and - kpmg · flection point for the industry—creating a more vibrant financial services industry...

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THE RESERVE BANK OF INDIA’S (RBI) ROADMAP

for the presence of foreign banks in Indiacould, if actually implemented, herald asignificant change in the competitivedynamics of Indian banking. The proposedroadmap envisages two distinct phases of

change. The first phase, for which concrete detailsare awaited, allows foreign banks to establish a presencein India through the wholly owned subsidiary route andalso opens up the market for acquisitions of weakbanks that RBI deems appropriate for consolidation. Thesecond and more encompassing phase is slated to begin,at the earliest, from April 2009, when foreign banksmay be permitted to acquire controlling stakes in pri-vately owned Indian banks—what could be called theprecursor to open markets.

This discussion emphasises that, irrespective ofopen markets actually fructifying, local participants—both public and private sector banks, need to act witha sense of urgency—a sense of urgency that will drivethem to look more actively at both organic and inorganicmeans to grow their businesses in an efficient manner. Thepossibility of open markets in 2009 should act as a cat-alyst to encourage local banks to shape up. For the foreignbank, of course, open markets imply a completely new

avenue of inorganic growth and it thereby assumesgreater significance. This discussion focusses on thestrategic process that banks need to adopt to prepare forthe changing competitive dynamics in the years ahead—irrespective of when and whether markets actually open up.

A catalyst and a possible inflection point?On the face of it, the road map appears to deal with,what is now a very small component of the Indianbanking industry—foreign banks. However, the impactthat this possible opening up could have on the entirebanking landscape is significant. Should the regulatorpermit and should industry participants, particularlypublic and private sector banks, choose to make the bestof the time they have, 2009 could turn out to be an in-flection point for the industry—creating a more vibrantfinancial services industry that in turn has a down-stream effect on the Indian economy. Open markets2009 impacts the industry on two fronts:■ External - Consolidation: Changes in the landscapedue to mergers & acquisitions being undertaken acrossthe industry; and■ Internal - Markets and efficiencies: Shaping up ofbanks, internally with respect to target markets &customers, business models and operations.

OPEN MARKETS 2009OPPORTUNITIES

ANDCHALLENGES

The possibility of the opening up of the Indian banking in 2009should act as a catalyst for action, ushering in a

transformational phase of organic and inorganic growthRUSSELL PARERA AND ANAND GIRIDHAR

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An important point to remember is that for majorityof the participants, the private and public sector banks,the above does not need Open Markets 2009 tohappen. However, just the possibility of marketsopening up, would act as a catalyst for these participantsto evaluate their strategies and build the requiredcapabilities. The preparation that is done by eachplayer—public, private or foreign, prior to this point aswell as competitive dynamics that follow will drivethe growth of the industry and also determine thesuccess of individual players over the longer term.

The driversIt is important to note that the proposed opening up

of markets in 2009 would be undertaken by RBI, posta host of considerations that include the experience inthe first phase upto 2009. It would therefore, beimportant to assess if it would be realistic to expectthat reforms would actually be undertaken. Let’slook at it quite simply from what can be termed as,the ‘demand and supply’ for a change in thecompetitive landscape:■ Supply perspective: What considerations drive theregulator? Are there any sufficient reasons for theregulator to consider opening up the market?■ Demand perspective: Are there compelling reasonsfor global/foreign banks to look aggressively at theIndian market?

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Supply side driversLet’s first take a look at the supply perspective—whatregulatory drivers could initiate an opening up ofmarkets? Here we look only at a few of the drivers thatwould influence the opening up of markets. Thereare drivers that would also deter/hinder the opening ofmarkets, but that is not the focus of this discussion. Theenabling supply side drivers include:■ Minimising systemic risk: A healthy and robustfinancial system with adequate capital to supportgrowth and manage risk. For instance, the regulator iskeen for all banks to have a capital base of Rs 300 croregoing forward and many old private sector banksdon’t meet these requirements. Implication for open markets: A requirement of capitalfor both risk and growth that can also come fromforeign investments into the sector.■ Increasing banking penetration: Increasing thepenetration of banking products and services ingeographies and customer segments that are under-penetrated. India may have more than 90 scheduledcommercial banks with nearly 70,000 branches, but thisdoes not indicate the penetration of banking services.As per some estimates, with just around 250 millionaccounts for more than a billion people, withoutfactoring multiple accounts with a single individual, thebanking sector is clearly under-penetrated. There is aneed to bring more people and businesses under theorganised financing umbrella. Implication for open markets: A need for increasedcompetition and larger banks that have the capital toinvest, scale up and expand operations. Also, thepresence of foreign banks would indirectly drive localbanks to look at expansion and entrenchment in thosegeographies that foreign banks would not be easily ableto reach out to in the years prior to open markets. ■ Sophistication of the banking industry: Increasedsophistication of products and services and the

incorporation of good practices. If India or its financialhub Mumbai is to emerge as a regional financial centre,it must be well integrated with global financial marketsand its participants should incorporate world-classprocesses and capabilities.Implication for open markets: The presence of welldeveloped foreign banks would definitely drive theintroduction of world class practices and capabilities thatthey would bring to the industry. Their influence on theindustry in this context is at present very small due tothe limited reach that they currently have in India.

Additionally, the above are only internal drivers—there are external drivers such as increased integrationwith global financial markets as well as internationalpressure for the same.

Demand side driversTo understand demand side drivers, let us look at theexample of China. Just five years back, China’s bankswere not considered in good fiscal shape, withsignificant non performing loans and being hamperedby bureaucracy. However, the situation from anattractiveness point of view has turned on its head.Investments last year, in Chinese banks by globalfinancial services players have been rather significant—Global banks and investors that include players such asBank of America, Citigroup, Temasek, HSBC, GoldmanSachs and American Express have invested an aggregateof $15-20 billion into Chinese financial institutions. Theimportant point to note is that even these significantinvestments do not provide these foreign banks withcontrol. With stakes of just ~ 5-10 per cent and limitedboard presence, these investors have little say in mattersof strategy or structure.

Compare this with the potential that the Indianmarket has to offer. The Indian financial system is inmuch more robust shape than the Chinese. It may besignificantly smaller in size but the retail market isstill significant compared to other countries. The returnsin the Indian market are also considered more attractivethan those in the Chinese market. More importantly,foreign banks will be able to own 74 per cent of a localbank—providing them with the required managementcontrol to steer strategy. India may not be as big a mar-ket as China but the potential avenues for growth,better returns as well as strategic control would makeIndia a very attractive market when it opens up.

The pointers towards the direction the industry islikely to gravitate over a period of time are clear.There may be a question mark on the timeframe for theopening up of the market, but not on its eventuality.

An opportunityThe connotations of open markets for each of the


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banking groups (public sector, private sector and foreignbanks), is quite different. Even within a banking group,views differ depending on the financial and marketposition that the particular bank finds itself in. Forexample, within the public sector group, some bankscould view this as an opportunity to put as muchground between themselves and foreign banks. Othersmay view this with apprehension as they would bevulnerable takeover targets. Some others even see thisas a chance to grow inorganically through alliances/mergers. To the foreign banks, of course, this would bean opportunity to establish a significant foothold in theIndian market—a means to get instant access togeographies and customers through acquisitions.

All banks, particularly public and private sectorbanks have a choice before them—use the time framebefore open markets to prepare for the coming changeor remain unprepared and vulnerable to the changesahead. For banks that make the most of the next threeyears in building capabilities and reshaping themselvesboth organically and inorganically (feasible in the case

of private and public sector banks), 2009 could be aninflection point that will see them in a much strongerposition in a possibly changed world. For banks that failto make use of this opportunity and progress in areactive manner, 2009 onwards could see a weakeningof their relative competitiveness. What each bankmakes of this opportunity depends on how they view2009 and prepare for the run-up to open markets.

Strategies for a changing worldThe question then is, how should banks preparefor change? The strategy each player should adoptwould depend on the unique positioning that theplayer finds itself in. What is needed is for eachplayer to adopt a structured approach towards assessing the implications of changes in the landscapeand preparing for what may lie ahead.

The first step would be for each participant in theindustry to assess its position along specific dimensions.There are five key dimensions that banks should care-fully assess themselves on.These dimensions include:

Markets■ Positioning with respect to the products and serviceswithin its portfolio; its target segments; penetration andreach in terms of geography.■ For example, with a strong retail presence andsignificant reach through branches in smaller towns andcities, large public sector banks are likely to beconcerned with protecting their competitive advantageand cementing relationships with the customer segmentin this geography. These markets may prove to be thenext frontier of growth as reach acquires importanceand penetration in tier 2 and 3 towns increases. On theother hand, with restrictions on their ability to ex-pand, foreign banks may focus on strategies to increase

Banking Buzz: As competition intensifies, players will have to carefully weigh their strategies

their penetration in areas they are already present—other parts of the portfolio can be grown throughacquisitions in 2009.

Capability■ To be effectively executed, strategy must be supportedby internal capabilities that include technology, efficientprocesses, enabling structure and capable humanresources. Banks would need to assess their positioningon these internal capabilities as they drive operationalefficiencies that determine their competitiveness inthe marketplace.■ For example, public sector banks and old privatesector banks are likely to be focussed on ensuring thatappropriate processes are in place—supportinginnovation in product structuring and efficiency indelivery. Foreign banks would need to ensure thatthey are well integrated with their global operations—best practices and processes need to be in place andimbibed internally before they expand their operationsthrough acquisitions.

Fiscal■ It would be important to assess the fiscal health thebank is currently in—Is there adequate capital from aregulatory perspective? Are there profitability concerns?Is there adequate capital for growth?■ While weak public and private sector banks wouldneed to assess the availability of adequate capital fromrisk and regulatory requirements, the strong private sec-tor banks would be concerned about infusion of capi-tal to support aggressive growth plans.

Strategic■ Strategic aspirations of the bank are also an importantdimension—ultimately growth has to be linked to riskappetite of the bank. For instance, some foreign banksmay not have the risk appetite to look at expandinginorganically into less penetrated geographies.

Competition■ The above four dimensions are internal to a bank.However, in a situation where consolidation rules,competitive dynamics can change, quite literally, witha signature on the dotted line. Competitive movementscan set back all the planning done, if strategies by keycompetitors are not factored in.

Assessing one’s position on these dimensions willenable a bank to understand its relative competitiveness.The choice then some banks would need to make is—do they aggressively grow the business through organicmeans and inorganic acquisitions or do they merge withlarger players for survival—predator or prey?

Complementary strategies & resource allocationNext would be to understand where the bank wishes toposition itself in the future. This would involvearticulating the desired vision in terms of growth,customer segments, products & services and relativemarket share.

However, as mentioned earlier, the 2009 scenarioadds a new perspective that would drive vision—bankswould also need to consider the impact of potentialcompetitive movements. For instance, the strategicaspiration of a private sector bank to grow its marketshare could be significantly impacted by the merger ofa key private sector competitor with a public sectorbank. The merger would enable its key competitorto leverage its technology platform to reach out tothe larger umbrella of customers of the public sectorbank. Similarly, alliances with players operating inother financial services spaces, such as insurance andasset management, would give competitive advantagesin terms of product portfolio as well as distributionefficiencies to competitors.

The question that the bank in question would needto ask is whether the competitor’s action couldsignificantly impact them and would they prefer to act


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faster? Strategies may therefore in-volve targeting markets that are difficultto penetrate for other bank groups ortaking pre-emptive action in existingmarkets that may be targeted by newentrants. An example of the former isthat of public sector banks tying upwith micro finance institutions as wellas expanding their presence in smallertowns. An example of the latter isState Bank of India’s (SBI) advertisingcampaign that seeks to educate Indianconsumers on the products and servicesoffered by the bank. The communica-tion attempts to emphasise SBI’sinnovativeness and service quality—areas that are normally considered tobe the characteristics of private sec-tor and foreign banks.

The desired positioning that theplayer wishes to reach over, say, the next five years,would then need to be translated into a strategic ac-tion plan. However, given the potential for consoli-dation in 2009, this plan would need to have twocomponents—organic and inorganic, both of whichneed to be complementary to each other. This meansthat each plan should focus on building those capa-bilities and strengths that the other cannot facilitate.

An inorganic strategic plan would only be actionablefor foreign banks post 2009, when such activitieswould be feasible. However, public and private sectorbanks can and should look towards complimentaryinorganic strategies from day one. Irrespective of openmarkets actually fructifying in 2009, they would needto add an inorganic dimension to their strategies—actively looking at mergers and acquisitions that buildcapabilities, grow business and increase shareholdervalue. Failure to incorporate this component of strategywould only mean a rude shock when markets open upand competitive dynamics change. For the public andprivate sector banks, the interim period is a goldenopportunity to move a step ahead in the race.

In the three years to the run-up to 2009, for for-eign banks, it would be the organic strategy thatwould set the foundations for growth. The bank’sexisting organic strategy would need to focus oncomplementary assets and capabilities, keeping inmind that the rest of the portfolio could possibly becompleted through acquisitions. A distinct advantageof such an approach is that management attentionand economic resources are invested in focussed areas such as specific target segments or internal capabilities. However the most evident disadvantageis the uncertainty associated—the opening up of the

sector, the nature of players availablefor alliances and willingness of play-ers to consolidate. Having said that,given that resources are alwaysscarce, it would be better for foreignbanks to adopt the combination of a two-phased organic and inorganicstrategy.

In conclusionOpen markets should not be per-ceived as just an opportunity for for-eign players to acquire Indian banks.The inevitability of an inorganiccomponent of strategy would need tobe accepted by public sector and pri-vate sector players. Today each of thebanking groups—new private, oldprivate, public and foreign—has acertain profile, which in turn causes

distinctions between the groups. Over the longterm, as markets open up and cross investmentsand mergers are undertaken, these distinctionsbetween banking groups would blur. Open mar-kets 2009 is an opportunity for all players to shapeup and prepare for the growth that is likely to comefrom increased competition. It is important to notethat this actually does not need 2009 to occur—however, irrespective of when markets open up,2009 will only act as a catalyst to drive home the ur-gency to achieve scale and efficiencies.

The bank that makes the most of the next threeyears and is best prepared for the changed landscapethat could emerge five years hence would emergeon top. Hopefully, open markets 2009 will be thecatalyst for action—bringing in a transformationalphase, with players shaping up to make the most ofgrowth to come. ■

Russell Parera is Head, Financial Services and Anand Giridhar is aManager, Advisory Services with KPMG in India. The views expressedin the article are the personal views of the authors and do not reflectthe views of KPMG.


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Open markets should not be

perceived as just an opportunity for foreign players

to acquire Indian banks

* The 2004 rankings were published in the issue of BT dated January 2, 2005 N.R.: Not Ranked in 2004 ▼See How We Ranked The Banks❑ Asset-Liability Management ◆ Non-Performing Assets Deposits, Average Working Funds, Net Profits, Business/Branch, Operating Figures in bold in each cell are inter se ranks Profit/Employee and Operating Profit/Branch are in Rs crore

TheBestBanks2005SIZE AND STRENGTH OPERATIONS PRODUCTIVITY & EFFICIENCY QUALITY OF EARNINGS CAPITAL ADEQUACY QUALITY OF ASSETS

RANKS BANK Deposits Average Net Growth Growth Growth In Net Cost Of Avg. Fee Income/ ALM❑❑ Business/ Operating Operating Operating Cost To Return Interest Operating Return Capital Tier 1 NPA◆◆ / NPA Loan TOTALWorking Profit In PAT In Share of Interest Interest Total Income Score Branch Profit/ Profit/ Expenses/ Income On Captital Spread/ Profits/ on Average Adequacy Capital Net Growth Loss SCORE▼▼2005 2004*Funds (%) Business Total Income/ Bearing (%) Employee Branch Total Ratio Employed AWF AWF Assets Ratio (%) (%) Advances Rate Cover (%)

(%) Deposits (%) AWF (%) Funds (%) Assets (%) (%) (%) (%) (%) (%) (%) (%)

1 1 HDFC Bank 36,354 44,335 666 31 30 3 4.00 3.60 16.70 5 136.68 0.15 3.01 2.30 44.70 18 3.20 3.00 1.40 12.16 9.6 0.20 1.50 86.20 4,96914 13 8 5 7 12 6 4 9 1 11 8 9 30 15 20 14 11 9 26 15 3 14 4

2 7 HSBC 17,013 23,570 337 71 14 -11 4.20 3.30 21.70 2.5 757.96 0.25 24.23 2.60 42.50 11 3.50 4.00 1.30 14.03 11.38 0.50 2.20 84.50 4,57330 27 21 4 37 49 5 3 4 19 3 2 2 44 10 38 9 1 20 14 8 7 31 6

3 3 ABN AMRO 7,077 13,003 195 0 38 6 4.40 3.20 26.80 2.5 826.74 0.23 23.27 4.40 56.20 16 3.80 3.40 1.50 10.55 7.89 0.40 0.70 84.80 4,55441 38 31 23 3 6 3 2 2 19 2 3 3 58 39 27 5 5 7 48 25 5 3 5

4 6 Corporation Bank 27,233 30,444 402 -20 23 -1 3.70 4.30 10.80 2.5 58.51 0.1 1.36 2.00 37.60 14 2.40 3.50 1.30 16.23 13.55 1.10 1.40 65.10 4,51420 18 16 32 19 20 19 9 23 19 17 10 12 15 3 32 30 3 18 4 5 15 11 21

5 15 Andhra Bank 27,551 28,718 520 12 26 2 3.70 4.60 10.90 2.5 38.52 0.08 0.85 2.80 45.50 32 3.10 3.50 1.70 12.11 8.03 0.30 1.20 88.20 4,49719 23 13 14 13 16 18 17 22 19 40 14 25 49 17 2 15 4 3 28 23 4 5 2

6 2 Citibank NA 21,484 30,129 600 5 12 -10 4.80 2.90 21.00 2.5 1,071.68 0.42 33.47 3.90 51.10 20 3.90 3.90 1.90 10.78 8.6 1.00 0.90 51.00 4,46227 20 11 18 48 47 1 1 5 19 1 1 1 57 30 14 3 2 2 46 20 13 4 38

7 21 Punjab National Bank 103,167 106,302 1,410 27 20 -1 3.80 4.60 11.50 5 39.94 0.05 0.67 2.60 52.40 21 3.70 2.50 1.20 14.78 8.87 0.20 1.50 84.20 4,4092 3 3 6 24 21 14 16 19 1 38 36 35 41 34 11 6 27 21 9 17 2 17 7

8 9 Standard Chartered 22,522 34,801 602 1 18 -4 4.00 4.00 14.40 2.5 495.69 0.2 12.88 2.40 44.10 20 4.00 3.10 1.70 10.46 7.1 1.10 1.90 34.70 4,33225 16 10 21 28 28 8 8 12 19 4 4 4 35 13 13 2 10 4 49 37 16 24 56

9 13 UTI Bank 31,712 29,846 335 20 53 24 2.40 4.30 16.30 5 172.53 0.12 2.29 1.90 50.70 19 2.50 1.90 1.10 12.66 8.87 1.40 1.40 30.30 4,18316 21 22 9 1 2 55 12 11 1 8 9 11 9 29 18 28 40 25 20 17 22 12 58

10 12 Vijaya Bank 25,618 26,666 381 -7 25 3 3.70 4.70 7.20 2.5 43.63 0.07 0.87 2.10 41.00 26 1.80 3.00 1.40 12.92 7.59 0.60 2.90 80.40 4,05822 25 17 27 17 10 20 21 44 19 32 17 23 17 8 6 44 13 8 15 28 9 45 8

11 28 Indian Overseas Bank 44,241 47,058 651 27 12 -10 3.90 4.80 7.60 5 46.18 0.05 0.89 2.40 46.40 28 3.30 2.80 1.30 14.21 7.1 1.30 2.60 71.90 4,05212 11 9 7 45 46 9 29 41 1 28 26 18 36 21 4 10 15 17 11 37 18 42 11

12 4 State Bank of Patiala 26,496 29,200 287 -33 18 0 3.30 4.60 9.10 5 55.22 0.07 1.14 1.60 36.00 15 2.00 2.90 1.00 14.21 11.05 1.20 3.00 71.00 3,99421 22 24 35 30 18 31 19 30 1 21 15 14 2 1 29 36 14 29 11 10 17 47 12

13 24 ICICI Bank 99,819 131,075 2,005 22 47 26 2.20 5.70 18.50 2.5 363.35 0.16 5.82 2.30 52.70 19 1.80 2.30 1.40 11.78 7.59 1.70 1.80 44.60 3,9203 2 2 8 2 1 57 55 6 19 5 7 7 24 35 19 43 34 13 33 28 29 23 48

14 27 Allahabad Bank 40,762 38,600 542 17 32 10 3.50 5.00 5.80 5 31.39 0.06 0.55 2.30 46.50 28 2.70 2.80 1.40 12.53 6.46 1.30 2.30 77.90 3,85613 14 12 13 5 5 23 35 50 1 47 25 40 33 22 5 22 16 16 23 42 19 36 10

15 5 Oriental Bank of Commerce 47,850 46,066 761 11 32 13 3.30 4.80 4.80 0 64.07 0.08 1.09 1.70 39.20 25 2.60 2.70 1.60 9.21 5.42 1.30 9.50 88.10 3,80410 12 5 15 6 3 34 30 56 44 15 11 15 3 5 8 23 20 5 57 55 20 59 3

16 25 State Bank of Travancore 24,133 25,129 247 1 27 4 3.60 5.00 7.80 5 57.15 0.07 1.2 1.90 38.50 24 2.40 3.20 0.90 11.05 6.17 1.80 2.10 57.30 3,78924 26 27 20 12 8 22 37 38 1 18 18 13 10 4 9 31 8 31 44 45 31 29 27

17 31 State Bank of Mysore 13,585 14,582 206 17 27 3 3.70 4.90 13.30 5 34.95 0.05 0.71 3.20 51.50 31 2.00 3.10 1.40 12.08 7.12 0.90 2.10 79.60 3,78634 34 29 11 10 14 16 34 14 1 44 35 32 51 32 3 38 9 15 30 36 11 28 9

18 23 Canara Bank 96,908 99,584 1,110 -17 17 -5 3.20 4.80 8.40 5 61.87 0.05 1.03 2.00 44.90 20 2.70 2.60 1.10 12.78 7.29 1.90 2.80 47.60 3,7464 4 4 29 33 31 39 28 36 1 16 27 16 14 16 16 21 23 26 17 33 32 43 43

19 44 Karnataka Bank 10,837 11,376 147 10 22 -3 2.80 5.10 6.50 2.5 43.35 0.08 0.88 1.70 36.70 18 1.90 3.00 1.30 14.52 12.51 2.30 1.20 66.50 3,71238 39 33 16 21 25 48 40 47 19 33 12 20 4 2 22 40 12 19 10 6 36 6 19

20 33 Union Bank of India 61,831 62,101 719 19 28 3 3.30 5.00 5.90 0 49.04 0.06 0.77 1.90 44.40 21 2.90 2.50 1.10 12.09 6.07 2.60 1.80 66.80 3,6957 8 6 10 9 9 32 38 49 44 25 21 31 11 14 10 16 28 23 29 50 41 22 18





21 18 State Bank of Bikaner and Jaipur 19,038 21,762 206 -32 25 0 4.00 4.70 13.40 0 36.94 0.06 0.89 2.90 46.00 17 2.50 3.40 0.90 12.6 7.95 1.60 1.50 51.10 3,67329 30 30 34 14 19 7 24 13 44 43 24 19 50 18 23 27 6 30 22 24 27 16 37

22 55 Centurion Bank 3,530 3,817 248 459 19 -9 4.70 5.10 16.70 2.5 66.87 0.04 0.69 4.60 78.20 63 4.50 1.40 6.10 39.22 17.8 2.50 2.30 64.80 3,65149 49 26 1 27 45 2 41 8 19 14 43 34 59 52 1 1 50 1 1 1 39 35 23

23 17 Karur Vysya Bank 6,672 7,324 105 -35 15 -2 3.50 5.20 10.70 0 46.12 0.07 0.86 2.30 46.10 14 2.50 2.70 1.40 16.07 14.36 1.60 1.30 65.10 3,64742 42 36 38 35 23 25 45 26 44 29 16 24 25 19 31 25 18 10 5 3 28 9 22

24 8 Kotak Bank 4,300 5,944 85 8 25 -21 3.80 3.80 8.60 0 153.31 0.03 2.51 3.60 62.80 13 3.50 2.20 1.40 12.8 10.12 0.40 1.30 46.60 3,64646 44 38 17 15 58 13 5 32 44 10 47 10 54 47 35 8 35 12 16 12 6 10 46

25 30 Tamilnad Mercantile Bank 4,827 5,275 82 2 13 -8 4.40 6.10 9.00 0 41.88 0.08 1.01 2.30 41.80 16 3.60 3.30 1.50 19.74 16.22 2.90 2.40 56.60 3,57744 45 39 19 42 42 4 58 31 44 36 13 17 34 9 24 7 7 6 2 2 45 37 28

26 22 Nainital Bank 933 952 11 -7 29 3 3.90 4.30 5.00 2.5 18.78 0.03 0.31 2.70 54.60 16 3.90 2.20 1.20 14.85 11.3 0.00 1.20 175.50 3,55258 58 47 26 8 13 12 11 55 19 57 46 49 47 36 25 4 36 22 8 9 1 8 1

27 14 State Bank of Indore 13,807 14,339 133 -41 34 10 3.50 4.80 10.80 5 50.63 0.05 0.8 2.20 48.30 16 2.70 2.50 0.90 11.61 6.67 1.00 2.50 65.80 3,54133 35 34 40 4 4 26 25 24 1 23 28 28 19 25 26 18 31 32 38 40 14 40 20

28 41 Indian Bank 34,808 37,943 408 1 20 -2 3.40 4.70 8.40 2.5 38.21 0.04 0.69 2.30 48.80 11 2.60 2.50 1.00 14.14 7.6 1.30 1.70 55.90 3,52315 15 14 22 26 24 27 22 35 19 41 38 33 29 27 40 24 30 27 13 27 21 20 29

29 36 State Bank of India 367,048 433,849 4,304 17 20 -2 3.20 5.10 11.20 5 40.37 0.05 0.8 2.30 47.80 19 2.40 2.50 1.00 12.45 8.04 2.60 2.80 49.90 3,4931 1 1 12 25 22 37 43 20 1 37 30 29 32 24 17 29 29 28 24 22 40 44 39

30 32 Bank of Baroda 81,333 87,592 677 -11 15 -5 3.40 4.40 7.20 0 44.25 0.06 0.84 2.20 46.30 13 2.00 2.60 0.80 12.61 8.21 1.40 1.90 52.10 3,4915 6 7 28 34 32 29 13 43 44 31 22 26 20 20 34 37 21 35 21 21 25 25 35

31 20 State Bank of Hyderabad 28,930 31,299 251 -34 20 -3 3.10 4.90 10.70 5 47.11 0.05 0.77 2.00 48.50 15 2.10 2.30 0.80 11.74 7.58 0.60 1.60 62.00 3,46817 17 25 37 23 26 41 33 25 1 26 29 30 16 26 30 34 33 34 34 30 10 18 24

32 19 IndusInd Bank 13,114 14,594 210 -20 18 -3 2.80 5.30 13.30 2.5 165.1 0.19 3.46 1.70 39.80 26 2.00 2.70 1.40 11.62 7.24 2.70 4.10 23.80 3,37535 33 28 31 29 27 46 48 15 19 9 5 8 5 6 7 39 17 14 37 35 42 55 59

33 42 United Bank of India 25,348 26,798 300 -5 21 -4 3.40 5.10 7.70 2.5 27.43 0.04 0.53 2.60 50.50 15 2.70 2.60 1.10 18.16 14.15 2.40 2.20 61.90 3,30123 24 23 24 22 30 28 39 40 19 50 41 41 40 28 28 20 24 24 3 4 37 32 25

34 35 BNP Paribas 1,674 2,694 15 213 14 -16 3.20 4.00 17.20 2.5 360.76 0.18 6.28 3.30 63.10 4 2.70 2.10 0.50 9.41 6.1 0.60 0.20 70.30 3,25657 54 46 2 40 56 38 7 7 19 6 6 6 52 48 48 19 37 43 54 47 8 1 14

35 10 The Jammu & Kashmir Bank 21,645 22,843 115 -72 22 3 2.60 4.70 5.20 0 70.48 0.06 0.84 1.40 47.60 7 1.70 1.60 0.50 15.15 12.48 1.40 1.60 48.50 3,22126 28 35 45 20 11 51 20 54 44 13 20 27 1 23 43 46 48 42 6 7 24 19 41

36 11 State Bank of Saurashtra 12,613 13,623 41 -77 23 2 3.70 5.00 8.60 2.5 45.51 0.05 0.88 1.80 40.80 5 1.00 2.70 0.30 11.45 8.68 1.40 1.50 41.20 3,10036 36 42 47 18 15 17 36 33 19 30 32 22 7 7 47 53 19 46 39 19 23 15 51

37 39 Federal Bank 15,193 15,399 90 -34 14 -4 3.30 4.80 9.20 5 52.19 0.06 0.88 2.00 43.90 13 1.50 2.60 0.60 11.27 6.42 2.20 2.60 70.90 3,06531 31 37 36 39 29 36 26 29 1 22 19 21 12 12 33 48 22 38 42 44 35 41 13

38 38 Syndicate Bank 46,295 47,978 403 -7 17 -7 3.50 4.60 7.10 2.5 39.17 0.04 0.55 2.50 56.00 20 2.50 2.10 0.80 10.7 6.1 1.80 2.00 67.30 3,04411 9 15 25 32 34 24 18 45 19 39 40 39 38 38 15 26 38 33 47 47 30 27 17

39 29 City Union Bank 3,095 3,343 46 -19 17 -7 3.30 6.00 11.00 5 37.53 0.06 0.6 1.90 43.40 21 3.20 2.40 1.40 12.18 10.05 3.40 3.40 44.30 3,02851 51 41 30 31 37 33 57 21 1 42 23 36 8 11 12 13 32 11 25 14 47 51 49

40 26 Bharat Overseas Bank 2,749 2,880 20 -43 13 -7 3.60 4.30 3.50 0 46.73 0.05 0.6 2.30 56.30 11 2.90 1.90 0.70 14.95 9.28 1.60 1.20 55.70 2,97152 53 44 43 43 38 21 10 60 44 27 31 37 31 40 39 17 41 37 7 16 26 7 30





41 23 American Express Bank 2,264.42 3,019.7 16.61 170 -10 -42 3.90 5.70 43.60 5 320.26 0.05 9.66 9 79.10 6 3.20 2.60 0.50 10.87 10.23 1.00 23.10 39.60 2,89454 52 45 3 59 60 10 56 1 1 7 33 5 60 54 44 12 25 41 45 11 12 60 53

42 43 Central Bank of India 60,752 63,115 357 -42 13 -7 3.80 4.80 5.30 5 27.55 0.04 0.52 2.60 51.20 11 2.20 2.50 0.50 12.15 6.08 3.00 3.60 68.40 2,6988 7 18 42 44 35 15 31 53 1 49 39 42 39 31 37 32 26 40 27 49 46 53 16

43 37 UCO Bank 49,470 47,500 346 -21 27 5 3.00 4.80 7.10 2.5 42.78 0.03 0.47 2.20 57.40 18 2.10 1.70 0.70 11.26 5.75 2.90 3.00 39.70 2,6789 10 19 33 11 7 43 27 46 19 34 45 43 23 43 21 33 46 36 43 52 44 46 52

44 34 Bank of India 78,821 87,675 340 -36 15 -7 2.60 4.70 10.20 0 50.62 0.03 0.56 2.10 57.00 8 1.60 1.70 0.40 11.73 7.27 2.80 1.70 44.80 2,5666 5 20 39 36 36 52 23 27 44 24 44 38 18 42 42 47 47 45 36 34 43 21 47

45 47 Bank of Rajasthan 8,120 8,494 35 -53 12 -9 2.50 3.80 8.50 2.5 25.49 0.02 0.22 2.20 70.30 10 3.30 1.00 0.40 12.75 7.84 2.50 0.50 54.60 2,50340 41 43 44 47 44 53 6 34 19 53 52 53 21 51 41 11 53 44 18 26 38 2 31

46 40 Bank of Maharashtra 28,844 30,401 177 -42 10 -7 2.90 5.30 3.90 0 32.29 0.04 0.42 2.20 56.90 12 1.90 1.80 0.50 12.68 7.1 2.10 1.90 69.30 2,39918 19 32 41 50 39 45 47 59 44 45 42 44 22 41 36 42 44 39 19 37 34 26 15

47 54 ING Vysya Bank 12,569 13,612 -38 -165 25 2 2.60 5.10 12.70 2.5 56.82 0.02 0.27 2.60 79.20 -5 2.00 0.70 -0.30 9.09 5.2 2.10 3.20 0.00 1,87037 37 56 51 16 17 50 42 16 19 19 53 50 46 55 51 35 55 51 58 57 33 49 60

48 50 Dena Bank 20,096 21,847 61 -74 12 -9 3.10 5.30 8.20 0 27.03 0.04 0.4 2.40 55.20 6 1.50 2.00 0.30 11.91 6.63 5.20 3.10 46.70 1,81328 29 40 46 46 43 40 50 37 44 51 37 46 37 37 45 49 39 47 32 41 55 48 45

49 51 South Indian Bank 8,492 9,366 9 -90 11 -13 2.70 5.40 7.40 2.5 31.53 0.05 0.41 2.00 52.10 2 1.10 1.80 0.10 9.89 5.68 3.80 2.30 41.60 1,63839 40 49 49 49 55 49 52 42 19 46 34 45 13 33 49 52 42 49 51 53 49 34 50

50 45 Catholic Syrian bank 4,021 4,371 11 -81 9 -12 3.30 5.60 7.70 2.5 21.03 0.03 0.26 2.60 59.20 5 1.80 1.80 0.20 11.35 7.49 3.80 2.40 47.80 1,63247 48 48 48 51 52 30 54 39 19 56 49 51 42 44 46 45 43 48 40 32 48 38 42

51 46 Bank of Punjab 4,307 4,649 -61 -266 8 -6 2.90 4.50 24.00 2.5 55.78 0.01 0.17 3.80 90.50 -25 0.70 0.40 -1.30 9.23 3.83 4.60 5.90 53.50 1,45245 47 57 55 53 33 44 15 3 19 20 56 54 56 57 56 56 56 56 56 58 53 57 34

52 59 Punjab & Sind Bank 14,171 14,629 -71 -938 4 -12 3.90 4.90 6.00 0 26.68 0.03 0.34 3.70 68.90 -16 1.90 1.80 -0.50 9.46 5.26 8.10 3.60 54.40 1,35132 32 58 59 56 51 11 32 48 44 52 50 48 55 49 53 41 45 52 53 56 59 52 32

53 48 Lakshmi Vilas Bank 3,496 3,774 3 -92 7 -12 2.80 5.60 12.10 0 25.45 0.03 0.25 2.30 62.30 1 0.70 1.40 0.10 11.32 5.67 5.00 2.30 32.80 1,32550 50 50 50 54 53 47 53 18 44 54 48 52 27 46 50 57 49 50 41 54 54 33 57

54 56 United Western Bank 6,453 6,934 -99 -419 5 -11 2.10 5.20 9.70 5 42.49 0.03 0.36 1.80 60.70 -36 0.20 1.20 -1.40 4.86 2.43 5.80 2.40 47.20 1,28943 43 59 57 55 50 58 46 28 1 35 51 47 6 45 57 60 51 57 59 59 57 39 44

55 58 Dhanalakshmi Bank 2,339 2,422 -22 -224 14 -7 3.00 5.30 4.50 0 21.62 0.01 0.11 2.70 79.00 -17 1.10 0.80 -0.80 10.16 6.12 4.30 1.40 52.10 1,23453 56 53 54 38 40 42 49 58 44 55 55 56 48 53 54 51 54 53 50 46 51 13 36

56 52 Ratnakar Bank 784 820 -9 -212 13 -8 3.30 5.20 5.80 0 15.72 0.02 0.13 2.60 69.90 -19 0.90 1.20 -1.10 12.03 10.06 5.50 5.00 49.00 1,22959 59 52 53 41 41 35 44 51 44 58 54 55 45 50 55 54 52 55 31 13 56 56 40

57 49 Lord Krishna Bank 2,176 2,528 -24 -193 3 -22 2.20 6.20 12.40 5 30.37 0 -0.01 2.30 101.80 -15 0.50 0.00 -1.00 11.74 7.57 4.20 3.90 35.50 1,18055 55 54 52 57 59 56 59 17 1 48 58 58 28 58 52 59 58 54 34 31 50 54 55

58 53 Development Credit Bank 3,895 4,738 -163 -1039 -11 -19 1.50 5.30 16.70 2.5 76.88 0 -0.06 3.30 102.60 -67 0.50 -0.10 -3.20 9.88 5.85 7.20 9.40 53.70 1,01048 46 60 60 60 57 59 51 10 19 12 59 59 53 59 60 58 59 60 52 51 58 58 33

59 57 Sangli Bank 1,985 2,031 -31 -358 9 -13 2.50 4.50 4.60 2.5 13.01 0 0.03 2.60 89.90 -37 0.80 0.30 -1.50 9.3 6.44 4.30 2.20 37.00 99256 57 55 56 52 54 54 14 57 19 59 57 57 43 56 58 55 57 58 55 43 52 30 54

60 N.R. Ganesh Bank 217 226 -6 -542 2 -11 1.40 7.00 5.50 0 10.01 -0.02 -0.09 2.30 209.70 -54 1.40 -1.20 -2.60 3.99 -0.25 8.30 3.20 58.80 53260 60 51 58 58 48 60 60 52 44 60 60 60 26 60 59 50 60 59 60 60 60 50 26


TheBest<5 BranchesBanks2005SIZE AND STRENGTH OPERATIONS PRODUCTIVITY & EFFICIENCY QUALITY OF EARNINGS CAPITAL ADEQUACY QUALITY OF ASSETS



1 3 JP Morgan Chase Bank 930.24 997.88 46.86 191 176 102 2.40 2.30 57.40 2.5 1,080.24 1.36 89.45 3 23.20 19 2.10 9.00 4.70 10.19 9.44 0.00 0.00 100.00 1,9316 7 4 3 3 2 14 7 3 12 3 2 2 18 2 2 15 2 2 25 25 2 1 2

2 8 Chohung Bank 97.36 210.42 5.79 40 60 39 4.60 2.10 16.90 2.5 166.41 0.69 10.3 2 30.00 8 4.60 4.90 2.70 55.31 53 0.00 0.00 100.00 1,90917 19 11 4 7 4 3 4 12 12 15 3 10 11 5 4 3 6 5 9 9 2 1 2

3 4 UFJ Bank Ltd 70.79 317.85 6.81 15 13 0 4.50 2.20 9.00 5 172.51 0.43 13.46 2 30.60 3 4.40 4.20 2.10 121.6 120.07 0.00 0.00 100.00 1,86219 18 9 8 13 9 4 5 20 1 14 7 7 10 6 14 4 7 7 1 1 2 1 2

4 5 Antwerp Diamond Bank N.V. 50.45 525.66 6.69 13 46 29 3.10 2.50 15.70 5 453.4 0.66 13.23 1 36.50 5 3.00 2.50 1.10 39.99 26.81 0.00 0.00 100.00 1,77920 12 10 9 9 6 7 8 15 1 6 4 8 6 10 11 8 11 11 11 14 2 1 2

5 7 Bank of America NA 1,992.52 5,111.38 80.45 25 3 -16 2.50 3.20 17.30 5 1,165.52 0.58 39.34 2 36.60 8 2.20 3.10 1.50 30.07 23.39 0.00 0.00 100.00 1,7222 2 1 6 16 12 13 12 10 1 2 5 4 8 11 5 14 9 9 15 15 8 13 10

6 6 Barclays Bank PLC 74.73 754.22 62.48 -13 249 226 3.00 4.20 67.90 2.5 73.51 3.1 117.86 3 21.00 11 2.90 15.60 5.80 20.85 19.88 0.10 17.90 0.00 1,63918 10 3 12 2 1 10 17 1 12 20 1 1 21 1 3 9 1 1 18 18 12 22 25

7 9 Mizuho Corporate Bank 109.84 367.11 9.71 37 36 -17 3.10 2.80 20.80 5 316.27 0.19 9.51 2 46.10 6 3.20 2.60 2.60 28.76 27.52 0.00 0.00 100.00 1,62415 16 7 5 10 13 8 10 8 1 9 14 11 14 13 9 7 10 6 16 13 10 1 9

8 12 Societe Generale 526.54 787.15 15.24 2 7 -4 2.20 3.70 17.20 2.5 311.47 0.19 5.67 2 59.40 6 1.50 1.40 1.90 64.81 61.53 0.00 0.00 100.00 1,6239 9 5 10 15 10 15 13 11 12 10 13 12 12 17 8 18 18 8 6 6 1 1 1

9 10 Arab Bangladesh Bank 23.33 71.69 2.47 -20 71 32 3.40 1.90 49.50 5 36.83 0.18 4.26 3 30.70 6 3.40 5.90 3.40 109.39 108 0.20 0.00 42.50 1,59623 23 14 13 5 5 6 3 4 1 22 16 14 17 7 10 6 4 4 2 2 14 16 22

10 11 DBS Bank 611.44 991.31 9.01 213 65 -65 2.60 1.60 7.60 5 688.81 0.18 11.12 2 62.40 2 2.50 1.10 0.90 35.06 34.45 0.00 0.00 100.00 1,5857 8 8 1 6 25 11 1 22 1 5 15 9 9 18 16 13 20 15 12 11 2 1 2

11 2 Bank of Tokyo-Mitsubishi Ltd 532.34 1,160.61 10.58 -87 9 -22 3.50 2.50 40.90 2.5 362.73 0.39 21.56 3 34.40 3 3.50 5.60 0.90 32.1 21.65 0.10 0.00 93.80 1,5568 6 6 16 14 15 5 9 5 12 7 9 5 20 9 15 5 5 14 13 17 13 14 13

12 1 Deutsche Bank AG 3,624.58 9,400.25 77.19 -72 33 22 0.90 3.80 15.90 2.5 1,222.78 0.58 43.76 3 55.70 7 0.80 2.30 0.80 16.22 12.62 0.00 0.00 100.00 1,5081 1 2 15 11 7 23 14 14 12 1 6 3 19 16 6 21 13 16 19 21 9 1 11

13 13 Krung Thai Bank 34.46 65.77 0.02 -97 57 75 4.80 2.20 5.00 2.5 50.32 0.1 1 4 70.80 0 4.70 1.50 0.00 101.01 99.59 0.00 0.00 100.00 1,41222 24 17 17 8 3 2 6 23 12 21 19 21 22 20 17 2 17 17 4 4 2 1 2

14 N.R. Sonali Bank 22.24 31 1.41 19 -8 -26 2.00 3.20 64.00 2.5 21 0.06 2.48 9 54.90 26 2.00 8.00 4.10 105.81 103.73 1.90 0.90 78.30 1,28124 25 16 7 19 18 16 11 2 12 25 21 19 25 15 1 16 3 3 3 3 16 18 16

15 18 State Bank of Mauritius 147.83 439.13 5.48 -5 -16 -30 3.10 7.30 3.70 2.5 123.02 0.37 3.66 1 29.50 4 2.80 2.50 1.20 31.06 29.76 4.20 0.00 46.80 1,25714 15 12 11 22 20 9 22 25 12 16 11 15 1 4 12 10 12 10 14 12 18 1 21

16 19 Bank of Ceylon 104.4 175.77 2.14 200 -2 -14 1.80 4.50 16.50 0 78.64 0.24 3.29 1 26.80 4 1.10 3.70 1.10 49.4 48.3 13.80 0.00 68.20 1,21616 20 15 2 17 11 19 19 13 24 19 12 16 5 3 13 20 8 12 10 10 24 1 20

17 14 Mashreqbank psc 268.69 337.88 3.69 -39 -16 -38 1.20 9.00 9.20 5 23.11 0.42 2.12 1 46.40 6 1.20 1.30 1.10 60.14 58.03 0.00 0.00 100.00 1,20712 17 13 14 21 24 22 24 19 1 24 8 20 4 14 7 19 19 13 7 8 11 1 8

18 16 Scotia Bank (The Bank of Nova Scotia) 1,601.97 3,124.05 -11.78 -166 -3 -24 1.60 3.80 12.30 2.5 805.77 0.37 17.18 1 33.50 -4 1.70 2.20 -0.40 15.27 14.36 3.10 0.00 35.00 1,1454 3 21 19 18 16 20 15 16 12 4 10 6 3 8 19 17 16 18 20 19 17 15 24

19 15 SBI Commercial and Intl Bank 331.48 477.78 -10.03 -156 19 -20 1.90 4.40 26.60 5 278.61 0.11 5.45 2 41.30 -11 -2.40 2.30 -2.10 23.56 23.01 7.60 13.40 73.90 99511 14 20 18 12 14 18 18 7 1 12 18 13 7 12 22 24 14 21 17 16 21 20 18

20 25 Bank Internasional Indonesia 11.08 111.95 -0.83 -254 88 -27 2.60 1.90 26.60 5 30.86 -0.02 -0.33 3 112.90 -1 2.50 -0.30 -0.70 92.26 92.06 10.50 333.80 35.70 94125 22 18 20 4 19 12 2 6 1 23 24 24 16 24 18 12 24 19 5 5 22 25 23


TheBest<5 BranchesBanks2005

How We Ranked The Banks

SIZE AND STRENGTH OPERATIONS PRODUCTIVITY & EFFICIENCY QUALITY OF EARNINGS CAPITAL ADEQUACY QUALITY OF ASSETS



21 21 Chinatrust Commercial Bank 48.23 119.48 -8.93 -711 -30 -35 4.80 4.70 11.40 2.5 106.87 0.16 2.7 4 62.50 -20 4.80 2.30 -7.40 59.94 58.46 6.00 14.40 80.10 90721 21 19 24 25 23 1 20 18 12 18 17 17 23 19 23 1 15 25 8 7 20 21 15

22 24 Calyon Bank 1,305.85 1,193.46 -15.79 -545 264 20 1.60 10.30 8.00 5 248.33 -0.11 -2.85 4 127.50 -7 2.60 -1.00 -1.20 14.4 10 0.30 61.90 93.10 8265 5 23 21 1 8 21 25 21 1 13 25 25 24 25 20 11 25 20 21 23 15 23 14

23 26 Bank of Bahrain and Kuwait B.S.C 393.7 632.27 -22.65 -2814 -12 -24 2.00 4.00 12.00 5 290.3 0.02 0.91 2 87.80 -28 -3.60 0.30 -3.50 11.66 9.84 5.50 0.00 77.70 69410 11 24 25 20 17 17 16 17 1 11 22 22 13 21 24 25 21 24 24 24 19 17 17

24 22 Abu Dhabi Commercial Bank 1,662.55 1,937.57 -50.2 -621 -25 -32 0.60 7.70 19.80 2.5 344.86 0.08 2.51 2 90.40 -70 -1.20 0.30 -2.60 14.38 12.03 12.70 2.40 72.20 6743 4 25 23 24 21 25 23 9 12 8 20 18 15 22 25 22 22 22 22 22 23 19 19

25 27 Oman International Bank S.A.O.G 225.21 478.82 -13.88 -568 -22 -34 0.60 5.10 4.20 0 117.49 -0.01 -0.23 1 109.60 -9 -2.20 -0.10 -2.90 13.52 13.2 55.00 199.50 94.70 46513 13 22 22 23 22 24 21 24 24 17 23 23 2 23 21 23 23 23 23 20 25 24 12

The Background: The KPMG team,led by Russell Parera, Head—Financial Services, Manoj Vijai,Director and Anand Giridhar,Manager, Advisory Services.The Data: The data for the studywas based on the published annualreports of banks. All the figures usedwere as reported for the financialyear 2004-05 and 2003-04.The Universe: The ranking covers 85scheduled commercial banks that hadprovided their annual reports for the fi-nancial year ended March 31, 2005,at the time of conducting the study.■ Some banks have been excludedfrom the study due to the closure/mergerof their operations in India. -Sumitomo Mitsui Bank's Indian op-erations were acquired by StandardChartered Bank -Credit Lyonnais merged with CreditAgricole to form Calyon Bank-ING Bank has not been included inthe study, consequent to the INGGroup increasing its stake in VysyaBank and ING Bank’s managementdecision to close its operations in India■Some banks have been excludedfrom the study due to incompara-bility of their financial statements

with other banks as a consequence ofdiffering periods of statement-Yes Bank has been excluded fromthe study since its financial state-ments are for a period of 18 monthsthus making comparisons with otherbanks infeasible-IDBI Bank has been excluded sincepost the merger of IDBI and IDBIBank, the financial statements ofthe entity are for a period of sixmonths only, making comparisonswith other banks infeasible

The Ranking ProcessThe BT-KPMG ranking study con-sists of six key categories of param-eters:■ Size and Strength■ Operations■ Productivity & Efficiency■ Quality of Earnings■ Capital Adequacy■ Asset QualityWe have grouped the banks in twogroups based on their points of pres-ence in order to have a comparablepool. Accordingly, the study hasgrouped banks with five or lessbranches to provide a comparablepool of banks in terms of point of

presence and business volumes.Thus, there is one set of rankingsfor 60 banks and one for the 25banks with five or less branch banks.The Ranking: The composite rank foreach bank was arrived at by com-bining its ranks on each of the 24 pa-rameters, using a weight for eachparameter.The Computation: To compute abank's total score, it was assigned ascore for each of the 24 parameters,based on its ranks on the parameter.For each parameter, for the bankswith more than five branches, a bankwith a rank of 1 earned a score of 60(as there are 60 banks in the com-parison set), a rank of 2 earned ascore of 59 and so on, down to therank of 60, which earned a score of 1.The score under each parameter wasthen multiplied by the weightage as-signed to that parameter. The resultswere aggregated to compute eachbank's total score, on the basis ofwhich the final ranks were assigned. How To Read The Scoreboard RankRank: The composite rank of a bankwas calculated using the BT-KPMG’smethodology. The performance ofeach bank in FY 2004-05 on each of

the 24 parameters has also beenpresented.

Size And Strength■ Deposits: Total deposits as on endof FY 2004-05.■ Average working funds (AWF):Total liabilities of the bank averagedover FY 2003-04 and FY 2004-05(minus any other liabilities and pro-visions).■ Net profit: Net profit for FY 2004-05.■ Growth in PAT: Growth in Profit af-ter tax from FY 2003-04 to FY2004-05.■ Growth in business: Growth in thetotal of non-bank deposits and loans& advances from FY 2003-04 to FY2004-05.■ Growth in share of total deposits:The proportion of growth in depositsin comparison to the overall industrygrowth in deposits from FY 2003-04to FY 2004-05.

Operations■ Net interest income/AWF: Interestearnings expressed as a percentage ofAWF.■ Cost of average interest bearingfunds: The interest expended as apercentage of average interest bearingliabilities (deposits plus borrowings).

■ Fee income/total income: Fee in-come includes commission, exchangebrokerage plus profit on exchangeand miscellaneous income, expressedas a percentage of the total income.■ Asset-Liability management (ALM)score: ALM mismatch within 15 percent for the first two time periods.

Productivity & Efficiency■ Business/Branch: Loans & ad-vances plus deposits as reported forFY 2004-05, divided by the numberof branches in India.■ Operating profits/Employee:Operating profits divided by the totalnumber of employees.■ Operating expenses/Total assets:Operating expenses divided by the av-erage total assets for the years 2003-04 and 2004-05■ Operating profits/Branch: Operatingprofits divided by the total number ofbranches.■ Cost to income ratio: Operatingexpenditure expressed as a percent-age of operating income.■ Return on capital employed:Reported net profit divided by theaverage net worth of the bank.

Quality of Earnings■ Interest spread/AWF: The differencebetween the interest earned by the

bank and the interest paid by it, ad-justed by provisions as applicable, ex-pressed as a percentage of the AWF.■ Operating profits/AWF: Operatingprofits expressed as a percentage ofthe AWF.■ Return on average assets: The ra-tio of net profit to average total assets,as published by the bank.

Capital Adequacy■ Capital Adequacy: The capital-to-risk weighted assets ratio, as pub-lished by the bank for FY 2004-05.■ Tier-I capital: The Tier-I capital ra-tio as published by the bank for FY2004-05.

Quality of Assets■ Net non-performing assets/Net ad-vances: The sum of substandard,doubtful and loss on loans and net ofprovisions made for such loans, ex-pressed as a percentage of netadvances.■ Non-performing assets (NPAs)growth rate: The incremental grossNPAs expressed as a percentage ofgross advances for the previous yearminus gross NPAs for the previousyear.■ Loan loss cover: The provisionsfor NPA expressed as a percentage ofNPA. ■

F E B R U A R Y 2 6 2 0 0 6 B U S I N E S S T O D A Y 0 0 00 0 0 B U S I N E S S T O D A Y F E B R U A R Y 2 6 2 0 0 6

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