Productivity and profitability in banking bank of baroda vs ing vysya bank

The purpose of this paper is to compare the productivity and profitability of Public Sector Banks with that of Private Sector Banks. There is a general notion that staffs of private sector banks perform better than the staff of public sector banks and this study has been conducted to compare the business per employee and profit per employee to the two groups. The study has been done through the comparison of 5 years profit and loss and balance sheet of two banks and ‘A Profile of Banks 2009– 10′ released by the RBI, Analysis of profit per employee and business per employee showed that Bank of Baroda is doing better than ING Vysya bank and this is mainly because of two reasons; first being the computerisation and the second being the entry of Bank of Baroda in retail loans and SME loans. The retail and SME loans on the one side increase the margins and on the other side are helpful in controlling the NPAs. The public sector banks understand the Indian market better than the private banks. They have a nationwide presence and can follow local sentiments, the general public has greater confidence in the public sector banks. Lastly and more significantly the public sector banks have been able to adapt well post liberalization. They have reduced their work force, outsourced where ever economical and computerize all the banking functions, now even the smallest public sector bank offers ATM/debit cards, RTGS fund transfer, internet banking, telephone banking etc. The staff in public sector banks is now motivated and they realise the importance of a good performance whereas the private bank staff is generally offered contractual employment and therefore, they lack the sense of belongingness with their organization, which is generally seen in public sector banks. The DSA (Direct Sales Agent) culture in private sector banks is also tarnishing their image

Bank of Baroda is doing quite well and it seems that in coming years also it will be proving itself as the strong pillars of Indian economy.

To compare the productivity and profitability of ING Vysya Bank Ltd with Bank of Baroda, their Balance Sheets and Profit Loss Accounts for the last five years have been compared.

The study has been done on basis of Ratio Analysis. In financial analysis, ratios are generally used as benchmarks for evaluating a firm's position or performance. The absolute values may not provide us meaningful values until and unless they are related to some other relevant information. Ratios represent the relationship between two or more variables. Ratios help to summarize large data to draw qualitative judgments about the firm's performance. The common denominator used for developing the various profitability ratios is business volume (deposits + investments + advances). The banks generally calculate spread ratio as % of total assets. The total assets are accounting (Balance sheet) figures, which are based on historical costs and hence are not very suitable to evaluate the current performance of the banks. In order to have a suitable indicator for evaluating current bank performance we are using the volume of business (Advances + Investments + Deposits) in the denominator. It is like using Gross profit ratio (Gross profit/sales) as a substitute for Return on Total Asset (Profit/Total asset) as an indicator of the profitability of a business organisation.