1

DISSERTATION – PROJECT REPORT

ON
Comparative Study of Profitability of ICICI Bank & Bank of Baroda
A report submitted in partial fulfillment of the requirements for the Award of a
Degree of
Post Graduate Diploma
in
BANKING AND INSURANCE
Submitted By
Rahul Khanchandani
PRN No.: 8022046860

Prerana Balwani
PRN No.: 8022049271
Seat No.: 232203

Himanshi Rana
PRN No.: 8022048393
Seat No.:232230

Under the Guidance of

Mrs. Namrata Jadhav

DEPARTMENT OF BANKING AND INSURANCE

FACULTY OF COMMERCE

THE MAHARAJA SAYAJIRAO UNIVERSITY OF BARODA

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ACKNOWLEDGMENT

We first and foremost express our gratitude to our guide Mrs. Namrata Jadhav. An inspiration

and unique conceptualization of our guide really supported and encouraged us throughout this

research work. This project work could have never been finished without the help of our guide.

We would like to thank Prof. (Dr.) Ketan Upadhyay, Head - Department of Banking and

Insurance, for the support and facilities provided to complete this project report. We also thank

all faculty members for their keen interest and co- operation extended to us. We owe sincere

thanks to our family members and friends for their continuous support.

FROM:

-------------------

Rahul Khanchandani
PRN – 8022046860

------------------

Prerana Balwani
PRN– 8022049271
Seat No.: 232203

-----------------

Himanshi Rana
PRN- 8022049271
Seat No.:232230
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CERTIFICATE

This is certified that dissertation on the topic of “ Comparative Study of Profitability

of ICICI Bank & Bank of Baroda” submitted as part of fulfillment and requirement
of Post Graduate Diploma in Banking & Insurance is the work of Rahul khanchandani,
Prerana Balwani, Himanshi Rana; who have carried out the study under my supervision and
guidance.

Name of the Guide: Mrs. Namrata Jadhav

Signature of the Guide:

Date:
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Index of Content

Sr no. Tittle of the Content Page No.

01 Tittle 1

02 Acknowledgement 2

03 Certificate 3

04 CH-1 Introduction 5

05 CH-2 Literature Review 16

06 CH-3 Research Methodology 20

07 CH-4 Data Analysis 23

08 CH-5 Findings And Conclusions 29

09 Biblography 30
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CHAPTER 1: INTRODUCTION
Banks are defined in many ways by various authors in the books on economics and commerce.
It is very difficult to define a bank, because a bank performs multifarious functions in many
ways according to their functions. According to the bill of exchange Act 1889 (England)
defines "A Bank includes a body of persons, whether incorporated or not, who carry on the
business of banking ".

A Bank is a financial institution which is involved in borrowing and lending money. Banks take
customer deposits in return for paying customers an annual interest payment. The Bank then
uses the majority of these deposits to lend to other consumers for a variety of loans. The
difference between the two interest rates is effectively the profit margin for offering a service
for people wishing to save. Banks also play an important role in offering finance to business
who wish to invest and expand. These loans and business investment are important for enabling
economic growth.

According to W. Hock "Bank is such an institution which creates money by money only"

According to sir John Pagette "Bank is such a financial institution which collects money in
current, savings or fixed deposits account, collect cheques as deposits and pays money from
the depositors account through cheques".

According to Cairn Cross "Bank is a financial intermediary institution which deals in loans and
advances".

Banking business in India is largely governed by the banking regulation Act 1949 sections 5(b)
"A Bank is a financial institution and a financial intermediary that accepts and channels those
deposits into lending activities, either directly by loaning or indirectly through the capital
market. A bank links together customers that have capital deficits and customers with capital
markets. Without a sound and effective banking system in India it cannot have a healthy
economy.

A bank is a financial institution which accepts deposits, pays interest on pre-defined rates,
clears checks, makes loans, and often acts as an intermediary in financial transactions. It also
provides other financial services to its customers
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Evolution of Banks
The origin of bank or banking activities can be traced to the Roman empire during the
Babylonian period. It was being practised on a very small scale as compared to modern day
banking and frame work was not systematic.

The word bank comes from an Italian word banco. It means a Bench. since Italian merchants
in the Renaissance made deals to borrow and lend money beside a bench. They placed the
money on that bench.

It is of Germanic origin though some persons trace its origin to the French word 'Banqui' and
the Italian word 'Banca'. It referred to a bench for keeping, lending, and exchanging of money
or coins in the market place by money lenders and money changers.

Depending on the definition, the world's oldest bank is either Banca Monte dei Paschi di Siena
or Berenberg Bank. Banca Monte dei Paschi di Siena was founded in its present form in 1624,
but traces its history to a mount of piety founded in 1472.

The concept of banking may have begun in ancient Assyria and Babylonia with merchants
offering loans of grain as collateral within a barter system. Lenders in ancient Greece and
during the Roman Empire added two important innovations: they accepted deposits and
changed money. [citation needed] Archaeology from this period in Iran, ancient China and
India also shows evidence of money lending.

The Bank of England originated the permanent issue of banknotes in 1695.

The Royal Bank of Scotland established the first overdraft facility in 1728. By the beginning
of the 19th century Lubbock's Bank had established a bankers' clearing house in London to
allow multiple banks to clear transactions. The Rothschilds pioneered international finance on
a large scale, financing the purchase of shares in the Suez Canal for the British government in
1875.

Modern banking in India originated in the mid of 18th century. Among the first banks were the
Bank of Hindustan, which was established in 1770 and liquidated in 1829–32; and the General
Bank of India, established in 1786 but failed in 1791.

Modern banks deal with banking activities on a larger scale and abide by the rules made by the
government. The government plays a crucial role with its control over the banking system. This
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calls for bank management, which further ensures quality service to customers and a win-win
situation between the customer, the banks.

Banking system has evolved from barbaric banking where commodities were loaned to the
modern-day banking system, which caters to a range of financial services. The evolution of the
banking system was gradual with growth in each and every aspect of banking. Some of the
major changes which took place are as follows −

● Barter system replaced by money which made transaction uniform

● Uniform laws were setup to increase public trust
● Centralised banks were setup to govern other banks
● Book keeping was evolved from papers to digital format with the introduction of
computers
● ATMs were setup for easier withdrawal of funds
● Internet banking came into existence with development of internet
● Banking system has witnessed unprecedented growth and will be undergoing it in future
too with the advancement in technology.

Types of Banks
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Schedule Bank:
A schedule bank in India which is listed in the 2nd schedule of the Reserve Bank of India
act,1934

Condition for becoming a schedule bank:

1. Minimum capital and reserve and amount should be 25 lakhs

2. The bank should work in interest of depositors.

Schedule Commercial Banks:

Schedule commercial banks in India are categorised into four different groups according to
their ownership and nature of operation. Which are following:

1.Public sector bank:

Public sector banks are banks where a majority stake (I.e., more than 50%) is held by a
government. The shares of these banks are listed on stock exchange. There are a total of 21
public sector banks in India.
2.Private sector bank:
Private sector banks are the banks in which majority of the share capital of bank is held by
Private individuals. These banks are registered as companies with limited liabilities.

Important fact regarding Private Bank

● To start a Bank capital required 500 crores

● Total Assets 5000 crore
In India Two types of private Bank

1. Old Private Bank (Formed before1993)

2. New Private Bank (Formed after 1993)
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Old Private Bank New Private Bank

● City union Bank ● Axis Bank

● Kumar Vysya Bank ● HDFC Bank

● Nalnatal Bank ● DCB Bank

● Karnataka Bank ● ICICI Bank

● Dhan Laxmi Bank ● INDUSIND Bank

● South India Bank ● Yes Bank

● Federal Bank ● Kotak Mahindra Bank

● Jammu and Kashmir Bank ● IDFC Bank

● RBL Bank ● Bandhan Bank

● Lakshmi Vilas Bank

● Catholic Syrian Bank

● Tamilnadu Mercantile Bank

3.Foreign Bank:
These banks are registered and have their headquarter in a foreign country but operate their
branches in our country.

Important fact regarding Foreign Bank

● Minimum capital - 5 billion (500 crore)

● Maintain PSL - 40% - FDI - 74%

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Priority sector lending (PSL)- is a set of Rules/ directives given by RBI to banks in India, which
states that out of total lending by banks, 40% of loans should be given to priority sectors
(Agriculture, MSME, weaker sections, renewable energy, education and housing).

4.Regional Rural Bank:

Regional Rural Banks are scheduled commercial banks (Government Banks) operating at
regional level in different states of India. They have been created with a view to serve primarily
the rural areas of India with basic banking and financial services. However, RBBs may have
branches set up for urban operations and their area of operation may include urban areas too.

Regional Rural Banks are Regulated by NABARD.

Share - 50% Central government, 15% state government, 35% sponsor Bank.

Schedule Co-operative Bank:

A Bank that holds deposits, makes bans and provides other financial services to co-operation.
Also known as Banks for co-operative.

● Co-operative banks in India are registered under the co-operative society Act.

● In Urban areas, they mainly serve small industries and self-employed workers. They are
registered under the co-operative societies Act, 1912. They are regulated by the Reserve Bank
of India under the Banking Regulation Act,1949 and Banking laws Act,1965.

Two types of Banks in co-operative Bank:

1. District central co-operative Banks: These Banks operate at the district level. They
act as a link between Primary credit societies and state co-operative banks.
2. State co-operative Banks: State co-operative Banks are biggest forms of co-operative
banks. They operate at the state level. Some of state co-operative banks operate in multi
states.
2.Non-scheduled Bank:
Non-scheduled banks by define are those which are not listed in the 2nd schedule of the RBI
act, 1934. They don't conform to all the criteria under clause 42, but dully follow specific
guidelines as laid down by RBI. Banks with a reserve capital of less than 5 lakh rupees qualify
as non-scheduled banks.
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Government Bank and Private Bank

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks
are generally resilient and have withstood the global downturn well.

Indian banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.

The digital payments system in India has evolved the most among 25 countries with India’s
Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments
Innovation Index (FPII).

Public Sector Banks (PSBs) are a major type of government owned banks in India, where a
majority stake (i.e. more than 50%) is held by the Ministry of Finance of the Government of
India or State Ministry of Finance of various State Governments of India. The officers working
for these entities and their subsidiaries are gazetted officers. The employees subordinate to the
officers working for these respective entities and their subsidiaries are also full-fledged
government employees. The shares of these banks are listed on stock exchanges. Their main
objective is social welfare.

The "private-sector banks" are banks where greater parts of stake or equity are held by the
private shareholders and not by the government. The private sector banks are split into two
groups, old and new. The old private sector banks existed prior to the nationalisation in 1969
and kept them.

After the nationalisation of major commercial banks in 1969, for well over two decades no new
banks were allowed to be set up in the private sector. In the early 1990s, guidelines for licensing
of new banks in the private sector were issued in January 1993 and subsequently revised in
January 2001.

Private banks play a pivotal role for a country's economic development. They are the major
players in today's market. Private banking system has invited foreign economies to insert into
our developing country. The statistics help us to understand the private sector banks in India.

The contribution of private sector banks towards deposits and advances of scheduled
commercial banks increased from 12.63 percent and 12.56 percent in 2000 to 30.35 percent
and 36.04 percent respectively in 2020. Private banking involves providing banking,
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investment, tax management. Private banks and financial companies are becoming specialised
to offer their financial services to the rural people and farmers.
This is resulting in economic growth of the rural sector in India. Domestic credit to the private
sector (% of GDP) in India was reported at 54.8 percent in 2020. According to the world bank
collection of development indicators, compiled from an officially recognized source.

Difference Between Public Bank and Private Sector Bank

Public Sector Bank Private Sector Bank

Public sector banks are the banks whose Private sector Banks refers to the banks
complete or maximum ownership lies with whose majority of stake is held by the
the government. individuals and corporations.

Owned by the Government. Owned by Private Individuals.

In the public sector Bank maximum of its Private sector Banks maximum of its share
share content by the Government. hold by Private shareholders.

In public sector Bank Interest rate of saving In Private sector Banks Interest rate of saving
is low and loan rate is Higher is Higher and loan rate is low.

In Public sector banks the growth opportunity In Private sector Banks the growth
is low. opportunity is comparatively high.

Public sector Bank customers are large. In Private sector Banks customer base is
relatively low.

In Public sector Bank the job security is In Private sector Banks job security is totally
always present. based on performance.

In the Public sector Bank promotion is based In Private sector Banks promotion is based on
on seniority. merit or performance.
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Importance Of Private Sector Banks:

Over the years, the Indian banking system has evolved to attain excellence and transparency in
providing financial services to customers. It holds the financial conditions of various social
classes of the country.

Public and private banks in India are coming with more flexibility in terms of their offerings
and schemes. But private banks have come in a better position to be people’s best choices.
Private banks in India are better in terms of operational efficiency and innovation level. They
are profit-driven, due to which they provide a better service level.

Private banks were recognized in the 1990s after the LPG policy came into existence. Amongst
the oldest and most famous private banks, Axis Bank and IndusInd Bank are regarded as the
oldest private banks in India started in 1993-94 when the government allowed them to launch
such banks.

Private banks in India are exceptional service providers as they work in a more converse and
competitive environment. They offer more products and services than nationalised banks. They
ensure the privacy and security of the customers.

Currently, only SBI figures among the top 100 global banks by size as on December, 2019.
Large private banks including ICICI and HDFC have size lower than the Spanish bank, which
is ranked 100. Though banks grew significantly over the years, their consolidated total balance
sheet constitutes less than 70 per cent of GDP. This is much less compared to global peers,
particularly for a bank-dominated financial system. For context, in China and Japan it’s over
150 per cent.

Similarly, the HHI index for India is about 0.08 for both credit and deposits, which indicates
an unconcentrated industry. “The share of five largest banks in India is one of the lowest as
compared to

other jurisdictions. However, in terms of cost efficiencies, Indian banks are just at the bottom
of the list, primarily on account of large staff costs. “The net pre-tax profit generated by Indian
banks per unit of operating costs is just about $0.14 million as against a global average of $1
million,” the report observed.
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They give suggestions and recommendations of finance options for real estate. They provide
loans and credit at cheap rates. Various private banks in India assist the clients regarding tax
compliance and the future trends in taxation

Their main functions & activities include:

● They provide services of opening deposit accounts with high-interest rates on savings
accounts and other benefits.
● These banks suggest and decide on different investment strategies for clients to meet
their end results. In other words, they also offer investment planning services.
● They give suggestions and recommendations of finance options for real estate.
● They provide loans and credit at cheap rates.
● Various private banks in India assist the clients regarding tax compliance and the future
trends in taxation.
● Similar to tax trends, private banks aid customers with future uncertainties and risks
including market conditions, interest rate changes, liquidity risks, etc.
● They offer cash flow management of different clients by managing bills and receipts.

Importance Of Profitability in Private Sector Banks

Profitability based measurement on the other hand can serve as a more robust and inclusive
means to measure the performance by gauging the extent of operational efficiency as well as
capturing the nuances of bank’s diversifying earnings through non-interest income activities
and management of their costs.

➔ Sector Profile
ICICI Bank:
ICICI Bank was established by the Industrial Credit and Investment Corporation of India
(ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994 in Vadodara
however the parent company was formed in 1955 as a joint-venture of the World Bank,
India's public-sector banks and public-sector insurance companies to provide project
financing to Indian industry. The parent company was later merged with the bank. The
Industrial Credit and Investment Corporation of India (ICICI) was established on 5 January
1955 and Sir Arcot Ramasamy Mudaliar was elected as the first Chairman of ICICI Ltd.
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Sr. no Title
1 ICICI Revenue 161192 Cr
2 Operating Profit 42261 Cr
3 Net Profit 20220 Cr
4 Total Assets 1573812 Cr
5 Equity Share Capital 153078 Cr
6 Branches 5275
7 ATMs 15589
8 No. of Employee 97354

BOB PROFILE:
An Indian state-owned international banking and financial services corporation, Bank of
Baroda, with its headquarters in Gujarat's Vadodara (formerly known as Baroda). Maharaja
Sayajirao Gaekwad III, the Maharaja of Baroda, established the bank on July 20, 1908. On
July 19, 1969, the Government of India declared the bank, along with 13 other major
commercial banks in India, to be a profit-making Public Sector Undertaking (PSU).

Indian nationals can get nationalised banking services from Bank of Baroda, also known as
BOB or BoB. The state of Gujarat's capital city of Vadodara is home to the Bank of Baroda's
headquarters. The State Bank of India is the highest ranked bank, closely followed by Bank of
Baroda at number four. In the then-princely kingdom of Baroda, Gujarat, it was established in
1908 by the ruler Sayajirao Gaekwad III. The monarch wasn't the lone founder; a number of
other people also contributed to his success. BOB ultimately opened its first branch in the city
of Ahmedabad in the year 1910.

Sr.no Title
1 Bob revenue 87,780.2 Cr
2 Operating profit 6031 Cr
3 net profit 4.31 Cr
4 Total asset 13.4 lakh Cr
5 Equity share capital 1035.53 Cr
6 Branches 9676
7 ATMs More than 9200
8 No. of Employee 79806
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CHAPTER 2. LITERATURE REVIEW

1.) Mitra Roma, Ravi Shankar (2008) A stable and efficient banking sector is an essential
precondition to increase the economic level of a country. This paper this to modes and
evaluate the efficiency of 50 Indian banks. The inefficiency can be analysed and
identified for every evaluated unit. The aim of this paper is to estimate and compare
efficiency of the banking sector in India. The analysis is supposed to verify or reject the
hypothesis whether the banking sector fulfils its intermediation function sufficiently to
compete with the global players. This paper evaluates the performance of banking
sectors India.

2.) Gulati Rachita and Kumar Sunil (2009) Explore the relation between efficiency and
profitability in 51 Indian domestic banks operating in the financial year 2006 -2007.
The empirical result shows that de novo private sector banks dominate in the formation
of the efficient frontier for Indian domestic banking industry. The efficient profitability
matrix reveals that the source utilization process in 22 banks that fall in the “question
mark” and sleeper quadrants is not functioning well and featuring the presence of
consideration wastage of inputs.

3.) Gulati Rachita and Kumar Sunil (2009) To explore the relationship between efficiency
and profitability in 51 Indian domestic banks operating in the financial year 2006-2007.
The empirical results show that de novo private sector banks dominate in the formation
of the efficient frontier for Indian domestic banking Industry. The efficient profitability
matrix reveals that the resource utilization process in 22 banks that fall in the “Question
mark” and sleeper quadrants is not functioning well and featuring the presence of
considerable wastage of inputs. Further, Tamil Nadu Mercantile Bank and Yes Bank
may be considered as an ideal bench mark for the poor performing banks on the
efficiency and profitability dimensions of performance evaluation.

4.) Kumar Satish (2008) In his article on an evaluation of the financial performance of
Indian private sector banks wrote private sector banks play an important role in
development of Indian economy. After liberalization the banking Industry underwent
major changes. The economic reforms totally have changed the banking sector. RBI
permitted new banks to be started in the private sector as per the recommendation of
Narashiman committee. The Indian banking industry was dominated by public sector
banks. But now the situations have changed new generation banks with used of
technology and professional management has gained a reasonable position in the
banking industry.
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5.) Pal and Malik [5] In their research examined the modifications in the financial
individualities of public sector banks, private sector banks and foreign banks in India
based on features, such as liquidity, risk, profitability, and efficiency. To find the
changes, the multi nominal regression analysis was used on the sample of 74 Indian
commercial banks comprising 23 foreign banks, 27 public sector banks and 24 private
sector banks for the period 2000-05. The conclusions propose that foreign banks were
better performers, as compared with the other two sets of banks, in general and in terms
of application of resources in particular during the period decided for the study.

6.) Aparna Bhatia, Poonam Mahajan, Subhash Chander (2012) As financial intermediaries
banks play an important role in the operations of an economy. The paper examines the
determinants of profitability in the private sector banks in India for the years 2006-07
to 2009-10. A sample of 23 banks in the private sector has been taken. Backward
Stepwise Regression Analysis has been used to study the impact of these determinants
on the performance of the banks. Return on Assets (ROA) has been taken as the
dependent variable while other variables as Spread ratio, Provisions and contingencies,
non-interest income, Credit/deposit ratio, Operating expense ratio, Profit per employee,
Business per employee, Investment/deposit ratio, Capital adequacy ratio, non-
performing assets and Type of bank have been controlled in the study. The results show
that Spread ratio, Provisions and contingencies, non-interest income, Operating
expense ratio, Profit per employee, Investment/deposit ratio and non-performing assets
are significant variables in affecting the profitability of banks in the private sector of
Indian economy. It is also suggested that if banks concentrate on these variables, they
would be able to generate better profitability in the present globalised era.

7.) Brenda devi, v (2013) The objective of this study was overall profitability analysis of
different private sectors banks in India based on the performance of profitability ratios
like Interest spread, net profit margin, return on long term fund, return on net worth and
return on asset. Profitability is a measure of efficiency and control it indicates the
efficiency or effectiveness with which the operations of the business are carried on.
Recording profitability for the past period or projecting profitability for the coming
period, measuring profitability is the most important measure of the success of the
business. A business is not profitable cannot survive. Conversely, a business that is
highly profitable has the ability to reward its owners with a large return on their
investment. Increasing profitability is one of the most important tasks of the business
managers. Managers constantly look for ways to change the business to improve
profitability. These potential changes can be analysed with a support of income
statement and balance sheet.

8.) Priya s. (2014) study was primarily based on the secondary data relating on the
profitability of 4 banks (Axis, ICICI, KVB, SIB). And the period of study is 2002-2003
to 2011-2012. The objective of this study was profitability ratios show a company’s
overall efficiency and performance of different private sectors banks in India. The
 18

different profitability ratios were used. And to analysis further the study includes mean,
standard deviation, co-efficient of variation as a statistical tool. The study shows the
role of profitability position of private sectors banks in India. It is the process of
comparing income to output and determining how much profit was made during a
specific time period.

9.) Dr. Pratibha Garg and Surabhi Kumari (2015) Profitability is the ability of a venture to
be financially successful. The perpetual existence of the firms depends on the profit
earning capacity of the firm, which is also considered to be the main factor in
influencing the reputation of the firm. Private bank in India are performing very well
and more and more private banks are coming up with high quality standards since
globalization. Globalization has given way too many foreign banks to set up their
business unit in a developing country like India. This paper represents an empirical
study which examines the profitability from different perspectives of private Banks in
India with a data of 10 years from 2004 to 2014 and five major private Banks have been
considered as sample units. For this analytical study, the Ratio Technique has been used
for analysis and to test hypothesis single Factor ANOVA (F-test) has been applied.

10.) Dr. D. Mahila vasanthi Thangam and Salini K. T. (2016) This study examines
the relationship among the profitability and productivity of Indian commercial banks
both public and private sector banks. Analysis the banks overall profitability and
productivity indices reveal that both public and private sector banks are profitable. This
paper is aimed at examine the profitability and productivity of Indian banks in relation
to each other. The objective is to study the profitability and to evaluate the productivity
of commercial banks with special reference to selected 5 banks in India during the
period 2010-2011 to 2014-2015. The sample are selected through random sampling
technique and data collected from secondary sources. The tools are correlation and T
test.

11.) Priya Agrawal (2019) In view of the significance of improving profitability of

the Banking sector in recent years, the present study is aimed at examining the
profitability of public and private sector banks of India using 4 ratios as return on assets,
return on equity, net interest margin and operating profits. The result of the analysis
carried out for the period 2005-2017 shows that private sector banks are in better
profitable positions than the public sector banks. Public sector banks with increasing
non-performing assets are experiencing negative return on their assets in recent years
which is deteriorating their profits. Also the business operations of private sector banks
are more efficient than the public sector banks which enable them to earn more profits.

12.) Satyakama Mishra, Bibhuti B Pradhan (2019) This paper makes an attempt to
explain the impact of liquidity management on the profitability of private sector banks
in India. For this purpose, 10 private sector banks have been considered for the period
from 2013 to 2017. Cash-Deposit Ratio (CDR), Credit-Deposit Ratio (CRDR) and
 19

Investment-Deposit Ratio (IDR) have been used as independent variables to denote the
liquidity management of the banks, while Return on Assets (ROA) and Return on
Equity (ROE) have been used as dependent variables for the profitability of the banks.
It is found that there is a significant negative effect of CDR and IDR on ROA. However,
in the case of ROE, it is found that there is no significant relationship between banks’
profitability and liquidity taking all the variables into consideration with respect to all
the selected commercial banks in India.

13.) Janki Kathiriya and Paresh Shah (2018) The banking sector in India has a very
big canvas of history. Private banking was started since starting of banking system in
India. New private sector banks is one of the fastest growing sector in India. The PSBs
have been the dominant role in the country’s financial system. Efficiency and
profitability of the banking sector in India has assumed primal importance due to
intense competition, greater customer demands and changing banking reforms. This
study attempts primarily to measure the probability of selected leading private banks in
India. Profitability performance of these banks have been analysed for the period 2007-
08 to 2016-2017. Financial ratio analysis (FRA) method has been used to draw an
overview about financial performance of private sector banks. This paper provides
important seed of knowledge and is very useful for bankers, practitioners and new
researcher.

14.) Poonam Sharma and Neha Mathur (2020), This paper examines 20 papers for
comparative study of NPAs, financial performance and employee morale of public and
private sector banks. Comparative study of public and private sector banks has done
through camel model, t- test, chi- square test and correlation. They took 3 public bank
and 3 private banks as sample of study. The research paper was based on secondary
data. The NPA of the private sector banks is lower than that of public sector banks. It
was found that private sector banks make more profit as compared to the public sector
banks as NPAs of public sector banks are having less CAR. The main aim of the study
was to reduce the rising NPA of public sector banks and improve financial performance.

15.) Dr. A vini infant (2021) The study was based on a secondary data collected from
different banks websites and analysis of annual report. The study consists the 3 private
banks. Banks selected for study are Axis bank, ICICI bank and south Indian bank .
Profitability is the ability of a business to earn profit for its owner. The main objective
of the study was to study the profitability ratio of some private sector bank and examine
the efficiency and overall profitability of banks. The main parameters of study were net
profit margin return of long turn funds, ROE, EPS. Increasing profitability is one of the
most important tasks of the business manager. Limitation of the study was they use only
5 year’s secondary data and cover only profitability ratios as study.
 20

CHAPTER 3 – REASEARCH METHODOLOGY

➔ OBJECTIVE
1.To examine the overall profitability of the selected Banks which are Bank of Baroda
and ICICI.
2.To identify changes of profitability of selected Bank in India.

➔ TIME PERIOD
The Present study proposed to conduct the study in the light of objective referred
above for a period of 5 years 2017-2018 to 2021-2022.

➔ SAMPLE SELECTION
At Present, in India, Banks are classified as: Schedule Bank and Non-Schedule Banks.
Schedule commercial Banks: 1. Public sector Bank 2. Private sector Bank 3. Foreign
Bank 4. Regional Bank and Schedule cooperative Banks as: 1. District central Co-
operative Bank and 2. State co-operative Banks.
In the India, there are total 135 schedule Bank. Out of that 12 public Bank, 21 private
Bank, 10 small bank, 6 payment bank, 43 regional rural Bank, 44 foreign Bank. The
study is executively based on private sector bank and public sector bank out of which
2 appropriate sample of banks shall be selected on criteria that these banks are top
banks in earning profitability and revenue are also high.

➔ DATA COLLECTION
The study is based on secondary data collected from annual report of banks and RBI
Publication.

➔ TOOLS AND COLLECTION

On the basis of objective of the present study appropriate substantial tool such as
mean, standard deviation, coefficient of Variance is used.

➔ Mean
In statistics, the mean is one of the measures of central tendency, apart from the mode
and median. Mean is nothing but the average of the given set of values. It denotes the
equal distribution of values for a given data set. The mean, median and mode are the
three commonly used measures of central tendency.

➔ Standard Deviation
In statistics, the standard deviation is a measure of the amount of variation or
dispersion of a set of values. A low standard deviation indicates that the values tend to
be close to the mean (also called the expected value) of the set, while a high standard
deviation indicates that the values are spread out over a wider range.
Standard deviation may be abbreviated SD, and is most commonly represented in
mathematical texts and equations by the lowercase Greek letter sigma σ, for the
population standard deviation, or the Latin letter s, for the sample standard deviation.
 21

➔ Coefficient of Variance
The coefficient of variation (CV) is a statistical measure of the dispersion of data
points in a data series around the mean. The coefficient of variation represents the
ratio of the standard deviation to the mean, and it is a useful statistic for comparing
the degree of variation from one data series to another, even if the means are
drastically different from one another.

➔ Parameters of the Study

1. Net Profit Margin

Net profit margin measures how much net income is generated as a percentage of
revenues received.
Net profit margin helps investors assess if a Banking company's management is
generating enough profit from its sales and whether operating costs and overhead
costs are being contained.
Net profit margin is one of the most important indicators of a Banking company's
overall financial health.
2. Earning per Share
Earnings per share (EPS) is a company's net profit divided by the number of common
shares it has outstanding.
EPS indicates how much money a company makes for each share of its stock and is a
widely used metric for estimating corporate value.
A higher EPS indicates greater value because investors will pay more for a company's
shares if they think the company has higher profits relative to its share price.
3. Return on Asset
Return on assets is a metric that indicates a company's profitability in relation to its
total assets.
ROA can be used by management, analysts, and investors to determine whether a
company uses its assets efficiently to generate a profit.
You can calculate a company's ROA by dividing its net income by its total assets.
It's always best to compare the ROA of companies within the same industry because
they'll share the same asset base.
ROA factors in a company's debt while return on equity does not.
4. Return on Equity
Return on equity (ROE) is the measure of a company's net income divided by its
shareholders' equity.
ROE is a gauge of a corporation's profitability and how efficiently it generates those
profits.
An ROE is considered satisfactory based on industry standards, though a ratio near
the long-term average of the S&P 500 of around 14% is typically considered
acceptable.
 22

➔ LIMITATIONS

• This study undertook the past data of only 5 years for both the banks. If more data
would have been undertaken, then more in depth analysis can be done and more clear
picture can be formatted.
• This paper studied everything on the basis of data collected from the secondary
sources, so it may not be 100% reliable. And only profitability ratios and descriptive
statistics is only undertaken. If More data and much time would be available, then
clear picture can be plot for the paper background.
 23

CHAPTER 4: DATA ANALYSIS

In an economy that is ever-fluctuating, investors want to know that their money is safe. Since
some banks have performed financial belly-flops, you may want to investigate a bank's
profitability before you place your money in their care. Three primary measures of bank
profitability are known as the "Return on Assets" (ROA), "Return on Equity" (ROE) and the
"Net Interest Margin" (NIM). Ratios are comparisons of various quantities. Use these formulas
to determine the profitability ratio of a bank.

(1) Net Profit Margin

Net profit margin is a profitability ratio that measures what percentage of revenue and other
income is left after subtracting all costs for the business, including costs of goods sold,
operating expenses, interest, and taxes.Net profit margin is one of the most important indicators
of a banking company's overall financial health. This margin also helps investors assess if a
company's management is generating enough profit from its sales and whether operating costs
and overhead costs are being contained.it is calculated as follows:

Net Profit Margin = Net Profit / Revenue * 100

BOB ICICI
2022 0.56 2.01
2021 0.07 1.31
2020 0.04 0.72
2019 0.05 0.34
2018 -0.33 0.77
 24

The amount of net income or profit generated as a percentage of revenue is expressed as the
net profit margin, or simply net margin. It is the proportion of a company's or business
segment's net profits to revenues. From the graph given above we can see that ICICI Bank is
having a great performance and its earning is mostly touching the roofs. The BOB bank is
running a bit slow in their profits and few years were in loss too.

(2) Earning Per Share

The portion of a company's profit allocated to each outstanding share of common stock.
Earnings per share serve
as an indicator of a company's profitability. It is calculated as:
EPS = Earning available / No. of share issued to shareholder

(a)Basic Earnings Per Share

Basic earnings per share (EPS) tells investors how much of a firm's net income was allotted to
each share of common stock. It is reported in a company's income statement and is especially
informative for businesses with only common stock in their capital structures.

BOB ICICI
2022 0.56 2.01
2021 0.07 1.31
2020 0.04 0.72
2019 0.05 0.34
2018 -0.33 0.77
 25

On occasion, analysts will differentiate between basic and diluted EPS. Basic EPS is calculated
by dividing the company's net income by the number of outstanding shares. It is the number
that is most frequently mentioned in financial media and provides the clearest explanation of
EPS. In the diagram, we can see that ICICI bank is running healthy with most of their data
running smoothly while BOB bank is struggling a bit to hold its position to manage their
sharing of EPS.

Diluted Earnings Per Share

Diluted EPS is a calculation used to gauge the quality of a company's earnings per share (EPS)
if all convertible securities were exercised. Convertible securities are all
outstanding convertible preferred shares, convertible debentures, stock options, and warrants.
The diluted EPS will usually be lower than the simple or basic EPS but in the rare case that
there are anti-dilutive securities it may be higher. In this case only the basic EPS is reported in
the financial statements.

YEAR BOB ICICI

2022 0.56 2.01

2021 0.07 1.31

2020 0.04 0.72

2019 0.05 0.34

2018 -0.33 0.77

 26

When all convertible securities are converted, a company's diluted earnings per share (EPS) is
calculated. Securities that can be converted into common stock are referred to as dilutive
securities. A shareholder's current ownership interest is devalued by dilution, which also lowers
a company's earnings per share. From the data and diagram we can see that ICICI bank is
running smoothly as it was before and it is in a healthy condition while BOB bank is managing
their progress and working hard to compete to Private giants.

Return On Equity

Return on equity (ROE) is a measure of financial performance calculated by dividing net

income by shareholders' equity. Because shareholders' equity is equal to a company’s assets
minus its debt, ROE is considered the return on net assets. ROE is considered a gauge of a
corporation's profitability and how efficient it is in generating profits.

YEAR BOB ICICI

2022 0.56 2.01
2021 0.07 1.31
2020 0.04 0.72
2019 0.05 0.34
2018 -0.33 0.77
 27

The Return On Equity ratio effectively calculates the rate of profit that holders of a company's
common stock make on their investments. The company's ability to generate returns on the
investments it has received from its shareholders is measured by its return on equity. From the
data we gathered we can see that ICICI bank is running in a very speed and positive condition
while the BOB is struggling to work and compete with the private entities

Return on Asset

The term return on assets (ROA) refers to a financial ratio that indicates how profitable a
company is in relation to its total assets. Corporate management, analysts, and investors can
use ROA to determine how efficiently a company uses its assets to generate a profit.

YEAR BOB ICICI

2022 0.56 2.01
2021 0.07 1.31
2020 0.04 0.72
2019 0.05 0.34
2018 -0.33 0.77
 28

A financial ratio known as return on assets (ROA) measures a company's profitability in

relation to its total assets. ROA can be used by corporate management, analysts, and investors
to assess how effectively a company uses its resources to make a profit. From the diagram and
charts that we prepared from the data that we collected, we found that ICICI is still in its
efficient condition and BOB is still struggling for their most efforts to manage their profits and
to minimize their expenses.

Thus we can see that from these ratios and from this interpretation we have realised that thee
private entity i.e., ICICI Bank is running very smoothly with most of their profitability ratios
touching the roofs and the firm is running very healthy. While BOB Bank is having their own
level of profitability but they are very small compared to the private corporate giants.
 29

CHAPTER 5: FINDINGS AND CONCLUSIONS

This paper attempts to study the profitability ratios between ICICI Bank and BOB Bank, and
thus there were various things that we found and cleared the objectives. The project had its
findings and results came clear towards ICICI Bank as It is a corporate giant and they have
much customer base and expertise advises. Thus having various advantages over a government
bank, their analysis will majority comes towards the private entities. Realising that most of the
profitability ratios were in favour of ICICI Bank and there were very less or struggling numbers
for BOB, we can understand that BOB's profit margin is a bit low compared to the ICICI Bank
and mostly same for other ratios.
 30

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