punjab national bank

FINANCIALANALYSIS
 Financial statements are final result of accounting work done
during the accounting period.
 These statements include the income statement, balance
sheet, statement of cash flows, and a statement of retained
earnings.
TECHNIQUES OF FINANCIAL ANALYSIS
 Various methods are used to study the relationship between
different statements. The following methods of analysis are
generally used :
1. Comparative financial statements
2. Trend analysis
3. Common size statements
4. Ratio analysis
5. Funds Flow Analysis.

RATIO ANALYSIS
 Ratio analysis is quantitative analysis of information contained
in a company’s financial statements.
 It is based on line items in financial statements like the balance
sheet, income statement and cash flow statement; the ratios of
one item – or a combination of items - to another item or
combination are then calculated.
 There are four main categories of ratios:
 Liquidity ratios
 Profitability ratios
 Activity ratios
 Leverage ratios.

ADVANTAGES
 To workout the profitability.
 To workout the solvency.
 Helpful in analysis of financial statements.
 Helpful in comparative analysis of performance.
LIMITATIONS
 Limited comparability.
 Effect of window dressing.
 False results.
 Costly technique.

RESEARCH METHODOLOGY
 Research in common parlance refers to a search for knowledge.
It can also be defined as a scientific and systematic search for
pertinent information on a specific topic.
 In simple words research is to get some knowledge, to come to
a conclusion for innovation.
REVIEW LITRETURE
 A literature review is an evaluative report of information found
in the literature related to your selected area of study.
 It should give a theoretical base for the research and help you
(the author) determine the nature of your research.
 Works which are irrelevant should be discarded and those
which are peripheral should be looked at critically.

 An Analysis of the Financial Performance of National Bank
Limited Using Financial Ratio. Md Aminul Islam stated that to
complete his task he had to use various materials and take help
form online source. Analyse the ratio here used financial ratio
analysis (FRA) method which help to draw a overview about
financial performance of the National bank limited in terms of
profitability, liquidity and credit performance.
 Analysis of Financial Performance of Private Banks in
Pakistan. Syed Qasim shah stated that they used Regression
analysis and correlation technique in order to address the issue.
Bank size and Operational Efficiency is negatively related with
ROA and positive relationship was found with Assets
management ratio. The data is collected from Financial
Statements Analysis of Financial Sector issued by State bank of
Pakistan.

 Financial analysis : Bollen (1999)conducted a study on Ratio
Variables on which he found three different uses of ratio
variables in aggregate data analysis: (1) as measures of
theoretical concepts, (2) as a means to control an extraneous
factor, and (3) as a correction for heteroscedasticity. In the use
of ratios as indices of concepts, a problem can arise if it is
regressed on other indices or variables that contain a common
component.
 A financial Ratio Analysis of Commercial Bank Performance
in South Africa : Mabwe kumbirai & Robert stated that overall
bank performance increased considerably in the first two years
of the analysis. A significant change in trend is noticed at the
onset of the global financial crisis in 2007, reaching its peak
during 2008-2009.

 The use of financial ratios as measures of risk in the
determination of the Bid-risk spread: Huldaha A. Ryan stated
that the present study extends this line of research by
examining the effect of risk, proxied by accounting risk
measures, on the bid-ask spread. the results indicate that a
model which includes both accounting risk measures and
market risk measures is a better fitted model that one which
includes either accounting risk measures or market risk
measures alone.
 The Role of Financial Analysis Ratio in Evaluating
Performance: Abdel-rahman. El-dalabeeh stated that the study
concluded that having an administrator accountant to analyze
the financial statements of the National Chlorine industries
co.ltd leads to identify and explain the deviations and the
undesired extreme results.

OBJECTIVES
 The first objective is to study the financial analysis techniques
in bank.
 To analyze the financial performance of Punjab national bank.
LIMITATIONS
 Firstly, this research is totally based on secondary data.
 The reliability of data is dependent on its source.

PUNJAB NATIONAL BANK
 Established in 1895 at Lahore, undivided India, Punjab
National Bank (PNB) has the distinction of being the first
Indian bank to have been started solely with Indian capital.
 The bank was nationalised in July 1969 along with 13 other
banks.
 Largest branch network in India -4525 Offices including
432 Extension Counters spread throughout the country.
 Ranked as 248th biggest bank in the world by bankers
Almanac, London.
 Well equipped dealing rooms; 20 different foreign currency
accounts are maintained at major centres all over the globe.

ACHIVEMENTS
 Punjab National Bank announced its Q1FY2010 results on
29 July 2009, delivering 62% y-o-y growth in net profits to
Rs832 crore (Rs512cr).
 While the bank’s deposit growth was reasonably robust at
4.4% sequentially and 26.5% y-o-y, unlike the peers its
growth in advances also remained strong at 38% y-o-y.
 Other Income surged 113% y-o-y, driven by strong
treasury gains of Rs355 crore during the quarter in line
with industry trends, even as Fee income was also robust
at 45% y-o-y, on the back of strong balance sheet growth.

AWARDS AND DISTINCTIONS
 Ranked among top 50 companies by the leading financial daily,
Economic Times.
 Ranked as 323rd biggest bank in the world by Bankers
Almanac (January 2006), London.
 Earned 9th place among India's Most Trusted top 50 service
brands in Economic Times- A.C Nielson Survey.
 Golden Peacock Award for Excellence in Corporate
Governance - 2005 by Institute of Directors.
 Included in the top 1000 banks in the world according to The
Banker, London.

CURRENT RATIO
CURRENT ASSETS
CURRENT LIABILITIES
 It is a financial ratio that measures whether or not a firm has
enough resources to pay its debts over the next 12 months.
 This ratio is used to assess the firm’s ability to meet its current
liabilities.
YEAR 2011 2012 2013 2014 2015
CURRENT
RATIO 2.8 2.6 2.3 3.4 3.7

 If current ratio is below 1 (current liabilities exceed current
assets), then the company may have problems paying its bills
on time.
 Here, Current ratio is more than 2, it means banks are liable to
pay their customers as and when they want to withdraw their
deposits.
0
0.5
1
1.5
2
2.5
3
3.5
4
2011 2012 2013 2014 2015

QUICK RATIO
CURRENT ASSETS – INVENTORIES
CURRENT LIABILITIES
 It is an indicator of a company’s short-term liquidity.
 The Quick ratio measures a company’s ability to meet its short-
term obligations with its most liquid assets.
YEAR 2011 2012 2013 2014 2015
QUICK
RATIO 2.8 2.6 2.2 3.4 3.7

 If quick ratio is higher, company may keep too much cash on
hand or have a problem collecting its accounts receivable.
 Here, Quick ratio is higher than 1:1, it means the business can
meet its current financial obligations with the available quick
funds on hand.
0
0.5
1
1.5
2
2.5
3
3.5
4
2011 2012 2013 2014 2015

DEBT EQUITY RATIO
TOTAL LONG TERM DEBT
SHAREHOLDERS FUND
 It is a financial ratio indicating the relative proportion
of shareholders' equity and debt used to finance a company's
assets.
YEAR 2011 2012 2013 2014 2015
DEBT-
EQUITY
RATIO
1.8 1.5 1.3 1.4 1.2

 A greater than 1 ratio indicates that the portion of assets
provided by creditors is greater than the portion of assets
provided by stockholders.
 Here, Debt equity ratio is more than 1, it means indicates that
the portion of assets provided by creditors is greater than the
portion of assets provided by stockholders.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2011 2012 2013 2014 2015

PROPRIETARY RATIO
SHAREHOLDERS FUND
TOTAL ASSETS
 Proprietary ratio (also known as Equity Ratio or Net worth to
Total assets or shareholder equity to total equity).
 Establishes relationship between proprietor's funds to total
resources of the unit.
YEAR 2011 2012 2013 2014 2015
RATIO 0.04 0.05 0.06 0.06 0.06

 A high proprietary ratio, indicates a strong financial position
of the company and greater security for creditors.
 A low ratio indicates that the company is already heavily
depending on debts for its operations.
0
0.01
0.02
0.03
0.04
0.05
0.06
2011 2012 2013 2014 2015

NET PROFIT RATIO
NET PROFIT x 100
SALES
 The net profit percentage is the ratio of after-tax profits to net
sales.
 It reveals the remaining profit after all costs of production,
administration, and financing have been deducted from sales,
and income taxes recognized.
YEAR 2011 2012 2013 2014 2015
NET
PROFIT
RATIO
22.6 20.8 19.8 23.8 22.9

 The higher the margin is, the more effective the company is in
converting revenue into actual profit.
 A low profit margin indicates a low margin of safety.
 Here, the Net profit ratio is higher, it means company indicates
high margin of safety.
0
5
10
15
20
25
2011 2012 2013 2014 2015

CAPITAL TURNOVER RATIO
SALES
CAPITAL EMPLOYED
 This Ratio indicates the efficiency of the organization with
which the capital employed is being utilized.
 A high capital turnover ratio indicates the capability of the
organization to achieve maximum sales with minimum amount
of capital employed.
YEAR 2011 2012 2013 2014 2015
RATIO 1.4 1.5 1.4 1.3 1.3

 Efficient utilisation of capital would lead to higher profitability.
 A high capital turnover ratio indicates the capability of the
organization to achieve maximum sales with minimum amount
of capital employed. Higher the capital turnover ratio better
will be the situation.
1.2
1.25
1.3
1.35
1.4
1.45
1.5
2011 2012 2013 2014 2015

FIXED ASSETS TURNOVER RATIO
SALES
FIXED ASSETS
 A financial ratio of net sales to fixed assets.
 The fixed-asset turnover ratio measures a company's ability
to generate net sales from fixed-asset investments -
specifically property, plant and equipment (PP&E) - net
of depreciation.
YEAR 2011 2012 2013 2014 2015
RATIO 10 12 13 14 15

 A high fixed assets turnover ratio indicates better utilization
of fixed assets and a low ratio means inefficient or under-
utilization of fixed assets.
 However, there might be situations when a high fixed asset
turnover ratio might not necessarily mean efficient use of
fixed assets.
0
2
4
6
8
10
12
14
16
2011 2012 2013 2014 2015

FINDINGS
 PNB is having a distribution network of more than 4000
branches. This is the main strength of the PNB, which cannot
be the strength of any other bank.
 Punjab National Banks are liable to pay their customers as and
when they want to withdraw their deposits.
 It can meet its current financial obligations with the available
quick funds on hand.
 Net Profit ratio of PNB indicates high margin of safety.
 Graph of Debt equity ratio is decreasing which indicates that
the portion of assets provided by stockholders is greater than
the portion of assets provided by creditors.
 Capital turnover ratio have increased in the year 2012.

CONCLUSIONS
 Financial analysis provides a clear understanding of the
organization since it should be performed in conjunction with
other valuation techniques and in comparison with other
organizations within the same industry in which the entity
operates.
 This project of Ratio analysis is not merely a work of project.
But a brief knowledge and experience of that how to analyze
the financial performance of the bank.
 According to this project, on the basis of various techniques
applied for the financial analysis of PNB we can arrive at a
conclusion that the financial position and overall performance
of the bank is satisfactory.

punjab national bank

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