A STUDY ON FINANCIAL PERFORMANCE OF

SOUTH INDIAN BANK LTD

Submitted in partial fulfilment of the requirements
for the Award of the Degree of
Master of Business Administration of Bangalore University

By

TRESA MARIA FRANCIS

Reg. No. 08JJCM6056

Under the Guidance of

Dr. JUSTIN NELSON MICHAEL

KRISTU JAYANTI COLLEGE OF MANAGEMENT AND TECHNOLOGY

(Affiliated to Bangalore University)

K. Narayanapura, Kothanur P.O

Bangalore 77

2009-2010
 STUDENTS DECLARATION

I, TRESA MARIA FRANCIS, hereby declare that this project titled A STUDY
ON FINANCIAL PERFORMANCE OF SOUTH INDIAN BANK LTD , BANGALORE
submitted by me to the Department of Management of Bangalore University, in partial
fulfilment of requirement of MBA programme is a bonafide work carried out by me
under the guidance of Dr. JUSTIN NELSON MICHAEL. This has not been submitted
earlier to any other university or institution for the award of any degree / diploma /
certificate or published any time before.

TRESA MARIA FRANCIS

Reg. No. 08JJCM6056

Place : Bangalore
Date :
 KRISTU JAYANTI COLLEGE OF MANAGEMENT AND
TECHNOLOGY
(Affiliated to Bangalore University)
K. Narayanapura, Kothanur P.O
Bangalore - 560 077

CERTIFICATE FROM GUIDE & HEAD OF THE INSTITUTION

Certified that this project entitled A STUDY ON FINANCIAL PERFORMANCE

OF SOUTH INDIAN BANK LTD, BANGALORE submitted in partial fulfilment for the
award of MBA Degree of Bangalore University was carried out by TRESA MARIA
FRANCIS under the guidance of Dr. JUSTIN NELSON MICHAEL. This has not been
submitted to any other university or institution for the award of any degree/ diploma/
certificate.

Dr. Justin Nelson Michael Dr. Pious Thomas Rev. Fr.Josekutty P.D

(Guide) (MBA Co-ordinator ) (Principal)

Place : Bangalore

Date :
 ACKNOWLEDGEMENTS

At the completion of my final project, I am deeply grateful to many people who extended
me their helping hand. First of all I raise my heart and mind in thanks to the Almighty
God who is always leading and guiding me in all my endeavours.

I express my heartfelt gratitude to Fr. Josekutty P. D, Principal, Kristu Jayanti

College, for giving me an opportunity to carry out the project on this topic.

I would also like to thank our MBA Coordinator Dr. Pious Thomas Department of
Management Studies, Kristu Jayanti College, for giving me with proper guidance and
valuable suggestions.

I express my thanks to Dr. Justin Nelson Michael who provided me the opportunity to
do my project under his guidance and for the help.

I am also grateful to all the Faculty members of the Department of Management Studies,
Kristu Jayanti College, whose encouragement and support were a source of inspiration to
me.

I affirm my renewed thanks to everyone who have helped me one way or the other to
complete this project. I deeply acknowledge every service with gratitude.

Tresa Maria Francis

Reg. No. 08JJCM6056
Kristu Jayanti College
Bangalore
 Table of contents

Chapte
Particulars Page No.
r
Executive Summary
I Introduction 01
II Research Design 08
III Profiles 12
IV Analysis and Interpretation 46
V Findings, Suggestion & Conclusion 78
Annexure 84
Bibliography 85
 EXECUTIVE SUMMARY

On the growing influence of globalization on the Indian banking industry, the financial
sector would be opened up for greater international competition under WTO. Opening up
of the financial sector from 2005, under WTO, would see a number of global banks
taking large stakes and control over banking entities in the country.

A size based comparison of Indian banks with the global players revealed that except
State Bank of India, no other bank could find a place in the top 250 banks of the world. It
has therefore become high time for the Indian banks to grow stronger to withstand the
competition from the foreign giants. Indian banks may foresee a potential threat of being
taken over.
Various ambitious domestic banks are working on possible permutation and combinations
to enable them to become significant players in the market and as a by-product, for
reducing the cut throat competition in the market one of the major tool is the mergers in
the banking industry. The Government of India along with the RBI provides all the
support to the banks to fulfill their vision to see at least three to four banks in the top 100
of the world.

After liberalization, Indian banks have grown dramatically in terms of size, efficiency
and number of products offered. The entry of competitive private and foreign players,
interest rate de-regulation and ever increasing consumerism have resulted in a dynamic
environment in which banks will have to operate. In the Indian economy which is just
opening up, the risk of increased capital market volatility is on the increase. This makes
predicting the interest rate movements difficult. For the banking sector, unexpected
interest rate fluctuations have an impact on the Net Interest Income (NII) of the banks
exposing them to Interest Rate Risks.

The common size statement, balance sheet and income statement of the bank are shown
in analytical percentages. The figures are shown as percentages of the total assets and
liabilities. The totals are taken as 100 and different assets are expressed as percentage of
the total. Similarly various liabilities are taken as a part of total liabilities.
These statements are also known as component percentage or 100% statements because
every individual item is stated as a percentage of the total 100. The shortcoming in
comparative statements are trend percentages where changes in items that could not be
compared with the totals that have been covered up. The analyst is able to assess the
figures in relation to total values.

Statement of the problem

Besides the reserve bank of India, commercial banks are also contributing to the
economic development of the country. This is possible only when commercial banks are
financially sound and operationally efficient. How far the commercial banks are meeting
this expected role of financial assistance to the economy is to be studied.

This study has been confined to SOUTH INDIAN BANK a scheduled private bank.

Objective of the study

1. To study liquidity of the bank.

2. To study profitability of the bank.
3. To assess the operational efficiency of the bank as a whole.
4. To study financial stability of the bank.

Scope of the study

The study was conducted in SOUTH INDIAN BANK Kothanur branch Bangalore
Karnataka. The current study was conducted with the help of the published annual report
of the bank from financial year 2008 to 2009 and with personal contact with the
concerned authorities. The study highlights the variance between performances of one
year. The study gives an idea about the present financial position of the bank.

Methodology

Methodology is a systematic and logical study of an issue or problem or phenomenon

through scientific method. It is the process of systematically obtaining accurate to
significant pertinent questions by the scientific methods gathering and interpreting
information. This is a real time case study and for this purpose South Indian Bank
Kothanur branch has been chosen.
 Data collection methods/sources

The sources of data in this study are basically secondary in nature. Secondary data
published by South Indian Bank is used for the study. Secondary data was collected from
annual reports and websites of the bank.

Limitation of the study

The following are the limitation of the study:

1. Secondary data is used for the study. So limitation of secondary data is

applicable.
2. The research was conducted to get an overall view of the organization.
3. Approximations have been restored to where they obtained answers do not
synchronize with the past trend.
4. The study was limited to financial analysis of the bank.
5. Analysis is only based on the ratios.

Suggestions

Bank can further increase its net profit by reducing its operating expenses.
The bank has to maintain its growth trend by improving its services to its
customers
The bank can improve its deposits and also keep in mind to increase its
advances so that more interest can be earned.
As mentioned earlier in findings that about 4/5 th of income of bank come from
interest earned. The bank can increase other incomes also by investing more
money.
The bank has to reduce its expenditure on interest expended so as to increase
its net profit

List of Tables

Table No. Name of the Table Page

 No.
4.1 Common Size Statement 47
4.2 Ratio of interest earned to total income 52
4.3 Ratio of interest expended to total expenditure 54
4.4 Interest expended to interest earned ratio 56
4.5 Ratio of net profit to total income 58
4.6 Operating profit ratio 60
4.7 Dividend payout ratio 62
4.8 Fixed asset turnover ratio 64
4.9 Proprietors equity ratio 66
4.10 Earnings per share 68
4.11 Current ratio 70
4.12 Quick ratio 72
4.13 Debt equity ratio 74
4.14 Owners fund as % of total source 76

List of Graph

Page
Table No. Name of the Graph
No.
3.1 Indian Banking Industry The impact of Globalization & Liberalization 12
3.2 Functions of Commercial Bank 22
4.3 Ratio of interest earned to total income 53
4.4 Ratio of interest expended to total expenditure 55
4.5 Interest expended to interest earned ratio 57
4.6 Ratio of net profit to total income 59
4.7 Operating profit ratio 61
4.8 Dividend payout ratio 63
4.9 Fixed asset turnover ratio 65
4.10 Proprietors equity ratio 67
4.11 Earnings per share 69
4.12 Current ratio 71
4.13 Quick ratio 73
4.14 Debt equity ratio 75
4.15 Owners fund as % of total source 77