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Comparative Analysis of Financial Performance
Group1 , Section 2
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Mndia, an emerging economy, has witnessed unprecedented

levels of economic expansion, along with countries like China,
Russia, Mexico and Brazil. Mndia, being a cost effective and
labor intensive economy, has benefited immensely from
outsourcing of work from developed countries, and a strong
manufacturing and export oriented industrial framework. With
the economic pace picking up, global commodity prices have
staged a comeback from their lows and global trade has also
seen healthy growth over the last two years.
The Mndian economy registered a growth of 7.4 per cent in
2009-10, with 8.6 per cent year-on-year (y-o-y) growth in its
fourth quarter. The growth is driven by robust performance of
the manufacturing sector on the back of government and
consumer spending. GDP growth rate of 7.4 per cent in 2009-
10. The first quarter of FY2011 has also seen robust
performance from Mndia and the MMF has revised its growth
estimate for Mndia to 9.4% growth in GDP for FY2011.
 

 



‡ A well developed market for financial '


     
products.        
Robust  
‡ Great Financial breadth and depth across Financial
financial products Mnfrastructure

Tremendous Large Talent

growth pool working
opportunities in the
at the bottom banking
of the industry
pyramid Mndian
Banking
Framework
'      ‡ A robust regulatory framework primarily monitored by the
Reserve Bank of Mndia
   
‡ Sup Prime performance stood testament to the efficacy
  
of the regulations

A balanced
Well defined
mix of Public
Regulatory
and Private
Sector Banks framework

°

 
Õ

 
Globalisation and liberalisation of the Mndian economy, and the interest of foreign banks
to expand their presence in Mndia through the inorganic route, have fuelled the growth of
the banking industry. Mndia has a well-balanced mix of public and private sector banks.
While public sector banks provide stability to the banking system in the country, private
sector banks add the necessary dynamism to it.
The banking system in Mndia is dominated by Scheduled Commercial Banks (SCBs)
with a pan-Mndia presence. As of March 2009, SCBs controlled most of the assets, with
the rest being controlled by a large number of small co-operative credit institutions with
a very limited geographic reach.
Within SCBs, public sector banks accounted for 71.9 per cent of the assets and the rest
was held by foreign banks and private sector banks. With an increasingly global
footprint, the Mndian banking industry has adopted certain global best practices such as
Mnternational Financial Reporting Standards (MFRS) and Basel MM. As of March 31, 2009,
all commercial banks in Mndia, excluding RRBs and local area banks, have become
Basel MM compliant.
Mndia has now entered the era of online banking, e-commerce and m-commerce, which
makes banking simple. Also, the use of ATMs and credit cards has increased
tremendously in the last few years. There has been a major change in the products
offered by banks, from a few standard credit and deposit products to a number of
customised offerings to suit the requirements of various categories of customers. Also,
with a network of around 70,000 branches, of which around 46,000 are in rural and
semi-urban areas, microfinance has emerged as one of the most promising areas for
commercial banks.
  


 

Reserve Bank of
Mndia

Non- Banking
Banks Financial
Mnstitutions

Scheduled
Co-operative All Mndia Financial State Level
Commercial Other Mnstitutions
Mnstitutions Mnstitutions Mnstitutions
banks

Rural Co-
Public Sector Private Sector Foreign Banks Urban Co-
Regional Rural operative Credit
operative Banks
27 22 31 banks 84 Mnstitutions
1,721
96,601
 
 

‡ Total Business has been growing at a phenomenal rate of

over 18 percent in the last 6 years.

‡ Non Performing Assets have been decreasing continuously

over a period of time

‡ Public Sector Banks enjoy majority of the Market Share

Chunk

‡ Private and Foreign Banks are steadily emerging

‡ Progressive steps to liberalize the sector being initiated by

the Government would help Private and Foreign Banks

°
     

   
 
  

 !!NPA ²Non-performing assets, RoA ²Return on assets
   


 
 
‡Government focus on expanding the coverage of financial services
‡Favorable demographics

 

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‡Universal banking
‡Technology into banking
‡Broad portfolio of financial products

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‡ Rapid growth of SME sector
‡Rapid growth of M&A activity in the country
‡Extension of special services such as Merchant Banking and Demat services
‡Growth in NRM transfers

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‡Robust regulatory framework has augmented investor confidence leading to FDM and FMM
‡Conducive banking environment with well-capitalised banks
‡All commercial banks in Mndia, excluding RRBs and local area banks, have become Basel MM
compliant
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‡ Axis Bank Ltd was incorporated in the year 1993 as µUTM Bank ‡Axis Bank currently has global footprint in four countries
Ltd¶ which provided corporate and retail banking products i.e. Singapore, Hong Kong, Dubai and Shanghai.
‡ Mt was the first private banks to have begun operations in 1994,
after the Government of Mndia allowed new private banks to be ‡ Seeking expansion in South Asia by opening a branch
established.
‡A market leader in the foreign currency travel card
segment and has generated a sales volume of USD


 285.33 million in FY08 on such cards.
‡ At present the bank is the third largest private sector bank
having a Pan Mndia network comprising of 1021 branch offices
and extension counters and 3174 ATMs across 433 centres
servicing over 10 million customers.
‡ AXMS Bank Limited is an Mndia-based bank. The Bank operates
in four segments:
1. Treasury
2. retail banking
3. corporate/wholesale banking
4. other banking business.
‡

Source: Annual report Axis bank 2010

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‡ The 3rd largest private sector bank with a Pan Mndia network
comprising of 713 branch offices and extension counters and
2904 ATMs across 433 centres servicing over 10 million
customers.

‡ Aggressive branch and ATM expansion to 1021 branches and

3714 ATMs by FY10E in upcoming tier MM and Tier MMM cities

‡ Expanding global reach by way of setting up 3 branch offices in

Singapore, Dubai and Hong Kong and 2 representative offices
in Shanghai and Dubai recently.

‡ One of Mndia¶s fastest growing private commercial bank with its

net income by 2514 cores

Source: 21-258414-280708.pdf & Axis Bank Website

  


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‡ Mt was set up at Udaipur in 1943 with an initial capital of
Rs.10.00 lacs. ‡The Bank is handling Foreign Exchange business at its 22
branches.
‡ An eminent Mndustrialist Late Seth Shri Govind Ram ‡The Bank has been continuously making arrangements with
Seksaria was the founder Chairman. foreign banks for augmenting export /import business of its
‡ Mt was classified as the Scheduled Bank in 1948. constituents.
‡ The Bank also established a rural (Gramin) bank Mewar ‡As on 31st March 2010, there were 67 correspondent banking
Anchlik Garmin Bank in Udaipur District in Rajasthan on. relationship in 70 countries.
‡ Presently the bank has 463 branches. ‡Export credit outstanding was Rs. 145.53 crores as on 31st March
10,



‡ The Bank operates in two segments: banking operations
and treasury operations.
‡ The Bank is engaged in commercial banking, merchant
banking, auxiliary services, consumer banking,
international banking and priority sector banking.
‡ As of March 31, 2010, the Bank's network had 463
branches 28 (ATMs) and 99 onsite ATMs covering 22
states & 2 Union Territories
‡

Source: http://rajbank.com/bor/wcms/en/home/whats-ne w/annual9-

10.avsFiles/File/ann_rep.pdf
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‡ The Bank¶s advances to Priority Sector as on 31.03.2010 stood

at Rs.2747.33 crores.

‡ The Bank has achieved an over all growth of 16.39% under

the retail assets portfolio of Home Loan, Mortgage Loan,
Vehicle Loan and Personal Loan products in the current FY
as compared to 3.22% growth achieved in the last FY

‡The growth over the past 5 decades has been good in

terms of advances, deposits, capital, and no of branches.

Source: http://www.slideshare.net/ujlakatyal/introduction-4363390
 
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‡ The bank came under the scanner of RBM for irregularities in transactions and misrepresentation of documents, norms
pertaining to anti-money laundering, Know Your Customer and irregularities in the conduct of accounts of a corporate
group.
‡ The Reserve Bank also appointed Deloitte Haskins and Sells to conduct a special audit of the bank, which recently
submitted its interim report to the Reserve Bank.
‡ Mn March, SEBM banned 100 entities, including Tayal Group firms, from all stock market-related activities for
fraudulently hiking the promoter holding in the bank, while conveying the impression that they were reducing their
shareholding.
‡ The promoter group, Tayal family has about 55 per cent stake and it needs to bring it down to 10 per cent to meet RBM
guidelines
‡    
 
 


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&&' .#  m/01.12

Source:http://www.humtum18.com/business-news/trouble-torn-bank-of-rajasthan-today-announced-that-merge-with-icici-bank/
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‡The NMM for Axis bank has shown a steady increase in the last 5 years whereas
the same for BOR has decreased over the last fiscal.
‡The NMM for the year 2009-10 was Rs 11638cr for axis bank while it was 1360 cr
for BOR.

Õ   
‡The total income has followed a similar rising trend in the case of Axis bank
while it has decreased over the last year for BOR

3 


‡ Net Profit grew at an average rate of 50% in the case of Axis bank to reach
2514 cr in the 2009-10. Mncase of BOR, the net profit stagnated for 3 years and
then reported losses to the tune of 102 cr in 2009-10

&
‡ The cash reserves have been steadily increasing in the case of axis bank to
reach 15639 cr in the last fiscal year. Due to this, axis bank has enough cash
reserves for many small ticket acquisitions.
‡ Since, Axis bank has transformed from growth stage to mature stage the
excess retained earnings is being given out as dividends to the investors on a
regular basis. Source: www.moneycontrol.com. (in cr)
 §

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!  %
‡As can be seen from the charts, dividend payments have increased at a
rapid rate in the case of Axis bank while in the case of BOR, there is a dip
in the dividends given out.

‡Because of the sustained growth in retained earnings, the book value

also has increased considerably in the case of Axis bank.

‡Similarly, the EPS has shown a robust growth in the last years. Mn case
of BOR, there was a net loss in the last fiscal.

Source: www.moneycontrol.com

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‡ Current ratio and quick ratio are the two important ratios
used to measure the liquidity levels of the companies. §
 0115 0116 0117 011# 01.1


‡ Mncase of banks the current ratio is generally low since, the Y
'
6.52 7.39 9.23 9.52 19.19
amount of liabilities that a bank has in comparison to the
 8.05 8.34 9.6 8.8 7.5
assets are really high.

‡ Quick ratio measures the most liquid current assets of a &Y!$% 0115 0116 0117 011# 01.1
firm. This is generally needed in worst-case scenario when
inventory cannot be sold. Y
'
11.08 11.57 13.73 13.69 15.8
‡ Mt should be at least 1 and the higher the better  10.6 11.32 11.87 11.5 7.52

‡ CAR ± capital adequacy ratio: this gives the minimum

'  0115 0116 0117 011# 01.1
amount of capital that a bank has to maintain in order to 
!$
protect the depositors and promote the stability of the bank. %
Y
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‡ Consists of Tier 1 and tier 2 capital to protect the depositors 50 55 51 53 43
in case of losses.  57 52 66 68 71
‡ The debt service % gives us the percentage of income
foregone for payment of interest on Debt.

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 &( 
 


‡ This is a measurement of how much suppliers, lenders, ‡ Dividend payout ratio indicates the amount of dividend that
creditors and obligors have committed to the company is paid from the amount earned per share.
versus what the shareholders have committed. 

 0115 0116 0117 011# 01.1
  !$%
'   0115 0116 0117 011# 01.1
-
!$% Y
' 23.2 22.57 23.47 23.16 22.56
Y
'  20.1 22.76 6.82 3.2 -
0.04 0.03 0.03 0.03 0.03
 8.81 11.49 9.99 17.28 13.97
   



 

 ‡ Net operating income per share gives the amount of
‡ This ratio is a rough measure of the productivity of a operating income that the firm earns for every share.
company's fixed assets (property, plant and equipment or 3  0115 0116 0117 011# 01.1
PP&E) with respect to generating sales. 


 
Y  0115 0116 0117 011# 01.1 Y
' 128.98 193.93 244.63 377.46 380.27
 

!$%  51.33 77.78 82.57 90.34 88.57
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' 7.31 7.78 6.32 4.97 4.0
 2.21 2.29 1.78 3.68 2.6
 
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 !$% 0115 0116 0117 011# 01.1
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' 18.44 21.84 16.09 19.93 19.89
‡ ROA, ROE and Net profit margins are the most used ratios  7.88 12.56 16.67 15.23 -18.86
to measure the profitability of a firm.
Y!$% 0115 0116 0117 011# 01.1
‡ ROA ratio illustrates how well management is employing
Y
' 1.18 1.10 1.24 1.44 1.67
the company's total assets to make a profit.
 1.18 1.10 1.24 0.74 0.58
‡ ROE measures how much the shareholders earned for
their investment in the company. 3m!$% 0115 0116 0117 011# 01.1
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' 13.47 12.01 12.22 13.31 16.1
‡ Net margin analysis detects consistency or
positive/negative trends in a company's earnings.  2.59 12.56 9.75 7.81 -6.85

Links Referred
www.investopedia.com
www.moneycontrol.com
www.axisbank.com
www.bankofrajasthan.com
www.money.rediff.com
&
     

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   ,
‡ Axis bank is promoted by a consortium of UTM, LMC, GMC
and 4 other public sector insurance companies.
‡ The share capital of the bank increased from 359cr in
2009 to 407cr in 2010.
‡ No further equity dilution is expected for the next 2-3
years.
‡ BOR had a issued share capital of 161.5cr in 2009 but in
May 2009 its board of directors approved the Scheme of
Amalgamation of The Bank of Rajasthan Limited with MCMCM
Bank Limited. The swap ratio was fixed at 1:4.72.

  
,
‡ As shown in the earlier graphs, Axis bank has consistently
increased the amount of dividend given per share owing to
the its stupendous performance.
‡ On the other hand BOR ran into losses in the FY2010 and
hence did not pay out any dividends though it had been
paying regularly in the earlier years.

Source: Annual reports of axis bank and

bank of rajasthan for FY 2010 and 2009 respectively
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