Operating Performance of Banks after Acquisition: Evidence from India

Madhuri Malhotra () and Anand Bhartiya

MPRA Paper from University Library of Munich, Germany

Abstract: The study examines the performance of banks after acquisition. Operating profits have been analyzed for Indian Private and Public sector banks The results from the analysis of Pre and post-merger operating performance ratios for the acquiring banks show that operating profit margins were increased in post merger period and there was a marginal decline in return on net worth and capital employed. The sample consists of 16 banks. Data from Prowess database has been collected for three years before and after the acquisition has taken place. The results show that most of the banks had performed well in post merger period. The profitability margin such as gross profit margin, net profit margins are very high in the post merger period which signifies that after acquiring the target bank their performance was well appraised. The returns on investment and capital employed were increased after acquisition. Some of the Indian public sector banks showed a decline in the post merger period which may be attributed to the inefficiency and the increase of Non Performing Assets (NPAs) with the target banks. Private sector banks have shown a rising trend in the profit margins after the acquisition.

Keywords: Operating performance; Banks; Merger; Acquisition (search for similar items in EconPapers)
JEL-codes: L24 (search for similar items in EconPapers)
Date: 2014-07-21
New Economics Papers: this item is included in nep-com and nep-eff
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