Mean Std Deviation Article

8/13/2019 Mean Std Deviation Article

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CHAPTER-5

ANALYSIS OF RESULTS AND DISCUSSION

For studying the impact of the Risk Based Supervisory measures on

the working of the Banks 6 Parameters have been chosen. They are:

I) Asset Quality-Net NPA to Total Advances Ratio

II) Net Interest Income to Total Assets Ratio

III) Net Profit to Total Assets Ratio

IV) Operating Expenses to Total Assets

V) Interest Expended to total Assets Ratio

VI) Capital Adequacy Ratio

ASSET QUALITY

One of the most important indicators for ascertaining the soundness

of a Bank’s working is the quality of Assets. In the CAMELS rating of

Banks, Asset quality is the second soundness indicator after the

Capital Adequacy. Prior to the Reform period Public Sector Banks

have suffered the most and have reported high non-performing assets

of disturbing proportions. In some Banks the ratio was as high as 25-

30%. The Regulator has given utmost priority to address this issue

and streamlined the procedures by issuing the Income Recognition

and Asset Classification Norms. The other initiatives to improve the

Asset Quality are the strict implementation of the PCA(Prompt

Corrective Action) mechanism, CDR (Corporate Debt Restructuring

Scheme etc.


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In this study we have compared the performance of the three Sectors

of Banks viz., Public Sector Banks, Private Sector Banks and Foreign

Banks.

The data relating to this parameter has been collected from secondary

sources and has been subjected to suitable statistical analysis with

the help of SPSS 19.0 version.

The data which covers the study period of 13 years viz.,1995 to 2008

has been rearranged.(Annexure 2) The period is divided into two

blocks, the first block consisting of 7 years data from 1995 to 2002

and the second from 2003 to 2008 so that it serves as two samples.

Now the sample means for all the three Sectors viz., Public, Private

and Foreign Banks have been computed for these two periods and

designated as Mean I and Mean II. This will enable Researcher to test

the Hypotheses as we are in a position to see whether there is any

significant difference in these means and also to measure the effect of

the Risk Based Supervisory measures taken by the Reserve Bank of

India, whether the impact of these measures is uniform among all the

Sectors, or are there significant differences in their performance.

OVERALL COMPARISON OF THE PERFORMANCE

OF ALL THE SCHEDULED COMMERCIAL BANKS

H0: There is no significant change in the Ratio of Net NPA to

total Advances of Scheduled Commercial Banks over the study

period.


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H1: There is a significant change in the Ratio of Net NPA to

total Advances of Scheduled Commercial Banks over the study

period.

An attempt has been made to compare the performance of all the

sample Scheduled Commercial Banks with respect to their

Performance over the study period in regard to the Ratio

of Net NPA to total Advances.

Table: 1.1

Paired Samples Statistics

Mean N

Std.

Deviation

Std. Error

Mean

Pair 1 Ist means 6.2211 49 3.9966 .5709

IInd means 2.7048 49 2.8851 .4121


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Comparison of the two means reveals that there is a significant

change among all the Scheduled Commercial Banks. The second

mean at 2.7048 is much lower when compared to the first mean of

6.2211. The correlation is observed to be positive.

The ‘t’ test suggests that the level of variations in the performance of

Scheduled Commercial Banks is significant.

As per the paired sample statistics, since there is significant change in

the working of the Scheduled Commercial Banks, the Null Hypothesis

is rejected.

SECTORWISE ANALYSIS: PUBLIC SECTOR BANKS

After the Group wise analysis, the following tables present the sector

wise performance analysis in regard to Public Sector Banks.

Table 1.2 : Paired Samples Correlations

N Correlation Sig.

Pair 1 Ist means

&IInd means

49 .179 .217

Table 1.3 :Paired Samples Test

Paired Differences

t df

Sig. (2

tailed)Mean

Std.Deviatio

n

Std.Error

Mean

95%Confide

nce Interval

of the

Difference

Lower

Uppe

r

Pair 1 Ist

means

IInd

means

3.5163 4.4899 .64141 2.226 4.806 5.48 48 .000


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HYPOTHESIS

H0: There is no significant change in the Ratio of Net

NPA to total Advances of Public Sector Banks over the

study period.

H1: There is a significant change in the Ratio of Net NPA

to total Advances of Public Sector Banks over the study

period.

Table: 2.1

Paired Samples Test

Mean N

Std.

Deviation

Std.Error

Mean

Pair 1 Ist means 8.3795 25 3.5314 .7062

IInd means 2.5838 25 3.3787 .6757

Table: 2.2 : Paired Samples Correlations

N Correlation Sig.

Pair 1 Ist means

& IInd means

25 .074 .725

Table: 2.3 : Paired Samples Statistic

Paired Differences t df Sig.

(2-

tailed

)

Mean Std.

Devia

tion

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair 1 Ist

means

IInd

means

5.795 4.70 .9407 3.854 7.7371 6.161 24 .000


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The first mean is computed for the period 1995-96 to 2001-2002 and

the second mean is computed is computed for the period 2002-2003

to 2007-2008. The second mean at 2.5838 is significantly lower than

the first mean at 8.3795, which indicates that there is significant

difference between the two means. They show substantial

improvement in the working of the Public Sector Banks.

As per Karl Person’s Correlation test there is correlation between the

means belonging to the same Sector. The results indicate very

insignificant correlation. As per the ‘t’ test at 0.05 level of

significance, it is observed that there is significant difference between

means with respect to Public Sector Banks.

As per the Paired Samples Statistics the Public Sector Banks have

shown significant change in the Ratio of Net NPA to total Advances.

Hence the null hypothesis is rejected.

Private Sector Banks

HYPOTHESES

H0: There is no significant change in the Ratio of Net NPA to

total Advances of Private Sector Banks over the study

period.

H1: There is a significant change in the Ratio of Net NPA to

total Advances of Private Sector Banks over the study

period.


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Table: 3.1


Mean NStd.

Deviation

Std.

ErrorMean

Pair 1 Ist means 4.0368 15 1.9093 .4929

IInd means 2.7538 15 1.1583 .2990

Table: 3.2 Paired Samples Correlation

N Correlation Sig.Pair 1 Ist means & IInd

means

15 .670 .006

Table: 3.3 Paired Samples Test

Paired Differences

t df

Sig.

(2-

taile

d)Mean

Std.

Deviati

on

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair 1 Ist

means

- IInd

means

1.2829 1.4232 .36748 .49479 2.071 3.49 14 .004


the second mean for the period 2002-2003 to 2007-2008. The

SECOND mean at 2.7538 is significantly lower than the first mean at

4.036, which indicates that there is significant difference between the

means. This shows substantial improvement in their working. As per

the Paired Sample Statistics, there is significant difference in the

working of these Banks hence the null hypothesis is rejected.


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FOREIGN BANKS

Table: 4.1


Mean N

Std.

Deviation

Std. Error

Mean

Pair 1 Ist

means

3.8663 9 4.7225 1.5741

IInd

means

2.9590 9 3.6367 1.2122

Table: 4.2 Paired Samples Correlations

N Correlation Sig.

Pair 1 Ist means& IInd means

9 .516 .155

Table 4.3 Paired Samples Test

Paired Differences

t df

Sig. (2-

tailed)Mean

Std.

Deviatio

n

Std.

Error

Mean

95% ConfidenceInterval of the

Difference

Lower Upper

Pair 1 Ist

means

- IInd

means

.9072 4.2185 1.4061 -2.3353 4.1499 .645 8 .537


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As can be seen from the above Table the second mean at 2.95904 is

marginally lower than the first mean at 3.8663.

As per Karl Person’s Correlation test, the results indicate positive

correlation. As per the ‘t’ test since the significance value is more than

0.05, it is concluded that there is no significant difference between

the averages of the first mean and the averages of the second mean

with respect to Foreign Banks. Since as per the paired sample

statistics, Foreign Banks have not shown significant change in the

ratio of NPAs to Total Advances, the Null Hypothesis is accepted.


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Table: 5

Group Statistics

bank type

N Mean

Std.

Deviation

Std. Error

MeanIst means public 25 8.3795 3.5314 .7063

private 15 4.0368 1.9093 .4929

IInd means public 25 2.5838 3.3787 .6757

private 15 2.7538 1.1583 .2991

overall

means

public 25 5.2300 2.4037 .4807

private 15 3.3434 1.3827 .3570

bank type

N Mean

Std.

Deviation

Std. Error

Mean

Ist means private 15 4.0368 1.9093 .4929

foreign 9 3.8663 4.7225 1.5743

IInd means private 15 2.7538 1.1583 .2990

foreign 9 2.9590 3.6367 1.2122

overall

means

private 15 3.3432 1.3827 .3570

foreign 9 3.3635 3.6122 1.2040

A comparison of Public Sector and Private Sector Banks has been

made. The results have shown that during the first phase Public

Sector Banks were far behind Private Sector Banks, with their 1 st

mean of 8.3795 as against the Private Sector Banks mean of 4.036.

The scenario has drastically changed during the second Phase. The

bank type

N Mean

Std.

Deviation

Std. Error

Mean

Ist means public 25 8.3795 3.5314 .7062

foreign 9 3.8663 4.7225 1.5741

IInd means public 25 2.5838 3.3787 .6757

foreign 9 2.9590 3.6367 1.212

overall means public 25 5.2300 2.4037 .4807

foreign 9 3.3635 3.6122 1.204


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performance of Private Sector Banks at 2.7538 though marginally

higher as compared to the Public Sector Banks ratio of 2.5838 is

considered a substantial reduction when compared to the previous

period.

A similar comparison of Public Sector and Foreign Banks has also

been made. The results have shown that during the first phase foreign

Banks were ahead of Public Sector Banks, with their 1st mean of

3.8663 as against the Public Sector Banks mean of 8.3795. During

the second Phase the performance of Public Sector Banks has

drastically improved from 8.3795 to 2.5838.Foreign Banks have also

achieved a reduction from 3.8663 to 2.9590. However the progress

achieved by them is far lower when compared to the Public Sector

Banks.

The performance of Private Sector Banks vis-à-vis Foreign Banks

reveals that during the 1st phase private banks with a mean of 4.036

were slightly behind Foreign Banks whose 1st mean is3.8863. During

the second phase, the position of the Private Sector Banks is better

with a lower ratio of 2.7538 as against the ratio of Foreign Banks

which is 2.9590.


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Table:6

Inference:

From the above table it is conclude that

i) There is significant difference between the three groups with respect

to first means

ii) There is no significant difference in the case of second mean, and

ANOVA

Sum ofSquares df

MeanSquare F Sig.

Ist means BetweenGroups

237.939 2 118.970 10.350 .000

Within Groups 528.767 46 11.495

Total 766.707 48

IInd mean BetweenGroups

8.469 2 4.235 1.422 .252

Within Groups 136.958 46 2.977

Total 145.427 48

overall means BetweenGroups

43.229 2 21.614 3.685 .033

Within Groups 269.823 46 5.866

Total 313.052 48


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TABLE: 7

Post Hoc Tests

Dependent

Variable

(I)bank

type

(J bank

type Mean

Differenc

e (I-J)

Std.

Error Sig.

95% Confidence

Interval

Lower

Bound

Upper

Bound

Ist means pub private 4.3426 1.1073 .000 2.1137 6.5715

foreign 4.5131 1.3179 .001 1.8602 7.1661

pri public -4.3426 1.1073 .000 -6.5715 -2.1137

foreign .17050 1.4295 .906 -2.7069 3.0479

foreign public -4.5131 1.3179 .001 -7.1661 -1.8602

pri -.17050 1.4295 .906 -3.0479 2.7069IInd

medians

public pri -.8241 .5635 .150 -1.9584 .3102

foreign -.8439 .6707 .215 -2.1940 .5062

pri public .8241 .5635 .150 -.31022 1.9584

foreign -.0197 .7275 .978 -1.4842 1.4446

foreign public .84391 .6707 .215 -.50624 2.1940

pri .01977 .7275 .978 -1.4446 1.4842

overall

means

publi pri 1.8862 .7909 .021 .29410 3.4784

foreign 1.8664 .9414 .053 -.02859 3.7615

pri public -1.8862 .7909 .021 -3.4784 -.2941

foreign -.0198 1.0211 .985 -2.0753 2.0357

foreig public -1.8664 .94147 .053 -3.7615 .02859

pri .01980 1.0211 .985 -2.0357 2.0753

*. The mean difference is significant at the 0.05 level.

Post Hoc test revealed that the difference is significant in the First

mean between the Public Sector and Private Sector and Public Sector

and Foreign Banks, while there is no significant difference between

Private Sector and Foreign Banks. In the case of the Second Mean

there is no significant difference between the three Sectors.


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TABLE: 8 RANKING OF BANKS: NET NPA TO TOTAL ADVANCES

SECTOR BANK SCORE RANK SECTOR BANK SCORE RANK

FOR DEUTSCHE .04 1 PVT ICICI 2.06 26

PVT HDFC .35 2 PUB BOB 2.19 27

PUB A B .59 3 PUB ALL. BANK 2.24 28

FOR HSBC .64 4 PUB BOM 2.26 29

FOR ABN-AMRO .65 5 PVT B.RAJASTHAN 2.32 30

PUB ORIENTALBANK

.78 6 PUB BANK OF INDIA 2.60 31

PUB S BP .86 7 PUB SBI 2.63 32

PUB SBH .88 8 PUB UBI 2.71 33

FOR SCB 1.00 9 PVT INDUSIND 2.75 34

PUB C BANK 1.00 10 PUB UCO BANK 2.86 35

PUB VIJAYA 1.02 11 PVT SOUTHINDIAN

2.92 36

PUB PN B 1.11 12 PVT KARNATAKA 3.00 37

FOR CITI. 1.13 13 PVT TMC LTD 3.36 38

PUB SB INDORE 1.21 14 PUB CBI 3.51 39

PVT J&K 1.27 15 PVT CITY UNION 3.65 40

PVT K VB 1.56 16 PVT LVB. 3.75 41

PUB S BBIKANER

1.69 17 PVT CATHOLIC 3.79 42

FOR DBS 1.74 18 FOR SBM. 4.14 43

PUB SBT 1.74 19 PVT DHAN.BK 4.29 44

PUB S BMYSORE

1.78 20 PVT DCB. 4.30 45

PUB SYNDICATE 1.84 21 PUB DENA BANK 5.40 46

PUB I O B 1.86 22 FOR B.BAHRAIN 6.24 47

PUB CANARA 1.88 23 FOR ABU DHABI 11.07 48

PUB IB 1.93 24 PUB UBI 18.03 49

PVT FED.BANK 1.95 25


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In an attempt to assess the performance of the Banks in the three

Sectors, ranks have been assigned to individual Banks, and from the

above table, the following inferences are drawn:

Deutsche Bank AG in Foreign sector stands out the best with first

rank among all the 49 sample Banks. Sector wise the Banks in the

1st position are as under:

Public Sector: Andhra Bank

Private Sector: HDFC Bank

Foreign Bank: Deutsche Bank AG

II-Parameter

NET INTEREST MARGIN TO TOTAL ASSETS

The way to effectively measure the profitability of a Bank is to

compare the ratio of Net Interest margin to Total Assets. If the ratio is

increasing over a period of time, it is indicative that the Bank is

functioning efficiently. Net interest margin is arrived at after providing

for all interest expenses out of its total interest income. Annexure 3

contains the data relating to this Parameter.


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OVERALL COMPARISON OF THE PERFORMANCE

OF ALL THE SCHEDULED COMMERCIAL BANKS

H0: There is no significant change in the Net interest Margin to

total assets ratio of Scheduled Commercial Banks over the

study period.

H1: There is a significant change in the Net interest Margin to

total assets ratio of Scheduled Commercial Banks over the

study period.

TABLE:-9.1


Mean N Std. Deviation

Std. Error

MeanPair 1 I means 2.8543 49 .5993 .08562

II nd means 2.7978 49 .5279 .07542

Table: 9.2 Paired Samples Correlations

N Correlation Sig.

Pair 1 I means & II nd means 49 .949 .000


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performance over the study period in regard to the Ratio of Net

Interest Margin to total assets as per the above Table.

Paired Samples Correlations statement reveals that there is positive

correlation, and the ‘t’ tests suggests that level of variations in the

performance is significant. Hence the null Hypotheses is rejected.


Paired Differences

t df

Sig.

(2-

tailed

)Mean

Std.

Devia

tion

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pai

r 1

I

means

- II nd

means

.0564 .1938 .0276 .00078 .11214 2.039 48 .047


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PUBLIC SECTOR BANKS

HO: There is no significant change in the Net interest

Margin total assets ratio of Public Sector Banks over

the study period.

H1: There is a significant change in the Net interest

Margin total assets ratio of Public Sector Banks over

the study period.

Table: 10.1


Mean NStd.Deviation

Std. ErrorMean

Pair 1 I means 2.959 25 .24124 .04824

IInd means 2.799 25 .21311 .04262

Table 10.2: Paired Correlation test

N Correlation Sig.



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Mean comparison reveals that the second mean at 2.7990 is lower

than the 1st mean at .2.9593. Karl Person’s Correlation test results

indicate highly positive correlation.

As per the‘t’ test since the significance value is less than 0.05, it is

concluded that there is a significant difference between the means

with respect to Public Sector Banks.


shown significant change in the Net Interest Margin to total assets

ratio. Hence the null hypothesis is rejected.

PRIVATE SECTOR BANKS

HO: There is no significant change in the Net interest Margin total

assets ratio of Private Sector Banks over the study period.

H1: There is a significant change in the Net interest Margin total

assets ratio of Private Sector Banks over the study period.

Table 10.3Paired Samples Test

Paired Differences

t df

Sig.

(2-

tailed

)Mean

Std.

Deviati

on

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair

1

I means

- II nd

means

.1602 .0993 .0198 .1192 .2013 8.063 24 .000


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Table: 11.1



Std. Error

MeanPair 1 I means 2.6411 15 .6223 .1606

IInd means 2.6291 15 .6051 .1562

Table 11.2 : Paired Samples Correlations:

N Correlation Sig.

Pair 1 I means

& II nd means

15 .991 .000

As per the above table the second mean at 2.6291 is lower than the 1 st

mean at .2.6411, which indicates that there is no significant

difference between the means.

As per Karl Person’s Correlation test, the results indicate highly

positive correlation.

As per the‘t’ test, since the significance value is more than 0.05, it is

concluded that there is no significant difference in the means with

respect to Private Sector Banks.

Table 11.3 : Paired Samples Test

Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviatio

n

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair 1 I means

IInd means

.0120 .0833 .0215 -.0340 .0582 .561 14 .584


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As per the Paired Samples Statistics the Private Sector Banks have

shown no significant change in the Net Interest Margin to total assets

ratio. Hence the null hypothesis is accepted.

FOREIGN BANKS

HO: There is no significant improvement in the Net interest Margin

total assets ratio of Foreign Banks over the study period.

H1: There is a significant improvement in the Net interest Margin

total assets ratio of Foreign Banks over the study period.

Table: 12.1



Std.

Error

Mean

Pair 1 I means 2.9179 9 1.0857 .3619

II nd means 3.0757 9 .8689 .2896


N Correlation Sig.

Pair 1 I means & II

nd means

9 .975 .000


Paired Differences

t df

Sig.

(2-

taile

d)Mean

Std.

Deviati

on

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair 1 I means

IInd

means

-.1578 .3076 .1025 -.3943 .0786 -1.539 8 .162


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As per the above table the second mean at 3.0757 is slightly higher

than the first mean at .2.9279, which indicates that there is no

significant difference between the means.

As per Karl Person’s Correlation test, the results indicate highly

positive correlation.

As per the ‘t’ test, since the significance value is more than 0.05, we

conclude that there is no significant difference with respect to Foreign

Banks.

As per the Paired Samples Statistics the Foreign Banks have shown

no significant change the Net Interest Margin to total assets ratio.

Hence the null hypothesis is accepted .


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Table: 13

COMPARISON IN THE PERFORMANCE OF BANKS – GROUPWISE

Bank Type

N Mean

Std.

Deviation

Std. Error

Mean

I means private bank 15 2.6411 .6223 .1606

foreign 9 2.9179 1.0857 .3618

IInd

means

private bank 15 2.6291 .6051 .15624

foreign 9 3.0757 .8689 .2896

overall

means

private bank 15 2.6899 .51288 .1324

foreign 9 3.2829 .85173 .2839

Bank Type

N MeanStd.Deviation

Std. ErrorMean

I means public 25 2.9593 .2412 .0482

private bank 15 2.6411 .6223 .1606

IInd means public 25 2.7990 .2131 .0426

private bank 15 2.6291 .6051 .1562

overall public 25 2.8857 .2809 .0561

private bank 15 2.6899 .5128 .1324

Bank

variable

N Mean

Std.

Deviation

Std.

Error

Mean

I means public 25 2.9593 .24124 .0482

foreign 9 2.9179 1.0857 .3619


foreign 9 3.0757 .8689 .2896

overall means public 25 2.8857 .2809 .05619

foreign 9 3.2829 .8517 .2839


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A comparison of the performance of Public Sector and Private Sector

Banks has been made. The results have shown that during the first

phase Private Banks were lagging behind Public Sector Banks, with

their 1st mean of 2.6411 as against the Public Sector Banks mean of

2.9593. Even during the second Phase the performance of Private

Sector Banks with their mean of 2.6291are behind Public Sector

Banks with a second mean of 2.7990.



Banks were slightly behind Public Sector Banks, with their 1st mean of

2.9179 as against the Public Sector Banks mean of 2.9593. However,

during the second Phase the performance of Foreign Banks has

improved from to 3.0757as against that of 2.7990 of the Public Sector

Banks.



were behind Foreign Banks whose 1st mean is 2.9179. The position of

the second means is Private Sector 2.6291 and Foreign Banks 3.0757.

This shows that the Private Sector Banks were behind Foreign Banks

during both the study periods.


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Table: 14

ANOVA

Sum of

Squares df

Mean

Square F Sig.

I means Between Groups .993 2 .497 1.406 .255Within Groups 16.250 46 .353

Total 17.244 48

IInd

means

Between Groups 1.122 2 .561 2.106 .133

Within Groups 12.258 46 .266

Total 13.380 48

overall means Between Groups 1.986 2 .993 4.014 .025


Total 13.367 48

From the Anova table, it is conclude that:

i) There is no significant difference between the three Sectors in

respect of the first means and the second means

ii) In the case of the overall means, the difference is significant.


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Table: 15

Post Hoc Test

Dep. Variable (I) bank type (J) banktype Mean

Differenc

e

(I-J)

Std.

Error Sig.

95%Confidence

Interval

Lower

Bound

Upper

Bound

I means public private

.

.3181 .1941 .108 -.0726 .7088

foreign .0414 .2310 .859 -.4236 .5064

private public -.3181 .1941 .108 -.7088 .0725

foreign -.2767 .2506 .275 -.7811 .2277

foreign public -.0414 .2316 .859 -.5064 .4236

private .2767 .2506 .275 -.2277 .7811

IInd means public private .1699 .1685 .319 -.1694 .5094

foreign -.2766 .2006 .175 -.6805 .1274

private public -.1699 .1685 .319 -.5093 .1694

foreign -.446* .2176 .046 -.8847 -.0085

foreign Public .2766 .2006 .175 -.1272 .6805

private .4466* .2176 .046 .0085 .8847

overall means public private .1958 .1624 .234 -.1311 .5228

foreign -.3971* .1935 .046 -.7863 -.0079

private Public -.1958 .1624 .234 -.5221 .1311foreign -.5928* .2097 .007 -

1.0151

-.1707

foreign public .3971* .1933 .046 .0079 .7863

private .5929* .2097 .007 .1703 1.015


As per the Post Hoc Test, in the case of overall means, there is significant

difference in the case of Public and Foreign Banks and private and foreign

Banks while in the case of public and private banks there is no significant

difference. In the case of the first and second means there is no significant

difference in the three sectors.


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Table:16 RANKING OF BANKS: NET INTEREST MARGIN


FOR CITI 4.2617 1 FOR SBMAUR 2.7583 26

FOR SCB 3.9483 2 PVT DHAN.BANK 2.7500 27

PVT T MC 3.8750 3 PUB SBT 2.7467 28

FORABN-AMRO

.3.8733 4 PUB SB INDORE 2.7367 29

FOR HSBC 3.5733 5 PUB BOB 2.7333 30

PVT HDFC 3.4183 6 PUB BOM 2.7067 31

PUB PN B 3.2550 7 PVT J& K BANK 2.6917 32

PUB I OB 3.2033 8 PUBST BANK

MYSORE2.6883 33

PVT K VB 3.1633 9 PUB DENA BANK 2.6833 34

PVTS. B &

JAIPUR3.1583 10 PUB

SB

PATIALA2.6500 35

PUB AB 3.0083 11 PUB CANARA B 2.5783 36

PVT CUB. 3.0033 12 PUB SBH 2.5617 37

FOR DBS 2.9767 13 PVT SOUTHINDIAN

2.5117 38

PUB C BI 2.9617 14 PUBBANK OF

INDIA2.4583 39

PUB VIJAYA 2.9117 15 PVTBANK OF

RAJ2.4033 40

PUB CORP.BANK 2.8900 16 PUB UCO BANK 2.3583 41

PUBINDIAN

BANK2.8833 17 PVT KARNATAKA 2.2817 42

PVTCATHOLIC

BANK2.8767 18 PVT LVB 2.1700 43

PUB SYNDICATE 2.8683 19 FORDEUTSCHE

BK2.1283 44

PVT FED BANK 2.8333 20 FORBK OF

BAHRAIN2.1050 45

PUB ALL BANK 2.8300 21 FOR ABU DHABI 2.0567 46

PUB O B C 2.8000 22 PVT DCB 1.9383 47

PUB CANARA 2.7717 23 PVT INDUSIND 1.8617 48

PUB IB 2.7667 24 PVT ICICI BANK 1.6583 49

PUB SBI 2.7667 25


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In an attempt to assess make the performance of the Banks in the

three Sectors, ranks have been assigned to individual Banks, and

from the above table, we draw the following inferences:

Citi Bank in Foreign sector stands out the best with first rank among

all the 49 sample Banks. Sector wise the Banks in the 1st position

are as under:

Public Sector: Punjab National Bank

Private Sector: TamilNadu mercantile Bank

Foreign Bank: Citi Bank

ICICI BANK in the Private Sector stood last in the above Ranking.


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III-Parameter

NET PROFIT TO TOTAL ASSETS RATIO

Net Profit to total assets ratio reflects the efficiency of Banks, and is a

very important indicator. Data relating to this Parameter is furnished

at Annexure 4.

In the Camels rating Net Profit takes the 4th place (Earnings). Banks

strive to improve the profitability, as the Regulator keeps a close

watch on the Return on Assets of Banks, and in extreme cases put the

Banks under watch list as per the PCA (Prompt Corrective Action)

guidelines. Since most Public Sector and Private Sector Shares are

quoted on the Stock Exchanges and actively traded, the Investor’

OVERALL POSITION OF THE SAMPLE SCHEDULED COMMERCIAL

BANKS:

HO: There is no significant change in the Net Profit to total

assets ratio of Scheduled Commercial Banks over the study

period.

H1: There is a significant change in the Net Profit to total

assets ratio of Scheduled Commercial Banks over the studyperiod.


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Table: 17.1


Mean N

Std.

Deviation

Std.Error

Mean

Pair

1

I means .7678 49 .7502 .1071

II

means

.9559 49 .4544 .0649

Table 17.2 Paired Samples Correlations

N Correlation Sig.Pair

1

I means & II

means

49 .271 .060


Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviation

Std.

Error

Mean

95%

Confidence

Interval ofthe

Difference

Lower Upper

Pair

1

I

means

- II

means

-.1881 .7645 .1092 -.4077 .0315 -1.722 48 .091

Comparison of the two means reveals that there is a marginal change

among all the Scheduled Commercial Banks. The second mean at

.9559 is higher when compared to the first mean of 0.7678. Paired

Samples Correlations statement reveals that there is correlation, and

the ‘t’ tests suggests that since the significance value is greater than


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0.05, it is concluded that there is no significance in the working of

SCBs.

Since as per the Paired Sample Statistics, there is no significant

change, the Null hypotheses is accepted.


HYPOTHESIS:Ho: There is no significant change in the

Net Profit to total assets ratio of Public Sector Banks over

the study period.


assets ratio of Public Sector Banks over the study period.

Table:18.1


Mean N

Std.

Deviation

Std. Error

Mean

Pair 1 Ist means .4296 25 .7391 .14782

IInd

means

.9592 25 .2052 .04105


N Correlation Sig.

Pair1 Ist means &

IInd means

25 .200 .339


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18.3 Paired Samples Test

Paired Differences

t df

Sig.

(2-

tailed

)MeanStd.

Deviatio

n

Std.Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair1

Ist

means

- IInd

means

-5296 .7265 .1453 -.8295 -.227 -3.64 24 .001

As per the able Table second mean at .9592 is significantly higher

than the first mean at .4296, which indicates that there is significant

difference between the means. Karl Person’s Correlation test has been

applied to find out if there is correlation between the means belonging

to the same Sector. The results indicate positive correlation.

As per the ‘t’ test since the significance value is less than 0.05, it is

concluded that there is significant difference between first mean and

second mean with respect to Public Sector Banks and hence the null

hypothesis is rejected.


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PRIVATE SECTOR BANKS : HYPOTHESIS

H0: There is no significant change in the Net Profit to total assets

ratio ratio of Private Sector Banks over the study period.

H1: There is a significant change in the Net Profit to total assets

ratio ratio of Private Sector Banks over the study period.

Table: 19.1

Paired Sample

Mean N

Std.

Deviation

Std. Error

Mean

Pair 1 Ist means 1.0095 15 .5342 .1379

IInd

means

.8856 15 .5720 .1477

Table 19.2: Paired Sample Correlations

N Correlation Sig.

Pair 1 I means & II means 15 .374 .170


Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviation

Std.

Error

Mean

95%

Confidence

Interval of the

Difference

Lower Upper

Pair 1 Ist

means

IIndmeans

.1238 .61987 .1600 -.2194 .4671 .774 14 .452


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Mean comparison: The first mean is computed for the period 1995-96

to 2001-2002 and the second mean is computed is computed for the

period 2002-2003 to 2007-2008. The analysis shows that the

performance of the Private Sector Banks has marginally declined as

shown by the fact that the 1st mean at 1.0095 is higher when

compared to the second mean at .8856.

As per Correlation test. there is slight positive correlation between the

first mean and second mean.

As per the‘t’ test, since the significance value is greater than 0.05, it is

concluded that there is no significant difference between the first

mean and second mean.

As per the Paired Samples Statistics the Private Banks have not

shown significant change in the Net Profit to total assets ratio. Hence

the null hypothesis is accepted.

FOREIGN BANKS

H0: There is no significant change in the Net Profit to total

assets ratio ratio of Foreign Banks over the study period.


assets ratio ratio of Foreign Banks over the study period.


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Table: 20.1

As per Correlation test, there is slight positive correlation between the

first mean and second mean at 0.486.

As per the ‘t’ test, since the significance value is greater than 0.05, it

is concluded that there is no significant difference between the first

mean and second mean.

Since as per the Paired Samples Statistics, there is no significance in

the case of Foreign Banks the null hypothesis is accepted.


Mean NStd.Deviation

Std. ErrorMean

Pair 1

Ist means 1.3044 9 .6691 .22304

IInd

means

1.0637 9 .7192 .23976

Table: 20.3 Paired Sample Test

Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviation

Std.

Error

Mean


Difference

Lower Upper

Pair1 Ist

means -

IInd

means

.2407 .7053 .2351 -.3014 .7829 1.024 8 .336


N

Correlatio

n Sig.Pair 1 Ist means & IInd

means

9 .486 .185


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.COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE

Table: 21

Group Statistics

Bank type

N Mean

Std.Deviatio

n

Std.ErrorMean

I means public 25 .4296 .7391 .1478

Private 15 1.0095

.5342 .1379

II means public 25 .5200 .5975 .1195

Private 15 .9747 .4937 .1274

overallmeans

public 25 .6474 .4569 .0913

Private 15 .9576 .4567 .1179

Bank type

N Mean

Std.

Deviation

Std.

Error

Mean

I means public 25 .4296 .7391 .1478

Foreign 9 1.3044 .6691 .2230

II means public 25 .5200 .5975 .1195

Foreign 9 1.2622 .4471 .1490

overall means public 25 .6474 .4569 .0913

Foreign 9 1.2053 .5819 .1939


made. The results have shown that during the first phase Private

Bank type

N Mean

Std.

Deviation

Std.

Error

Mean

I means Private 15 1.0095 .5342 .1379

Foreign 9 1.3042 .6691 .2230

II means Private 15 .9747 .4935 .1274

Foreign 9 1.2622 .4471 .1490

overall

means

Private 15 .9576 .4567 .1179

Foreign 9 1.2053 .5819 .1939


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Banks were well ahead of Public Sector Banks, with their 1st mean of

1.009523 as against the Public Sector Banks mean of 0.4296.

However, during the second Phase the performance of Private Sector

Banks has slipped from 1.009523 to 0.9747 and that of the Public

Sector Banks has drastically improved from 0.4296 to 0.5200. There

is no significant difference in the variances of the two sectors.



Banks were well ahead of Public Sector Banks, with their 1st mean of

1.3044 as against the Public Sector Banks mean of 0.4296. However,

during the second Phase the performance of Foreign Banks has

slipped from 1.3044 to 1.2622 and that of the Public Sector Banks

has drastically improved from 0.4296 to 0.5200.



were behind Foreign Banks whose 1st mean is 1.3044. The position of

the second means is Private Sector .9747 and Foreign Banks 1.2622.

This shows that both Sectors have slipped in their performance during

the second phase as revealed by the‘t’ test.


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Table: 22

ANOVA

Sum ofSquares df

MeanSquare F Sig.

I means Between Groups 6.328 2 3.164 7.034 .002


Total 27.018 48

II means Between Groups .179 2 .089 .423 .658


Total 9.911 48

overall

means

Between Groups 2.334 2 1.167 5.045 .010


Total 12.976 48

In the case of Net Profit Anova Test has shown that there is

significant difference in the First Mean, and overall mean, while there

is no significant difference in the second mean.


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Post Hoc test revealed that the difference is significant in the case of

Public and Private Banks and Public and Foreign Banks. There is no

significant difference between Foreign and Private Sector Banks. In

the second mean there is no significant difference between the three

sectors.

Table: 23

Post Hoc Tests

Multiple Comparisons

Dep.

Variable

(I) bankvariable (J)

bankvariable Mean

Differenc

e (I-J)

Std.

Error Sig.

95% Confidence

Interval

Lower

BoundUpper

Bound

I means public private -.5799* .2190 .011 -1.0208 -.1390

foreign -.8748* .2607 .002 -1.3996 -.3500

private

bank

public .5799* .2190 .011 .1390 1.0208

foreign -.2949 .2827 .302 -.8641 .2742

foreign

bank

public .8748* .2607 .002 .3500 1.3996

private .2949 .2827 .302 -.2745 .8645

II means public private .0735 .1502 .627 -.2287 .3759

foreign -.1044 .1788 .562 -.4643 .2554

private

bank

public -.0735 .1502 .627 -.3759 .2287

foreign -.1780 .1939 .363 -.5684 .2123

foreign

bank

public .1044 .1788 .562 -.2554 .4643

private .1780 .1939 .363 -.2123 .5684

overall

means

public private -.3101 .1570 .054 -.6263 .0060

foreign -.5578* .1869 .005 -.9341 -.1814

private

bank

public .3101 .1570 .054 -.0060 .6263

foreign -.2476 .2027 .228 -.6558 .1605

foreignbank

public .5578* .1869 .005 .1814 .9341private .2476 .2027 .228 -.1605 .6558



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Table : 24 Ranking of Banks: Net profit to total Assets


PUB ALL.BANK .556 44 PVT SEC B RAJASTHAN .764 34

PUB AB 1.134 16 PVT SEC CATHOLIC SY .836 30

PUB BOB .842 28 PVT SEC CITY UNION 1.362 8

PUB BOI .754 36 PVT SEC DHANALAKSHMI .612 43

PUB BOM .670 40 PVT SEC FEDERAL BANK .774 32

PUB CANARA .896 22 PVT SEC J & K BANK 1.632 3

PUB CBI .458 46 PVT SEC KARNATAKA 1.002 21

PUB CORPN. B 1.468 5 PVT SEC KARUR VYSYA 2.002 1

PUBDENABANK

.110 48 PVT SEC LAKSHMI VILAS 1.072 19

PUBINDIANBANK

-.232 49 PVT SEC SOUTH INDIAN .838 29

PUB IOB .654 41 PVT SEC TAMILNAD

MERC1.384 7

PUB OBC 1.178 13 PVT SEC DCB. .708 39

PUB PNB .862 27 PVT SEC HDFC 1.218 11

PUB SYNDICATE .866 25 PVT SEC ICICI BANK .876 24

PUB UCO BANK .476 45 PVT SEC INDUSIND .864 26

PUBUNIONBANK

.740 38 FOREIGN ABN-AMRO 1.420 6

PUBUNITEDBANK

.650 42 FOREIGN ABU DHABI .418 47

PUBVIJAYABANK

.892 23 FOREIGNBANK OFBAHRIN

.826 31

PUB SBI .744 37 FOREIGN CITIBANK N.A. 1.580 4

PUB SBIKANER 1.084 17 FOREIGN DBS BANK LTD. 1.148 15

PUB SBH 1.010 20 FOREIGNDEUTSCHE

BANK1.206 12

PUBS B

INDORE1.252 10 FOREIGN HSBC LTD. 1.078 18

PUBSBF

MYSORE.758 35 FOREIGN SCB 1.998 2

PUB SB PATIALA 1.326 9 FOREIGN SB MAURITIUS 1.152 14

PUB SBT .770 33


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above table, we draw the following inferences:

Karur Vysya Bank in Private sector stands out the best with first

rank among all the 49 sample Banks. Sector wise the Banks in the

1st position are as under:

Public Sector: Corporation Bank

Private Sector: Karur Vysya Bank

Foreign Banks: Standard Charatered Bank

Indian Bank in the Public Sector had negative profitability and so

stood last in the Ranking.

IV-Parameter

OPERATING EXPENSES AS PERCENTAGE OF TOTAL ASSETS

One of the most important performance indicators which shows the

efficient working of Banks is the ratio of Operating Expenses as per

cent age of Total Assets.

In the CAMELS rating of Banks, the ratio of Operating expenses as per

cent age of Total Assets plays a very important role as the earnings

capacity of a Bank is judged by the capacity of a Bank in achieving a

substantial reduction in this ratio.

This is a part of the fourth parameter which goes into the supervisory

rating awarded by the Reserve Bank of India to the respective Banks.

Hence Banks constantly are on the look out to achieve a reduction in

the ratio, as it will directly improve the profitability of Banks. Prior to


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the Reform period Banks have suffered the most on account of a high

degree of militancy among the Bank Employees. The productivity

levels were low. Since the Banks had a very low degree of

Computerization, the operating expenses ratio was high as most

operations were done manually. Post Reforms the things have

improved especially with the new Private Sector Banks bringing in the

new state of the art working conditions which contributed to higher

productivity levels. Hence the study of this ratio will be very helpful.

The Data relating to this Parameter is furnished at Annexure 5.

OVERALL COMPARISON OF THE PERFORMANCE OF ALL THE

SCHEDULED COMMERCIAL BANKS



performance over the study period in regard to the Ratio of Net

Interest Expenses.

H0: There is no significant change in the ratio of

Operating expenses as per cent age of Total Assets in

respect of Scheduled Commercial Banks over the study

period.

H1: There is a significant change in the ratio of

Operating expenses as per cent age of Total Assets in

respect of Scheduled Commercial Banks over the study

period.


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Table: 25.1



Std.

Error

MeanPair 1 I means 2.4383 49 .7168 .1024

II means 2.0923 49 .4970 .0710

: Table 25.2 : Paired Samples Correlations

N Correlation Sig.

Pair 1 I means

& II means

49 .210 .147

Comparison of the two means reveals that there is improvement

among all the Scheduled Commercial Banks. The second mean at

2.0923 lower when compared to the first mean of 2.4383. Paired

Samples Correlations statement reveals that there is correlation, and

the ‘t’ tests suggests that level of variations in the performance is

significant. Hence the null hypothesis is rejected.

Table 25.3 : Paired Samples Test :

Paired Differences

t df

Sig. (2-

tailed)Mean

Std.

Deviati

on

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair

1

I means

II means

.3459 .7818 .1116 .1214 .5705 3.09 48 .003


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The following is the sector wise performance of Scheduled Commercial

Banks in respect of the ratio of Operating expenses as per cent age of

Total Assets.

H0: There is no significant change in the ratio of Operating

expenses as per cent age of Total Assets in respect of Public

Sector Banks over the study period.

H1: There is a significant change in the ratio of Operating

expenses as per cent age of Total Assets in respect of Public


Table:26.1



Std. Error

Mean

Pair 1 I means 2.7376 25 .37600 .07520

II means 2.0027 25 .26394 .05278


N Correlation Sig.

Pair 1 I means

& II means

25 .705 .000


Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviati

on

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair 1 I

means-

IImeans

.7348 .2665 .0533 .6248 .8448 13.78 24 .000


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Mean comparison test reveals that the Second mean at 2.0027 is

significantly lower than the first mean at 2.7376, which indicates that

there is significant difference between the means. This shows

substantial improvement in the working of the Public Sector Banks.

As per Karl Person’s Correlation test, the results indicate that there is

positive correlation

As per the ‘t’ test since the Significance value is less than 0.05, we

conclude that there is significant difference between first mean and

second mean with respect to Public Sector Banks.


shown significant change in the ratio of the ratio of Operating

expenses as per cent age of Total Assets in the case Public Sector

Banks. Hence the null hypothesis is rejected.

SECTORWISE ANALYSIS: PRIVATE SECTOR BANKS

We now proceed to see the sector wise performance of Private Sector

in respect of the ratio of Operating expenses as per cent age of Total

Assets. The following is the hypothesis:

H0: There is no significant change in the ratio of Operating

expenses as per cent age of Total Assets Of Private Sector Banks

over the study period.

H1: There is a significant change in the ratio of Operating

expenses as per cent age of Total Assets In respect of Private



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Table: 27.1


Mean N

Std.

Deviation

Std. Error

Mean

Pair 1 I means 1.8172 15 .6144 .1586

II means 2.0338 15 .4886 .1261

As per the above Table second mean at 2.0338 is marginally higher

than the 1st mean at 1.8172 which indicates that there is no

significant difference between the means. This shows that in fact the

working of the Private Sector Banks has deteriorated during the study

period.

As per Correlation test has, the results indicate that there is positive

correlation, but statistically very insignificant.


N Correlation Sig.

Pair 1 I means

& IInd means

15 .280 .312


Paired Differences

t df

Sig.

(2-

tailed

)Mean

Std.

Deviati

on

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair

1

I means

II means

-.2166 .6695 .17286 -.587 .154 -1.25 14 .231


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As per the‘t’ test, since the significance value is more than 0.05, it is

concluded that there is no significant difference between first mean

and second mean with respect to Private Sector Banks.


not shown any significant change in the ratio of Operating Expenses

as a percentage of Total Assets in the case of Private Sector Banks.

Hence the null hypothesis is accepted.

SECTORWISE ANALYSIS: FOREIGN BANKS

The following is the sector wise performance of Foreign Banks in

respect of the ratio of Operating Expenses as a percentage of Total

Assets.

H0: There is no significant improvement in the ratio of Operating

Expenses as a percentage of Total Assets of Foreign Banks over the

study period.

H1: There is a significant improvement in the ratio of Operating

Expenses as a percentage of Total Assets in respect of Foreign

Banks over the study period.


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Table: 28.1



Std. Error

Mean

Pair

1

I means 2.6420 9 .9737 .3245

II means 2.4381 9 .8301 .2767


N Correlation Sig.

Pair 1 I means & IImeans

9 .035 .929


the second mean is computed is computed for the period 2002-2003

to 2007-2008. The second mean at 2.4385 is slightly lower than the

first mean at 2.6420, which indicates that there is no significant

difference between the means in the working of the Foreign Banks.

As per the Correlation test, the results indicate very slight positive

correlation which is not statistically significant.


Paired Differences

t df

Sig.

(2-

tailed)Mean

Std.

Deviation

Std.

ErrorMean

95%

Confidence

Interval of the

DifferenceLower Upper

Pair 1 I means & II

means

.2035 1.2573 .4191 -.762 1.170 .486 8 .640


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As per the ‘t’ test, since the significance value is more than 0.05, it is

concluded that there is no significant difference between first mean

and second mean with respect to Foreign Banks.

As per the Paired Samples Statistics the Foreign Banks have not

shown any significant change in the ratio of ratio of Operating

Expenses as a percentage of Total Assets. Hence the null hypothesis is

accepted.

Table: 29

COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE

Group Statistics

Bank type

N Mean Std. Deviation

Std. Error

Mean

I means public 25 2.737600 .3760077 .0752015

private 15 1.817238 .6144930 .1586614

II means public 25 2.002733 .2639479 .0527896

private 15 2.033889 .4886086 .1261582


private 15 1.903460 .4663746 .1204174

Bank type


Std. Error

Mean

I means private 15 1.8172 .61449 .15866

foreign 9 2.6420 .97377 .32459

II means private 15 2.0338 .48860 .12615

foreign 9 2.4385 .83018 .27672

overall means private 15 1.9034 .46637 .12041foreign 9 2.5630 .68272 .22757

Bank type


Std. Error

Mean

I means public 25 2.7376 .376 .0752

foreign 9 2.6420 .9737 .3245

II means public 25 2.0027 .2639 .0527

foreign 9 2.4385 .8301 .2767

overall means public 25 2.4438 .3099 .0619foreign 9 2.5630 .6827 .2275


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Sector Banks were behind Private Sector Banks, with their 1st mean of

2.7376as against the Private Sector Banks mean of 1.8172. During

the second Phase the performance of Private Sector Banks is more or

less similar ratio of 2.0338 as compared to the Public Sector Banks

ratio of 2.0027.



Banks were slightly ahead of Public Sector Banks, with their 1st mean

of 2.6420 as against the Public Sector Banks mean of 2.7376.

However during the second Phase the performance of Foreign Banks is

lower at a ratio of 2.4385 as compared to the Public Sector Banks

ratio of 2.0027.



were ahead of Foreign Banks whose 1st mean is 2.6420. However

during the second phase, the position of the Private Sector Banks

has improved and they are ahead of Foreign Banks with their IInd

Mean of 2.0338 as against the ratio of Foreign Banks which is

2.4385.


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Table: 30

ANOVA

Sum of

Squares df

Mean

Square F Sig.I means Between Groups 8.399 2 4.199 11.876 .000


Total 24.664 48

II means Between Groups 1.331 2 .665 2.907 .065


Total 11.859 48

overall means Between Groups 3.499 2 1.749 8.862 .001


Total 12.579 48

In the case of Operating Expenses Anova Test has shown that

i)there is significant difference in the case of the First mean

ii) there is no significant difference in the case of the second mean

iii) there is significant difference in the case of the overall between

different sectors of Banks.


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Table: 31

Post Hoc Tests

Multiple Comparisons

Depende

nt

Variable

(I) bank

type

(J) bank

typeMean

Differe

nce (I-

J)

Std.

Error Sig.

95% Confidence

Interval

Lower

Bound

Upper

Bound

I means public private .9203 .1942 .000 .5294 1.3112

foreign .0955 .2311 .681 -.3697 .5608

private public -.9203 .1942 .000 -1.3112 -.5294

foreign -.8248 .2507 .002 -1.3295 -.3201

foreign public -.0955 .2311 .681 -.5608 .3697

private .8248 .2507 .002 .320 1.3295

II means public private -.0311 .1562 .843 -.3456 .2833

foreign -.4357* .1859 .023 -.8101 -.0614

private public .0311 .1562 .843 -.2833 .3456

foreign -.4046 .2017 .051 -.8106 .0013

foreign public .4357 .1859 .023 .0614 .8101

private .4046 .2017 .051 -.00139 .8106

overall

means

public private .5403 .14510 .001 .248297 .8324

foreign -.1191 .1727 .494 -.4668 .2284

private public -.5403 .1451 .001 -.8324 -.2482

foreign -.6595 .1873 .001 -1.0366 -.2824

foreign public .1191 .1704 .494 -.2284 .4668

private .6595 .1873 .001 .2824 1.0366


Post Hoc Test has shown that in the case of the I mean the difference

is significant between Public and Private Sector and Private and

Foreign Banks, while there is no significant difference between Public

Sector and Foreign Banks. In the case of the overall mean the

difference is significant in the case of public and private banks and

private and foreign banks, while there is no significant in the case of

foreign and public banks.


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Table: 32

RANKING OF BANKS: OPERATING EXPENSES

SECTOR NAME SCORE RANK SECTOR NAME SCORE RANK

FB SBM 1.1500 1 PS ALLAHABAD 2.1200 26

FB DBS 1.2250 2 PS IOB 2.1350 27

PV J&K 1.3150 3 PV B.RAJASTHAN 2.1400 28

PV KARNATAKA 1.4900 4 PS SBI 2.1500 29

PS SBP 1.5000 5 PS INDIAN 2.1750 30

PS OBC 1.5200 6 PS DENA 2.1800 31

PV CUB 1.6000 7 PS PNB 2.2000 32

PS UBI 1.6550 8 PV HDFC 2.2050 33

PV INDUS 1.6700 9 FB ABU DHABI 2.2050 34

PS SBH 1.7350 10 FB BAHRAIN &KUWAIT

2.2400 35

PV FED. 1.7950 11 PS ANDHRA BANK 2.2750 36

PS SBT 1.8100 12 FB SCB 2.3200 37

PS CORP 1.8150 13 PS CBI 2.3800 38

PS CANARA 1.8400 14 PS SYNDICATE 2.3900 39

PV KVB 1.8400 15 PS UBI 2.4300 40

PV VIJAYA 1.9100 16 PS BIKANER &J 2.5600 41

PV SOUTHINDIAN

1.9150 17 PV DHANALAKSHMI 2.5850 42

PS SB INDORE 1.9300 18 PV CATHOLIC S 2.6250 43

PS UCO BANK 1.9450 19 PS SB MYSORE 2.6600 44

PS B0I 1.9550 20 FB HSBC 2.7850 45

PV ICICI 1.9800 21 FB CITI 2.9950 46

PS BOM 1.9900 22 PV DCB. 3.2000 47

PS B0B 2.0950 23 FB DEUTSCHE 3.3800 48

PV TMC 2.1050 24 FB ABN-AMRO 3.5200 49

PV LVB 2.1150 25


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State Bank of Mauritius Ltd in Foreign sector stands out the best

with first rank among all the 49 sample Banks. Sector wise the

Banks in the 1st position are as under:

Public Sector : State Bank of Patiala

Private Sector : Jammu & Kashmir Bank Ltd

Foreign Bank : State Bank of Mauritius Ltd

ABN-AMRO Bank in the Foreign Sector stood last in the above

ranking.


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V-Parameter

INTEREST EXPENDED AS PERCENTAGE OF TOTAL ASSETS

One of the most important performance indicators which shows the

efficient working of Banks is the ratio of INTEREST EXPENDED AS

PER CENTAGE OF TOTAL ASSETS. Data pertaining to this Parameter

is furnished at Annexure 6.

In the CAMELS rating of Banks, the ratio of INTEREST EXPENDED

AS PER CENTAGE OF TOTAL ASSETS plays a very important role as

the earnings capacity of a Bank is judged by the capacity of a Bank in

achieving a substantial reduction in this ratio.

This is a part of the fourth parameter which goes into the supervisory

rating awarded by the Reserve Bank of India to the respective Banks.

Hence Banks constantly are on the look out to achieve a reduction in

the ratio, as it will directly improve the profitability of Banks.

This is an important profitability indicator. Prior to the Reform period

Banks have suffered the most on account of Regulated Regime of

Interest Rates which left very little scope for launching innovative

products which would help reduction in this ratio. Post Reforms the

interest rates have been de regulated except in the case of Savings

Bank Accounts. As per the Reserve Bank of India Governor

Dr.Duvvuru Subba Rao, the RBI is contemplating to de regulate even

this restriction.


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OVERALL PERFORMANCE OF THE SAMPE SCHEDULED

COMMERCIAL BANKS

H0: There is no significant change in the ratio of Net InterestExpended as a percentage of Total Assets of Scheduled Commercial


H1: There is a significant change in the ratio of Net Interest

Expended as a percentage of Total Assets in respect of Scheduled

Commercial Banks over the study period.

Table: 33.1



Std. Error

Mean

Pair 1 I means 6.5296 49 .9464 .1352

II nd means 4.4982 49 .8603 .1229


N Correlation Sig.



Paired Differences

t df

Sig. (2-

tailed)Mean

Std.

Deviatio

n

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair

1

I means

- IInd

means

2.0314 .9074 .1296 1.7708 2.2920 15.671 48 .000


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As per the Paired Samples Statistics the Scheduled Commercial Banks

have shown significant change in the ratio of Net Interest Expended as

percentage of Total Assets. Hence the null hypothesis is rejected.


The following is the sector wise performance of Scheduled Commercial

Banks in respect of the ratio of Net Interest Expended as a percentage

of Total Assets. The following is the hypothesis for the purpose of

testing with the help of ‘t’ test.

H0: There is no significant change in the ratio of Net Interest

Expended as a percentage of Total Assets of Public Sector Banks



Expended as a percentage of Total Assets in respect of Public


Table: 34.1



Std. Error

Mean

Pair 1 I means 6.3088 25 .3872 .0774

IInd means 4.4898 25 .2326 .0465

Table 34.2: Paired Samples Correlations

N Correlation Sig.

Pair 1 I means &

IInd means

25 .244 .240


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Paired Differences

t df

Sig.

(2-

taile

d)Mean

Std.

Deviati

on

Std.

Error

Mean

95% Confidence

Interval of theDifference

Lower Upper

Pai

r 1

I means –

IInd means

1.818 .4002 .0800 1.6537 1.9841 22.72 24 .000

Mean comparison has been made between the first mean and the

mean. The first mean is computed for the period 1995-96 to 2001-

2002 and the second mean is computed is computed for the period

2002-2003 to 2007-2008. The second mean at 4.4898 is significantly

lower than the 1st mean at 6.3088, which indicates that there is

significant different between the means. This shows substantial

improvement in the working of the Public Sector Banks.


correlation.

As per the ‘t’ test, since the significance value is less than 0.05, it is

concluded that there is significant difference between first mean and

second mean with respect to Public Sector Banks.


shown significant change in the ratio of Net Interest Expended as

percentage of Total Assets. Hence the null hypothesis is rejected.


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SECTORWISE ANALYSIS: PRIVATE SECTOR BANKS

The following is the sector wise performance of Private Sector Banks in

respect of the ratio of Net Interest Expended as a percentage of Total

Assets.

H0: There is no significant change in the ratio of Net Interest

Expended as a percentage of Total Assets of Private Sector



Expended as a percentage of Total Assets in respect of Private


Table: 35.1


Mean N

Std.

Deviation

Std.

Error

Mean

Pair 1 I means 7.1038 15 1.0636 .2746

IInd means 4.9134 15 .6416 .1656


N Correlation Sig.

Pair 1 I means

& IInd means

15 .465 .081


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Paired Differences

t df

Sig.(2-

tailed

)Mean

Std.

Deviati

on

Std.

Error

Mean


Difference

Lower Upper

Pair 1 I means –

IInd

means

2.1903 .9534 .2461 1.6623 2.7183 8.89 14 .000

As per the above Table the second mean at 4.9134 is significantly

lower than the first mean at 7.1038, which indicates that there is

significant difference between the means. This shows substantial

improvement in the working of the Private Sector Banks.


correlation.

As per the ‘t’ test, since the significance value is less than 0.05, it is

concluded that there is significance difference between first mean and

second mean.


shown significant change in the ratio of Net Interest Expended as

percentage of Total Assets. Hence the null hypothesis is rejected


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SECTORWISE ANALYSIS: FOREIGN BANKS

The following is the analysis of Foreign Banks in respect of the ratio

of Net Interest Expended as a percentage of Total Assets.

HYPOTHESIS: H0 There is no significant change in the ratio of Net

Interest Expended as percentage of Total Assets of Foreign Banks



Expended as a percentage of Total Assets in respect of Foreign


Table: 36.1



Std.

Error

Mean

Pair 1 I means 6.1863 9 1.4286 .4762

IInd means 3.8294 9 1.6527 .5509

Table 36.3 Paired Samples statistics

Paired Differences

t df

Sig.

(2-

taile

d)Mean

Std.

Deviatio

n

Std.

Error

Mean

95% Confidence

Interval of the

Difference

Lower Upper

Pair 1 I means

- IInd

means

2.3560 1.6005 .5335 1.1266 3.5871 4.418 8 .002


N Correlation Sig.

Pair 1 I means

IInd means

9 .468 .204


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The mean comparison reveals that there is substantial improvement

in the working of the Foreign Banks. The second mean of 38294 is far

lower than the first mean of 6.1863. There is positive correlation as

per the Karl Pearson Correlation test. The ‘t’ test is indicating a highly

significant difference.

As per the Paired Samples Statistics the Foreign Banks have shown

significant change in the ratio of Net Interest Expended as percentage

of Total Assets. Hence the null hypothesis is rejected

Table: 37

COMPARISION IN THE PERFORMANCE OF BANKS-GROUPWISE

Group Statistics

bank

type N Mean

Std.

Deviation

Std. Error

Mean

I means public 25 6.3088 .3872 .0774

pri bank 15 7.1038 1.0636 .2746


pri bank 15 4.9134 .6416 .1656


pri bank 15 6.2270 .7862 .2030

Group Statistics

bank

type N Mean

Std.

Deviation

Std. Error

Mean

I means pri 15 7.1038 1.0636 .2746

forn 9 6.1863 1.4286 .4762

IInd means Pri. 15 4.9134 .64163 .1656

forn 9 3.8294 1.6527 .5509

overall means Pri. 15 6.2270 .78624 .2030

forn 9 5.2552 1.3152 .4384


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Group Statistics

Bank type

N Mean

Std.

Deviation

Std. Error

Mean

I means public 25 6.3088 .3872 .07745

forn 9 6.1863 1.4286 .4762

II nd means public 25 4.4898 .2326 .0465

forn 9 3.8294 1.6527 .5509


forn 9 5.2552 1.3152 .4384



Sector Banks were well ahead of Private Sector Banks, with their 1st

mean of 6.3088 against the Private Sector Banks mean of 7.1038.

Even, during the second Phase the performance of Private Sector

Banks is lower with a ratio of 4.9134 as compared to the Public

Sector Banks ratio of 4.4898.



Banks were ahead of Public Sector Banks, with their 1st

mean of

6.1863 as against the Public Sector Banks mean of 6.30888. Even

during the second Phase the performance of Foreign Banks is lower at

a ratio of 3.8292 as compared to the Public Sector Banks ratio of

4.4898.


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reveals that during the first phase private banks with a mean of

7.1038 were behind Foreign Banks whose first mean is 6.1863. Even

during the second phase, the position of the Private Sector Banks is

lower with a ratio of 4.9134 as against the ratio of Foreign Banks

which is 3.8294.

The Anova table suggests that there is significant difference between

the three groups with respect to 1st means, IInd Mean and the overall

means. Hence we conclude that there is homogeneity between the

three sectors of Banks.

Table: 38

ANOVA

Sum ofSquares df

MeanSquare F Sig.

I means Between

Groups

7.225 2 3.612 4.646 .015


Total 42.994 48

II nd means Between

Groups

6.613 2 3.307 5.260 .009


Total 35.529 48

overall means Between

Groups

6.285 2 3.142 5.967 .005


Total 30.513 48


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Table: 39

Ranking of Banks: Interested expended to total Assets


FOREIGN Deutche BankLtd.

2.73 1 PUB SBNK OFINDORE

4.60 26

FOREIGN HSBC LTD. 2.74 2 PUB UNION BANK 4.63 27

FOREIGN CITIBANK N.A. 2.83 3 PUB UNITED BANK 4.64 28

FOREIGN DBS BANK LTD. 3.03 4 PUB CANARA BANK 4.66 29

FOREIGN STANCHART 3.05 5 PUB DENA BANK 4.68 30

FOREIGN ABN-AMRO 3.17 6 PUB SB T 4.69 31

PVT SEC HDFC BANK 3.19 7 FOREIGN SB. MAURITIUS 4.73 32

PVT SEC BANK OF RAJ 3.89 8 PUB BOM 4.73 33

PUB PNB 4.02 9 PUB AL. BANK 4.75 34

PUB CORP. BANK 4.08 10 PUB UCO BANK 4.78 35

PUB B0B 4.12 11 PVT KVB 4.80 36

PUB INDIAN BANK 4.17 12 PVT FED BANK 4.83 37

PUB SYNDICATE 4.28 13 PUB OBC 4.85 38

PUB BOI 4.28 14 PVT SEC DHAN.BK 5.00 39

PUB S. BIKANER 4.29 15 PVT SEC SOUTH INDIANB

5.04 40

PUB SB OF PATIALA 4.32 16 PVT SEC DCB 5.19 41

PVT SEC J & K BANK 4.39 17 PVT SEC CUB 5.23 42

FOREIGN BANK OFBAHRAIN

4.40 18 PVT SEC ICICI BANK 5.23 43

PUB SBI 4.48 19 PVT SEC LAKSHMI VILAS 5.29 44

PUB S B MYSORE 4.50 20 PVT SEC CATHOLIC

SYRIAN

5.30 45

PUB CBI 4.51 21 PVT SEC INDUSINDBANK

5.38 46

PUB AB 4.53 22 PVT SEC KARNATAKABANK

5.42 47

PUB SBH 4.53 23 PVT SEC TMC 5.53 48

PUB IOB 4.55 24 FOREIGN ABU DHABIBANK

7.79 49

PUB VIJAYA 4.60 25


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Deutsche Bank in Foreign sector stands out the best with first rank

among all the 49 sample Banks. Sector wise the Banks in the 1st

position are as under:

Public Sector : Punjab National Bank

Private Sector : HDFC Bank

Foreign Banks : Deutsche Bank

Abu Dhabi Commercial Bank in the foreign sector stood last in the

above ranking.


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SECTORBANK R1 R2 R3 R4 R5

AVG.

C.RANK

FOREIGN SEC DBS BANK LTD. 18 13 15 2 4 10 1

PUB BANK CORPORATION BANK 10 16 5 13 10 11 2

FOREIGN SEC STANDARD CHARTERED 9 2 2 37 5 11 3

PVT SEC HDFC BANK 2 6 11 34 7 12 4

FOREIGN SEC CITIBANK N.A. 13 1 4 46 3 13 5

FOREIGN SEC ABN-AMRO BANK N.V. 5 4 6 49 6 14 7

PVT SEC J & K BANK 15 32 3 3 17 14 7

PUB BANK STATE BANK OF PATIALA 7 33 9 5 16 14 7

FOREIGN SEC HSBC LTD. 4 5 18 45 2 15 9

PVT SEC KARUR VYSYA BANK 16 9 1 15 36 15 10

PUB BANK ORIENTAL BANK 22 13 6 38 17 11 6

PUB BANK PUNJAB NATIONAL BANK 12 7 27 32 9 17 12

PUB BANK ANDHRA BANK 3 11 16 36 22 18 13

PUB BANK VIJAYA BANK 11 15 23 16 25 18 14

PUB BANK STATE BANK OF INDORE 14 29 10 18 26 19 15

PUB BANK S BH 8 37 20 10 23 20 16

PUB BANK STATE BANK OF B& J 17 10 17 41 15 20 17

FOREIGN SEC DEUTSCHE BANK 1 44 12 48 1 21 18

PVT SEC CITY UNION BANK 40 12 8 7 43 22 19

FOREIGN SEC S BANK OF MAURITIUS 43 26 14 1 32 23 20

PUB BANK SYNDICATE BANK 21 19 25 39 13 23 21

PUB BANK BANK OF BARODA 27 30 28 23 11 24 22

PVT SEC TAMILNADU MERCANTILE 3 7 24 48 24 23 38

PUB BANK INDIAN OVERSEAS BANK 22 8 41 27 24 24 24

PUB BANK SBTRAVANCORE 19 28 33 12 31 25 25

PUB BANK CANARA BANK 23 36 22 15 29 25 27

PVT SEC FEDERAL BANK LTD. 25 20 32 11 37 25 27

PUB BANK INDIAN BANK 24 17 49 30 12 26 28

PUB BANK BANK OF INDIA 31 39 36 20 14 28 30

TableNo:40

Composite Ranking Table Based On All Parameters


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R=RANK C=COMPOSITE

In an attempt to assess the Overall performance of the Banks in the

three Sectors, Composite ranks based on all the five parameters have

been assigned to individual Banks, and from the above table, we

draw the following inferences:

Development Bank of Singapore Ltd. in the foreign Sector stands out

the best with first rank among all the 49 sample Banks. Sector wise

the Banks in the 1st position are as under:

PVT SEC BANK OF RAJASTHAN 30 40 34 28 8 28 30

PUB BANK STATE BANK OF INDIA 32 25 37 29 19 28 31

PUB BANK UNION BANK OF INDIA 49 23 38 8 27 29 32

PVT SEC KARNATAKA BANK 37 42 21 4 47 30 33

PUB BANK ALLAHABAD BANK 28 21 44 26 34 31 34

PUB BANK STATE BANK OF MYSORE 20 35 35 44 20 31 35

PUB BANK BANK OF MAHARASHTRA 29 31 40 22 33 31 36

PUB BANK CENTRAL BANK OF INDIA 39 14 46 38 21 32 37

PVT SEC SOUTH INDIAN BANK 36 38 29 17 40 32 38

PVT SEC ICICI BANK 26 49 24 21 43 33 40

PVT SEC INDUSIND BANK LTD. 34 48 26 9 46 33 40

PUB BANK UNITED BANK OF INDIA 33 25 42 40 28 34 41

PVT SEC LAKSHMI VILAS BANK 41 43 19 25 44 34 42

PUB BANK UCO BANK 35 41 45 19 35 35 43

FOREIGN SEC B. OF BAHRAIN 47 45 31 35 18 35 44

PVT SEC CATHOLIC SYRIAN BANK 42 18 30 43 45 36 45

PUB BANK DENA BANK 46 34 48 31 30 38 46

PVT SEC DHANALAKSHMI BANK 44 27 43 42 39 39 47

PVT SEC D CREDIT BANK 45 47 39 47 41 44 48

FOREIGN SEC ABU DHABI L BANK LTD. 48 46 47 34 49 45 49


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Public Sector : Corporation Bank Ltd.

Private Sector : HDFC BANK Ltd

Foreign Banks : Development Bank of Singapore Ltd.

Abu Dhabi Commercial Bank in the Foreign Sector stood last in the

above Ranking.


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VI-Parameter:

CAPITAL ADEQUACY (CA)

The following Table shows the position of Banks in the three Sectors

regarding Capital Adequacy during the study period:

Table No.41.1 PUBLIC SECTOR BANKS

PERIOD 1996 2002 2008

No. of Banks with negative CA 2 -- --

No. of Banks with CA of below 8% 4 1 --

No. of Banks with CA between 8-10% 14 2 1

No. of Banks with CA above 10% 5 22 24

TOTAL 25 25 25

Table No.41.2 PRIVATE SECTOR BANKS

PERIOD 1996 2002 2008

No. of Banks with negative CA -- -- --

No. of Banks with CA of below 8% 1 -- --



TOTAL 15 15 15

Table No.41.3 FOREIGN BANKS

PERIOD 1996 2002 2008

No. of Banks with negative CA -- -- --

No. of Banks with CA of below 8% 1 -- --

No. of Banks with CA between 8-10% 3 1 --


TOTAL 9 9 9


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Table No.41.4 POSITION OF SCHEDULED COMMERCIAL BANKS

PERIOD 1996 2002 2008

No. of Banks with negative CA 2 -- --

No. of Banks with CA of below 8% 6 1 --



TOTAL 49 49 49

Table No.41.5

The Banks with highest capital adequacy during 2008 are the

following Sector wise:

SECTOR NAME OF THE BANK

CAPITAL

ADEQUACYPER CENT

PUBLIC SECTOR STATE BANK OF INDIA 13.5

PRIVATE SECTOR FEDERAL BANK 22.5

FOREIGN BANKSABUDABHI COMMERCIAL

BANK51.71

The issue of lower capital adequacy had negative connotations both

nationally and internationally. The Reserve Bank of India addressed

this issue on priority and convinced the Government of India to

recapitalize the ailing Public Sector Banks. This process started even

before the study period, and by 1996 the no. of Banks with negative


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capital adequacy are 2 viz., Indian Bank and Vijaya Bank in the

Public Sector, while there are no Banks in the Private Sector and

Foreign Banks with negative capital adequacy. During this period

Banks with capital adequacy of below 8% are 4, 1and 1 in the Public

Sector, Private Sector and Foreign Banks respectively. Banks with

capital adequacy of between 1-10% are 14, 4, and 3 in the Public

Sector, Private Sector and Foreign Banks respectively. The no. of

Banks with capital Adequacy of more than 10% were 5, 10 and 5

respectively.

The benefits Prompt Corrective Action, CAMELS rating can be directly

seen in this very important area of capital adequacy. By 2002 all

Banks are positively capitalised, and there is only one Bank with

capital below 8% viz., Indian Bank. This is the benchmark capital

adequacy prescribed by Basel Accord. 4 Banks were between 8-10%,

and 44 Banks have enjoyed capital adequacy of above 10%, much

above the requirements of Basel Committee8% and the Reserve Bank

Guidelines of 9%. The position has further improved by 2008 with all

the Banks enjoying capital adequacy above the regulatory

requirements. During this period 2 Banks had capital adequacy

between 8-10% while the rest 47 had capital adequacy of over 10%.

Mean Std Deviation Article

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