A

PROJECT
ON
FINANCIAL PERFORMANCE ANALYSIS
OF HDFC BANK

A Project Report Submitted to Osmania University

in Partial Fulfilment of the Requirement for the Award of Degree of
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY

CHAPYALA ASHEESH RAO

Hall Ticket No.: 1170-22-672-102

Under the Guidance of

Mr. CH. RUSHISWARUDU

Assistant Professor

DEPARTMENT OF BUSINESS MANAGEMENT

RG KEDIA COLLEGE OF COMMERCE
(Affiliated to Osmania University)
Hyderabad
(2022-2024)
 DECLARATION

I hereby declare that the project report entitled “A Study on FINANCIAL

PERFORMANCE ANALYSIS OF HDFC BANK”, is an original and bonafied

work done by me in partial fulfilment of the requirement for the award of

“MASTER OF BUSINESS ADMINISTRATION”. I have carried it out as a

student of R. G. KEDIA COLLEGE OF COMMERCE(KACHIGUDA), OSMANIA

UNIVERSITY HYDERABAD during I the year 2022-2024. The result embedded in

this project has not been submitted to any other university or institution for the

award of any other degree.

DATE:

PLACE:

CHAPYALA ASHEESH RAO

(H.T.NO:1170-22-672-102)
 CERTIFICATE

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

PERFORMANCE ANALYSIS OF HDFC BANK” being submitted by
ACKNOWLEDGEMENT

The satisfaction that accomplishes the successful completion of any task would be deficient

without the mention of the people who made it possible and whose constant encouragement and

guidance has been a source of inspiration throughout the course of project. Presentation of this

project has given me the opportunity to express my profound to all concerned persons in

completion of my project successfully. I am grateful to Dr.N. SRINIVAS, Principal, R.G.

KEDIA College kachiguda or his encouragement and co-operation for the successful completion

of the project.

I take this opportunity to express my sincere gratitude towards MR.CH.RUSHISWARUDU

Project Guide, for guiding me in completing each phase of this project with her advices,

suggestions and guidance. I greatly indebted and thanking with heart and soul to my parents and

friends, without their affection and inoperative support I could not have achieved this task.

CHAPYALA ASHEESH RAO

(H.T.NO:1170-22-672-102)
ABSTRACT
The main purpose of this study is to determine, forecast and evaluate the best of economic
conditions and company’s performance in the future. The other purpose of this study is to analyze
the financial statement and then give information for financial managers to make through decisions
about their business.
The financial statement applies tools, analytical techniques and required methods for business
analysis. It is a diagnostic tool for evaluating financing activities, investment activities and
operational activities as well as an assessment tool for management decisions and other business
decisions.
The analysis of financial statements, respectively the analysis of the financial reports are used by
managers, shareholders, investors and all other interested parties regarding the company's state.
Managers use financial reports to see the situation in which the company stands and then provide
information to shareholders, to see how reasonable are the investments made in the company.
To potential investors. The analysis of the financial statements of the company is very important,
because, first they want to know the actual state of the company and then decide whether to invest
or not.
 INDEX

Chapter Context Page No

List of tables i
List of figures Ii

 Introduction
 Need for the study
4-10
 Objectives of Study
Chapter - 1
 Scope of Study
 Research Methodology
 Tools and Techniques
 Limitations

Chapter - 2 Literature Review 11 - 17

Chapter - 3 Company Profile 18 - 29

Industry Profile
Chapter - 4 Data Analysis and Interpretation 30 - 45

Chapter – 5 Findings, Suggestions and Conclusions 46 - 49

BIBLIOGRAPHY 50
 List of tables
S.no Table Name Pg.No
4.1 Showing current ratio 31
4.2 Showing debt equity ratio 32
4.3 Showing proprietary ratio 33
4.4 Showing debt solvency ratio 35
4.5 Showing fixed assets to net worth ratio 42
4.6 Showing capital gearing ratio 43
4.7 Showing operating profile ratio 44
4.8 Showing net profit ratio 45
4.9 Showing return on investment 46-47
4.10 Showing return on shareholders fund 48
4.11 Balance sheet of financial year 2016-17 to 2017-18 49
4.12 Balance sheet of financial year 2017-18 to 2018-19 50
4.13 Balance sheet of financial year 2018-19 to 2019-20 50-51

List of figures

1
S.No. Name of the Figure Pg.No.

1 Current ratio 38

2 Debt equity ratio 39

3 Proprietary ratio 40

4 Solvency ratio 41

5 Fixed asset to net worth ratio 42

6 Capital gearing ratio 44

7 Operating profit ratio 45

8 Net profit ratio 46

9 Return on investment 47

10 Return on shareholder fund 48

2
 CHAPTER - 1

INTRODUCTION

INTRODUCTION: HDFC BANK

HDFC Bank Limited is a wholly-owned subsidiary of the Housing Development Finance Corporation.
It is headquartered in Mumbai. It is India's largest wholly-owned subsidiary of the Housing
Development .Finance Corporation by assets and world's 10th largest subsidiary of the Housing
Development Finance Corporation by market capitalisation as of April 2021. It is the third largest
3
company by market capitalisation of $122.50 billion on the Indian stock exchanges. It is also the
fifteenth largest employer in India with nearly 150,000 employees.

Finance is the master key that unlocks all production and merchandising opportunities. For the
preparation and administration of financial decisions, financial success is critical. It is a method of
determining how well a firm uses its assets from its core business mode to generate money, as well as
a method of determining an organization's overall financial health over time.

Every business, large, medium, or small, requires funding to continue operations and meet its goals.
Finance is so important nowadays that it is rightfully referred to as the "living blood" of businesses.
No business can achieve its goals without enough funding. As a result, the study of financial
performance is critical, as it is the process of calculating the financial results of a company's
operations.

Financial performance analysis is the process of determining a company's financial strengths and
weaknesses by correctly defining the relationship between balance sheet and profit and loss account
components. It also aids in short- and long-term forecasting, as well as the identification of growth
through the use of various financial techniques in financial performance analysis. In emerging
countries, a sound and efficient banking sector provides the required financial inputs to the economy.
It also assesses an organization's overall financial health over a period of time. The financial
performance of an organisation is concerned with the bank's financial strengths and weaknesses, as
well as the relationship between the balance sheet and the income statement.
A bank is a financial institution that offers its customers banking and other financial services. A bank
is a financial institution that performs basic banking functions such as receiving deposits and
disbursing loans. Money lenders conducted financial transactions prior to the foundation of banks.
Interest rates were extremely expensive at the time, and there was no guarantee of public savings or
loan consistency. To address these issues, the government built an organised banking system, which
is strictly regulated.
The Reserve Bank of India is the country's central bank. The Reserve Bank of India (RBI) oversees
and governs India's financial system. It is in charge of overseeing and implementing exchange
control, banking laws, and the government's monetary policy. The Indian banking sector operates in
accordance with the Reserve Bank of India's (RBI) standards.

The banking industry is the contemporary economy's lifeblood. The bank is crucial in terms o f deposit
mobilisation and credit disbursement to various sectors of the economy. It manages savings and current
accounts, extends credit to borrowers through loans and credit cards, and acts as a trustee for its
customers.

The structure of banking system in India consists of

1. RBI: The Reserve Bank supervises, control and regulates the activity of the banking sector.
4
The Reserve Bank of India is the currency issuing authority of the country.

The main functions of the RBI are:

• Welfare of the public.

• To maintain the financial stability of the country.

• To execute the financial transactions safely and effectively.

• To develop the financial infrastructure of the country.

• To allocate the funds effectively without any partiality.

2. Scheduled commercial bank: Among the banks, the commercial banks are one of the oldest in the
country. There are two sub types of commercial banks based on ownership and control over
management. They are:

• Public sector banks: The public sector banks are where the government owns 50% or more stake.
Currently there are 27 commercial public sector banks operating in India.

• Private sector banks: The private sector banks are where the majority of stake is held by the
shareholders of the bank. Currently there are 15 private sector banks operating in India.

• Foreign banks: These banks are registered and have their headquarters in a foreign country but
operate their branches in our country. Foreign banks have brought latest banking practices in India.
Examples of foreign banks in India are: HSBC, Citibank, Standard chartered Bank, etc.
• Regional Rural Bank: The government of India set up a Regional Rural Banks on October 2,
1975. The bank provide credit to weaker sections of the rural areas, particularly the small and
marginal farmers, agricultural labourers and small entrepreneurs. NABARD has the responsibility of
laying down the policies for the RRB‟s to oversee their operations, provide refinance facilities, to
monitor their performance and to attend their problems.

• Co-operative Banks: These banks are government sponsored, government supported and
government subsidized financial agencies in India. It aims at providing credit to primary agriculture
credit societies at lower rate of interest. They are located in rural, urban semiurban areas.

Importance of HDFC BANK

• It is India's largest wholly-owned subsidiary of the Housing Development Finance Corporation

by assets and world's 10th largest subsidiary of the Housing Development Finance Corporation
by market capitalisation as of April 2021.

5
 • It is the third largest company by market capitalisation of $122.50 billion on the Indian stock
exchanges. It is also the fifteenth largest employer in India with nearly 150,000 employees.

NEED OF THE STUDY

The project work is done for analyzing the financial position of the HDFC Bank. The analysis of the
financial position gives a better picture of the financial position of the organization in order to take better
decisions. Financial management is very important for both individuals and organizations because it
deals with managing the funds.
Itg u i d e s a c o m p a n y a n d i n d i v i d u a l t o m a k e o p t i m u m u s e o f m o n e y t o a c h i e
v e maximum ret financial analysis helps to an individual / organization to save more and thus
invest more.

OBJECTIVE OF THE STUDY

•To study the financial position of the HDFC Bank the period of study.

•To compare the profitability position of the company.

•To analyze the liquidity position of the HDFC Bank.

6
•To know the credit worthiness position of the HDFC Bank.

•To evaluate the long-term solvency position of the HDFC Bank.

•To observe the operating efficiency of the HDFC Bank.

•To give the suitable conclusions, suggestions for the better improvement of the HDFC Bank.

SCOPE OF THE STUDY

The current study only moves around the financial statement analysis of the HDFC Bank. The
present study concentrates only on the financial department of the HDFCBank with the use of comparative
income statement and ratio analysis.

7
• Analyze financial ratios to assess profitability, solvency, working capital management, liquidity, and

operating effectiveness.

• Compare current performance with historical conditions using trend analysis.

Compare with peer companies or industry averages to find out how well companies are performing.

Research Methodology

 Nature of the study

Study is analytical in nature, meaning that it deals primarily with secondary data collected from
the HDFC Bank’s financial statements over the last five years.

8
  Nature of Data

The data used is secondary in nature. Secondary data are those data which have already been
collected and stored.

Sources of data

 Primary Data
 Secondary Data

Data had been collected from annual report published by the Bank. These annual reports had been
downloaded from the official website of the company.

Period of Study

The study on financial performance of HDFC BANK Ltd is confined to a period of five years from 2016-
2017to 2021-2022. It took 3 weeks to collect the data and come to a conclusion on the study
Sample Design

Sample used in this study is HDFC BANK Ltd. Company is randomly chosen.

Tools for analysis

• Ratio analysis

• Comparative Balance sheet

Limitations of the Study

• The study takes into account only a limited period of five years.

It considers only monetary aspects. Non-monetary aspects like human behaviour, their relationships,
etc. are not considered.

• The study possesses the limitations of secondary data i.e., Annual reports of the bank taken from the
official website.

9
• Financial analysis ignores price level changes since it is based on the historical cost concept of
accounting.
• Qualitative aspects, such as the quality of employees and management, etc., are overlooked since
financial statements only keep records of quantitative aspects of the transactions.
• Financial statements often involve personal bias, judgments, and prejudices of the accountant.
Hence, the results of the analysis of such biased statements are not fair.
• Summer-time is here and so is the time to skill-up! More than 5,000 learners have now completed
their journey from basics of DSA to advanced level development programs such as Full-Stack,
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10
 CHAPTER – 2

LITERATURE REVIEW

11
2.1 INTRODUCTION

Meaning of Finance

Business concern needs finance to meet their requirements in the economic world. Any kind of
business activity depends on finance. Hence, it is called as lifeblood of business organization. Whether
the business concerns are small or big, they need finance to fulfil their business activities. In the
modern world, all the activities are concerned with economic activities and very particular to earning
profit through any venture or activities. The entire business activities are directly related with making
profit. A business concern needs finance to meet all the requirements. Hence finance may be called as
capital, investment, fund etc, buteach item is having different meanings and unique characters.
Increasing the profit is the main aim of any kind of economic activity.

Financial Analysis

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

Tools of financial analysis

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

. Common Size statement

. Trend Analysis

. Ratio Analysis

. Fund Flow Analysis

. Cash Flow Analysis

Strategies of Financial Performance in HDFC BANK

12
 They have a two-fold objective: First and foremost, to be the preferred provider of banking services for the
target retail and wholesale customer segments. The second goal is to achieve profitable growth that is
consistent with the bank's risk tolerance. HDFC Bank has its headquarters in Mumbai.

What is Financial Performance?

Financial performance is a subjective measure of how well a firm can use assets from its primary mode
of business and generate revenues. The term is also used as a general measure of a firm's overall
financial health over a given period.

Comparative Statement

Comparative statement is those statement which is used to study financial position for two or more
periods. It is also Called as horizontal financial analysis.

Types of Comparative Statement

1 Comparative Balance sheet

2 Comparative Profit and Loss Account

Comparative Balance Sheet

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

Comparative Profit and Loss Account

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

Common Size Statement

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

Ratio Analysis

The term accounting ratios is used to describe significant relationship between figures shown on
balance sheet, in a profit and loss account, in a budgetary control system or in any, other part of the
13
accounting organization. Ratio simply refers to one number expressed in terms of another number.
Ratio analysis is a technique of analysis and interpretation of financial statement. It is the process of
establishing and interpreting the various ratios for helping in making certain decision. However, ratio
analysis is not an end to itself. It is only a means of better understanding of financial strength,
weakness of a firm. Calculation of mere accounting ratios does not serve any purpose unless several
appropriate ratios are analysed and interpreted.

Objectives of Ratio Analysis

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

•To study the long-term solvency of a firm.

•To determine the profitability of a firm.

•To measure the performance of a firm.

•To facilitate the process of financial forecasting.

•To communicate the strength and weakness of a firm.

•To enable managerial decision making.

Liquidity Ratio

The term liquidity refers to the farm’s ability to meet its current liabilities. Liquidity ratios are used to
measure the liquidity position or short-term financial position of a firm. These ratios are used to assess
the short-term debt paying ability of a firm, important liquidity ratios are current ratio and quick ratio.

Current Ratio

Current ratio may be defined as the relationship between current assets and current liabilities. This
ratio is also known as working capital ratio. It is a measure of general liquidity and is the most widely
used to make the analysis of short term financial or liquidity of a firm. It is calculated by dividing the
total current assets by total current liabilities and the ideal current ratio is 2:1. It is calculated as
follows

Current Ratio = Current asset

Current liabilities
The higher the current ratio, the greater the firm’s ability to meet the short-term debts. A very high
current ratio indicates too much of money is blocked in current assets etc. In short, a very high current
ratio indicates that the firm will find it difficult to pay off its debts.

14
Quick Ratio

The term liquidity ratio refers to the ability of a firm to pay off its short-term obligations as and when
they become due. Cash in hand and cash at bank are the most liquid asset. The other assets included in
the liquid assets are bills receivables, sundry debtors, marketable and short term or temporary
investments. The Ideal liquid or quick ratio is 1:1. The liquid ratio can be calculated as follows

Quick ratio = Liquid assets

Current liabilities

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

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

Absolute Liquid Ratio or Cash Ratio

This ratio establishes the relationship between super quick assets and quick liabilities. And it is taken
as a ratio of absolute liquid assets or absolute quick assets include cash in hand, cash at bank and
marketable securities or short-term investments. It is also known as cash ratio. And ideal absolute
liquid ratio is 0.5: 19

Absolute Liquid Ratio = Absolute Liquid Assets

Current Liabilities

Solvency Ratio

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

Proprietary Ratio

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

15
 Proprietary Ratio = Shareholder’s fund
Total assets
This ratio shows financial health of the firm. A high ratio indicates safety to the creditors and low ratio
show greater risk to the creditors. The ideal ratio is 0.5:1or above.

Profitability Ratios

The ultimate aim of any business enterprise is to earn maximum profit. To the management, profit is
the measure of efficiency and control. Profitability ratio measures the ability of the firm to earn an
adequate return on sales, total assets and invested capital. There are two types of profitability ratios.
First, profitability based on sales and it includes gross profit ratio, operating ratio, operating profit ratio
and net profit ratio. Second, profitability ratio based on investment and it includes return on
investment, return on shareholders fund ratio, return on equity ratio and return on total assets. Profit is
important for everyone associated with the company including creditors and owners.

Return on shareholder’s fund

This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability from
shareholders point of view. This ratio is called the „mother of all the ratio‟. This is perhaps the most
important ratio because it measures the return that is earned on the owner’s capital. It is calculated as
follows:

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

Shareholder’s fund

Return in Investment (ROI)

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

ROI = Profit before interest and tax

Capital employed
Capital employed may be gross capital employed or net capital employed. Gross

capital employed means total assets minus current liabilities. Alternatively, it refers to total of share
capital, revenue reserves, debenture and other long-term loans. Profit before interest and tax is
16
calculated as gross profit minus operating expenses. The ideal return on investment ratio is 15%. The
higher the return on investment, greater is the overall profitability and more is the efficient use of
capital employed.

Net Profit Ratio

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

Net profit ratio = Net Profit×100

Net sales
Net profits can be taken as profit before tax and profits after tax. Higher the ratio, better is the
profitability.

Fund Flow Analysis

A fund flow statement means a statement which shows increase or decrease in working capital during
a period. The fund flow statement contains the source of funds, use of funds and changes in working
capital. Changes in working capital are obtained by preparing a statement called „Statement of
changes in working capital‟. It shows the changes in current asset and current liability. Fund flow
statement is also known as „ where got and where gone statement‟ or „statement of changes in
financial position‟.

Cash Flow Analysis

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

17
 CHAPTER – 3
COMPANY PROFILE

18
Company profile of HDFC bank

Founded: August, 1994

Headquarters: Mumbai, Maharashtra, India.
Number of employees: 104,154 (As of 30th June 2019)
The Housing Development Finance Corporation Limited
(HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India
(RBI) to set up a bank in the private sector, as part of RBI's liberalisation of the Indian Banking
Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited'
, with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.
Capital structure: -
As on 30 - June-2019 the authorized share capital of
the Bank is Rs. 650 crores.
The paid-up share capital of the Bank as on the said date is Rs 546,56,24,542 /- which is comprising
of273,28,12,271 equity shares of the face value of Rs 2/- each. The HDFC Group holds 21.31 % of the
Bank's equity and about 18.81 % of the equity is held by the ADS / GDR Depositories
(in respect of the bank's American Depository Shares (ADS) and Global Depository Receipts
(GDR)Issues). 31.37 % of the equity is held by Foreign Institutional Investors (FIIs) and the Bank
has6,53,843 shareholders. The shares are listed on the BSE Limited and The National Stock Exchange of
India Limited. The Bank's American Depository Shares (ADS) are listed on the New
York Stock Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts
(GDRs) are listed on Luxembourg Stock Exchange under ISIN No US40415F2002

Distribution network:
19
HDFC Bank is headquartered in Mumbai. As of June 30, 2019, the Bank's distribution network was at
5,130 branches across 2,764 cities. All branches are linked online on a real-time basis. Customers across
India are also serviced through multiple delivery channels such as Phone Banking, Net Banking, Mobile
Banking, and SMS based banking. The Bank's expansion plans take into account the need to have a
presence in all major industrial and commercial centers, where its corporate customers are located, as well
as the need to build a strong retail customer base for both deposits and loan products. Being a clearing /
settlement bank to various leading stock exchanges, the Bank has branches in centres where the NSE/BSE
have a strong and active member base. The Bank also has a network of 13,395 ATMs across India. HDFC
Bank's ATM network can be accessed by all domestic and international Visa/ MasterCard, Visa
Electron/Maestro, Plus / Cirrus and American Express Credit/Charge cardholders.
Board of Directors:
• Mrs. Shyamala Gopinath
• Mr. Malay Patel
• Mr. Keki Mistry
• Mr. Aditya Puri
• Mr. Kaizad Bharucha
• Mr. Umesh Chandra Sarangi
• Mr. Srikanth Nadhamuni
• Mr. Sanjiv Sachar
• Mr. Sandeep Parekh
• Mr. MD Ranganath Management:
HDFC Bank's Board of Directors comprises eminent individuals with a wealth of experience in public
policy, administration, industry and commercial banking. Senior executives representing HDFC Ltd. are
also on the Board.
Various businesses and functions in the Bank are headed by senior executives with work experience in
India and abroad. They report to the Managing Director. The Bank is focussed on recruiting and retaining
the best talent in the industry as it believes that its people are a competitive strength.

20
Awards and Rewards: 2016
Best Banking Performer, India in 2016 by Global Brands Magazine Award.
Best Performing Branch in Microfinance among private sector banks by NABARD, 2016, Award
for Best Performance in Microfinance

KPMG study of India's Best Banks, Bank of the year & best digital banking initiative award 2016
Brands Rankings, Most Valued brand in India for third successive year
Finance Asia poll on Asia's Best Companies 2015, Best managed public company – India
J. P. Morgan Quality Recognition Award, Best in class straight through processing rates
2018

Company of the year: The Economic Times Corporate Excellence Awards

Best Performing Private Bank in Total Aadhaar Generation & Update: [[Aadhaar Excellence Awards] NCPI -
National Payments Excellence Awards
2019

Best Bank: New Private Sector – FE Best Bank awards

Winner in Innovation and Inclusiveness in Priority Sector Lending – 11th Inclusive Finance India Awards (IFI) 2019
Ranked 1st in 2019 Brands Top 75 Most Valuable Indian Brands HDFC Bank was featured for the 6th consecutive
year.
Among The Most Honoured Company List, Institutional Investor All-Asia (ex-Japan) Executive Team 2019 survey
India’s Best Bank, Euromoney Awards for Excellence 2019
Bank of the Year and Best Large Bank, Business Today – Money Today Financial Awards 2019 Best
Bank in India 2019, by Global magazine Finance Asia.
Ranked 60th in 2019 Brands Top 100 Most Valuable Global Brands HDFC Bank was featured Brands
Top 100 Most Valuable Global Brands 2019 for the 5th consecutive year. The Bank's brand value has gone up from
$20.87 billion in 2018 to $22.70 billion in 2019.

Best Large Bank & Fastest Growing Large Bank in 2019, by Business World Magna Awards
India's leading private sector bank: Dun & Bradstreet BFSI Awards 2020

Best Bank in India: Euromoney Awards

Best Bank in India: Finance Asia Country Awards
2021

Best bank in India: Finance Asia Country Awards

Best bank for SMEs: Asian money best bank awards
Best bank in India: [[Euromoney the Euromoney Awards for Excellence The Euromoney Awards for Excellence]]
Ranks No. 1 in Mass Affluent category: Euro
On 12 January 2022 HDFC BANK has been adjudged ' Best Private Bank in India' at the Global Private
Banking Awards 2021, Organised by Professional Wealth Management (PWM) 2022

Best Bank in India: Euromoney Awards for Excellence 2022

13
HDFC Bank Limited (“HDFC Bank”) and Housing Development Finance Corporation
Limited (“HDFC Limited”) Announce a Transformational Merger

Key Highlights:

• Merger of India’s largest Housing Finance Company, HDFC Limited, with the largest
private sector bank in India, HDFC Bank, will enable seamless delivery of home loans
and leverage on the large base of over 68 million customers of HDFC Bank and inter alia
improve the pace of credit growth in the economy. HDFC Limited, over the last 45 years
has developed one of the best product offerings, delivered in a cost-effective manner and
in an efficient turn-around time, making it a leader in the housing finance business.

• The proposed transaction is to create a large balance sheet and net-worth that would allow
greater flow of credit into the economy. It will also enable underwriting of larger ticket
loans, including infrastructure loans, an urgent need of the country.

• HDFC Limited is a significant provider of home loans to the Low-Income Group (LIG)
and Middle-Income Group (MIG) segments under the affordable housing initiatives of the
Government of India. Access to housing finance for this category would be improved
further on account of low-cost funds available with HDFC Bank.

• The Bank has a presence in more than 3,000 cities/town through its 6,342 branches, with
about 50% of these branches in semi-urban/rural geographies in the country. Leveraging
this distribution might, the proposed transaction would broad base the home loan offering,
synonymous with the national objective of Pradhan Mantri Awas Yojana that intends to
provide housing for all.

Mumbai, April 4, 2022: The Board of Directors of HDFC Bank and HDFC Limited, at their
respective meetings held today, inter alia, approved a composite scheme of amalgamation
(“Scheme”) of: (i) HDFC Investments Limited and HDFC Holdings Limited, into and with
HDFC Limited; and (ii) HDFC Limited into HDFC Bank, and their respective shareholders
and creditors, under Sections 230 to 232 of the Companies Act, 2013 and other applicable
laws including the rules and regulations (“Proposed Transaction”). The Scheme and the
Proposed Transaction is subject to customary closing conditions, The Scheme is subject to the
receipt of requisite approvals from the Reserve Bank of India (“RBI”), Securities and
Exchange Board of India (“SEBI”), the Competition Commission of India, the National
Housing Bank (“NHB”), the Insurance Regulatory and Development Authority of India, the
Pension Fund Regulatory and Development Authority, the National Company Law Tribunal,
BSE Limited, the National Stock Exchange of India Limited and other statutory and
regulatory authorities, and the respective shareholders and creditors, under applicable law..
 Upon the Scheme becoming effective, the subsidiaries/associates of HDFC Limited
will become subsidiaries/associates of HDFC Bank. Shareholders of HDFC Limited
as on the record date will receive 42 shares of HDFC Bank (each of face value of
Re.1/), for 25 shares held in HDFC Limited (each of face value of Rs.2/-), and the
equity share(s) held by HDFC Limited in HDFC Bank will be extinguished as per
the Scheme. As a result of this, upon the Scheme becoming effective, HDFC Bank
will be 100% owned by public shareholders and existing shareholders of HDFC
Limited will own 41% of HDFC Bank.
Strategic Rationale and Benefits

HDFC Bank, with more than 68 million customers, 6,342 branches and a full suite of
credit, liability and distribution offerings is the leading private sector bank with deep
relationships, insights and understanding of its customers built over multiple decades.

HDFC Limited is India’s premier housing finance company and has unrivalled
relationships, scale and deep underwriting expertise in the housing sector, built over
multiple decades and across economic cycles.

The combined entity will bring together complementary strengths of the two
organizations, enabling a rewarding customer relationship. Post the combination,
HDFC bank’s customers will be offered mortgages as a core product in a seamless
manner. HDFC Bank will also leverage the long tenor mortgage relationship to offer
varied credit and deposit products enabled through better insights through-out the
customer life-cycle. This will result in an enhanced value proposition and customer
experience for all customers of the combined entity.

The housing loan market is at the cusp of a strong up-cycle, with all-time high
favourable industry dynamics and provides a steady secured asset class with very
attractive risk adjusted returns. Over the last few years, the regulatory developments
and reforms including (i) higher regulatory standards for the Non-Banking Financial
Companies (NBFCs) narrowing the gap with the Banking regulatory framework (ii)
reduction in SLR rates (iii) deepening of affordable housing bond market and (iv)
creation and deepening of Priority Sector Lending (PSL) Certificates market, have
created a conducive environment for amalgamation of the two entities, leading to a
“win-win” situation for all stakeholders.

The Boards of HDFC Limited and HDFC Bank believe that the merger will create
long- term value for all stakeholders, including customers, employees and
shareholders of both entities. The amalgamation of the two entities will provide
further impetus to the Government’s vision of “Housing for All”.

23
Bank Profile: HDFC BANK

HDFC Bank, a subsidiary of the Housing Development Finance Corporation, was founded in
1994 and is headquartered in Mumbai, Maharashtra, India. Manmohan Singh, the then Union Finance
Minister, launched the company's first corporate headquarters and a full-service branch at Sandoz
House in Worli. The bank's distribution network had 5,500 branches in 2,764 cities as of 30 June 2019.
In fiscal year 2017, it installed 430,000 point - of - sale terminals and issued 23,570,000 debit cards
and 12 million credit cards. As of March 21, 2020, it had 1,16,971 permanent employees.

• VISION

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

• MISSION

Committed to provide financial solutions for sustainable living and assist entrepreneurs in value
additional.

• VALUE

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

The corporate concept of HDFC Bank is founded on five basic values:

• Customer focus
• Product leadership
• People
• Sustainability
• Operational excellence

24
 Products and Services
HDFC Bank provides a number of products and services such as wholesale banking, retail banking,
treasury, auto loans, two-wheeler loans, personal loans, loans against property, consumer durable loan,
lifestyle loan and credit cards
 Whole sale banking  Retail Banking  Credit Cards

Subsidiaries 1. HDFC
Securities:

HDFC Securities Limited is a financial services Limited is a financial services intermediary and
a subsidiary of HDFC Bank, a private sector bank in India. HDFC Securities was founded in the year

2000 and is headquartered in Mumbai with its branches across major cities and towns in India.
Products and services:
• Equities: Investment in stocks of listed companies.
• Mutual funds: Investment in mutual funds including equity, hybrid, tax saving or debt schemes from
asset management companies.
• SIPs: Systematic investment plan that allows automated investments.
• IPOs: Investment in initial public offerings (IPO).
• Derivatives: Hedge or speculate on the price movement of stocks or index through its derivative
products.
• Bonds, NCDs and Corporate FDs: Investment in fixed income instruments such as bonds,
NCDs and Corporate FDs
1. HDFC ERGO General Insurance company:

HDFC ERGO is a 51:49 joint venture firm between HDFC International AG, one of the insurance
entities of the Munich Re Group in Germany operating in the insurance field under the BFSI sectors.
The company offers products in the retail, corporate and rural sectors. The retail sector products are
health, motor, travel, home, personal accident and cybersecurity policy. Corporate products include
liability, marine and poverty insurance. Rural sector caters the farmers with crop insurance and cattle
insurance.
2. HDFC Financial Services Limited:

HDFC Financial Services, a subsidiary company of HDFC Bank, is one of the biggest Non- Banking
Financial Company (NBFC) in our country who provides a variety of loans and finance to the people.
It is known for providing various easy financial services and loans to their customers such as:
• Personal loan
• Doctor loan
• New to Credit loan
25
 • Gold loan
• Car loan
• Loan against property
• Loan against insurance policies
• Two-wheeler loans and many more

3. Next Gen Publishing:

Next Gen Publishing Ltd was incorporated in October 2004 and commercial operations from January
2005 with the promise of offering the finest in the field of publishing. It is a publishing company
created by its parent companies Forbes Group, a subsidiary of Shapoorji Pallonji Group and HDFC
Bank. Its services include the following:
• Print Magazines
• Awards properties
• Digital Publishing

Statement of Problem
The statement of problem is based on finance and aims to analyse the financial performance of the
HDFC bank for the past 5 years. Financial performance analysis enables the outsiders and investors to
evaluate the past and current performance and financial position and to predict future performance.
The study is conducted to know whether the financial performance in the organisation is sound or not
with the help of last five years financial statements

OBJECTIVES

26
 Objectives are the ends that states specifically how goal be achieved. Every study must have an objective for
which all the efforts have been done. Without objective no research can be conducted and no result can be
obtained. On the basis of objective all the research process is followed. Objectives are the main aspect of every
study. The objective of the study gives direction to go through the research problem. It guides the researcher and
keeps him on track I have two objectives regarding my research project.
These are shown below

1. Primary objective

2. Secondary objective

1.Primary objective:

1) To study the software used in HDFC Bank

2) To analyse the financial statements of the corporation to it's true financial position by the use of ratios 2.

Secondary objective

1) To find out the shortcomings in HDFC Bank

2) To see whether HDFC is going well or not in different areas

3) To inform the management about the financial condition of HDFC

4) To inform the investor, enabling them to take the investment decision

27
 INDUSTRY PROFILE ON HDFC BANK
The Housing Development Finance Corporation Limited or HDFC Ltd was among the first financial
institutions in India to receive an “in principle” approval from the Reserve Bank of India (RBI) to set up a
bank in the private sector. This was done as part of RBI’s policy for liberalisation of the Indian banking
industry in 1994.

HDFC Bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office
in Mumbai, India. The bank commenced operations as a Scheduled Commercial Bank in January 1995.
On April 4, 2022 the merger of India’s largest Housing Finance Company, HDFC Limited and the largest
private sector bank in India, HDFC Bank was announced. HDFC Ltd, over the last 45 years has developed
one of the best product offerings making it a leader in the housing finance business. HDFC Bank enables
seamless delivery of home loans as a part of its wide product suite catering to urban, semi urban and rural
India.
As of April 30, 2024, the Bank’s distribution network was at 8,776 branches and 21,018 ATMs / Cash
Recycler Machine ( Cash deposit & withdrawal ) across 3,836 cities / towns. 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.
The HDFC Legacy
HDFC Ltd was founded in 1977, when the Late Shri. HT Parekh, Founder and Chairman of HDFC Ltd,
dreamt of millions of middle-class citizens of India owning a home and not having to wait till their
retirement. Pioneering India’s housing finance industry, the late Shri. Parekh, a Padma Bhushan recipient,
built HDFC Ltd on a strong foundation of integrity, transparency, and professionalism. Taking the legacy
further Mr. Deepak Parekh, Chairman HDFC Ltd. and a Padma Bhushan awardee, not only made HDFC the
leader in Mortgages, but also transformed it into India's leading Financial Services conglomerate with a
presence in Banking, Asset Management, Life Insurance, General Insurance, Real Estate Venture Fund,
Education Loans and Education.

Corporate Social Responsibility (CSR)

HDFC Bank Parivartan. A Step Towards Progress.

Parivartan, HDFC Bank’s social initiative has been a catalyst in transforming the lives of millions of people
in India. It aims to contribute towards the economic and social development of the country by sustainably
empowering its communities. Its wide range of interventions spanning across different social causes, has
brought about the desired change in the remotest parts of the country. Parivartan has uplifted rural
lives, create water structures, revolutionised education, supported social start-ups and opened pathways
towards financial independence through sustainable livelihood initiatives. With a lot already done, the bank
continues to bring about the change keeping with its philosophy of Sustainability and Innovation. Under
Parivartan, we work in the following focus areas:

1. Rural Development
2. Promotion of Education
3. Skill Training & Livelihood Enhancement
4. Healthcare and Hygiene
5. Financial Literacy and Inclusion

28
Capital Structure
As on 31-March-2023, the authorized share capital of the Bank is ₹ 650 crore. The paid-up share capital of
the Bank as on the said date is ₹ 557,97,42,786 comprising of 557,97,42,786 equity shares of the face value
of ₹ 1/- each. The HDFC Group holds 20.87% of the Bank's equity and about 18.43% of the equity is held
by the ADS Depositories in respect of the Bank's American Depository Shares (ADS). Further, 26.30% of
the equity is held by Foreign Institutional Investors (FIIs) and the Bank has 22,90,092 shareholders.
The shares are listed on the BSE Limited (BSE) and The National Stock Exchange of India Limited (NSE).
The Bank's American Depository Shares (ADS) are listed on the New York Stock Exchange (NYSE) with
symbol 'HDB'.

Technology
HDFC Bank has embarked on a transformative path, aspiring to be a “Technology company with a banking
license”. Adoption to state-of-the-art information technology and communication systems along with
leveraging emerging technologies and automation in key areas has been fundamental to empower this
transformation.
We conduct our operations in a highly efficient manner at our Tech competency centres at the back end to
deliver a seamless experience to our customers at the front-end. For smoother end user operation and
enhanced availability, all branches have been equipped with online connectivity giving multi-branch access
to our customers through branch network and Automated Teller Machines (ATMs).
We are constantly evolving and upgrading to acquire the best-in-class technology available internationally
making us truly a world class bank.
Our core banking systems are powered by Flexcube for corporate banking and Finware for retail banking.
The systems are open, scalable and web enabled.
At HDFC Bank, we strive towards making banking simple through seamless, neo-banking experiences. Each
of our businesses are focused with a domain-led expertise to develop new digital products and services for
our customers which will usher in the next wave of digital banking.

29
 CHAPTER 4

DATA ANALYSIS

AND

INTERPRETATION

30
 Ratio analysis

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

Liquidity Ratio

(a)Current Ratio

Current Ratio = Current Asset (Ideal Ratio = 2:1)

Current Liability

Table 4.1 Showing Current Ratio

Year Current Asset Current Liability Current Ratio
2017 - 2018 48952.1 56709.32 0.86
2018 - 2019 122915.08 45763.72 2.69
2019 - 2020 81347.64 55108.29 1.48
2020 - 2021 86618.72 67394.4 1.29
2021 - 2022 119470.4 72602.15 1.65
Mean 91860.79 59515.58 1.59
Standard Deviation 30437.73 10603.62 0.68
CV 33.13 17.82 42.6
CAGR -0.51 -0.74 -0.62
Source: Compiled from annual report of HDFC Bank
Table 4.1shows current assets and current liabilities over a period of 5 years from 2017-2018 to 2021-
2022. The average current ratio is 1.59 and its Standard Deviation is 0.68. Coefficient of Variation is
42.6 and CAGR follows a negative trend. Current ratio is high during period 2018 – 2019. It indicates
the firm is liquid and low during the period 2017 – 2018 and standard in another period.

31
Figure 4.1 Showing Current Ratio

Leverage / Solvency Ratio

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

(a) Debt Equity Ratio

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

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

Equity Share holder Fund
Table 4.2 Showing Debt Equity Ratio
Year Total Debt Equity Total Debt Equity Ratio
2017-2018 717668.58 89462.35 8.02
2018-2019 911875.61 106295.00 8.58
2019-2020 1040226.05 149206.35 6.97
2020-2021 1292130.83 170986.03 7.56
2021-2022 1470547.54 203720.83 7.22
Mean 1086489.72 143934.11 7.67
Standard Deviation 299352.69 46684.93 0.64
CV 27.55 32.43 8.38
CAGR -0.59 -0.54 -0.82
Source: Compiled from annual report of HDFC Bank

The above table shows the Debt Equity Ratio. The average Debt Equity Ratio is 7.67 and its standard
deviation is 0.64, the coefficient of variation is 8.38 and CAGR follows a negative trend. The ideal

32
 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.

Figure 4.2 Showing Debt Equity Ratio

(b) Proprietary Ratio

Proprietary ratio establishes the relationship between shareholders or proprietors fund and total assets.
This ratio shows how much funds have been contributed by shareholders in the total assets of the firm.
Proprietary ratio is also known as equity ratio or net worth ratio.
Proprietary Ratio =Shareholder Fund (Ideal ratio= .5:1)
Total Asset

Table 4.3 Showing Proprietary Ratio

Year Shareholder’s fund Total Asset Proprietary Ratio
2017 - 2018 89462.35 863840.2 0.1
2018 – 2019 106295 1063934.31 0.1
2019 - 2020 149206.35 1244540.69 0.12
2020 – 2021 170986.03 1530511.27 0.11
2021 - 2022 203720.83 174670.53 1.17
Mean 143934.11 975499.4 0.32
Standard Deviation 46684.93 510401.01 0.47
CV 32.43 52.32 1.47
CAGR -0.54 -0.96 1.25
Source: Compiled from annual report of HDFC Bank
The above table shows the proprietary ratio. The average proprietary ratio is .32 and its standard
deviation is .47. The coefficient of variation is 1.47 an CAGR follows a positive trend. The ratio is
high during the period 2021-22. It indicates that the margin for meeting no operating expenses,
creating reserves and paying dividend is less.

33
 Figure 4.3 Showing Proprietary Ratio (c)
Solvency Ratio
Solvency ratio is one of the various ratios used to measure the ability of a company to meet its long-
term debts. Solvency ratio is also called leverage ratio. It focuses on the long-term sustainability of a
company instead of the current liability payments.

Solvency Ratio = Total Asset

Total Debt

Table 4.4 Showing Debt Solvency Ratio

Year Total Asset Total Debt Solvency Ratio
2017-2018 863840.20 717668.53 1.20
2018-2019 1063934.31 911875.61 1.17

34
 2019-2020 1244540.69 1040226.05 1.20
2020-2021 1530511.27 1292130.83 1.18
2021-2022 1746870.53 1470547.54 1.19
Mean 1289939.40 1086489.71 1.19
Standard Deviation 354034.16 299352.70 0.01
CV 20.27 20.36 1.18
CAGR -0.60 -0.59 -0.80
Source: Compiled from annual report of HDFC Bank
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.

Figure 4.4 Showing Solvency Ratio (c) Fixed Asset to Net Worth Ratio
Fixed assets to net worth ratio show the relationship between fixed assets and shareholder’s fund.
Usually, fixed assets are purchased by using owner's fund such as equity capital, reserves and surplus,
retained earnings etc. If the ratio is less than 100%, it implies that owner's fund are more than total fixed
assets and part of the working capital is financed by shareholders fund and vice versa. Ideal ratio is
considered as 60% to 65%.

Fixed Asset to net worth ratio = Fixed Asset (Ideal ratio = .67:1)
Net worth

Table 4.5 Showing Fixed asset to Net worth ratio

Fixed Asset To
Year Fixed Asset Net worth
Net worth Ratio
2017-2018 3626.74 89462.35 0.04
2018-2019 3607.20 106295.00 0.03

35
 2019-2020 4030.00 149206.35 0.03
2020-2021 4431.92 170986.03 0.03
2021-2022 4909.32 203720.83 0.02
Mean 4121.04 143934.11 0.03
Standard Deviation 555.58 46684.93 0.01
CV 13.48 32.43 22.54
CAGR -0.73 -0.54 -0.88
Source: Compiled from annual report of HDFC Bank

The above table shows the Fixed Asset to net worth ratio. The average Fixed Asset to net worth ratio is
0.03 and its standard deviation is 0.01. the coefficient of variation is 22.54 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.

Figure 4.5 Showing Fixed Asset to net worth ratio (d) Capital Gearing Ratio

Capital gearing ratio is the ratio between total equity and total debt; this is a specifically important
metric when an analyst is trying to invest in a company and wants to compare whether the company is
holding a right capital structure or not.

Capital Gearing Ratio = Fixed Income Bearing fund

Equity Shareholder Fund

Table 4.6 Showing Capital Gearing Ratio

Fixed Income Bearing Equity Shareholder Capital Gearing
Year fund Fund Ratio

36
 2017-2018 717668.53 89462.35 8.02
2018-2019 911875.61 106295.00 8.58
2019-2020 1040226.00 149206.35 6.97
2020-2021 1292130.80 170986.03 7.56
2021-2022 1470547.50 203720.83 7.22
Mean 1086489.69 143934.11 7.67
Standard
Deviation 299352.69 46684.93 0.64

CV 27.55 32.43 8.38

CAGR -0.59 -0.54 -0.82
Source: Compiled from annual report of HDFC Bank
The above table shows the Capital Gearing Ratio. The average Capital Gearing Ratio is 7.67 and its
standard deviation is 0.64. the coefficient of variation is 8.38 and CAGR follows a negative trend.
Figure 4.6 Showing Capital Gearing Ratio
1800000
1600000
1400000
1200000
1000000
800000 Capital Gearing

600000 Equity Shareholder

400000 Fixed Income Bearing
200000
0 2017-2018
2018-2019
2019-2020
2020-2021
2021-2022 Deviation
Standard
Year Mean CV CAGR
-200000

Profitability ratio
Profitability ratio measures the ability of the firm to earn an adequate return on sales, total assets and
invested capital

(a) Operating profit ratio

Operating profit express the relationship between operating cost and sales. It indicates the overall
efficiency in operating in business.

Operating Profit Ratio =Operating Profit × 100

Total Income
Table 4.7 Showing Operating profit ratio
Year Operating Profit Total Income Operating Profit Ratio
2017-2018 61899.12 81602.46 75.85
37
 2018-2019 72771.28 95461.66 76.23
2019-2020 90478.57 116597.94 77.60
2020-2021 107375.94 138073.47 77.77
2021-2022 113340.49 146063.12 77.60
Mean 89173.08 115559.73 77.01
Standard Deviation 21965.88 27365.27 0.90
CV 24.63 23.68 1.16
CAGR -0.63 -0.64 -0.80
Source: Compiled from annual report of HDFC Bank

The above table shows the Operating Profit Ratio. The average Operating Profit Ratio is 77.01
and its standard deviation is 0.90, the coefficient of variation is 1.16 and CAGR follows a
negative trend.
Figure 4.7 Showing Operating profit ratio

(b) Net Profit Ratio

Net profit ratio is the ratio of net profit earned by a business and its net sales;it measures overall
profitability.
Net Profit Ratio =Net Profit × 100
Total Income
Table 4.8 Showing Net Profit Ratio
Year Net Profit Total Income Net Profit Ratio
2017-2018 14549.64 81602.46 17.83
2018-2019 17486.73 95461.66 18.32
2019-2020 21078.17 116597.94 18.08

38
2020-2021 26257.32 138073.47 19.02
2021-2022 31116.53 146063.12 21.30
Mean 22097.68 115559.73 18.91
Standard Deviation 6669.25 27365.27 1.41
CV 30.18 23.68 7.46
CAGR -0.57 -0.64 -0.76
Source: Compiled from annual report of HDFC Bank
The above table shows the Net Profit Ratio. The average Net Profit Ratio is 18.91 and its standard
deviation is 1.41. the coefficient of variation is 7.46 and CAGR follows a negative trend. 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.

Figure 4.8 Showing Net Profit Ratio

(C) Return On Investment

It establishes the relationship between return and investment. It is also called accounting rate of return.

ROI = Profit before interest and tax× 100

Capital employed
Table 4.9 Showing Return on Investment
Year Operating Profit Capital Employed Return On Investment
2017-2018 61899.12 807130.88 7.67
2018-2019 72771.28 1018170.60 7.15
2019-2020 90478.57 1189432.50 7.61
2020-2021 107375.94 1463116.90 7.34

39
 2021-2022 113340.49 1674268.40 6.77
Mean 89173.08 1230423.86 7.31
Standard Deviation 21965.88 345345.01 0.37
CV 24.63 28.07 5.01
CAGR -0.63 -0.59 -0.82
Source: Compiled from annual report of HDFC Bank

The above table shows the return on investment. The average return on investment is 7.31and its
standard deviation is 37. the coefficient of variation is 5.01 and CAGR follows a negative trend. The
figure shows that bank is not having sufficient return on capital employed. It’s ideal ratio is 15%.
Overall banks profitability is low and shows that there is inefficient use of capital employed.

Figure 4.9 Showing Return on Investment

(d)Return on shareholder fund

This is the ratio of net profit to shareholder’s fund or net worth. It measures the profitability from
shareholders point of view. This ratio is called the „mother of all the ratio‟. This is perhaps the most
important ratio because it measures the return that is earned on the owner’s capital. It is calculated as
follows:

Return on shareholders fund = Net profit after interest and tax× 100
Shareholder’s fund

Table 4.10 Showing Return on shareholder fund

Year Net Profit Shareholder Fund Return On Shareholder Fund

40
2017-2018 14549.64 89462.35 16.26
2018-2019 17486.73 106295.00 16.45
2019-2020 21078.17 149206.35 14.13
2020-2021 26257.32 170986.03 15.36
2021-2022 31116.53 203720.83 15.27
Mean 22097.68 143934.11 15.49
Standard Deviation 6669.25 46684.93 0.93
CV 30.18 32.43 5.99
CAGR -0.57 -0.54 -0.81
Source: Compiled from annual report of HDFC Bank

The above table shows the return on shareholder fund. The average return on investment is 15.49 and
its standard deviation is 0.93. the coefficient of variation is 5.99 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.

Figure 4.10 Showing Return on shareholder fund

COMPARATIVE BALANCE SHEET

Table 4.11 showing comparative balance sheet of financial year 2016 –17 to 2017 -2018
Particulars Amount Of Percentage Of
2016-17 2017-18 Increase Increase/Decrease

/Decrease
Capital And Liabilities

41
 Capital 505.64 512.51 6.87 1.36
Reserves and Surplus 72172.13 88949.84 16777.71 23.25
Deposits 546424.19 643639.66 97215.47 17.79
Borrowings 53018.47 74028.87 21010.40 39.63
Other Liabilities and Provisions 36725.13 56709.32 19984.19 54.42
Total 708845.57 863840.19 154994.62 21.87
Assets
Cash And Balances with RBI 30058.31 37896.88 7838.57 26.08
Balances with Other Banks 8860.53 11055.22 2194.69 24.77
Investments 163885.77 214463.34 50577.57 30.86
Advances 464593.96 554568.20 89974.24 19.37
Fixed Assets 3343.16 3626.74 283.58 8.48
Other Assets 38103.84 42229.82 4125.98 10.83
Total 708845.57 863840.19 154994.62 21.87

In the financial year 2017-18 the fixed assets of the bank Increased by 8.48 % from the previous year.
There was only 1.36 % increase in the capital of the bank. While the balances with other banks
increased to 24.77 % in the year. The bank deposits increased by 17.79 % and the advances provided
increased by 19.37 %.
Table 4.12 showing comparative balance sheet of financial year 2017 -18 to 2018 -2019
Amount Of Percentage Of
Particulars 2017-18 2018-19 Increase Increase/Decrease

/Decrease
Capital And Liabilities

Capital 512.51 519.02 6.51 1.27

Reserves and Surplus 88949.84 105775.98 16826.14 18.92
Deposits 643639.66 788770.64 145130.98 22.55
Borrowings 74028.87 123104.97 49076.1 66.29
Other Liabilities and Provisions 56709.32 45763.72 -10945.6 -19.3
Total 863840.19 1063934.3 200094.13 23.16
Assets

Cash And Balances with RBI 37896.88 104670.47 66773.59 176.2

Balances with Other Banks 11055.22 18244.61 7189.39 65.03
Investments 214463.34 242200.24 27736.9 12.93
Advances 554568.2 658333.09 103764.89 18.71

42
Fixed Assets 3626.74 3607.2 -19.54 -0.54
Other Assets 42229.82 36878.7 -5351.12 -12.67
Total 863840.19 1063934.3 200094.13 23.16

During the financial year 2018 -2019 the fixed asset is deceased by .54 % and also other asset and
other liability and provision decreases, the bank borrowings is increased by 66.29 % and investment is
increased by 12.93 %.

Table 4.13 showing comparative balance sheet of financial year 2018 -19 to 2019 -20

Amount Of Percentage Of
Particulars 2018-19 2019-20 Increase Increase/Decrease

/Decrease
Capital And Liabilities

Capital 519.02 544.66 25.64 4.94

Reserves and Surplus 105775.98 148661,69 42885.71 40.54
Deposits 788770.64 923140.93 134370.29 17.04
Borrowings 123104.97 117085.12 -6019.85 -4.89
Other Liabilities and Provisions 45763.72 55108.29 9344.57 20.42
Total 1063934.3 1244540.7 180606.37 16.98
Assets

Cash And Balances with RBI 104670.47 46763.62 -57906.85 -55.32

Balances with Other Banks 18244.61 34584.02 16339.41 89.56
Investments 242200.24 290587.88 48387.64 19.98
Advances 658333.09 819401.22 161068.13 24.47
Fixed Assets 3607.2 4030 422.8 11.72
Other Assets 36878.7 49173.95 12295.25 33.34
Total 1063934.3 1244540.7 180606.37 16.98

During the financial year 2019-2020 borrowings decreased by 4.89 % cash and Balance with RBI
decreased by 55.32.While banks deposit increased by 40.54% and advances increased by

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 24.47%.

Table 4.14 showing comparative balance sheet of financial year 2019 -20 to 2020 -2021

Amount Of Percentage Of
Particulars 2019-20 2020-21 Increase Increase/Decrease

/Decrease
Capital And Liabilities
Capital 544.66 548.33 3.67 0.67
Reserves and Surplus 148661.69 170437.7 21776.01 14.65
Deposits 923140.93 1147502.3 224361.36 24.3
Borrowings 117085.12 144628.54 27543.42 23.52
Other Liabilities and Provisions 55108.29 67394.4 12286.11 22.29
Total 1244540.69 1530511.3 285970.57 22.98
Assets
Cash And Balances with RBI 46763.62 72205.12 25441.5 54.4
Balances with Other Banks 34584.02 14413.6 -20170.42 -58.32
Investments 290587.88 391826.66 101238.78 34.84
Advances 819401.22 993702.88 174301.66 21.27
Fixed Assets 4030 4431.92 401.92 9.97
Other Assets 49173.95 53931.09 4757.14 9.67
Total 1244540.69 1530511.3 285970.57 22.98

During the financial year 2020-2021 Balance with other banks decreased by 58.32and banks advance,
investments and deposit increased.

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Table 4.15 showing comparative balance sheet of financial year 2020 -21 to 2021 -2022

Amount Of Percentage Of
Particulars 2020-21 2021-22 Increase Increase/Decrease

/Decrease
Capital And Liabilities
Capital 548.33 551.28 2.95 0.54
Reserves and Surplus 170437.7 203169.55 32731.85 19.2
Deposits 1147502.3 1335060.2 187557.93 16.34
Borrowings 144628.54 135487.32 -9141.22 -6.32
Other Liabilities and Provisions 67394.4 72602.15 5207.75 7.73
Total 1530511.3 1746870.5 216359.26 14.14
Assets
Cash And Balances with RBI 72205.12 97340.74 25135.62 34.81
Balances with Other Banks 14413.6 22129.66 7716.06 53.53
Investments 391826.66 443728.29 51901.63 13.25
Advances 993702.88 1132836.6 139133.75 14
Fixed Assets 4431.92 4909.32 477.4 10.77
Other Assets 53931.09 45925.89 -8005.2 -14.84
Total 1530511.3 1746870.5 216359.26 14.14

During the financial year 2021-2022 borrowings is decreased by 6.32% and other assets decreased by 14.84
and deposit, investments, advances is increased
.

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 CHAPTER – 5

FINDINGS, SUGGESTIONS AND CONCLUSIONS

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 FINDINGS

• During the study period the current ratio of bank is close to the ideal ratio 2:1, during the 3 years
from 2017-18 to 2019-20. The ratio was slightly low in the year 2016-17 and beyond the standard
ratio in 2021-22.
• 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.
• The ideal proprietary ratio is high during the year 2020-21. The bank having low ratio during the
last four years from 2016-17 to 2021-22. A low ratio indicates the firm is more dependent on
creditors for its working capital.
• During the period of study, the solvency ratio is satisfactory.
• Fixed asset to net worth ratio is less than one it indicates that all fixed asset are purchased out of
proprietors fund and a part of proprietor fund is invested in working capital.
• The Return on investment shows that the bank is not having the sufficient return on capital
employed. Its ideal ratio is 15%oveall bank profitability is low.
• During the period of study net profit is very high and is above its ideal ratio it indicates the bank
have high profitability.
• In the financial year 2016-17 the fixed assets of the bank Increased by 8.48 % from the previous
year. There was only 1.36 % increase in the capital of the bank. While the balances with other
banks increased to 24.77 % in the year. The bank deposits increased by 17.79 % and the advances
provided increased by 19.37 %.
• During the financial year 2017 -2018 the fixed asset is deceased by .54 % and also other asset and
other liability and provision decreases, the bank borrowings is increased by
66.29 % and investment is increased by 12.93 %.
• During the financial year 2018-2019 borrowings decreased by 4.89 % cash and Balance with RBI
decreased by 55.32. While banks deposit increased by 40.54% and advances increased by 24.47%.
• During the financial year 2019-2020 Balance with other banks decreased by 58.32and banks
advance, investments and deposit increased.
• During the financial year 2020-2021 borrowings is decreased by 6.32% and other assets decreased
by 14.84 and deposit, investments, advances is increased.

SUGGESTIONS

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• Bank should focus on increasing the current assets and decreasing the current liability so as to maintain

satisfactory level of current ratio.

• The bank needs to improve the long-term financial position

• The bank should follow the recommendations of financial auditor,

• The bank should take steps to improve its overall efficiency.

• The bank has to reduce its overall debt.

• To make people aware about the benefit of becoming HDFC Bank Executive, following activities of

advertisement should be done through

 Pri Malia

 Hoarding & Banners

 Stalls in Trade Fares

 Distribution of leaflets containing details information

• The bank should provide life time valid ATM card to all its customers

• Minimum balance for savings account should be reduced from Rs 5000 to RS 1000, so that people who are

not financially strong enough can maintain their account properly

• The company should provide a pass book to all its customers

• Make people understand about the various benefits of its products,

• Company should organize the program in the society, so that people will be aware about the company and

different products of the bank

CONCLUSIONS

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The study mainly concentrates on the analysis of financial performance and soundness of the bank. It helps to

understand the working of the bank. From the study of financial performance of HDFC BANK it can be concluded

that the bank has satisfactory position with regard to profitability and the bank needs to improve its liquidity and

solvency. If the bank continues to work with more efficiency, it can have greater success in the near future.

HDFC Bank, the banking arm of HDFC is expected to go on stream. The bank already has good number of

employees on board and is recruiting Sales Executives heavily to take the headcount to many more. It is on the

brim of increasing its customers through its attractive schemes and offer The project opportunities provided was

market segmentation and identifying prospective customers in potential geographical location and convincing

them to open an account so that new Business Opportunities of the bank can be explored. Through this project, it

could be concluded that people are not much aware about the various products of the bank and many of them not

interested to open an account at all Service was considered as insight good which require hardcore selling, but in

changing trend in income and people becoming financially literate the demand for banking sector is increasing day

by day According to my findings Company's promotional activities for recruiting sales executives are also very

less So, at last the conclusion is that there is tough competition ahead for the company from its major competitors

in the banking sector

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BIBBILIOGRAPHY

BOOKS

1. Jain, S. (2008). Cost and management accounting. Ludhiana: Kalyani Publishers.

2. Introduction to Management Accounting – Horn green and Sundlem

3. Principles of Management Accounting – Manmohan & Goyal

4. Management Accounting – Dr. E.B. Khedkar, Dr. D.B. Bharati and Dr. A. B. Kharpas.

5. Cost and Management Accounting –S.M. Inamdar

6. Management Accounting – Dr. Mahesh Kulkarni.

7. Management Accounting 3rd Ed. – Khan & Jain

WEBSITE

• https://www.wikipedia.org/
• https://shodhganga.inflibnet.ac.in/
• https://www.moneycontrol.com/

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