International Journal of Advanced Scientific Research and Management , Volume 4 Issue 6, June 2019
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ISSN 2455-6378
Financial Performance Analysis- A Comparative Study of Bank of Baroda and Axis Bank.
Anshuja Tiwari1 and Rakhi Tiwari2
1Department of Commerce Barkartullah University, Bhopal (M. P), India
2Research Scholar CRIM, Barkartullah University, Bhopal (M. P), India
Abstract Economic development of the nation is apparent Banking sector has now completely revolutionized through the soundness of the financial framework. in the contemporary scenario. Fast changes in Deregulation in the money related market, Indian economy has directly affected the Indian advertise advancement, financial changes have banking system for instance demonetization , a big seen significant changes in banking industry.Banks move in Indian economic history after 1991 are the predominant money related units in India reforms has now transformed banking operations and have gained great ground amid the worldwide on large scale. Expansion in financial services to its monetary emergency; it is clear from its yearly variety of customers is also one of the important credit development and benefit. The development factors of survival of the bank. In India, both public is conceivable in two different ways, natural or and private sector banks are now serving there inorganic. Organic development is likewise alluded customers with numerous banking services. This as inward development, happens when the has lead to increased competition among public and organization develops from its own business action private sector banks utilizing assets from one year to grow the The present study is committed to investigate the organization the next year. Such development is a financial performance of Axis Bank and Bank Of progressive procedure spread over a couple of Baroda by utilizing Ratio analysis technique so as years yet firms need to become quicker. Inorganic to give significant insights about the Financial development is alluded as outer development and competence of Banks in terms of Asset Quality, considered as a quicker method to develop which is ManagementEfficiency and Earning Ratios. The most favored Inorganic development happens when ratios are determined from the critical examination the organization develops by merger or securing of of Balance sheet and Profit and loss account of the another business. selected banks over a period of five years from Financial performance can not be judged from the 2013 to 2018. The study concluded that the Axis records and documents in any organisation. It must Bank ,a private sector banks is highly management be determined by strategic examination. The efficient compared to BOB while BOB is found to determination and utilization of strategy is liable to have better position in terms of its Asset quality the choice of the person. A portion of the and Earning Ratio. significant and ordinarily utilized strategies are: Ratio Analysis, Comparative balancesheet Key Words- Ratio analysis, Management examination, Time series etc The present Effeciency, Earning examination is dedicated to investigation of the Ratio,AssetQuality,PublicBank,Private Banks financial performance of Axis Bank and Bank Of Baroda ,A Public and private sector bank. by 1.Introduction utilizing Ratio analysis so as to give significant findings about thefinancial performance of the The financial sector is a standout amongst the most banks. significant instrument of the national improvement, possesses a vital position in a country's economy.
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International Journal of Advanced Scientific Research and Management , Volume 4 Issue 6, June 2019
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ISSN 2455-6378
Financial Ratios are utilized in the assessment of measures, human capital improvement, innovative the financial condition and benefit of an up-degree, auxiliary improvement which helped organization. The ratios are determined from the them for accomplishing widespread benchmarks in balance sheet and profit and loss account.Ratio terms of prudential standards and pre-prominent Analysis is one of the methods of financial practices. This paper looks to decide the effect of investigation where ratios are accustomed to different market and administrative activities on assessing the financial condition and execution of a effectiveness upgrades of Indian banks. firm. The use of ratios relies upon skilful Productivity of firm is estimated as far as its elucidation and insight of the researcher. relative execution that is, proficiency of a firm with respect to the efficiencies of firms in an example. 2.Review Of Literature Information Envelopment Analysis (DEA) has used to distinguish banks that are on the yield AbhayJais wal and Chanchala Jain (2016), A boondocks given the different contributions Comparative Study of Financial Performance of available to them. The present examination is kept SBI and ICICI, The examination is an endeavor to just to the Constant-Return-to-Scale (CRS) judge the financial performanceof SBI and ICICI suspicion of basic leadership units (DMUs). banks.. SBI has 14 Local Head Offices and 57 Variable comes back to scale (VRS) suspicion for Zonal Offices situated at significant urban assessing the proficiency was most certainly not communities all through the nation. ICICI bank is endeavored. It was found from the outcomes that the second biggest, driving bank of private division national banks, new private banks and foreign in India The Bank has 2,533 branches and 6,800 banks have indicated high proficiency over a period ATMs in India. The study is descriptive and time than residual banks. analytical in nature. The data is collected from different reports issued by these banks .The 3. Objective of the Study correlation of financial performance of these two banks was made based on Ratio Analysis. The outcomes of the studyshowed that the SBI is Tocompare the financial performance and performing great and finnacially stable than ICICI efficiency of the Bank Of Baroda and Bank. Additionally the market position of SBI is Axis Bank. superior to ICICI in wording to acquiring per share, To give suggestive measures to improve value proportion per offer and profit payout the financial performance of Bank Of proportion, however then again ICICI bank is Baroda and Axis Bank. performing great as far as NPA and arrangement for NPA in correlation of SBI bank. 4. Hypothesis Of the Study
Kumbirai, M. and Webb, R. (2010) has discussed H0 1=There is no significant difference in asset the financial performance of South Africa‟s quality of BOB and AXIS bank. commercial banking sector under the period of 2005- 2009. Different Financial ratios are used to H0 2=There is no significant difference in assessthe profitability, credit quality and liquidity Management efficiency ratio in terms of Interest performance of five large South African based commercialbanks. The study revealed that overall income to total asset of BOB and AXIS. bank performance has considerably increased in the first two years of the study period.WhileA H0 3=There is no significant difference in significant change in trend in financial performance earning ratio in terms of Non interest income to is noticed afterwards due to global financial crisis total asst of BOB and AXIS. in 2007, it has reached its maximum during2008- 2009. Thus resulted profitability falls ,lowliquidity 5. Research Methodology and deteriorating credit quality in the SouthAfrican Banking sector. The study is descriptive and analytical in nature .it is based on secondary data which is collected from Dwivedi and Charyulu (2011), One of the the annual reports of banks. The collected data is significant targets of Indian banking segment then analyzed over a five years period to determine changes was to support operational independence, the financial performance of both the banks. adaptability and rivalry in the framework and to expand the financial norms in India to the global Period of the study .the time period of the study is prescribed procedures. The second period of from the year 2013-14 to 2017-18. changes started in 1997 with mean to redesign
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International Journal of Advanced Scientific Research and Management , Volume 4 Issue 6, June 2019
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ISSN 2455-6378
Tools of analysis The collected data is analyzed Graph No.1 using t test statistic using SPSS software version 21 to compare the financial performance based on parameters of capital adequacy and management 10 BOB MEAN efficiency of bob and axis bank. 8 6 AXIS MEAN 4 2 Table No.1:Financial Comparison of Bank Of 0 SD MEAN Baroda and Axis bank BOB S.No. Parameters BOB AXIS 1 2 SD MEAN Asset quality AXIS 1 2018 6.67 4 2 2017 4.71 2 Interpretation 3 2016 4.96 1 4 2015 1.88 0 The Earning ratio of BOB has a mean score of 5 2014 1.51 0 0.7820 compared to 2.0340 of Axis Bank while the Earnings Ratio Asset Quality of BOB is found greater that 3.9460 Non Interest Income/Total Assets axis bank 1.40.the management efficiency ratio of 6 2018 0.92 1.80 bob is found to be 0.7820less compared to 2.03 of 7 2017 0.97 2.17 Axis bank. Similarly depending upon the mean 8 2016 0.74 1.99 score of banks the standard deviation of BOB in 9 2015 0.61 2.07 terms of Asset quality is 0.98068 compared to 10 2014 0.67 2.14 0.748 of Axis bank and the Management Efficiency Management efficiency Ratio Interest Income/Total Assets of BOB is 0.256 compared to Axis bank 11 2018 6.06 7.09 0.56309.while the Earning ratio of BOB 0.15675 12 2017 6.07 7.90 compared to 0.14809 of Axis bank 13 2016 6.56 8.29 14 2015 6.00 8.37 15 2014 5.90 8.46 Source-Annual reports of Banks Hypothesis Testing
Table No.2:Comparative Financial Performance H0 1=There is no significant difference in asset of Bank Of Baroda and Axis bank quality of BOB and AXIS bank
Table No.3: Statistical Analysis asset quality Ratio Ratios BOB AXIS BOB AXIS S.No. BOB-AXIS BANK Mean Mean S.D S.D 1 Mean 2.54 2 Std. Deviation .94 Asset quality 3.94 1.40 0.98 0.74 3 Std. Error Mean .42 Ratio 4 95% Lower 1.37486 Confidence Interval of the Upper 3.71714 Difference Management 6.11 8.02 0.25 0.56 5 t 6.036 efficiency 6 Df 4 7 Sig. (2-tailed) .004 Ratio Source-SPSS Analysis Earning 0.78 2.03 0.15 0.14
Ratio
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International Journal of Advanced Scientific Research and Management , Volume 4 Issue 6, June 2019
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ISSN 2455-6378
Interpretation Interpretation
From the above table and graph the calculated From the above table and graph the calculated value of t is 6.036 at 4 degree of freedom. The p value of t is -7.078 at 4 degree of freedom. The p value is found to be 0.004 less than the 0.05 level value is found to be 0.002 less than the 0.05 level of significance therefore the null hypothesis is of significance therefore the null hypothesis is rejected. rejected.
H0 2=There is no significant difference in Table No.6 Result Summary Hypothesis Testing Earnings ratio in terms of Non interest income to Total asset of BOB and AXIS bank Hypothesis Summary
Table No.4: Statistical Analysis Earnings ratio H0 1=There is no significant Rejection difference in asset quality of BOB S.N.O BOB-AXIS BANK and AXIS bank 1 Mean -1.25 H0 2=There is no significant Rejection 2 Std. Deviation 0.24 difference in Earning ratio in 3 Std. Error Mean 0.107 terms of Non Interest Income to Total Asset of BOB and AXIS 4 95% Confidence Lower -1.55 bank. Interval of the Upper -.95 Rejection Difference H0 3=There is no significant 5 t -11.62 difference in Management Efficiency ratio in terms of Interest 6 Df 4 Income to Total Asset of BOB and 7 Sig. (2-tailed) 0.00 AXIS bank. Source-SPSS Analysis
Interpretation 6. Suggestions
From the above table and graph the calculated Asset quality is a standout amongst the most basic value of t is -11.628 at 4 degree of freedom. The p zones in determining the financial state of a bank. value is found to be 0.000 less than the 0.05 level The essential factor influencing Asset quality is the of significance therefore the null hypothesis is nature of the credit portfolio and the credit rejected. organization program. Advances regularly involve H0 3=There is no significant difference in a dominant part of a bank's benefits and convey the Management efficiency ratio in terms of Interest income to total asset of BOB and AXIS bank. best measure of hazard to their capital. Securities may likewise involve a substantial segment of the Table No.5: Statistical Analysis Management benefits and furthermore contain huge dangers. efficiency ratio Other things which can affect resource quality are other land, different resources, reeling sheet things S.No. BOB-AXIS BANK and, to a lesser degree, 1 Mean -1.90 2 Std. Deviation 0.60 money and due from records, and premises and 3 Std. Error Mean 0.26 fixed resource. To overcome the problems of 4 95% Confidence Lower -2.65 stressed assets there is a strong need to enhance Interval of the Upper -1.15 credit and venture portfolios system in terms of Difference sufficiency of credit and venture arrangements, 5 t - techniques, and practices and the capacity of the 7.078 board to legitimately control its resources, 6 Df 4 including the auspicious distinguishing proof and 7 Sig. (2-tailed) 0.002 accumulation of issue resources. The Management Source-SPSS Analysis efficiency and earnings of the bank can be increased by extensive training and retraining to its employees and motivation. Need of sound
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International Journal of Advanced Scientific Research and Management , Volume 4 Issue 6, June 2019
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ISSN 2455-6378
customer retention policies and effective grievance References redressal mechanism. [1] Dwivedi.K.A and D..Charyulu.K.D 7. Conclusion “Efficiency of Indian Banking Industry in Through the above analysis it is concluded that the Post-Reform Era”, Indian Institute of banking environment is changing drastically in Management, Ahmedabad, W.P. No. India .it has given raised to increased competition 2011.. among public and private sector banks. Mere [2] Jaiswal.A and C. Jain,A Comparative financial performance can not help the bank to Study of Financial Performance of SBI survive in this cut throat competition. Fast and ICICI Banks in India. International consolidation in banking sector has presented vast Journal of Scientific Research in changes in functioning of the banks.thus both Computer Science and Engineering, 4(3), banks the public and the private sector bank are not 1-6.2016. antagonist but are supplement to each other for the [3] M. Kumbirai, R. Webb, A Financial Ratio nations overall development. Analysis of Commercial Bank Performance in South Africa, African Review of Economics and Finance, Vol.2(1), ,30-53,2010.
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