FINANCIAL PERFORMANCE ANALYSIS OF AXIS

BANK

PROJECT REPORT
Submitted to Mahatma Gandhi University in partial fulfillment
of the requirements for the award of the Degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by

JOBIN KURIAN JOHN

Reg. No.190031000656

Under the guidance of

Mr. JIBUMON K G
Faculty Guide

Accredited by NAAC with ‘A’ Grade

DEPARTMENT OF MANAGEMENT STUDIES
MAR ATHANASIOS COLLEGE FOR ADVANCED STUDIES
TIRUVALLA
2021
 MAR ATHANASIOS COLLEGE
FOR ADVANCED STUDIES
TIRUVALLA
Ph: 0469 2730323 Fax: 0469 2730317 [email protected]

www.macfast.org

CERTIFICATE

This is to certify that the project report entitled “FINANCIAL PERFORMANCE

ANALYSIS OF AXISBANK” is a bonafide report of the project work undertaken by JOBIN
KURIAN JOHN fourth semester MBA student of our college during a period of 8 weeks
commencing from 1st Aprilto 31th May,2021.

Mr.Jibumon K G Dr. Sudeep B. Chandramana

Faculty Guide Head of Dept. of Management Studies

Rev. Fr. Dr. Cherian J Kottayil Signature of the external examiner

Principal, MACFAST
 DECLARATION

I hereby declare that this project report entitled “FINANCIAL PERFORMANCE

ANALYSIS OF AXIS BANK” is a bonafide report of the study undertaken by me, under the
guidance of Mr. JIBUMON K G, Department of Management Studies, MACFAST, Tiruvalla.

I also declare that this project report has not been submitted to any other University or
Institute for the award of any degree or diploma.

Place: Tiruvalla
Date: 01/06/2021 JOBIN KURIAN JOHN
 ACKNOWLEDGEMENT

First of all, words are inadequate to express my whole hearted thankfulness to God Almighty,
the source of all wisdom and powerful for leading me kindly in each and every association of
this project endeavor. I would proudly utilize this opportunity to express my thanks and
sincere gratitude to my esteemed guide, Mr. Jibumon K G without whose valuable guidance
and encouragement, it would not have been possible for me to bring out the Organization
study report.

I also express my sincere gratitude to the Head of the Department, Dr.Sudeep B.

Chandramana for his prompt helpfulness and guidance. I would also take this opportunity to
acknowledge my sincere thanks to Fr.Dr.Cherian J Kottayil, Principal, MACFAST, Tiruvalla
for his encouragement and help in making this project fruitful. I would make this opportunity
to express my sincere thanks to all the Teachers of MBA Department, MACFAST College
Tiruvalla for their valuable suggestions. This work has given me an opportunity to
acknowledge the inner debt that I owe to my parents and all my friends who have influenced
me throughout my project.

JOBIN KURIAN JOHN

 LIST OF TABLES
PAGE
TABLE NO TITLE
NO.
5.1 RETURN ON EQUITY 58
5.2 RETURN ON ASSETS 59
5.3 NET INTEREST MARGIN 60
5.4 LEVERAGE RATIO 61
5.5 TOTAL CAPITAL RATIO 62
5.6 LOAN RATIO 63
5.7 CAR RATIO 64
5.8 DEBT – EQUITY RATIO 65
5.9 ADVANCE/TOTAL ASSET RATIO 66
5.10 NET NPA TO NET ADVANCE 67
5.11 NET NPA TO TOTAL ASSETS 68
5.12 GROSS NPA TO TOTAL ASSETS 69
5.13 TOTAL ADVANCE TO TOTAL DEPOSITS 70
5.14 PROFIT PER EMPOLYEE 71
5.15 BUSINESS PER EMPLOYEE 72
5.16 INTEREST INCOME TO TOTAL INCOME 73
5.17 NON INTEREST INCOME TO TOTAL INCOME 74
5.18 CURRENT RATIO 75
5.19 CREDIT DEPOSIT RATIO 76
5.20 COMPARATIVE BALANCE SHEET (2019 & 2020) 77
5.21 COMPARATIVE BALANCE SHEET (2018 & 2019) 78
5.22 COMPARATIVE BALANCE SHEET (2017 & 2018) 79
5.23 COMPARATIVE BALANCE SHEET (2017 & 2016) 80
 LIST OF FIGURES
DIAGRAM NO. TITLE PAGE NO
5.1.1 RETURN ON EQUITY 58
5.2.1 RETURN ON ASSETS 59
5.3.1 NET INTEREST MARGIN 60
5.4.1 LEVERAGE RATIO 61
5.5.1 TOTAL CAPITAL RATIO 62
5.6.1 LOAN RATIO 63
5.7.1 CAR RATIO 64
5.8.1 DEBT – EQUITY RATIO 65
5.9.1 ADVANCE/TOTAL ASSET RATIO 66
5.10.1 NET NPA TO NET ADVANCE 67
5.11.1 NET NPA TO TOTAL ASSETS 68
5.12.1 GROSS NPA TO TOTAL ASSETS 69
5.13.1 TOTAL ADVANCE TO TOTAL DEPOSITS 70
5.14.1 PROFIT PER EMPOLYEE 71
5.15.1 BUSINESS PER EMPLOYEE 72
5.16.1 INTEREST INCOME TO TOTAL INCOME 73
5.17.1 NON INTEREST INCOME TO TOTAL INCOME 74
5.18.1 CURRENT RATIO 75
5.19.1 CREDIT DEPOSIT RATIO 76
 ABBREVIATIONS

• CAR : Capital Adequacy Ratio

• DER: Debit Equity Ratio
• NIM : Net Interest Margin
• NPA: Non- Performing Assets
• RBI : Reserve Bank of India
• ROA : Return on Assets
• ROE : Return on Equity
 CONTENTS

Page No.

ACKNOWLEDGEMENT (i)

LIST OF TABLES (ii- iii)

LIST OF FIGURES (iv-v)

ABBREVIATIONS (vi)

Introduction-Statement of the problem 1-6

Chapter 1

1.1 Background of the Study 2-6

1.2 Statement of the Problem 6

1.3 Relevance & Scope of the Study 6

1.4 Objectives of the Study 6

Chapter 2 Industry Profile 7-32

2.1 Business Process of the Industry 15-17

2.2 Market Demand & Supply – Contribution to GDP – 17-22

Revenue Generation
2.3 Level and Type of Competition – Firms Operating in 22-25
the Industry
 2.4 Pricing Strategies in the Industry 25-26

2.5 Prospects and Challenges of the Industry 26-29

2.6 Key Drivers of the Industry 29-32
Chapter 3 Review of Literature 33-41

3.1 Brief Theoretical Construct related to the Problem 34-38

3.2 An Overview of Earlier Studies 38-40

3.3 Uniqueness of Research Study 40-41

Chapter 4 Methodology of the Study 42-56

4.1 Research Approach and design 43

4.2 Sampling Design 43

4.3 Data Analysis Tools 44

4.4 Report Structure 44-54

4.5 Duration of Study 55

4.6 Limitations of the Study 56

Chapter 5 Data Analysis, Interpretation & Inference 57-80

Chapter 6 Findings & Suggestions 81-83
Chapter 7 Conclusions 84-85
• Bibliography 86
CHAPTER – 1

INTRODUCTION

1
1. INTRODUCTION

1.1 BACKGROUND OF THE STUDY

BANKING IN INDIA

Without a sound and effective banking system in India it cannot have a healthy economy. The
Banking system of India should not only be hassle free but it should be able to meet new
Challenges posed by the technology and any other external and internal factors. For the past
three decades India's banking system has several outstanding achievements to its credit. The
most striking is its extensive reach. It is no longer confined to only metropolitans or
cosmopolitans in India. In fact, Indian banking system has reached even to the remote corners of
the country. This is one of the main reasons of India's growth process.

HISTORY:
The first bank in India, though conservative, was established in 1786. From 1786 till today, the
Journey of Indian Banking System can be segregated into three distinct phases. They are as
Mentioned below:
PHASE I - Early phase from 1786 to 1969 of Indian Banks
PHASE II - Nationalization of Indian Banks and up to 1991
PHASE III - Indian Financial & Banking Sector Reforms after 1991.

PHASE I:
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of Bombay
(1840) and Bank of Madras (1843) as independent units and called it Presidency Banks. These
three banks were amalgamated in 1920 and Imperial Bank of India was established which started
as private shareholders banks, mostly Europeans shareholders. During the first phase the growth
was very slow and banks also experienced periodic failures between 1913 and 1948. There were
approximately 1100 banks, mostly small. To streamline the functioning and activities of
commercial banks, the Government of India came up with The Banking Companies Act, 1949

2
which was later changed to Banking Regulation Act 1949 as per amending Act of 1965 (Act
No.23 of 1965). Reserve Bank of India was vested with extensive powers for the supervision of
banking in India as the Central Banking Authority. During those days public had lesser
confidence in the banks. As an aftermath deposit mobilization was slow. On top of it the savings
bank facility provided by the Postal department was comparatively safer. Moreover, funds were
largely given to the traders.

PHASE II:
Government took major steps in this Indian Banking Sector Reform after independence. In 1955,
it nationalized Imperial Bank of India with extensive banking facilities on a large scale especially
in rural and semi-urban areas. Second phase of nationalization, Indian Banking Sector Reform
was carried out in 1980 with seven more banks. This step brought 80% of the banking segment
in India under Government ownership. The following are the steps taken by the Government of
India to Regulate Banking Institutions in the Country:

➢ 1949: Enactment of Banking Regulation Act.

➢ 1955: Nationalization of State Bank of India.
➢ 1959: Nationalization of SBI subsidiaries.
➢ 1961: Insurance cover extended to deposits.
➢ 1969: Nationalization of 14 major banks.
➢ 1971: Creation of credit guarantee corporation.
➢ 1975: Creation of regional rural banks.
➢ 1980: Nationalization of seven banks with deposits over 200 crore.

After the nationalization of banks, the branches of the public sector bank India raised to
approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in the
sunshine of Government ownership gave the public implicit faith and immense confidence about
the sustainability of these institutions.

3
PHASE III
This phase has introduced many more products and facilities in the banking sector in its reforms
measure. In 1991, under the chairmanship of M Narasimham, a committee was set up by his
name which worked for the liberalization of banking practices.
The country is flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire
System became more convenient and swift. The financial system of India has shown a great deal
of resilience. It is sheltered from any crisis triggered by any external macroeconomics shock as
other East Asian Countries suffered. This is all due to a flexible exchange rate regime, the
foreign reserves are high, the capital account is not yet fully convertible, and banks and their
customers have limited foreign exchange exposure.

Current Scenario
The industry is currently in a transition phase. On the one hand, the PSBs, which are the
mainstay of the Indian Banking system are in the process of shedding their flab in terms of
excessive manpower, excessive non-Performing Assets (NPA) and excessive governmental
equity, while on the other hand the private sector banks are consolidating themselves through
mergers and acquisitions. PSBs, which currently account for more than 78 percent of total
Banking industry assets are saddled with NPAs (a mind-boggling Rs 830 billion in 2000), falling
revenues from traditional sources, lack of modern technology and a massive workforce while the
new private sector banks are forging ahead and rewriting the traditional banking business model
by way of their sheer innovation and service. The PSBs are of course currently working out
challenging strategies even as 20 percent of their massive employee strength has dwindled in the
wake of the successful Voluntary Retirement Schemes (VRS) schemes. The private players
however cannot match the PSB‟s great reach, great size and access to low cost deposits.
Therefore one of the means for them to combat the PSBs has been through the merger and
acquisition (M& A) route. Over the last two years, the industry has witnessed several such
instances. For instance, HDFC Bank’s merger with Times Bank ICICI Bank’s acquisition of ITC
Classic, Anagram Finance and Bank of Madura. Centurion Bank, IndusInd Bank, Bank of

4
Punjab, Vysya Bank are said to be on the lookout. The UTI bank- Global Trust Bank merger
however opened a Pandora’s box and brought about the realization that all was not well in the
functioning of many of the private sector banks. Private sector Banks have pioneered internet
banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller
Machines (ATMs) and combined various other services and integrated them into the mainstream
banking arena, while the PSBs are still grappling with disgruntled employees in the aftermath of
successful VRS schemes.

Also, following India’s commitment to the WTO agreement in respect of the services sector,
foreign banks, including both new and the existing ones, have been permitted to open up to 12
branches a year with effect from 1998-99 as against the earlier stipulation of 8 branches. Talks of
government diluting their equity from 51 percent to 33 percent in November 2000 has also
opened up a new opportunity for the takeover of even the PSBs. The FDI rules being more
rationalized in Q1FY02 may also pave the way for foreign banks taking the M& A route to
acquire willing Indian partners. Meanwhile the economic and corporate sector slowdown has led
to an increasing number of banks focusing on the retail segment. Many of them are also entering
the new vistas of Insurance. Banks with their phenomenal reach and a regular interface with the
retail investor are the best placed to enter into the insurance sector. Banks in India have been
allowed to provide fee-based insurance services without risk participation invest in an insurance
company for providing infrastructure and services support and set up of a separate joint venture
insurance company with risk participation. Banking sector is the main component of financial
sector; hence measuring the performance of banking institution has become a major task of all
economies. The functioning of banking sector has change upside down in India also. To evaluate
the efficiency of Indian Bank, their financial performance should be assessed. So it is important
to examine as to whether the performance of banks has improved after crisis. Such information
can provide use full guidance, to policy maker about understanding the efficiency of banking
sector in India.

Financial performance indicates the performance of the financial institution at the end of the
year. This information reflects the bank NPA’s, return on investment and profitability of the
business. Evaluation of financial performance also helps to measures the overall financial

5
conditions of the financial institution over a given period of time. The main purpose of financial
performance is for decision making through analysis and interpretation. Financial performance
analysis is a process of identifying the financial strength and weakness of the banking sector.
Comparative financial statement provides information relating to development of the banking
sector for a particular period of time. It also indicates the favorable and unfavorable condition of
the banking sector. Although performance measurement systems can play a key role in
communicating, evaluating, and rewarding the achievement of strategic objectives.

1.2 STATEMENT OF THE PROBLEM

The title of the project is “Financial Performance Analysis of Axis Bank”. Therefore, a study
of liquidity, profitability, leverage, turnover, operational efficiency, market based and their
association with risk, and assessing the financial position is very much necessary to evaluate the
financial strength of the banking institution and to have knowledge about accounting ratios,
analysis and its interpretation. It helps to analyze the financial performance of the concerned
Bank.

1.3 RELEVANCE & SCOPE OF THE STUDY

The study will be limited to the financial statements of the particular bank. The study is based on
the financial reports of the bank for the period of 5 years from 2015/16 to 2019/20. It includes
liquidity, profitability, leverage, turnover and market based ratio performance of the Bank. The
present study does not cover the human resource practices employee performance, performance
of mutual funds in the Indian stock market and the likes of it. The study was carried out for a
period of one month commencing from 1st may 2021 to 30th may 2021.

1.4 OBJECTIVE OF THE STUDY

• To study the overall monetary performance of Axis Bank over a period of five years
(2015-16 to 2019-20).
• To evaluate financial position of the Bank in terms of solvency, profitability, liquidity
and efficiency.
• To determine the long term financial solvency position of the Bank.

6
 CHAPTER – 2
INDUSTRY PROFILE

7
COMPANY PROFILE

Axis Bank is the third largest private sector bank in India. The bank offers the entire spectrum of
financial services to customer segments covering Large and Mid-Corporates, MSMEs,
Agriculture and retail businesses. The Bank operates in four segments, namely treasury, retail
banking, corporate/ wholesale banking and other banking business. The treasury operations
include investments in sovereign and corporate debt, equity and mutual funds, trading
operations, derivative trading and foreign exchange operations on the account, and for customers
and central funding. Retail banking includes lending to individuals/small businesses subject to
the orientation, product and granularity criterion. It also includes liability products, card services,
Internet banking, automated teller machines (ATM) services, depository, financial advisory
services and NRI services.

The corporate/wholesale banking segment includes corporate relationships not included under
retail banking, corporate advisory services, placements and syndication, management of publics
issue, project appraisals, capital market related services, and cash management

The Bank's registered office is located at Ahmedabad and their Central Office is located at
Mumbai. With 4528 domestic branches (including extension counters) and 12044 ATMs and
5433 cash recyclers across the country as on 31 March 2020, the network of Axis Bank spreads
across 2,033 cities and towns, enabling the bank to reach out to a large cross-section of
customers with an array of products and services. The bank also has nine overseas offices with
branches at Singapore, Hong Kong, Dubai (at the DIFC), Shanghai and Colombo; representative
offices at Dubai, Abu Dhabi and Dhaka and an overseas subsidiary at London, UK. The Bank
has five wholly-owned subsidiaries namely Axis Securities and Sales Ltd, Axis Private Equity
Ltd, Axis Trustee Services Ltd, Axis Asset Management Company Ltd and Axis Mutual Fund
Trustee Ltd. Axis Bank was incorporated in the year 1993 with the name UTI Bank Ltd. Axis
Bank is one of the first new generation private sector banks to have begun operations in 1994.
The bank was promoted in 1993, jointly by Specified Undertaking of Unit Trust of India
(SUUTI) (then known as Unit Trust of India), Life Insurance Corporation of India (LIC),

8
General Insurance Corporation of India (GIC), National Insurance Company Ltd., The New
India Assurance Company Ltd., The Oriental Insurance Company Ltd. and United India
Insurance Company Ltd. The shareholding of Unit Trust of India was subsequently transferred to
SUUTI, an entity established in 2003. In the year 2001, the bank along with Global Trust Bank
(GTB) had a merger proposal to create the largest private sector bank, but due to media's issues
both the banks withdraw the merger proposal. In the year 2003, the Bank was given the
authorized to handle Government transactions such as collection of Government taxes, to handle
the expenditure related payments of Central Government Ministries and Departments and
pension payments on behalf of Civil and Non-civil Ministries such as defense, posts, telecom and
railways. In December 20003, the Bank launched their merchant acquiring business. In the year
2005, the Bank raised $239.3 million through Global Depositary Receipts. They won the award
'Outstanding Achievement Award' for the year 2005 from Indian Banks Association for IT
Infrastructure, delivery capabilities and innovative solutions.

In December 2005, the Bank set up Axis Securities and Sales Ltd (originally incorporated as
UBL Sales Ltd) to market credit cards and retail asset products. In October 2006, they set up
Axis Private Equity Ltd, primarily to carry on the activities of managing equity investments and
provide venture capital support to businesses. In the year of 2007, the bank again raised $218.67
million through Global Depository Receipts. They opened 153 new branches during the year,
which includes 43 extension counters that have been upgraded to branches and 8 Service
branches/ CPCs. They also opened new overseas offices at Singapore, Dubai and Hong Kong
and a representative office in Shanghai. During the year 2007-08, the Bank opened 143 new
branches, taking the number of branches to 651 which included 33 extension counters that have
been upgraded to branches. Also, they expanded overseas with the opening of a branch at the
Dubai International Finance Centre. The Bank changed their name from UTI Bank Ltd to Axis
Bank Ltd with effect from July 30, 2007 to avoid confusion with other unrelated entities with
similar name.
During the year 2008-09, the Bank opened 176 new branches that include 12 extension counters
that have been upgraded to branches taking the total number of branches and ECs to 835. During
the year, they opened 831 ATMs, thereby taking the ATM network of the Bank from 2,764 to
3,595. Also, they opened a Representative Office in Dubai. In May 2008, the Bank established

9
Axis Trustee Services Company Ltd as a wholly owned subsidiary company, which is engaged
in trusteeship activities. In December 2008, they launched their new investment advisory service
exclusively for High Net Worth clients. In January 2009, the Bank set up Axis Asset
Management Company Ltd to carry on the activities of managing a mutual fund business. Also,
they incorporated Axis Mutual Fund Trustee Ltd to act as the trustee for the mutual fund
business.
During the year 2009-10, the Bank opened 200 branches taking the total number of branches
Extension Counters (ECs) to 1,035. In March 209, 2010, they opened their 1000 branch at
Bandra West, Mumbai. In September 2009, Axis Bank launched the private banking business in
the domestic market, christened 'Privee' to cater to highly affluent individuals and families
offering them unique investment opportunities During the year, the Capital Markets SBU was
restructured with the debt capital market business (hitherto a part of the capital markets) carved
into a separate vertical.
As a result, the Bank's Capital Markets SBU comprises equity capital markets (ECM) business,
mergers and acquisitions and private equity syndication. In February 24, 2010, the Bank
launched the 'AXIS CALL & PAY on atom', a unique mobile payments solution using Axis
Bank debit cards. Axis Bank is the first bank in the country to provide a secure debit card-based
payment service over IVR. During the year 2010-11, 407 new branches were added to the Bank's
network taking the total number of branches and extension counters (ECs) to 1,390. Of these,
564 branches/ ECs are in semi-urban and rural areas and 826 branches/ECs are in metropolitan
and urban areas. The Bank is present in all states and Union Territories (except Lakshadweep)
covering 921 centers.
The ATM network of the Bank increased from 4,293 to 6,270. During the year, the Bank also
opened a Representative Office in Abu Dhabi. This was in addition to the existing branches at
Singapore, Hong Kong and DIFC (Dubai International Financial Centre) and representative
offices at Shanghai and Dubai. In March 7, 2011, the Bank incorporated a new subsidiary
namely Axis U.K. Ltd. as a private limited company registered in the United Kingdom (UK)
with the main purpose of filing an application with Financial Services Authority (FSA), UK for a
banking license in the UK and for the creation of necessary infrastructure for the subsidiary to
commence banking business in the UK. On 8 January 2014, Axis Bank announced the opening
of its Shanghai Branch, thus becoming the first Indian private sector bank to set up a branch in

10
China. On 4 December 2014, Axis Bank announced that it had closed its Senior Unsecured
Redeemable Non-Convertible Debenture issue of amount Rs 5705 crore and priced at 8.85% p.a.
payable annually maturing on 5 December 2024. On 9 December 2014, Axis Bank announced
the launch of limited period offer of 20 year fixed rate home loan for affordable housing at
10.40%. On 27 July 2015, Axis Bank announced that it had signed a $200 million 7 year bilateral
loan deal with the Asian Development Bank (ADB) for extending affordable agriculture credit to
farmers in India.

On 22 November 2015, Axis Bank announced the opening of its Representative Office in Dhaka,
Bangladesh in a bid to strengthen its international presence. On 9 March 2016, Axis Bank
announced the launch of the world's first Forex prepaid card issued in conjunction with Diners
Club International, a business unit of Discover Financial Services. On 30 March 2017, Axis
Bank announced a strategic partnership with Wells Fargo & Company to offer seamless
remittance facility to their NRI customers from The United States of America (USA). On 17
June 2017, Axis Bank in association with Kochi Metro Rail Corporation (KMRL) launched
India's first single-wallet contactless, open loop metro card to allow cashless commuting for
commuters in Kochi. On 5 July 2017, Axis Bank announced its foray into the luxury bikes loans
segment for 500cc & above bikes. On 11 July 2017, Axis Bank announced its collaboration with
Inter-American Investment Corporation (IIC) to facilitate trade with Latin America and the
Caribbean. Axis Bank on 27 July 2017 announced that it has entered into an agreement with
Jasper Infotech Private Limited to acquire 100% stake in its subsidiaries viz. FreeCharge
Payment Technologies Private Limited and Accelyst Solutions Private Limited, which together
constitute the digital payments business under the 'FreeCharge' brand. The deal marked the first
such acquisition of a digital
payments company by a bank in India. The bank had a network of 3703 branches and 13814
ATMs & cash deposit machines as at 31 March 2018 across the country. The bank has raised Rs
8680 crore of capital from a consortium of investors (Bain Capital, Life Insurance Corporation of
India and other marquee investors).
During the fiscal 2019, the bank has won the Excellence Certificate in Corporate Social
Responsibility (CSR) category at the prestigious CII ITC Sustainability Awards 2018. The bank
has partnered with SignCatch to launch the first-of-its-kind Smart Bill Pay initiative for New

11
Delhi Municipal Corporation. As on 31 March 2019, the bank had a network of 4050 branches,
11801 ATMs and 4917 cash deposit machines across the country. During the FY 2019-20, the
bank has opened 478 new branches, taking the total network of branches as at 31 March 2020 to
4528 and 17477 ATMs & cash deposit machines across the country. During the year, the bank
has won the award for Excellence in Operations at the IDC Insights Awards 2019. Axis Bank is
one of the three entities allowed by RBI to set up the Trade Receivables Discounting System
(TReDS which is an electronic platform for facilitating cash flows for MSMEs.

12
Type Public

Traded as BSE: 532215

LSE: AXBC
NSE: AXISBANK
BSE SENSEX Constituent
NSE NIFTY 50 Constituent

ISIN INE238A01034

Industry Banking
Financial services

Founded 1993; 28 years ago

Headquarters Mumbai, Maharashtra, India[1]

Number of 4800+ branches (December 2019)

locations

Key people Amitabh Chaudhry

(MD & CEO)

Shri Rakesh Makhija

(Chairman)

Revenue ₹80,057.67 crore (US$11 billion) [2] (2020)

13
Operating ₹61,991.91 crore (US$8.7 billion) [2] (2020)
income

Net income ₹1,853.11 crore (US$260 million) [2] (2020)

Total assets ₹927,871.81 crore (US$130 billion) [3] (2020)

Total equity ₹85,776.09 crore (US$12 billion) [3] (2020)

Owner Life Insurance Corporation (9.19%)

Specified Undertaking of Unit Trust of India (SUUTI) (4.68%)
General Insurance Corporation of India (1.15%)
The New India Assurance Company Limited (0.74%)

Subsidiaries Axis Asset Management Company Ltd.

Axis Mutual Fund Trustee Ltd.
Axis Capital Ltd.
Axis Finance Ltd.
Axis Securities Ltd.
A.TREDS Ltd.
Axis Bank UK Ltd.
Axis Trustee Services Ltd.
Freecharge
Accelyst Solutions Private Ltd.
Axis Private Equity Ltd.[4]

Capital ratio 9.35% (December 2019)

Website www.axisbank.com

14
2.1 BUSINESS PROCESS OF THE INDUSTRY
Today’s retail and wholesale banks face unprecedented operational pressures that test the
efficiency, effectiveness, and agility of their business processes. The typical banking business
process often fails the test, struggling to adapt to shifting marketplace demands and regulatory
requirements. Lending institutions of all stripes are looking to build a better banking business
process, intelligent enough to successfully balance business objectives with customers’ desires,
and agile enough to keep pace with a dynamic operational environment.

Business Process Automation (BPA) or digital transformation is referred to the procedure of

handling and managing business process by using automated processes that are innovative and
technologically driven. Process automation replaces and reduces the effort, time and costs that
are required to perform the task manually. It also provides enhanced accuracy and remove
potential human errors. Automate business processes are especially designed to increase the
overall productivity of business process with the help of modern technologies and computer
software.
BPA has become the emerging trend in all the industries due to its remarkable abilities to
simplify redundant and complex tasks, improve efficiency, enhance service quality, achieve
target quickly, and reduce operational costs and accomplishing digital transformation. BPA also
helps improving business workflows and achieving higher levels of efficiency. All the major
industries including banking and finance sector are widely implementing BPA as an integral part
of their business strategy in order to adopt the changing needs of the industry, while redefining
job responsibilities and roles and reducing human errors.

Machine learning, artificial intelligence and robotic processes automation (RPA) are some of the
significant automation technologies that are leading the smooth digital transformation within the
finance and banking sector. Biometrics and Blockchain are some other technologies that are
turned out to be transformative within the banking industry. Some of the major breakthroughs
that are introduced to the industry are because of these automated processes. Below we have
discussed few that we found most important.

15
1. KYC (Know-Your-Customer)
In the banking and financial sectors, the information related to the customers is of utmost
importance. Financial and banking services require customer data not only for account opening
but also for other banking processes. This information is required to be passed through the
internal banking process, to ensure its regulatory compliance with other regulatory agencies.
And, to ensure that, multiple checks such as ID Verification, Background Checks, Reference
Checks etc. are imposed. Applying the entire process step-by-step every time for every single
customer, whenever they open an account or request a loan, become a very heft task for banks.
This is where the efficient automated processing comes into play within the banking sector.
Modern banks are now using automated systems to create a centralized information network
which allow quick and easy access and push and pull of the information. These systems are using
machine learning to extract information from disparate data sources.

2. Risk Analysis & Compliance

Audits are inevitable in banking operations, and this is why financial institutions and banks are
significantly investing in process automation technologies, in order to automate and improve
their operation that are potential to risk and compliance issues. These automation technologies
not only improve the overall performance and efficiency, but also reflect amazing adaptability in
relation to other IT platforms. This helps banks to better check the frauds, report risk, and check
quality etc.

3. Core Banking & Finance Operations

There are numerous automation technologies available now that are being efficiently used in
blend with BPA to modify and improve the back-office banking and financial operations such as
ID verifications, data updates, accounts reconciliation, documentation and much more.

16
4. Mortgage Loan & Credit Processing
Mortgage loan systems have been amplified by the technological transformations, but especially
by the process automation. The loan approval process used to take more than 60 days before the
process was automated. But now, as soon as the ID checks and employment status are checked
and verified, you get your loan approval. BPA has made the process a lot easier and simpler. The
entire loan approval procedure has been accelerated by BPA with reduced processing time and
quicker response.

5. Customer Request & Support Services

Customer service is amongst the top most priorities for banks. With scorching competition
within the banking industry, banks are continuously striving hard to provide exceptional
customer service to their customers. BPA has enabled banks to provide remarkable service and
customer experience. For example, with automated processes, banks are now capable of
responding thousands of queries everyday while offering the best possible solutions at the
earliest.

6. Fraud Detection
Terrorist activities and fraud concerns have been significantly increased along with the
digitization. However, RPA (Robotic Process Automation) is amongst one of the process
automation technology which offer great fraud prevention by using predictive analysis and steps
any data breach.

2.2 MARKET DEMAND AND SUPPLY – CONTRIBUTION TO GDP-

REVENUE GENERATION.

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalized and
well-regulated. The financial and economic conditions in the country are far superior to any
other country in the world. Credit, market and liquidity risk studies suggest that Indian banks are
generally resilient and have withstood the global downturn well. Indian banking industry has
recently witnessed the roll out of innovative banking models like payments and small finance
banks. RBI’s new measures may go a long way in helping the restructuring of the domestic

17
banking industry. The digital payments system in India has evolved the most among 25 countries
with India’s Immediate Payment Service (IMPS) being the only system at level five in the Faster
Payments Innovation Index (FPII).

2.2.1 MARKET SIZE

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44 foreign
banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural cooperative
banks in addition to cooperative credit institutions. As of November 2020, the total number of
ATMs in India increased to 209,282.

According to RBI, India’s foreign exchange reserves reached US$ 590.18 billion, as of February
5, 2021. According to RBI, bank credit and deposits stood at Rs. 106.40 trillion (US$ 1.45
trillion) and Rs. 146.24 trillion (US$ 2.00 trillion), respectively, as of January 15, 2021. Credit to
non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15, 2021. Asset
of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20. Total assets
across the banking sector (including public, private sector and foreign banks) increased to US$
2.52 trillion in FY20.

Indian banks are increasingly focusing on adopting integrated approach to risk management. The
NPAs (Non-Performing Assets) of commercial banks has recorded a recovery of Rs. 400,000
crore (US$ 57.23 billion) in FY19, which is highest in the last four years.

RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code (Amendment)
Ordinance, 2017 Bill has been passed and is expected to strengthen the banking sector. Total
equity funding of microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in
2018-19.
As of January 27, 2021, the number of bank accounts opened under the Government’s flagship
financial inclusion drive Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 41.75 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.37 lakh crore (US$ 18.89 billion).

18
Rising income is expected to enhance the need for banking services in rural areas, and therefore,
drive the growth of the sector.

The digital payments revolution will trigger massive changes in the way credit is disbursed in
India. Debit cards have radically replaced credit cards as the preferred payment mode in India
after demonetization. In January 2021, Unified Payments Interface (UPI) recorded 2.30 billion
transactions worth Rs. 4.31 lakh crore (US$ 59.16 billion).

2.2.2 Government Initiatives

As per Union Budget 2019-20, the government has proposed fully automated GST refund
module and an electronic invoice system that will eliminate the need for a separate e- way bill.
Under the Budget 2019-20, government has proposed Rs 70,000 crore (US$ 10.2 billion) to the
public sector bank. Government has smoothly carried out consolidation, reducing the number of
Public Sector Banks by eight. As of September 2018, the Government of India has made the
Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme an open-ended scheme and has also added
more incentives. The Government of India is planning to inject Rs 42,000 crore (US$ 5.99
billion) in the public sector banks by March 2019 and will infuse the next tranche of
recapitalization by mid-December 2018.

2.2.3 Bank Marketing In the Indian Perspective:

In banking sector marketing plays a very important role. Competitive pressure is pushing the
banks to adopt new marketing initiatives. Marketing is going to play very important role in this
changing scenario. Employees have to realize the importance of marketing. The old methods of
banking where walk-in customers were the source of business is not applicable in present
scenario. The customer’s expectations are changing. Now customers want the banks to visit them
instead of them visiting the bank. Competition has set the reversal of roles. Customers are also
expecting better services. Bank has to identify the financial needs of the customers and offer
services, which can satisfy those needs. Marketing is about understanding, creating and retaining
customers. All strategies are formulated to ensure that customers ultimately deal with us.
Marketing is an important tool, which helps us in achieving organizational objective of the bank.

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2.2.4 Marketing mix in banking sector
Service
Recently, banks are in a period that they earn money in servicing beyond selling money. The
prestige is get as they offer their services to the masses. Like other services, banking services are
also intangible. Banking services are about the money in different types and attributes like
lending, depositing and transferring procedures. These intangible services are shaped in
contracts. The structure of banking services affects the success of institution in long term.
Besides the basic attributes like speed, security and ease in banking services, the rights like
consultancy for services to be compounded are also preferred.

Price
The price which is an important component of marketing mix is named differently in the base of
transaction exchange that it takes place. Banks have to estimate the prices of their services
offered. By performing this, they keep their relations with extant customers and take new ones.
The prices in banking have names like interest, commission and expenses. Price is the sole
element of marketing variables that create earnings, while others cause expenditure. While
marketing mix elements other than price affect sales volume, price affect both profit and sales
volume directly. Banks should be very careful in determining their prices and price policies.
Because mistakes in pricing cause customers’ shift toward the rivals offering likewise services.
Traditionally, banks use three methods called “cost-plus”, “transaction volume base” and
“challenging leader” in pricing of their services.

Distribution
The complexities of banking services are resulted from different kinds of them. The most
important feature of banking is the persuasion of customers benefiting from services. Most
banks’ services are complex in attribute and when this feature joins the intangibility
characteristics, offerings take also mental intangibility in addition to physical intangibility. On

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the other hand, value of service and benefits taken from it mostly depend on knowledge,
capability and participation of customers besides features of offerings. This is resulted from the
fact that production and consumption have non separable characteristics in those services. Most
authors argue that those features of banking services makes personal interaction between
customer and bank obligatory and the direct distribution is the sole alternative. Due to this
reason, like preceding applications in recent years, branch offices use traditional method in
distribution of banking services.

Promotion
One of the most important element of marketing mix of services is promotion which is consist of
personal selling, advertising, public relations, and selling promotional tools.

Personal Selling
Due to the characteristics of banking services, personal selling is the way that most banks prefer
in expanding selling and use of them. Personal selling occurs in two ways. First occurs in a way
that customer and banker perform interaction face to face at branch office. In this case, whole
personnel, bank employees, chief and office manager, takes part in selling. Second occurs in a
way that customer representatives go to customers’ place. Customer representatives are specialist
in banks’ services to be offered and they shape the relationship between bank and customer.

Advertising
Banks have too many goals which they want to achieve. Those goals are for accomplishing the
objectives as follows in a way that banks develop advertising campaigns and use media.
1. Conceive customers to examine all kinds of services that banks offer
2. Increase use of services
3. Create well fit image about banks and services
4. Change customers’ attitudes
5. Introduce services of banks
6. Support personal selling
7. Emphasize well service

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Advertising media and channels that banks prefer are newspaper, magazine, radio, direct posting
and outdoor ads and TV commercials. In the selection of media, target market should be
determined and the media that reach this target easily and cheaply must be preferred.
Banks should care about following criteria for selection of media.
1. Which media the target market prefer
2. Characteristics of service
3. Content of message
4. Cost
5. Situation of rivals Ads should be mostly educative, image making and provide the information
as follows:
1. Activities of banks, results, programs, new services
2. Situation of market, government decisions, future developments
3. The opportunities offered for industry branches whose development meets national benefits.

Public relations
Public relations in banking should provide;
1. Establishing most effective communication system
2. Creating sympathy about relationship between bank and customer
3. Giving broadest information about activities of bank.
It is observed that the banks in India perform their own publications, magazine and sponsoring
activities.

Selling Promotional Tools

Another element of the promotion mixes of banks is improvement of selling. Mostly used selling
improvement tools are layout at selling point, rewarding personnel, seminaries, special
gifts, premiums, contests.

2.3 LEVELS AND TYPE OF COMPETITION-FIRMS OPERATING IN

THE INDUSTRY
Competition in the banking sector in India is best seen as the product of two grand bargains. The
first was between successive governments and the banks, whereby banks got privileged access to

22
low cost demand and time deposits, to the central banks liquidity facilities, as well as some
protection from competition, in return for accepting obligations such as financing the
government (through the Statutory Liquidity Ratio or SLR), helping in monetary transmission
(through maintaining the Cash Reserve Ratio or CRR), opening branches in unbanked areas and
making loans to the priority sector. The second grand bargain was between the public sector
banks (PSBs) and the government, whereby these banks undertook special services and risks for
the government, and were compensated in part, by the government standing behind the public
sector banks. As India has developed, both these bargains are coming under pressure. And it is
development and competition that is breaking them down.

Today, the investment needs of the economy, especially long term investment in areas like
infrastructure, have increased. The government can no longer undertake these investments.
Private entrepreneurs have been asked to take them up. To create space for financing, the
government has to pre-empt less of the banking systems assets. But the nature of financing
required is also changing. Private investment is risky, so there has to be more risk absorbing
financing such as from corporate bond markets and from equity markets. As more sources of
financing emerge, not only will banks no longer be able to have a monopoly over financing
corporations and households, they will also have to compete for the best clients, who can access
domestic and international markets.

Similarly, deposit financing will no longer be as cheap, as banks will have to compete with
financial markets and real assets for the households savings. As households become more
sophisticated, they will be unwilling to leave a lot of money in low interest bearing accounts. Of
course, households will still be willing to accept low interest rates in return for liquidity. So
privileged access to the central banks liquidity windows will allow banks to offer households
these liquidity services safely and get a rent, but this advantage will also become eroded as new
payments institutions and technologies emerge.

The first grand bargain -- cheap deposits in return for financing the government is therefore
being threatened from both sides. Deposits will not continue to be cheap, while the government
cannot continue to pre-empt financing at the scale it has in the past if we are to have a modern

23
entrepreneurial economy. This is yet another reason why fiscal discipline will be central to
sustainable growth going forward.

Public sector banks are, if anything, in a worse position than private sector banks, which is why
the second bargain is also under threat. As low risk enterprises migrate to financing from the
markets, banks are left both with very large risky infrastructure projects and with lending to
small and medium sized firms. The alternative to taking these risks is to plunge into very
competitive retail lending, so public sector banks may have little option especially if the
government pushes them to lend to infrastructure.

Many of the projects being financed today, however, require sophisticated project evaluation
skills and careful design of the capital structure. Successful lending requires the lender to act to
secure his position at the first sign of trouble, otherwise the slow banker ends up providing the
loss cover for more agile bankers or for unscrupulous promoters. To survive in the changing
business of lending, public sector banks need to have strong capabilities, undertake careful
project monitoring, and move quickly to rectify problems when necessary. In the past, PSBs had
the best talent. But today, past hiring freezes have decimated their middle-management ranks,
and private banks have also poached talented personnel from PSBs. PSBs need to be able to
recruit laterally, while retaining the talent they have, but to do so they need to be able to promise
employees responsibility as well as the freedom of action. Unfortunately, employee actions in
public sector banks are constrained by government rules and second-guessed by vigilance
authorities, even while pay is limited. It will be hard for public sector banks to compete for
talent.
If, in addition, these banks are asked to make sub- optimal decisions in what is deemed the
public interest, their performance will suffer more than in the past. This will make it hard for
them to raise funds, especially capital. With the government strapped for funds, its ability to
support the capital needs of public sector banks as part of the second grand bargain is also
coming into question. We cannot go backwards to revive the two bargains that means reversing
development and bottling the genie of competition, neither of which would be desirable for the
economy even if feasible. Instead, the best approach may be to develop the financial sector by

24
increasing competition and variety, even while giving banks, especially public sector banks, a
greater ability to compete.

2.4 PRICING STRATEGIES

Traditionally, the Indian banking industry has been tightly regulated, with little scope for
innovation in products and pricing. Most banks follow a cost-plus and market-based pricing
strategy, which was justifiable until recently as the banking industry was in a nascent stage and
the market, largely underpenetrated. This strategy has helped banks grow considerably.
Typically, the approach for banks’ pricing factors in the cost of funds, risk-based spread and an
assessment of the competitors’ product portfolios. However, there are other components that are
either underestimated or not fully accounted for such as the correct cost of servicing and the
customers’ value perception regarding such products.

VALUE BASED PRICING

A value-based pricing approach focuses on understanding the customers’ willingness to pay a
premium for products or services on the basis of the value offered. Banks can optimize their
pricing and secure a larger share of customers’ wallets with an increased focus on product
innovation and customer analytics applications. Value-based pricing advocates segmenting
customers first. It calls for a gradual shift from a product-centric mind-set to a customer-centric
approach. Banks should consider the following points while deciding on pricing strategies for
products:

The following aspects will enable banks to determine the appropriate value across all dimensions
– product, pricing and channels. These would also help them understand the customers’ reaction
to a pricing strategy:
1. Costly customer acquisition does not always lead to a sustained increase in market share:
To increase their market share, many banks and financial institutions tend to price their products
aggressively. While in the short term, this could help attract customers at high costs, it does not
always lead to increased profitability or growth for banks. Therefore, they need to define a

25
matrix analysing their acquisition cost versus the potential realisable value across the product
lifecycle for customers.

2. Customers have easy access to market information: With the advent of third-party
platforms, customers can easily access the products’ features, and compare the value they derive
from each offering. Our experience also reveals that banking products with complicated features
are often avoided even if available at discounted prices.

3. Poor marketing could lead to dissatisfaction with prices: Customers do not realise the
value proposition of the product, if it is not marketed appropriately. This may result in price
dissatisfaction even if the products offered by banks are good and customers have the capacity to
pay the premium. Therefore, the marketing strategy is as essential as appropriate pricing.

4. Low-involvement products are difficult to price higher: Customers are more emotionally
attached to certain products than others. For instance, a savings account may not lead to high
emotional satisfaction, whereas a vehicle loan which results in acquisition of a tangible asset can
be extremely satisfying. Another point worth noting is that value based pricing can only take
place with product differentiation. Therefore, product-related criterion such as customers’
involvement and differentiation of features are key parameters for any pricing strategy. It is
important to note that value-based pricing does not always call for an increase in the products’
pricing. Optimised pricing may also be needed to win a large share of customers’ wallets,
thereby improving profitability.

2.5 CHALLENGES FACED BY THE INDUSTRY

The banking sector is undergoing a radical transformation. The shifts include changing business
models, disruptive technologies, FinTechs, and compliance pressures. The emergence of non-
bank startups, which is also referred to as FinTechs, is altering the competitive landscape in the
banking industry. It has forced traditional institutions to reorganize the way they conduct
business.

26
As information breaches become more frequent and privacy concerns increase, compliance and
regulatory necessities become more limiting as a result. On top of that, client’s demands have
been evolving. Many consumers seek to be met with round-the-clock personalized services.
These financial problems can be corrected by the very innovation, causing disruption. But, the
transition from a legacy system of offering service to modern solutions has never been an easy
task.
Customer retention
Financial services clients expect meaningful and personalized experiences through intuitive and
straightforward interfaces on any device, anywhere, and at any time. While customer experience
can be tricky to quantify, client turnover is substantial, and client loyalty is rapidly becoming an
endangered idea. Client loyalty is a product born through sturdy relationships that start by
comprehending the client and their expectations.
Understanding the client and engaging with them appropriately can result in client satisfaction,
therefore, decreasing customer churn. Financial institutions can also use Bots, which is an
effective and efficient technology for delivering superior client services. Bots can assist in
increasing client engagement without incurring costs.
Financial institutions are adjusting to such technologies to improve customer satisfaction.
However, various demands will always arise. However, with helpful information at hand, the
industry will escalate its strategies to retain clients in the coming year.

Increasing expectations
Today’s clients are savvier, smarter, and more informed. They expect a high degree of
convenience and personalization out of their financial service experience. Altering client
demographics plays a vital role in these heightened expectations. Each new generation of
financial service clients is having a better understanding of technology. As a result, there is an
elevated expectation of digitalized prospects.

A cultural shift
From thermostats that allow you to heat the surrounding to artificial intelligence-enabled
wearables that monitor the user’s health is the technology that has been embedded in our culture.
The same has extended to the banking industry.

27
The digital world has no access to manual systems and processes. The banking industry needs to
figure out innovation-based resolutions to financial industry problems. Therefore, financial
organizations must promote a culture filled with technology. Innovation is leveraged to optimize
the existing procedures and processes for maximum efficiency.

Altering Business models

The cost that is linked with compliance management is among the numerous financial service
challenges forcing banking institutions to alter the manner they conduct business. The elevated
cost of capital integrated with unrelenting low-interest rates decreased proprietary trading, and
decreasing return on equity are all pressurizing traditional source’s financial profitability. But,
the shareholder prospects remain unwavering.
These factors have forced several institutions to establish new service offerings, seek long-
lasting progress in operational efficiencies, and rationalize business lines to maintain profits. The
failure to keep up with the shifting demands is not an option. This means that banking
institutions have to structure and be equipped to pivot when appropriate.

Regulatory compliance
This is among the most vital financial industry challenges. The dramatic increase in regulatory
fees has steered this. Compliance with various set regulations can significantly strain financial
institutions as they gather resources.
Similarly, if banks fail to comply with the regulations, they are faced with costly consequences.
They incur additional risks and cost for them to remain updated on the latest regulatory changes.
Additionally, they have to oversee the controls that are required to see those requirements
satisfied. Overcoming the regulatory compliance problem requires credit unions and banks to
nurture a culture of compliance within the institution. Technology can play a crucial role in
establishing a culture of compliance.

2.5.1 STRATEGIC OPTIONS TO COPE WITH THE CHALLENGES:

Dominant players in the industry have embarked on a series of strategic and tactical
initiatives to sustain leadership. The major initiatives incorporate:

28
 • Focus on ensuring reliable service delivery through Investing on and
implementing right technology.
• Leveraging the branch networks and sales structure to mobilize low cost current
and savings deposits.
• Making aggressive forays in the retail advances segments of home and personal
loans.
• Implementing initiatives involving people, process and technology to reduce the
fixed costs and the cost per transaction.
• Focusing on fee based income to compensate foe squeezed spread
• Innovating products to capture customer 'mind share' to begin with and later the
wallet share.

2.6 KEY DRIVERS OF THE INDUSTRIES

The banking industry is indeed up for major transformation, the process of which has already
begun. As discussing below, there are major aspects that can be the key driving factors. And, it’s
the technology and data that is evident to be at the intersection space of all these factors

1. Digital Transformation
Digital transformation is not the only technological advancement witnessed in the banking
sector. Robotic process automation or RPA in banking is being seen as a major revolution.
Robotic process automation is about the usage of virtual assistants or software used for
addressing repetitive tasks. A virtual assistant here also refers to programmed robots. Usage of
tools of such is going to drive the modern-day and future banking arena by cutting down the
manpower requirements. The best part about RPA in banking is the way it makes things effective
in a much cost-effective fashion. The entire banking functionality can be structured to be
automated in many ways.
Interesting here is to note that the banks have already used it like the replacements of their
employees, as it can interact with through technically enriched user interfaces and can also deal
with optimized applications. Undoubtedly, the future of the banking industry is going to be
greatly revolutionized through RPA.

29
2. Regulatory Measures
Because modern-day technology is getting more and more data-oriented, setting up fresh data
protection regulation has become imperative for the industries. This is expected to be somewhat
challenging, with the added concerns of streamlining the experiences of the customers. Emphasis
is going to be more towards the interactions involving a nominal touch. Through the process, it is
certainly going to reduce the various kinds of threats associated with regulatory affairs. At the
same time, the optimizations of such can make the entire system more financially beneficial as
well. Customer-oriented platforms thus are said to be one of the key business drivers in
contemporary, as well as the future banking industry. One thing here can be noted is that
technology lies at the core of all sorts of the transformation of banking procedures.

3. Business and Revenue-Boosting Models

Personalized banking experience is being given a lot of importance in modern times. This is one
aspect that can be decisive in terms of keeping competitors at bay. The banking industry outlook
is getting more digital technology-oriented. Innovation in digital technology has enriched
customer experience through a high-end user-interface. The fintech companies are emphasizing
preparing roadmaps based on the same technology. Data management tools and analytics tools
are being used and going to be extensively used to enrich sustainability in the banking sector.

The smooth performance and customer engagement in the banking sectors of modern days are
said to be due to the advanced process optimization. In other words, there is a significant
transformation that has occurred in terms of the operation mode of the global banking sector. The
level of enhancement of core banking like vital models have managed to deliver superior
business goals. In other words, it can be claimed as the prime revenue driver for banks.
Leveraging digital technology in this context, the emphasis is being given towards the
development of up-to-the-minute business scope. Ultimately, a streamlined process helps deliver
a better customer experience — the immediate business scope of such help the customers or
clients in taking immediate business decisions. In short, the idea of enriching customer

30
engagement through process optimization and the technologies meant for the same can be the
key drivers of the banking industry.

4. Changing the Scenario From a Lender’s Perspective

A lot has been already discussed regarding the evolution of customer behavior over time. At the
same time, liabilities of the lenders about the economical challenges of the banks are going to be
the critical factors. The risk factors confronted while deciding whether to grant or deny loans
have been decisive.
Functional models of the banks and other financial institutions have been transformed as well.
Scenarios are being tried to be changed through the introduction of creative ideas like instant
payment schemes. However, there is still no alternative to limiting the occurrences involving
greater financial risks.
As per the present scenario, liabilities can be strategically kept under the carpet. In this context, it
is considered essential for the lenders to come up with their modes for greater assessment of
probable threats. Specifically, proper analysis is required when it comes to high-value financial
payments.

5. Cloud Computing
The impact and acceptance of cloud computing in the banking industry are very much evident. A
lot has already been discussed regarding the growing interest in cloud computing principles
among the banking sectors. The rate of migration over the cloud platform among the banks and
financial organizations, even at remotest parts or small towns has significantly grown.
Successfully integrating all the units and segments of a bank or financial institution, and
streamlining the data access, has been phenomenal all the way. Naturally, it is growing at a
bigger scale and in a very encouraging way, is pretty unsurprising.

6. Efforts to Minimize the Risk factor

The compulsion of a borrower to address the possible threats is a key factor in analyzing for
getting it well about their efficacy to pay back the loan amounts. Financial service providers have
a great role to play in this context. They are the people ultimately who have to have thorough

31
knowledge regarding the ability of clients. Undoubtedly, they have been the business drivers for
financial companies. But, with transforming scenarios, these business drivers’ financial services
have to transform as well. Upon observing the regular modes of the functionality of the banking
industry, the emphasis has always been giving towards sustainability and enduring customer
relationships. To ensure that the business does not get affected and the relationship remains
similarly endured, banks should come up with new products or loan payment models, where the
financial threats remain nominal.

7. AI Being the Key Driver

AI Being the Key Driver in banking. Because data and technology have traditionally been the
bank performance, drivers, concepts like AI in banking are obvious to be the game- changer. AI
is certainly going to streamline the banking procedures in a great way.
Expanding the scope of automation, technology can indeed make the process more effective and
productive at the same time. With automation, it is obvious for the entire process to be
accomplished in a cost-effective fashion. All that the banks have to ensure is that the privacy of
customer data is thoroughly secured with them.

8. Fintech Service Providers

Fintech providers are certainly going to be the key business drivers in the banking industry. Their
role is going to be even more impactful. There should be no surprise about this upon observing
the way these technologies have competed with the usual ways of delivering financial services.
Though it is still an emerging concept for the banking industry in remote parts but looks
established in major sectors, it promises a lot from future perspectives. Fintech can indeed be
claimed as one of the hottest banking industry trends at present. Specifically, their role is
expected to be the most effective in the upcoming retail banking market, which is going to be
more technology-oriented.

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 CHAPTER – 3

REVIEW OF LITERATURE

33
3.1 THEORETICAL FRAMEWORK INCLUDING LITERATURE

The theory applied in this study relates to Financial Management, particularly Financial
statement Analysis, as it would facilitate financial performance analysis. The analysis of
financial statements is generally undertaken for evaluating the financial position/performance of
the company, to be used by its stakeholders such as Investors, Creditors and Managers. The
outcome of analysis also helps in predicting financial performance for future period.

Khan and Jain (2011) have defined the analysis of Financial Statements as a process of
evaluating the relationship between parts of financial statements to obtain a better understanding
of the firm’s position and its performance. There are two broad approaches used to measure
Bank performance, the Accounting Approach, which makes use of financial ratios and secondly
Econometric Techniques. Traditionally, Accounting Methods are largely based on the use of
financial ratios, which have been employed for assessing Bank performance (Ncube, 2009).

Kumar (2012) has given a definition to camel rating system, according to him it is a mean to
categorize bank based on the overall health, financial status, managerial and operational
performance. In his study he has chosen the SBI and its associates for checking the performance
and concludes that State Bank of India is always in the lead than its associates in every aspect of
camel.

In a study conducted by Collis and Jarvis (2006) on financial information and the management
of small private companies in the U.K., the most useful sources of information are the periodic
management account (i.e. the balance sheet and income statement), cash flow information and
bank statements (of course bank statement are another form of cash flow information but
generated externally). These sources of information are used by eight (80) per cent of companies
and this demonstrates the importance of controlling cash, which previous research ( Bolton,
1971, Birly & Niktari, 1995, Jarvis et al, 1996) suggest is critical to the success and survival of a
small business.

34
In the same research eight-seven (87) per cent of small companies’ prepared profit and loss
accounts and seventy-eight (78) per cent, balance sheet. These key financial statements allow
management to monitor profitability of the business as well as its net assets. Confirming the
usefulness of cash flow information, the analysis shows that seventy-three (73) per cent use bank
reconciliation statement and more than fifty-five (55) percent use cash flow statements and
forecast. However, other competitive performance measures perceived in literature such as ratio
analysis, industry trends and inter-firm comparison are not widely used.

Collis and Jarvis (2002) then states that this may indicate that small companies experience
problems in gaining access to appropriate benchmarks, but could also be the results of
competitors filing abbreviated accounts which reduces the amount of information available for
calculating ratio and making comparison. In addition, as many small companies operate in the
service sector, they occupy niche markets and may be less concerned with competition than
those in other markets.

Melse (2004), reports that ratio analysis provides an insight into the financial health of a firm by
looking into it liquidity, solvability, profitability, activity and capital and market structure.

Jooste (2004) investigates that many authors agree that cash flow information is a better
indicator of financial performance than traditional earnings.

Largay and Stickney (1980) and Lee (1982) show that profits were increasing, W.T. Grant and
Laker Airways had severe cash flow problems prior to bankruptcy. Jooste (2004) further states
that users of financial statements around the world evaluate the financial statements of
companies to determine the liquidity, assets activity, leverage, profitability and performance.
Users of financial statements use traditional balance sheet and income statements ratios for
performance evaluation. Therefore, along with traditional ratios, operating cash flow is also
important when evaluating a company’s performance (Jooste, 2004). Various literature states
that the primary purpose of the cash flow statement is to assess a company’s liquidity, solvency,
viability and financial adaptability.

35
According to Everingham et al (2003) operating cash flow ratios are indicators of performance.
They determine the extent to which a company has generated sufficient funds

Hr Machirajn international publishers (2009): Efficiency can be considered from technical

economical or empirical considerations. Technical efficiency implies increase in output. In the
case of banks defining inputs and output is difficult and hence certain ratios of costs to assets or
operating revenues are used to measure banks efficiency. In the Indian context public sector
banks accounts for a major portion of banking assets, it is necessary to evaluate the financial
decisions of these banks and compare them with private sector banks to know the quality of
financial decisions on its impact or performance of banks in terms of efficiency, profitability,
competitiveness and other economic variables.

Bhatawdekar (2010) explains that Financial Ratio Analysis is the systematic use of ratio to
interpret the components of financial statements for evaluation of strength and weaknesses of a
firm in addition to its historical performance and present financial condition.

Hassan and Bashir (2005) believe that financial ratios are popular due to several reasons as they
are easy to calculate, interpret and permit comparison between the Banks.

Halkos and Salamouris (2004) conclude that financial ratios permit comparisons between the
Banks and the benchmark, which is usually the average of the industry sector.

Dr.Dhanabhakyam & M.kavitha (2012) in their research used some important ratio to analyses
the financial performance of selected public sector banks such as ratio of advances to assets, ratio
of capital to deposit, ratio of capital to working fund, ratio of demand deposit to total deposit,
credit deposit ratio, return on average net worth ratio, ratio of liquid assets to working fund etc.
The ratio of advances to assets shows an increasing trend for most of the public sector bank. It
shows aggressiveness of bank in lending which ultimately result in high profitability.

36
Chaudhary (2014) conducted a study to measure the right performance of public and private
sector banks by the use of secondary data collected from annual reports, periodicals, website etc.
for the year 2009-2011 and found out that in every aspect private sector bank has performed
better than public sector banks and they are growing at faster pace.

Jha and Hui (2012) tried to find out the factors affecting the performance of Nepalese
Commercial Banks By using various camel ratios such as return on asset (ROA), return on equity
(ROE), capital adequacy ratio (CAR) etc. As Public sector banks have higher total assets
compared to joint venture or domestic private banks, thus ROA was found higher whereas
overall performance of public sector was unsound because ROE and CAR of joint venture and
private banks was found superior. The financial performance of public sector banks is being
eroded by other factors such as poor management, high overhead cost, political intervention, low
quality of collateral etc.

Dr Richa Jain, Prof. Mitali Amit Shelankar & Prof Bharti Sumit Mirchandani,

(2015) Tools / Techniques of financial statement analysis:- The various tools and techniques of
financial statement analysis are;

Trend Percentage Analysis: It is also known as Intra firm comparison in which the financial
statements of the same company for few years are compared for some important series of
information.

Comparative Statement: These are the statement of financial positions at different periods of
time. The financial position is shown in a comparative form over two period of time.

Common Size Statements: The common size statements, balance sheet and income statements
are shown in terms of percentages. The data is shown as percentage of total assets, liabilities and
sales.

Ratio Analysis: It is a technique of analysis and interpretation of financial statements. It is the

process of establishing and interpreting various financial ratios for helping in taking decisions.

37
Funds Flow Statements: It is a statement of studying the changes in the financial position of a
business enterprise between the beginning and the end it is a statement indicating rises of funds
for a period of time.

Cash Flow Statements: It shows the changes in cash flow between two periods.

3.2 AN OVERVIEW OF EARLIER STUDIES

Baral (2005), study the performance of joint ventures banks in Nepal by applying the CAMEL
Model. The study was mainly based on secondary data drawn from the annual reports published
by joint venture banks. The report analyzed the financial health of joint ventures banks in the
CAMEL parameters. The findings of the study revealed that the financial health of joint ventures
is more effective than that of commercial banks. Moreover, the components of CAMEL showed
that the financial health of joint venture banks was not difficult to manage the possible impact to
their balance sheet on a large scale basis without any constraints inflicted to the financial health.

Wirnkar and Tanko (2008), analyzed the adequacy of CAMEL in evaluating the performance of
bank. This empirical research was implemented to find out the ampleness of CAMEL in
examining the overall performance of bank, to find out the importance of each component in
CAMEL and finally to look out for best ratios that bank regulators can adopt in assessing the
efficiency of banks. The analysis was performed from a sample of eleven commercial banks
operating in Nigeria. The study covered data from annual reports over a period of nine years
(1997-2005). The analysis disclosed the inability of each component in CAMEL to congregate
the full performance of a bank. Moreover the best ratios in each CAMEL parameter were
determined.

Bansal (2010) studied the impact of liberalization on productivity and profitability of public
sector banks in India. The study has been conducted on the basis of primary as well as secondary
data for the period 1996-07. The study concluded that the ability of banks to face competition

38
was dependent on their determined efforts at technological upgradation and improvement in
operational and managerial efficiency, improvement in customer service, internal control and
augmenting productivity and profitability. The study found that public sector banks have to pay
great attention to strategic management, strategic planning and to greater specialization in the
technical aspect of lending and credit evaluation. It was recommended that public sector banks
should strengthen their project appraisal capabilities. In order to raise their productivity and
profitability, public sector banks should spell turnover strategies, income-oriented and cost
oriented strategies from time to time.

Aspal and Malhotra (2013) measured the financial performance of Indian public sector banks’
asset by camel model and applying the tests like Anova, f test and arithmetic test for the data
collected for the year 2007-2011. They concluded that the top two performing banks are bank of
Baroda and Andhra bank because of high capital adequacy and asset quality and the worst
performer is united bank of India because of management inefficiency, low capital adequacy and
poor assets and earning quality. Central bank of India is at last position followed by UCO bank
and bank of Maharashtra.

Tarawneh (2006) in his study measured the performance of Oman Commercial Banks using
financial ratios and Banks were ranked on the basis of their performance. The findings indicated
that Bank performance was strongly and positively influenced by Operational Efficiency, Asset
Management and Bank Size.

Samad (2004) investigated the performance of seven locally incorporated Commercial Banks
during the period 1994-2001. Financial ratios were used to evaluate the Credit Quality,
Profitability and Liquidity Performances.

Dr. Anurag B Singh and Ms.Priyanka Tandon (2012): The researcher has mentioned the
importance of the banking sector in the economic development of the country. In India banking
system is featured by large network of Bank branches, serving many kinds of financial services
of the people. The research Methodology used by there is a comparative analysis of both the

39
banks based on the mean and compound growth rate (CGR). The study is based on secondary
data collected from magazines, journals & other published documents. Which was a limitation
since it’s difficult to prove the geniuses of the data.

Renu Bagoria (2014): The main objective of this paper is to make a comparative study between
private sector banks and public sector banks and the adoption of various services provided by
this bank. The different services provided by these banks are M-Banking, Net banking, ATM,
etc. One of the services provided by the bank i.e. Mobile banking helps us to conduct numerous
financial transactions through mobile phone or personal digital assistant (pda).Data analysis had
been made in private sector banks like ICICI Bank, INDUSSIND Bank, HDFC Bank, Axis Bank
and public sector banks like SBI Bank, SBBJ, IDBI and OBC Bank. These banks also provide
Mobile Banking service. The overall study showed that the transaction of Mobile banking
through public sector bank is higher than private sector.

Kumar and Sharma (2013) analyzed the performance of top 10 and highest market capitalized
banks in India with the help of camel model approach, for the year 200610, their study found that
Kotak Mahindra Bank is on the lead and on highest position in terms of capital adequacy
followed by ICICI bank and they both are more efficient in managing their liquidity. SBI has
highest NPA level among their peer group followed by ICICI bank whereas PNB is highly
management efficient with the highest grading in this parameter. Earning quality of SBI and
PNB are on top but overall SBI is ranked first followed by PNB and HDFC.

3.3 UNIQUENESS OF THE RESEARCH

• CAMEL RATING is an important technique of financial analysis. It is a means for

judging the financial health of a business enterprise. It determines and interprets the
liquidity, solvency, profitability, etc. of a business enterprise. With the help of ratio
analysis, comparison of profitability and financial soundness can be made between one
industry and another. Similarly comparison of current year figures can also be made with
those of previous years with the help of ratio analysis and if some weak points are
located, remedial measures are taken to correct them. It discloses the position of business

40
 with different viewpoint. It discloses the position of business with liquidity viewpoint,
solvency view point, profitability viewpoint, etc. with the help of such a study, we can
draw conclusion regarding the financial health of business enterprise.

• Ratio analysis refers to the analysis of various pieces of financial information in the
financial statements of a business. They are mainly used by external analysts to determine
various aspects of a business, such as its profitability, liquidity, and solvency. It helps in
comparison. It helps in trend line and operational efficiency.

• Comparative balance sheet presents side by side information about an entity’s assets,
liability and shareholder’s equity as of multiple points in time. It helps in comparison and
forecasting.

41
 CHAPTER - 4

METHODOLOGY OF THE STUDY

42
4.1 RESEARCH APPROACH AND DESIGN

The nature of study of this project is descriptive and analytical. In analytical study, one has to use
facts or information already available and analyze these to make critical evaluation of the material.

Secondary data are those data which have already been collected and stored. Secondary data may be
collected from:

• Annual reports of the bank

• Bulletins
• Periodicals
• News letters
• Internal reports of the bank

The study has been conducted with reference to the data related to Axis Bank. The study examines
the financial performance of some variables and compares the performance of the bank over a
period of five years.

4.2 SAMPLING DESIGN

For performance analysis of Axis Bank over the years, the study has been taken during the period
from 2016 to 2020(five years).To know the financial performance of the banks by using ratio
analysis and camel rating. Financial performance of the bank can be analyzed through their
financial reports.

43
4.3 DATA ANALYSIS TOOLS

In this study, data was analyzed by using tabular representation of data to ease comparing and to
enable readers visually appreciate the findings from the study. Different scales will be used for data
analysis. Various financial ratios, bar charts are used to know financial performance of the bank.

For the analysis of the financial performance the following tools are used:

a) Ratio Analysis

b) CAMEL Rating

c) Comparative balance sheet

a)RATIO ANALYSIS

Ratio analysis is one of the most powerful tools of financial analysis. It is a yardstick which
measures relationship between variables. In layman’s terms a ratio represents for every amount one
thing how much there is of another thing. Ratio analysis is a widely- used tool of financial analysis.
It can be used to compare the risk and return relationship of firms of different sizes. It is defined as
the systematic use of ratio interprets the financial statements so that the strength and weakness of a

44
firm as well as its historical performance and current financial condition can be determined. The
term ratio to the numerical or quantitative relationship between two items. Following are the ratios:

1) PROFITABILY RATIOS

Profitability is a relative term. It is hard to say what percentage of profits represents a profitable
firm, as profits depend on such factors as the position of the company and its products on the
competitive life cycle (for example profits will be lower in the initial years when investment is
high), on competitive conditions in the industry, and on borrowing costs.

For decision-making, it is concerned only with the present value of expected future profits. Past or
current profits are important only as they help to identify likely future profits, by identifying
historical and forecasted trends of profits and sales. Profitability ratios measure operating efficiency
and ability to ensure adequate return to shareholders.

In other words, they are used to evaluate the overall management effectiveness and efficiency in
generating profit on sales, total assets and owners’ equity. Profitability ratios help to measure how
well a company is managing its expenses. These measurements allow evaluating the company’s
profits with respect to a given level of sales, a certain level of assets, or the owner’s investment. It is
related to the effectiveness with which management has employed both the total assets and the net
assets as recorded on the balance sheet. These ratios are usually created by relating net profit,
defined in a variety of ways, to the resources utilized in generating that profit. Following ratios:

I. Return on Equity

II. Return on Assets

III. Net Profit Margin

I. Return on Equity

45
equity indicates the profitability to shareholders of the Bank after all expenses and taxes). It
measures how much the firm is earning after tax for each invested in the Bank It is also an indicator
of measuring managerial By and large, higher ROE means better managerial performance; however,
a higher return on equity may be due to debt

(financial leverage) or higher return on assets. Financial leverage creates an important difference
between ROA and ROE in that financial leverage always magnifies ROE. This will always be the
case as long as the ROA (gross) is greater the interest rate on debt. Usually, there is higher ROE for
high growth companies.

ROE = Net income after tax

Total equity
II. RETURN ON ASSETS

It shows the ability of management to acquire deposits at a reasonable cost and invest them in
profitable investments. This ratio indicates how much net income is generated of assets. Return on
assets indicates the profitability on the assets of the Bank after all expenses and taxes. It is a
common measure of managerial performance. It measures how much the firm is earning after tax
for invested in the assets of the firm. That is, it measures net earnings per unit of a given asset,
moreover, how bank can convert its assets into earnings.

Generally, a higher ratio means better managerial performance and efficient utilization of the assets
of the firm and lower ratio is the indicator of inefficient use of assets. ROA can be increased by
Banks either by increasing profit margins or asset turnover but they can’t do it simultaneously
because of competition and trade-off between turnover and margin. So bank maintain higher ROA
will make more the profit.

ROA = Net income after tax

Total assets

46
III. NET INTEREST MARGIN

It is a profitability metric that measures how much a bank earns in interest compared to the outgoing
expenditures it pays consumers. A positive net margin indicates a bank invests efficiently, while a
negative return implies investment efficiencies.

NIM = Total interest income – Total interest expense

Total assets

2) RISK RATIO

It assesses a company’s capital structure and current risk level in relation to the company’s debt
level. Investors use the ratio to decide whether they want to invest in a company. Here as follows:

I. LEVERAGE RATIOS

Leverage ratio is any one of several financial measurements that assesses the ability of a company
to meet its financial obligations. It may be also be used to measure a company’s mix of operating
expenses to get an idea of how changes in output will affect operating income. Common leverage
ratios include the debt equity ratio, equity multiplier ratio, degree of financial leverage.

Leverage Ratio = Total equity

Total assets

47
II. TOTAL CAPITAL RATIO

It indicates the relationship between shareholders fund, long term debt, and reserve to total assets. It
shows the long term solvency.

TCR = Total equity + long term debt + reserve

Total assets

III. LOAN RATIO

It measures the percentage of assets that is tied up in loans. Net loan to total assets ratio (NLTA) is
also another important ratio that measures the liquidity condition of the bank. Whereas Loan to
Deposits is a ratio in which liquidity of the bank is measured in terms of its deposits, NLTA
measures liquidity of the bank in terms of its total assets. That is, it gauges the percentage of total
assets the bank has invested in loans (or financings). The higher is the ratio the less the liquidity is
of the bank. Similar to LDR, the bank with low NLTA is also considered to be more liquid as
compared to the bank with higher NLTA. However, high NLTA is an indication of potentially
higher profitability and hence more risk. The higher the ratio, the less liquid the bank is.

Loan Ratio = Net loans

Total assets

b) CAMEL Rating

CAMEL is a proportion based model to assess the execution of banks. It represents Capital
Adequacy, Asset Quality, Management Efficiency, Earning Quality and Liquidity. This model
identifies the strength and weakness of banks and helps in improving future development of
banking. The period for evaluating performance through CAMEL in this study is 5 years, i.e. from
financial year 2016 to 2020.

1.Capital Adequacy (C)

48
The capital adequacy ratio (CAR) is used to check the ability of the banks in taking up a reasonable
amount of loss. The bank CAR is tracked by the national regulators. This helps in knowing how
safe is the people‘s money to the banks and how the banks can overcome the losses if any. This
helps in protecting the depositors and also to support the steadiness and effectiveness of the banking
systems in the globe. The minimum requirement of CAR ratio, by Basel II norms is 8%, by RBI
9%.

The four ratios under this parameter are:-

a) CAR ratio:

The capital which takes in the losses is called Tier I capital. At the time of winding up of the
company tier II capital can help in absorbing the losses. This capital gives lesser shield to
depositors. The highest CAR ratio is preferred and will be rated at 1.

Capital adequacy ratio = Tier I capital + Tier II capital x 100

Risk weighted assets

b) Debt / Equity ratio:

This ratio shows how much debt is taken up by the company to fund its assets. If the ratio is more
then it means creditor financing is more than the investor financing. This contributes to greater
financial distress if earnings do not surpass the borrowing cost. Lower debt to equity ratio is
preferred and will be ranked as 1.

Debt / Equity ratio = Total liabilities x 100

Shareholder‘s equity

49
c) Advances / Total assets ratio:

This ratio helps in identifying how violent a bank is, in lending, which results in improved
profitability. The larger the ratio, the better the profit and is ranked 1. Receivables are included in
total advances and re- valued assets are removed from total assets.

Advances / Total assets ratio = Advances x 100

Total assets
2) ASSET QUALITY (A)

This parameter used to assess the credit risk which is tied in with a particular asset. How effective
the organization is in protecting and monitoring the credit risk may have an outcome of the credit
rating that the bank would like to achieve. Asset quality measures how much percentage of Non-
Performing Assets (NPA) are present in the total assets. This also suggests the different ways of
advances the bank may produce. The subsequent proportions be applied to evaluate the asset
quality:

a) NET NPAs to NET ADVANCES

Net Non-Performing Assets are measured as a percentage of net advances. From gross Non-
Performing Assets, provision for Non-Performing Assets and interest in suspense account are
subtracted to get net NPAs. It shows bad debts against the total loan sanctioned. Lower ratio will be
preferred.

Net Non-Performing Assets / Net advances = Net Non-Performing Assets x 100

Net advances

b) Net Non-Performing Assets / Total Assets:

When any borrower is unable to return the interest or the principal amount within 90 days, then that
amount is considered as a Non Performing Asset (NPA). This ratio helps in identifying the

50
competency of the bank in predicting the credit risk and its ability in recovering the debts. Lower
ratio is preferred.

Net NPA / Total assets = Net Non-Performing Assets x 100

Total assets

c) Gross Non-Performing Assets / Total assets ratio:

Here the lower ratio is chosen.

Gross Non-Performing Assets / Total Assets ratio = Gross Non-Performing Assets x 100
Total assets

3) MANAGEMENT

This stands for the capacity of the management to find, monitor, compute and manage the risk. This
ratio takes the subjective analysis to appraise the effectiveness and efficiency of the management.
This parameter is used to find the banks, which are performing better sweep away the banks which
are managed poorly. The following ratios are used to measure this.

a) Total Advance to Total Deposits

Total advance to deposit ratio is used to assess a bank’s liquidity by comparing a bank’s total
advance to its total deposits for the same periods. Typically the ideal loan to deposit ratio is 80 % to
90%. A loan to deposit ratio of 100 % means a bank loaned one rupee to customers for every rupee
received in deposits it received.

TATD = Total loans x 100

Total deposit

51
 b) PROFIT PER EMPLOYEE

This ratio indicates the employees’ contribution towards the profit of the banks. The larger ratio is
chosen.

Profit per employee = Net profits x 100

Number of employees

c) BUSINESS PER EMPLOYEE

This ratio shows how effectively the human resources are utilized by the business. The Larger the
ratio, the better the human resources are utilized. The higher ratio is chosen.

Business per employee = Total deposits and advances x 100

Number of employees

4) Earning Quality (E)

Profitability of the banks is determined by this. The following proportions will be counted on to
determine the earnings of the Banks:

A) Interest Income to Total Income

This ratio helps in finding out the portion of the income from interest out of income in total. The
higher ratio is chosen.

Net interest / Total income = Interest earned – Interest paid x 100

Total income

52
b) Net Interest Margin (NIM) to Total Assets Ratio:

It is a profitability metric that measures how much a bank earns in interest compared to the outgoing
expenditures it pays consumers. A positive net margin indicates a bank invests efficiently, while a
negative return implies investment efficiencies.

NIM = Total interest income – Total interest expenses x 100

Total assets

c)Non Interest Income to Total Income

It is a profitability metric that measures how much a bank earns in other income compared to the
total income.

NII = other income x 100

Total income

5) Liquidity (l)

Liquidity shows the ability of the banks to fulfil their short term obligations. Banks should get hold
of the right steps to hedge them against liquidity risk and to ensure that they put in better
investments to generate a higher yield on investment. This will help the banks to get earnings and at
the same time offer the liquidity. The following ratios are considered here.

A) Liquid assets / Total assets:

Cash in hand & with other banks (India and abroad), cash in Reserve Bank of India and money at
call and short notice are called liquid assets. The liquidity position of the bank could be assessed by
this ratio. A higher ratio is chosen.

53
 Liquid assets / Total assets = Liquid assets x 100
Total assets

B) Liquid Assets / Total Deposit:

The ability of the banks to quickly convert their deposits into cash is measured by thisratio. Total
deposit includes demand, saving, and term deposits and deposits in other institutions. The bank with
higher ratio is chosen.

Liquid assets / Total deposits = Liquid assets x 100

Total deposits

C) Credit Deposit Ratio:

The amount of advances made by the depository financial institution against its total deposits is
measured by this ratio. If the ratio is low, then it shows that the bank is not fully employing its
resources and a higher ratio means the reverse of it. For the lending purpose the higher the ratio is
preferred.

Credit deposit ratio = Total advances x 100

Total deposits

c) Comparative balance sheet

Comparative balance sheet is a balance sheet which provides financial figures of Assets, Liability
and equity for the “two or more period of the same company” or “two or more than two company of
same industry” or “two or more subsidiaries of same company” at the same page format so that this
can be easily understandable and easy to analysis. The comparative balance sheet has two-column
of amount against each balance sheet items; one column shows the current year financial position
whereas another column will show the previous year’s financial position so that investors or other
stakeholders can easily understand and analyze the company’s financial performance against last
year.

54
4.4 REPORT STRUCTURE

First chapter: Deals with the background of study, statement of the problem, scope of the study
and objectives of the study. It gives a clear idea about the role of bank in the development of the
country.

Second chapter: Deals with business process of the industry, contribution to GDP, Pricing
strategies in the industry, levels of competition, challenges of the industry and key drivers of the
industry. This chapter gives an idea about the opportunities and challenges of the banking industry.

Third chapter: Deals with the review about theoretical construct related to the problem, an
overview of earlier studies and uniqueness study. It gives a clear idea about previous study about
this topic and also gives a theoretical review to it.

Fourth chapter: Deals with research methodology about study, research approach and design,
source of data, data analysis tools, and limitation of the study. This chapter gives that method which
is used for the analysis of the financial performance of the banks and also mention about the
limitation of the study.

Fifth chapter: Deals with the data analysis and its interpretation It includes the overall study on the
topic and working that supports the study.

Sixth chapter: Findings of study

Seventh chapter: Conclusion

55
4.5 DURATION OF STUDY

The study was conducted over the period of 2 months from 1st April 2021 – 31st May 2021.

4.6 LIMITATIONS OF STUDY

• Ratios are based only on the information which has been recorded in the financial
statements

• Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There are
no well accepted standards or rule of thumb for all ratios which can be accepted as norm.

• Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios
have to interpret and different people may interpret the same ratio in different way.

• The inherent limitation of the secondary data may affect the observation analysis and
findings made in this study also.

• The study is confined to the financial statement analysis of the company and findings of
the study will be relevant only for the reference period. Generalization could not be
made.

56
 CHAPTER 5-

DATA ANALYSIS

AND INTERPRETATION

57
TABLE 5.1 RETURN ON EQUITY

YEAR %
2016 15.46
2017 6.59
2018 0.43
2019 7.01
2020 1.91

INTERPRETATION:

ROE is the most important indicator of a bank’s profitability and growth potential. It is the rate
of return to shareholders or the percentage return on each of equity invested in the bank. Usually,
there is higher ROE for high growth companies. Axis Bank has higher ROE of 15.46% in the
year 2016

DIAGRAM 5.1.1 RETURN ON EQUITY

20
18
16 15.46

14
12
10
8 6.59 7.01
6
4
1.91
2 0.43
0
2016 2017 2018 2019 2020

58
TABLE 5.2 RETURN ON ASSETS

YEAR %
2016 1.56
2017 0.61
2018 0.03
2019 0.58
2020 0.17

INTERPRETATION:

This ratio indicates how much net income is generated of assets. ROA can be increased by Banks
either by increasing profit margins or asset turnover but they can’t do it simultaneously because
of competition and trade-off between turnover and margin. So bank maintain higher ROA will
make more the profit. Axis Bank has the highest ROA of 1.56% in year 2016.

DIAGRAM 5.2.1 RETURN ON ASSETS

1.56
1.5

0.61 0.58
0.5
0.17
0.03
0
2016 2017 2018 2019 2020

59
TABLE 5.3 NET INTEREST MARGIN

YEAR %
2016 3.20
2017 3.00
2018 2.69
2019 2.71
2020 2.75

INTERPRETATION:

A positive net margin indicates a bank invests efficiently, while a negative return implies
investment efficiencies. Axis Bank has a higher Net Margin of 3.20 in the year 2016.

DIAGRAM 5.3.1 NET INTEREST MARGIN

3.5 3.2
3
3 2.69 2.71 2.75

2.5

1.5

0.5

0
2016 2017 2018 2019 2020

60
RISK RATIO

TABLE 5.4 LEVERAGE RATIO

YEAR %
2016 0.76
2017 0.78
2018 0.74
2019 0.76
2020 0.79

INTERPRETATION:

Leverage ratio is any one of several financial measurement that assesses the ability of a company
to meet its financial obligations. A high leverage ratio also increases the risk of insolvency. A
figure of 0.5 or less is ideal. The most ideal is 0.74% in year 2018.

0.78 0.79
0.76 0.74 0.76

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.4.1 LEVERAGE RATIO

61
TABLE 5.5 TOTAL CAPITAL RATIO

YEAR %
2016 0.96
2017 0.95
2018 0.96
2019 0.96
2020 0.95

INTERPRETATION:

It indicates the relationship between shareholders fund, long term debt, and reserve to total
assets. It shows the long term solvency. Axis Bank has the highest Capital ratio of 0.96% in the
years 2016, 2018 & 2019.

1 0.96 0.95 0.96 0.96 0.95

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.5.1 TOTAL CAPITAL RATIO

62
TABLE 5.6 LOAN RATIO

YEAR %
2016 0.20
2017 0.17
2018 0.21
2019 0.19
2020 0.16

INTERPRETATION:

It measures the percentage of assets that is tied up in loans. Net loan to total assets ratio (NLTA)
is also another important ratio that measures the liquidity condition of the bank. The higher the
ratio, the less liquid the bank is.

0.5

0.2 0.21
0.19
0.17 0.16

0
2016 2017 2018 2019 2020

DIAGRAM 5.6.1 LOAN RATIO

63
CAPTIAL ADEQUACY

TABLE 5.7 CAR RATIO

YEAR %
2016 15.67
2017 18.00
2018 16.57
2019 15.84
2020 17.53

INTERPRETATION:

This capital gives lesser shield to depositors. The highest CAR ratio is preferred and will be rated
at 1.the Bank has highest CAR ratio of 18% in the year 2017.

20
18 17.53
18 16.57
15.67 15.84
16
14
12
10
8
6
4
2
0
2016 2017 2018 2019 2020

DIAGRAM 5.7.1 CAR RATIO

64
TABLE 5.8 DEBT- EQUITY RATIO

YEAR %
2016 8.60

2017 9.31

2018 9.48

2019 10.52

2020 9.28

INTERPRETATION:

This ratio shows how much debt is taken up by the company to fund its assets. If the ratio is
more then it means creditor financing is more than the investor financing. This contributes to
greater financial distress if earnings do not surpass the borrowing cost. Lower debt to equity ratio
is preferred and will be ranked as 1. Lowest of 9.28% is achieved in year 2020.

DIAGRAM 5.8.1 DEBT – EQUITY RATIO

12
10.52
10 9.31 9.48 9.28
8.6
8

0
2016 2017 2018 2019 2020

65
TABLE 5.9 ADVANCE/TOTAL ASSET RATIO

YEAR %
2016 62.75

2017 62.00

2018 63.59

2019 61.77

2020 62.82

INTERPRETATION:

This ratio helps in identifying how violent a bank is, in lending, which results in improved
profitability. The larger the ratio, the better the profit and is ranked 1.the highest ratio is achieved
is 63.59% in the year 2018.

DIAGRAM 5.9.1 ADVANCE/ TOTAL ASSET RATIO

70
62.75 62 63.59 61.77 62.82
60

50

40

30

20

10

0
2016 2017 2018 2019 2020

66
ASSET QUALITY

5.10 NET NPA TO NET ADVANCE

YEAR %
2016 0.70

2017 2.11

2018 3.40

2019 2.06

2020 1.56

INTERPRETATION:

Net Non-Performing Assets are measured as a percentage of net advances. Lower ratio will be
preferred. Lowest ratio of 0.70% is achieved in the year 2016.

DIAGRAM 5.10.1 NET NPA TO NET ADVANCE

4
3.4
3.5

2.5
2.11 2.06
2
1.56
1.5

1 0.7
0.5

0
2016 2017 2018 2019 2020

67
 TABLE 5.11 NET NPA TO TOTAL ASSETS

YEAR %
2016 0.47

2017 1.43

2018 2.39

2019 1.40

2020 1.02

Interpretation:

This Ratio Helps In Identifying The Competency Of The Bank In Predicting The Credit Risk And
Its Ability In Recovering The Debts. Lower Ratio Is Preferred. The Bank has a lower ratio of 0.47%
in the year 2016.

3.5

2.5 2.39

2
1.43 1.4
1.5
1.02
1
0.47
0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.11.1 NET NPA TOTOTAL ASSET

68
TABLE 5.12 GROSS NPA TO TOTAL ASSETS

YEAR %
2016 1.15

2017 3.53

2018 4.95

2019 3.71

2020 3.30

INTERPRETATION:

Here the lower ratio is chosen. The Bank has a lower ratio of 1.15% in the year 2016.

5 4.95

4.5
4 3.71
3.53
3.5 3.3

3
2.5
2
1.5 1.15
1
0.5
0
2016 2017 2018 2019 2020

DIAGRAM 5.12.1 GROSS NPA TO TOTAL ASSET

69
 TABLE 5.13 TOTAL ADVANCE TO TOTAL DEPOSITS

YEAR %
2016 94.63

2017 90.03

2018 96.91

2019 90.21

2020 89.27

INTERPRETATION:

Total advance to deposit ratio is used to assess a bank’s liquidity by comparing a bank’s total
advance to its total deposits for the same periods. Typically the ideal loan to deposit ratio is 80 % to
90%. The Bank has the most ideal ratio of 89.27% in year 2020.

100 94.63 96.91

90.03 90.21 89.27
90
80
70
60
50
40
30
20
10
0
2016 2017 2018 2019 2020

DIAGRAM 5.13.1 TOTAL ADVANCE TO TOTAL DEPOSIT

70
TABLE 5.14 PROFIT PER EMPLOYEE

YEAR %
2016 16.40

2017 6.49

2018 0.46

2019 7.66

2020 2.25

INTERPRETATION:

Ratio indicates the employees‘ contribution towards the profit of the banks. The larger ratio is
chosen. The Bank has the larger ratio of 16.40% in the year 2016.

20
18 16.4
16
14
12
10
7.66
8 6.49
6
4
2.25
2 0.46
0
2016 2017 2018 2019 2020

DIAGRAM 5.14.1 PROFIT PER EMPLOYEE

71
 TABLE 5.15 BUSINESS PER EMPLOYEE

YEAR %
2016 13.09
2017 9.79
2018 6.87
2019 5.75
2020 4.83

INTERPRETATION:

This ratio shows how effectively the human resources are utilized by the business. The Larger the
ratio, the better the human resources are utilized. The higher ratio is chosen. The Bank has a higher
ratio of 13.09% in the year 2016.

DIAGRAM 5.15.1 BUSINESS PER EMPLOYEE

20
18
16
14 13.09
12
9.79
10
8 6.87
5.75
6 4.83
4
2
0
2016 2017 2018 2019 2020

72
TABLE 5.16 INTEREST INCOME TO TOTAL INCOME

YEAR %
2016 0.78
2017 0.82
2018 0.97
2019 0.93
2020 0.89

INTERPRETATION:

This ratio helps in finding out the portion of the income from interest out of income in total. The
higher ratio is chosen. The Bank has a higher ratio of 0.97% in the year 2018.

1 0.97
0.93
0.89
0.82
0.78

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.16.1 INTEREST INCOME TO TOTAL INCOME

73
TABLE 5.17 NON INTEREST INCOME TO TOTAL INCOME

YEAR %
2016 18.60
2017 20.79
2018 19.32
2019 19.27
2020 24.80

INTERPRETATION:

It is a profitability metric that measures how much a bank earns in other income compared to the
total income. The bank has a higher ratio of 24.80% in the year 2020.

25 24.8

20.79
19.32 19.27
20 18.6

15

10

0
2016 2017 2018 2019 2020

DIAGRAM 5.17.1 NON INTEREST INCOME TO TOTAL INCOME

74
TABLE 5.18 CURRENT RATIO

YEAR %
2016 2.20
2017 1.91
2018 1.65
2019 2.03
2020 2.30

INTERPRETATION

It shows the liquidity position of the bank. A range between 1.5-3 is considered healthy. The
bank has a more ideal ratio of 2.30% in the year 2020.

3.5

2.5 2.2 2.3

2.03
1.91
2
1.65
1.5

0.5

0
2016 2017 2018 2019 2020

DIAGRAM 5.18.1 CURRENT RATIO

75
TABLE 5.19 CREDIT DEPOSIT RATIO

YEAR %
2016 91.65
2017 90.03
2018 96.92
2019 90.21
2020 89.27

INTERPRETATION:

Total advance to deposit ratio is used to assess a bank’s liquidity by comparing a bank’s total
advance to its total deposits for the same periods. Typically the ideal loan to deposit ratio is 80 %
to 90%. The Bank has ideal ratio of 89.27% in year 2020.

100 96.92
91.65 90.03 90.21 89.27
90
80
70
60
50
40
30
20
10
0
2016 2017 2018 2019 2020

DIAGRAM 5.19.1 CREDIT DEPOSIT RATIO

76
COMPARATIVE BALANCE SHEET OF AXIS BANK

TABLE 5.20 COMPARATIVE BALANCE SHEET FOR YEAR ENDING MARCH, 2020 AND
MARCH, 2019.

Year ending 31st March Increase/Decrease

Particulars
2020 2019 Amount Percentage
Liabilities 12 Months 12 Months
Share Capital 564.34 514.33 50.01 9.72
Reserves & Surplus 84383.51 66161.97 18221.54 27.54
Net Worth 84947.84 66676.3 18271.54 27.40
Secured Loan 147954.13 152775.78 -4821.65 -3.16
Unsecured Loan 640104.94 548471.34 91633.6 16.71
TOTAL LIABILITIES 873006.91 767923.42 105083.49 13.68
Assets
Gross Block 3838.59 3763.94 74.65 1.98
(-) Acc. Depreciation 0 0 0 0.00
Net Block 3838.59 3763.94 74.65 1.98
Capital Work in
474.31 272.69 201.62 73.94
Progress
Investments 156734.32 174969.28 -18234.96 -10.42
Inventories 0 0 0 0.00
Sundry Debtors 0 0 0 0.00
Cash and Bank 97268.28 67204.64 30063.64 44.73
Loans and Advances 656849.32 554785.98 102063.34 18.40
Total Current Assets 754117.6 621990.62 132126.98 21.24
Current Liabilities 42157.9 33073.12 9084.78 27.47
Provisions 0 0 0 0.00
Total Current
Liabilities
42157.9 33073.12 9084.78 27.47
NET CURRENT
ASSETS
711959.7 588917.5 123042.2 20.89
Misc. Expenses 0 0 0 0.00
TOTAL
ASSETS(A+B+C+D+E)
873006.91 767923.42 13.68
105083.49

77
 TABLE 5.21 COMPARATIVE BALANCE SHEET FOR YEAR ENDING MARCH, 2019 AND
MARCH, 2018.

Year ending 31st March Increase/Decrease

Particulars
2019 2018 Amount Percentage
Liabilities 12 Months 12 Months
Share Capital 514.33 513.31 1.02 0.20
Reserves & Surplus 66161.97 62931.95 3230.02 5.13
Net Worth 66676.3 63445.26 3231.04 5.09
Secured Loan 152775.78 148016.14 4759.64 3.22
Unsecured Loan 548471.34 453622.72 94848.62 20.91
TOTAL LIABILITIES 767923.42 665084.13 102839.29 15.46
Assets
Gross Block 3763.94 3625.59 138.35 3.82
(-) Acc. Depreciation 0 0 0
Net Block 3763.94 3625.59 138.35 3.82
Capital Work in Progress 272.69 346.09 -73.4 -21.21
Investments 174969.28 153876.08 21093.2 13.71
Inventories 0 0 0
Sundry Debtors 0 0 0
Cash and Bank 67204.64 43454.89 23749.75 54.65
Loans and Advances 554785.98 490026.93 64759.05 13.22
Total Current Assets 621990.62 533481.82 88508.8 16.59
Current Liabilities 33073.12 26245.45 6827.67 26.01
Provisions 0 0 0
Total Current Liabilities 33073.12 26245.45 6827.67 26.01
NET CURRENT
ASSETS
588917.5 507236.36 81681.14 16.10
Misc. Expenses 0 0 0
TOTAL
ASSETS(A+B+C+D+E)
767923.42 665084.13 15.46
102839.29

78
 TABLE 5.22 COMPARATIVE BALANCE SHEET FOR YEAR ENDING MARCH, 2018 AND
MARCH, 2017.

Year ending 31st March Increase/Decrease

Particulars
2018 2017 Amount Percentage
Liabilities 12 Months 12 Months
Share Capital 513.31 479.01 34.3 7.16
Reserves & Surplus 62931.95 55283.53 7648.42 13.83
Net Worth 63445.26 55762.54 7682.72 13.78
Secured Loan 148016.14 105030.87 42985.27 40.93
Unsecured Loan 453622.72 414378.79 39243.93 9.47
TOTAL LIABILITIES 665084.13 575172.2 89911.93 15.63
Assets
Gross Block 3625.59 3465.93 159.66 4.61
(-) Acc. Depreciation 0 0 0
Net Block 3625.59 3465.93 159.66 4.61
Capital Work in Progress 346.09 280.96 65.13 23.18
Investments 153876.08 128793.37 25082.71 19.48
Inventories 0 0 0
Sundry Debtors 0 0 0
Cash and Bank 43454.89 50256.18 -6801.29 -13.53
Loans and Advances 490026.93 418671.22 71355.71 17.04
Total Current Assets 533481.82 468927.41 64554.41 13.77
Current Liabilities 26245.45 26295.47 -50.02 -0.19
Provisions 0 0 0
Total Current Liabilities 26245.45 26295.47 -50.02 -0.19
NET CURRENT ASSETS 507236.36 442631.94 64604.42 14.60
Misc. Expenses 0 0 0
TOTAL
ASSETS(A+B+C+D+E)
665084.13 575172.2 89911.93 15.63

79
 TABLE 5.23 COMPARATIVE BALANCE SHEET FOR YEAR ENDING MARCH, 2017 AND
MARCH, 2016.

Year ending 31st March Increase/Decrease

Particulars
2017 2016 Amount Percentage
Liabilities 12 Months 12 Months
Share Capital 479.01 476.57 2.44 0.51
Reserves & Surplus 55283.53 52688.34 2595.19 4.93
Net Worth 55762.54 53164.91 2597.63 4.89
Secured Loan 105030.87 99226.38 5804.49 5.85
Unsecured Loan 414378.79 357967.56 56411.23 15.76
TOTAL LIABILITIES 575172.2 510358.85 64813.35 12.70
Assets
Gross Block 3465.93 3316.2 149.73 4.52
(-) Acc. Depreciation 0 0 0
Net Block 3465.93 3316.2 149.73 4.52
Capital Work in Progress 280.96 206.97 73.99 35.75
Investments 128793.37 122006.2 6787.17 5.56
Inventories 0 0 0
Sundry Debtors 0 0 0
Cash and Bank 50256.18 33325.44 16930.74 50.80
Loans and Advances 418671.22 366612.8 52058.42 14.20
Total Current Assets 468927.41 399938.24 68989.17 17.25
Current Liabilities 26295.47 15108.77 11186.7 74.04
Provisions 0 0 0
Total Current Liabilities 26295.47 15108.77 11186.7 74.04
NET CURRENT ASSETS 442631.94 384829.47 57802.47 15.02
Misc. Expenses 0 0 0
TOTAL
ASSETS(A+B+C+D+E)
575172.2 510358.85 64813.35 12.70

80
 CHAPTER – 6

FINDINGS & SUGGESTIONS

81
 FINDINGS

According to research conducted using camel rating, performance ratio and comparative balance
sheet of Axis Bank from previous 5 years (2016-2020) it is found out that:

• Axis Bank has higher ROE of 15.46% in the year 2016

• Axis Bank has the highest ROA of 1.56% in year 2016.
• Axis Bank has a higher Net Margin of 3.20 in the year 2016.
• Axis Bank has the highest Capital ratio of 0.96% in the years 2016, 2018 & 2019.
• The Bank has highest CAR ratio of 18% in the year 2017.
• Lowest debt-equity ratio of 9.28% is achieved in year 2020.
• The highest advances to total assets ratio is achieved is 63.59% in the year 2018.
• Lowest Net NPA to Net Advance ratio of 0.70% is achieved in the year 2016.
• The Bank has a lower Net NPA to Total Assets ratio of 0.47% in the year 2016.
• The Bank has a lower Gross NPA to Total Assets ratio of 1.15% in the year 2016.
• The Bank has the most ideal Total Advances to Total Deposits ratio of 89.27% in year
2020.
• The Bank has the larger Profit per Employee ratio of 16.40% in the year 2016.
• The Bank has a higher Business per Employee ratio of 13.09% in the year 2016.
• The Bank has a higher Interest Income to Total Income ratio of 0.97% in the year 2018.
• The bank has a higher Non-Interest Income to Total Income ratio of 24.80% in the year
2020.
• The bank has a more ideal Current ratio of 2.30% in the year 2020.
• The Bank has ideal Credit Deposit ratio of 89.27% in year 2020.

82
SUGGESTIONS

• Debt-Equity Ratio Can Be Improved By Effectively Managing The Loan Payments And
Also Restructuring Debt When The Current Market Rates Are Low Helps To Lower The
Debt – Equity Ratio.

• Profitability can be attained by balancing the three major drivers – profit, growth and
risk.

• Banks can increase their capital ratios by either increasing the regulatory capital or by
decreasing the weighted assets.

• Bank’s efficiency can be increased by streamlining workforce, improving technology

integration and containing compliance costs.

83
Chapter – 7

Conclusion

84
CONCLUSION

The study provided a great opportunity to study about one of the leading Banks in India. It also help
to understand the how much a banking sector is influencing a developing country like India.

The banking sector has shown a remarkable responsiveness to the needs of the planned economy. It
has brought about a considerable progress in its efforts at deposit mobilization and has taken a
number of measures in the recent past for accelerating the rate of growth of deposits. The activities
of commercial banking have growth in multi-directional ways as well as multi-dimensional
manner.. In a way, commercial banks have emerged as key financial agencies for rapid economic
development. By pooling the savings together, banks can make available funds to specialized
institutions which finance different sectors of the economy, needing capital for various purposes,
risks and durations.

The overall financial performance of Axis Bank for the period of 2016-2020 is discussed here. On
the basis of the findings of the study it can be concluded that financial ratios can help institutions to
determine their financial strength. It can also help present shareholders and prospective shareholders
or investors to make sound decisions to hold shares, buy additional shares or to sell the shares.
Addition to this, it also shows how the management are performing base on the shareholders or
investors inputs. It also help to forecasting the future performance.

85
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• Corporate Profile - Third-Largest Private Sector Bank in India | Axis Bank. (n.d.).

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us/corporate-profile

• Axis Bank Ltd Balance Sheet, Axis Bank Ltd Financial Balance Sheet - The Financial

Express. (n.d.). Www.Financialexpress.Com. Retrieved May 18, 2021, from

https://www.financialexpress.com/market/stock-market/axis-bank-ltd-stock-

price/financials-balance-sheet/

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https://en.wikipedia.org/wiki/Axis_Bank

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ltd/balancesheet/companyid-9175.cms

86