FINANCIAL PERFORMANCE ANALYSIS : A CASE OF INDIAN BANKS

Abstract

Banking Business is an important part of economy of any country. The monetary progress of a state depends upon the banking system of that country. This research paper is done to analyse the effect of merger and acquisition process on the financial ratios before and after process of merger and acquisition. The research methodology in this case is used to study the financial performance of Bank of Baroda (A public sector Bank as well as the financial performance Kotak Mahindra Bank(A Private Bank) The null hypothesis is in this research is that there is a no significant change in the financial ratios of the selected banks in the pre and post-merger period. Which is analysed from shareholder’s perspectives and the bank assets perspectives. In the research design, the exploratory research is conducted different variables has been taken from the banking web sites as well as other websites like www.moneycontrol.com . The data of three year prior to merger and three year after of merger is considered. The pre and post-merger influence has been assessed based on the subsequent financial results obtained by determining of mean value, standard deviation and thereafter, t test and p test is derived from the excel work book. That data is analyzed and found that there is no major change in the wealth of the shareholder’s as well as assets of the bank is noticed. The impact of the merger and acquisition varies in different scenarios. The merger and acquisition not always advantageous to the acquirer but it depends upon certain conditions and therefore different procedural steps are followed before attain finality of the merger and acquisition. In this report, the paired t test is used to analyses the impact of the merger and acquisition and to make it more reliable the t test is conducted one of the public sector bank and another is done on the private bank. The outcome of the research is that there is increase in the efficacy of the bank but not to a significant level. 7 | P a g e Large cost reduction potential due to network overlaps. It also helps in cost saving as well as income opportunities. Second Canara Bank consolidated with Syndicate Bank to form the fourth largest public sector bank. The anchor bank got capital infusion of Rs. 6500 crore. The third merger was of Union Bank merged with Andhra Bank & Corporation bank and become the fifth largest public sector bank. It becomes the seventh largest public sector bank. Allahabad Bank became part of Indian Bank. It aimed to create next –generation banks with strong National presence and global outreach accompanied with enhanced capacity to increase credit to various sector of economy.