Name: Kirti-S-Dodeja

Class: TY-BBI

Roll No: HSBBI008

Semester: 5th

Subject:

Topic: Financial Statement Analysis of PNB Bank

General Introduction
Bank may be defined as a financial institution which is engaged in the business of keeping
money for savings and checking accounts or for exchange or for issuing loans and credit etc. A
set of services intended for private customers and characterized by a higher quality than the
services offered to retail customers. Based on the notion of tailor-made services, it aims to
offer advice on investment, inheritance plans and provide active support for general
transactions and the resolution of asset-related problems.The essential function of a bank is to
provide services related to the storing of deposits and the extending of credit.Basic function
may include Credit collection, Issuer of banking notes, Depositor of money and lending
loans.Now a days banking is not in its traditional way , with the advancement of technology its
focusing on more comfort of customer providing services such as:
 online banking
 investment banking
 electronic banking
 internet banking
 pc banking /mobile banking
 e-banking
The importance of banking sector is immense in the progress and prosperity of
any State or country.
A Brief History
Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is the State Bank of India, a government-owned bank that traces its origins
back to June 1806 and that is the largest commercial bank in the country. Central banking is
the responsibility of the Reserve Bank of India, which in 1935 formally took over these
responsibilities from the then Imperial Bank of India, relegating it to commercial banking
functions. After India's independence in 1947, the Reserve Bank was nationalized and given
broader powers. In 1969 the government nationalized the 14 largest commercial banks; the
government nationalized the six next largest in 1980. Currently, India has 88 scheduled
commercial banks (SCBs) - 27 public sector banks (that is with the Government of India
holding a stake), 31 private banks (these do not have government stake; they may be publicly
listed and traded on stock exchanges) and 38 foreign banks. They have a combined network
of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating
agency, the public sector banks hold over 75 percent of total assets of the banking industry,
with the private and foreign banks holding 18.2% and 6.5% respectively
Growth and Present Status of Banks
In the early 1990s, the then Narsimha Rao government embarked on a policy of
liberalization, licensing a small number of private banks. These came to be known as New
Generation tech-savvy banks, and included Global Trust Bank (the first of such new
generation banks to be set up), which later amalgamated with Oriental Bank of Commerce,
Axis Bank(earlier as UTI Bank), ICICI Bank and HDFC Bank. This move, along with the
rapid growth in the economy of India, revitalized the banking sector in India, which has seen
rapid growth with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks. The next stage for the Indian
banking has been setup with the proposed relaxation in the norms for Foreign Direct
Investment, where all Foreign Investors in banks may be given voting rights which could
exceed the present cap of 10%,at present it has gone up to 49% with some restrictions.
Organization’s Profile
Name of organization : Punjab National Bank
Head Office : Bhikaji Cama
Place, New Delhi Origin of the Organization
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. From its modest beginning, the
bank has grown in size and stature to become a front-line banking institution in India at
present.
 A professionally managed bank with a successful track record of over
110 years.

 Largest branch network in India - 4525 Offices including 432 Extension

Counters spread throughout the country.

 Strategic business area covers the large Indo-Gangetic belt and the
metropolitan centres.
 Ranked as 248th biggest bank in the world by Bankers Almanac ,
London.
 Strong correspondent banking relationships with more than 217
international banks of the world.
 More than 50 renowned international banks maintain their Rupee
 Accounts with PNB.
 Well equipped dealing rooms; 20 different foreign currency accounts are
maintained at major centres all over the globe.
 Rupee drawing arrangements with M/s UAE Exchange Centre, UAE,
M/s Al Fardan Exchange Co. Doha, Qatar,M/s Bahrain Exchange Co,
Kuwait, M/s Bahrain Finance Co, Bahrain,M/s Thomas Cook Al
Rostamani Exchange Co. Dubai,UAE, and M/s Musandam Exchange,
Ruwi, Sultanate of Oman.
MEANING OF FINANCIAL STATEMENT:-
Financial statement refers to such statement which contains financial
information about an enterprise. It gives report of profitability and the financial
position of the business at the end of accounting period. The term financial
statement includes at least two statements which the accountant prepares at the
end of an accounting period. The two statements are:-
a) Balance Sheet
b) Profit and Loss Account
They provide some extremely useful information to the extent that balance
sheet mirror the financial position on a particular date in terms of the structure
of assets, liabilities and owners equity and the profit and loss account shows the
results of operations during a certain period of time in terms of the revenues
obtained and the cost incurred during the year. Thus the financial statement
provides a summarized view of financial positions and operations of a firm.
MEANING OF FINANCIAL ANALYSIS:-
The term financial analysis is also known as “Analysis and interpretation of
financial statement”.It refers to the process of determining financial strength
and weakness of the firm by establishing strategic relationship between the
items of the balance sheet, profit and loss account and other operative data.The
first task of financial analysis is to select the information relevant to the
decision under consideration to the total information contained in the financial
statement.The second step is to arrange the information in a way to highlight
significant relationship.The final step is interpretation and drawing of inference
and conclusion. Financial statement is the process of selection, relation and
evaluation.
FEATURES OF FINANCIAL ANALYSIS
The main Features of Financial Analysisare the following:-
To present a complex data contained in the financial statement in simple
andunderstandable form.
Data of PNB bank :

Total
Revenues
25,032 30,599 40,630
(In Rs. Cr.
Horizontal analysis of financial statements can also be carried out by computing
trend percentages. Trend percentage states several years’ financial data in
terms of a base year. The base year equals 100%, with all other years stated in
some percentage of this base.
Vertical Analysis:
Vertical analysis is the procedure of preparing and presenting common size
statements. Common size statement is one that shows the items appearing
on it in percentage form as well as in dollar form. Each item is stated as a
percentage of some total of which that item is a part. Key financial changes and
trends can be highlighted by the use of common size statements.
PURPOSE OF FINANCIAL ANALYSIS
The main purposes of financial analysis are the following:-
To know the earning capacity or profitability.
To know the solvency.
To know the financial strengths.
To know the capability of payment of interest & dividends.
 To make comparative study with other firms.
To know the trend of business.
To know the efficiency of mgt.
To provide useful information to mgt.
RATIO ANALYSIS
It refers to the systematic use of ratios to interpret the financial statements in
terms of the operating performance and financial position of a firm. It involves
comparison for a meaningful interpretation of the financial statements.
TYPE OF RATIO ANALYSIS:-
In view of the needs of various uses of ratios the ratios, which can be calculated
from the accounting data are classified into the following broad categories:-
a) Liquidity Ratio
b) Turnover Ratio
c) Solvency or Leverage ratios
d) Profitability ratios
BALANCE SHEET OF PNB BANK
Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '21 Mar '20 Mar '19 Mar '18 Mar '17
12 months 12 months 12 months 12 months 12 months
Capital and Liabilities:
Total Share 339.18 316.81 315.30 315.30 315.30
Capital
Equity Share 339.18 316.81 315.30 315.30 315.30
Capital
Share 0.00 0.00 0.00 0.00 0.00
Application
Money
Preference 0.00 0.00 0.00 0.00 0.00
Share Capital
Reserves 26,028.37 19,720.99 15,915.63 12,824.59 10,467.35
 Revaluation 1,449.53 1,470.76 1,491.99 1,513.74 1,535.70
Reserves
Net Worth 27,817.08 21,508.56 17,722.92 14,653.63 12,318.35
Deposits 379,588.48 312,898.73 249,329.80 209,760.50 166,457.23
Borrowings 37,264.27 31,589.69 19,262.37 4,374.36 5,446.56
Total Debt 416,852.75 344,488.42 268,592.17 214,134.86 171,903.79
Other Liabilities 13,524.18 12,328.27 10,317.69 18,130.13 14,798.23
& Provisions
Total Liabilities 458,194.01 378,325.25 296,632.78 246,918.62 199,020.37

Mar '21 Mar '20 Mar '19 Mar '18 Mar '17
12 months 12 months 12 months 12 months 12 months
Assets
Cash & Balances 18,492.90 23,776.90 18,327.58 17,058.25 15,258.15
with RBI
Balance with 10,335.14 5,914.32 5,145.99 4,354.89 3,572.57
Banks, Money at
Call
Advances 293,774.76 242,106.67 186,601.21 154,702.99 119,501.57
Investments 122,629.47 95,162.35 77,724.47 63,385.18 53,991.71
Gross Block 5,265.08 4,981.60 4,215.21 3,930.36 3,699.64
Accumulated 2,096.22 1,876.01 1,701.74 1,533.25 1,384.12
Depreciation
Net Block 3,168.86 3,105.59 2,513.47 2,397.11 2,315.52
Capital Work In 0.00 0.00 0.00 0.00 0.00
Progress
Other Assets 9,792.88 8,259.42 6,320.07 5,020.20 4,380.84
Total Assets 458,194.01 378,325.25 296,632.79 246,918.62 199,020.36
Contingent 173,768.84 101,465.73 68,124.47 79,270.65 80,606.88
Liabilities
Bills for collection 50,981.22 37,449.53 33,215.78 31,941.43 23,448.99
Book Value (Rs) 777.39 632.48 514.77 416.74 341.98
 PROFIT AND LOSS ACCOUNT

Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '21 Mar '20 Mar '19 Mar '18 Mar '17
12 12 12 12 months 12 months
months months months
Income
Interest Earned 36,428.03 26,986.48 21,466.91 19,326.16 14,265.02
Other Income 4,202.60 3,612.58 3,565.31 2,919.69 1,997.56
Total Income 40,630.63 30,599.06 25,032.22 22,245.85 16,262.58
Expenditure
Interest expended 23,013.59 15,179.14 12,944.02 12,295.30 8,730.86
Employee Cost 4,723.48 4,461.10 3,121.14 2,924.38 2,461.54
Selling and Admin 3,353.59 2,813.45 1,701.46 1,406.42 884.19
Expenses
Depreciation 292.26 255.85 222.83 191.06 170.23
Miscellaneous 4,363.51 3,456.02 3,137.42 2,337.80 1,966.98
Expenses
Preoperative Exp 0.00 0.00 0.00 0.00 0.00
Capitalized
Operating Expenses 9,405.85 8,367.96 5,761.36 5,026.81 3,902.55
Provisions & 3,326.99 2,618.46 2,421.49 1,832.85 1,580.39
Contingencies
Total Expenses 35,746.43 26,165.56 21,126.87 19,154.96 14,213.80

Mar '21 Mar '20 Mar '19 Mar '18 Mar '17

12 months 12 12 12 12
months months months months
Net Profit for the Year 4,884.20 4,433.50 3,905.36 3,090.88 2,048.76
Extraordinary Items 7.88 0.00 0.00 0.00 0.00

Profit brought forward 0.00 0.00 7.64 0.00 15.52

Total 4,892.08 4,433.50 3,913.00 3,090.88 2,064.28

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 746.19 696.99 693.67 630.61 409.89

Corporate Dividend Tax 121.05 113.07 116.43 107.17 69.66

Per share data (annualized)

Earnings Per Share (Rs) 144.00 139.94 123.86 98.03 64.98

Equity Dividend (%) 220.00 220.00 220.00 200.00 130.00

Book Value (Rs) 777.39 632.48 514.77 416.74 341.98

Appropriations

Transfer to Statutory Reserves 1,390.32 1,258.39 1,532.46 1,155.46 596.14

Transfer to Other Reserves 2,634.53 2,365.05 1,570.44 1,190.00 988.59

Proposed Dividend/Transfer to 867.24 810.06 810.10 737.78 479.55

Govt.
Balance c/f to Balance Sheet 0.00 0.00 0.00 7.64 0.00

Total 4,892.09 4,433.50 3,913.00 3,090.88 2,064.28

FINANCIAL RATIOS

Key Financial Ratios

Mar '21 Mar '20 Mar '19 Mar '18 Mar '17
 Investment Valuation Ratios

Face Value 10.00 10.00 10.00 10.00 10.00

Dividend Per Share 22.00 22.00 22.00 20.00 13.00

Operating Profit Per Share (Rs) 223.61 205.58 191.63 151.48 109.81

Net Operating Profit Per Share 1,170.81 940.76 777.82 694.81 505.09
(Rs)
Free Reserves Per Share (Rs) 130.21 69.25 63.79 64.04 63.79

Bonus in Equity Capital -- -- -- -- --

Profitability Ratios

Interest Spread 4.51 4.67 4.46 4.18 4.18

Adjusted Cash Margin(%) 12.80 15.39 16.52 14.60 13.72

Net Profit Margin 12.09 14.56 15.64 13.76 12.68

Return on Long Term Fund(%) 113.95 108.49 116.11 129.83 111.52

Return on Net Worth(%) 18.52 22.12 24.06 23.52 19.00

Adjusted Return on Net Worth 18.50 22.11 24.04 23.50 18.99

(%)
Return on Assets 777.39 632.48 514.77 416.74 341.98
Excluding
Revaluations
Return on Assets 820.13 678.91 562.09 464.75 390.68
Including
Revaluations

Management Efficiency Ratios

Interest Income / Total Funds 9.53 8.87 9.07 9.89 8.86
Net Interest Income / Total Funds 4.01 4.35 4.28 4.34 4.00
Non Interest Income / Total Funds 0.16 0.19 0.16 0.25 0.13
Interest Expended / Total Funds 5.52 4.52 4.79 5.55 4.86
Operating Expense / Total Funds 2.19 2.41 2.05 2.18 2.08
Profit Before Provisions / Total Funds 1.91 2.05 2.31 2.32 1.96
Net Profit / Total Funds 1.17 1.32 1.45 1.40 1.14
Loans Turnover 0.15 0.14 0.14 0.16 0.15
Total Income / Capital Employed (%) 9.69 9.06 9.24 10.14 8.99
Interest Expended / Capital Employed 5.52 4.52 4.79 5.55 4.86
(%)
Total Assets Turnover Ratios 0.10 0.09 0.09 0.10 0.09
Asset Turnover Ratio 0.10 0.09 0.10 0.11 4.35
Profit And Loss Account Ratios
Interest Expended / Interest Earned 63.18 56.25 60.30 63.62 61.20
Other Income / Total Income 1.68 2.12 1.75 2.46 1.43
Operating Expense / Total Income 22.56 26.64 22.19 21.53 23.10
Selling Distribution Cost Composition 0.09 0.13 0.16 0.14 0.14
Balance Sheet Ratios
Capital Adequacy Ratio 12.63 12.42 14.16 14.03 13.46
Advances / Loans Funds (%) 77.17 78.98 77.31 80.15 76.19
Debt 7Coverage Ratios

Credit Deposit Ratio 77.39 76.25 74.34 72.88 70.55

Investment Deposit Ratio 31.45 30.75 30.74 31.20 32.38

Cash Deposit Ratio 6.10 7.49 7.71 8.59 9.02

Total Debt to Owners Fund 14.40 15.62 15.36 15.96 15.44

Financial Charges Coverage Ratio 0.36 0.47 0.50 0.43 0.42

Financial Charges Coverage Ratio 1.22 1.31 1.32 1.27 1.25

Post Tax
Leverage Ratios

Current Ratio 0.02 0.03 0.02 0.02 0.02

Quick Ratio 23.81 22.24 20.47 9.75 9.40

Cash Flow Indicator Ratios

Dividend Payout Ratio Net Profit 17.75 18.27 20.74 23.86 23.40

Dividend Payout Ratio Cash Profit 16.75 17.27 19.62 22.47 21.61

Earning Retention Ratio 82.23 81.72 79.25 76.12 76.59

Cash Earning Retention Ratio 83.24 82.72 80.37 77.51 78.38

Adjusted Cash Flow Times 73.39 66.77 60.43 63.95 75.05

Mar '16 Mar '15 Mar Mar Mar

'14 '13 '12
Earnings Per Share 144.00 139.94 123.86 98.03 64.98

Book Value 777.39 632.48 514.77 416.74 341.98

RESEARCH METHODOLOGY
Research Methodology refers to the method the researchers use in performing
research operations. In other words, all those methods, which are used by the
researcher during the course of studying his research problem, are termed as
Research Methods.
Objectives of study
 To study the ratio analysis of Punjab National Bank.
 To study the balance sheet of the Punjab National Bank.

 To analysis the financial statement i.e Profit & Loss Account and Balance sheet of
Punjab National Bank.
 To evaluate the Financial Ratios, Stability and Liquidity of Punjab National Bank
Current Ratio
The current ratio is a financial ratio that shows the proportion of a company's current
assets to its current liabilities. The current ratio is often classified as a liquidity ratio
and a larger current ratio is better than a smaller one. However, a company's liquidity
is dependent on converting the current assets to cash in time to pay its obligations.
Current Ratio = Current Assets
Curent Liabilities
Table 1

Current Ratio
Year 2021 2020 2019 2018 2017
Current Assets 4736.95 3937.39 3278.99 2479.61 1963.67
Current Liabilities 1854.95 1492.71 1632.70 1457.73 1355.45
Ratios 2.55 2.64 2.01 1.68 1.46

GRAPH 1

3
2.5
2
1.5 2.5 2.6
1 4 2.0 1.6
5 1.4
0.5 1 8 6
0
202 202 201 201 201
1 0 9 8 7
Current
Ratio

Interpretation
 Current ratio is always 2:1 it means the current assets two time of
current liability.
 After observing the figure the current ratio is fluctuating.
 In the year 2019 ratio is showing good shine.
 Company’s current ratio has increased in 2019, but has reduced in 2017;
this signifies a diminishing short term solvency.
 1) Quick Ratio
The quick ratio is an indicator of a company’s short-term liquidity position and
measures a company’s ability to meet its short-term obligations with its most
liquid assets. Since it indicates the company’s ability to instantly use its near-cash
assets (that is, assets that can be converted quickly to cash) to pay down its current
liabilities, it is also called as the acid test ratio. An acid test is a quick test
designed to produce instant results—hence, the name.
Quick Ratio = Quick Assets

Qucik Liabilities
Table 2
Quick Ratio
Year 2021 2020 2019 2018 2017
Quick Assets 3771.4 3034.92 2335.81 1658.8 1119.57
Quick Liabilities 1854.95 1492.71 1632.70 1475.73 1355.45
Ratios 2.03 2.03 1.43 1.12 0.83
Graph 2

2.5

1.5

1 2.03 2.03
1.43
1.12
0.5 0.83

0
2021 2020 2019 2018 2017

Quick Ratio

Interpretation
 Standard Ratio is 1:1
 Company’s Quick liabilities is more than Quick assets for all these 5 years.
 The company do not have the immediate solvency as the ratios of
 the company are below standard ratio that is 1:1.
 This indicates the funds are locked-up in inventories, it is
suggested to reduce the inventory level to increase the immediate
solvency and ratio of the company.
 The quick ratio was at its peak in year 2020 and 2021, while it was
lowest in year 2017.
Conclusion
On the basis of various techniques applied for the financial analysis of PNB Bank wecan arrive at a
conclusion that the financial position and overall performance of the bank is satisfactory. The income
of the bank has increased over the period but not in the same pace of expenses. But the bank has
succeeded in maintaining a reasonable profitability position.The bank has succeeded in increasing its
share capital also which has increased around50% in the last 5 years. Individuals are the major
shareholders. The major achievement of the bank has been a tremendous increase in its deposits, which
has always been its mainobjective. Fixed and current deposits have also shown an increasing
trend.Equity shareholders are also enjoying an increasing trend in the return on their capital.Though
current assets and liabilities (current liquidity) of the bank is not so satisfactory but bank has
succeeded in maintaining a stable solvency position over the years. As far asthe ratio of external and
internal equity is concerned, it is clear that bank has been usingmore amount of external equity in the
form of loans and borrowings than owner’s equity.Bank’s investments are also showing an increasing
trend. Due to increase in advances,the interest received by the bank from such advances is proving to
be the major source of income for the bank.
WEBLIOGRAPHY

WEBSITES:
 http://www.google.com/
 http://www.moneycontral.com/
 http://www.pnbindia.in/
 http://www.wikipedia.com/
 http://www.scribd.com/