Financial Performance of Federal Bank and South Indian Bank in India Through the CAMELS Framework

Purpose: The purpose of this study is to examine the financial performance of Federal Bank and South Indian Bank over a five-year period from 2019-2020 to 2023-2024, using the CAMELS ratings model. By analyzing six key components of bank performance, the study aims to identify each bank's operational strengths and areas for improvement. Special focus is given to their sensitivity to market risk and profitability, where notable differences are observed. The objective is to provide a comprehensive assessment that supports informed decision-making by stakeholders. Design/Methodology/Approach: The study employs a quantitative and comparative approach, based on the CAMELS framework, which evaluates six key parameters. The analysis depends only on secondary data obtained from the official yearly financial reports of the Federal Bank and the South Indian Bank. Data was studied over five years (2019-2020 to 2023-2024), utilising ratio analysis and graphical tools to follow performance patterns and make inter-bank comparisons within each CAMELS component. Findings/Results: The data shows that Federal Bank regularly exceeded South Indian Bank in all CAMELS metrics. Federal Bank achieved superior capital adequacy, demonstrating greater solvency and improved asset quality through effective credit risk management. Its managerial efficiency increased substantially over time, whilst South Indian Bank's remained relatively stable. Federal Bank also reported high earnings and improved liquidity management. In terms of market risk sensitivity, both banks were harmed, although Federal Bank demonstrated a positive turnaround in the final year, whereas South Indian Bank remained significantly affected. Originality/Value: The present research adds value by applying the CAMELS model to conduct a concentrated regional comparison of two major private sector banks in Kerala. It provides statistical information on their risk exposure, enabling investors, regulators, and bank managers to make better decisions. The study adds to the greater discussion of banking sector stability in India by establishing the reliability of CAMELS as an assessment instrument, with practical implications for performance benchmarking and regulatory monitoring. Type of paper: Descriptive and Analytical Research.