1.

1 INTRODUCTION

A Bank is a financial institution that accepts deposits from the public and creates credit.
Lending activities can be performed either directly or indirectly through capital markets. Due
to their importance in the financial stability of a country, banks are highly regulated in most
countries. Most nations have institutionalized a system known as fractional reserve banking
under which banks hold liquid assets equal to only a portion of their current liabilities.
(Goldschmidt, 1981)

In this paper we are focusing on Analysis of Profitability of banks in India and understand how
various factors affect it is covered data set of five years are from fiscal year 2018-2022 has
been taken into consideration to analyze the various aspects of profitability of Bank. In total
there are almost 90+ National & International Banks in India. These banks are serving millions
of customers with thousands of branches and relationship centers. The State Bank of India
aka SBI is the largest Public Sector Bank and ICICI is the largest Private Sector Bank in India.
literature. Hence, it was decided to analyze SISRI’s suitability in the Indian scenario.

1.1.2 FUNDAMENTAL ANALYSIS :

Fundamental analysis is considered to be one of the easiest ways of company’s valuation.

The main aim of fundamental analysis is to reveal the actual current value of the company.
One of the main aims of fundamental analysis is prediction of future profits, dividends and the
risk in order to calculate the true value of the stocks. It is not enough just to find a successful
business, it is necessary to find companies that worth more than other investors estimate.
Important role in fundamental financial analysis play financial ratios.

Researchers has identified factors including firm size, past stock performance, value and
growth as some of the factors affecting stock returns. Fundamental analysis examines the
company's stocks prices movements by their historical financial and accounting data. It
includes analysis of the company's earnings, expenses, profit, management experience,
assets and liabilities and industry dynamics. Such analysis helps investors to make the
investments strategies for getting the surplus returns. Five readily fundamental signals which
are considered more efficient by the financial analyst in predicting the stock returns i.e. current
ratio, leverage ratio, returns on assets, earnings per share and Price Earnings Ratio.

Fundamental analysis is a method of assessing the intrinsic value of a stock. It combines

financial statements, external influences, events, and industry trends. It is important to note
that the intrinsic value or a fair value of a stock does not change overnight.

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FUNDAMENTAL ANALYSIS USES THREE SETS OF DATA:

1. Historical data to check how things were in the past.

2. Publicly known information about the company, including announcements made by the
management and what others say about the company.

3. Information that is not known publicly but is useful, i.e., how the leadership handles crises,
situations, etc.

Fundamental analysis studies the business at a basic fundamental level to judge its financial
health. It examines the key ratios of a business to determine if the stock’s current price is
undervalued or overvalued. It also projects the company’s health and growth prospects. For
an investor, fundamental analysis is necessary. It helps him or her determine a company’s
worth. Fundamental analysis takes the following components into account:

1. Company’s financial reports

2. Effectiveness of the management

3. Asset management

4. Demand for the product

5. Company’s press releases

6. Global industry review

7. Trade agreements

8. External policies of the government

9. News releases

10. Competitor analysis

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The various fundamental factors can be grouped into two categories: quantitative and
qualitative. The financial meaning of these terms isn't much different from well-known
definitions:

• Quantitative: Information that can be shown using numbers, figures, ratios, or

formulas
• Qualitative: Rather than a quantity of something, it is its quality, standard, or nature

Qualitative Fundamentals:
There are four key fundamentals that analysts always consider when regarding a company.
All are qualitative rather than quantitative. They include:

The Business Model

What exactly does the company do? This isn't as straightforward as it seems. If a company's
business model is based on selling fast-food chicken, is it making its money that way? Or is
it just coasting on royalty and franchise fees?

Competitive Advantage
A company's long-term success is primarily driven by its ability to maintain a competitive
advantage and keep it. Powerful competitive advantages, such as Coca-Cola's brand name
and Microsoft's domination of the personal computer operating system, create a moat around
a business allowing it to keep competitors at bay and enjoy growth and profits. When a
company can achieve a competitive advantage, its shareholders can be well rewarded for
decades.

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MANAGEMENT
Some believe management is the most important criterion for investing in a company. It
makes sense: Even the best business model is doomed if the company's leaders fail to
execute the plan properly. While it's hard for retail investors to meet and truly evaluate
managers, you can look at the corporate website and check the resumes of the top brass
and the board members.

CORPORATE GOVERNANCE
Corporate governance describes the policies in place within an organization denoting the
relationships and responsibilities between management, directors, and stakeholders.

INDUSTRY
It's also important to consider a company's industry: its customer base, market share among
firms, industry-wide growth, competition, regulation, and business cycles. Learning how the
industry works will give an investor a deeper understanding of a company's financial health.

QUANTITATIVE FUNDAMENTALS:
Financial statements are the medium by which a company discloses information concerning
its financial performance. Followers of fundamental analysis use quantitative information from
financial statements to make investment decisions. The three most important financial
statements are income statements, balance sheets, and cash flow statements.

THE BALANCE SHEET

The balance sheet represents a record of a company's assets, liabilities, and equity at a
particular point in time. It is called a balance sheet because the three sections—assets,
liabilities, and shareholders' equity—must balance using the formula:

Assets = Liabilities + Shareholders' Equity

Assets represent the resources the business owns or controls at a given time. This includes
items such as cash, inventory, machinery, and buildings. The other side of the equation
represents the total financing value the company has used to acquire those assets.

Financing comes as a result of liabilities or equity. Liabilities represent debts or obligations

that must be paid. In contrast, equity represents the total value of money that the owners
have contributed to the business including retained earnings, which is the profit left after
paying all current obligations, dividends, and taxes.

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THE INCOME STATEMENT
While the balance sheet takes a snapshot approach in examining a business, the income
statement measures a company's performance over a specific time frame. Technically, you
could have a balance sheet for a month or even a day, but you'll only see public companies
report quarterly and annually.

The income statement presents revenues, expenses, and profit generated from the business'
operations for that period.

STATEMENT OF CASH FLOWS

The statement of cash flows represents a record of a business' cash inflows and outflows
over a period of time. Typically, a statement of cash flows focuses on the following cash-
related activities:

• Cash from investing (CFI): Cash used for investing in assets, as well as the
proceeds from the sale of other businesses, equipment, or long-term assets
• Cash from financing (CFF): Cash paid or received from the issuing and borrowing
of funds
• Operating Cash Flow (OCF): Cash generated from day-to-day business operations

The cash flow statement is important because it's challenging for a business to manipulate
its cash situation. There is plenty that aggressive accountants can do to manipulate earnings,
but it's tough to fake cash in the bank. For this reason, some investors use the cash flow
statement as a more conservative measure of a company's performance.

1.1.3TECHNICAL ANALYSIS

• Technical analysis is a form of security analysis that uses price data and volume data,
typically displayed graphically in charts. The charts are analyzed using various
indicators in order to make investment recommendations.
• Technical analysis has three main principles and assumptions: (1)The market
discounts everything, (2) prices move in trends and countertrends, and (3) price action
is repetitive, with certain patterns reoccurring.
• Technical analysis differs from fundamental analysis, in that traders attempt to
identify opportunities by looking at statistical trends, such as movements in a stock's
price and volume. The core assumption is that all known fundamentals are factored
into price, thus there is no need to pay close attention to them.

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 • Technical analysts do not attempt to measure a security's intrinsic value. Instead,
they use stock charts to identify patterns and trends that suggest what a stock will do
in the future.
• Technical analysis is primarily the visual illustration of the tussle between buyers
(demand) and sellers (supply).

Mainly there are three components of technical analysis

➢ Charts
➢ Indicators and
➢ Overlays

1.1.4 Types of Charts :

Line Chart :

• This is often obtained by connecting the closing prices for a given period. Sometimes
the color of the line segments is decided based on the price difference between two
periods – i.e., if the price goes high then green color otherwise red color, A line chart
is a graphical representation of an asset's historical price action that connects a series
of data points with a continuous line.

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 CHART 1.1.1

Bar Chart :

One of the basic tools of technical analysis is the bar chart, where the open, close, high,
and low prices of stocks or other financial instruments are embedded in bars, plotted as a
series of prices over a specific time period. Bar charts are often called OHLC charts (open-
high-low-close charts) to distinguish these charts from more traditional bar charts used to
depict other types of data. Bar charts allows traders to see patterns more easily.

CHART 1.1.2

Candlestick chart :

This is again based on High, Low, Open and Close. However, it gives you a different visual,
which resembles like a candle with color differentiating the low/high explicitly. Candlestick
charts are used by traders to determine possible price movement based on past patterns.
Candlesticks are useful when trading as they show four price points (open, close, high,
and low) throughout the period of time the trader specifies.

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 CHART 1.1.3

Point and Figure chart:

A point-and-figure chart plots price movements for stocks, bonds, commodities,

or futures without taking into consideration the passage of time. Contrary to some other
types of charts, like candlesticks, which mark the degree of an asset's movement over
set time periods, P&F charts utilize columns consisting of stacked X's or O's, each of
which represents a set amount of price movement. The X's illustrate rising prices, while
O's represent a falling price.

CHART 1.1.4

1.1.5 TECHNICAL INDICATOR:

❖ A Technical indicator is a mathematical pattern derived from historical data used by

technical traders or investors to predict future price trends and make trading decisions.
It uses a mathematical formula to derive a series of data points from past price, volume,
and open interest data.

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 ❖ A technical indicator is usually shown graphically and compared with the
corresponding price chart for analysis. The mechanics of a technical indicator captures
the behaviour and sometimes the investors’ psychology to provide a clue of future
trends of price activity.
❖ Technical indicators offered in technical analysis to predict future price movements
include cycle volumes, momentum readings, volume patterns, price trends, Bollinger
Bands, moving average, Elliot waves, oscillators, and sentiment indicators. Besides
providing valuable insight into the price structure, a technical indicator also shows how
to reap potential profits from price movements.

TYPES OF TECHNICAL INDICATORS:

→ Oscillators
→ Overlays
→ Accumulation/Distribution Line (A/D Line)

→ Average Direction indicator (ADX)

→ . Moving Average Convergence Divergence (MACD)

1. Oscillators

Oscillators are a special subset of technical indicators that oscillates between a local minimum
and maximum and focuses on market momentum. They are best used to provide readings of
overbought and oversold price movements. Traders and investors define price turns and
reversals within ranging markets using oscillators because they swing within a generally
defined range.

In many cases, technical analysts consider using multiple oscillators on a single chart as
redundant because they bear a striking similarity in their mathematical formulas, function, and
appearance. Technical analysis uses oscillators, such as relative strength.

2. Overlays

Overlays are special types of technical indicators used by traders and investors to identify
overbought and oversold levels. They provide insight into the supply and demand of a stock.
Commonly used overlays include Bollinger Bands and average. Other than giving the
overbought and oversold conditions, Bollinger Bands measure the impending market volatility.
On the other hand, moving averages are used to determine and measure the strength of a
market trend.

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3. Accumulation/Distribution Line (A/D Line)

The Accumulation/Distribution Line is commonly used to determine a security’s money flow.

The A/D line focuses only on the security’s closing price and trading range for the period. A
buying interest is shown when the indicator line is trending up, while a falling indicator line
shows a downtrend.

4. Average Direction indicator (ADX)

Traders and investors use the Average Direction indicator (ADX) to measure a trend’s strength
and momentum. A robust direction strength, either up or down, is in the offing when the ADX
is above 40. A weak trend or non-trending is suggestive when the indicator is below 20.

5. Moving Average Convergence Divergence (MACD)

Traders use Moving Average Convergence Divergence (MACD) to see the direction and
momentum of a trend that provides different trade signals. When the price is on an upward
phase, the MACD is above zero, while a below-zero MACD is suggestive of a bearish period.

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1.2 STATEMENT OF THE PROBLEM:

Banking sector plays a vital role in the economic growth of India. It helps the economy a lot to
survive or immune various national or global economic crises. When the global recession had
affected the banking system across the world, India’s financial system could sustain well. Even
during the crisis times, the Indian banking sector showed progress in competitiveness, growth,
efficiency, Despite ongoing global economic challenges, the bank’s international operations
continued to be stable and ensured the “trust and confidence” of its stakeholders. Thus, this
paper aims to assess the price performance of SBI with ICICI Bank as the proxy for judging
the financial health of Indian banking system using Fundamental and Technical Analysis. The
study will help to know what strategies the investor can adopt while trading in equity market
with the help of fundamental analysis or technical analysis. Fundamental Analysis is the
upcoming tool and helps the investor to know how the company is fundamentally strong and
who want to invest in a systematic manner in the competitive world.

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1.3 OBJECTIVES OF THE STUDY:

The following are the objectives of the study:

✓ To study the growth and performance of SBI with ICICI stocks.

✓ To study the fundamentals analysis of SBI with ICIC stock to recommend for better
choice.
✓ To study and compare the share price movements of SBI with ICICI bank.
✓ To make suggestion for investment decision by using technical.

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1.4 SCOPE OF THE STUDY:

The study deals with the price performance analysis of public bank with private bank. Since it
is a comparative study a comparison of price performance of SBI with ICICI bank is made.
The study will be useful to the future researcher. The function of the project is analyzing the
price performance of SBI with ICICI bank as the proxy for judging the financial health of Indian
banking system using Fundamental and Technical Analysis. The study will help to know what
strategies the investor can adopt while trading in equity market with the help of fundamental
analysis or technical analysis. Fundamental Analysis is the upcoming tool and helps the
investor to know how the company is fundamentally strong and who want to invest in a
systematic manner in the competitive world.

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1.5 LIMITATIONS OF THE STUDY:

❖ This study is mainly carried out based on the price performance of SBI with ICICI Bank
which might be not sufficient to generalize whole banking sector.
❖ The study is based on technical analysis and fundamental factors were considered.
❖ The period of study is confined for 5 years from 2018 to 2022 which might be not
sufficient to predict the future trend of market.

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2.1 REVIEW OF LITERATURE

A.A. PRAKASH, SHANMUGHA, & VALLEY (2018) - Analyzed the market price of the shares
of a company tends to alter according to internal as well as external factors. This study
analyses the share price movement of bank industry as a rise in investment values throughout
India leading to revenue generation for banks. The tools used in this study are Simple moving
Average, Relative strength Index, Money flow Index, Linear Regression Findings.

M. Prakash (2016) conducted research and their study shows a better understanding of stock
market trend will permit allocation of sources to the more lucrative investment prospect. The
behaviour of stock will assist investors to make suitable investment decisions it measures the
strength of the money involved in investing in the stocks. Simple moving average model is
applied and which would help investors in giving the sell or buy signal. In India, typically funds
are raised through issue of shares.

L.MOHAN RAJU, K.NEELIMA, B. KRISHNA PRASAD (2015) - The study is aimed

atascertaining the behavior of share returns. This project analyses the equity share
fluctuations in India Selected Industry. It also measures the strength of the trend and the
money involved in investing in the stocks. Simple moving average model is applied for
selected companies which would give the investor a sell signal or buy signal. This study made
will help the investors know the behavior of share prices and thus can succeed.

JOSHI, MRUNAL (2019) - A study on Indian Stock market and demonstrated that financial
specialists require being ready about the happenings in the market. Therefore, each and every
investor needs to be attentive of the major issues affecting the stock market. In the research
it was tried to find out the aspects responsible for up-down movement in Indian stock market.
From the study it was discovered elements such as Flow of Foreign Institutional Investors, 12

Political Stability, Growth of Gross Domestic Product, Inflation, Liquidity and different interest
rate and Global level factors are major factors responsible for the creation of movements in
Indian Stock Market.

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DR. M.MUTHU GOPALAKRISNAN AND DR. K.V.RAMANATHAN (2017) conducted aStudy
on Volatility in Indian Stock Market – A Study of Post and Prerecession Period. In this study,
the Researchers try to analyze price fluctuation in Indian stock market. Estimating the volatility
in the market will help the investors in estimating or calculating their risk. They analyze the
volatility of sectorial index listed in Nifty using daily opening price, closing price, high and low
prices of 31 selected companies. This study helps in identifying volatility relationship during
Pre-Recession and Post-Recession period.

S.NAGARAJAN AND K.PRABHAKARAN (2018) conducted a study on Equity Analysis of

Selected FMCG Companies Listed on NSE. They had used standard deviation, co- efficient
of variation and beta for analyzing the shares of various selected FMCG companies. They
found that the Nestle India Ltd share price has 53% relationship with nifty index. It was much
lower than other companies selected from the FMCG sector.

DR. P.VIKKREAMAN AND P.VARADHARAJAN (2009) analyzed the equity of selected

companies in the automobile industry for the period of 2004 to 2007. They use Beta and Alpha
techniques for analyzing risk and return of the automobile companies. The calculation of the
return indicator and systematic risk provide a clear understanding regarding the investment
decisions on these companies.

MICKO TANAKA YAMAWAKI ET. AL., (2007) have conducted a study on the Adaptive use
of Technical Indicators for predicting the Intra-Day price movements. The researcher has
proposed a system to select the best combination of technical indicators and their parameter
values adaptively by learning the patterns from the tick-wise financial data. In this paper, the
researcher has shown that this system gives good predictions on the directors of motion with
13the hitting rate at 10 ticks ahead of the decision point as high as 70% for foreign exchange
rates (FX) in five years from kl1996 to 2000 and 8 different stock prices in NYSE market in
1993 The study concludes that the tick-wise price time series carry a long memory of the order
of at least a few minutes, which is equivalent to 10 ticks.

BENNET AND JAMES A.ET.AL (2001) have conducted a study on "can money flow predict
is defined as the difference between up stick and down stick dollar trading volume. The study
says that despite little published research regarding its usefulness, the measure has become
an increasingly popular technical indicator because of its own means. The study summarizes
its most important finding that money flow appears to predict across- sectional variation in
future returns. Their predictive ability is sensitive, however, to the method of money flow
measurement (e.g. the exclusion or inclusion of block trades) and the Forecast horizon.

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2.2 INDUSTRY PROFILE – BANK:

A bank is a financial institution that accepts deposits from the public and creates a demand
deposit while simultaneously making loans. Lending activities can be directly performed by
the bank or indirectly through capital markets. It’s a monetary intuition that takes money from
people and provides credit. It also performs Lending activities directly or indirectly through
capital markets. Most of the country have institutionalized a system know as fractional- reserve
banking under which banks keeps reserves equally to a portion of their current liabilities. It’s
the most comprehended as a foundation which gives basic savings money administrations,
for example tolerating stores and giving credits. There are additional non-managing accounts
in the organization that leads to a few money administrations without accepting the legitimate
of a bank. A bank is a sub set related to money industry.

Because banks play an important role in financial stability and the economy of a country, most
jurisdictions exercise a high degree of regulation over banks. Most countries have
institutionalized a system known as fractional reserve banking, under which banks hold liquid
assets equal to only a portion of their current liabilities. In addition to other regulations intended
to ensure liquidity, banks are generally subject to minimum capital requirements based on an
international set of capital standards, the Basel Accords.

The other view of the origin of the word bank is a German term “bank’’ that means a joint stock
finance. Then later the word tuned into the Italian word word “banco” were the Germans
became the ruler to a major side of Italy. The French people were also using the same term
as “bank”. Afterward, the Britishers turned this term into “Bank” later its universally accepted.

Banking in its modern sense evolved in the fourteenth century in the prosperous cities
of Renaissance Italy but in many ways functioned as a continuation of ideas and concepts
of credit and lending that had their roots in the ancient world. In the history of banking, a
number of banking dynasties – notably, the Medicis, the Fuggers, the Welsers,
the Berenbergs, and the Rothschilds – have played a central role over many centuries.
The oldest existing retail bank is Banca Monte dei Paschi di Siena (founded in 1472), while
the oldest existing merchant bank is Berenberg Bank (founded in 1590).

The banking system in India comprises indigenous banking that is unorganised sector and
also modern banking know as organized sector. The unorganized sector means Indigenous
bankers, Private money lenders, shroffs, centibars, etc. While organized sector includes
commercial banks, Development banks, regional Banks, co-operatives banks and so on.

17
The central bank of India is known as reserves bank of India and an apex body of banking
companies. With the rapid development of communication, transportation and
industrialization, the banking business has made a drastic progress in this modern era and its
as became a part of our daily life.

The Indian banking sector is maintained by RBI act of 1934. The BANKING REGULATION
ACT 1949 by issuing direction to the maximum amount of deposits, the period and the rate of
interest they could offer on the deposits accepted. India reserve bank, provides different rules
and guidelines, polices and notifications on time to time to control the banking industries

Indian banking system, as we see it today in India has come a long way. Its transitioned from
unorganized system of lending and borrowing, passing through establishment of private banks
to nationalized, to liberalization and now facing the globalization of the financial world.

The organized system is well developed that it can compete with its international counterparts
in terms of modern technology, financial products and services, infrastructure, efficiency and
professional.

2.2.1 Structure of banking system in India

Banking system in India is totally headed by the RBI, India has no central bank before the
formation of RBI. The RBI is known as a supreme monetary and a banking authority in
regulating the banking segments in India. It’s also known as reserve bank has it handles all
the reserve of all the commercial banks.

The banking segments of India is classified into 2 division as shown in the below chart.

CHART 2.2.1

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The Indian banking segments is generally divided into scheduled and unscheduled banks. All
banks include is the 2nd schedule to the Reserve bank of India act, 1934 are scheduled banks.
These banks comprise scheduled commercial banks and co-operative banks. scheduled co-
operative Banks and urban cooperative banks. Scheduled commercial Banks in India are
categorised into 5 different groups according to their ownership and its operations:

➢ State bank of India and its Associates

➢ Nationalised Banks
➢ Private Sector Banks
➢ Foreign Banks
➢ Regional rural banks

commercial banks might be characterized as, any financial association that manages the
deposits and credits of business associations. this bank provides bank checks and drafts, just
as acknowledge cash on term stores. banks likewise go about as moneylenders, by method
for as of late advances and overdrafts. commercial banks additionally consider a different
types of deposits accounts, for example, checking, reserve funds, and time deposits. These
banks are ruined to make a benefit by gathering of people. As SBI is a commercial bank which
serves for the benefit of people and to their economy.

2.3 COMPANY PROFILE- SBI

State Bank of India (SBI) is an Indian multinational public sector bank and financial services
statutory body headquartered in Mumbai, Maharashtra. SBI is the 49th largest bank in the
world by total assets and ranked 221st in the Fortune Global 500 list of the world's biggest
corporations of 2020, being the only Indian bank on the list. It is a public sector bank and the
largest bank in India with a 23% market share by assets and a 25% share of the total loan and
deposits market. It is also the fifth largest employer in India with nearly 250,000 employees.

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On 14 September 2022, State Bank of India became the third lender (after HDFC Bank and
ICICI Bank) and seventh Indian company to cross the ₹ 5-trillion market capitalisation on the
Indian stock exchanges for the first time.

The bank descends from the Bank of Calcutta, founded in 1806 via the Imperial Bank of India,
making it the oldest commercial bank in the Indian subcontinent. The Bank of Madras merged
into the other two presidency banks in British India, the Bank of Calcutta and the Bank of
Bombay, to form the Imperial Bank of India, which in turn became the State Bank of India in
1955.

Overall the bank has been formed from the merger and acquisition of nearly twenty banks
over the course of its 200-year history. The Government of India took control of the Imperial
Bank of India in 1955, with Reserve Bank of India (India's central bank) taking a 60% stake,
renaming it State Bank of India.

On 16th Aug 2022 an attempt to facilitate and support start-ups in the country, the State Bank
of India (SBI) announced the launch of its first "state-of-the-art" dedicated branch for start-ups
in the country in Bengaluru.

2.3.1 SUBSIDIARIES

SBI provides a range of banking products through its network of branches in India and
overseas, including products aimed at non-resident Indians (NRIs). SBI has 16 regional hubs
and 57 zonal offices that are located at important cities throughout India.

2.3.2 NON-BANKING SUBSIDIARIES

Apart from five of its associate banks (merged with SBI since 1 April 2017), SBI's non-banking
subsidiaries include:

→ SBI Capital Markets Ltd

→ SBI Cards & Payments Services Pvt. Ltd. (SBICPSL)
→ SBI Life Insurance Company Limited
→ SBI Mutual Fund

In March 2001, SBI (with 74% of the total capital), joined with BNP Paribas (with 26% of the
remaining capital), to form a joint venture life insurance company named SBI Life Insurance
company Ltd.

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2.3.3 EMPLOYEES

SBI is one of the largest employers in the world with 245,652 employees as on 31 March 2021.

Out of the total workforce, the representation of women employees is nearly 26%. The
percentage of Officers, Associates and Subordinate staffs was 44.28%, 41.03% and 14.69%
respectively on the same date.

Each employee contributed a net profit of ₹828,350 (US$10,000) during FY 2020–21.

2.3.4 FORMER ASSOCIATE BANKS

➢ SBI main branch at Mumbai lit up

➢ Main Branch of SBI in Mumbai

SBI acquired the control of seven banks in 1960. They were the seven regional banks of
former Indian princely states. They were renamed, prefixing them with 'State Bank of'.

These seven banks were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad
(SBH), State Bank of Indore (SBN), State Bank of Mysore (SBM), State Bank of Patiala (SBP),
State Bank of Saurashtra (SBS) and State Bank of Travancore (SBT).

All these banks were given the same logo as the parent bank, SBI. State Bank of India and all
its associate banks used the same blue Keyhole logo said to have been inspired by
Ahmedabad's Kankaria Lake. The State Bank of India wordmark usually had one standard
typeface, but also utilised other typefaces. The wordmark now has the keyhole logo followed
by "SBI".

The plans for making SBI a single very large bank by merging the associate banks started in
2008, and in September the same year, SBS merged with SBI. The very next year, State Bank
of Indore (SBN) also merged.

Following a merger process, the merger of the 5 remaining associate banks, (viz. State Bank
of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala,
State Bank of Travancore); and the Bharatiya Mahila Bank) with the SBI was given an in-
principle approval by the Union Cabinet on 15 June 2016.

This came a month after the SBI board had, on 17 May 2016, cleared a proposal to merge its
five associate banks and Bharatiya Mahila Bank with itself.

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On 15 February 2017, the Union Cabinet approved the merger of five associate banks with
SBI. An analyst foresaw an initial negative impact as a result of different pension liability
provisions and accounting policies for bad loans. The merger went into effect from 1 April
2017.

DOMESTIC

Samriddhi Bhavan, Kolkata

SBI has over 24000 branches in India. In the financial year 2012–13, its revenue was ₹2.005
trillion (US$25 billion), out of which domestic operations contributed to 95.35% of revenue.
Similarly, domestic operations contributed to 88.37% of total profits for the same financial year.

Under the Pradhan Mantri Jan Dhan Yojana of financial inclusion launched by Government in
August 2014, SBI held 11,300 camps and opened over 3 million accounts by September,
which included 2.1 million accounts in rural areas and 1.57 million accounts in urban areas.

INTERNATIONAL

As of 2014–15, the bank had 191 overseas offices spread over 36 countries having the largest
presence in foreign markets among Indian banks.

➢ SBI Australia
➢ SBI Bangladesh
➢ SBI Bahrain
➢ SBI Botswana

The SBI Botswana subsidiary was registered on the 27th January 2006 and was issued a
banking licence by the Bank of Botswana on the 29th July 2013. The subsidiary handed over
its banking licence and closed its operations in the country.

SBI Canada Bank was incorporated in 1982 as a subsidiary of the State Bank of India. SBI
Canada Bank is a Schedule II Canadian Bank listed under the Bank Act and is a member of
Canada Deposit Insurance Corporation.

SBI (Mauritius) Ltd SBI established an offshore bank in 1989, State Bank of India International
(Mauritius) Ltd. This then amalgamated with The Indian Ocean International Bank (which had
been doing retail banking in Mauritius since 1979) to form SBI (Mauritius) Ltd. Today, SBI

22
(Mauritius) Ltd has 14 branches – 13 retail branches and 1 global business branch at Ebene
in Mauritius.

Nepal SBI Bank Limited

Main article: Nepal SBI Bank Limited

In Nepal, SBI owns 55% of share. (The state-owned Employees Provident Fund of Nepal owns
15% and the general public owns the remaining 30%.) Nepal SBI Bank Limited has branches
throughout the country.

SBI Sri Lanka now has three branches located in Colombo, Kandy and Jaffna. The Jaffna
branch was opened on 9 September 2013. SBI Sri Lanka is the oldest bank in Sri Lanka; it
was founded in 1864.

In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo–Nigerian
Merchant Bank and received permission in 2002 to commence retail banking. It now has five
branches in Nigeria.

In Moscow, SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest.
In Indonesia, it owns 76% of PT Bank Indo Monex. State Bank of India already has a branch
in Shanghai and plans to open one in Tianjin.

In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for US$8
million in October 2005.

SBI South Korea in January 2016, SBI opened its first branch in Seoul, South Korea.

➢ SBI South Africa

➢ SBI UK Ltd
➢ State Bank of India branch at Southall, United Kingdom

SBI USA In 1982, the bank established a subsidiary, State Bank of India, which now has ten
branches nine branches in the state of California and one in Washington, D.C. The 10th
branch was opened in Fremont, California on 28 March 2011. The other eight branches in
California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno, San Diego,
Tustin and Bakersfield.

23
2.3.5 LISTINGS AND SHAREHOLDING

As on 31 March 2017, Government of India held around 61.23% equity shares in SBI. The
Life Insurance Corporation of India, itself state-owned, is the largest non-promoter shareholder
in the company with 8.82% shareholding.

2.3.6 PROMOTERS OF STATE BANK OF INDIA

Shareholders Shareholding
Promoters in Government of India 56.92%
FIIs/GDRs/OCBs/NRIs 10.94%
Banks & Insurance Companies 10.63%
Mutual Funds & UTI 13.72%
Others 07.79%
Total 100.0%

TABLE 2.3.6

The equity shares of SBI are listed on the Bombay Stock Exchange, where it is a constituent
of the BSE SENSEX index, and the National Stock Exchange of India, where it is a constituent
of the CNX Nifty. Its Global Depository Receipts (GDRs) are listed on the London Stock
Exchange.

ICICI Bank Limited is an Indian Private bank. It is headquartered at Mumbai. 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.

2.3.7 VISSION, MISSION & QUALITY POLICY

VISSION:

Be the bank of choice for a transforming India.

MISSION:

Committed to providing simple, Responsive and innovative financial solutions

24
OUR VALUES:

❖ S-Services
❖ T-Transparency
❖ E-Ethics
❖ P-Politeness
❖ S-Sustainability

QUALITY POLICY:

➢ To ensure greater quality in giving client benefits.

➢ To manages clients and to give consistently progress.
➢ To accomplish our client’s objectives

2.3.8 BANKING

Banking is the business of protecting money for others. Banks lend this money, generating
interest that creates profits for the bank and its customers. A bank is a financial institution
licensed to accept deposits and make loans. But they may also perform other financial
services.

✓ Balance Equity

✓ Mobile Banking

✓ Net Banking

✓ Customer Services

BALANCE EQUITY:

SBI account holders can use SBI net banking, toll-free number, mobile banking, passbook,
missed call service, SMS banking (SBI Quick), USSD, ATM to check their SBI account balance
instantly.

MOBILE BANKING:

SBI offers mobile banking facility to its users through the SBI Anywhere Personal Banking
App. Customers can check their account balance, transfer funds, pay bills & much more via
SBI mobile banking.

25
NET BANKING:

SBI offers net banking services to its customers to provide great customer experience through
which they can easily check their account balance, transfer funds within & outside the bank,
& more,

CUSTOMER SERVICES:

SBI account holders can avail the facility of customer care for any queries, complaints,
feedback, etc. Customers can contact via SMS, e-mail, toll-free number which is available
24 x 7.

2.3.9 ACHIEVEMENTS AND AWARDS

➢ SBI was named as the best nationalized bank in the year 2015-16 by ‘financial
express’s as a best bank award.
➢ SBI was positioned as the best bank in India depend on its tier 1 capital by the banker
of magazine in the year 2014 positioning.
➢ SBI was named the most branded company in the global as per for bees in the year
2009 positioning.
➢ SBI has also ranked 232nd in the fortune worldwide 500 ranking of the universe largest
organization in the year 2016.
➢ From the IT Awards of innovation in customer management (DWP) The bank has got
first place.
➢ By Asia’s Best CSR Practices Award in 2013 held in Singapore the bank was
rewarded with Best CSR Practices in banking sector through CMO Asia.

26
2.3.10 ICICI BANK

This development finance institution has a network of 5,275 branches and 15,589 ATMs
across India and has a presence in 17 countries. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Qatar,
Oman, Dubai International Finance Centre, China and South Africa.

As well as representative offices in United Arab Emirates, Bangladesh, Malaysia and

Indonesia. The company's UK subsidiary has also established branches in Belgium and
Germany.

The Industrial Credit and Investment Corporation of India (ICICI) was established on 5
January1955 and Sir Arcot Ramasamy Mudaliar was elected as the first Chairman of ICICI
Ltd. It was structured 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.

ICICI Bank was established by ICICI, as a wholly owned subsidiary in 1994 in Vadodara. The
bank was founded as the Industrial Credit and Investment Corporation of India Bank, before
it changed its name to ICICI Bank. The parent company was later merged with the bank.

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.

ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in
India in 1998, followed by an equity offering in the form of American depositary receipts on the
NYSE in 2000.

ICICI Bank acquired the Bank of Madura Limited in an all-stock deal in 2001 and sold
additional stakes to institutional investors during 2001–2002. ICICI Bank launched Internet
Banking operations in 1998.

27
In 1999, ICICI become the first Indian company and the first bank or a financial institution from
non-Japan Asia to be listed on the NYSE.

ICICI, ICICI Bank, and ICICI subsidiaries ICICI Personal Financial Services Limited and ICICI
Capital Services Limited merged in a reverse merger in 2002.

During the financial crisis of 2007–2008, customers rushed to ICICI ATMs and branches in
some locations due to rumors of bank failure. The Reserve Bank of India issued a clarification
on the financial strength of ICICI Bank to dispel the rumours.

In March 2020, the board of ICICI Bank Ltd. approved an investment of ₹10 billion (US$130
million) in Yes Bank, resulting in a 5% ownership interest in Yes.

2.3.11 PRODUCTS

ICICI Bank offers products and services such as online money transfers, tracking services,
current accounts, savings accounts, time deposits, recurring deposits, mortgages, loans,
automated lockers, credit cards, prepaid cards, debit cards and digital wallets called ICICI
pocket.

ICICI bank launched 'ICICI Stock' which provides online services such as payment options,
digital accounts, instant car loans, insurance, investments, loans etc.

2.3.12 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 the retail financing of cars and trucks. It also had some 250,000 depositors.

2001 Bank of Madura

2002 The Darjeeling and Shimla branches of Grindlays Bank
2005 Investitsionno-Kreditny Bank (IKB), a Russian bank

28
 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$380 million). RBI was critical of BOR's promoters not reducing their
holdings in the company. BOR has since been merged with ICICI Bank.

2.3.13 ROLE IN INDIAN FINANCIAL INFRASTRUCTURE

ICICI Bank office in financial district hyderabad

ICICI bank has contributed to the setting up of a number of Indian institutions to establish
financial infrastructure in the country over the years:

The National Stock Exchange was promoted by India's leading financial institutions (including
ICICI Ltd.) in 1992 on behalf of the Government of India with the objective of establishing a
nationwide trading facility for equities, debt instruments and hybrids, by ensuring equal access
to investors all over the country through an appropriate communication network.

In 1987, ICICI Ltd along with UTI set up CRISIL as India's first professional credit rating
agency.

NCDEX (National Commodities and Derivatives Exchange) was set up in 2003, by ICICI Bank
Ltd, LIC, NABARD, NSE, Canara Bank, CRISIL, Goldman Sachs, Indian Farmers Fertiliser
Cooperative Limited (IFFCO) and Punjab National Bank.

ICICI Bank facilitated the setting up of "FINO Cross Link to Case Link Study" in 2006, as a
company that would provide technology solutions and services to reach the underserved and
underbanked population of the country. Using technologies like smart cards, biometrics and a
basket of support services, FINO enables financial institutions to conceptualise, develop and
operationalise projects to support sector initiatives in microfinance and livelihoods.

29
Entrepreneurship Development Institute of India (EDII), was set up in 1983, by the erstwhile
apex financial institutions like IDBI, ICICI, IFCI and SBI with the support of the Government of
Gujarat as a national resource organisation committed to entrepreneurship development,
education, training and research.

Eastern Development Finance Corporation (NEDFI) was promoted by national level financial
institutions like ICICI Ltd in 1995 at Guwahati, Assam for the development of industries,
infrastructure, animal husbandry, agri-horticulture plantation, medicinal plants, sericulture,
aquaculture, poultry and dairy in the North Eastern states of India.

Following the enactment of the Securitisation Act in 2002, ICICI Bank, together with other
institutions, set up Asset Reconstruction Company India Limited (ARCIL) in 2003. ARCIL was
established to acquire non-performing assets (NPAs) from financial institutions and banks with
a view to enhance the management of these assets and help in the maximisation of recovery.

ICICI Bank has helped in setting up Credit Information Bureau of India Limited (CIBIL), India's
first national credit bureau in 2000.

2.3.14 SUBSIDRIES

• ICICI Prudential Life Insurance

• Main article: ICICI Prudential Life Insurance
• ICICI Lombard
• Main article: ICICI Lombard
• ICICI Prudential Mutual Fund
• Main article: ICICI Prudential Mutual Fund
• ICICI direct
• Main article: ICICI direct
ICICI Bank Canada is a wholly owned subsidiary of ICICI Bank, whose corporate office is
located in Toronto. Established in December 2003, ICICI Bank Canada is a full-service direct
bank with assets of about $6.5 billion as of 31 December 2019.
It is governed by Canada's Bank Act and operates under the supervision of the Office of the
Superintendent of Financial Institutions. The bank has seven branches in Canada.
In 2003, ICICI Bank Canada was established as a Schedule II (foreign-owned or -controlled)
bank. It was incorporated in November and opened its head office and downtown Toronto
branch in December.
In 2004 launched an online banking platform. In 2005, it launched its financial advisor services
channel. In 2008, the bank relocated its corporate office to the Don Valley Business Park in
Toronto.
In 2010, it launched a mortgage broker service. In 2014, the bank launched a mobile banking
app.

30
ICICI Bank Canada is a member of several esteemed trade association; as well as the
Canadian Bankers Association (CBA); a registered member with the Canada Deposit
Insurance Corporation (CDIC), a federal agency insuring deposits at all of Canada's chartered
banks; Interac Association; Cirrus Network; and The Exchange Network.

ICICI BANK REGIONAL SUBSIDIARIES

ICICI Bank has operations in Bahrain, Germany, Europe, Hong Kong, and China in addition
to the countries mentioned above.

CHANDA KOCHHAR FRAUD CASE

On 4 October 2018, the then MD & CEO Chanda Kochhar stepped down from her position
following allegations of corruption. In January 2019, based on the report of an enquiry panel
headed by Justice Srikrishna, the bank board officially terminated her from service.
It also become one of the first in the country to ask for a claw back of bonuses and benefits.
In 2020 the Enforcement Directorate provisionally seized assets and shares belonging to
Chanda Kochhar with an estimated value of more than ₹780 million (US$9.8 million), in
relation to the ICICI bank loan case.

MONEY LAUNDERING ALLEGATIONS

ICICI Bank was one of the leading Indian banks accused of blatant money laundering through
violation of RBI guidelines in the famous Cobra Post sting operation which shook up Indian
banking industry during April–May 2013.

On 14 March 2013 the online magazine Cobra post released video footage from Operation
Red Spider showing high-ranking officials and some employees of ICICI Bank agreeing to
convert black money into white, an act in violation of Prevention of Money Laundering Act,
2002.

The Government of India and Reserve Bank of India ordered an inquiry following the exposé.
On 15 March 2013, ICICI Bank suspended 18 employees, pending inquiry.

On 11 April 2013 the Deputy Governor of RBI, H R Khan reportedly said that the central bank
was initiating action against ICICI Bank in connection with allegations of money laundering.

31
IN HUMAN DEBT RECOVERY METHODS

A few years after its rise to prominence in the banking sector, ICICI bank faced allegations on
the recovery methods it used against loan payment defaulters. A number of cases were filed
against the bank and its employees for using "brutal measures" to recover the money.

Most of the allegations were that the bank was using goons to recover the credit card
payments and that these "recovery agents" exhibited inappropriately and in some cases,
inhuman behaviour. Incidents were reported wherein the defaulters were put to "public shame"
by the recovery agents.

The bank also faced allegations of inappropriate behaviour in recovering its loans. These
allegations started initially when the "recovery agents" and bank employees started
threatening the defaulters.

In some cases, notes were written by the bank's employees asking the defaulters to "sell
everything in the house including family members", were found. Such charges faced by the
bank rose to a peak when suicide cases were reported wherein the suicide notes spoke of the
bank's recovery methods as the cause of the suicide. This led to legal battles and the bank
paying huge compensation.

32
3.1 RESEARCH METHODOLOGY:

It is the specific procedures or techniques used to identify, select, process, and

analyze information about a topic. It is a way of explaining how a researcher intends to carry
out their research. It’s a logical, systematic plan to resolve a research problem. A methodology
details a researcher’s approach to the research to ensure reliable, valid results that address
their aims and objectives. Methodology is the study of research methods, (or) more formally
“a contextual framework for research, a coherent and logic scheme based on views, beliefs,
and values that guides the choices researchers.

3.2 RESEARCH DESIGN:

It is simply a structural framework of various research methods as well as techniques

that are utilized by a researcher. The research design helps a researcher to pursue their
journey into the unknown but with a systematic approach by their side. There are four major
types of Research Designs. They are:

1. Descriptive Research Design

2. Experimental Research Design
3. Explanatory Research Design
4. Exploratory Research Design

3.3 COLLECTION OF DATA

3.3.1 SECONDARY DATA:
Secondary data is the data that has already been collected through primary sources
and made readily available for researchers to use for their own research. It is a type of data
that has already been collected in the past.
✓ Statistical tables relating to banks in India for various years published by the
moneycontrol.com.
✓ Annual reports of the selected banks.
✓ Various journals devoted to the subject of banking in India.
3.4 TOOLS USED IN ANALYSIS:
Used Accounting tools such as

• Ratio analysis
• Trend analysis

33
3.4.1 RATIO ANAYSIS:

Ratio analysis is referred to as the study or analysis of the line items present in the financial
statements of the company. It can be used to check various factors of a business such as
profitability, liquidity, solvency and efficiency of the company or the business.

3.4.1.2 PRICE EARNINGS RATIO:

The price-to-earnings ratio is the ratio for valuing a company that measures its current share
price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes
known as the price multiple or the earnings multiple.

P/E ratios are used by investors and analysts to determine the relative value of a company's
shares in an apples-to-apples comparison. It can also be used to compare a company against
its own historical record or to compare aggregate markets against one another or over time.

The formula and calculation used to calculate PE ratio is:

P/E Ratio = Market Price per Share/ Annual Earnings per Share

3.4.1.3 PRICE BOOK RATIO:

The price-to-book (P/B) ratio measures the market's valuation of a company relative to its book
value. The market value of equity is typically higher than the book value of a company's stock.
The price-to-book ratio is used by value investors to identify potential investments.

Many investors use the price-to-book ratio (P/B ratio) to compare a firm's market capitalization
to its book value and locate undervalued companies. This ratio is calculated by dividing the
company's current stock price per share by its book value per share (BVPS).

The formula and calculation used to calculate P/B ratio is:

P/B Ratio = Market Price per share/ Book value per share

3.4.1.4 DEBT EQUITY RATIO:

The debt-to-equity ratio measures your company's total debt relative to the amount originally
invested by the owners and the earnings that have been retained over time.

Debt-to-equity (D/E) ratio is used to evaluate a company’s financial leverage and is calculated
by dividing a company’s total liabilities by its shareholder equity.

34
D/E ratio is an important metric in corporate finance. It is a measure of the degree to which a
company is financing its operations with debt rather than its own resources. Debt-to-equity
ratio is a particular type of gearing ratio.

The formula and calculation used to calculate D/E ratio is:

D\E= (Short Term Debt + Long Term Debt + Other Fixed

Payments)/Shareholder’s Equity

3.4.1.5 RETURN ON EQUITY RATIO:

The ROE ratio is calculated by dividing the net income of the company by total shareholder
equity and is expressed as a percentage. The ratio can be calculated accurately if both the
net income and equity are positive in value. Return on equity = Net income / Average
shareholder's equity.

Return on equity (ROE) is a measure of financial performance calculated by dividing net

income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE is considered the return on net assets.

The formula and calculation used to calculate ROE ratio is:

ROE = Net Income/Shareholder’s Equity

3.4.1.6 RETURN ON CAPITAL EMPLOYED RATIO:

The term Return On Capital Employed (ROCE) refers to a financial ratio that can be used to
assess a company's profitability and capital efficiency. In other words, this ratio can help to
understand how well a company is generating profits from its capital as it is put to use.

Return on capital employed can be especially useful when comparing the performance of
companies in capital-intensive sectors, such as utilities and telecoms. This is because, unlike
other fundamentals such as return on equity (ROE), which only analyzes profitability related
to a company’s shareholders’ equity, ROCE considers debt and equity. This can help
neutralize financial performance analysis for companies with significant debt.

The formula and calculation used to calculate ROCE ratio is

ROCE = Earnings Before Interest and Tax/Capital Employed

35
3.4.1.7 EARNINGS PER SHARE:

Earnings per share (EPS) is calculated as a company's profit divided by the outstanding
shares of its common stock. The resulting number serves as an indicator of a company's
profitability. It is common for a company to report EPS that is adjusted for extraordinary items
and potential share dilution.

The higher a company's EPS, the more profitable it is considered to be.

Earnings per Share = Net Income − Preferred Dividends/End of period

common shares outstanding

3.4.1.8 NET PROFIT MARGIN:

The net profit margin, or simply net margin, measures how much net income or profit is
generated as a percentage of revenue. It is the ratio of net profits to revenues for a company
or business segment.

Net profit margin is typically expressed as a percentage but can also be represented in decimal
form. The net profit margin illustrates how much of each dollar in revenue collected by a
company translates into profit.

Net Profit Margin Ratio = Net Profit/Revenue

3.4.1.9 OPERATING PROFIT MARGIN:

The operating margin measures how much profit a company makes on a dollar of sales after
paying for variable costs of production, such as wages and raw materials, but before paying
interest or tax. It is calculated by dividing a company’s operating income by its net sales.
Higher ratios are generally better, illustrating the company is efficient in its operations and is
good at turning sales into profits.

It is expressed on a per-sale basis after accounting for variable costs but before paying any
interest or taxes (EBIT).

Operating profit Margin Ratio = Operating income/Revenue

36
3.4.2 TREND ANALYSIS:

Trend analysis is a technique used to examine and predict movements of an item based on
current and historical data. You can use trend analysis to improve your business using trend
data to inform your decision-making.

Trend analysis helps you compare your business against other businesses to establish a
benchmark of how your business should be operating, at both the initial stage and ongoing,
or developing.

Analysing market trends is key to adapting and changing your business, keeping current and
ahead of the industry, and for continual growth.

Trend analysis consists of:

✓ Trend data, for assessing changes within your own business performance over time
✓ Benchmark data, for comparing your business to a similar organisation (learn about
benchmarking your business for greater performance)

Market trends, for analysing the data from a whole industry or sector

37
4.1 DATA ANALYSIS:
Data analysis is a process of inspecting, cleansing, transforming, and modeling data with the
goal of discovering useful information, informing conclusions, and supporting decision-making.
Data analysis has multiple facets and approaches, encompassing diverse techniques under a
variety of names, and is used in different business, science, and social science domains. In
today's business world, data analysis plays a role in making decisions more scientific and
helping businesses operate more effectively. It is collected and analyzed to answer questions,
test hypotheses, or disprove theories.

4.2 INTERPRETATION

Interpretation is the act of explaining, reframing, or otherwise showing your own understanding
of something. A person who translates one language into another is called an interpreter
because they are explaining what a person is saying to someone who doesn't understand. It
can be an individual's subjective understanding, or it can be the result of critical analysis and
study.

38
 4.2.1 PRICE EARNINGS RATIO:

TABLE 4.2.1.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
P/E 12.45 14.51 8.89 124.32 -46.80

TABLE 4.2.1.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
P/E 20.17 21.35 21.86 60.59 23.16

INTERPRETATION:

SBI

The P/E for State Bank has been below 15 for the past five years. This suggests
that the bank has been less efficient in generating profits from its capital
investments compared to other companies. While there may be various reasons
for this, it could be an indication of weaker financial performance and growth
prospects for State Bank compared to other companies in the same industry.

ICICI

The P/E for ICICI Bank has been consistently above 15 for the past five years,
indicating that the bank has been more efficient in generating profits from its capital
investments. This suggests that ICICI Bank has a stronger financial position and
growth prospects compared to other companies in the same industry.

Based on the P/E values alone, it appears that SBI Bank would be the better choice
to invest in compared to ICICI Bank. This is because ICICI Bank has consistently
demonstrated a higher efficiency in generating profits from its capital investments
over the past five years, which may be indicative of a stronger financial position
and growth prospects.

39
4.2.2 PRICE BOOK RATIO:

TABLE 4.2.2.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
P/B 1.56 1.29 0.77 1.22 1.09

Table 4.2.2.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
P/B 2.84 2.60 1.75 2.31 1.66

INTERPRETATION:

SBI

Looking at the table, we can see that SBI's P/B ratio has fluctuated over the years.
The P/B ratio was 1.56 in March 2022, which is higher than the P/B ratio of March
2021, indicating that the market is willing to pay more for each unit of earnings
compared to the previous year.

In March 2020, SBI's P/B ratio was 0.77, which was lower than the previous year,
suggesting that the market considered the stock to be undervalued. However, the
P/B ratio of March 2019 was unusually high at 1.22, indicating that investors were
willing to pay a premium for SBI's earnings. In March 2018, SBI's P/E ratio was
negative at 1.09, which is not a meaningful valuation metric and could be due to
the company having negative earnings during that period.

Overall, SBI's P/B ratio has fluctuated significantly over the years, indicating
changes in investor sentiment and market conditions

40
ICICI BANK:

Looking at the table, we can see that ICICI Bank's P/E ratio has been relatively
stable over the years, hovering around the range of 20 to 22. In March 2022, ICICI
Bank's P/E ratio was 2.84, which is slightly higher than the previous year. In March
2021, ICICI Bank's P/E ratio was 2.60, which is slightly higher than the previous
year. In March 2020, ICICI Bank's P/E ratio was 1.75, which is slightly less than
the previous year. In March 2019, ICICI Bank's P/E ratio was higher at 2.31,
indicating that investors were willing to pay a premium for the bank's earnings. In
March 2018, ICICI Bank's P/E ratio was 1.66, which was higher than the previous
year.

Overall, ICICI Bank's P/E ratio has been relatively stable over the years, indicating
that investors have been willing to pay a consistent price for each unit of earnings.

41
4.2.3 DEBT EQUITY RATIO:

TABLE 4.2.3.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
D/E 17.44 17.80 17.08 16.89 15.79

Table 4.2.3.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
D/E 3.21 1.95 1.26 0.43 0.80

INTERPRETATION:

The tables show the Debt-to-Equity (D/E) ratios of SBI and ICICI Bank for the fiscal years
ending March 2022, March 2021, March 2020, March 2019, and March 2018.

The D/E ratio is a financial leverage ratio that compares a company's total liabilities to its
shareholder equity. A higher D/E ratio indicates that a company has more debt relative to its
equity, which can increase financial risk and reduce financial flexibility.

A lower D/E ratio suggests that a company has less debt relative to its equity, which can
indicate financial stability and a lower risk of default.

Looking at the tables, we can see that SBI's D/E ratio has remained relatively stable over the
years, ranging from 15.79 in March 2018 to 17.80 in March 2021. In March 2022, SBI's D/E
ratio was 17.44, which is slightly lower than the previous year. This indicates that SBI has a
higher level of debt relative to its equity, which can increase its financial risk.

On the other hand, ICICI Bank's D/E ratio has been decreasing over the years, from 0.80 in
March 2018 to 3.21 in March 2022. This indicates that ICICI Bank has a lower level of debt
relative to its equity, which can indicate greater financial stability and lower financial risk.

Based on the D/E ratio alone, it appears that ICICI Bank is in a better financial position
compared to SBI, as it has a lower level of debt relative to its equity.

42
4.2.4 RETURN ON EQUITY RATIO:

TABLE 4.2.4.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018

ROE 12.53 8.89 8.69 0.98 -2.21

Table 4.2.4.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018

ROE 14.04 11.90 7.98 3.82 7.16

INTERPRETATION:

The tables show the Return on Equity (ROE) ratios of SBI and ICICI Bank for the fiscal years
ending March 2022, March 2021, March 2020, March 2019, and March 2018.

ROE is a profitability ratio that measures the amount of net income returned as a percentage
of shareholders' equity. A higher ROE indicates that a company is generating more profit
from each unit of shareholder equity, which can be a sign of effective management and a
strong business model.

Looking at the tables, we can see that both SBI and ICICI Bank have improved their ROE
ratios over the years. SBI's ROE has been more volatile, ranging from -2.21 in March 2018
to 12.53 in March 2022. In March 2021 and 2022, SBI's ROE was 8.89% and 12.53%,
respectively, which indicates that SBI is generating more profit from each unit of shareholder
equity. However, SBI's ROE is still lower than that of ICICI Bank.

43
ICICI Bank's ROE has been consistently higher than SBI's, ranging from 7.16 in March 2018
to 14.04 in March 2022. In March 2021 and 2022, ICICI Bank's ROE was 11.90% and
14.04%, respectively, which indicates that ICICI Bank is generating more profit from each
unit of shareholder equity. This suggests that ICICI Bank has been more effective in utilizing
its equity to generate profits for its shareholders.

Based on the ROE ratio alone, it appears that ICICI Bank is a better investment compared to
SBI, as it has consistently generated higher returns on shareholder equity.

44
4.2.5 RETURN ON CAPITAL EMPLOYED RATIO:

TABLE 4.2.5.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018

ROCE 1.57 1.77 1.94 0.00 1.91

Table 4.2.5.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018

ROCE 2.58 2.86 2.60 2.39 3.10

INTERPRETATION:

The tables show the Return on Capital Employed (ROCE) ratios of SBI and ICICI Bank
for the fiscal years ending March 2022, March 2021, March 2020, March 2019, and
March 2018.

ROCE is a profitability ratio that measures the return that a company is making on its
capital employed. Capital employed represents the total capital that a company has
used in its operations, including equity and debt. A higher ROCE indicates that a
company is generating more profit from each unit of capital employed, which can be a
sign of efficient use of resources.

Looking at the tables, we can see that both SBI and ICICI Bank have varying ROCE
ratios over the years. SBI's ROCE has been fluctuating, ranging from 0.00 in March
2019 to 1.94 in March 2020. In March 2021 and 2022, SBI's ROCE was 1.77% and
1.57%, respectively, which indicates that SBI is generating lower returns from its
capital employed.

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On the other hand, ICICI Bank's ROCE has been consistently higher than SBI's,
ranging from 2.39 in March 2019 to 3.10 in March 2018. In March 2021 and 2022,
ICICI Bank's ROCE was 2.86% and 2.58%, respectively, which indicates that ICICI
Bank is generating higher returns from its capital employed compared to SBI.

Based on the ROCE ratio alone, it appears that ICICI Bank is a better investment
compared to SBI, as it has consistently generated higher returns from its capital
employed.

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4.2.6 EARNINGS PER SHARE:

TABLE 4.2.6.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Basic 39.64 25.11 22.15 2.58 -5.34
EPS
(Rs.)
Diluted 39.64 25.11 22.15 2.58 -5.34
EPS
(Rs.)

Table 4.2.6.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Basic 36.21 27.26 14.81 6.61 12.02
EPS
(Rs.)
Diluted 35.44 26.83 14.55 6.53 11.89
EPS
(Rs.)

INTERPRETATION:

The tables show the Basic EPS (Earnings Per Share) and Diluted EPS of SBI and ICICI Bank
for the fiscal years ending March 2022, March 2021, March 2020, March 2019, and March
2018.

EPS is a key financial metric that indicates the profitability of a company. It represents the
portion of a company's profit that is allocated to each outstanding share of common stock.
Basic EPS is calculated by dividing the net profit by the number of outstanding shares, while
Diluted EPS takes into account the potential impact of dilutive securities, such as stock
options or convertible bonds.

47
Looking at the tables, we can see that both SBI and ICICI Bank have varying EPS over the
years. SBI's Basic EPS has been increasing over the years, from -5.34 in March 2018 to
39.64 in March 2022, which is a significant improvement. Diluted EPS has also followed the
same trend. This indicates that SBI has been consistently profitable over the years and has
shown significant improvement in its profitability in recent years.

On the other hand, ICICI Bank's EPS has been fluctuating over the years. Its Basic EPS was
12.02 in March 2018, which decreased to 6.61 in March 2019 and increased to 36.21 in
March 2022. Similarly, Diluted EPS has also followed the same trend. This indicates that
ICICI Bank's profitability has been inconsistent over the years, with significant fluctuations in
its earnings.

Based on the EPS ratio alone, it appears that SBI is a better investment compared to ICICI
Bank, as it has consistently improved its profitability over the years.

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4.2.7 NET PROFIT MARGIN:

TABLE 4.2.7.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Net profit 12.53 8.73 6.73 1.21 -1.82
Margin
(%)

Table 4.2.7.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Net profit 27.02 22.67 13.23 7.90 14.63
Margin
(%)

INTERPRETATION:

SBI:

➢ The net profit margin for SBI has been increasing over the past few years, from -
1.82% in March 2018 to 12.53% in March 2022.

➢ This suggests that SBI has been able to improve its profitability by generating more
revenue or reducing expenses.

ICICI:

➢ The net profit margin for ICICI has also been increasing over the past few years,
from 14.63% in March 2018 to 27.02% in March 2022.

➢ This suggests that ICICI has been able to improve its profitability even more than
SBI by generating more revenue or reducing expenses.

Based on this metric alone, ICICI appears to be the better performer as it has a higher net
profit margin.

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4.2.8 OPERATING PROFIT MARGIN:

TABLE 4.2.8.1

SBI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Operating -27.81 -29.82 -29.63 -29.14 -35.70
profit
Margin (%)

Table 4.2.8.2

ICICI

Valuation Mar Mar Mar Mar Mar

Ratio 2022 2021 2020 2019 2018
Operating -38.09 -58.10 -63.32 -74.51 -76.74
profit
Margin (%)

INTERPRETATION:

The operating profit margin (%) for SBI has been negative for the past five years, indicating
that the company's operating expenses have exceeded its revenues during this period.
Specifically, SBI's operating profit margin improved slightly from -35.70% in 2018 to -27.81%
in 2022, but it still remains negative.

On the other hand, ICICI's operating profit margin (%) has also been negative for the past
five years, with a significant improvement in recent years. ICICI's operating profit margin has
improved from -76.74% in 2018 to -38.09% in 2022. This indicates that ICICI's operating
expenses have been decreasing or its revenues have been increasing, resulting in a smaller
negative operating profit margin.

Overall, both companies have negative operating profit margins, but ICICI has shown a
greater improvement in recent years.

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4.2.9 TREND ANAYSIS

CHART 4.2.9.1

SBI chart

CHART 4.2.9.2

ICICI chart

51
 Using Trend analysis is an important aspect of technical analysis, but it’s only one of
many tools and techniques available. Trend is the direction that the prices are moving in,
based on where they have been in the past. Trends are made up of Peaks and troughs.

SIMPLE MOVING AVERAGE:

It is simply the average price over the specified period. The average is called "moving"
because it is plotted on the chart bar by bar, forming a line that moves along the chart as the
average value changes.

➢ Simple moving averages calculate the average of a range of prices by the number of
periods within that range.
➢ A simple moving average is a technical indicator that can aid in determining if an asset
price will continue or if it will reverse a bull or bear trend.
➢ A simple moving average can be enhanced as an exponential moving average (EMA)
that is more heavily weighted on recent price action.

GOLDEN CROSS OVER:

The golden cross occurs when a short-term moving average crosses over a major long-term
moving average to the upside and is interpreted by analysts and traders as signaling a
definitive upward turn in a market.

A golden cross and a death cross are exact opposites. A golden cross indicates a long-term
bull market going forward, while a death cross signals a long-term bear market. Both refer to
the solid confirmation of a long-term trend by the occurrence of a short-term moving average
crossing over a major long-term moving average.

52
5.1 Findings:

SBI:

✓ SBI's Debt-to-Equity (D/E) ratio has consistently been high in the past five years,
indicating that the company has relied heavily on debt to finance its operations.

✓ The Return on Equity (ROE) and Return on Capital Employed (ROCE) have been
relatively low in the past five years, with negative ROE in 2018. This suggests that the
company has been less efficient in generating profits from its investments and equity.

✓ The Basic EPS and Diluted EPS have shown an increasing trend in the past five years,
indicating that the company's earnings per share have been growing.

✓ The Net Profit Margin has also been increasing over the past five years, indicating that
the company has been able to generate more profits from its revenue.

✓ However, the Operating Profit Margin has consistently been negative in the past five
years, indicating that the company's operating expenses have been higher than its
operating income.

ICICI:

✓ ICICI's D/E ratio has been consistently low in the past five years, indicating that the
company has not relied heavily on debt to finance its operations.

✓ The ROE and ROCE have been relatively higher compared to SBI in the past five
years, indicating that the company has been more efficient in generating profits from
its investments and equity.

✓ The Basic EPS and Diluted EPS have been fluctuating in the past five years, with a
decreasing trend in the most recent year.

✓ The Net Profit Margin has consistently been high in the past five years, indicating that
the company has been able to generate more profits from its revenue.

✓ However, the Operating Profit Margin has consistently been negative in the past five
years, indicating that the company's operating expenses have been higher than its
operating income.

✓ Overall, based on these metrics, ICICI appears to have performed better than SBI in
the past five years.

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5.2 SUGGESTIONS:

Based on the above findings, here are some suggestions:

1. Further analysis: The findings from the above analysis provide some insights into the
financial performance of SBI and ICICI in the past five years. However, additional
analysis of other financial metrics and factors such as market trends, competition, and
regulatory changes may provide a more comprehensive understanding of the
companies' financial health.

2. Risk assessment: Since SBI has a consistently high debt-to-equity ratio, it may be
more exposed to financial risks such as bankruptcy and insolvency. Hence, it is
important to conduct a risk assessment of both SBI and ICICI to identify potential
financial risks and develop risk mitigation strategies.

3. Performance evaluation: Based on the financial metrics analyzed, ICICI appears to

have performed better than SBI in the past five years. However, it is important to
evaluate the performance of both companies relative to their competitors in the banking
industry to gain a more accurate understanding of their performance.

4. Long-term investment: While short-term investment decisions can be based on

financial metrics, long-term investment decisions should also consider the strategic
direction of the companies and their potential for growth and sustainability in the future.
Hence, it is important to conduct a thorough analysis of both companies' strategies and
prospects before making long-term investment decisions.

5. Consultation: It is always advisable to seek professional advice from financial experts

before making any investment decisions.

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5.3 CONCLUSION:

In conclusion, the study compared the financial performance of two Indian banks, SBI and
ICICI, over the past five years. The analysis found that ICICI performed better than SBI in
several key metrics, including debt-to-equity ratio, return on equity, return on capital employed,
and net profit margin. Although SBI's earnings per share and net profit margin showed an
increasing trend over the past five years, its high debt-to-equity ratio and consistently negative
operating profit margin were concerning. On the other hand, ICICI's low debt-to-equity ratio,
relatively higher return on equity and capital employed, and consistently high net profit margin
were positive indicators.

Based on these findings, it may be suggested that investors consider ICICI as a potential
investment opportunity over SBI. However, it is important to note that investing in any company
carries inherent risks, and investors should conduct their own thorough research before
making any investment decisions.

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