HDFC Bank Group7

7/27/2019 HDFC Bank Group7

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FINANCIAL STATEMENT ANALYSIS OF HDFC BANK

Presented by

Anurag Gupta 211131

Kanwardeep Singh 063018Pooja Agnihotri 211177

Prashant Tejwani 063037

Vasu Sharma 211162


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March'13 March'12 March'11

Capital 0.12 0.14 0.17

Reserves 8.93 8.72 8.98

Deposits 74.00 73.01 75.21

Borrowings 8.24 7.06 5.19

Other Liabilities & Provisions 8.71 11.08 10.45

Total Liabilities 100.00 100.00 100.00

Assets

Cash & Balances with RBI 3.65 4.44 9.05

Balance with Banks, Money at Call 3.16 1.76 1.65

Advances 59.88 57.83 57.68

Investments 27.88 28.85 25.57

Net Block 0.68 0.69 0.78

Other Assets 4.75 6.43 5.26

Total Assets 100 100 100


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March13 March12March11Total Income

100 100100

Expenditure

Interest expended 45.93 45.95 38.52

Operating Expenses 26.81 28.33 33.02

Provisions & Contingencies 11.22 9.88 12.33Total Expenses

83.95 84.16 83.88

Net Profit for the Year 16.05 15.84 16.12

Profit brought forward 20.04 18.93 18.61

AMOUNT AVAILABLE FOR

APPROPRIATION 36.09 34.77 34.72Appropriations

Transfer to Statutory Reserves 4.26 3.83 4.09

Transfer to Other Reserves 1.60 1.58 1.61

Proposed Dividend/Transfer to

Govt 3.65 3.60 3.66

Balance c/f to Balance Sheet 26.56 25.75 25.34

Profit & Loss A/C


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Relationship between Balance Sheet &

Income Statement

Balance Sheet Incom e Statement

Cash & Balances with RBI

Investments Interest earned

Advances

Fixed Assets Operating Expenses

Capital Net Profit

Reserves & Surplus

Deposits Interest Expended

Borrowings


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COMMON SIZE STATEMENT- LIABILITIES

March'13 March'12 March'11

Capital and Liabilities:

Equity Share Capital 102.29 100.88 100.00

Reserves 143.45 118.23 100.00

Net Worth 142.69 117.91 100.00

Deposits 142.03 118.28 100.00

Borrowings 229.31 165.67 100.00

Total Debt 147.66 121.33 100.00

Other Liabilities & Provisions 120.25 129.11 100.00

Total Liabilities 144.34 121.83 100.00


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Assets

Cash & Balances with RBI 58.27 59.72 100

Balance with Banks, Money at Call 276.99 130.18 100

Advances 149.84 122.15 100

Investments 157.36 137.44 100

Net Block 124.53 108.13 100

Other Assets 130.23 148.77 100

Total Assets 144.34 121.83 100

Common Size Statement- Assets


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Deposits-Borrowings-Interest Expended


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Net Profit-Capital-Reserves

Mar'11 Mar'12 Mar'13

Net Profit for the Year 3,926.40 5,167.09 6,726.28

Capital 465.23 469.34 475.88

Reserves 24,914.04 29,455.04 35,738.26


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DIFFERENT FUNCTIONAL AREAS

REFLECTING IN

BALANCE SHEET AND INCOME

STATEMENT


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Segments Net Profit

2011 2012 2013

Treasury 5,391.16 7,823.56 9,711.02

Corporate Banking 19,505.03 27,532.72 34,919.65

Retail Banking 11,612.89 15,808.41 17,633.82

Other banking Business 2,483.69 3,020.97 3,902.56

5,391.167,823.56

9,711.02

19,505.03

27,532.72

34,919.65

11,612.89

15,808.4117,633.82

2,483.69

3,020.97

3,902.560.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

40,000.00


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Segments Net Assets

2011 2012 2013

Treasury 90,324.22 121,349.00 139,459.18

Corporate Banking 88,065.88 112,840.91 138,001.73

Retail Banking 85,074.76 92,710.51 107,109.05

Other banking business 5,293.65 7,521.95 11,331.21

90,324.22

121,349.00

139,459.18

88,065.88

112,840.91

138,001.73

85,074.76

92,710.51

107,109.05

5,293.65 7,521.9511,331.21

0.00

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

160,000.00


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KEY PERFORMANCE INDICATORS OF

HDFC BANKCAMEL APPROACH


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CAMEL APPROACH

C CAPITAL ADEQUACY

A ASSET QUALITY

M MANAGEMENT

E

EARNINGS

L LIQUIDITY


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CAPITAL ADEQUACY:CAPITAL ADEQUACY

RATIO(CAR)

CAR = (Tier I+Tier II)*100Total risk weighted assets

In Rs. Cr. 2010-11 2011-12 2012-13

Tier I 23,718,35 21,886.11 33,881.13

Tier II 7,743,81 9,758.84 17,519.23

Total Capital 31,462,16 31,644.95 51,400.36

Total risk weighted

assets193,960,26 231,711.39 305,878.89

Tier I ratio 12.23% 9.45% 11.08%

Tier II ratio 3.99% 4.21% 5.72%

CAR 16.22% 16.52% 16.80%


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CAR

16.22%

16.52%

16.80%

0.159

0.16

0.161

0.162

0.163

0.164

0.165

0.166

0.167

0.168

0.169

2010-11 2011-12 2012-13

CARLinear (CAR)


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ASSET QUALITY:NPA%

S.No. In Rs. Cr. 2010-11 2011-12 2012-13

1 Standard Advances 1,599,826,654 1,954,200,292 2,397,206,432

2 Gross NPAs 1,694,34 1,999.39 2,334.64

3 Gross Advances (1+2) 1,599,826,654 1,954,202,291 2,397,208,767

4Gross NPAs as a percentage of

Gross Advances (2/3) (in %)

0.011% 0.01% 0.0097%

5 Deductions

i Provisions for NPAs 1,397,93 1,647.06 1,865.69

ii Floating Provisions 735,03 1,435.03 1,835.03

iii

Provisions for Standard

Accounts- 157.34 133.97

6 Net Advances{ 3-5( i + ii + iii )} 1,599,828,348 1,954,199,052 2,397,204,932

7 Net NPAs {2 - 5( i + ii )} 1,694.34 -1,082.70 -1,366.08

8Net NPAs as a percentage ofNet Advances (7/6) (in %)

0.011% 0.005% 0.0057%


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0.0110%

0.0050%

0.0057%

0.0000%

0.0020%

0.0040%

0.0060%

0.0080%

0.0100%

0.0120%

2010-11 2011-12 2012-13

Net NPA as % of NetAdvances

NET NPA AS % OF NET ADVANCES


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MANAGEMENT RATIOSIn Rs Cr. 2010-11 2011-12 2012-13

Interest Income 20,380.77 27,874.19 35,064.87

Non Interest Income 4,945.23 5,783.62 6,852.62

Operating profit 8,160.90 9,390.59 11,427.63

Working fund 277,352.59 337,909.50 400,331.90

Interest Income to working fund%(Interestearned/working fund)

7.35% 8.25% 8.76%

Non Interest Income to working fund%(OtherIncome/working fund)

1.78% 1.71% 1.71%

Operating profit to working fund%([TotalIncome-(Int expended+ Operatingexpenses)]/working fund)

2.94% 2.78% 2.95%

Profit per employee(Net Profit/Total employees) 0.07 0.08 0.10

Business(deposits less interbank deposits plus

advances) per employee 6.53 6.54 7.5


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MANAGEMENT RATIOS

7.35%

8.25%

8.76%

1.78% 1.71% 1.71%

2.94% 2.78% 2.95%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

2010-11 2011-12 2012-13

Intrest income toworking fund

Non Intrest income toworking fund

Operating profit toworking fund


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MANAGEMENT RATIOS

0.07 0.08 0.1

6.53 6.54

7.5

0

1

2

3

4

5

6

7

8

2010-11 2011-12 2012-13

Profit per Employee

Business per Employee


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EARNINGSIn Rs Cr. 2010-11 2011-12 2012-13

Operating profit 8,160.90 9,390.59 11,427.63

Net Interest (Interest Income-Int expenses) 10,995.69 12,884.61 15,811.12

PAT 3,926.40 5,167.07 6,726.28

Working Fund 277,352.59 337,909.50 400,331.90

NIM(Net Interest/Working Fund) 3.96% 3.81% 3.95%

Net Profit Margin(PAT/Total Income) 16.18% 15.35% 16.05%

ROA(PAT/Avg assets) 1.58% 1.77% 1.90%

ROE(PAT/Equity) 16.52% 18.37% 20.07%


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16.52%

18.37%20.07%

1.58% 1.77% 1.90%

3.96% 3.81%3.95%

16.18% 15.35%

16.05%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2010-11 2011-12 2012-13

Return on Earnings

Return on Assets

Net Interest Margin

Net Profit Margin

EARNING RATIOS


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LIQUIDITY RATIOS

In Rs Cr. 2010-11 2011-12 2012-13

Deposits 208,586.41 246,706.45 296,246.98

Cash and balances with RBI 25,100.82 14,991.09 14,627.3

Advances 159,982.7 195,420.0 239,720.6

Investment 70,929.37 97,482.91 111,613.60

Cash To deposit(cash and balances withRBI/Deposit)

12.03% 6.08% 4.94%

Credit To deposit(Advances/Deposit) 76.70% 79.21% 80.92%

Investment To deposit(Investment/Deposit) 34.00% 39.51% 37.68%


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LIQUIDITY RATIOS

12.03%6.08%

4.94%

76.70%79.21%

80.92%

34.00%

39.51%

37.68%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

2010-11 2011-12 2012-13

Cash to Deposit

Credit to Deposit

Investment to Depost


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CASA RATIO AND ITS IMPLICATIONS


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CASA RATIO

Ratio of deposits in the current and savingsaccounts of a bank to its total deposits.

CASA should be high for a bank because

interest paid on savings account is very low andno interest is paid on current account deposits

A high CASA ratio indicates that a higher portionof the banks deposits come from current and

savings accounts. It means that the bank is getting money at low

cost.


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DEPOSITS

2010-11 2011-12 2012-13 CAGR(5 yrs)

CA Deposit 464,604,888 454,078,426 523,102,806 12.96%

SA Deposit 634,477,904 739,980,381 882,112,454 20.37%

Term Deposit 986,781,262 1,273,005,652 1,557,254,586 14.41%

Total Deposits 2,085,864,054 2,467,064,459 2,962,469,846 15.71%


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CASA DEPOSITS

2010-11 2011-12 2012-13

CASA Deposits 52.69% 48.40% 47.44%

Term Deposits 47.31% 51.60% 52.56%


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TERM DEPOSITS V/S CASA DEPOSITS

44.00% 45.00% 46.00% 47.00% 48.00% 49.00% 50.00% 51.00% 52.00% 53.00% 54.00%

2010-11

2011-12

2012-13

Term Deposits

CASA Deposits


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FALL IN CASA DEPOSITS

44.00%

45.00%

46.00%

47.00%

48.00%

49.00%

50.00%

51.00%

52.00%

53.00%

54.00%

2010-11 2011-12 2012-13

CASA Deposits

Term Deposits


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IMPLICATIONS

CA deposits are always less than 25%.

SA deposits are close to 30%.

More than 50% deposits are term deposits

which are high cost funds as interest on them

is high. Term Deposits are long term

deposits, as a result interest rates are higher.


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Higher Proportion of Term Deposits canincrease the cost of funds for the bank. Thoughthe cost of funds was higher than the year agoperiod in case of HDFC bank, the yield onadvances also improved which resulted in astable net interest margin of 4.2%

Significant decrease in CASA can be seen in

2012-13. This fall is mainly because of the spikein interest rates through 2011 which resulted ina lot of canalisation towards fixed deposits.


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DUPONT ANALYSIS

DuPont analysis is an expression which breaks ROE

(Return On Equity) into three parts.

Profitability (measured by profit margin)

Operating efficiency (measured by asset turnover)

Financial leverage (measured by equity multiplier)


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RETURN ON EQUITY (ROE)

EquityNIROEUltimately ,

)()()( leverageXefficiencyXityprofitabilROE

Equity

AssetsX

Assets

SalesX

Sales

NIROE


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PROFIT MARGIN

Profit Margin is defined as net profits divided by salesrevenue.

Profit Margin for 2012-2013(Amount in Crores)

= Net Profit / Total Sales Revenue

= 6,726.28/22,663.74

= 0.296

2009-10 2010-2011 2011-2012 2012-2013

24.18% 26.3% 29.45% 29.6%


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ASSET TURNOVER

It is defined as the amount of sales generated for

every rupee worth of assets.

Asset Turnover in 2012-2013 (fig in crores)

= 22,663.74/ 4,00,331.8973

= 0.056

2009-2010 2010-11 2011-12 2012-13

5.9% 5.7% 5.5% 5.6%


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EQUITY MULTIPLIER

It is defined as this ratio shows a company's totalassets per rupee of stockholders' equity.

Equity Multiplier (000)= Total Assets/ Shareholders Equity

= 4,07,72,29,850/36,64,27,277

= 11.12

2009-10 2010-11 2011-12 2012-13

10.33 10.92 11.28 11.12


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Component

s of ROE 2009-10 2010-11 2011-12 2012-13

Profit

Margin0.2418 0.263 0.2945 0.296

Asset

Turnover

0.059 0.057 0.055 0.056

EquityMultiplier

10.33 10.92 11.28 11.12

ROE 14.7% 16.3% 18.2% 18.4%

Components of Return on Equity (ROE)


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NON FINANCIAL MEASURES OF BANKS

PERFORMANCE

(KEY PERFORMANCE INDICATORS)

KPIs\Years 2010-11 2011-12 2012-13

Numberof ATMs 5471 8913 10743

No. of branches 1986 2544 3062

Cities / Towns 996 1399 1845

Debit cards(in lacs) 115.5 141.1 157.6

No. of employees 55,752 66,076 69,065


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COMPETITIVE ANALYSIS

(NO. OF BRANCHES)

0

500

10001500

2000

2500

3000

3500

2010-11 2011-12 2012-13HDFC 1986 2544 3062

Axis Bank 1390 1622 1947ICICI Bank 2529 2752 3100

From 2010-11 to 2012-2013,

HDFC Bank increased no. of branches by 54% , Axis Bank

increased no. of branches by 40%, ICICI Bank increased no. ofbranches by 22%


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COMPETITIVE ANALYSIS

(NO. OF ATMS)

0

2000

4000

6000

8000

10000

12000

2010-11 2011-12 2012-13HDFC 5471 8913 10743

Axis 6270 9924 11245

ICICI 6104 9006 10481

From 2010-2011 to 2012-2013,

HDFC Bank has increased no. of ATMs by 96.3%, whereas the rival banks -

Axis Bank has increased by 79% and ICICI Bank by 71%


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SOME KEY POINTS REGARDING CASH

MANAGEMENT SERVICES

HDFC is has maintained its position as a leading

player in cash management business, which covers

outstation collection, disbursement, and electronicfund transfer, all this volumes to over Rs. 27 trillion.

The Bank also strengthened its market leadership

in cash settlement services for major stock

exchanges and commodity exchanges in the

country


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PROFITABILITY OF LINES OF BUSINESS


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PROFITABILITY OF VARIOUS LINES OF BUSINESS

Treasury

Retail Banking

WholesaleBanking

Other Banking

Business


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CORPORATE/WHOLESALE BANKING

Corporate Advisory Services, Management of Public Issue,Project Appraisal, Cash Management Services

Maintaining Corporate Relationships

Principal Activities

Interest & Fees given to customers falling under thissegment.

Fees from transaction services & merchant bankingactivities.

Revenue

Interest Expense on Deposits & Funds borrowed fromother segments, Infrastructure & Premises Expenses forOperating Branch Network.

Expenses

TREASURY


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Investments in Sovereign & Corporate Debt, Equity & MutualFunds, Trading Operations, Derivative Trading & ForeignExchange Operations

Treasury are also responsible for setting Interest Rates &designing loans & financial products that meet client needs


Primary Source of Revenue is from fees & gains from tradingoperations

Interest Income on Investment Portfolio

Revenue

Interest Expense on funds borrowed from External Sources &other Internal Segments

Personnel Costs & Other Direct Overheads

Expenses

TREASURY

RETAIL


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Lending to Individual/Small businesses.

It also includes Card Services, Internet Banking, ATMServices, Depository & Financial Advisory Services & NRIServices


Many sources of revenue like interest earned on loans, feesfor banking & Advisory Services, ATM Fees and Credit CardCharges.

Revenue

Interest Expense on Deposits & Funds Infrastructure &Premises Expenses for Retail Branches, Personnel Costs& Overheads.

Expenses

RETAIL

OTHER BANKING BUSINESS


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Banking Activities like third party (Insurance Companies)

product distribution & other banking transaction not coveredin any other segments.


Commission Basis

Revenue

Operating Expenses related to the activities.

Expenses

OTHER BANKING BUSINESS


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SEGMENT ASSETS/TOTAL ASSETS

32.1633.74

34.8634.84

36.2935.23

31.07

27.72 27.05

1.93 2.25 2.86

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2010-11 2011-12 2012-13

Retail Banking

Treasury

Wholesale Banking

Other Banking Operations

Values in terms of

percentage(%)


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SEGMENT PROFIT/TOTAL PROFIT

1.466952365

4.5376683852.051940543

46.00739276

41.42001853 40.3470789

36.9837737938.86638474

43.33661948

15.54188109 15.17592835 14.26436108

0

5

10

15

20

25

30

35

40

45

50

2010-11 2011-12 2012-13

Treasury

Retail Banking

Wholesale Banking

Other Banking Operations


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KEY DRIVERS OF NON-INTEREST

INCOME & EXPENSE


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KEY DRIVERS OF NON-INTEREST INCOMEin Rs '000 2010-11 2011-12 2012-13

Commission, exchange and brokerage 35,967,188 43,120,963 51,669,046

Profit / (loss) on sale of investments (net) -836,846 -1,061,596 1,264,352

Profit / (loss) on revaluation of investments (net) 310,616 -897,174 348,627

Profit / (loss) on sale of building and other assets (net) -8,153 15,132 -10,566

Profit on exchange transactions (net) 9,208,434 12,653,760 12,317,708

Income earned by way of dividends from subsidiaries

companies and / or joint ventures abroad / in India/ 4,468 11,655 7,693

Miscellaneous income -1,294,180 3,993,515 2,929,366

Total 43,351,527 57,836,255 68,526,226

Key Drivers are:

Commission, exchange and brokerage (75.4%)

Profit on exchange transactions (17.98%)


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KEY DRIVERS OF NON-INTEREST EXPENSESin Rs '000 2010-11 2011-12 2012-13

Payments to and provisions for employees 28,360,445 33,999,068 39,653,843

Rent, taxes and lighting 6,262,969 7,161,306 8,406,573

Printing and stationery 2,227,794 2,339,263 3,108,216

Advertisement and publicity 1,589,462 1,524,816 1,841,294

Depreciation onbanks

property 4,974,057 5,425,150 6,516,663Directors fees, allowances and expenses 4,676 4,423 7,111

Auditors fees and expenses 10,218 11,725 14,612

Law charges 315,037 317,465 509,569

Postage, telegram, telephone etc. 3,001,915 3,529,781 4,023,604

Repairs and maintenance 5,084,702 6,184,142 7,665,309

Insurance 1,987,777 2,418,023 2,877,862Other expenditure* 17,710,089 29,861,241 37,736,509

Total 71,529,141 92,776,403 112,361,165

Key Drivers are:

Payment to and provisions for employees (35.29%)

Rent, Taxes and Lighting (7.48%)

Other Expenditure (33.58%)


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KEY MEASURES OF RISK WITHIN A BANK

TYPES OF RISKS


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Credit Risk

Quality of individual assets and the chances of defaults.

Liquidity Risk

Arises from the general funding needs of the Bank's activities and

management of its assets and liabilities.Operational Risk

Risk of loss that could occur as a result of inadequate internalprocesses, employees or systems, or from external events.

Market Risk Risk resulting from volatility in the market rates or prices. These risks

are in terms of:

Interest Rate Risk

Security Price Risk

Foreign Exchange Risk

TYPES OF RISKS


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