COMPUTER APPLICATION LAB

PROJECT REPORT

SUBMITTED BY – TANMAY CHHIKARA

(2K21/BBA/155) AND
YUVAN MALIK (2K21/BBA/181)
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HDFC BANK LTD

About-:
The Housing Development Finance Corporation Limited
(HDFC) was amongst the first to receive an 'in principle'
approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector. HDFC Bank is a publicly held
banking company, the bank was incorporated in August 1994
in the name of 'HDFC Bank Limited', with its registered office
in Mumbai, India. It is engaged in providing a range of
banking and financial services including retail banking,
wholesale banking and treasury operations. It is promoted by
HDFC Ltd. which has 19.32% stake as on September 30, 2020.
Currently, HDFC Bank Ltd. (HBL) is the largest private sector
bank in India. As on March 31, 2020, the bank’s total balance
sheet size stood at Rs. 15,30,511 Cr.

Ratios-:
 Capital Adequacy Ratio - 18.8%

 Net Interest Margin - 4.2%

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 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%

Location wise breakup-:

 Domestic - 99%

 International - 1%

Sector wise loan breakup-:

 Agriculture and allied activities – 31.87%

 Advances to industries eligible as priority sector lending

– 16.77%

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 Services – 38.91%

 Personal loans – 12.45%

Leadership in the Payments business-:

HDFC is the leading player in the Payments ecosystem in the
country. Every third rupee spent on cards in India happens on
an HDFC Bank’s issued instrument.

They have issued almost 3.21 Crore debit cards and 1.45
Crore credit cards. On the acquiring side currently they have
over 17 Lakh merchant acceptance points across India. They
have a dominant market share, with approximately 50% of
electronic card volumes.

HDFC Bank is the second largest collector of direct taxes.

Number 1 in middle-market banking with 60% market share.

One of the largest banking networks in semi-urban and rural

India.

HDFC Bank continues to be a leader in the auto loans

segment with strong presence in passenger, commercial
vehicle and two-wheeler financing.

Market leader in almost every asset category with best-in-

class portfolio quality.

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Fun fact - 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.

HDFC RATIO ANALYSIS DURING YEAR – 2018, 2019, 2020

and 2021-

NET PROFIT RATIO ANALYSIS

5

4.5

3.5

3
NET PROFIT RATIO
2.5

1.5

0.5

0
2018 2019 2020 2021

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QUICK RATIO ANALYSIS

QUICK RATIO
17.8
17.6
17.4
17.2
17
16.8
16.6
16.4
16.2
16
2021 2020 2019 2018

SO THIS THIS CONCLUDED FROM THE FOLLOWING COLUMN

AND LINE CHARTS THAT BOTH THE NET PROFIT AND QUICK
RATIO HAS INCREASED OF THE HDFC COMPANY.

BALANCE SHEET

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PROFIT & LOSS STATEMENT

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KOTAK MAHINDRA BANK LTD

ABOUT -:
Kotak Mahindra Bank is a diversified financial services group
providing a wide range of banking and financial services
including Retail Banking, Treasury and Corporate Banking,
Investment Banking, Stock Broking, Vehicle Finance, Advisory
services, Asset Management, Life Insurance and General
Insurance.

Ratios-:
 Capital Adequacy Ratio - 23.4%

 Net Interest Margin - 4.45%

 Gross NPA - 3.25%

 Net NPA - 1.21%

 CASA Ratio - 60.4%

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Branch Network-:
Presently, the bank operates ~1,600 branches
& ~2,600 ATMs in India. 45% of its branches are located in
metro cities while the rest 55% are distributed in urban,
semi-urban and rural areas. North, East & West accounts for
~30% of total branches while the East accounts for only 8% of
total branch network.

Following is the concentration of different items in the bank's

customer assets-:

 Home loan & Loan against property - 22%

 Working capital loans - 9%

 Personal loan, consumer Durables - 3%

 Credit cards - 2%

 Comm. vehicle, construction equipment - 8%

 Agriculture Division - 10%

 Tractor finance - 4%

 Corporate Banking - 26%

 SME - 8%

 Credit substitute - 6%

 Others - 2%

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Fees Income-:It earns ~74% of its fees as general banking

fees, ~21% as distribution & syndication Income & the rest
5% from other sources.

KOTAK RATIO ANALYSIS OF

YEARS – 2018, 2019, 2020 and 2021
NET PROFIT RATIO

2018 2019 2020 2021

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CURRENT RATIO
CURRENT RATIO

0.05 0.05

0.04 0.04

2017.5 2018 2018.5 2019 2019.5 2020 2020.5 2021 2021.5

THROUGH THE KOTAK RATIO ANALYSIS IT IS BEEN

CONCLUDED THAT BOTH NET PROFIT AND
CURRENT RATIO HAVE BEEN INCRESED IN THE
YEAR 2021

BALANCE SHEET

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PROFIT & LOSS STATEMENT

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Impact of Covid 19-:

A nationwide lockdown to curb the spread of the pandemic
brought the Indian economy to a screeching halt. With the
economy in shackles, banks were up for some hammering.
However, the Reserve Bank of India (RBI), put their foot in
the door and saved the banks from drowning. Had it not
been for RBI intervention, banks would have bled more than
they did.

For the first two quarters of the fiscal year 2021, although
the banks reported lower NPA figures, they also reported flat
or negative revenue and profit growth. As the restrictions
eased up and the festival season dawned upon the country,
demand came roaring back.

Home loans were the major demand driver in the retail

category due to lower interest rate regime. In the wholesale
category, banks financed the increased working capital
requirements of businesses.

Thanks to this revived demand, Indian banks closed the year

on a healthy note.

Future prospects-:
A large part of India is still credit averse. A lot of people in
India see loans and credit in a bad light.
As a result, India lags behind developed nations in terms of
credit. India's total outstanding loans to gross domestic

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product (GDP) is just 15% compared to 80-100% in its

western counterparts.

So, India has a lot to cover and there is a lot of headroom for
growth for Indian banks. Let's look at some of the
possibilities of how India may achieve higher credit growth
and financial inclusion.
To start with, as companies adopt China plus one strategy,
they see India as an obvious alternative. The Indian
government too is looking at this opportunity to make India
as the biggest manufacturing hub in the world.
Small and medium enterprises (SME) would play a crucial
role in making India a manufacturing hub. Hence, SME
financing could be a great opportunity for banks to grow
their loan book.
Also, it's expected that people currently working in the
agriculture sector would shift to the manufacturing sector
once the sector starts growing. Therefore, rural markets
would present a new wave of growth for banks to ride on.
However, financial literacy remains a big challenge. Banks
must tackle this issue if they wish to leverage the untapped
potential of the rural market.
Finally, due diligence remains a key for any bank's success.
Any bank which follows a quality due diligence framework
and keeps a check on its bad loans will emerge as a leader.
HDFC Bank and Kotak Mahindra Bank are perfect examples of
this.
To sum up, HDFC Bank and Kotak Mahindra Bank, being the
top players in the industry, are poised to grow as the overall
industry grows.

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Return and valuation ratios-:

Many analysts give a lot of importance to two return ratios
while analysing banks. These ratios are return on equity
(ROE) and return on assets (ROA).
ROE tells an investor how much profit a company generates
from shareholders' capital. It's expressed as a percentage.
ROA tells an investor how much profit a company generates
on its total assets. ROA is calculated as a ratio of net income
to its total performing (generating interest income) assets.
For banks, ROA of 1% is a benchmark and anything beyond
that is considered excellent.
A key point to note here is that loans are registered as assets
on the bank's balance sheet.
Take a look at the return ratios of HDFC Bank and Kotak
Mahindra Bank.

HDFC BANK VS KOTAK MAHINDRA BANK(2016-21)

2016- 2017- 2018- 2019- 2020-

 
2017 2018 2019 2020 2021
Return on
 
Equity (%)
HDFC Bank 16.6% 16.9% 14.5% 15.5% 15.2%
Kotak
12.8% 12.3% 12.4% 12.8% 11.8%
Mahindra Bank
Return on
 
Asset (%)
HDFC Bank 1.7% 1.7% 1.7% 1.7% 1.8%
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Kotak pg. 16
1.8% 1.8% 1.8% 1.9% 2.1%
Mahindra Bank
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On the ROE front, HDFC Bank outperforms Kotak Mahindra

Bank. The five-year average ROE of HDFC Bank and Kotak
Mahindra Bank is 15.8% and 12.4% respectively.
However, Kotak Mahindra Bank scores marginally higher than
HDFC Bank on the ROA front. The five-year average ROA of
HDFC Bank and Kotak Mahindra Bank is 1.7% and 1.9%
respectively.
Coming to valuations, the following table shows the two
most important valuation ratios, i.e. price to earnings
(P/E) and price to book value (P/BV) of HDFC Bank and Kotak
Mahindra Bank.

Which is better?
If we compare the two banks on credit growth, HDFC Bank is
easily ahead of Kotak Mahindra Bank by a huge margin.
However, on the net margin front, Kotak Mahindra Bank
scores higher than HDFC Bank.
As far as the credit quality is concerned, both banks have
been successful in maintaining their NPAs at the lowest in the
industry primarily due to a strong due diligence framework in
place. However, when seen relatively, HDFC Bank scores a
point here.
If we were to conclude with a better bank on the above three
metrics, both banks seem to have robust financials and a
strong balance sheet.

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However, if we compare them on valuation ratios, HDFC Bank

is trading at a discount to Kotak Mahindra Bank.

FEATUES OF WORD USED-

SHAPES
ONLINE PICTURES
BOLD, ITALIC AND UNDERLINE
PICTURE WATERMARK
HEADER
PAGE NUMBER
PAGE BORDER
CHARTS- COLUMN, LINE, PIE, ETC
TABLE
WORDART
FONTS - Calibri (Body), Britannic Bold, Georgia
and Garamond etc
TEXT BOX
3D, GLOW AND ROTATION FEATURE

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