A

Summer Training Report

On
“FINANCIAL PERFORMANCE ANALYSIS
OF THE
ICICI BANK LTD”

Submitted
In Partial fulfillment of the Degree of Master Business Administration
(Session 2018-20)

Submitted To: Submitted By:

Kurukshetra University Narender Singh Lather
Kurukshetra MBA 3rd Semester
Univ. Roll No.

SETH JAI PRAKASH MUKAND LAL INSTITUTE

OF ENGINEERING AND TECHNOLOGY

(Approved by AICTE, Affiliated to Kurukshetra University, Kurukshetra)

 PREFACE

In any organization, the two important financial statements are the Balance Sheet and
Profit & Loss Account of the business. Balance Sheet is a statement of financial position
of an enterprise at a particular point of time. Profit & 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 analyzed, 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 financial statement has now become an important
technique of credit appraisal. The investors, financial experts, management executives
and the bankers all analyze these statements. Analysis of financial statements is necessary
because it helps in depicting the financial position on the basis of past and current
records. Analysis of financial statements helps in making the future decisions and
strategies.
Therefore it is very necessary for every organization whether it is a financial or
manufacturing, to make financial statement and to analyze it.
 ACKNOWLEDGEMENT

With the deep sense of gratitude, I wish to place on record my profound thanks to all
those who supported and encouraged me to come out with this project work successfully.

I express my sincere thanks to my project guide Ms Geeta Saini for valuable guidance,
time and continuous efforts for completion of my project.

It is my proud privilege to express my profound gratitude to the Head of Department

Dr. Vandana and the entire faculty of department, Seth Jai Prakash Mukand Lal Institute
of Management And Technology and teachers of department for providing me with
opportunity to avail the excellent facilities and infrastructure.

Last but not the least; I am very thankful to my friends who continuously support me
during my project.

Narender Singh Lather

MBA 2nd III Semester

 DECLERATION

I declared that the project entitled “Financial Performance Analysis of the ICICI
Bank” submitted by me in the partial fulfillment of the degree of Master of Business
Administration is a record of the original project done by me and data provided in the
study is authentic to the best of my knowledge.

I further declare that this project report has not been submitted to any other university/
institution of any degree.

Narender Singh Lather

 Table of Contents
SR.No. Title Page No.
Chapter 1 Introduction to Industry
Introduction to company
Chapter 2 Introduction to Financial analysis
Chapter 3 Objective of the study
Chapter 4 Literature review
Chapter 5 Research methodology
Research problem
Research design
Data collection method

Chapter 6 Data analysis and interpretation

Chapter 7 Finding, suggestion and conclusion

Bibliography
Annexure
Appendix-I
Appendix-II
Appendix-III
 List of Figures

Figure Title Page No.

Figure 1.1 Bank structure in India

Figure 1.2 Growth in deposit over past few years

Figure 2.1 ICICI bank headquarter in Bandra Kurla

Figure 2.2 ICICI bank at glance

Figure 2.3 Physical channel at Mar’19

Figure 2.4 The 4-D framework

Figure 5.1 Balance sheet part showing deposits trend

Figure 5.2 Balance sheet part showing advance trend

Figure 5.3 Profit and loss A/c showing net profit trend

Figure 5.4 Deposit, advances and net profit plot (base year 2015)

Figure 5.5 Current ratio bar graph from Mar’15 to Mar’19

Figure 5.6 Quick ratios bar graph from Mar’15 to Mar’19

Figure 5.7 Dividend per share bar graph from Mar’15 to Mar’19

Figure 5.8 Return on net worth (%) bar graph from Mar’15 to Mar’19

Figure 5.9 Total assets turnover ratio from Mar’ 15 to Mar’19

Figure 5.10 Capital adequacy ratio bar graph from Mar’15 to Mar’19

Figure 5.11 Cash flow statement form Mar’15 to Mar’19

 List of Table

Table Title Page No.

Table 2.1 Value unlocked from subsidiaries

Table 4.1 Framework of research design

Table 5.1 Showing deposits, advances and net profits in ₹Crore

Table 5.2 Percentage figures for deposits, advances and net profits

Table 5.3 Current ratios from Mar’15 to Mar’19

Table 5.4 Quick ratios from Mar’15 to Mar’19

Table 5.5 Dividend per share from Mar’15 to Mar’19

Table 5.6 Return on net worth from Mar’15 to Mar’19

Table 5.7 Total assets turnover ratio from Mar’15 to Mar’19

Table 5.8 Capital adequacy ratio from Mar’15 to Mar’19

 Chapter-1

Introduction To
Industry
Introduction

1.1 Introduction of Bank

1.1.1 Definition of Bank:

Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits
of money from the public, repayable on demand or otherwise and withdraw by cheque,
draft or otherwise."
-Banking Companies (Regulation) Act, 1949

1.1.2 Origin of the word “Bank”

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called banchibancheri"
According to another viewpoint banking is derived from German word "Branck" which
mean heap or mound. In England, the issue of paper money by the government was
referred to as a raising a bank.

1.2 Origin of banking

Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of banking
was developed as it provides the safer place to store the money. This safe place ultimately
evolved in to financial institutions that accepts deposits and make loans i.e., modern
commercial banks.
1.3 Banking system of India

Without a sound and effective banking system in India it cannot have a healthy
economy.The banking system of India should not only be hassle free but it should be able
to meet new challenges posed by the technology and any other external and internal
factors.
For the past three decades India's banking system has several outstanding achievements
to its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even
to the remote corners of the country. This is one of the main reasons of India's growth
process.

1.3.1 History of banking in India

Banking in India has its origin as early or Vedic period. It is believed that the transitions
from many lending to banking must have occurred even before Manu, the great Hindu
furriest, who has devoted a section of his work to deposit and advances and laid down
rules relating to the rate of interest. During the mogul period, the indigenous banker
played a very important role in lending money and financing foreign trade and
commerce.

During the days of the East India Company it was the turn of agency house to carry on
the banking business. The General Bank of India was the first joint stock bank to be
established in the year 1786. The other which followed was the Bank of Hindustan and
Bengal Bank. The Bank of Hindustan is reported to have continued till 1906. While other
two failed in the meantime. In the first half of the 19th century the East India Company
established there banks, The bank of Bengal in 1809, the Bank of Bombay in 1840 and
the Bank of Bombay in1843. These three banks also known as the Presidency banks were
the independent units and functioned well. These three banks were amalgamated in 1920
and new bank, the Imperial Bank of India was established on 27th January, 1921.
With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial
Bank of India was taken over by the newly constituted SBI. The Reserve Bank of India
(RBI) which is the Central bank was established in April, 1935 by passing Reserve bank
of India act 1935. The Central office of RBI is in Mumbai and it controls all the other
banks in the country.

In the wake of Swadeshi Movement, number of banks with the Indian management were
established in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank
of Baroda Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were
nationalized and on 15th April 1980, 6 more commercial private sector banks were taken
over by the government.

1.3.2 Phases in Indian banking

The first bank in India, though conservative, was established in 1786. From 1786 till
today,the journey of Indian Banking System can be segregated into three distinct phases.
They areas mentioned below:

 Early phase from 1786 to 1969 of Indian Banks

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

 New phase of Indian Banking System with the advent of Indian Financial & Banking
Sector Reforms after 1991.

Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency
Banks.
These three banks were amalgamated in 1920 and Imperial Bank of India was established
which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. Reserve Bank of India came in 1935.

Phase II
Government took major steps in this Indian Banking Sector Reform after independence.
In1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. It formed State Bank of India to act as the
principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th
July,1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country
was nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.

Phase III
This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was
set up by his name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being put
to give a satisfactory service to customers. Phone banking and net banking is introduced.
The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries
suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,
the capital account is not yet fully convertible, and banks and their customers have
limited foreign exchange exposure.

1.4Banks in India
In India the banks are being segregated in different groups. Each group has their own
benefits and limitations in operating in India. Each has their own dedicated target market.
Few of them only work in rural sector while others in both rural as well as urban. Many
even are only catering in cities. Some are of Indian origin and some are foreign players.

All these details and many more is discussed over here. The banks and its relation with
the customers, their mode of operation, the names of banks under different groups and
other such useful information’s are talked about.

One more section has been taken note of is the upcoming foreign banks in India. The RBI
has shown certain interest to involve more of foreign banks than the existing one
recently. This step has paved a way for few more foreign banks to start business in India.

1.5 Banking structure in India

Figure1.1. Banking structure in India

1.5.1 Reserve Bank of India
The Reserve Bank of India (RBI) is India's central banking institution, which controls
the issuance and supply of the Indian rupee. Until the Monetary Policy Committee was
established in 2016, it also controlled monetary policy in India.It commenced its
operations on 1 April 1935 in accordance with the Reserve Bank of India Act, 1934. The
original share capital was divided into shares of 100 each fully paid, which were initially
owned entirely by private shareholders. Following India's independence on 15 August
1947, the RBI was nationalized on 1st January 1949.

1.5.2 Scheduled and unscheduled banks

A scheduled bank refers to a bank which has been included in the Schedule (second) of
Reserve bank Act 1934.

Scheduled banks fulfill the condition that the paid up capital and collected funds of banks
should not be less than ₹ 5 lakh. Any activity in the bank will not adversely affect the
interest of deposit.

A scheduled bank is eligible for obtaining loans/debts on bank rate from RBI

1.5.3Commercial banks
A commercial bank is a type of bank that provides services such as accepting deposits,
making business loans, and offering basic investment products that is operated as a
business for profit.

It can also refer to a bank, or a division of a large bank, which deals with corporations or
large/middle-sized business to differentiate it from a retail bank and an investment bank.

There are various categories of the commercial bank in India.

1.5.3.1 Private sector banks

These banks are owned and run by the private sector. Various banks in the country such as ICICI
Bank, HDFC Bank etc. An individual has control over their banks in preparation to the share of
the banks held by him.

Private banking in India was practiced since the beginning of banking system in India. It is one of
the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development
bank in the world as Private Banks in India and has promoted world class institutions in India.
1.5.3.2 PSU banks

Public sector banks are those banks which are owned by the Government. The Govt. runs
these Banks. In India 14 banks were nationalized in 1969 & in 1980 another 6 banks were
also nationalized. Therefore in 1980 the number of nationalized bank were 20.

Since then merger of these bank has taken several times as of SBI and its associates
banks from time to time and government is planning for merger of more banks.

Public Sector Banks (Government Shareholding %, as of 1st Apr '19)

1. Bank of India (87.0535%)

2. Bank of Baroda (63.74%)
3. Bank of Maharashtra (87.01%)
4. Central Bank of India (88.02%)
5. Indian Overseas Bank (91%)
6. Punjab & Sind Bank (79.62%)
7. State Bank of India (61.00%)
8. UCO Bank (93.29%)

Being merged

1. Indian Bank (81.73%) - Allahabad Bank (79.41%)

2. Union Bank of India (67.43%) - Andhra Bank (84.83%) - Corporation Bank (84.96%)
3. Canara Bank (72.55%) - Syndicate Bank (81.23%)
4. Punjab National Bank (70.22%) - Oriental Bank of Commerce (77.23%) - United
Bank of India (92.25%)

Payments Bank (PB)

1. India Post Payments Bank (IPPB) (100%)

1.5.3.3Foreign banks in India

There are two ways of presence of foreign banks in India. First is the branch form of the
presence which means that the foreign bank has its physical branch in India. Second is
the presence through representative office in India which is actually not a branch. Like
Australia and new Zealand banking group, The Bank of Tokyo- Mitsubishi UFJ, Ltd
Qatar National Banketc

1.5.3.4Rural banks in India

Rural banking in India started since the establishment of banking sector in India. Rural
Banks in those days mainly focused upon the agro sector. Regional rural banks in India
penetrated every corner of the country and extended a helping hand in the growth process
of the country. Apart from SBI, there are other few banks which functions for the
development of the rural areas.

1.6 Cooperative banks in India

The Cooperative bank is an important constituent of the Indian Financial System, judging
by the role assigned to cooperative, the expectations the cooperative is supposed to fulfil,
their number, and the number of offices the cooperative bank operate. Though the
cooperative movement originated in the West, but the importance of such banks have
assumed in India is rarely paralleled anywhere else in the world.
Cooperative Banks in India are registered under the Co-operative Societies Act. The
cooperative bank is also regulated by the RBI. They are governed by the Banking
Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

1.7 NABARD
National Bank for Agriculture and Rural Development (NABARD) is a development
bank in the sector of Regional Rural Banks in India. It provides and regulates credit and
gives service for the promotion and development of rural sectors mainly agriculture,
small scale industries, cottage and village industries, handicrafts. It also finance rural
crafts and other allied rural economic activities to promote integrated rural development.
It helps in securing rural prosperity and its connected matters.
1.8 Indian banking industry
The Indian banking market is growing at an astonishing rate, with deposits to reach US$
1,781.12 billion. An expanding economy, middleclass, and technological innovations are
all contributing to this growth.
The country’s middle class accounts for over 320 million People. In correlation with the
growth of the economy, rising income levels, increased standard of living, and
affordability of banking products are promising factors for continued expansion.

Figure 1.2 Growth in deposit over past few years (us $ billion)
Source India brand equity foundation, New Delhi

 During FY07–18, deposits grew at a CAGR of 11.66 per cent and reached US$ 1.6
trillion by FY17.
 Strong growth in savings amid rising disposable income levels are the major factors
influencing deposit growth.
 Access to banking system has also improved over the years due to persistent
government efforts to promote banking-technology
 Deposits under Pradhan Mantri Jan DhanYojana (PMJDY), have also increased
to₹80,674.82 crore (US$ 12.03 billion) were deposited and 32.25 million accounts
were opened in India.
Introduction To
Company
Company’s Profile

2.1 Introduction to ICICI bank

ICICI Bank Limited is an Indian multinational banking and financial services company
headquartered in Mumbai, Maharashtra with its registered office in Vadodara, Gujarat.
As of 2018, ICICI Bank is the second largest bank in India in terms of assets and market
capitalization.
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. As
on March 31, 2018, the bank has a network of 4867 branches and 14367 ATMs across
India and has a presence in 17 countries including India.

Figure 2.1 ICICI Bank headquarter in BandraKurla Complex Mumbai

ICICI Bank is one of the Big Four banks of India. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Sri
Lanka, Qatar, Oman, Dubai International Finance Centre, China and South Africa; and
representative offices in United Arab Emirates, Bangladesh, Malaysia and Indonesia.
2.2 History of ICICI bank
ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994. The
parent company was formed in 1955 as a joint-venture of the World Bank, India's public-
sector banks and public-sector insurance companies to provide project financing to Indian
industry.
The bank was founded as the Industrial Credit and Investment Corporation of India Bank,
before it changed its name to the abbreviated ICICI Bank. The parent company was later
merged with the bank.
ICICI Bank launched internet banking operations in 1998.
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.

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger
of ICICI and two of its wholly owned retail finance subsidiaries, ICICI Personal
Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The
merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by
the High Court of Gujarat at Ahmedabad in March 2002 and by the High Court of
Judicature at Mumbai and the Reserve Bank of India in April 2002.

In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and
branches in some locations due to rumours of an adverse financial position of ICICI
Bank. The Reserve Bank of India issued a clarification on the financial strength of ICICI
Bank to dispel the rumours.

Acquisitions

 1996: ICICI Ltd. A diversified financial institution with headquarters in Mumbai

 1997: ITC Classic Finance. Incorporated in 1986, ITC Classic was a non-bank
financial firm that engaged in hire, purchase, and leasing operations. At the time of
being acquired, ITC Classic had eight offices, 26 outlets, and 700 brokers.
 1997: SCICI (Shipping Credit and Investment Corporation of India)
 1998: Anagram(ENAGRAM) Finance. Anagram had built up a network of some 50
branches in Gujarat, Rajasthan, and Maharashtra that were primarily engaged in retail
financing of cars and trucks. It also had some 250,000 depositors.
 2001: Bank of Madurai
 2002: The Darjeeling and Shimla branches of Grindlays Bank
 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank
 2007: Sangli Bank. Sangli Bank was a private sector unlisted bank, founded in 1916,
and 30% owned by the Bahte family. Its headquarters were in Sangli in Maharashtra,
and it had 198 branches. It had 158 in Maharashtra and 31 in Karnataka, and others in
Gujarat, Andhra Pradesh, Tamil Nadu, Goa, and Delhi. Its branches were relatively
evenly split between metropolitan areas and rural or semi-urban areas.
 2010: The Bank of Rajasthan (BOR) was acquired by the ICICI Bank in 2010 for ₹30
billion (US$430 million). RBI was critical of BOR's promoters not reducing their
holdings in the company. BOR has since been merged with ICICI Bank.

2.3 Business objectives

Vision

To be the trusted financial services provider of choice for our customers, thereby creating
sustainable value for our stakeholders.

Mission

To grow our risk-calibrated core operating profit by:

 Delivering products and services that create value for customers.

 Bringing together all our capabilities to seamlessly meet customer needs.

 Conducting our business within well-defined risk tolerance levels.

2.4 ICICI bank today

ICICI Bank is a leading private sector bank in India. The Bank’s consolidated total assets
stood at Rs.12.50 trillion at June 30, 2019. ICICI Bank currently has a network of 4,874
branches and 14,987 ATMs across India.

Figure 2.2 ICICI bank at a glance

2.5 ICICI group companies

ICICI Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its group
companies.

Key subsidiaries

Domestic

 ICICI Prudential Life Insurance Company Limited

 ICICI Lombard General Insurance Company Limited
 ICICI Prudential Asset Management Company Limited
 ICICI Prudential Trust Limited
 ICICI Securities Limited
 ICICI Securities Primary Dealership Limited
 ICICI Venture Funds Management Company Limited
 ICICI Home Finance Company Limited
 ICICI Investment Management Company Limited
 ICICI Trusteeship Services Limited
 ICICI Prudential Pension Funds Management Company Limited[35]

International

 ICICI Bank USA

 ICICI Bank UK PLC
 ICICI Bank Canada
 ICICI Bank Germany
 ICICI Bank Eurasia Limited Liability Company
 ICICI Securities Holdings Inc.
 ICICI Securities Inc.
 ICICI International Limited.

Table 2.1 Value unlocked from subsidiaries

2.6 Strategic Focus Area for Business

ICICI Bank has focused on being a future-ready organization and has consistently
evolved its capabilities to ensure agility and value creation in its businesses. This focus is
integral to the Bank’s strategy and underscores the several pioneering initiatives taken by
the Bank.

2.6.1 Meeting customer needs

The objective of the Bank is to develop products and services that create value for
customers. Technology and digitization play an integral part in meeting this objective.
The Bank focuses on providing high levels of functionality and investing in technologies
to provide a secure, superior, seamless and uniform service experience to customers
across all channels.

2.6.2 Retail banking

The retail business was a key driver of growth for the Bank in fiscal 2019. The retail loan
portfolio grew by 21.7% year-on-year at March 31, 2019 to ` 3,528.31 billion. The retail
loan portfolio as a proportion of the total loan portfolio increased from 56.6% at March
31, 2018 to 60.1% at March 31, 2019.

Digital initiatives have played a key role in driving growth and efficiency in the retail
business. These initiatives have improved the efficiency of branches. The Bank is now
able to serve more customers at its existing branches and has enabled employees to
perform more value-added activities.

Figure 2.3 Physicals channel at March 31, 2019

2.6.3 Rural and inclusive banking

The Bank believes that a key driver of India’s growth is the rural economy which has
distinct financial needs. The Bank’s rural banking operation caters to the complete
financial requirements of customers in rural and semi-urban locations, primarily engaged
in agriculture and agro-related value chain activities. The Bank’s reach in rural areas is
supported by a network of branches, on-field staff and business correspondents providing
last-mile access in remote areas.

The segments include farmers, rural salaried customers, commodity traders, seed and
farm input dealers and processors. The key focus for the business is to build banking
habits and to help in creating wealth for rural customers.

2.6.4 Small and medium enterprises

Small and medium enterprises (SMEs) require a comprehensive relationship approach
depending on various factors including size, supply chain linkages and leverage
capability. The Bank has been providing tailored products and services for enabling
wide-ranging support and has been partnering SMEs for their business growth.

During fiscal 2019, several digital products were launched for SMEs to meet their
business and transaction banking requirements and add better operational efficiencies

2.6.5 Whole sale banking

Meeting the needs of Indian corporates has been a long-standing business focus for the
Bank. This is provided through solutions for credit-related needs like working capital and
term loans, transaction banking solutions and market-related solutions like foreign
exchange and derivatives.

Following the significant challenges faced by the Bank in its corporate portfolio, the
Bank put in place specific measures with a focus on lending to higher-rated,
well-established corporates, enhancing the quality of the existing corporate portfolio and
reducing concentration risk. The Bank made significant progress towards these
objectives.
2.6.6 International business

ICICI Bank’s international footprint consists of branches in the United States, Singapore,
Bahrain, Hong Kong, Sri Lanka, Dubai International Finance Centre, South Africa,
China, Offshore Banking Unit (OBU) and IFSC (International Financial Services Centre)
Banking Unit (IBU) and representative offices in the United Arab Emirates, Bangladesh,
Malaysia and Indonesia.

2.6.7Enhancing customer service

Customer service is an important pillar of banking and the Bank makes continuous efforts
towards improving customer experience and operational efficiency. A rapidly changing
economic and technological landscape has created new dimensions in customer
expectations from banks. Speed and convenience are two key drivers in meeting these
expectations. To keep up with evolving customer expectations, the Bank is increasing its
focus on customer delight and advocacy. This is being measured through the Net
Promoter Score, Transaction Experience and Customer Satisfaction metrics.

The Bank follows a 4D framework to map the entire customer journey across products,
processes and channels.

Figure 2.4The 4D framework

 Chapter-2

Introduction to

Financial Analysis
Financial Analysis

5.1 Financial analysis

Meaning

The term financial analysis is also known as ‘analysis and interpretation of financial
statements’ refers to the process of determining financial strength and weakness of the
firm by establishing strategic relationship between the items of the Balance Sheet, Profit
and Loss account and other operative data.
The first task of financial analysis is to select the information relevant to the decision
under consideration to the total information contained in the financial statement. The
second step is to arrange the information in a way to highlight significant relationship.
The final step is interpretation and drawing of inference and conclusions. Financial
statement is the process of selection, relation and evaluation.

Features of Financial Analysis

 To present a complex data contained in the financial statement in simple and

understandable form.

 To classify the items contained in the financial statement in convenient and rational
groups.

 To make comparison between various groups to draw various conclusions.

Purpose of Analysis of financial statements

 To know the earning capacity or profitability.

 To know the solvency.

 To know the financial strengths.

 To know the capability of payment of interest & dividends.

 To make comparative study with other firms.

 To know the trend of business.

 To know the efficiency of mgt.

 To provide useful information to mgt.

Meaning of financial statements

Financial statements refer to such statements which contains financial information about
an enterprise. They report profitability and the financial position of the business at the
end of accounting period. The team financial statement includes at least two statements
which the accountant prepares at the end of an accounting period. The two statements
are: -

 The Balance Sheet

 Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors
the financial position on a particular date in terms of the structure of assets, liabilities and
owners’ equity, and so on and the Profit And Loss account shows the results of
operations during a certain period of time in terms of the revenues obtained and the cost
incurred during the year. Thus the financial statement provides a summarized view of
financial positions and operations of a firm.

5.2 Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of financial
statements
 The analyst should acquaint himself with principles and postulated of accounting. He
should know the plans and policies of the management so that he may be able to find
out whether these plans are properly executed or not.
 The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is find out. Earning capacity of the enterprise then analysis of
income statement will be undertaken. On the other hand, if financial position is to be
studied then balance sheet analysis will be necessary.

 The financial data be given in statement should be recognized and rearranged. It will
involve the grouping similar data under same heads. Breaking down of individual
components of statement according to nature. The data is reduced to a standard form.

 A relationship is established among financial statements with the help of tools &
techniques of analysis such as ratios, trends, common size, fund flow etc.

 The information is interpreted in a simple and understandable way. The significance

and utility of financial data is explained for help in decision making.

 The conclusions drawn from interpretation are presented to the management in the
form of reports.

5.3 Types of financial analysis

There are different ways of analysis the financial statements:

1. On the basis of process of analysis

a) Horizontal Analysis
This is used when the financial statement of a number of years are to be analysed.
Such analysis indicates the trends and the increase or decrease in various items
not only in absolute figures but also in percentage form. This analysis indicates
the strengths and weaknesses of the firm. This analysis is also called as dynamic
analysis because it also shows the trend of the business.
 b) Vertical Analysis
This is used when financial statements of a particular year or on a particular date
are analyzed. For this type of analysis we generally use common size statements
and the ratio analysis. It involves a study of quantitative relationship among
various items of balance sheet and profit and loss account. This type of analysis is
static analysis because this is based on the financial results of one year. Vertical
analysis is useful when we have to compare the performance of different
departments of the same company.

Among these two types of analysis, horizontal analysis is more useful because it
brings out more clearly the trends of working of a firm. This gives us more concrete
bases for future planning.

2. On The Basis Of Information Available

a) Internal Analysis
This analysis is based on the information available to the business firm only
.Hence internal analysis is made by the management. Internal analysis is more
reliable and helpful for financial decisions.

b) External Analysis
This analysis is made on the basis of published statements,reports and
information’s. This analysis is made by external parties such as creditors,
Investors,banks,financial analysis etc. external analysis is less reliable in
comparison to internal analysis because of limited and often incomplete
information.

3. On the basis of number of firms

a) Inter-Firm Analysis
When financial analysis of two or more companies or firms are analyzed and
compared over a number of accounting period, it is called inter-firm analysis.
 b) Intra -Firm Analysis
Intra-firm analysis is concerned with the analysis of financial performance of
different units or departments or segments of the same enterprise or company.
Similarly when financial statements of two or more years of the same firm are
analyzed and compared it is also called as intra-firm analysis.

4. On the basis of objectives

a) Accounting Analysis
Accounting analysis is analysis of past financial performance and involves
examining
How generally accepted accounting principles and conventions have been
applied in
arriving at the values of assets, liabilities, revenues and expenses.

b) Prospective Analysis
Prospective analysis involves developing forecasted financial statements
keeping in view the changes that are likely to shape and affect the business
given the assumptions about these changes and the limitation of the forecasting
technique used. This is quite complicated analysis.

Methods/Tools of financial analysis

A number of methods can be used for the purpose of analysis of financial statements.
These are also termed as techniques or tools of financial analysis. Out of these, and
enterprise can choose those techniques which are suitable to its requirements. The
principal techniques of financial analysis are:-

 Comparative financial statements

 Common-size statements
 Trend analysis
 Ratio analysis
  Funds flow analysis
 Cash flow analysis

Comparative financial statements

When financial statements figures for two or more years are placed side-side to facilitate
comparison, these are called ‘comparative Financial Statements’. Such statements not
only show the absolute figures of various years but also provide for columns to indicate
to increase or decrease in these figures from one year to another. In addition, these
statements may also show the change from one year to another on percentage form. Such
cooperative statements are of great value in forming the opinion regarding the progress of
the enterprise.

Objectives purpose or significance of comparative financial statements

 To simplify data
 To make inter period/inter-firm comparison
 To indicate the trends
 To enable forecasting
 To indicate the strengths and weaknesses of the firm
 To compare the performance
 To analyse expenses
 To analyse profits

Tools for comparison of financial statements

Comparative financial statement is a tool of financial analysis that depicts change in each
item of the financial statement in both absolute amount and percentage term, taking the
item in preceding accounting period as base.
Comparison and analysis of financial statements may be carried out using the following
tools
Comparative Balance Sheet
The comparative balance sheet shows increase and decrease in absolute terms as well as
percentages, in various assets, liabilities and capital. A comparative analysis of balance
sheets of two periods provides information regarding progress of the business firm.
The main purpose of comparative balance sheet is to measure the short- term and long-
term solvency position of the business.

Comparative Income Statement

Comparative income statement is prepared by taking figures of two or more than two
accounting periods, to enable the analyst to have definite knowledge about the progress
of the business.Comparative income statements facilitate the horizontal analysis since
each accounting variable is analysed horizontally.

Common- Size Statements

Common size statements are such statements in which the items of financial statements
are covered into percentage of common base. In common-size income statement, by
assuming net sales as 100(i.e %) and other individual items are converted as percentage
of this. Similarly, in common –size balance sheet, total assets are assumed to be 100(i.e
%) and individual assets are expressed as percentage.

Objectives of common size statements

 Presenting the change in various items in relation to total assets or total liabilities
or net sales.
 Establishing a relationship.
 Providing a common base for comparison.

Types of common size statements

1) Common-Size Balance Sheet
A common –size balance sheet is a statement in which total of assets or liabilities
is assumed to be equal to 100 and all the figures are expressed as percentage of
the total. That is why it is known as percentage balance sheet.
 Common-size balance sheet facilitate the vertical analysis since each item of the
Balance Sheet is analyzed vertically.

2) Common-Size Income Statement

Common-size income statement is a statement in which the figures of net sales is
assumed to be equal to 100 and all other figures of “profit and loss A/c” are
expressed as percentage of net sales. This statement facilitate the vertical
analysiss since each accounting variable is analyzed vertically. One can draw
conclusion, regarding the behaviour of expenses over period of time by examining
these percentages.

Trend Analysis
Trend percentage are very useful is making comparative study of the financial statements
for a number of years. These indicate the direction of movement over a long time and
help an analyst of financial statements to form an opinion as to whether favorable or
unfavorable tendencies have developed. This helps in future forecasts of various items.
For calculating trend percentages any year may be taken as the ‘base year’. Each item of
base year is assumed to be equal to 100 and on that basis the percentage of item of each
year calculated.

Ratio Analysis

Meaning
Absolute figures expressed in financial statements by themselves are meaningfulness.
These figures often do not convey much meaning unless expressed in relation to other
figures. Thus, it can be say that the relationship between two figures, expressed in
arithmetical terms is called a ratio.

“A ratio is simply one number expressed in terms of another. It is found by dividing

one number into the other.”
According to R.N. Anthony
Objective of the ratio analysis

 Helpful in analysis of financial statements.

 Simplification of accounting data.
 Helpful in comparative study.
 Helpful in locating the weak spots of the business.
 Helpful in forecasting
 Estimate about the trend of the business
 Fixation of ideal standards

Limitation of the ratio analysis

 False accounting data gives false ratios

 Comparisons not possible of different firms adopt different
 Accounting policies.
 Ratio analysis becomes less effective due to price level
 change
 Ratios may be misleading in the absence of absolute data.
 Limited use of a single ratio.
 Window-Dressing
 Lack of proper standards.
 Ratio alone are not adequate for proper conclusions
 Effect of personal ability and bias of the analyst.

Classification of ratios

In view of the financial management or according to the tests satisfied, various ratios
have been classified as below:

Liquidity Ratios
These are the ratios which measure the short-term solvency or financial position of a
firm. These ratios are calculated to comment upon the short-term paying capacity of a
concern or the firm’s ability to meet its current obligations.

Long –Term Solvency and Leverage Ratios

Long-term solvency ratios convey a firm’s ability to meet the interest cost and repayment
schedules of its long-term obligation e.g. Debit Equity Ratio and Interest Coverage
Ration. Leverage Ratios.

Activity Ratios
Activity ratios are calculated to measure the efficiency with which the resource of a firm
have been employed. These ratios are also called turnover ratios because they indicate the
speed with which assets are being turned over into sales e.g. debtors turnover ratio.

Profitability Ratios
These ratios measure the results of business operations or overall performance and
effective of the firm e.g. gross profit ratio, operating ratio or capital employed. Generally,
two types of profitability ratios are calculated.
1. In relation to Sales, and
2. In relation in Investment

5.4.4 Cash-flow statement

A cash – flow statement is a statement showing inflows (receipts) and outflows
(payments) of cash during a particular period. In other words, it is a summary of sources
and applications of each during a particular span of time.

Objectives of Cash Flow Statement

 Useful for Short-Term Financial Planning.
 Useful in Preparing the Cash Budget.
 Comparison with the Cash Budget.
 Study of the Trend of Cash Receipts and Payments.
 Chapter-3

Literature Review
 Literature Review

Once the problem is formulated a brief summary of it should be written down. An

extensive literature review is undertaken connected with the problem. For this problem,
the abstracting and indexing journals and published and unpublished bibliographic are the
first place to go to. Academic journals, conference proceedings meeting of the bank,
government reports books, bank annual report etc. must be taped depending upon the
nature of the problem.

3.1 Conceptual literature

Conceptual literature is that which relates with concepts and theories. Help from different
book is taken for different concepts and theories.

3.2 Empirical literature

Empirical literature consist of study made by other in the same field. The published data
in newspaper, books, annual reports and magazines available for discussion with people
of organization.

Cooper (2000)
1) He conducted a study on Financial Intermediation on which he observed that the
quantitative behavior of business-cycle models in which the intermediation process
acts either as a source of fluctuations or as a propagator of real shocks. In neither case
do we find convincing evidence that the intermediation process is an important
element of aggregate fluctuations. For an economy driven by intermediation shocks,
consumption is not smoother than output, investment is negatively correlated with
output, variations in the capital stock are quite large, and interest rates are procyclical.
The model economy thus fails to match unconditional moments for the U.S.
economy. We also structurally estimate parameters of a model economy in which
intermediation and productivity shocks are present, allowing for the intermediation
process to propagate the real shock. The unconditional correlations are closer to those
observed only when the intermediation shock is relatively unimportant.
2) Munya Mtetwa (2010)
In this article he short propose that about the fixed asset. He define that fixed assets
are assets that are used in production or supply of goods or services and they are to be
used within the business for more than one financial year. Consequently, fixed assets
represent the company's long term income generating assets and they can either be
tangible or non tangible. It includes land and buildings, plant and equipment, golf
courses, casinos, football players, machinery and hotels depending on the nature of
the business under consideration. Fixed asset turnover = Sales / Net fixed asset.

3) Manish Mittal and Vyas (2017) Investors have certain cognitive and emotional
weakness which comes in the way of their investment decisions. Over the past few
years, behavioural finance researchers have scientifically shown that investors do not
always act rationally.

4) Nayak, M. K. (2017), analyse the significance of difference between the various

demographic variable and investors knowledge of grievances, awareness of function
of readdressed agencies, loading of complain are some of the factors which affect
their satisfaction level. Agriculture is generally less informed and passive to making
investment so that they suffer from all the traits of being prone to grievances.
 Chapter-4

Objective of the study

Objective of the study
Objectives are the ends that states specifically how goal be achieved. Every study must
have an objective for which all the efforts have been done. Without objective no research
can be conducted and no result can be obtained. On the basis of objective all the research
process is followed. Objectives are the main aspect of every study. The objective of the
study gives direction to go through the research problem. It guides the researcher and
keeps him on track. I have two objectives regarding my research project.

The objective of this research report are:

1. To study the financial position of the ICICI bank through various tools.
2. To study the trend of advances, deposits and net profits for past years.
3. To study the liquidity position of the bank.
4. To study the capital adequacy of the bank
5. To study cash flow statement trend.
 Chapter-5

Research Methodology

Research Methodology

Introduction to research
The procedure adopted for conducting the research requires a lot of attention as it has
direct bearing on accuracy, reliability and adequacy of results obtained. It is due to this
reason that research methodology, which we used at the time of conducting the research,
needs to be elaborated upon. It may be understood as a science of studying how research
is done scientifically.
Therefore the research methodology not only talks about the research methods but also
considers the logic behind the method used in the context of the research study. Research
Methodology is a way to systematically study and solve the research problems. If a
researcher wants to claim his study as a good study, he must clearly state the
methodology adapted in conducting the research the research so that it may be judged by
the reader whether the methodology of work done is sound or not.

The Research Methodology here includes

 Meaning of Research.

 Research Problem

 Objective of Research

 Research Design.

 Data Collection method.

 Analysis and interpretation of Data

 Limitation of study

Meaning of the research

Research is defined as “a scientific and systematic search for pertinent information on a
specific topic”. Research is an art of scientificinvestigation. Research is a systematized
effort to gain now knowledge. It isa careful investigation or inquiry especially through
search for new facts inany branch of knowledge.
Research is an academic activity and this termshould be used in a technical sense.
Research comprises defining andredefining problems, formulating hypothesis or
suggested solutions. Makingdeductions and reaching conclusions to determine whether
they if theformulating hypothesis. Research is thus, an original contribution to theexisting
stock of knowledge making for its advancement. The search forknowledge through
objective and systematic method of finding solutions toa problem is research.

Research is a systematic, formal, rigorous and precise process employed to gain solutions
to problems or to discover and interpret new facts and relationships.
According to Waltz and Bansell (1981)

Research problem
The first step while conducting research is careful definition of Research Problem. “To
ERR IS THE HUMAN” is a proverb which indicates that no one is perfect in this world.
Every researcher has to face many problems which conducting any research that’s why
problem statement is defined to know which type of problems a researcher has to face
while conducting any study it is said that

“Problem well defined is problem half solved.”

Basically, a problem statement refers to some difficulty, which researcherexperiences in
the context of either a theoretical or practical situation and wants to obtain the solution
for the same.

The problem statement here is

“Tomake financial performance analysis of the ICICI

bank”

Research design
A research designs is the arrangement of conditions for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economy in
procedure. Research Design is the conceptual structure with in which research in
conducted. It constitutes the blueprint for the collection measurement and analysis of
data. Research Design includes and outline of what the researcher will do form writing
the hypothesis and it operational implication to the final analysis of data.
A research design is a framework for the study and is used as guide in collection and
analyzing the data. It is a strategy specifying which approach will be used for gathering
and analyzing the data. It also include the time and cost budget since most studies are
done under these two cost budget since most studies are done under theses tow
constraints. The design is such studies must be rigid and not flexible and most focus
attention on the following

 What is the study about?

 Why is the study being made?
 Where will the study be carried out?
 What type of data is required?
 Where can be required data be found?
 What period of time will the study include?
 What will be sample design?
 What techniques of data collection will be used?
 How will the data be analyzed?
 In what style will the report be prepared?

Types of the research design

1. Experimental Research Design

2. Exploratory Research Design
3. Descriptive and Diagnostic Research Design

Exploratory Research Design

This research design is preferred when researcher has a vague idea about the problem the
researcher has to explore the subject.

Experimental Research Design

The research design is used to provide a strong basis for the existence of casual
relationship between two or more variables.

Descriptive Research Design

It seeks to determine the answers to who, what, where, when and how questions. It is
based on some previous understanding of the matter.

Diagnostic Research Design It determines the frequency with which something occurs
or its association with something else.

Research design used in the study

Descriptive research design is used in this study because it will ensure the minimization
of bias and maximization of reliability of data collected. Descriptive study is based on
some previous understanding of the topic.
Research has got a very specific objective and clear cut data requirements the researcher
had to use fact and information already available through financial statements of earlier
years and analyze these to make critical evaluation of the available material. Hence by
making the type of the research conducted to be both Descriptive and Analytical in
nature.

Following framework of the research design is used in the study.

Purpose of the study Descriptive
Study setting Non contrived
Time Horizon Cross sectional

Table 4.1 Framework of research design

Data Collection Method
The process of data collection begins after a research problem has been defined and
research design has been chalked out. There are two types of data

Primary Data
It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The main
tool in gathering primary data was investigation and observation. It was achieved by a
direct approach and observation from the officials of the company.

Secondary Data
It is the data which is already collected by someone else. Researcher has to analyze the
data and interprets the results. It has always been important for the completion of any
report. It provides reliable, suitable, adequate and specific knowledge.
The data used in the study is ‘secondary data’.

The required data for the study are basically secondary in nature and the data
arecollected from

 The audited reports of the company.

 INTERNET – which includes required financial data collected form ICICI Bank’s
official website i.e.www.icici.com and some other websites on the internet for the
 purpose of getting all the required financial data of the bank and to get detailed
knowledge about ICICI Bank for the convenience of study.
 Data from India Brand Equity foundation.
 Broachers of ICICI Bank.
 The valuable cooperation extended by staff members and the branch manager of
ICICI bank,Karnalcontributed a lot to fulfill the requirements in the collection of data
in order to complete the project.

Features of the research project financial analysis

Research includes following types of the financial analysis

 Horizontal analysis

 Vertical analysis

 External analysis

 Intra-firm analysis

 Accounting analysis
 Chapter-6
Data Analysis
And Interpretation
Methods/Tools applied to the research

5.5.1 Trend analysis

These indicate the direction of movement over a long time and help an analyst of
financial statements to form an opinion as to whether favorable or unfavorable tendencies
have developed. This helps in future forecasts of various items. For calculating trend
percentages any year may be taken as the ‘base year’. Each item of base year is assumed
to be equal to 100 and on that basis the percentage of item of each year calculated.
For this research project curved is traced for

Deposits
Deposits are liability to banks, which need money to lend. It is the amount that any
citizen (resident or no-resident) keep with the bank subject to some regulatory
compliance. In turn, banks pay interest on deposits. It is considered the safest form of
investment. Deposits are of two types current and savings deposits (CASA) as well as
term deposits.

Advances
Advance is the amount that banks lend to individuals and companies. They charge
interest on loans. Interest rates vary depending on the terms and conditions of such credit.
Banks raise money to lend through different sources like deposits, money market and so
on.

Net profits
Net profit is the result after all expenses have been subtracted from revenues. This
figure is the aggregate result of all operating and financing activities of an
organization.
The various figures for the deposits, advances and net profits are obtained for the five
financial years from FY 2015 to FY 2019 respectively from the bank standalone balance
sheet and profits and loss statement.

Figure 5.1 Balance sheet part showing deposits for five years.

Figure 5.2 Balance sheet part showing advances for five years.

Figure 5.3 Profit and loss account part showing net profits for five years.
Complete standalone balance sheet and profit and loss account statement is provided in
Appendix I and Appendix II respectively

Following table is obtained from the account statement and the profit and ‘loss’ account
statement.

Particulars Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Deposits 361,562.73 421,425.71 490,039.06 560,975.21 652,919.67
Advances 387,522.07 435,263.94 464,232.08 512,395.29 586,646.58
Net Profits 11,175.35 9,726.29 9,801.09 6777.42 3,363.30

Table 5.1Showing deposits, advances and net profits in ₹Crore

In order to plot the trend of the deposits advances and the net profits following steps are
followed
 The above figures are converted into percentage by taking 2015 as the base year.
 Value for the base year 2015 is taken as 100 and rest values are measured with
reference to the base year
 Following table is obtained.

base year( 2015)

Particulars Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Deposits 100 117 135 155 181
Advances 100 112 120 132 151
Net Profits 100 87 88 61 30

Table 5.2Percentage figures for deposits, advances and net profits

 TREND GRAPH OF ICICI BANK
200.00
180.00
160.00
140.00
PERCENTAGE(%)

120.00
100.00
80.00
60.00
40.00
20.00
FINANCIAL YEAR
0.00
2015 2016 2017 2018 2019
Deposits 100 117 135 155 181
Advances 100 112 120 132 151
Net Profits 100 87 88 61 30

Figure 5.4 Deposits,Advances,Net Profits plot with previous year (base year 2015)

Interpretation
 There is increase in the deposits and advances monotonically.
 Net profit first decreases for FY2016 after it increases slightly with subsequent
decrease in profit after FY 2017.

Ratio analysis

5.5.2 Current ratio

This ratio is also known as ‘Working capital ratio ‘and is used for determining the short
term financial position of the firm. It is an indication of a company's ability to meet short-
term debt obligations; the higher the ratio, the more liquid the company is.
Current ratio is equal to current assets divided by current liabilities. If the current assets
of a company are more than twice the current liabilities, then that company is generally
considered to have good short-term financial strength.
If current liabilities exceed current assets, then the company may have problems meeting
its short-term obligations.
The ideal current ratio is 2:1, which denotes that short term assets should be twice the
value of short term liabilities. Low current ratio may indicates that the business does not
have sufficient funds to honors its obligation.

Current ratio = Current assets/ Current liabilities

Current Ratio
Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19
Current 0.78 1.66 1.83 2.38 2.16
ratio

Table 5.3 Current ratios from Mar’15 to Mar’19

Current Ratio of ICICI Bank

2.5

1.5

0.5

0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.5 Current ratios bar graph from Mar’15 to Mar’19

Interpretations
 Current ratio increases continuously up to Mar’18 with slight decrease in Mar’19.
 For year 2018 and 2019 current ratio is more than twice, which indicates that
company has good short term financial strength.
 Company has greater liquidity and greater safety of funds but at sacrifice of
profitability because current assets are less profitable than fixed assets.
5.5.3 Liquid ratio
Liquid ratio is also known as ‘Quick’ or ‘Acid Test ‘Ratio. Liquid assets refer toassets
which are quickly convertible into cash. Current Assets other stock and prepaid
expensesare considered as quick assets. Generally quick ratio of 1:1 is considered
satisfactory.
Quick Ratio = Total quick assets/Total current liabilities
Quick Assets = Total current assets – Inventory

Liquid ratio
Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19
Quick ratio 13.81 14.97 16.31 20.44 18.66

Table 5.4 Quick ratios from Mar’15 to Mar’19

Quick Ratio of ICICI Bank

25

20

15

10

0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.6 Quick ratios bar graph from Mar’15 to Mar’19

Interpretation
 Quick ratio increase up to year Mar’18 and then decreases for Mar’19.
 High quick ratio indicates that company is capable of meeting short term financial
liabilities.
 5.5.4 Dividend per share
It is investment valuation ratio.The amount a firm pays out in dividends directly
translates to income for the shareholder.
It is expressed by dividing dividend paid to equity shareholders by no. of equity shares. This
shows the per share dividend given to equity shareholders. It is very helpful for potential
investors to know the dividend paying capacity of the company.

Dividend per share = Dividend paid to equity shareholders/ No. of equity shares

Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Dividend per share 5.0 5.0 2.5 1.50 1.00

Table 5.5 Dividend per share from Mar’15 to Mar’19

Dividend per share of ICICI Bank

6

0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.7 Dividend per share bar graph from Mar’15 to Mar’19

Interpretation
 There is decrease in the dividend per share. The decrease may be due to
reinvestment in a firm's operations, debt reduction, and poor earnings.
  A decrease in DPS can cause investors to sell their stake in the company, thus
driving the market value of ICICI bank Ltd down.
5.5.5 Return on net worth
It is profitability ratio and can be used for inter firm comparison. It measures the
profitability of the business in view of the shareholders. It judges the earning capacity of
the company and the adequacy of return on proprietor’s funds. Shareholders and potential
investors are interested in this ratio.
It is used know firm’s profitability from the perspective of the shareholders and also it
explains efficiency of shareholder capital to generate profit.

Return on Net Worth = Net profit after interest and tax x 100
Shareholder’s funds

Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Return on net worth(%) 13.89 11.19 10.11 6.63 3.19

Table 5.6 Return on net worth from Mar’15 to Mar’19

Return on net worth (%) of ICICI Bank

16
14
12
10
8
6
4
2
0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.8 Return on net worth (%) bar graph from Mar’15 to Mar’19

Interpretation
  There is continuous decline on return on net worth.
 It has reduced to almost 50% from Mar’18 to Mar’19.

5.5.6 Total assets turnover ratio

This ratio is relationship between sales and total assets. This ratio is used to
measure the overall activity and performance of the business concern. It
Indicates efficiency with which business uses its assets for the purpose of
generating revenue and profits.
The higher the ratio indicates that the company is utilizing all its assets
efficiently to generate sales.
Lower ratio indicates poor management of resources.
Total assets turnover ratio = Sales/ Total assets

Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Total assets turnover ratio 0.08 0.08 0.08 0.07 0.07

Table 5.7 Total assets turnover ratio from Mar’15 to Mar’19

Total assets turnover ratio of ICICI Bank

0.1

0.08

0.06

0.04

0.02

0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.9 Total assets turnover ratio from Mar’ 15 to Mar’19

Interpretation
  The ratio has high value remains almost constant with slight decrease in Mar’18.
 The high value shows efficient use of the assets by the company.
5.5.7 Capital adequacy ratio
The capital adequacy ratio, also known as capital-to-risk weighted assets ratio
(CRAR).The capital adequacy ratio (CAR) is a measurement of a bank's available capital
expressed as a percentage of a bank's risk-weighted credit exposures. It is used to protect
depositors and promote the stability and efficiency of financial systems around the
world.
A lower CAR means a bank is prone to the risk of going burst in case of any crisis.
However, a very high CAR means, the bank is not doing enough business.

Year Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Capital adequacy ratio 17.02 16.64 17.39 18.42 16.89

Table 5.8 Capital adequacy ratio from Mar’15 to Mar’19

Total assets turnover ratio of ICICI Bank

20

15

10

0
Mar’15 Mar’16 Mar’17 Mar’18 Mar’19

Financial Year

Figure 5.10 Capital adequacy ratio bar graph from Mar’15 to Mar’19

Interpretation
 CAR remains almost constant with highest value in Mar’18.
  The moderate value shows that the bank is not prone to risk and at same time
doing enough business from its assets.
5.5.8 Cash flow statement
A cash – flow statement is a statement showing inflows (receipts) and outflows
(payments) of cash during a particular period. In other words, it is a summary of sources
and applications of each during a particular span of time.

Figure 5.11 Cash flow statement form Mar’15 to Mar’19

Interpretation
Net profit before tax has reduced from Mar’15 to Mar’19
Variation is also observed in Net (decrease)/increase in cash and cash equivalents.
 Chapter-7
Finding, Conclusion
And Suggestion
 Findings
 Balance sheet indicates that there is continuous increase in the deposits and
advances made to the bank.
 Profit and loss account indicates that the net profit has reduced significantly form
Mar’15 to Mar’19 and it has dropped to almost 50% in Mar’19 in comparison to
Mar’18.
 Current ratio and quick ratio indicates good liquidity position of the bank with
improvement from Mar’15 with highest being Mar’18.
 Dividend per share has reduced significantly which shows that there is high
chance that the market value of the bank share may decline.
 Past trend of total assets turnover ratio indicates good management of the
resources.
 Return on net worth from the perspective of investor’s shows decline in it
therefore earning of shareholders is reducing.
 CAR remains almost constant with highest value in Mar’18.The moderate value
shows that the bank is not prone to risk and at same time doing enough business
from its assets.

Suggestions
 Bank should adopt strategy to increase net profit.
 The bank must adopt strategy to increase the earning of the shareholders.
 Bank must focus on the financial inclusion so that assets of the bank can be
improved further.
 Further improvement in the digital banking to cover maximum services by
providing fast convenient and safe banking services.
 Though the bank has been successful in increasing its 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 can also think for improving its day-to -day service to its clients. Such
service can be improved by providing prompt service and showing an attitude of
co-operation to its clients. It will help to give a kind of confidence to the public
and build a better public image.

Conclusion
On the basis of various techniques applied for the financial analysis of ICICI Bank we
can arrive at a conclusion that the financial position and overall performance of the bank
is satisfactory. Though the net profit of the bank has over the period but not in the same
pace as of expenses. But the bank has succeeded in maintaining a reasonable profitability
position.

The bank has succeeded in increasing its share capital also which has increased around
50% in the last 5 years. Individuals are the major shareholders. The major achievement of
the bank has been a tremendous increase in its deposits, which has always been its main
objective. Fixed and current deposits have also shown an increasing trend.

Equity shareholders are also enjoying an increasing trend in the return on their capital.
Though current assets and liabilities (current liquidity) of the bank is not so satisfactory
but bank has succeeded in maintaining a stable solvency position over the years. As far as
the ratio of external and internal equity is concerned, it is clear that bank has been using
more amount of external equity in the form of loans and borrowings than owner’s equity.
Bank’s investments are also showing an increasing trend. Due to increase in advances,
the interest received by the bank from such advances is proving to be the major source of
income for the bank.

Bibliography
  Analysis of the financial statements second edition by Pamela P.Peterson, Frank
J.Fabozzi from wiley finance.

 Fundamentals of accounting and financial analysis by Anil Chowdhry from

Pearson Education.

 Financial statement analysis second edition by Gokul Sinha by PHI Learning.

 Financial management theory and practices eighth edition by Shashi K. Gupta and
R.K Sharma

 https://www.icicibank.com/

 https://www.icicibank.com/aboutus/annual.page

 https://www.moneycontrol.com/financials/icicibank/

 https://www.ibef.org/

Appendix-I
Consolidated Balance sheet
PRINT

APPENDIX-II
Profit and loss account
ICICI
Previous Years »
Bank
Standalone Profit & Loss
------------------- in Rs. Cr. -------------------
account
Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Interest Earned 63,401.19 54,965.89 54,156.28 52,739.43 49,091.14
Other Income 14,512.16 17,419.63 19,504.48 15,323.05 12,176.13
Total Income 77,913.35 72,385.52 73,660.76 68,062.48 61,267.27
Expenditure
Interest expended 36,386.40 31,940.05 32,418.96 31,515.39 30,051.53
Employee Cost 6,808.24 5,913.95 5,733.71 3,012.69 4,749.88
Selling, Admin & Misc Expenses 30,578.51 26,973.36 24,949.36 23,109.60 14,631.56
Depreciation 776.91 780.74 757.65 698.51 658.95
Operating Expenses 18,089.06 15,703.94 14,755.06 12,683.55 11,495.83
Provisions & Contingencies 20,074.60 17,964.11 16,685.66 14,137.25 8,544.56
Total Expenses 74,550.06 65,608.10 63,859.68 58,336.19 50,091.92
Mar '19 Mar '18 Mar '17 Mar '16 Mar '15
12 mths 12 mths 12 mths 12 mths 12 mths
Net Profit for the Year 3,363.30 6,777.42 9,801.09 9,726.29 11,175.35
Profit brought forward 18,495.26 18,744.94 17,132.19 17,261.42 13,318.59
Total 21,858.56 25,522.36 26,933.28 26,987.71 24,493.94
Equity Dividend 965.13 1,457.46 0.95 2,907.52 2,898.81
Corporate Dividend Tax 0.00 8.73 -7.19 279.37 271.15
Per share data (annualised)
Earning Per Share (Rs) 5.22 10.54 16.83 16.73 19.28
Equity Dividend (%) 50.00 75.00 125.00 250.00 250.00
Book Value (Rs) 163.38 158.91 166.37 149.47 138.72
Appropriations
Transfer to Statutory Reserves 3,013.86 5,560.91 8,194.58 6,668.62 4,062.57
Transfer to Other Reserves 0.00 0.01 0.00 0.01 0.00
Proposed Dividend/Transfer to
965.13 1,466.19 -6.24 3,186.89 3,169.96
Govt
Balance c/f to Balance Sheet 17,879.57 18,495.26 18,744.94 17,132.19 17,261.42
Total 21,858.56 25,522.37 26,933.28 26,987.71 24,493.95

APPENDIX-III
Ratio
ICICI
Previous Years »
Bank
Key Financial Ratios
Mar
Mar '18 Mar '17 Mar '16 Mar '15
'19
Investment Valuation Ratios
Face Value 2.00 2.00 2.00 2.00 2.00
Dividend Per Share 1.00 1.50 2.50 5.00 5.00
Operating Profit Per Share (Rs) 15.05 12.61 13.29 15.89 14.15
Net Operating Profit Per Share
98.35 85.51 92.98 90.70 84.68
(Rs)
Free Reserves Per Share (Rs) -- -- -- -- --
Bonus in Equity Capital 9.04 9.06 -- -- --
Profitability Ratios
Interest Spread 6.36 6.43 6.58 6.83 7.04
Adjusted Cash Margin(%) 5.31 10.44 14.33 15.31 19.31
Net Profit Margin 5.30 12.33 18.09 18.44 22.76
Return on Long Term Fund(%) 38.13 38.54 45.09 50.29 57.03
Return on Net Worth(%) 3.19 6.63 10.11 11.19 13.89
Adjusted Return on Net Worth(%) 3.19 6.63 10.11 11.19 13.89
Return on Assets Excluding
163.38 158.91 166.37 149.47 138.72
Revaluations
Return on Assets Including
168.10 163.59 171.59 154.31 138.72
Revaluations
Management Efficiency Ratios
Interest Income / Total Funds 6.90 6.68 7.29 7.73 7.91
Net Interest Income / Total Funds 2.94 2.80 2.92 3.11 3.07
Non Interest Income / Total Funds 1.58 2.12 2.62 2.25 1.96
Interest Expended / Total Funds 3.96 3.88 4.36 4.62 4.84
Operating Expense / Total Funds 1.88 1.81 1.88 1.76 1.75
Profit Before Provisions / Total
2.55 3.01 3.56 3.50 3.18
Funds
Net Profit / Total Funds 0.37 0.82 1.32 1.43 1.80
Loans Turnover 0.12 0.11 0.12 0.13 0.14
Total Income / Capital
8.48 8.80 9.91 9.98 9.88
Employed(%)
Interest Expended / Capital
3.96 3.88 4.36 4.62 4.84
Employed(%)
Total Assets Turnover Ratios 0.07 0.07 0.07 0.08 0.08
Asset Turnover Ratio 0.07 0.07 0.08 0.08 0.08
Profit And Loss Account Ratios
Interest Expended / Interest
57.39 58.11 59.86 59.76 61.22
Earned
Other Income / Total Income 18.63 24.07 26.48 22.51 19.87
Operating Expense / Total Income 22.22 20.62 19.00 17.61 17.69
Selling Distribution Cost
1.14 0.73 0.53 0.40 --
Composition
Balance Sheet Ratios
Capital Adequacy Ratio 16.89 18.42 17.39 16.64 17.02
Advances / Loans Funds(%) 75.11 74.18 75.25 77.02 75.94
Debt Coverage Ratios
Credit Deposit Ratio 90.54 92.92 98.69 105.08 104.72
Investment Deposit Ratio 33.84 34.68 35.32 44.32 52.43
Cash Deposit Ratio 5.85 6.17 6.45 6.74 6.85
Total Debt to Owners Fund 7.77 7.28 6.58 6.86 6.64
Financial Charges Coverage Ratio 1.67 1.80 1.84 1.78 1.68
Financial Charges Coverage Ratio
1.11 1.24 1.33 1.33 1.39
Post Tax
Leverage Ratios
Current Ratio 0.12 0.12 0.12 0.13 0.06
Quick Ratio 18.66 20.44 16.31 14.97 13.81
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 28.69 21.50 -- 29.89 25.93
Dividend Payout Ratio Cash
23.31 19.28 -- 27.89 24.49
Profit
Earning Retention Ratio 71.31 78.50 100.00 70.11 74.07
Cash Earning Retention Ratio 76.69 80.72 100.00 72.11 75.51
Adjusted Cash Flow Times 157.70 74.22 46.41 40.43 30.55
Mar
Mar '18 Mar '17 Mar '16 Mar '15
'19
Earnings Per Share 5.22 10.54 16.83 16.73 19.28
Book Value 163.38 158.91 166.37 149.47 138.72