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Financial performance analysis of pre and post merger in banking sector: a study with reference to ICICI bank Ltd
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This paper evaluates the financial performance of the ICICI bank such as, profitability ratio, liquidity ratio, leverage ratio, growth ratio, net profit margin, ROE, ROA, debt equity ratio, current ratio, quick ratio, cash ratio, debt ratio, interest coverage ratio etc.

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Nội dung Text: Financial performance analysis of pre and post merger in banking sector: a study with reference to ICICI bank Ltd

  1. International Journal of Management (IJM)
    Volume 7, Issue 7, November–December 2016, pp.240–249, Article ID: IJM_07_07_025
    Available online at
    http://www.iaeme.com/ijm/issues.asp?JType=IJM&VType=7&IType=7
    Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com
    ISSN Print: 0976-6502 and ISSN Online: 0976-6510
    © IAEME Publication

    FINANCIAL PERFORMANCE ANALYSIS OF PRE AND
    POST MERGER IN BANKING SECTOR: A STUDY
    WITH REFERENCE TO ICICI BANK LTD
    Dr. Veena K.P
    Associate Professor, Dept. of Master of Business Administration (MBA),
    Visvesvaraya Technological University, P.G. Centre, Mysore Regional Centre,
    Mysore – 570029, Karnataka, India

    Prof. S.N. Patti
    Professor, P.G. Dept. of Business Administration, Berhampur University,
    Berhampur -760007, Odisha, India

    ABSTRACT
    Merger and acquisition plays crucial role in Indian banking sector, it leads to increasing pre-
    merger and post merger financial performance of banks to achieve their goals. This paper evaluates
    the financial performance of the ICICI bank such as, profitability ratio, liquidity ratio, leverage ratio,
    growth ratio, net profit margin, ROE, ROA, debt equity ratio, current ratio, quick ratio, cash ratio,
    debt ratio, interest coverage ratio etc. The main aim of the study is to highlight the theoretical
    background and impact on pre and post merger financial performance of ICICI bank Ltd. and to
    examine the profitability ratio analysis of pre and post merger financial performance in ICICI bank
    Ltd and to study the liquidity ratio analysis of pre and also post merger financial performance in
    ICICI bank Ltd. Finally this study assesses the leverage ratios and growth ratio analysis of pre and
    post merger financial performance in ICICI bank Ltd. In this article data has been collected from
    secondary sources and to measure the reliability of data applied group or descriptive statistics and
    for financial ratios of pre-merger data and post merger data T-test has been applied, therefore the
    study has been finds out There is no significant difference between pre-merger and post-merger
    financial performance towards ICICI bank Ltd and There is no relationship between profitability ratio,
    liquidity ratio, leverage ratio, growth ratio performance towards ICICI Bank Ltd. Therefore the null
    hypothesis is accepted alternative hypotheses id rejected. Therefore finally this study concludes the post
    merger financial performance is better compared to the pre merger financial performance of ICICI bank
    Ltd.
    Key words: Pre Merger, Post Merger, Profitability Ratio, Liquid Ratio, ICICI Bank
    Cite this Article: Dr. Veena K.P and Prof. S.N. Patti, Financial Performance Analysis of Pre and
    Post Merger in Banking Sector: A Study with Reference To ICICI Bank Ltd. International Journal
    of Management, 7(7), 2016, pp. 240–249.
    http://www.iaeme.com/IJM/issues.asp?JType=IJM&VType=7&IType=7

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  2. Financial Performance Analysis of Pre and Post Merger In Banking Sector: A Study with Reference To ICICI Bank Ltd

    1. INTRODUCTION
    Mergers and Acquisitions (M&As) are most widely used strategy by firms to strengthen and maintain their
    position in the market place. M&As are considered as a relatively fast and efficient way to expand into new
    markets and incorporate new technologies. Still, we can find many evidences that their success is by no
    means assured. On the contrary, a majority of M&As fall short of their stated aims and objectives. Some
    failure can be explained and justified by financial and market factors. On the contrary a considerable number
    can be traced, which has neglected those factors, which are related to human resources issues and activities.
    Merger is the combination of two or more firms, in other words it can be stated that when two or more
    firms which are in same or in different product or service line decide to carry their work simultaneously in
    future. It is also resulted from a various number of studies, although mergers also having some failure results
    in some of industries. But now-a-days, it is very popular growth oriented strategy especially in developing
    countries such as India. There are various motives behind Mergers, which force this activity very rapidly,
    these courses of actions done to expand business, to get synergic advantages, to minimize costs, to maintain
    strong distribution chain, tax planning, new product development and to face rapid competition, etc. The
    news of Mergers are very sensitive, it influence the companies involved as well as customers, investors,
    share prices and other part of an economy in positive or negative way, in form of financial as well as non-
    financial point of view as follows, M= Mixing, E= Entities, R=Recourses for, G=Growth, E= Enrichment,
    R=Renovation.
    According to researcher (Ganghan, 2002). Defines “Mergers as the comparison of two or more
    companies in creation of a new entity or formation of a holding company.” Acquisition is the purchase of
    shares or assets another company to achieve a managerial influence not necessarily by mutual agreement”.
    According to Ramaiya (1977) defines “A merger or Amalgamation results in the combination of two or
    more companies in to one, where in the merging entities lose their identities by being absorbed into the
    merger entity.
    The history of Industrial Credit & Investment Corporation of India (ICICI) shows that it was formed in
    1955 by the initiative of the World Bank, the Government of India and representatives of Indian industry.
    The principal objective of ICICI was to create a development financial institution for providing medium-
    term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from
    a development financial institution offering only project finance to a diversified financial services group
    offering a wide variety of products and services, both directly and through a number of subsidiaries and
    affiliates like ICICI Bank. In 1999, ICICI became the first Indian company and the first bank or financial
    institution from non-Japan Asia to be listed on the NYSE.
    The managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank
    would be the optimal strategic alternative for both the entities, and would create the optimal legal structure
    for the ICICI group’s universal banking strategy. Further, the merger would enhance value for ICICI
    shareholders through the merged entity by low-cost deposits, greater opportunities for earning fee-based
    income and the ability to participate in the payments system and provide transaction-banking services.
    Consequently, ICICI Bank was promoted in 1994 by ICICI Limited, an Indian financial institution, and was
    its wholly-owned subsidiary. In October 2001, the Board of Directors of ICICI and ICICI Bank approved
    the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial
    Services Limited and ICICI Capital Services Limited, with ICICI Bank. Shareholders of ICICI and ICICI
    Bank approved the merger in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and
    by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. The following table
    shows that mergers and amalgamations done by ICICI Bank.

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  3. Dr. Veena K.P and Prof. S.N. Patti

    List of banks merger with ICICI bank Ltd
    SI. No. Mergers by ICICI Bank Ltd. in India Year of Merger
    1 SICICI 1996
    2 ITC Classic Finance Ltd 1997
    3 Anagram Finance 1998
    4 Bank of Madura Ltd. 2001
    5 ICICI Personal Financial Services Ltd. 2002
    6. ICICI Capital Services Ltd. 2002
    7. Standard Chartered Grindlays Bank 2002
    8. Sangli Bank Ltd. 2007
    9. The Bank of Rajasthan Ltd. (BoR) 2010
    Sources: Goyal, K. A. and Joshi, V. (2011) Mergers in Banking Industry of India.
    Mergers and Acquisitions have become the crucial means of bank expansion, especially for banking
    firms seeking commanding heights in global financial markets. Bank mergers produced a sea change in the
    banking industry structure. Further the banks overseas funds for various purposes ranging from capital
    expenditure to leveraged M&A financing. Hence, Indian banks are setting up branches and subsidiaries
    overseas and foreign banks are expanding their operations in India. These bank branches (set up abroad)
    further target the local population to be profitable and hence target local acquisitions. Evidently, this results
    in an M&As opportunity for foreign banks to acquire an Indian bank and also Indian banks to acquire foreign
    banks. For example, ICICI Bank has made an acquisition of a bank in Europe in 2006 to establish itself in a
    geographical area. To be concluded that mergers and acquisitions of banking sector has takeover supports
    and solidity in the market driven in the post-liberalization period. Mergers and Acquisitions in the post-
    mergers bidder banks acquire weak banks which understood their stand in the market and stability in the
    productivity and profitability of bank strong banks.

    2. REVIEW OF LITERATURE
    The lot of research has been conducted on pre and post merger financial performance of ICICI bank Ltd
    from last few decades.
    Tiwari (2011), these studies was conducted on mergers of banks some issues and challenges us.This paper
    attempt to some important dimensions and issues in the post merger regime of banking system in India.
    These issues may vary from financial restructuring to human resource to IT consolidation etc.This paper
    main objective is synergy operations and bringing financial strength. There are some issues, questions and
    challenges which need to be addressed in an inevitable environment of imminent reality of banking mergers
    in India and also this study recommends narasingham Committee and BASEL conventions have also
    propagated the need of mergers and consolidations of banking industry to bring synergic consequences in
    India.
    Goyal (2012), this study was undertaken on merger and acquisition in banking industry: A case study of
    ICICI bank Ltd. The main objective of this article is to study the growth of ICICI Bank Ltd. through mergers,
    acquisitions, and amalgamation. This article is divided into four parts. The first part includes introduction
    and conceptual framework of mergers and acquisition. The second part discusses the historical background
    of ICICI Bank Ltd. and followed by review of literature. The third part discusses all the mergers, acquisitions,
    and amalgamations in detail. Finally, the article concludes that a firm must devise a strategy in three phases
    such as, pre-merger phase, acquisition phase and post-merger phase etc.
    Javid (2013), this study was emphasized on impact of merger and acquisition on operating performance and
    shareholder wealth in Pakistan banking sector. The present paper investigated the impact of merger and
    acquisitions on operating performance and shareholder wealth in Pakistani banking sector. In this study has
    been covered data from 2007-2010,with both domestic and foreign banks which are operating in Pakistan.
    The present study showed that after the transaction the operating performance from the figures that the ratios

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  4. Financial Performance Analysis of Pre and Post Merger In Banking Sector: A Study with Reference To ICICI Bank Ltd

    of operating performance has decreased significantly which shows that the transaction doesn’t have a
    positive relationship with the operating performance of the banks.
    Fakarudin (2014), this study was undertaken on effects of mergers and acquisitions on revenue efficiency
    and the potential determinants: evidence from Malaysian banks. This paper discusses on identifying the
    effects of regulators-guided mergers on production efficiency gains of Malaysian banks as measured by
    revenue efficiency ratio and capital gearing ratio etc. The paper also examines the potential bank-specific
    and macroeconomics determinants correlated with revenue efficiency. The study sample consisted of banks
    that were engaged in mergers during 2002-2009. This study results the revenue efficiency did not improve
    after the merger, meanwhile, size, market power and management quality were shown to be correlated with
    revenue efficiency of Malaysian banks.
    Singh (2015), this study was conducted on mergers in service sectors: post merger financial analysis of
    ICICI bank. This paper evaluates the performance of the ICICI bank, after buy the Sangli Bank in April 2007
    and Bank of Rajasthan in May 2010.This study mainly focused on pre and post amalgamation performance
    was analyzed based on financial statements of ICICI bank from (2004- 2014) by using various financial
    ratios such as, net profit margin, ROA, ROE, ROI, return on advances, debt/equity ratio, current Ratio, quick
    ratio and EPS.T-test was applied to the various financial ratios for before and after merger data. The results
    show that, out of total performance ratios of ICICI Bank half of ratios have significantly changed after
    mergers in both sample cases.
    Tamragundi (2016), this study was focused on impact of mergers on Indian banking sector: A comparative
    study of public and private sector merged banks. This paper examines the impact of mergers on performance
    of selected commercial banks in India and also merger of public sector banks with private sector banks and
    data have been collected from CMIE data base at IIM, Bangalore and Bank’s annual reports and to test
    reliability of data used Statistical tool such as, Mean, Standard deviation and T-Test etc.Finally, the study
    concludes that, Merger is a useful strategy, through this Banks can expand their operations, serve larger
    customer base, increases profitability, liquidity and efficiency but the overall growth and financial illness of
    the bank can’t be solved from mergers of public and private sector banks.

    3. OBJECTIVES OF THE STUDY
    The major objectives of the study are as follows
    1. To highlight the theoretical background and impact of pre and post merger financial performance of ICICI
    bank Ltd.
    2. To examine the profitability ratio analysis of pre and post merger financial performance in ICICI bank Ltd.
    3. To study the liquidity ratio analysis of pre and post merger financial performance in ICICI bank Ltd.
    4. To assess the leverage ratios and growth ratio analysis of pre and post merger financial performance in ICICI
    bank Ltd.
    5. To offer findings and suggestions in the light of the study.

    4. RESEARCH METHODOLOGY
    Research is considered as journey from unknown to the known. Methodology is the way to solve the research
    problem systematically. The required secondary data constitutes the main source of information, suitable for
    the purpose of the present study. In this study we have selected ICICI bank for analysis of data. The sources
    of secondary data were collected from Annual reports of ICICI bank. The information for this study is
    gathered for the time of 2007-08 to 2016-17. And also various national and international journals, periodic
    publications, working papers, books, articles, thesis, dissertation work on pre and post financial performance
    of Indian banking sector. For the purpose data analyze applied group or descriptive statistics, independent
    sample T-test to known the significant relationship between two variables and also to prove the hypotheses
    of the study to measure the reliability of data.

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  5. Dr. Veena K.P and Prof. S.N. Patti

    5. HYPOTHESES
    The study is based on the following hypotheses
    Null (H0): There is no significant difference between pre-merger and post-merger financial performance of
    ICICI bank Ltd.
    Alternative (H1): There is a significant difference between pre-merger and post-merger financial
    performance of ICICI bank Ltd.
    Null (H0): There is no relationship between profitability ratio, liquidity ratio, leverage ratio, growth ratio
    performance of ICICI Bank Ltd.
    Alternative (H2): There is relationship between profitability ratio, liquidity ratio, leverage ratio, growth ratio
    performance of ICICI Bank Ltd.

    6. ANALYSIS AND INTERPRETATION
    Pre and Post Merger Performance measurement though Profitability ratios
    Table No.1 indicates the profitability ratio analysis of pre and post merger financial performance of ICICI
    bank Ltd. The profitability ratio are further divided into three types such as, net profit margin, return on
    assets, return on equity etc. In the context of net profit margin ratio the overall pre merger performance was
    recorded 110.30 billion and post merger performance was recorded 546.77 billion this shows the post merger
    performance was high compared to pre merger performance in ICICI bank. In the context of pre merger
    financial performance the highest net profit margin was recorded 41.58 billion in the year 2008-09 as against
    lowest net profit margin was recorded 31.10 billion in the year 2007-08.Further the post merger performance
    the highest net profit margin was recorded 111.75 billion in the year 2015-16 as against lowest net profit
    margin was recorded 40.25 billion in the year 2010-11. In the context of return on assets the overall pre
    merger and post merger performance was recorded 3.2 times and 10.71 times respectively. The highest pre
    merger performance on return on assets was recorded 1.10 times in the year 2008-09 as against lowest return
    on assets was recorded 1.10 times in the year 2009-10. Further the post merger performance, the highest
    return on assets was recorded 1.86 times in the year 2015-16, as against the lowest return on assets was
    recorded 1.1 times in the year 2010-11. In the context of return on equity the overall pre merger and post
    merger performance was recorded 32.2:1 and 69.54:1 respectively.

    Table 1 Pre and Post Merger Performance through Profitability ratios
    Profitability Ratios Net Profit Margin Return on Assets Return on Equity
    Pre-Merger
    2007-08 31.10 1.10 13.4
    2008-09 41.58 1.10 11.1
    2009-10 37.58 1.00 7.70
    Total [A] 110.30 3.2 32.2
    Post-Merger
    2010-11 40.25 1.1 7.90
    2011-12 51.51 1.34 9.58
    2012-13 64.65 1.50 11.09
    2013-14 83.25 1.66 12.94
    2014-15 98.10 1.76 13.73
    2015-16 111.75 1.86 14.3
    2016-17 97.26 1.49 11.32
    Total [B] 546.77 10.71 69.54
    Grand Total [A+B] 657.07 13.91 101.74
    Source: Annual Reports of ICICI Bank.

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  6. Financial Performance Analysis of Pre and Post Merger In Banking Sector: A Study with Reference To ICICI Bank Ltd

    The highest pre merger performance of return on equity was recorded 13.4:1 in the year 2007-08 as
    against lowest return on equity was recorded 7.70:1 in the year 2009-10. Further the post merger
    performance, the highest return on equity was recorded 13.73:1 in the year 2014-15. As against lowest return
    on equity was recorded 7.90:1 in the year 2010-11.To be conclude that post merger financial performance
    are high or better compared to the pre merger financial performance of profitability ratios in ICICI Bank Ltd.

    Pre and Post Merger Performance Measurement through Liquidity Ratios
    Table No.2 represents that liquidity ratio analysis of pre and post merger financial performance of ICICI
    bank Ltd. The liquidity ratio are further divided into three types such as, current ratio, acid test ratio and cash
    ratio etc. In the context of current ratio the overall pre merger performance was recorded 1.14 times and post
    merger performance was recorded 2.71 times this shows the post merger performance was high compared
    to pre merger performance in ICICI bank. In the context of pre merger financial performance the highest
    current ratio was recorded 0.90 times in the year 2007-08 as against lowest current ratio was recorded 0.11
    times in the year 2008-09.Further the post merger performance the highest current ratio was recorded 1.33
    times in the year 2016-17, As against lowest current ratio was recorded 0.06 times in the year 2015-16.In
    the context of acid test ratio the overall pre merger and post merger performance was recorded 18.4 times
    and 84.28 times respectively. The highest pre merger performance of acid test ratio was recorded 6.42 times
    in the year 2008-09 as against lowest acid test ratio was recorded 5.94 times in the year 2009-10. Further the
    post merger performance, the highest acid test ratio was recorded 15.86 times in the year 2011-12, as against
    the lowest acid test ratio was recorded 8.7 times in the year 2016-17.In the context of cash ratio the overall
    pre merger and post merger performance was recorded 0.281 times and 0.557 times respectively. The highest
    pre merger performance of cash ratio was recorded 0.107 times in the year 2007-08 as against cash ratio was
    recorded 0.079 times in the year 2009-10. Further the post merger performance, the highest cash ratio was
    recorded 0.106 times in the year 2010-11.As against lowest cash ratio was recorded 0.065 times in the year
    2015-16.To be conclude that post merger financial performance are high or better compared to the pre merger
    financial performance of liquidity ratios in ICICI Bank Ltd.

    Table 2 Pre and Post Merger Performance through Liquidity ratios
    Liquidity Ratios Current Ratio Acid Test Ratio Cash Ratio
    Pre-Merger
    2007-08 0.90 6.04 0.107
    2008-09 0.11 6.42 0.095
    2009-10 0.13 5.94 0.079
    Total [A] 1.14 18.4 0.281
    Post-Merger
    2010-11 0.14 14.7 0.106
    2011-12 0.07 15.86 0.083
    2012-13 0.12 9.37 0.074
    2013-14 0.90 10.53 0.077
    2014-15 0.09 11.31 0.069
    2015-16 0.06 13.81 0.065
    2016-17 1.33 8.7 0.082
    Total [B] 2.71 84.28 0.557
    Grand Total [A+B] 3.85 102.68 0.838
    Source: Annual Reports of ICICI Bank.

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  7. Dr. Veena K.P and Prof. S.N. Patti

    Pre and Post Merger measurement through Leverage Ratios
    Table No.3 shows that leverage ratio analysis of pre and post merger financial performance of ICICI bank
    Ltd. The leverage ratios are further divided into three types such as, debt ratio, debt-equity ratio and interest
    coverage ratio etc. In the context of debt ratio the overall pre merger performance was recorded 9.14 times
    and post merger performance was recorded 48.09 times this shows the post merger performance was high
    compared to pre merger performance in ICICI bank. In the context of pre merger financial performance the
    highest debt ratio was recorded 3.27 times in the year 2008-09 as against lowest debt ratio was recorded 2.75
    times in the year 2007-08. Further the post merger performance the highest debt ratio was recorded 8.99
    times in the year 2015-16, as against lowest debt ratio was recorded 4.70 times in the year 2016-17.In the
    context of debt equity ratio the overall pre merger and post merger performance was recorded 23.76:1 and
    45.47:1 respectively. The highest pre merger performance of debt equity ratio was recorded 11.42:1 in the
    year 2007-08 as against lowest debt equity ratio was recorded 5.72:1 in the year 2009-10.Further the post
    merger performance, the highest debt equity ratio was recorded 7.27:1 in the year 2016-17, as against the
    lowest debt equity ratio was recorded 5.74:1 in the year 2010-11. In the context of interest coverage ratio the
    overall pre merger and post merger performance was recorded 38.96:1 and 100.03:1 respectively. The
    highest pre merger performance of interest coverage ratio was recorded 13.47:1 in the year 2007-08 as
    against lowest interest coverage ratio was recorded 12.69:1 in the year 2009-10. Further the post merger
    performance, the highest interest coverage ratio was recorded 16.19:1 in the year 2014-15.As against lowest
    interest coverage ratio was recorded 12.62:1 in the year 2016-17.To be conclude that post merger financial
    performance are high or better compared to the pre merger financial performance of leverage ratios of ICICI
    Bank Ltd.

    Table 3 Pre and Post Merger Performance through Leverage ratios
    Interest Coverage
    Leverage Ratios Debt Ratio Debt-Equity Ratio
    Ratio
    Pre-Merger
    2007-08 2.75 11.42 13.47
    2008-09 3.27 6.62 12.80
    2009-10 3.12 5.72 12.69
    Total [A] 9.14 23.76 38.96
    Post-Merger
    2010-11 5.92 5.74 13.48
    2011-12 7.36 6.08 13.97
    2012-13 6.45 6.55 14.96
    2013-14 7.14 6.56 15.27
    2014-15 7.53 6.64 16.19
    2015-16 8.99 6.63 13.81
    2016-17 4.70 7.27 12.62
    Total [B] 48.09 45.47 100.03
    Grand Total [A+B] 57.23 69.23 139.26
    Source: Annual Reports of ICICI Bank.

    Pre and Post Merger Performance through Growth ratios
    Table No.4 depicts that growth ratio analysis of pre and post merger financial performance of ICICI bank
    Ltd. The growth ratios are further divided into two types such as, Earning Per Share (EPS) and Dividend Per
    Share (DPS) etc. In the context of earning per share the overall pre merger performance was recorded 108.04
    Rs and post merger performance was recorded 330.74 Rs, this shows the post merger performance was high
    compared to pre merger performance in ICICI bank. In the context of pre merger financial performance the
    highest earning per share amounts to Rs.39.4 in the year 2008-09 as against lowest earning per share amounts

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  8. Financial Performance Analysis of Pre and Post Merger In Banking Sector: A Study with Reference To ICICI Bank Ltd

    to Rs.33.8 in the year 2009-10.Further the post merger performance the highest earning per share amounts
    to Rs.84.99 in the year 2014-15.as against lowest earning per share amounts to Rs.16.75 in the year 2016-
    17.In the context of Dividend Per Share (DPS) the overall pre merger and post merger performance amounts
    to Rs.32.00 and Rs.95.50 respectively. The highest pre merger performance of dividend per share amounts
    to Rs.11.00 in the year 2008-09 as against lowest dividend per share amounts to Rs.10.00 in the year 2009-
    10.Further the post merger performance, the highest dividend per share amounts to Rs.23.00 in the year
    2014-15, as against the lowest dividend per share amounts to Rs.5.00 in the year 2016-17.To be conclude
    that post merger financial performance are high or better compared to the pre merger financial performance
    of growth ratios of ICICI Bank Ltd

    Table 4 Pre and Post Merger Performance through Growth ratios
    Growth Ratios Earnings Per Share (EPS) Dividend Per Share (DPS)
    Pre-Merger
    2007-08 34.84 10.00
    2008-09 39.4 11.00
    2009-10 33.8 11.00
    Total [A] 108.04 32.00
    Post-Merger
    2010-11 36.1 12.00
    2011-12 45.27 14.00
    2012-13 56.11 16.50
    2013-14 72.20 20.00
    2014-15 84.99 23.00
    2015-16 19.32 5.00
    2016-17 16.75 5.00
    Total [B] 330.74 95.50
    Grand Total 439.14 127.50
    [A+B] Source: Annual Reports of ICICI Bank.

    7. FINDINGS OF THE STUDY
    The following are the major findings of the study
    • In the context of net profit margin ratio the overall pre merger performance was recorded 110.30 billion and
    post merger performance was recorded 546.77 billion this shows the post merger performance was high
    compared to pre merger performance in ICICI bank.
    • Further the return on assets the overall pre merger and post merger performance was recorded 3.2 times and
    10.71 times respectively.
    • The overall return on equity of pre merger and post merger performance was recorded 32.2:1 and 69.54:1
    respectively.
    • In the context of current ratio the overall pre merger performance was recorded 1.14 times and post merger
    performance was recorded 2.71 times this shows the post merger performance was high compared to pre
    merger performance in ICICI bank.
    • The overall acid test ratio of pre merger and post merger performance was recorded 18.4 times and 84.28
    times respectively.

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  9. Dr. Veena K.P and Prof. S.N. Patti

    • Further overall cash ratio of pre merger and post merger performance was recorded 0.281 times and 0.557
    times respectively.
    • In the context of debt ratio the overall pre merger performance was recorded 9.14 times and post merger
    performance was recorded 48.09 times this shows the post merger performance was high compared to pre
    merger performance in ICICI bank.
    • The overall debt equity ratio of pre merger and post merger performance was recorded 23.76:1 and 45.47:1
    respectively.
    • In the context of interest coverage ratio the overall pre merger and post merger performance was recorded
    38.96:1 and 100.03:1 respectively.
    • The overall earnings per share of pre merger performance was recorded Rs. 108.04 and post merger
    performance was recorded Rs. 330.74 this shows the post merger performance was high compared to pre
    merger performance in ICICI bank.
    • In the context of dividend per share (DPS) the overall pre merger and post merger performance amounts to
    Rs.32.00 and Rs.95.50 respectively.

    8. SUGGESTIONS FOR THE STUDY
    The following are the suggestion for the study
    • Government of India and RBI to liberalize their policies in connection with Mergers and Acquisitions to
    increase number of deals between the banks, it leads to increasing profitability of the banks.
    • Banks should be create awareness relates to merger and acquisition, intensify training and retraining
    progrmames for all staff, particularly the management staff, to improve management efficiency.
    • Insure banks post merger legal battles in India. Even mergers happen between two entities or banks can attract
    Income tax in India if there is a remote link with Indian entities before or after mergers.
    • The banks should be concentrate on liquid management competencies after the pre merger and post merger
    acquisition make out the proper strategies to maintain liquidity position of the banks.
    • The risk of bad loan constitutes the greatest threat to the existence of a banking institution. so the banks should
    analyze pre merger and post merger financial performance of the banks.

    9. CONCLUSION
    Banking sector is one of the faster growing areas in the Indian economy. Mergers and acquisitions considered
    as one of the most useful strategy for expansion. M&A in Indian banking sector has provided evidence that
    it is useful tools for survival of weak banks by merging in to larger banks. The present study focused on
    overall ten years of years of performance data out that three years considered as pre-merger performance
    (2007-2010) and remaining seven years considered as post-merger performance (2010-2016), for the
    purposes of measure the performance of ICICI bank they used different ratios such as, profitability ratio,
    liquidity ratio, leverage ratio and growth ratios, this results shows banks are able to performance better after
    merger with other banks. Finally in this study post merger performance standards are better compared to the
    pre merger performance standards therefore post- merger movement as well as impact of merger on acquiring
    entity i.e. ICICI Bank Ltd.

    http://www.iaeme.com/IJM/index.asp 248 editor@iaeme.com

  10. Financial Performance Analysis of Pre and Post Merger In Banking Sector: A Study with Reference To ICICI Bank Ltd

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    http://www.iaeme.com/IJM/index.asp 249 editor@iaeme.com

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