Bank Performance Analysis- KOTAK MAHINDRA BANK LTD.

PROFITABILITY ANALYSIS
Mar-16 Mar-17

Rs in Crore Rs in Crore
1 Total Assets 192,260 214,590
2 Earning Assets
Balances with RBI 5,956 6,495
Balances with Banks in Deposit Accounts 41 507
Balances with Banks & money at Call & Short Notice 2,011 1,930
Balances with Banks Outside India 1,661 929
Investments + 51,260 45,074
Advances + 118,665 136,082
Total Earning Assets 179,595 191,018

3 Interest bearing Liabilities

Saving Deposits 29,495 41,504
Term & Other Deposits 138,640 115,922
Borrowings 20,975 21,095
Subordinated Debt 1,776 1,207
Total Interest bearing liabilities 190,886 179,728

Equity Capital 917 920

Reserves 23,042 26,696
Total Equity 23,959 27,616

5 Interest Income 16,384 17,699

6 Interest Expenditure 9,484 9,573
10 Non-interest operating income 2,612 3,477
11 Non-interest operating Expenditure 5,472 5,618
12 Provisions and Contingencies 1,951 2,573
Provisions and Contingencies include provision for tax
Profit After tax 2,090 3,411

Profitability Ratios
Return on Assets= NI/ TA 1.09% 1.59%
Equity Multiplier TA/ TE 8.02 7.77
TE/ TA
ROE=ROA X EM 8.72% 12.35%

NI/ OR 11.00% 16.11%

OR/ TA 9.88% 9.87%
TA/ TE 8.02 7.77
ROE 8.72% 12.35%

(II - IE)/ TA 3.59% 3.79%

(OI-OE)/ TA -1.49% -1.00%
Provisions/TA 1.01% 1.20%
ROA 1.09% 1.59%

(II- IE)/E A 3.84% 4.25%

EA/ TA 93.41% 89.02%
(II - IE)/ TA 3.59% 3.79%
(II - IE)/ TA 3.59% 3.79%

NIM 3.84% 4.25%

II/ EA 9.12% 9.27%
IE/ Intt Bearing Liab 4.97% 5.33%
Intt Bearing Liabilities/ EA 106.29% 94.09%
Spread 4.15% 3.94%

Efficiency ratio= Non intt exp/ (Net Interest Income+Non intt 57.52% 48.42%

Risk Ratios
Liquidity Risk= Short term securities/ Deposits 2.30% 1.57%
Interest Rate Risk = Interest Sensitive Assets/ Interest Sensitive Liab 94.08% 106.28%
Credit Risk = Provisioning / Assets 1.09% 1.35%
Capital Risk = Capital / Assets 0.51% 0.48%
Leverage ratio= Total equity/Total assets 12.46% 12.87%
Total capital ratio= (Total equity + Long-term debt + Reserve for
loan losses)/Total assets 23.37% 22.70%
Provision for loan loss ratio= PLL/ TL (provision for loan
losses/total loans and leases)
Loan Ratio = Net loans/ Total assets 61.72% 63.41%
Loss Ratio = Net charge-offs on loans (gross charge-offs minus
recoveries)/ Total loans and leases
Reserve Ratio = Reserve for loan losses (reserve for loan losses
last year minus gross charge-offs plus PLL and recoveries)/Total
loans and leases
19.42% 19.62%

Nonperforming ratio= Nonperforming assets (nonaccrual loans

and restructured loans)/Total loans and leases 2.39% 2.63%

Operating efficiency (cost control)= Wages and salaries/Total

expenses 16.66% 15.58%

Volatile liability dependency ratio= (Total volatile liabilities -

Temporary investments)/Net loans and leases

Other Financial Ratios

Tax rate = Total taxes paid/Net income before taxes 40.23% 27.81%
Gap ratio = (Interest rate-sensitive assets – Interest rate-sensitive
liabilities)/ Total assets -5.87% 5.26%

CONCLUSION -

*Blank cells denote that the information is not declared by the bank.
RA BANK LTD.

Mar-18 Mar-19 Mar-20 Analysis and comments

Rs in Crore Rs in Crore Rs in Crore

264,933 312,172 360,252

7,704 9,656 7,783

6 2 7
5,192 8,574 40,300
1,824 4,955 3,312
64,562 71,189 75,052
169,718 205,695 219,748
249,007 300,072 346,202

65,529 79,685 104,609

127,114 146,196 158,212
25,154 32,248 37,993
927 456 456
218,724 258,585 301,270

953 1,454 1,457

36,529 41,444 47,559
37,482 42,898 49,015

19,748 23,890 26,930

10,217 12,684 13,430
4,052 4,657 5,372
6,426 7,515 8,851
3,074 3,483 4,074

4,084 4,865 5,947

1.54% 1.56% 1.65% Return on assets has been constantly maintained.which is a good sign
7.07 7.28 7.35 Equity multiplier ranges between 7-8 and is stable which is good for the bank
10.90% 11.34% 12.13% Continuously growing Return on Equity is a positivie sign of growth

17.16% 17.04% 18.41% It is good for our bank and is increasing at a constant rate which is a good sign
8.98% 9.14% 8.97% It is pretty much constant and the ratio is good .The asset utilization ratio indic
7.07 7.28 7.35 The equity multiplier states the level of debt financed by a business. High ratio
10.90% 11.34% 12.13% Continuously growing Return on Equity is a positivie sign of growth

3.60% 3.59% 3.75% It is constant for all the years which is good and indicates that they are able to
-0.90% -0.92% -0.97% This ratio is indicator to show the health of the bank that how much operating
1.16% 1.12% 1.13% This ratio tells the need of bank to create total provisions of its total assets. Th
1.54% 1.56% 1.65% Return on assets tells that how much the assets are efficient in generating inco

3.83% 3.73% 3.90% This ratio states the power of earning assets to create the ability of the bank to
93.99% 96.12% 96.10% The ratio helps to see the portion of earning assets from total assets. It indicate
3.60% 3.59% 3.75% It is constant for all the years which is good and indicates that they are able to
3.60% 3.59% 3.75% It is constant for all the years which is good and indicates that they are able to

3.83% 3.73% 3.90% Since banks basic source of earning is spread, the need to know earning power
7.93% 7.96% 7.78% This ratio helps to find the total percentage of interest income earned because
4.67% 4.91% 4.46% This ratio helps to find the total percentage of interent expence out of total inte
87.84% 86.17% 87.02% The ratio is helpful to understand the total percentage of earning asset consum
3.26% 3.06% 3.32% The total amount of income generated because of lending at higher rate and de

47.30% 47.37% 46.90% This ratio tells how well the overheads expenses are being take care of. The ef

1.62% 1.85% 1.51% The ratio is stable and indicates that the bank has stable liquidity to meet its sh
113.84% 116.04% 114.91% A higher ratio means a higher income for the bank. But along with this higher
1.23% 1.16% 1.18% Credit risks are used by investors to find out company's risk level and whether
0.38% 0.48% 0.42% This ratio measures bank's financial stability by measuring it's capital and risk.
14.15% 13.74% 13.61% This ratio is the proportion of shareholders' equity to total assets, and as such

23.64% 24.07% 24.15% The ratio indicates the total amount internal liability to that of its total assets

64.06% 65.89% 61.00% It intreprets the banks total assets financed by debt. If it is greater than 1, it in
21.52% 20.15% 21.64% This ratio gives the indication about the money which is kept aside to recover

2.25% 2.17% 2.29% . NPA ratio of the bank has not improved and is stable over the years w

14.96% 13.44% 14.84% . The Operating efficiency ratio is somehow stable in last few years, which imp

33.63% 33.09% 25.64% It shows the percentage of tax paid by the banks. The less it is means more dis

11.43% 13.29% 12.47% A positive gap means that when rates rise, a bank’s profits or revenues will lik

THE BANK HAS BEEN OUTSTANDING IN IT'S PERFORMANCE IN

which is a good sign
e which is good for the bank
 tivie sign of growth

tant rate which is a good sign for the bank.This ratio states the total percentage of net profit generated from its total operations. The Higher
he asset utilization ratio indicates the capabilty of total assets to generate revenue.
nced by a business. High ratio means more company is using a high amount of debt to finance its assets. Stability can be seen in this ratio by
tivie sign of growth

ndicates that they are able to make almost 4% of their assets utilized.
nk that how much operating profit is generated by utilizing its total assets. Since, it is negative for all the years, it is not a good sign.
ovisions of its total assets. The higher the bad as it blocks money and reduces efficeincy. It is constant at around 1% which is a good sign fo
e efficient in generating income. The ROA of is constant which is a good sign.

eate the ability of the bank to create more spread. The higher the better. It has been stable and is good
s from total assets. It indicates the ability of bank to create wealth. Tha ratio has very high and good for the bank and can be said to be usin
ndicates that they are able to make almost 4% of their assets utilized.
ndicates that they are able to make almost 4% of their assets utilized.

need to know earning power of assets to generate spread is very important. It is constant for all the years which is good
erest income earned because of earning assets. It decreased from 2017 but is still very good.
erent expence out of total interest bearing liability. It is constant since last five years which is not good as it means the bank is not making p
tage of earning asset consumed in to settle interest bearning liabilites. The trend shows that it is pretty high which is very bad situation for t
lending at higher rate and depositing at lower rate is called spread. The more is good. The trend shows that it is stable and is good for the b

are being take care of. The effeciency ratio under 50% is considered optimal. The ratio after 2016 is below 50% which shows that the bank

stable liquidity to meet its short term requirements.

nk. But along with this higher income, the bank also faces higher risk, becuase bank might not be able to change interest frequently due to p
pany's risk level and whether they should invest in the shares of this bank or not. An ideal credit risk ratio is less than 35% and here in all t
measuring it's capital and risk. The minimum capital to asset ratio is 8% under BASEL Norm and anything above it indicates that the capital i
y to total assets, and as such provides a rough estimate of the amount of capitalization currently used to support a business. The ratio her

lity to that of its total assets and rest portion is external liabilites. The ratio is good and shows that the bank doesn’t have much debt.

ebt. If it is greater than 1, it indicates that a considerable portion of debt is funded by assets. The ratio is constant and is good above the in
which is kept aside to recover bad loans in the future. The ratio has increased recently which may not be a good sign for the bank

is stable over the years which implies that the bank was not able to reduce their Bad Loans over the years.

e in last few years, which implies their efficiency

The less it is means more disposable income and better opportunities fornext year. Since the bank has been in the losses for last five years

k’s profits or revenues will likely rise. The bank changed its negatuve ratio from 2017 and has been increasing which is good for the bank.

IT'S PERFORMANCE IN ALMOST ALL THE RATIOS AND IS MUCH BETTER FROM THE COMPETITORS AND INDUST
rom its total operations. The Higher the better as it states it is able to generate high profit because of low cost.

Stability can be seen in this ratio by the bank which means the bank has to use more debt to finance its assets.

he years, it is not a good sign.

t around 1% which is a good sign for the bank.

r the bank and can be said to be using its assets very effeciently

rs which is good

as it means the bank is not making progress.

igh which is very bad situation for the bank as it simply indicates more and more burden.
that it is stable and is good for the bank

low 50% which shows that the bank has been managing its overheads expenses properly and is a good sign.

o change interest frequently due to pressure of the system.

tio is less than 35% and here in all the years it is around 1% which is great sign for the bank and investors.
g above it indicates that the capital is more than the minimum requirement for daily transactions to take place, here it is less which indicat
to support a business. The ratio here is stable and shows a good sign.

bank doesn’t have much debt.

s constant and is good above the industry standards which is good for kotak mahindra bank
e a good sign for the bank

ver the years.

een in the losses for last five years

reasing which is good for the bank.

E COMPETITORS AND INDUSTRY STANDARDS

ke place, here it is less which indicates that the bank does not have minimum money required to carry out it's operations.
out it's operations.