Qualitative and Quantitative Analysis
In partial fulfilment of the course Management of banking and Financial Institutions under the guidance of Prof. N.R. Bhusnurmath, Finance Area, MDI Gurgaon
15th November 2010
Table of Contents
1. Present Scenario in Retail Banking in India3
2. About the Bank4
a. Bank Profile4
c. Product Segments5
d. Business Strategy5
3. Key Financial Highlights6
4. Financial Comparison with other Banks8
5. SWOT Analysis of HDFC Bank12
Retail Banking Scenario in India
In the past five years, Indian retail banking has been showing phenomenal growth with a CAGR of over 35%. During the same period, 42% of credit growth has come from retail products. Also, banking assets are expected to reach $1 trillion levels by year end 2010.
Source: Celent Bank Report, Prathima Rajan
Most banks in India are currently focussing on expanding their retail and rural base. A growing Indian economy, expanding middle class segment and technological and IT revolution are fuelling this growth. Also after the recommendations of the Narasimham Committee Report, with the entry of many private players in the retail banking space, starte of the art infrastructure and excellent customer service have entered into the domain, along with aggressive marketing techniques.
Retail banking market has transformed into a customer centric “buyers” market. It now consists of multiple products and customer groups and various channels of distribution.
The inherently strong domestic consumption combined with both the monetary and fiscal stimuli measures helped the Indian economy bounce back after the economic meltdown. Service sector growth was dominated by social and personal services reflecting increased government expenditure. In addition adequate capital provisioning and stringent prudential regulations shielding the domestic banking system, deterioration of asset quality of Indian banks will be minimal.
Profile: The Housing Development Finance Corporation was founded in 1997 by Hasmukh Bhai Parakh. In 1994, after approval from the RBI on the recommendations of the Narasimham Report, HDFC Bank Limited was incorporated, with the registered office at Mumbai. The Bank’s first IPO in India was in 1995, and currently HDFC is listed at NSE, BSE and also has an ADR listed on the NYSE.
HDFC posted total income and net profit of Rs. 19,980.5 cr and Rs. 2,948.7 cr respectively for the financial year ended March 31, 2010. Its dividend payout ratio has consistently ranged between 20-25% over the years. Also, the capital adequacy ratio (CAR) stood at 17.4%, well above the RBI regulatory minimum of 9.0%. As at March 31, 2010, the Bank’s total balance sheet increased by 21% to Rs. 222,459 cr.
The bank currently has 1,725 branches spread in 780 cities in India. In addition, there are also 4,865 ATMs all over the country. HDFC Bank is also a clearing/settlement bank to various leading stock exchanges.
As a financial institution, HDFC had significant expertise in retail mortgage loans in addition to a large corporate client base for its housing related credit facilities. With this experience, a strong market reputation, large shareholder base and unique consumer franchise, it was ideally positioned as a promoter to a private bank in the country.
Mission: HDFC’s mission is “To become a World Class Bank”. To achieve this aim, it seeks to (1) build sound customer franchises across distinct businesses (2) become the preferred provider of banking...