The data to rank the banks was taken from published annual reports of the banks as well as the Reserve Bank of India's 'Profile of Banks, 2012/13'. The data considered was for the period 2009/10 to 2012/13. The ranking covers 65 scheduled commercial banks that provided their annual reports at the time of conducting the study. Scheduled commercial banks whose financial statements were not made available to us or have not yet completed four years of operations, did not qualify for the study. For banks having zero non-performing assets (NPAs), the provision coverage ratio was considered to be 100 per cent, thus assigning them the highest rank in that category.
The three broad ranking parameters - divided into 29 sub-parameters - were as follows:
There were five sub-parameters in this category. They were: (a) growth over 2011/12 in deposits, alongside three-year compound annual growth rate (CAGR) of total deposits; (b) growth over 2011/12 in loans and advances, together with three-year CAGR in loans and advances; (c) growth over 2011/12 in fee income (commissions, exchange, brokerage plus miscellaneous income) alongside three- year CAGR in fee income; (d) growth in operating profit over 2011/12 together with three- year CAGR in operating profit; and (e) absolute increase in market share of deposits and of current account savings account (CASA).
The sub-parameters were three: size of total deposits, size of operating profit and size of balance sheet for 2012/13.
There were four overarching sub-parameters, each with further sub-divisions.
Quality of Assets:
Total NPA growth ratio: additions to NPAs during the year as a percentage of average net advances; NPA coverage: provisions for NPAs as a percentage of gross NPA closing balance; net NPAs as a ratio of net advances: gross NPAs net of provisions as a percentage of net advances; restructured assets as a ratio of total average loans and advances: standard restructured assets as a percentage of total average loans and advances; outstanding restructured assets as a ratio of outstanding loans and advances: outstanding restructured assets as on March 31 as a percentage of outstanding loans and advances. The outstanding restructured assets ratio is a new parameter introduced this year.
Productivity and efficiency:
Cost to income ratio: operating expenditure as a percentage of operating income; cost to average asset ratio: operating expenditure as a percentage of average assets; operating profit per employee: operating profit divided by total number of employees; absolute increase in return on assets: basis points increase in return on assets (net profit over total assets) from 2011/12 to 2012/13; percentage increase in ratio of operating profit to total income from 2011/12 to 2012/13.
Quality of earnings:
Return on assets: ratio of net profit to total assets for 2012/13; fee income as a percentage of total income; return on capital employed: reported net profit divided by average net worth; net interest income as a percentage of average working funds.
Capital adequacy ratio: capital-to-risk weighted assets ratio for 2012/13; Tier-I Capital: total of equity capital and disclosed reserves.
The banks were grouped in four sets.
Set A: 29 banks with balance sheet size higher than or equal to Rs 100,000 crore;
Set B: 21 banks with more than 10 branches and balance sheet size less than Rs 100,000 crore;
Set C1: Six banks with 10 or less branches and balance sheet size more than or equal to Rs 10,000 crore;
Set C2: Nine banks with less than 10 branches and balance sheet size less than Rs 10,000 crore.
To compute a bank's total score, it was assigned a score for each of the 29 sub-parameters. The score under each parameter was multiplied by the parameter's weightage. The results were aggregated to arrive at the total score.