Objective:

To analyze the performance of ICICI Bank and RBL bank based on liquidity, profitability and
Efficiency ratios.

Methodology:
Annual report of financial year 2016-17 is being used for ratio analysis of ICICI and RBL bank.

ICICI Bank Profile:

ICICI Bank is India's largest private sector bank with total consolidated assets of Rs. 9,860.43
billion (US$ 152.0 billion) at March 31, 2017 and profit after tax of Rs. 98.01 billion (US$ 1.5
billion) for the year ended March 31, 2017. ICICI Bank currently has a network of 4,850 Branches
and 13,859 ATM's across India. It offers a wide range of banking products and financial services
for corporate and retail customers through a variety of delivery channels and specialized
subsidiaries in the areas of investment banking, life, non-life insurance, venture capital and asset
management. The bank has a network of 4,850 branches and 14,404 ATMs in India, and has a
presence in 19 countries including India.

RBL Bank Profile:

RBL Bank is one of Indias fastest growing private sector banks with an expanding presence across
the country. It currently services over two million customers through a network of 237 branches
and 375 ATMs spread across 16 Indian states and Union Territories. RBL Bank has been
recognized by the World Economic Forum as a Global Growth Company (GCC). The Bank has
also been awarded as Indias Best Bank (Growth) in the Small-Sized Bank Segment by
Business Today-KPMG Best Bank Study for five consecutive years (2012-16).

Established in 1943, RBL Bank started a transformational journey under a new management team
in 2010. Today, the Bank offers specialized services under six business verticals namely:
Corporate & Institutional Banking, Commercial Banking, Branch & Business Banking,
Agribusiness Banking, Development Banking and Financial Inclusion, Treasury and Financial
Markets Operations.
 Ratio Analysis

Liquidity Ratios:

Liquidity, or the amount of cash or cash-like assets on the balance sheet, is critical for any bank.
Banks must meet funding needs for their operations, they must be able to repay their own debts,
and they must have enough cash on hand to meet withdrawal requests, and fund new loans for
customers. A lack of liquidity is the fastest path to failure for a bank, so investors should always
pay very close attention to bank liquidity positions. Below are few ratios that can be used to analyze
liquidity positioning of bank.

Liquidity Ratios

ICICI Bank RBL Bank

Sr No
Cash to Demand Deposit 0.123 0.28
1
Higher ratio indicated better liquidity position of bank. RBL has better liquidity position as compare
to ICICI

Demand to time deposit 0.101 0.299

2
Higher ratio indicates more liquidity is required by the bank. From above values we can see that RBL
will have to increase its liquidity position

Short term Investment to total asset 0.0373 0.035

3
Higher ratio indicates more liquid is the banks asset portfolio. Both bank have almost same ratio.

SLR investment to total investment 0.76 0.46

4
Higher ratio indicates higher liquidity. ICICI has better liquidity positioning as compare to RBL
Profitability Ratio:

Banks earn profit by earning more then what they pay in expenses. The major portion of banks
profit comes from the fees that it charges for its services and the interest that it earns on its
assets. Its major expense is the interest paid on its liabilities.

The major assets of a bank are loans to individuals, businesses and the securities that it holds,
while major are its deposits and the money that it borrows either from the other banks or by
selling commercial paper in the money market.

Profitability Ratios
Sr No ICICI Bank RBL Bank
Profit Margin
1 (Net Profit/Total Income) 0.2646 0.1008
Higher the profit ratio higher is the profitability of Bank. Clearly ICICI is more
profitable than RBL
Asset Utilization Ratio
2 Total Income/Total Asset 0.115 0.0918
This ratio indicated how well bank is utilizing its asset to generate income. ICICI is
better with asset utilization as compare to RBL bank

Cost of Funds
(Interest expense/ (Interest bearing deposit
3 +borrowings)) 0.0545 0.049
Higher the ratio Higher is the cost of Funds. For ICICI cost of fund is more as
compare to RBL bank.
Net Interest Margin
4 (Net interest/Total Asset) 0.0281 0.026
This ratio gives idea about the fund based income for bank. As ICICI bank has
slightly higher ratio it shows that ICICI
Bank has more fund base income as compare to RBL
ROE
5 (Net Profit/Average Shareholders Fund) 0.1034 0.3019
RBL has higher ROE as compare to ICICI bank
ROA
6 (Net Profit/Total Asset) 0.091 0.03
ROA for ICICI bank is better as compare to RBL which shows ICICI is able to
generate
more profit through its deployed assets as compare to RBL bank
Efficiency Ratio:

These ratios describe how well the financial institution controls expenses relative to producing
revenues and how productive employees are in terms of generating income, managing assets and
handling accounts.

Efficiency Ratios
Sr No ICICI Bank RBL Bank
Operating Efficiency
1 (Total operating expense/total assets) 0.04885 0.0217

Operating efficiency of ICICI bank is better than that of RBL bank

2 Non-Interest Income/ Total Income 0.264 0.4626

Share of non-interest income is more for RBL as compare to ICICI bank

From above ratios we can see that ICICI bank is better positioned and has higher profitability as
compared to RBL bank.