A COMPARATIVE ANALYSIS OF FINANCIAL

PERFORMANCE OF HDFC BANK and ICICI BANK

Research Project Submitted in Partial Fulfilment of the Requirements for the

Degree of
B.COM Honours
By
Divya kabra

To the
DEPARTMENT OF COMMERCE
BHOPAL SCHOOL OF SOCIAL SCIENCES

April, 2021

Submitted by Guided by
Divya kabra Dr. Swapna Pillai
Associate Professor
Department of Commerce
 CERTIFICATE

It is certified that the work contained in the project report titled “ A COMPARATIVE
ANALYSIS OF FINANCIAL PERFORMANCE OF HDFC AND ICICI BANK” by
"DIVYA KABRA", has been carried out under my/our supervision and that this work has not
been submitted elsewhere for a degree.

Signature of Supervisor: …………….

Name: Dr. Swapna Pillai, Associate Professor

Department: Commerce

Bhopal School of Social Sciences

April, 2021
 DECLARATION
I hereby declare that this project report entitled “A COMPARATIVE ANALYSIS OF
FINANCIAL PERFORMANCE OF HDFC AND ICICI BANK " was carried out by me for
the degree of BCOM Honours under the guidance and supervision of Dr. Swapna Pillai,
Associate Professor of Department of Commerce, BSSS College. The interpretations put
forth are based on my reading and understanding of the original texts and they are not
published anywhere in any form. The other books, articles and websites, which I have made
use of are acknowledged at the respective place in the text. This research report is not
submitted for any other degree or diploma in any other University.

Place: Bhopal

Name of the Student: Divya kabra

Class & Section: B.com Honours final year

Date: 15th April, 2021

 ACKNOWLEDGEMENT

I would like to thank our Principal Dr.Fr. John P.J. and Vice Principal Dr. Sr.
Sonia Kurien for their immense support and blessings. I thank our HOD Dr.
Amit Kumar Nag for his support. I would like to express my special thanks of
gratitude to my research guide Dr. Swapna Pillai, Associate Professor of
Department of Commerce for her valuable suggestions and guidance and for
giving me the golden opportunity to do this wonderful research project on the
topic: A study on training and development of employees at Himalaya drug
company. Without her help it would have been difficult for me to have reached
this state of completion of my project report. Also, I would like to thank my
parents and friends who helped me a lot in the preparation of this project.

I wish to acknowledge the help of all those who have provided me information,
guidance and other help during my research period.
TABLE OF CONTENT
Chapter I: Introduction of the Topic

1.1 Rationale of the Study

1.2 Introduction to the industry

1.3 Introduction to the company

1.4 Justification of the topic

Chapter 2: Review of Literature

2.1 International Reviews

2.2 National Reviews

Chapter 3 : Research Methodology

3.1 Objectives of the Study

3.2 Research Hypothesis

3.3 Scope of the Study

3.4 Data Collection

3.5 Limitation of the study

Chapter 4: Data representation & Analysis

4.1 Data representation & Interpretation

4.2 Hypothesis Testing

Chapter 5. Results & Discussion

5.1 Major Findings

5.2 Discussions & Suggestions

5.3 Conclusion

REFERENCES

ANNEXURE
 Chapter-1
1.1 Rationale of the study
1.2 Introduction to the industry
1.3 introduction to the company
1.4 Justification of the company
 CHAPTER 1
INTRODUCTION TO THE TOPIC

1.1 Rationale of the study

This study is conducted to check the profitability performance of the two India largest banks
as follow ICICI BANK and HDFC BANK. This study is conducted to check the financial
performance of the banks and to draw attention on the financial statement of this banks.,

This study also helps us to get the knowledge of new strategic policies of the banks.

There are many researchers and professional experts who affirms that there is high significance
of financial performance of the banks. There are many tools and techniques used to do the data
analysis of this banks such as ratio analysis, trends, simple and multiple correlation are used to
analyses the data. Also, after the privatization private banks plays an important role and in
monetary framework.

These banks imply the policy of withdrawal and accepting deposits. This study appropriate
Parametric and Non -parametric test are employed and the analysis of data presented through
the Datas, bar graphs and tabulation.

RARIo analysis is a process of computing and det determining. Anne. Presenting the
relationship of the items. All financial statements. to provide. Meaningful understanding.
Meaningful understanding. of the. Financial performance. Of bank

1.2 Introduction to the industry

According to “Banking Companies Act, 1949”, “banking means the accepting (for the
purpose of lending or investments) of deposits of money from the public, repayable on
demand or otherwise, and withdraw able by cheques, drafts, or otherwise.”

The banking practices is as old as the human culture. The public bank was established in Italy
in 1157 AD named as Bank of Venice, banking industry in modern form was prospered in
around 19th century. The British Companies Act, 1883 and Joint Stock Companies Act, 1833
gave birth to commercial banks in England and India respectively. In India in 1881 “Oudh
Bank” was first bank to be registered under companies act.

In India the companies act was not adequate to regulate and control banks hence, the Banking
Regulation Act, 1949 came into act on March 16, 1949.

In india banks are classified in two categories-

Types of banks

1. Commercial bank
2. Reserve bank of India
3. Private banks
4. Public sector banks
5. Regional rural banks.
6. Foreign banks
7. Cooperative bank.
8. Non-scheduled banks

Classification of banking industry in india

Indian banking system is very vast it divided in two parts, organized and unorganized.

The organized sector includes rbi, commercial banks, and cooperative bank specialized

commercial banks such as HDFC, ICICI banks.

Reserve bank of India is the India central largest banks which works on the demand and supply
of the money. It plays huge role in the monetary functions of india.it helps other banks for their
monetary functions of the banks.

TYPES OF BANKS

 Scheduled bank Scheduled Bank: Scheduled banks are covered under the 2nd Schedule
of the Reserve Bank of India Act, 1934. A bank that has a paid-up capital of Rs. 5 Lakhs
and above qualifies for the schedule bank category. These banks are eligible to take
loans from RBI at bank rate.
 Commercial bank: Commercial Banks are regulated under the Banking Regulation
Act, 1949 and their business model is designed to make profit. Their primary function
is to accept deposits and grant loans to the general public, corporate and government
 . Commercial banks can be divided into
 Public sector banks: These are the nationalized banks and account for more than 75 per
cent of the total banking business in the country. Majority of stakes in these banks are
held by the government. In terms of volume, SBI is the largest public sector bank in
India and after its merger with its 5 associate banks (as on 1st April 2017) it has got a
position among the top 50 banks of the world.
 Private sector banks: These include banks in which major stake or equity is held by
private shareholders. All the banking rules and regulations laid down by the RBI will
be applicable on private sector banks as well. Given below is the list of private-sector
banks in India
 Foreign banks:
 A foreign bank is one that has its headquarters in a foreign country but operates in India
as a private entity. These banks are under the obligation to follow the regulations of its
home country as well as the country in which they are operating. Citi Bank, Standard
Chartered Bank and HSBC are some leading foreign banks in India.
 Regional rural banks: A foreign bank is one that has its headquarters in a foreign
country but operates in India as a private entity. These banks are under the obligation
to follow the regulations of its home country as well as the country in which they are
operating. City Bank, Standard Chartered Bank and HSBC are some leading foreign
banks in India.
  Non Scheduled banks: As per the Second Schedule of the Banking Regulation Act of
1965 a bank must satisfy the following conditions, to get fully authorized to run banking
business in India.

Types of Cooperative banks: a) Primary Credit Societies- These institutions are formed at
village level or town level. The operations of such banks are limited to a very small area (b)
District Central Cooperative Banks- These banks operate at the district level. They act as a
link between primary credit societies and state cooperative banks (c) State Cooperative
Banks- State Cooperative Banks are biggest forms of cooperative banks. They operate at the
state level. Some of State Cooperative banks operate in multi States.

Cooperative bank: Cooperative banks are owned by their customers and follow the
cooperative principle of one person, one vote. Co-operative banks are often regulated under
both banking and cooperative legislation. They provide services such as savings and loans to
non-members as well as to members, and some participate in the wholesale markets for
bonds, money and even equities. Many cooperative banks are traded on public stock markets,
with the result that they are partly owned by non-members. Member control is diluted by
these outside stakes, so they may be regarded as semi-cooperative.

1.3INTRODUCTION TO THE COMPANY

For conducting the research, researcher had selected the two banks
1.HOUSING DEVELOPMENT FINANCE CORPORATION.
2.ICICI bank

1.3.1 HOUSING DEVELOPMENT FINANCE CORPORATION.

HDFC BANK IS THE LARGEST BANK IN INDIA has their headquarter in the Mumbai with
the largest manpower as 114356.as on 21 march 2020.

HDFC bank is the largest bank by assets.it is the largest bank by market value.

It has market capital of 8trillion.it is the third largest company of NSE national stock exchange.

HDFC banks provide many services to their customers as in the form of loans, deposits, locker
security. Auto Loans'd, two-wheeler loans, loans against the house property, credit card, net
banking and many more.

Investment

In march 2020 the bank has the investment of huge amount in the YES bank.

The shares of the hdfc listed in the NSE and BSE.

1.3.2 ICICI BANK

ICICI bank is the leading private sector bank which has headquarter in Gujrat and Mumbai.

FORMED IN 1995 with the main of providing long term loan and medium term loan to the
businessman of india.

ICICI bank provide services like net banking ,long term loans and short term loans , locker
facility, loan against security, credit cards ,debit card, ATM cards,ICICI wallets.

ICICI bank has also listed in BSE and NSE of the India.
iCICI Bank is one of the big fourt bank of India. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Qatar,
Oman, Dubai International Finance Centre, China[and South Africa] as well as representative
offices in United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK
subsidiary has also established branches in Belgium and Germany.
1.4 Justification of the topic
This study reveals the financial performance of the India leading banks. This study has taken
under the research to check the which banks is performing good from the last 5 year.in this I
have conducted the research with the help og secondary data available on the bank official
website.

In this study we can get the knowledge of the financial ratios, trends, balance sheet of the
banks. This study also signifies that the most of us thinks that they always work on the profit
motive of their own but this study also signifies that they also have losses and face financial
problem and face loss in annual profit.

This can be affected by the several factors either related to their marketing policies or the
professional services offered by the bank, or other value-added thing which affect the growth
of the company.

HDFC and ICICI are the two major notable banks that are often get feature as leading banks
in the private sector banks.

To get more and check the accuracy of the banks this study analyses and compare the
profitability of the banks with the help of the secondary data with five consecutive years.
 Chapter 2

REVIEW OF LITREATURE

2.1 International review

2.2 National review
 CHAPTER 2
REVIEW OF LITREATURE

Given the continual banking system in India, competition between this two banks is explode
assuring in better services, innovation, and upgrade. Subsequently, banks in India are under
the pressure to develop, differentiate, and discover in order to attract more clients in a
competitive market. To seize a market share, banks have to actively engage in product
development and micro-planning. Moreover, prudent pricing and relevant customization of
services should be embracing to meet the needs of the customers.

2.1 International review

 Mampilly (1980)[1]has made a attempt on the Cost and profitability of commercial

banks in India. These studies provide an analytical view of the trend in the
components of cost of earning s of different groups of Indian commercial banks since
nationalization. The study mainly focuses on the cost and profitability of banking
industry as a whole rather than individual bank.
 Karkal.G.L. (1982)has examined the concept of profit and profitability in the banking
industry parlance, and also the factors that determine the same. Regarding the profits
and the techniques used in profit planning, the author has suggested some measures to
improve the profitability of 10 banks under study. These include, increasing the
margin between lending (advances) and borrowing (deposits) rates, improving the
profitability to staff, and implementation of a uniform maximum services changes.
The study, however, has not touched upon the area of costing of banking services, and
also the costing initiatives in the Indian banking industry,
 Similarly, Delvin James (1995) carried out a case study that aimed at examining the
retail banking services offered in UK, using First Direct, a subsidiary of Midland
Bank. His analysis reveals that banks can increase their market share through proper
communication and prompt delivery of their products. This study uses the VAIC
model developed by Pulic, 1998, Pulic, 2004 which measures the intellectual capital
performances of firms. The VAIC model reveals the intellectual capability of an
organization and whether its sources are used efficiently or not. In other words, VAIC
measures the newly-created value per monetary unit invested in each source. The
higher the VAIC value of an organization is, the more is the value added created by
overall sources of that organization (Pulic, 2004).
 (Al-Obaidan, 2008) suggests that large banks are more efficient than small banks in
the Gulf region. (Tarawneh, 2006) found that the bank with higher total capital,
deposits, credits, or total assets does not always mean that has better profitability
performance. Financial performance of the banks was strongly and positively
influenced by the operational efficiency and asset management, in addition to the
bank size.
 (Muhammad Sidqui and Adnan Shoaib, 2011) found in their study “Measuring
performance through capital structure in Pakistan ”that size of the bank played a
significant role in determining the profitability of the bank measured by ROE. They
used also the Tobin’s Q model as a proxy of determining banks performance while
they found that Tobin’s Q is affected by the size of the bank, the leverage ratio and
Investments carried out by the bank.
 Studies into bank performance have been in literature since the late 1980s and the
early 1990s where two organizations model were applied; the Market Power (MP) and
 Efficiency Structure (ES) theories (Atanasio et al, 2006). The market power theory
posits that the market structure of the industry influences the performance of banks
 Athanasoglou et al, (2006), profitability is believed to be influenced by both
endogenous and exogenous factors. The endogenous factors are firm specific factors
that result from the decisions and policies of management. Examples of such factors
are efficiency, profitability, liquidity, capital structure and asset quality ratios. The
exogenous factors are industrial structural factors such as ownership, market
concentration and stock market development and other macroeconomic factors. For
the purpose of this study, the endogenous factors are used since they are the areas that
the banks are expected to differ in. The exogenous factors are not expected to be
significantly different since they are not firm specific but affects all firms in the
industry.

2.1 National review

 Amandeep concluded that to have excellent financial performance, banks need to have
excellent performance in managing burden. In the same vein, Ashok Kumar (2020) in
his study “Opportunities and provocation in the Indian retail banking industry”
concludes that for the development of retail banking in India, a sample or specimen
shift is required in bank financing through innovative products and processs involved
in the constant up-scale of the banks internal systems and processes . He point out that
retail banking has more scope for generating profit than any other traditional methods
 Cheema agrawal analyses the profitability and the financial performance of
commercial banks in India and analyses the performance of public banks, private
banks and foreign banks in India. In this analysis, public sector banks were divided into
two categories, i.e., State bank group and nationalized banks.The input variables like
owned funds, deposits, borrowings and wage bills were used. The output variables like
spread, income from non interest found were used. Among public sector banks,
 Goyal and Kaur (2010) studied the financial performance of a group of private banks
(seven in number), analysing their data from2015 to 2020. The various statistical tools
 like mean, standard deviation, trend ainspection testing, null hypothesis, mean,
deviation correlation.
 And the secondary data is taken from the annual report of the banks.

 Angadi and Devraj (1983)[4]found the factors determining the profitability and
productivity of public sector banks (PSBs) in India. The study has been primarily based
on published financial statements of respective banks. These authors have observed that
though PSBs have discharged their social responsibilities, their deficiencies in respect
of effective mobilization of funds at lower costs, attracting retail banking business,
augmenting earnings from other sources, effective cash and portfolio management etc.,
have contributed towards the lower productivity and profitability of these bankss
 Sunil Kumar (2009) found that “the analysis of correlation between efficiency,
effectiveness and performance measures indicate that a positive and strong correlation
exist between effectiveness and performance measures. This suggests that banks can
improve their performance by concentrating more on their income generation capability
 Sumeet Gupta et.al (2008) found that “private sector banks are trying to improve their
position by different method like mergers and acquisition .Transparency and good
governance would work as principal guiding force in present.
 C.S. Balasubramaniam (2010) reported that “private sector banks like ICICI and
HDFC are well-placed in complying Basel III norms. Indian banks performance is good
as reflected by ROE, ROA but NPA is also increasing which can be reduced by good
credit appraisal procedure.” 4.
 Ashwini kumar Mishra et.al (2013) concluded that “private sector banks are at the top
of list with their performance in terms of soundness being best and private sector banks
will head towards convergence faster than public sector banks.” 5
 Avneet Kaur (2012) reported in her article that “to maintain a study growth rate deposits
bank should come forward to offer some subsidiary services. The banks should take
efforts to reduce the operating expenses by means of improving the efficiency of the
non-viable branches by utilizing some expert services,”
 Chitra Madaan found that “performance and compensation have a strong relation in
private sector banks and foreign banks and job is less challenging and secure in public
sector banks other than two banks.”
 Gupta et.al (2008) revealed that “efficiency increase in private sector banks has come
from small banks and increase in capital adequacy ratio results in higher productivity
which stems out of higher profitability of banks which increase soundness.”

Chapter 3
RESEARCH METHODOLOGY
3.1 OBJECTIVE OF THE STUDY
3.2 RESEARCH HYPOTHESIS
3.3 SCOPE OF THE STUDY
3.4 DATA COLLECTION
3.5 LIMITATION OF THE STUDY
 Chapter 3

3.1 OBJECTIVE OF THE STUDY

1.To study the structure of financial performance in two top banks in India financial
performance of HDFC Bank and ICICI Bank.

2. An analytical study of the banks with the help of ratio analysis.

3. To study the financial performance of the HDFC and ICICI bank.

4. Two study the profitability performance of the HDFC and ICICI banks.

5.To give the findings and suggestions to enhance the performance of the banks.

3.2 Research hypothesis

A hypothesis is an assumption that demonstrates the interpreted relationships among various

possible factors. The hypothesized correlation coefficients are based on existing writings.
Many such inferential statistics or methodologies can be used to confirm all such
relationships. Based on the success of regression techniques, these hypotheses may or may
not be embraced.

H0= There is no significance difference between of gross profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of gross profit ratios of selected HDFC Bank
and ICICI Bank.

H0= There is no significance difference between of Net profit ratio in selected HDFC Bank
and ICICI Bank.

H1= There is a significance difference between of Net profit ratio in selected HDFC Bank and
ICICI Bank

. H0= There is no significance difference between of Return on assets ratio in selected HDFC
Bank and ICICI Bank.

H1= There is a significance difference between of Return on assets ratio in selected HDFC
Bank and ICICI Bank.

H0= There is no significance difference between of Return on capital employed ratio in

selected HDFC Bank and ICICI Bank

H1= There is a significance difference between of Return on capital employed ratio in selected
HDFC Bank and ICICI Bank.

3.3 scope of the study

Financial statement analysis is used to identify the past trends and relationships between
financial and profirability statement items. Both internal users and external users such as
analysts, creditors, and investors of the banks financial statements need to assess a company's
profitability, liquidity, and solvency. The most common methods we use for financial
statement analysis are trend analysis, common‐size statements, and ratio analysis. These
methods include calculations and comparisons of the results to historical and secondary data
of the banks , competitors annual reports, or industry averages to determine the relative strength
and performance of the company being analyzed.
T this study shows the financial performance of these two banks ICICI and HDFC Bank's. With
the help of ratio analysis, trend analysis, T- testing. Hypothesis testing.

3.4 Data collection

The sample of the study only includes two banks; HDFC Bank and ICICI Bank. Simple random
sampling was used to select the sample from this banks which are working in the stock market
based on the current situation. The study works on largely on secondary data that was taken
from the annual reports of the selected banks. Seconday data is collected from the IBA
Bulletins, RBI publications, different publication, Bank Quest and journals , various books,
periodicals, journals and relating banking industry etc. have also been used for better reliability.
Opinions expressed in Business Standard, News Papers, accounting literature, Annual report
and different publications have also been used in this study. The collected data is duly edited,
classifies, tabulated according to the needs of the objectives and hypothesis. Mathematical and
statistical tools and techniques like Ratio, Trends, Simple & multiple correlations have been
used. The most appropriate Parametric & Non parametric test have been used by the researcher.

3.5 Limitation of the study

The limitation of the study is only that the data is collected by secondary source of the banks.
The data is taken from the past five years and one reports of the banks. and whatever the
outcome will come be depend on this secondary data. The data is taken from consecutive past
five years.

This study covers only 2 banks listed and actively traded on NSE and BSE out of whole
banking industries therefore the results might or might not be same for the whole banking
industry.
 CHAPTER 4
Data representation & Analysis
4.1 Data representation & Interpretation
4.2 Hypothesis Testing
4.1 Data Representation and Interpretation
To interpret the data, various statistical techniques are used. The analysis is limited to Gross
Profit Ratio, Net Profit margin Ratio, Return on Asset, and Return on Capital Employed. All
the data related to these aspects are presented and discussed below.

a) Gross Profit Ratio

The gross profit is calculated as follows:

Gross Profit Ratio = Sales − Cost of Good Sold / Sales × 100

This ratio measures the gross profit on the total net sales made or earned by the company.
The gross profit represent the excess of sales proceeds during the period under observation
over their cost, before taking into account administration, selling and distribution and financing
charges.

Importance

• This ratio shows the relationship between the gross profit and net sales

. • Higher ratio means lower the cost of goods sold.

Interpretation

The table above, the Gross Profit Ratio of the HDFC and ICICI Banks are represented during
the time period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shoes
continuously increasing trend. The average Profit Ratio of the HDFC Bank were19.678%
during the study period. The ratio was the highest to 22.23% during 2019-20, whereas it was
the lowest to 17.35% during 2015-16.

In case of ICICI Bank the Ratio shows fluctuating trend during the study period. It was 15.37%
in 2015-16 which increased to 16.19% in 2016-17 it was highest.

In HDFC Bank the Ratio was higher during the study period. Hence the performance of HDFC
bank is good than ICICI Bank.

Net Profit Margin Ratio

This is the ratio of net profit to net sales. The concept of net profit is different from net
operating profit. In calculating the net profit, all non-operating expenses and losses are also
deducted and all non-operating income is added. The net profit ratio is the overall measure of
a firm’s ability to turn each rupee of business income into profit. It indicates the efficiency with
which a business is managed. A firm with a high net profit ratio is in an advantageous position
to survive in the face of cost of firm. where the net profit is low, the firm will find it difficult
to withstand these types of adverse conditions.

It’s computed as

Net profit margin = Net Profit / Business Income

Where, Net profit = Net operating Profit + Non-operating Incomes- Non-operating Expenses.
Interpretation

The above table indicates the Net Profit Ratio of the HDFC and ICICI Banks during the
period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shows fluctuating
trend. The average Profit Ratio of the HDFC Bank was 21.11% during the time of study
period. The ratio was the highest in 21.79% during 2018-19, where as it was the lowest of
20.41% during 2016-17. In case of ICICI Bank the Ratio shows decreasing trend during the
study period. This show that the ratio 22.76% in 2015-16 which decrease to 5.304% in 2019-
20 it was lowest. In HDFC Bank the Ratio was higher during the study period, Hence the
performance of HDFC bank is good than ICICI Bank except in one year.

Return on Total Assets Ratio Return on assets

Return on Total Assets Ratio Return on assets (ROA) is an indicator of how profitable a
company is relative to its total assets. ROA gives a manager, investor, or analyst an idea as to
how efficient a company's management is at using its assest to generate earning.

Businesses (at least the ones that survive) are ultimately about efficiency: squeezing the most
out of limited resources. Comparing profits to revenue is a useful operational metric, but
comparing them to the resources a company used to earn them cuts to the very feasibility of
that company's’ existence. Return on assets (ROA) is the simplest of such corporate bang-for-
the buck measures. ROA is calculated by dividing a company’s net income by total assets. As
a formula, it would be expressed as:

Return on Assets Ratio = Net Income/ TotalAsset

interpretation
The given table indicates the Return on Assets Ratio of the HDFC and ICICI Banks during the
period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shows fluctuating trend.
The average Profit Ratio of the HDFC Bank was 1.69 during the study period. The ratio was
the higher to 1.73 during 2016-17, where as it was the lower to 1.643 during 2018-19. In case
of ICICI Bank the Ratio shows decreasing trend during the study period. It was 1.735 in 2015-
16 which decreases to 0.272 in 2019-20 it was lowest. In HDFC Bank the Ratio was higher
during the study period, Hence the performance of HDFC bank is good than ICICI Bank in the

year.

Return on capital employed.

The term investment may refer to total assets or net assets. The funds employed in net assets
are known as capital employed. Net assets equal net fixed assets plus current assets minus
current liabilities excluding bank loan. Alternatively, capital employed is equal to net worth
plus total debt .

Return on Capital Employed = Net Profit Before Interest and Tax/ Capital Employed

significance:

• The success of enterprise is judge with the help of this ratio

. • It is perhaps the most important ratio from the viewpoint of management.

interpretation
The table indicates the Capital Employed Ratio of the HDFC and ICICI Banks during the
period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shows fluctuating trend.
The average Profit Ratio of the HDFC Bank was 1.788 during thetime of study period. The
ratio was the higher of 1.83 during 2015-16, where as it was the lower of 1.72 during 2018- 19.
In case of ICICI Bank the Ratio shows fluctuated trend during the study period. It was 0.171
in 2015-16 which decrease to 0.289 in 2019-20 it was lowest. In HDFC Bank the Ratio was
higher during the study period, Hence the performance of HDFC bank is good than ICICI Bank
in the year.

4.2 Hypothesis testing

Hypothesis testing for gross profit ratio

H0= There is no significance difference between of gross profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of gross profit ratio in selected HDFC Bank

and ICICI Bank.

Particulars Hdfc bank Icici bank

mean 19.678 14.368
Variance 5.23424 19.2382
observation 5 5
df 8
T-start 4.43869
P (T<=t) one tail 0.0010869
tcritical one tail 1.859538

P(T<=t) two tail 0.002173

Tcritical two tail 2.306004

This indicates that calculated value of ‘t’ is 4.4383, while table value of ‘t’ is 2.306 which is
less than the calculated value. So null hypothesis is rejected and alternative hypothesis is
accepted. It shows that there is a significance difference in Gross Profit Ratio of HDFC Bank
and ICICI Bank.

Hypothesis testing for net profit ratio

H0= There is no significance difference between of Net profit ratio in selected HDFC Bank
and ICICI Bank.

H1= There is a significance difference between of Net profit ratio in selected HDFC Bank and
ICICI Bank

Two-Sample Assuming Equal Variances

particular HDFC bank ICICI bank
mean 21.11 15.3848
variance 0.2502 45.0007
observation 5 5
df 8
T start 1.89453

tCritical one tail 1.85354

P(T<=t) two tail 0.095036
Tcritical two tail 2.306004
RESULT

This shows the result of t-test according to that calculated value of ‘t’ is 1.8926, while table
value of ‘t’ is 2.306 which is less than the calculated value. So, null hypothesis is accepted and
alternative hypothesis is rejected at 5% level of significant. It shows that there is no significance
difference in Net Profit Ratio of HDFC Bank and ICICI bank.

CHAPTER – 5
RESULTS AND DISCUSSIONS
Major finding

 The major findings and outcome of these study reveal that the gross profit ratio is
found to be higher in HDFC Bank. This indicates that HDFC Bank has better profit
earning capacity and more income from ICICI bank.
 Nonetheless, the net profit ratio in both the bank is found to be similar. This denotes
both the banks have the same profit margin.
 ,the Net profit ratio is similar in both the banks. This indicates the banks have same
earning capacity.
 In terms of the return on capital employed, the study reveals that it is higher in HDFC
bank. This indicates that the bank has better earning capacity of return on capital
employed than ICICI bank.
 Overall, the profitability performance of HDFC bank is higher in terms of profit ration,
and the bank possesses better earning capacity than ICICI bank.
  When compared to ICICI bank, HDFC bank stands better in almost all aspects of
profitability performance.
 the net profit ratio of both of the bank is found to be similar. This denotes both the banks
have the same profit margin.

5.2 Discussion and suggestions

 ICICI bank can multiply return on assets by increasing assets or by increasing
profitability of the bank. Profitability may be increased by granting more loans,
earning higher interest on loans and passing the same to depositors.,
 ICICI bank has to invest its cash in order to give maximum benefits to ICICI bank
and charge more interest from the beneficiary companies
 The banks has to maintain proper reserve for the profitability of the bank. The banks
has to maintain proper assets to have a good long term financial. t.
 So it is suggested that ICICI Bank have to increase its income and reduce its expenses
to maximize the profit.
 ICICI bank should reduce variable cost and improve the customer loyalty and
improve services offered to customer

5.3Conclusion
The main aim of this study to cheque the financial performance of this banks of these two
private leading banks. financial statement analysis plays an important role to check the
financial performance.

This study reveals that the performance of HDFC bank Is far more better than the performance
of ICICI bank.This study reveals the overall performance of these two banks with the respected
to their consecutive five year Past data and from these study I got to know that ICICI bank

performance is not satisfactory as compared with HDFC bank.

References

1. Vinod, R.R. (2013) . Efficiency of Old Private Sector Banks in India: a DEA approach “,
International journal of management and social science research, vol.2, no.6. | 2. Gupta,
sumeet, & Verma, Renu. (2008). Comparative Analysis and Financial Performance of Private
Sector Banks in India: Application of CAMEL model, Journal of global economy, vol. 4,
no.2. | 3. Balasubramanian, C.S. (2010). Non-performing assets and profitability of
commercial banks in India: assessment and emerging issues. | 4. Mishra, Ashwini, kumar,
Gadhaia, Jigar, Prasah, kar, Bibha, Biawabas Patra & Anand, Shivi (2013) Are private sector
banks more sound and efficient than public sector banks? Assessment based on CAMEL and
DEA approaches. | 5. Kaur, Avneet. (Nov. 2012) An Empirical Study on the performance
evaluation of public sector banks in India, vol.1, issue 11. | 6. Madaan, Chitra. Public, Private
and Foreign banks: A Comparison. | 7. Gupta, Omprakash K., Doshit, Yogesh, & Chinubhai,
Aneesh. (2008). Dynamics of Productive Efficiency of Indian Banks, International Journal of
Operations Research, 5(2). | 8. Kumar, Sunil. (2009). Measuring Efficiency, Effectiveness
 and Performance of Indian Public Sector Bank, International Journal of Productive and
Performance Management, vol59, no.1. |

https://www.icicibank.com/

https://www.hdfcbank.com/
ttps://www.dhammaias.com/foundation-courses/economics/chapter-19-banking-structure-in-
indiahttps://en.m.wikipedia.org/wiki/Cooperative_banking

ttps://www.coursehero.com/file/p30j45lq/Banks-are-classified-into-scheduled-and-non-scheduled-banks-Scheduled-banks-
can/

ANNEXURE

BALANCE MAR 20 MAR 19 MAR 18 MAR 17 MAR 16

SHEET OF
ICICI BANK
(IN RS. CR.)
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES
AND
LIABILITIES
SHAREHOL
DER'S
FUNDS
Equity Share 1,294.76 1,289.46 1,285.81 1,165.11 1,163.17
Capital
TOTAL 1,294.76 1,289.46 1,285.81 1,165.11 1,163.17
SHARE
CAPITAL
Revaluation 3,114.87 3,044.51 3,003.19 3,042.14 2,817.47
Reserve
Reserves 112,091.29 104,029.40 100,864.37 95,737.57 85,748.24
and Surplus
Total 115,206.16 107,073.91 103,867.56 98,779.71 88,565.72
Reserves
and Surplus
TOTAL 116,504.41 108,368.04 105,158.94 99,951.07 89,735.58
SHAREHOL
DERS
FUNDS
Deposits 770,968.99 652,919.67 560,975.21 490,039.06 421,425.71
Borrowings 162,896.76 165,319.97 182,858.62 147,556.15 174,807.38
Other 47,994.99 37,851.46 30,196.40 34,245.16 34,726.44
Liabilities
and
Provisions
TOTAL 1,098,365.1 964,459.15 879,189.16 771,791.45 720,695.10
CAPITAL 5
AND
LIABILITIES
ASSETS
Cash and 35,283.96 37,858.01 33,102.38 31,702.41 27,106.09
Balances
with
Reserve
Bank of
India
Balances 83,871.78 42,438.27 51,067.00 44,010.66 32,762.65
with Banks
Money at
Call and
Short Notice
Investments 249,531.48 207,732.68 202,994.18 161,506.55 160,411.80
Advances 645,289.97 586,646.58 512,395.29 464,232.08 435,263.94
Fixed Assets 8,410.29 7,931.43 7,903.51 7,805.21 7,576.92
Other 75,977.67 81,852.17 71,726.80 62,534.55 57,573.70
Assets
TOTAL 1,098,365.1 964,459.15 879,189.16 771,791.45 720,695.10
ASSETS 5
OTHER
ADDITIONA
L
INFORMATI
ON
Number of 5,324.00 4,874.00 4,867.00 4,850.00 4,450.00
Branches
Number of 99,319.00 86,763.00 82,724.00 82,841.00 72,175.00
Employees
Capital 16.00 17.00 18.00 17.00 17.00
Adequacy
Ratios (%)
KEY
PERFORMA
NCE
INDICATOR
S
Tier 1 (%) 15.00 15.00 16.00 14.00 13.00
Tier 2 (%) 1.00 2.00 3.00 3.00 4.00
ASSETS
QUALITY
Gross NPA 40,829.09 45,676.04 53,240.18 42,159.39 26,221.25
Gross NPA 6.00 7.00 0.00 9.00 6.00
(%)
Net NPA 9,923.24 13,449.72 27,823.56 25,216.81 12,963.08
Net NPA (%) 1.54 2.29 5.00 5.00 3.00
Net NPA To 2.00 2.00 5.00 5.00 3.00
Advances
(%)
CONTINGEN
T
LIABILITIES,
COMMITME
NTS
Bills for 48,216.24 49,391.99 28,588.36 22,623.19 68,932.74
Collection
Contingent 2,523,825.8 1,922,038.2 1,289,244.0 1,030,993.7 853,520.77
Liabilities 0 9 0 1

BALANCE MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

SHEET OF
HDFC BANK
(IN RS. CR.)
12 mths 12 mths 12 mths 12 mths 12 mths
EQUITIES
AND
LIABILITIES
SHAREHOL
DER'S
FUNDS
Equity Share 551.28 548.33 544.66 519.02 512.51
Capital
TOTAL 551.28 548.33 544.66 519.02 512.51
SHARE
CAPITAL
Revaluation 0.00 0.00 0.00 0.00 0.00
Reserve
Reserves 203,169.53 170,437.70 148,661.69 105,775.98 88,949.84
and Surplus
Total 203,169.53 170,437.70 148,661.69 105,775.98 88,949.84
Reserves
and Surplus
TOTAL 203,720.81 170,986.03 149,206.35 106,295.00 89,462.35
SHAREHOL
DERS
FUNDS
Deposits 1,335,060.2 1,147,502.2 923,140.93 788,770.64 643,639.66
2 9
Borrowings 135,487.33 144,628.54 117,085.12 123,104.97 74,028.87
Other 72,602.16 67,394.40 55,108.29 45,763.72 56,709.32
Liabilities
and
Provisions
TOTAL 1,746,870.5 1,530,511.2 1,244,540.6 1,063,934.3 863,840.19
CAPITAL 2 6 9 2
AND
LIABILITIES
ASSETS
Cash and 97,340.73 72,205.12 46,763.62 104,670.47 37,896.88
Balances
with
Reserve
Bank of
India
Balances 22,129.66 14,413.60 34,584.02 18,244.61 11,055.22
with Banks
Money at
Call and
Short Notice
Investments 443,728.29 391,826.66 290,587.88 242,200.24 214,463.34
Advances 1,132,836.6 993,702.88 819,401.22 658,333.09 554,568.20
3
Fixed Assets 4,909.32 4,431.92 4,030.00 3,607.20 3,626.74
Other 45,925.89 53,931.09 49,173.95 36,878.70 42,229.82
Assets
TOTAL 1,746,870.5 1,530,511.2 1,244,540.6 1,063,934.3 863,840.19
ASSETS 2 6 9 2
OTHER
ADDITIONA
L
INFORMATI
ON
Number of 0.00 5,416.00 5,103.00 4,787.00 4,715.00
Branches
Number of 0.00 116,971.00 98,061.00 88,253.00 84,325.00
Employees
Capital 18.80 19.00 17.00 15.00 15.00
Adequacy
Ratios (%)
KEY
PERFORMA
NCE
INDICATOR
S
Tier 1 (%) 0.00 17.00 16.00 13.00 13.00
Tier 2 (%) 0.00 1.00 1.00 2.00 2.00
ASSETS
QUALITY
Gross NPA 15,086.00 12,649.97 11,224.16 8,606.97 5,885.66
Gross NPA 1.00 1.00 1.00 1.00 1.00
(%)
Net NPA 4,554.82 3,542.36 3,214.52 2,601.02 1,843.99
Net NPA (%) 0.40 0.36 0.00 0.00 0.00
Net NPA To 1.00 0.00 0.00 0.00 0.00
Advances
(%)
CONTINGEN
T
LIABILITIES,
COMMITME
NTS
Bills for 0.00 51,584.90 49,952.80 42,753.83 30,848.04
Collection
Contingent 0.00 1,128,953.4 1,024,715.1 875,488.23 817,869.59
Liabilities 0 2

KEY MAR 21 MAR 20 MAR 19 MAR 18 MAR 17

FINANCIAL
RATIOS OF
HDFC BANK
(IN RS. CR.)
PER SHARE
RATIOS
Basic EPS 56.60 48.01 78.65 67.76 57.18
(Rs.)
Diluted EPS 56.30 47.66 77.87 66.84 56.43
(Rs.)
Cash EPS 56.44 50.07 81.59 70.88 60.03
(Rs.)
Book Value 369.54 311.83 547.89 409.60 349.12
[Excl. Reval
Reserve]/Sh
are (Rs.)
Book Value 369.54 311.83 547.89 409.60 349.12
[Incl. Reval
Reserve]/Sh
are (Rs.)
Dividend/Sh 0.00 2.50 15.00 13.00 11.00
are (Rs.)
Operating 219.23 209.39 363.43 309.20 270.46
Revenue /
Share (Rs.)
Net 56.44 47.89 77.40 67.38 56.78
Profit/Share
(Rs.)
PER
EMPLOYEE
RATIOS
Interest 0.00 9,815,479.9 10,092,906. 9,092,195.7 8,218,909.9
Income/ 8 51 3 1
Employee
(Rs.)
Net Profit/ 0.00 2,244,771.3 2,149,495.2 1,981,431.6 1,725,424.3
Employee 5 4 0 9
(Rs.)
Business/ 0.00 183,054,361 177,699,813 163,972,185 142,094,024
Employee .58 .90 .69 .12
(Rs.)
PER
BRANCH
RATIOS
Interest 0.00 211,987,907 193,948,756 167,623,469 146,990,366
Income/ .87 .61 .81 .49
Branch (Rs.)
Net Profit/ 0.00 48,481,009. 41,305,438. 36,529,618. 30,858,199.
Branches 97 57 34 79
(Rs.)
Business/ 0.00 3,953,480,7 3,414,740,6 3,022,986,6 2,541,267,9
Branches 47.42 33.16 93.96 92.36
(Rs.)
KEY
PERFORMA
NCE RATIOS
ROCE (%) 3.42 3.33 3.34 3.20 3.18
CASA (%) 0.00 42.23 42.37 43.49 48.03
Net Profit 25.74 22.86 21.29 21.79 20.99
Margin (%)
Operating 4.89 2.60 3.48 2.82 3.25
Profit
Margin (%)
Return on 1.78 1.71 1.69 1.64 1.68
Assets (%)
Return on 15.27 15.35 14.12 16.45 16.26
Equity /
Networth
(%)
Net Interest 3.71 3.67 3.87 3.76 3.83
Margin (X)
Cost to 40.37 38.52 38.41 39.62 37.84
Income (%)
Interest 6.91 7.50 7.95 7.54 8.02
Income/Tot
al Assets (%)
Non- 1.44 1.51 1.41 1.43 1.42
Interest
Income/Tot
al Assets (%)
Operating 0.33 0.19 0.27 0.21 0.26
Profit/Total
Assets (%)
Operating 1.87 2.00 2.09 2.13 2.28
Expenses/T
otal Assets
(%)
Interest 3.20 3.83 4.07 3.77 4.18
Expenses/T
otal Assets
(%)
VALUATION
RATIOS
Enterprise 2,196,571.0 1,692,584.9 1,624,316.3 1,298,053.5 1,049,367.5
Value (Rs. 6 6 8 3 8
Cr)
EV Per Net 18.17 14.74 16.41 16.18 15.14
Sales (X)
Price To 4.04 2.76 4.23 4.62 4.13
Book Value
(X)
Price To 6.81 4.12 6.37 6.12 5.33
Sales (X)
Retention 100.00 75.09 80.77 100.00 100.00
Ratios (%)
Earnings 0.04 0.06 0.03 0.04 0.04
Yield (X)