2012

Analysis Of Q4 2011 Banking Co.s Performance (Public Sector Vs Private Sector)

Banking Assignment - 2

Private Bank: Axis Bank Public Bank: Oriental Bank of Commerce

Prepared by: Sudhanshu Garg ,Abhishek Goel Sayantan Basak

Axis bank was the first of the new private banks to have begun operations in 1994, after the GOI allowed new private banks to be established. The Bank was jointly promoted by the administrators of UTI, LIC, GIC and other four PSU insurance companies, i.e. National Insurance Co Ltd., The New India Assurance Co. Ltd., The Oriental Insurance Co. Ltd. and United India Insurance Co. Ltd. The Bank as on 31st March, 2012 is capitalized to the extent of Rs. 413.20 Cr with the public holding at 54.08%. The Bank has a very wide network of more than 1600 branches and over 10000 ATMs as on 31st March, 2012 providing 24 hrs a day banking convenience to its customers.

1. Profitability:
Q4 FY 11 Q4 FY 12

(Amounts in Cr.)

3734 3151 1763 1020 1277 1892

Net Profit

Core Operating Profit

Operating Revenue

From the above Chart it is evident that: Net Profit has increased by 25.19 % because sales have increased by 39% YOY. There is an increase of 18.50% in operating revenue. Total Net Advances grew 19% YOY to `1,69,760 crores. Retail Advances grew by 35% YOY to 37,570 crores; constituted 22% of total advances, as compared to 19% at the end of Q4FY11

2. Net Interest Margin and Cost of Funds:

Net Interest Margin 5.56% Cost of Funds 6.45%

3.44%

3.55%

Q4 FY11

Q4 FY 12

From the above Chart it is evident that: In Q4 FY 12, Net Interest Margin stands at 3.55% i.e. Rs. 2146 Crores. Net interest income has shown an increase of 40% in 5 years CAGR.

3. Fee Income Composition:

Q4 FY 11 438 442 Q4 FY 12

(Amounts in Cr.)

377 312 255 249 100 117 19 Large & Mid Corprate Credit Treasury Agri & SME Banking 13 Retail Business

Capital Markets

From the above Chart it is evident that: There is an overall increase of 8% YOY in Fees income. Axis bank has earned Rs. 1327 cr. from fee in Q4FY12. If we see individually fees income from retail business has shown a maximum increase of 20.83% YOY There is a fall of 32% YOY on fees from capital markets. This can be due to fall in Capitals markets.

4. Stressed Assets and Net NPA:

Gross NPAs 1599 Net NPAs 1806

(Amounts in Cr.)

410

473

Q4 FY 11

Q4 FY 12

The increase in gap between Gross NPAs and Net NPAs shows the efficiency of the NPA department.

5. Treasury:
Q4 FY 11 128,855 81,258 Q4 FY 12

(Amounts in Cr.)

19 Forex Turnover

73

43

68

SLR & Money Market Trading

Forex & Derivatives Trading

There is a fall of 37% YOY in forex turnover, this can be due to rupee depreciation. There is an increase of 285% in SLR & Money market Trading.

OBC, Lahore based Public sector bank was established in 1980. The Bank has witnessed many ups and downs since its establishment. At one time, profit plummeted to Rs. 175 that prompted the owner of the bank, the Thapar House, to sell or close the bank. Then employees and leaders of the Bank came forward to rescue the Bank. At that time total working of the Bank was Rs. 483 Cr having 19th position among the 20 nationalised banks. Within a decade the bank turned into one of the most efficient and best performing banks of India and now, Rs. 2 Lacs Cr. as on 31st March 2010 making it the seventh largest PSB.

1. Profitability:
Q4 FY 11 Q4 FY 12
842

(Amounts in Cr.)

753

333

265

Net Profit

Core Operating Profit

Net Profit has decreased by 20.61 % because operating expenses has increased by 39.93% YOY.

2. Net Interest Margin and Cost of Funds:

Net Interest Margin Cost of Funds 7.08% 5.89%

2.98%

2.68%

Q4 FY11

Q4 FY 12

In Q4 FY 12, Net Interest Margin stands at 2.97%. i.e.1068.15 cr.

3. Fee Income Composition:

Q4 FY 11 3280 2415 934 26 Interest on Bills/Advances Interest on Investments 43 Q4 FY 12

(Amounts in Cr.)

785

179

219

Treasury

Commission Exchange & Brokerage

Overall there is an increase of 30.58% in Fees income. There is a fall of 81.59% in other interest income

4. Stressed Assets and Net NPA:

Gross NPAs 3232 2061 Net NPAs 3580

(Amounts in Cr.)

2459

Q4 FY 11

Q4 FY 12

There is an increase of 19.28% YOY in net NPA. This depicts the inefficiency
of the bank.

Bank has technically written off 932.88 cr. in Q4FY12 with an increase of
138.14% YOY

5. Core Business:
Q4 FY 11 155,964 Q4 FY 12

(Amounts in Cr.)

139,054

96,838

113,049

Gross Deposits

Gross Advances

There is an increase of 12.16% YOY in Gross deposits CD Ratio stands at 72.68% in Q4FY12 in comparison of 69.73% in Q4FY11. CD ratio gives an indication of a bank's dependence on borrowed funds to fund its credit growth.

Comparison Between the banks

Axis Bank (Q4FY12) Net Profit Net Interest Margin Fee Income growth Net NPA 1277 cr. 3.55% 8% 473 cr.

OBC (Q4FY12) 265 cr. 2.68 30.58% 2459 cr.

We have compared a private bank and a public bank in same scenario yet we can see a huge difference in the performance of the bank.

BIBLIOGRAPHY:
http://www.axisbank.com/download/IP-Q4-FY12.pdf http://www.axisbank.com/download/AFR-Q4-FY12.pdf http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/axisbank/AB 16 https://www.obcindia.co.in/obcnew/upload/obc/MainMenuEnglishLevel3_PRESENTATION_MARCH_2012.pdf https://www.obcindia.co.in/obcnew/upload/obc/MainMenuEnglishLevel3_AUDITED_FINANCIAL_RESULTS_-_31.03.2012.pdf http://www.moneycontrol.com/india/stockpricequote/bankspublicsector/orientalbankc ommerce/OBC Prowess software