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ABSTRACT: Banks play an important role in the economic development of a country. They are the lifeblood
of modern commerce and have control over a large part of money supply. A bank is a financial intermediary
that accepts deposits and channels them into lending activities. It plays a vital role in the marketing of new type
of deposits and advances schemes. The operational efficiency, service quality and managerial effectiveness are
the main areas to observe the performance of a bank. The financial performance of a bank can be measured as
the achievement of the bank in terms of profitability position, service quality, customer satisfaction and other
relevant aspects. The profitability of a bank denotes the efficiency with which a bank deploys its total resources
to optimize its net profits and thus serve as an index to the degree of asset utilization and managerial
effectiveness. At present, the Indian banking system faces a number of difficult challenges. In such a scenario,
the present study is an attempt to measure the financial performance of the second largest public sector bank of
India i.e. Punjab National Bank. This study is entirely based on secondary data and different ratios have been
applied to evaluate the financial performance of the bank along with regression analysis with the help of SPSS
20.0. The study concluded that the selected bank has performed well on the sources of growth rate and financial
efficiency but profitability position has been found poor during the study period.
Keywords: Public Sector Bank, Punjab National Bank, Return on Assets, Return on Equity, Net profit Margin.
I. INTRODUCTION
A good bank is not only the financial heart of the community but also a helping hand in every possible
manner to improve the economic condition of the society. Banks are a fundamental component of the financial
system and are also active players in financial markets. The essential role of a bank is to connect those who have
capital (investors or depositors), to those who seek capital (individuals or firms). Banks have control over a
large part of the supply of money in circulation. Through their influence over the volume of bank money, they
can influence nature and character of production in any country. Economic development is a dynamic and
continuous process which highly depends upon the extent of mobilization of resources, investment and
operational efficiency of various segments i.e. trade, industrial development, and agriculture of the economy.
Thus, in a modern economy like India, banks have become a part and parcel of all economic activities.
Banks play a significant role in the economic development of all the Nations of the world. In fact,
Banking is the lifeblood of Modern Commerce. From its original narrow scope and modest purpose of taking
care of other peoples money and lending a part of it, banking has developed to such an extent that, in countries
like England, France and the U.S.A., there is hardly a Business deal without the assistance of a Bank is sought in
one form or another (Srivastava, 2013). The present study is divided into four parts. The first part provides the
introductory background of the topic; a concise survey of available literature has been conducted in the second
part of the study. Third section provides the detailed methodology of present research and the fourth section of
the study is concerned with data analysis and interpretation. The fifth part covers the concluding remarks and
suggestions.
Financial Performance Evaluation: A Brief Review
Financial Analysis is a process of synthesis and summarization of financial and operative data to get an
insight into the operative activities of a business concern. Financial analysis consists of comparisons for the
same company over periods of time or comparisons of different companies either in the same industry or in
different industries. It may be done for a variety of purposes, which may range from a simple analysis of the
short term liquidity position of the firm to a comprehensive assessment of the strengths and weaknesses in
various areas. It is helpful in assessing corporate excellence, operating efficiency, judging credit worthiness,
forecasting bond ratings, predicting bankruptcy and assessing market risk. The financial analysis can be
performed by analysts who work for the firm or by outsiders like investors, creditors, lenders, suppliers,
customers, security analysts, academicians, researchers, environmental protection organizations, special interest
lobbying groups, government and other regulatory bodies.
There are numbers of tools and techniques available for the performance evaluation of a bank like Data
Envelopment Analysis, CAMEL model and ratio analysis, etc. Financial analysis of a bank can be done mainly
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Total Business
673363
700356
800666
881913
965377
Deposits
379588
391560
451397
501379
553051
Advances
293775
308796
349269
380534
412326
Total Assets
458194
478948
550420
603334
667390
Capital
27817
32676
35895
39080
38310
Net Profit
5730
4884
4748
3343
3062
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Total Advances
293775
308796
349269
380534
412326
Total Assets
458194
478948
550420
603334
667390
ATAR
64.1159
64.4738
63.455
63.0719
61.7819
Capital
27817
32676
35895
39080
38310
Total Deposit
379588
391560
451397
501379
553051
CDR
7.32821
8.34508
7.95198
7.7945
6.92703
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Credit
293775
308796
349269
380534
412326
Total Deposit
379588
391560
451397
501379
553051
CDR
77.393
78.863
77.375
75.897
74.555
Net Profit
4884
4748
3343
3062
-3974
Total Asset
458194
478948
550420
603334
667390
ROA
1.06592
0.99134
0.60735
0.50751
-0.5955
Net Profit
4884
4748
3343
3062
-3974
Net Worth
27817
32676
35895
39080
38310
ROE
17.5576
14.5305
9.31327
7.83521
-10.373
Net Profit
4884
4748
3343
3062
-3974
Total Deposit
379588
391560
451397
501379
553051
NPM
1.28666
1.21259
0.74059
0.61072
-0.7186
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Coefficient
10973.41
-0.014537
0.904423
0.872564
28.38832
0.012920
Std. Error
1255.86
0.002728
t-statistics
8.741759
-5.328069
p-value
0.0032
0.0129
Variables
11962.70
-0.021807
0.915944
0.887925
32.69028
0.010616
Std. Error
1341.398
0.003814
t-statistic
8.918084
-5.717542
p-value
0.0030
0.0106
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Bank should obey the RBI norms and provide facilities as per the norms.
It should provide loan at the lower interest rate and education loans should be given with ease without
much documentation. The bank must provide loans against shares.
Fair dealing with the customers and more contribution from the employee of the bank should be
cooperative.
24 hours banking should be induced so as to facilitate the customers who may not have a free time in the
daytime. It will help in facing the competition more effectively.
Customers generally complain that full knowledge is not granted to them. Thus the bank should properly
disclose the features of the product and services to the customers.
The branch should promote cooperation and coordination among employees which help them in efficient
working.
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