Mergers in service sectors: Post merger financial analysis of ICICI bank

Abstract

The banking sector is one of the most important sector that contributes to the national development. In today's globalized economy, mergers and acquisitions (M&A) are being increasingly used world over, and baking sector is not being escape. This paper evaluates the performance of the ICICI bank, after buy the Sangli Bank in April 2007 and Bank of Rajasthan in May 2010. Pre and Post amalgamation performance was analysed based on financial statements of ICICI bank from (2004- 2014) by using various financial ratios like, 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. While other half of ratios have not significantly changed after merger, because null hypothesis is accepted in both sample cases.