Financial Engineering

DOI: 10.37394/232032.2023.1.29 Neeraj Rani, Dr. Sangeeta

Effect of mergers on Bank of Baroda before and after, a study of the

banking sector
NEERAJ RANI, DR. SANGEETA
Maharaja Agrasen University, Baddi, Himachal Pradesh, INDIA

Abstract: The banking industry has been essential to the economy’s development. Mergers and acquisitions are one of the
best ways for banks to expand. The government merged banks when banks had more non-performing assets (NPA), less
efficiency for work, no global reach, less profitable situation, or had other unimportant features. The government decided
to combine three public sector banks in 2019, namely Vijaya Bank, Dena Bank, and Bank of Baroda (BOB). BOB rose to
become India’s third-largest bank following the merger. In order to analyze the position of the bank, the study covered
various indicators like Gross & Net NPA, operational profit, net profit, capital adequacy ratio (CAR), return on assets
(ROA), return on equity (ROE), earning per share (EPS), deposits & advances. Charts are used to analyze these factors,
and data from the two years before and two years after the banks’ merger has been used. Secondary sources such as annual
reports, websites, various publications, etc. has been used to get the data. After the two-year merger, operating profits rose
by 40.11% and 52.96%, while net profits rose by 25.81% and 91.01%, demonstrating improved efficiency. Since gross
NPA exceed net NPA, banks had control the NPA such that inefficiency became efficiency. Deposits and advances have
both climbed, and the CAR has as well, indicating that there is enough capital on hand to handle losses. Since the merger,
EPS, ROA, and ROE have all dramatically increased. According to the study, the bank’s performance of BOB improved
after the merger.

Keywords: NPA, Merger, BOB, Profitability, ROA, ROE, CAR, EPS

Received: June 11, 2022. Revised: June 9, 2023. Accepted: July 5, 2023. Published: July 17, 2023.

1.Introduction
Mergers and Acquisitions helps in the acquisition of a Mysore, and Travancore in 2017. In 2017, Bharatiya Mahila
competitiveness and the reduction of industrial deficiencies. Bank and SBI also combined. SBI became the world’s 43rd-
Companies trade information on revenue, debt, properties, largest bank as a consequence of the merger[4].
technology, etc. while merging. Based on regional consider- The Bank of Baroda Ltd., a private bank with one million
ations and the severity of bad loans, public sector banks were paid up capital, was formed on July 20, 1908 as the fore-
combined. Additionally, it reshapes and recreates the finan- runner of today’s Bank of Baroda. Maharaja Sayajirao III of
cial industry in the nation. In Indian banking, there have been Baroda founded it. The Bank of Baroda Ltd. was replaced by
several voluntary merger efforts, and following financial re- Bank of Baroda after BOB was nationalized in 1969. BOB
forms in 1991, Times Bank and HDFC Bank merged for the has established a large number of branches and is now operat-
first time [1]. Indian banks sought to merge with another bank ing globally. The merger of BOB with Vijaya Bank and Dena
in order to cut costs, increase stability, maximise shareholder Bank was suggested by the Indian government on September
returns, or establish themselves as a universal bank[2]. 17, 2018, and the plan was accepted by the union cabinet on
The earliest financial system was established in India in the January 2, 2019. Three public sector banks namely BOB,
middle of the 18th century. Bank of Hindustan, which opened Vijaya Bank and Dena Bank merged on April 1, 2019. Fol-
in India in 1770 and closed in 1832, was the country’s first lowing the merger, Bank of Baroda has become the second-
modern bank. The General Bank of India was founded in largest public sector bank in India in terms of market capital-
1786 and was closed down in 1791. Many banks were formed ization and the business of SBI[5]. BOB now has 120 million
throughout the history of banking, but owing to unfavorable clients, 79,806 workers, 8,214 branches, 10,033 ATMs, Rs.
conditions, some of them were forced to shut. State Bank 1,155,364.8 crore in total assets, etc. After merging, there
of India (SBI) is one of the largest and oldest public banks are 12 public sector banks, there were 27 public sector banks
currently in operation in India. Initially known as the Bank in all prior to this.
of Calcutta, it was founded in 1806 and changed its name
to the Bank of Bengal in 1809. In 1921, the Imperial Bank 2.Objective
of India was formed by the merger of three banks: the Cal-
cutta Bank (1806–1921), the Bank of Bombay (1840–1921), Objectives of the study are given below:
and the Bank of Madras (1843–1921). State Bank of In- 1. To know about the history of BOB.
dia took over as the Imperial Bank of India’s successor in
1955. After the merger, SBI with its associates failed to pro- 2. To research the Bank of Baroda’s performance before
duce any outstanding results [3]. State Bank of India (SBI) mergers and acquisitions.
amalgamated with its seven subsidiaries, including the State
3. To research the Bank of Baroda’s performance after
Bank of Saurashtra in 2008, the State Bank of Indore in 2010,
mergers and acquisitions.
and the State Banks of Hyderabad, Patiala, Bikaner & Jaipur,

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3.Literature Review and asset utilization were insignificant.

Athma and Bhavani [6] discovered that there were signifi- Kar and Soni et al. [11] the fact that companies have used
cant changes to the regulatory framework following mergers mergers and acquisitions (M&A) to grown and that Indian
in the Indian banking sector, which greatly increased com- corporate organizations have refocused on their core capabil-
petition through internet banking. The 22 mergers of Indian ities, market share, international competitiveness, and con-
banks that occurred between 1991 and 2017 were included solidation The analysis included the M&A data of 15 listed
in the analysis, and secondary sources were used to gather businesses from 1990-1991 to 2000-2001 based on the width
the data. T-test has been utilized to compare the pre- and of the deal. The overall time period has been divided into two
post-performance of the chosen banks, and Pearson’s multi- phases, the first from 1990 to 1996 and the second from 1996
ple correlation and regression analysis have been performed to 2001, with a total of 68 M&A in the first phase and 1318
to assess the strength. The results showed that, for the mostly, M&A in the second. Sales, net profit, book value of the firm,
variables performed well after the merger, with the exception and return on net worth are only a few of the several factors
of SBI’s employee count and profitability and HDFC Bank’s that have been used to evaluate the success of the chosen or-
employee count. ganizations. Results indicated that sales climbed after gained
Chawla et al. [7] investigated the pre- and post-M&A im- the experience of M&A, profit after tax increased between
pact on Indian telecommunication businesses between 2000 1994 and 1998, and book value of firms increased between
and 2010. To enhance efficiency and effectiveness, it incor- 1994 and 1999, but there was no influence on the return of
porated 10 M&A transactions in the Indian telecom indus- new value.
try, which is listed on the BSE. Wilcoxon T-test and paired Kashyap et al. [12] investigated that the M&A of banking
sign-rank tests were employed to gauge performance. Three sector had been important role for the expansion and de-
years before and three years after the merger made up the two velopment of the economy. For this reason, the operational
phases of the time span. In seven telecom businesses, the per- and financial performance of BOB has been examined before
formance following a merger is meaningless. Results showed and after the mega merger of BOB, Dena Bank, and Vijaya
that expected goals and objectives to boost performance had Bank. Numerous operational metrics, such as the number of
been set during the pre-merger planning period. employees, branches, and clients, as well as financial met-
Halder et al. [8] showed that firm restructuring has been the rics, such as deposits and advances, operating income and
most successful M&A strategy in the twenty-first century. expenditure, NPA, operating profit, net profit, capital, liabil-
The study looked at whether stock performance of firms was ity, and assets, had been collected of BOB before and after
impacted by M&A announcements. The event study method the merger. To displayed the pre- and post-merger metrics
and cumulative average abnormal return were used to assess like operating and financial of BOB via charts. The out-
the before and after incident. The stock prices exhibited posi- come showed that BOB’s condition following the merger had
tive results after the M&A announcement, which showed that a beneficial influence on the banking industry.
more unfavorable returns were changed into less adverse re- Kulothunga [13] investigated that the comparison of the pre
turns and negative anomalous returns were changed into pos- and after merger of the three nationalized banks Bank of Bar-
itive returns. Stock price stability over the long run has been oda, State Bank of India, and IDBI from 2000 to 2010 was
seen as opposed to stability over the short term. sought after. For the study’s pre- and post-merger analysis,
Hinal and Divekar [9] investigated that the Indian banking many factors were examined across all banks, including net
industry has separated into two phases: pre-liberalization profit ratio, ROE, ROA, EPS, and profit per employee. By
(1991) and post-liberalization (after 1991). the primary goal using a paired t-test, it was determined that after the merger
of the merger was to minimize the non-performing assets held banks had a negative impact on the net profit ratio, ROE, and
by one weaker bank (Dena Bank) and two stronger banks ROA while having a favorable influence on EPS and profit
(Bank of Baroda and Vijaya Bank). When the merger hap- per employee. The results showed that bank mergers helped
pened, all of the banks’ profitability was negligible. In order to manage risk and boost financial health.
to change this, factors included the total number of branches, Kumar and Aggarwal [14] discovered that the primary goal
employees, loans made, deposits received, capital adequacy of the merger of three public sector banks was to increase
ratio, NPA, and ROA of all the banks were taken into consid- client base and improve customer services. Because merg-
eration. According to the results, a combination of a strong ers in the service sector have an impact on people, human
bank with a weak bank might aid in reducing the load of NPA. resources were taken into consideration when mergers were
Jahan et al. [10] analyzed that six randomly selected made. Data from 2016–17 to 2020–21 were collected to ex-
Bangladeshi Islamic banks were used to measure bank per- amine the pre– and post–merger state of BOB. Several fac-
formance. The metrics employed for this analysis were re- tors, including the investment valuation ratio, debt coverage
turn on assets, return on equity, and return on deposit. Du ratio, profit and loss ratio, and efficiency ratio, were used for
Pont analysis was used to determine the relationship between this aim. The conclusion was that human resources should
ROA and ROE. All profitability scenarios saw excellent per- be taken into account throughout the merging process of the
formance from EXIM Bank, and the average assets of Islamic service industry.
banks were discovered to be the greatest. ROD and ROA pro- Mubarak and Barikara [15] Investigations were conducted
duced a satisfactory result, however operational effectiveness into a significant banking sector merger in 2017 involving

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SBI and its associates, followed in 2019 by a mega merger financial results and the merger’s effects on the Indian corpo-
involving 10 public sector banks into 4 sizable banks. The ef- rate sector. Financial ratios including liquidity, solvency, and
fects of the merger on the Indian economies of PNB, Canara, profitability have been utilized, along with chi-square and t-
Union, and Indian banks were covered in the study. Informa- test, for this purpose. Outcome was that the merger had little
tion of these Indian banks has been gathered via secondary immediate effect on profitability, but over time it improved
data. This merger significantly altered the economy and re- returns for the corporate sector.
solved the NPA issue. The outcome showed that banks have Soni et al. [21] explored the value of shareholder wealth,
to need the strengthen their stability and profitability going as well as the impact of preceding and subsequent M&A on
forward. market return and script return. Data on the top 10 Indian
Mucenieks [16] studied that M&A of enterprises account- companies that were listed on stock markets between 2004
able for the European Commission Union. Due to growing and 2014 were gathered via convenience sampling. This
competition, technological innovation, modernization, pro- study has divided into three parts: First, a 2004–2014 trend
duction restructuring, change in strategy, etc., has been uti- study was conducted. The short-term impact on shareholder
lized as a corporate development instrument for continuous wealth was examined in the second component of the re-
growth and stability. If a corporation added social qualities, search, and the long-term impact was discussed in the third.
then society directly benefited to the company. Since each Correlation was used to compare the closing prices of the
M&A is unique, it has not been necessary to alter the usual script to the index values in order to accomplish this. Market
course of business; in fact, due diligence has helped the sit- return and script return have always been closely related. The
uation. M&A’s success thus relied on the context in which findings indicated that while only 40% of firms saw favorable
it was used. The results demonstrated that the speed of in- returns after an acquisition in the long term, the return prior
tegration was crucial to a successful M&A since a delayed an acquisition was much better in short run of 70% of the
integration would lead to cultural disputes and obstruct the companies.
merger.
Muhammad et al. [17] examined the M&A activity in Pak- 4.Research Hypothesis
istan’s banking sector between 2004 and 2015. ratio analysis
A research-based research hypothesis needs to be created in
was performed to evaluate the financial performance follow-
order to accomplish the objectives.
ing the M&A. The result was that the banks‘ liquidity, prof-
H01 : The performance of the Bank of Baroda before to
itability, and investment ratios greatly improved their perfor-
merger is insignificant.
mance following the M&A, but their solvency ratios showed
H02 : The performance of Bank of Baroda following the
that their increasing debt load had an adverse impact on their
merger is insignificant.
performance.
Patel [18] observed that the long-term profitability of four
Indian banks—Bank of Baroda, OBC, IDBI, and SBI—has 5.Research Methodology
been the subject of selection. The impact of bank mergers 5.1. Data and Sample of the study
was examined using data collected from 2003-04 to 2013-14 Numerous articles studies that examined the effects of merg-
and included financial parameters such ROE, ROA, EPS, Net ers and acquisitions both before and after they occurred on
Profit Ratio, Yield on Advance, Yield on Investment, Profit the banking sector have been evaluated. This research uses
per Employee, and Business per Employee. While some vari- secondary data that has been gathered from a variety of pub-
ables had beneficial results, others had the opposite effect lished sources including websites, articles, online resources,
after merger of banks. All the banks saw improvements in annual reports, and other references. The research includes
assets, equity, investments, and advances while other aspects a number of indicators, such as Gross & Net NPA, opera-
declined. The findings showed that SBI has benefited from tional profit, net profit, CAR, ROA, ROE, EPS, deposits &
the merger more than other banks. advances. Charts have been used to assess these elements in
Prajapati and Nakum [19] found that merger and acquisition order to analyze the bank’s status for the two years before and
had a significant role in the market’s future. Despite their tiny two years following the merger of banks.
size, e-commerce companies are well-known. Flipkart pur- Government-led mergers in the banking industry have in-
chased this technology, which Walmart then acquired after creased dramatically over the past several years as a result
making the same improvements. Walmart and Flipkart struck of increased profitability, the elimination of bad loans, in-
the largest transaction, at $16 billion. Due to the development creased efficiency, a broader network, and other factors. The
of the internet, online shopping, online payments, and other government decided to merge and acquire banks in order to
technologies, etc., the trend of e-commerce is growing daily. reduce bad loans and boost efficiency[22]. SBI subsidiaries
Walmart must remain competitive over time if Flipkart is to and Bharatiya Mahila Bank were merged with SBI in 2017,
remain viable. Vijaya Bank & Dena Bank were combined with BOB in
Smita et al. [20] from 2005 to 2007, the research included the 2019, and 10 public sector banks were reduced to four by
merger and acquisition of many Indian business sectors, such 2020. There were 12 PSUs overall following these mergers.
as banking, aviation, software, steel, FMCG, petroleum, tele- This study examines the effects of Vijaya Bank & Dena Bank
com, and energy. It included examining the relevant firms’ merging with BOB both before and after.

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5.2. History of Bank of Baroda opened a branch in Noida for the next generation; opened
1908 The bank of Baroda Ltd. founded Bank of Baroda as a five loan factories (in New Delhi, Raipur, Ludhiana, Nasik,
private bank. and Jodhpur); and introduced the Baroda Pensioners Savings
1918 Mumbai received a branch. Account and the Jeevan Surekha Savings Account. Provided
1937 Ahmedabad received a branch. a mobile banking option and expanded the banking network.
1949 opened first branch in Delhi. 2013 established the 100th branch in Dubai, started a loan
1953-1969 launched three offices in Fiji, five in Kenya, three factory for agriculture, and expanded the availability of e-
in Uganda, one in London, and a single one in Guyana. banking services.
1969 The Bank of Baroda Ltd. was renamed Bank of Baroda 2014 introduced door-to-door banking services and creative
once it was nationalized. services for rural development.
1969-1974 erected three branches in Mauritius, two in the 2016 adopted social media sites like Twitter, YouTube, and
UK, and one in Fiji. Facebook, created the Navodaya initiative, and backed FIFA
1974 built two branches in the UAE after entering wealthy Under-17 World Cup.
gulf nations (Dubai & Abu Dhabi). 2017 offered digital cash management and supply chain fi-
1976 one regional rural bank out of 19 sponsored. nance, and also utilized Instagram to demonstrate the bank’s
existence.
1977 for rural development, created Gram Vikas Kendra.
2018 released the Kisan app using the Linked in platform to
1984 introduced credit card.
support bank presence.
1991 housing finance, asset management, and capital market
2020 presented BOB NOWW for cutting-edge banking.
operations created subsidiaries.
2021 BOB World was introduced, the website was central-
1996 IPO was used to enter the capital market.
ized, and the consumer was given information through KYC
1997 opening a new location in Durban.
for creating an online account.
1999 began depository operations.
2022 created the Quora platform for the bank’s presence, won
2000-2001 created a distinct risk management department
a wonderful place to work award, and became the bank with
and hired Arthur Andersen India Pvt. Ltd. as a consultant.
the greatest technology usage
2002 Debit card affiliation with VISA.
2004 inked an agreement to market non-life insurance prod- 5.3. Mergers with Bank of Baroda
ucts with National Insurance Company.
1958 The Hind bank merged.
2004-2005 Expanding the ATM network, introducing 24-
1961 merged with The New Citizen bank ltd.
hour operations in five locations nationwide, offering multi-
1963 Surat Banking Corporation merged.
city checks, and launching IT-enabled business information.
1964 acquired the Tamil Nadu Central Bank and Umaraon
2006 created a Singapore an offshore banking business. Peoples Bank.
2007 cooperation with Life Insurance Company of UK- 1972 merged the Ugandan business of Bank of India
based, establishment of a branch for the younger generation, 1975 bought the bulk of the shares in Nainital Bank and
agreement with Dun & Bradstreet for SSI, joint venture for Bareilly Corporation Bank in Uttar Pradesh.
the assets management industry with Pioneer Global Assets 1988 merger of Delhi’s 34 branches of Traders Bank Ltd.
Management, Italy, and introduction of gold coins. 1993 merged the London branch of Union Bank of India and
2008-2009 opened new urban retail loan factories and intro- Punjab & Sind Bank.
duced new loan products, signed a memorandum of under- 1999 The Bareilly Corporation Bank merged.
standing with auto manufacturers, opened four new branches 2002 The Benares State Bank Ltd. merged.
in China, the United Arab Emirates, Uganda, and Kenya, and 2004 The South Gujarat Local Area Bank merged.
received approval from the China Banking Regulatory Com- 2019 Merger of Dena Bank and Vijaya Bank.
mission to open a full-fledged branch in Guangzhou.
2009-2010 inaugurated 6 new retail loan factories (in Chandi-
garh, Gamdevi, Patna, Coimbatore, Ranchi, and Allahabad), 6.Financial Analysis
created 3 loan factories, worked on the new project "Navnir- Following is a financial study of Bank of Baroda before and
maan Baroda Next," and all branches utilized the Core Bank- after its merger with Vijaya Bank and Dena Bank:
ing Solution (CBS) platform to provide Anywhere Anytime, Standalone operating profit for Bank of Baroda before their
the ability to conduct RTGS and NEFT transactions, and pro- merger into Vijaya Bank and Dena Bank was Rs. 12,006
vided housing loan subsidies for urban poor people. Got crore and Rs. 13,487 crore on March 31, 2018 and March
a commercial banking license from BIA Bank in Malaysia, 31, 2019, respectively, while for the two years following the
where merged ownership of BOB, IOB, and Andhra Bank, merger, it was Rs. 18,896 crore and Rs. 20,630 crore on
built 1 branch in New Zealand and 10 in the UK, and signed March 31, 2020 and March 31, 2021, respectively and op-
a MOC with the Dubai Multi Commodity Center Authority erating profit of Vijaya Bank was rs 3,098 crore while Dena
for Trade. bank have a loss of rs. 1,923 crore. In the two years following
2010-2011 inaugurated seven new branches: one in the UK, the merger, the bank’s standalone net profit was rs. 546 crore
five in the UAE, and one in New Zealand; offered loans and rs. 829 crore on the corresponding 31 March, 2020 and
secured by jewelry; introduced new term deposit products; 31 March, 2021. In the two years prior to the merger, loss

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Table 1. List of Recent merger of Public Sector Banks

Sr. No. Acquirer/Bidder Banks Acquired/Merged/Target Organizations Year

1. Indian Bank Allahabad Bank 2020
Oriental Bank of commerce
2. Punjab National Bank 2020
United Bank of India
Andhra bank
3. Union Bank of India 2020
Corporation Bank
4. Canara Bank Syndicate Bank 2020
Dena Bank
5. Bank of Baroda 2019
Vijaya Bank
State Bank of Bikaner & Jaipur
State Bank of Patiala
State Bank of Mysore
6. State Bank of India 2017
State Bank of Travancore
State Bank of Hyderabad
Bharatiya Mahila Bank

Figure 1. Profits of BOB (Source: Annual report of BOB)

was rs. 2,432 crore and profit rs. 434 crore in 2018 and 2019 12.26% gross and 5.49% net in 2018 and it was 9.61% gross
respectively and the net loss earned by Dena bank while net and 3.33% net in 2019. After the merger, the NPA was 9.4%
profit of Vijaya bank was rs.727 crore . If the post-merger gross and 3.13% net in 2020, and it was 8.87% gross and
scenario is examined, operating profit will improve by Rs. 3.09% net in 2021. If the post-merger environment is exam-
5,409 and Rs. 7,143 in 2020 and 2021, respectively, over ined, both gross and net NPA will decline as compared to
2019, and net profit would increase by Rs. 112 crore and Rs. 2018 and 2019.
395 crore, respectively, over 2019.
The bank’s capital in proportion to risk-weighted assets is
Non-Performing Assets (NPA) at Bank of Baroda before the measured using the capital adequacy ratio (Basel-III). Prior
merger totaled Rs. 56,480 crore (gross) and Rs. 23,483 crore to the merger, Bank of Baroda’s CAR was 12.13 and 13.42
(net) in 2018 and Rs. 48,233 crore (gross) and Rs. 15,610 percent, which risen to 13.3 and 14.99% in 2020 and 2021,
crore (net) in 2019. While before merger Dena bank has Rs. respectively Before merger Dena bank’s CAR was 11% and
16,361 crore (gross) and Rs. 7,839 crore (net) and Vijaya 13.90% of Vijaya bank. According to a post-merger analysis,
bank has Rs. 7,526 crore (gross) and Rs. 5,021 crore (net) the CAR rate has improved, indicating that the bank is in a
NPA. In contrast, following the merger, the bank’s NPA rose better position to cover losses owing to sufficient capital.
to Rs. 69,381 crore (gross) and Rs. 21,577 crore (net) in
In the wake of the Vijaya bank and Dena bank merger, Bank
2020 and Rs. 66,671 crore (gross) and Rs. 21,800 crore (net)
of Baroda enjoys higher earnings per share. In 2018 and
in 2021. Both the gross and net NPA are up after the merger,
2019, the EPS was Rs. -10.53 and Rs. 1.64, respectively.
which is alarming.
After the merger, the EPS was Rs. 1.36 in 2020, a decline
The graph below illustrates the percentage of NPA for Bank from 2019, but Rs. 1.78 in 2021, a rise from the preceding
of Baroda before and after the merger, demonstrating a de- merger. Before merger Dena bank has also negative (18.06)
cline in both gross and net NPA. before the merger NPA was EPS while 6.83 & of Vijaya bank. The EPS situation follow-

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Figure 2. NPA of BOB (Source: Annual report of BOB)

Figure 3. NPA (percent) of BOB (Source: Annual report of BOB)

Figure 4. CRA (percent) (BASEL-III) of BOB (Source: Annual report of BOB)

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Figure 5. EPS (in Rs) of BOB (Source: Annual report of BOB)

ing the merger reveals the banks’ profitability as well as the even weak banks are able to survive in the nation. The mas-
worth of each share for future expansion. sive merger of Bank of Baroda, Vijaya Bank, and Dena Bank
A graph compares Bank of Baroda deposits and advances be- is covered in the paper. The merger decision took effect on
fore and after a two-year merger. Deposits were Rs. 5,91,315 April 1, 2019, and BOB became the third-largest public bank
crore and Rs. 6,38,690 crore before the merger, but they were in the nation to serve the general public as a result of the
Rs. 9,45,984 crore and Rs. 9,66,997 crore after the merger, merger. To analyze the status of the bank after the merger,
demonstrating the growth in deposits. Deposits are more than the study used data from the annual reports of BOB for the
advances. It was Rs. 4,27,432 crore and Rs. 4,68,819 crore two years prior to and following the merger.
before the merger. Deposits of Dena bank was Rs. 1,06,130 Operating earnings and net profits both grew as a result of
crore and Rs. 1,57,288 crore of Vijaya bank. While advances the merger, reaching Rs. 18,896 crore (operating profit) by
of Dena bank was Rs. 65,582 crore and Rs. 1,16,165 crore of 40.11% and Rs. 546 crore (net profit) by 25.81% in 2020
Vijaya bank. After the merger, it was determined that there and Rs. 20,630 crore (operating profit) by 52.96% and Rs.
had been a rise in both deposits and advances. 830 crore (net profit) by 91.01% in 2021compared to 2019
Bank of Baroda’s return on equity (ROE) was negative in of Bank of Baroda. The capital adequacy ratio has also al-
2018 but improved to 1.18 in 2019. After the merger, the tered; it decreased by 0.12% in 2020 but increased by 1.57%
bank’s ROE has improved which means demonstrating the in 2021, indicating an improved ability of the bank to handle
improvement in the bank’s financial situation. Although re- unforeseen losses. Earnings per share fell from Rs. 1.64 to
turn on assets (ROA) was negative in 2018, was up in 2019. Rs. 1.36 in 2020, but rose to Rs. 1.78 in 2021.
Before merger Dena bank has negative (20.89%) ROE and Following the merger, the percentage of Return on Assets and
40.74% ROA while Vijaya bank has 8.98% ROE and 0.44% Return on Equity both increased, highlighting the bank’s im-
ROA. Following the merging of the banks, the ROA result proved status. Deposits grew by 48.11% and 51.40%, respec-
has improved, demonstrating the bank’s improved financial tively, in 2020 and 2021 compared to 2019, indicating a rise
performance. Positive ROE & ROA are profitability indica- in the liabilities. Additionally, advances will grow by 47.20%
tors, whereas negative ROE & ROA showed that the bank had in 2020 and 50.66% in 2021, which will result in the bank
suffered losses. lending to more different entities. The bank’s income comes
from interest on advances, which boosts its earning potential.
Non-performing assets have grown on both a gross and net
7.Conclusion basis. In comparison to 2019, it climbed by 43.85% (gross)
and 38.23% (net) in 2020, and by 38.22% (gross) and 39.65%
The financial backbone of the economy is the banking sec-
(net) in 2021. The problem for the bank is to minimize NPA
tor, and via mergers and acquisitions, banks are increasingly
since an increase in NPA is not good for the expansion of
playing a significant role. To enhance the financial status of
banks. After the merger, Bank of Baroda’s overall condition
the banks, the government has made many decisions regard-
significantly improved, and the public’s service area was ex-
ing bank mergers. When a weak bank merges with a pow-
panded.
erful bank, the weak bank’s financial situation is better, and

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DOI: 10.37394/232032.2023.1.29 Neeraj Rani, Dr. Sangeeta

Figure 6. Deposits and Advances of BOB (Source: Annual report of BOB)

Figure 7. ROA and ROE of BOB (Source: Annual report of BOB)

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