IMS Manthan (The Journal of Mgt., Comp. Science & Journalism)

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A Study of ten Indian Commercial Bank's Financial Performance Using Camels Methodology


Affiliations
1 Charak Institute of Business Management, Lucknow, India
2 Narvadeshwar Management College, Lucknow, India
3 Standard Chartered Bank, Karachi, Pakistan
     

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Globalization, rapid Industrialization with overall development and volatile stock market has created an unparalleled competitive environment which is necessary for the rapid economic growth which implies a long term rise in per capita of nation. To match the ever growing economic appetite India requires huge investment which can be possible if nations saving are sound and investor are willing to challenge market risk. Ever since Indian economy opened its doors to liberalization and globalization which ultimately explored the financial market potential are prudent result of the foundations laid through the first and second generation reforms, contribution of Reserve Bank of India (RBI) and other policy maker due to which Indian banking industry witnessed radical changes, transformational regulatory requirements and enormous growth in terms of new products and services and overall competition. Thus for competitive survival banks depends on their profitability, efficient management, growth rate and the risk exposure which has a direct impact on its market potential. In the light of these recent developments, a systematic analysis of the profitability and overall performance of Indian scheduled commercial banks is inevitable. The present study attempts to analyze financial performance of ten selected Indian Commercial Banks like SBI, ICICI, Axis, HDFC, BOI, PNB, IDBI, UBI, BOB and Canara Bank during the period 2005-2010 using CAMEL methodology. The variables taken for the study are Capital Adequacy in which Capital Adequacy Ratio (CAR), Debt-Equity Ratio (DER), Advance to Assets (ADV/AST), Asset Quality, in which (NNPAs), Management Efficiency in which Total Advances to Total Deposits (TA/TD), Profit Per Employee (PPE), Return on Net Worth (RONW), Earning Efficiency in which Percentage Growth in Net profit, Net Interest Margin (NIM), Non Interest Income / Total funds (NII/TF) and in Liquidity, Loans to Deposit Ratio (LDR), Liquid Assets / Total Assets (LA/TA) are been evaluated. The study brings out the competitiveness, effectiveness of selected major Commercial banks and in last conclusive remarks been given.

Keywords

CAMEL, CA, CAR, DER, LDR, ADV/AST, AQ, NNPA, TA/TD, PPE, RONW, NIM, NII/TF, LA/TA, PAT, JEL Codes: G18, G21, G24, G29, G30, N20, F30
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  • A Study of ten Indian Commercial Bank's Financial Performance Using Camels Methodology

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Authors

S. M. Tariq Zafar
Charak Institute of Business Management, Lucknow, India
Adeel Maqbool
Narvadeshwar Management College, Lucknow, India
Syed Imran Nawab Ali
Standard Chartered Bank, Karachi, Pakistan

Abstract


Globalization, rapid Industrialization with overall development and volatile stock market has created an unparalleled competitive environment which is necessary for the rapid economic growth which implies a long term rise in per capita of nation. To match the ever growing economic appetite India requires huge investment which can be possible if nations saving are sound and investor are willing to challenge market risk. Ever since Indian economy opened its doors to liberalization and globalization which ultimately explored the financial market potential are prudent result of the foundations laid through the first and second generation reforms, contribution of Reserve Bank of India (RBI) and other policy maker due to which Indian banking industry witnessed radical changes, transformational regulatory requirements and enormous growth in terms of new products and services and overall competition. Thus for competitive survival banks depends on their profitability, efficient management, growth rate and the risk exposure which has a direct impact on its market potential. In the light of these recent developments, a systematic analysis of the profitability and overall performance of Indian scheduled commercial banks is inevitable. The present study attempts to analyze financial performance of ten selected Indian Commercial Banks like SBI, ICICI, Axis, HDFC, BOI, PNB, IDBI, UBI, BOB and Canara Bank during the period 2005-2010 using CAMEL methodology. The variables taken for the study are Capital Adequacy in which Capital Adequacy Ratio (CAR), Debt-Equity Ratio (DER), Advance to Assets (ADV/AST), Asset Quality, in which (NNPAs), Management Efficiency in which Total Advances to Total Deposits (TA/TD), Profit Per Employee (PPE), Return on Net Worth (RONW), Earning Efficiency in which Percentage Growth in Net profit, Net Interest Margin (NIM), Non Interest Income / Total funds (NII/TF) and in Liquidity, Loans to Deposit Ratio (LDR), Liquid Assets / Total Assets (LA/TA) are been evaluated. The study brings out the competitiveness, effectiveness of selected major Commercial banks and in last conclusive remarks been given.

Keywords


CAMEL, CA, CAR, DER, LDR, ADV/AST, AQ, NNPA, TA/TD, PPE, RONW, NIM, NII/TF, LA/TA, PAT, JEL Codes: G18, G21, G24, G29, G30, N20, F30

References