Financial Analysis of HDFC Bank
Housing Development Finance Corporation Bank
By: Ruchita Agarwal PGFB 1244
About The Company
Hasmukh Bhai Parekh is the founder of HDFC Bank. The bank was incorporated in August 1994, in the name of HDFC Bank Limited, with its registered office in Mumbai. The Bank started its operations as scheduled Commercial Bank in in January 1995. It was the first to receive an in-principle approval from RBI to set up a Bank in private sector, as part of the RBIs liberalization of the Indian Banking Industry in 1994. Listed in BSE, NSE, NYSE.
Major Functions of HDFC Bank
Retail Banking Services Wholesale Banking Services Treasury Operations
Network
Financial Analysis
Financial Analysis refers to an assessment of the viability, stability and profitability of a business.
Purpose to do Financial Analysis
To know the earning capacity or profitability. To know the financial strengths. To know the trend of business. To know the efficiency of management. To provide the useful information to management.
Ratio Analysis
Ratios are well known and most widely used tools of financial analysis. A ratio gives the mathematical relationship between one variable and another. Accounting ratios are relationships, expressed in quantitative terms between figures which have a cause and effect relationship or which are connected with each other in some manner or the other.
Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations. The Current Ratio formula is:
Current Ratio
0.9 0.8 0.7 0.6 0.5
0.4
0.3 0.2 0.1 0 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Current Ratio
Earning Per Share
The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability.
Earning Per Share
90 80 70 60 50 40 30 20 10 0 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09 Earning Per Share
Dividend Per Share
Dividend per share (DPS) is the total dividends paid out over an entire year divided by the number of outstanding ordinary shares issued.
Dividend Per Share
18 16 14 12 10 8 6 Dividend Per Share
4
2 0 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Net Profit Ratio
It measures how much out of every dollar of sales a company actually keeps in earnings.
Net Profit Ratio
18 16 14 12 10 8 6 4 2 0 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09 Net Profit Ratio
Credit Deposit Ratio
The portion of loans generated by banks from the deposit received. Credit deposit ratio is a tool used to study the liquidity position of the bank.
A high ratio shows that there is more amounts of liquid cash with the bank to met its clients cash withdrawals. Credit Deposit Ratio
90 80 70 60 50 40 Credit Deposit Ratio
30
20 10 0 Mar '13 Mar '12 Mar '11 Mar '10 Mar '09
Learning Outcomes
How to maintain the statements.
Importance of Financial statements in a company.
Importance of Ratio. And the impact of Ratio on working of the company. Know about the banking terms. Services given by the Bank.
Suggestions & Recommendations
As a result they should do decline in average outstanding share and increase its net income so that EPS will increase. We can see that in 2011 Dividend is highest but after that they fall down and unable to reach that point so company should increase the dividend decrease the number of shares. Credit Deposit ratio of HDFC Bank in 2013 was 35.99% that means bank is not earning an optimum return , HDFC Bank should focus on increasing the customer deposits so that it can increase its Credit Deposit Ratio and make it stability like it did in last four years from 2009 to 2012.
Highlights Net profit Rs.6,726 crore. An increase of 30.2% compared to the previous year. Balance sheet size: Rs 400,332 crore. An increase of 18.5% compared to the previous year. Total deposits: Rs 296,247 crore. An increase of 20.1% compared to the previous year. Total advances: Rs 239,721 crore. An increase of 22.7% compared to the previous year.
