RAJA PANDAfinancial Statement Analysis of HDFC Bank

FINANCIAL PERFORMANCE ANALYSIS OF HDFC BANK

CHAPTER-1
INTRODUCTION

RAJA PANDA 1 UG2130COM236

1. INTRODUCTION
1.1 BACKGROUND OF THE STUDY
BANKING IN INDIA
Without a sound and effective banking system in India it cannot have a healthy economy.
The Banking system of India should not only be hassle free but it should be able to meet
new Challenges posed by the technology and any other external and internal factors. For
the past three decades India's banking system has several outstanding achievements to its
credit. The most striking is its extensive reach. It is no longer confined to only
metropolitans or cosmopolitans in India. In fact, Indian banking system has reached even
to the remote corners of the country. This is one of the main reasons of India's growth
process.
HISTORY:
The first bank in India, though conservative, was established in 1786. From 1786 till
today, the Journey of Indian Banking System can be segregated into three distinct phases.
They are as Mentioned below:
PHASE I - Early phase from 1786 to 1969 of Indian Banks
PHASE II - Nationalization of Indian Banks and up to 1991
PHASE III - Indian Financial & Banking Sector Reforms after 1991.
PHASE I:
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan
and Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency
Banks. These three banks were amalgamated in 1920 and Imperial Bank of India was
established which started as private shareholders banks, mostly Europeans shareholders.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913and 1948. There were approximately 1100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No.23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority. During those days public had lesser confidence in the banks.
As an aftermath deposit mobilization was slow. On top of it the savings bank facility
provided by the Postal department was comparatively safer. Moreover, funds were largely
given to the traders.
PHASE II:
Government took major steps in this Indian Banking Sector Reform after independence.
In 1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. Second phase of nationalization, Indian
Banking Sector Reform was carried out in 1980 with seven more banks. This step brought
80% of the banking segment in India under Government ownership. The following are the
steps taken by the Government of India to Regulate Banking Institutions in theCountry:
➢ 1949: Enactment of Banking Regulation Act.

➢ 1955: Nationalization of State Bank of India.
➢ 1959: Nationalization of SBI subsidiaries.
➢ 1961: Insurance cover extended to deposits.
➢ 1969: Nationalization of 14 major banks.
➢ 1971: Creation of credit guarantee corporation.
➢ 1975: Creation of regional rural banks.
➢ 1980: Nationalization of seven banks with deposits over 200 crores.

After the nationalization of banks, the branches of the public sector bank India raised to
approximately 800% in deposits and advances took a huge jump by 11,000%. Banking in
the sunshine of Government ownership gave the public implicit faith and immense
confidence about the sustainability of these institutions.
PHASE III
This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimha, a committee was set
up by his name which worked for the liberalization of banking practices. The country is
flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The
entire System became more convenient and swift. The financial system of India has shown
a great deal of resilience. It is sheltered from any crisis triggered by any external
macroeconomics shock as other East Asian Countries suffered. This is all due to a flexible
exchange rate regime, the foreign reserves are high, the capital account is not yet fully
convertible, and banks and their customers have limited foreign exchange exposure.
CURRENT SCENARIO
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised
and well-regulated. The financial and economic conditions in the country are far superior
to any other country in the world. Credit, market and liquidity risk studies suggest that
Indian banks are generally resilient and have withstood the global downturn well. The
Indian banking industry has recently witnessed the rollout of innovative banking models
like payments and small finance banks. In recent years India has also focused on
increasing its banking sector reach, through various schemes like the Pradhan Mantri
Jan Dhan Yojana and Post payment banks. Schemes like these coupled with major
banking sector reforms like digital payments, neo-banking, a rise of Indian NBFCs and
fintech have significantly enhanced India’s financial inclusion and helped fuel the credit

cycle in the country. Indian Fintech industry is estimated to be at US$ 150 billion by
2025. India has the 3rd largest FinTech ecosystem globally. India is one of the fastest-
growing Fintech markets in the world. There are currently more than 2,000 DPIIT-
recognized Financial Technology (FinTech) businesses in India, and this number is
rapidly increasing. The digital payments system in India has evolved the most among 25
countries with India’s Immediate Payment Service (IMPS) being the only system at level
five in the Faster Payments Innovation Index (FPII).* India’s Unified Payments Interface
(UPI) has also revolutionized real-time payments and strived to increase its global reach
in recent years.
1.2 STATEMENT OF THE PROBLEM

The title of the project is “Financial statement Analysis of HDFC Bank”. Therefore, a
study of liquidity, profitability, leverage, turnover, operational efficiency, market based
and their association with risk, and assessing the financial position is very much
necessary to evaluate the financial strength of the banking institution and to have
knowledge about accounting ratios, analysis and its interpretation. It helps to analyse the
financial performance of the concerned Bank.
1.3 RELEVANCE & SCOPE OF THE STUDY

The study will be limited to the financial statements of the particular bank. The study is
based on the financial reports of the HDFC bank for the period of 5 years from 2018-19 to
2022-23. It includes liquidity, profitability, leverage, turnover and market-based ratio
performance of the Bank. The present study does not cover the human resource practices
employee performance, performance of mutual funds in the Indian stock market and the
likes of it. The study was carried out for a period of one month commencing from 1st may
2021 to 30th may 2021.

1.4 OBJECTIVE OF THE STUDY

 To study all the financial statement for the past five years and to identify the
changes inthe various items present in them.
 To examine the impact of the changes in the financial statement on the financial
positionand profitability of the board.
 preparation of comparative statement to know the changes in absolute figures as
well aspercentage.
 To know the liquidity ratio, solvency ratio, general profitability ratio, turnover ratio
and overall profitability ratio in order to ascertain financial significance of the
figures contained in the financial statement by establishing relationship between
them.
 To analyse the financial statement of the corporation to it’s true financial position
by useof ratio.
1.5 LIMITATION OF THE STUDY

Limitation faced during the preparation of this project report on financial statement
analysis of HDFC bank as follows :-
 This study may not be extensive enough to cover all the ratios to be considered in
evaluating the financial soundness of the bank accurately.
 The information collected through the secondary data. some of the information
might bewrong.
 The report is based on the analysis of past five years data, which may not be
sufficient insome case.
 Lack of practical knowledge about conducting the research.

CHAPTER-2
REVIEW OF LITERATURE

2. REVIEW OF THE LITERATURE

2.1 CONCEPTUAL REVIEW
 Financial analysis is the process of identifying the financial strength and weakness
of the phone buy property establishment relationship between the items of balance
sheet and the profit and loss account.
 The firm’s financial analysis means the analysis and interpretation of financial
statement.
 A financial statement is a collection of data organized according to the logical and

consistent accounting procedures.
 It’s a process to convey and understanding of some financial aspects of business

firm.
 It may show a position at moment in time, as in the case of balance sheet or may
reveal a series of activities over a given period of time, as in the case of income
statement.
Thus financial statement generally refers to the two statements.
1. The position statement or balance sheet
2. The income statement or profit and loss account
These statements are used to convey to management and other investment outsiders the
profitability and financial position of a firm. The purpose of financial analysis is to
diagnose the information contained in financial statement.
Financial statement analysis is an attempt to determine the significant and meaning of the
financial statement data, so that forecast may be made of the future earningsability to pay
interest and debt maturities .
Tools or Techniques of Financial Statements
 Comparative financial statement

 Ratio analysis
2.1.1 Comparative financial statement

 A Comparative balance sheet analysis is a simple way of comparing the data on two
or more balance sheet that have different dates. We can compare several balance
sheets from a bank, each of which has the same data but on different months or
different years.
 For example, we can analyse the month-end totals for each month in a year or year-
end totals over several years to chart market trends and how this affects your
company’s growth.
 A comparative balance sheet analysis is a method of analysing a company’s balance

sheet over time to identify changes and trends.
 Public companies are required to include the information needed for a comparative
balance sheet analysis in their quarterly and annual reports to the SEC, though it
can be useful to pull together more data on its’ own for a longer- term analysis.
 Comparative balance sheet is a balance sheet which provides financialfigures of

Assets, Liability and equity for the “ two or more periods of the same company” or
“ two or more than two company of same industry” or “two or more subsidiaries of
same company” at the same page format so that this can be easily understandable
and easy to analyse.
2.1.2 Ratio Analysis
 Ratio analysis is a widely used Technique of analysing financial statements. An

analysis of financial statements with the help of ratios is termed as ratio analysis

 It is a systematic use of accounting ratios to interpret the financial statements for

studying the financial position and performance of an enterprise.
 Ratio analysis was perhaps the financial tools developed to analysis and interpret
the financial statement and is still used widely for this purpose.
 Ratio analysis is defined as the systematic use of accounting ratios on order to
weigh and performance of the f irm.
 It is the process of determining and interpreting various ratios for helping in certain
decisions.
 Meaning and nature of ratio analysis is simply one number expressed in terms of
another number.
 It refers to numerical relationship between two figures.
 It is obtained by one figure by the other.
 According ratios are the relationship in mathematical terms between two related
figures in the financial statements, eg: ratio between current asset and current
liabilities.
2.1.3 Classification of Ratios
Accounting ratio can be classified in several in several ways in general; accounting ratios
may be classified on the following basis :
2.1.3.1 Liquidity Ratio
2.1.3.2 Leverage Ratio
2.1.3.3 Activity Ratio
2.1.3.4 Profitability Ratio
2.1.3.5 Market Test Ratio

2.1.3.1 Liquidity Ratio

 The term liquidity refers to the firm’s ability to pay its current liabilities out of its
current assets.
 Liquidity ratios are used to measure the liquidity position or short term debt paying
ability of a firm.
 These ratios are highly useful to creditors and commercial banks that provide short
term credit.
 Important liquidity ratios are:
1. Current Ratio
 Current ratio is defined as the ratio of current assets to current liabilities.
 It shows the relationship between total current assets and total current liabilities.
 It is the measure of firm’s short term solvency.
 That is, its ability to meet short-term obligations. In sound business a current ratio
of 2:1 is considered as an ideal one.
Current ratio = Current assets

Current liabilities
2. Absolute liquid ratio or cash ratio

 Cash ratio of absolute liquid ratio shows the relationship between cash and current
liabilities.
 Absolute liquid asset includes cash in hand and cash at bank and marketable
securities are temporary investments.
 The acceptable norms for this ratio is 0.75:1
Absolute Liquid ratio = Cash and Bank+Short term securities

Current Liabilities
3. Liquid ratio or quick ratio

 Liquid ratio is the ratio of liquid assets to current liabilities. It establishes the
relationship between quick Assets and current liabilities

 It is a measure of instant debt paying ability of the business enterprise.

 It is also called acid test ratio.
 An acid test ratio of 1:1 is considered to be satisfactory as a firm can easily meet all
its current liabilities.
 Inventory are considered to be less liquid. It is computed as follows;
Liquid ratio = Liquid assets

Current liabilities
2.1.3.2 Leverage Ratio
 The term solvency means the ability of a firm to meet its long-term obligations.
 The long-term creditors of firms are primary interested in knowing firms ability to
pay interest on long term borrowings, repayment of principle amount of maturity etc.
These ratios are described as follows
1. Debt equity ratio
 It shows the relationship between total debt and owned debt. It is the ratio of the
amount invested by the shareholders.
 This ratio reflects the relative claim of shareholders and creditors against the assets
of the company.
Debt equity ratio= Debt

Equity
2. Fixed assets to net worth ratio
 It measures the percentage of fixed assets to network.

 This ratio helps to analysis the long-term solvency of the firm
Fixed assets to net worth ratio= Fixed Asset

Shareholders Fund

3. 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 the shareholders in the
total assets of the firm.
 Proprietary ratio is also known as equity ratio or net- worth ratio.
It is computed as:
Proprietary ratio = Shareholders fund

Total asset
4. Solvency ratio
 This ratio expresses the relationship between total Assets and total liabilities of a
business.
 It measures the solvency of the business.
 This ratio is known as solvencyratio.
 This ratio is generally expressed as a proportion.
The following formula is used for computing solvency and ratio.
Solvency Ratio = Total assets

Total Debt
5. Fixed Asset Ratio
 It is the ratio of fixed assets to long-term funds or capital employed.
Fixed Asset Ratio = Fixed asset (after depreciation)

Long term funds

2.1.3.3 Activity Ratio

 These ratio indicate efficiency in Asset Management.
 These ratios are also known as efficiency ratios or performance ratios of assets
utilization ratios. The ratio indicates the cash elasticity of current assets.
 This ratio indicates the speed with which the resources are turned over or converted
into cash.
 These ratios are also known as turnover ratios.
 It should be noted that turnover ratios are always expressed in number of times, i.e.,
rate of turning over. Important activity or turnover ratios are discussed as follows:
1. Inventory Turnover Ratio
 Inventory or stock turnover ratio shows the relationship between cost of goods sold
and average inventory on stock. It is also called merchandise turnover ratio.
 It is obtained by dividing cost of goods sold by average stock. Stock turnover ratio
iscomputed by the following formula:
Inventory Turnover Ratio = Cost of Goods sold

Average Stock
2. Debtors turnover ratio
 Debtors’ turnover ratio explain the relationship between net credit sales and average
debtors including bills receivable.
 This ratio shows how quickly debtors are realized or converted into cash. It is also
known as receivables turnover ratio.
 The following formula used for calculating debtors turnover ratio:
Debtors turnover ratio = Net Credit sales Average

debtors including B/R

3. Creditors turnover ratio

 It shows the relationship between net credit purchase and average creditors
including bills payable.
 This ratio indicates the number of times the creditors are paid.
 It is also called payable turnover ratio, it is computed by the following formula:
Creditors turnover ratio = Net credit purchase

Average creditors including B/P
4. Working capital turnover ratio
 Current asset will change with change in sales. This means working capital is related
with States.
 The relation between sales and working capital is called working capital turnover
ratio.
 This ratio shows how many times the working capital is turned over to produce sales.
 Working capital turnover ratio is computed by the following formula :
Working capital turnover ratio = Net Sales

Working capital
5. Fixed asset turnover ratio
 For knowing whether fixed asset or effectively utilized or not, fixed asset turnover
ratio is used.
 It measures the efficiency with which a firm is utilising it’s fixed assets in producing
sales. It is computed as follows:
Fixed asset turnover ratio = Net sales

Net fixed asset

2.1.3.4 Profitability ratios

 The term profitability refers to the ability of a firm to earn income.
 The profitability of a firm can be easily measured by its profitability ratios.
 Profitability ratios are always based on sales .Important general profitability ratio
are discussed below;
1. Gross profit ratio
 This is the ratio of gross profit to sales expressed as percentage.

 It is also known asgross margin.
 It is calculated as follows:
G/P ratio = Gross profit x100

100 Net profit
2. Operating ratio
 Operating ratio expresses the relationship between operating cost and sales.
 It indicates the overall efficiency in operating the business.
 The formula for computing operating ratio is as follows:
Cost of goods sold+Operating expenses

Operating ratio = x 100
Net sales
3. Operating profit ratio
 Operating profit ratio explain the relationship between operating profit and net
sales.
 It is calculated by the following formula:
Operating profit
Operating profit ratio = x 100
Net sales

4. Net profit ratio

 Net profit ratio is the ratio of net profit earned by a business and its net sales.
 Itmeasures overall profitability.
Net profit
Net profit ratio = x 100
Net sales
5. Return on investment (ROI)
 ROI measures the overall profitability.
 It establishes the relationship betweenprofit or return and investment.
 It is also called the accounting rate of return.
 It is computed as follows:
Net profit before interest and tax

ROI = x 100
Capital employed
6. Return on shareholder’s fund
 This is the ratio of net profit to shareholders fund or net-worth.

 It measures theprofitability from the shareholders point of view.
Net profit after interest and tax

Return on shareholder’s fund = x 100
Capital employed

2.2 THEORITICAL FRAMEWORK INCLUDING LITERATURE
S. Muruganantham and S. K. Nerdish (2021) ‘A study on financial performance

analysis of HDFC Ltd ’analyzed financial performance through ratio analysis and
examined the financial position with the use of different ratios. The objectives of the study
are to study the growth aspect of HDFC bank and measure its financial results. The study
has been made on various aspects of the bank like interest, loans, assets, expenses,
deposits, etc. The findings of the study reveals that the bank has minority issues in
managing the deposits and all aspects are going well.
Khan and Jain (2011) have defined the analysis of Financial Statements as a process of
evaluating the relationship between parts of financial statements to obtain a better
understanding of the firm’s position and its performance. There are two broad
approaches used to measure Bank performance, the Accounting Approach, which makes
use of financial ratios and secondly Econometric Techniques. Traditionally, Accounting
Methods are largely based on the use of financial ratios, which have been employed for
assessing Bank performance (Ncube, 2009).
Nandhini Thakur (2020), ‘The study is conducted on financial statement analysis of

HDFC Bank with the time period of 2013-14 to 2017-18. Tools used in this study was
ratio analysis, cash and fund flow analysis trend analysis. 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.’
K. C. Sharma (2007) Banking has entered the electronic era. This has been due to

reforms introduced under the WTO compliances. Private sector banks have been
permitted to open their shops in the country. These banks are either foreign or domestic
banks with foreign partnerships. Some of them have been set up by Development
Financial Institutions in order to embrace concept of universal banking, as practiced in
advanced countries. The private sector on the other hand have began their high tech
operations from the initial stage and made the late of the country to taste the best banking
practices that happens in the western countries. They have foreseen the digital world and
have seen the emerging electronic market, which has encouraged them to have a better
customer service strategy that would be able to deliver the things as per customer’s
requirement.
Hr Michigan international publishers (2009): Efficiency can be considered from

technical, economical or empirical considerations. Technical efficiency implies increase
in output. In the case of banks defining inputs and output is difficult and hence certain
ratios of costs to assets or operating revenues are used to measure banks efficiency. In
the Indian context public sector banks accounts for a major portion of banking assets, it is
necessary to evaluate the financial decisions of these banks and compare them with
private sector banks to know the quality of financial decisions.
Jindal and Hasrat's empirical study titled "Customer Awareness and Preferences for
HDFC Bank's Digital Banking" highlights how changing consumer habits and a
competitive market are compelling banks to upgrade their technology on a daily basis to
maintain profitability. As a result, the banking industry is increasingly focused on rapidly
upgrading its products and services to keep up with market transformations. While banks
are not typically known for their agility, the industry has introduced innovative methods
of banking to make it as hassle-free as possible and stay competitive.

Rajgopal Subashini and Velmurugan Gopalasamy (2016) elucidated the

notion of customer satisfaction within the banking industry. With private and public
banks playing a pivotal role in providing a plethora of intermediate banking services to
both rural and urban customers, maintaining customer loyalty and retention has become
crucial. However, the study observed that some banks neglect the significance of their
clients.
Trends and Progress Made By Indian Banks in Adoption of Technology: A case studyof
HDFC Bank. This study examines the progress and trends of Indian banks in embracing
technology, given the increasing reliance on technological advancements.
Several parameters, such as the deployment of Automated Teller Machines, the issuance
of Debit and Credit Cards, as well as the use of NEFT, RTGS, and mobile banking for
outward debits and inward credits have been analyzed. (Dr. Katoch Rupinder 11 oct
2019).
Nirmaljeet Virk and Prabhjot Kaur Mahal (2012) investigated customer satisfaction in
both public and private banks in India. The study found that private bank managers
establish stronger personal relationships with their customers compared to public bank
managers. This factor significantly impacts customer satisfaction levels.

CHAPTER – 3
INDUSTRY PROFILE

3. INDUSTRY PROFILE
The finance department is the saviour of any frontier economy. It is one of the key
monetary related pillars of the monetary component, and it bears the basic work in
economic operations. For a country's monetary improvement, it is vital that its exchange,
industrial and agricultural financing needs are subject to higher obligations and
obligations. Therefore, the improvement of a country is bound to be related to the
development of the banking industry. In the frontier economy, banks should not be seen as
cash merchants, but should be seen as pioneers of progress. They hold important
positions in the assembly of stores and the payment of credit to different economic
sectors. The financial framework reflects the country's monetary stability. The quality of
the economy depends on the quality and effectiveness of the monetary framework, so the
monetary framework relies on a sound and solvable financial framework. A good
financial framework can effectively pool a favourable portion of the reserve fund and a
solvable financial framework to ensure that the bank can fulfill its commitment to
investors. In India, banks are firmly grasping the country’s financial progress after
autonomy. The finance department is dominant in India because it represents the benefits
of the budget department. The rapid changes that Indian banks have achieved through
partial changes in the budget have gone through an impressive phase, and these changes
are gradually being realized.
3.1 COMPANY PROFILE

HDFC Bank Limited (Housing Development Finance Corporation) was incorporated in
August 1994 with its registered office in Mumbai, India. HDFC Bank commenced
operation as a scheduled commercial bank in January 1995. HDFC was amongst the first
to receive an approved from the Reserve Bank of India (RBI) to set up a bank in the
private sector. HDFC Bank comprises of dynamic and enthusiastic term determined to
accomplish the vision of becoming a World-class Indian Bank. The Bank has two
subsidiary companies namely HDFC securities Ltd and HDFC financial
services Ltd. The bank deals with three major key business segments namely retail
banking services, wholesale banking services and treasury operation. The retail banking
segment serves retail customers through a branch network and other delivery channels.
These segments raise deposits from customers and makes loans and provides other
services with the help of specialist product groups to such customers. The wholesale
banking segment provide loans on non-fund facilities and transactions services to
corporate public sector units, government bodies, financial institutions, and medium
scale enterprises. The treasury segment includes net interest earnings on investments
portfolio of the Bank. The Banks’ share is listed on the Bombay Stock Exchange Ltd. and the
National Stock Exchange of India Ltd. HDFC Bank was listed on the Bombay Stock
Exchange on 19 may 1995. The Bank was listed on the National Stock Exchange on 8
November 1995.
(HDFC Bank Headquarter, Mumbai )
As of January 31, 2024, the Bank’s distribution network was at 8,143 branches and 20,688
ATMs / Cash Recycler Machine (Cash deposit & withdrawal) across 3,836 cities /towns.

HDFC Ltd.’s distribution network comprising

737 outlets, which include 214 offices of
HDFC Sales Private Limited stands
amalgamated into the Bank’s network. The
Bank’s international presence includes
branches in 4 countries and 3 representative
offices in Dubai, London and Singapore
offering Home Loan products to Non-Resident Indians and Persons of Indian Origin.
HDFC Bank provides a number of products and services including wholesale banking,
treasury, auto loans, two-wheeler loans, credit cards and the various digital products.
The total number of customers the bank created to as on 1st June 2023 was around 120
million previous year.
In odisha, HDFC Bank was established on 2001, with its registered office in
Mumbai. There are around 175 branches in odisha, spread across the state. Out of which,
thereare 6 branches in berhampur.

HDFC Bank Limited
Company Public
type
Traded as  NSE: HDFCBANK

 BSE: 500180
 NYSE: HDB (ADS)
 BSE SENSEX Constituent
 NSE NIFTY 50 Constituent
ISIN INE040A01034
Industry Financial services
Founded August 1994 (29 years ago)
Headquarters Mumbai, Maharashtra

,
India
Area served India
Key people  Atanu Chakraborty

(Chairman)[1]
 Sashidhar Jagdishan
(CEO)
Products  Consumer banking

 Commercial banking
 Insurance
 Credit cards
 Investment banking
 Mortgage loans
 Private banking
 Private equity
 Investment management
 Asset management
 Mutual funds
 Exchange-traded funds
 Index funds
 Wealth management[2]
 Stockbroking
 Risk management
Revenue ₹2.05 lakh crore (US$26 billion)[3] (2023)
Operating ₹615 billion (US$7.7 billion)[3] (2023)

income
Net income ₹459.97 billion (US$5.8 billion)[3] (2023)
Total assets ₹25.3 lakh crore (US$320 billion)[4] (2023)
Total equity ₹2.85 lakh crore (US$36 billion)[4] (2023)
Number of 177,000 (1 July 2023)[5]

employees
Subsidiaries HDFC Life

HDFC ERGO
HDFC Securities[6]
HDFC Asset Management Company
HDFC Mutual Fund
HDB Financial Services[7]
HDFC Credila Financial Services
Website www.hdfcbank.com
Nos. Shareholders (as of Shareholding

30 September 2023)
1 Promoter group (HDFC) 0%
2 Foreign institutional investor (FII) 52.13%
3 Individual shareholders 13.66%
4
Domestic Institutional Investors 30.6%
Mutual fund
19.71%
Insurance companies
(Including LIC) 8.74%
5 NPS (HDFC Pension Management 1.50%

Scheme)
6 Central/State government 0.001%

3.2 MISSION
 Client services & products revolution tuned to varied personal needs andcorporate
patrons.
 Continuous Expertise upgradation while upholding human values.

 Progressive globalization and attaining worldwide standard.
 Competence and Usefulness built on moral practices.

 Shopper satisfaction through providing eminence service effectually andefficiently.
VISION STATEMENT OF THE HDFC BANK

The HDFC bank is committed to maintain the highest level of ethical standard ,
professional integrity and regulatory compliance. HDFC bank business philosophy is
based on four core values :-
 Operational excellence
 Customer focus
 Product leadership
 People
The objective of the HDFC bank is to provide its target market customer a full range of
financial product and banking service, giving the customer a one-step window for all
his/her requirement. The HDFC bank plus and the investment advisory service programs
have been designed keeping in mind needs of customers who seeks distinct financial
solutions, information and advice investment avenues.
CORE VALUES
The core values that echo across the guiding principle and conclusion of the Bank consist
of:
 User Centered
 Conscience
 Unambiguousness
 Solidarity
 Proprietorship

3.3 MARKET DEMAND AND SUPPLY – CONTRIBUTION TO

GDP- REVENUE GENERATION.
As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalized
and well-regulated. The financial and economic conditions in the country are far superior
to any other country in the world. Credit, market and liquidity risk studies suggest that
Indian banks are generally resilient and have withstood the global downturn well. Indian
banking industry has recently witnessed the roll out of innovative banking models like
payments and small finance banks. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry. The digital payments system in India has
evolved the most among 25 countries with India’s Immediate Payment Service (IMPS)
being the only system at level five in the Faster Payments Innovation Index (FPII).
3.3.1 MARKET SIZE

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 44
foreign banks, 43 regional rural banks, 1,484 urban cooperative banks and 96,000 rural
cooperative banks in addition to cooperative credit institutions. As of November 2020, the
total number of ATMs in India increased to 209,282. According to RBI, India’s foreign
exchange reserves reached US$ 590.18 billion, as of February 5, 2021. According to RBI
, bank credit and deposits stood at Rs. 106.40 trillion (US$ 1.45 trillion) and Rs. 146.24
trillion (US$ 2.00 trillion), respectively, as of January 15, 2021. Credit to non-food
industries stood at Rs. 105.53 trillion (US$ 1.44 trillion), as of January 15, 2021. Asset of
public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion) in FY20. Total
assets across the banking sector (including public, private sector and foreign banks)
increased to US$ 2.52 trillion in FY20. Indian banks are increasingly focusing on
adopting integrated approach to risk management. The NPAs (Non-Performing Assets) of
commercial banks have recorded a recovery of Rs. 400,000 crore (US$ 57.23 billion) in
FY19, which is highest in the last four years. RBI has decided to set up Public Credit

Registry (PCR), an extensive database of credit information, accessible to all

stakeholders. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill
has been passed and is expected to strengthen the banking sector. Total equity funding of
microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion) in 2018-19. As
of January 27, 2021, the number of bank accounts opened under the Government’s
flagship financial inclusion drive Pradhan Mantri Jan Dhan Yojana (PMJDY) reached
41.75 crore and deposits in Jan Dhan bank accounts stood at more than Rs. 1.37 lakh
crore (US$ 18.89 billion). Rising income is expected to enhance the need for banking
services in rural areas, and therefore, drive the growth of the sector. The digital payments
revolution will trigger massive changes in the way credit is disbursed in India. Debit
cards have radically replaced credit cards as the preferred payment mode in India after
demonetization. In January 2021, Unified Payments Interface (UPI) recorded 2.30 billion
transactions worth Rs. 4.31 lakh crore (US$ 59.16 billion).
3.4 PRODUCT/SERVICE PROFILE AND AREA OF OPERATION

HDFC Bank is the first biggest exclusive monetary establishments in India. It offers a
wide scope of budgetary items and administrations to singular clients, huge and mid-
corporates, MSME, Farming and Trade Businesses. It has in excess of 3,510 local offices
and more than 13,940 ATMs the nation over. Bank likewise has abroad branch in
Singapore, Hong Kong, Dubai (at the DFIC), Shanghai and Colombo; delegate
workplaces at Dubai, Abu Dhabi, Dhaka and Sharjah. The item and administrations
palette of it incorporates individual advance, Master cards, training credit, vehicle
advance, business advance, fixed store and that's only the tip of the iceberg. Other items
are:
 wholesale banking
 retail banking
 treasury
 auto-loan

two-wheeler loans
loams against property
consumer durable loan
lifestyle loan
credit
cards digitals
products are:
 Payzapp
 Smart BUY
3.5 COMPETITORS INFORMATION
They are 8 main competitors Bank of HDFC Bank
 State Bank of India (SBI)

 ICICI Bank.
 Axis Bank.
 Kotak Mahindra Bank.
 IndusInd Bank.
 Yes Bank.
 Punjab National Bank.
3.6 SWOT ANALYSIS
3.6.1 HDFC STRENGTHS

1. Comprehensive network of branches
HDFC Bank stands out as India’s second-largest financial institution in private banking.
The bank has up to 6,342 branches and 18,130 ATMs. That empowers the bank to reach a
wider population, which in turn has a positive impact on its annual revenue.
2. Significant player in the banking sector

HDFC Bank ranks as the number one private sector bank by assets in India and
the 16th largest bank by market capitalization. HDFC trades on the Indian stock
exchanges at a market capitalization of 9.04 trillion Rupees
3. Strong presence in retail banking

The bank performs exceptionally well in retail banking. It provides customized services to
individual consumers who get better ways of managing their money, accessing credit,
and securely depositing money.
4. SME finance services

HDFC Bank provides financial solutions to small and medium businesses all over India.
The SME services available include credit cards, working capital, trade services, cards,
loans, accounts, and payments and collections.
3.6.2 HDFC WEAKNESSES

1. Lack of strong rural presence
HDFC Bank has yet to create a strong presence in the rural area, contrary to what its
main competitor ICICI has been doing. This lack of rural dominance means the company
loses important businesses that would have further bolstered its revenue. Currently, the
bank has 1,147 branches in rural areas, compared with 1,312 in urbanareas and 1,843 in
metropolitans
2 Investors’ uncertainty
Investors have remained uncertain about their investment in HDFC Bank for a while
because the bank’s share prices keep fluctuating.
3. Stiff competition from public and private banks

HDFC Bank has to put up with spirited competition from other banks with more
aggressive marketing strategies.

3.6.3 HDFC OPPORTUNITIES

1. Leverage growing corporate banking
HDFC Bank can expand its business by taking advantage of the growing corporate
banking sector. According to India Ratings & Research, banking credit is expected tohave
double-digit growth in the next few years.
Small, medium, and large businesses are expanding at a rapid rate. The bank can use its
positive reputation in corporate banking to attract these customers.
2. Venture into foreign markets

HDFC Bank can start looking beyond its borders. It is something that they can do easily,
considering the bank’s strong financial backing.
3. Debt settlement process

HDFC Bank has gradually improved its bad debt portfolio compared to most government
banks. Putting in place efficient debt settlement processes can further work to its
advantage
4. Digital opportunities
HDFC has been actively integrating technology into its operations. The company has
engaged in digital transformation, which is under three pillars named Digital Factory,
Enterprise Factory, and Enterprise IT. The bank is future-ready to harvest any new
opportunities related to digital banking.
3.6.4HDFC THREATS
1. New-age banking
We are in an era of banking where things have changed from how they used to be done
traditionally. Aspects like online cryptocurrency and online stock trading present
significant threats to HDFC Bank if it does not adapt to the new environment.
2. Restricted growth
HDFC Bank has had a rough time trying to increase its market share due to the spirited
marketing that ICICI has conducted.
3. Increasing competition
Government banks have started becoming more flexible, which makes them more
competitive with private banks like HDFC Bank.
4. Data securities
As more and more client data and software systems are stored in the cloud, cybercriminals
could utilize this vulnerability to organize cyber-attacks. Cybersecurity has become an
important issue in banking. HDFC will need toensure the safety of its IT infrastructures to
avoid harmful breaches.

3.7 CHALLENGES FACED BY THE INDUSTRY

The banking sector is undergoing a radical transformation. The shifts include changing
business models, disruptive technologies, FinTechs, and compliance pressures. The
emergence of non-bank startups, which is also referred to as FinTechs, is altering the
competitive landscape in the banking industry. It has forced traditional institutions to
reorganize the way they conduct business. As information breaches become more
frequent and privacy concerns increase, compliance and regulatory necessities become
more limiting as a result. On top of that, client’s demands have been evolving. Many
consumers seek to be met with round-the-clock personalized services. These financial
problems can be corrected by the very innovation, causing disruption. But, the transition
from a legacy system of offering service to modern solutions has never been an easy task.
CUSTOMER RETENTION
Financial services clients expect meaningful and personalized experiences through
intuitive and straightforward interfaces on any device, anywhere, and at any time. While
customerexperience can be tricky to quantify, client turnover is substantial, and client
loyalty is rapidly becoming an endangered idea. Client loyalty is a product born through
sturdy relationships that start by comprehending the client and their expectations.
Understanding the client and engaging with them appropriately can result in client
satisfaction, therefore, decreasing customer churn. Financial institutions can also use
Bots, which is an effective and efficient technology for delivering superior client services.
Bots can assist in increasing client engagement without incurring costs. Financial
institutions are adjusting to such technologies to improve customer satisfaction.
However, various demands will always arise. However, with helpful information at hand,
the industry will escalate its strategies to retain clients in the coming year.

INCREASING EXPECTATIONS
Today’s clients are savvier, smarter, and more informed. They expect a high degree of
convenience and personalization out of their financial service experience. Altering client
demographics plays a vital role in these heightened expectations. Each new generation of
financial service clients is having a better understanding of technology. As a result, there
is an elevated expectation of digitalized prospects.
A CULTURAL SHIFT
From thermostats that allow you to heat the surrounding to artificial intelligence-enabled
wearables that monitor the user’s health is the technology that has been embedded in our
culture. The same has extended to the banking industry. The digital world has no access
to manual systems and processes. The banking industry needs to figure out innovation-
based resolutions to financial industry problems. Therefore, financial organizations must
promote a culture filled with technology. Innovation is leveraged to optimize the existing
procedures and processes for maximum efficiency.
ALTERING BUSINESS MODELS

The cost that is linked with compliance management is among the numerous financial
service challenges forcing banking institutions to alter the manner they conduct business.
The elevated cost of capital integrated with unrelenting low-interest rates decreased
proprietary trading, and decreasing return on equity are all pressurizing traditional
source’s financial profitability. But, the shareholder prospects remain unwavering. These
factors have forced several institutions to establish new service offerings, seek long-
lasting progress in operational efficiencies, and rationalize business lines to maintain
profits. The failure to keep up with the shifting demands is not an option. This means that
banking institutions have to structure and be equipped to pivot when appropriate.
REGULATORY COMPLIANCE
This is among the most vital financial industry challenges. The dramatic increase in
regulatory fees has steered this. Compliance with various set regulations can
significantly strain financial institutions as they gather resources. Similarly, if banks fail
to comply with the regulations, they are faced with costly consequences. They incur
additional risks and cost for them to remain updated on the latest regulatory changes.
Additionally, they have to oversee the controls that are required to see those
requirements satisfied. Overcoming the regulatory compliance problem requires credit
unions and banks to nurture a culture of compliance within the institution. Technology
can play a crucial role in establishing a culture of compliance.
3.8 STRATEGIC OPTIONS TO COPE WITH THE

CHALLENGES:
Dominant players in the industry have embarked on a series of strategic and tactical
initiatives to sustain leadership. The major initiatives incorporate:
• Focus on ensuring reliable service delivery through Investing on and implementing right
technology.
• Leveraging the branch networks and sales structure to mobilize low-cost current and
savings deposits.
• Making aggressive forays in the retail advances segments of home and personal loans.
• Implementing initiatives involving people, process and technology to reduce the fixed
costs and the cost per transaction.
• Focusing on fee based income to compensate foe squeezed spread
• Innovating products to capture customer 'mind share' to begin with and later the wallet
share.
3.9 KEY DRIVERS OF THE INDUSTRIES

The banking industry is indeed up for major transformation, the process of which has

already begun. As discussing below, there are major aspects that can be the key driving
factors. And, it’s the technology and data that is evident to be at the intersection space of
all these factors
1. DIGITAL TRANSFORMATION
Digital transformation is not the only technological advancement witnessed in the
banking sector. Robotic process automation or RPA in banking is being seen as a major
revolution. Robotic process automation is about the usage of virtual assistants or
software used for addressing repetitive tasks. A virtual assistant here also refers to
programmed robots. Usage of tools of such is going to drive the modern-day and future
banking arena by cutting down the manpower requirements. The best part about RPA in
banking is the way it makes things effective in a much cost-effective fashion. The entire
banking functionality can be structured to be automated in many ways. Interesting here is
to note that the banks have already used it like the replacements of their employees, as it
can interact with through technically enriched user interfaces and can also deal with
optimized applications. Undoubtedly, the future of the banking industry is going to be
greatly revolutionized through RPA.
1. REGULATORY MEASURES
Because modern-day technology is getting more and more data-oriented, setting up fresh
data protection regulation has become imperative for the industries. This is expected to
be somewhat challenging, with the added concerns of streamlining the experiences of the
customers. Emphasis is going to be more towards the interactions involving a nominal
touch. Through the process, it is certainly going to reduce the various kinds of threats
associated with regulatory affairs. At the same time, the optimizations of such can make
the entire system more financially beneficial as well. Customer-oriented platforms thus
are said to be one of the key business drivers in contemporary, as well as the future
banking industry. One thing here can be noted is that technology lies at the core of
all sorts of the transformation of banking procedures.
2. BUSINESS AND REVENUE-BOOSTING MODELS

Personalized banking experience is being given a lot of importance in modern times. This
is one aspect that can be decisive in terms of keeping competitors at bay. The banking
industry outlook is getting more digital technology-oriented. Innovation in digital
technology has enriched customer experience through a high-end user-interface. The
fintech companies are emphasizing preparing roadmaps based on the same technology.
Data management tools and analytics tools are being used and going to be extensively
used to enrich sustainability in the banking sector.The smooth performance and customer
engagement in the banking sectors of modern days are said to be due to the advanced
process optimization. In other words, there is a significant transformation that has
occurred in terms of the operation mode of the global banking sector. The level of
enhancement of core banking like vital models have managed to deliver superior business
goals. In other words, it can be claimed as the prime revenue driver for banks.
Leveraging digital technology in this context, the emphasis is being given towards the
development of up-to-the-minute business scope. Ultimately, a streamlined process helps
deliver a better customer experience — the immediate business scope of such help the
customers or clients in taking immediate business decisions. In short, the idea of
enriching customer engagement through process optimization and the technologies meant
for the same can be the key drivers of the banking industry.
3. CHANGING THE SCENARIO FROM A LENDER’S PERSPECTIVE A

lot has been already discussed regarding the evolution of customer behaviour over time.
At the same time, liabilities of the lenders about the economical challenges of the banks
are going to be the critical factors. The risk factors confronted while deciding whether to
grant or deny loans have been decisive. Functional models of the banks and other
financial institutions have been transformed as well. Scenarios are being tried to be
changed through the introduction of creative ideas like instant payment schemes.

However, there is still no alternative to limiting the occurrences involving greater

financial risks. As per the present scenario, liabilities can be strategically kept under the
carpet. In this context, it is considered essential for the lenders to come up with their
modes for greater assessment of probable threats. Specifically, proper analysis is
required when it comes to high-value financial payments.
4. CLOUD COMPUTING
The impact and acceptance of cloud computing in the banking industry are very much
evident. A lot has already been discussed regarding the growing interest in cloud
computing principles among the banking sectors. The rate of migration over the cloud
platform among the banks and financial organizations, even at remotest parts or small
towns has significantly grown. Successfully integrating all the units and segments of a
bank or financial institution, and streamlining the data access, has been phenomenal all
the way. Naturally, it is growing at a bigger scale and in a very encouraging way, is
pretty unsurprising.
5. EFFORTS TO MINIMIZE THE RISK FACTOR

The compulsion of a borrower to address the possible threats is a key factor in analyzing
for getting it well about their efficacy to pay back the loan amounts. Financial service
providers have a great role to play in this context. They are the people ultimately who
have to have thorough knowledge regarding the ability of clients. Undoubtedly, they have
been the business drivers for financial companies. But, with transforming scenarios,
these business drivers’ financial services have to transform as well. Upon observing the
regular modes of the functionality of the banking industry, the emphasis has always been
giving towards sustainability and enduring customer relationships. To ensure that the
business does not get affected and the relationship remains similarly endured, banks
should come up with new products or loan payment models, where the financial threats
remain nominal.
6. AI BEING THE KEY DRIVER

AI Being the Key Driver in banking. Because data and technology have traditionally been
the bank performance, drivers, concepts like AI in banking are obvious to be the game-
changer. AI is certainly going to streamline the banking procedures in a great way.
Expanding the scope of automation, technology can indeed make the process more
effective and productive at the same time. With automation, it is obvious for the entire
process to be accomplished in a cost-effective fashion. All that the banks have to ensure is
that the privacy of customer data is thoroughly secured with them.
7. FINTECH SERVICE PROVIDERS

Fintech providers are certainly going to be the key business drivers in the banking
industry. Their role is going to be even more impactful. There should be no surprise
about this upon observing the way these technologies have competed with the usual ways
of delivering financial services. Though it is still an emerging concept for the banking
industry in remote parts but looks established in major sectors, it promises a lot from
future perspectives. Fintech can indeed be claimed as one of the hottest banking industry
trends at present. Specifically, their role is expected to be the most effective in the
upcoming retail banking market, which is going to be more technology-oriented.

CHAPTER-4
METHODOLOGY OF THESTUDY

4.1 RESEARCH APPROACH AND DESIGN

Preparing the project report is a research analysis, it involves the process of collecting of
data, analysing of data and reporting of data for absolute result.
For the preparation of the project report on “financial statement analysis of HDFC
Bank”. This project is based on two types of data that is:
(1) Primary data
(2) Secondary data
(1) Primary data
Primary data is the data, which has not been collected and used by somebody else before.
In short, primary data means the data specifically collected for the project.
(2) Secondary data

Secondary data is the data which is collected from the published source. I have collected
data from various source such as bank’s annual report of previous year, different
document prepared by the bank and from various reference books also.
The nature of study of this project is descriptive and analytical. In analytical study, one
has to use facts or information already available and analyse these to make critical
evaluation of the material. Secondary data may be collected from:
 Annual reports of the bank
 Bulletins
 Periodicals
 News letters
 Internal reports of the bank
The study has been conducted with reference to the data related to HDFC Bank. Thestudy
examines the financial performance of some variables and compares the performance of
the bank over a period of five years.

4.2 SAMPLING DESIGN

For performance analysis of HDFC Bank over the years, the study has been taken during
the period from 2018 to 2023 (five years).To know the financial performance of the banks
by using ratio analysis and camel rating. Financial performance of the bank can be
analyzed through their financial reports.
4.3 DATA ANALYSIS TOOLS

In this study, data was analyzed by using tabular representation of data to ease
comparing and to enable readers visually appreciate the findings from the study. Different
scales will be used for data analysis. Various financial ratios, bar charts are used to
know financial performance of the bank. For the analysis of the financial performance
the following tools are used:
 Comparative balance sheet
 Comparative income statement
 Ratio analysis
4.4 REPORT STRUCTURE

First chapter: Deals with the background of study, statement of the problem, scope ofthe
study and objectives of the study. It gives a clear idea about the role of bank in the
development of the country.
Second chapter: Deals with business process of the industry, contribution to GDP,
Pricing strategies in the industry, levels of competition, challenges of the industry and key
drivers of the industry. This chapter gives an idea about the opportunities and challenges
of the banking industry.
Third chapter: Deals with the review about theoretical construct related to the problem,
an overview of earlier studies and uniqueness study. It gives a clear idea about previous
study about this topic and also gives a theoretical review to it.
Fourth chapter: Deals with research methodology about study, research approach and

design, source of data, data analysis tools, and limitation of the study. This chapter gives
that method which is used for the analysis of the financial performance of the banks and
also mention about the limitation of the study.
Fifth chapter: Deals with the data analysis and its interpretation It includes the overall
study on the topic and working that supports the study.
Sixth chapter: Findings of study
Seventh chapter: Conclusion
4.5 DURATION OF STUDY

The study was conducted over the period of 2 months from 1st February 2024 – 31st
March 2024.

CHAPTER-5
DATA ANALYSIA AND INTERPRETATION

5. FINANCIAL STATEMENT ANALYSIS AND

INTERPRETATION
5.1 RATIO ANALYSIS
(1) Liquidity Ratio
(a) Current Ratio
Current Ratio = Current Asset ( Ideal Ratio = 2:1)

Current Liability
Table: Showing Current Ratio

Year Current Asset Current Liability Current Ratio
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
2022 - 2023 152326.92 84407.46 1.80
Mean 112535.752 65055.204 1.782
Standard 29084.14 15066.86 0.5422
Deviation
CV 25.84435567 23.16011491 30.43
CAGR -75.21 -63.11 -86.56
3
CURRENT RATIO
2.69
2.5
2 1.8
1.65
1.48
1.5 1.29
0.5
0
2018-19 2019-20 2020-21 2021-22 2022-23

INTERPRETATION:
Table shows current assets and current liabilities over a period of 5 years from 2018-
2019 to 2022- 2023. The average current ratio is 1.78 and its Standard Deviation is 0.54.
Coefficient of Variation is 30.43 and CAGR (Compound Annual Growth Rate) follows a
negative trend. Current ratio is high during period 2018 – 2019 that is 2.69. It indicates
the firm is liquid and low during the period 2020 – 2021 and standard in another period.
In 2022-2023 the ratio is 1.80 which shows that the company is able to pay the short-term
obligation
(2) Leverage / Solvency Ratio
(a) Debt Equity Ratio
Debt Equity Ratio = Total Debt (Ideal ratio =1:1)

Equity Share holder Fund
Table: Showing Debt Equity Ratio
Year Total Debt Equity Total Debt

Equity Ratio
2018 – 2019 911875.61 106295 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
2022 - 2023 1744034.65 240092.94 7.26
Mean 1291762.94 174060.23 7.52
Standard 333203.75 51135.51 0.63
Deviation
CV 25.79449678 29.37805494 8.38
CAGR -0.62 -0.55 -0.83

DEBT-EQUITY RATIO
10
9 8.58
8 7.56
7.22 7.26
6.97
7
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the Debt Equity Ratio. The average Debt Equity Ratio is 7.52 and
its Standard deviation is 0.63, the coefficient of variation is 8.38 and CAGR follows a
negative trend. 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. In 2018-2019 the ratio is 8.58 which is very high that shows
Company is borrowing more capital from the market to fund its operations. In 2022-2023
the ratio is reduce by 7.26 which shows that company is utilizing its assets and borrowing
less money from the market
(b) Proprietary Ratio
Proprietary Ratio = Shareholder Fund (Ideal ratio= .5:1)

Total Asset

Table: Showing Proprietary Ratio
Year Shareholder’s Total Asset Proprietary

fund Ratio
2018 – 2019 106295 1063934.31 0.1
2019 - 2020 149206.35 1244540.69 0.12
2020 - 2021 170986.03 1530511.26 0.11
2021 - 2022 203720.83 1,746,870.52 0.12
2022 - 2023 240092.94 2,068,535.05 0.12
Mean 174060.23 1530878.37 0.114
Standard 51135.51 398670.75 0.0089
Deviation
CV 29.37805494 26.04196113 7.807017544
CAGR -0.548251677 -0.611153615 -0.76
PROPRIETARY RATIO
0.125
0.12 0.12 0.12
0.12
0.115
0.11
0.11
0.105
0.1
0.1
0.095
0.09
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the proprietary ratio. The average proprietary ratio is 0.114 and
its standard deviation is 0.0089. The coefficient of variation is 7.81 an CAGR follows a
negative trend. The ratio is high during the period 2021-2022 & 2022-23. It indicates that
the margin for meeting no operating expenses, creating reserves and paying dividend is
less.

(c) Solvency Ratio
Solvency Ratio = Total Asset

Total Debt
Table: Showing Solvency Ratio
Year Total Asset Total Debt Solvency Ratio

2018 - 2019 1063934.31 911875.61 1.17
2019 - 2020 1244540.69 1040226.05 1.2
2020 - 2021 1530511.27 1292130.83 1.18
2021 - 2022 174670.53 1470547.54 1.12
2022 - 2023 2,068,535.05 1744034.65 1.19
Mean 1,216,438.37 1291762.936 1.172
Standard 695348.47 333203.75 0.0311
Deviation
CV 57.1626551 25.79449686 2.653583618
CAGR -0.611153615 -0.617484089 -0.796581197
SOLVENCY RATIO
1.22
1.2
1.2 1.19
1.18
1.18 1.17
1.16
1.14
1.12
1.12
1.1
1.08
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the solvency ratio. Its average is 1.17, its standard deviation is
0.0311. The coefficient of variation is 2.65 and CAGR follows a negative trend.
Generally, 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
(d) Fixed Asset to Net worth Ratio
Fixed Asset to net worth ratio = Fixed Asset (Ideal ratio = .67:1)
Net worth
Table: Showing fixed asset Ratio

Year Fixed Asset Net worth Fixed Asset To Net
worth Ratio
2018 – 2019 3607.2 106295 0.03
2019 - 2020 4030 149206.35 0.03
2020 - 2021 4431.92 170986.03 0.03
2021 - 2022 4909.32 203720.83 0.02
2022 - 2023 6,083.67 240,092.94 0.03
Mean 4612.422 174060.23 0.028
Standard 953.28 51135.51 0.0045
Deviation
CV 20.66766658 29.37805494 16.07142857
CAGR -0.662692947 -0.548251677 -0.8
FIXED ASSET RATIO

0.035
0.03 0.03 0.03 0.03
0.03
0.025
0.02
0.02
0.015
0.01
0.005
0
2018-201- 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The above table shows the Fixed Asset to net worth ratio. Theaverage Fixed Asset to net
worth ratio is 0.028 and its standard deviation is 0.0045. Thecoefficient of variation is
16.07 and CAGR follows a negative trend. 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.
(3) Profitability ratio
(a) Operating Profit Ratio
Operating Profit Ratio = Operating Profit × 100

Total Income
Table Showing: Operating profit Ratio

Year Operating Profit Total Income Operating Profit
Ratio
2018-2019 72771.28 95461.66 76.23
2019-2020 90478.57 116597.94 77.59
2020-2021 107375.94 138073.47 77.77
2021-2022 113340.49 146063.12 77.59
2022 -2023 119820.83 157,263.02 76.19
Mean 100757.422 130691.842 77.074
Standard 19068.5 24680.94 0.79
Deviation
CV 18.9251567 18.88483598 1.02499
CAGR -0.670691982 -0.670521087 -0.8001

OPERATING PROFIT
78 77.77
77.59 77.59
77.5
77
76.5
76.23 76.19
76
75.5
75
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the Operating Profit Ratio. The average Operating Profit Ratio is
77.07 and its standard deviation is 0.79, the coefficient of variation is 1.025 and CAGR.
Follows a negative trend. The ratio that is used to define a relationship between the
operating profit and the net sales. Typically, an operating profit ratio of about 20% is
considered good, and below 5% is considered low. The HDFC bank has good Operating
Profit Ratio.
(b) Net Profit Ratio
Net Profit Ratio = Net Profit × 100

Total Income

Table Showing: Net Profit Ratio
Year Net Profit Total Income Net Profit Ratio

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 21.3
2022 - 2023 36961.36 157263.02 23.5
Mean 26580.022 130691.842 20.044
Standard 7768.76 24680.94 2.31
Deviation
CV 29.22781629 18.88483598 11.52464578
CAGR -0.577263902 -0.670521087 -0.743449782
NET PROFIT RATIO

25
20
15
10
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the Net Profit Ratio. The average Net Profit Ratio is
20.04 and its standard deviation is 2.31. The coefficient of variation is 11.52
and CAGR follows a negative trend. In 2022-2023 the net profit ratio is 23.5.
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.
(b) Return On Investment
ROI = Profit before interest and tax× 100

Capital employed
Table Showing: Return on Investment

Year Operating Profit Capital Employed Return On
Investment
2018-2019 72771.28 1018170.6 7.15
2019-2020 90478.57 1189432.4 7.61
2020-2021 107375.94 1463116.86 7.34
2021-2022 113340.49 1674268.37 6.77
2022 - 2023 119820.83 1984127.59 6.04
Mean 100757.422 1465823.164 6.982
Standard 19068.5 383692.87 0.61
Deviation
CV 18.9251567 26.17593168 8.73675
CAGR -0.670691982 -0.610256358 -0.831
RETURN ON INVESTMENT
8 7.61
7.15 7.34
7 6.77
6.04
6
0
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023

INTERPRETATION:
The above table shows the return on investment. The average return on
investment is 6.98 and its standard deviation is 0.61. The coefficient of
variation is 8.74 and CAGR follows a negative trend. The figure shows that
bank is not having sufficient return on capital employed. Its ideal ratio is 15%.
Overall banks profitability is low and shows that there is inefficient use of
capital employed.
(c) Return On Shareholder Fund
Return on shareholders fund = Net profit after interest and tax × 100
Shareholder’s fund
Table Showing: Return on shareholder fund
Year Net Profit Shareholder Return On

Fund Shareholder
Fund
2018-2019 17486.73 106295 16.45
2019-2020 21078.17 149206.35 14.13
2020-2021 26257.31 170986.03 15.36
2021-2022 31116.53 203720.83 15.27
2022 -2023 36961.36 240,092.94 15.39
Mean 26580.02 174060.23 15.32
Standard 7768.76 51135.51 0.82188807
Deviation
CV 29.22781849 29.37805494 5.364804634
CAGR -0.577263902 -0.548251677 -0.812887538

RETURN ON SHAREHOLDER FUND

17
16.45
16.5
16
15.36 15.27 15.39
15.5
15
14.5 14.13
14
13.5
13
12.5
2018-2019 2019-2020 2020-2021 2021-2022 2022-2023
INTERPRETATION:
The above table shows the return on shareholder fund. The average return on
investment is 15.32 and its standard deviation is 0.82. The coefficient of
variation is 5.36 and CAGR follows a negative trend. The ideal ratio of return
on shareholders’ fund is 15%. From the above figure it is clear that banks
Return on shareholders’ fund in all the 5 year is more than the standard ratio,
which means there is better utilization of owner’s fund and higher productivity

5.2 COMPARATIVE BALANCE SHEET OF

HDFC BANK
Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '23 Mar '22 Mar '21 Mar '20 Mar '19
12 mths 12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 557.97 554.55 551.28 548.33 544.66
Equity Share Capital 557.97 554.55 551.28 548.33 544.66
Reserves 279,641.03 239,538.38 203,169.55 170,437.70 148,661.69
Net Worth 280,199.00 240,092.93 203,720.83 170,986.03 149,206.35
Deposits 1,883,394.65 1,559,217.44 1,335,060.22 1,147,502.29 923,140.93
Borrowings 206,765.57 184,817.21 135,487.32 144,628.54 117,085.12
Total Debt 2,090,160.22 1,744,034.65 1,470,547.54 1,292,130.83 1,040,226.05
Other Liabilities & Provisions 95,722.25 84,407.46 72,602.15 67,394.40 55,108.29
Total Liabilities 2,466,081.47 2,068,535.04 1,746,870.52 1,530,511.26 1,244,540.69
Assets
Cash & Balances with RBI 117,160.77 129,995.64 97,340.74 72,205.12 46,763.62
Balance with Banks, Money at Call 76,604.31 22,331.29 22,129.66 14,413.60 34,584.02
Advances 1,600,585.90 1,368,820.93 1,132,836.63 993,702.88 819,401.22
Investments 517,001.43 455,535.69 443,728.29 391,826.66 290,587.88
Gross Block 8,016.54 6,083.67 4,909.32 4,431.92 4,030.00
Net Block 8,016.54 6,083.67 4,909.32 4,431.92 4,030.00
Other Assets 146,712.52 85,767.83 45,925.89 53,931.09 49,173.95
Total Assets 2,466,081.47 2,068,535.05 1,746,870.53 1,530,511.27 1,244,540.69

5.3 COMPARATIVE INCOME STATEMENT

OF HDFC BANK
HDFC Bank
Statement of Profit & Loss account ------------------- in Rs. Cr. -------------------
Income
Interest Earned 161,585.54 127,753.12 120,858.23 114,812.65 98,972.05
Other Income 31,214.83 29,509.90 25,204.89 23,260.82 17,625.88
Total Income 192,800.37 157,263.02 146,063.12 138,073.47 116,597.93
Expenditure
Interest expended 74,743.32 55,743.53 55,978.66 58,626.40 50,728.83
Employee Cost 15,512.36 12,031.69 10,364.79 9,525.67 7,761.76
Selling, Admin & Misc Expenses 68,113.16 65,988.48 63,003.58 54,610.63 43,439.16
Depreciation 2,242.48 1,599.80 1,302.41 1,195.85 1,140.10
Operating Expenses 59,571.74 52,504.02 48,425.47 42,839.92 33,669.45
Provisions & Contingencies 26,296.26 27,115.95 26,245.31 22,492.23 18,671.57
Total Expenses 160,611.32 135,363.50 130,649.44 123,958.55 103,069.85
Net Profit for the Year 32,189.04 21,899.52 15,413.68 14,114.93 13,528.08
Profit brought forward 93,185.67 73,652.79 57,492.40 49,223.30 40,453.42
Total 125,374.71 95,552.31 72,906.08 63,338.23 53,981.50

5.4 COMPARATIVE CASH FLOW

STATEMENT OF HDFC BANK
Cash Flow ------------------- in Rs. Cr. -------------------
Net Profit Before Tax 58485.30 49015.48 41658.98 36607.15 32199.66
Net Cash from Operating Activities 27313.41 -14208.72 41494.79 -16689.78 -56054.67
Net Cash (used in)/from

-2428.88 -1291.60 -1120.17 -1104.92 -1326.12
Investing Activities
Net Cash (used in)/from Financing Activities 16121.92 48191.75 -7381.11 22851.79 15718.00
Net (decrease)/increase In Cash and Cash

41438.16 32856.53 32851.68 5271.08 -41567.44
Equivalents
Opening Cash & Cash Equivalents 152326.92 119470.40 86618.72 81347.64 122915.08
Closing Cash & Cash Equivalents 193765.08 152326.92 119470.40 86618.72 81347.64

CHAPTER-6
FINDING AND SUGGESTION

FINDINGS
 The bank focuses on understanding the needs of customers and offering them
superior products and services.
 They focus on to create quality of customers and not quantity ofcustomers.
 current ratio indicates that banks liquidity and it’s repayment of debts are sound
during the period of study.
 Debt equity ratio explains that creditors are safe during the study period.
 The Balance Sheet size as on March 2023 was Rs2,466,081.47crore as against Rs.
2,068,535.05crore as on March 2022, a growth of 16.12%.
 The total deposit as of 2023 were 1,883,394.65, an increase of 17.2% over March
2022.
 The advances as on March 2023 were 1,600,585.90, an increase of 14.4% over
March 2022.
 There has been a consistent increment in fixed assets in 2021, 2022 and 2023
45925.89 and 85767.83 and 146712.52 respectively
 The Bank’s total income (net interest income plus other income) increased from
₹157,263.02crore for the quarter ended March 2022 to
₹192,800.37crore for the quarter ended March 2023.
 Other income (non-interest revenue) at ₹31,214.83crore was 16.2% of net revenue
for the quarter ended March 2023 and grew by 5.46% over 25,509.90 crore in the
corresponding quarter of the previous year.
 Provisions and contingencies for the quarter ended March 2023 were Rs.26,296.26
crore as against Rs.27,115.95 crore for the quarter ended March 2022.
 As mentioned earlier, the second wave of COVID-19 disrupted business activities

for close to two third of the quarter, leading to a decrease in the efficiency in
collecting efforts and a high level of provisions.

SUGGESTION
(1) The attention is required on the areas of growth, profitability, service leveland
building talent
(2) To increase profit of the bank, bank should decrease their operating expenses
and increase income
(3) To increase liquidity, bank should keep some more cash in its hand instead of
giving more and more advances
(4) Introduce quality consciousness and standardization of work and procedures.
(5) Make manager competitive and spirit of market orientation and culture of
working for customer satisfaction
(6) There is need to build the knowledge and skill base among the employees in the
context of technology
(7) Performance measure should not only cover financial aspect i.e quantitatively
aspect but also qualitative aspect

CHAPTER-7
CONCLUSION

CONCLUSION
HDFC Bank is a largest private sector bank in India. The research was on
financial performance of HDFC Bank for five years from 2019 -2023. The data has
been collected from annual reports of the bank and the web site. The data was
analyzed through ratio analysis. The research presented sought to know the
financial viability and financial health of HDFC Bank. For this tables and ratio
analysis were used to analyze and interpret the information obtained.
HDFC Bank deals with three key business segments:
 Retail Banking Services
 Wholesale Banking Services
 Treasury operation
Retail banking business caters to; Salaries and professional borrowings, Individual
borrowings, Micro & small businesses, Extremely small businesses like kirana
stores, Self-help Groups (SHGs), Non-resident Indians (NRIs).
Wholesale banking businesses focuses on the institutional customers such as ; Large

corporate including MNCs, Public Sector Enterprises, Emerging corporate,
Business banking / SMEs, Infrastructural finance groups.
Treasury is the custodian of the Bank’s cash/ liquid assets and manages its
investments in securities and other market instruments. It manages the liquidity and
interest rate risk on the balance sheet and is also responsible for meeting statutory
reserve requirement.

BIBLIOGRAPHY
REFERENCE
 A body Dental ‘Revaluations of fixed assets and future firm performance: Evidence
from the UK’, in Journal of accounting and economics. Amsterdam: North Holland.
 Annual reports of HDFC bank, published balance sheet and profit and loss
statement
 Bangaru Pushpalatha (2020), “Financial Performance Analysis of SBI an
Empirical Study”, Journal of Emerging Technologies and Innovative Research,
Volume 7, Issue 2, pp. no. 192-196. [3]
 Barker, Richard (2001) Determining value: valuation models and financial
statements. Harlow: Pearson Education
 Dr Gagandeep Sharma, D. D. (2017, June). Comparision and analysis of
Profitability of top three Indian private sector Bank. International Journal of
Engineering technology Science and Research,
 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,
 Nandini Thakur & Shiva M (2020), “A Study on Financial Performance Analysis
of HDFC Bank”, Mukt Shabd Journal, Volume 9, Issue 6, pp. no. 2343-2353.
 Pakira, S. K. (2016). Growth performance analysis - AComparative Study between
SBI and HDFC Bank Limited. American Journal of Theoretical and Applied
Business
 Rajendran P & Dr. B Sudha (2019), “A Study on Financial analysis and
performance of HDFC Bank”, Journal for the study and research, Volume 11,
Issue 11, pp. no. 37-49.
 S. Murugananthamand S. K. Modish (2021) “A study on Financial Performance

Analysis of HDFC Ltd.”
 Sharma, K. C. (2007). Modern Banking in India. Deep and Deep Publications
 Thakur, N. (2020, June). A Study on Financial Statement Analysis of HDFC Bank.

Mukt Shabd Journal
 University of East London, Kalakkar, Sudeep "Key Factors in Determining the
Financial Performance of Indian Banking Sector," August 1, 2012.
Books
 Financial statement analysis and reporting – Dr. Sahadev swain and Dr.
biswo Ranjan mishra
 Management Accounting 3rd Ed. – Khan & Jain
JOURNALS
 International Journal of Finance & Banking Studies (IJFBS)
 International journal of novel research and development
 The International Journal of Bank Marketing
 The Journal of Central Banking Theory and Practice
WEBSITE
https://www.moneycontrol.com/
https://www.hdfcbank.com/
https://www.investopedia.com/
https://www.mymoneymantra.com/blog/these-are-the-top-10-largest banks-in-
India

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FINANCIAL PERFORMANCE ANALYSIS OF HDFC BANK

RAJA PANDA 1 UG2130COM236

PHASE II - Nationalization of Indian Banks and up to 1991

➢ 1949: Enactment of Banking Regulation Act.

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1.2 STATEMENT OF THE PROBLEM

1.3 RELEVANCE & SCOPE OF THE STUDY

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1.4 OBJECTIVE OF THE STUDY

1.5 LIMITATION OF THE STUDY

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2. REVIEW OF THE LITERATURE

 A financial statement is a collection of data organized according to the logical and

 It’s a process to convey and understanding of some financial aspects of business

Thus financial statement generally refers to the two statements.

1. The position statement or balance sheet

2. The income statement or profit and loss account

Tools or Techniques of Financial Statements

 Comparative financial statement

2.1.1 Comparative financial statement

 A comparative balance sheet analysis is a method of analysing a company’s balance

 Comparative balance sheet is a balance sheet which provides financialfigures of

2.1.2 Ratio Analysis

 Ratio analysis is a widely used Technique of analysing financial statements. An

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 It is a systematic use of accounting ratios to interpret the financial statements for

2.1.3 Classification of Ratios

2.1.3.1 Liquidity Ratio

2.1.3.2 Leverage Ratio

2.1.3.3 Activity Ratio

2.1.3.4 Profitability Ratio

2.1.3.5 Market Test Ratio

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2.1.3.1 Liquidity Ratio

Current ratio = Current assets

2. Absolute liquid ratio or cash ratio

Absolute Liquid ratio = Cash and Bank+Short term securities

3. Liquid ratio or quick ratio

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 It is a measure of instant debt paying ability of the business enterprise.

Liquid ratio = Liquid assets

2.1.3.2 Leverage Ratio

1. Debt equity ratio

Debt equity ratio= Debt

 It measures the percentage of fixed assets to network.

Fixed assets to net worth ratio= Fixed Asset

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Proprietary ratio = Shareholders fund

 It measures the solvency of the business.

 This ratio is known as solvencyratio.

 This ratio is generally expressed as a proportion.

The following formula is used for computing solvency and ratio.

Solvency Ratio = Total assets

5. Fixed Asset Ratio

 It is the ratio of fixed assets to long-term funds or capital employed.

Fixed Asset Ratio = Fixed asset (after depreciation)

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