Methodology: How we did it
The data for the study is based on the published annual reports of banks
and the Reserve Bank of India's publication
The Data: The data for the study is based on the published annual reports of banks and the Reserve Bank of India's publication
A Profile of Banks: 2009-10. All the fi gures used are those reported for the financial year 2009-10.
The Universe: The ranking covers 67 scheduled commercial banks that had provided their annual reports at the time of conducting the study.
Banks excluded from the study: SBI Commercial & International Bank, JSC VTB Bank, UBS AG, Bank International Indonesia, Chinatrust Commercial Bank, Sonali Bank, American Express Banking Corporation, Credit Agricole Corporate and Investment Bank, AB Bank, Bank of Ceylon and Calyon Bank. These banks have been excluded on account of non-availability of their annual reports at the time of conducting the study.
Note: For foreign banks with nil non-performing assets, or NPAs, the NPA coverage has been graded at 100 per cent, according them the highest rank in this category
The ranking parameters: The BT-KPMG ranking study consists of three broad categories: growth, size and strength. These were further subdivided into 26 parameters as explained below
GROWTH (over 2008-09)
Growth in deposits; growth in loans and advances; growth in fee income (income from commissions, exchange brokerage and miscellaneous income); growth in operating profi t; absolute increase in market share of deposits (market share is based on the deposits of all banks that are a part of the survey); absolute increase in market share of current account, savings account, or CASA (market share is based on total CASA of all banks that are a part of the survey); three-year compounded annual growth rate, or CAGR, of total deposits from 2006-07 to 2009-10; three-year CAGR of loans and advances from 2006-07 to 2009-10; three-year CAGR of fee income from 2006-07 to 2009-10; three-year CAGR of operating profi t from 2006-07 to 2009-10.
SIZE
Total deposits; operating profit; balance sheet size as on March 31, 2010
STRENGTH
Quality of Assets: Total NPA growth ratio: Additions to non-performing assets during the year expressed as a percentage of average net advances; NPA coverage: provisions for NPAs expressed as a percentage of gross NPA closing balance; net NPAs/net advances: gross NPAs net of provisions expressed as a percentage of net advances.
Productivity and Efficiency: Cost-toincome ratio: operating expenditure expressed as a percentage of operating income; cost to average asset ratio: operating expenditure expressed as a percentage of average assets; operating profi t per employee; absolute increase in return on assets - net profi t over total assets - over 2008-09; growth in ratio of operating profi t to total income over 2008-09.
Quality of Earnings: Return on assets: ratio of net profi t to total assets for 2009-10; fee income to total income; return on capital employed: reported net profi t divided by the average net worth of the bank; net interest income to average working funds: Interest earnings expressed as a percentage of AWF (total average assets of the bank less average of other liabilities).
Capital Adequacy: Capital-to-risk weighted assets ratio, as published by the bank for 2009-10.
The process: We have grouped the banks into three sets based on their balance sheet size and number of branches. Set A: 31 banks with a balance sheet size greater than Rs 50,000 crore; Set B: 20 banks with a balance sheet size less than Rs 50,000 crore and with more than 10 branches; Set C1: Seven banks with a balance sheet size greater than Rs 3,000 crore and with fewer than 10 branches; Set C2: Nine banks with a balance sheet size less than Rs 3,000 crore, and with fewer than 10 branches. Note: In previous years' studies, Set A had banks with a balance sheet size greater than Rs 24,000 crore; this year we have increased that limit to Rs 50,000 crore, as banks have signifi cantly expanded their balance sheets over the past few years on account of buoyant economic growth and a rise in credit offtake. This also allows more of the rapidly-growing banks, which would otherwise be low down on the list in Set A, to make their presence felt in Set B, which now considers banks with a balance sheet size less than Rs 50,000 crore and with more than 10 branches.
Rank: The composite rank of a bank was calculated using BT-KPMG's methodology. The rank of each bank in 2009-10 on the individual parameter has also been presented. The composite rank for each bank was arrived at by combining its ranks on each of the 26 parameters, using a weight for each parameter.
The computation: To compute a bank's total score, it was assigned a score for each of the 26 parameters based on its ranks on the parameter. For example, a bank in Set A with a rank of one earned a score of 31 (as there are 31 banks in the comparison set), a rank of two earned a score of 30 and so on, down to the rank of 31, which earned a score of one. The score under each parameter was then multiplied by the weightage assigned to that parameter. The results were aggregated to compute each bank's total score, on the basis of which the fi nal ranks were assigned.
A Profile of Banks: 2009-10. All the fi gures used are those reported for the financial year 2009-10.
The Universe: The ranking covers 67 scheduled commercial banks that had provided their annual reports at the time of conducting the study.
Banks excluded from the study: SBI Commercial & International Bank, JSC VTB Bank, UBS AG, Bank International Indonesia, Chinatrust Commercial Bank, Sonali Bank, American Express Banking Corporation, Credit Agricole Corporate and Investment Bank, AB Bank, Bank of Ceylon and Calyon Bank. These banks have been excluded on account of non-availability of their annual reports at the time of conducting the study.
Note: For foreign banks with nil non-performing assets, or NPAs, the NPA coverage has been graded at 100 per cent, according them the highest rank in this category
The ranking parameters: The BT-KPMG ranking study consists of three broad categories: growth, size and strength. These were further subdivided into 26 parameters as explained below
GROWTH (over 2008-09)
Growth in deposits; growth in loans and advances; growth in fee income (income from commissions, exchange brokerage and miscellaneous income); growth in operating profi t; absolute increase in market share of deposits (market share is based on the deposits of all banks that are a part of the survey); absolute increase in market share of current account, savings account, or CASA (market share is based on total CASA of all banks that are a part of the survey); three-year compounded annual growth rate, or CAGR, of total deposits from 2006-07 to 2009-10; three-year CAGR of loans and advances from 2006-07 to 2009-10; three-year CAGR of fee income from 2006-07 to 2009-10; three-year CAGR of operating profi t from 2006-07 to 2009-10.
SIZE
Total deposits; operating profit; balance sheet size as on March 31, 2010
STRENGTH
Quality of Assets: Total NPA growth ratio: Additions to non-performing assets during the year expressed as a percentage of average net advances; NPA coverage: provisions for NPAs expressed as a percentage of gross NPA closing balance; net NPAs/net advances: gross NPAs net of provisions expressed as a percentage of net advances.
Productivity and Efficiency: Cost-toincome ratio: operating expenditure expressed as a percentage of operating income; cost to average asset ratio: operating expenditure expressed as a percentage of average assets; operating profi t per employee; absolute increase in return on assets - net profi t over total assets - over 2008-09; growth in ratio of operating profi t to total income over 2008-09.
Quality of Earnings: Return on assets: ratio of net profi t to total assets for 2009-10; fee income to total income; return on capital employed: reported net profi t divided by the average net worth of the bank; net interest income to average working funds: Interest earnings expressed as a percentage of AWF (total average assets of the bank less average of other liabilities).
Capital Adequacy: Capital-to-risk weighted assets ratio, as published by the bank for 2009-10.
The process: We have grouped the banks into three sets based on their balance sheet size and number of branches. Set A: 31 banks with a balance sheet size greater than Rs 50,000 crore; Set B: 20 banks with a balance sheet size less than Rs 50,000 crore and with more than 10 branches; Set C1: Seven banks with a balance sheet size greater than Rs 3,000 crore and with fewer than 10 branches; Set C2: Nine banks with a balance sheet size less than Rs 3,000 crore, and with fewer than 10 branches. Note: In previous years' studies, Set A had banks with a balance sheet size greater than Rs 24,000 crore; this year we have increased that limit to Rs 50,000 crore, as banks have signifi cantly expanded their balance sheets over the past few years on account of buoyant economic growth and a rise in credit offtake. This also allows more of the rapidly-growing banks, which would otherwise be low down on the list in Set A, to make their presence felt in Set B, which now considers banks with a balance sheet size less than Rs 50,000 crore and with more than 10 branches.
Rank: The composite rank of a bank was calculated using BT-KPMG's methodology. The rank of each bank in 2009-10 on the individual parameter has also been presented. The composite rank for each bank was arrived at by combining its ranks on each of the 26 parameters, using a weight for each parameter.
The computation: To compute a bank's total score, it was assigned a score for each of the 26 parameters based on its ranks on the parameter. For example, a bank in Set A with a rank of one earned a score of 31 (as there are 31 banks in the comparison set), a rank of two earned a score of 30 and so on, down to the rank of 31, which earned a score of one. The score under each parameter was then multiplied by the weightage assigned to that parameter. The results were aggregated to compute each bank's total score, on the basis of which the fi nal ranks were assigned.
