Project Report

On
“A STUDY ON FINANCIAL PERFORMANCE OF
HDFC BANK IN INDIA’’

Submitted in Partial Fulfillment for award of

the Degree of Master of Business Administration

Supervised By : Submitted By:

Dr. Amit Sharma Name- ADARSH
Faculty, School of Commerce and Roll No.21015126005
Management, Himachal Pradesh Technical MBA-4rd sem.
University Finance

School of Commerce & Management

Himachal Pradesh Technical University
Hamirpur, Distt. Hamirpur – 177001, Himachal Pradesh
(Established under Act No. 16 of 2010 of Himachal Pradesh Legislative Assembly)
 CERTIFICATE OF SUPERVISION

This is to certify that the project report entitled “A STUDY ON FINANCIAL

PERFORMANCE OF HDFC BANK IN INDIA’’ has been completed under my
supervision and guidance. It was submitted in partial fulfilment of the requirements for
the award of the degree of MASTER OF BUSINESS ADMINISTRATION from
Himachal Pradesh Technical University, Hamirpur.

The project was carried out by Mr. ADARSH RANA, bearing Roll Number
21015126005, with dedication and commitment. Throughout the project duration, Mr.
Adarsh rana demonstrated a strong work ethic, research skills, and analytical thinking.
The findings and conclusions presented in the project report are the outcome of his
diligent efforts and academic abilities.

I have closely supervised and provided guidance to Mr. Adarsh rana during the various
stages of the project. I have reviewed the report's content, methodology, and overall
quality, ensuring that it meets the necessary academic standards.

Therefore, based on my assessment, I certify that the project report has been
successfully completed under my supervision. It is my belief that Mr. Adarsh rana has
met the academic requirements set forth by Himachal Pradesh Technical University for
the degree of MASTER OF BUSINESS ADMINISTRATION.

I wish Mr. Adarsh rana continued success in his academic and professional endeavours.

Sincerely,

Dr. Amit Sharma

Project Supervisor
Himachal Pradesh Technical University
Declaration
I, student of Department of Management Studies, School of Commerce and
Management, Himachal Pradesh Technical University, Hamirpur – 177001, Himachal
Pradesh, hereby declare that I have completed my at “A study on financial performance
of HDFC bank in India ” in partial fulfilment for the award of the Degree in Master of
Business Administration of Session (2021-23).

The information submitted is true and original to the best of my knowledge.

Place: Hamirpur
Date:
ADARSH RANA
(Signature of Student)
 PREFACE

This project work is necessary for the Final year students and is essential for
the award of the degree of Master of Business Administration in Finance.
The present study entitled “A Study on financial performance of HDFC bank in
India”. In spite of best endeavors, the project report is not a work of
excellence as it is student’ s attempt to watch record and understand
the business activities and pratical aspect of business by applying
theoretical knowledge and concepts.
So we are thankful to all who helped us in the complition of our project.

ADARSH RANA
 ACKNOWLEDGEMENT
I am deeply indebted to many people for the successful completion of this
project. I would like to take this opportunity and go on record to thank them for
their help and support. I am thankful to the Himachal Pradesh Technical
University for all the support provided for this project. I express my deep sense
of gratitude and sincere feelings of obligation to my Project Guide Dr. Amit
Sharma who has helped me in overcoming many difficulties and who has
imparted me the necessary conceptual knowledge. I wish to thank all my
teachers, for their helpful inputs, insightful comments, steadfast love and
support.

ADARSH RANA
RollNo.21015126005
 TABLE OF CONTENT

SR NO. Particulars Page no.

1 Introduction
• Financial Performance
• Financial Product 1-9
• Bank Profile
• History
• Industry Analysis
• Objective

2 Review literature
10-14

3 Research Design
• Need & scope 15-25
• Objective
• Research Methodology
• Tools & Techniques
• Source of Data
• Limitation

5 Data Analysis & Interpretation

• Method
• Profit & loss Balance sheet 26-41
• Financial Results
• Financial Analysis of HDFC
• SWOT Analysis

6 Finding, Suggestion , Conclusion 42-44

7 Bibliography 45-47
 Chapter: 1
INTRODUCTION
INTRODUCTION
Finance is the master key that unlocks all production and merchandising opportunities. For
the preparation and administration of financial decisions, financial success is critical. It is a
method of determining how well a firm uses its assets from its core business mode to
generate money, as well as a method of determining an organization's overall financial health
over time.
Every business, large, medium, or small, requires funding to continue operations and meet its
goals. Finance is so important nowadays that it is rightfully referred to as the "living blood"
of businesses. No business can achieve its goals without enough funding. As a result, the
study of financial performance is critical, as it is the process of calculating the financial
results of a company's operations.
Financial performance analysis is the process of determining a company's financial strengths
and weaknesses by correctly defining the relationship between balance sheet and profit and
loss account components. It also aids in short- and long-term forecasting, as well as the
identification of growth through the use of various financial techniques in financial
performance analysis. In the development of the Indian economy, the bank plays a critical
role. In emerging countries, a sound and efficient banking sector provides the required
financial inputs to the economy. It also assesses an organization's overall financial health
over a period of time. The financial performance of an organization is concerned with the
bank's financial strengths and weaknesses, as well as the relationship between the balance
sheet and the income statement.
FINANCIAL PERFORMANCE
Financial Performance is a complete evaluation of a company’s overall standing in categories
such as assets, liabilities, equity, expenses, revenue and overall profitability. It measured
through various business related formulas that allow user to calculate exact details regarding
a company’s potential effectiveness.
Three element of Financial Performance:

 Assets: These are items of economic benefit that are expected to yield benefits in
future periods. Examples are accounts receivable, inventory, and fixed assets.

 Liabilities: These are legally binding obligations payable to another entity or individual.
Examples are accounts payable, taxes payable, and wages payable.

 Equity: This is the amount invested in a business by its owners, plus any remaining retained
earnings.
Components of Financial Statements

Financial statements usually consists of the following:

1. Balance Sheet– A balance sheet depicts the value of economic resources controlled by an
enterprise, as well as the liquidity and solvency of an enterprise. This is used to estimate the
ability of the enterprise in meeting its financial commitments.

2. Statement of Profit and Loss- Portrays the outcome of the functioning of the organization.

3. Cash Flow Statement– Outlines the way of determination of income, as well as its usage.

4. Notes and Schedules– Provides supplementary information explaining different modules

of financial statements. A few examples can be risks and uncertainties affecting an enterprise,
accounting policies etc.

Financial Statement Analysis is a method of reviewing and analyzing a company’s

accounting reports (financial statements) in order to gauge its past, present or projected future
performance. This process of reviewing the financial statements allows for better economic
decision making. Globally, publicly listed companies are required by law to file their
financial statements with the relevant authorities. For example, publicly listed firms America
are required to submit their financial statements to the Securities and Exchange
Commission (SEC). Firms are also obligated to provide their financial statements in the
annual report that they share with their stakeholders. As financial statements are prepared in
order to meet requirements, the second step in the process is to analyze them effectively so
that future profitability and cash flows can be forecasted. Therefore, the main purpose of
financial statement analysis is to utilize information about the past performance of the
company in order to predict how it will fare in the future. Another important purpose of the
analysis of financial statements is to identify potential problem areas and troubleshoot those.

USERS OF FINANCIAL STATEMENT ANALYSIS

There are different users of financial statement analysis. These can be classified into internal
and external users. Internal users refer to the management of the company who analyzes
financial statements in order to make decisions related to the operations of the company. On
the other hand, external users do not necessarily belong to the company but still hold some
sort of financial interest. These include owners, investors, creditors, government, employees,
customers, and the general public. These users are elaborated on below:
1. Management

The managers of the company use their financial statement analysis to make intelligent
decisions about their performance. For instance, they may gauge cost per distribution
channel, or how much cash they have left, from their accounting reports and make
decisions from these analysis results.

2. Owners

Small business owners need financial information from their operations to determine
whether the business is profitable. It helps in making decisions like whether to continue
operating the business, whether to improve business strategies or whether to give up on
the business altogether.

3. Investors

People who have purchased stock or shares in a company need financial information to
analyses the way the company is performing. They use financial statement analysis to
determine what to do with their investments in the company. So depending on how the
company is doing, they will either hold onto their stock, sell it or buy more.

4. Creditors

Creditors are interested in knowing if a company will be able to honour its payments as
they become due. They use cash flow analysis of the company’s accounting records to
measure the company’s liquidity, or its ability to make short-term payments

5. Government

Governing and regulating bodies of the state look at financial statement analysis to
determine how the economy is performing in general so they can plan their financial and
industrial policies. Tax authorities also analyse a company’s statements to calculate the
tax burden that the company has to pay.

6. Employees

Employees need to know if their employment is secure and if there is a possibility of a

pay raise. They want to be abreast of their company’s profitability and stability.
Employees may also be interested in knowing the company’s financial position to see
whether there may be plans for expansion and hence, career prospects for them.
 7. Customers

Customers need to know about the ability of the company to service its clients into the
future. The need to know about the company’s stability of operations is heightened if the
customer (i.e. a distributor or procurer of specialized products) is dependent wholly on the
company for its supplies.

8. General Public

Anyone in the general public, like students, analysts and researchers, may be interested
in using a company’s financial statement analysis. They may wish to evaluate the effects
of the firm on the environment, or the economy or even the local community. For
instance, if the company is running corporate social responsibility programs for
improving the community, the public may want to be aware of the future operations of the
company.

FINANCIAL PRODUCTS:

Types of financial products

• Shares: These represent ownership of a company. While shares are initially issued by
corporations to finance their business needs, they are subsequently bought and sold by
individuals in the share market. They are associated with high risk and high returns. Returns
on shares can be in the form of dividend pay-outs by the company or profits on the sale of
shares in the stock market. Shares, stocks, equities and securities are words that are generally
used interchangeably.

• Bonds: These are issued by companies to finance their business operations and by
governments to fund budget expenses like infrastructure and social programs. Bonds have a
fixed interest rate, making the risk associated with them lower than that with shares. The
principal or face value of bonds is recovered at the time of maturity.

• Treasury Bills: These are instruments issued by the government for financing its short term
needs. They are issued at a discount to the face value. The profit earned by the investor is the
difference between the face or maturity value and the price at which the Treasury Bill was
issued.

• Options: Options are rights to buy and sell shares. An option holder does not actually
purchase shares. Instead, he purchases the rights on the shares.
• Mutual Funds: These are professionally managed financial instruments that involve the
diversification of investment into a number of financial products, such as shares, bonds and
government securities. This helps to reduce an investor’s risk exposure, while increasing the
profit potential.

• Certificate of Deposit: Certificates of deposit (or CDs) are issued by banks, thrift
institutions and credit unions. They usually have a fixed term and fixed interest rate.

• Annuities: These are contracts between individual investors and insurance companies,
where investors agree to pay an allocated amount of premium and at the end of a pre-
determined fixed term, the insurer will guarantee a series of payments to the insured party.

BANK PROFILE

HDFC Bank Limited is an Indian banking and financial services company headquartered
in Mumbai. It is India's largest private sector bank by assets and world's 10th largest bank by
market capitalization as of April 2021. It is the third largest company by market capitalization
of $122.50 billion on the Indian stock exchanges. It is also the fifteenth largest employer in
India with nearly 120,000 employees.

1. ISION
To be the premiere financial partner in ensuring sustainable housing and living standards.

2. MISSION
Committed to provide financial solutions for sustainable living and assist entrepreneurs in
value additional.
3. VALUE
The goal of HDFC Bank is to become a world - class Indian bank. It aims to accomplish two
things: First and foremost, to be the preferred banking service provider for the target retail
and wholesale customer categories. The second goal is to generate profitable growth that is in
line with the bank's risk appetites. The bank is dedicated to upholding the highest ethical
standards, professional integrity, corporate governance, and regulatory compliance possible.
HISTORY

HDFC Bank was incorporated in 1994 as a subsidiary of the Housing Development Finance
Corporation, with its registered office in Mumbai, Maharashtra, India. Its first corporate office
and a full-service branch at Sandoz House, Worli were inaugurated by the then Union
Finance Minister, Manmohan Singh.

As of 30 June 2019, the bank's distribution network was at 5,500 branches across 2,764 cities.
It has installed 430,000 POS terminals and issued 23,570,000 debit cards and 12 million
credit cards in FY 2017. It has a base of 1,16,971 permanent employees as of 21 March 2020.

PRODUCT AND SERVICE

HDFC Bank provides a number of products and services including wholesale banking, retail
banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property,
consumer durable loan, lifestyle loan and credit cards. Along with this various digital
products are Payzapp and SmartBUY.

Mergers and Acquisitions

HDFC Bank merged with Times Bank in February 2000. This was the first merger of two
private banks in the New Generation private sector banks category. Times Bank was
established by Bennett, Coleman and Co. Ltd., commonly known as The Times Group,
India's largest media conglomerate.

In 2008, Centurion Bank of Punjab (CBoP) was acquired by HDFC Bank. HDFC Bank's
board approved the acquisition of CBoP for ₹95.1 billion in one of the largest mergers in the
financial sector in India. In 2021, the bank acquired a 9.99% stake in FERBINE, an entity
promoted by Tata Group, to operate a Pan-India umbrella entity for retail payment
systems, similar to National Payments Corporation of India.

In September 2021, the bank partnered with Paytm to launch a range of credit cards powered
by the global card network Visa.

On April 4 2022, HDFC Bank announced merger with HDFC Limited.

INVESTMENT

In March 2020, Housing Development Finance Corporation, parent company of HDFC Bank,
made an investment of ₹1,000 cores in Yes Bank. As per the scheme of reconstruction of Yes
Bank, 75% of the total investment by the corporation would be locked in for three years. On
14 March, Yes Bank allotted 100 core shares of the face value of ₹2 each for consideration of
₹10 per share (including ₹8 premium) to the Corporation aggregating to 7.97 percent of the
post issue equity share capital of Yes bank.

LISTINGS AND SHAREHOLDER

The equity shares of HDFC Bank are listed on the Bombay Stock Exchange and the National
Stock Exchange of India. Its American depositary receipts are listed on the NYSE issued
through JP Morgan Chase Bank.

Its global depository receipts (GDRs) was listed on the Luxembourg Stock Exchange but was
terminated by board of directors following its low trading volume.

Shareholder (as of September 2021) Shareholding

Promoter group (HDFC) 25.88%

Foreign institutional investor(FII) 38.30%

Individual shareholders 13.25%

Qualified institutional buyer 4.74%

Insurance companies 2.94%

Unit Trust of India/mutual funds 14.57%

Financial institutions/banks 0.4%

Central government 0.6%

HDFC Bank and its Business Model

Incorporated in 1994, HDFC Bank is one of the earliest private sector banks to get approval
from RBI in this segment. HDFC Bank has a pan India presence with over 5400+ banking
outlets in 2800+ cities, having a wide base of more than 56 million customers and all its
branches interlinked on an online real-time basis.

HDFC Limited is the promoter of the company, which was established in 1977. HDFC Bank
came up with its 50 crore-IPO in March 1996, receiving 55 times subscription. Currently,
HDFC Bank is the largest bank in India in terms of market capitalization (Nearly Rs 8.8 Lac
Cr.). HDFC Securities and HDB Financial Services are the subsidiary companies of the bank.
HDFC Bank primarily provides the following services:

 Retail Banking (Loan Products, Deposits, Insurance, and Cards etc.)

 Wholesale Banking (Commercial Banking. Investment Banking etc.)

 Treasury (Forex, Debt Securities, Asset Liability Management)

Industry Analysis

HDFC (Housing Development Finance Corporation) Bank is headquartered in Mumbai. As

of March 31, 2022, the Bank's distribution network was at 6,342 branches across 3,188 cities
and 18,130 ATMs. Customers across India are serviced through multiple delivery channels
such as Phone Banking, Net Banking, Mobile Banking, and SMS based banking.

It is India's largest private sector bank by assets and world's 10th largest bank by market
capitalization as of April 2021. It is the third largest company by market capitalization of
$122.50 billion on the Indian stock exchanges. It is also the fifteenth largest employer in
India with nearly 120, 093 employees.

Market Share

MARKET SHARE

6.32%

15.83%
25.50%

4.22%
4.67%

13.10% 24.13%

6.23%

SBI HDFC AXIS ICICI IDBI HOME LOAN PNB HOME LOAN LIC OTHER
OBJECTIVE OF THE FINANCIAL PERFORMANCE

1. To evaluate the financial performance of HDFC Bank in India.

2. To understand the working of HDFC Bank in India.

3. To analyses the liquidity and solvency position of the bank.

Reference
 https://en.wikipedia.org/wiki/Housing_Development_Finance_Corporation
 https://v1.hdfcbank.com/htdocs/common/2021/July/AR/hdfc-AR/financial-
performance.html#:~:text=We%20continue%20to%20deliver%20a,credit%20risk%2
0evaluation%20and%20management.
 CHAPTER 2

REVIEW OF LITERATURE
Review of Literature

Literature review is a comprehensive summary of previous research on a topic. The literature

review surveys scholarly articles, books, and other sources relevant to a particular area of
research. The review should enumerate, describe, summarize, objectively evaluate and clarify
this previous research.

A good literature review doesn’t just summarize sources—it analyses, synthesizes, and
critically evaluates to give a clear picture of the state of knowledge on the subject.

1. Yadav Shewta, Jang Jonghag 2021: The objective of the study is to investigate the
impact on the financial performance of HDFC Bank before and after the merger by
CAMEL Analysis. The period of the study includes five-year prior merger (2003-2008)
and five year of post-merger period (2009-2014). The study states that the performance of
HDFC Bank is increased after the merger.
2. Dr.Pandit Seema, Gandhi Jash 2021 : Study compare the performance of SBI and
HDFC Bank by applying CAMEL Model. The results shows that the SBI Bank
performed well on the parameters of Capital Adequacy, Asset Quality and Management
whereas HDFC Bank performed well on the parameters of liquidity.
3. Dr. Sudha B, Rajendran P 2019: Conducted a study on financial health of Axis Bank &
HDFC Bank for the time period of 2013-2014 to 2017-2018 by using various statistical
tools and ratio analysis for analyzing data. The study conclude that overall financial
performance of Axis Bank is less compared the HDFC Bank.
4. Dr. Malini R, Dr Banu A Meharaj 2019 : This study examined the financial
performance of Indian Tobacco Corporation Ltd. Objective of the study was to analysis
the liquidity, profitability, Solvency possession of the firm within the period from 1st
April 2013 to 31st March 2017. Study reveals that the financial performance is better. The
fund contributes to the development of social security system of a country. A fund is
established by private employers, governments, or unions for the payment of retirement
benefits. Pension funds are designed to provide for poverty relief, consumption
smoothing etc.
5. Jha Priyanka 2018: A study Examined the financial performance of public sector bank
(PNB) and private sector bank (ICICI Bank) in India. Objective of study was to compare
 financial performance of both banks. Study concludes that ICICI bank Performed better
PNB in comparison.
6. Hemant Sonaje Vijay, Dr Shriram S.Nerlekar 2017: This study analyses the
performance of COMMERCIAL Bank in India during the period 2013 to 2017 using
CAMEL approach. The study reveals that the KOTAK and HDFC perform better than
SBI and PNB.
7. Jaiswal A, Jain C 2016: Conducted a comparative study of financial performance of SBI
& ICICI Bank in India. This study evaluates the financial performance of Indian Banks
with help of CAMEL MODEL. The result of the study clarifies that the financial
performance of SBI is little bit more than ICICI Bank and also market position is high,
but in other terms ICICI Bank is performing well in terms of NPA.
8. Pawan, Gorav 2016: The study entitled to compare financial health ICICI Bank and Axis
Bank. Objective of the study was to measure and compare financial performance of Axis
an ICICI Bank. The study concludes that the performance of Axis Bank is better compare
to ICICI Bank.
9. Kumar Pakira Sanjib 2016: Examines his research growth performance analysis a
comparative study between SBI and HDFC Bank Limited. His objective was to analysis
the growth rate in SBI and HDFC Bank limited as both the banks are giant banks in
public and private sector. In this research work the researcher found that HDFC Bank has
performed much better than the SBI Bank.
10. Dr Sharma Mukund 2014: Conducted a study to investigate financial performance of
Indian public and private sector bank based on CAMEL FRAME WORK. The study
stated that private banks are better than public sector banks. The capital budgeting
decisions of a firm has to decide the way in which the capital project will be financed.
The financing or capital structure decision. The assets of a company can be financed
either by increasing the owners claims on the creditors’ claims. The various means of
financing represent the financial structure of an enterprise.
11. Islam Aminul 2014:This study investigates the financial performance of National Bank
Limited with in the period 2008 to 2013.This study also determine specific areas for bank
to work to attain sustainable growth. Analyzed the performance of HDFC Bank.
Researcher explained about HDFC Bank’s history. Current ratio, cash position ratio,
Debt equity ratio and proprietary ratio was good. The study finds that part of working
capital of the bank was financed by long term funds. Researcher concluded with result as
 HDFC Bank was the largest private sector bank in India and its financial performance
was strong during the period of study.
12. Dr K Sreenivas, L Saroja 2013: Entitled a comparative study of financial performance
of HDFC Bank and ICICI Bank. Study revels there is no significance difference in the
performance of HDFC Bank and ICICI Bank, but they conclude that HDFC Bank
financial performance is slightly shows an increase in compared with ICICI Bank. The
objective is to measure the efficiency of various properties of bank. Researchers find
that bank’s financial performance was strong and suggested to providing more housing
loans to the development of the citizen of India.
13. Dr Ahmed Arif Almazari 2012: This study attempts basically to measure the financial
performance of the Jordanian Arab commercial bank for the period 2000-2009 by using
the DuPont system of financial analysis which is based on analysis of return on equity
model. Arab bank had less financial leverage in the recent years, which means the bank is
relying less on debt to finance its assets.
14. Mabwe Kumbirai, Robert Webb 2010: This Study Investigate performance of
commercial bank in South Africa for the period 2005 to 2009.This study reveals that the
performance of the bank is better in the first two years but later its performance fall is
noticed due to the global financial crisis in 2007.The study conclude that the performance
and profitability is falling down.
Reference

1. Shweta Yadav, J. J. (2021). Impact of Merger on HDFC Bank Financial Performance : A

Camel Analysis Approach. International Journal of Economics and Finance.
2. Dr. Seema Pandit, J. G. (2021). A Comparative Study on the Financial Performance of
SBI and HDFC Bank based on CAMEL Model. International Journal of Scientific
Research in Engineering and Management.
3. B Sudha, D., & Rajendran, p. (2019). A Study on Financial Health of Axis Bank &
HDFC Bank. https://adalyajournal.com.
4. Dr. R. Malini, D. A. (2019). A Study on Financial Performance Analysis of Indian
Tobacco Corporation Limited. Indian Journal of Applied Research.
5. Priyanga Jha (2018, August). Analyzing Financial Performance (2011-18) of Public
Sector Banks (PNB) and Private Sector Banks (ICICI) in India. ICTACT Journal of
Management Studies.
6. .Vijay Hemant Sonaje, D. S. (2017). Financial Performance Analysis of Selected Banks
using CAMEL Approach.
7. A. Jaiswal, C. J. (2016, June). A Comparative Study of Financial Performance of SBI and
ICICI. International Journal of Scientific Research in Computer Science and Engineering.
8. Gorav, P. a. (2014). A Comparative Study on Financial Health of ICICI Bank and Axis
Bank. international Journal of Marketing and Financial Management.
9. Pakira, S. K. (2016). Growth performance analysis – A Comparative Study between SBI
and HDFC Bank Limited. American Journal of Theoretical and Applied Business.
10. Sharma, D. M. (2014). Performance of Indian Public and Private Sector Banks: A
Comparative Study. EPRA Internal Journal of Economic and Business Review.
11. Islam, A. (2014). An Analysis Of The Financial Performance Of National Bank Limited
Using Financial Ratio. Journal of Behavioural Economics, Finance, Entrepreneurship
, Accounting and Transport.
12. L.Saroja, D. a. (2013, 7 2). Comparative Financial Performance of HDFC Bank and
ICICI Bank”. Scholars World-International Refereed Multi diplomacy Journal of
Contemporary Research.
13. Almazari D. A. (2012). Financial Performance Analysis of the Jordanian Arab Bank by
Using. International Journal of Economics and Finance.
14. M. Kumbirai, R. W. (2010). A Financial Ratio Analysis of Commercial Bank
Performance in South Africa. African Review of Economics and Finance.
 CHAPTER – 3
RESEARCH DESIGN
RESEARCH DESIGN
The research design refers to the overall strategy that you choose to integrate the different
components of the study in a coherent and logical way, thereby, ensuring you will effectively
address the research problem; it constitutes the blueprint for the collection, measurement, and
analysis of data.
Need & Scope of study
1. Analyse financial ratios to assess profitability, solvency, working capital management,
liquidity, and operating effectiveness.
2. Compare current performance with historical conditions using trend analysis.
3. This study useful to known the financial position of company.

Objective

1. To evaluate the financial performance of HDFC Bank in India.

2. To understand the working of HDFC Bank in India.

3. To analyses the liquidity and solvency position of the bank.

Research Methodology
Research methodology is a way of explaining how a researcher intends to carry out their
research. It's a logical, systematic plan to resolve a research problem. A methodology details
a researcher's approach to the research to ensure reliable, valid results that address their aims
and objectives.

Tools & Technique

The following tool & techniques have been classification in the study
(A)Accounting Techniques
(B) Statistical Techniques
ACCOUNTING TECHNIQUES
The researcher picks up the techniques to suit their requirement and also basis to data
available to them. The accounting techniques which are used for the analysis is as under.
Ratio Analysis A ratio is a quotient of two numbers and the relation expressed between two
figures. Ratio analysis is a process of comparison of one figure against another, which makes
ratio. Ratio analysis is a very powerful. The ratio analysis concentrates on the inter-relation-
ship among the figures appearing in the financial statement.
STATISTICAL TECHNIQUES
Statistical methods involved in carrying out a study include planning, designing, collecting
data, analyzing, drawing meaningful interpretation and reporting of the research findings. The
statistical analysis gives meaning to the meaningless numbers, thereby breathing life into a
lifeless data.

Financial Analysis
Financial analysis is the process of Identifying the strength and weakness of the company
with the help of accounting information provided by the financial statements of profit and
loss account and balance sheet. It is a process of evaluation of relationship between
components part of financial statement to obtain better understanding of firm position and
performance.

Tools of financial analysis

A Number of techniques or devices are used to undertake financial analysis. The fundamental
objective of analytical method is to simply the data into understandable terms. The following
are the important tools of financial analysis.

 Comparative statement
 Common Size statement
 Trend Analysis
 Ratio Analysis
 Fund Flow Analysis
 Cash flow Analysis

Comparative Statement
Comparative statement is those statement which is used to study financial position for two or
more periods. It is also Called as horizontal financial analysis.
Types of Comparative Statement
1. Comparative Balance sheet
2. Comparative Profit and Loss Account
Comparative Balance Sheet

It shows the account of current assets and current liability on different dates and also shows the
increase and decrease in these accounts.
Comparative Profit and Loss Account

It shows the operational results and progress of business in a given period of time

Common Size Statement

Common size statement is another technique of financial analysis. Common size financial
statement is those statement in which terms are converted into percentages taking some
common base. These statements are also called 100 percent statement or common percentage.
Common size statement includes common size balance sheet and common size profit and loss
account.

Ratio Analysis
The term accounting ratios is used to describe significant relationship between figures shown
on balance sheet, in a profit and loss account, in a budgetary control system or in any, other
part of the accounting organization. Ratio simply refers to one number expressed in terms of
another number. Ratio analysis is a technique of analysis and interpretation of financial
statement. It is the process of establishing and interpreting the various ratios for helping in
making certain decision. However, ratio analysis is not an end to itself. It is only a means of
better understanding of financial strength, weakness of a firm. Calculation of mere
accounting ratios does not serve any purpose unless several appropriate ratios are analyzed
and interpreted.

Objectives of Ratio Analysis

 To study the short-term solvency of a firm.

 To study the long-term solvency of a firm.
 To determine the profitability of a firm.
 To measure the performance of a firm.
 To communicate the strength and weakness of a firm.

Liquidity Ratio
The term liquidity refers to the firm’s ability to meet its current liabilities. Liquidity ratios are
used to measure the liquidity position or short-term financial position of a firm. These ratios
are used to assess the short-term debt paying ability of a firm, important liquidity ratios are
current ratio and quick ratio.
Current Ratio
Current ratio may be defined as the relationship between current assets and current liabilities.
This ratio is also known as working capital ratio. It is a measure of general liquidity and is the
most widely used to make the analysis of short term financial or liquidity of a firm. It is
calculated by dividing the total current assets by total current liabilities and the ideal current
ratio is 2:1. It is calculated as follows

Current Ratio = Current asset

Current liabilities

The higher the current ratio, the greater the firm’s ability to meet the short-term debts. A very
high current ratio indicates too much of money is blocked in current assets etc. In short, a
very high current ratio indicates that the firm will find it difficult to pay off its debts.
Quick Ratio
The term liquidity ratio refers to the ability of a firm to pay off its short-term obligations as
and when they become due. Cash in hand and cash at bank are the most liquid asset. The
other assets included in the liquid assets are bills receivables, sundry debtors, marketable and
short term or temporary investments. The Ideal liquid or quick ratio is 1:1. The liquid ratio
can be calculated as follows

Quick ratio = Liquid assets

Current liabilities

Quick Assets = Current Assets - (stock + prepaid expenses)

Liquid ratio is considered to be superior to current ratio in testing the liquidity position of a
firm. If the current ratio is 2:1 and quick ratio is 1:1; the liquidity position may be considered
satisfactory. If the current ratio is higher than 2:1, but quick ratio is less than 1:1, it indicates
excessive inventory.

Absolute Liquid Ratio or Cash Ratio

This ratio establishes the relationship between super quick assets and quick liabilities. And it
is taken as a ratio of absolute liquid assets or absolute quick assets include cash in hand, cash
at bank and marketable securities or short-term investments. It is also known as cash ratio. And
ideal absolute liquid ratio.
Absolute Liquid Ratio = Absolute Liquid Assets
Current Liabilities
Solvency Ratio
Solvency ratio is one of the various ratios used to measure the ability of a company to meet
its long-term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term
sustainability of a company instead of the current liability payments.

Proprietary Ratio
Proprietary ratio establishes the relationship between shareholders or proprietors fund and
total assets. This ratio shows how much funds have been contributed by shareholders in the
total assets of the firm. Proprietary ratio is also known as equity ratio or net worth ratio. It is
computed as follows:

Proprietary Ratio = Shareholder’s fund

Total assets

This ratio shows financial health of the firm. A high ratio indicates safety to the creditors and
low ratio show greater risk to the creditors. The ideal ratio is 0.5:1or above.

Profitability Ratios
The ultimate aim of any business enterprise is to earn maximum profit. To the management,
profit is the measure of efficiency and control. Profitability ratio measures the ability of the
firm to earn an adequate return on sales, total assets and invested capital. There are two types
of profitability ratios. First, profitability based on sales and it includes gross profit ratio,
operating ratio, operating profit ratio and net profit ratio. Second, profitability ratio based on
investment and it includes return on investment, return on shareholders fund ratio, return on
equity ratio and return on total assets. Profit is important for everyone associated with the
company including creditors and owners.
Return on shareholder’s fund
This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability
from shareholders point of view. This ratio is called the ‘mother of all the ratio’. This is
perhaps the most important ratio because it measures the return that is earned on the owner’s
capital. It is calculated as follows:

Return on shareholders’ fund = Net profit after interest and tax

Shareholder’s fund

Return in Investment (ROI)

When a firm invest money in a business, it naturally expects adequate return on its
investment. Therefore, the firm wants to know how much profit is earning on its investment.
For this, ROI is computed. It establishes the relationship between return and investment. It is
also called accounting rate of return.

ROI = Profit before interest and tax

Capital employed

Capital employed may be gross capital employed or net capital employed. Gross capital
employed means total assets minus current liabilities. Alternatively, it refers to total of share
capital, revenue reserves, debenture and other long-term loans. Profit before interest and tax
is calculated as gross profit minus operating expenses. The ideal return on investment ratio is
15%. The higher the return on investment, greater is the overall profitability and more is the
efficient use of capital employed.

Net Profit Ratio

Net profit ratio is the ratio of net profits to revenues for accompany or business segment. It
measures the overall profitability.Net profit and net sales are the two components of net profit
ratio. Net profit is the final profit after adjusting all expenses and all incomes. The main
objectives of the ratio is to measure the overall profitability. This ratio indicates how much of
the sales are left after meeting expenses. The ideal net profit ratio is 5% - 10%.

Net profit ratio = Net Profit ×100

Net sales
Net profits can be taken as profit before tax and profits after tax. Higher the ratio, better is the
profitability.
Fund Flow Analysis
A fund flow statement means a statement which shows increase or decrease in working
capital during a period. The fund flow statement contains the source of funds, use of funds
and changes in working capital. Changes in working capital are obtained by preparing a
statement called ‘Statement of changes in working capital’. It shows the changes in current
asset and current liability. Fund flow statement is also known as ‘ where got and where gone
statement’ or ‘statement of changes in financial position’.

Cash Flow Analysis

Cash flow statement is a statement showing the changes in cash position from one period to
another. It explains the reasons for increase or decrease in the amount of cash between two
balance sheet dates. In other words, it explains the reasons for inflow or outflow of cash. It is
the statement of sources and use of cash.

SOURCE OF DATA

Secondary Data

Secondary data refers to that data which is already in existence and someone has obtained for
specific purpose but reutilize by the researcher. The said research work is based on the
secondary Data of published financial statement of selected Indian industries and the selected
companies within them.

(1) The data of various financial parameters have been obtained from the Annual Reports of
the companies directly from the official web sites of the company or stock exchange website.

(2) The resources at CMIE (Centre For Monitoring Indian Economy) have also been utilised
for the same purpose. For accounting analysis ratio analysis has been used. Ratio Analysis
The term ‘ratio’ refers to the mathematical relationship between any two inter-related
variables. According to J. Batty, Ratio can be defined as “the term accounting ratio is used to
describe significant relationship which exists between figures shown in a balance sheet and
profit and loss account in a budgetary control system or any other part of the accounting
management.”
As per Myers, “Ratio analysis is a study of relationship among various financial factors in a
business.” A ratio is a relationship expressed between two different figures of the financial
statement. Ratio analysis is an art of determining relationship between different components
of financial statement so as to derive a meaningful understanding of profitability, liquidity,
solvency and efficiency of a Company. Profitability can be measured in different ways- like
income based, expense based and investment based. This study is based on income based
ratios and is confined to four ratios which are as follows: Earning profit is one of the
objectives of every business concern. A company must have sufficient profits in relation to
the capital employed by it. Profitability of a company is indicated by the amount of profits
earned in comparison to capital invested in business.

Profitability is to be examined with reference to sales and capital employed.

• Operating Profit Margin(%) : Operating Income / Sales * 100

Operating margin is a measurement of what proportion of a company's revenue is left over

after paying for variable costs of production such as wages, raw materials, etc. A healthy
operating margin is required for a company to be able to pay for its fixed costs, such as
interest on debt.

1. Profit Before Interest And Tax Margin(%) : PBIT / Sales *100

In other words, EBIT is all profits before taking into account interest payments and income
taxes. An important factor contributing to the widespread use of EBIT is the way in which it
nulls the effects of the different capital structures and tax rates used by different companies.
By excluding both taxes and interest expenses, the figure hones in on the company's ability
to profit and thus makes for easier cross-company comparisons.

2. Gross Profit Margin(%) : (Sales - COGS) / COGS * 100

A financial metric used to assess a firm's financial health by revealing the proportion of
money left over from revenues after accounting for the cost of goods sold. Gross profit
margin serves as the source for paying additional expenses and future savings. COGS
expands to Cost Of Goods Sold.

3. Net Profit Margin(%) : Net Profit (after Interest & tax)/ Sales * 100

Profit margin is very useful when comparing the performance of various companies whether
they belong to the same industries or different industries. A higher profit margin indicates a
more profitable company that has better control over its costs compared to its competitors.
Liquidity implies the short term flexibility of a company in payment of obligation. To
examine availability of current asset and liquidity of the Company following two ratios are
calculated with following formula:

4. Current Ratio : Current Assets / Current liabilities

It helps to assess the short term financial position of the business enterprise. It shows how
many times Current Assets are in excess of Current Liabilities. Higher the Current ratio,
greater is the rupee available for the purpose of current liability, more is the Company’s
ability to meet its current obligations and greater is the safety of Company’s short term
creditors.

Limitations

• The study is restricted only the five financial years i.e.2017,2018,19,20,2021 and 2022 and
then compare to each-other with financial ratio, like current ratio, quick ratio, credit deposit
ratio, total assets turnover ratio.

• This study is mainly based on secondary data from the published annual Report, websites
and literature.
References

 Nandini Thakur & Shiva M (2020), “Financial Performance Analysis of

HDFC Bank”, Mukt Shabd Journal, Volume 9, Issue 6, pp. no. 2343-2353.
 Kaur, H.V. (2010), Analysis of Banks in India- A CAMEL Approach, Global
Business Review, 11, pp.257-280
 https://economictimes.indiatimes.com/hdfc-bank-ltd/stocks/companyid-
9195.cms?from=mdr
 https://www.capitalmarket.com/Company-Information/Information/About-
Company/HDFC-Bank-Ltd/4987.
 CHAPTER: 4

DATA ANALYSIS & INTERPRETATION

DATA ANALYSIS AND INTERPRETATION
Analysis and interpretation of financial statements are an attempt to determine the
significance and meaning of the financial statement data so that a forecast may be made of
the prospects for future earnings, ability to pay interest, debt maturities, both current as well
as long term, and profitability of sound dividend policy.

The main function of financial analysis is the pinpointing of the strength and weaknesses of a
business undertaking by regrouping and analysis of figures contained in financial statements,
by making comparisons of various components and by examining their content. The analysis
and interpretation of financial statements represent the last of the four major steps of
accounting.

A business owner can use several methods to check the financial health of the

business. Three of the most used methods are:

Horizontal Analysis – analysis the trend of the company’s financials over a period of time.
Each line item shows the percentage change from the previous period.

Vertical Analysis – compares the relationship between a single item on the Financial
Statements to the total transactions within one given period. It also shows the percentage of
change since the last period. You can perform a Vertical Analysis on both an Income
Statement and a Balance Sheet.

Ratio Analysis – analysis relationships between line items based on a company’s financial
information. It also compares a company’s performance from one period to another (current
year vs. last year). Analysis of Financial Statements determines the strength of a business and
where there is room for improvement. Without analysis, a business owner may make
mistakes understanding the firm’s financial condition. Resulting in poor rather than strong
decision making. For example, an Asset to Sales ratio is a measure of a firm’s productive use
of Assets. Whereas a low percentage rate compared to the average for the industry usually
indicates an efficient use of Assets. Likewise, a high percentage rate indicates the need to
improve the use of Assets. Check out our blog post on Ratio Analysis.

The following sections give a detail explanation of Vertical and Horizontal analysis:
Horizontal Company Financial Statement Analysis

With a Horizontal Analysis, also, known as a “trend analysis,” you can spot trends in your
financial data over time. For example, a $2 million profit year looks impressive following a
$0.25 million profit year, but not after a $10 million profit year.

Horizontal analysis stresses the trends in:

Earnings Assets Liabilities

1. Financial Statements often contain current data and the data of a previous period. This
way, the reader of the financial statement can compare to see where there was change,
either up or down.
2. Horizontal Analysis takes this comparison goes one step further. It depicts the amount of
change as a percentage to show the difference over time as well as the dollar amount.
3. The following illustration depicts a Horizontal Analysis.

4. Note that the line-items are a condensed Balance Sheet and that the amounts are shown as
dollar amounts and as percentages and the first year is established as a baseline.

5. A baseline is established because a financial analysis covering a span of many years may
become cumbersome. It would require the arrangement and calculation of interlinked
numbers and dates. Particularly, interlinks among the numbers make financial analysis
tiresome and complex for a typical businessperson. A solution is to create Comparative
Financial Statements, which depicts the results of Horizontal Analysis and show the trends
relative to only one base year. The baseline acts as a peg for the other figures while
calculating percentages.

Ratio Analysis: One of the most powerful tools in financial analysis is the ratio analysis. It is
the procedure for calculating and understanding different ratios. The ratio analysis is used to
investigate a company's liquidity, profitability, and solvency. The financial statements may
be analysed more clearly with the use of ratios, and decisions can be taken based on this
analysis.

 Liquidity Ratio

Current ratio = _current assets

Current liability
 Current Ratio

Year Current Asset Current Liability Current Ratio

2017 - 2018 48952.1 56709.32 0.86

2018 - 2019 122915.08 45763.72 2.69

2019- 2020 81347.64 55108.29 1.48

2020 - 2021 86618.72 67394.4 1.29

2021 - 2022 119470.4 72602.15 1.65

Mean 91860.79 59515.58 1.59

Source: Compiled from annual report of HDFC Bank

Current Ratio

0.86
1.65

1.29 2.69

1.48

2017-18 2018-19 2019-2020 2020-21 2021-22

Current assets and current liabilities over a period of 5 years from 2017-2018to 2021- 2022.
The average current ratio is 1.59 Current ratio is high during period 2018– 2019. It indicates
the firm is liquid and low during the period 2017 – 2018 and standard in another period.

 Leverage / Solvency Ratio

Solvency or Leverage ratios are used to analyses the long-term financial position of the
firm. In other words, these ratios are used to analyses the capital structure of a firm.

Debt Equity Ratio

Debt to equity ratio is the most commonly used ratio to test the solvency of a firm. This
ratio indicates the relative proportion of debt and equity in financing the assets of the firm.

Debt Equity Ratio = Total Debt (Ideal ratio =1:1)

Equity Share holder Fund

Debt Equity Ratio

Year Total Debt Equity Total Debt Equity Ratio

2017-2018 717668.58 89462.35 8.02

2018-2019 911875.61 106295.00 8.58

2019-2020 1040226.05 149206.35 6.97

2020-2021 1292130.83 170986.03 7.56

2021-2022 1470547.54 203720.83 7.22

Mean 1086489.72 143934.11 7.67

 Debt equity ratio

7.56 8.02

6.97
8.58

2017-18 2018-19 2019-20 2020-21 2021-22

The average Debt Equity Ratio is 7.67 .The ideal debt equity ratio is 1:1. During the five
years of study the debt equity ratio is very high. These indicates that the higher proportion of
debt content in the capital structure.

Proprietary Ratio
Proprietary ratio establishes the relationship between shareholders or proprietors fund and
total assets. This ratio shows how much funds have been contributed by shareholders in the
total assets of the firm. Proprietary ratio is also known as equity ratio or net worth ratio.

Proprietary Ratio = Shareholder Fund (Ideal ratio= .5:1)

Total Asset

Proprietary Ratio

Shareholder’s
Year fund Total Asset Proprietary Ratio

2017- 2018 89462.35 863840.2 0.1

2018 – 2019 106295 1063934.31 0.1

 2019 – 2020 149206.35 1244540.69 0.12

2020- 2021 170986.03 1530511.27 0.11

2021 – 2022 203720.83 174670.53 1.17

Mean 143934.11 975499.4 0.32

The average proprietary ratio is 0.3. The ratio is high during the period 2021-22. It indicates
that the margin for meeting no operating expenses, creating reserves and paying dividend is
less.

Solvency Ratio

Solvency ratio is one of the various ratios used to measure the ability of a company to meet
its long-term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term
sustainability of a company instead of the current liability payments.

Solvency Ratio = Total Asset

Total Debt

Debt Solvency Ratio

Year Total Asset Total Debt Solvency Ratio

2017-2018 863840.20 717668.53 1.20

2018-2019 1063934.31 911875.61 1.17

2019-2020 1244540.69 1040226.05 1.20

2020-2021 1530511.27 1292130.83 1.18

2021-2022 1746870.53 1470547.54 1.19

Mean 1289939.40 1086489.71 1.19

Higher the solvency ratio the stronger is its financial position and vice versa. From the above
data it is clear that, the assets are more than the outside liabilities. In all year’s solvency ratio
is above 1:1, it indicates that there is no difficult in paying off its outside liabilities.

Fixed Asset to Net worth Ratio

Fixed assets to net worth ratio show the relationship between fixed assets and shareholder’s
fund. Usually, fixed assets are purchased by using owner's fund such as equity capital,
reserves and surplus, retained earnings etc. If the ratio is less than 100%, it implies that
owner's fund are more than total fixed assets and part of the working capital is financed by
shareholders fund and vice versa. Ideal ratio is considered as 60% to 65%.
Fixed asset to net worth ratio = fixed asset / net worth

Fixed asset to Net worth ratio

Fixed Asset To
Year Fixed Asset Net worth
Net worth Ratio
2017-2018 3626.74 89462.35 0.04

2018-2019 3607.20 106295.00 0.03

2019-2020 4030.00 149206.35 0.03

2020-2021 4431.92 170986.03 0.03

2021-2022 4909.32 203720.83 0.02

Mean 4121.04 143934.11 0.03

The average Fixed Asset to net worth ratio is 0.03 .The table shows fixed assets to proprietary
ratio of the concern. Ratio less than 1 indicates that all fixed assets are purchased out of
proprietor’s fund and a part of proprietor’s fund is invested in working capital.

Net Profit Ratio

Net profit ratio is the ratio of net profit earned by a business and its net sales it measures
overall profitability.
Net Profit Ratio = Net Profit × 100
Total Income
Net Profit Ratio

Year Net Profit Total Income Net Profit Ratio

2017-2018 14549.64 81602.46 17.83

2018-2019 17486.73 95461.66 18.32

2019-2020 21078.17 116597.94 18.08

2020-2021 26257.32 138073.47 19.02

2021-2022 31116.53 146063.12 21.30

Mean 22097.68 115559.73 18.91

The average Net Profit Ratio is 18.91. Here the bank has a very high net profit ratio and is
above its idle ratio. Hence this indicates there is high efficiency as well as profitability for the
company and they have to maintain this same satisfactory level as well.

Profit & Loss - HDFC Bank Ltd.Rs (in Crores)

Mar'22 Mar'21 Mar'20 Mar'19 Mar'18

12Months 12Months 12Months 12Months 12Months

INCOME:

Sales Turnover 127753.12 120858.23 114812.65 98972.05 80241.35

Excise Duty .00 .00 .00 .00 .00

NET SALES 127753.12 120858.23 114812.65 98972.05 80241.35

Other Income 29509.9004 25204.8927 23260.8187 17625.8849 15220.3042

TOTAL INCOME 157263.02 146063.12 138073.47 116597.94 95461.66

EXPENDITURE:

Manufacturing Expenses .00 .00 .00 .00 .00

Material Consumed .00 .00 .00 .00 .00

Personal Expenses 12031.69 10364.79 9525.67 7761.76 6805.74

Selling Expenses 216.13 95.47 97.91 157.37 165.22

Administrative Expenses 38656.40 36662.80 32020.49 24610.22 15202.25

Expenses Capitalized .00 .00 .00 .00 .00

Provisions Made 15061.83 15702.85 12142.39 7550.08 5927.49

TOTAL EXPENDITURE 65966.04 62825.91 53786.45 40079.43 28100.71

Operating Profit 21105.38 17756.51 14542.19 15713.87 17921.65

EBITDA 121420.64 114642.90 108571.79 91618.67 73677.62

Depreciation 1599.80 1302.41 1195.85 1140.10 906.34

Other Write-offs .00 .00 .00 .00 .00

EBIT 119820.83 113340.49 107375.94 90478.57 72771.28

Interest 55743.53 55978.66 58626.40 50728.83 40146.49

EBT 49015.48 41658.99 36607.15 32199.66 26697.30

Taxes 12054.12 10542.46 10349.84 11121.49 9210.57

Profit and Loss for the Year 36961.36 31116.53 26257.31 21078.17 17486.73

Non Recurring Items .00 .00 .00 .00 .00

Other Non Cash Adjustments .00 .00 .00 .00 .00

Other Adjustments .00 .00 .00 .00 .00

REPORTED PAT 36961.36 31116.53 26257.31 21078.17 17486.73

KEY ITEMS

Preference Dividend .00 .00 .00 .00 .00

Equity Dividend .00 .00 6540.31 4052.59 .00

Equity Dividend (%) .00 .00 1192.77 744.06 .00

Shares in Issue (Lakhs) 55455.41 55127.76 54832.86 27233.07 25950.90

EPS - Annualised (Rs) 66.65 56.44 47.89 77.40 67.38

Rs (in Crores)
FINANCIAL YEARS

Year Revenue (In crores) Profits/Loss (In crores) Total Assets (In crores)

FY 2010 16,233 3,004 222,947

FY 2011 20,043 3,992 277,963

FY 2012 28,193 5,247 341,055

FY 2013 35,861 6,870 407,723

FY 2014 42,555 8,743 503,620

FY 2015 50,666 10,689 607,097

FY 2016 63,162 12,801 762,212

FY 2017 73,271 15,280 892,344

FY 2018 85,288 18,510 1,103,186

FY 2019 105,161 22,332 1,292,806

FY 2020 122,189 27,254 1,580,830

FY 2021 128,552 31,833 1,799,502

FY 2022 135,936 38,053

FINANCIAL RESULTS

Particulars Mar 2022 Mar2021 %Chg.

(Rs.cr)

Net sales 35,574.19 32,606.92 9.1

Other Sales 8,386.26 8,302.57 1.01

Total income 43,960.45 40,909.49 7.46

Total Expenses 15,044.07 15,560.52 -3.32

Operating profit 28,916.38 25,348.97 14.07

Net Profit 10,474.89 8,444.33 24.05

Equity Capital 554.55 551.28

Services

HDFC Bank provides a number of products and services including wholesale banking, retail
banking, treasury, auto loans, two-wheeler loans, personal loans, loans against property,
consumer durable loan, lifestyle loan and credit cards. Along with this various digital
products are Payzapp and SmartBUY.

Financial Analysis of HDFC Bank

 48% of the total revenue for HDFC bank comes from Retail Banking, followed by
Wholesale Banking (27%), Treasury (12%), and 13% of the total comes from other
sources.

 Industries receive a maximum share of loans issued by HDFC bank, which is 31.7%,
followed by Personal Loans and Services both at a 28.7% share of the total. Only
10.9% of the total loans are issued to Agricultural and allied activities.

 HDFC Bank has a 31.3% market share in credit card transactions, showing a growth
of 0.23% from the previous fiscal year, which makes it the market leader, followed by
SBI.

 HDFC Bank is the market leader in large corporate Banking and Mid-Size Corporate
Banking with 75% and 60% share respectively.

 In Mobile Banking Transaction, the market share of HDFC bank is 11.8%, which has
seen a regrowth of 0.66% in the current fiscal year.

 With each year, HDFC Bank has shown increasing net profit, which makes the 1-year
profit growth (24.13%) greater than both 3-year CAGR (21.75%) and 5-year CAGR
(20.78%).

 Capital Adequacy Ratio, which is a very important figure for any bank stands at
18.52% for HDFC Bank.

 HDFC Bank is again at the second spot in the market share of Bank deposits with
8.6%. SBI leads with a nearly 24.57% market share. PNB holds 7.5% of the market
share in this category, coming out as the third followed by Bank of Baroda with
6.89%.

 During the financial year 2020-2021 borrowings is decreased by 6.32% and other
assets decreased by 14.84 and deposit, investments, advances is increased.
SWOT Analysis

1. Strengths

 Currently, HDFC Bank is the leader in the retail loan segment (personal, car and
home loans) and credit card business, increasing its market share each year

 The HDFC tag has become a sign of trust in the people as HDFC has come out as a
pioneer not only in banking, but loans, insurances, mutual funds, AMC and
brokerage.

 HDFC Bank has always been an institution of its words as it has, without fail,
delivered its guidance and this has created a strong brand loyalty in the market for
them.

2. Weaknesses

 HDFC bank doesn’t have a significant rural presence as compared to its peers. Since
its inception, it has focused mainly on high-end clients. However, the focus is shifting
in the recent period as nearly 50% of its branches are now in semi-urban and rural
areas.

3. Opportunities

 The average age of the Indian population is around 28 years and more than 65% of the
population is below 35, with increasing disposable income and rising urbanization,
the demand for retail loans is expected to increase. HDFC Bank, being a leader in
retail lending, can make the best out of this opportunity.

 With modernization in farming and a rise in rural and semi-urban disposable income,
consumer spending is expected to rise. HDFC Bank can increase its market share in
these segments by grabbing this opportunity. Currently, the bank has only 21% of the
branches in rural areas.

4. Threats

 A lot of niche players have set up their strong branches in respective segments, which
has shown stiff competition and has shrined the market share and profit margin for the
company. Example – Gold Loans, Mutual Funds, Brokerage, etc.

 In-Vehicle Financing (which is HDFC Bank’s major source of lending income), most
of the leading vehicle companies are providing the same service, which is a threat to
the bank’s business.
 CHAPTER: 5

FINDINGS,SUGGESTIONS,CONCLUSIONS
FINDINGS, SUGGESTIONS, CONCLUSIONS

FINDINGS:

1. During the period of study the solvency ratio is satisfactory.

2. During the period of study net profit is very high and is above its ideal ratio its
indicates the bank have high profitability.
3. The position of HDFC in the market was so much strong and having great goodwill
in market because of customer satisfaction and trust.
4. Current ratio indicates that banks liquidity and its repayment of debts are sound
during the period of study.
5. Fixed assets ratio plains portion of working capital had financed by long-term funds
during the study period.
6. Debt equity ratio explains the creditors are safe during the study period.
7. Proprietary ratio reveals that the bank long-term solvency position is good in the
study period.

SUGGESTIONS:
1. The company should increase the profit margin after the acquisition the profit margin it’s
continually lower then following years.

2. 2021 tax ratio also increased the company should construct provision tax.

3. The return on asset in HDFC Bank is in decreasing trend. The HDFC Bank should take
necessary steps to improve the return on asset

4. Before acquisition the borrowing is low but in the year 2010 the borrowing level of HDFC
Bank it’s very high so HDFC Bank concentrates in this regard.

5. Banks should increase the rate of saving account.

6. Banks should provide loan at the lower interest rate and education loans should be given
with ease without much documentation. All the banks must provide loans against shares.

7. Fair dealing with the customers. More contribution from the employee of the bank. The
staff should be cooperative, friendly and must be capable of understanding the problems of
customers.

8. Internet banking facility must be made available in all the banks.

9. Banks should obey the RBI norms and provide facilities as per the norms, which are not
being followed by the banks. While the customer must be given prompt services and the bank
officer should not have any fear on mind to provide the facilities as per RBI norms to the
units going sick.

10. Prompt dealing with permanent customers and speedy transaction without harassing the
customers.

11. Each section of every bank should be computerized even in rural areas also.

12. Real time gross settlement can play a very important role.

13. More ATM coverage should be provided for the convenience of the customers

CONCLUSION

The HDFC Bank is the largest private sector bank in India. The researcher find the
financial performance for the past five financial years from 2017-2022. The data collected
from annual reports of the bank and the web site. The data analyzed through various
ratios. This research article finally concluded that the HDFC bank financial performance is
strong during the study period.
BIBLIOGRAPHY
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Kaur, H.V. (2010), Analysis of Banks in India- A CAMEL Approach, Global Business
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Website

 https://www.wikipedia.org/

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 https://www.moneycontrol.com/
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 https://www.moneycontrol.com/india/stockpricequote/banksprivatesector/hdfcbank/
HDF01
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