Unveiling Merger Effects: Analyzing the Impact of Financial Performance of Union Bank and Indian Bank

DOI: https://doie.org/10.1101/ES.2024335316

Vimal. V. S, Dr. V. Sivakamy, Dr. C. Sundar, Raveen Raja, Amit Sunny George

Keywords:

Amalgamation, Financial performance, Public Sector banks, Mergers

Abstract:

In India, the banking industry has been the source of mergers and acquisitions with the biggest effects. As a result, this study aids in assessing the combined organisations' overall performance as well as their productivity, profitability, and efficiency compared to the separate businesses functioning separately. This study examines the effects of amalgamation, particularly in the Indian banking industry.  The study focuses on the financial parameters of the recently combined public banks. Secondary data from reports and government sources was used in this investigation. The study's analysis of financial performance before and after amalgamation makes up its methodology. Inferential statistics were employed in the study; the t-test was utilised on all ratios to determine their significance, which allowed us to assess the main areas that needed improvement. It primarily displays the amalgamation success rate, or if the goal of the amalgamation was accomplished. The analysis of Union Bank's financial performance pre and post-amalgamation indicates stability in Earnings Per Share and CASA ratio, with non-significant p-values. However, a significant increase in Net Interest Margin post-amalgamation, highlighted by a p-value of 0.0108, suggests enhanced profitability. Conversely, Return on Equity, Net Profit Margin, and Operating Profit Margin show no significant differences, indicating successful integration without major disruptions. Similarly, Indian Bank's analysis reveals a significant increase in CASA Ratio post-amalgamation with p-value of 0.0167, while other metrics remain stable, suggesting overall stability in profitability and operational efficiency post-consolidation.

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