FINANCIAL MANAGEMENT – I
RISK AND RETURN ANALYSIS
SUBMITTED TO DR. SUSHMA VISNANI
APURBA PRASAD NATH
Our project deals with Banking industry. In the project the various banks which are taken into account are Allahabad Bank, Canara Bank, Punjab National Bank, State Bank of India, and Union Bank of India.
Each of the group members took up each of the bank and did their respective analysis. The banks which were assigned to different group members are as follows:
Allahabad Bank by Apurba Prasad Nath
Canara Bank by Avanikant Mishra
Punjab National Bank by Daud Ali Qidwai
State Bank of India by Abhishek Das
Union Bank of India by Ankit Tripathi
INTRODUCTION ________________________________ _________________ 4 ALLAHABAD BANK ________________________________ ______________ 5 CANARA BANK ________________________________ _________________ 10 PUNJAB NATIONAL BANK ________________________________ _______ 16 STATE BANK OF INDIA________________________________ __________ 21 UNION BANK OF INDIA ________________________________ _________ 27 INTER-COMPANY COMPARISION OF RISK AND RETURN _________ 33
CONCLUSION ________________________________ ___________________ 39
A bank is
accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. Here in the project we are dealing with risk and return analysis of the various banks. According to Financial Management, Total risk = Systematic risk + Unsystematic risk Unsystematic risk is the company or industry specific risk that is inherent in each invest ment. It can be removed.
But systematic can’t be removed though it can be minimized. Interest rates, recession and wars all represent sources of systematic risk because they affect the entire market and cannot be avoided through diversification. To capture the systematic risk of a stock, Beta (β) can be used. Beta measures a stock's volatility, the degree to which its price fluctuates in relation to the overall market. In other words, it gives a sense of the stock's market risk compared to the greater market.
Beta is used also to compare a stock's market risk to those other stocks. This measure is calculated using regression analysis.
A beta of 1 indicates that the security's price tends to move with the market. A beta greater than 1 indicates that the security's price tends to be more volatile than the market.
A beta less than 1 but greater than 0 means it tends to be less volatile than the market.
Allahabad Bank (Hindi: इलाहाबाद बक), NSE: ALBK, BSE: 532480 which began operations in 1865, has its head-quarters in Kolkata is the oldest joint stock bank in India. The bank was founded in Allahabad in 1865 and as of 31 March 2012 now has over 2500 branches throughout India. The Chairman and Managing Director of the bank is Shubhalakshmi Panse. Shri T.R Chawla is the senior Most Executive Director of the Bank.The bank has a branch in Hong Kong and a representative office in Shenzen.
The government's ownership of Allahabad Bank fell in October 2002 after the bank engaged in an Initial Public Offering (IPO) of 10 crores of shares, each with a face value Rs.10. The IPO reduced the Government's shareholding to 71.16%. Then in April 2005 the bank conducted a second public offering of 10 crores of shares, each with a face value Rs.10 and selling at a premium of Rs.72. This offering reduced the Government's ownership to 55.23%.
In June 2006 the bank opened its first office outs ide India when it opened a representative office in Shenzen, China. In February 2007, Allahabad Bank opened its first overseas branch, in Hong Kong. In March, the bank's business crossed Rs.1,00,000 crores mark.
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