Banks play an important role in the economic development of every nation.

They have control

over a large part of the supply of money in circulation. A bank is a financial intermediary that
accepts deposits and channels those deposits into lending activities. Banks are a fundamental
component of the financial system, and are also active players in financial markets. Financial
performance refers to the achievement of the bank in terms of profitability. The profitability of a
bank denotes the efficiency with which a bank deploys its total resources to optimize its net
profits and thus serve as an index to the degree of asset utilization and managerial effectiveness.

Here we see the financial performance of the selected banks with the different norms. They are
grouped as follows, ratio analysis, correlation and regression. For this study Five government
Banks are selected. The Indian banking system faces several difficult challenges. The selected
banks have performed well on the sources of growth rate and financial efficiency.

They are:

1. State Bank of India (SBI)

2. Bank of Baroda

3. Punjab National Bank

4. Bank of India

5. Canara Bank

1) Ratio analysis:

Profitability Ratios have been calculated for the past five years for the purpose of analysis.
Ratios being designed are named as:

Return on Total Shareholders Fund(RONW)

Return on Capital Employed
Return on Assets
Earnings Per Share (EPS)
Dividend Per Share (DPS)
Capital adequacy Ratio
Dividend Payout Ratio

2) Mean
3) Standard deviation

A. Returnon Total Shareholders Fund

It is the ratio of net profit to total shareholders fund. Return on Net Worth measures how much a
bank earns within a specific period in relation to the amount that's invested in its common stock.
If the Return on Net Worth is higher than the bank's return on assets, it may be a sign that
management is using leverage to increase profits and profit margins.

Return on Total Shareholders Fund= [{Net profit (after tax & interest)/ Total shareholders
fund}*100

Table Return on Total Shareholders Fund(in Percentage)

As per table Return on Total Shareholders Funds of SBI and canara are showing fluctuating
trend. BOB is showing fluctuations from 2009-11 and it is starting decreasing from 2011. PNB is
showing increasing trend from 2009-10 then it starts decreases. SBI showing decreasing trend
from 2009-11 then after it start increasing. Return on Total Shareholders Fundsof Bank of India
issloping down steadily after 2009 but it is starting recovery in 2011 and after that again starts
decreasing. PNB has the highest return on Net Worth (mean) which is a sign that management of
Punjab national bank is at using leverage to increase profits and profit margins. It is also
indicating a sign of good management. Variations in Mean and S.D according to year mean and
S.D are highest in 2009(mean) and 2010(S.D) respectively. Mean and S.D are both lowest in
2014. Variations in Mean and S.D according to position of banks mean and S.D are highest of
PNB (mean) and BOI (S.D)Respectively. Mean and S.D are lowest of SBI respectively.

1) Return on Capital Employed:Return on Capital Employed

(ROCE) is used in finance as a measure of the returns that bank is realizing from its capital
employed. It is commonly used as a measure for comparing the performancebetween businesses
and for assessing whether a business generates enough returns to pay for its cost of capital.

Return on Capital Employed = [(Profit before interest, tax & dividend/Capital employed)*100

Table Return on Capital Employed(In Percentage)

As per table Return on Capital Employed of PNB and canara bank are showing decreasing trend
from 2009- 11 and after that it increases, BOI is showing decreasing trend from 2009-2011 and
then remains constant from 2012-13 .SBI and BOB both are showing fluctuating trend .PNB has
the highest return on capital employed (mean) which indicates that PNB is realizing highest
returns from its capital employed in comparison to other banks taken under study. Variations in
Mean and S.D according to year mean and S.D are highest in 2009& 2012. Mean and S.D are
both lowest in 2011. Variations in Mean and S.D according to position of banks mean and S.D
are highest of PNB (mean) & BOI (S.D) respectively. Mean and S.D are both lowest of BOB.

2) Return onAssests: An indicator of how profitable a company is relative to its total assets. ROA
gives an idea as to how efficient management is at using its assets to generate earnings.

Return on Equity Shareholders Fund = [{Net Income/Total Assets}*100]

As per table- RETURN ON Assets BOB and Canara Bank are showing increasing trend from
2009-11 and after 2011 it start decreasing. BOI is showing decreasing trend in starting while
from the year 2010 it is showing fluctuations. SBI is also showing a decreasing trend from 2009-
11 after 2011 it start recovery& again falling in 2014. PNB is showing decreasing trend except
the year 2010. PNB has the Return on Assets (mean) which is a sign that management of PNB is
using Assets fund more efficiently to increase earning capacity in comparison to other banks.
Variations in Mean and S.D according to year mean and S.D are highest in 2009 and 2011
respectively. Mean and S.D are lowest in 2014 respectively. Variations in Mean and S.D
according to position of banks mean and S.D are highest of PNB and SBI respectively. Mean and
S.D are lowest of Bank of India and BOB respectively.

Table EARNING PER SHARE (In Rs. Per share)

EARNING PER SHARE (EPS):This ratio measures the profit available to the equity
shareholders on a per share basis.
EARNING PER SHARE (EPS) = [(Net profit after tax Preference Dividend) / No. Of Equity
Share (common share)]

As per table- Earning Per Share of BOB and PNB is showing increasing trend from 2009 but
suddenly decrease in 2013. SBI is showing increasing trend of Earning per share in all years
expect the financial year 2011& 2014. BOI is showing decreasing trend of Earning per share in
the year 2010 after that it is showing the flat trend or almost same the year 2010 to 2014. SBI has
the highest Earning per share (mean) which means that SBI has the highest EPS which means
that it has highest profits available to equity shareholders on per share basis in comparison to
other banks. Variations in Mean and S.D according to year mean and S.D are highest in 2012 and
2014respectively. Mean and S.D are lowest in 2009 and 2011 respectively. Variations in Mean
and S.D according to position of banks mean and S.D are highest of SBI and PNB respectively
but BOB has the highest S.D after that state bank of India. Mean and S.D are lowest of Bank of
India respectively.

DIVIDEND PER SHARE (DPS)

Out of all profits left after payment of the tax and preference dividend, a portion of this profit is
retained in business and remaining is distributed among equity shareholders as dividend.

Dividend Per Share = (Dividend paid to equity shareholders/No. Of equity shares)

TABLE DIVIDEND PER SHARE (In Rs. Per share)

As per table- DIVIDEND PER SHARE Bank of Baroda and Canara bank are showing increasing
trend except 2014. State Bank of India is also showing a decrease in Dividend per Share from
2009-2010 but after it increases and then is remains constant (flat trend) from 2010-2012. after
that it shows increasing DPS in the financial year 2013 .PNB and BOI are showing fluctuating
trend from 2009 to2014. Dividend per Share of Bank of Baroda is showing increasing trend.
State Bank of India has the highest Dividend per Share (mean) which means that it has highest
dividend available to equity shareholders on per share basis in comparison to other 4 banks.
Variations in Mean and S.D according to year mean and S.D are both highest in 2013. Mean and
S.D are both lowest in 2009 and 2011. Variations in Mean and S.D according to position of banks
mean and S.D are both highest of State bank of India. Mean and S.D are lowest of Bank of India.

CAPITAL ADEQUACY RATIO: capital adequacy ratio is the ratio which determines the banks
capability to meet the time liabilities and other risk as credit risk. It is calculated by using this
formula;

Capital Adequacy Ratio = [(Equity /Assets)*100]

Capital adequacy ratio of SBI and PNB bank are showing decreasing trend of capital adequacy
from 2009-11 and after that it increases, bank of India is showing decreasing trend from 2009-
2014 .SBI and Canara bank both are showing fluctuating trend .BOB is showing increasing trend
expect the year 2013& 2014..BOB has the highest capital adequacy (mean) which is a sign that
BOB is managing debt and equity( assets and liabilities ) in comparison to other banks taken
under study. Variations in Mean and S.D according to year mean and S.D are the highest in 2009
and S.D in year 2011 Mean and S.D are lowest in 2013& 2009. Variations in Mean and S.D
according to position of banks mean and S.D are highest of bank of Baroda (mean) & Canara
bank( S.D) respectively. Mean and S.D are both lowest of Bank of India

DIVIDEND PAYOUT RATIO: These measures the relationship between the earning available to
equity shareholders and the dividend distributed among them. In other words, it shows what
percentage of profit is paid as dividend to equity shareholders
Dividend Payout Ratio = [(Dividend per share / Earning per share)*100

TABLE : DIVIDEND PAYOUT RATIO (In Percentage )

As per table dividend payout ratio of Bank of Baroda and BOI are showing fluctuating trend
from 2009-14. PNB and Canara bank are showing a decrease inDividend Payout Ratio. PNB is
showing decrease in dividend payout ratio from 2009 except 2013.Dividend Payout Ratio of
Canara bank is showing decreasing trend in starting while from the year 2011-09 and it is
starting recovery in 2011. SBIis showing increasing trend from 2009 to 2011 then it start
falling.State bank of India has highest Dividend Payout Ratio (Mean) which means that it has
highest percentage of profit distribute as dividend to equity shareholders and it is more efficient
in comparison to other banks. Variations in Mean and S.D according to year mean and S.D are
highest in 2013(mean) or 2014(S.D). Mean and S.D are lowest in 2014(mean) or 2013(S.D).
Variations in Mean and S.D according to position of banks mean and S.D are highest of State
bank of India. Mean and S.D are lowest of Punjab national bank respectively. V