A Financial Performance Comparative Trend Analysis Finance Essay

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CHAPTER – 2 - RESEARCH STUDY
A study on the "FINANCIAL PERFORMANCE – COMPARATIVE TREND ANALYSIS OF STATE BANK OF MYSORE (SBM)"
INTRODUCTION
Trend analysis seeks out and examines systematic historical patterns in financial statements or other quantitative data. Such analysis of data overtime can vary from primarily descriptive techniques to more complex cause and effect methods.
This module minimizes discussions of cause and effect analysis and focuses on the descriptive methods of trend analysis and two closely related analytical techniques- fluctuation analysis and common size statements analysis.
Trend analysis usually involves choosing one fiscal period and then expressing subsequent quantities as a percentage of the data associated with this base period. In the case of an income statement, changes in all items could be assessed in relation to the base period. Significant changes can then be investigated further.
Trend analysis is valuable when one wants to use historical data to predict future values or to calculate expected values for comparison to actual current values.
Trend analysis is also useful for identifying unexpected variances that may indicate strategic or operational changes or entity weaknesses worthy of additional exploration and analysis.
TREND ANALYSIS =
(NEXT YEAR – CURRENT YEAR)/ CURRENT YEAR *100
Financial Statements:
They are those statements that are to be prepared by every business concern, so as to find out the net results i.e. net profit or net loss, as well as the financial position of the business at the end of each financial year. It helps to know the progress of the business from year to year. The financial information is presented to the Board of Directors of the executive office for decision making. It is also presented to the share-holders, investors, creditors, suppliers, bankers etc every year.
Objectives or Advantages:
To have a permanent record of the entire business from year to year.
To serve as evidence in the court of law, in case of disputes that are likely to arise in the business.
To know the amounts due to the business and to whom the amounts are due by the business.
To pay regular and current tax on the income earned by the company to the tax authorities or government authorities.
To pay regular dividends to share-holders, financial statements are very helpful.
Types:
Trading Concerns
Trading account
Profit and Loss account
Profit and Loss Appropriation Account
Balance Sheet
Funds/Cash Flow Statement
Non- Trading Concerns
Receipts and Payments Account
Income and Expenditure Account
Balance Sheet
Financial Analysis:
Financial Statement Analysis refers to the segregation of the figures of the income statement and balance sheet so as to draw useful conclusions and help the top level executives of the company and the shareholders to take effective decisions relating to the financial performance of the company.
Types:
Comparative Analysis – In this type of analysis, the income statement and the balance sheet items of two or more years are compared to find out the differences or changes of two years, taking into consideration the previous year’s figures as the base year and useful conclusions are drawn by finding out the percentage change.
Common Sized Statement Analysis – This method of analysis is applicable for only balance sheet financial statement of several years of a single company or multiple companies in the industry. Under this method, the gross capital employed is considered as 100% and all the items expressed as a percentage of the gross capital employed.
Trend Analysis – Under this method, the last previous year’s figures will be taken into consideration as the base year 100% and all the figures of the subsequent years are expressed as a percentage relationship of the various items of the financial statements. By this, useful conclusions are drawn.
The strengths and weaknesses of the firm can be ascertained in this manner.
STATEMENT OF PROBLEM
Banks contribute to the economic development of the country. The current study has been undertaken to analyze the financial strength and stability of State Bank of Mysore, to suggest remedies wherever possible, so as to set the bank’s progress on the right path and to see if it is able to achieve its objectives. This analysis is also critical and essential to study. This will provide direct benefit to the company.
OBJECTIVES OF THE STUDY
To study the financial performance of the bank.
To study the trends in the previous four years.
To find out the profitability of the Bank.
To provide appropriate solutions to problems that exists.
SCOPE OF THE STUDY
This study is conducted at State Bank of Mysore, Bangalore. The current study is conducted with the help of published annual reports of the bank of the years 2009-2012. The study gives an idea about the present financial position of the bank.
OPERATIONAL DEFINITIONS OF CONCEPTS
Financial Statements:
They are those statements that are to be prepared by every business concern, so as to find out the net results i.e. net profit or net loss, as well as the financial position of the business at the end of each financial year. It helps to know the progress of the business from year to year. The financial information is presented to the Board of Directors of the executive office for decision making. It is also presented to the share-holders, investors, creditors, suppliers, bankers etc every year.
Financial Analysis:
Financial Statement Analysis refers to the segregation of the figures of the income statement and balance sheet so as to draw useful conclusions and help the top level executives of the company and the shareholders to take effective decisions relating to the financial performance of the company.
Comparative Analysis:
In this type of analysis, the income statement and the balance sheet items of two or more years are compared to find out the differences or changes of two years, taking into consideration the previous year’s figures as the base year and useful conclusions are drawn by finding out the percentage change.
Common Sized Statement Analysis:
This method of analysis is applicable for only balance sheet financial statement of several years of a single company or multiple companies in the industry. Under this method, the gross capital employed is considered as 100% and all the items expressed as a percentage of the gross capital employed.
Trend Analysis:
Under this method, the last previous year’s figures will be taken into consideration as the base year 100% and all the figures of the subsequent years are expressed as a percentage relationship of the various items of the financial statements. By this, useful conclusions are drawn.
METHODOLOGY OF STUDY
Review of Literature: Purpose
In this project work secondary data are used as a basis of analysis. In this study the financial performance of State Bank of Mysore, only past financial statements like Balance Sheet is studied. The current study has been undertaken to analyze the functioning and financial performance of the bank over the past years and suggest remedies wherever possible so as to set the banks progress on the right path and to see if it is able to achieve its objectives.
Method of Review:
In this project the method used was the 4 year annual report of State Bank of Mysore to analyze the trends in the previous years. In order to get the information regarding the bank and its operations, internet was used. The bank’s web address also helped to collect information regarding the country wide operations.
Benefits of the Literature:
It facilitates to know types of secondary data, advantages of secondary data.
It also helps to know the following:
Topic on which similar research has been done
Purpose of the earlier similar research
Conclusion derived from the earlier research
It facilitates to know how this research is different from the earlier one
Helped in making this research more specific and precise thereby enabling to analyze the problem systematically.
Data Collection Method:
The sources of data in this study are basically secondary in nature. Secondary data published by State Bank of Mysore is used for the study. Secondary data was collected from annual reports, other brochures and website of the bank. Primary data was collected from a bank official using an interview schedule. This was an expert opinion.
Reference Period:
A Reference Period of four years has been taken for the analysis i.e., 2008-2009, 2009-2010, 2010-2011 and 2011-2012. By conducting an analysis on a 4 year span, it provides a wider coverage on the operations of the bank and techniques can be brought about in a more effective manner.
PLAN OF ANALYISIS
Techniques Used:
Comparative Analysis:
In this type of analysis, the income statement and the balance sheet items of two or more years are compared to find out the differences or changes of two years, taking into consideration the previous year’s figures as the base year and useful conclusions are drawn by finding out the percentage change.
Trend Analysis:
Under this method, the last previous year’s figures will be taken into consideration as the base year 100% and all the figures of the subsequent years are expressed as a percentage relationship of the various items of the financial statements. By this, useful conclusions are drawn.
LIMITATIONS OF THE STUDY
The study is limited to banking sector.
Time period is one of the limitations of the study.
Secondary data is used mainly for the study. Therefore, the limitations of secondary data are applicable to this study as well.
The study is limited to the financial performance of State Bank of Mysore.
The research was conducted to get an overall view of the firm; as such it was not possible to probe deep into the subject.
OVERVIEW OF CHAPTER SCHEME
CHAPTER 1 INTRODUCTION – This chapter mentions about information on the Industry – Bank and the Subject – Finance.
CHAPTER 2 RESEARCH STUDY – This chapter contains the blue print of the entire project. Research Design is a blueprint for the collection and analysis of data. It includes all the 10 steps in research design. It aims to combine relevance to the purpose of the research. Introduction, statement of problem, objectives of the study, scope of the study, hypothesis, operational definitions, methodology and sources of data, sampling design, plan of analysis and tools for collection of data, limitations of the study, overview of chapter scheme.
CHAPTER 3 COMPANY PROFILE – This chapter includes an overview of the company – Origin and development, products and services, competitors, organizational structure.
CHAPTER 4 DATA ANALYSIS AND INTERPRETATION – This chapter includes the comparative trend analysis made from the secondary data obtained from the company such as the company guide and brochures. With the help of tables and graphs, interpretations were made. Tables and graphs of capital, reserves & surplus, deposits, borrowings, other liabilities & provisions, total liabilities, cash & balance with RBI, balances with bank & money at call, investments, advances, fixed assets, other assets, total assets, contingent liability, bills for collection, equity paid up, net worth, capital employed, sales, PBT, PAT, EPS, dividend.
CHAPTER 5 FINDINGS, CONCLUSION AND SUGGESTIONS – This is the last chapter in the research project which contains summary of findings for the study. Based on the analysis and interpretation, conclusions and suggestions are finally given by the researcher in this chapter.
CHAPTER 4 - DATA ANALYSIS AND INTERPRETATION - TREND ANALYSIS
SOURCES OF FUNDS
Table: 4.1 SHOWING CHANGE IN CAPITAL
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
CAPITAL
3,60,000
3,60,000
4,67,998
4,67,998
ACUAL CHANGES
-
NIL
1,07,998
NIL
PERCENTAGE
-
0%
29.99%
0%
Inference:
The issued, subscribed, called-up and paid up capital of State Bank of Mysore has seen an increase from 3,60,00,000 equity shares of 10 each in 2009 and 2010 to 4,67,99,790 equity shares of 10 each in 2011 to 2012.
Graph: 4.1 SHOWING CHANGE IN CAPITAL
Analysis & Interpretation:
From the above graph we find out that the capital has remained constant for two consecutive years starting from March 2009 to March 2010 and has increased by 1,07,998 in March 2011 and remained constant till March 2012.
Table: 4.2 SHOWING CHANGE IN RESERVES AND SURPLUS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
RESERVES AND SURPLUS
2,23,50,434
2,62,92,888
3,63,65,150
3,94,17,285
ACTUAL CHANGES
-
39,42,454
1,00,72,262
30,52,135
PERCENTAGE
-
17.64%
45.07%
13.66%
Inference:
In March 2012, there has been addition to reserves namely: statutory, revenue and special reserves.
In March 2011, there has been addition to reserves namely: statutory, capital, share premium, revenue and special reserves.
In March 2010, there has been addition to reserves namely: statutory, capital, revenue and special reserves.
Graph: 4.2 SHOWING CHANGE IN RESERVES AND SURPLUS
Analysis & Interpretation:
The above graph shows reserves growing in an increasing trend.
In March 2010 the reserves have increased by 17.64 % whereas in March 2011 the reserves have increased by 45.07% and in March 2012 by 13.66%.
Table: 4.3 SHOWING CHANGE IN DEPOSITS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
DEPOSITS
32,91,57,699
38,88,00,032
43,22,54,671
50,18,63,002
ACTUAL CHANGES
-
5,96,42,333
4,34,54,639
6,96,08,331
PERCENTAGE
-
18.12%
13.20%
21.15%
Inference:
In March 2012, there has been an increase in the bank deposits, namely: demand deposits from others, savings deposits, term deposits from banks and others and deposits of branches in India.
In March 2011, there has been an increase in bank deposits, namely: demand deposits from banks and others, savings deposits, term deposits from banks and others and deposits of branches in India.
In March 2010, there has been an increase in bank deposits, namely: demand deposits from banks and others, savings deposits, term deposits from others and deposits of branches in India.
Graph: 4.3 SHOWING CHANGE IN DEPOSITS
Analysis & Interpretation:
The above graph shows Deposits growing in an increasing trend. The percentage of increase from March 2009 to 2012 is as follows:-
March 2009-2010: 18.12%
March 2010-2011: 13.20%
March 2011-2012: 21.15%
Table: 4.4 SHOWING CHANGE IN BORROWINGS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
BORROWINGS
2,76,20,822
2,27,40,096
3,30,79,547
4,42,55,862
ACTUAL CHANGES
-
-48,80,762
1,03,39,451
1,11,76,315
PERCENTAGE
-
-17.67%
37.43%
40.46%
Inference:
In March 2012, borrowings have increased from RBI and other banks in India; and also outside India.
In March 2011, borrowings have increased from RBI and other institutions/ agencies in India; and also outside India.
In March 2010, borrowings have decreased from other institutions/agencies in India.
Graph: 4.4 SHOWING CHANGE IN BORROWINGS
Analysis & Interpretation:
The above graph shows a decreasing trend in borrowings from March 2009-2010. However during the year 2010-2011 borrowings have increased by 37.43% whereas in the previous year 2009-2010 borrowings had grown by 17.67% and in the year 2011-2012 borrowings had increased by 40.46%.
Table: 4.5 SHOWING CHANGE IN OTHER LIABILITIES & PROVISIONS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
OTHER LIABILITIES AND PROVISIONS
2,53,68,945
1,58,96,348
1,81,57,235
1,80,31,530
ACTUAL CHANGES
-
-94,72,597
22,60,887
-1,25,705
PERCENTAGE
-
-37.34%
89.12%
-0.50%
Inference:
In March 2012, there has been a decrease in bills payable.
In March 2011, there has been an increase in interest accrued and standard asset provision.
In March 2010, there has been a decrease in inter-office adjustments.
Graph: 4.5 SHOWING CHANGE IN OTHER LIABILITIES & PROVISIONS
Analysis & Interpretation:
The above graph shows a fluctuating trend. The above graph shows a decrease in the other liabilities & provisions during the year 2009-2010 by 37.34% but in the next year there has been an increase in other liabilities & provisions by 89.12%. In the next year, there has been a decrease by 0.50%.
Table: 4.6 SHOWING CHANGE IN TOTAL LIABILITIES
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
TOTAL LIABILITIES
40,48,57,900
45,40,89,364
52,03,24,601
60,40,35,677
ACTUAL CHANGES
-
4,92,31,464
6,62,35,237
8,37,11,076
PERCENTAGE
-
12.16%
16.36%
20.68%
Inference:
In March 2012, there has been an increase in reserves and surplus, deposits and borrowings.
In March 2011, there has been an increase in capital, reserves and surplus, deposits, borrowings and other liabilities and provisions.
In March 2010, there has been an increase in reserves and surplus, deposits and other liabilities and provisions.
Graph: 4.6 SHOWING CHANGE IN TOTAL LIABILITIES
Analysis & Interpretation:
The above graph shows Liabilities growing in an increasing trend. The percentage of increase in Liabilities from March 2009 to 2012 is as follows:-
March 2009-2010: 12.16%
March 2010-2011: 16.36%
March 2011-2012: 20.68%
APPLICATION OF FUNDS
Table: 4.7 SHOWING CHANGE IN CASH AND BALANCE WITH RBI
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
CASH AND BALANCE WITH RBI
1,73,50,480
2,76,56,203
2,70,56,837
3,02,58,450
ACTUAL CHANGES
-
1,03,05,723
-5,99,366
3,2,01,613
PERCENTAGE
-
59.40%
-3.45%
18.45%
Inference:
In March 2012, there has been an increase in balances with RBI in current account.
In March 2011, there has been a decrease in balances with RBI in current account.
In March 2010, there has been an increase in cash in hand and balances with RBI in current account.
Graph: 4.7 SHOWING CHANGE IN CASH AND BALANCE WITH RBI
Analysis & Interpretation:
The above graph shows a fluctuating trend. During the year 2009-2010 there is a huge increase in cash & balance with RBI by 59.40%. However in the next year there has been a gradual decrease in cash & balance with RBI by 3.45% and an increase by 18.45% during the year 2011-2012.
Table: 4.8 SHOWING CHANGE IN BALANCES WITH BANK & MONEY AT CALL
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
BALANCES WITH BANK & MONEY AT CALL
40,76,632
21,38,547
23,46,033
33,68,618
ACTUAL CHANGE
-
-19,38,085
2,07,486
10,22,585
PERCENTAGE
-
-47.54%
50.90%
25.08%
Inference:
In March 2012, there has been an increase in money at call and short notice with banks in India.
In March 2011, there has been an increase in balance current accounts and money at call and short notice outside India.
In March 2010, there has been a decrease in balance current accounts in India. Also there has been a decrease in balance in current accounts and money at call and short notice outside India.
Graph: 4.8 SHOWING CHANGE IN BALANCES WITH BANK & MONEY AT CALL
Analysis & Interpretation:
The above graph shows a fluctuating trend. During the year 2009-2010 there is a huge decrease in Balances with Banks & money at Call by 47.54% but in the next year (2010-2011) there is a slight increase in Balances with Banks & money at Call by 50.90% and in the next year (2011-2012) there is a further increase in Balances with Banks & money at Call by 25.08%.
Table: 4.9 SHOWING CHANGE IN INVESTMENTS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
INVESTMENTS
11,37,79,606
11,49,44,083
12,92,71,362
14,73,27,035
ACTUAL CHANGES
-
10,35,64,477
1,43,27,279
1,80,55,673
PERCENTAGE
-
91.02%
12.59%
15.87%
Inference:
In March 2012, there has been an increase in net investment, government securities, debentures and bonds and other investments.
In March 2011, there has been an increase in net investment, government securities, shares, debentures and bonds and other investments.
In March 2010, there has been an increase in net investments, government securities and other investments.
Graph: 4.9 SHOWING CHANGE IN INVESTMENTS
Analysis & Interpretation:
The above graph shows Investments growing in an increasing trend. The percentage of increase in Investments from March 2009 to 2012 is as follows:-
March 2009-2010: 91.02%
March 2010-2011: 12.59%
March 2011-2012: 15.87%
Table: 4.10 SHOWING CHANGE IN ADVANCES
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
ADVANCES
25,61,60,522
29,53,58,601
34,02,98,120
39,83,53,073
ACTUAL CHANGES
-
3,91,98,079
4,49,39,519
5,80,54,953
PERCENTAGE
-
15.30%
17.54%
22.66%
Inference:
In March 2012, there has been an increase in public sector, banks and other advances in India.
In March 2011, there has been an increase in priority sector, public sector and other advances in India.
In March 2010, there has been an increase in priority sector, public sector and other advances in India.
Graph: 4.10 SHOWING CHANGE IN ADVANCES
Analysis & Interpretation:
The above graph shows Advances growing in an increasing trend. The percentage of increase in Advances from March 2009 to 2012 is as follows:-
March 2009-2010: 15.30%
March 2010-2011: 17.54%
March 2011-2012: 22.66%
Table: 4.11 SHOWING CHANGE IN FIXED ASSETS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
FIXED ASSETS
73,13,632
73,29,909
72,49,969
74,94,149
ACTUAL CHANGES
-
16,277
-79,940
2,44,180
PERCENTAGE
-
0.22%
-1.09%
3.33%
Inference:
In March 2012, there has been an increase in total value of premises and total value of furniture and fixtures.
In March 2011, there has been a decrease in total value of premises.
In March 2010, there has been an increase in total value of furniture and fixtures.
Graph: 4.11 SHOWING CHANGE IN FIXED ASSETS
Analysis & Interpretation:
The above graph shows a fluctuating trend. From March 2009 to 2010 the trend increases to a tiny extent. In the 2011, there is a decrease. In 2012, there is an increase in the volume of assets and the percentage of increase of assets from 2011 to 2012 is 3.33%.
Table: 4.12 SHOWING CHANGE IN OTHER ASSETS
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
OTHER ASSETS
61,77,028
66,62,021
1,41,02,280
1,72,34,352
ACTUAL CHANGES
-
4,84,993
74,40,259
31,32,072
PERCENTAGE
-
7.85%
120.45%
50.70%
Inference:
In March 2012, there is an increase in interest accrued, tax paid in advance, other assets and deferred tax assets.
In March 2011, there is an increase in net inter-office adjustments, interest accrued and other assets.
In March 2010, there is an increase in interest accrued, non banking assets acquired in satisfaction of claims and other assets.
Graph: 4.13 SHOWING CHANGE IN TOTAL ASSETS
Analysis & Interpretation:
The above graph shows TOTAL ASSETS growing in an increasing trend. The percentage of increase in TOTAL ASSETS, from March 2009 to 2012 is as follows:-
March 2009-2010: 12.16%
March 2010-2011: 16.36%
March 2011-2012: 20.68%
Table: 4.14 SHOWING CHANGE IN CONTINGENT LIABILITY
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
CONTINGENT LIABILITY
19,11,44,040
20,05,74,670
16,96,65,064
17,96,98,145
ACTUAL CHANGES
-
9,43,06,30
-3,09,09,606
1,00,33,081
PERCENTAGE
-
4.93%
-16.17%
5.25%
Inference:
In March 2012, there has been an increase in claims against the bank not acknowledged as debts, liability on account of venture capital funds, guarantee given behalf of constituents in India and outside India, acceptance/ endorsements/ other obligations, letters of comfort outstanding, claims made by various governments departments.
In March 2011, there has been a decrease in liability on account of outstanding forward exchange contracts.
In March 2010, there has been an increase in claims against the bank not acknowledged as debts, guarantee given behalf of constituents in India and acceptance/ endorsements/ other obligations.
Graph: 4.14 SHOWING CHANGE IN CONTINGENT LIABILITY
Analysis & Interpretation:
The above graph shows a fluctuating trend. During the year March 2009 to 2010 there is an increase in the volume of Contingent Liability followed by a tremendous decrease in the year 2011, and further there is a slight increase in the volume of Contingent Liability in the year 2011-2012 by 5.25%.
Table: 4.15 SHOWING CHANGE IN BILLS FOR COLLECTION
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
BILLS FOR COLLECTION
89,51,199
5,16,046
46,64,315
1,19,30,348
ACTUAL CHANGES
-
-84,35,153
41,48,269
72,66,033
PERCENTAGE
-
-94.23%
46.34%
81.17%
Inference:
The bills for collection has decreased drastically by 94.23% in March 2010, whereas in the next year it has increases by 46.34% and a further increase in March 2012 can be noted by 81.17%.
Graph: 4.15 SHOWING CHANGE IN BILLS FOR COLLECTION
Analysis & Interpretation:
The above graph shows a drastically fluctuating trend. In the year 2009-2010 there is a huge decrease in the volume of bills for collection by 94.23% followed by an increase in the volume of bills for collection by 46.34% also followed by a huge increase in the volume of bills for collection in the year 2011-2012 by 81.17%.
Table: 4.16 SHOWING CHANGE IN EARNINGS PER SHARE
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
EARNINGS PER SHARE
93.59
123.83
121.66
78.81
ACTUAL CHANGES
-
30.24
-2.17
-42.85
PERCENTAGE
-
32.31%
-2.32%
-45.78%
Inference:
An increase in EPS can be noticed in 2010 by 32.31% and following a decrease in the 2 consecutive years by 2.32% and 45.78% respectively is depicted.
Graph: 4.16 SHOWING CHANGE IN EARNINGS PER SHARE
Analysis & Interpretation:
The above graph shows an increase in EPS in 2010. The percentage of increase in EPS, from March 2009-2010 is 32.31%. Then in March 2010-2011 a slight decrease in EPS by 2.32% can be noted and in March 2011-2012 the EPS decreases drastically by 45.78%
Table: 4.17 SHOWING CHANGE IN NET PROFIT
PARTICULARS
MAR 09
MAR 10
MAR 11
MAR 12
NET PROFIT
33,69,152
44,57,678
50,06,260
36,91,491
ACTUAL CHANGES
-
10,88,526
5,48,582
-13,14,769
PERCENTAGE
-
32.30%
16.28%
-39.02%
Inference:
There has been an increase in net profit in the year 2010, since total income and total appropriations have increased. In the year 2011, the expenditure has increased a little thereby decreasing the net profit by a small extent. But in 2012, there has been a drastic decrease in net profit due to a huge increase in expenditure and appropriations.
Graph: 4.17 SHOWING CHANGE IN NET PROFIT
Analysis & Interpretation:
The above graph shows Net profit in an increasing trend upto 2011. The percentage increment in the amount of net profit, from March 2009 to 2011 is as follows:-
March 2009-2010: 32.30%
March 2010-2011: 16.28%
In March 2011-201 there has been a fall in net profits by 39.02%
Therefore the amount of profits was higher in the year 2011.
PARTICULARS
2009
2010
CHANGES
%
LIABILITIES
Total Share Capital
3,60,000
3,60,000
NIL
0%
Reserves
2,23,50,434
2,62,92,888
39,42,454
17.64%
Deposits
32,91,57,699
38,88,00,032
5,96,42,333
18.12%
Borrowings
2,76,20,822
2,27,40,096
-48,80,762
-17.67%
Other Liabilities & Provisions
2,53,68,945
1,58,96,348
-94,72,597
-37.34%
Total Liabilities
40,48,57,900
45,40,89,364
4,92,31,464
12.16%
ASSETS
Cash
1,73,50,480
2,76,56,203
1,03,05,723
59.40%
Balance with banks
40,76,632
21,38,547
-19,38,085
-47.54%
Investments
11,37,79,606
11,49,44,083
10,35,64,477
91.02%
Advances
25,61,60,522
29,53,58,601
3,91,98,079
15.30%
Fixed Assets
73,13,632
73,29,909
16,277
0.22%
Other Assets
61,77,028
66,62,021
4,84,993
7.85%
TOTAL ASSETS
40,48,57,900
45,40,89,364
4,92,31,464
12.16%
INTERPRETATION
The reserves & surplus of the Bank has increased by 17.64% and the deposits have increased by 18.12%. But the borrowings have decreased by 17.67%. The fixed assets of the Bank have grown by 0.22%. This shows that the policy of the Management is to finance its fixed assets through long term sources of finance.
Other liabilities of the Bank has declined by -37.34% whereas the other assets has grown by 7.85%. This indicates that the Bank has a good working capital position.
Cash of the Bank has increased by 59.44% whereas the balance with banks has decreased by 47.45% indicating satisfactory liquid position of the Bank.
The reserves & surplus of the Bank has increased by 17.64% thus indicating that the Bank is earning good profits.
The investments of the Bank have increased by 91.02%.
PARTICULARS
2010
2011
CHANGES
%
LIABILITIES
Total Share Capital
3,60,000
4,67,998
1,07,998
29.99%
Reserves
2,62,92,888
3,63,65,150
1,00,72,262
45.07%
Deposits
38,88,00,032
43,22,54,671
4,34,54,639
13.20%
Borrowings
2,27,40,096
3,30,79,547
1,03,39,451
37.43%
Other Liabilities & Provisions
1,58,96,348
1,81,57,235
22,60,887
89.12%
Total Liabilities
45,40,89,364
52,03,24,601
6,62,35,237
16.36%
ASSETS
Cash
2,76,56,203
2,70,56,837
-5,99,366
-3.45%
Balance with banks
21,38,547
23,46,033
2,07,486
50.90%
Investments
11,49,44,083
12,92,71,362
1,43,27,279
12.59%
Advances
29,53,58,601
34,02,98,120
4,49,39,519
17.54%
Fixed Assets
73,29,909
72,49,969
-79,940
-1.09%
Other Assets
66,62,021
1,41,02,280
74,40,259
120.45%
TOTAL ASSETS
45,40,89,364
52,03,24,601
6,62,35,237
16.36%
INTERPRETATION
The reserves & surplus of the Bank has increased by 45.07% and the borrowings has increased by 37.43%.The fixed assets of the Bank has dropped by 1.09%. This shows the change in the policy of the Management.
Other liabilities of the Bank have increased by 89.12% whereas the other assets have decreased by 3.45%. This indicates that the Bank had a satisfactory working capital position.
Cash of the Bank has decreased by 3.45% whereas the balance with banks has increased by 50.90% indicating good liquid position of the Bank.
The reserves & surplus of the Bank has increased by 45.07% thus indicating that the Bank is earning good profits.
The investments of the Bank have increased by 12.59%.
PARTICULARS
2011
2012
CHANGES
%
LIABILITIES
Total Share Capital
4,67,998
4,67,998
NIL
0%
Reserves
3,63,65,150
3,94,17,285
30,52,135
13.66%
Deposits
43,22,54,671
50,18,63,002
6,96,08,331
21.15%
Borrowings
3,30,79,547
4,42,55,862
1,11,76,315
40.46%
Other Liabilities & Provisions
1,81,57,235
1,80,31,530
-1,25,705
-0.50%
Total Liabilities
52,03,24,601
60,40,35,677
8,37,11,076
20.68%
ASSETS
Cash
2,70,56,837
3,02,58,450
3,2,01,613
18.45%
Balance with banks
23,46,033
33,68,618
10,22,585
25.08%
Investments
12,92,71,362
14,73,27,035
1,80,55,673
15.87%
Advances
34,02,98,120
39,83,53,073
5,80,54,953
22.66%
Fixed Assets
72,49,969
74,94,149
2,44,180
3.33%
Other Assets
1,41,02,280
1,72,34,352
31,32,072
50.70%
TOTAL ASSETS
52,03,24,601
60,40,35,677
8,37,11,076
20.68%
INTERPRETATION
The reserves & surplus of the Bank has increased by 13.66% and the borrowings has increased by 40.46%.The fixed assets of the Bank has grown by 3.33%. This shows that the policy of the Management is to finance its fixed assets through long term sources of finance.
Other liabilities of the Bank have decreased by 0.50% whereas the other assets have increased by 50.70%. This indicates that the Bank has a good working capital position.
Cash of the Bank has increased by 18.45% whereas the balance with banks has also increased by 25.08% indicating satisfactory liquid position of the Bank.
The investments of the Bank have increased by 15.87%.
CHAPTER 5 - FINDINGS, CONCLUSIONS AND SUGGESTIONS
SUMMARY OF FINDINGS
Objective 1 - To study the financial performance of the bank.
The total liabilities of the Bank have shown an increasing trend.
The total assets have shown a progressive increasing trend.
The EPS of the Bank has shown an increasing trend upto March 2011 but in March 2012, it has decreased. It shows that the Bank has been earning better on its shares upto 2011 thereby reflecting the performance of the Bank.
The net profit of the bank has shown an increasing trend upto March 2011 but in March 2012, it has decreased.
Objective 2 - To study the trends in the previous four years.
The reserves of the bank have shown an increasing trend. It is assumed that the company has earmarked more funds in order to meet future liabilities.
The Deposits of the Bank have shown an increasing trend. It is presumed that the bank will be able to make fresh advances in the future.
The borrowings of the Bank have shown an increasing trend after March 2010. It is presumed the bank is trying to lessen the burden of borrowings.
Other liabilities & provisions of the Bank have shown a fluctuating trend. It is presumed that the bank has earmarked more provisions for meeting temporary liabilities like different taxes.
The fixed assets of the Bank have shown an increasing trend and as such increase in the assets shows that the bank has created fresh assets. But in March 2011, the assets have dropped drastically.
The other assets of the Bank have shown a dual increasing trend.
The contingent liability of the Bank has drastically fluctuated and it is assumed that the bank is likely to face some suits filed or pending in the courts.
Objective 3 - To find out the profitability of the Bank.
The investments of the Bank have shown an increasing trend. It is presumed that the bank has invested in different companies in order to earn and maximize the profits. It is a healthy trend if invested in Gilt edged companies.
The advances of the Bank have shown an increasing trend. The advances are assets and backbone of the banking company provided they are standard assets. Again it is assumed that the bank has made fresh advances in order to earn more profit by charging interest.
Other findings
The capital of the Bank has remained constant for two consecutive years starting from March 2009 to March 2010. In March 2011, the Bank has employed fresh capital of 1,07,998 thus an increase by29.99% is noted.
Cash & balance with RBI has shown a fluctuating trend. The fluctuation is attributed to the change in CRR by RBI from time to time.
Balances with Banks & money at Call have shown an increasing trend after March 2010.
It is presumed that the bills business of the Bank is showing increasing trend and as such it will increase the income of the Bank.
CONCLUSION
Banks play an important role in the overall development of the economy. In order to have a healthy overall development the Banking sector must be properly organized and the Bank must take the guidelines put forth by the RBI seriously.
With this study it may be found that the objectives are fully met within the constraints of the limitations. As seen in the study the financial performance of the Bank has been good over the past four years but the bank can try and increase its business by tapping new markets and thereby increasing its deposits and advances and hence increase its profits. The Bank can also float more shares instead of depending more on borrowings.
Overall the Bank is in a good financial position as it can be seen that their EPS and the rate of dividend declared has been satisfactory over the past four years thus proving that the Bank is earning good profits. But compared to previous years, the EPS ant net profit has reduced by small margins.
The capital, reserves, deposits, borrowings and total liabilities have shown an increasing trend.
The investments, advances, assets, bills business have also shown an increasing trend.
The EPS and net profit have decreased marginally.
SUGGESTIONS
The capital of the Bank has remained static for 2 consecutive years, starting from March 2009 to March 2010. In March 2011, the Bank has employed fresh capital of 1,07,998 thus an increase by 29.99% is noted. The issued, subscribed, called-up and paid up capital of State Bank of Mysore has seen an increase from 3,60,00,000 equity shares of 10 each in 2009 and 2010 to 4,67,99,790 equity shares of 10 each in 2011 to 2012. So the Bank can go for fresh public shares in the next year.
The bank can strive for achieving better percentage of deposits by opening new branches in unbanked areas in the state. The Deposits of the Bank have shown an increasing trend. It is presumed that the bank will be able to make fresh advances in the future. There has been an increase in demand deposits from banks and others, savings deposits, term deposits from banks and others and deposits of branches in India. This will require RBI approval.
The Bank should invest in Gilt edged securities to increase its profits and minimize risk. The investments of the Bank have shown an increasing trend. The bank must invest in different companies in order to earn and maximize the profits.
The Bank can reduce its liabilities and increase its current assets so as to maintain better liquidity.
In terms of liabilities: The bank must earmark more funds in order to meet future liabilities. The bank must try to lessen the burden of borrowings. The bank must earmark more provisions for meeting temporary liabilities like different taxes. This must be done to correct some suits filed or pending in the courts against the bank.
In terms of assets: The advances are assets and backbone of the banking company provided they are standard assets. The bank must make fresh advances in order to earn more profit by charging interest. The bills business of the Bank will increase the income of the Bank.
The EPS and the Net profit are 2 areas that need attention for better performance in the next year. The EPS of the Bank has shown an increasing trend upto March 2011 but in March 2012, it has decreased. It shows that the Bank has been earning better on its shares upto 2011 thereby reflecting the performance of the Bank. The net profit of the bank has shown an increasing trend upto March 2011 but in March 2012, it has decreased. The Bank can also float more shares instead of depending more on borrowings but overall the Bank is in a good financial position as it can be seen that their EPS and the rate of dividend declared has been satisfactory over the past four years thus proving that the Bank is earning good profits. But compared to previous years, the EPS ant net profit has reduced by small margins.

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