The goal of Financial Management is to maximize the shareholder's value. The shareholder's wealthis measured by the returns they receive on their investment. Returns are in two parts, first is in theform of dividends and the second in the form of capital appreciation reflected in market value of shares of which market value is thee dominant part. The market value of share is influenced by number of factors, many, of which, may not be fully influenced by the management of firm. However, one factor, which has a significant influence on the market value, is the expectation of theshareholders regarding the return on their investment. There exist very measures like return onCapital Employed, Return on Equity, earnings per share, Net Profit margin, and Operating profitmargin to evaluate the performance of the business. The problem with theses measures is that theylack a proper benchmarkfor comparison. The shareholders require at least a minimum rate of returnon their vestment depending on the risk in the investment. To overcome these problems the concept of EVA vas developed.
The report studies Indian bank's profile to demonstrate a direct correlation between the investment instakeholder reLationships and corporate performance. Many Indian banking seems to have destroyedshareholder's wealth over a period of time and only afew have positiveLy contributed to their wealth.With the help of EVA (Economic Value Added) which teLL what the institution is doing with investor'shard earned money, the report examines an appropriate way of evaLuating bank's performance and also finds out which Indian banks have been able to create (or destroy) sharehoLders wealth since2005-2006 to 2007-2008.