Financial Analysis of Public and Private Sector Banks of India: A Comparative Study of Punjab National Bank and HDFC Bank

Abstract

Banking sector occupies an important role in the economic development of a nation. It is one of the fastest growing sectors in India as it is featured by a large network of bank branches, serving many kinds of financial services to its customer. Bank plays an important role to mobilize savings of general public, remittance of money and other general banking services. The performance of a bank may be evaluated for several reasons depending upon various objectives. Profit is the main motive for the continued existence of every commercial organization and profitability depicts the relationship between the absolute amounts of profit with various other factors. As compared to other business concerns, banks in general have to pay much more attention for balancing profitability and liquidity. Liquidity is required to meet the prompt demands of customers whereas profitability is required to meet the expenses of banks. Hence, the present research is an effort to measure and compare the financial performance of Punjab National Bank and HDFC Bank as both the banks are big giants in public and private sector respectively. The study focused on the growth and performance analysis of both the banks for a period of ten years, i.e. from 2006-07 to 2015-16. Quantitative analysis has been undertaken by looking at various financial ratios like management efficiency, liquidity and profitability which are the reliable indicators of a bank performance. It is found that PNB is more financially sound than HDFC Bank but in context of deposits and expenditure HDFC bank has better managing efficiency than PNB.