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A STUDY ON PROFITABILITY POSITION OF

ICICI BANK IN INDIA
* Dr.K.M.SABITHA

** J.INDHUMATHI
1. *Dr. K.M.SABITHA - Assistant Professor & Research Supervisor, Department of
Commerce,Government Arts Science& college, Modakkurichi ,Erode (DT) - 638104.
2. **J.INDHUMATHI - Research Scholar, Department of Commerce, Government Arts &
Science College, Modakkurichi, Erode (DT) - 638104.

ABSTRACT
The present study attempts to analyze the profitability position of ICICI bank. During 2014-2015 to 2018-
2019.based on the core business activity of banks, study has considered six ratios. Such as operating ratio,
operating profit ratio, net profit ratio, earning per share, payout ratio, and interest cover ratio for profitability
analysis. Spread is the real indicator of profitability which was better in case of private sector banks.
Therefore in the light of six indicators especially study conduces that profitability position of private sector
banks was better than public sector banks. Therefore indicators especially spread study concludes that
profitability position of the private sector banks was better than public sector banks.

KEY WORDS: ICICI bank, profitability position, operating ratio, operating profit ratio, expenses ratio,
net profit ratio, earning per share, payout ratio, interest cover ratio.

INTRODUCTION
ICICI bank was originally promoted in 1994 by the Industrial credit and Investment
Corporation of India (ICICI) .This is a financial institution of India, this is wholly owned
subsidiary, ICICI was initially formed subsidiary, ICICI was initially formed of the word bank in
1995. In the very beginning the bank was known as the Industrial credit and Investment
Corporation of India (ICICI) and bank were merged later. Internet banking operation had launched
in 1998 in as ICICI bank. This is second largest bank in India and by the market capitalization this
is largest bank in private sector.ICICI is the major banking and financial organization. The bank has
the wide network of more than 5520 ATMs in India and other 19 countries in the world.

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STATEMENT OF PROBLEM
This study makes an attempt to find out the impact profitability position of the ICICI Bank. The
study examines the financing pattern of different ICICI Bank for finding out answers to some basic
records like profitability position of the bank. ICICI Bank required large amount of investment, to
getting this requirement credit worthiness and profitability of the Bank playing a crucial role in the
process of decision making of the shareholders.

SCOPE OF THE STUDY

 The present study was highlights profitability position of the ICICI Bank in India through
facts of published financial data.
 The profitability position of the ICICI Bank was evaluated through various Ratios.
 The profitability position of the ICICI Bank was evaluated on the parameter like
profitability, utilization of assets, growth of performance, financial strength and financial
health.
OBJECTIVES OF THE STUDY
 To brief the profile of the ICICI Bank.
 To evaluate the profitability position of ICICI Bank.
 To suggest ways of improve the ICICI Bank.
RESEARCH METHODOLOGY
The evaluation period of profitability position of ICICI bank is ranging from 2014-2015 to 2018-
2019 for five years secondary data is collected from the ICICI bank .in this study the standard tool
ratio analysis has been applied to analyze the data. For the better profitability position and control
the activities of ICICI bank has been evaluated the ideal structure are industry average ratio.

IMPORTANCE OF THE STUDY

 Quantitative analysis of information enclosed in company’s financial statements. Ratio
analysis’s is used to estimate various factors of a company operating & financial
performance such as its profitability, liquidity, effectiveness and wealth.
 By showing the financial performance to various lenders and creditors it is possible to get
credit in easy term if good financial condition is maintained in the company with assets
outweighing the liabilities.
 Protecting the property of the business.
 Compliances with legal requirement.
 Financial ratios are mathematical assessments of financial statements accounts or groups.
These relationships between the financial statement accounts helps investors, creditors,
and internal company management recognize how well a business is execution and areas
of requiring development.

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LIMITATION OF THE STUDY
 Difficulty in data collection.
 Limited knowledge about the bank in the initial stages.
 Branch manager was reluctant for giving financial data of the bank.
 The analysis and inter predation are based on secondary data contained in the published
annual reports of ICICI Bank for the study period.
 Due to the limited time available at the disposable, the study has been confined for a period
of 5 year (2014- 2015to 2018-2019).
 Ratio itself will not completely show the company’s good or bad financial position.
 Inter firm comparison was not possible due to the non availability of competitors data.
The study of financial performance can be only a means to know about the financial
condition of the company and cannot show a through picture of the activities of the
company.

REVIEW OF LITERATURE
Man dell (1977): Discusses ATM adoption in the USA the first ATM was installed in the USA
in 1969 and, according to Man dell, only 10% of all national banks had adopted even one ATM after
eight years. Man dell states that a bank’s adoption of innovation depends, for example on its size,
branching status and competitive position. According to Man dell, in those days adoption of new
technology was related more closely to competition than to cost savings.
Hancock et.al. (1999): Discusses the consolidation of Fed wire and find that consolidation
reduced costs. They investigate the gains from electronic payments with Norwegian data and
conclude that electronic payments lead to social benefits.
Hester et.al. (1999): Study decisions on ATM in Italian banks. According to their results, the
number of ATMs is positively related to the bank’s number of branches and deposit accounts. There
are studies on ATM pricing and fees.
Moletji (1998): Internet Banking is fast becoming popular in India. However, it is still in its
evolutionary stage. By the year 2005. Large sophisticated and highly competitive internet banking
markets will develop. Almost all the banks operating in India and having their websites but only a
few banks provide transactional internet banking.
Daniel (1999): Customer’s value features in internet banking such as convenience, increased
choice of access to the ICICI bank, improved control over their banking activities and finances, case
of use, speed and security. From the banks prospective the main benefits and electronic banking is
cost savings, reaching new segments and the population, efficiency, cross selling. Third party
integration and customer satisfaction.

PROFITABILITY RATIO
Profitability ratios measure a bank ability to generate earnings relative to its expenses and other
costs. For most bank profitability ratios, larger values relative to its industry or to the same ratio
from a previous period are better.

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OPERATING RATIO:
Operating ratio indicates the relationship between total operating expenses and sales.
Operating ratio = cost of sales + operating expenses x100
Net sales
OPERATING RATIO
(In cores)
Source: calculation from ICICI Bank Annual report
YEAR COST OF NET SALES OPERATING
SALES+ RATIO The
OPERATING
EXPENSES
2014-2015 55178.15 49091.14 112.39
2015-2016 61711.78 52739.43 117.01
2016-2017 62419.98 54156.28 115.25
2017-2018 63975.14 54965.89 116.39
2018-2019 73905.11 63401.19 116.56
Operating ratio of ICICI Bank from the study period 2014-2019.The highest ratio of 117.01was
registered in the year 2015-2016.The lowest ratio of 112.39 was registered in the year 2014-2015.
The Operating ratio has decreasing trend in the study period.

OPERATING RATIO

118 117.01
116.39 116.56
117
116 115.25
115
RATIO

114
112.39
113
112
111
110
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

OPERATING PROFIT RATIO

Operating profit ratio establishes the relationship between operating profits and sales it
measures the cost of opening per rupee of sales. It is calculated by dividing operating profit by sales.
Operating profit ratio = Operating profit x 100
Net Sales

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OPERATING PROFIT RATIO
(In cores)
YEAR OPERATING NET SALES OPERATING
PROFIT PROFIT RATIO
2014-2015 8202.73 49091.14 16.70
2015-2016 9238.99 52739.43 17.51
2016-2017 7739.91 54156.28 13.29
2017-2018 8102.65 54965.89 14.74
2018-2019 9702.65 63401.19 15.30
Source: calculation from ICICI Bank Annual report
The Operating Profit ratio of ICICI Bank from the study period 2014-2019.The highest ratio
of 17.51was registered in the year 2015-2016.The lowest ratio of 13.29 was registered in the year
2016-2017.
The Operating Profit ratio has increasing trend in the study period.

OPERATING PROFIT RATIO

20
17.51
18 16.7
16 14.74 15.3
14.29
14
12
RATIO

10
8
6
4
2
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

EXPENSES RATIO
Expenses ratios are known as supporting ratios to operating ratio. They indicate the efficiency
with which business as a whole functions. Therefore each aspect of cost of sales and operating
expenses are analyzed.
Expenses ratio = Non -operating expenses x 100
Net sales

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EXPENSES RATIO
(In cores)
YEAR NON NET SALES EXPENSES
OPERATING RATIO
EXPENSES
2014-2015 30051.53 49091.14 61.21
2015-2016 31515.39 52739.43 59.75
2016-2017 32418.96 54156.28 59.86
2017-2018 31940.05 54965.89 58.10
2018-2019 36386.40 63401.19 57.39
Source: calculation from ICICI Bank Annual report
The Expenses ratio of ICICI Bank from the study period 2014-2019.The highest ratio of
61.21was registered in the year 2014-2015.The lowest ratio of 57.39 was registered in the year 2018-
2019.
The Expenses ratio has decreasing trend in the study period.

NON-OPERATING EXPENSES

62 61.21
61 59.86
59.75
60
RATIO

59 58.1
58 57.39

57
56
55
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

NET PROFIT RATIO

Net profit ratio establishes are relationship between a net profit for after taxes and sales, and
indicates the efficiency of the management in manufacturing, selling, administrative and other
activities of the firm.
Net profit ratio = Net profit after tax x100
Net sales

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NET PROFIT RATIO
(In cores)
YEAR NET PROFIT NET SALES NET SALES
AFTER TAX
2014-2015 11175.35 49091.14 22.76
2015-2016 9726.29 52739.43 18.44
2016-2017 9801.09 54156.28 18.09
2017-2018 6777.42 54965.89 12.33
2018-2019 3363.30 63401.19 5.30
Source: calculation from ICICI Bank Annual report
The Net profit ratio of ICICI Bank from the study period 2014-2019.The highest ratio of
22.76was registered in the year 2014-2015.The lowest ratio of 5.30 was registered in the year 2018-
2019.
The Net profit ratio has decreasing trend in the study period.

NET PROFIT RATIO

25 22.76
18.44 18.09
20

12.33
RATIO

15

10
5.3
5

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

EARNING PER SHARE (EPS)

Earning per ratios highlights the overall success of the concern form owners point of view
and it is helpful in determining market price of equity shares.
Earning per shares = Net profit after tax and preference dividend
No. of equity shares

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EARNING PER SHARE
(In cores)
YEAR NET PROFIT NO.OF EQUITY EARNING PER
AFTER TAX AND SHARES SHARES
PERFERENCE
DIVIDEND
2014-2015 11175.35 1159.4 9.63
2015-2016 9726.29 1163.0 8.36
2016-2017 9801.09 1164.9 8.41
2017-2018 6777.42 1285.6 5.27
2018-2019 3363.30 1289.2 2.60
Source: calculation from ICICI Bank Annual report
The Earning per share of ICICI Bank from the study period 2014-2019.The highest ratio
of9.63was registered in the year 2014-2015.The lowest ratio of 2.60 was registered in the year 2018-
2019.
The Earning per share has decreasing trend in the study period.

EARNING PER SHARE

9.63
10 8.36 8.41
8
5.27
RATIO

4 2.6

0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

PAY OUT RATIO

Payout ratio also indirectly throws light on the financial policy of the management in pouching
back.
Payout ratio = Net profit after tax and preference dividend
Equity dividend

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PAYOUT RATIO
(In cores)
YEAR EQUITY NET PROFIT PAYOUT RATIO
DIVIDEND AFTER TAX AND
PERFERENCE
DIVIDEND
2014-2015 2627.66 11175.35 23.51
2015-2016 2628.14 9726.29 27.02
2016-2017 8.13 9801.09 0.08
2017-2018 1448.74 6777.42 21.37
2018-2019 965.13 3363.30 28.69
Source: calculation from ICICI Bank Annual report
The Payout ratio of ICICI Bank from the study period 2014-2019.The highest ratio of
28.69was registered in the year 2018-2019.The lowest ratio of 0.08 was registered in the year 2016-
2017.
The Payout ratio has increasing trend in the study period.

PAYOUT RATIO
28.69
30 27.02
23.51
25 21.37

20
RATIO

15

10

5
0.08
0
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

INTEREST COVER RATIO

Interest cover ratio establishes the relationship between profit before interest and tax and fixed
interest charges.
Interest cover ratio = Profit before interest and tax
Fixed interest charges

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INTEREST COVER RATIO
(In cores)
PROFIT FIXED INTEREST
YEAR BEFORE INTEREST COVER RATIO
INTEREST AND CHARGES
TAX
2014-2015 49771.44 30051.53 1.65
2015-2016 55378.93 31515.39 1.75
2016-2017 58905.70 32418.96 1.81
2017-2018 56681.58 31940.05 1.77
2018-2019 59824.29 36386.40 1.64
Source: calculation from ICICI Bank Annual report
The Interest cover ratio of ICICI Bank from the study period 2014-2019.The highest ratio of
1.81was registered in the year 2016-2017.The lowest ratio of 1.64 was registered in the year 2018-
2019.
The Interest cover ratio has decreasing trend in the study period.

INTEREST COVER RATIO

1.85 1.81
1.8 1.77
1.75
1.75
RATIO

1.7 1.65 1.64

1.65
1.6
1.55
2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
YEAR

FINDINGS
 The operating ratio has reducing trend in the study period.
 The operating profit ratio has increasing trend in the study period.
 The net profit ratio has decreasing trend in the study period.
 The earnings per shares have increasing trend in the study period.
 The payout ratio has increasing trend period of the study.
 The interest cover ratio has decreasing trend in the study period.

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SUGGESTION
Bank can also think for improving its day-to-day service to its customer. Such service can be
improved by providing prompt service and showing an attitude of co- operation to its customer. It
will help to give a kind of confidence to the public and build a better public image. To achieve of
rural development it should open more and more branches in different rural areas of the country. It
will facilitate in providing help to rural poor farmers and other living below the poverty line bank
can appoint commission agents for different area who can encourage general public to invest in the
capital in ICICI bank. The bank should simplify the procedure of advances for quick disbursement.
To achieve organizational success a proper independent working atmosphere should be developed
to achieve desired objective more effectively. Last but not least, bank should adopt branch
automation experiment to control the operational cost.

CONCLUSION
In this study, analysis profitability position of ICICI Bank and I concluded that the Bank
profitability position is strong. So, overall profitability position of the ICICI Bank is high level.
Hence these statistics imply a bright future for the Bank. It can be said that in near future, the bank
will be booming in the bank industry.

References & Bibliography

Berman R.B. Samantha G.P. “Banking services prices indexing An Exploratory analyses of
India” (www.financialindia.com) Chaudhary Prasad
and Shrinivas Rae (2004) “Private sector bank in India, A SWOT analysis bankers professional,
The official web side of ICICI Bank. www.icicibank.com
Sharma E.M (2012) “Financial analysis of ICICI Bank Growth in subsequents Year”

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