A Study on Risk and Return Analysis of Madanapalle Co-Operative Town Bank Ltd. – A Financial Performance Study (2020–21 to 2024–25)

Abstract

Purpose: This study examines the risk and return profile of Madanapalle Co-operative Town Bank Ltd. over five financial years (2020–21 to 2024–25) to evaluate its financial performance and risk management effectiveness. Design/Methodology: The study relies exclusively on secondary data drawn from the bank's annual reports, balance sheets, and profit and loss accounts. Analytical tools employed include Return on Assets (ROA), Return on Equity (ROE), Return on Investment (ROI), Net Profit Margin (NPM), Capital Adequacy Ratio (CAR), Standard Deviation, Beta, Sharpe Ratio, Treynor Ratio, Pearson Correlation, and Regression Analysis. Findings: The bank maintained a stable capital position with CAR consistently above 18%, while ROE showed continuous improvement reaching 462.69% in 2024–25. However, ROA and ROI exhibited declining trends in later years. Both the Sharpe Ratio (−24.96) and Treynor Ratio (−89.40) indicate weak risk-adjusted returns relative to the risk-free rate. Correlation and regression analyses confirm a perfect positive relationship between risk and return (r = +1.000, R² = 1.000). Practical Implications: The findings provide actionable insights for cooperative bank management in improving profitability, investment efficiency, and risk-return balance for sustainable growth. Originality: This is one of the few empirical studies focused specifically on a cooperative town bank in Andhra Pradesh using a comprehensive set of financial and statistical tools over a recent five-year period.