The aggregate market capitalisation of 22 scheduled commercial banks rose by 25.46 per cent from Rs 20616.01 crore in 31st March 1999 to Rs 25865.55 crore in 17th August 1999. The market capitalisation of a bank, which is calculated by multiplying the total number of its outstanding shares by the share price on a particular day, gives a clue to the rating of shares of a bank on the stock exchange. This study ranks 22 scheduled commercial banks according to their market capitalisation as of 31st March 1999 and 17th August 1999. We have also tried to give a brief review of the trends in the capital market as reflected by the ratio of market capital to paid-up equity capital of bank shares as on 31st March 1999 and 17th August 1999.

The share prices have been determined on the basis of the closing quotations, in each of the two dates covered by this study,cfrom the official price lists published by the stock exchange.

The market capitalisation of the top three banks rose from Rs 13952.58 crore in 31st March 1999 to Rs 16693.18 crore in 17th August 1999, recording a growth of 19.6 per cent. The top three banks in terms of market capitalisation in 17th August 1999 were: State Bank of India (Rs 12,675.94 crore), Bank of Baroda (Rs 2,397.24 crore) and HDFC Bank (Rs 1,620 crore). All the three banks were in the list of top three in 31st March 1999. Of the top three banks, the highest percentage change in market capitalisation was recorded by Bank of Baroda (79.12 per cent) followed by HDFC Bank (17.14 per cent) and State Bank of India (12.86 per cent).

The significant percentage change in the market capitalisation of Bank of Baroda can be explained from its performance during 1998-99. During the year, Bank of Baroda garnered deposits of over Rs 44,614 crore. As on March 1998, its deposits stood at Rs 39,120 crore. Net profit dropped marginally to Rs 421 crore in 1998-99 from Rs 461 crore in 1997-98. The net profit is lower due to enhanced outlay of Rs 95 crore for wage revision, provisioning, and bond floatation expenses amounting to Rs 7 crore written off. The earning per share (EPS) decreased from Rs 15.74 in March 1998 to Rs 14.33 in March 1999.

The bank is very well placed in terms of capital adequacy and the ratio of capital to risk weighted assets stood at 13.30 per cent as on March 31, 1999, which is among the best in the banking industry.

Of the 22 banks, three showed negative percentage change in market capitalisation during 17th August from 31st March. The three banks are Bank of India (-0.75 per cent), Bank of Punjab (-0.90 per cent) and State Bank of Travancore (-4.44 per cent).

In terms of shares of the top three in the aggregate market capitalisation, there was a decline from 67.7 per cent in 31st March to 64.5 per cent in 17th August.

The ratio of market capital to equity capital gives an idea of the extent of appreciation of equity capital during a period. The top three in terms of this ratio in 17th August were State Bank of Mysore (2989.50 per cent), State Bank of B&J (2915.50 per cent) and State Bank of India (2408.50 per cent).

The share price of State Bank of Mysore appreciated significantly during 17th August over the 31st March level. This was probably due to its better performance in 1998-99. Its total income increased by 15.2 per cent to Rs 817 crore during 31st March 1999 from the level of Rs 709 crore during 31st March 1998. Similarly, in the case of State Bank of B&J, the total income has increased by 11.2 per cent to Rs 1,127 crore during 1998-99. Its net profit also increased from Rs 90 crore during 1997-98 to Rs 92 crore during 1998-99.