Profitability of district co-operative banks in northern kerala: an interbank comparison

Abstract

The study entitled “Profitability of District Co – operative Banks in Northern Kerala – An Inter BANK Comparison” was undertaken with the objectives of evaluating the inter bank variability of profitability of district co – operative banks (DCBs) in northern Kerala and determining the factors affecting profitability of the district co – operative banks. The study was conducted in three District Co – operative Banks in Northern Kerala, viz. Kannur District Co – operative Bank (KRDCB), Kozhikode District Co – operative Bank (KZDCB), Kasargode District Co – operative Bank (KGDCB), for a decade from 1992 – 1993 to 2001 – 2002. The study was based on the secondary data collected from the annual reports and audit reports maintained by the banks. The methodology used for the analysis of the present study is the decomposition model proposed by Das (1999). For finding the inter bank variability of profitability of banks, coefficient of variation is used and correlation coefficient is computed for the detailed analysis of identifying the factors affecting the profitability of banks. The analysis has revealed that Kannur District Co – operative Bank (KRDCB) is a well performing bank with comparative higher consistency in profit, average profitability and higher staff productivity and lowest interest expenses inspite of below par performance in certain indicators. The bank realizes human resources as a vital factor and gives utmost significance for its development. The analysis revealed that the banks with lowest burden could achieve highest profitability and banks with high burden recorded lowest profitability. Banks are suffering from high burden levels which is the root cause of their low profitability. The Kozhikode District Co – operative Bank (KZDCB) has got highest burden which retard its profit to a great extent.