Pre & Post-Merger Financial Performance: An Indian Perspective of Exit Strategy

The financial performance is evaluated based on various variables. The study finds a negative impact of merger on return on equity, return on ass ets, Net profit ratio, yield on advance and yield on investment. However, variables namely, the Earning per share, Profit per employee and Business per em...

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Bibliographic Details
Published in:RIMS Journal of Management 2020-02, Vol.4 (2), p.1-13
Main Authors: Mabanur, Girish Mallappa, Sindhu, A N
Format: Article
Language:English
Subjects:
Bank acquisitions & mergers
Banking industry
Commercial banks
Corporate profits
Data envelopment analysis
Earnings per share
Financial analysis
Financial performance
Private sector
Profit margins
Profitability
Ratios
Rural areas
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Summary:The financial performance is evaluated based on various variables. The study finds a negative impact of merger on return on equity, return on ass ets, Net profit ratio, yield on advance and yield on investment. However, variables namely, the Earning per share, Profit per employee and Business per employee has shown positive trend and growth after merger. It has been observed that after the merger, the assets, equity, investment and advances of all banks increases but due to underutilization their respective yield decreases. On a contrary, the business per employee and profit per employee has increased due to optimum utilization of human resources. By applying the Comparative analysis, the paper also assess the financial performance of acquiring bank with the banking industry. The Bank of Baroda and Oriental bank of commerce has found decreases in Yield on Advances, and yield on investment as compared to average of all banks in the post- merger period. State Bank of India & IDBI Bank has higher business per employee and profit per employee as compared to industry average.
ISSN:2455-1449