FASTER. BETTER. STRONGER.

The Indian banks are a source of envy for the global community. Domestic banks were not only unaffected by the financial crisis but also thrived in it. ET Intelligence Group presents the country's first survey on publicly listed banks in India AFTER 'The Great Economic Depression' of 1930s, it is 'The Global Financial Crisis', which will remain entrenched in the memories of people across the world for several years to come. Deep-rooted in the banking system of the developed world, it sent tremors to developing countries like India and China. Indian banking system however remained insulated demonstrating the strength of local banks.      We at ET Intelligence Group think that the time is ripe to compare Indian banks to each other. For this, we undertook a detailed exercise to rank banks across broad parameters like growth, efficiency, financial strength, scale and shareholder's return. Each parameter was further broken down into many layers (please refer to the methology box)      The objective was to make sure that growth is backed by sustainability and efficiency. We considered growth in core fee income as well, because it shows how successful a bank has been in activities, which are ancillary to the primary function of lending and accepting deposits, like distribution of financial products and providing value-added services. Apart from other income, growth in deposits and advances was taken into account to gauge the pace of balance-sheet expansion. To make sure that growth was reflected in operations, net profit growth was also considered.      We tried to distill oft-repeated success mantra, 'growth with efficiency' by breaking it down in three parameters: net interest margin (NIM), business per employee  and return on assets (RoA). NIM was considered to make sure that the funds are efficiently deployed; business per employee to ascertain the efficiency of human resource and RoA to check if the assets are efficiently being put to use. The financial strength of banks was measured by its asset quality (as evident from non-performing assets) and capital adequacy ratio. In order to determine the shereholder's return, we also considered factors like stock price gain, volatility in the stock price and dividend growth. We considered the data for last three financial years, so that conclusions are not skewed in favour of just one year's performance. More weightage was given to the recent year's performance and vice versa. After hours of number crunching, we figured out that Axis Bank is the best bank in the country followed by Bank of India (BoI) and HDFC Bank. It must be noted that of the top 10 Indian banks, six are from public sector space. That PSU banks are bridging the gap with private banks was a hypothesis, which has now been vindicated. Of the four broad parameters that we discussed, BoI ranks in top 5 in three parameters. The bank has posted significant growth in dividend in last three years and its stock has appreciated sharply. Ever consistent HDFC Bank sits smartly at the third slot.      Bank of Baroda and Indian Bank have too featured in the top 5. With a high growth, huge scale and aggressive advertisement campaign, BoB's success doesn't come as a surprise. But for a mid-sized PSU Bank like Indian Bank to stay ahead of its much bigger counterparts, both in public and private space, is quite an achievement. Though, Indian Bank is not among the top banks in terms of growth and scale, but in terms of efficiency and financial strength it ranks among the best.      Among other PSU Banks, Punjab National Bank (PNB) also feature in the top 10. The bank may not be the best on one specific parameter, but with its sheer focus on maintaining growth without letting the margin and asset quality suffer, the bank has managed a good overall score.      The country's largest bank State Bank of India (SBI) ranks 10. The bank has been growing at astounding rates of-late. However, its average NIM & RoA has pushed down its rankings. Union Bank of India ranked one point up SBI. Much like PNB, the bank is not the best on any parameter, but with its above average performance, it has managed to sneak into top 10.      For Yes Bank – with a much smaller base than its peers – to feature in the top 10 is quite a feat. It is growing fast and also seems to be one of the robust banks. Much like Indian Bank, Federal Bank, too, comes as a pleasant surprise in top 10. The bank does not have the advantage of a large scale but is the best in terms of efficiency and financial strength.      ICICI Bank has revolutionised banking in India and brought ATM technology tomasses. However, high NPAs, low margins and stagnant business seem to have taken a toll on its overall performance as it ranks at 17 in our list.      It is clear that size alone, or low NPA, or high capital adequacy alone doesn't make abest bank. Not only a bank has to perform well on all the parameters, it also needs to sustain that performance over a long period of time to feature among the best banks.      karan.sehgal@timesgroup.com  CLOCKWISE STARTING FROM TOP Alok Kumar Misra, CMD, Bank of India, Shikha Sharma, MD & CEO, Axis Bank, M S Sundara Rajan, CMD, Indian Bank, M D Mallya, CMD, Bank of Baroda, Aditya Puri, MD, HDFC Bank