Nothing new, we are #1 again: HDFC Bank has been consistent in its performance over the past few years

In the 2006 sweepstakes, HDFC Bank has edged out arch-rival ICICI Bank in the overall rankings. More specifically, it's come up trumps on various parameters, which include return on assets, return on capital employed, fee income growth, net non-performing assets (NPAs) and the ratio of net interest income to average working capital funds. But it isn't as if ICICI Bank has been blanked out by HDFC Bank. For its part, the bank headed by K.V. Kamath is top dog on parameters like deposit growth, advances growth, operating profit growth, capital adequacy ratio and operating profit per branch. Small wonder then that ICICI Bank has seen a major jump in ranking, from 13th position in 2005 to the #2 position in the most recent study. Best of all, ICICI Bank, which is the country's second largest bank after the state-owned State Bank of India, has come out as the fastest growing bank in the BT-KPMG survey. Clearly, if ICICI Bank has been judged the fastest growing bank, it's being rewarded for its steadfast and aggressive focus on size and volumes. This is amply reflected in the bank's uncompromising and relentless forays into international and rural markets, even as it seeks to tighten its grip on the lucrative urban segment, where an ever-increasing prospering and consuming class is ensuring that the retail banking engine keeps chugging along smoothly (at least, so far).

ABN AMRO has tumbled from #3 to #16, but Country Representative Romesh Sobti would be happy with his bank's low net NPA to advances

Amongst the PSU pack, the South India-based Corporation Bank is the highest-ranked state-owned bank, at #6, relegating the biggies like State Bank, Bank of Baroda and Bank of India lower down in double digits. Corporation Bank has scored well on parameters like net NPAs, cost-to-income ratio and return on assets.

Winner Takes it All

On the asset quality front, it's ABN Amro Bank that has grabbed the top slot, courtesy its lowest net NPA to advances figure of 0.11 percent. HDFC Bank has a net NPA to advances number of 0.44 per cent. At a time when the financial services sector has seen a major churning of employees, all the four foreign banks are clear winners in terms of productivity per employee with the top four places being occupied by Citibank, Standard Chartered Bank, HSBC and ABN Amro, in that order. Citibank has got the highest operating profit per employee, with the figure standing at Rs 0.49 crore.

Capital is yet another tool which, if used efficiently, can result in higher returns for shareholders. The public sector Indian Overseas Bank has got the highest return on capital employed at 27.23 per cent followed by Allahabad Bank at 23.67 per cent.

With credit growth outpacing the deposit growth, IDBI Bank, though with a small base of deposits, has seen the highest cumulative average growth of 60.86 per cent over two years of its total deposits. The other top gainers include ICICI Bank, ABN Amro, UTI Bank and HDFC Bank.

Fall from Grace

Citibank's Country Head Sanjay Nayar has done well to ensure the top slot for his bank on the productivity per employee front

Vijaya Bank has fared poorly on return on capital employed, which languishes at 7.79 per cent as against the #1 bank within this parameter, Indian Overseas Bank, whose ROCE is an impressive 27.23 per cent. Vijaya's fee to total income was at 7.75per cent and return on assets (ROA) the lowest at 0.40 per cent. Those sitting at the bottom of the study include Bank of Maharashtra, Central Bank, UCO Bank, State Bank of Bikaner and Dena Bank.

Starting this year, the BT-KPMG study has started a new category to reward smaller sized banks with a balance sheet size of less than Rs 20,000 crore but with more than 10 branches. State Bank of Mysore has emerged as the best bank within this club followed by Kotak Bank and Karur Vysya Bank. In fact, many old private sector banks figure at the bottom in terms of ranking due to their sagging financials. These are Bharat Overseas Bank, Catholic Syrian Bank, Ratnakar Bank, Bank of Rajasthan and Development Credit Bank. These banks have plenty of catching up to do, what with the banking industry getting extremely competitive. Many of them will have little option but to merge or be acquired by a stronger entity.

BT-KPMG has ranked Centurion Bank of Punjab as the fastest growing bank amongst those with a balance sheet size of less than Rs 20,000 crore, but with more than 10 branches. Rana Talwar's Centurion Bank of Punjab has witnessed a turnaround post change of management. This new generation private sector bank is already in growth mode with two acquisitions-Bank of Punjab in 2005 and Lord Krishna Bank in 2006-in the last two years. Talwar, who played a part in the global merger of Standard Chartered Bank and Grindlays in 2000, is aggressively eyeing inorganic growth back home.

In the category of banks with a balance sheet size of less than Rs 20,000 crore, but with a branch network of less than 10, it's many of the second-rung foreign banks that feature. Barclays Bank has been ranked number one followed by JP Morgan Chase and Bank of America. In the past, Barclays Bank has been quite active in the capital market arena in India. Now it's shifting focus to commercial banking. The bank has roped in Samir Bhatia, formerly Country Head (Corporate Banking) at HDFC Bank, as its Chief. Don't be surprised to see Barclays winning awards in other categories in the years to come.

IDBI Bank, with V.P. Shetty at the helm as Chairman & Managing Director, has registered the highest deposit growth over two years

In the 2006 sweepstakes, HDFC Bank has edged out arch-rival ICICI Bank in the overall rankings. More specifically, it's come up trumps on various parameters, which include return on assets, return on capital employed, fee income growth, net non-performing assets (NPAs) and the ratio of net interest income to average working capital funds. But it isn't as if ICICI Bank has been blanked out by HDFC Bank. For its part, the bank headed by K.V. Kamath is top dog on parameters like deposit growth, advances growth, operating profit growth, capital adequacy ratio and operating profit per branch. Small wonder then that ICICI Bank has seen a major jump in ranking, from 13th position in 2005 to the #2 position in the most recent study. Best of all, ICICI Bank, which is the country's second largest bank after the state-owned State Bank of India, has come out as the fastest growing bank in the BT-KPMG survey. Clearly, if ICICI Bank has been judged the fastest growing bank, it's being rewarded for its steadfast and aggressive focus on size and volumes. This is amply reflected in the bank's uncompromising and relentless forays into international and rural markets, even as it seeks to tighten its grip on the lucrative urban segment, where an ever-increasing prospering and consuming class is ensuring that the retail banking engine keeps chugging along smoothly (at least, so far).

For most observers of the banking industry, having HDFC Bank and ICICI Bank amongst the top 2 wouldn't come as a surprise, although it can be debated till the cows come home about which bank should have coveted the #1 position. But there were some surprises lower down the list. For instance, Standard Chartered Bank, the largest foreign bank in terms of balance sheet as well as net profit in India, has improved its rating in a big way, from #8 last year to #3, while its competitors in the foreign banking space, Citibank, HSBC and ABN Amro, have seen their ranking going down in the most recent study. Standard Chartered Bank's Indian arm contributes almost 10 per cent to the global operations of the bank. In the last five years, the bank's balance sheet size has swelled from Rs 20,260 crore to Rs 48,182 crore. Today, if one judges a bank purely on returns on assets or growth and productivity, then StanChart will emerge as the best bank in the country. Standard Chartered Bank today has a network of 81 branches, 16,228 employees and an investment of $1.5 billion (Rs 6,750 crore) in India.

Amongst the PSU pack, the South India-based Corporation Bank is the highest-ranked state-owned bank, at #6, relegating the biggies like State Bank, Bank of Baroda and Bank of India lower down in double digits. Corporation Bank has scored well on parameters like net NPAs, cost-to-income ratio and return on assets.

Winner Takes it All

On the asset quality front, it's ABN Amro Bank that has grabbed the top slot, courtesy its lowest net NPA to advances figure of 0.11 percent. HDFC Bank has a net NPA to advances number of 0.44 per cent. At a time when the financial services sector has seen a major churning of employees, all the four foreign banks are clear winners in terms of productivity per employee with the top four places being occupied by Citibank, Standard Chartered Bank, HSBC and ABN Amro, in that order. Citibank has got the highest operating profit per employee, with the figure standing at Rs 0.49 crore.

Capital is yet another tool which, if used efficiently, can result in higher returns for shareholders. The public sector Indian Overseas Bank has got the highest return on capital employed at 27.23 per cent followed by Allahabad Bank at 23.67 per cent.

With credit growth outpacing the deposit growth, IDBI Bank, though with a small base of deposits, has seen the highest cumulative average growth of 60.86 per cent over two years of its total deposits. The other top gainers include ICICI Bank, ABN Amro, UTI Bank and HDFC Bank.

Fall from Grace

Interestingly, there are some banks that have shown a dismal performance, which is reflected in a plunge in ranking. Those who have slipped down the pole include Vijaya Bank, State Bank of Patiala, Andhra Bank, and Punjab National Bank.

Vijaya Bank has fared poorly on return on capital employed, which languishes at 7.79 per cent as against the #1 bank within this parameter, Indian Overseas Bank, whose ROCE is an impressive 27.23 per cent. Vijaya's fee to total income was at 7.75per cent and return on assets (ROA) the lowest at 0.40 per cent. Those sitting at the bottom of the study include Bank of Maharashtra, Central Bank, UCO Bank, State Bank of Bikaner and Dena Bank.

Starting this year, the BT-KPMG study has started a new category to reward smaller sized banks with a balance sheet size of less than Rs 20,000 crore but with more than 10 branches. State Bank of Mysore has emerged as the best bank within this club followed by Kotak Bank and Karur Vysya Bank. In fact, many old private sector banks figure at the bottom in terms of ranking due to their sagging financials. These are Bharat Overseas Bank, Catholic Syrian Bank, Ratnakar Bank, Bank of Rajasthan and Development Credit Bank. These banks have plenty of catching up to do, what with the banking industry getting extremely competitive. Many of them will have little option but to merge or be acquired by a stronger entity.

BT-KPMG has ranked Centurion Bank of Punjab as the fastest growing bank amongst those with a balance sheet size of less than Rs 20,000 crore, but with more than 10 branches. Rana Talwar's Centurion Bank of Punjab has witnessed a turnaround post change of management. This new generation private sector bank is already in growth mode with two acquisitions-Bank of Punjab in 2005 and Lord Krishna Bank in 2006-in the last two years. Talwar, who played a part in the global merger of Standard Chartered Bank and Grindlays in 2000, is aggressively eyeing inorganic growth back home.

In the category of banks with a balance sheet size of less than Rs 20,000 crore, but with a branch network of less than 10, it's many of the second-rung foreign banks that feature. Barclays Bank has been ranked number one followed by JP Morgan Chase and Bank of America. In the past, Barclays Bank has been quite active in the capital market arena in India. Now it's shifting focus to commercial banking. The bank has roped in Samir Bhatia, formerly Country Head (Corporate Banking) at HDFC Bank, as its Chief. Don't be surprised to see Barclays winning awards in other categories in the years to come.