5 KPI's to Analyze

Banking Sector
Fundamental
Analysis
1 CASA Ratio
Out of the total deposit, how much percent is
Current Account (CA) and Savings Account (SA).

For example - HDFC bank has CASA ratio 40%

It means, total deposit of bank from all the
sources (FD, CA, SA etc.) is 100 rupees then
40% is contributing in the form of CASA.
What to analyze here?
CA = given 0% interest.
SA = gives 4-5 % interest.
New Banks gives 6-7 % interest in SA.

Good bank has Higher CASA ratio and Low

interest rate.

Bad banks: Banks with low CASA ratio

and High interest rate.
2 Net NPA
NPA (Non performing Assets)
Suppose banks has distributed 100
rupees of loan in market to 5 people.

Out of 5 people how many are not

able to pay the loan back to bank
with interest.
What to analyze here?
Good bank: Having Low NPA
Bad bank: Having High NPA

This tells us how good a bank is in

analyzing it's customer before
giving loan.
3 Cost of Liability
(COL)
This tells roughly on an average
how much interest banks are
paying back to customer from all
the deposits (CA, SA, FD etc.)
What to analyze here?
Good bank: Having High CASA
ratio and Low COL
Bad bank: Having high low
CASA ratio and High COL

Some banks try increase their CASA

by giving high interest (COL).
4 Advances
Growth %
This tells as, how much loans banks
has distributed current year as
compare to previous year.
Good bank: Having High Advances growth
Good bank: Having Low Advances growth
5 CAR
(Capital Adequacy ratio)

It measures a bank's financial

strength by using its capital and
assets.
It is used to protect depositors
and promote the stability and
efficiency of financial systems.
What to analyze here?
Good bank: Having High CAR
Good bank: Having Low CAR

A bank's with high CAR ratio is less likely

to become insolvent if unexpected losses
occur.
If bank has low CAR ratio, it means their
NPA is increasing and bank is loosing its
money.
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