HDFC BANK

TABLE OF CONTENT
S. No.

Chapters

Introduction

Analysis of Vision, Mission & Core values

The External Environment Analysis

The Internal Environment Analysis

SWOT Analysis

Competition Analysis
Industry Structure (Using Porters Five forces model)
Competitive Profile Matrix (Based on Key Success factors)

BCG matrix

Conclusion

Page No.

References

Page 1

HDFC BANK

Introduction
Banking sector is going to be the most watched sector in the coming quarters. There are
reasons for this, RBI has reduced the CRR rate and repo rates. The debt/GDP ratio of the
Government is scary at 80% essentially meaning that the Government cannot borrow much
without jeopardizing stability of banking sector. Given project is an attempt to identify and
analyse the vision and mission of HDFC bank, as well as comparing the position and
strategies of the bank with its major competitor.
Project:
Provides all the crucial information on HDFC Bank Limited required for business and
competitor intelligence needs.
Contains a study of the major internal and external factors affecting HDFC Bank Limited in
the form of a SWOT analysis as well as a breakdown and examination of strategies of
HDFC Bank Limited.
Major factors contributing the success of HDFC.
Industrial analysis of HDFC through Porters five forces model as well as comparing that
with its competitor ICICI.
Analysis done on BCG matrix

With this project we have tried to understand the different business process identified by the
bank, as well as analyzing its strength and weakness as compared to other banks. Our
project is mainly concentrated on the comparative analysis of HDFC and competitor ICICI.
The source of information is secondary that is through internet and different newspapers
and sites of HDFC and ICICI as well as some of the journals.

OVERVIEW OF THE COMPANY

HDFC Bank Limited is an Indian financial services company based in Mumbai,
Maharashtra that was incorporated in August 1994. HDFC Bank is the fifth or sixth
largest bank in India by assets and the second largest bank by market capitalization as
Page 2

HDFC BANK

of February 24, 2012. The bank was promoted by the Housing Development Finance
Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank
has 1,986 branches and over 5,471 ATMs, in 996 cities in India, and all branches of the
bank are linked on an online real-time basis. As of 30 September 2008 the bank had
total assets of Rs.1006.82 billion.

BUSINESS FOCUS
HDFC Bank deals with three key business segments. - Wholesale Banking Services,
Retail Banking Services, Treasury. It has entered the banking consortia of over 50
corporate for providing working capital finance, trade services, corporate finance, and
merchant banking. It is also providing sophisticated product structures in areas of
foreign exchange and derivatives, money markets and debt trading And Equity research.

Wholesale banking services

Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates
and agri-based businesses. For these customers, the Bank provides a wide range of
commercial and transactional banking services, including working capital finance, trade
services, transactional services, cash management, etc. The bank is also a leading
provider of the above services to its corporate customers, mutual funds, stock exchange
members and banks.

Retail banking services

HDFC Bank was the first bank in India to launch an International Debit Card in
association with VISA (Visa Electron) and issues the MasterCard Maestro debit card as
well. The Bank launched its credit card business in late 2001. By March 2009, the bank
had a total card base (debit and credit cards) of over 13 million. The Bank is also one of
the leading players in the merchant acquiring business with over 70,000 Point-of-sale
(POS) terminals for debit / credit cards acceptance at merchant establishments.
Net based B2C opportunities including a wide range of internet banking services for
Fixed Deposits, Loans, Bill Payments, etc. With Finest of Technology and Best of Man
power in Banking Industry HDFC BANK's retail services have become by and large the
best in India and since the contribution to CASAi,e total number of current and savings
Page 3

HDFC BANK

account of more than 50%, HDFC BANK has full potential to become Indias No.1
Private Sector Bank.

Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services
are provided through the bank's Treasury team. To comply with statutory reserve
requirements, the bank is required to hold 25% of its deposits in government securities. The
Treasury business is responsible for managing the returns and market risk on this
investment portfolio

Page 4

ANALYSIS OF VISION, MISSION & CORE VALUES

VISION
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank.
MISSION
HDFC mission is to be World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.
ANALYSIS
PARAMETER

HDFC BANK

Markets

YES

Technology

YES

Survival growth and profit

YES

Philosophy

YES

Self- concept

YES

Public image

NO

Employees

YES

Customers

YES

Products Services

YES

Increase the market share in Indias expanding banking and financial services industry
by following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer service.
Leverage the technology platform and open scalable systems to deliver more products
to more customers and to control operating costs.
Maintain the current high standards for asset quality through disciplined credit risk
management.
Develop innovative products and services that attract the targeted customers and address
inefficiencies in the Indian financial sector.Continue to develop products and services
that reduce the cost of funds.Focus on high earnings growth with low volatility.

ENVIRONMENTAL ANALYSIS
Business environment includes set of conditions or situation that affects business activities or
decision making. These conditions are broadly classified into internal environment and external
environment.

THE EXTERNAL ENVIRONMENT ANALYSIS

External environment include factors which are outside the control of the business organization but it
provide opportunities or pose threats. External environment is further classified into two categories
micro environment and macro environment.

1) Political Factor
Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to their
benefits like waiver of short-term agricultural loans, to attract the farmers votes. By
doing so the profits of the bank get affected.
FDI move to increase the limits to 49 percent from 26 percent.
The Union Budget 2009-10 extended the debt waiver scheme by six more months for
farmers owing more than 2 hectare of land The Union Budget 2008-09 allowed these
farmers 25% rebate on loan if they repay 75%of their overdue within stipulated period of
30th June 2009.
2) Economic Factor

Cash Reserve Ratio (CRR) reduced by 0.25% to 4.5% of net demand and time liabilities
(NDTL) to potentially inject primary liquidity of Rs. 170 billion; token reduction in lending
rates expected, given comfortable liquidity position and the recent revisions in deposit rates
and lending rates for certain products undertaken by some Banks. Benchmark Repo rate
maintained at 8.0%; Reverse Repo and Marginal Standing Facility (MSF) stand unchanged
at 7.0% and 9.0%, respectively. Bank Rate also maintained at 9.0%. Following a 1%
reduction in July 2012, Statutory Liquidity Ratio (SLR) kept unchanged at 23% of NDTL.
The primary focus of monetary policy remains inflation control and anchoring of
inflation expectations, despite increasing risks to economic growth. The Reserve
Bank of India (RBI) highlighted that inflationary pressures and risks related to fiscal
deficit and current account deficit constrain it from providing a stronger monetary
policy response to boost economic growth. As policy measures to stimulate growth
materialize, monetary policy to reinforce the positive impact of such actions while
retaining a focus on managing inflation.
Guidance provided that liquidity management by the RBI would ensure adequate
credit flows to the productive sectors of the economy and appropriate responses to
shocks brought on by external developments.

3) Social Factor
HDFC announced its plans to make an entry into education sector. The group plans to focus on
small towns wherein it would either set up schools or take over weak performing boarding
schools. According to McKinsey Global Institutes Bird of Gold report, the discretionary
spending on education is set to increase from 5% in 2005 to 6% in 2015. HDFC will foray into
this sector through a separate subsidiary. It is widely believed that many schools are planning to
set up model, which is profitable and scalable, as operating under trusts makes it difficult to
segregate profits. As a result, HDFC could look to adopt those schools that are open to the
takeover model. HDFC already has an educational loan unit Credila Financial Services in
which it owns 62.3% stake. Credila plans to boosts the distribution network and customer base
of HDFC Bank in order to expand and also lower the cost of funds. The groups likely entry
into education sector could be beneficial in the long run.

HDFC Bank ,is partnering with the citys municipal authorities to educate people about the
danger posed by plastic bags to the environment, and to offer recycle paper bags
instead.The bank reinforced the Kolkata Municipal Corporation(KMC) intiated anti-plastic
awarness drive by distributing recycled and eco-friendly paper bags to retailers and
customers across nine markets in the city.Encourage citizens to use environment friendly
and cost effective paper bags as the best substitute.4)Technological Factor
Productivity ratio of HDFC is increasing significantly over the years. Number of employees of
the group increased to 1,607 in FY2011, as compared to 797 in FY2010 and 727 in FY2009.
While, profit per employee increased significantly to $491,900, as compared to $117,500 and
$7,500 in FY2010 and FY2009 respectively. Administration cost per asset ratio decline to
0.30% in FY2011, as compared to 0.49 in FY2010 and 0.76 in FY2009. Similarly, cost to
income ratio improved to 7.7% in FY2011 from 13.8% and 30.9% in FY2010 and FY2009
respectively. Improving productivity would likely enhance the groups profit margin.

ATM The latest developments in terms of technology in computer and

telecommunication have encouraged the bankers to change the concept of branch
banking to anywhere banking.
Credit card facility has encouraged an era of cashless society.
Today MasterCard and Visa card are the two most popular cards used world over.
Smartcards or debit cards to be used for making payments. These are also called as
electronic purse
Today banks are also using SMS and Internet as major tool of promotions and giving
great utility to its customers. For example SMS functions through simple text
messages sent from your mobile.

CORE BANKING SOLUTIONS -It is the buzzword today and every bank is trying to adopt it
is the centralize banking platform through which a bank can control its entire operation the
adoption of core banking solution will help bank to roll out new product and services. THE

INTERNAL ENVIRONMENT ANALYSIS

Internal environment consists of factors which are within the control of the organization.
Business ethics, Objective of the firm, Value system, Management structure, Physical
assets, Technological resources, financial resources, Stakeholders, Human resources etc. are
part of the internal environment of business.
1)VISION AND MISSION HDFC BANK
VISION
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to
accomplish the vision of becoming a world-class Indian bank.
MISSION
HDFC mission is to be World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.
Business strategy emphasizes the following :

Increase the market share in Indias expanding banking and financial services
industry by following a disciplined growth strategy focusing on quality and not
on quantity and delivering high quality customer service.

Leverage the technology platform and open scalable systems to deliver more
products to more customers and to control operating costs.

Maintain the current high standards for asset quality through disciplined credit
risk management.

 Develop innovative products and services that attract the targeted customers and
address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce the cost of funds.
Focus on high earnings growth with low volatility.
ICICI BANK
VISION
To be the leading provider of financial services in India and a major global bank
MISSION
We will leverage our people, technology, speed and financial capital to

Be a banker of first choice of customer by delivering high quality, world class

product and services

Expand the frontiers of our business globally

Maintain high standers of governance and ethics
Create value of our stake holder
Contribute positively to the various countries and market in which operate.

ANALYSIS:
ICICI banks main focus as we can analyse from its vision and mission is on, people
technology and increasing market capital. It also wants to add value to its stake holder.
Delivering quality is also their main focus of interest. They have not mentioned about any
Corporate social responsibility but maintain ethics is something in their agenda.

COMPERATIVE ANALYSIS OF HDFC AND ICICI BANK

PARAMETER

HDFC BANK

ICICI BANK

Markets

YES

YES

Technology

YES

YES

Survival growth and profit

YES

YES

Philosophy

YES

YES

Self- concept

YES

YES

Public image

NO

NO

Employees

YES

NO

Customers

YES

YES

Products Services

YES

YES

2) LONG TERM OBJECTIVE

HDFC Banks mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the banks risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and
regulatory compliance. HDFC Banks business philosophy is based on four core values:
Operational Excellence, Customer Focus, Product Leadership and People.
3) LEADERSHIP

HDFC bank own the leadership awards the Best Bank at Bloomberg UTV's Financial
Leadership Awards 2011 and declared the Best Bank in the Private Sector category at the
NDTV Business Leadership Awards 2010.therefore we can conclude that HDFC is better in
leadership than ICICI bank.
Key executive for HDFC bank
Name

Board Relationships

Title

Age

Aditya Puri

15 Relationships

Managing Director, Director, Member of Investors

Grievance (Share) Committee, Member of Credit Approval
Committee, Member of Risk Policy & Monitoring
Committee, Member of Fraud Monitoring Committee,
Member of Premises Committee and Member of Customer
Service Committee

61

Sashi Jagdishan

No Relationships

Head of Finance

47

Bhavesh Zaveri

46 Relationships

Head of Operations, Head of Wholesale Banking

Operations and Head of Cash Management

46

Sunil Shah B.com Mba

15 Relationships

Managing Director of HDFC Securities Limited and

Director of HDFC Securities Limited

54

Abhay Aima

5 Relationships

Head of Equities & Private Banking - Third Party Products

& NRI Banking

50

HDFC bank limited board members

Name
C. M. Vasudev

Board Relationships
32 Relationships

Primary Company
HDFC Bank Ltd.

Age
69

Aditya Puri

15 Relationships

HDFC Bank Ltd.

61

Harish Engineer

15 Relationships

HDFC Bank Ltd.

63

Paresh Sukthankar

15 Relationships

HDFC Bank Ltd.

49

Sunil Shah B.com Mba

15 Relationships

HDFC Bank Ltd.

54

4) POLICY
RBI is the policy maker of all the banks which is followed by every bank in
India All the monetary policy controlled by RBI
CRR,SLR,REPO RATE.REVERSE REPO RATE is decided by RBI and base rate
decided by individual banks under the guidance of RBI

Strengths

HDFC bank is the second largest private banking sector in India having 2,201
branches and 7,110 ATMs
HDFC bank is located in 1,174 cities in India and has more than 800 locations to
serve customers through Telephone banking
The banks ATM card is compatible with all domestic and international Visa/Master
card, Visa Electron/ Maestro, Plus/cirus and American Express. This is one reason for
HDFC cards to be the most preferred card for shopping and online transactions

HDFC bank has the high degree of customer satisfaction when compared to other
private banks
The attrition rate in HDFC is low and it is one of the best places to work in private
banking sector
HDFC has lots of awards and recognition, it has received Best Bank award from
various financial rating institutions like Dun and Bradstreet, Financial express,
Euro money awards for excellence, Finance Asia country awards etc
HDFC has good financial advisors in terms of guiding customers towards right
investments
Weakness
HDFC bank doesnt have strong presence in Rural areas, where as ICICI bank its
direct competitor is expanding in rural market
HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard
core loyals in terms of banking services.
HDFC lacks in aggressive marketing strategies like
ICICI The bank focuses mostly on high end clients
Some of the banks product categories lack in performance and doesnt have reach
in the market

The share prices of HDFC are often fluctuating causing uncertainty for the
investorsOpportunities
HDFC bank has better asset quality parameters over government banks, hence the
profit growth is likely to increase
The companies in large and SME are growing at very fast pace. HDFC has good
reputation in terms of maintaining corporate salary accounts
HDFC bank has improved its bad debts portfolio and the recovery of bad debts are
high when compared to government banks HDFC has very good opportunities in
abroad Greater scope for acquisitions and strategic alliances due to strong financial
position
Threats
HDFCs nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is
a slight variation its not a good sign for the financial health of the bank
The non banking financial companies and new age banks are increasing in India
The HDFC is not able to expand its market share as ICICI imposes major threat

The government banks are trying to modernize to compete with private banks RBI has
opened up to 74% for foreign banks to invest in Indian market. COMPETITION

ANALYSIS
1) Industry Structure (Using Porters five forces model)
PORTER'S FIVE FORCES MODEL
Porter's five forces analysis is a framework for industry analysis and business strategy
development formed by Michae l E. Porter of Harvard Business School in 1 979. It draws
upon industrial organization (IO) economics to derive five forces that determine the
competitive intensity and therefore attractiveness of a market. Attractiveness i n this context
refers to the overall industry profitability. An "unattractive" industry is one in which the
combination of these five forces acts to drive down overall profitability. A very unattractive
industry would be one approaching "pure competition", in which available profits for all
firms are driven to normal profit.
Three of Porter's five forces refer to competition from external sources. The remainder are
internal threats
They consist of those forces close to a company that affect its ability to serve its customers
and make a profit. A change in any of the forces normally requires a business unit to reassess the marketplace given the overall change in industry information.

INDUSTRY ANALYSIS OF HDFC BANK

FIVE FORCE

HIGH/ MEDIUM/ REMARK

LOW

Threat of new entrants

Low

For any new entrants permission

should be granted from RBI, and it is
not easy to have the permission. There
was many political and legal issue.
And the early investment was very
high.

Bargaining
customers

power

of Medium

Customer can switch to any other bank

very easily if service was not good
because switching cost is low. But
most of time customers are having their
account in most of the bank and they
know that every bank provide similarly
the same service.

Bargaining
suppliers

power

of Low

In bank industry there is no such

supplier.

Threat of substitutes

High

Because there are many public and

private bank. And also the post office
provide some of the services, many
private firm provide easy loan scheme
to attract the customers. People also
started investing their money instead of
saving them like stock market, mutual
funds , property etc.

Degree of rivalry

High

There are large numbers of public and

private bank and market growth rate
was also high. The switching cost was
also very low and the services provide
by all the bank was same.

2) Competitive Profile Matrix (Based on Key Success factors)

HDFC Bank has revised its deposit rates. The rates have been changed for maturities
ranging from six months 17 days to five years. The bank is also offering a maximum of
8.75% interest on its retail term deposits.
ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis
points. The revised rates are effective from Tuesday, the bank said on its website. The
lender has cut rates across maturities ranging from 91 days to less than five years. It now
offers a maximum 8.75% interest on retail term deposit compared to 9.25% earlier.
Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.
The moves hardly surprised the industry analysts as they have been expecting lenders to
reduce their deposit rates to protect dilution in their interest margins.
Last week, State Bank of India (SBI), the largest commercial bank in the country had pared
its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to
mirror this move.
The net interest margin of banks has been under stress as the increase in cost of deposits has
outpaced the rise in yield on advances in the past one year. As loan demand has remained
largely muted so far this year the pressure on the margins is expected to intensify further.

Bank

New Rates

Effective Date

HDFC Bank

4.00 - 8.75

12-Sep-12

ICICI Bank

4.75 - 8.75

11-Sep-12

Axis Bank

3.50 - 9.25

11-Sep-12

Note: The new rates are applicable on deposits up to Rs 1 cr.ANALYSIS ON THE BASIS
OF KEY SUCCESS FACTOR

key

HDFC BANK

FACTORS

WEIGHT

No. of
Branches

.1

NPA

WAS

SBI BANK

RATING

WAS RATING

WAS

0.4

0.4

0.5

0.8

0.6

0.4

0.9

1.2

0.6

1.2

1.2

0.6

0.3

0.1

0.4

19

3.6

16

3.5

15

2.5

.2

Busines
s
per
Employ
ee
SERVICES

.3
.3

Revenue

.1

Total
score

RATING

ICICI BANK

1.0

average

3.8

3.2

3.0

Since average of HDFC bank is higher than SBI bank and ICICI bank thats means HDFC
bank is more preferred bank than any other bank. The reason behind this is HDFC bank
have low NPA ratio and service provided by the bank is also better than any other
bank.BCG MATRIX
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1970 to help corporations with analyzing their business units or
product lines. This helps the company allocate resources and is used as an analytical tool in
brand marketing, product management, strategic management, and portfolio analysis.

HDFC Bank
HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high market
growth and they also have high market share. There is a lot of growth potential for the
banking industry because of increasing disposable income of customers, increasing working
class, more volatility in other markets also increasing importance of savings and already
discussed almost 30% of the market is still untapped.

HDFC Insurances
In insurance sector HDFCs most of the products are in star position. HDFC insurance
products have high market share and high growth rate. So we have lot of opportunity for
investment.
HDFC Mutual Funds

Mutual fund stands at cash cow. This shows that HDFC high market share and low market
growth rate in mutual funds. This means we should only focus on profitable products and
try to investment on those products which are low market growth rate but perform well if
proper investment is theirs.CONCLUSION
Banking is also now being regarded as a versatile financial planning tool. Research
indicates that Indians have four basic financial needs during their life asset accumulation
(such as buying a house or car), protecting their family, securing their childrens education,
and provision for their retirement. India being a country having a huge population of around
one billion people with only 32% of the banking population in India possessing banking the
country has a vast potential, which has been left untapped till now.
With this prospect HDFC is continuously working in this direction, but there are several
competitors already in the market with the similar strategy. This project concludes that with the
changing economical and political scenario bank sector faces many ups and downs but in order
to maintain the position HDFC needs to follow some differentiating strategy. Because it has a
very fine line of difference with its competitor ICICI and can outshine HDFC.

The project has given the clear cut vision as to how to differentiate its strategy from other
competitors an how to use the strength and convert the weakness of others as an opportunity

REFERENCES
1. www.moneycontrol.com
2. www.economictimes.com
3. www.hdfc.com
4. www.icici.com
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6. www.10paisa.com
7. http://investing.businessweek.com/research/stocks/private/people.asp?privcapId=1016
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8. http://www.marketing91.com/swot-analysis-hdfc/
9. http://www.rbi.org.in/scripts/ATMView.aspx
10. www.wikipedia.com