Description
Financial Statement Analysis ICICI Bank & Axis Bank
Financial statement Analysis of
ICICI Bank and Axis Bank
Overview
?
Investments ? Short Term Investment ? Long Term Investment
?
Lending ? Short Term Investment ? Long Term Investment
Strategic Analysis
?
Investments: Short Term Investment
Short Term Investment :Capital Adequacy Ratio (CAR)
? This
? Its ? It
is capital to risk weighted assets ratio which signifies the risk exposure of the bank.
minimum limit prescribed by RBI is 9% for scheduled banks. is similar for both ICICI and Axis Bank.
? Both
the banks have CAR in range of 13%
Short Term Investment : CASA Ratio
•
Higher CASA ratio indicates cheaper funds which in turn suggests higher returns for the banks
Short Term Investment : Net Interest Income to Total Funds
? Net
interest is the difference in the interest earned on advances and interest paid on deposits.
? It
signifies the efficiency of utility of funds by bank.
? ICICI
has better efficiency than Axis bank. The only exception was last year when ICICI was hit by global financial crisis.
Short Term Investment : Price to Earnings
• Investments in stock should be primarily based on future earnings of the company • Trailing PE’s are indicative of past performance but not a categorical criteria for investment • Axis looks relatively cheap, so investment decision should be taken in favor of Axis bank
Short Term Investment : Price to Book
• Book value indicates the value of the company on liquidation • Axis looks relatively cheap, so investment decision should be taken in favor of Axis bank • ICICI definitely looks in better shape and priced lower compared to Axis, however ICICI might have strained books which is responsible for is cheaper valuations in terms of book value
Short Term Investment: Credit Deposit Ratio
• • •
Credit- Deposit ratio signifies bank’s performance in its core function i.e. lending. A higher CD Ratio signifies better performance of its lending performance and hence better utilization of funds. The credit deposit ratio is higher for ICICI than Axis Bank.
Short Term Investment: Profitability Ratios
• •
They show the long-term earning power of the company. Higher profit margins mean a more sustainable future earnings
•
Axis bank is better based on these ratios
Short Term Investment: Beta Value
• •
•
• •
? value signifies the volatility of the stock as compared to the movement of the Sensex. ? Value>1 signifies that the movement in stock is proportionately more than the market movement. ? Value>1 signifies that the movement in stock is proportionately less than the market movement. The ? Value of ICICI Bank is 1.34 and that for Axis Bank is 1.2. In a bullish market ICICI would be a better investment because it will give higher capital returns
Short Term Investment: Cash Flow from operating activities
• • •
A positive value of cash flow from Operating activities indicates negative credit growth. Cash flow from operating activities for ICICI was negative in last two years as compared to high positive value Axis Bank. This was basically due to withdrawal of deposits from the bank during the financial crisis and doesn’t mean that the bank has performed well.
Short Term Investment - Recommendations
• • • •
Looking at the above mentioned parameters, it would be better to invest in Axis Bank Axis bank has been growing even during this crisis period as it has good mix of income from various sources ICICI books are primarily strained because of huge retail lending portfolio which is almost 60% and its derivatives exposure. The retail portfolio will be adversely hit during times of recession by adding more complexity to its lending portfolio impacting its ALM (Asset Liability maturity) management Looking at relative valuations ICICI’s PE is comparatively higher than Axis and other private banks
•
Long Term Investment
Long Term Investment : Capital Adequacy ratio
• A safe CAR is required to ensure that the company can keep on growing by advancing more loans. • Both the banks have safe Capital Adequacy Ratio in the range of 12-14%. • Both banks seem to be pretty safe in terms of CAR.
Long Term Investment : Business Per Employee
• Business per employee is directly related to the efficiency of the company • Business per employee has remained almost constant for all 5 years for Axis Bank. Though there was a increase in it in the year of 2008. • For ICICI, it has been regularly increasing reaching a maximum value at 11.54 crores in 2009. though there was a dip in 2008 which can be attributed to the financial crisis.
Long Term Investment : Dividend Payout Ratio
• DPR is defined as the ratio of DPS and EPS • It signifies the proportion of earnings paid out as dividends and shows the growth plan of the company • Lower the Dividend Pay out, higher the retention ratio which in turn signifies higher growth • For ICICI, the value is around 33% whereas for axis bank it is 22% • This also indicates that there are better growth prospects for Axis bank
Long Term Investment : Return on Equity
• It shows the ratio of profit and net worth of the company. • Higher ROE indicates better returns to the shareholders. • ROE for Axis Bank is much higher as compared to that of ICICI Bank
Long Term Investment : Other Income/Total Income
• Other income consists of fee income from guarantee, underwriting commissions, credit card commissions, fees from merchant banking, income from money market instruments etc. • ICICI derives significant part of its income from other non interest income which indicates more diversified in its operations. • ICICI will fare well during times of boom as they have greater transactions in securities trading, merchant banking etc
Long Term Investment : Return on Asset
• It shows the ratio of profit to the total assets of the company. • Higher ROA indicates better efficiency • ROA for Axis Bank has improved over time. This shows better managerial efficiency
Long Term Investment: Net Interest Margin
•
•
•
Net interest margin is the net interest income earned by the bank on its average earning assets. These assets comprises of advances, investments, balance with the RBI and money at call NIM = Interest income – Interest expenses / Average earning assets Since Axis has higher NIM%, it indicates better earnings through loan interest income hence indicating stable and higher income over long term
Long Term Investment: CASA Ratio
• • •
CASA ratio = Current account & savings account deposits / Total deposits Higher CASA ratio indicates cheaper funds hence better earnings In the long run, Axis has better prospects due to better CASA ratio.
Long Term Investment: Gross NPA
• •
GNPA indicates defaults in advances, which indicates losses for the banks. In the long run this is not for the good health of the bank Axis has reduced its NPA over time. Thus it seems to be better investment
Long Term Investment: Net NPA
• • •
Net NPAs are calculated by reducing cumulative balance of provisions outstanding in a period from gross NPAs. Higher ratio reflects rising bad quality of loans which is not in the favour of the company in the long run Axis has considerable reduced its Net NPA’s through higher provisions and also reducing its overall non performing asset portfolio
Long Term Investment: Net Profit Margin
• • •
Net Profit margin indicates profitability of the bank Axis bank has improved its profitability after becoming private in 2006 As per this ratio we can say that Axis banks looks better than ICICI as how in the figure
Net Profit margin
20 15 10 ICICI Axis
5
0 Year 2007
2005
2006
2008
2009
Long Term Investment - Recommendation
•
Axis has better growth opportunities in the future because of its access to cheaper funds and can be expected to deliver better returns in the long run Axis has higher CASA,ROE, ROA, NIM and lower GNPA and NNPA. Cash Flow from operations for Axis bank is positive and hence there is scope to lend more money in the future Axis is cheap compared to other private banks in terms of PE, however it has higher Price to book which negates the investment decision However based on all these ratios Axis bank is the stock to be invested for long term
• • •
•
Lending: Short Term Lending
Short-Term Lending: Cash Deposit Ratio
•
•
Axis Bank is not in very comfortable position due to lower Cash Deposit Ratio during recent years In the short run Axis is expected to have liquidity problems.
Short Term Lending: Deposits Growth Rate
•
In recent years, due to financial crisis, the deposits for ICICI have fallen, but overall deposits of ICICI bank are much higher than Axis Bank
Short Term Lending: Investments / Deposit Ratio
• • •
Generally Investments by banks are held in liquid form e.g. T-Bills Thus, higher this ratio, better the liquidity position of the bank ICICI has a better ratio in recent years. So, it seems to be a good option for short-term lending
Short-Term Lending - Recommendations
•
Due to lower cash deposit ratio, Axis Bank has more chances of defaulting in the short run. This can also be attributed to efficiency of the management. ICICI has better Investment-deposit Ratio, this is because of decrease in deposit due to global Financial Crisis. Similarly Axis Bank’s decrease in ratio can be attributed to increase in deposits In the Short run, Axis Bank seems to be a better borrower.
•
•
Long Term Lending
Long-Term Lending: CAR Tier I
Tier I capital is the most permanent and readily available support against unexpected losses. Higher CAR Tier I is good for the Bank in the long run. Both the banks have almost similar CAR Tier I.
Long Term Lending: Return on Asset
• It shows the ratio of profit to the total assets of the company. • Higher ROA indicates better efficiency • ROA for Axis Bank has improved over time. This shows better managerial efficiency
Long-Term Lending: Total Asset Base
• • •
Total Asset Base represents scale of operations of the bank Total Asset base of ICICI bank is almost 4 times as large as that of Axis Bank ICICI bank has better market penetration due to more branches all over India
Long Term Lending: Gross NPA
• •
GNPA indicates defaults in advances, which indicates losses for the banks. In the long run this is not for the good health of the bank Axis has reduced its NPA over time. Thus it seems have better managerial efficiency and less future losses. Hence it would be the preferred bank for lending in the long run.
Long Term Lending: Net NPA
• • •
Net NPAs are calculated by reducing cumulative balance of provisions outstanding in a period from gross NPAs. Higher ratio reflects rising bad quality of loans which is not in the favour of the company in the long run Axis has considerable reduced its Net NPA’s through higher provisions and also reducing its overall non performing asset portfolio. So in the long run it is expected to have better earnings
Long Term Lending: Non financials
•
For long term lending, the following non-financial parameters, should also be taken into consideration
• Diversity of business, • size of the bank which determines the strength it exercises
through Market Capitalization
• Management quality and reputation • Corporate Relations of Management • Corporate governance
• Organizational structure
Long Term Lending: Credit Rating
• • • • •
Before giving loans the lender has to measure the default, measure and operational risk of the bank They have to measure default risk, market risk and operational risk of the bank The non financial parameters are also to be taken into consideration All of these are incorporated in the CR given by the credit rating agency The agency also check the operating cash flow and other profitability ratios to give a credit rating .
As per Fitch Ratings, For long term loans, both the banks have following ratings •ICICI BBB•Axis BBB Axis has a better rating.
Long-Term Lending - Recommendations
•
The purpose for utilization of long term loans for both the banks are for giving out advances. This can be ascertained by analyzing their PAT and Gross Block. Total asset base of ICICI is more than that of Axis, which provides more security for the loan. On basis of Gross and Net NPA Axis Bank would be our preference because it has less chances of loss due to defaults in the future. ROA of Axis Bank is Higher which denotes better efficiency on the long run. Credit rating of Axis Bank is better than ICICI basically due to rerating of ICICI due to financial crisis. Going with the current trend, Axis Bank will be our preference. On the whole, Axis Bank seems to be a better borrower in the long term
• • • •
•
Strategic Analysis
Ratios – ICICI Bank
2005 CAR NIM GNPA NNPA NPM ROE ROA 7.59 2.8 1.2 0.9 15.34 19.51 1.2 2006 9.2 2.7 1.5 0.7 11.76 14.62 1.3 2007 7.42 2.6 2.1 1 11.77 13.37 1.1 2008 11.76 2.2 3.3 1.5 10.5 11.75 1.1 2009 11.84 2.4 4.3 2 9.71 7.85 1
Ratios – Axis Bank
2005 CAR 8.87 2006 7.26 2007 6.42 2008 10.17 2009 9.26
NIM
GNPA NNPA NPM
2.32
2.2 1.07 14.29
2.17
1.7 0.75 13.41
2.89
1.25 0.55 11.83
3.7
0.83 0.36 12.16
3.33
1.09 0.35 13.21
ROE
ROA
18.88
1
18.37
1.1
21.0
1.31
17.61
1.24
19.13
1.44
Risk Portfolio – Non Performing Assets to Total Assets
? ICICI’s
non performing assets form a large proportion of net assets which is about % while HDFC’s form about 0.90%
? This
reflects on the inability of ICICI to recover its loans.
should properly evaluate its risk associated with its loans.
? ICICI
Recommendations – ICICI Bank
?
The NPM of the bank has shown a decreasing trend over last years which has reflected badly on its ROE.
?
With the revision of the criteria for recognizing NPA, the NPA’s of the bank has increased tremendously. The ICICI should be thus more careful in giving loans.
Over the last three years ROA of the bank has decreased. The management should look into matters for efficient utilization of assets NIM has also reduced. This could be basically attributed to the volatility in rates in the recent years. Looking at the recent trends the bank should take steps to improve NIM. There have been deposit withdraws from the bank after the bank was personally affected by the crisis. The bank has to rebuild its reputation to bring back the deposits
?
?
?
Recommendations – Axis Bank
?
The NPM of the bank has shown a decreasing trend over last years which has reflected badly on its ROE. Even after the revision of the criteria for recognizing NPA, the NPA’s of the bank has decreased. It seems the bank is overcautious in giving loans. Axis thus should try to relax its stringent policies Over the last three years ROA of the bank has increased. This is basically due to change in management after its privatization. The low cash credit ratio shows the efficiency of the bank. NIM has also increased even after such volatile interest rates in the recent years Basically the bank has to improve its credit-deposit ratio to improve profitability.
?
?
Thank You
doc_742521797.pptx
Financial Statement Analysis ICICI Bank & Axis Bank
Financial statement Analysis of
ICICI Bank and Axis Bank
Overview
?
Investments ? Short Term Investment ? Long Term Investment
?
Lending ? Short Term Investment ? Long Term Investment
Strategic Analysis
?
Investments: Short Term Investment
Short Term Investment :Capital Adequacy Ratio (CAR)
? This
? Its ? It
is capital to risk weighted assets ratio which signifies the risk exposure of the bank.
minimum limit prescribed by RBI is 9% for scheduled banks. is similar for both ICICI and Axis Bank.
? Both
the banks have CAR in range of 13%
Short Term Investment : CASA Ratio
•
Higher CASA ratio indicates cheaper funds which in turn suggests higher returns for the banks
Short Term Investment : Net Interest Income to Total Funds
? Net
interest is the difference in the interest earned on advances and interest paid on deposits.
? It
signifies the efficiency of utility of funds by bank.
? ICICI
has better efficiency than Axis bank. The only exception was last year when ICICI was hit by global financial crisis.
Short Term Investment : Price to Earnings
• Investments in stock should be primarily based on future earnings of the company • Trailing PE’s are indicative of past performance but not a categorical criteria for investment • Axis looks relatively cheap, so investment decision should be taken in favor of Axis bank
Short Term Investment : Price to Book
• Book value indicates the value of the company on liquidation • Axis looks relatively cheap, so investment decision should be taken in favor of Axis bank • ICICI definitely looks in better shape and priced lower compared to Axis, however ICICI might have strained books which is responsible for is cheaper valuations in terms of book value
Short Term Investment: Credit Deposit Ratio
• • •
Credit- Deposit ratio signifies bank’s performance in its core function i.e. lending. A higher CD Ratio signifies better performance of its lending performance and hence better utilization of funds. The credit deposit ratio is higher for ICICI than Axis Bank.
Short Term Investment: Profitability Ratios
• •
They show the long-term earning power of the company. Higher profit margins mean a more sustainable future earnings
•
Axis bank is better based on these ratios
Short Term Investment: Beta Value
• •
•
• •
? value signifies the volatility of the stock as compared to the movement of the Sensex. ? Value>1 signifies that the movement in stock is proportionately more than the market movement. ? Value>1 signifies that the movement in stock is proportionately less than the market movement. The ? Value of ICICI Bank is 1.34 and that for Axis Bank is 1.2. In a bullish market ICICI would be a better investment because it will give higher capital returns
Short Term Investment: Cash Flow from operating activities
• • •
A positive value of cash flow from Operating activities indicates negative credit growth. Cash flow from operating activities for ICICI was negative in last two years as compared to high positive value Axis Bank. This was basically due to withdrawal of deposits from the bank during the financial crisis and doesn’t mean that the bank has performed well.
Short Term Investment - Recommendations
• • • •
Looking at the above mentioned parameters, it would be better to invest in Axis Bank Axis bank has been growing even during this crisis period as it has good mix of income from various sources ICICI books are primarily strained because of huge retail lending portfolio which is almost 60% and its derivatives exposure. The retail portfolio will be adversely hit during times of recession by adding more complexity to its lending portfolio impacting its ALM (Asset Liability maturity) management Looking at relative valuations ICICI’s PE is comparatively higher than Axis and other private banks
•
Long Term Investment
Long Term Investment : Capital Adequacy ratio
• A safe CAR is required to ensure that the company can keep on growing by advancing more loans. • Both the banks have safe Capital Adequacy Ratio in the range of 12-14%. • Both banks seem to be pretty safe in terms of CAR.
Long Term Investment : Business Per Employee
• Business per employee is directly related to the efficiency of the company • Business per employee has remained almost constant for all 5 years for Axis Bank. Though there was a increase in it in the year of 2008. • For ICICI, it has been regularly increasing reaching a maximum value at 11.54 crores in 2009. though there was a dip in 2008 which can be attributed to the financial crisis.
Long Term Investment : Dividend Payout Ratio
• DPR is defined as the ratio of DPS and EPS • It signifies the proportion of earnings paid out as dividends and shows the growth plan of the company • Lower the Dividend Pay out, higher the retention ratio which in turn signifies higher growth • For ICICI, the value is around 33% whereas for axis bank it is 22% • This also indicates that there are better growth prospects for Axis bank
Long Term Investment : Return on Equity
• It shows the ratio of profit and net worth of the company. • Higher ROE indicates better returns to the shareholders. • ROE for Axis Bank is much higher as compared to that of ICICI Bank
Long Term Investment : Other Income/Total Income
• Other income consists of fee income from guarantee, underwriting commissions, credit card commissions, fees from merchant banking, income from money market instruments etc. • ICICI derives significant part of its income from other non interest income which indicates more diversified in its operations. • ICICI will fare well during times of boom as they have greater transactions in securities trading, merchant banking etc
Long Term Investment : Return on Asset
• It shows the ratio of profit to the total assets of the company. • Higher ROA indicates better efficiency • ROA for Axis Bank has improved over time. This shows better managerial efficiency
Long Term Investment: Net Interest Margin
•
•
•
Net interest margin is the net interest income earned by the bank on its average earning assets. These assets comprises of advances, investments, balance with the RBI and money at call NIM = Interest income – Interest expenses / Average earning assets Since Axis has higher NIM%, it indicates better earnings through loan interest income hence indicating stable and higher income over long term
Long Term Investment: CASA Ratio
• • •
CASA ratio = Current account & savings account deposits / Total deposits Higher CASA ratio indicates cheaper funds hence better earnings In the long run, Axis has better prospects due to better CASA ratio.
Long Term Investment: Gross NPA
• •
GNPA indicates defaults in advances, which indicates losses for the banks. In the long run this is not for the good health of the bank Axis has reduced its NPA over time. Thus it seems to be better investment
Long Term Investment: Net NPA
• • •
Net NPAs are calculated by reducing cumulative balance of provisions outstanding in a period from gross NPAs. Higher ratio reflects rising bad quality of loans which is not in the favour of the company in the long run Axis has considerable reduced its Net NPA’s through higher provisions and also reducing its overall non performing asset portfolio
Long Term Investment: Net Profit Margin
• • •
Net Profit margin indicates profitability of the bank Axis bank has improved its profitability after becoming private in 2006 As per this ratio we can say that Axis banks looks better than ICICI as how in the figure
Net Profit margin
20 15 10 ICICI Axis
5
0 Year 2007
2005
2006
2008
2009
Long Term Investment - Recommendation
•
Axis has better growth opportunities in the future because of its access to cheaper funds and can be expected to deliver better returns in the long run Axis has higher CASA,ROE, ROA, NIM and lower GNPA and NNPA. Cash Flow from operations for Axis bank is positive and hence there is scope to lend more money in the future Axis is cheap compared to other private banks in terms of PE, however it has higher Price to book which negates the investment decision However based on all these ratios Axis bank is the stock to be invested for long term
• • •
•
Lending: Short Term Lending
Short-Term Lending: Cash Deposit Ratio
•
•
Axis Bank is not in very comfortable position due to lower Cash Deposit Ratio during recent years In the short run Axis is expected to have liquidity problems.
Short Term Lending: Deposits Growth Rate
•
In recent years, due to financial crisis, the deposits for ICICI have fallen, but overall deposits of ICICI bank are much higher than Axis Bank
Short Term Lending: Investments / Deposit Ratio
• • •
Generally Investments by banks are held in liquid form e.g. T-Bills Thus, higher this ratio, better the liquidity position of the bank ICICI has a better ratio in recent years. So, it seems to be a good option for short-term lending
Short-Term Lending - Recommendations
•
Due to lower cash deposit ratio, Axis Bank has more chances of defaulting in the short run. This can also be attributed to efficiency of the management. ICICI has better Investment-deposit Ratio, this is because of decrease in deposit due to global Financial Crisis. Similarly Axis Bank’s decrease in ratio can be attributed to increase in deposits In the Short run, Axis Bank seems to be a better borrower.
•
•
Long Term Lending
Long-Term Lending: CAR Tier I
Tier I capital is the most permanent and readily available support against unexpected losses. Higher CAR Tier I is good for the Bank in the long run. Both the banks have almost similar CAR Tier I.
Long Term Lending: Return on Asset
• It shows the ratio of profit to the total assets of the company. • Higher ROA indicates better efficiency • ROA for Axis Bank has improved over time. This shows better managerial efficiency
Long-Term Lending: Total Asset Base
• • •
Total Asset Base represents scale of operations of the bank Total Asset base of ICICI bank is almost 4 times as large as that of Axis Bank ICICI bank has better market penetration due to more branches all over India
Long Term Lending: Gross NPA
• •
GNPA indicates defaults in advances, which indicates losses for the banks. In the long run this is not for the good health of the bank Axis has reduced its NPA over time. Thus it seems have better managerial efficiency and less future losses. Hence it would be the preferred bank for lending in the long run.
Long Term Lending: Net NPA
• • •
Net NPAs are calculated by reducing cumulative balance of provisions outstanding in a period from gross NPAs. Higher ratio reflects rising bad quality of loans which is not in the favour of the company in the long run Axis has considerable reduced its Net NPA’s through higher provisions and also reducing its overall non performing asset portfolio. So in the long run it is expected to have better earnings
Long Term Lending: Non financials
•
For long term lending, the following non-financial parameters, should also be taken into consideration
• Diversity of business, • size of the bank which determines the strength it exercises
through Market Capitalization
• Management quality and reputation • Corporate Relations of Management • Corporate governance
• Organizational structure
Long Term Lending: Credit Rating
• • • • •
Before giving loans the lender has to measure the default, measure and operational risk of the bank They have to measure default risk, market risk and operational risk of the bank The non financial parameters are also to be taken into consideration All of these are incorporated in the CR given by the credit rating agency The agency also check the operating cash flow and other profitability ratios to give a credit rating .
As per Fitch Ratings, For long term loans, both the banks have following ratings •ICICI BBB•Axis BBB Axis has a better rating.
Long-Term Lending - Recommendations
•
The purpose for utilization of long term loans for both the banks are for giving out advances. This can be ascertained by analyzing their PAT and Gross Block. Total asset base of ICICI is more than that of Axis, which provides more security for the loan. On basis of Gross and Net NPA Axis Bank would be our preference because it has less chances of loss due to defaults in the future. ROA of Axis Bank is Higher which denotes better efficiency on the long run. Credit rating of Axis Bank is better than ICICI basically due to rerating of ICICI due to financial crisis. Going with the current trend, Axis Bank will be our preference. On the whole, Axis Bank seems to be a better borrower in the long term
• • • •
•
Strategic Analysis
Ratios – ICICI Bank
2005 CAR NIM GNPA NNPA NPM ROE ROA 7.59 2.8 1.2 0.9 15.34 19.51 1.2 2006 9.2 2.7 1.5 0.7 11.76 14.62 1.3 2007 7.42 2.6 2.1 1 11.77 13.37 1.1 2008 11.76 2.2 3.3 1.5 10.5 11.75 1.1 2009 11.84 2.4 4.3 2 9.71 7.85 1
Ratios – Axis Bank
2005 CAR 8.87 2006 7.26 2007 6.42 2008 10.17 2009 9.26
NIM
GNPA NNPA NPM
2.32
2.2 1.07 14.29
2.17
1.7 0.75 13.41
2.89
1.25 0.55 11.83
3.7
0.83 0.36 12.16
3.33
1.09 0.35 13.21
ROE
ROA
18.88
1
18.37
1.1
21.0
1.31
17.61
1.24
19.13
1.44
Risk Portfolio – Non Performing Assets to Total Assets
? ICICI’s
non performing assets form a large proportion of net assets which is about % while HDFC’s form about 0.90%
? This
reflects on the inability of ICICI to recover its loans.
should properly evaluate its risk associated with its loans.
? ICICI
Recommendations – ICICI Bank
?
The NPM of the bank has shown a decreasing trend over last years which has reflected badly on its ROE.
?
With the revision of the criteria for recognizing NPA, the NPA’s of the bank has increased tremendously. The ICICI should be thus more careful in giving loans.
Over the last three years ROA of the bank has decreased. The management should look into matters for efficient utilization of assets NIM has also reduced. This could be basically attributed to the volatility in rates in the recent years. Looking at the recent trends the bank should take steps to improve NIM. There have been deposit withdraws from the bank after the bank was personally affected by the crisis. The bank has to rebuild its reputation to bring back the deposits
?
?
?
Recommendations – Axis Bank
?
The NPM of the bank has shown a decreasing trend over last years which has reflected badly on its ROE. Even after the revision of the criteria for recognizing NPA, the NPA’s of the bank has decreased. It seems the bank is overcautious in giving loans. Axis thus should try to relax its stringent policies Over the last three years ROA of the bank has increased. This is basically due to change in management after its privatization. The low cash credit ratio shows the efficiency of the bank. NIM has also increased even after such volatile interest rates in the recent years Basically the bank has to improve its credit-deposit ratio to improve profitability.
?
?
Thank You
doc_742521797.pptx