CHAPTER – I

INTRODUCTION AND RESEARCH DESIGN

INTRODUCTION

A sound and effective banking system is the backbone of an economy. The

economy of a country can function smoothly and without many hassles if the banking
system backing it is not only flexible but also capable of meeting the new challenges
posed by the technology and other external as well as internal factors.

The importance and role of information technology for achieving this

beginning objective cannot be undermined. There is an urgent need for not only
technology up-gradation but also its integration with the general way of functioning of
banks.

Banking has undergone a sea change over the past decades-gone are the days
of sour-faced clerks and long cheques. With the arrival of foreign and private banks,
customers are blooded with options starting from ATM to phone banking to number
of other customized services. Banks have become centers for wealth maximization,
strategizing long-term investment and loans.

DEFINITION OF BANKING

Banking Means “Accepting Deposits for the purpose of lending of investing of

deposits of money from the public, repayable on demand or otherwise and withdraw
by cheque, draft or otherwise”.

-Banking Companies (regulation) Act, 1949

Every financial manager is involved in his financial decision making and

financial planning. In order to take right decision at right time he should be equipped
either sufficient present and past information about the firm and its operations or how
it is changing over time. Much of this information that is used by a finance manger is
known as financial information and derived from the basic financial statements. An

1
understanding of basic financial statements and analysis of the statement is therefore a
necessary step in the corporate financial management.

SCOPE OF THE STUDY

The present study is useful for the bank under the study because it deals with
the financial performance of the bank. The management can extract the finding and
suggestions for better and sound banking systems in India.

PERIOD OF THE STUDY

This study covers a period of 5 years from 2008 – 2012. Data related to the 5
years collected from the annual reports of the Bank.

OBJECTIVES

 To know the overall financial performance of the bank.

 To find out the present financial position and study the future prospects.
 To know the business growth in terms of financial as well as the expansional
aspects.
 To identify the changes in financial position through common size balance
sheet and comparative balance sheet.
 To infer findings and offer suggestions for the development of the banks.

METHODOLOGY

Research Method

The method of research for the study is ‘Descriptive Research’. The purpose
of research is describing the state of affairs as it exist at present. The study describes
about the position and soundness of the study.

Data Collection

The data required for the study were collected from the secondary sources.
The figures were taken from the annual reports, management information reports and
manuals. The data were collected through the bank’s web sites and the bank’s annual
reports.

Tools Applied
2
 The data were analysed by applying certain financial tools in the study which
are as follows:

 Ratio Analysis
 Comparative Statement Analysis
 Common Size Statement Analysis
 Trend Analysis

LIMITATIONS

 The period of the study is restricted to five years only i.e., from 2007 – 2008
to 2011 – 2012.
 The past performances of the bank are not be included in this study.
 The study does not included the quality of services offered by the bank.

CHAPTER SCHEME

CHAPTER I - INTRODUCTION AND RESEARCH DESIGN

CHAPTER II - PROFILE OF THE UNION BANK OF INDIA

CHAPTER III - FINANCIAL ANALYSIS - AN OVERVIEW

CHAPTER IV - ANALYSIS OF FINANCIAL PERFORMANCE

CHAPTER V - FINDINGS, SUGGESTIONS AND CONCLUSION

CHAPTER – II

3
 PROFILE OF THE UNION BANK OF INDIA

INDUSTRY PROFILE

Banking in India originated in the first decade of 18 th century with The

General Bank of India coming into existence in 1786. This was followed by Bank in
existence by Bank of Hindustan. Both these banks are now defunct. The oldest bank
existence in India is the State Bank of India being established as The Bank of Bengal
in Calcutta in 1806. A couple of decades later, foreign banks like Credit Lyonnais
Started their Calcutta operations in the 1850’s. At that point of time, Calcutta was the
most active trading pert, mainly due to the trade of the British Empire, and due to
which banking activity took roots there and proposed. The first fully Indian owned
bank was the ‘Allahabad Bank’, established in 1865.

By the 1990s, the market expanded with the establishment of banks such as
Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai –
both of which were founded under private ownership. The Reserve Bank of India
formally took on the responsibility of regulating the Indian banking sector from 1935.
After India’s independence in 1947, the Reserve Bank was nationalised and given
broader powers.

Early History

At the end of late-18th century, there were hardly any banks in India in the
modern sense if the term. At the time of the American Civil War, a void was created
as the supply of cotton to Lancashire stopped from the Americas. Some banks were
opened at that time which functioned as entities to finance industry, including
speculative trades in cotton. With large exposure to speculative ventures, most of the
banks opened in India during that period could not survive and failed.

The banking in India was controlled and dominated by the presidency banks,
namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras – which
later on merged to from the Imperial Bank of India, and Imperial Bank of India. There
were also some exchange banks, as also a number of India joint Stock banks. All
these banks operated in different segments of the economy.

4
Post-Independence

The partition of India in 1947 had adversely impacted the economies of

Punjab and West Bengal, and banking activities had remained paralysed for months.
India’s independence marked the end of a regime if the Laissez-faire for the Indian
Banking.

The Government of India initiated measures to play an active role in the

economic life of the nation, and the Industrial Policy Resolution adopted by the
government in 1948 envisaged a mixed economy. This resulted into greater
involvement of the state in different segments of the economy including banking and
finance. The major steps to regulate banking included.

In 1948 the Reserve Bank of India’s central banking authority, was

nationalised, and it became an institution owned by the Government of India. In 1949,
the Banking Regulation Act was enacted, control, and inspect the banks in India.

The Banking regulation Act also provided that no new bank or branch of an
existing bank may be opened without a license from the RBI, and no two banks could
have common directors. However, despite these provisions, control and regulations,
banks in India expect private persons. This changed with the nationalisation of major
banks in India on 19thh July, 1969.

Nationalisation

By the 1960’s, the Indian banking industry has become an important tool to
facilitate to development of the Indian economy. At the same time, it has emerged as
a large employer, and a debate has ensured about the possibility to nationalize the
banking industry. The GOI issued an ordinance and nationalized the 14 largest
commercial banks with effect from the midnight of July 19, 1969. A second dose of
nationalization of 6 more commercial banks followed in 1980.

Nationalised Banks

1. Allahabad Bank

5
 2. Andhra Bank
3. Bank Of Baroda
4. Bank Of India
5. Bank Of Maharashtra
6. Canara Bank
7. Central Bank Of India
8. Corporation Bank
9. Indian Bank
10. Indian Overseas Bank
11. Punjab And Sind Bank
12. Punjab National Bank
13. State Bank Of/Bikaner & Jaipur
14. State Bank Of Hyderabad
15. State Bank Of India
16. State Bank Of Indore
17. State Bank Of Mysore
18. State Bank Of Patiala
19. State Bank Of Saurashtra
20. State Bank Of Travancore
21. Union Bank Of India

Liberalization

In the early 1990’s the then Narasimha Rao government embarked on a policy of
liberalisation and gave liberalization and gave license to a small number of private
banks, which came to be known as New Generation tech-savvy banks, which included
banks such as UTI Bank(now re-named as Axis Bank)( the first of such new
generation banks to be set up). ICICI Bank and HDFC Bank. This move, Along with
the rapid growth in the economy of India, kick started the banking sector in India,
which has seen rapid growth with strong contribution from all the three sector of
banks, namely government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up with three proposed
relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in

6
banks may be given voting rights which could exceed the present cap of 10%, at
present it has gone up to 49% with some restrictions.

Current Situation

Current banking in India is generally fairly mature in terms of supply, product

ranges and reach-even through reach in rural India still remains a challenge for the
private sector and foreign banks. In terms of quality of assets and capital adequacy,
Indian banks are considered to have clean, strong and transparent balance sheets
relative to other banks in comparable economies in its region.

The RBI is an autonomous body, with minimal pressure from the government.
The stated policy of the Bank in the Indian Rupee is to manage volatility but without
any fixed exchange rate and this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some
time especially in its services sector the demand for banking services, especially retail
banking, mortgages and investment services are expected to be strong. One may also
expect M & As, takeovers, and asset sales.

In March 2006, the RBI allowed Warbaurg Pincus to increase its stacking in
Kotak Mahindra Bank (a private sector Bank) to 10%. This is first time and investor
has been allowed to hold more than 5% in private sector bank since the RBI
announced norms in 2005 that any stake exceeding 5% in the private sector banks
would need to be vetted by them.

Currently, India has 88 schedule commercial banks (SCBs) – 28 public sector

banks (that is with the Government of India holding a stake), 29 private banks (these
do not have government stake ; they may be publicity listed and traded on stock
exchanges) and 31 foreign banks. They have a combined network over 53,000
branches and 17,000 ATM’s.

According to report by ICRA Limited, a rating agency, the public sector banks
hold over 75% of total assets of the banking industry, with the private and foreign
banks holding 18.2% and 6.5% respectively.

BANK PROFILE

7
 UNION BANK OF INDIA

Union Bank of India (UBI) (BSE: 532477) is one of the largest public sector banks
of India (the government owns 55.43% of its share capital remains public, private
organizations and foreign companies), is listed on the Forbes 2000. It has assets of
USD 13.45 billion and all the bank's branches have been networked with its 4129
ATMs. Its online Telebanking facility are available to all its Core Banking Customers
- individual as well as corporate. It has representative offices in Abu Dhabi, United
Arab Emirates, Beijing, Peoples Republic of China, London, Shanghai, and Sydney,
and a branch in Hong Kong.

The bank is in the process of upgrading its representative offices in London

and Sydney to branches. It also is working on establishing branches in Dubai (in the
Dubai International Financial Centre), and in Antwerp.

OVERVIEW
A glorious Past – A Brighter Future
Union Bank of India (UBI) was registered on 11 November 1919 as a limited
company in Mumbai.
The head office building of the Bank in Mumbai was inaugurated by Mahatma
Gandhi, the father of our nation in the year 1921.

“We should have the ability to carry in a big hank, to manage efficiently crores of
rupees in the course if our national activities. Though we have not many banks among
us, it does not follow that we are not capable of efficiently managing crores and tens
of rupees.

His prescient words anticipated the growth of the bank that has taken place in the
decades that followed. The bank now operates through over 2800 branches across the
country. The bank’s core values of prudent management without ignoring
opportunities is reflected in the fact that the bank has shown uninterrupted profit
during all 90 year of its operations.

8
Union Bank has been playing a very proactive role in the economic growth of India
and it extends credit fir the requirements of different sectors of economy. Industries,
exports, trading, agriculture, infrastructure and the individual segment are sectors.

Resources are mobilized through current, savings and terms and through refinance
and borrowings from abroad. The bank has a large clientele base of over 24 million.

On the technology front the bank has taken early initiatives and 100% of its branches
ate computerized. The bank has also introduced Core Banking Solutions with
connectivity between branches. 100% of the business of the bank is under Core
Banking Solutions making it a leader among its peers in infusion of technology.

Behind all these achievements is a dedicated team of staff, which is truly

cosmopolitan in its composition. Many generation of members of staff have
contributed in a building up the strong edifice of the bank. The present team of over
2900 members of staff distinguishes itself with its customer centricity, willingness to
learn and adherence to values enabling us to be recognized as a caring organization
where people enjoy their work and relationship with customers.

CORPORATE VISSION:

To become the first choice in our chosen areas by building beneficial and
lasting relationships with customers through a process of continuous improvement.

CORPORATE MISSION:

 To be a customer centric organization known for its differentiated customer

service
 To offer a comprehensive range of products to meet all financial needs of
customers
 To be a top creator of shareholder wealth through focus on profitable growth
 To be a young organization leveraging on technology & an experienced
workforce
 To be the most trusted brand, admired by all stakeholders
 To be a leader in the area of Financial Inclusion

9
LIST OF DIRECDTORS

BOARD OF DIRECTORS

 SHRI DEBABRATA SARKAR

CHAIRMAN & MANAGING DIRECTOR

 SHRI SURESH KUMAR JAIN

EXECUTIVE DIRECTOR

 SHRI K. SUBRAHMANYAM,
 SHRI CHANDAN SINHA

RBI NOMINEE DIRECTOR

 SHRI B.M.SHARMA

CHARTERED ACCOUNTANT DIRECTOR

 DR RAVIDRARAI H. DHOLAKIA

10
AWARDS AND COMMENDATIONS:

Union Bank of India has been the proud recipient of many awards and
commendations. It is an honor to be appreciated for the work we do in serving the
customer and society.

 The Dale Carnegie Leadership Award was conferred on Union Bank of India
on 28th October 2010 by Dale Carnegie Training for the Bank's
transformation initiatives undertaken through project Nav Nirman.
 Our Bank has been the winner of Association of Business Communicators of
India (ABCI) Gold Award for marketing and Brand Communications, 2010.
The award is in recognition of the transformation process undertaken by the
Bank.
 Our Bank was ranked as the 275th most valuable global banking brand for
calendar year 2009, up from 351st rank in 2008.
 The ranking is carried by Brand Finance Plc, an independent intangible asset
valuation and brand strategy global firm
 The brand value rating for Union Bank is A+ (A means strong) compared to
BB (BB means Average) in previous year
 Bank's brand value increased by 148% during the calendar year 2009.
 The Asian Banker ranked Union Bank of India the 7th Strongest Bank in Asia-
Pacific Region in 2009. The Bank was ranked at No. 3 amongst banks in
India.
 Our Bank has participated in the prestigious Banking Technology Awards
2009 conducted by IBA-TFCI award and bagged the Best User of Business
Intelligence award.
 Union Bank of India was awarded the prestigious Skoch Challenger Award
2009 for excellence in capacity building through innovative concept of
'Village Knowledge Centre' as part of financial inclusion initiatives

11
 ORGANISTIONAL CHART OF UNION BANK OF INDIA

SECRETA
CHAIRMAN AND RY TO
MANAGING THE
DIRECTOR BOARD
GM-VIG

EXECUTIVE
EXECUTIVE
DIRECTOR
DIRECTOR
(CORPORATE &
(RETAL BUSINESS)
INTERNATIONAL

BUSINESS VERTICALS IN CENTRICAL OFFICE ARE

HEARDED BY GENERAL MANAGERS FIELD
OFFICES AT MUMBAI, DELHI, LUCKNOW ARE ALSO
HEADED BY GENERAL MANAGERS.

REGIONAL
OFFICES

BRANCHES

12
HISTORY:

YEAR EVENTS
1969 The Bank was brought into existence by the Ordinance issued on 10th
July, by the Central Government. In terms of the Ordinance, the
Undertaking of `The Union Bank of India, Ltd.', was replaced by the
Banking Companies (Acquisition and Transfer of Undertakings) Act,
1969. An Ordinance was thereupon promulgated which was later repalced
by the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 which was made effective retrospectively from 19th July, 1969.

1970 Under the `Lead Bank' scheme, the Bank was allotted 5 districts and the
survey reports in respect of 3 districts were submitted.
1971 The Bank opened a total of 36 branches in the lead districts till the end of
1972.

1972 A fresh study-cum-survey was undertaken for evaluation of results of the

Bank's activities in the area, further identification of growth area and
credit gaps and preparation of a concrete programme of action in such
areas. The Bank sponsored four regional rural banks.
1982 Rs 275,00,000 was capitalized.
1985 Rs 2400,00,000 contributed by Government.
1986 Rs 14,00,00,000 contributed by Government.
1988 Rs14,00,00,000 contributed by Government.
1991 Rs 50 crores contributed by Government.
1993 Rs 230 crores contributed by Government
2000 M. Venugopal, chief executive of Bank of India's European Operations,
has been appointed executive director of Union Bank of India. Union
Bank of India has introduced a special leave scheme for its employees.

13
2001

 Bank closed its voluntary Retirement Scheme.

 United Bank of India has raised Rs.100cr by way of subordinated debt under
Tier II.
UBI cuts its Prime Lending Rate to Rs.11.50% from 12.50%.
 United Bank of India has raised Rs.100cr by way of subordinated debt under
Tier II.
UBI cuts its Prime Lending Rate to Rs.11.50% from 12.50%.
 United Bank of India has launched special Deposit Scheme for senior citizens,
which will offer a high rate of interest on all domestic term deposit.
 United bank of India staff college, which received ISO 9001 certification is
offering its training programmes on commercial basis.
 Bank appoints PriceWaterCoopers(PwC) as consultant for putting in place a
structured asset liability management and risk management systems

2002

 The issue of 170cr Tier-II subordinated debt was fully subscribed

within two hours of its opening.
 UBI has recorded 102% hike in the net profit to Rs. 314cr from
Rs.155cr as in the last year.
 UBI has brought down interest rates on its housing loans.
 UBI introduced a new scheme called 'Union Express Remittance
scheme' to provide service to NRI in West Asia. The scheme would
reduce the time lag in the receipt of draft by the beneficiary.
 UBI has set up Cash Management Services (CMS) in coimbatore.

2003

 UBI launches 2 new schemes that is NRI Foreign Currency

Loans(NRIFCL) and Domestic Resident Foreign currency accounts for
the benefit of NRI and FCNR(B) customers.
 UBI has launched today its major IT initiative, the Core Banking
Solution(CBS), for Anywhere Banking interconnecting its 12 branches
across centers.

14
  Union Bank has signed an agreement with Corporation Bank to share
its Cash Management System infrastructure.
 UBI implemented Quality Management System in 64 branches and 3
extension counters and obtained ISO-9001 certification.

2004

 Union Bank of India Launches Union Suraksha - Easy Life Cover

 Union Bank ties up with HDFC Standard Life to provide bank
depositors an insurance cover under group policy with a target to bring
in 50,000 customers under risk cover
 Union Bank of India has informed that the Central Government has
nominated Shri A N Rao, Chief General Manager, Dept of Exp &
Budgetary Control, Reserve Bank of India, Mumbai as a Director of
Union Bank of India with effect from January 09, 2004 and until
further orders vice Shri P Saran, RBI nominee Director on the Board of
the Bank.
 Union Bank of India has entered into a bancassurance tie-up with the
Export Credit Guarantee Corporation Ltd (ECGC) for marketing the
latter's export credit insurance products.

2005

 Principal PNB Asset Management Company ties up with Union Bank

of India for distribution of their mutual fund schemes.
 Union Bank's tie-up for Boosting Agriculture Lending
 Union Bank unveils new scheme to promote milk production
 UBI opens retail mart in Pune
 Union Bank's Launch of On-Line Trading Services
 Union Bank of India launches new agri-clinic scheme3

2006

 Dena Bank and Union Bank of India have tied up with Small Farmers
Agri-business Consortium (SFAC) to facilitate growth of agri business.
 Union Bank ties up with LIC to unveil group insurance.

15
  Union Bank of India has nominated Smt. Rani Satish as part-time non-
official Director on the Board of the Bank for a period of three years
from the date of notification i.e. January 02 ,2007 or until her
successor is nominated or until further orders, whichever is the earliest.
 Union Bank inks agreement with DGFT
 Union Bank joins hand with NBHC
 Union Bank launches sale of gold coins

2007

 Union Bank of India has informed that the Central Government, in

exercise of the powers conferred by clause (a) of Sub-section (3) of
section 9 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 / 1980, read with sub-clause (1) of clause 3,
sub-clause(1) of clause 8 of the Nationalised Banks (Management and
Miscellaneous Provisions) Scheme, 1970 / 1980, and after consultation
with the Reserve Bank of India, have appointed Shri. T Y Prabhu,
General Manager, Canara Bank, as Executive Director of the Bank,
from the date of his taking charge of the post and until further orders or
till the date of his superannuation i.e. up to December 31, 2010,
whichever is earlier.

2008

 Union Bank of India has informed that the Central Government, in

exercise of the powers conferred by Sub-section 3(h) and (3-A) of
Section 9 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3 of
the Nationalised Banks (Management and Miscellaneous Provisions)
Scheme, 1970/1980, have nominated Shri. Ashok Singh as part-time
non-official Director on the Board of the Bank for a period of three
years from the date of notification i.e. February 19, 2008 or until
further orders, whichever is earlier.
 Union Bank Of India had informed regarding appointment of Smt.
Monika Kalia as Company Secretary of the Bank. The Bank has now
informed that Smt. Monika Kalia is designated as Compliance Officer

16
 of the Bank. Her Contact number is 22896650 and E-mail id is
[email protected].

2009

 Union Bank of India has informed BSE that the Central Government,
in exercise of the powers conferred by sub-section 3 (h) and (3-A) of
Section 9 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3 of
the Nationalised Banks (Management and Miscellaneous Provisions)
Scheme, 1970/1980, has nominated Dr. Gulfam Mujibi as part-time
non-official Director on the Board of Directors of the Bank, for a
period of three years from the date of notification i.e. January 29, 2009
of his appointment or until further orders, whichever is earlier.
 Shri. R R Nair, Prof. N L Sarda, Prof. M S Sriram. Further it may be
noted that the following three Directors have been elected in the
aforesaid Extraordinary General Meeting. Shri. Arun Kumar Nanda,
Prof. M S Sriram (re-elected), Shri. S Ravi
 Union Bank Of India has appointed Shri S.C. Kalia,
(DoB :06.08.1951) Executive Director of Vijaya Bank, as Executive
Director of Union Bank of India.

2010

 Union Bank of India has nominated Shri B. M. Sharma, as part-time

non-official director under Chartered Accountant Category, on the
Board of Directors of Union Bank of India, for a period of three years
from the date of notification i.e. April 16, 2010, of his appointment
and/or until further orders, whichever is earlier.
 Union Bank of India has informed BSE that the Central Government,
in exercise of the powers conferred by clause (c) sub-section 3 of
Section 9 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970/1980, read with sub-clause (1) of clause 3 of
the Nationalised Banks (Management and Miscellaneous Provisions)
Scheme, 1970/1980, has nominated Smt. Meena Hemchandra, as
Director under RBI Nominee Category, on the Board of Directors of

17
Union Bank of India, in place of Shri K. Sivaraman with immediate
effect from the date of notification i.e. July 30, 2010 and until further
orders.

CHAPTER - III

18
 FINANCIAL ANALYSIS - AN OVERVIEW

FINANCIAL STATEMENTS

The financial statements are the end product of the financial accounting
process. The financial statements are nothing but the financial information presented
in concise and capsule from and he financial information is the information related to
the financial position of any firm. The basic source which provides the financial
information is the annual report of which is presented by the bank to its members.

FINANCIAL STATEMENT ANALYSIS

Financial statement analysis refers to the process of the critical examination of

the financial information contained in the financial statements in order to understand
and make decisions regarding the operations of the banks. The financial statements
analysis is basically a study of the relationship among various financial facts and
figures as given in a set of financial statements. The process of establishing
relationship and interpretation thereof to understand the working and financial
position of banks is called financial statement analysis.

Thus the financial statement analysis is the process of establishing and

identifying weaknesses and strength of the firm. It is indicative of two aspects of a
bank i.e. the profitability and financial position. Analysis and interpretation analysis
has no value. Interpretation is drawing of inference and stating what the figures in the
financial statements rally mean.

TECHNIQUES OF FINANCIAL ANALYSIS

The analysis and interpretation of financial statement are made to determine the
financial position and result of operation. A number of techniques are used to study
the relationship between different statements. They are as follows:

 RATIO ANALYSIS

19
  COMMON SIZE STATEMENTS
 COMPARATIVE STATEENTS
 TREND ANALYSIS

Ratio analysis

The relationship between two figures expressed mathematically is called ratio.

It’s a numerical relationship between two numbers which are related in same manner.
It’s called by providing one by another. Ratio analysis is a technique of analysis and
interpretation of financial statement. It is the process of determining and interpreting
various ratios first helping in make certain decision. CLASSIFICATION OF
RATIO:

A. LIQUIDITY RATIO
B. LONGTERM SOLVENCY RATIO
C. ACTIVITY RATIO
D. POFITABILITY RATIO
a) Liquidity Ratio (short-term solvency)

Liquidity ratio measures the ability of the firm to meet its current obligation. They
indicate whether the firm has sufficient liquid resource to meet its short liabilities.

b) Long Term Solvency Ratio:

Solvency ratio assesses the long term financial condition of the firm. Bankers and
creditors are most interested in liquidity. But share holders, debenture holders and
financial institution are concerned with long term financial prospectus.

c) Activity Ratio:

These ratios evaluate the use of the total resources of the business concern along
with the use of the components of total assets. They are intended to measure the
effectiveness of the assets management the efficiency with which the assets are used
would he reflected in the speed and rapidly with which the assets management would
be (e.g.) stock turnover ratio, fixed assets turnover ratios etc.

d) Profitability Ratio:

20
 The profitability ratios of a business concern can he measured by the profitability
ratios. These ratios highlight the end result if business activities by which alone the
overall efficiency of a business unit can be judged (E.g.) gross profit ratios, net profit
ratio.

I. LONG TERM SOLVENCY RATIO:

i) Proprietary Ratio:

Proprietary ratio is the relationship between proprietors funds and total

tangible asset. Proprietary ratio = shareholders fund / total tangible asset

II. ACTIVITY RATIO:

i) Fixed asset turnover ratio:

The ratio indicates the extent to which the investment in fixed assets
contributes towards sales. If compared with a previous year. It indicates the
investment in fixed assets has been judies or not the ratio is calculated ass follows;

Net sales
Fixed asset turnover ratio = ---------------
Fixed Assets
ii) Total Asset Turnover Ratio:

Total income
Total asset turnover ratio = ------------------
Total asset
iii) Return On Total Asset:

Net profit
Return on total asset = --------------- * 100
Total asset

iv) Interest Coverage Ratio:

21
 PBIT
Interest coverage ratio = -------------------
Interest charges
III. PROFITABILITY RATIO:
i) Net profit ratio:

net profit ratio establishes a relationship between net profit (after taxes) and
sales. It is determined by dividing the net income after taxes to the net sales for the
period and ensures the profit per rupees of sales.

Net profit

Net profit ratio = --------------- * 100

Net sales

IV. DEPOSIT RATIO:

i) Advance To Deposit Ratio:

Advances

Advance to deposit ratio = ---------------- * 100

Deposit

ii) Investment To Deposit Ratio:

Investment

Investment to deposit ratio = ----------------- * 100

Deposit

iii) Cash To Deposit Ratio:

Cash

Cash To Deposit Ratio = ---------------------- * 100

Deposit

Comparative Financial Statement:

22
 Comparative financial statements are those statement which have been
designed in way so as time perspective to the consideration of various elements of
financial position embodied in such statements. In these statement figures for two of
more periods are placed side by side facilitate comparison. Both the income statement
and balance sheets can be prepared in the form of comparative financial statement.

Comparative Income statement:

The income statement discloses net profit and net loss on account of operation.
A comparative income statement will show the absolute figures for tow or more
periods, the absolute change from one period to another and if desired the change in
terms of percentage.

Comparative Balance Sheet:

Comparative balance sheet as on two or more different dates can be used for
comparing assets and liabilities and finding out any increase or decrease in those
items.

Common Size Statement:

Common size financial statements are those in which figures reported are
covered into percentage to some common base. In the income statement the sale
figure is assumed to be low and all figures are expressed as a percentage of sale.
Similarly in the balance sheet the total of assets of liabilities is taken as 100 and all
the figures are expressed as percentage of this total.

Trend percentages:

Trend percentages are immensely helpful in making a comparative study of

the financial statement for several years. The method of calculating trend percentages
involves the calculation of percentage relationship that each item bears to the same
item in the base year.

CHAPTER – IV

23
 DATA ANALYSIS AND INTERPRETATION

The research has taken the financial statement of Union Bank of India for five years
2008 – 2012. The collected data were classified tabulated and analyzed in the following
pages:

TABLE – 4.1

NET PROFIT RATIO

Net profit

Net Profit Ratio = ------------------------ * 100

Sales

TOTAL
YEAR NET PROFIT INCOME RATIO
2007 - 2008 1387.03 10679.97 12.99

2008 -2009 1726.55 13371.93 12.91

2009 - 2010 2074.92 15277.42 13.58

2010 - 2011 2081.95 18491.4 11.26

2011 - 2012 1787.14 23476.66 7.61

(Rs. in cr)

(source: secondary data)

INTERPRETATION:

During the study period , it was found that net profit ratio was fluctuating. The
highest percentage of profit was recorded (13.58%) in the year 2009 – 2010 and the lowest
(7.61%) during the year 2011 – 2012

CHART – 4.1

24
 NET PROFIT RATIO
16

14 13.58
12.99 12.91
12 11.26

10
NET PROFIT RATIO
8 7.61

0
2007 - 2008 2008 -2009 2009 - 2010 2010 - 2011 2011 - 2012

TABLE – 4.2

25
 PROPRIETARY RATIO

Shareholders fund

Proprietary Ratio = -----------------------

Total asset (Rs in cr)

(source: secondary data)

SHAREHOLDERS TOTAL
YEAR FUND ASSET RATIO

2007 - 2008 7347.71 124073.3 0.06

2008 -2009 8740.36 160975.5 0.05

2009 - 2010 10423.78 195161.9 0.05

2010 - 2011 12764.52 235984.4 0.05

2011 - 2012 14633.06 262211.4 0.06

INTERPRETATION:

Above table exhibits the proprietary ratio of the bank for last five years. It was
0.06% in the year 2008 – 2009, after that it was decreased to 0.05 % in the year 2009 - 2012.
Similarly it was increased to 0.06% in the year 2011 – 2012.

26
 CHART – 4.2

PROPRIETORYRATIO
0.062
0.06 0.06
0.06

0.058

0.056

0.054 0.05 0.05 0.05 PROPRIETORYRATIO

0.052

0.05

0.048

0.046

0.044
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

27
 TABLE – 4.3

OPERATING EXPENSES RATIO

Operating Expenses

Operating Expenses Ratio = ------------------------- * 100

Total Income (Rs. In Cr)

OPERATING TOTAL
YEAR EXPENSES INCOME RATIO

2007 - 2008 2178.2 10679.97 20.40

2008 -2009 2760.59 13371.93 20.64

2009 - 2010 3206.76 15277.42 20.99

2010 - 2011 5137.69 18491.4 27.78

2011 - 2012 5498.24 23476.66 23.42

(source: secondary data)

INTERPRETATION:

During the study period, operating profit ratio was increasing. The highest
percentage of profit was recorded (27.78%) in the year 2010 – 2011 and the lowest is
(20.40%) during the year 2007 – 2008. The profit was decreased to (23.42%) in the year 2011
– 2012.

28
 CHART – 4.3

OPERATING EXPENCES RATIO

30 27.78

23.42
25
20.4 20.64 20.99
20
OPERATING EXPENCES-
RATIO
15

10

0
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

29
 TABLE – 4.4

TOTAL ASSET TURN OVER RATIO

Total Income

Total Asset Turnover Ratio = ------------------------

Total Asset (Rs. in cr)

YEAR TOTAL INCOME TOTAL ASSET RATIO

2007 - 2008 10679.97 124073.3 0.09

2008 -2009 13371.93 160975.5 0.08

2009 - 2010 15277.42 195161.9 0.08

2010 - 2011 18491.4 235984.4 0.08

2011 - 2012 23476.66 262211.4 0.09

(source: secondary data)

INTERPRETATION:

From the above table the total assets of the bank increased for every year. The
changes also very little every year. It shows high in 2007 – 2008 and 2011 – 2012 (0.09) and
low in remaining 3 years.

CHART – 4.4

30
 TOTAL ASSET TURNOVERRATIO
0.092
0.09 0.09
0.09
0.088
0.086
0.084 TOTAL ASSET
TURNOVER-
0.082 RATIO
0.08 0.08 0.08
0.08
0.078
0.076
0.074
2007 - 2008 2008 -2009 2009 - 2010 2010 - 2011 2011 - 2012

CHAPTER – 4.5

31
 RETURN ON TOTAL ASSET

Net Profit

Return On Total Asset = ------------------ * 100

YEAR NET PROFIT TOTAL ASSET RATIO

2007 - 2008 1387.03 124073.3 1.12

2008 -2009 1726.55 160975.5 1.07

2009 - 2010 2074.92 195161.9 1.06

2010 - 2011 2081.95 235984.4 0.88

2011 - 2012 1787.14 262211.4 0.68

Total Asset (Rs. in Cr)

(source: secondary data)

INTERPRETATION:

The above table shows, it was decreasing in nature. The changes were also
very little every year. It shows high in 2007 – 2008 (1.12) and low in 2011 – 2012
(0.68).

CHART - 4.5

32
 RETURN ON TOTAL ASSET RATIO
1.2 1.12 1.07 1.06
1 0.88

0.8 0.68
RETURN ON TOTAL ASSET
RATIO
0.6

0.4

0.2

0
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

TABLE – 4.6

FIXED ASSET TURNOVER RATIO

33
 Total Income

Fixed Asset Turnover Ratio = ------------------ * 100

Fixed Asset (Rs. in Cr)

(source: secondary data)

YEAR TOTAL INCOME FIXED ASSET RATIO

2007 - 2008 10679.97 2195.83 4.86

2008 -2009 13371.93 2327.3 5.75

2009 - 2010 15277.42 2295.48 6.66

2010 - 2011 18491.4 2279.2 8.11

2011 - 2012 23476.66 2332.19 10.07

INTERPRETATION:

The above table dealt with fixed assets turnover ratio. Higher the ratio more is the
efficiency in probability of a business concern. A lower ratio is the indication of under
utilization of fixed assets. The ratio level was 4.86 % in the year 2007 – 2008. But that is
increased to 10.07% in the year 2011 – 2012.

CHART – 4.6

34
 FIXED ASSET TURN OVER RATIO
12
10.07
10
8.11
8
6.66
5.75
6 4.86
FIXED ASSET TURN OVER
4 RATIO

0
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

TABLE – 4.7

INTEREST COVERAGE RATIO

35
 PBIT

Interest Coverage Ratio = ------------------------

Interest charges (Rs. in Cr)

INTEREST
YEAR PBIT CHARGES RATIO

2007 - 2008 1387.03 6360.95 0.22

2008 -2009 1726.55 8075.81 0.21

2009 - 2010 2074.92 9110.27 0.23

2010 - 2011 2081.95 10236.42 0.20

2011 - 2012 1787.14 14235.39 0.13

(source: secondary data)

INTERPRETATION:

The above table shows that the interest coverage ratio was fluctuating in
nature. It varies between 0.23% to 0.13%. The interest coverage ratio was coverage
ratio was 0.22% in 2008 and decreased to 0.21%in the year 2009. In 2010 it was
increased to 0.23% and in 2011 and 2012 it is decreased to 0.20% and 0.13%
respectively.

CHART 4.7

36
 INTEREST COVERAGE RATIO
0.25
0.22 0.23
0.21
0.2
0.2

0.15 0.13
INTEREST COVERAGE RATIO

0.1

0.05

0
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

TABLE – 4.8

ADVANCES TO DEPOSITS RATIO

37
 Advances

Advances To Deposits Ratio = -------------------- * 100

YEAR ADVANCES DEPOSITS RATIO

2007 – 2008 74348.29 103858.7 71.59

2008 -2009 96534.23 138702.8 69.60

2009 – 2010 119315.3 170039.7 70.17

2010 – 2011 150983.1 202461.3 74.57

2011 – 2012 177882.1 222869 79.81

Deposits (Rs. in Cr)

(source: secondary data)

INTERPRETATION:

The advantage to deposit ratio varies between 79.81% and 69.60%. in 2009 it
is decreasing in nature during 2008(71.59%) and 2009(69.60%). In following years it
was increasing to 70.71%, 74.57% and 79.81% in 2010, 2011 and 2012 respectively.

CHART – 4.8

38
 ADVANCES TO DEPOSIT RATIO
79.81
80
78
76 74.57
74 ADVANCES TO DEPOSIT
71.59
RATIO
72 70.17
69.6
70
68
66
64
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

TABLE – 4.9

INVESTMENT TO DEPOSIT RATIO

39
 Investment

Investment To Deposit Ratio = ------------------ * 100

YEAR INVESTMENT DEPOSITS RATIO

2007 - 2008 33822.63 103858.7 32.57

2008 -2009 42996.96 138702.8 31.00

2009 - 2010 54403.53 170039.7 31.99

2010 - 2011 58399.14 202461.3 28.84

2011 - 2012 62363.56 222869 27.98

Deposit (Rs. in Cr)

(source: secondary data)

INTERPRETATION:

The above table shows that investment to deposit ratio varies between 32.57%
in 2008 and 27.98% in the year 2012. It was decreased to 32.57% in 2008 and 31% in
2009 and increased to 31.99% in 2010. Then it is decreased to 28.84% and 27.98% in
the years 2011 and 2012 respectively.

CHART – 4.9

40
 INVESTMENTS TO DEPOSIT RATIO
33 32.57
31.99
32
31
31
30 INVESTMENTS TO DEPOSIT
28.84
RATIO
29
27.98
28
27
26
25
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

TABLE – 4.10

CASH TO DEPOSIT RATIO

41
 Cash

Cash To Deposit Ratio = -------------- * 100

Deposit

YEAR CASH DEPOSITS RATIO

2007 - 2008 9454.74 103858.7 9.10

2008 -2009 8992.05 138702.8 6.48

2009 - 2010 12468.24 170039.7 7.33

2010 - 2011 17610.45 202461.3 8.70

2011 - 2012 11633.56 222869 5.22

(source: secondary data)

INTERPRETATION:

The cash to deposit ratio varies between 9.10%in 2008 and 5.22% in 2012. It
records high in percentage 9.10% in 2008 and decreased to 6.48% in 2009 and
increased to 7.33% in 2010 and 8.70% in 2011 and then it decreased to 5.22% in
2012.

CHART – 4.10.

42
 CASH TO DEPOSIT RATIO
10 9.1
8.7
9
8 7.33
6.48
7
6 5.22
CASH TO DEPOSIT RATIO
5
4
3
2
1
0
2007 - 2008 - 2009 - 2010 - 2011 -
2008 2009 2010 2011 2012

43
 TABLE – 4.11

Common Size Income Statement For The Year 2008 – 2009

Particulars 2008 PERCENTAGE 2009 PERCENTAGE

INCOME

Interest earned 9,447.30 88.46 11,889.38 88.91

Other Income 1,232.67 11.54 1,482.55 11.09

Total 10,679.97 100.00 13,371.93 100.00

EXPENDITURE

Interest Expended 6,360.95 59.56 8,075.81 60.39

Operating
2,178.20 20.40 2,760.59 20.64
Expenses

Provisions
&Contingencies 753.79 7.06 808.97 6.05
(NET)

(+) Net Profit 1,387.03 12.99 1,726.55 12.91

Total 10,679.97 100.00 13,371.92 100.00

(Rs. in cr)

TABLE – 4.12

44
 Common Size Income Statement For The Year 2009 – 2010

(Rs in Cr)

Particulars 2009 PERCENTAGE 2010 PERCENTAGE

INCOME

Interest earned 11,889.38 88.91 13,302.68 87.07

Other Income 1,482.55 11.09 1,974.74 12.93

Total 13,371.93 100.00 15,277.42 100.00

EXPENDITURE

Interest Expended 8,075.81 60.39 9,110.27 59.63

Operating
2,760.59 20.64 3,206.76 20.99
Expenses

Provisions
&Contingencies 808.97 6.05 885.47 5.80
(NET)

(+) Net Profit 1,726.55 12.91 2,074.92 13.58

Total 13,371.92 100.00 15,277.42 100.00

45
 TABLE – 4.13

Common Size Income Statement For The Year 2010 – 2011

Particulars 2010 PERCENTAGE 2011 PERCENTAGE

INCOME

Interest earned 13,302.68 87.07 16,452.62 88.97

Other Income 1,974.74 12.93 2,038.78 11.03

Total 15,277.42 100.00 18,491.40 100.00

EXPENDITURE

Interest
9,110.27 59.63 10,236.42 55.36
Expended
Operating
3,206.76 20.99 5,137.69 27.78
Expenses

Provisions
&Contingencies 885.47 5.80 1,035.35 5.60
(NET)

(+) Net Profit 2,074.92 13.58 2,081.95 11.26

Total 15,277.42 100.00 18,491.41 100.00

(Rs in Cr)

46
 TABLE – 4.14

Common Size Income Statement For The Year 2011 – 2012

Particulars 2011 PERCENTAGE 2012 PERCENTAGE

INCOME

Interest earned
16,452.62 88.97 21,144.28 90.07

Other Income
2,038.78 11.03 2,332.38 9.93

Total
18,491.40 100.00 23,476.66 100.00
EXPENDITUR
E

Interest
Expended 10,236.42 55.36 14,235.39 60.64
Operating
Expenses 5,137.69 27.78 5,498.24 23.42
Provisions
&Contingencies
(NET) 1,035.35 5.60 1,955.89 8.33

(+) Net Profit

2,081.95 11.26 1,787.14 7.61

Total
18,491.41 100.00 23,476.66 100.00
(Rs. in cr)

47
INTERPRETATION:

 The interest of income of the profit & loss a / c increased by 88.91 %

in 2008 to 90.07 in 2012.
 The other income of profit & loss a/c is decreased from 11.09% in
2008 to 9.93% in 2012.
 The interest expended in the profit & loss a/c is decreased by 60.39 %
in 2008 to 60.64 % in 2012.
 The operating expenses of the profit & loss a/c increased from 20.64 %
in 2008 to 23.42 % in 2012.
 The provision & contingencies of the profit & loss a/c increased from
6.05 % in 2008 to 8.33 % in 2012.
 The net profit is decreased from 12.91% in 2008 to 7.61% in 2012.

48
49
INTERPRETATION:

 The percentage of capital in the total liabilities has decreased from

0.41% to 0.25% every year.
 The reserves in the total liabilities increased from 5.51 % (2008) to
5.33 % (2012).
 The deposits in the total liabilities increased from 83.71 % (2008) to 85
% (2012).
 The barrowings in the total liabilities increased from 3.84 % (2008) to
6.83% (2012).
 The other liabilities and provisions is decreased from 6.53% to 2.59%.

50
51
INTERPRETATION:

 The cash & Balance with RBI in the total asset decreased from 7.62 %
in 2008 to 4.44% in 2012
 The balance with banks in the total asset increased from 0.52 % in
2008 to 1.54 % in 2012.
 The investment in the total asset decreased from 27.26% in 2008 to
23.78% in 2012.
 The advances in total asset are increased from 59.92% in 2008 to
67.84% in 2012.
 The fixed asset is decreased from 1.775 in 2008 to 0.89% in 2012.
 The other asset is decreased from 2.91% in 2008 to 1.51% in 2012.

52
 TABLE – 4.17

Comparative P&L A/c for the year 2008 – 2009

Absolute Increase/Decrease
Particulars 2008 2009 Increase/Decrease %

INCOME

Interest earned 9,447.30 11,889.38 2,442.08 25.85

Other Income 1,232.67 1,482.55 249.88 20.27

Total 10,679.97 13,371.93 2,691.96 25.21

EXPENDITURE

Interest Expended 6,360.95 8,075.81 1,714.86 26.96

Operating
Expenses 2,178.20 2,760.59 582.39 26.74

Provisions &
Contingencies
(NET) 753.79 808.97 55.18 7.32

(+) Net Profit 1,387.03 1,726.55 339.52 24.48

Total 10,679.97 13,371.92 2,691.95 25.21

(Rs. in cr)

53
INTERPRETATION:

 The interest earned to income of the profit and loss a/c is increased by
25.85% while compared to the previous year.
 The other income of profit and loss a/c increased by 20.27% compared
to the previous year
 The interest expended to profit and loss a/c increased by 26.96% while
compared to previous year.
 The operating expenses of profit and loss a/c is increased by 26.74%
while compared to previous year.
 The provisions and contingencies is increased by 7.32% while
compared to previous year.
 The net profit was also increased by 24.48% while compared to
previous year.

54
 TABLE – 4.18

Comparative P&L A/c for the year 2009 – 2010

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2009 2010 Increase/Decrease %

INCOME

Interest earned 11,889.38 13,302.68 1,413.30 11.89

Other Income 1,482.55 1,974.74 492.19 33.20

Total 13,371.93 15,277.42 1,905.49 14.25

EXPENDITURE

Interest Expended 8,075.81 9,110.27 1,034.46 12.81

Operating
Expenses 2,760.59 3,206.76 446.17 16.16
Provisions
&Contingencies
(NET) 808.97 885.47 76.50 9.46

(+) Net Profit 1,726.55 2,074.92 348.37 20.18

Total 13,371.92 15,277.42 1,905.50 14.25

55
INTERPRETATION:

 The interest earned to income of the profit and loss a/c is increased by
11.89% while compared to the previous year.
 The other income of profit and loss a/c increased by 33.20% compared
to the previous year
 The interest expended to profit and loss a/c increased by 12.81% while
compared to previous year.
 The operating expenses of profit and loss a/c is increased by 16.16%
while compared to previous year.
 The provisions and contingencies is increased by 9.46% while
compared to previous year.
 The net profit was also increased by 20.18% while compared to
previous year.

56
 TABLE –4.19

Comparative P&L A/c for the year 2010 – 2011

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2010 2011 Increase/Decrease %

INCOME

Interest earned 13,302.68 16,452.62 3,149.94 23.68

Other Income 1,974.74 2,038.78 64.04 3.24

Total 15,277.42 18,491.40 3,213.98 21.04

EXPENDITURE

Interest Expended 9,110.27 10,236.42 1,126.15 12.36

Operating
Expenses 3,206.76 5,137.69 1,930.93 60.21
Provisions
&Contingencies
(NET) 885.47 1,035.35 149.88 16.93

(+) Net Profit 2,074.92 2,081.95 7.03 0.34

Total 15,277.42 18,491.41 3,213.99 21.04

57
INTERPRETATION:

 The interest earned to income of the profit and loss a/c is increased by
23.68% while compared to the previous year.
 The other income of profit and loss a/c increased 3.24% compared to
the previous year
 The interest expended to profit and loss a/c increased by 12.36% while
compared to previous year.
 The operating expenses of profit and loss a/c is increased by 60.21%
while compared to previous year.
 The provisions and contingencies is increased by 16.93% while
compared to previous year.
 The net profit was also increased by 0.34% while compared to
previous year.

58
 TABLE – 4.20

Comparative P&L A/c for the year 2011 – 2012

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2011 2012 Increase/Decrease %

INCOME

Interest earned 16,452.62 21,144.28 4,691.66 28.52

Other Income 2,038.78 2,332.38 293.60 14.40

Total 18,491.40 23,476.66 4,985.26 26.96

EXPENDITURE

Interest Expended 10,236.42 14,235.39 3,998.97 39.07

Operating Expenses 5,137.69 5,498.24 360.55 7.02

Provisions
&Contingencies
(NET) 1,035.35 1,955.89 920.54 88.91

(+) Net Profit 2,081.95 1,787.14 -294.81 -14.16

Total 18,491.41 23,476.66 4,985.25 26.96

59
INTERPRETATION:

 The interest earned to income of the profit and loss a/c is increased by
28.52% while compared to the previous year.
 The other income of profit and loss a/c increased 14.40% compared to
the previous year
 The interest expended to profit and loss a/c increased by 39.07% while
compared to previous year.
 The operating expenses of profit and loss a/c is increased by 7.02%
while compared to previous year.
 The provisions and contingencies is increased by 88.91% while
compared to previous year.
 The net profit is decreased by 14.16% while compared to previous
year.

60
 TABLE – 4.21

Comparative Balance Sheet for the year 2008 – 2009

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2008 2009 Increase/Decrease %
CAPITAL &
LIABS

Capital 505.12 505.12 0.00 0

Reserves &
surplus 6,842.59 8,235.24 1,392.65 20.35

Deposits 103,858.65 138,702.83 34,844.18 33.55

Borrowings 4,760.49 3,884.90 -875.59 -18.39

Other Liabilities
& Provisions 8,106.43 9,647.43 1,541.00 19.01

Total Liabilities 124,073.28 160,975.52 36,902.24 29.74

ASSETS
cash & Balances
With RBI 9,454.74 8,992.05 -462.69 -4.89
Balance With
Other Bank
MCSN 643.10 6,992.88 6,349.78 987.37

Investments 33,822.63 42,996.96 9,174.33 27.12

Advances 74,348.29 96,534.23 22,185.94 29.84

Fixed Assets 2,195.83 2,327.30 131.47 5.99

Other Assets 3,608.67 3,132.09 -476.58 -13.21

Total Assets 124,073.26 160,975.51 36,902.25 29.74

61
INTERPRETATION:

 The reserves of the bank increased by 20.35 % compared to previous

year.
 The deposits of the bank increased by 33.55% compared to previous
year.
 The other borrowings of the bank decreased by 18.39% compared to
previous year.
 The other liabilities and provisions of the bank increased by 19.01%
when compared to previous year.
 The cash and balances with RBI of the bank decreased by 4.89%
compared to previous year.
 The balances with other bank and money at call and short notice is
increased by 987.37% when compared to previous year.
 The investment of the bank increased by 27.12% when compared to
previous year.
 The advances of the bank increased by 29.84% compared to previous
year
 The fixed asset of the bank increased by 5.99% when compared to
previous year.
 The other asset of the bank decreased by 13.21% when compared to
previous year.

62
 TABLE – 4.22

Comparative Balance Sheet for the year 2009 – 2010

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2009 2010 Increase/Decrease %
CAPITAL &
LIABS

Capital 505.12 505.12 0.00 0.00

Reserves &
surplus 8,235.24 9,918.66 1,683.42 20.44

Deposits 138,702.83 170,039.74 31,336.91 22.59

Borrowings 3,884.90 9,215.31 5,330.41 137.21

Other Liabilities &
Provisions 9,647.43 5,483.01 -4,164.42 -43.17

Total Liabilities 160,975.52 195,161.84 34,186.32 21.24

ASSETS
cash & Balances
With RBI 8,992.05 12,468.24 3,476.19 38.66
Balance With
Other Bank MCSN 6,992.88 3,308.45 -3,684.43 -52.69

Investments 42,996.96 54,403.53 11,406.57 26.53

Advances 96,534.23 119,315.30 22,781.07 23.60

Fixed Assets 2,327.30 2,295.48 -31.82 -1.37

Other Assets 3,132.09 3,370.85 238.76 7.62

Total Assets 160,975.51 195,161.85 34,186.34 21.24

63
INTERPRETATION:

 The reserves of the bank increased by 20.44 % compared to previous

year.
 The deposits of the bank increased by 22.59% compared to previous
year.
 The other borrowings of the bank increased by 137.21% compared to
previous year.
 The other liabilities and provisions of the bank decreased by 43.17%
when compared to previous year.
 The cash and balances with RBI of the bank decreased by 38.66%
compared to previous year.
 The balances with other bank and money at call and short notice is
decreased by 52.69% when compared to previous year.
 The investment of the bank increased by 26.63% when compared to
previous year.
 The advances of the bank increased by 23.60% compared to previous
year
 The fixed asset of the bank decreased by 1.37% when compared to
previous year.
 The other asset of the bank decreased by 7.62% when compared to
previous year.

64
 TABLE – 4.23

Comparative Balance Sheet for the year 2010 – 2011

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2010 2011 Increase/Decrease %
CAPITAL &
LIABS

Capital 505.12 635.33 130.21 25.78

Reserves &
surplus 9,918.66 12,129.19 2,210.53 22.29

Deposits 170,039.74 202,461.29 32,421.55 19.07

Borrowings 9,215.31 13,315.97 4,100.66 44.50

Other Liabilities
& Provisions 5,483.01 7,442.67 1,959.66 35.74

Total Liabilities 195,161.84 235,984.45 40,822.61 20.92

ASSETS
cash & Balances
With RBI 12,468.24 17,610.45 5,142.21 41.24
Balance With
Other Bank
MCSN 3,308.45 2,487.99 -820.46 -24.80

Investments 54,403.53 58,399.14 3,995.61 7.34

Advances 119,315.30 150,986.08 31,670.78 26.54

Fixed Assets 2,295.48 2,279.20 -16.28 -0.71

Other Assets 3,370.85 4,221.58 850.73 25.24

Total Assets 195,161.85 235,984.44 40,822.59 20.92

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INTERPRETATION:

 The total share capital of the bank increased by 25.78% compared to

previous year.
 The reserves of the bank increased by 22.29 % compared to previous
year.
 The deposits of the bank increased by 19.07% compared to previous
year.
 The other borrowings of the bank increased by 44.50% compared to
previous year.
 The other liabilities and provisions of the bank increased by 35.74%
when compared to previous year.
 The cash and balances with RBI of the bank increased by 41.24%
compared to previous year.
 The balances with other bank and money at call and short notice is
decreased by 24.80% when compared to previous year.
 The investment of the bank increased by 7.34% when compared to
previous year.
 The advances of the bank increased by 26.54% compared to previous
year
 The fixed asset of the bank decreased by 0.71% when compared to
previous year.
 The other asset of the bank increased by 25.24% when compared to
previous year.

TABLE – 4.24

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 Comparative Balance Sheet for the year 2011 – 2012

( Rs. in cr)

Absolute Increase/Decrease
Particulars 2011 2012 Increase/Decrease %
CAPITAL &
LIABS

Capital 635.33 661.55 26.22 4.13

Reserves & surplus 12,129.19 13,971.51 1,842.32 15.19

Deposits 202,461.29 222,868.95 20,407.66 10.08

Borrowings 13,315.97 17,909.49 4,593.52 34.50

Other Liabilities &
Provisions 7,442.67 6,799.95 -642.72 -8.64

Total Liabilities 235,984.45 262,211.45 26,227.00 11.11

ASSETS
cash & Balances
With RBI 17,610.45 11,633.56 -5,976.89 -33.94
Balance With
Other Bank MCSN 2,487.99 4,041.58 1,553.59 62.44

Investments 58,399.14 62,363.56 3,964.42 6.79

Advances 150,986.08 177,882.08 26,896.00 17.81

Fixed Assets 2,279.20 2,332.19 52.99 2.32

Other Assets 4,221.58 3,958.47 -263.11 -6.23

Total Assets 235,984.44 262,211.44 26,227.00 11.11

INTERPRETATION:

67
 The total share capital of the bank increased by 4.31% compared to
previous year.
 The reserves of the bank increased by 15.19 % compared to previous
year.
 The deposits of the bank increased by 10.08% compared to previous
year.
 The other borrowings of the bank increased by 34.50% compared to
previous year.
 The other liabilities and provisions of the bank decreased by 8.64%
when compared to previous year.
 The cash and balances with RBI of the bank decreased by 33.94%
compared to previous year.
 The balances with other bank and money at call and short notice is
increased by 62.44% when compared to previous year.
 The investment of the bank increased by 6.79% when compared to
previous year.
 The advances of the bank increased by 17.81% compared to previous
year
 The fixed asset of the bank increased by 2.32% when compared to
previous year.
 The other asset of the bank decreased by 6.23% when compared to
previous year.

68
TREND

INTERPRETATION:

69
  The total share capital increased by 104.13% from 2008 to 2012.
 The reserves and surplus increased by 115.19% from 200 to 2012.
 The deposits also increased by 110.08% in 2008 to 2012.
 The borrowings of the bank increased by 134.5o% in the year 2011 -
2012
 The other liabilities and provisions decreased by 91.36% in 2008 to
2012.

Therefore, the total share capital, reserves, borrowings, deposits are quite
increased but other liabilities and provisions are decreased i.e., there is no
additional capital introduced every year.

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INTERPRETATION:

 The cash and bank balance with RBI increased by 66.06% in 2012.

71
  The balance with other bank and money at call and short notice
increased by 162.44% in the year 2012.
 The investment of the bank increased by 106.79% in the year 2012.
 The advances of the bank also increased by 117.81% in year 2012.
 The fixed assets of the bank increased by 102.32% in the year 2012.
 The other asset also increased by 93.77% in the year 2012.

Therefore cash balance with RBI, balance with other bank and money at
call and short notice, investment advances fixed asset and other assets are
increased.

CHAPTER – V

FINDINGS, SUGGESTIONS AND CONCLUSION

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FINDIGS

The financial statements of the bank have been analyzed over the period of five years
from 2008 to 2012.

RATIO ANALYSIS

 The bank net profit ratio was fluctuating. The highest percentage of profit was
recorded (13.58%) in the year 2009 – 2010 and the lowest (7.61%) during the
year 2011 – 2012.
 The proprietary ratio is 0.06% in the year 2008 – 2009, after that it was
decreased to 0.05 % in the year 2009 - 2012. Similarly it was increased to
0.06% in the year 2011 – 2012.
 The operating profit ratio was increasing the highest percentage of profit was
recorded (27.78%) in the year 2010 – 2011 and the lowest is (20.40%) during
the year 2007 – 2008. The profit was decreased to (23.42%) in the year 2011 –
2012.
 The total assets of the bank increased for every year the changes also very
little every year. It shows high in 2007 – 2008 and 2011 – 2012 (0.09) and low
in remaining 3 years.
 The return on total asset was decreasing in nature. The changes were also very
little every year. It shows high in 2007 – 2008 (1.12) and low in 2011 – 2012
(0.68).
 The Fixed assets turnover ratio is Higher the ratio more is the efficiency in
probability if a business concern. A lower ratio is the indication of under
utilization of fixed assets. The ratio level was 4.86 % in the year 2007 – 2008.
But that is increased to 10.07% in the year 2011 – 2012.
 The interest coverage ratio was fluctuating in nature. The changes were also
very little in every year. It shows high in 2009 – 2010 (0.23) and low in 2011
– 2012 (0.13).
 The advances to deposit ratio shows high in 2011 – 2012 (79.81 and low in
2008 – 2009 (69.60).
 The investment to deposit ratio shows high in the year 2007 – 2008 (32.57%)
and in the year 2011 – 2012 (27.98%).

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  The cash to deposit ratio shows higher value in the year 2007 – 2008 (9.10%)
and lower value in the year 2011 – 2012 (5.22%).

COMPARITIVE INCOME STATEMENT

 The interest earned to income of the profit and loss a/c is increased by 28.52%
while compared to the previous year.
 The other income of profit and loss a/c increased 14.40% compared to the
previous year
 The interest expended to profit and loss a/c increased by 39.07% while
compared to previous year.
 The operating expenses of profit and loss a/c are increased by 7.02% while
compared to previous year.
 The provisions and contingencies is increased by 88.91% while compared to
previous year.
 The net profit is decreased by 14.16% while compared to previous year.

COMPARITIVE BALANCE SHEET

 The total share capital of the bank increased by 4.31% compared to previous
year.
 The reserves of the bank increased by 15.19 % compared to previous year.
 The deposits of the bank increased by 10.08% compared to previous year.
 The other borrowings of the bank increased by 34.50% compared to previous
year.
 The other liabilities and provisions of the bank decreased by 8.64% when
compared to previous year.
 The cash and balances with RBI of the bank decreased by 33.94% compared
to previous year.
 The balances with other bank and money at call and short notice is increased
by 62.44% when compared to previous year.
 The investment of the bank increased by 6.79% when compared to previous
year.
 The advances of the bank increased by 17.81% compared to previous year
 The fixed asset of the bank increased by 2.32% when compared to previous
year.

74
  The other asset of the bank decreased by 6.23% when compared to previous
year.

COMMON SIZE INCOME STATEMENT

 The interest of income of the profit & loss a / c increased by 88.91 % in 2008
to 90.07 in 2012.
 The other income of profit & loss a/c is decreased from 11.09% in 2008 to
9.93% in 2012.
 The interest expended in the profit & loss a/c is decreased by 60.39 % in 2008
to 60.64 % in 2012.
 The operating expenses of the profit & loss a/c increased from 20.64 % in
2008 to 23.42 % in 2012.
 The provision & contingencies of the profit & loss a/c increased from 6.05 %
in 2008 to 8.33 % in 2012.
 The net profit is decreased from 12.91% in 2008 to 7.61% in 2012.

COMMON SIZE BALANCE SHEET

 The percentage of capital in the total liabilities has decreased from 0.41% to
0.25% every year.
 The reserves in the total liabilities increased from 5.51 % (2008) to 5.33 %
(2012).
 The deposits in the total liabilities increased from 83.71 % (2008) to 85 %
(2012).
 The barrowings in the total liabilities increased from 3.84 % (2008) to 6.83%
(2012).
 The other liabilities and provisions is decreased from 6.53% to 2.59%.
 The cash & Balance with RBI in the total asset decreased from 7.62 % in 2008
to 4.44% in 2012
 The balance with banks in the total asset increased from 0.52 % in 2008 to
1.54 % in 2012.
 The investment in the total asset decreased from 27.26% in 2008 to 23.78% in
2012.
 The advances in total asset are increased from 59.92% in 2008 to 67.84% in
2012.

75
  The fixed asset is decreased from 1.775 in 2008 to 0.89% in 2012.
 The other asset is decreased from 2.91% in 2008 to 1.51% in 2012.

TREND ANALYSIS

 The total share capital, reserves, borrowings, deposits are quite increased but
other liabilities and provisions are decreased i.e., there is no additional capital
introduced every year.
 The cash balance with RBI, balance with other bank and money at call and
short notice, investment advances fixed asset and other assets are increased.

SUGGESTIONS:

 The bank has adequate interest coverage ratio it should maintain the same
level
 The investment and current assets composed in total assets were good. The
bank should maintain the same position.

76
 Fixed asset turnover ratio is fluctuated for all the five years and it indicates
that efficiency of utilization of fixed asset is low. Thus the bank can
effectively utilize their fixed asset to facilitate future growth.
 The bank should concentrate on generating more income and reduce the
expenditure. The bank can earn more income by providing more loans and
advances.
 The bank should increase their earning capacity for forth coming years.

77
CONCLUSION

The financial performance of UNION BANK OF INDIA was good for last
five years. The Union Bank is working with good aspects and serving people
commercially as well as socially. The banks financial performance is analyzed
carefully thorough with my knowledge enough to show my findings. Suggestions
were given to the bank such as interest coverage ratio should maintain in same level,
expand their fixed asset to facilitate future growth, they should concentrate on
generating income and reducing expenditure etc., thus the overall financial
performance of UNION BANK OF INDIA was good.

78
 BIBLIOGRAPHY

BOOKS

Dr. S.N.MAHESHWARI - Financial Management, Sulthan Chand and Company,

New Delhi, Ed.2007

E.GORDON AND - Banking Theory, Law and Practices,

Dr.K.NATARAJAN Himalaya Publishing House, Mumbai, Ed.2008.

C.R Kothari - Research Methodology, methods and practice.

2nedition Viswaparakasam Pvt Ltd New Delhi.

WEBSITES

www.unionbankof india.com

www.moneycontrol.com

www.indiainfoline.com

www.yahoofinance.com

www.wikipedia.com

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