Impact of functional performance on profitability of selected public sector banks

Banks play an important role in the economic development of every nation. They have control over a large part of the supply of money in circulation. A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities. Banks are a fundamental component of the financial system, and are also active players in financial markets. Financial performance refers to the achievement of the bank in terms of profitability. The profitability of a bank denotes the efficiency with which a bank deploys its total resources to optimize its net profits and thus serve as an index to the degree of asset utilization and managerial effectiveness. This paper aims to examine the functional performance and its impact on the profitability of selected banks in terms of Deposits, Advances, CD Ratio, Priority Sector Advances, Productivity and Performance ratios. On the whole it can be said that there is an improvement in the functional performance of the bank during the study period. The comparative analysis shows that both the banks are having same level of profitability.