CHAPTER-IV

ANALYSIS OF DATA
Enhancing efficiency and performance of Public sector

banks (PSBs) is a key objective of economic reforms in many

countries including India. It is believed that private ownership

helps in improving efficiency and performance. Accordingly, the

Indian government started diluting its equity in PSBs from early

1990s in a phased manner. It has to be analysed whether the

partial privatization of Indian banks had really helped them in

improving their efficiency and performance.

The present research seeks to asses the financial

performance of the public and private sector Banks operating in

India in post liberalization era. The Indian banking sector has

been dominated by public sector bank in number of branches

and assets. The Indian banking sector (comprise of 28 public

sector bank with majority of government owned banks, 23 banks

operating in private sector and 27 foreign banks. It is observed

that the public sector bank has remained unchanged in terms of

number over the last decades. In the era of liberalization where

the Indian Banks are trying to compete with global banks, it is

the need of the hour to study the efficiency and their

[118]
performance in the post liberalization period. It is in this context

that the present research has been undertaken. "The public

sector banks constitute about 27% of the total commercial

banking assets. It is glaring to note that the assets share of

public sector banks have decline from 90% in 1980 to 68% in

2007".1

Though the number of domestic private banks had decline

since 1980, but the assets of these banks have gone upto 20% in

2007. The total banking assets constitute more than 92% of GDP

at the end of March 2008, and the commercial banking assets

constitute more than 95% of total banking assets. Even though

the number of foreign banks have gone up significantly the

assets share had not increased correspondingly. "The total

assets of public sector bank in 1980 was Rs. 1649.56 billion,

which increased to Rs. 5638.22 billion in 2000."2 and further to

"12,206.56 billion in 2007. During the financial reform the total

assets of banking sector had recorded higher growth, and since

1999 the total assets of the banking sector has gone

significantly. The total commercial banking assets in 1999 was

Rs. 6531.37 billion was increased to Rs. 17854.76 billion".3

In case of private sector banks the "total assets was Rs.

[119]
90.26 billion which increased to Rs. 686.30 billion in 1993 and

further to Rs. 3728.88 billion in 2007".4

CAMEL MODEL

"CAMEL is basically a ratio-based model for evaluating the

performance of banks".5 Various ratios forming this model are

available as follows:-

C: Capital Adequacy - Capital Adequacy Ratio

- Debt-Equity Ratio
- Advances to Assets
- Govt. Securities to Total investment
A: Assets Quality - Gross NPA to Net Advances
- Net NPAs to Net Advances
- Total Investments to Total Assets
- Net NPAs to Total Assets.
M: Management - Total Advances to Total Deposits
Efficiency - Business per Employee
- Profit per Employee
E: Earning Quality - Operating Profits to Average Working
Funds.
- Spread to Total Assets
- Net Profit to Average Assets
- Interest Income to Total Income.
- Non-Interest Income to Total Income
L: Liquidity - Liquid Assets to Total Assets
- Govt. Securities to Total Assets
- Liquid Assets to Demand Deposits
- Liquid Assets to Total Deposits

[120]
8.3 CONSTITUENTS OF CAMEL MODEL

(i) CAPITAL ADEQUACY

It is important for a bank to maintain depositor's

confidence and preventing the bank from going bankrupt.

Capital is seen as a cushion to protect the depositors and to

promote the stability and efficiency of financial system around

the world. Capital adequacy reflects the overall financial

condition of the banks and also the ability of the management to

meet the need for additional capital. It also indicates whether the

bank has enough capital to absorb unexpected losses. Capital

adequacy ratio acts as an indicator of bank leverage. The

following ratios measure Capital Adequacy:

(A) Capital Adequacy Ratio : The banks are required to

maintain the Capital Adequacy Ratio (CAR) as specified by RBI

from time to time. As per the latest RBI norms, the banks in

India should have a CAR of 9%. It is arrived at by dividing the

sum of Tier-I & Tier-II capital by aggregate of Risk Weighted

Assets (RWA) Symbolically CAR = (Tier I + Tier-II) / RWA

• Tier - I capital includes equity capital & free reserves

• Tier - II capital comprise of subordinate debt of 5-7 years

tenure, revaluation reserves, general provisions and loss

[121]
 reserves, hybrid debt capital instruments and undisclosed

reserves and cumulative perpetual preference shares.

(B) Debt-Equity Ratio: The ratio indicates the degree of

leverage of a bank. It indicates the extent of the bank business

which is financed through debt and equity. This is calculated as

the proportion of total outside liability to net worth. 'Outside

Liabilities' includes total borrowings, deposits and other

liabilities. 'Net Worth' includes equity capital and reserves &

surplus. Higher ratio indicates less protection for the creditors

and depositors in the banking system.

(C) Advances to Assets: Advances to Assets is the ratio of the

total advances to total assets. This ratio indicates a bank's

aggressiveness in lending which ultimately results in better

profitability. Higher ratio of advance/deposits (assets) is

preferred to a lower one. Total advances also include receivables.

The value of total assets excludes the re-valuation of all the

assets.

(D) Govt Securities (G-Secs) to Total Investments: The

percentage of investment in government securities to total

investments is a very important indicator, which shows the risk-

taking ability of the bank. It indicates a bank's strategy as being

[122]
high profit-high risk or low profits-low risk. It also provides a

view as to the availability of alternative investment opportunities.

Government securities are generally considered as the most safe

debt instrument, which, as a result, carries the lowest return. As

government securities are risk-free, the higher the G-Secs to

investment ratio, the lower the risk involved in bank's

investments.

(ii) ASSETS QUALITY:

The quality of assets is an important parameter to gauge

the strength of the bank. The prime motto behind measuring the

assets quality is to ascertain the component of non-Performing

Assets (NPA) as a percentage of the total assets. This indicates

the models of advances which the bank has made to generate

interest income. Thus, assets quality indicates the type of the

debtors the bank is having. The following ratios are necessary to

assess the asset quality:

(A) Gross NPAs to Net Advances: It is a measure of the

quality of assets in a situation, where the management has not

provided for loss on NPAs. The Gross NPAs are measured as a

percentage of Net Advances. The lower the ratio betters the

quality of advances.

[123]
(B) Net NPAs to Net Advances: It is the most standard

measure of assets quality. In this ratio, Net NPAs are measured

as a percentage of Net Advances. Net NPAs are gross NPAs net of

provision on NPAs and interest in suspense account.

(C) Total Investments to Total Assets Ratio: Total

investments to total assets indicate the extent of deployment of

assets in investment as against advances. The ratio is applied as

a tool to measure the percentage of total assets locked up in

investments, which, by conventional definition, does not form

part of the core Income of the bank. A higher level of investment

lack of credit off-take in the economy. The ratio is calculated by

dividing total investments by total assets of the bank. A higher

ratio indicates that the bank has conservatively kept a high

cushion of investment to guard against NPAs. However, this also

affects its profitability adversely.

(D) Net NPAs to Total Assets: This ratio indicates the

efficiency of the bank in assessing credit risk and, to an extent,

recovering the debts. The ratio is arrived by dividing the Net

NPAs by Total Assets. Total assets considered are net of

revolution reserves. Lower the ratio better is the performance of

the Bank.

[124]
(iii) MANAGEMENT EFFICIENCY:

Management efficiency is another important element of the

CAMEL model. The ratios in this element involve subjective

analysis to measure the efficiency and effectiveness of

management. The management of the bank takes crucial

decisions depending on its risk perception. It sets vision and

goals for the organization and sees that it achieves them. This

parameter is used to evaluate management efficiency as to

assign premium to better quality banks and discount poorly

managed ones. The ratios that are used to evaluate management

efficiency are:-

(A) Total Advances to Total Deposits: This ratio measures

the efficiency and ability of the bank's management in converting

the deposits available with the bank (excluding other funds like

equity capital, etc.) into high earnings advances. Total Deposits

include demand deposits, saving deposits, term deposits and

deposits of other banks. Total Advances also include the

receivables.

(B) Business Per Employee: This ratio shows the productivity

of human forces of the bank. It is used as a tool to measure the

efficiency of all the employees of a bank in generating business

[125]
for the bank. It is arrived at by dividing the total business by

total number of employees. Higher the ratio, the better it is for

the bank. Business, per employee relates to the sum of Total

Deposits and Total Advances in a particular year.

(C) Profit Per Employee: This ratio indicates the surplus

earned per employee. It is arrived at by dividing the Profit after

Tax (PAT) earned by the bank by the total number of employees.

The higher the ratio, the higher the efficiency of the

management.

(iv) EARNING QUALITY

The quality of earnings is an important criterion that

determines the ability of a bank to earn consistently, going into

the future. It basically determines the profitability of the banks.

It also explains the sustainability and growth in earnings in the

future. The parameter gains importance in the light of the

argument that a large part of a bank's income is earned through

non core activities like investments, treasury operations, and

corporate advisory services and so on. The following ratios try to

assess the quality of income in terms of income generated by

core activity- income from lending operations:

[126]
(A) Operating Profits to Average Working Funds Ratio: This

ratio indicates how much a bank can perform its operations net

of the operating expenses for every rupee spent on working

funds. This is arrived at by dividing the operating profits by

average working funds. Average Working Funds (AWF) are the

total resources (total assets/liabilities) employed by a bank. It is

daily average of total assets/liabilities during a year. The higher

the ratio, the better it is. This ratio determines the operating

profits generated out of working funds employed. The better

utilization of funds will result in higher operating profits. Thus,

this ratio will indicate how a bank has employed its working

funds in generating profits. Banks, which use their assets

efficiently, will tend to have a better average than the industry

average.

(B) Spread or Net Interest Margin (NIM) to Total Assets:

NIM, being the difference between the interest income and the

interest expended as a percentage of total assets, shows the

ability of the bank to keep the interest on deposits low and

interest on advance high. It is an important measure of a bank's

core income (income from lending operations). A higher spread

indicates the better earnings given the total assets. The interest

[127]
income includes dividend income and interest expended includes

interest paid on deposits, loan from the RBI, and other short-

term and long-term loans.

(C) Net Profit to Average Assets: Profit to average assets

indicates the efficiency of the banks in utilizing their assets in

generating profits. A higher ratio indicates the better income

generating capacity of the assets and better efficiency of

management. It is arrived at by dividing the net profit by average

assets, which is the average of total assets in the current year

and previous year. Thus, the ratio measures the return on assets

employed. Higher ratio indicates better earnings potential in the

future.

(D) Interest Income to Total Income : Interest income is a

basic source of revenue for banks. The interest income to total

income indicates the ability of the bank in generating income

from its lending. In other words, this ratio measures the income

from lending operations as a percentage of the total income

generated by the bank in a year. Interest income includes

income on advances, interest on deposits with the RBI, and

dividend income.

(E) Non-Interest Income to Total Income: Fee based

income accounts for a major portion of a bank's other incomes.

[128]
The bank generates higher fee income through innovative

products and adapting the technology for sustained service

levels. The stream of revenue is not dependent on the bank's

capital adequacy and consequent potential to generate income is

immense. Thus, this ratio measures the income from operations,

other than lending, as a percentage of the total income. Non

interest income is the income earned by the banks excluding

income on advance and deposits with the RBI. The higher ratio

of non-interest income/total income indicates the increasing

proportion of fee-based income.

(V) LIQUIDITY

Liquidity is am important aspect for any organization

dealing in money. Banks have to take proper care in hedging

liquidity risk while at the same time ensuring that a good

percentage of funds are invested in higher return generating

investment, so that banks can generate profit while at the same

time provide liquidity to the depositors. Among a bank's assets,

cash investments are the most liquid. The ratios suggested to

measure liquidity under CAMEL Model are as follows;

(A) Liquid Assets to Total Assets: Liquid assets include cash

in hand, balance with the RBI, balance with other banks (both in

India and abroad) and money at call and short notice. Total

assets include the revaluations of all the assets. The proportion

[129]
of liquid assets to total assets indicates the overall liquidity

position of the bank.

(B) G-Secs to Total Assets: Government securities are the

most liquid and safe investments. This ratio measures the G-

Secs 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 held by a bank.

(C) Liquid Assets to Demand Deposits: The ratio measures

the ability of a bank to meet the demand from deposits in a

particular year. It is arrived at by dividing the liquid assets by

total demand deposits. The demand deposits offer high liquidity

to the depositors and hence banks have to invest these assets in

a highly liquid form. The liquid assets include cash in hand,

balance with the RBI, balance with other banks (both in India

and abroad), and money at call and short notice.

(D) Liquid Assets to Total Deposits: This ratio measures the

liquidity available to the deposits of a bank. Total deposits

include demand deposits, saving deposits, term deposits and

deposits of other financial institutions. Liquid assets include

cash in hand, balance with RBI, balance with other banks, and

money at calls and short notice.

[130]
DEPOSITS:

Deposits play a very important role in analyzing the

financial performance of any bank. Deposit is one of the

important function of commercial bank. On the basis of deposits

banks generates loans and advances to the various sector of the

economy and thereby generates profit. The total deposits of the

commercial banks had significantly increased since 1990. It has

been observed and that majority of the banks whether operating

public private or foreign banks had recorded higher deposits

specially after 1990. "In the case of public sector banks the total

deposits was Rs. 1227.23 billion in 1980 which increase to Rs.

4217.06 billion in 1999 and further to Rs. 6169.36 billion in

2003. By end of 2007 the total deposits of public sector bank

amounted to Rs. 9975.96 billion. In case of private bank the

total deposit was 70.81 billion, which increases 572.81 billion in

1999 and further to 1182.58 billion in 2003 and Rs. 2761.31

billion in 2007. The total deposits of all bank comprising of

public private, foreign and regional rural banks increases to Rs.

1397.57 billion in 2007 which was only Rs. 5283.27 billion in

1999 and Rs. 1342.81 billion in 1980".6

In case of SBI the total deposit was Rs. 43521 crores in

[131]
2007 which increased to Rs. 537404 crore in 2008 showing

increase of 23.3%. Regarding the ICICI bank the total deposit

was Rs. 230510 crores which increased to Rs. 244431 crore in

2008 indicating a 6% increase since it can be analyize that

deposits of SBI is 4 times the total deposits of ICICI Bank. This

reason that could be attributed was due to the larger no. of

branches and also due to a larger number of customers. The

increase in deposits can lead to the generation of larger profit.

800000
Total Deposits (In Rs.)

700000
600000
500000
400000 SBI
300000 ICICI Bank
200000
100000
0
2007 2008 2009
Years

Total Deposits
(Fig. 4.1)

Earning Per Share (EPS):

Earning Per share (EPS) is an importance aspect. The

portion of company's profit allocated to each outstanding shares

of common stock. Earning per share serves as an indication of a

company's profitability. It is calculated as:

"EPS = Net Income-Dividends on Preferred stock/Average

outstanding shares."7

[132]
Return on Assets (ROA):

Return on Assets (ROA) is a ratio indication of how

profitable a company is relative to its total assets. It is calculated

by dividing a company's annual earnings by its total assets, and

is represented as a percentage. ROA is also referred as 'Return

on Investment.

The formula for return on assets is:

"ROA = Net Income/Total Assets."8

TOTAL INCOME:

Income plays a very important role in banking sector as

this factor leads to the determination of profit. The income

comprises of interest income and other income like, commission

brokerage etc. "The interest income of the State Bank of India in

2007 was Rs. 37242 crore which increased to Rs. 48950 crore in

2008 and further to Rs. 63788 crore while the other income in

2007 was Rs. 6765 crore which increased to Rs. 8695 crore and

further to 12691 in 2009. Hence the total income in 2007 of

State Bank of India was 44008 crore which increased to

57645.24 crore showing an increase of 31%. In case of ICICI

Bank the interest income was Rs. 21995 crore which increased

to 30,788 crore in 2008 and further to Rs. 31,092".9

[133]
 "The total income of ICICI Bank was Rs. 28,923 crore in

2007 which increased to Rs. 39,599 crore in 2008 showing a

increase 37%"10. The increase in interest of Private Sector Bank

as compare to SBI could be attributed to the fact that interest

rate on advance and other income was more as compare to

public sector bank.

70000
Interest Income (In Rs.)

60000
50000
40000
SBI
30000 ICICI Bank
20000
10000
0
2007 2008 2009
Year
Interest Income
(Fig. 4.2.1)

14000
Other Income (In Rs.)

12000
10000
8000
SBI
6000
IC IC I B a n k
4000
2000
0
2007 2008 2009
Year

Other Income
(Fig. 4.2.2)

[134]
Operating Ratio:

Operating ratio is an important ratio that explains the

changes in net profit margin ratio. The higher operating ratio is

unfavorable since it is believed that a small amount of operating

income will not be able to meet interest, dividend etc. The

operating ratio is a field of operating efficiency but is should be

used continuously. The ratio effected by a number of external

uncontrollable factors, internal factor employees and

management efficiency or inefficiency which are difficult to

analyze. Further the operating ratio can not be used as test of

financial condition in case of firm, where non operating revenue

and expenses form a substantial part of total income. The

operating ratio indicates the average aggregate variation in

expenses where some of the expenses may increase or decrease

over the years.

"The operating profit of State Bank of India in 2007 was Rs.

10,000 crore which increased to Rs. 13,108 crore in 2008 and

further to Rs. 17,915 crore showing an increase of 31% in the

year of 2007-08. In case of ICICI Bank the operating profit in

2007 was Rs. 5874 crores which increased to Rs. 7960 crore an

increase of 35.5% and further to Rs. 8925.23 crore."11

[135]
 Operating profit (In Rs. Crore)
18000
16000
14000
12000
10000
SBI
8000
ICICI Bank
6000
4000
2000
0
2007 2008 2009
Year

Operating Profit
(Fig. 4.3)

Net Profit:

Net profit is obtained when operating expenses and taxes

are deducted from gross profit. "The net profit in State Bank of

India was Rs. 4541 crore in 2007, which increased to Rs. 6729

crore showing an increase of 48%, while in case of ICICI Bank

the net profit of Rs. 3110.22 crore which increased to Rs.

4157.73 crore indicate the growth rate of 33.78%."12

Credit Deposit Ratio:-

Credit deposit ratio reflects the management performance

of Bank often the financial liberalization majority of bank have

shown higher credit deposit ratio. One of the glaring observation

seen in India during the years is that the credit deposit ratio has

highest in case of foreign bank and lowest in case of public

sector bank.

[136]
 The over all commercial sector bank witnessed an increase

in credit deposit ratio in 1980. The credit deposit ratio of all

commercial bank was 63% which increased to 73% in 2007. In

case of State Bank of India the credit deposit ratio was 77.46%

which increased to 77.55% and further to 73.11 in 2009.

While in case of ICICI Bank Credit Deposit Ratio 84.97% in

2007 which further increased to 92.30% in 2008 and further

99.80% in 2009. It is seen that the credit deposit ratio has

shown improvement in Private Sector Bank as compare to public

sector bank which shown in declining.

100
90
Credit Deposit Ratio (in %age)

80
70
60
50 SBI
40 ICICI Bank
30
20
10
0
2007 2008 2009
Year

Credit Deposit Ratio

(Fig. 4.4)

Total Advances Credit:

The advances in case of SBI was Rs. 337336 crore in 2007

crore which increased to Rs. 41676 crore in 2008 which in case

[137]
of ICICI Bank the advance in 2007 was Rs. 195865.6 crore

which increased to Rs. 225616.08 crore in 2008 and further to

Rs. 218310.8 crore in 2009. The total advance in public sector

bank had significantly improved in case of public and private

sector banks. "In case of public sector bank the total advances

was Rs. 779.47 crore which increased to Rs. 2228.26 crore the

2000 and Rs. 7204 crore in 2007 while in case of public sector

Bank the total advance was Rs. 38.13 crore 2000 and Rs. 2074

crore in 2007. Since 2003, advances of all commercial bank have

been more than double. In 2007 the all banks advances

aggregated Rs. 4344.5 crore which increase to Rs. 10147.7 crore

in 2007"13.

450000
Total Advance Credit (In Rs.)

400000
350000
300000
250000
SBI
200000
ICICI Bank
150000
100000
50000
0
2007 2008
Year
Total Advance Credit
(Fig. 4.5)
Asset Quality:

The asset quality reflects the structured soundness of the

[138]
banking sector. The ratio of contingent liability shows that

foreign banks are more exposed to default which indicate that

these banks provide more significant services. The reason that

could be given in this context us that foreign banks concentrate

more in urban areas and mostly have big clients. The contingent

liability Asset ratio of the total commercial bank showed decline

from 1980 to 2007. The private sector Banks are exposed to

more losses in case of default than public sector Bank. "The ratio

of contingent liability to asset in case of public sector bank have

decline from 14% in 2000 to 12% in 2004 but again increased to

14% in 2007 while in case of private sector bank this ratio was

11% in 2000 which increased to 24% in 2003 and further

declined to 19% in 2007"14. This indicate that private sector

banks are exposed to more losses as compared to public sector

Bank.

Profitability:

Profitability can be measured with two indicator viz. Return

on asset (ROA) and Return on Equity (ROE). The ROA is defined

as ratio of net profit to average assets. In the port financial

reform period the Banking Sector had showing more profitability.

The domestic private bank had shown larger profit as compared

[139]
to public sector bank. After liberalization the public sector bank

recorded higher rate of return on assets. During the early phase

of reform the ROA was negative but with the passage of time it

converted itself to positive. "In case of State Bank of India the

ROA was 0.84% in 2007 which increased to 1.01% in 2008 and

further to 1.40% in 2009 while in case of ICICI Bank it was

1.09% in 2007 which increased to 1.12% in 2008 and decline to

0.98% in 2009"15.

[140]
RESULT AND ANALYSIS:
Table - 4.6 Capital Adequacy (In %)

Ratios Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Capital Adequacy Ratio SBI 12.79 13.35 13.50 13.53 12.45 11.88 12.34 13.54 12.97
(CAR)
ICICI Bank 11.57 11.44 11.10 10.36 11.78 13.35 11.70 14.92 15.92

Debt-Equity Ratio SBI 18.84 18.38 17.75 16.41 16.04 13.75 13.92 10.96 12.81

ICICI Bank 13.27 12.32 11.32 11.82 10.34 7.45 9.50 5.27 4.22

Advances to Assets SBI 35.99 34.69 36.65 38.73 44.01 53.00 59.50 57.80 56.30

ICICI Bank 35.62 45.18 49.88 49.59 54.52 58.00 50.00 56.43 57.55

G-Securities to Total SBI 78.47 80.83 83.61 84.85 87.24 86.00 82.12 76.34 83.94
Investment
ICICI Bank 49.71 63.31 72.05 69.96 68.31 72.00 77.65 71.70 67.79

Source: 1. SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
2. ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
3. Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of
Engineering & Tech.

[141]
 Table - 4.6.1 Capital Adequacy Ratio

Ratios Banks Mean Ratio Standard Deviation C.V.

Capital Adequacy Ratio (CAR) SBI 12.93 0.06 0.46

ICICI Bank 12.46 1.76 14.13

Debt-Equity Ratio SBI 15.43 2.72 17.63

ICICI Bank 9.50 3.01 31.68

Advances to Assets SBI 46.30 9.71 20.97

ICICI Bank 50.75 6.72 13.24

G-Securities to Total Investment SBI 82.60 3.34 04.44

ICICI Bank 68.05 7.45 10.95

[142]
A- Capital Adequacy:

The ratios used in measuring capital adequacy are Capital

Adequacy Ratio (CAR), Debt Equity Ratio, Advance to Assets and

Government Security to Total Investment. In Case of State Bank

of India (SBI) and Investment Credit and Industrial Corporation

of India (ICICI) Bank. These ratios are depicted in Table 4.6 and

4.6.1. It is observed from these tables that SBI and ICICI Bank

have maintained the average capital adequacy ratio at 12.93%

and 12.46% respectively between 2000-01 to 2008-09. This

indicates that both the banks have maintained higher CAR than

the prescribed level. "According to the norms of RBI, each bank

in India has to maintain 8% of their risk weighted assets as

capital with effect from March 2000" However the coefficient of

variance of ICICI was 14.13 in respect to SBI 0.46%, which

indicates that SBI is in better position, in respect to capital

adequacy than ICICI Bank due to less fluctuation.

Debt-Equity Ratio is also an important ratio to measure the

capital adequacy. Higher ratio indicates less protection for the

creditors and depositors in the banking system. The average

Debt Equity Ratio of SBI and ICICI Bank from 2000-01 to 2008-

2009 are 15.43% and 9.50% respectively. The coefficient of

variance (CV) of SBI was 17.63 as against 31.68 of ICICI Bank.

[143]
This figure shows that instead of higher Debt-Equity Ratio SBI

had low fluctuation but the Debt-Equity Ratio in ICICI Bank was

better.

Advances to Assets indicates the bank aggressiveness in

lending. Higher ratio indicates higher investment which results

in higher profitability. The average Advances to Asset ratio in

2000-01, 2008-09 are 46.30% and 50.75% of SBI and ICICI

Bank respectively. The CV of SBI and ICICI Bank are 20.97 and

13.24 respectively as shown in table 4.6.1. The ratios indicates

that ICICI has shown better profitability than SBI.

Government Security to Total Investment indicates the

risk-taking ability of the bank. It indicates a bank strategy as

being high profit - high risk and law profit law risk. The average

ratios from 2000-01 to 2008-09 are 82.60% and 68.05 and the

CV is 4.44 and 10.95 of SBI and ICICI Banks respectively. The

high ratios indicates the low risk and low ratios indicates high

risk due to investing in others risky and high return securities.

The low ratio of ICICI Bank shows higher profit.

[144]
 Table - 4.7 Assets Quality Ratio (In %)

Ratios Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Gross NPAs to net Advances SBI 13.98 12.82 9.80 8.02 6.15 4.86 2.96 2.52 2.98

ICICI Bank 5.82 10.66 9.44 4.91 3.03 1.55 2.13 3.36 4.32

Net NPAs to Net Advances SBI 6.03 5.63 4.50 3.48 2.65 1.88 1.56 1.78 1.76

ICICI Bank 2.19 5.48 5.21 2.21 1.65 0.72 1.02 1.55 2.09

Total Investments to Total SBI 38.93 41.68 45.85 45.53 42.86 32.90 26.33 26.26 28.61
Assets
ICICI Bank 41.48 34.47 33.20 34.13 30.11 19.54 26.29 27.88 24.64

Net NPAs to Total Assets SBI 2.17 1.96 1.64 1.33 1.16 1.13 0.93 1.03 0.88

ICICI Bank - - 2.64 1.17 0.90 0.43 0.58 0.87 1.20

Source: 1. SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
2. ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
3. Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal College of
Engineering & Tech.

[145]
 Table - 4.7.1 Assets Quality Ratio

Ratios Banks Mean Ratio Standard Deviation C.V.

Gram NPAs to net Advances SBI 7.90 3.78 47.85

ICICI Bank 5.02 8.92 177.69

Net NPAs to Net Advances SBI 3.25 1.62 49.85

ICICI Bank 2.46 4.91 199.59

Total Investments to Total Assets SBI 36.55 7.64 20.90

ICICI Bank 30.19 6.10 20.20

Net NPAs to Total Assets SBI 1.36 0.45 33.09

ICICI Bank 1.11 0.67 60.36

[146]
B. Assets Quality

The Assets Quality is an important element in measuring

the performance of the assets in Banks. The ratio used to

measure Assets quality are the Gross NPAs to net Advances, Net

NPAs to net advances, total investment to total assets and net

NPAs to total assets.

Gross NPAs to Net Advances is the measure of the quality

of assets in a situation, where the management has not provided

for loss of NPAs. Hence the Gross NPAs are measured as a

percentage of Net Advances. A low ratio is better for a bank.

Table 4.7.1 indicates the average ratio of Gross NPAs to net

advances of SBI and ICICI Bank from 2000-01 to 2008-09. The

mean ratios are 7.90 and 5.02 of SBI and ICICI bank

respectively. The ratio depicts that ICICI bank is in better

position than SBI.

Net NPAs to Net Advances is the most standard measure of

assets quality. Net NPAs and gross NPAs net of provision on

NPAs and interest in suspense account. The ratios and

coefficient of variance of SBI and ICICI Banks are 3.25, 2.46 and

49.85, 99.59 respectively. The ratios indicate that ICICI Bank is

in better position in assets management.

Total Investment to Total Assets ratios indicate the extent

[147]
of deployment of assets in investment as against advances. A

higher level of investment means lack of credit of - take in the

economy but increase the profitability. The average total

investment to total assets from 2000-01 to 2008-09 is 36.55 and

30.19 and C.V. of SBI and ICICI Bank and 20.90 and 20.20. This

indicate the fluctuation in both bank is approximately same but

the investment of SBI is higher means getting high profit than

ICICI Bank.

Net NPAs to Total Assets Ratios indicates the efficiency of

the bank in assessing credit risk and to some extent, recovering

the debts. The average of ratios from 2000-01 to 2008-09 are

1.36 and 1.11 of SBI and ICICI Banks respectively. The

coefficient of variance are 33.09 and 60.36 of SBI and ICICI

Bank respectively. The ratio shows that ICICI Bank has lower

ratio of Net NPAs to total Assets which indicates that the Bank

has been able to manage advances is better way as compare &

SBI.

[148]
 Table - 4.8 Management Efficiency

Ratios Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Total Advances to Total SBI 46.78 44.65 46.52 49.57 55.14 68.89 77.46 77.55 73.11
Deposits (In %)

ICICI Bank 42.93 146.59 110.61 91.17 91.57 88.54 74.38 92.30 99.98

Business Per Employee (Rs. SBI 136.58 173.01 190.77 211.00 243.08 299.23 357.00 456.00 55.60
Lakh)

ICICI Bank 815.22 486.49 1120.00 1010.00 880.00 905.00 1027.00 1008.00 1154.00

Profit per Employee (Rs. SBI 0.70 1.16 1.48 2.00 2.07 2.16 2.37 3.73 4.74
Lakh)

ICICI Bank 10.45 5.33 11.00 12.00 11.00 10.00 9.00 10.00 11.00

Source: 1. SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
2. ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
3. Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal
College of Engineering & Tech.

[149]
 Table - 4.8.1 Management Efficiency Ratio

Ratios Banks Mean Ratio Standard Deviation C.V.

Total Advances to Total Deposits (In %) SBI 59.96 13.28 22.19

ICICI Bank 93.12 31.45 33.77

Business Per Employee (Rs. Lakh) SBI 235.81 113.57 48.16

ICICI Bank 933.97 184.96 19.77

Profit per Employee (Rs. Lakh) SBI 2.27 1.20 52.86

ICICI Bank 9.98 1.83 18.34

[150]
C. Management Efficiency:

The Management Efficiency is another important element

of camel model which is calculated on the basis of total advances
to total deposits, business per employee and profit per employee.
Total Advances to Total Deposits measures the efficiency
and ability of the bank's management in converting the deposits
available with the bank in to advances. The table 4.8.1 shows
the average ratios and C.V. from 2000-01 to 2008-09. The
average total advances to total deposits of SBI and ICICI Bank
are 59.96 and 93.12 respectively and SD are 13.28 and 31.45 of
SBI and ICICI Bank respectively. The ratios indicates that ICICI
Bank is efficiently converting their advances into deposits.
Business Per Employee indicate the productivity of human
forces of the bank. It is used as a tool to measure the efficiency
of all the employees of a bank in generating business for the
bank. It is arrived at by dividing the total business by total
number of employees. The average business per employee of SBI
and ICICI Bank from 2000-01 to 2008-09 are (Rs. Lakh) 235.81
and 933.97 and SD of these banks are 113.57 and 184.96
respectively. This shows that ICICI Bank have the letter
productivity human forces of the bank.
Profit Per Employee shows the surplus earned per
employees. The average profit per employees of SBI and ICICI
Bank are 2.27 and 9.98 (Rs. in Lakh) respectively. The SD of SBI
and ICICI Banks are 1.20 and 1.83. The ratio shows that the
ICICI Bank profit per employee is higher than the SBI and high
variance, it is good for the ICICI Bank.

[151]
 Table - 4.9 Earning Quality (In %)

Ratios Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Operating profit to Average SBI 1.33 1.83 2.27 2.5 2.61 2.27 1.86 1.96 2.05
working Funds
ICICI Bank 2.35 2.14 2.49 2.09 2.18 1.98 2.05 2.14 2.33

Spread to Total Assets SBI 2.61 2.61 2.65 2.74 3.03 3.16 2.66 2.36 2.16

ICICI Bank 2.05 0.57 1.33 1.50 1.69 1.87 1.93 1.83 2.21

Net Profit to Average Assets SBI 0.56 0.73 0.86 0.97 0.99 0.89 0.84 1.01 1.04

ICICI Bank 1.01 0.42 1.14 1.41 1.37 1.30 1.10 1.10 1.0

Interest Income to Total SBI 86.62 87.72 87.41 80.00 82.00 82.87 84.63 87.92 83.41
Income
ICICI Bank 84.96 78.91 74.78 74.37 73.37 77.38 79.50 78.52 79.56

Non Interest Income to Total SBI 13.38 12.28 15.59 20.00 18.00 17.13 16.63 15.08 16.59
Income
ICICI Bank 15.05 21.09 25.22 25.63 26.63 22.95 20.75 22.25 19.65

Source: 1. SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
2. ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
3. Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal
College of Engineering & Tech.

[152]
 Table - 4.9.1 Earning Quality Ratio

Ratios Banks Mean Ratio Standard Deviation C.V.

Operating profit to Average working Funds SBI 2.08 0.37 17.79

ICICI Bank 2.19 0.24 10.96

Spread to Total Assets SBI 2.66 0.86 32.33

ICICI Bank 1.66 0.49 29.52

Net Profit to Average Assets SBI 0.87 0.14 16.09

ICICI Bank 1.09 0.83 76.15

Interest Income to Total Income SBI 84.06 2.09 2.49

ICICI Bank 77.93 3.33 4.27

Non Interest Income to Total Income SBI 16.08 2.20 13.68

ICICI Bank 22.14 3.37 15.22

[153]
D. Earnings Quality:

The Earning Quality determines the profitability, of the

banks. It explains the sustainability and growth in earnings in

the future. It is assessed on the basis of (a) Operating Profits to

Average Working Funds Ratio (b) Spread or Net Interest Margin

(NIM) to Total Assets (c) Net Profit to Average Assets (d) Interest

Income to Total Income and (e) Non Interest Income to Total

Income.

The Operating Profits to Average Working finds. The ratio

indicates the extent which a bank can form its operations, net of

the operating expenses for the every rupee spent on working

funds. The higher the ratio is better. The average ratio of last ten

years from 2000-01 to 2008-09 show higher ratio of ICICI

Banks. The average ratio are 2.08 and 2.18 and S.D. are 0.37

and 0.24 of SBI and ICICI Bank respectively.

Spread or Net Interest Margin (NIM) to total assets (NIM) is

an important measure of a bank's core income (income from

lending operations). A higher spread indicates the better

earnings given by the total assets. The table 4.9.1 indicates the

average ratio from 2000-01 to 2008-09 are 2.66 and 1.66 of SBI

and ICICI Banks respectively. The S.D. of these banks are 0.86

and 0.49 respectively. This shows that SBI is better than ICICI

Bank.

[154]
 Net Profit to Average Assets indicates the efficiency of the

banks in utilizing their assets in generating profits. A higher

ratio indicates better income generating capacity of the assets

and better efficiency of management the average ratios of the SBI

and ICICI Banks from 2000-01 to 2008-09 are (Rs. in Lakhs)

0.87 and 1.09 and the S.D. are 0.14 and 0.83 respectively. It

shows that the ICICI is better bank than SBI in this term.

Interest Income to Total Income measures the income from

lending operations as a percentage of the total income generated

by the bank in a year. Its average between 2000-01 and 2008-09

are 84.06 and 77.93 and the S.D. are 2.09 and 3.33 respectively.

These figures indicates that SBI is in better position.

Non Interest Income to Total Income measures the income

from operations, other than lending, as a percentage of the total

income. The higher ratio of non-interest income/total income

indicates the increasing proportion of fee-based income. The

average non-interest income to total income from 2000-01 to

2008-09 are 16.08 and 22.14 and S.D. and 2.20 and 3.37 of SBI

and ICICI Bank respectively. These values indicates that the

ICICI Bank non-interest income against total income is higher

than SBI during the period.

[155]
 Table - 4.10 Liquidity (In %)

Ratios Banks 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Liquid Assets to Total Assets SBI 19.23 18.65 12.02 10.68 8.55 6.14 6.46 1.66 8.33

ICICI Bank 18.21 12.28 6.08 6.76 7.71 4.23 6.05 7.65 1.16

G-secs Total Assets SBI 30.55 33.69 38.34 38.63 37.39 27.25 20.77 19.51 23.46

ICICI Bank 20.63 21.82 23.92 23.88 20.57 20.32 19.55 18.85 16.71

Liquid Assets to Deposits SBI 150.54 153.45 100.91 86.63 69.46 44.61 44.61 63.91 72.56

ICICI Bank 137.07 467.36 175.9 116.7 100.72 64.22 97.51 78.24 28.07

Liquid Assets to Total SBI 25.00 24.00 15.26 13.67 10.71 7.98 8.40 11.54 10.83
Deposits
ICICI Bank 21.94 39.85 13.47 12.44 12.95 6.45 9.04 12.51 10.05

Source: 1. SBI Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
2. ICICI Bank Annual Report 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07, 2007-08, 2008-09
3. Kumar Satish B. "Financial Performance of Private Sector Bank in India coimbatore, Tamilnadu, India - An Evaluation" VLB Janakimal
College of Engineering & Tech.

[156]
 Table - 4.10.1 Liquidity Ratio

Ratios Banks Mean Ratio Standard Deviation C.V.

Liquid Assets to Total Assets SBI 10.19 5.44 53.39

ICICI Bank 7.79 4.63 59.44

G-secs Total Assets SBI 29.95 7.13 23.81

ICICI Bank 20.69 2.17 10.49

Liquid Assets to Deposits SBI 87.41 38.49 44.03

ICICI Bank 140.64 122.18 86.87

Liquid Assets to Total Deposits SBI 14.15 5.90 41.70

ICICI Bank 15.31 9.04 59.05

[157]
E. Liquidity:

Liquidity is one of the vital elements for organization

dealing with finance. The ratio suggested to measure liquidity

under CAMEL model are (a) Liquid Assets to Total Assets (b) G-

Securities to Total Assets (c) Liquid Assets to Demand Deposits

(c) Liquid Assets to Total Deposits.

The Liquid Assets to Total Assets are the proportion of

liquid assets to total assets indicates the overall liquidity position

of the bank. The average ratio from 2000-01 to 2008-09 are

10.19 and 7.79 and S.D. are 5.44 and 4.63 of SBI and ICICI

Banks respectively. It shows that inspite of higher mean ratio the

SBI kept more fluctuations. ICICI Bank investing more and

getting higher profit than SBI.

Government securities to Total Assets measures the G.

Securities as a proportion of total assets. Banks invest in

government securities primarily to meet their SLR requirements,

which are 25 of net demand and time liabilities. This ratio

measures the risk involved in the assets held by a bank. The

average of it from 2000-01 to 2008-09 is 29.95 and 20.69 and

S.D. of it is 7.13 and 2.17 of SBI and ICICI Bank respectively.

Liquid Assets to Demand Deposits ratio measures the

ability of a bank to meet the demand from deposits in a

[158]
particular year. The demand deposits offer high liquidity to the

depositors and hence banks have to invest these assets in a

highly liquid form. The average of it from 2000-01 to 2008-09 is

87.41 and 140.64 and S.D. is 38.49 and 122.18 of SBI and ICICI

Bank respectively.

Liquid Assets to Total Deposits ratio measures the liquidity

available to the deposits of a bank. The high ratio indicates the

conservating investment policy of the bank and getting law risk

and low return. The average ratio of the banks from 2000-01 to

2008-09 are given in table 4.10.1. The average ratios are 14.15 &

15.31 and standard aviation is 5.90 and 9.04 of SBI and ICICI

banks respectively. This indicates that shows the private banks

are using aggressive policy and getting high risk and return.17

Overall Ranking:

The CAMEL model is used for rating of banks according

their performance. Hence, an attempt has been made to rank the

two banks under consideration Table 5.11,19 the reveals that, on

the whole, ICICI bank has fared well than it's public sector

competitor SBI.

[159]
 Table 4.11 : Ranking of SBI and ICICI Bank According to average
of CAMEL Model Ratios for the Period 2000-01 to 2008-09.

Camel Ratio Bank

SBI ICICI
Bank
C: Capital Adequacy Capital Adequacy Ratio

Debt Equity Ratio

Advances to Assets

G-Security to total Investment

A: Assets Quality Gross NPAs to Net Advances

Net NPAs to Net Advances

Total Investments to Total Assets

Net NPAs to Total Assets

M: Management Total Advances to Total Deposits

Efficiency Business per Employees

Profit per Employees

E: Earning Quality Operating profit to average

working funds.
Spread to Total Assets

Net Profit to Average of Assets

Interest Income to Total Income

Non interest Income to total

income
C: Liquidity Liquid Assets to Total Assets

G-Securities to Total Assets

Liquid Assets to Demand

Deposits
Liquid Assets to total Deposits

Note:
indicate the superiority of a bank over the other bank in terms of
the concerning ratios.

From the above analysis, it is obvious that both SBI and

ICICI are performing ungallantly since the beginning of the 21st

century. In the respect of some of the parameters in which SBI

[160]
has outperformed ICICI bank are government securities to total

investment, spread to Total Assets, Interest to total Assets, G-

Secs to total assets etc. In contrast, ICICI has done better than

SBI in regard to the advances to Assets, Total Advances to

Deposits, Business per Employee; Profit per Employee, Non-

Interest income to total income, liquid assets to Total Deposits

etc. On the whole, ICICI bank has performed better than SBI.

The performance of the Public and Private Sector Banks also

may be checked through the ranking of CAMEL model on the

basis of recommendation of the Padmanabhan Committee

Report.

CAMEL Rating System:

The CAMEL rating system is based upon an evaluation of

five critical elements of a credit union's operations Capital

Adequacy, Asset Quality, Management, Earnings and

Asset/liability Management. This rating system is designed to

take into account and referential significant financial and

operational factors examiners assess in their evaluation of a

credit union's performance. Credit unicons are stated using a

combination of financial ratios and examiner judgments.

[161]
 Since the composite CAMEL rating is an indicator of the

visibility of a credit union, it is important that examiners rate

credit unions based on their performance in absolute terms

rather than against peer averages or predetermined benchmarks.

The examiner must use professional judgment and consider both

qualitative and quantitative factors when analyzing a credit

unions performance. Since members are often lagging indicators

of a credit unions condition, the examiner must also conduct a

qualitative analysis of current and projected operations when

assigning CAMEL ratings.

Although the CAMEL composite rating should normally be

based on close relationship to the component ratings. The

examiner should not derive the composite rating solely by

computing an arithmetic average of the component ratings.

Following are general definitions the examiner should use for

assigning the crolx unions CAMEL composite rating.

Need of CAMEL Rating System in Banks:

In 1979, the bank regulatory agencies created the Uniform

Financial Institutions Rating System (LFIRS). Under the original

LFIRS a bank was assigned ratings based on performance in five

areas the adequacy of Capital, the quality of Assets, the

capability of Management, the quality and level of Earnings and

the adequacy of Liquidity.

[162]
 CAMEL ratings reflect the excellent banking condition and

performance over the last several years. There is a need for bank

employees to have sufficient knowledge of the rating system in

coder to guide the banking growth rate in the positive direction.

Lack of knowledge among employees regarding banking

performance indicators affects banks negatively as these are the

bases for any banking action.

Reasons for Weightage:

1. Capital:

In Capital ratios we have given 0.5 to capital adequacy

ratio as it is the most important ratio which has significant

impact on capital of the basis. Second most important ratio

which affects the capital ratio is debit - enquiry ratio and rest of

then are of low impact.

2. Assets:

In assets Ratio, we have highest importance to Net NPA

which shows clear picture how well company is performing with

its assets. Secondly Gross NPA is given is not given so much

importance compared to Net NPAs. Other ratios like Net NPA to

Total Assets, Total Investment to Total Asset.

3. Management:

In management ratios there is no specific ratio which has

specific importance. All ratios have equal impact so here we have

equal weightage to all the ratios.

[163]
4. Earnings:

In Earnings ratios there is no specific ratio which has

specific importance. All ratios have equal impact so here we have

equal weightage to all the ratios.

5. Liquidity:

In liquidity ratios, there is no specific ratio which has

specific importance. All ratios have impact so here we have equal

weightage to all the ratios.

Table - 4.12 CAPITAL RATIOS

CAPITAL RATIOS
Particulars Capital Debt Advances Securities
Adequacy Equity to Assets to Total
Ratio Ratio Investments
State Bank of India 12.93 15.43 46.30 82.60
ICICI Bank 12.46 9.50 50.75 68.05

Weightage 0.5 0.3 0.1 0.1 Total

State Bank of India 6.47 4.63 4.63 8.26 23.99

ICICI Bank 6.23 2.85 5.08 6.81 20.97
90
80
70
60
50 State Bank of India
40 ICICI Bank
30
20
10
0
Debt Eqiutiy
Adequacy

Advances to

Securities to

Investments
Capital

Ratio

Ratio

Assets

Total

(Fig. 4.12.1)

[164]
 Table-4.13 ASSETS RATIOS

ASSETS RATIOS
Particulars Gross NPA Net NPA Total Net NPA to
to Net to Net Investment total Assets
Advances Advances to Total
Assets
State Bank 7.90 3.25 36.55 1.36
of India

ICICI Bank 5.02 2.46 30.19 1.11

Weightage 0.1 0.5 0.2 0.2 Total

State Bank 0.79 1.63 7.31 0.27 10.00

of India

ICICI Bank 0.50 1.23 6.04 0.22 7.99

40

35

30

25 State Bank of
India
20
ICICI Bank
15

10

0
Gross NPA Net NPA to Total Net NPA to
to Net Net Investment Total Assets
Advances Advances to Total
Assets

(Fig. 4.13.1)

[165]
 Table-4.14 MANAGEMENT RATIOS

MANAGEMENT RATIOS

MANAGEMENT RATIOS MANAGEMENT RATIOS

Particulars Total Business Profit Per
Advances Per Employee
to Total Employee (In Lacs)
Deposits (In Lacs)
State Bank of India 59.96 235.81 2.27

ICICI Bank 93.12 933.997 9.98

Weightage 0.33 Total 0.33 0.33 Total %age

State Bank of India 19.79 19.79 77.82 0.75 78.57 20.14

ICICI Bank 30.73 30.73 308.21 3.29 311.5 79.86

Particulars Total 1 Total 2 Final Total

State Bank of India 19.79 20.14 39.93

ICICI Bank 30.73 79.86 110.59

1000

900

800

700

600 State Bank of

India
500
ICICI Bank
400

300

200

100

0
Total Business Profit Per
Advances to Per Employee
Total Employee (In Case)
Deposit (In Lacs)

(Fig. 4.14.1)

[166]
 Table - 4.15 EARNINGS RATIOS

EARNINGS RATIOS
Particulars Operating Spread Net Profit Interest Non-
Profit to to to Income to Interest
Average Total Average Total Income
Working Assets Assets Income to Total
Funds Income

State Bank of India 2.08 2.66 0.87 84.06 16.08

ICICI Bank 2.19 1.66 1.09 77.93 22.14

Weightage 0.2 0.2 0.2 0.2 0.2 Total

State Bank of India 0.42 0.53 0.17 16.81 3.22 21.15

ICICI Bank 0.44 0.33 0.22 15.59 4.43 21.01

90

80

70

60
State Bank of
50 India
40 ICICI Bank
30

20

10

0
Operating Spread to Net Profit to Interest Non-Interest
Profit to Total Assets Average Income to Income to
Average Assets Total Total
Working Income Income
Funds

(Fig. 4.15.1)

[167]
 Table - 4.16 LIQUIDITY RATIOS

LIQUIDITY RATIOS
Particulars Liquid Government Liquid Assets Liquid
Assets Securities to to Demand Assets to
to Total Total Assets Deposits Total
Assets Deposits
State Bank of 10.19 29.95 87.41 14.15
India

ICICI Bank 7.79 20.69 140.64 15.31

Weightage 0.25 0.25 0.25 0.25 Total

State Bank of 2.55 7.49 21.85 3.54 35.43

India

ICICI Bank 1.95 5.17 35.16 3.83 46.11

160

140

120

100 State Bank of

India
80
ICICI Bank
60

40

20

0
Liquid Government Liquid Liquid
Assets to Securities to Assets to Assets to
Total Assets Total Assets Demand Total
Deposits Deposits

(Fig. 4.16.1)

[168]
 TABLE 4.17 SHOWING CAMEL RATING COMPARSION

CAMEL RATING

Particulars Capital Assets Manage- Earnings Liquidity Total Rank

ment
State 23.99 10.00 39.93 21.15 35.43 - -
Bank of
India

ICICI 20.97 7.99 110.59 21.01 46.11 - -

Bank

Weightage 0.2 0.2 0.2 0.2 0.2 - -

State 4.80 2.00 7.99 4.23 7.09 26.11 2

Bank of
India

ICICI 4.19 1.60 22.12 4.20 9.22 41.11 1

Bank

120

100

80
State Bank of
India
60
ICICI Bank
40

20

0
s
l

s
t

ty
ita

en
et

ng

i
id
ss
ap

ni

qu
e
A
C

r
ag

Ea

Li
an
M

(Fig. 4.17.1)

[169]
Interpretation:

Here ICICI Bank got Rank I which indicates strong

performance and risk management practices that consistently

provide for safe and sound operations. The historical trend and

projections for key performance measures are consistently

positive. It is not performing well in liquidity ratio but it performs

strong in other ratios which covered up its weak performing

area.

The performance of ICICI Bank is better than State Bank of

India through CAMEL model. Hence the hypothesis is proved.

[170]
 REFERENCE

1. "Business Standard" Subscribers copy, Banking annual

Dec. 2008.

2. Ibid.

3. Report of Committee on Financial System 1991- a

summary; Reserve Bank of India, 2010.

4. http://scribd.com, March-April 2010.

5. Kumar, Satish, B. "Financial Performance of Private

Sector Bank in India, Coimbatore, Tamilnadu, India - An

Evaluation, 2009.

6. "Business Standard" Subscribers copy, Banking annual

Dec. 2008.

7. http://www.investopedia.com/terms/e/eps.asp, Dec.

2008

8. www.investopedia.com/terms/r/returnonassts.asp.

9. "Business Standard" Subscribers copy, Banking annual

Dec. 2008.

10. Ibid.

11. Ibid.

12. www.iba.org.in, Jan.-April 2010.

13. Ibid.

[171]
14. Annual Report of SBI and ICICI Bank of 2000, 07, 08, 09.

15. Ibid.

16. Graewal Lovely, "A project on CAMEL Framework as a tool

of performance evaluation for banking" Som Institute,

Ahmedabad, 2010.

17. SBI Annual Report and ICICI Bank Annual Report of

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