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Profitability

In: Banking Reforms in India

Author

Listed:
  • T. R. Bishnoi

    (The Maharaja Sayajirao University of Baroda)

  • Sofia Devi

    (The Maharaja Sayajirao University of Baroda)

Abstract

Since 1991, public sector banks began to emphasize profitabilityProfitability objective in order to strengthen their net worth and financial health as necessitated under financial reformsFinancial reforms , and therefore, the analysis is in terms of three profitability ratios—return on assetsProfitability Return on Assets (ROA), return on equityProfitability Return on Equity (ROE) and profit marginProfitability Profit Margin (PM) for the period from 1991–1992 to 2014–2015. Positive trend in growth rates of these indicators suggested the favourable impact of banking reforms over the period. ROA of the public sector banks improved by 0.06% points, ROA annually by 1.05% points and PM by 0.69% points per year. Among determinants of banks’ profitability, significant factors were credit quality and management of funds.

Suggested Citation

  • T. R. Bishnoi & Sofia Devi, 2017. "Profitability," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Banking Reforms in India, chapter 0, pages 165-185, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-319-55663-5_6
    DOI: 10.1007/978-3-319-55663-5_6
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