Dupont analysis of nationalised banks in India

Profitability of a bank depends on the amount of capital available with the bank for business activities. So it is important to know how efficiently bank utilising its capital and are the profitability ratios true reflection of the performance of a bank. For that purpose 19 Nationalised banks in India are selected to study the performance through DuPont Analysis method. In order to do this, we take into account the nationalised banks in India. Decomposition of Return on Equity (ROE) after Return on Assets (ROA), Return on Sales (ROS), Total Assets Turnover (TAT) and Equity Multiplier (EM) provides an analytical framework appropriate for observing factors that make and influence financial profitability, represented by the value of ROE. The findings reveal that the performance of the bank cannot be judged by profit or some ratios alone and that the banks that made more profit were not really efficient.