A STUDY ON

FINANCIAL PERFORMANCE OF ICICI BANK

By Stewartraj Dharmaraj
Project Guide- Prof:- Evonne Sakhrani
 

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 ABSTRACT

The banking industry plays an important role in the economic development of a country. It supplies the
lifeblood of the economy, i.e. finance, that supports and fosters growth in all the industries and thereby
ensures economic development. The Indian banking industry is one of the fastest growing industries in
India. In this context, a study has been undertaken to evaluate the financial performance of ICICI bank,
that is India’s largest private sector bank. It is the most precious financial institution in India in terms of
market capitalization and is ranked third among all the companies listed on the Indian Stock exchanges
(Sharma, 2012). The main purpose of this analysis is to know the capability of payment of interest and
earning capacity or profitability. It will helpful in providing useful information to management such as
efficiency of business. The financial analysis of ICICI bank has found that in 2019-20, profitability is
very low i.e. 0.35% and in the year 2015-16 it is very high i.e.1.73%. In the 2020-21 year, the bank using
funds in a profitable manner and performs well

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What Is Financial Performance?
Financial performance is a subjective measure of how well a firm can use assets from its
primary mode of business and generate revenues. The term is also used as a general
measure of a firm's overall financial health over a given period. Analysts and investors use
financial performance to compare similar firms across the same industry or to compare
industries or sectors in aggregate .
KEY TAKEAWAYS
 The financial performance tells investors about the general well-being of a firm. It's a
snapshot of its economic health and the job its management is doing.
 A key document in reporting corporate financial performance is Form 10-K, which all
public companies are required to publish annually.
 Financial statements used in evaluating overall financial performance include the
balance sheet, the income statement, and the statement of cash flows.
 Financial performance indicators are quantifiable metrics used to measure how well a
company is doing.
 No single measure should be used to define the financial performance of a firm.

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INTRODUCTION OF ICICI BANK
Industrial Credit and Investment Corporation of India (ICICI)
• ICICI Bank Limited is an Indian multinational financial services company with its registered office in
Vadodara, Gujarat, and corporate office in Mumbai, Maharashtra.
 
• It offers a wide range of banking products and financial services for corporate and retail customers through
a variety of delivery channels and specialized subsidiaries in the areas of investment banking, life, non-life
insurance, venture capital and asset management.
 
• The bank has a network of 5,275 branches and 15,589 ATMs across India and has a presence in 17
countries.
 
• The bank has subsidiaries in the United Kingdom and Canada; branches in United States, Singapore,
Bahrain, Hong Kong, Qatar, Oman, Dubai International Finance Centre, China and South Africa; as well as
representative offices in United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK
subsidiary has also established branches in Belgium and Germany

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 Key people

Sandeep Bakhshi (MD & CEO) Girish Chandra Chaturvedi (Chairman)

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BUSINESS OBJECTIVE

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: be the banker
of first choice for our customers by delivering high quality, world-class service
. • Expand the frontiers of our business globally
. • Play a proactive role in the full realisation of India’s potential
. • Maintain a healthy financial profile and diversify our earnings across businesses and geographies.
• Maintain high standards of governance and ethics.
• Contribute positively to the various countries and markets in which we operate.
• Create value for our stakeholders

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 REVIEW OF LITERATURE

Brar (2002) evaluated the relative productivity effectiveness and overall performance of
US industrial banks between 1984 and 1998. It detailed the CAMELS ranking system,
which is utilised by bank examiners and regulators, and discovered that institutions with
high-efficiency ratings also had high CAMEL ratings. It was revealed that the various
relationships were recognised, and it is recommended that DEA be used to assist analysts
and policymakers in better recognizing companies, regulators and examiners in improving
monitoring equipment, and banks in bench-marking their procedures. While evaluating the
operational and monetary overall performance of Indian Factoring Companies,

Mitra (2007) in his paper revealed that reforms and comparative appraisal of financial
performance of public sector banks and private sector banks in India during post reform
era. By his observations, financial sector reforms have brought tremendous changes in the
banking sector of our country. He also pointed out that changed financial scenario have
provided our banks with ample opportunities to expand globally through self-expansion,
strategic alliances etc.

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 • OBJECTIVES OF THE STUDY

. Primary objective :-
a) To analyze the financial statements of the corporation to assess it’s true financial position
by the use of ratios.
 
2. Secondary objective :-
a) To find out the shortcomings in ICICI Bank.
b) To see whether ICICI Bank is going well or not in different areas
c) To examine the efficiency of the ICICI bank through CAMEL Analysis

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The CAMELS acronym stands for "Capital adequacy, Asset quality, Management, Earnings, Liquidity, and
Sensitivity."
 
The components of CAMEL are:
 
(C)apital adequacy Management
(A)ssets Management assessment determines whether an institution is able to properly react to
financial stress. This component rating is reflected by the management's capability to
(M)anagement capability point out, measure, look after and control risks of the institution's daily activities. It
(E)arnings covers management's ability to ensure the safe operation of the institution as they
(L)iquidity comply with the necessary and applicable internal and external regulations.
Earnings
A bank's ability to produce earnings to be able to sustain its activities, expand, remain
competitive are a key factor in rating its continued viability. Examiners determine this
by assessing the bank's earnings, earnings' growth, stability, valuation allowances, net
margins, net worth level, and the quality of the bank's existing assets.
Liquidity
To assess a bank's liquidity, examiners look at interest rate risk sensitivity, availability of
assets that can easily be converted to cash, dependence on short-term volatile financial
resources and ALM technical competence.
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Net Interest Margin
Formula :- Net Interest Margin = (Interest Returns – Interest Expense) /Average Total
Assets
Banks provide around 3% interest rate on saving accounts and 6% on fixed deposits. They earn interest on various loans they issue to their
clients. For example, car loans, home loans, education loans.
The difference between what banks give and what they earn as interest is Net Interest. If it is positive, we can conclude that the bank’s
operations are profitable. If it is negative, we can say that the bank is not profitable.
Here is ICICI Bank’s Net Interest Margin of the past five years –

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Interpretation:
We can observe a slight improvement in the net margin percentage. The shift shows that
the bank is trying to generate more revenue from interest rate differences.
 CONCLUSION
ICICI Bank is India’s second-largest bank and it plays an important role in the economy and for investors. The study of financial
performance helps to understand the progress of the bank. The study identified that there is a significant difference in performance
of the bank from 2015 onwards. The productivity of the bank presented a downward trend. The proportion of performing assets is
also increasing year by year. The performance of the bank is progressive till 2018-19, later the bank suffering from huge variations
in different ratios. In this study overall financial performance of ICICI banks for the period of 2015-2020 was analyzed. From
Camel Framework it is found that under the capital adequacy ratio parameter bank was at the average, asset quality parameter
ICICI bank was moderate, management efficiency parameter ICICI bank was in a decreasing trend, earning quality parameter the
ICICI bank was also in decreasing trend and liquidity parameter ICICI bank were on the average position. Hence, the results
suggest that cost minimization for income maximization is the one of the avail alternatives for better financial performance.

Suggestions  Though the bank has been successful in increasing it’s deposits but to further
improve upon such situation it can introduce some new and attractive schemes for
public. Such schemes can be in the form of higher rate of interest and shorter
maturity period for FD’s etc.
 
 Bank should try to finance more and more projects. Financing will help it to earn
higher amount of profits.
 
 The bank is having a greater reliance on debt capital. The increasing reliance on
external equities may prove hazardous in the long run. So in order to remedy this
situation bank should increase its focus on internal equities and other sources of
internal financing. STEWARTRAJ DHARMARAJ MCOM PART 2 SEM 3 ACCOUNTS
STEWARTRAJ DHARMARAJ MCOM PART 2 SEM 3 ACCOUNTS
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 THANK YOU

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