Capital adequacy: CAR = Capital/risk 13.21 Interpretation: Capital adequacy ratio (CAR) is a ratio of a bank's capital to its risk.

National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and are complying with their statutory Capital requirements. The formula for Capital Adequacy Ratio is, (Tier 1 Capital + Tier 2 Capital)/Risk Weighted Assets. Capital adequacy ratio is the ratio which determines the capacity of the bank in terms of meeting the time liabilities and other risks such as credit risk, operational risk, etc. In the simplest formulation, a bank's capital is the "cushion" for potential losses, which protects the bank's depositors or other lenders. Here, incase of UCO Bank we can see that its CAR showed a sudden dip in the year 2008 but after that it has shown a steady rise for the next 2 years which is a good sign for its depositors and investors.

Debt-Equity Ratio 234.24 Interpretation: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Here, in case of UCO Bank we can see that the Debt-Equity ratio has increased over the years. This is because its equity capital showed no growth from the year 2006 to 2008 and it decreased by around Rs250 crore in 2009 and remained the same for the year 2010. But its debt capital has shown a steady increase over the past 5 years. From this we can infer that since UCO Bank is a public sector undertaking it depends much more on debt capital ruther than equity capital.

Advances to Assets 0.60

Interpretation: Advances to Asset is also a good indicator of a firms Capital Adequacy. A high ratio of Advances to Assets would mean that the chances of Non Performing Assets formation are also high, which is not a good scenario for a bank. This would mean the credibility of its assets would go down. In case of UCO Bank we can see that it is able to maintain a pretty steady ratio of its Advances to Assets which means the credibility of its assets is good.

Government Securities to Total Investments 0.86

Interpretation: The ratio of Government Securities to Total investments shows how safe are the companys investments. Here, in case of UCO Bank we can see that its ratio of investments in Government Securities to Total Investments is very high and it has remained quite steady over the years with minimal fluctuations. The high ratio tells that UCO Banks investment policy is conservative and their investments are safe.

Assets Quality 1- Gross NPA to net Advances1652/51129=0.0323 1540/64020=0.024 1640/77560=0.021

The gross NPA was 1652, 1540 and 1640 in 2008,09 and 2010 respectively. The analysis shows that the gross nonperforming assets were 3.2% 0f the net advances means the bank was not able to receive the repayment of 3.2% of the total load and advances. In 2009 it was 2.4% of the total net advances means that the bank is improving its capability to get return its loans and advances in comparison to 2008 that is it was lesser than the gross npa of 2008.Same in the 2010 it was continue decreasing . Overall interpretation is the UCO bank is focusing towards the NPA the company doesnt want to increase the NPA because it will affect the performance of the bank as due to increase in NPA the capital adequacy, of the bank will decrease.

1. NPA to net Advance1092/51129=0.021 813/64020=0.012 900/77560=0.011

In this section it can be seen from the above that the bank is able to decrease to its NPA and due to this the bank is able to increase its capital adequacy and also the profitability of bank is increasing continuously. The gross profit of the bank is Rs 5020 crore in 2008, Rs 6476 crore in 2009, and Rs 7202 crore in 2010. If we see the analysis it can be seen that the net NPA of the bank was more in 2010 in comparison to 2009 but still the profit was more in 2009 than 2008 the reason os that this time bank is able to reduce its cost of fund.

2. Total investment to total assets23135/83815=0.27 28110/104291=0.26 42358/129504=0.32

The bank invested 27%, 26% and 32%, in 208. 09 and 2010 respectively of its total assets means bank invested more than one fourth of its total assets that shows that the bank is moving towards the safe side. It can be seen that the bank is increasing its investment with the increase in the total assets. The policy of the bank is to be safe.

3. Percentage change in net NPA813-1093/1093=-0.25 900-813/813=0.10 The bank was able to reduce its net NPA in 2009 over 2008 means that was able to get receive its fund. But in 2010 the net NPA was more than 2009. Meaning is that the bank was not able to control its NPA i.e. bank did not get return on its loans and advances. But still the profit of the bank is more than 2009 because the total assets of the bank are increased and also the bank was able to reduce its cost of fund.

4. Net NPA to total Assets1092/83815=0.013 813/104291=0.007 900/129504=0.006

When the Net NPA is compared with the total assets in is continuously increasing and the percentage of net NPA is decreasing over the total assets. Due to decrease in the Net NPA the banks capital adequacy is increasing and the bank is able to pay more loans.

Several indicators, however, can jointly serveas, for instance, efficiency measures doas an indicator of management soundness. The ratios used to evaluate management efficiency are described as under:

Profit per branch: (Rs. in crores) Year Mar-12 1012.19 Net Profit No. of Branches Net Profit /No. of Branches 2152

0.470334

Interpretation: Profit per branch shows the increasing trend. As number of branches of UCO bank are increasing and percentage of profit per branch also is increasing. It shows the effective management of UCO bank. It not only focuses on increasing branches but also profit per branches. UCO bank has increased no. of branches from 1744 branches to 2152 branches also ratio of profit per branch is four times.

Total Advance to Total Deposit Ratio: This ratio measures the efficiency and ability of the banks management in converting the deposits available with the banks (excluding other funds like equity capital, etc.) into high earning advances. Total deposits include demand deposits, saving deposits, term deposit and deposit of other bank. Total advances also include the receivables. Total Advance to Total Deposit Ratio =Total Advance/ Total Deposit (Rs. in Mar-12 Crores) Particulars 122,415.55 Deposits Advances 82,504.54

0.6739 Total advances/Tot al Deposits

Interpretation: This ratio measures the efficiency and ability of the banks management in converting deposits available with the banks (excluding other funds like equity capital, etc.) into high earning advances. Total deposits include demand deposits, saving deposits, Term deposit and deposit of other bank. Total advances also include the receivables. In year 2008, ratio of total advance to total deposits showed decline trend mainly due to Recession. Due to sub-prime crisis, all over the world mainly financial institutions failure in US market; Bank across the world started preferring liquid assets. Even gold were been sold in exchange of currency. This can be one of the main reason for giving less advance as bank were short of liquidity. But, after that bank managed it well, in 2010 ratio increased due effective management.

Business per Employee: Revenue per employee is a measure of how efficiently a particular bank is utilizing its employees. Ideally, a bank wants the highest business per employee possible, as it denotes higher productivity. In general, rising revenue per employee is a positive sign that suggests the bank is finding ways to squeeze more sales/revenues out of each of its employee. Business per Employee =Total Income/ No. of Employees (In Rs. crores) Jun 12 8.88 Business per Employee

Interpretation Revenue per employee is a measure of how efficiently a particular bank is utilizing its employees. Ideally, a bank wants the highest business per employee possible, as it denotes higher productivity. In general, rising revenue per employee is a positive sign that suggests the bank is finding ways to squeeze more sales/revenues out of each of its employee. UCO bank is doing well; it has increased from 5.82 to 8.82 crores.

Earnings Quality Percentage Growth in Net Profits 2012 0.81

As per the analysis it can be seen that the net profit of the bank is going continuously from the year 2008 onwards. In the year 2007 -08 the net profit was decreased because of the subprime crises in USA. And again it was increased in 2008-09 as RBI did not stopped money flow in the market.

Net Profit to total Assets 2010 0.0078

Net profit to total assets is continue increasing from 2006 onwards .It means the bank is able to utilize its assets.

Interest Income to Total Income 2012 8.06

Non-Interest Income to Total Income

2010

0.32

Liquidity Liquidity Asset to Total Asset Financial year 2012 7242.73+861.60+82504.53/137319.47 = 0.65984

Government Securities to Total Asset Government Securities are the most liquid and safe investments. This ratio measures the government securities as a proportion of total assets. Banks invest in government securities primarily to meet their SLR requirements, which are around 25% of net demand and time liabilities. This ratio measures the risk involved in the assets hand by a bank.

Government Securities Approved Securities to Total Asset Approved securities include securities other than government securities. This ratio measures the Approved Securities as a proportion of Total Assets. Banks invest in approved securities primarily after meeting their SLR requirements, which are around 25% of net demand and time liabilities. This ratio measures the risk involved in the assets hand by a bank. Approved Securities Total Asset Liquidity Asset to Demand Deposit This ratio measures the ability of a bank to meet the demand from deposits in a particular year. Demand deposits offer high liquidity to the depositor and hence banks have to invest these assets in a highly liquid form. 67.56344

Liquidity Asset to Total Deposit This ratio measures the liquidity available to the deposits of a bank. Total deposits include demand deposits, savings deposits, term deposits and deposits of other financial institutions.

Liquid assets include cash in hand, balance with the RBI, and balance with other banks (both in India and abroad), and money at call and short notice.

Liquidity Asset Total Deposit

Financial year 10 7242.73+861.60+82504.53/122415.55 =0.74017

Return on Equity (ROE) and Return on Assets (ROA) Analysis Return on Equity (ROE)

Mar '12 1.84 Interpretation: Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the common stock owners. It measures a firm's efficiency at generating profits from every unit of shareholders' equity (also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. The formula for ROE is Net Income/ Average Total Equity. UCO Banks ROE has always shown a growth over the past 5 years and it has grown at a very fast rate from the year 2008 to 2009 and from the year 2009 to 2010. This is because in the last 5 years its equity share capital has never increased; rather it decreased from Rs799.36crore to Rs549.36crore from the year 2008 to 2009. On the other hand its Net Income has always increased over the past 5 years and the jump from 2009 to 2010 was very high. The high growth in ROE from 2008 to 2009 is not only because its Net Income increased but also because its Equity Share Capital decreased but the high growth from 2009 to 2010 is due to the fact that its Net Income almost doubled in this period. Return on Assets (ROA)

Mar ' 12 0.0074

Interpretation: The formula for Return on Assets (ROA) is Net Income/ Average Total Assets. It shows how profitable a companys assets are in generating revenue.The number tells you what the company can do with what it has, i.e. how many rupees of earnings it derives from each rupee of assetsit controls. In case of UCO Bank we can see that its ROA has increased over the years, especially from the year 2009 to 2010. This is because though its Total Assets has increased over the years, its Net Income has also increased accordingly and at a faster rate. The cause for the big jump in the ROA from the year 2009 to 2010 is due the fact that its Net Income almost doubled in this time from Rs557.72crore to Rs1,012.19crore the change in its Total Assets during this period was Rs111,664.16crore to Rs137,319.47crore. With the increase in ROA we can conclude that UCO Bank is utilizing its assets well for generating revenue.

Equity Multiplier

Mar 12 249.9

Interpretation: The formula for Equity Multiplier is Total Assets/Total Equity. It is a measure of the banks financial leverage. A higher leverage works in the banks favour when the by boosting the ROE when the earnings are positive. But it is a double-edged sword because when the bank records negative earnings the fall in ROE is greater. Here, in case of UCO Bank we can see that its Equity Multiplier has shown a steady growth from the year 2006 to 2010. If we observe more closely we can also see that the jump from 2008 to 2009 is very high. So, it can be concluded that the risk in UCO Banks equity has gradually increased over the years as the chances of fluctuations in its ROE has increased.

Findings Capital adequacy: The capital adequacy ratio of all the three banks is above the minimum requirements and above the industry average. Assets: UCO Bank has maintained a standard for the NPAs in the period of 2006-2010. UCO bank has shown remarkable decrease in NPAs in the same period.

Management: Professional approach that has been adopted by the banks in the recent past is in right direction & also it is the right decision. Earnings: UCO has shown a good growth record for its ROA. Liquidity: Banks should maintain quality securities with good liquidity to meet contingencies. Sensitivity to Market Risks: UCO banks have ventured into many financial areas and are in the league of Universal Banking and also it has overseas presence. They have also become sensitive to customer needs.

Conclusion & Recommendations 1. UCO banks should adapt themselves quickly to the changing norms. 2. The system is getting internationally standardized with the coming of BASELL II accords so the UCO bank and Indian banks should strengthen internal processes so as to cope with the standards. 3. UCO bank should maintain a 0% NPA by always lending and investing or creating quality assets which earn returns by way of interest and profits. 4. UCO bank should find more avenues to hedge risks as the market is very sensitive to risk of any type. 5. Have good appraisal skills, system, and proper follow up to ensure that UCO bank is above the risk.