PROJECT REPORT

ON
“ANALYSIS OF FINANCIAL
STATEMENT”
OF

ICICI Bank

Submitted to Kurukshetra University, Kurukshetra

In the partial fulfillment of
Award of the degree of
Master of Business Administration

Submitted by: Under the Guidance of:

XXXXXXX MR. ANKUR MAHAJAN

Lecturer, M.B.A,
Roll no. 4329 XX college, Place.
 CERTIFICATION LETTER

TO WHOM IT MAY CONCERN

This is to certify that the Project Report entitled “ANALYSIS OF FINANCIAL
STATEMENT OF ICICI BANK” has been completed by: XXXXXXX under my
supervision. To the best of my knowledge, this is his own work and he has not submitted
the same elsewhere for the award of any other degree or diploma.

I approve it for submission in the partial fulfillment of the requirement for the degree of
Master of Business Administration.

Date
Mr.XXXXXX
(Project Guide)
Place Lecturer M.B.A,
XXX College

ACKNOWLEDGEMENT
No task is single man’s effort .Any job in this world however trivial or tough cannot be
accomplished without the assistance of others. An assignment puts the knowledge and
experience of an individual to litmus test. There is always a sense of gratitude that one
likes to express towards the persons who helped to change an effort in a success. The
opportunity to express my indebtness to people who have helped me to accomplish this
task.

I deem it a proud privilege to extend my greatest sense of gratitude to my Project Guide

MR. ANKUR MAHAJAN (lecturer B.B.A) for the keen interest, inspiring guidance,
continuous encouragement, valuable suggestions and constructive criticism throughout
the pursuance of this report.

I am thankful to Coordinator sir DR. UTTAM CHAND for giving me the opportunity to
undertake the study. I am highly indebted to MR. DINESH JAMWAL (PROF.
REGIONAL CENTRE,H.P.U,SHIMLA) for sparing time from their busy schedule for
providing me with their able guidance at the time of need and helping me to achieve the
ultimate goal of the study. I would also like to thank MR. RAJ (Branch Manager,
ICICI Bank, Dharmshala) for their valuable support in helping me to gain this
opportunity of being associated with an organization of such esteem.

Last but not the least, it would be unfair if I don’t express my indebtness to my parents
and all my friends for their active cooperation which was of great help during the course
of my training project.
 PREFACE

In any organization, the two important financial statements are the Balance Sheet and
Profit & Loss Account of the business. Balance Sheet is a statement of financial position
of an enterprise at a particular point of time. Profit & Loss account shows the net profit or
net loss of a company for a specified period of time. When these statements of the last
few year of any organization are studied and analyzed, significant conclusions may be
arrived regarding the changes in the financial position, the important policies followed
and trends in profit and loss etc. Analysis and interpretation of financial statement has
now become an important technique of credit appraisal. The investors, financial experts,
management executives and the bankers all analyze these statements. Though the basic
technique of appraisal remains the same in all the cases but the approach and the
emphasis in the analysis vary. A banker interprets the financial statement so as to
evaluate the financial soundness and stability, the liquidity position and the profitability
or the earning capacity of borrowing concern. Analysis of financial statements is
necessary because it helps in depicting the financial position on the basis of past and
current records. Analysis of financial statements helps in making the future decisions and
strategies. Therefore it is very necessary for every organization whether it is a financial or
manufacturing, to make financial statement and to analyze it.

Table of content
Chapter PARTICULARS
no.
Acknowledgement
Preface
1. Introduction Of Banking
a. Introduction of banking………………….
b. History of banking in India………………
c. Banks in India……………………………
d. Fact files of banks in India………………
e. Indian banking industry………………….
2. Company’s Profile
a. Introduction to ICICI Bank…………
b. ICICI Bank today……………………
c. Business profile……………………...
d. Board of directors……………………
e. Board committee…………………….
f. Business objective……………………
g. Technology used in ICICI Bank……..
h. Products and services………………...
i. Awards and recognition………………
3. Research Methodology
a. Objective of study……………………
b. Importance of study………………….
c. Meaning of research…………………
d. Research problem……………………
e. Research design……………………...
f. Data collection method………………
g. Analysis and interpretation of data…..
h. Limitation of study…………………..
4. Financial Analysis
a. Introduction of the topic……………….
b. Method/Tools of financial analysis…….
c. Balance sheet of ICICI Bank…..
d. Profit and Loss Account of ICICI
Bank……………………………..
e. Financial statement analysis……………
1) Comparative financial
statement……………………….
2) Trend
analysis…………………….
3) Ratio
analysis……………………..

5. Findings ,Suggestions And

Conclusion……………………….

6. Bibliography…………………………………………
Chapter 1

INTRODUCTION OF BANKING
 INTRODUCTION OF BANKING

Definition Of Bank:

Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits
of money from the public, repayable on demand or otherwise and withdraw by cheque,
draft or otherwise."
-Banking Companies (Regulation) Act,1949

ORIGIN OF THE WORD “BANK”:-

The origin of the word bank is shrouded in mystery. According to one view point the
Italian business house carrying on crude from of banking were called banchi bancheri"
According to another viewpoint banking is derived from German word "Branck" which
mean heap or mound. In England, the issue of paper money by the government was
referred to as a raising a bank.

ORIGIN OF BANKING :

Its origin in the simplest form can be traced to the origin of authentic history. After
recognizing the benefit of money as a medium of exchange, the importance of banking
was developed as it provides the safer place to store the money. This safe place ultimately
evolved in to financial institutions that accepts deposits and make loans i.e., modern
commercial banks.

Banking system in India

Without a sound and effective banking system in India it cannot have a healthy
economy.The banking system of India should not only be hassle free but it should be able
to meet new challenges posed by the technology and any other external and internal
factors.
For the past three decades India's banking system has several outstanding achievements to
its credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even
to the remote corners of the country. This is one of the main reasons of India's growth
process.
  HISTORY OF BANKING IN INDIA

Banking in India has its origin as early or Vedic period. It is believed that the transitions
from many lending to banking must have occurred even before Manu, the great Hindu
furriest, who has devoted a section of his work to deposit and advances and laid down
rules relating to the rate of interest. During the mogul period, the indigenous banker
played a very important role in lending money and financing foreign trade and commerce.

During the days of the East India Company it was the turn of agency house to carry on
the banking business. The General Bank of India was the first joint stock bank to be
established in the year 1786. The other which followed was the Bank of Hindustan and
Bengal Bank. The Bank of Hindustan is reported to have continued till 1906. While other
two failed in the meantime. In the first half of the 19th century the East India Company
established there banks, The bank of Bengal in 1809, the Bank of Bombay in 1840 and
the Bank of Bombay in1843. These three banks also known as the Presidency banks were
the independent units and functioned well. These three banks were amalgamated in 1920
and new bank, the Imperial Bank of India was established on 27th January, 1921.

With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial
Bank of India was taken over by the newly constituted SBI. The Reserve Bank of India
(RBI) which is the Central bank was established in April, 1935 by passing Reserve bank
of India act 1935. The Central office of RBI is in Mumbai and it controls all the other
banks in the country.

In the wake of Swadeshi Movement, number of banks with the Indian management were
established in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank
of Baroda Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were
nationalized and on 15th April 1980, 6 more commercial private sector banks were taken
over by the government.

The first bank in India, though conservative, was established in 1786. From 1786 till
today,the journey of Indian Banking System can be segregated into three distinct phases.
They areas mentioned below:

 Early phase from 1786 to 1969 of Indian Banks

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector

Reforms.

 New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
To make this write-up more explanatory, I prefix the scenario as Phase I, Phase II and
Phase III.

Phase I

The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency
Banks.

These three banks were amalgamated in 1920 and Imperial Bank of India was established
which started as private shareholders banks, mostly Europeans shareholders.

In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. Reserve Bank of India came in 1935.

During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority.

During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.

Phase II

Government took major steps in this Indian Banking Sector Reform after independence.
In1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. It formed State Bank of India to act as the
principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.

Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th
July,1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country
was nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.
The following are the steps taken by the Government of India to Regulate
BankingInstitutions in the Country:

 1949: Enactment of Banking Regulation Act.

 1955: Nationalization of State Bank of India.
 1959: Nationalization of SBI subsidiaries.
 1961: Insurance cover extended to deposits.
 1969: Nationalization of 14 major banks.
 1971: Creation of credit guarantee corporation.
 1975: Creation of regional rural banks.
 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.

Phase III

This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimham, a committee was
set up by his name which worked for the liberalization of banking practices.

The country is flooded with foreign banks and their ATM stations. Efforts are being put
to give a satisfactory service to customers. Phone banking and net banking is introduced.
The entire system became more convenient and swift. Time is given more importance
than money.

The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries
suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,
the capital account is not yet fully convertible, and banks and their customers have
limited foreign exchange exposure.
 Chapter 2
Type Private
BSE & NSE:ICICI,
COMPANY’S PROFILE
NYSE: IBN

Industry Banking
Insurance
Capital Markets and allied
industries

Founded 1955 (as Industrial Credit and

Investment Corporation of India)

Headquarters ICICI Bank Ltd.,

ICICI Bank Towers,
Bandra Kurla,
Mumbai, India

K.V. Kamath,Chairman
Chanda Kochhar, Managing
Director & CEO
Key people Sandeep Bakhshi, Deputy Managing
Director
N.S. Kannan, Executive Director &
CFO
K. Ramkumar, Executive Director
Sonjoy Chatterjee, Executive
Director

Products Loans, Credit Cards, Savings,

Investment vehicles, Insurance etc.

Revenue ▲ USD 15.06 billion

Total assets ▲ USD 120.61 billion (at March

31, 2009.)

Website www.icicibank.com
 INTRODUCTION TO ICICI BANK

The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives
of Indian industry, with the objective of creating a development financial institution for
providing medium-term and long-term project financing to Indian businesses.
Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited. ICICI
emerges as the major source of foreign currency loans to Indian industry. Besides funding
from the World Bank and other multi-lateral agencies, ICICI was also among the first
Indian companies to raise funds from international markets.

ICICI BANK TODAY

ICICI Bank (BSE: ICICI) (formerly Industrial Credit and Investment Corporation of
India) is India's largest private sector bank by market capitalisation and second largest
overall in terms of assets. Trotal assets of Rs. 3,562.28 billion (US$ 77 billion) at
December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the nine
months ended December 31, 2009. The Bank also has a network of 1,640+ branches (as
on February 11, 2010) and about 4,721 ATMs in India and presence in 18 countries, as
well as some 24 million customers (at the end of July 2007). ICICI Bank offers a wide
range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and specialised subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and asset
management. ICICI Bank is also the largest issuer of credit cards in India. ICICI Bank
has got its equity shares listed on the stock exchanges at Kolkata and Vadodara, Mumbai
and the National Stock Exchange of India Limited, and its ADRs on the New York Stock
Exchange (NYSE). The Bank is expanding in overseas markets and has the largest
international balance sheet among Indian banks. ICICI Bank now has wholly-owned
subsidiaries, branches and representatives offices in 18 countries, including an offshore
unit in Mumbai. This includes wholly owned subsidiaries in Canada, Russia and the UK
(the subsidiary through which the HiSAVE savings brand is operated), offshore banking
units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium, Hong
Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia,
Indonesia, South Africa, Thailand, the United Arab Emirates and USA. Overseas, the
Bank is targeting the NRI (Non-Resident Indian) population in particular.

ICICI reported a net profit of Rs. 3,758 crore (US$ 741 million) for FY2009. The bank's
Current and savings account (CASA) ratio increased to 28.7% at March 31, 2009 from
26.1% at March 31, 2008. Increase of Rs. 5,286 crore in CASA deposits in quarter ended
March 31,2009.
ICICI Bank is one of the Big Four Banks of India with State Bank of India, Axis Bank
and HDFC Bank

ICICI Bank Group

 BUSINE
SS PROFILE
Products & Services

Personal Banking

• Deposits
• Loans
• Cards
• Investments
• Insurance
• Demat Services
• Wealth Management

NRI Banking

• Money Transfer
• Bank Accounts
• Investments
• Property Solutions
• Insurance
 • Loans

Business Banking

• Corporate Net Banking

• Cash Management
• Trade Services
• FXOnline
• SME Services
• Online Taxes
• Custodial Services

Board of Directors

 Board Members

Mr. K. V. Kamath, Chairman

....................................................
Mr. Sridar Iyengar
....................................................
Mr. Homi R. Khusrokhan
....................................................
Mr. Lakshmi N. Mittal
................................................
Mr. Narendra Murkumbi
.................................................
Dr. Anup K. Pujari
.................................................
Mr. Anupam Puri
..................................................
Mr. M.S. Ramachandran
..................................................
Mr. M.K. Sharma
..................................................
Mr. V. Sridar
Prof. Marti G. Subrahmanyam
.........................................................
Mr. V. Prem Watsa
.........................................................
Ms. Chanda D. Kochhar,
Managing Director & CEO
.........................................................
Mr. Sandeep Bakhshi,
Deputy Managing Director
 .........................................................
Mr. N. S. Kannan,
Executive Director & CFO
.........................................................
Mr. K. Ramkumar,
Executive Director
.........................................................
Mr. Sonjoy Chatterjee,
Executive Director

 Board committee

Board Governance Remuneration &

Audit Committee
Nomination Committee
Mr. Sridar Iyengar, Chairman Mr. M. K. Sharma, Chairman
Mr. M. K. Sharma, Alternate Chairman Mr. K. V. Kamath
Mr. Narendra Murkumbi Mr. Anupam Puri
Mr. V. Sridar Prof. Marti G. Subrahmanyam

Corporate Social Responsibility Customer Service Committee

Committee

Mr. M. K. Sharma, Chairman Mr. K. V. Kamath, Chairman

Dr. Anup K. Pujari Mr. Narendra Murkumbi
Ms. Chanda D. Kochhar Dr. Anup K. Pujari
Mr. M. S. Ramachandran
Mr. M.K. Sharma
Ms. Chanda D. Kochhar

Credit Committee Fraud Monitoring Committee

Mr. K. V. Kamath, Chairman Mr. M. K. Sharma, Chairman

Mr. Narendra Murkumbi Mr. K. V. Kamath
Mr. M. S. Ramachandran Mr. M .K. Mr. Narendra Murkumbi
Sharma Ms. Chanda D. Kochhar
Ms. Chanda D. Kochhar Mr. Sandeep Bakhshi

Risk Committee Share Transfer & Shareholders'/

Investors' Grievance Committee

Mr. K. V. Kamath, Chairman Mr. M. K. Sharma, Chairman

Mr. Sridar Iyengar Mr. Narendra Murkumbi
Dr. Anup K. Pujari Mr. N. S. Kannan
Prof. Marti G. Subrahmanyam
Mr. V. Prem Watsa
Ms. Chanda D. Kochhar
Committee of Executive Directors
Ms. Chanda D. Kochhar, Chairperson
Mr. Sandeep BakhshiMr. N. S. Kannan
Mr. K. Ramkumar
Mr. Sonjoy Chatterjee

BUSINESS OBJECTIVE

 Vision
To be the leading provider of financial services in India and a major global bank.

 Mission
• We will leverage our people, technology, speed and financial capital to: be the
banker of first choice for our customers by delivering high quality, world-class
service.
• Expand the frontiers of our business globally.
• Play a proactive role in the full realisation of India’s potential.
• Maintain a healthy financial profile and diversify our earnings across businesses
and geographies.
• Maintain high standards of governance and ethics.
• Contribute positively to the various countries and markets in which we operate.
• Create value for our stakeholders.
 PRODUCTS AND SERVICES
PERSONAL BANKING
Loan Product Deposit Product Investment &
Insurance
• Auto loan • Savings A/C • Mutual Funds
• Loan against • Current A/C • Bonds
security • Fixed Deposits • Knowledge Centre
• Loan against • Demat A/C • Insurance
property • Safe Deposit • General And Health
• Personal loan Lockers Insurance
• Credit card • Equity And
• 2- wheeler loan Derivatives
• Commercial • Mudra Gold Bar
vehicles finance
• Home loans
• Retail business
banking
• Tractor loan
• Working capital
finance
• Construction
• Equipment finance
• Health care finance
• Education loan
• Gold loan
Cards Payment Access To Bank
Services
• Credit Card • Net Safe • Net Banking
 • Debit Card • Merchant • One View
• Prepaid Card • Prepaid Refill • InstaAlert Mobile
• Bill Pay Banking
-------------------------------- • Visa Bill Pay • ATM
Forex services • InstaPay • Phone Banking
-------------------------------- • Direct Pay • Email Statements
• Product And • VisaMoney • Branch Network
Services Transfers
• Trade Services • E-Monies Electronic
• Forex Service Funds Transfer
Branch Locater • Online Payment Of
• RBI Guidelines Direct Tax

WHOLESALE BANKING

Corporate Small and Financial Institutions

Medium and
Enterprises Trusts

• Funded Services • Funded Services BANKS

• Non Funded • Non Funded
Services Services • Clearing Sub-Membership
• Value Added • Specialized Services • RTGS Sub-Membership
Services • Value Added • Fund Transfer
• Internet Banking Services • ATM Tie- Ups
• Internet Banking • Corporate Salary A/C
• Tax Collection

Financial Institutions

Mutual Funds

Stock Brockers

Insurance Companies

Commodities Business

Trusts
 NRI SERVICES

Accounts & Deposits Remittances

• Rupee Saving A/C • North America

• Rupee Current A/C • Uk
• Rupee Fixed Deposits • Europe
• Foreign Currency Deposits • South East Asia
• Accounts For Returning Indians • Middle East
• Africa
• Others
Quick Remit
India Link
Check Lock Box
Telegraphic/ Wire Transfer
Fund Transfer Cheques/Dds/Tcs

Investment & Insurances Loans

• Mutual Funds • Home Loans

• Insurance • Loans Against Securities
• Private Banking • Loans Against Deposits
• Portfolio Investment Scheme • Gold Card Credit

Payment Services Access To Bank

• Net Safe • Net Banking

• Bill Pay • One View
• InstaPay • InstaAlert
• DirectPay • ATM
• VisaMoney • Phone Banking
• Online Donation • Email Statements
• Branch Networks

Chapter 3
RESEARCH METHODOLOGY
 Research methodology
The procedure adopted for conducting the research requires a lot of attention as it has
direct bearing on accuracy, reliability and adequacy of results obtained. It is due to this
reason that research methodology, which we used at the time of conducting the research,
needs to be elaborated upon. It may be understood as a science of studying how research
is done scientifically. So, the research methodology not only talks about the research
methods but also considers the logic behind the method used in the context of the
research study. Research Methodology is a way to systematically study and solve the
research problems. If a researcher wants to claim his study as a good study, he must
clearly state the methodology adapted in conducting the research the research so that it
way be judged by the reader whether the methodology of work done is sound or not.

The Research Methodology here includes:-

 Objective of study

 Meaning of Research.

 Research Problem.

 Research Design.

 Data Collection method.

 Analysis and interpretation of Data

 Limitation of study
OBJECTIVE OF THE STUDY
Objectives are the ends that states specifically how goal be achieved. Every study must
have an objective for which all the efforts have been done. Without objective no research
can be conducted and no result can be obtained. On the basis of objective all the research
process is followed. Objectives are the main aspect of every study. The objective of the
study
gives direction to go through the research problem. It guides the researcher and keeps him
on track. I have two objectives regarding my research project. These are shown below :-
1. Primary objective
2. Secondary objective

1. Primary objective :-
1) To study the software used in ICICI Bank.
2) To analyse the financial statements of the corporation to assess it’s
true financial position by the use of ratios.

2. Secondary objective :-
1) To find out the shortcomings in ICICI Bank.
2) To see whether ICICI Bank is going well or not in different areas.

IMPORTANCE OF THE STUDY

• By “FINANCIAL PERFORMANCE ANALYSIS OF ICICI Bank” we would be

able to get a fair picture of the financial position of ICICI Bank.

• By showing the financial performance to various lenders and creditors it is

possible to get credit in easy terms if good financial condition is maintained in the
company with assets outweighing the liabilities.

• Protecting the property of the business.

 • Compliances with legal requirement.

Meaning of Research:
Research is defined as “a scientific and systematic search for pertinent information on a
specific topic”. Research is an art of scientific investigation. Research is a systematized
effort to gain now knowledge. It is a careful investigation or inquiry especially through
search for new facts in any branch of knowledge. Research is an academic activity and
this term should be used in a technical sense. Research comprises defining and redefining
problems, formulating hypothesis or suggested solutions. Making deductions and
reaching conclusions to determine whether they if the formulating hypothesis. Research is
thus, an original contribution to the existing stock of knowledge making for its
advancement. The search for knowledge through objective and systematic method of
finding solutions to a problem is research.

Research Problem
The first step while conducting research is careful definition of Research Problem. “To
ERR IS THE HUMAN” is a proverb which indicates that no one is perfect in this world.
Every researcher has to face many problemswhich conducting any research that’s why
problem statement is defined to know which type of problems a researcher has to face
while conducting any
study. It is said that,
“Problem well defined is problem half solved.”

Basically, a problem statement refers to some difficulty, which researcher

experiences in the context of either a theoretical or practical situation and
wants to obtain the solution for the same.

The problem statement here is:-

“TOMAKE A FINANCIAL ANALYSIS OF FINANCIAL

STATEMENTS OF ICICI BANK”

Research Design
A research designs is the arrangement of conditions for collection and analysis data in a
manner that aims to combine relevance to the research purpose with economy in
procedure. Research Design is the conceptual structure with in which research in
conducted. It constitutes the blueprint for the collection measurement and analysis of
data. Research Design includes and outline of what the researcher will do form writing
the hypothesis and it operational implication to the final analysis of data. A research
design is a framework for the study and is used as guide in collection and analyzing the
data. It is a strategy specifying which approach will be used for gathering and analyzing
the data. It also include the time and cost budget since most studies are done under these
two cost budget since most studies are done under theses tow constraints. The design is
such studies must be rigid and not flexible and most focus attention on the following:-

 What is the study about?

 Why is the study being made?
 Where will the study be carried out?
 What type of data is required?
 Where can be required data be found?
 What period of time will the study include?
 What will be sample design?
 What techniques of data collection will be used?
 How will the data be analyzed?
 In what style will the report be prepared?

TYPES OF RESEARCH DESIGN :

 EXPERIMENTAL RESEARCH DESIGN
 EXPLORATORY RESEARCH DESIGN
 DESCRIPTIVE& DIAGNOSTIC RESEARCH

Exploratory Research Design: This research design is preferred when researcher has a
vague idea about the problem the researcher has to explore the subject.

Experimental Research Design – The research design is used to provide a strong basis
for the existence of casual relationship between two or more variables.

Descriptive Research Design – It seeks to determine the answers to who, what, where,
when and how questions. It is based on some previous understanding of the matter.

Diagnostic Research Design It determines the frequency with which something occurs
or its association with something else.

RESEARCH DESIGN USED IN THE STUDY:

Descriptive research design is used in this study because it will ensure the minimization
of bias and maximization of reliability of data collected. Descriptive study is based on
some previous understanding of the topic. Research has got a very specific objective and
clear cut data requirements The researcher had to use fact and information already
available through financial statements of earlier years and analyse these to make critical
evaluation of the available material. Hence by making the type of the research conducted
to be both Descriptive and Analytical in nature. From the study, the type of data to be
collected and the procedure to be used for this purpose were decided.

Data Collection Method

The process of data collection begins after a research problem has been
defined and research design ahs been chalked out. There are two types of
data –

PRIMARY DATA -
It is first hand data, which is collected by researcher itself. Primary data is collected by
various approaches so as to get a precise, accurate, realistic and relevant data. The main
tool in gathering primary data was investigation and observation. It was achieved by a
direct approach and observation from the officials of the company.

SECONDARY DATA - it is the data which is already collected by someone else.

Researcher has to analyze the data and interprets the results. It has always been important
for the completion of any report. It provides reliable, suitable, adequate and specific
knowledge.

TYPE OF DATA USED IN THE STUDY

The required data for the study are basically secondary in nature and the data are
collected from

 The audited reports of the company.

 INTERNET – which includes required financial data collected form ICICI Bank’s
official website i.e www.icici.com and some other websites on the internet for the
purpose of getting all the required financial data of the bank and to get detailed
knowledge about ICICI Bank for the convenience of study.
 Brouchers of ICICI Bank.
 The valuable cooperation extended by staff members and the branch manager of
ICICI bank,dharmshala contributed a lot to fulfill the requirements in the
collection of data in order to complete the project.

Methods of data analysis

The data collected were edited, classified and tabulated for analysis. The analytical tools
used in this study are:

ANALYTICAL TOOLS APPLIED:

The study employs the following analytical tools:

1. Comparative statement.
2. Trend Percentage.
3. Ratio Analysis.
4. Cash Flow Statement.

Limitations of study

 Difficulty in data collection.

 Limited knowledge about the bank in the initial stages.
 Branch manager was reluctant for giving financial data of the
bank.
 The analysis and interpretation are based on secondary data
contained in the published annual reports of ICICI Bank for the
study period.
 Due to the limited time available at the disposable , the study has
been confined for a period of 5 years (2005-2009).
 Ratio itself will not completely show the company’s good or bad
financial position.
 Inter firm comparison was not possible due to the non
availability of competitors data.
 The study of financial performance can be only a means to know
about the financial condition of the company and cannot show a
through picture of the activities of the company
.
Chapter 4

FINANCIAL ANALYSIS
INTRODUCTION OF THE TOPIC

Meaning Of Financial Statements

Financial statements refer to such statements which contains financial information about
an enterprise. They report profitability and the financial position of the business at the
end of accounting period. The team financial statement includes at least two statements
which the accountant prepares at the end of an accounting period. The two statements are:
-

• The Balance Sheet

• Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors
the financial position on a particular date in terms of the structure of assets, liabilities and
owners equity, and so on and the Profit And Loss account shows the results of operations
during a certain period of time in terms of the revenues obtained and the cost incurred
during the year. Thus the financial statement provides a summarized view of financial
positions and operations of a firm.

Meaning Of Financial Analysis

The term financial analysis is also known as ‘analysis and interpretation of financial
statements’ refers to the process of determining financial strength and weakness of the
firm by establishing strategic relationship between the items of the Balance Sheet, Profit
and Loss account and other operative data.
The first task of financial analysis is to select the information relevant to the decision
under consideration to the total information contained in the financial statement. The
second step is to arrange the information in a way to highlight significant relationship.
The final step is interpretation and drawing of inference and conclusions. Financial
statement is the process of selection, relation and evaluation.
Features of Financial Analysis

o To present a complex data contained in the financial statement in simple and

understandable form.

o To classify the items contained in the financial statement in convenient and

rational groups.

o To make comparison between various groups to draw various conclusions.

Purpose of Analysis of financial statements

 To know the earning capacity or profitability.

 To know the solvency.

 To know the financial strengths.

 To know the capability of payment of interest & dividends.

 To make comparative study with other firms.

 To know the trend of business.

 To know the efficiency of mgt.

 To provide useful information to mgt.

Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of

financial statements:-

 The analyst should acquaint himself with principles and postulated of accounting.
He should know the plans and policies of the management so that he may be able
to find out whether these plans are properly executed or not.

 The extent of analysis should be determined so that the sphere of work may be
decided. If the aim is find out. Earning capacity of the enterprise then analysis of
income statement will be undertaken. On the other hand, if financial position is to
be studied then balance sheet analysis will be necessary.

 The financial data be given in statement should be recognized and rearranged. It

will involve the grouping similar data under same heads. Breaking down of
 individual components of statement according to nature. The data is reduced to a
standard form.

 A relationship is established among financial statements with the help of tools &
techniques of analysis such as ratios, trends, common size, fund flow etc.

 The information is interpreted in a simple and understandable way. The

significance and utility of financial data is explained for help in decision making.

 The conclusions drawn from interpretation are presented to the management in the
form of reports.

 Types Of Financial Analysis

There are different ways of analysis the financial statements:

1. On The Basis Of Process Of Analysis

a) Horizontal Analysis: This is used when the financial statement of a number of

years are to be analysed. Such analysis indicates the trends and the increase or
decrease in various items not only in absolute figures but also in percentage form.
This analysis indicates the strengths and weaknesses of the firm. This analysis is
also called as dynamic analysis because it also shows the trend of the business.

b) Vertical Analysis : This is used when financial statements of a particular year or

on a particular date are analyzed. For this type of analysis we generally use
common size statements and the ratio analysis. It involves a study of quantitative
relationship among various items of balance sheet and profit and loss account.
This type of analysis is static analysis because this is based on the financial results
of one year. Vertical analysis is useful when we have to compare the performance
of different departments of the same company.

Among these two types of analysis, horizontal analysis is more useful because it
brings out more clearly the trends of working of a firm. This gives us more concrete
bases for future planning.

2. On The Basis Of Information Available

a) Internal Analysis: This analysis is based on the information available to the

business firm only .Hence internal analysis is made by the management. Internal
analysis is more reliable and helpful for financial decisions.

b) External Analysis : This analysis is made on the basis of published

statements,reports and informations. This analysis is made by external parties
such as creditors,investors,banks,financial analysis etc. external analysis is less
 reliable in comparison to internal analysis because of limited and often incomplete
information.

3. On The Basis Of Number Of Firms

a) Inter-Firm Analysis : When financial analysis of two or more companies or

firms are analyzed and compared over a number of accounting period, it is called
inter-firm analysis.

b) Intra -Firm Analysis : intra-firm analysis is concerned with the analysis of

financial performance of different units or departments or segments of the same
enterprise or company. Similarly when financial statements of two or more years of the
same firm are analyzed and compared it is also called as intra-firm analysis.

4. On The Basis Of Objectives

a) Accounting Analysis: Accounting analysis is analysis of past financial performance

and involves examining how generally accepted accounting principles and conventions
have been applied in arriving at the values of assets, liabilities, revenues and expenses.

b) Prospective Analysis : Prospective analysis involves developing forecasted financial

statements keeping in view the changes that are likely to shape and affect the business
given the assumptions about these changes and the limitation of the forecasting technique
used. This is quite complicated analysis.

Methods/Tools Of Financial Analysis

A number of methods can be used for the purpose of analysis of financial statements.
These are also termed as techniques or tools of financial analysis. Out of these, and
enterprise can choose those techniques which are suitable to its requirements. The
principal techniques of financial analysis are:-

a. Comparative financial statements

b. Common-size statements
c. Trend analysis
d. Ratio analysis
e. Funds flow analysis
f. Cash flow analysis
g. Break even point analysis

a. Comparative Financial Statements:

When financial statements figures for two or mote years are placed side-side to facilitate
comparison, these are called ‘comparative Financial Statements’. Such statements not
only show the absolute figures of various years but also provide for columns to indicate
to increase ort decrease in these figures from one year to another. In addition, these
statements may also show the change from one year to another on percentage form. Such
cooperative statements are of great value in forming the opinion regarding the progress of
the enterprise.

Objectives purpose or significance of comparative financial statements

1.To simplify data

2.To make inter period/inter-firm comparison
3.To indicate the trends
4.To enable forecasting
5.To indicate the strengths and weaknesses of the firm
6.To compare the performance
7.To analyse expenses
8.To analyse profits

Tools for comparison of financial statements

Comparative financial statement is a tool of financial analysis that depicts change in each
item of the financial statement in both absolute amount and percentage term, taking the
item in preceding accounting period as base.

Comparison and analysis of financial statements may be carried out using the following
tools:

1.Comparative Balance Sheet : The comparative balance sheet shows increase and
decrease in absolute terms as well as percentages ,in various assets ,liabilities and capital.
A comparative analysis of balance sheets of two periods provides information regarding
progress of the business firm.
The main purpose of comparative balance sheet is to measure the short- term and long-
term solvency position of the business.

2. Comparative Income Statement : Comparative income statement is prepared by

taking figures of two or more than two accounting periods,to enable the analyst to have
definite knowledge about the progress of the business.Compartative income statements
facilitate the horizontal analysis since each accounting variable is analysed horizontally.

b. Common- Size Statements:

Common size statements are such statements in which the items of financial statements
are covered into percentage of common base. In common-size income statement, by
assuming net sales as 100(i.e %)and other individual items are converted as percentage of
this. Similarly, in common –size balance sheet ,total assets are assumed to be 100 (i.e %)
and individual assets are expressed as percentage.
Objectives of common size statements

1. Presenting the change in various items in relation to total assets or total liabilities
or net sales.
2. Establishing a relationship.
3. Providing a common base for comparison.

Types of common size statements

1. Common-Size Balance Sheet : A common –size balance sheet is a statement in

which total of assets or liabilities is assumed to be equal to 100 and all the figures
are expressed as percentage of the total. That is why it is known as percentage
balance sheet.
Common-size balance sheet facilitate the vertical analysis since each item of the
Balance Sheet is analyzed vertically.

2. Common-Size Income Statement: Common-size income statement is a

statement in which the figures of net sales is assumed to be equal to 100 and all
other figures of “profit and loss A/c” are expressed as percentage of net sales.this
statement facilitate the vertical analysiss since each accounting variable is
analyzed vertically. One can draw conclusion, regarding the behaviour of
expenses over period of time by examining these percentages.

c. Trend Analysis:

Trend percentage are very useful is making comparative study of the financial statements
for a number of years. These indicate the direction of movement over a long tine and help
an analyst of financial statements to form an opinion as to whether favorable or
unfavorable tendencies have developed. This helps in future forecasts of various items.
For calculating trend percentages any year may be taken as the ‘base year’. Each item of
bease year is assumed to be equal to 100 and on that basis the percentage of item of each
year calculated.

d. Ratio Analysis:

Meaning :
Absolute figures expressed in financial statements by themselves are meaningfulness.
These figures often do not convey much meaning unless expressed in relation to other
figures. Thus, it can be say that the relationship between two figures, expressed in
arithmetical terms is called a ratio.

“According to R.N. Anthony.”

“A ratio is simply one number expressed in terms of
another. It is found by dividing one number into the other.”

TYPES OF RATIOS

1. Proportion or Pure Ratio or Simple ratio.

2. Rate or so many Times.
3. Percentage
4. Fraction.

OBJECTS AND ADVANTAGES OR USES OF RATIO

ANALYSIS

1. Helpful in analysis of financial statements.

2. Simplification of accounting data.
3. Helpful in comparative study.
4. Helpful in locating the weak spots of the business.
5. Helpful in forecasting
6. Estimate about the trend of the business
7. Fixation of ideal standards
8. Effective control
9. Study of financial soundness.

LIMITATION OF RATIO ANALYSIS

1. False accounting data gives false ratios
2. Comparisons not possible of different firms adopt different
3. accounting policies.
4. Ratio analysis becomes less effective due to price level
5. change
6. Ratios may be misleading in the absence of absolute data.
7. Limited use of a single Ratio.
8. Window-Dressing
9. Lack of proper standards.
10. Ratio alone are not adequate for proper conclusions
11. Effect of personal ability and bias of the analyst.
CLASSIFICATION OF RATIOS
In view of the financial management or according to the tests satisfied,
various ratios have been classifieds as below:

Liquidity Ratios : These are the ratios which measure the short-term solvency or
financial position of a firm. These ratios are calculated to comment upon the short-term
paying capacity of a concern or the firm’s ability to meet its current obligations.
Long –Term Solvency and Leverage Ratios : Long-term solvency ratios convey a
firm’s ability to meet the interest cost and repayment schedules of its long-term
obligation e.g. Debit Equity Ratio and Interest Coverage Ration. Leverage Ratios.

Activity Ratios: Activity ratios are calculated to measure the efficiency with which the
resource of a firm have been employed. These ratios are also called turnover ratios
because they indicate the speed with which assets are being turned over into sales e.g.
debtors turnover ratio.

Profitablity Ratios: These ratios measure the results of business operations or overall
performance and effective of the firm e.g. gross profit ratio, operating ratio or capital
employed. Generally, two types of profitability ratios are calculated.
(a) In relation to Sales, and
(b)In relation in Investment

FUNCTIONAL CLASSIFICATION IN VIEW OF

FINANCIAL MANAGEMENT OR CLASSIFICATION
ACCORDING TO TESTS

Liquidity Ratios Long-term Activity Ratios Profitability

Solvency and Ratios
Leverage Ratios
-Current Ratio Financial Operating Inventory Turnover In Relation to Sales.
-Liquid Ratio Composite Ratio. Gross Profit Ratio.
(Acid) Test or -Debt. Equity Debtors Turnover Operating Ratio.
Quick Ratio. Ratio Ratio Operating Profit
-Absolute liquid or -Debt to Total Fixed Assets Ratio.
-Cash Ratio. Capital Ratio Turnover Ratio Net Profit Ratio.
-Debtors -Interest Total Asset Turnover Expenses Ratio
Turnover Ratio Coverage Ratio Ratio In relation to
-Creditors Turnover -Capital Gearing Working Capital investments
Ratio Ratio Turnover Ratio. Return on
-Inventory Turnover Payables Turnover Investments.
ratio Ratio Return on capital.
Capital Employed Return on Equity
Turnover Ratio Capital.
Return on total
Resources
Earning per share.
Price Earning Ratio.

CASH-FLOW STATEMENT
A cash – flow statement is a statement showing inflows (receipts) and
outflows (payments) of cash during a particular period. In other words, it is a
summary of sources and applications of each during a particular span of
time.

Objectives of Cash Flow Statement :

1. Useful for Short-Term Financial Planning.

2. Useful in Preparing the Cash Budget.
3. Comparison with the Cash Budget.
4. Study of the Trend of Cash Receipts and Payments.
5. It explains the Deviations of Cash from Earnings.
6. Helpful in Ascertaining Cash Flow from various Separately.
7. Helpful in Making Dividend Decisions.
BALANCE SHEET OF ICICI BANK LTD.
As On Mar 2006,Mar 2007, Mar 2008, Mar2009, Mar2010. (Rs. In
crores)
2006 2007 2008 2009 2010
CAPITAL
AND
LIABILITIES:
Total Share 1086.75 1239.83 1249.34 1462.68 1463.29
Capital
Equity Share 736.75 889.83 899.34 1112.68 1113.29
Capital
Share 0.02 0.00 0.00 0.00 0.00
Application
Money
Preference Share 350.00 350.00 350.00 350.00 350.00
Capital
Reserves 11813.20 21316.16 23413.92 45357.53 48419.73
Revaluation 0.00 0.00 0.00 0.00 0.00
Reserves
Net Worth 12899.97 22555.99 24663.26 46820.21 49883.02
Deposits 99818.78 165083.17 230510.19 244431.05 218347.82
Borrowings 33544.50 38521.91 51256.03 65648.43 67323.69
Total Debt 146263.25 226161.17 306429.48 356899.69 335554.53
Other Liabilities 21396.17 25227.88 38228.64 42895.39 43746.43
And Provisions
Total Liabilities 167659.42 251388.95 344658.12 399795.08 379300.96

ASSETS:
Cash And 6344.90 8934.37 18706.88 29377.53 17536.33
Balances With
RBI
Balances With 6585.07 8105.85 18414.45 8663.60 12430.23
Banks,Money At
Call
Advances 91405.15 146163.11 195865.60 225616.08 218310.85
Investments 50487.35 71547.39 91257.84 111454.34 103058.31
Gross Block 5525.65 5968.57 6298.56 7036.00 7443.71
Accumulated 1487.61 1987.85 2375.14 2927.11 3642.09
Depreciation
Net Fixed Assets 4038.04 3980.72 3923.42 4108.89 3801.62
Capital Work In 96.30 147.94 189.66 0.00 0.00
Progress
Other Assets 8702.59 12509.57 16300.26 20574.63 24163.62
Total Assets 167659.40 251388.95 344658.11 399795.07 379300.96

Contingent 97507.79 119895.78 177054.18 371737.36 803991.92

liabilities
Bills for 9803.67 15025.21 22717.23 29377.55 36678.71
collection
Book 170.35 249.55 270.37 417.64 445.17
value(Rs.)
EPS 27.22 28.55 34.59 37.37 33.78
No. of 736716094 889823901 899266672 1112687495 1113250642
equity shares
PROFIT AND LOSS ACCOUNT OF ICICI BANK LTD.
For The Year Ended Mar2006,Mar2007,Mar2008,Mar2009,Mar2010 (Rs. In
Crores)
2006 2007 2008 2009 2010
INCOME:
Interest Earned 9409.90 13784.49 22994.29 30788.34 31092.55
Other Income 3416.14 4983.14 5929.17 8810.77 7603.72
Total Income 12826.04 18767.63 28923.46 39599.11 38696.27
EXPENDITURE:
Interest Expended 6570.89 9597.45 16358.50 23484.24 22725.93
Operating 3299.15 4479.51 6690.56 8154.18 7045.11
Expenses
Total Expenses 9870.04 14076.96 23049.06 31638.42 29771.04
Operating Profit 2956 4690.67 5874.40 7960.69 8925.23
Other Provision 428.80 1594.07 2226.36 2904.59 3808.26
And Contigencies
Provision For Tax 522 556.53 537.82 898.37 1358.84
Net Profit 2005.20 2540.07 3110.22 4157.73 3758.13
Extraordinary 0.00 0.00 0.00 0.00 (0.58)
Items
Profit B/F 53.09 188.22 293.44 998.27 2436.32

Total 2058.29 2728.29 3403.66 5156.00 6193.87

Preference 0.00 0.00 0.00 0.00 0.00
Dividend
Equity Dividend 632.96 759.33 901.17 1227.70 1224.58
Corporate 90.10 106.50 153.10 149.67 151.21
Dividend Tax
Pershare Data
Eps(Rs.) 27.22 28.55 34.59 37.37 33.78
Equity 85.00 85.00 100.00 110.00 110.00
Dividend(%)
Book Value(Rs) 170.35 249.55 270.37 417.64 445.17
Appropriations
Transfer To 547.00 248.69 1351.12 1342.31 2008.42
Statutory Reserve
Transfer To Other 600.01 1320.34 0.00 0.01 0.01
 Reserve
Proposed 723.06 865.83 1054.27 1377.37 1375.79
Dividend/Transfer
To Govt
Balance C/F To 188.22 293.44 998.27 2436.32 2809.65
Balance Sheet
Total 2058.29 2728.30 3403.66 5156.01 6193.87

FINANCIAL STATEMENT ANALYSIS

Comparative Balance Sheet Of ICICI Bank From 2006-2007 To 2009-2010

(Rs. in crores)
PARTICULARS 2006-2007 2007-2008 2008-2009 2009-2010
Absolut % of Absolut % of Absolut % of Absolute % of
e chang e chang e chang change chang
change e change e change e e
CAPITAL
AND
LIABILITIES:
Capital 153.08 14 9.51 0.8 213.34 17 0.61 .04
Reserves and 9502.96 80 2097.76 10 21943.61 94 3062.2 7
surplus
Deposits 65264.39 65 65427.02 40 13920.86 6 (26083.23) (11)
Borrowings 4977.41 15 12734.12 33 14392.4 28 1675.26 2.5
Other Liabilities 3831.71 18 13000.76 51.5 4666.75 12 851.04 2
and Provisions

TOTAL CAPITAL 83729.55 50 93269.17 37 55136.96 16 (20494.12) (5.1)

AND LIABILITIES

ASSETS:
Investments 21060.04 42 19710.45 27.5 20196.5 22 (8396.03) (7.5)
Advances 54757.96 60 49702.49 34 29750.48 15 (7305.23 (3.25)
Fixed assets (57.32) (1.4) (57.3) (1.4) 185.47 5 (307.27) (7.5)
Capital Work In 51.64 54 41.72 28.2 (189.66) -100 0.00 0.00
Progress
Current assets 7917.23 37 23871.8 81 5194.17 10 (4485.58) (8)
TOTAL 83729.55 50 93269.16 37 55136.96 16 (20494.11) (5.1)
ASSETS:
Interpretation
 The capital of bank increased by 14% in 2006-07,0.8% in
2007-08,17% in 2009-09,and .04 % in 2009-10.This shows
that there is fluctuation in the rate of increase in the capital. In
2006-07 and 2008-09 the rate of increase in capital is more
than that of 2007-08 and 2009-10.
 There is a huge fluctuation in the rate of increase in reserves
and surplus also. This shows that bank is effectively utilizing
its reserves and surplus.

 In 2006-07 deposits increase by 65%,in 2007-08 it increased

by 40%,and an increase of 6% in 2008-09 in 2009-10
deposits fall by 11%.this shows that the bank has repayed its
deposits in this year.

 The borrowings are also showing a fluctuating rate of

increase.in 2008-08 the borrowings have increased at a very
low rate.this shows that bank has repaid a large amount of
borrowings in this year and thereby reducing the dependence
on outside debt.

 The investments are also increasing but with lower rates

compared to the preceding years.

 Similarly advances rose by 60% in 2006-07,an increase of

34% in 2007-08,15% increase in 2008-09 and finally
decreased by 3.25% in 2009-10.

 Thre has been a consistent decline in the fixed assets over

years.in 2006-07 and 2007-08 it decreased by 1.4 %
,increased by 5% in 2008-09 and again decreasing by 7.5% in
2009-10.this is mainly due to increase in the rate of
depreciation in the subsequent years.

 A huge fluctuation is revealed from current assets. it

increased by 37% in 2006-07,rate of increase rose to 80% in
2007-08 and then the it increased at a much lower rate i.e at
10%.this shows that the bank is effectively ustilising its
working capital.there is a fall in current assets in 2009-10 by
8 %.this is mainly due to the repayment of deposits in the
years 2009-10.
 1. Comparative Income Statement Of ICICI Bank
(Rs. in crores)
PARTICULARS 2006-2007 2007-2008 2008-2009 2009-2010
Absolute % of Absolut % of Absolut % of Absolut % of
change change e chang e chang e chan-
change e change e change ge
INCOME:

Operating income 5941 46.3 10156 54.1 10676 37 (902.84) (2.3)

EXPENDITURE:

Interest expended 3026.56 46 6761.05 70.4 7125.74 43.5 (758.31) (3)

Operating 1180.36 36 2211.05 49.3 1463.62 22 (1109.07 (14)
expenses
Total expenses 4206.92 43 8972.1 64 8589.36 37.2 (1867.38) (5.9)
Operating profit 1734.67 59 1183.73 25.2 2086.29 35.5 964.54 12.1

Provision and 1199.8 126.1 613.58 28.5 1038.78 37.5 1364.14 36

contigencies
Net profit for the
year 534.87 27 570.15 22.4 1047.51 34 (399.6) (10)
Extraordinary
items 0.00 0.00 0.00 0.00 0.00 0.00 (0.58) 0.00
Profit brought
forward 135.13 254.5 105.22 56 704.83 21 1438.05 144

TOTAL PROFIT/ 670 32.55 675.37 25 1752.34 51.4 1037.87 20

(LOSS):

From 2007-2008 To 2009-2010

Interpretation:-
  The net profit shows a fluctuating trend i.e it increased by 27% in 2006-07,22.4%
increase in 2007-08,and increased by 34% in 2008-09 and finally if falls by 10%
in2009-10.this may be due to decline in operating income and increased tax
liability in the year 2009-10.

 The interest expenses from the period 2006 to 2009 showed an increasing trend
but decreased in 2009-10 due to repayment of borrowings.

2.TREND ANALYSIS
Trend Percentage Of ICICI Bank From 2004-2005 To 2008-2009
(base year 2004 -05) Percentage(%) figures
Particulars 2005 2006 2007 2008 2009
Deposits 100 165 231 245 219
Advances 100 160 214 247 239
Net profit 100 127 155 207 187

T ren d g ra p h of IC ICI B ank

300

250

200
percentage(%)

D E P O S ITS
150 A D V A NC E S
NE T P RO F IT
100

50

0
2005 2006 20 07 2008 2009
Years
Interpretation:

 There is a continous increase in the deposits till the year ending 2008 followed by a
downfall in the year ending 2009 due to repayment od deposits in this year.
 Similarly advances also shows as increasing trend till the year ending 2008 followed by a
slight downfall in the year ending 2009.
 There has been a substantial increase in net profit till the year year ending 2008.In four
years it has been more than double.

The overall performance of the bank is satisfactory.

3. CASH FLOW STATEMENT OF ICICI BANK

2006 2007 2008 2009 2010

Profit before tax 2,527.20 3,096.61 3,648.04 5,056.10 5,116.97
Net cashflow-operating
9,131.72 4,652.93 23,061.95 -11,631.15 -14,188.149
activity
Net cash used in
-3,445.24 -7,893.98 -18,362.67 -17,561.11 3,857.88
investing activity
Netcash used in fin.
-1,227.13 7,350.90 15,414.58 29,964.82 1,625.36
activity
Net inc/dec in cash and
4,459.34 4,110.25 20,081.10 683.55 -8,074.57
equivlnt
Cash and equivalent
8,470.63 12,929.97 17,040.22 37,357.58 38,041.13
begin of year
Cash and equivalent end
12,929.97 17,040.22 37,121.32 38,041.13 29,966.56
of year
Chapter 5

FINDINGS,SUGGESTIONS
& CONCLUSION
 Findings
 Profit before tax for the year ended March 31, 2009 (FY2009) was Rs. 5,117 crore
(US$ 1,009 million), compared to Rs. 5,056 crore (US$ 997 million) for the year
ended March 31, 2008 (FY2008).

Profit after tax for FY2009 was Rs. 3,758 crore (US$ 741 million) compared to
Rs. 4,158 crore (US$ 820 million) for FY2008 due to the higher effective tax rate
on account of lower proportion of income taxable as dividends and capital gains.

Net interest income increased 15% from Rs. 7,304 crore (US$ 1,440 million) for
FY2008 to Rs. 8,367 crore (US$ 1,650 million) for FY2009. While the advances
declined marginally year-on-year, the net interest income increased due to
improvement in net interest margin from 2.2% in FY2008 to 2.4% in FY2009.

Operating expenses (including direct marketing agency expenses) decreased 14%
to Rs. 6,835 crore (US$ 1,348 million) in FY2009 from Rs. 7,972 crore (US$
1,572 million) in FY2008. The cost/average asset ratio for FY2009 was 1.8%
compared to 2.2% for FY2008.
 During the year, the Bank has pursued a strategy of prioritizing capital
conservation, liquidity management and risk containment given the challenging
economic environment. This is reflected in the Bank’s strong capital adequacy
and its focus on reducing its wholesale term deposit base and increasing its CASA
ratio. The Bank is maintaining excess liquidity on an ongoing basis. The Bank has
also placed strong emphasis on efficiency improvement and cost rationalization.
The Bank continues to invest in expansion of its branch network to enhance its
deposit franchise and create an integrated distribution network for both asset and
liability products.

In line with the above strategy, the total deposits of the Bank were Rs. 218,348 crore
(US$ 43.0 billion) at March 31, 2009, compared to Rs. 244,431 crore (US$ 48.2 billion)
at March 31, 2008. The reduction in term deposits by Rs. 24,970 crore (US$ 4.9 billion)
was primarily due to the Bank’s conscious strategy of paying off wholesale deposits.
During Q4-2009, total deposits increased by Rs. 9,283 crore (US$ 1.8 billion), of which
Rs. 5,286 crore (US$ 1.0 billion), or about 57%, was in the form of CASA deposits. The
CASA ratio improved to 28.7% of total deposits at March 31, 2009 from 26.1% at March
31, 2008.

 The branch network of the Bank has increased from 755 branches at March 31,
2007 to 1,438 branches at April 24, 2009. The Bank is also in the process of
opening 580 new branches which would expand the branch network to about
2,000 branches, giving the Bank a wide distribution reach in the country.

In line with the strategy of prioritizing capital conservation and risk containment, the loan
book of the Bank decreased marginally to Rs. 218,311 crore (US$ 43.0 billion) at March
31, 2009 from Rs. 225,616 crore (US$ 44.5 billion) at March 31, 2008.

 Liquidity position

The liquid ratio of the bank in the year 2005,2006 and 2009 is 0.60,0.67and 0.68
respectively and the year 2007 and 2008 liquid ratio is 0.97 and 0.88 respectively
which is close to 1.Though it is not equal to the ideal liquid ratio of 1:1 but still its
under control. So in nut shell, it can be concluded that the liquidity position of the
bank is quite satisfactory.

 Capital adequacy and return on capital employed

The Bank’s capital adequacy at March 31, 2009 as per Reserve Bank of India’s
revised guidelines on Basel II norms was 15.5% and Tier-1 capital adequacy was
11.8%, well above RBI’s requirement of total capital adequacy of 9.0% and Tier-1
capital adequacy of 6.0%. The above capital adequacy takes into account the impact
of dividend recommended by the Board.

Also the capital is being effectively utilized in the bank as it shows better return on
capital employed over years.

 Asset quality

At March 31, 2009, the Bank’s net non-performing asset ratio was 1.96%. During the
year the Bank restructured loans aggregating to Rs. 1,115 crore (US$ 220 million).

 Dividend on equity shares

Since the dividend per share has shown a promising increase for the period under
study.It shows that the bank is following a sound dividend policy and is capable of
distributing higher dividends.in this way the investors will feel investing in capital of
the bank a much beneficial option and will be reluctant to withdraw capital for a long
time.
  Earnings per share

The earnings per share for the period under study also shows a promising increase.it
suggests that bank has better profitability position and in future it can be a better or
attractive channel of investment for shareholders.

 Higher trends of credit deposit ratio – A positive sign

High trends of credit deposit ratio reveals that bank has performed satisfactorily as regard
to granting loans and advances to generate income. It suggests that credit performance is
good and the bank is doing its business good by fulfilling its major objective as regards to
granting loans and accepting deposits.

Conclusion
On the basis of various techniques applied for the financial analysis of ICICI Bank we
can arrive at a conclusion that the financial position and overall performance of the bank
is satisfactory. Though the income of the bank has increased over the period but not in the
same pace as of expenses. But the bank has succeeded in maintaining a reasonable
profitability position.

The bank has succeeded in increasing its share capital also which has increased around
50% in the last 5 years. Individuals are the major shareholders. The major achievement of
the bank has been a tremendous increase in its deposits, which has always been its main
objective. Fixed and current deposits have also shown an increasing trend.

Equity shareholders are also enjoying an increasing trend in the return on their capital.
Though current assets and liabilities (current liquidity) of the bank is not so satisfactory
but bank has succeeded in maintaining a stable solvency position over the years. As far as
the ratio of external and internal equity is concerned, it is clear that bank has been using
more amount of external equity in the form of loans and borrowings than owner’s equity.
Bank’s investments are also showing an increasing trend. Due to increase in advances,
the interest received by the bank from such advances is proving to be the major source of
income for the bank.
 Suggestions

 Although the short term liquidity position is quite satisfactory as per revealed by
liquid ratio but the current ratio is below the ideal ratio of 2:1.So the bank should
make efforts to increase its current assets to maintain a safety margin and to
maintain a better liquidity position.

 The profitability of the bank for the period under study is not satisfactory. Profits
are increasing but not with same pace as of the expenditure due to higher reliance
on debt capital in the form of borrowings and loans for financing capital structure.
So in order to improve profitability, the bank should reduce its dependence on
external equities for meeting capital requirements. Consequently, the interest
expenses will decline and profits will increase which is good for the bank.
Similarly non productive expenses should be curtailed to improve profitability.

 Higher trend of credit deposit ratio reveals that the bank has performed
satisfactorily as regard to granting loans and advances to generate income. It
suggests that the credit performance of bank is good and it is performing its
business well by fulfilling the major objective of granting credit and accepting
deposit. So in order to have more creditability in the market the bank should
maintain its credit deposit ratio.

 Though the bank has been successful in increasing it’s deposits but to further
improve upon such situation it can introduce some new and attractive schemes for
public. Such schemes can be in the form of higher rate of interest and shorter
maturity period for FD’s etc.

 Bank should try to finance more and more projects. Financing will help it to earn
higher amount of profits.

 The bank is having a greater reliance on debt capital. The increasing reliance on
external equities may prove hazardous in the long run. So in order to remedy this
 situation bank should increase its focus on internal equities and other sources of
internal financing.

 Bank can also think for improving it’s day-to -day service to its clients. Such
service can be improved by providing prompt service and showing an attitude of
co-operation to its clients. It will help to give a kind of confidence to the public
and build a better public image.

 To achieve the objective of Rural development it should open more and more
branches in different rural areas of the country. It will facilitate in providing help
to rural poor farmers and other living below the poverty line. Bank can appoint
commission agents for different area who can encourage general public to invest
in the capital of the bank and make more deposits in ICICI Bank.

 The bank should simplify the procedure of advances for quick disbursement.

 To achieve organizational success a proper independent working atmosphere

should be developed to achieve desired objective more effectively.

 Last but not least, bank should adopt branch automation experiment to control the
operational cost.
CHAPTER 6
BIBLIOGRAPHY
 BIBLIOGRAPHY

Books Reffered:

 Accountancy. R.K. Mittal,A.K.Jain.

 Financial Management- Theory and Practice. Shashi.K.Gupta , R.K. Sharma.

 Essentials of Corporate Finance 2nd edition ,Irwin /McGraw-Hill.Ross, S.A.,R.W.

Westerfield and B.D. Jordan.

 Basic Financial Management ,8th edition ,Prentice -Hall,Inc. Scott, D.F., J.D
Martin, J.W. Petty and A.Keown.

Internet websites:

 Www.Icicibank.Com

 Www.Moneycontrol.Com

 WWW.Money.Rediff.Com

 Www.Wikipedia.Org

 Www.Google.Com

 Www.Scribd.Com
 Www.Managementparadise.Com