PROJECT REPORT

ON

STRATEGIC ANALYSIS OF HDFC BANK

Submitted To Submitted By
Prof. Deepak Kapur Lakshay Manchanda
UBS, PU Nikhil Gharu
 TABLE OF CONTENT

S. No. Chapters Page No.

Executive Summary 3

1 Introduction to the company 4

2 Analysis of Vision, Mission & Core values 6

3 The External Environment Analysis 8

4 The Internal Environment Analysis 11

5 SWOT Analysis 20

6 Competition Analysis 22
Industry Structure (Using Porter’s Five forces model)
Competitive Profile Matrix (Based on Key Success factors)

7 BCG matrix 26

8 Conclusion 28

References 29
 HDFC BANK

EXECUTIVE SUMMARY

Banking sector is going to be the most watched sector in the coming quarters. There are
reasons for this, RBI has reduced the CRR rate and repo rates. The debt/GDP ratio of the
Government is scary at 80% essentially meaning that the Government cannot borrow much
without jeopardizing stability of banking sector. Given project is an attempt to identify and
analyse the vision and mission of HDFC bank, as well as comparing the position and
strategies of the bank with its major competitor.

Project:

 Provides all the crucial information on HDFC Bank Limited required for business
and competitor intelligence needs. 

 Contains a study of the major internal and external factors affecting HDFC Bank
Limited in the form of a SWOT analysis as well as a breakdown and examination of
strategies of HDFC Bank Limited. 

 Major factors contributing the success of HDFC. 

 Industrial analysis of HDFC through Porter’s five forces model as well as comparing
that with its competitor ICICI. 

 Analysis done on BCG matrix 

With this project we have tried to understand the different business process identified by
the bank, as well as analyzing its strength and weakness as compared to other banks. Our
project is mainly concentrated on the comparative analysis of HDFC and competitor ICICI.
The source of information is secondary that is through internet and different newspapers
and sites of HDFC and ICICI as well as some of the journals.

3|Page
 HDFC BANK

INTRODUCTION TO THE COMPANY

HDFC Bank Limited is an Indian financial services company based in Mumbai, Maharashtra
that was incorporated in August 1994. HDFC Bank is the fifth or sixth largest bank in India by
assets and the second largest bank by market capitalization as of February 24, 2012. The bank
was promoted by the Housing Development Finance Corporation, a premier housing finance
company (set up in 1977) of India. HDFC Bank has 1,986 branches and over 5,471 ATMs, in
996 cities in India, and all branches of the bank are linked on an online real-time basis. As of 30
September 2008 the bank had total assets of Rs.1006.82
billion. For the fiscal year 2015-16, the bank has reported net profit of
3,926.30 crore (US$742.07 million), up 33.1% from the previous fiscal. Total annual
earnings of the bank increased by 20.37% reaching at 24,263.4 crore (US$4.59 billion) in
2015-16. HDFC Bank is one of the Big Four banks of India, along with: State Bank of
India, ICICI Bank and Punjab National Bank.

BUSINESS FOCUS
HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail
Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for
providing working capital finance, trade services, corporate finance, and merchant banking.
It is also providing sophisticated product structures in areas of foreign exchange and
derivatives, money markets and debt trading And Equity research.

Wholesale banking services

Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and
agri-based businesses. For these customers, the Bank provides a wide range of commercial and
transactional banking services, including working capital finance, trade services, transactional
services, cash management, etc. The bank is also a leading provider of the above services to its
corporate customers, mutual funds, stock exchange members and banks.

Retail banking services

HDFC Bank was the first bank in India to launch an International Debit Card in association
with VISA (Visa Electron) and issues the MasterCard Maestro debit card as well. The Bank
launched its credit card business in late 2001. By March 2009, the bank had a total card base
(debit and credit cards) of over 13 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit /

4|Page
 HDFC BANK

credit cards acceptance at merchant establishments. The Bank is positioned in various net
based B2C opportunities including a wide range of internet banking services for Fixed
Deposits, Loans, Bill Payments, etc. With Finest of Technology and Best of Man power in
Banking Industry HDFC BANK's retail services have become by and large the best in India
and since the contribution to CASAi,e total number of current and savings account of more
than 50%, HDFC BANK has full potential to become Indias No.1 Private Sector Bank.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services
are provided through the bank's Treasury team. To comply with statutory reserve
requirements, the bank is required to hold 25% of its deposits in government securities. The
Treasury business is responsible for managing the returns and market risk on this
investment portfolio

5|Page
 HDFC BANK

ANALYSIS OF VISION, MISSION & CORE VALUES

VISION

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team
determined to accomplish the vision of becoming a world-class Indian bank.

MISSION

HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against

international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.

ANALYSIS
PARAMETER HDFC BANK
Markets YES
Technology YES
Survival growth and profit YES
Philosophy YES
Self- concept YES
Public image NO
Employees YES
Customers YES
Products Services YES

6|Page
 HDFC BANK

Increase the market share in India’s expanding banking and financial services industry
by following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer service.

Leverage the technology platform and open scalable systems to deliver more products
to more customers and to control operating costs.

Maintain the current high standards for asset quality through disciplined credit risk
management.

Develop innovative products and services that attract the targeted customers and
address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce the cost of funds.

Focus on high earnings growth with low volatility.

7|Page
 HDFC BANK

ENVIRONMENTAL ANALYSIS
Business environment includes set of conditions or situation that affects business activities
or decision making. These conditions are broadly classified into internal environment and
external environment.

THE EXTERNAL ENVIRONMENT ANALYSIS

External environment include factors which are outside the control of the business
organization but it provide opportunities or pose threats. External environment is further
classified into two categories micro environment and macro environment.

1) Political Factor

Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to attract the farmer’s
votes. By doing so the profits of the bank get affected.

FDI move to increase the limits to 49 percent from 26 percent.

The Union Budget 2015-16 extended the debt waiver scheme by six more months
for farmers owing more than 2 hectare of land The Union Budget 2014-15 allowed
these farmers 25% rebate on loan if they repay 75%of their overdue within
stipulated period of 30th June 2011.

2) Economic Factor

Cash Reserve Ratio (CRR) reduced by 0.25% to 4.5% of net demand and time
liabilities (NDTL) to potentially inject primary liquidity of Rs. 170 billion; token
reduction in lending rates expected, given comfortable liquidity position and the
recent revisions in deposit rates and lending rates for certain products undertaken by
some Banks.
Benchmark Repo rate maintained at 8.0%; Reverse Repo and Marginal Standing
Facility (MSF) stand unchanged at 7.0% and 9.0%, respectively. Bank Rate also
maintained at 9.0%.

8|Page
 HDFC BANK

Following a 1% reduction in July 2012, Statutory Liquidity Ratio (SLR) kept

unchanged at 23% of NDTL.
The primary focus of monetary policy remains inflation control and anchoring of
inflation expectations, despite increasing risks to economic growth. The Reserve
Bank of India (RBI) highlighted that inflationary pressures and risks related to fiscal
deficit and current account deficit constrain it from providing a stronger monetary
policy response to boost economic growth. As policy measures to stimulate growth
materialize, monetary policy to reinforce the positive impact of such actions while
retaining a focus on managing inflation.
Guidance provided that liquidity management by the RBI would ensure adequate
credit flows to the productive sectors of the economy and appropriate responses to
shocks brought on by external developments.

3) Social Factor

HDFC announced its plans to make an entry into education sector. The group plans to focus on
small towns wherein it would either set up schools or take over weak performing boarding
schools. According to McKinsey Global Institute’s Bird of Gold report, the discretionary
spending on education is set to increase from 5% in 2005 to 6% in 2015. HDFC will foray into
this sector through a separate subsidiary. It is widely believed that many schools are planning to
set up model, which is profitable and scalable, as operating under trusts makes it difficult to
segregate profits. As a result, HDFC could look to adopt those schools that are open to the
‘takeover model’. HDFC already has an educational loan unit – Credila Financial Services – in
which it owns 62.3% stake. Credila plans to boosts the distribution network and customer base
of HDFC Bank in order to expand and also lower the cost of funds. The group’s likely entry
into education sector could be beneficial in the long run.

HDFC Bank ,is partnering with the city’s municipal authorities to educate people about the
danger posed by plastic bags to the environment, and to offer recycle paper bags
instead.The bank reinforced the Kolkata Municipal Corporation(KMC) intiated anti-plastic
awarness drive by distributing recycled and eco-friendly paper bags to retailers and
customers across nine markets in the city.“Encourage citizens to use environment friendly
and cost effective paper bags as the best substitute.

9|Page
 HDFC BANK

4)Technological Factor

Productivity ratio of HDFC is increasing significantly over the years. Number of employees of
the group increased to 1,607 in FY2011, as compared to 797 in FY2010 and 727 in FY2009.
While, profit per employee increased significantly to $491,900, as compared to $117,500 and
$7,500 in FY2010 and FY2009 respectively. Administration cost per asset ratio decline to
0.30% in FY2011, as compared to 0.49 in FY2010 and 0.76 in FY2009. Similarly, cost to
income ratio improved to 7.7% in FY2011 from 13.8% and 30.9% in FY2010 and FY2009
respectively. Improving productivity would likely enhance the group’s profit margin.

ATM The latest developments in terms of technology in computer and

telecommunication have encouraged the bankers to change the concept of branch
banking to anywhere banking.
Credit card facility has encouraged an era of cashless society.
Today MasterCard and Visa card are the two most popular cards used world over.
Smartcards or debit cards to be used for making payments. These are also called as
electronic purse
Today banks are also using SMS and Internet as major tool of promotions and
giving great utility to its customers. For example SMS functions through simple text
messages sent from your mobile.
CORE BANKING SOLUTIONS -It is the buzzword today and every bank is trying
to adopt it is the centralize banking platform through which a bank can control its
entire operation the adoption of core banking solution will help bank to roll out new
product and services

10 | P a g e
 HDFC BANK

THE INTERNAL ENVIRONMENT ANALYSIS

Internal environment consists of factors which are within the control of the organization.
Business ethics, Objective of the firm, Value system, Management structure, Physical
assets, Technological resources, financial resources, Stakeholders, Human resources etc.
are part of the internal environment of business.

1)VISION AND MISSION

HDFC BANK

VISION

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to
accomplish the vision of becoming a world-class Indian bank.

MISSION

HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against

international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.

Business strategy emphasizes the following :

 Increase the market share in India’s expanding banking and financial services
industry by following a disciplined growth strategy focusing on quality and not
on quantity and delivering high quality customer service. 

 Leverage the technology platform and open scalable systems to deliver more
products to more customers and to control operating costs. 

 Maintain the current high standards for asset quality through disciplined credit 

11 | P a g e
 HDFC BANK

risk management.

 Develop innovative products and services that attract the targeted customers and
address inefficiencies in the Indian financial sector. 

 Continue to develop products and services that reduce the cost of funds. 

 Focus on high earnings growth with low volatility. 

ICICI BANK

VISION
To be the leading provider of financial services in India and a major global bank

MISSION
We will leverage our people, technology, speed and financial capital to

 Be a banker of first choice of customer by delivering high quality, world class

product and services 

 Expand the frontiers of our business globally 

 Maintain high standers of governance and ethics 

 Create value of our stake holder 

 Contribute positively to the various countries and market in which operate. 

ANALYSIS:
ICICI banks main focus as we can analyse from its vision and mission is on, people
technology and increasing market capital. It also wants to add value to its stake holder.
Delivering quality is also their main focus of interest. They have not mentioned about any
Corporate social responsibility but maintain ethics is something in their agenda.

12 | P a g e
 HDFC BANK

COMPERATIVE ANALYSIS OF HDFC AND ICICI BANK

PARAMETER HDFC BANK ICICI BANK

Markets YES YES
Technology YES YES
Survival growth and profit YES YES
Philosophy YES YES
Self- concept YES YES
Public image NO NO
Employees YES NO
Customers YES YES
Products Services YES YES

2) LONG TERM OBJECTIVE

HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth
in profitability, consistent with the bank’s risk appetite. The bank is committed to maintain
the highest level of ethical standards, professional integrity, corporate governance and
regulatory compliance. HDFC Bank’s business philosophy is based on four core values:
Operational Excellence, Customer Focus, Product Leadership and People.

3) LEADERSHIP
HDFC bank own the leadership awards the Best Bank at Bloomberg UTV's Financial
Leadership Awards 2011 and declared the Best Bank in the Private Sector category at the
NDTV Business Leadership Awards 2010.therefore we can conclude that HDFC is better
in leadership than ICICI bank.

13 | P a g e
 HDFC BANK

Key executive for HDFC bank

Name Board Relationships Title Age
Aditya Puri 15 Relationships Managing Director, Director, Member of Investors 61
Grievance (Share) Committee, Member of Credit Approval
Committee, Member of Risk Policy & Monitoring
Committee, Member of Fraud Monitoring Committee,
Member of Premises Committee and Member of Customer
Service Committee
Sashi Jagdishan No Relationships Head of Finance 47
Bhavesh Zaveri 46 Relationships Head of Operations, Head of Wholesale Banking 46
Operations and Head of Cash Management
Sunil Shah B.com Mba 15 Relationships Managing Director of HDFC Securities Limited and 54
Director of HDFC Securities Limited
Abhay Aima 5 Relationships Head of Equities & Private Banking - Third Party Products 50
& NRI Banking

HDFC bank limited board members

Name Board Relationships Primary Company Age

C. M. Vasudev 32 Relationships HDFC Bank Ltd. 69
Aditya Puri 15 Relationships HDFC Bank Ltd. 61
Harish Engineer 15 Relationships HDFC Bank Ltd. 63
Paresh Sukthankar 15 Relationships HDFC Bank Ltd. 49
Sunil Shah B.com Mba 15 Relationships HDFC Bank Ltd. 54

4) POLICY

RBI is the policy maker of all the banks which is followed by every bank in
India All the monetary policy controlled by RBI
CRR,SLR,REPO RATE.REVERSE REPO RATE is decided by RBI and base rate
decided by individual banks under the guidance of RBI

5) ORGANISATION STRUCTURE

Top to lower level

14 | P a g e
 HDFC BANK

6) FINANCIAL ANALYSIS
HDFC Bank
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 469.34 465.23 457.74 425.38 354.43
Equity Share Capital 469.34 465.23 457.74 425.38 354.43
Share Application Money 0.00 0.00 0.00 400.92 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00
Preference Share Application
0.00 0.00 0.00 0.00 0.00
Money
Employee Stock Opiton 0.30 0.00 2.91 5.49 0.00
Reserves 29,741.11 25,120.83 21,158.15 14,262.74 11,180.72
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net Worth 30,210.45 25,586.06 21,615.89 15,089.04 11,535.15
Deposits 246,539.58 208,287.21 167,297.78 142,644.80 100,631.38
Borrowings 26,334.15 14,650.44 13,171.80 2,775.84 4,478.86
Total Debt 272,873.73 222,937.65 180,469.58 145,420.64 105,110.24
Minority Interest 183.66 121.66 75.89 43.35 36.92
Policy Holders Funds 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Other Liabilities & Provisions 37,786.88 29,317.57 20,783.21 22,844.24 16,510.76
Total Liabilities 340,871.06 277,841.28 222,868.68 183,353.92 133,156.15
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Assets
Cash & Balances with RBI 14,991.63 25,100.89 15,483.31 13,527.22 12,553.18
Balance with Banks, Money at
6,183.53 4,737.39 14,594.88 4,009.94 2,274.80
Call
Advances 198,837.53 160,831.42 126,162.73 99,027.37 63,426.90
Investments 96,795.11 70,276.67 58,508.28 58,715.15 49,288.01
Gross Block 6,024.90 5,328.86 4,777.65 4,019.68 2,437.58
Accumulated Depreciation 3,646.99 3,127.91 2,628.59 2,287.40 1,241.29
Net Block 2,377.91 2,200.95 2,149.06 1,732.28 1,196.29
Capital Work In Progress 0.00 0.00 0.00 0.00 0.00
Other Assets 21,869.30 13,626.33 5,205.07 5,528.89 4,453.89
Minority Interest 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Total Assets 341,055.01 276,773.65 222,103.33 182,540.85 133,193.07

Contingent Liabilities 844,393.94 559,718.86 466,309.73 396,639.98 208,498.36

Bills for collection 39,610.71 28,869.10 20,940.13 17,939.62 17,092.85
Book Value (Rs) 128.74 549.97 472.23 345.29 325.45

15 | P a g e
 HDFC BANK

P/L account
Profit & Loss account ------------------- in Rs. Cr. -------------------

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Income

Interest Earned 27,286.35 19,928.21 16,172.90 16,332.26 10,115.00

Other Income 5,333.41 4,433.51 3,810.62 3,470.63 2,205.38

Total Income 32,619.76 24,361.72 19,983.52 19,802.89 12,320.38

Expenditure

Interest expended 14,989.58 9,385.08 7,786.30 8,911.10 4,887.12

Employee Cost 3,399.91 2,836.04 2,289.18 2,238.20 1,301.35

Selling and Admin Expenses 2,647.25 2,510.82 3,395.83 2,851.26 974.79

Depreciation 542.52 497.41 394.39 359.91 271.72

Miscellaneous Expenses 5,873.42 5,205.97 3,169.12 3,197.49 3,295.22

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Operating Expenses 9,241.64 8,045.36 7,703.41 7,290.66 3,935.28

Provisions & Contingencies 3,221.46 3,004.88 1,545.11 1,356.20 1,907.80

Total Expenses 27,452.68 20,435.32 17,034.82 17,557.96 10,730.20

Mar '15 Mar '14 Mar '13 Mar '12 Mar '11

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit for the Year 5,167.09 3,926.40 2,948.70 2,244.94 1,590.18

Extraordionary Items -2.12 -2.65 -0.93 -0.59 -0.06

16 | P a g e
 HDFC BANK

Profit brought forward 6,174.24 4,532.79 3,455.57 2,574.63 1,932.03

Total 11,339.21 8,456.54 6,403.34 4,818.98 3,522.15

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,009.08 767.62 549.29 425.38 301.27

Corporate Dividend Tax 163.70 124.53 91.23 72.29 51.20

Per share data (annualised)

Earning Per Share (Rs) 22.02 84.40 64.42 52.77 44.87

Equity Dividend (%) 215.00 165.00 120.00 100.00 85.00

Book Value (Rs) 127.52 545.53 470.19 344.44 324.38

Appropriations

Transfer to Statutory Reserves 1,250.08 997.52 935.15 641.25 436.05

Transfer to Other Reserves 516.70 392.64 294.87 224.50 159.02

Proposed Dividend/Transfer to
1,172.78 892.15 640.52 497.67 352.47
Govt

Balance c/f to Balance Sheet 8,399.65 6,174.24 4,532.79 3,455.57 2,574.61

Total 11,339.21 8,456.55 6,403.33 4,818.99 3,522.15

------------------
Cash Flow ------------------- -inRs.Cr.

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Net Profit Before Tax 7513.17 5818.66 4289.14 3299.25 2280.63

Net Cash From Operating Activities -11355.61 -375.83 9389.89 -1736.14 3583.43

Net Cash (used in)/from

-686.85 -1122.74 -551.51 -663.78 -619.82
Investing Activities

17 | P a g e
 HDFC BANK

Net Cash (used in)/from

3286.19 1227.99 3598.91 2964.66 3628.34
Financing Activities

Net (decrease)/increase In Cash

-8731.11 -273.56 12435.78 564.74 6591.95
and Cash Equivalents

Opening Cash & Cash Equivalents 29668.83 29942.40 17506.62 14778.34 8074.54

Closing Cash & Cash Equivalents 20937.73 29668.83 29942.40 15343.08 14666.49

ANALYSIS BASED ON KEY FINANCIAL RATIOS

Ratios Mar 2015 Mar 2014 Mar 2013 Mar 2012 Mar 2011

Dividend per share 4.3 16.5 12 10 8.5

Earning per share 22.01 84.42 64.33 52.68 44.85

Current ratio 0.58 0.5 0.28 0.27 0.26

QUICK / LIQUID 6.2 6.89 7.14 5.23 4.89

RATIO

NET PROFIT 22.69 22.72 21.72 22.16 22.16

RATIO

EARNING PER SHARE

Earning per share reduces because company introduces equity share capital in the market
during the financial year as a result dividend per share also declines

CURRENT RATIO

Ideal current ratio with 2:1 (or) more is considered as satisfactory position of the firm.
Which indicate that current assets should be twice as compared to the current liabilities. So
in that organization the current ratio is very high that will not indicate a favourable position.
As it means that there is excessive investment in current assets is made. This will result in
decreasing in profitability due to blocking of large funds in working capital.

18 | P a g e
 HDFC BANK

QUICK / LIQUID RATIO

Quick ratio is more rigorous test of liquidity than the current ratio. The term liquidity refers
to the ability to pay its short term obligations as and when they become due. As a rule of
thumb quick ratio of 1:1 is considered satisfactory.

Quick Ratio = Quick/ liquid Assets

Current liabilities

OPERATING RATIO

Operating ratio establishes the relationship between cost of goods sold and other
operating expenses on the one hand and sales on the other hand. Operating ratio
indicates the percentage of net sales that is consumed by operating cost. Higher the
operating ratio is less favourable for the company because it would have small
margin to cover interest, income tax , dividend and reserve.

The operating profit ratio is used to measure the relationship between net profits and sales
of a firm. Depending on the concept, it will decide. Operating profit is the profit arising out
of business operations on.

NET PROFIT RATIO

Net profit ratios establish a relationship between net profit after tax and sales and
indicate the efficiency of the management in controlling the expenses of the
company.

Net profit ratio = Net profit after tax * 100

Net sales

19 | P a g e
 HDFC BANK

SWOT ANALYSIS OF HDFC BANK

Strengths

HDFC bank is the second largest private banking sector in India having 2,201
branches and 7,110 ATM’s
HDFC bank is located in 1,174 cities in India and has more than 800 locations to
serve customers through Telephone banking
The bank’s ATM card is compatible with all domestic and international Visa/Master
card, Visa Electron/ Maestro, Plus/cirus and American Express. This is one reason for
HDFC cards to be the most preferred card for shopping and online transactions
HDFC bank has the high degree of customer satisfaction when compared to other
private banks
The attrition rate in HDFC is low and it is one of the best places to work in private
banking sector
HDFC has lots of awards and recognition, it has received ‘Best Bank’ award from
various financial rating institutions like Dun and Bradstreet, Financial express,
Euro money awards for excellence, Finance Asia country awards etc
HDFC has good financial advisors in terms of guiding customers towards right
investments

Weakness
HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank its
direct competitor is expanding in rural market
HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard
core loyals in terms of banking services.
HDFC lacks in aggressive marketing strategies like
ICICI The bank focuses mostly on high end clients
Some of the bank’s product categories lack in performance and doesn’t have reach
in the market
The share prices of HDFC are often fluctuating causing uncertainty for the investors

20 | P a g e
 HDFC BANK

Opportunities
HDFC bank has better asset quality parameters over government banks, hence the
profit growth is likely to increase
The companies in large and SME are growing at very fast pace. HDFC has good
reputation in terms of maintaining corporate salary accounts
HDFC bank has improved it’s bad debts portfolio and the recovery of bad debts are
high when compared to government banks
HDFC has very good opportunities in abroad
Greater scope for acquisitions and strategic alliances due to strong financial position

Threats
HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is
a slight variation it’s not a good sign for the financial health of the bank
The non banking financial companies and new age banks are increasing in India
The HDFC is not able to expand its market share as ICICI imposes major threat
The government banks are trying to modernize to compete with private banks
RBI has opened up to 74% for foreign banks to invest in Indian market.

21 | P a g e
 HDFC BANK

COMPETITION ANALYSIS
1) Industry Structure (Using Porter’s five forces model)
PORTER'S FIVE FORCES MODEL
Porter's five forces analysis is a framework for industry analysis and business strategy
development formed by Michae l E. Porter of Harvard Business School in 1 979. It draws
upon industrial organization (IO) economics to derive five forces that determine the
competitive intensity and therefore attractiveness of a market. Attractiveness i n this context
refers to the overall industry profitability. An "unattractive" industry is one in which the
combination of these five forces acts to drive down overall profitability. A very unattractive
industry would be one approaching "pure competition", in which available profits for all
firms are driven to normal profit.

Three of Porter's five forces refer to competition from external sources. The remainder are
internal threats

They consist of those forces close to a company that affect its ability to serve its customers
and make a profit. A change in any of the forces normally requires a business unit to re-
assess the marketplace given the overall change in industry information.

22 | P a g e
 HDFC BANK

INDUSTRY ANALYSIS OF HDFC BANK

FIVE FORCE HIGH/ MEDIUM/ REMARK

LOW

Threat of new entrants Low For any new entrants permission

should be granted from RBI, and it is
not easy to have the permission. There
was many political and legal issue.
And the early investment was very
high.

Bargaining power of Medium Customer can switch to any other bank

customers very easily if service was not good
because switching cost is low. But
most of time customers are having their
account in most of the bank and they
know that every bank provide similarly
the same service.

Bargaining power of Low In bank industry there is no such

suppliers supplier.

Threat of substitutes High Because there are many public and

private bank. And also the post office
provide some of the services, many
private firm provide easy loan scheme
to attract the customers. People also
started investing their money instead of
saving them like stock market, mutual
funds , property etc.

Degree of rivalry High There are large numbers of public and

private bank and market growth rate
was also high. The switching cost was
also very low and the services provide
by all the bank was same.

23 | P a g e
 HDFC BANK

2) Competitive Profile Matrix (Based on Key Success factors)

HDFC Bank has revised its deposit rates. The rates have been changed for maturities
ranging from six months 17 days to five years. The bank is also offering a maximum of
8.75% interest on its retail term deposits.

ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis
points. The revised rates are effective from Tuesday, the bank said on its website. The
lender has cut rates across maturities ranging from 91 days to less than five years. It now
offers a maximum 8.75% interest on retail term deposit compared to 9.25% earlier.

Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.

The moves hardly surprised the industry analysts as they have been expecting lenders to
reduce their deposit rates to protect dilution in their interest margins.

Last week, State Bank of India (SBI), the largest commercial bank in the country had pared
its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to
mirror this move.

The net interest margin of banks has been under stress as the increase in cost of deposits has
outpaced the rise in yield on advances in the past one year. As loan demand has remained
largely muted so far this year the pressure on the margins is expected to intensify further.

Bank New Rates Effective Date

HDFC Bank 4.00 - 8.75 12-Sep-12

ICICI Bank 4.75 - 8.75 11-Sep-12

Axis Bank 3.50 - 9.25 11-Sep-12

Note: The new rates are applicable on deposits up to Rs 1 cr.

24 | P a g e
 HDFC BANK

ANALYSIS ON THE BASIS OF KEY SUCCESS FACTOR

key HDFC BANK ICICI BANK SBI BANK

FACTORS WEIGHT RATING WAS RATING WAS RATING WAS

No. of
Branches .1
4 0.4 4 0.4 5 0.5
NPA .2

4 0.8 3 0.6 2 0.4

Business
per
Employee .3 3 0.9 4 1.2 2 0.6
SERVICES .3

4 1.2 4 1.2 2 0.6

Revenue .1

3 0.3 1 0.1 4 0.4

Total score 1.0

19 3.6 16 3.5 15 2.5

average

3.8 3.2 3.0

Since average of HDFC bank is higher than SBI bank and ICICI bank that’s means HDFC
bank is more preferred bank than any other bank. The reason behind this is HDFC bank
have low NPA ratio and service provided by the bank is also better than any other bank.

25 | P a g e
 HDFC BANK

BCG MATRIX
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1970 to help corporations with analyzing their business units or
product lines. This helps the company allocate resources and is used as an analytical tool in
brand marketing, product management, strategic management, and portfolio analysis.

HDFC Bank
HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high market
growth and they also have high market share. There is a lot of growth potential for the
banking industry because of increasing disposable income of customers, increasing working
class, more volatility in other markets also increasing importance of savings and already
discussed almost 30% of the market is still untapped.

26 | P a g e
 HDFC BANK

HDFC Insurances
In insurance sector HDFC’s most of the products are in star position. HDFC insurance
products have high market share and high growth rate. So we have lot of opportunity for
investment.
HDFC Mutual Funds
Mutual fund stands at cash cow. This shows that HDFC high market share and low market
growth rate in mutual funds. This means we should only focus on profitable products and
try to investment on those products which are low market growth rate but perform well if
proper investment is theirs.

27 | P a g e
 HDFC BANK

CONCLUSION
Banking is also now being regarded as a versatile financial planning tool. Research
indicates that Indians have four basic financial needs during their life asset accumulation
(such as buying a house or car), protecting their family, securing their children’s education,
and provision for their retirement. India being a country having a huge population of around
one billion people with only 32% of the banking population in India possessing banking the
country has a vast potential, which has been left untapped till now.

With this prospect HDFC is continuously working in this direction, but there are several
competitors already in the market with the similar strategy. This project concludes that with the
changing economical and political scenario bank sector faces many ups and downs but in order
to maintain the position HDFC needs to follow some differentiating strategy. Because it has a
very fine line of difference with its competitor ICICI and can outshine HDFC.

The project has given the clear cut vision as to how to differentiate its strategy from other
competitors an how to use the strength and convert the weakness of others as an opportunity.

28 | P a g e
 HDFC BANK

REFERENCES

1. www.moneycontrol.com

2. www.economictimes.com

3. www.hdfc.com

4. www.icici.com

5. www.sbi.in

6. www.10paisa.com

7. http://investing.businessweek.com/research/stocks/private/people.asp?privcapId=1016
77

8. http://www.marketing91.com/swot-analysis-hdfc/

9. http://www.rbi.org.in/scripts/ATMView.aspx

10. www.wikipedia.com

29 | P a g e