A commercial Bank is a financial institution which runs purely for the benefit of the people. It is a business venture working for providing services to boost up the economy of a nation. Bank plays a vital role by playing the role of an intermediary between the saver group and the investing group of the economy. The saver group deposits their earnings and savings in commercial banks for the purpose of getting back their savings with interest as and when they require. The bank accepts deposits from the public for the purpose of lending or investment in the industry or trade and thereby boosting up the nation’s economy. Since the banker is carrying his business with other people’s money, he cannot be reckless in investing his funds. So the bank has to build up its resources in such a way that it will have adequate income to pay interest at the prescribed rates to different kind of depositors, meet establishment expenses, build reserves, pay dividend to the shareholders etc. Further the banker cannot be free in deciding the manner in which the funds are to be deployed. The legal requirements, directions issued by RBI and other social obligations consistent with the national objectives are very relevant to the operations of a bank. So in order to obtain the goals of the bank, their financial resource must be utilised affectively. Financial analysis is necessary to understand the financial performance. Financial statements are prepared to depict financial position of a concern. For the present study Punjab National Bank (PNB) has been selected. The reason for selecting PNB is that it is the leading Nationalised Bank in India after SBI. It became the first Nationalised Bank to book Rs. 1000 crore as net profit in single quarter of Oct-Dec 2008. The bank achieved 100% Core Banking Solution (CBS) even by the year 2008.
Objectives of the Study
The study aims to:
Examine earning capacity,
Determine short term and long term solvency of the concern,
Determine the profitability of the concern and
Examine the future prospect of the concern.
Scope of the Study
The present project’s scopes are
Studies about the liquidity position of the bank,
Studies about the financial position of the bank,
Provides detailed financial ratios for the past five years and Provides the current trend of growth of the bank.
Secondary data have been used in this study. The analysis is done on the basis of the information collected from annual report of PNB and from some websites. The study is carried out on the basis of the data for the period 2005 to 2009. On the data collected, following parameters have been used for the study.
Measurement of Financial Analysis on the basis of Ratio Analysis Ratio analysis is a technique of analysis and interpretation of financial statement. It is a process of establishing and interpreting various ratios for helping to make certain decision. However, ratio analysis is only a means of better understanding of financial strength and weakness of firm.
Steps to Be Considered While Calculating Ratio Analysis
1) Selection of the relevant data from the financial statement depending upon the objectives of the analysis.
2) Calculation of appropriate ratio from the above data.
3) Comparison of calculated ratio with ratios of the same firm in the past years and with the standard ratio.
4) Interpretation of calculated ratio.
The following types of ratio analysis are used to measure the financial performance of Punjab National Bank.
Pay-out Ratio and
Limitations of the Study
The important limitations are as follows:
The limited time period that was available for this study is its major limitation. Analysis may include personal judgment.
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