Life seems to be returning to nor-
mal in the global banking sector
after it was hit hard by the financial catastrophe, which unraveled
in September 2008, as better-than-expected results from banks across
the globe lend credence to the claims that stimulus efforts are finally yielding
results. However, much to the chagrin of the recoupling theorists, it is the
banks from the developing nations, particularly the BRIC economies, which
are leading the charge. Indian banks, which initially were in a denial mode
about the impact of the crisis (on them), but soon admitted to vulnerability to
global shocks, have shown remarkable resilience, thanks to the Reserve Bank
of India's timely and prudent measures which saved the domestic banks
from the blushes from the worst financial cataclysm since the Asian financial
crisis of 1997. However, it is not without its share of worries, as this year's The Analyst study highlights. The study covers Indian banking sector's
performances for the fiscal year 2008-09, the last two quarters of which were
affected by the global financial crisis, and this
is what makes it the most eagerly awaited annual results in
recent memory. As our analysis shows, the domestic banking sector has done
remarkably well on parameters like returns, maintaining profitable growth and
risk management, though there are some warning signals. The study also
underlines the fact that banks have successfully waded through a tough
liquidity scenario without hampering the credit growth. Further, even amidst the
tough environment, many domestic banks were able to maintain a healthy
interest margin, a trend that has been observed for the last 4-5 years.
The rankings throw several surprises. To begin with, as our
study shows, the top ranked bank among the Public Sector Banks (PSBs) is Bank
of Baroda, which has undergone a significant facelift in recent years, though
it has been keeping a low-profile all along. It is followed by Punjab National
Bank and Bank of India at No. 2 and No. 3, respectively, which too have been
showing lot of aggression in recent times; while PNB has been working hard
to spruce up its image as a tech-savvy bank, having successfully
implemented core banking solutions across all its branches, the first state-owned bank
to achieve this milestone, the latter is cranking up its marketing machine
to make the star, once its hallmark, twinkle again. For the record,
though BoI slips two ranks over its previous year's ranking, on the positive side,
it remains among the top three PSBs in this year's rankings. The private
sector too throws up an unexpected winner in City Union Bank, ahead of many
high-profile names. Yes Bank, a late entrant on the domestic banking landscape,
but aiming for the big, retains its last year's ranking as the No. 2 among the
private sector banks. The Kerala-based Federal Bank, known for its tech-savvy
image, is ranked third this year on the basis of the CAMEL model. Last
year's winner Karur Vysya Bank is ranked 4th this year. Among the foreign
banks, Bank of Ceylon replaces last year's winner Shinhan Bank, jumping 15 ranks
to emerge as the No. 1 bank, this year, while the latter drops to the
second rank.
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