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HDFC
HDFC
As on 30th June, 2010 the authorized share capital of the Bank is Rs. 550 crore.
The paid-up capital as on said date is Rs. 459,69,07,030/- (45,96,90,703 equity
shares of Rs. 10/- each). The HDFC Group holds 23.63 % of the Bank's equity
and about 17.05 % of the equity is held by the ADS Depository (in respect of
the bank's American Depository Shares (ADS) Issue). 27.45% of the equity is
held by Foreign Institutional Investors (FIIs) and the Bank has about 4,33,078
shareholders.
The shares are listed on the Bombay Stock Exchange Limited and The National
Stock Exchange of India Limited. The Bank's American Depository Shares
(ADS) are listed on the New York Stock Exchange (NYSE) under the symbol
'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on
Luxembourg Stock Exchange under ISIN No US40415F2002.
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect
from 6th July 2010. Mr. Vasudev has been a Director of the Bank since October
2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the
civil services and has held several key positions in India and overseas, including
Finance Secretary, Government of India, Executive Director, World Bank and
Government nominee on the Boards of many companies in the financial sector.
The Managing Director, Mr. Aditya Puri, has been a professional banker for
over 25 years, and before joining HDFC Bank in 1994 was heading Citibank's
operations in Malaysia. The Bank's Board of Directors is composed of eminent
individuals with a wealth of experience in public policy, administration,
industry and commercial banking. Senior executives representing HDFC are
also on the Board. Senior banking professionals with substantial experience in
India and abroad head various businesses and functions and report to the
Managing Director. Given the professional expertise of the management team
and the overall focus on recruiting and retaining the best talent in the industry,
the bank believes that its people are a significant competitive strength.
CBoP & TIMES BANK AMALGAMATION
On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC
Bank was formally approved by Reserve Bank of India to complete the statutory
and regulatory approval process. As per the scheme of amalgamation,
shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of
CBoP.
The merged entity will have a strong deposit base of around Rs. 1,22,000 crore
and net advances of around Rs. 89,000 crore. The balance sheet size of the
combined entity would be over Rs. 1,63,000 crore. The amalgamation added
significant value to HDFC Bank in terms of increased branch network,
geographic reach, and customer base, and a bigger pool of skilled manpower.
The objective of the Retail Bank is to provide its target market customers a
full range of financial products and banking services, giving the customer a
one-stop window for all his/her banking requirements. The products are
backed by world-class service and delivered to customers through the
growing branch network, as well as through alternative delivery channels
like ATMs, Phone Banking, NetBanking and Mobile Banking.
The HDFC Bank Preferred program for high net worth individuals, the
HDFC Bank Plus and the Investment Advisory Services programs have
been designed keeping in mind needs of customers who seek distinct
financial solutions, information and advice on various investment avenues.
The Bank also has a wide array of retail loan products including Auto
Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP)
services for retail customers, providing customers the facility to hold their
investments in electronic
form.
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 2010, the bank had a total card base (debit and credit
cards) of over 14 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 90,000 Point-of-sale (POS)
terminals for debit / credit cards acceptance at merchant establishments. The
Bank is well positioned as a leader in various net based B2C opportunities
including a wide range of internet banking services for Fixed Deposits,
Loans, Bill Payments, etc.
Treasury
Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt
Securities, and Equities. With the liberalisation of the financial markets in
India, corporates need more sophisticated risk management information,
advice and product structures. These and fine pricing on various treasury
products 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.
Fundamental Analysis
SWOT ANALYSIS
Strengths
HDFC bank has 5326 branches and 14996 ATMs and is the second largest
private bank in India.
HDFC bank operates in 2825 Indian cities and has more than 800 telephone
banking locations to service customers.
The bank’s ATM is available in Plus/cirus, Visa Electron/ Maestro,
Visa/Master, and American Express domestic and international cards. That’s
also another reason why the most famous card for shopping and online
purchases is HDFC cards.
In contrast to other private banks, HDFC Bank has a high degree of
customer loyalty.
HDFC has a low turnover rate and is one of the best places to work in the
private banking industry.
HDFC has many recognition and awards by various financial ranking
institutions such as Dun and Bradstreet, Financial Express, Euromoney
awards for innovation, Finance Asia country awards, etc., it has won ‘Best
Bank’ awards.
HDFC has large number financial advisors guiding customers for good
investment options.
Financial position: HDFC Bank has a solid financial position with
consecutive earnings over the last 5 years, along with accumulated income
reserves that can be used to fund potential capital spending.
Has a broad asset base offering greater solvency.
Return on Capital Expenditure: In the past, HDFC Bank was able to
effectively produce positive returns on the capital expenditure it spent on
different ventures.
Trained Workforce: HDFC has a employee base of 104154 permanent full
time employees. HDFC Bank has invested heavily in its workforce training,
which has resulted in it hiring a significant number of professional and
motivated workers.
Has a diverse workforce, with people of many ethnic, racial, cultural and
educational backgrounds who help the organization bring in various ideas
and methodologies to do things.
Revenue of HDFC Bank is 21 US billion Dollars.
Has trained and certified competent teamworkers.
Entering new markets: Creative teams from HDFC Bank have helped it to
come up with new products and reach new markets. In the past it was
successful, in most of the initiatives it took in new markets.
Social Media: HDFC Bank has a strong social media presence with over
millions of followers on the three most prominent social networking
platforms : Facebook , Twitter and Instagram. It has a high degree of
customer engagement with low customer response time on those channels.
Website: HDFC Bank has a well-functioning and engaging website that
attracts a huge amount of traffic and sales on the internet.
Product Portfolio: HDFC Bank has a broad selection of products and
services.
HDFC Bank’s geography and location give it a cost advantage in serving its
customers as compared with the competition. HDFC Bank products and
services including retail banking, wholesale banking, auto loans, treasury,
personal loans, two-wheeler loans, loans against property, lifestyle loan,
consumer durable loan, pand credit cards.Payzapp and SmartBUY are
HDFC Bank digital products.
Weaknesses
HDFC bank has no good presence in rural markets, where its direct
competitor is expanding in the rural market as ICICI bank.
In rural areas, HDFC does not enjoy first-mover privileges. With respect
to banking institutions, rural residents are hard-core loyalists.
HDFC lacks methods for effective marketing, such as ICICI.
The bank mainly works on high end consumers.
Any of the commodity groups in the bank lack performance and have
very little market presence.
HDFC’s share prices frequently fluctuate, causing investors to feel
confused.
Opportunities
HDFC banks have stronger criteria of asset quality than government banks,
so it is possible that earnings growth will accelerate.
Big enterprises and SMEs are rising at a very rapid rate. In terms of
managing corporate salary accounts, HDFC has a strong record.
HDFC Bank has increased its portfolio of bad debts and, relative to
government banks, the recovery of bad debts is high.
HDFC has really good overseas opportunities.
Greater scope due to a good financial role for investments and strategic
partnerships.
Threats
Ratios
Capital Adequacy Ratio - 18.8%
Net Interest Margin - 4.2%
Gross NPA - 1.32%
Net NPA - 0.40%
CASA Ratio - 46.1%
Segment revenue
Treasury – 12.37%
Retail banking – 50.30%
Wholesale banking – 28.47%
Other banking operations – 8.86%
TREND WORS
S: 10 YEARS 7 YEARS 5 YEARS 3 YEARS RECENT BEST T
Sales
Growth 18.36% 17.11% 15.27% 14.66% 5.21% 14.66% 5.21%
58.12
OPM 64.71% 64.61% 63.81% 62.69% 58.12% 62.69% %
Price to 23 24 24 24 26 26
Earning .53 .17 .70 .39 .08 .08 23.53
Promoters 25.97
FIIs 39.79
DIIs 20.99
Government 0.24
Public 13.01
ROE %
2017 18%
2018 18%
2019 17%
2020 16%
100,000 Revenue
Interest
80,000 Expenses +
Financing Profit
Financing Margin %
60,000 Other Income
Depreciation
Profit before tax
40,000 Tax %
Net Profit
20,000 EPS in Rs
Dividend Payout %
0
Mar-18 Mar-19 Mar-20
Balance Sheet
1200000
Share Capital +
1000000 Reserves
Borrowings
800000 Other Liabilities +
Total Liabilities
600000 Fixed Assets +
CWIP
400000 Investments
Other Assets +
200000 Total Assets
0
Mar-18 Mar-19 Mar-20
Conclusion
Pros
Cons