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ICICI Bank .Black Book-3
ICICI Bank .Black Book-3
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EXECUTIVE SUMMARY
● Objective Of Study
● Company Profile
2 RESEARCH METHODOLOGY
● Research Design
● Sampling Technique
● Sample size
● Hypothesis
3 LITERATURE REVIEW
4 DATA ANALYSIS
FINDINGS
6 BIBLIOGRAPHY
Introduction
Selection and problems
Financial statements are formal records of the financial activities and position
of a business, person, or other entity. They consist of the following four
components:
1.Income Statement (Profit and Loss Statement): This statement shows the
revenues and expenses incurred over a specific period of time, usually a year
or a quarter. It demonstrates the company's ability to generate profit by
increasing revenue, decreasing expenses, or both.
2. Balance Sheet: A balance sheet presents the company's financial position at
a specific point in time, typically at the end of a fiscal quarter or year. It
consists of assets, liabilities, and owner's equity, showing the company's net
worth.
3. Cash Flow Statement: This statement tracks the flow of cash in and out of
the business during a specific period, usually a quarter or a year. It categorizes
the cash flows into operating, investing, and financing activities.
4. Statement of Changes in Equity (or Owner's Equity Statement): This
statement presents changes in equity over a period, typically a quarter or a
year. It includes items such as net income, dividends, and changes in capital.
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 analysed, 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, manageme0nt executives and the bankers all analyse 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.
Objective of study
The main objectives of this project are the following:
⮚ To study about ICICI BANK and its related aspects like its
BANK with the help of Balance sheet and profit and loss
account.
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).
2.1.1HISTORY
.
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.
The merger was approved by shareholders of ICICI and ICICI Bank in January
2002, by the High Citst of Gujarat at Ahmedabad in March 2002, and by the
High Citst of Judicature at Mumbai and the Reserve Bank of India in April
2002. One of the most significant events in ICICI Bank's history occurred in
2002, when it merged with ICICI Ltd., the parent company of ICICI. This
merger created a powerful financial conglomerate that combined the strengths
of both entities, cementing ICICI Bank's position as a leading player in the
Indian banking sector. The bank continued to grow rapidly, expanding its
network of branches and ATMs across India and internationally.
Under the leadership of Chanda Kochhar from 2009 to 2018, ICICI Bank has
continued to innovate and adapt to changing market dynamics.
CICI Bank, one of India's largest private-sector banks, has undergone several
phases of evolution since its establishment. Here's a detailed timeline of its
growth:
1. 1955: ICICI Ltd. (Industrial Credit and Investment Corporation of India) was
established as a development financial institution to provide financial assistance
to Indian industries.
4. 1997: ICICI Bank opened its first branch in Chennai and began offering
internet banking services.
8. 2001: ICICI Bank merged with Bank of Madura, expanding its reach.
9. 2002: ICICI Bank acquired the personal financial services division of Tata
Finance Ltd.
10. 2003: ICICI Bank acquired the Bank of Rajasthan (BOR) in a non-hostile
takeover, and in the same year, ICICI Bank UK PLC, a wholly-owned
subsidiary, opened a branch in Antwerp, Belgium.
11. 2004: ICICI Bank merged with ICICI Ltd., becoming the first Indian bank
to merge with its parent. ICICI Bank launched its mobile banking service, ICICI
Mobile.
13. 2006: ICICI Bank became the first Indian bank to open a branch in China.
14. 2007: ICICI Bank launched "Direct Banking" for NRIs and "Infinity" - a
wealth management portal.
15. 2008: ICICI Bank acquired 9.9% stake in Bank of Rajasthan, taking its total
shareholding to 55%. ICICI Bank also launched the first 'Contactless' credit and
debit cards in India.
16. 2009: ICICI Bank launched "I Mobile" - a mobile banking application.
17. 2010: ICICI Bank became the first Indian bank to launch a Facebook
banking application.
18. 2011: ICICI Bank launched the 'Pockets' app, a digital wallet.
19. 2012: ICICI Bank launched the "Coral Contactless Debit Card" in
association with Visa.
21. 2014: ICICI Bank launched the "Smart Vault," India’s first fully automated
digital locker.
22. 2015: ICICI Bank introduced "Eazy pay," a digital payment service for
merchants.
23. 2016: ICICI Bank launched "I Wish," a goal-based savings account.
24. 2017: ICICI Bank introduced "Eazy pay," a digital payment service for
merchants. ICICI Bank also launched 'Unified Payment Interface' (UPI) for
easier mobile payments.
25. 2018: ICICI Bank launched "Insta BIZ," a digital platform for business
customers.
26. 2019: ICICI Bank launched "I Box," a self-service delivery channel for
customers.
1. Retail Banking:
2. Corporate Banking:
The bank serves corporate clients with a wide range of products and
services, including working capital loans, term loans, trade finance, and
treasury solutions.
3. International Banking:
4. Digital Banking:
The bank has been a pioneer in digital banking, offering various digital
channels such as internet banking, mobile banking, and digital wallets,
making banking convenient for its customers.
5. Financial Inclusion:
The bank has a track record of innovation, introducing new products and
services to meet evolving customer needs. This includes innovations in
digital banking, payment solutions, and wealth management.
7. Customer-Centric Approach:
8. Risk Management:
10.Regulatory Compliance:
Committee of Directors -
Mr. K. V. Kamath
Ms. Chanda D. Kochhar
Ms. Madhabi Puri-Buch
Mr. Sonjoy Chatterjee
Mr. V. Vaidyanathan
2.1.6 VISION AND MISSION
Vision
❖ To be the leading provider of financial services in India and a
major global bank.
Mission
We will leverage our people, technology, speed and financial capital to:
❖ 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
❖ GOVERNMENT BANKING
The Government Banking Group is responsible for government banking
initiatives.
❖ 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.
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 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.
❖ CORPORATE BANKING
Fiscal 2008 saw continued demand for credit from the corporate sector, with
growth and additional investment demand across all sectors. We were able to
leverage our international presence and deep corporate relationships to work
on overseas acquisitions made by Indian companies and infrastructure projects
in India. During fiscal 2008 we were involved in 75% of outbound mergers and
acquisitions deals from India. We are now a preferred partner for Indian
companies for syndication of external commercial borrowings and other fund
raising in international markets and have been ranked number one in offshore
loan syndications of Indian corporates in calendar year 2007.
❖ 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.
❖ INTERNATIONAL BANKING
ICICI Bank has established a strong franchise among non-resident Indians (NRI).
It has established strong customer relationships by offering a comprehensive
product suite, technology-enabled access for overseas customers, a wide
distribution network in India and alliances with local banks in various markets.
It has over 5,00,000 NRI customers.
❖ 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
ICICI Bank offers a range of deposit solutions to meet varying needs at every
stage of life. It offers a range of tenures and other features to suit all
requirements.
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.
❖ 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. 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
ATMs: With more than 2500 ATMs across the country, ICICI Bank has one of
the largest ATM networks in India
PHONE BANKING: Phone banking offers 24*7 service across liability, asset
and investment products to both retail and corporate customers.
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.
❖ RISK MANAGEMENT
Risk is an integral part of the banking business and bank aim at delivering
superior shareholder value by achieving an appropriate trade-off between risk
and returns. Bank is exposed to various risks, including credit risk, market risk
and operational risk. Bank’s risk management strategy is based on a clear
understanding of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with international
best practices. Bank has two dedicated groups, the RISK MANAGEMENT
GROUP (RMG) and COMPLIANCE & AUDIT GROUP (CAG) which is responsible
for assessment, management and mitigation of risk in ICICI Bank. These groups
from part of the corporate center are completely independent of all business
operations and are accountable to the Risk and Audit committees of the Board
of directors. RMG is further organized into the Credit Risk Management group,
Market Risk Management group, Retail Risk Management group and
Operational Risk Management group. CAG is further organised into the Credit
Policies, RBI Inspection & Anti-Money Laundering Group and the Internal Audit
Group.
❖ 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.
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, analysing 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.
INTERNATIONAL SUSIDIARIES
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.
Awards 2007
The null and alternative hypotheses regarding ICICI Bank could be framed in
various contexts depending on the specific research question or objective.
Here are some examples:
1. Financial Performance:
- Null Hypothesis (H0): There is no significant difference in the financial
performance (measured by metrics such as profitability, liquidity, and asset
quality) of ICICI Bank before and after implementing a new strategic plan.
- Alternative Hypothesis (H1): There is a significant difference in the financial
performance of ICICI Bank before and after implementing a new strategic plan.
2. Customer Satisfaction:
- Null Hypothesis (H0): There is no significant difference in customer
satisfaction levels between ICICI Bank and its competitors.
- Alternative Hypothesis (H1): ICICI Bank has higher customer satisfaction
levels compared to its competitors.
3. Technology Adoption:
- Null Hypothesis (H0): There is no significant relationship between the level
of technology adoption (e.g., digital banking platforms, AI applications) and
customer retention at ICICI Bank.
- Alternative Hypothesis (H1): Higher levels of technology adoption at ICICI
Bank are associated with increased customer retention.
4. Risk Management:
- Null Hypothesis (H0): There is no significant difference in the effectiveness
of risk management practices between ICICI Bank and other leading banks in
the industry.
- Alternative Hypothesis (H1): ICICI Bank's risk management practices are
more effective compared to other leading banks in the industry.
5. Market Position:
- Null Hypothesis (H0): There is no significant difference in market share
between ICICI Bank and its competitors in a specific geographic region.
- Alternative Hypothesis (H1): ICICI Bank holds a higher market share
compared to its competitors in a specific geographic region.
and ICICI BANK. Public sector and private sector respectively. The study
found that SBI is performing well and financially sound than ICICI BANK
but in context of deposits and expenditure ICICI bank has better
managing efficiency than SBI.
Bank’s initiatives”
had focused on CRM in Banking and its applications in ICICI Bank. The
CRM in ICICI is being used for targeting customers, sales, consistent
interface with customers, etc. ICICI Bank has managed to focus better on
customers by undertaking a serious approach that has enabled it to
manage its operations effectively. It included better targeting of
customers; higher share of wallet; more effective channel strategies;
database marketing, etc. The bank is able to evaluate customer usage
pattern through CRM data warehouse. New products are developed
through extensive customer profiling. Through CRM, ICICI is able to
manage its data centrally.
● Khan M. Y. Recently ICICI Ltd. (along with two of its subsidiaries, ICICI
Personal Finance Services Ltd. and ICICI Capital Services Ltd.) has been
merged with ICICI bank Ltd; effective from May3, 2002. The erstwhile
DFI has thus ceased to exist. Its main objective is to encourage and
promote private ownership of industrial investment and expansion of
investment markets.
4.DATA ANALYSIS
Sr.No. Particulars Percentage of Response
2 Intermediate 11.7%
3 Bachelor 78.3%
4 Master 3.3%
5 Doctorate 0%
Sr.No. Particulars Percentage of Response
1 Student 75.4%
2 Employed 13.1%
1 Profitability 22%
2 Liquidity 27.1%
3 Leverage 47.5%
4 Efficiency 3.4%
Sr.No. Particulars Percentage of Response
1 Liquidity 28.3%
2 Profitability 25%
1 Liquidity 18.3%
2 Profitability 38.3%
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.
items with the sales such as commission paid to sole-selling agents and
other selling agents and brokerage and discounts on sales other than
usual trade discount.
❖ Depreciation: The amount of depreciation of fixed assets and the
must be debited with the estimated liabilities for tax on the current
profits at current rates of taxation.
debit side of the appropriation section of the profit and loss account.
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
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
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.
Current Liabilities: On the equity side of the balance sheet, as on the asset
side, you need to make a distinction between current and long-term items. Your
current liabilities are obligations that you will discharge within the normal
operating cycle of your business. In most circumstances your current liabilities
will be paid within the next year by using the assets you classified as current.
The amount you owe under current liabilities often arises as a result of
acquiring current assets such as inventory or services that will be used in current
operations. You show the amounts owed to trade creditors that arise from the
purchase of materials or merchandise as accounts payable. If you are obligated
under promissory notes that support bank loans or other amounts owed, your
liability is shown as notes payable. Other current liabilities may include the
estimated amount payable for income taxes and the various amounts owed for
wages and salaries of employees, utility bills, payroll taxes, local property taxes
and other services.
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.
Assets
Current Assets
Cash and cash equivalents
Inventories
Account receivable
Non-Current Assets
Property, plant and equipment
Goodwill
Investment in associates
Deferred tax assets
Miscellaneous Expenditure
Revaluation reserve
Translation reserve
Retained earnings
Minority interest
Non-Current Liabilities
Bank loan
Issued debt securities
Current Liabilities
Accounts payable
Short-term provisions
sheet should include the legal name of your company and the date or
dates that your statement is presented. For example, a comparative
presentation might be headed:
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.
primarily for conversion into cash and rank them in the order of their
expected conversion. Then, follow with items held primarily for use in
operations but that could be converted into cash, and rank them in the
order of liquidity. Finally, finish with items whose costs you will defer to
future periods or that you cannot convert into cash.
4.4.2 PURPOSE: The main purpose of analyzing the financial statement are
the following:-
❖ Horizontal Analysis
❖ 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
sheets and income statements can be more easily compared, whether
across the years for a single company or across different companies.
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
service its current obligations. Generally, the higher the current ratio, the
greater the cushion between current obligations and a firm ability to pay
them. The stronger ratio reflects a numerical superiority of current assets
over current liabilities Current ratio is calculated as follows:
● Quick Ratio: It is also known as the “acid test” ratio, this is a refinement
❖ 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.
Worth
❖ PROFITABILITY RATIO
the shareholders, measuring for the profits earned for each rupee
invested in business. It is calculated as follows:
Return on Equity= Net income/shareholder’s equity
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.
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.
● Non-interest income increased by 27.2% to Rs. 88.11 billion in fiscal 2008
from Rs. 69.28 billion in fiscal 2007 primarily due to a 32.2% increase in fee
income and a 14.0% increase in treasury and other non-interest income.
from Rs. 66.91 billion in fiscal 2007 primarily due to a 28.6% increase in
employee expenses and a 31.6% increase in other administrative expenses.
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.
2008 from Rs. 3,446.58 billion at year-end fiscal 2007 primarily due to an
increase in advances by 15.2% and an increase in investments by 22.1%.
● The Sangli Bank Limited (Sangli Bank) was amalgamated with ICICI Bank
with effect from April 19, 2007 in terms of the scheme of amalgamation
approved by Reserve Bank of India (RBI) vide its order DBOD No. PSBD
10268/16.01.128/2006-07 dated April 18, 2007 under section 44A (4) of the
Banking Regulation Act, 1949. Sangli Bank was a banking company
incorporated under the Companies Act, 1956 and licensed by RBI under the
Banking Regulation Act, 1949. The consideration for the amalgamation was
100 equity shares of ICICI Bank of face value Rs. 10 each fully paid-up for
every 925 equity shares of face value of Rs. 10 each of Sangli Bank.
Accordingly, on May 28, 2007, ICICI Bank allotted 3,455,008 equity shares of
Rs. 10 each, credited as fully paid up, to the shareholders of Sangli Bank.
The excess of the paid-up value of the shares issued over the fair value of
the net assets acquired (including reserves) of Rs. 3.26 billion and
amalgamation expenses of Rs. 0.22 billion have been deducted from the
securities premium account.
5.2 COMPARATIVE INCOME STATEMENT
TREND ANALYSIS
❖ Operating profit increased to Rs. 79.61 Billion for FY2008 from Rs. 58.74
❖ Profit after tax increased to Rs. 41.58 Billion for FY2008 from Rs. 31.10
❖ 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.
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.
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.
Rs. 29.05 billion in fiscal 2008 from Rs. 22.26 billion in fiscal 2007
5.3 COMPARATIVE FINANCIAL POSITION
STATEMENT
TREND ANALYSIS
SUMMARIZED BALANCE-SHEET
❖ Increase in cash balance with bank in 2008 is more than in the previous
Billion in 2007.
❖ Increase in fixed and other assets is also less than in 2008 from 2007 i.e
❖ 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
1) CURRENT RATIO:
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
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:
Net Fixed Assets= 39.80 billion
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.
5.5 CASH FLOW STATEMENT
CONCLUSION AND SUGGESTIONS
CONCLUSION
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.
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.
SUGGESTIONS
Some of the recommendation and suggestion are as follows:
6.BIBLOGRAPHY
Here is a bibliography for ICICI Bank: