FINANCIAL INSTITUTIONS AND MARKETS

XIM UNIVERSITY, BHUBANESWAR

ASSIGNMENT – 1

PROJECT ON THE FINANCIAL RATIO ANALYSIS OF

CANARA BANK, INDIA

SUBMITTED TO SUBMITTED BY
PROF. ASHOK K. MISHRA SATTWIK S. RATH
ASSISTANT PROFESSOR B.COM, 2ND YEAR
SCHOOL OF COMMERCE USCBC21120
PhD PGDFMP BATCH OF 2021 - 24

1
 CANARA BANK

FINANCIAL ANALYSIS OF
F.Y. 2016 - 2020

2
 CONTENTS

OBJECTIVE - 4
INDIAN ECONOMY - 5
BANKING INDUSTRY - 6
CANARA BANK - 7
FINANCIAL RATIOS - 8
GRAPHS AND ANALYSIS - 9,10,11
CONCLUSION - 12

1. OBJECTIVES
3
Financial Ratios are relationship between two accounting figures expressed mathematically.

The objective of analysing financial ratios are –

Evaluating the companies performance and compare it with other business in the industry.

Ascertaining financial position of the company.

Interpreting key financial statements.

Assess operating efficiency of the business

My objective is to find the Financial Ratios , Make their graph , Analyse them and to

conclude with the Financial status of the Bank

2. INDIAN ECONOMY

4
India is a mixed economy. The mixed economic system was introduced keeping in view a
socialist pattern of society. Since india is a welfare state , the economy of india is the corner
stone for the growth of the nation with equity and social justice.In this system both public and
private sector co-exist , the former attending the commanding height of the society to
undertake in those areas where the private sector is unable or unwilling to invest. Public and
Private sectors are not rival to each other but the public sector takes the responsibility of
creating congenial economic environment for the private sector to continue. Finally both the
sectors must converge in the process of economic development of the country.
After the introduction of new economic policy in 1991 the concept of liberalisation ,
privatisation and globalisation (LPG) characterised the economy of india for international
competitiveness. In most of the cases where the public sector was inefficient excluding those
of strategic importance and maintainance of secrecy. The trend of disinvestment continues to
for better performance and economic efficiency. The new industrial policy of 1991 , new
export-import policy ,foreign investment policy are designed accordingly. The objective of
macroeconomics stabilization and microeconomics efficiency is pivotal at the stage. In the
same line the propects of Indian economy is very bright at the stage as it attracts huge amount
of foreign investment inflow with technological transfer. It persues export-led growth and its
benefits percolating to the grass root level for inclusive economic growth.
Indian economy is again a middle income market economy and presently it is the worlds fifth
largest economy by nominal GDP and third largest by purchasing power parity (PPP) ranking
142nd by nominal GDP and 125th by PPP on a per capita income basis according to Indian
Monetary Fund (IMF). After the adaption of broad economic liberalisation in 1991 the annual
average GDP growth has been 6% to 7% since the start of 21 st century. The share of Indian
economy is 7.5 % of world economy by PPP terms
The service sector is the fastest growing sector making contributing about 50% of India’s
GDP. The BSE and NSE are some of the worlds largest stock exchanges by market
capitalisation. It has the world’s 4th largest foreign exchange reserve worth $588314 billion
dollars. India has a high public debt with 86% of GDP and its fiscal deficit stood at 7% of
GDP. Indias government owned banks faced mounting bad debts resulting in low credit
growth simultaneosely the NBFC sector has been engulfed in a liquidity crisis. India faces
moderate unemployment , rising income inequality , and a drop in aggregate demand , In
recent years independent economists and financial institutions have accused the government
of manipulating various economic data especially GDP growth.
Presently india’s GDP is $3.469 trillion dollar and is expected to be $5 trillion dollar by 2025

3. BANKING INDUSTRY IN INDIA

5
The imperial bank of india was nationalised in 1955 in the State Bank of India (SBI) 14
private bank at the first instance get nationalised in 1969 and in 1980 another 6 banks were
added to it. In 1973 rural Banks were introduced sponsor by different nationalised banks to
cater to the needs of rural economy. In 1952 National Bank of Agricultural and Rural
Development (NABARD) was setup considering the needs of agriculture and rural
development in india through co-operative banks , rural banks and different nationalised
banks. NABARD acted as the refinancing banks for upgrading the role of banks at different
level in india

However after the new economic policy and due to the economic reforms in india banking
reforms was not an exception to it. The government of indiaformed the banking reform
committee under the chairmanship of Narashimam in 1996. The committee has given
different recomandations for better performance of the banking system in india to maintain
satisfactory level of profitability , liquidity and safety and overall competitiveness of the bank

According the Capital Adequecy Ratio , Statuitory Liquidity Ratio , Cash Reserve Ratio were
fixed . The concept of universal banking introduced to serve customers and to improve their
accessibility to banks. It explores the possibility of insaurance service by the bank and to
competewith insaurance companies. The scope for competitetion with banks facilitated. At
present there is a lot of expectation from banking industries having there best scenario with
expected efficiency and performance moreover most of the nationalised banks are getting
merged or privatised observing their networth in nutshell the nationalised banks are at the
cross road either to perform the best or to quit.

4. CANARA BANK
6
Canara Bank is a central public sector undertaking bank. It was founded in 1 st July 1906 as

Canara bank hindu permanent fund at Mangalore by Ammembal Subba Rao . Later it was

converted to Canara Bank Ltd in 1910 and in 1969 it got nationalised by government of india

with 13 other banks then finally called Canara Bank. In 1996 canara bank was the first bank

to get ISO certification for ‘Total Branch Banking’. Presently its Headquater is in Bangalore ,

india. It has 9877 branches and 11819 ATMs all over the country. It has also its offices in

foreign countries like London , Hongkong , Dubai and NewYork etc. Its products and

services includes Asset management , Commercial banking , Credit Cards , Investment

Banking , Mortages , Pensions , Private Banking , Retail Banking etc. On 30th August 2019 ,

finance minister Nirmala Sitharaman announced that Sydnicate Bank would be merged with

canara bank. It is a wll performing bank with revenue Rs 84,525 crore, operating income

Rs20,009 crore and net income Rs 2,557 crore.

5. FINANCIAL RATIOS

7
Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Earning Per Share (Rs.) -53.61 20.63 -70.47 4.71 -26.50

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Dividend/Share (Rs.) 0.00 1.00 0.00 0.00 0.00

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Capital Adequacy Ratios (%) 11.08 12.86 13.22 11.90 13.65

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Net NPA To Advances (%) 6.00 6.00 7.00 5.00 4.00

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

ROCE (%) 1.32 1.56 1.59 1.56 1.32
Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
CASA (%) 25.74 30.23 31.82 29.18 31.37

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Net Profit Margin (%) -6.38 2.71 -10.23 0.74 -4.56

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Return on Assets (%) -0.50 0.19 -0.68 0.04 -0.30

Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20

Net Interest Margin (X) 1.76 1.69 1.97 2.08 1.81
Years Mar-16 Mar-17 Mar-18 Mar-19 Mar-20
Return on Equity/ Networth (%) -10.75 3.96 -14.51 1.16 -6.78

6. GRAPHS AND ANALYSIS

8
 Earning per share over the 5 years from
40.00
Earning Per Share (Rs) Mar 16 to Mar 20 exhibits volatility and is
20.00 likely to remains in the same trend in
0.00
future years
-20.00 ( Net profit / Equity shares )
-40.00
FIG – 1
-60.00
-80.00

Dividend per share (in Rs) was at the peak in Mar 17 as a result of continues upward trend
Dividend Per Share (Rs) since Mar 16. However in Mar 18 it has
1.20 continuesly declined and flattened at the
1.00 bottom level of Mar 18 , 19 and for future
0.80 years
0.60
0.40 ( Dividend / Equity shares )
0.20
FIG - 2
0.00

Capital Adequecy Ratio (in %) shows gradual rising trend upto Mar 18 then a gentle
Capital Adequacy Ratios (%) declining trend upto Mar 19 and after that
16.00 again rising for future years
14.00
12.00 [ Capital ( Tier 1 + Tier 2 ) / Risk
10.00 weighted assets ]
8.00
FIG - 3
6.00
4.00
2.00
0.00

Return on capital employed (in %) seems

ROCE (%) almost stable over the years since Mar 16
1.80 upto Mar 20 with negligible upward trend
1.60
1.40
from Mar 16 to Mar 17 and downward
1.20 from Mar 19 to Mar 20
1.00
0.80 ( EBIT / Capital Employed )
0.60
0.40 FIG - 4
0.20
0.00

9
 CASA (in %) gives a gradual upward
CASA (%) trend over the years from Mar 16 to Mar
35.00 20 with negligible change
30.00
( Current Ac + Saving Ac / Total
25.00
deposits )
20.00
15.00 FIG - 5
10.00
5.00
0.00

After gradual upward trend from Mar 16

Net NPA To Advances (%) to Mar 18 net NPA to net Advances
8.00 percentage declines gradually upto Mar
7.00 20 and for future years
6.00
5.00 ( Net NPA / Advances )
4.00
FIG - 6
3.00
2.00
1.00
0.00

Net Profit Margin (%) Net profit margin (in %) over the years
4.00
2.00
since Mar 16 to Mar 20 fluctuates having
0.00
upward and downward growth in
-2.00 successive years
-4.00 ( Net profit / Total interest income)
-6.00
-8.00 FIG - 7
-10.00
-12.00

Return on Assets (in %) has the same

0.40
Return on Assets (%) trend as NPM (in %) over the years
0.20
from Mar 16 to Mar 20

0.00

-0.20 ( Net Profit / Asset )

-0.40
Return on Equity FIG – 8
-0.60 / Networth (%)
100%
-0.80
90%
80%
70%
60%
50% 10
40%
30%
20%
10%
0%
Return on Equity (in %) has the trend almost considering with that of NPM and ROA

( Net Profit / Equity )

FIG - 9

Net interest margin is having slight

Net Interest Margin (X) rising trend from Mar 16 upto Mar 19
2.50 then negligible declining trend from
Mar 19 for future years
2.00

1.50 ( Interest earned – Interest

expenses / Average Advances )
1.00
FIG - 10
0.50

0.00

7. CONCLUSION

Observing the above indicators and their growth trend over the years since March 16 to

March 20 the performance of the Canara bank is not attractive as it is expected keeping in

view its performance in March 16 further there is fluctuation in terms of different parameters

as considered to measure their volatility over the years of course the impact of economic

11
scenario due to pandemic from March 20 definitely impacted the performance of the bank.

Comparing it overall performance between March 16 to March 17 the future prospects signal

bright after 2020 depending upon the Liquidity, Profitability and safety norms as pursued by

the bank.

12