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Submitted in partial fulfillment of the requirements for qualifying

Post Graduate Diploma in Management





With Candor and Pleasure I take opportunity to express my sincere thanks and obligation to my esteemed guide …………………….  It is because of his indispensable and mature guidance and co-operation without which it would not have been possible for me to complete my project.

Finally, I gratefully acknowledge the support, encouragement & patience of my family, and as always, nothing in my life would be possible without God, Thank You!







I hereby declare that this project work titled “ANALYSIS OF FINANCIAL PERFORMANCE OF UNION BANK OF INDIA FROM INVESTMENT PERSPECTIVE” is my original work and no part of it has been submitted for any other degree purpose or published in any other from till date.











  1. Introduction to topic…………………………………………….…..
  1. Review of Literature…………………………………………………
  1. Objective of the Research……………………………..…………….
  1. Research Methodology………………………………………….…..
  1. Data Analysis…………………………………………..….….……..
  1. Conclusion and Major Finds………………………….……….……
  1. Limitations……..…………………..…….…………………………
  1. References.…………………………………………………………..
  1.  Questionnaire …………………………………………………..…..













Investment may be defined as, “a commitment of funds made in the expectations of some positive rate of return. It is the sacrifice of a certain sum of money for some uncertain reward in future.

Investment is the choice by the individual to risk his savings with the hope of gain. Rather than store the good produced, or its money equivalent, the investor chooses to use that good either to create a durable consumer or producer good, or to lend the original saved good to another in exchange for either interest or a share of the profits.



Indian Banking System: The Current State & Road Ahead



Recent time has witnessed the world economy develop serious difficulties in terms of lapse of banking & financial institutions and plunging demand. Prospects became very uncertain causing recession in major economies. However, amidst all this chaos India’s banking sector has been amongst the few to maintain resilience.

A progressively growing balance sheet, higher pace of credit expansion, expanding profitability and productivity akin to banks in developed markets, lower incidence of nonperforming assets and focus on financial inclusion have contributed to making Indian banking vibrant and strong. Indian banks have begun to revise their growth approach and re-evaluate the prospects on hand to keep the economy rolling.



The pace of development for the Indian banking industry has been tremendous over the past decade. As the world reels from the global financial meltdown, India’s banking sector has been one of the very few to actually maintain resilience while continuing to provide growth opportunities, a feat unlikely to be matched by other developed markets around the world. FICCI conducted a survey on the Indian Banking Industry to assess the competitive advantage offered by the banking sector, as well as the policies and structures required to further stimulate the pace of growth.


It is desirable to review the relevant literature while understanding the research problem. It provides base for preparing the research design of the study and conceptualizing different concepts. In this chapter a brief review of these studies, pertinent to the present research have been presented.



According to Amitabh Dugar   & Siva Nathan in 20th April 2010:

This study shows that financial analysts of brokerage firms that provide investment banking services to a company (investment banker analysts) are optimistic, relative to other (noninvestment banker) analysts, in their earnings forecasts and investment recommendations. Returns earned by following the investment recommendations of investment banker analysts, however, are not significantly different from those of non-investment banker analysts. Given that information regarding the investment banking relationships of brokerage firms is publicly available, we find evidence that capital market participants rely relatively less on the investment banker analysts in forming their earnings expectations. Although we find a significant capital market reaction around the noninvestment banker analysts’ research report dates and not around the investment banker analysts’ research report dates, the difference between the two market reactions is not statistically significant.


According to Fariborz Moshirian & Toan Pham in 1999:

As foreign direct investment in banking is part of trade in financial services and as the prospects of Australia’s trade in financial services to Asian countries has increased, this paper intends to analyse and measure Australia’s foreign direct investment in banking. The paper distinguishes between banks’ activities abroad and investors’ (banks and nonbanks) FDI in banking. The flow model of FDI in banking based on the eclectic theory of FDI identifies those factors which are most relevant to financial services as opposed to manufacturing. The empirical results of this study indicate that the relative cost of capital, the size of the foreign banking market, the exchange rate, relative economic growth, FDI in manufacturing and Australia’s banks’ foreign assets are the major determinants of her FDI in banking.

According to Caroline Fohlin in 17th December 2002:

Close bank relationships are thought to ameliorate firms’ liquidity constraints – a phenomenon frequently measured by liquidity sensitivity of investment. Using German firms during the formative years of universal banking (1903–1913), this paper shows that, even controlling for selection bias, investment is more sensitive to internal liquidity for bank-networked firms than unattached firms. The firm exhibiting the greatest liquidity sensitivity, however, faced no apparent liquidity constraint. The findings yield two implications: they support recent research rejecting a linear relationship between liquidity sensitivity and financing constraints, and they suggest that relationship banking provides no consistent lessening of firms’ liquidity sensitivity


According to Robyn M. McLaughlin in 22 April 2002:

Empirical analysis reveals that investment-banker advisory fees in tender offers average 1.29% of the value of a completed transaction, far below the levels often alluded to in the business press. Most fees are contingent on offer outcome, with target-firm fees typically contingent on transaction value and bidding-firm fees on the number of shares purchased. Although these contingent contracts motivate investment bankers to satisfy some client objectives, many also create conflicts of interest between banker and firm. These incentive problems are apparent in offer evaluation, in hostile offers, and in the price paid by bidding firms

According to  PATRICIA C. O’BRIEN in 15 JUL 2005:

This study examines whether investment banking ties influence the speed with which analysts convey unfavorable news. We hypothesize that affiliated analysts have incentives to respond promptly to good news but prefer not to issue bad news about client companies. Using duration models of the time between an equity issue and the first downgrade, we find affiliated analysts are slower to downgrade from Buy and Hold recommendations and significantly faster to upgrade from Hold recommendations, in both within-analyst and within-issuer tests. We also find affiliated analysts issue recommendations sooner and more frequently after an offering than unaffiliated analysts, and that unaffiliated analysts are more likely than affiliated analysts to drop coverage of sample firms. Our findings indicate that banking ties increase analysts’ reluctance to reveal negative news, and that reform efforts must carefully consider the incentives of affiliated and unaffiliated analysts to initiate coverage and convey the results of their research.



  1. To analyze the financial statements of the Union Bank of India along with the data available with other institutions and sources to find the comprehensive picture of the probable future financial performance of the UBI group.
  2. To analyze the use fullness from the investor’s perspective in group’s stocks, lenders as well as business entities conducting business with the UBI and its associate banks.
  3. To do the ratio analysis to find out the profitability of the bank, its performance in stock market, revenue growth etc.





Research methodology in a way is a written game plan for conducting research. Research methodology has many dimensions. It includes not only the research methods but also considers the logic behind the methods used in the context of the study and complains why only a particular method of technique has been used. Descriptive research procedure was used for describing the recent situations in the organization and analytical research to analyze the results by using research tools. Study will be qualitative as well as quantitative. Semi-structured interviews with senior management functionaries, practicing professionals, academicians and domain experts will be conducted for getting their expert opinion. It will help in carrying out a qualitative analysis. Analysis of the secondary data available in annual reports and from other sources will help in carrying out a conclusive study about UBI performance.


Data source & Collection Methods:

Primary Data: Most of the information will be gathered through primary sources’. The methods that will be used to collect primary data are: Questionnaire and online interviews


Secondary Data:

Secondary data is that data which is already existed. This is indirect collection of data from sources containing past or recent past information like:-

  • Annual reports,
  • Balance sheet,
  • Books,
  • Newspapers and Magazines and Other company’s publications.



5 years financial statements of Union Bank of India are:

         2013-2014

         2012-2013

         2011-2012

         2010-2011

         2009-2010


Method you will use to present data:

STASTICAL TOOLS: MS-EXCEL will be used to prepare pie- charts and graphs and MS-WORD will be used to prepare or write the whole project report. Report Encompasses – Charts, diagrams.






The banking sector is also taken as a proxy for the economy as a whole. The performance of bank should therefore, reflect “Trends in the Indian Economy”. Due to the reforms in the financial sector, banking industry has changed drastically with the opportunities to the work with, new accounting standards new entrants and information technology. The deregulation of the interest rate, participation of banks in project financing has changed in the environment of banks.





  1. Availability of Funds

There are seven lakh crore wroth of deposits available in the banking system. Because of the recession in the economy and volatility in capital markets, consumers prefer to deposit their money in banks. This is mainly because of liquidity for investors.

  1. Banking network

After nationalization, banks have expanded their branches in the country, which has helped banks build large networks in the rural and urban areas. Private Banks allowed operating but they mainly concentrate in metropolis.

  1. Large Customer Base

This is mainly attributed to the large network of the banking sector. Depositors in rural areas prefer banks because of the failure of the NBFCs.

  1. Low Cost of Capital

Corporate prefers borrowing money from banks because of low cost of capital. Middle income people who want money for personal financing can look to banks as they offer at very low rates of interests. Consumer credit forms the major source of financing by banks.



  1. Loan Deployment

Because of the recession in the economy the banks have idle resources to the tune of 3.3 lakh crores. Corporate lending has reduced drastically

  1. Powerful Unions

Nationalization of banks had a positive outcome in helping the Indian Economy as a whole. But this had also proved detrimental in the form of strong unions, which have a major influence in decision-making. They are against automation.

  1. Priority Sector Lending

To uplift the society, priority sector lending was brought in during nationalization. This is good for the economy but banks have failed to manage the asset quality and their intensions were more towards fulfilling government norms. As a result lending was done for non-productive purposes.

  1. High Non-Performing Assets

Non-Performing Assets (NPAs) have become a matter of concern in the banking industry. This is because of change in the total outstanding advances, which has to be reduced to meet the international standards.


  2. Universal Banking

Banks have moved along the valve chain to provide their customers more products and services. For example: – SBI is into SBI home finance, SBI Capital Markets, SBI Bonds etc.

  1. Differential Interest Rates

As RBI control over bank reduces, they will have greater flexibility to fix their own

interest rates which depends on the profitability of the banks.

  1. High Household Savings

Household savings has been increasing drastically. Investment in financial assets has also increased. Banks should use this opportunity for raising funds.

  1. Overseas Markets

Banks should tape the overseas market, as the cost of capital is very low.   

  1. Interest Banking

The advance in information technology has made banking easier. Business can effectively carried out through internet banking.  


  2. NBFCs, Capital Markets and Mutual funds

There is a huge investment of household savings. The investments in NBFCs deposits, Capital Market Instruments and Mutual Funds are increasing. Normally these instruments offer better return to investors.

  1. Change in the Government Policy

The change in the government policy has proved to be a threat to the banking sector.

  1. Inflation

The interest rates go down with a fall in inflation. Thus, the investors will shift his investments to the other profitable sectors.

  1. Recession

Due to the recession in the business cycle the economy functions poorly and this has proved to be a threat to the banking sector. The market oriented economy and globalization has resulted into competition for market share. The spread in the banking sector is very narrow. To meet the competition the banks has to grow at a faster rates and reduce the overheads. They can introduce the new products and develop the existing services.




“United Bank reported subdued set of numbers for the quarter, as its operating profit grew by 6.9 percent yoy. The bank witnessed higher asset quality pressures during the quarter, which resulted in 147.4 percent yoy increase in the provisioning expenses and it reported PBT level loss of Rs268cr as compared to PBT level earnings of Rs171cr in 4QFY2012. However, aided by tax write-backs of Rs279cr during the quarter, as compared to tax expenses of Rs22cr during 4QFY2012, the bottom-line came in positive at Rs31cr, thereby registering a decline of 79.1 percent yoy.” “During 4QFY2013, the bank witnessed moderate growth in its business, as its advances and deposits grew by 9.3 percent and 12.9 percent yoy respectively. Loan growth was largely aided by higher growth in Retail and MSME advances (22.9 percent yoy and 21.5 percent yoy, respectively). Current deposits degrew by 2.1 percent yoy, while growth in savings deposits came in moderate at 14.2 percent yoy. CASA ratio dipped 112bp yoy to 39.6 percent. Reported NIMs for the bank remained stable sequentially at 2.7 percent. Non-interest income grew by 47.6 percent yoy, largely aided by higher treasury gains which almost tripled on a yoy basis.








  1.  Venketesan, R. & Varma, S. (1998), Policy Competition Among States in India for Attracting Foreign Direct Investment, National Council of Applied Economic Research, New Delhi.
  2. Electricity Trading In Competitive Power Market: An Overview and Key Issues  ;Prabodh Bajpai and S. N. Singh; International conference  on power systems, ICPS2004, Kathmandu, Nepal (P110)
  4. Pvt investment in power sector — Planning Commission expresses reservation on BOOT/BLOT concept by G. Srinivasan, Business Daily from THE HINDU group of publications, Tuesday, Apr 07, 2009
  6.  The report on 1 7 th Elect ric Pow er Survey of I ndia has been published by Cent ral Elect ricity Authority
  7. Policy Environment and Regulatory Reforms for Private and Foreign Investment in Developing Countries:A Case of the Indian Power Sector: Anoop Singh: ADB Institute Discussion Paper No. 64
  8. UNDP / World Bank (1999), Global Energy Sector Reform in Developing Countries: A Scorecard, Energy and Mining Sector Unit, World Bank, Washington, DC.
  10. The World Bank. “The World Bank’s Role in the Electric Power Sector: Policies for Effective Institutional, Regulatory and Financial Reform.” Policy Paper, 1993, p. 14.
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  Dear Employees,

I am ………, a student of MBA Final Year, as a part of my curriculum; I am to take a research Project on “Analysis of the financial performance of state bank of India from investment perspective”.

 To enable to undertake above mentioned study, I request you to give your fair views. Your insights and perspective are important and valuable for my research.


Policy on Confidentiality: Please feel free to give your honest responses. The confidentiality of the information provided by the respondent is     completely assured