FINANCIAL PERFORMANCE ANALYSIS OF PRE- AND POST-MERGER OF KOTAK MAHINDRA BANK AND STATE BANK OF INDIA

Abstract

The banking sector is one of the most important and fastest growing sectors in India. It occupies a unique place in the growth of the economy. The economic development of a country is evident from the reliability of the banking system. Mergers in the banking sector lead to significant growth in business, help in reducing costs and reduce competition as mergers lead to elimination of competitors in the banking sector. Today, every bank strives to be financially strong and more effective and efficient in its operations. Public sector banks face strong challenges from private sector banks and are under great pressure to keep up with the facilities offered by private sector banks. The study is conducted to understand the performance of Kotak Mahindra Bank and SBI before and after merger. One private sector bank and one public sector bank were selected for the study. Kotak Mahindra Bank is one of the leading and growing private sector banks, while SBI is the largest bank in India with a market share of more than 23% in assets and 25% in loans and deposits. The analysis before and after the merger of SBI with its partner banks and Kotak Mahindra Bank with ING Vysya Bank shows that the net profit margin, return on capital employed, return on equity and leverage ratio have no significant difference in these ratios. There is a significant difference in operating profit margin for Kotak Mahindra Bank but not for SBI and its partners.