Profitability and Efficiency Analysis of Punjab National Bank

Profitability is considered a very important test for measuring efficiency of the Bank as it is a means to measure the ability of the bank to earn profits. Bank has to take care of profitability while granting advances along with the other two aspects i.e. funds remain fairly liquid, safe and give a reasonable return. Liquidity in bank's investment would mean that a bank is able to acquire cash as and when required, i.e., in short period of time. By solvency of a bank means that the advances granted by the bank are safe enough and the borrowers are able to repay them in time so that bank is in the position to fulfill its obligations.

An important component of the mechanism of the banks is profit management systems and methods for its analysis. Profit analysis is the process of investigation of the conditions and results of its formation and use of reserves in order to identify further efficiency management. The purpose of the analysis of profit and profitability is to increase the absolute value of profits and profitability of the bank based on the effective management of revenue and expenditure Profit is the main reason for the continued existence of every commercial organization and profitability depicts the relationship of the absolute amount of profit with various other factors.

This paper attempts to analyze the profitability and efficiency of Punjab National Bank in India during the study period from2005-06 to 2014–2015. Key Performance Indicators such as number branches, employees, deposits, advances, business, spread, burdenand average and growth rate is taken for the present study. The PNB maintained the highest operating profit in 2014-15among nationalized banks. The study finds and concludes that the profitability, efficiency and business performance of PNBwere improved over the period of study.