in India increased by 11.99% in 2006-07.67% in 2006-07 to 9. whereas the average level of deposits in India grew by 22.31 crore during the year. While Net Interest Income recorded a growth of 13.22. The average yield. 31.929.184.08 crore in 2007-08.12 crore for 2007-08 as compared to Rs.ANALYSIS AND INTERPRETATION Profit The Operating Profit of the Bank for 2007-08 stood at Rs.59% in 2007-08.9.20 crore in 2006-07 to Rs. Total interest expenses of global operations increased from Rs.18%. 21 . Operating Expenses increased by 6.04% from Rs.872.950. registering a growth of 31.22.

3.00 crore towards Wage arrears. Operating Expenses.12 crore in the previous year) by way of dividends from Associate Banks/ subsidiaries and joint ventures in India and abroad. the total provision held on Standard Assets amounts to Rs.38 crore. .000.069. Provisions and Contingencies Major amounts of provisions made in 2007-08 were as under: .823.Rs. 2. 105. Including the current years provision.50 crore in 2006-07).83 crore).97 crore towards Standard Assets (as against Rs. excluding deferred tax credit of Rs. 589.performing assets (as against Rs. have registered an increase of 6.Rs.94% mainly due to increase in expenses on rent.8. 1. Operating Expenses There was marginal decline of 1. 197. audit fees and miscellaneous expenditure.19 crore in 2006-07). taxes and lighting.87 crore in 2007-08.379.50 crore towards Provision for Tax.785.Non-Interest Income Non-interest income stood at Rs. repair and maintenance.23 crore in 2006-07).6.43 crore (as against Rs. excluding amortization of premium on Held to Maturity category (as against Rs.50 crore in 2006-07). insurance.932. postage. .26 crore in 2006-07. Staff Cost included an amount of Rs.68 crore (write back) towards provision for depreciation on investments. comprising both staff cost and other operating expenses. 22 . Other Operating Expenses have also registered an increase of 23.94 crore (net of write-back) for non. .61 crore in 2006-07 excluding deferred tax credit of Rs. telegrams and telephones.93 crore as against Rs. 566. 219. 3.84% in the Staff Cost from Rs.429.014. 88.694.598.Rs. the Bank received an income of Rs.Rs.00 crore towards Fringe Benefit Tax (as against 88.Rs.7. .725.41 crore (Rs.575. 19. 2.64%. During the year.58 crore in 2006-07 to Rs 7.

49. Investments increased by 27.88 crore to Rs 1.321.21.64% from Rs. The Banks market shares in domestic advances was 15.35.1.An amount of Rs. 416. 4.768.19 crore.501.31 crore as at end March 2008.28% as of March 2008.565.075.Reserves and Surplus .839. .148. 5.37.55% from Rs.An amount of Rs.35% from Rs. the loan portfolio increased by 23.49 crore to Rs.64 crore was withdrawn from Other Reserves towards transitional liability for complying with Accounting Standard -15 (Revised) .15 crore in 2006-07) was transferred to Other Reserves.07 crore (as against Rs. 3. Liabilities The Banks aggregate liabilities (excluding capital and reserves) rose by 25.266.526.11 crore in 2006-07) was transferred to Statutory Reserves. 304. A major portion of the investment was in the domestic market in government and other approved securities.89.06% from Rs. 7.(Nil in 2006-07) .27 crore.5.35 crore (as against Rs.336. 62.4. During the period.68 23 .18 crore was transferred to Investment Reserves.An amount of Rs.24crore at the end of March 2007 to Rs.Employee Benefits Assets The total assets of the Bank increased by 27.3. .An amount of Rs.66.358.

46. Gold coins & asset management business.463 crore.Towards developing a cost effective alternative channels of delivery. large franchise value and good brand image. With it’s policy of inclusive growth in the Indo-Gangetic belt.091 crore. PNB has achieved significant growth in business which at the end of March 2009 amounted to Rs 3. with assets of more than Rs 2. Today. payment of bills of utilities. PNB is ranked as the 3rd largest bank in the country (after SBI and ICICI Bank) and has the 2nd largest network of branches (4668 including 238 extension counters and 3 overseas offices). PNB has remained fully committed to its guiding principles of sound and prudent banking. During the FY 2008-09.PUNJAB NATIONAL BANK VISION "To be a Leading Global Bank with Pan India footprints and become a household brand in the Indo-Gangetic Plains providing entire range of financial products and services under one roof" MISSION "Banking for the unbanked" With over 38 million satisfied customers and 4668 offices. its’ ratio of priority sector credit to adjusted net bank credit at 41.03% with Tier I and Tier II capital ratio at 8. The Bank has launched a drive for biometric smart card based technology enabled Financial Inclusion with the help of Business Correspondents/Business Facilitators (BC/BF) so as to reach out to the last mile 24 . thus covering 100% of it’s business and providing ‘Anytime Anywhere’ banking facility to all customers including customers of more than 2000 rural branches.During the FY 2008-09. etc. The bank has also been offering Internet banking services to the customers of CBS branches like booking of tickets.900 crore. maintaining its number ONE position amongst nationalized banks. The bank has made rapid strides in this direction.05% respectively as on March’09. with 39% share of low cost deposits.17% respectively. life and non-life insurance business. With the help of advanced technology. one of the major achievements of the Bank is covering all the branches of the Bank under Core Banking Solution (CBS). Besides being ranked as one of India's top service brands.72% was also higher than the respective national goals of 40% & 18%. bullion business. PNB has continued to retain its leadership position among the nationalized banks. the Bank’s mission is “Banking for Unbanked”. the bank achieved a net profit of Rs 3. the Bank has the Gross and Net NPA ratio of only 1.64. Bank has a strong capital base with capital adequacy ratio as per Basel II at 14. purchase of airline tickets etc.98% and 5. The bank enjoys strong fundamentals. PNB has always looked at technology as a key facilitator to provide better customer service and ensured that its ‘IT strategy’ follows the ‘Business strategy’ so as to arrive at “Best Fit”. the Bank has been a frontrunner in the industry so far as the initiatives for Financial Inclusion is concerned.53% & agriculture credit to adjusted net bank credit at 19. the bank has also entered the credit card & debit card business. Apart from offering banking products. the bank with more than 2150 ATMs has the largest ATM network amongst Nationalised Banks. As on March’09.77% and 0. Alongwith the achievement of 100% branch computerization. Since its humble beginning in 1895 with the distinction of being the first Indian bank to have been started with Indian capital.

The impressive operational and financial performance has been brought about by Bank’s focus on customer based business with thrust on SME. The Bank has already achieved 100% financial inclusion in 21. Kazakhstan.408 villages. The bank also has a joint venture with Everest Bank Ltd. ‘The Banker’ listed PNB at 250th place. DIFC Dubai. diary farmers. Agriculture. Under the long term vision. The BC/BF will address the outreach issue while technology will provide cost effective and transparent services. the bank has retained its NUMBER ONE position among the nationalized banks in terms of number of branches. Backed by strong domestic performance. vegetable vendors. 25 .customer. Bank continues with its goal to become a household brand with global expertise. UK. total Business. Bank proposes to start its operation in Fiji Island. the Bank continues its selective foray in international markets with presence in Hongkong. Australia and Indonesia. A second branch in Hongkong at Kowloon was opened in the first week of April’09. Nepal. thrust on recovery and increased efficiency in core operations of the Bank. improved margin management. Deposit. Bank is also in the process of establishing its presence in China. Bhutan. (EBL). Canada and Singapore. Financial Performance: Punjab National Bank continues to maintain its frontline position in the Indian banking industry. Dubai. construction workers. operating and net profit in the year 2008-09. Singapore. Further. Shanghai. more inclusive approach to banking. The Bank has started several innovative initiatives for marginal groups like rickshaw pullers. better asset liability management. the bank is planning to realize its global aspirations. In particular. Amongst Top 1000 Banks in the World. Kabul and Norway. etc. Advances. In order to increase its international presence. PNB is at the 1166th position among 48 Indian firms making it to a list of the world’s biggest companies compiled by the US magazine ‘Forbes’.

The performance highlights of the bank in terms of business and profit are shown below: Parameters Operating Profit* Net Profit* Deposit Advance Total Business Mar'07 Mar'08 3617 1540 4006 2049 Mar'09 5744 3091 209760 154703 364463 CAGR 26.47 26.02 41.55 24.67 22.15 139860 166457 96597 119502 236456 285959 FINANCIAL PERFORMANCE OF PUNJAB NATIONAL BANK 26 .

27 Mar '05 9.69 1.020.3 315.50 52.918.12 2.36 119.35 166.83 1.36 80.14 74.376.80 162.50 Mar '07 12.89 21.372.40 39.501.859.653.50 312.460.606.74 14.674.85 10.518.422.134.878.394.101.875.315.35 1.318. -Mar '05 Rs.758.930.533.98 Mar '09 315.63 209.3 315.57 53.18 126.699.11 0 5.82 0 3.760. Money at Call Advances Investments Gross Block Accumulated Depreciation Net Block Capital Work In Progress Other Assets Total Assets Contingent Liabilities Bills for collection Book Value (Rs) 315.815.79 Mar '07 315.93 145.31 2.36 214.076.397.178.28 33.189.058.62 79.824.18 3.83 60.860.980.106.372.56 1.166.194.20 1.89 2.52 0 4.055.99 63.68 302.3 0 0 10.448.457.687.23 0 3.397.412.25 4.73 13.161.826.29 105.25 2.36 1.84 2.684.267.384.80 126.74 Capital and Liabilities: Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Net Worth Deposits Borrowings Total Debt Other Liabilities & Provisions Total Liabilities Assets Cash & Balances with RBI Balance with Banks.628.15 3.422.884.627.53 10.991.23 5.71 3.572.88 23.18 12.885.43 416.798.92 1.70 12.92 1.44 126.86 18.49 96.020.467.65 910.533.03 3.37 41.267.79 14.10 9.57 119.23 199.49 8.65 Mar '08 315.39 Mar '06 23.241.62 Mar '09 17.808.64 1.3 0 0 9.38 9.380.237.020.42 965.92 6.31 293.75 50.3 0 0 12.446.718.3 0 0 7.40 18.130.74 1.918.in Cr.903.67 1.258.23 0 3.29 103.354.59 321.941.Balance Sheet -.99 341.13 246.3 315.672.50 4.89 154.435.20 246.247.513.372.79 145.3 0 0 8.59 1.030.374.009.535.385.56 171.84 199.273. Mar '06 315.46 248.241.91 287.65 31.702.37 Mar '08 15.51 162.3 315.596.3 315.86 141.93 27 .270.762.948.52 45.46 139.

919.997.56 Mar '09 19.15 1.854.85 1. -Mar '07 11.54 9.459.4 8 1.16 2.69 28 .in Rs.326. Cr.23 Mar '06 -.265.Profit & Loss account Mar '05 Income Interest Earned Other Income 8.64 Mar '08 14.478.584.0 2 1.343.537.

76 0 3.37 1.1 2 16.453.245.28 Depreciation Miscellaneous Expenses 183.27 Mar '05 1.30 2.19 170.213.85 4.12 1.91 2.80 Preoperative Exp Capitalised 0 Operating Expenses 3.49 1.032.45 8.048.08 0 2.337.39 14.28 0 3.154.026.352.924.540.410.96 Mar '09 12 mths 12 mths 12 mths 12 mths 12 mths Net Profit for the Year 1.439.08 11.623.05 0 3.26 0 3.3 9 11.392.902.88 0 0 1.738.53 9.8 884.31 0 1.98 2.38 Selling and Admin Expenses 618.88 29 .11 2.Total Income Expenditure Interest expended Employee Cost 10.8 0 Mar '08 1.022.442.832.42 191.461.97 6.90 Total Expenses 8.15 0 3.341.257.723.86 2.090.65 1.5 8 22.81 Provisions & Contingencies 1.50 194.966.79 186.121.06 1.295.57 15.881.31 183.580.27 1.410.926.406.314.062.904.28 638.439.114.262.12 Extraordionary Items 0 Profit forward Total brought 0 1.765.730.090.07 Mar '06 1.23 1.39 2.917.064.3 8 12.23 4.38 1.55 0 5.52 2.85 19.193.528.263.0 4 Mar '07 1.54 12.

98 98.31 15.89 0 630.48 26.064.12 -1.65 48.66 Balance c/f to Balance Sheet 0 Total 1.58 0 2.18 0 409.34 800 988.18 0 189.439.090.78 183.53 63.14 1.512.17 Per share data (annualised) Earning Per Share (Rs) 44.46 Transfer to Other Reserves 0 Proposed Dividend/Transfer to Govt 197.11 69.552.155.59 1.61 23.Preference Dividend Equity Dividend Corporate Dividend Tax 0 174.79 100 321.89 0 409.03 60 287.64 3.74 Book Value (Rs) Appropriations Transfer to Statutory Reserves 1.212.06 596.84 64.65 100 341.190.88 30 .46 2.52 1.93 45.66 107.00 215.23 435.98 200 416.410.55 737.723.72 Equity (%) Dividend 30 248.28 7.49 1.71 473 479.

31 .

registering a y-o-y growth of 41.2%.20% during April-September 2007 from 8.444. exchange and brokerage increased by 17.88 Total Assets 964. Total expenses (excluding provisions) amounted to Rs 5938 Cr during the half year ended September 2007.55 Cr.918.43 19. compared to Rs 5596 Cr during April-September 2006.62 155.51 Cr during the first half of FY 2006-07. registering a y-o-y growth of 29.) Net Interest Income 63. compared to Rs 1778 Cr during the half year ended September 2006.08 246. Profit & Loss Account 1 • Net profit for the first half of the current financial year 2007-08 amounted to Rs 963. compared to Rs 4204 Cr during the half year ended September 2006.2%. 2 Yield on Advances of the bank has improved to 10.4%.788.September 2006. the Operating Profit of the bank amounted to Rs 1290 Cr during the first half year ended September 2007.24 3.74 Cr incurred on transfer of securities to HTM portfolio.September 2007 from 3.Non-Interest income through commission. gratuity & leave encashment for staff of the bank under projected unit credit method (PUCM) resulted in lower operating profit of the bank.COMPETITION Last Price SBI PNB 2.15 Market Cap.87 FINANCIAL INTERPRETATION AND ANALYSIS I. 0 .432. cr.49% during April. registering a y-o-y growth of 10. 1 Net Interest Margin has declined to 3.326.September 2006. on accounting for the loss of Rs 497. The transfer of securities was done during the first quarter of FY 2007-08 to de-risk the investment portfolio of the bank from interest rate risk. However. 32 .95% during April.4 % to Rs 540 Cr during the first half of FY 2007-08 from Rs 461 Cr during the first half of FY 2006-07.121. Financial Results 1.090.246.16 Net Profit 9. higher pressure on Net Interest Margin & NPAs and the need for additional provisioning for pension.86% during April.07 27. compared to Rs 872. In the current environment.40 864. (Rs.448. 1 • Total income of the bank increased to Rs 7228 Cr during April-September 2007. 2 • Operating Profit of the bank (excluding loss incurred on transfer of securities to HTM portfolio) during the half year ended September 2007 increased to Rs 1788 Cr.

2.3% of Gross Credit of the bank.9%. Agricultural advances as percent to adjusted net bank credit at around 18. registering a y-o-y growth of 23. 0 Retail credit constituted 23. recording a Y-O-Y growth of 22. 2 • Total Deposits at the end of September 2007 amounted to Rs 149980 Cr.8% to Rs 24100 Cr at the end of September 2007 from Rs 19794 Cr at the end of September 2006. registering a Y-O-Y growth of 13. Ratio of Small Enterprises advances to adjusted net bank credit stood at 11.September 2007 from 7.3% was higher than the national goal of 18%.3% on y-o-y basis to Rs 251474 Cr at the end of September 2007 compared to Rs 210755 Cr as at the end of September 2006. 4 Yield on Investment of the bank has declined to 6. 6 Capital to Risk Asset Ratio (CRAR) at the end of September 2007 at 12. It increased by 21. showing an increase of 35% to Rs 1155 Cr.615 Cr as at the end of September 2006.433 Kisan Credit Cards (KCCs) during April-September 2007 taking the cumulative number to 22. 5 Return on Assets stood at 1. as at the end of September 2007. To facilitate disbursal of credit to the farmers.29. compared to Rs 9606 Cr as at the end of September 2006.98% at the end of September 2007. Priority sector advances increased to Rs 41. compared to Rs 16570 Cr as at the end of September 2006 showing Y-O-Y growth of 14. compared to Rs 82340 Cr as at the end of September 2006. Ratio of PS advances to adjusted net bank credit continued to remain much higher at 42. the Cost of Deposits of the bank increased to 5. The bank has opened more than 3 lakh No Frill accounts under PNB Mitra Scheme and has issued more than 24.09% during April. compared to Rs 36. Bank is ready for Basel II compliance.7%. compared to Rs 128415 Cr as at the end of September 2006 registering a growth of 16. Education loan is the main thrust area of the bank.789 Cr.September 2006. Information Technology 33 . CASA accounted for 43.13% at the end of September 2007. the bank has issued 1. 3 • Advances at the end of September 2007 amounted to Rs 101494 Cr.3 Due to the overall firming of interest rates. The bank's advances to the Small Enterprises at the end of September 2007 stood at Rs 11. Credit to Agriculture was Rs 18.88% during April. while loan to traders increased by 46% to Rs 7889 Cr.942 Cr at the end of September 2007.91 % of the total deposits of the bank at the end of September 2007.48 lakh KCCs.55% during the first half of FY 2007-08 from 4. II.58%.3 %.8 % on y-o-y basis.35% during the first half of FY 2006-07.3%. Balance Sheet 1 • Total Business of the bank increased by 19.38% against national goal of 40%.000 General Credit Cards.709 Cr at the end of September 2007.

The bank is in the process of upgrading its Representative Office at Shanghai into a branch and to establish presence at Singapore (OBU) and Canada (Subsidiary).8 %.848 Cr in the half year ended September 2006. International Operations 2 3 1 • Total Export-Import turnover of the bank increased to Rs 30. covering 83% of bank's total business. • The bank has 2353 RTGS and 1395 SFMS branches. 2007. PNB is also exploring possibilities for its presence in Bhutan through JV route 2 34 . • PNB’s Hong Kong branch is likely to be operational in the month of November. registering a y-o-y growth of 22. III. facilitating around 2.1 • Core Banking Solution (CBS) has been implemented in 2791 Service Outlets (SOLs) at 935 centres.506 Cr in half year ended September 2007 as compared to Rs 24.23 Cr customers with "anytime and anywhere" banking. • National Electronic Fund Transfer (NEFT) is operational in 2280 branches.

while Gross NPAs to Gross Advances of the bank stood at 4. Taran Taran. Dehradun. Rajasthan and endeavors to launch it at 9 more places.614 persons till September 2007. viz at Chandigarh. Gaya and Patna. 2 • Under Financial Inclusion. 09. NPA Management 1 • At the end of September 2007. the ratio of Net NPAs to net Advances was 1. 2 • PNB was bestowed Golden Peacock Award for Excellence in Corporate Governance by the Institute of Directors for the FY 2006-07. 35 . The FTC introduced a scheme. Recognition : First Half of FY 2007-08 : 1 • According to ‘The Banker’. Alwar.000 villages. Mayur Bhanj.86 %. a Reverse Mortgage Loan Scheme for senior citizens and 49 cases involving an amount of around Rs 18 Cr have already been sanctioned.57 % at the end of September 2007. V. Saharanpur & Balia. New Business Initiatives of the Bank 1 • Bank launched a pilot project on financial inclusion at Neemrana. amongst top 1000 Banks in the World. VI. 3 • CIO 100 Awards (2007) by IDG Media Pvt Ltd for Best IT Implementation. PNB is placed at 255th place. who are actively pursuing the task of financial inclusion by visiting the doorstep of villagers. the bank plans to cover 30. 15 million households and 75 million people by 2010. a London based Magazine (July 2007). Distt. 4 • PNB has introduced PNB Baghban. called Kisan Bandhu whereby 5 local youth have been inducted and trained at each FTC. 3 • PNB’s 8 Farmers’ Training Centres (FTCs) trained 1. Ranchi.IV.

transparency. introduction of prudential norms. profitability. efficiency. The managements of these 27 banks will give a thorough look into all the aspects of study. With these developments and by taking full advantage of Information Technology in the entire banking system. diagnose the reasons for the outcomes. Public Sector Banks will gear up and reach to their pinnacle in performance and delivering the expected levels of service in about 4 –5 years from now. They have been functioning as commercial and profit oriented establishments for long period but due to the developmental policies of the Government of India. the story does not end here. deregulation of interest rates. close follow up of non performing assets. The transition in political and 19 economic conditions in the country took place in later years of eighties and simultaneously technological and legal changes have also gained importance. and assess their strengths and weaknesses so as to initiate corrective or remedial measures. Radical changes in accounting. have made the managements (including the GOI) to turn to generate surpluses and make these banks self-sufficient even by approaching the Capital Market. 36 . Thanks to the Financial Sector Reforms initiated during early nineties. Corporate Governance in Banks is an accepted phenomenon today. However. etc in order to make them work on high standards competing with new Private Sector and Foreign Banks. concern for total customer care. voluntary retirement of old generation staff. professional managements.CONCLUSION Indian Public Sector Banks have been operating in different economic and political conditions for several decades – earlier as Private Sector Banks and now in Public Sector subsequent to their nationalization. wherever warranted. the focus has shifted to productivity. profit making was given a go-by.

Issue 50. Washington. Advani (2000). “The Art of Bank Restructuring: Issues and Techniques”. Working Paper. pp. “Frontier Cost Functions and Bank Efficiency”.Vol. pp. http://www. “First Call’s Analyst Consensus Rankings”. June. “Before the Whining Drowns it Out. Lovell.P. pp. Business Source Premier [9] Bank Indices (2001). India’s Best Banks. “India’s Best Banks”. August 15 [3] Ashok H. “The impact of liberalization on the productive efficiency of Indian commercial banks”.A. Feb. A Quarterly Journal of Agriculture. pp. Pankaj (1997). [7] A. No.163. pp.38-39 [6] Andrew Sheng (1991). D. Aruna Kumari (2002).-Feb.com/full_story. Vol. “A New Breed of Banker: the ‘Risk Pillar’ Strategist”. “Economic Reforms and Performance of Indian Banking: A Cross Structural Analysis”. and Sahay. Jan. Listen to the New India”. Special Banking Issue. Business India.C. The Indian Express. pp.233-241 [2] Arun Shourie (2003).php?content_id=29666. S. Issue 2. pp.3. European Journal of Operational Research. [4] American Banker (1998). Issue 136..BIBLIOGRAPHY [1] Altunbas.6.30-31 [5] American Banker (1998). “First Call’s Analyst Consensus Rankings”.72. Issue 929. July.42-48 37 .163. Vol.19-21 [8] Banker (2003). Professional Banker. Vol. 98. “Top 1000 World Banks”.9-16 [11] Bhattacharyya.V.42-45 [10] Banking & Finance (2002).. Economic Letters. Trade and Commerce. Ed (2001). Vol. Arunava. p.332-346 [12] Blount. (2001). Vol. Issue 6. Issue 2. pp. C.187-222. Industry. Y.153.K. 7-20. Indian Economic Panorama. Economic Development Institute of the World Bank. Vol. and Chakravarthy.indianexpress.93.

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