Loan Loss Provision 37

A Project Report on

“Pattern Analysis in Data and Documentation with respect to banking sector”

MIDHUN RAJ

1NH15MBA86

Submitted to

DEPARTMENT OF MANAGEMENT STUDIES NEW HORIZON COLLEGE OF ENGINEERING, OUTER RING ROAD, MARATHALLI, BANGALORE

In partial fulfillment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of

INTERNAL GUIDE EXTERNAL GUIDE NIVIYA FESTON VIJAY SRIKANTHAMURTHY Senior Assistant Professor Manager, Estimate Department NHCE Thomson Reuters

2015-2017

CERTIFICATE

This is to certify that MIDHUN RAJ bearing USN 1NH15MBA86, is a bonafide student of Master of Business Administration course of the Institute (Batch), autonomous program, affiliated to Visvesvaraya Technological University, Belgaum. Project report on “Pattern Analysis in Data and Documentation with respect to banking sector on the basis of KPI measures”is prepared by him under the guidance of Ms. NIVIYA FESTON, in partial fulfillment of requirements for the award of the degree of Master of Business Administration of Visvesvaraya Technological University, Belgaum Karnataka.

Signature of Internal Guide Signature of HOD Signature of Principal

DECLARATION I, MIDHUN RAJ, hereby declare that the project report entitled “Pattern Analysis in Data and Documentation with respect to Banking sector” with reference to “Thomson Reuters, RMZ Infinity, Bangalore” prepared by me under the guidance of Ms.NIVIYA FESTON, faculty of M.B.A Department, New Horizon College of Engineering and external assistance by Vijay Srikanthamurthy, Manager, Estimate Department, Thomson Reuters.

I also declare that this project work is towards the partial fulfillment of the university regulations for the award of the degree of Master of Business Administration by Visvesvaraya Technological University, Belgaum.

I have undergone a summer project for a period of sixteen weeks. I further declare that this project is based on the original study undertaken by me and has not been submitted for the award of a degree/diploma from any other University / Institution.

Signature of Student Place:

Date

Acknowledgment

I wish to express my sincere gratitude to my project guide Ms. NIVIYA FESTON, faculty of M.B.A department for her exemplary guidance monitoring and constant encouragement throughout the course of this project. The blessing, help and guidance given by her from time to time, shall carry me a long way in the journey of life on which I am about to embark. I also thank our manager Vijay Srikantamurthy and team leader Mr.Ganjan Virappa for giving opportunity to do internship at Thomson Reuters. I also thank our H.O.D Dr.Sheelan Mishra for her encouragement and support in the form of various facilities which create a very peaceful atmosphere for our main-project.

Secondly I would also like thank my parents and friends for their constant encouragement without which this project would not be possible.

TABLE OF CONTENTS

Chapter Title of the Chapter Page. no. No.

1 INTRODUCTION 1-5

2 INDUSTRY & COMPANY PROFILE 6-21

3 THEORETICAL BACKGROUND OF THE 22-30 STUDY

4 DATA ANALYSIS & INTERPRETATION 31-49

5 FINDINGS, SUGGESTIONS & 50-53 CONCLUSION

BIBLIOGRAPHY 54-55

LIST OF TABLES

Table. No. Title of the Table Page. No.

4.1 Net income interest 32

4.2 Non interest revenue 33

4.3 Fees and Commission 34

4.4 Trading income 35

4.5 Total income 36

4.6 Loan loss provision 37

4.7 Non interest expense 38

4.8 Securities 39

4.9 Loan 40

4.10 Efficiency ratio 41

4.11 Intangible book value 42

4.12 Net interest margin 43

4.13 Billed business 44

4.14 Non performing asset 45

4.15 Non performing loans 46

4.16 Risk weighted asset 47

4.17 Discount fees 48

4.18 Assets under Management 49

LIST OF GRAPH

Figure Particulars Page No, No.

4.1 Net income interest 32

4.2 Non interest revenue 33

4.3 Fees and Commission 34

4.4 Trading income 35

4.5 Total income 36

4.6 Loan loss provision 37

4.7 Non interest expense 38

4.8 Securities 39

4.9 Loan 40

4.10 Efficiency ratio 41

4.11 Intangible book value 42

4.12 Net interest margin 43

4.13 Billed business 44

4.14 Non performing asset 45

4.15 Non performing loans 46

4.16 Risk weighted asset 47

4.17 Discount fees 48

4.18 Assets under Management 49

Executive summary

The project titled “Pattern Analysis in Data and Documentation with respect to banking sector” for the period 2015. The study based on secondary data from financial reports and other internet sources. The project is trying to analyses the financial performance of the banking sector on the basis of key performance indicators. The key performance analysis helps to understand the strength and weakness of the banking sector. It will also provide a guideline for the future activities of the banking sector. This project report divided into five chapters. Chapter one includes the introduction part, chapter two comprises of brief overview about these industry and company profile, chapter three includes the theoretical background of the study, data analysis is contained in chapter four, chapter five includes the findings, suggestions and conclusion.

CHAPTER 1

INTRODUCTION

1.1 TITLE OF THE STUDY

“Analyze the Banking sector on the basis of KPI measures”

A key performance indicator (KPI) is a measurable value that how effectively a company is achieving key business objectives. Organizations use KPI at multiple levels to evaluate their success at reaching targets. The Indian banking sector is broadly classified into scheduled banks and non- scheduled banks. All banks included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks. Banking in India is fairly mature in terms of supply, product range and reach-even though reach in rural India and to the poor still remains a challenge.

1.2 STATEMENT OF PROBLEM

Statement of the problem is to analyse the banking sector on the basis of KPI measures and also give suggestions according their performance.

1.3 NEED FOR STUDY

This key performance analysis helps to understand the strength and weakness of the banking sector. It will also provide a guideline for the future activities of the banking sector .

1.4 OBJECTIVES OF THE STUDY

• To study about KPI measures used in banking sector. • To study the performance of the banking sector on the basis of KPI measures. • To analyse the performance of the banking sector based on KPI measures

1.5 SOURCES OF DATA COLLECTION

Analyse the banking sector on the basis of KPI (key performance indicator) measures based on secondary data that collected from annual report of the respective companies and other publications. Internet is the main sources of collecting annual report.

1.6 SAMPLING DESIGN

• Data –secondary data • Population -banking sector

1.7 ANALYTICAL TOOLS

Net interest income, Fees & commission income, Trading income, Discount fees, Total revenues net of interest expense, Total income, Total non-interest revenues, Non-interest expense, Loan loss provisions, Assets under management, Net gains/losses, Non-recurring items, Total deposits, Customer deposits under total deposits, Loans, Risk-weighted assets, Securities, Non-performing assets, Non- performing loans, OREO expenses, Intangible book value, Tangible book value, Net new money/assets, Core tier 1 capital, Tier 1 capital ratio, Billed business, Net charge-offs/average loans, Net interest margin, Net interest spread, Return on net operating assets, Efficiency ratio .

1.8 LITERATURE REVIEW

1. Edward Zaik,John Walter, Gabriela Retting, Christopher James Annual reports, especially the profit/loss account and balance‐sheet of the banks concerned for the relevant years, were used to obtain the data. A review is conducted of the international literature on intellectual capital with specific reference to literature that reviews measurement techniques and tools, and the VAIC method is applied in order to analyze the data of Indian banks for the five‐year period. The intellectual or human capital (HC) and physical capital (CA) of the Indian banking sector is analysed and their impact on the banks' value‐based performance is discussed.

2. Lawrence Livermore National Laboratory. Financial Electronic Data Interchange Pilot Project. Lawrence Livermore National Laboratory, Finance Department, UCRL-AR-124103, (May 1, 1996).

RAROC systems allocate capital for two basic reasons: (1) risk management and (2) performance evaluation. For risk management purposes, the overriding goal of allocating capital to individual business units is to determine the bank's optimal capital structure–the proportion of equity to assets that minimizes the bank's overall cost of funding. This process involves estimating how much the risk (or volatility) of each business unit contributes to the total risk of the bank, and hence to the bank's overall capital requirements. For performance evaluation purposes, RAROC systems assign capital to business units as part of a process of determining the risk-adjusted rate of return and, ultimately, the “economic profit” of each business unit. The objective in this case is to measure a business unit's contribution to shareholder value, and thus to provide a basis for effective planning, capital budgeting, and incentive compensation at the business unit level.

3.Hutt, A.E., Bosworth, S., and Hoyt, D.B. Computer Security Handbook. (Third Ed.). Wiley, NY, 1995:

Concerns about capital adequacy, along with the Basel risk-based capital requirements, have played some role in the growth of RAROC among commercial banks. But the most powerful impetus to bankers' use of more systematic risk measures is coming from increasingly activist institutional investors. Besides giving senior management an economic basis for evaluating the bank as a portfolio of businesses and for making resource allocation decisions that improve the bank's risk/reward profile, RAROC systems are also expected to produce better performance by holding managers accountable for the amount of investor capital they are putting at risk.

4. Griffin, J. (1995). Customer loyalty: how to earn it, how to keep it. San Francisco, USA: Jossey- Bass Publishers.

The BPI is a performance indicator (“the higher the better”) and informs about the usage of physical and intellectual (human) capital in order to create value added for the firm. The Japanese Ministry of Finance (www.mof.go.jp) uses another way to define the value added of firms. Accordingly VA is equal to salaries and wages + interest and discounting + rental or leasing expenses for fixed and liquid assets + taxes and public charges + net operating income (operating income-interest and discounting expenses). This approach seems to be rather suitable for a process or cost oriented (manufacturing firms) philosophy and less for a market or value (trade and service sector.

5. Vacca, J. Internet Security Secrets. IDG Books Worldwide, Inc., Foster City, Calif., 1996.

All 98 scheduled commercial banks are studied as per the information provided by the Reserve Bank of India (RBI)/India's Apex bank. Regional rural banks (RRBs), a segment of the Indian banking sector, are not dealt with in the study since their number is large (more than 200), but they contribute only 3 percent of the market of Indian banks. This paper is a landmark in Indian banking history as it approaches performance measurement with a new dimension .

6. Harris, L. C., & Goode, M. M. H. (2004). The four levels of loyalty and the pivotal role of trust: a study of online service dynamics:

The paper has strong theoretical foundations, which have a proven record and applications. The methodology adopted has been research tested. Domestic banks in India are provided with a new dimension to understand and evaluate their performance and benchmark it with global standards. The paper also has policy implications, as it reflects the lop‐sided growth of a few sections in the Indian banking segment. 4

7. Henry, C. M., & Wilson, R. (2004). The politics of Islamic Finance. Edinburgh: Edinburgh University Press.

The human “genius” has been recognized as a vehicle for certain valuable capabilities and as the critical enabler of transforming processes. But it has not been considered as an intellectual capitalizator or intellectual asset. This has happened recently in the promising field of intellectual capital and its related philosophy of knowledge management, although the related research status quo is still in its infancy.

8. Meidan, A. (1996). Marketing Financial Services. Hound mills, UK: Macmillan Press:

Analyzes the intellectual or human (HC) and physical capital (CA) of the Japanese banking sector and discusses their impact on the banks’ value‐based performance. Focuses on the actual status of HC and CA capital and its predictive, discriminative and integrative impact on the “intellectual” added value‐based performance situation. Confirms the existence of significant performance differences among the various groups of Japanese banks but also the differences between the Japanese and some European banks (Greece and Austria).

9. Wong, A., & Shoal, A. (2003). Service quality and customer loyalty perspectives on two levels of retail relationships:

The largest bank, and the oldest still in existence, is the State Bank of India (S.B.I). It originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank of Bengal. This was one of the three banks funded by a presidency government; the other two were the Bank of Bombay and the Bank of Madras. The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years the presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934

1.9 LIMITATIONS OF STUDY

• The project based on secondary data, and the accuracy of secondary data may affect the results of the problem • Chance of window dressing in annual report.

CHAPTER 2

INDUSTRIAL & COMPANY PROFILE

2.1 INDUSTRY PROFILE

Banking in India

In the modern sense, originated in the last decades of the 18th century. Among the first banks were the Bank of Hindustan, which was established in 1770 and liquidated in 1829–32; and the General Bank of India, established in 1786 but failed in 1791.

• The largest bank, and the oldest still in existence, is the State Bank of India (S.B.I). It originated as the Bank of Calcutta in June 1806. In 1809, it was renamed as the Bank of Bengal. This was one of the three banks funded by a presidency government the other two were the Bank of Bombay and the Bank of Madras. The three banks were merged in 1921 to form the Imperial Bank of India, which upon India's independence, became the State Bank of India in 1955. For many years the presidency banks had acted as quasi-central banks, as did their successors, until the Reserve Bank of India was established in 1935, under the Reserve Bank of India Act, 1934.

In 1960, the State Banks of India was given control of eight state-associated banks under the State Bank of India (Subsidiary Banks) Act, 1959. These are now called its associate banks. In 1969 the Indian government nationalised 14 major private banks. In 1980, 6 more private banks were nationalised. These nationalised banks are the majority of lenders in the Indian economy. They dominate the banking sector because of their large size and widespread networks.

The Indian banking sector is broadly classified into scheduled banks and non-scheduled banks. The scheduled banks are those included under the 2nd Schedule of the Reserve Bank of India Act, 1934. The scheduled banks are further classified into: nationalised banks; State Bank of India and its associates; Regional Rural Banks (RRBs); foreign banks; and other Indian private sector banks. The term commercial banks refer to both scheduled and non-scheduled commercial banks regulated under the Banking Regulation Act, 1949.

Generally banking in India is fairly mature in terms of supply, product range and reach-even though reach in rural India and to the poor still remains a challenge. The government has developed initiatives to address this through the State Bank of India expanding its branch network and through the National Bank for Agriculture and Rural Development (NBARD) with facilities like microfinance.

During the period of British rule merchants established the Union Bank of Calcutta in 1829, first as a private joint stock association, then partnership. Its proprietors were the owners of the earlier Commercial Bank and the Calcutta Bank, who by mutual consent created Union Bank to replace these two banks. In 1840 it established an agency at Singapore, and closed the one at Mirzapore that it had

opened in the previous year. Also in 1840 the Bank revealed that it had been the subject of a fraud by the bank's accountant. Union Bank was incorporated in

1845 but failed in 1848, having been insolvent for some time and having used new money from depositors to pay its dividends.

The Allahabad Bank, established in 1865 and still functioning today, is the oldest Joint Stock bank in India, it was not the first though. That honour belongs to the Bank of Upper India, which was established in 1863 and survived until 1913, when it failed, with some of its assets and liabilities being transferred to the Alliance Bank of Simla.

Foreign banks too started to appear, particularly in Calcutta, in the 1860s. The Comptoir d Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862; branches followed in Madras and Pondicherry, then a French possession. HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the British Empire, and so became a banking centre.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in 1894, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period of stability. Around five decades had elapsed since the Indian rebellion, and the social, industrial and other infrastructure had improved. Indians had established small banks, most of which served particular ethnic and religious communities.

The presidency banks dominated banking in India but there were also some exchange banks and a number of Indian joint stock banks. All these banks operated in different segments of the economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign trade. Indian joint stock banks were generally under capitalised and lacked the experience and maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it seems we are behind the times. We are like some old fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome compartments.

The period between 1906 and 1911 saw the establishment of banks inspired by the Swedish movement. The Swedish movement inspired local businessmen and political figures to found banks of and for the Indian community. A number of banks established then have survived to the present such as Catholic Syrian Bank, The South Indian Bank, Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank and Central Bank of India.

The fervour of Swadeshi movement led to the establishment of many private banks in Dakshina Kannada and Udupi district, which were unified earlier and known by the name South Canara (South Kanara)district. Four nationalised banks started in this district and also a leading private sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian Banking".

The partition of India in 1947 adversely impacted the economies of Punjab and West Bengal, paralysing banking activities for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted in greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included:

• The Reserve Bank of India, India's central banking authority, was established in April 1935, but was nationalised on 1 January 1949 under the terms of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948 (RBI, 2005b).

• In 1949, the Banking Regulation Act was enacted, which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India."

• The Banking Regulation Act also provided that no new bank or branch of an existing bank could be opened without a license from the RBI, and no two banks could have common directors. Nationalisation in the 1960s

Despite the provisions, control and regulations of the Reserve Bank of India, banks in India except the State Bank of India (SBI), remain owned and operated by private persons. By the 1960s, the Indian banking industry had become an important tool to facilitate the development of the Indian economy. At the same time, it had emerged as a large employer, and a debate had ensued about the nationalisation of the banking industry. Indira Gandhi, the then Prime Minister of India, expressed the intention of the Government of India in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization. The meeting received the paper with enthusiasm.

Thereafter, her move was swift and sudden. The Government of India issued an ordinance ('Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969') and nationalised the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquisition and Transfer of Undertaking) Bill, and it received the presidential approval on 9 August 1969.

A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the Government of India controlled around 91% of the banking business of India. Later on, in the year 1993, the government merged New Bank of India with Punjab National Bank.[21] It was the only merger between nationalised banks and resulted in the reduction of the number of nationalised banks from 20 to 19. Until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the average growth rate of the Indian economy.

Liberalisation in the 1990s

In the early 1990s, the then government embarked on a policy of liberalisation, licensing a small number of private banks. These came to be known as New Generation tech-savvy banks , and included Global Trust Bank (the first of such new generation banks to be set up), which later amalgamated with Oriental Bank of Commerce, UTI Bank (since renamed Axis Bank), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, revitalised the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been set up, with proposed relaxation of norms for foreign direct investment. All foreign investors in banks may be given voting rights that could exceed the present cap of 10% at present. It has gone up to 74% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4–6–4 method (borrow at 4%; lend at 6%; go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People demanded more from their banks and received more.

2.2 Company Profile THOMSON REUTERS

Logo : Industry : Mass Media Founded : 17 April 2008 Headquarters : 3 Times square, New York Chairman : David Thomson CEO : James .C .Smith Traded as : New York stock exchange (NYSE) Toronto stock exchange (TSE) Area Served : Worldwide (more than 100 countries) No .of employees : 60,000 Total Asset : US $ 28413 Million (Q3 2016) Total Revenue : US $ 11.2 Billion (2016)

THOMSON REUTERS

Thomson Reuters Corporation is a multinational mass media and information firm with operational headquarters at 3 Times Square in Manhattan, New York. Thomson Reuters operates in more than 100 countries and has more than 60,000 employees.

Thomson Reuters provides professionals with the intelligence, technology and human expertise they need to find trusted answers. Thomson Reuters enables professionals in the financial and risk, legal, tax and accounting, and media markets to make the decisions that matter most, all powered by the world’s most trusted news organization. Thomson Reuter’s shares are listed on the Toronto and New York stock exchanges.Thomson Reuter’s shares are listed on the Toronto and New York Stock Exchanges (symbol: TRI). Thomson Reuters provides professionals with the intelligence, technology and human expertise they need to find trusted answers. They enable professionals in the financial and risk, legal, tax and accounting, and media markets to make the decisions that matter most, all powered by the world's most trusted news organization.

HISTORY

The company was founded by Roy Thomson in 1934 in Ontario as the publisher of The Timmins Daily Press. In 1953 Thomson acquired the Scotsman newspaper and moved to Scotland the following year. He consolidated his media position in Scotland in 1957 when he won the franchise for Scottish Television. In 1959 he bought the Kemsley Group, a purchase that eventually gave him control of the Sunday Times. He separately acquired the times in 1967. He moved into the airline business in 1965, when he acquired Britannia Airways and into oil and gas exploration in 1971 when he participated in a consortium to exploit reserves in the North Sea. In the 1970s, following the death of Lord Thomson, the company withdrew from national newspapers and broadcast media, selling the Times, the Sunday Times and Scottish Television and instead moved into publishing, buying Sweet & Maxwell in 1988. The company at this time was known as the International Thomson Organisation Ltd (ITOL).

In 1989, ITOL merged with Thomson Newspapers, forming The Thomson Corporation. In 1996 The Thomson Corporation acquired West Publishing, a purveyor of legal research and solutions including Westlaw.

Reuters Directors and shareholders were determined to protect and preserve the Trust Principles established in 1941 when Reuters became a publicly traded company on the London Stock Exchange and Nasdaq. A unique structure was put in place to achieve this. A new company was formed and given the name 'Reuters Founders Share Company Limited', its purpose being to hold a 'Founders Share' in Reuters.

The Trust Principles were created in 1941, in the midst of World War II, in agreement with the Newspaper Publishers Association and the Reuters shareholders at the time. Thomson Reuters Corporation, incorporated on December 28, 1977. 12

OPERATIONS

The chief executive of the combined company is James C. Smith, who was the chief executive for the professional division, and the chairman is David Thomson, who was the chairman of Thomson.

The company is organized around eight divisions across financial, media, legal and science industries:

• Financial

• Risk Management Solutions

• Intellectual Property

• Legal

• Pharma & Life Sciences

• Reuters News Agency

• Tax & Accounting

• Scholarly & Scientific Research

Thomson Reuters competes with Bloomberg L.P., in aggregating financial and legal news.

MARKET POSITION

The Thomson-Reuters merger transaction was reviewed by the U.S. Department of Justice and by the European Commission. On February 19, 2008, both the Department of Justice and the Commission cleared the transaction subject to minor divestments. The Department of Justice required the parties to sell copies of the data contained in the following products: Thomson's World Scope, a global fundamentals product; Reuters Estimates, an earnings estimates product; and Reuters Aftermarket (Embargoed) Research Database, an analyst research distribution product. The proposed settlement further requires the licensing of related intellectual property, access to personnel, and transitional support to ensure that the buyer of each set of data can continue to update its database so as to continue to offer users a viable and competitive product. The European Commission imposed similar divestments: according to the Commission's press release, "the parties committed to divest the databases containing the content sets of such financial information products, together with relevant assets, personnel and customer base as appropriate to allow purchasers of the databases and assets to quickly establish themselves as a credible competitive force in the marketplace in competition with the merged entity, re-establishing the pre-merger rivalry in the respective fields."

These remedies were viewed as very minor given the scope of the transaction. According to the Financial Times, "the remedy proposed by the competition authorities will affect no more than $25m of the new Thomson Reuters group’s $13bn-plus combined revenues."

The transaction was cleared by the Canadian Competition Bureau.

In November 2009, The European Commission opened formal anti-trust proceedings against Thomson Reuters concerning a potential infringement of the EC Treaty's rules on abuse of a dominant market position (Article 82). The Commission investigated Thomson Reuters' practices in the area of real-time market data feeds, and in particular whether customers or competitors were prevented from translating Reuters Instrument Codes (RICs) to alternative identification codes of other data feed suppliers (so- called 'mapping') to the detriment of competition. In December 2012, the European Commission adopted a decision that renders legally binding the commitments offered by Thomson Reuters to create a new license ("ERL") allowing customers, for a monthly fee, to use Reuters Instrument Codes (RICs) in applications for data sourced from Thomson Reuters' real time consolidated data feed competitors to which they have moved

The answer company

Provides the intelligence, technology and human expertise you need to find trusted answers in:

• Financial. • Government Solution. • Legal. • Reuter’s news agency. • Risk Management Solution. • Tax Accounting.

Thomson Reuters enables professionals in the financial risk, legal, tax and accounting and media markets to make the decisions that matter most. Its powered by the world’s most trusted news organization. Thomson Reuter share trusted answers on global topics through channels such as sustainability.tr.com, and in 2015, our employees volunteered 116,000 hours of their expertise to organizations and cause across the globe.

As The Answer Company, we know that data on its own is not enough. Without insightful people and intuitive technology, data has no source and no direction. It's just noise.

Our boundary breaking solutions provide a unique view of the challenges modern professionals face.Our employees come from the very industries we specialize in. We are business analysts, lawyers, accountants, programmers, publishers and more.

Vision

Provides professionals with the intelligence, technology and human expertise they need to find trusted answers.

Mission

• Thomson Reuters’ corporate responsibility lies in sharing of skills and resources with the communities where they live work and do business. • Thomson Reuters believes in shared responsibility to do business in ways that respects, protects and benefits their customers, employees, communities and environment.

Values

These Values are based on their culture

Trust Partnership Innovation Performance

About Thomson Reuters Foundations

At the Thomson Reuters Foundation, use the skills, values and expertise of Thomson Reuters to run programs that trigger real change and empower people around the world. They stand for free independent journalism, human rights, women's empowerment, and the rule of law. They expose corruption worldwide and play a leading role in the global fight against human trafficking.

About Thomson Reuters trust principles

Thomson Reuters is dedicated to upholding the Trust Principles and to preserving its independence, integrity and freedom from bias in the gathering and dissemination of information and news .

The Trust Principles are:

1. That Thomson Reuters shall at no time pass into the hands of any one interest, group or factio:

2. That the integrity, independence and freedom from bias of Thomson Reuters shall at all times be fully preserved;

3. That Thomson Reuters shall supply unbiased and reliable news services to newspapers, news agencies, broadcasters and other media subscribers and to businesses governments, institutions, individuals and others with whom Thomson Reuters has or may have contracts;

4. That Thomson Reuters shall pay due regard to the many interests which it serves in addition to those of the media; and

5. That no effort shall be spared to expand, develop and adapt the news and other services and products so as to maintain its leading position in the international news and information business.

Thomson Reuters Founders Share Company was established in 1984 when Reuters became a public company. The Directors of Thomson Reuters Founders Share Company have a duty to ensure, to the extent possible, that the Trust Principles are complied with.

The Directors of Thomson Reuters Founders Share Company are experienced and eminent people from the world of politics, diplomacy, media, public service and business. The Directors are selected by a nomination committee and proposed to the board of Thomson Reuters Founders Share Company for appointment. The nomination committee also has unique features. Two of its members are judges from the European Court of Human Rights and assist in scrutinizing candidates' suitability. The Thomson Reuters board has two representatives on the committee and Thomson Reuters Founders Shars.

Company's board has five representatives, including its chairman. Other members are representatives of the press associations from the UK, Australia and New Zealand.

The number of Directors has to be at least 14 and not more than 18. Directors have a minimum of two meetings per year, and receive reports on our activities in the different fields in which we operate. The Directors meet with both the Thomson Reuters Board and representatives of senior management.

Through Thomson Reuters Founders Share Company's Chairman, regular contact is maintained with our company. The relationship is one of trust and confidence .

Segments of Thomson Reuters

Financial & risk The Company's financial business provides a range of offerings to financial markets professionals. The Company delivers global content sets, including fundamentals, estimates, and primary and secondary research. The Company also provides customers with tools, platforms, venues and services to enable decision-making.

Legal The Company's Legal segment is a provider of critical online and print information, know-how, decision tools, software and services. The business serves customers in law firms, corporate legal departments and governments, including federal, provincial, state and local government lawyers and judges, as well as investigators.

Tax Accounting The Tax & Accounting segment is a provider of integrated tax compliance and accounting information, software and services for professionals in accounting firms, corporations, law firms and government.

ACQUISITION

2009

• In July, Thomson Reuters acquired Stream logics. Founded in 1999, Stream logics is a provider of customizable, high volume, real time data mining solutions for hundreds of enterprises across several verticals including financial services, technology and health care/life sciences. Stream logics' webcasting solutions are used for training and certification, marketing and lead generation, and corporate communications.

• In August, it bought Vhayu Technologies. Vhayu is a provider of tick data services, and Thomson Reuters had been distributing its Velocity product under the Reuters Tick Capture Engine label for the four years prior to the acquisition.

• On September 21, 2009, Thomson Reuters bought Hugin Group, the European IR and PR distribution group, from NYSE Euro next. Terms have not been disclosed, but it has been reported in Danish newspapers that the price was between €40 million and €42m.

• In September, it also bought the Abacus software business from Deloitte, a provider of corporate taxation software for the U.K., Ireland, the Netherlands, New Zealand, and Hong Kong, as well as Indirect Tax Reporting software for 20 E.U. countries. Terms of the transaction were not disclosed.

• In October, Thomson Reuters acquired Breaking Views

• In November, The Tax & Accounting business acquired Sabrix, Inc, a global provider of transaction tax management software applications and related services.

2010

• In January, Thomson Reuters acquired Discovery Logic

• In February, Thomson Reuters acquired Aegisoft LLC to improve their electronic trading capabilities by offering direct market access.

• In May, it acquired Point Carbon A/S, a Norwegian company that provides news and trading analytics for the energy and environmental markets.

• In June, it acquired Complinet, a compliance software company.

• In October, it acquired Serengeti Law, a matter management and ebilling system.

• On November 22, it acquired the legal process outsourcing (LPO) provider Pangea3. Pangea3 serves corporate legal departments and law firms worldwide. Financial Terms of the deal were not disclosed.

• In November, it also acquired the banking data and analytic provider Highline Financial, and Gene Go, a supplier of systems biology databases, software and services.

• 2011

• On 20 June 2011, Thomson Reuters acquired CorpSmart from Deloitte.

• On July 18, 2011 Thomson Reuters acquired Manatron from Thoma Bravo.

• In August 2011, Thomson Reuters acquired GFMS.

• In December 2011, Thomson Reuters acquired Emochila, a website development firm in the tax and accounting space, in order to further integrate its CS suite of products onto a cloud-based platform.

2012

• In January 2012, Thomson Reuters acquired Dr Tax, Canada’s largest independently owned developer of income tax software for accounting firms and consumers.

• In February 2012, Thomson Reuters acquired Red Egg, a provider of media intelligence solutions for public relations and marketing professionals.

• On March 22, it acquired BizActions, a digital newsletter and Web marketing providers for accounting firms in North America

• On 8 June 2012, Thomson Reuters acquired Apsmart, a London-based company specializing in design and development of mobile solutions.

• On 25 June 2012, Thomson Reuters acquired Zawya Limited, a regional provider of business intelligence and unique tools for financial professionals in the Middle East and North Africa.

• On 10 July 2012, Thomson Reuters acquired FX Alliance Inc, an independent provider of electronic foreign exchange trading solutions to corporations and asset managers.

• In July, it also acquired Do fiscal

• On 26 July 2012, Thomson Reuters announced acquisition of Mark Monitor, a San Francisco- based company specializing in internet brand protection software and services.

2013

• On January 3, 2013, Thomson announced that it was to acquire Practical Law Company, the London-based provider of practical legal know-how and workflow tools to law firms and corporate law departments. Practical Law Company has more than 750 employees, with principal operations in London and New York, and will be part of the Legal business of Thomson Reuters.

• On 16 April 2013, Thomson Reuters acquired Select Tax Works Assets of Red Gear Technologies.

• On 6 June 2013, Thomson Reuters acquired Pricing Partners, a provider of OTC Derivatives Pricing Analytics and independent valuation.

• On 2 July 2013, Thomson Reuters acquired the foreign exchange options business of Trade web.

• On August 16, 2013, Thomson Reuters acquired the foreign exchange options risk management technology provider SigmaGenix.

• On August 18, 2013, Thomson Reuters acquired a majority stake in Omnesys Technologies and acquired completely the company on September 16, 2013

• In August, it also acquired We Comply.

• On September 10, 2013, Thomson Reuters acquired the CPE and CPA Division of Bisk Education Inc and Kortes.

• On October 23, 2013, Thomson Reuters acquired Entagen, acquiring the Cortellis family of products for drug pipeline, deals, patents, and company content.

• On December 10, 2013, Thomson Reuters acquired Avedas and expands its scholarly-research analytics solution.

2014

• In February, Thomson Reuters acquired Brazil's Domínio Sistemas, a company focused on developing accounting solutions.

• On July 1, 2014, Thomson Reuters acquired UBS Convertible Indices.

2015

• In January, Thomson Reuters acquired K'Origin.

• In September, Thomson Reuters acquired business-integrity.

• 2016

• In April, Thomson Reuters acquired Wm Reuters Foreign Exchange benchmarks from State Street Corporation.

SWOT Analysis

Strength

• One of the largest publishing company with 1.3 million square foot manufacturing • facility Provides quality printing services to businesses through skilled book printers and manufacturers • Best customer service for every client through ‘Manufacturing Client Services. • Hi-tech technology to meet the demands on time with a target of 24-hour cycle time and excellent distribution centre • Has a strong impact of global publishing services

Weakness

• More importance is given to real time, high-impact, multimedia news and information services to newspapers by parent company and lesser commercial printing • No own brands under publication • Being a prime news service, open to backlash and criticism

Opportunities

• Acquire other publications to enter story book publications • Operate locally to meet the demands of all the customers • Establish its own brands to increase its growth

Threats

• Increasing raw material costs and technological changes. • Improvement of local players in respective countries grabbing the opportunities. • Self-Cannibalization through its own advancement of media.

CHAPTER-3

THEORETICAL BACKGROUND OF THE STUDY

KPI measures

KPI analysis is a powerful and most used tool for analyse the performance of an industry. KPI (key performance indicator) measures means that a measurable value that demonstrates how effectively a company is achieving key business objectives. Organizations use KPIs at multiple levels to evaluate their success at reaching targets. Selecting the KPI measures will depend on industry and which part of the business you are looking to track. Each industry will use different KPI types to measure success based on specific business goals and targets. Once KPIs have been determined, management must continually refine the indicators to ensure they reinforce each other and do not cause conflicting priorities. In addition to being quantifiable, all KPIs should be well-defined and communicated to clearly. Each KPI should be part of the next higher-level summary, so that all levels of the organization are pulling in the same direction.

When developing KPIs, the business must ask three key questions, how can performance best be measured, what absolutely must be done right, and what data is most pertinent to decision support? The development of relevant KPIs isn’t enough, however. They must be implemented effectively, with the realization that measuring aspects of business operations alone is not enough to yield success. In many cases, the data related to KPIs should help guide discussion and strategic decision making rather than be considered as hard benchmarks of performance. KPIs for oil and gas industry, including financial measures such as exploration expenditure and maintenance capital expenditure measurements. The KPIs used vary based upon what each company has decided best drives their business forward. A local oil producing company will likely have different KPIs than a global oil producing 18 company. Several major oil and gas companies choose to publish their KPIs along with their business models and strategies in an online format open to the public. Sometimes these indicators are found within annual reports and while in other cases the KPIs can be found in a company’s description of what they do This Key performance indicator analysis helps to reduce large quantity of financial or performance data into meaningful terms.

The following key performance indicator analysis methods are used to analyse the banking sector companies.

1. NET INTEREST INCOME

Net interest income is the difference between revenues generated by interest –bearing assets and the cost servicing (interest-burdened) liabilities. In simple words, it’s the difference between interests earned on all types of loans and the interest expensed for the deposits accepted.

Net interest Income = interest earned on assets – interest expensed on liabilities

Collection Policy:

Net Interest Income estimate is usually found in income statement of contributor research reports. Collect the same under the billion units.

2. FEES & COMMISSION INCOME (FCI)

Apart from interest charged on the loans the major source of income for banks is the fees and commissions. Along with lending money, banks also provide various other services and most of these services are charged to the customers as fees. Similarly we see commission income also recorded by banks under non-interest income.

Collection Policy:

Fees & Commission will be found in income statement and shall be collected in billion. We need to collect “Fees and Commission income” only if it is part of non-interest or other income. If the source has only “Fees income” or “Commission income” but still matches with actual, we can collect in “Fees & commission income”. If a company derives income from only “Fees” or only “Commission” then we can collect it under “Fees & commission”, but if they give it as 2 separate line items, then it would be safe to leave the measure blank.

3. TRADING INCOME (TDI)

The dealer trading account profit is considered as the trading income

Collection Policy:

Trading Income can be usually found in Income statement. We need to collect estimates only if it is termed as “Trading income”, “Trading profit”, “Dealer trading profit” or “Trading account” “Net income from financial transactions/instruments”.

4. TOTAL INCOME (TIN )

Total Income of a bank is the interest earned plus other incomes before deducting interest expense. It is different from total revenue for banks because total revenue is adjusted for interest expense.

Total income = Interest Income + Non interest Income

Collection Policy:

These are usually found in income statement. These must be collected in billion. Brokers name them as “Total Income”. Collect them only when explicitly stated. Also, make sure that this value is before interest expenses.

5. TOTAL NON – INTEREST REVENUES (NIR)

Any source of revenue for a bank apart from interest income is accounted under the head

Noninterest revenue.

Collection Policy:

Non-interest revenue is usually found in the income statements. The other terms used for non-interest revenue is “Non-interest Income”, “Total non-interest income” or “ Total non-interest Revenue”.

If broker provides “Total fees income/revenue” and when summed up with Net Interest Income, returns Total revenue numbers, then collect it under NIR. Please go to Fees and Commission Income” to see the example of such particular case.

In particular cases we can collect “Other non – interest revenue” under NIR, however it has to be checked by adding up Net Interest Income and Other non – interest revenue. If the summed up value is equal to Total Revenue, then we can collect them under NIR, else do not collect.

6. NON – INTEREST EXPENSE (NIE)

This is the fixed operating costs that a financial institution must incur, such as anticipated bad debt provisions. Non – interest expenses can include employee salaries and benefits, equipment and property leases, taxes, loan loss provision and professional service fees. Companies will offset non – interest expenses by generating revenue through non – interest income.

Collection Policy:

These are usually found in the income statement. We should collect them in billions and positive value. Brokers name them as “Non – Interest expense”, “Total expenses under non – interest expenses”, “NIE”, “NI Expense” and “Non – interest Expenses”.

7. LOAN LOSS PROVISIONS (LLP)

Loan loss provision is an expense type of data which represents funds set aside by a bank to cover anticipated losses on loans.

Collection Policy:

Loan Loss Provision are operating expenses which can be found in income statement just after Net Interest Income. They are also known as “ Provision for Losses on Loans ” “ Impairment of loans and guarantees”,

“write downs on loans ” or “ Provision for credit loses ” and should be collected as aggregate numbers in billion. Please collect also “Credit Loss Expense” under LLP field, but only after ensuring that respective actual are equal. If actual from Thomson One and Research do not match-do not collect this measure under LLP field.

Loan Loss Provision should be collected both in positive and negative signs based on identifying it to be an expense – positive sign (usually it will be an expense) or a gain – negative sign (setting off previous period’s expenses).

Collect only when as provisions. Do not collect bad debt charge or impairments as they are not synonyms for LLP.

8. LOANS (LNS)

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically the money is paid back in regular instalments, or partial repayments; in an annuity, each instalment is the same amount.

Collection Policy:

Loans are usually found in the balance sheet. These should be collected in billions. We should collect only when research report contains “Total Loans”, “EOP Loans HFI” (held for investment), “EOP Loans”, “Customer Loans”, “Lending’s”, “Period end loans”, “Loans and leases”, “Portfolio loans and leases” and “Net loans ”. We should not collect not collect average numbers. Please find possible scenarios and collection policy for each of them: 26

• If broker provides 2 lines items “Customer loans” and “Loans to banks”- We do not collect any of them • If broker provides only one item named “Customer loans”- We should assume it to be their total loans and collect them. (Customer loans is a synonym for Loans only when “Customer Loans” is the only item given in the research document) • If broker provides only one item named “Loans to banks- We should not collect them • If there is no “Loans” given in research documents but broker gives “Advances” you can also collect them in LNS field. When both separate items like “Loans” and “Advances” are given, please collect “Loans”.

9. SECURITIES (SID)

A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:

• Debt securities (such as banknotes and debentures) • Equity securities, e.g., common stock • Derivative contracts, such as forwards, futures, option and swaps

Collection Policy:

Securities are usually found in the balance sheet in liabilities section very close to Total Deposit or Deposits. These should be collected in billions. Brokers name them as “ Securities in issue”, “Debt Securities in issue” . Do not collect “Investment Securities ” or any securities which are assets for the company.

10. EFFICIENCY RATIO (EFR)

Efficiency Ratio refers to a measure of a bank’s overhead as a percentage of its revenue. The efficiency ratio is the traditional measure for bank productivity. It is the cost required to generate each dollar of revenue. Costs include salaries, rent and other general and administrative expenses. Interest expenses are usually excluded because they are investing decisions, not operational decisions. Revenue includes interest income and fee income, though some banks exclude their provision for loan losses from revenue or add their tax equivalent net interest income to revenue when calculating the efficiency.

Bank Efficiency Ratio = Non- interest expense/Revenue*100

Collection Policy:

Efficiency ratio is found in the income statement or in margin/ratio tables. It should be collected in percentages. Brokers name them as “Efficiency ratio” , “Operating efficiency ratio”, “Cost/Income ratio ”, “ Cost/Income (%) ” and “ Cost to income ratio ”. We should be collecting values that are after DA, We should also collect EFR numbers which are pre-credit losses.

11. INTANGIBLE BOOK VALUE (IBV)

Intangible book value are defined as identifiable non – monetary assets that cannot be seen, touched or physically measured, which are created through time and/or effort and that are identifiable as a separate asset.

Collection policy:

These are usually found in balance sheet. These should be collected in billions. Brokers name them as “Intangibles”, “Intangible book value”, “Intangible BV”, and “BV(intangibles)”.

12. BILLED BUSINESS (BLB)

Billed business refers to the amount of charges on all the cards, also referred as spend or charge volume.

Collection policy: This is usually found in the key operating metrics table. This should be collected in millions. Brokers name them as “Billed business ” & “Cards billed business”. We should always collect total or consolidated value. Do not collect segment value.

13. NET INTEREST MARGIN (NIM) Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets. It is similar to the gross margin of non-financial companies. In simple terms, it is the difference between interest income and interest expenses, expressed as a percentage of average earning assets. Net interest margin = (Investment returns - interest expenses) / Average earning assets

Collection policy:

Net Interest margin should be collected if it is given in the research as Net Interest margin. It can be usually found in Profitability Analysis or Margin tables.

14. NON- PERFORMING ASSETS (NPA )

A Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or instalment of principal has remained „past due‟ for a specified period of time. Nonperforming assets may include loans and other items like short term & long term investments, while non-performing loans would be exclusive to loans only.

Collection policy: Non-Performing Assets are usually found under the ratio section of the income statement. These should be collected in Millions. Brokers name them as “NPA” and “Non-Performing Assets” . For all Indian market, it is observed that NPA (Non Performing Assets) and NPL (Non Performing Loan) is same hence we need to collect them only under NPA. Even if the broker tags them under NPL, it needs to be processed under NPA. This rule only applies for Indian market.

15. NON- PERFORMING LOANS (NPL) A Non-performing loan is a loan that is in default or close to being in default. Many loans become nonperforming after being in default for 3 months, but this can depend on the contract terms. A loan is non-performing when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full.

Collection policy: Non-Performing Loans (NPL) is usually found in balance sheet. These should be collected in millions. Brokers name them as “NPL” and “Non-performing loans” .

16. RISK- WEIGHTED ASSETS (RWA) Risk-weighted assets are a bank's assets or off-balance sheet exposures, weighted according to risk. This sort of asset calculation is used in determining the capital requirement or Capital Adequacy Ratio (CAR) for a financial institution.

Collection policy: Risk Weighted Assets (RWA) is usually found on the balance sheet. These values should be collected in millions. Brokers name them as “Risk-Weighted Assets” and “RWA” . Collect only total or end of period (EOP) figures, do not collect average numbers.

17. ASSETS UNDER MANAGEMENT (AUM)

Assets under management (AUM) is a financial term denoting the market value of all the funds being managed by a financial institution (a mutual fund, hedge fund, or brokerage house) on behalf of its clients, investors, depositors, etc. This metric is very popular within the financial industry and is a sign of size and success of any firm against its competition. The AUM metric is not constant; it changes along with the value of assets; plus investors may contribute new capital and receive distributions, also the firm charges management fee and share of profit.

Collection policy: AUM is usually found in the balance sheet of the broker‟s research report. This should be updated in millions. Terminologies used by the brokers may be: “AUM” and “Total Assets under management” . Please do not collect “Asset Management” values based on nominal account (taken from Income statement) as those could be revenues from Asset Management segment achieved by the company in particular periods. We should collect only “ AUM” based on real account same as Balance Sheet items (TAS, SHE etc.). Please check below examples for better understanding.

18. DISCOUNT FEES (DSF) This refers to function of mortgage interest rates. Discount fees on mortgages may or may not be beneficial to the borrower. Sometimes discount fees mean more income for the lender, but they can also mean a lower interest rate for the borrower. . Collection policy: These are usually found in the income statement. These must be collected in millions. Brokers name them as “Discount Fees”, “Disc. Fees” or “Discount revenue”.

CHAPTER-4

DATA ANALYSIS & INTERPRETATION

Table 4.1 showing the Net Income Interest of HSBC, Bank of America, JP Morgan (2015):

Banks Net Income Interest(billion)

HSBC 21.37

Bank of America 40.15

JP Morgan 43.51

Source: Annual Rep ort

Chart 4.1 showing the Net Income Interest of HSBC, Bank of America, JP Morgan

Net Income Interest

43.51 45 40.15 40 35 30 25 21.37 20 15 10 5 0 HSBC Bank of America JP Morgan

Source: Table 4.1

Interpretation:

The above t able reveals that HSBC have 21.37 billion of net in come interest, Bank of America has 40.15 billion Net Income Interest and JP Morgan have 43.51 Net Income Interest with respect to the financial year 2015.

32 Table 4.2 showing the Non-Interest Revenue of HSBC , Bank of America, JP Morgan (2015):

Banks Non-Interest Revenue (billion)

HSBC 26.48

Bank of America 42.26

JP Morgan 47.03

Source: Annual Report

Chart 4.2 showing the Non-Interest Revenue of HSBC, Bank of America, JP Morgan (2015):

Non-Interest Revenue (2015)

26.48 47.03

HSBC 42.26 Bank of America JP Morgan

Source: Table 4.2

Interpretation:

The above table reveals that HSBC have 26.48 billion of Non-Interest Revenue , Bank of America have 42.26 billion Non-Interest Revenue and JP Morgan have 47.03 Non – interest revenue with respect to the financial year 2015.

33 Table 4.3 showing the Fees and Commission of HSBC, Bank of America, JP Morgan (2015):

Banks Fees and Commission (billion)

HSBC 11.79

Bank of America 32.99

JP Morgan 44.03

Source: Annual Report

Chart 4.3 showing the Fees and Commission of HSBC, Bank of America, JP Morgan (2015):

Fees and Commission (2015) 44.37 45 40 32.99 35 30 25 20 15 11.79 10 5 0 HSBC Bank of America JP Morgan

Source: Table 4.3

Interpretation:

The above table reveals that HSBC have 11.79 billion of Fees and commission, Bank of America have 32.99 billion Fees and commission and JP Morgan have 44.03 Fees and commission with respect to the financial year 2015.

34 Table 4.4 showing the Trading Income of HSBC, Bank of America, JP Morgan (2015):

Banks Trading Income(billion)

HSBC 5.71

Bank of America 6.47

JP Morgan 4.79

Source: Annual Report

Figure 4.4 showing the Trading Income of HSBC, Bank of America, JP Morgan (2015):

Trading Income

4.79 5.71

HSBC Bank of America 6.47 JP Morgan

Sour ce: Table 4. 4

Interpretation:

The above table reveals that HSBC have 5.71 billion of Trading income, Bank of America have 6.47 billion Trading income and JP Morgan have 4.79. Tra ding income with respect to the financial year 2015.

Table 4.5 showing the Total Income of HSBC, Bank of America, JP Morgan (2015):

Banks Total Income(billion)

HSBC 8.85

Bank of America 15.59

JP Morgan 23.92

Chart 4.5 showing the Total Income of HSBC, Bank of America, JP Morgan (2015):

Total Income

8.85

23.92 HSBC 15.59 Bank of America JP Morgan

Source: Table 4. 5

Interpretation:

The above table reveals that HSBC have 5.71 billion of Total income , Bank of America have 6.47 billion Total income and JP Morg an have 4.79 Total income with respect to the financial year 2015.

36 Table 4.6 showing the Loan Loss Provision of HSBC, Bank of America, JP Morgan (2015):

Banks Loan Loss Provision (billion)

HSBC 2.35

Bank of America 3.60

JP Morgan 3.83

Source: Annual Report

.Chart 4.6 showing the Loan Loss Provision of HSBC, Bank of America, JP Morgan

Loan Loss Provision

3.83 4 3.6 3.5 3 2.35 2.5 2 1.5 1 0.5 0 HSBC Bank of America JP Morgan

Sour ce: Table 4. 6

Interpretation:

The above table reveals that HSBC have 2.35 billion of Loan loss provision , Bank of America have 3.60 billion Loan loss provision and JP Morgan have 3.83 Loan loss provision with respect to the financial year 2015

37 Table 4.7 showing the Non Interest Expense of HSBC, Bank of America, JP Morgan (2015):

Banks Non Interest Expense (billion)

HSBC 34.59

Bank of America 56.37

JP Morgan 55.99

Source: Annual Report

Chart 4.7 showing th e Non Interest Expense of HSBC, Bank of America, JP Morgan (2015):

Non -Interest Expense

34.59 55.99

HSBC

56.37 Bank of America JP Morgan

Source: Table 4. 7

Interpretation:

The above table reveals that HSBC ha ve 34.59 billion of Non-Interest expense, Bank of America have 56.37 billion Non-Interest expense and JP Morgan have 55.99 Non-Interest expense with respect to the financial year 2015.

38 Table 4.8 showing the Securities of HSBC, Bank of America, JP Morgan (2015):

Banks Securities(billion)

HSBC 1.43

Bank of America 0.78

JP Morgan 0.57

Source: Annual Report

Chart 4.8 showing the Securities of HSBC, Bank of America, JP Morgan (2015):

Securities

HSBC Bank of America JP Morgan

Source: Table 4. 8

Interpretation:

The above table reveals that HSBC have 1.43 billion of Securities , Bank of America have 0.78 billion Securities and JP Morgan have 0.57 Securities with respect to the financial year 2015.

Table 4.9 showing the Loan of HSBC, Bank of America, JP Morgan (2015):

Banks Loan(billion)

HSBC 35.3

Bank of America 32.67

JP Morgan 33.13

Source: Annual Report

Chart 4.9 showing the Loan of HSBC, Bank of America, JP Morgan (2015):

Loans

33.13 35.3

HSBC Bank of America 32.67 JP Morgan

Source: Table 4.9

Interpretation:

The above table reveals th at HSBC have 35.3 billion of Loans , Bank of America has 32.67 billion Loans and JP Morgan have 33.13 Loans with respect to the financial year 2015.

Table 4.10 showing the Efficiency ratio of HSBC, Bank of America, JP Morgan (2015):

Banks Efficiency ratio(billion)

HSBC 50.56

Bank of America 66

JP Morgan 67.5

Source: Annual Report

Chart 4.10 showing the Efficiency ratio of HSBC, Bank of America, JP Morgan (2015):

Efficiency Ratio

33.13 50.56

HSBC

32.67 Bank of America JP Morgan

Source: Table 4.1 0

Interpretation:

The above table reveals that HSBC have 50.56 billion of Efficiency ratio, Bank of America have 66 billion Efficiency ratio and JP Morgan have 67.5 Effici ency ratio with respect to the financial year 2015.

Ta ble 4.11 showing the Intangible Book Value of HSBC, Bank of America, JP Morgan (2015):

Banks Intangible Book Value (billion)

HSBC 40.8

Bank of America 44.4

JP Morgan 42.4

Source: Annual Report

Chart 4.11 showing the Intangible Book Value of HSBC, Bank of America, JP Morgan (2015):

JP Morgan, 42.4 HSBC, 40.8

HSBC Bank of Bank of America America, 44.4 JP Morgan

Source: Table 4. 11

Interpretation:

The above table reveals that HSBC have 40.8 billion of Intangible book value, Bank of America have 44.4 billion Intangible book value and JP Morgan have 42.4 Intangible book value with respect to the financial year 2015.

Table 4.12 showing the Net Interest Margin of HSBC, Bank of America, JP Morgan (2015):

Banks Net Interest Margin (billion)

HSBC 50.6

Bank of America 48.3

JP Morgan 52

Source: Annual Report

Chart 4.12 showing the Net Interest Margin of HSBC, Bank of America, JP Morgan (2015):

JP Morgan, 52 HSBC, 50.6

Bank of HSBC America, 48.3 Bank of America JP Morgan

Source: Table 4.12

Interpretation:

The above table reveals that HSBC have 50. 6 billion of Net interest margin, Bank of America have 48.3 billion Net interest margin and JP Morgan have 52 Net interest margin with respect to the financial year 2015.

Ta ble 4.13 showing the Billed Business of HSBC, Bank of America, JP Morgan (2 015):

Banks Billed Business (billion)

HSBC 58

Bank of America 57.4

JP Morgan 51

Source: Annual Report

Chart 4.13 showing the Billed Business of HSBC, Bank of America, JP Morgan (2015):

JP Morgan, 51 HSBC, 58

HSBC Bank of Bank of America America, 57.4 JP Morgan

Source: Table 4.1 3

Interpretation:

The above table reveals that HSBC have 58 billion of Billed business, Bank of America have 57.4 billion Billed business and JP M organ have 51 Billed business with respect to the financial year 2015.

44 Table 4.14 showing the Non- Performing Asset of HSBC, Bank of America, JP Morgan (2015):

Banks Non- Performing Asset (billion)

HSBC 61.5

Bank of America 63.6

JP Morgan 60.3

Source: Annual Report

Table 4.14 showing the Non- Performing Asset of HSBC, Bank of America, JP Morgan (2015):

JP Morgan, 60.3 HSBC, 61.5

HSBC

Bank of Bank of America America, 63.6 JP Morgan

So urce: Table 4.1 4

Interpretation:

The above table reveals that HSBC have 61.5 billion of Non - performing asset, Bank of America have 63.6 billion Non - performing asset and JP Morgan have 60.3 Non - performing asset with respect to the financial year 2015.

45 Table 4.15 showing the Non- Performing Loans of HSBC, Bank of America, JP Morgan (2015):

Banks Non- Performing Loans (billion)

HSBC 58

Bank of America 61

JP Morgan 54

Source: Annual Report

Chart 4.15 showing the Non- Performing Loans of HSBC, Ba nk of America, JP Morgan (2015)

62 61

60 58 58

56 54 54

50 HSBC Bank of America JP Morgan

Source: Table 4.15

Interpretation:

The above table reveals that HSBC have 58 billion of Non – performing loans, Bank of America have 61 billion Non – performing loans and JP Morgan have 54 Non – performing loans with respect to the financial year 2015.

46 Ta ble 4.16 showing the Risk Weighted Asset of HSBC, Bank of America, JP Morgan (2015):

Banks Risk Weighted Asset (billion)

HSBC 44

Bank of America 43.8

JP Morgan 47.8

Source: Annual Report

Chart 4.16 showing the Risk Weighted Asset of HSBC, Bank of America, JP Morgan (2015):

47.8 48

45 44 43.8 44

41 HSBC Bank of America JP Morgan

Source: Table 4.1 6

Interpretation:

The above table reveals that HSBC have 44 billion of Risk weighted asset, Bank of America have 43.8 billion Risk weighted asset and JP Morgan have 47.8 Ri sk weighted asset with respect to the financial year 2015.

47 Ta ble 4.17 showing the Discount Fees of HSBC, Bank of America, JP Morgan (2015):

Banks Discount Fees (billion)

HSBC 36.5

Bank of America 33.7

JP Morgan 39

Source: Annual Report

Chart 4.17 showing the Discount Fees of HSBC, Bank of America, JP Morgan (2015):

39 39

38 36.5 37

35 33.7 34

31 HSBC Bank of America JP Morgan

Source: Table 4. 17

Interpretation:

The above table reveals that HSBC have 36.5 billion of Discount fees, Bank of America have 33.7 billion Discount fees and JP Morgan have 39 Discount fees with respect to the financial year 2015.

48 Ta ble 4.18 showing the Assets under Management of HSBC , Bank of America, JP Morgan (2015):

Banks Assets under Management (billion)

HSBC 63

Bank of America 64.7

JP Morgan 68

Source: Annual Report

Chart 4.18 showing the Assets under Management of HSBC, Bank of America, JP Morgan (2015):

68 68

66 64.7 65

64 63 63

60 HSBC Bank of America JP Morgan

Source: Table 4.1 8

Interpretation:

The above table reveals that HSBC have 63 billion of Assets under management, Bank of America have 64.7 billion Assets under management and JP Morgan have 68 Assets under management with respect to the financial year 2015.

CHAPTER-5

FINDINGS, SUGGESTIONS & CONCLUSION

5.1 Findings

• J P Morgan has invested 43.51 billion rupees in Net income interest. • J P Morgan has invested 47.03 billion rupees in Noninterest revenue. • J P Morgan has invested 44.03 billion rupees in Fess and Commission. • Bank of America has invested 6.47 billion rupees in Trading Income. • J P Morgan has invested 23.92 billion rupees in Total income. • J P Morgan has invested 3.83 billion rupees in Loan Loss Provision. • Bank of America has invested 56.37 billion rupees in Noninterest expense. • HSBC has invested 1.43 billion rupees in Securities. • HSBC has invested 35.3 billion rupees in Loan. • J P Morgan has invested 67.5 billion rupees in Efficiency Ratio. • Bank of America has invested 44.4 billion rupees in Intangible book value. • J P Morgan has invested 52 billion rupees in Net interest margin. • HSBC has invested 58 billion rupees in Billed business. • Bank of America has invested 63.6 billion rupees in Nonperforming asset. • Bank of America has invested 61 billion rupees in Nonperforming Loans. • J P Morgan has invested 47.8 billion rupees in Risk weighted asset. • J P Morgan has invested 39 billion rupees in Discount fees. • J P Morgan has invested 68 billion rupees in Asset under management.

5.2 Suggestions

The study has reached several recommendations to be forwarded to the company, the recommendations are follows:

 Cash flow from operating activities, financing activities, and investing activities showing negative growth during the study period, it will effect dividend issuing, issuing or selling more stock, return on investment, and regular business activities. Therefore company should focus on cash flow from their operating activities.

 Current liabilities is more than current asset, it will make difficult for meeting their current obligations, therefore company focuses on either increasing current asset part or decreasing current liability portion.

 Upstream income of the showing huge decreasing under studying period, it indicate company earned very low income on their activities, therefore company should increase the income from their activities.

 The investment is showing decreasing trend over study period, it will effect total production and expenses and income from the activities. Therefore company should increase their throughput measure.

 Company profitability and efficiency decreases over study period, its due to improper usage of employees work in the company, company should efficiently use their employees and increase their return on capital employed.

 Company makes low return from their capital investment; it will effect cash flow activities from financing activities and return on invested capital. Company should invest their capital properly and make sure about it will not affect the profitability of the company.

5.3 Conclusion

The study on the subject conducted “Analyse the banking sector on the basis of KPI (key performance indicator) measures”. It was understood to be a great experience and learning for me to how to analyse a financial statements of a banking sector company and what are the key performance indicator used in banking sector. The tools used for analysis is exploration, extraction, refining, total production of oil and gas products and fund used for operating activities. Chapter 1 covered the main problem of the study, need for the study, and objectives of the study. Also indicate the importance of the study. Chapter 2 includes company and industry profiles. Chapter 3 described the analytical tools used for the KPI analysis of the banking Sector Company. Chapter 4 deals with analysis of the data of the banking Sector Company and interpretation of that and chapter 5 includes the findings, suggestions and conclusions of the study.

The study found that the oil production increases and gas production decreases the study period. Cash flow from operating activities, financing activities, and investing activities showing negative growth during the study period. Return on capital decreasing trend over study period it will impact efficiency and profitability of the company. And also company faces difficult get return on investment. In this study, it mainly focuses on key performance analysis of the banking Sector Company. These analyses help to easily find out the company performing well or not

BIBLIOGRAPHY

1. www.thomsonreuters.com

2. www.jpmorganchase.com

3. www.bankofamerica.com

4. www.hsbc.com