Financial & Swot Analysis of HDFC Bank
Financial & Swot Analysis of HDFC Bank
Financial & Swot Analysis of HDFC Bank
Bank is defined as an institution for the keeping, landing and exchanging etc. of money.
Economists have also defined a bank highlighting its various functions. According to
Crowther, the banker business is to take the debt of other people to offer his own in
exchange and thereby create money. Thus a bank is an institution that accepts deposits
from the public in turn advances loans by creating credit.
It is different from other financial institutions in that they cannot create credit though they
may be accepting deposits and making advances.
TYPES OF BANKS:
Commercial banks: are those banks which perform all kinds of banking functional such
as accepting deposits, advancing loan, and recreation and agency functions. They are also
called joint stock banks as they are organized in the same manner as joint stock
companies. They usually advance short term loans to customers some of commercial
banks in India are Andhra Bank, Canara Bank, Indian Bank, PNB etc.
Exchange banks: are those banks, which deal in foreign exchange and specialize in
financing trade. They are called foreign exchange banks. In India these exchange banks
have their head offices located outside India. These banks also render other services such
as collecting and supplying information about the foreign customers providing remittance
facilities etc. such as chartered bank, Gridlays bank.
Industrial banks: are those banks, which provide medium term and long-term finance
for industries for the purchase of land, machinery, etc. They underwrite the debenture and
shares of industries and also subscribe to them such as industrial development bank of
India, industrial finance corporation of India etc.
Agricultural banks: are those banks, which provide cr. To farmers for short term,
medium term and long term needs. In India, commercial banks, regional rural banks and
agricultural co-operative banks provide short-term loans to farmers. Such as national
bank for agriculture and rural development, NABARD.
Cooperative banks: are those financial institutions, which are organized on the principle
of cooperation. They provide short term, medium term loans to their members. In rural
area there are agriculture cooperative banks, which are also cooperative banks, which
perform the function of ordinary commercial banks but give loan to their members only.
They also get funds from the RBI. There is a state cooperative bank in every state of
India with its branches at the district level known as the central cooperative banks.
Saving banks: help promote small saving and mobilize them. They have been very
successful in Japan and Germany. In India post office act as saving bank.
Central banks: is the apex bank, in a country, which controls its monetary, and banking
structure. It is owned by the govt. of the country and operates in national interest. It
regulates and issues currency, performs banking and a agency services for the state, keeps
cash reserves of commercial banks, keeps and manages international currency, act as the
lender of the last resort, acts as the clearing house and controls of credit. The RBI is the
central bank in India.
Banking system
The banking system is an integral sub-system of the financial system. It represents an
important channel of collecting small saving from the households and lending it to the
corporate sector. The Indian banking system has the RBI as the apex body for all matters
relating to the banking system. It is the central bank of India. It is the bankers to all
other banks.
Functions of RBI:
1. Currency issuing authority.
2. Banker to the government.
3. Banker to other banks.
4. Framing of monetary policy.
5. Exchange control.
6. Custodian to foreign exchange and gold reserves.
7. Development activities.
8. Research and development in the banking sector.
Type
Private
(BSE: 500180, NYSE: HDB)
Industry
Founded
August 1994
Founder(s)
Deepak Parekh
Headquarters
Mumbai, India
Key people
Jagdish
Kapoor
Aditya Puri (MD)
Products
Investment
Commercial
Retail
Private
Asset
Mortgages
Credit Cards
Revenue
Operating income
Profit
Total assets
Total equity
(Chairman)
Banking
Banking
Banking
Banking
Management
Employees
51,888 (2010)
Website
HDFCBank.com
TABLE 1
portfolio covers over a million dwelling units. HDFC has developed significant expertise
in retail mortgage loans to different markets segments and also was a large corporate
HDFC Banks business philosophy is based on four core values: Operational Excellence,
Customer Focus, Product Leadership and People. The Bank signed a strategic business
collaboration agreement with Chase Manhattan Bank in February 1999.Plus /Cirrus and
American Express Credit / Charges cardholders. It is the only bank in India which
provides access to all the 3 major International Card Networks on its ATM network.
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank
benchmarking ourselves against international standards and best practices in terms of
product offerings, technology, service levels, risk management and build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services
for target retail and wholesale customer segments and to achieve a healthy growth in
profitability, consistent with the Banks risk appetite.
Increase our market share in Indias expanding banking and financial services
industry by following a disciplined growth strategy and delivering high quality
customer service.
Leverage our technology platform and open, scaleable systems to deliver more
products to more customers and to control operating cost;
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Maintain our current high standards for asset quality through discipline credit risk
management;
Develop innovative products and services that attract our targeted customers and
address inefficiencies in the Indian financial sector;
Continue to develop products and services that reduce our cost of funds; and
Focus on high earnings growth with low volatility.
ACCOUNTS
DEPOSITS
&
LOANS
INVESTMENTS
INSURANCE
- Personal Loans
- Home Loans
- Two Wheeler Loans
- New Car Loans
- Used Car Loans
- Overdraft against Car
- Express Loans
- Loan against Securities
- Loan against Property
-Loan
against
Rental
Receivables
-Health care finance
-Tractor Loans
Commercial
Vehicle
Finance
- Working Capital Finance
- Construction Equipment
Finance
- Mutual Funds
- Tax Planning
- Insurance
- Bonds
- Financial Planning
- Knowledge Centre
- Equities & Derivatives
- Mudra Gold Bar
- Mudra silver Bar
FOREX SERVICES
PAYMENT SERVICES
ACCESS
YOUR
ACCOUNT THROUGH
- Net Safe
- Product & Services
- Prepaid Refill
- Trade services
- Bill Pay
- Forex service Branch - Direct Pay
Locator
- Visa Money Transfer
- Forex Limits
- E-Monies Electronic
- Forex Plus Card
Funds Transfer
- RBI Guidelines
- Excise & Service Tax
Payment
&
CARDS
- Credit cards
- Debit cards
- Prepaid cards
-Net Banking
-Credit card Online
-One View
-Insta Alert
-Mobile Banking
-ATM
-Phone Banking
-Email Statements
TABLE 2
BOARD OF DIRECTORS
EXECUTIVE DIRECTOR
STATE MANAGER
BRANCH MANAGER
SUPEVISOR AUTHORITIES
SUPEVISOR AUTHORITIES
PERSONAL BANKER
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th
July 2010. Mr. Vasudev has been a Director of the Bank since October 2006. A retired
IAS officer, Mr. Vasudev has had an illustrious career in the civil services and has held
several key positions in India and overseas, including Finance Secretary, Government of
India, Executive Director, World Bank and Government nominee on the Boards of many
companies in the financial sector. The Banks Managing Director, Mr. Aditya Puri, has
been a professional banker for over 25 years. Before joining HDFC Bank in 1994, he was
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HDFC Bank is headquartered in Mumbai. The Bank of present has an enviable network
of over 241 branches spread over 129 cities all across the country. All branches are linked
on an online real time basis. Customers in 39 locations are also serviced through
Telephone Banking. The Banks expansion plans take into account the need to have a
presence in all major industrial and commercial centers where its corporate customers are
located as well as the need to build a strong retail customer base. Being a
clearing/settlement bank to various leading stock exchanges, the Bank has branches in the
centers where the NSE/BSE has a strong and active member base.
The Bank also has a network of almost over 775 networked ATMs across these cities.
Moreover, HDFC Banks ATM network can be accessed by all domestic and international
Visa/Master Card. The authorized capital of HDFC Bank is Rs. 450 crores. The paid up
capital is Rs. 281.2 crores. The HDFC Group holds 24.5% of the banks equity while
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about 13.3% of the equity is held by the depository in respect often banks issue of
American Depository Shares (ADS/ADR Issue).
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Mumbai and the National Stock Exchange. The Banks American Depository Shares are
listed on the New York Stock Exchange under the symbol HDB.
1.8 LEADERSHIP
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect from 6th
July 2010. Mr. Vasudev has been a Director of the Bank since October 2006. A retired
IAS officer, Mr. Vasudev has had an illustrious career in the civil services and has held
several key positions in India and overseas, including Finance Secretary, Government of
India, Executive Director, World Bank and Government nominee on the Boards of many
companies in the financial sector. The Banks Managing Director, Mr. Aditya Puri, has
been a professional banker for over 25 years. Before joining HDFC Bank in 1994, he was
heading Citibanks operations in Malaysia.
S.NO
NAME
DESIGNATION
1)
Mr. CM Vasudev
Chairman
2)
Managing Director
3)
TABLE 4
1.9 SOURCES OF DATA COLLECTION
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I took data comprise of annual reports and earlier records. Bank has provided me annual
reports from by help of which, I prepared my report. The valuable cooperation extended
by staff members contributed a lot to fulfill the requirements in the collection of data in
order to complete the project. Various statistical tools are applied depending on the
research problem. In this study ratio analysis has been used for analyzing and interpreting
the result.
A SWOT analysis must first start with defining a desired end state or objective. A SWOT
analysis may be incorporated into the strategic planning model. Strategic Planning has
been the subject of much research.
Strengths: characteristics of the business or team that give it an advantage over others in
the industry.
Weaknesses: are characteristics that place the firm at a disadvantage relative to others.
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2.1.1
STRENGTHS
1.
2.
3.
15
4.
5.
6.
7.
8.
2.1.2
WEAKNESS
1.
2.
3.
4.
5.
2.
3.
4.
5.
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6.
2.2.2 THREATS
1.
2.
3.
4.
5.
6.
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Efficiency of Operations
18
Hire and Fire-This phrase is used in books only. A company cannot hire and then
fire an employee. An employee can be released from his duties either by VRS
opted by himself or as a major penalty.
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The financial statements namely profit and loss a/c and balance sheet, of a business firm
contains substantial and extremely useful information about its financial health. This set
of information may also be useful to the management for judging the business firm from
all perspectives such as:
The firm should be able to pay short-term maturing obligations as well as and when
they become due.
It should make available a satisfactory rate of return on investments made by
shareholders.
Above all, management should ensure that organization is profitable.
Financial Performance:
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There are numerous measures that need to be applied and that lead to achievement of the
objective i.e. the posting of a profit. This means that financial performance is a part of
performance management. The primary goal of financial reporting and analysis is to
provide information that is useful to the internal and external users of this information.
Internal users of financial information are people who control the resources of the
operation, or the decision makers. External users are people who do not directly control
the resources of the operation. These would include bankers, accountants, the Internal
Revenue Service, and possibly stockholders. A financial performance measurement
system should provide with tools and metric to understand financial situation.
This information can be used for making better business decisions in a number of
areas including:
Business profitability
Pricing
Budgeting
Cost accounting
Capital purchasing
Strategic planning
Incentive compensation etc.
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Financial statement analysis is the most objective way to evaluate the financial
performance of a company. Financial analysis involves assessing the leverage,
profitability, operational efficiency and solvency for a company. Financial ratios are the
principle tool used to conduct the analysis. The challenge is to know which ratios to
choose from and how to interpret the result.
People interested in evaluation of financial performance:
Lenders
Banks/ Financial Institutions
Potential Investors
Managers ( Internal Analysts)
Financial performance measurement by:
1. Ratio Analysis:
Most popular and commonly used financial performance measure is Ratios Analysis. It
helps in estimating financial soundness or weakness. Ratio is quantitative relationship
between two items for the purpose of comparison. The items presented in profit and loss
account and balance sheet are related to each other. This relationship can be calculated
with the help of ratios. For example, profit is related to capital invested in business and
debtors are related to credit sales. Thus ratio helps in drawing meaningful conclusions by
establishing relationship between various facts. On the basis of their interpretation,
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unfavourable situations in the future can be avoided. Hence comparative and significant
conclusions cannot be drawn from financial data of different years of a business or of
different businesses unless arithmetic relationship is established among such data.
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2. Investments
Investment is putting money into something with the expectation of gain that upon
thorough analysis, has a high degree of security of principle, as well as security of return,
within an expected period of time. It has decreased from 724,558,371 to 371,464,385 .
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3. Loans
Loans has increased from 177,506,396 to 180,964,971 this shows that the company is
expanding, which is good for policy holders, shareholders and the members of the
company.
4. Fixed Assets
Fixed Assets has decreased from 51268897 to 48229933.
5. Current Assets
Current Assets has increased from 1,061,423,350 to 1,894,520,238.
6. Current Liabilities
Current Assets has increased from 165,763,129 to 215,407,017.
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RATIO ANALYSIS:
LIQUIDITY RATIO:
1. Current Ratio:
Current Ratio = Current Assets/Current Liabilities
Current Assets include Cash in hand, Cash at Bank, Sundry Debtors, Bills Receivable,
Stock of Goods, Short-term Investments, Prepaid Expenses, Accrued Incomes etc.
Current Liabilities include Sundry Creditors, Bills Payable, Bank Overdraft, Outstanding
Expenses etc. Current ratio shows the short-term financial position of the business. This
ratio measures the ability of the business to pay its current liabilities. The ideal current
ratio is supposed to be 2:1 i.e. current assets must be twice the current liabilities. In case,
this ratio is less than 2:1, the short-term financial position is not supposed to be very
sound and in case, it is more than 2:1, it indicates idleness of working capital.
CURRENT RATIO
MAR09-10
2442803185/548282947 4.455:1
MAR08-09
1506986533/445563183 3.382:1
TABLE 5
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5
4
3
MAR08-09
MAR09-10
1
0
year
FIGURE 1
Since Ideal Current Ratio is 2:1, Current Ratio has been improved from 2009, i.e.
from 3.382:1 to 4.455:1
SOLVENCY RATIOS:
2 .Debt-Equity Ratio
Debt-Equity Ratio= Debts (long term loans)/Equity(shares fund)
Debts: Debentures, mortgage loans, bank loans, public deposits, bonds
Equity: Equity share capital, preference share capital, reserves and surplus, securities
premium, general reserve.
DEBT-EQUITY RATIO
MAR09-10
180964971/2324554402 0.077:1
MAR08-09
177506396/1846605159 0.096:1
TABLE 6
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0.1
0.08
0.06
MAR08-09
0.04
MAR09-10
0.02
0
year
FIGURE 2
The Debt/Equity ratio is certainly far from perfect. A high ratio of 0.077 in 2010
means that the company is exposing itself to a large amount of equity. This is
certainly better than a high ratio or more since this would expose the company to risk
such as interest rate increases and creditor nervousness. One way to improve their
situation would be to issue more debt and use the cash to buy-back some of its
outstanding shares.
3 .Total Assets to Debt Ratio
Total Assets to Debt ratio=Total Assets/Debts
Total assets: Current assets, fixed assets, Investments
Debts: Debentures, mortgage loans, bank loans, public deposits, bonds
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TOTAL
ASSETS
MAR09-10
2442803185+371464355+48229933/180964971
1.581:1
TO MAR08-09
1506986533+724558371+51268897/177506396
1.286:1
DEBT RATIO
TABLE 7
2
1.5
MAR08-09
MAR09-10
0.5
0
year
FIGURE 3
The objective of this ratio is to measure the safety margin available to providers of long
term debts. A higher the ratio represents higher security to lenders. On the other hand, a
low ratio represents risky financial position. Since the ratio has increased from 1.286 to
1.581 this shows a high security to its lenders.
4. Proprietary Ratio
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PROPRIETARY RATIO
MAR09-10
2324554402/2862497473 0.812:1
MAR08-09
1846605159/2282813801 0.808:1
TABLE 8
0.812
0.811
0.81
0.809
MAR08-09
0.808
MAR09-10
0.807
0.806
year
FIGURE 4
Since the ratio or the share of shareholders in the total capital of the company is higher
than 2009 i.e. it has increased from 0.808 to 0.812 in 2010. This shows a better long-term
solvency position of the company. This ratio throws light on the general financial strength
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of the company. It is also regarded as a test of the soundness of the capital structure.
Higher the ratio or the share of shareholders in the total capital of the company better is
the long-term solvency position of the company. A low proprietary ratio will include
greater risk to the creditors.
PROFITABILITY RATIOS:
5. Return on Investment
The prime objective of making investments in any business is to obtain satisfactory return
on capital invested. Hence, the return on capital employed is used as a measure of success
of a business in realizing this objective. Return on Investment establishes the relationship
between the profit and the capital employed. It indicates the percentage of return on
capital employed in the business and it can be used to show the overall profitability and
efficiency of the business.
ROI: Profit before interest, tax and dividend / capital employed X 100
Capital employed = Fixed assets + Investments + Working capital
RETURN ON
MAR09-10
INVESTMENT
1138456226/2314214526 46.98%
X 100
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MAR08-09
974117109/1837250618
53.02%
X 100
TABLE 9
RETURN ON INVESTMENT
FIGURE 5
Return on Investment is considered to be the best measure of profitability in order to
assess the overall performance of the business. It indicates how well the management has
used the investment made by owners and creditors into the business. It is commonly used
as a basis for various managerial decisions.
As the primary objective of business is to earn profit, higher the return on capital
employed, the more efficient the firm is in using its funds. HDFC is not working
efficiently as the ROI has decreased from 53.02 to 49.19.
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MAR09-10
5467446/5000000
150.65
MAR08-09
689491328-
125.07
64093298/5000000
TABLE 10
FIGURE 6
The earnings per share is a good measure of profitability and when compared with EPS
of similar companies, it gives a view of the comparative earnings or earnings power of
the firm. EPS ratio calculated for a number of years indicates whether or not the earning
power of the company has increased.
4.1 WORKING ENVIRONMENT
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Appropriate time for break is given so that with lunch some rest can also be taken
by the employees.
There is strict discipline regarding working hours in the company which reaps
employee turnover.
Good working conditions are provided to the employees so that employee can
perform their task efficiently.
With this summer training lot information in the field of Banking is now known to
me.
During my summer training I have observed that hard work & zeal to work is
very much needed to be on the top in a as there is very high competition in this
field.
With this summer training lot of information in the field of Marketing and
different production techniques are now known to me.
This company is utilizing the talents of its employees in a very efficient manner as
every person has been assigned different tasks to perform. This makes the work of
the company in a very efficient way.
Working time in the company is strictly followed with which employees are also
satisfied.
The employees of the organization were preoccupied with their routine work
hence I had to ask them repeatedly for my queries.
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As it was my first ever experience in any of the organization so it was difficult for
me to adapt the working conditions prevailing there.
There was no training module in the organization for the new trainees like us
which could have helped us in easy and early learning.
Working under the Marketing field was difficult as the pressure to perform was
high.
There was a lack of time to expose, learn and analyze the environment fully as
well as to complete the project.
4.4 SUGGESTIONS/RECOMMENDATIONS
Students should be sent for summer training in companies because of the following
reasons:-
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I got a good exposure about what really the corporate life is about.
It helps in gaining knowledge about the organization and its working conditions a
helps and policies.
It helps in dealing with both the clients and the employees of the organization.
Helps individual in ensuring focus on customer with emphasis on customerservice attitude and behavior throughout the organization.
Capacity to deal with routine and abstract work process in the organization.
CONCLUSION
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The leadership process involves in influencing the individual and group behavior toward
achievement of HDFC bank goals. It is concerned with traits, philosophy and behavior of
the leaders the leader, the characteristics of subordinates and the superior.
It is obvious that HRD is a major component of the broad managerial function and has
roots and branches extending throughout and beyond HDFC bank. It is a major subsystem of organizations which are inter-related and inter-dependent. Every personnel
managers responsibilities include planning for people, organizing people, staffing with
people, directing people, gaining the commitment, internet and effect of people and
applying controls to people.
Internal sources are the most obvious sources. These include personnel already on the
pay-roll of HDFC Bank i.e. its present working force whenever any vacancy occurs.
Somebody from within the organization is upgraded, transferred promoted or sometimes
demoted. This source also include personnel who were once on the pay-roll of the
company but who plan to change in the quality of production, fluctuations in work
requirements, and changes in the organizational structure, the introduction of new lines or
reduction in the workforce due to a shortage or a surplus in same section so that lay offs
may be avoided, fillings in off the vacancies which may occur because of separations or
because of the need for suitable adjustments in business operations such transfers are
known as production transfers, flexibility transfers or organizational transfers. The
purpose of such transfers is the stabilize employment in an organizations. They are
generally controlled centrally through and by the personnel department.
It was found out during the study that the following causes hampered the growth of the
banking sector. These causes need to be addressed properly as that the remedial measures
40
adopted prone effective and actually succeed in improving the functioning of these banks.
Unrealistic assumptions have been behind plans and projections made in respect of
critical aspects of the banks operations such as seduction of NPAs, recovery, creation of
fresh NPAs, generation of non-interest income, etc. under most of these heads the
performance of the banks has been wide off the projections made.
Inspite of their weak bank image, these banks are able to garner deposits obviously
because of government ownership, deposit insurance and the public perception that
government support would always be available. Investments are replacing advances,
particularly remunerative advances and income from non-fund based business is not
growing or is growing very marginally. The capability of these banks to do full range
banking already has been happenings. It is obvious that HRD is a major component of the
broad managerial.
REFERENCES/BIBLIOGRAPHY
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Banking : The Network is the bank, by Yogesh Sharma, Dataquest, January 31,
2006
Race will end in survival of the fittest, The Financial Express, November 29,
2006.
RBI road map for banking, The Indian Express, July 21, 2007.
www.hdfcbank.com
www.hdfc.com
https://netbanking.hdfcbank.com
www.moneycontrol.com
APPENDICES
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43
44
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