Top 5 Banks With The Highest Capital Adequacy Ratio
Capital Adequacy Ratio (CAR) is defined as the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and that it complies with the statutory capital requirements.
In this article we will look at the top 5 banks that have a high CAR (as per the Basel II norms) as of FY13.
| Company Name | FY13 (%) | YTD Return (%) |
|---|
| CAR (Basel II) | Tier-1 (Basel II) | Tier-2 (Basel II) |
|---|
| ICICI Bank | 18.74 | 12.8 | 5.94 | -8.2 |
| YES Bank | 18.3 | 9.5 | 8.8 | -1.47 |
| Axis Bank | 17 | 12.23 | 4.77 | -7.05 |
| HDFC Bank | 16.8 | 11.08 | 5.72 | -4.24 |
| Kotak Mahindra Bank | 16.05 | 14.71 | 1.34 | 7.86 |
Source: Ace Equity
ICICI Bank: ICICI Bank is India's largest private sector bank with total assets worth Rs 5,367.95 billion (USD 99 billion) and profit after tax of Rs 83.25 billion (USD 1,533 million) as of March 31, 2013. The Bank has a network of 3,350 branches and 10486 ATMs in India, and has a presence in 19 countries, including India.
The bank has topped our list with a CAR of 18.74% as of FY13 as per Basel II norms. The Tier 1 stands at 12.80% and the Tier 2 stands at 5.94%. On a YTD basis, the bank has yielded negative returns of 8.20%.
YES Bank: YES Bank, India's fourth largest private sector bank, has a widespread network of over 430 branches across 275 cities, with more than 1000 ATMs and 2 National Operating Centers in Mumbai and Gurgaon. YES Bank is the only bank to have been awarded the Greenfield license by the RBI in the last 17 years.
The bank has yielded a negative return of a mere 1.47% on a YTD basis. The CAR of the bank as of FY13 stands at 18.30% (Tier 1 at 9.50% and Tier 2 at 8.80%).
Axis Bank: Axis Bank is the third largest private sector bank in India. With a balance sheet size of Rs 2,85,628 crore as on March 31, 2012, Axis Bank is ranked 9th among all Indian scheduled banks. It has achieved consistent growth and a stable asset quality with a 5-year CAGR (2007-12) of 31% in total assets, 30% in total deposits, 36% in total advances and 45% in net profit.
The Tier 1 and Tier 2 CAR stands at 12.33% and 4.77% respectively taking the total CAR (Basel II) to 17% for FY13. On YTD basis, the bank has yielded negative returns of 7.05%.
HDFC Bank: The Housing Development Finance Corporation (HDFC) was among the first few banks to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank'.
HDFC Bank has yielded negative returns of 4.24% on a YTD basis. The CAR of the bank, as of FY13, stands at 16.80% (Tier 1 CAR at 11.08% and Tier 2 CAR at 5.72%).
Kotak Mahindra Bank: Kotak Mahindra Bank offers banking and financial services to high net worth individuals, entrepreneurs, business families, and employed professionals in India. It operates approximately 357 branches and 866 ATMs. Kotak Mahindra Bank was founded in 1985 and is based in Mumbai.
This is the only bank that has provided positive returns in the list provided above. The scrip has yielded a return of 7.86% on a YTD basis. The CAR of the bank stands at 16.05% with the Tier 1 CAR at 14.71% and the Tier 2 CAR at 1.34% as of FY13.