fam project
TRANSCRIPT
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Financial Statement Analysis of
HDFC & ICICI Bank
Submitted By:
Gaurav Tripathi (11DCP074)
Nirvan Rustagi (11DCP085)
Yudhvir Singh (11DCP103)
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Contents
Objective ................................................................................................................................................. 3
HDFC Bank Introduction ....................................................................................................................... 3ICICI Bank Introduction ........................................................................................................................ 3
Methodology ........................................................................................................................................... 4
Ratio Analysis .......................................................................................................................................... 8
Conclusion ................................................................................................ Error! Bookmark not defined.
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Objective
The objective of this project is to analyse the financial position of two leading banks in the Indian
banking sector by using trend analysis, common size analysis and ratio analysis method of evaluation
and present a comparative study over a period of 5 years from 2006-07 to 2010-11.
HDFC Bank Introduction
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 the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated inAugust 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.
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.
ICICI Bank Introduction
ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34 billion (US$ 91 billion) at
March 31, 2011 and profit after tax Rs. 51.51 billion (US$ 1,155 million) for the year ended March 31,
2011. The Bank has a network of 2,533 branches and 6,700 ATMs in India, and has a presence in 19
countries, including India.
ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialised subsidiaries in the areas
of investment banking, life and non-life insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and
representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.
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Methodology
Analysis of financial statements of HDFC Bank and ICICI Bank has been carried out for the
period 20062010. As a first step financial statements of both the companies have been
downloaded from their respective corporate website and the data that are required for ouranalysis are tabulated below:
HDFC Bank
Balance Sheet in Rs. Cr.
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Capital and Liabilities:
Total Share Capital 319.39 354.43 425.38 457.74 465.23
Equity Share Capital 319.39 354.43 425.38 457.74 465.23Share Application Money 0 0 400.92 0 0
Preference Share Capital 0 0 0 0 0
Reserves 6,113.76 11,142.80 14,226.43 21,064.75 24,914.04
Revaluation Reserves 0 0 0 0 0
Net Worth 6,433.15 11,497.23 15,052.73 21,522.49 25,379.27
Deposits 68,297.94 1,00,768.60 1,42,811.58 1,67,404.44 2,08,586.41
Borrowings 2,815.39 4,478.86 2,685.84 12,915.69 14,394.06
Total Debt 71,113.33 1,05,247.46 1,45,497.42 1,80,320.13 2,22,980.47
Other Liabilities & Provisions 13,689.13 16,431.91 22,720.62 20,615.94 28,992.86
Total Liabilities 91,235.61 1,33,176.60 1,83,270.77 2,22,458.56 2,77,352.60
Assets
Cash & Balances with RBI 5,182.48 12,553.18 13,527.21 15,483.28 25,100.82
Balance with Banks, Money at Call 3,971.40 2,225.16 3,979.41 14,459.11 4,568.02
Advances 46,944.78 63,426.90 98,883.05 1,25,830.59 1,59,982.67
Investments 30,564.80 49,393.54 58,817.55 58,607.62 70,929.37
Gross Block 1,917.56 2,386.99 3,956.63 4,707.97 5,244.21
Accumulated Depreciation 950.89 1,211.86 2,249.90 2,585.16 3,073.56
Net Block 966.67 1,175.13 1,706.73 2,122.81 2,170.65
Capital Work In Progress 0 0 0 0 0Other Assets 3,605.48 4,402.69 6,356.83 5,955.15 14,601.08
Total Assets 91,235.61 1,33,176.60 1,83,270.78 2,22,458.56 2,77,352.61
Contingent Liabilities 2,02,126.73 5,82,835.94 3,96,594.31 4,66,236.24 5,59,681.87
Bills for collection 7,211.88 17,092.85 17,939.62 20,940.13 28,869.10
Book Value (Rs) 201.42 324.38 344.44 470.19 545.53
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HDFC Bank
Profit & Loss account in Rs. Cr.
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Income
Interest Earned 6,889.02 10,115.00 16,332.26 16,172.90 19,928.21
Other Income 1,510.24 2,205.38 3,470.63 3,810.62 4,433.51
Total Income 8,399.26 12,320.38 19,802.89 19,983.52 24,361.72
Expenditure
Interest expended 3,179.45 4,887.12 8,911.10 7,786.30 9,385.08
Employee Cost 776.86 1,301.35 2,238.20 2,289.18 2,836.04
Selling and Admin Expenses 727.53 974.79 2,851.26 3,395.83 2,510.82
Depreciation 219.6 271.72 359.91 394.39 497.41
Miscellaneous Expenses 2,113.28 3,295.22 3,197.49 3,169.12 5,205.97
Preoperative Exp Capitalised 0 0 0 0 0
Operating Expenses 2,590.66 3,935.28 7,290.66 7,703.41 8,045.36
Provisions & Contingencies 1,246.61 1,907.80 1,356.20 1,545.11 3,004.88
Total Expenses 7,016.72 10,730.20 17,557.96 17,034.82 20,435.32
Net Profit for the Year 1,382.54 1,590.18 2,244.94 2,948.70 3,926.40
Extraordionary Items -0.35 -0.06 -0.59 -0.93 -2.65
Profit brought forward 1,455.02 1,932.03 2,574.63 3,455.57 4,532.79
Total 2,837.21 3,522.15 4,818.98 6,403.34 8,456.54
HDFC Bank
Cash Flowin Rs. Cr.
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Net Profit Before Tax 1638.75 2280.63 3299.25 4289.14 5818.66
Net Cash From OperatingActivities
666.63 3583.43 -1736.14 9389.89 -375.83
Net Cash (used in)/frominvesting activities
-311.4 -619.82 -663.78 -551.51 -1122.74
Net Cash (used in)/fromFinancing Activities
1637.88 3628.34 2964.66 3598.91 1227.99
Net (decrease)/increase InCash and Cash Equivalents
1993.11 6591.95 564.74 12435.78 -273.56
Opening Cash & CashEquivalents
6188.66 8074.54 14778.34 17506.62 29942.4
Closing Cash & CashEquivalents
8181.77 14666.49 15343.08 29942.4 29668.83
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ICICI BankBalance Sheet in Rs. Cr.
2006-07 2007-08 2008-09 2009-10 2010-11
Capital and Liabilities:
Total Share Capital 1,249.34 1,462.68 1,463.29 1,114.89 1,151.82
Equity Share Capital 899.34 1,112.68 1,113.29 1,114.89 1,151.82
Share Application Money 0 0 0 0 0.29
Preference Share Capital 350 350 350 0 0
Reserves 23,413.92 45,357.53 48,419.73 50,503.48 53,938.82
Net Worth 24,663.26 46,820.21 49,883.02 51,618.37 55,090.93
Deposits 2,30,510.19 2,44,431.05 2,18,347.82 2,02,016.60 2,25,602.11
Borrowings 51,256.03 65,648.43 67,323.69 94,263.57 1,09,554.28
Total Debt 2,81,766.22 3,10,079.48 2,85,671.51 2,96,280.17 3,35,156.39
Other Liabilities & Provisions 38,228.64 42,895.39 43,746.43 15,501.18 15,986.35
Total Liabilities 3,44,658.12 3,99,795.08 3,79,300.96 3,63,399.72 4,06,233.67
Assets
Cash & Balances with RBI 18,706.88 29,377.53 17,536.33 27,514.29 20,906.97
Balance with Banks, Money at Call 18,414.45 8,663.60 12,430.23 11,359.40 13,183.11
Advances 1,95,865.60 2,25,616.08 2,18,310.85 1,81,205.60 2,16,365.90
Investments 91,257.84 1,11,454.34 1,03,058.31 1,20,892.80 1,34,685.96
Gross Block 6,298.56 7,036.00 7,443.71 7,114.12 9,107.47
Accumulated Depreciation 2,375.14 2,927.11 3,642.09 3,901.43 4,363.21
Net Block 3,923.42 4,108.89 3,801.62 3,212.69 4,744.26
Capital Work In Progress 189.66 0 0 0 0
Other Assets 16,300.26 20,574.63 24,163.62 19,214.93 16,347.47
Total Assets 3,44,658.11 3,99,795.07 3,79,300.96 3,63,399.71 4,06,233.67
Contingent Liabilities 1,77,054.18 3,71,737.36 8,03,991.92 6,94,948.84 8,83,774.77
Bills for collection 22,717.23 29,377.55 36,678.71 38,597.36 47,864.06
Book Value (Rs) 270.37 417.64 444.94 463.01 478.31
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ICICI Bank
P & L Statement in rs Cr.
Income 2006-07 2007-08 2008-09 2009-10 2010-11
interest income 22994.29 30788.34 31092.55 25706.93 25974.05
other income 6962.95 8878.85 8117.76 7292.43 7108.91
Total 29957.24 39667.19 39210.31 32999.36 33082.96
expenditure
interest expenditure 16358.5 23484.24 22725.93 17592.57 16957.15
employee cost 1616.75 2078.9 1971.7 1925.79 2816.93
selling and admin expenses 4900.67 5834.95 5977.72 6056.48 3785.13
depriciation 544.78 578.35 678.6 619.5 562.44
miscellaneous expenses 3426.32 3533.03 4098.22 2780.03 3809.93
preoperative exp capitalised 0 0 0 0 0
operating expenses 8849.86 10855.18 10795.14 10221.99 8594.16provisions and contingencies 1638.66 1170.05 1931.1 1159.81 2380.27
total expenses 26947.02 35509.47 35452.17 28974.37 27931.58
net profit 3110.22 4157.73 3758.13 4024.98 5151.38
ICICI Bank
Cash Flowin Rs. Cr.
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Net Profit Before Tax 3648.04 5056.1 5116.97 5345.32 6760.7
Net Cash From OperatingActivities
23061.95 -11631.15 -14188.49 1869.21 -6908.92
Net Cash (used in)/fromInvesting activities
-18362.67 -17561.11 3857.88 6150.73 -2108.82
Net Cash (used in)/fromFinancing activities
15414.58 29964.82 1625.36 1382.62 4283.2
Net (decrease)/increase InCash and Cash Equivalents
20081.1 683.55 -8074.57 8907.13 -4783.61
Opening Cash & CashEquivalents
17040.22 37357.58 38041.13 29966.56 38873.69
Closing Cash & CashEquivalents
37121.32 38041.13 29966.56 38873.69 34090.08
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Ratio Analysis
Liquidity Analysis: The liquidity analysis is carried to determine a companys ability to pay off.
Current Ratio: - Ability of a company to meet short term debt obligations
Liquidity Analysis
Current Ratio
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
HDFC 0.04 0.04 0.04 0.03 0.06
ICICI 0.09 0.11 0.13 0.14 0.11
The current Ratio of both the companies is very weak. An ideal ratio is 2:1 which nowhere is
close to the existing ratio. The low current ratio is due to the high short term deposits of the
companies, which act as inventories for banks. Due to this the quick ratio is comparatively
very high as compared to the current ratio.
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Current Ratio
HDFC
ICICI
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Quick Ratio: - A measure of short term debt paying ability
Quick Ratio
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
HDFC 4.07 4.89 5.23 7.14 6.89
ICICI 6.04 14.7 5.94 6.42 15.86
The quick ratio of both the companies is very strong indicating a very healthy short term liquidity
situation.
0
2
4
6
8
10
12
14
16
18
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Quick Ratio
HDFC
ICICI
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Profitability Analysis:- It is a measure of profitability of a company
Net Profit Ratio: - A measure of profitability of the company
Net Profit Ratio
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11HDFC 13.57 12.82 11.35 14.76 16.09
ICICI 10.81 10.51 9.74 12.17 15.91
The net profit ratio is very decent for both the companies and lies within the industry acceptable
standards of 10-15%. This implies that net profit is a fair margin of the total sales which further
implies that the expenses incurred to turn in the sales are paying off along with a good margin held
in sales.
0
2
4
6
8
10
12
14
16
18
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Net Profit Ratio
HDFC
ICICI
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Return on Assets:- Measure of productivity of assets
Return On Assets
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
HDFC 6.37% 6.30% 6.83% 5.52% 5.88%
ICICI 6.12% 7.21% 7.49% 6.27% 6.03%
The returns on assets of both the companies is identical but at the same time lower than the
industry norms of 10% (average). This basically means that the management of both the companies
is not able to profitably convert the assets into operating profit. This is a weak sign on the part of themanagement as it gives a negative outlook to future investors of both debt and equity.
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2007 2008 2009 2010 2011
Return on Assets
ICICI
HDFC
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Return on Net Worth:
Return On Net Worth
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11
HDFC 23.57 13.83 15.32 13.7 15.47
ICICI 12.31 8.8 7.55 7.53 9.27
Both the companies have a very strong return to net worth ratio indicating a bright prospect forfuture equity investors. Another positive sign for the companies is that even though their net worth
has constantly increased due to retained earnings added back, the company is still able to generate
operating profits in line to maintain a decent ratio indicating a good profitable picture of both the
companies.
0
5
10
15
20
25
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Return On net worth
HDFC
ICICI
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Leverage Analysis:- Means of using borrowed money to earn a return greater than the cost of
borrowing
DebtEquity Ratio:
Debt Equity RatioMar 07 Mar 08 Mar 09 Mar 10 Mar 11
HDFC 10.62 8.76 9.75 7.78 8.22
ICICI 9.5 5.27 4.42 3.91 4.1
Even though the debt equity ratio of both the companies is on the higher side, ICICI has managed to
balance it out a bit in the recent past by managing their dividend payout and retained earnings well.
Also HDFC has raised substantial capital but they have been unable to create a good balance as they
have taken a more than proportionate debt component into their capital structure. This can harm
the company in the near future as this will increase the interest component of the company and
harm the near term liquidity situation (quick) of the company which is currently strong.
0
2
4
6
8
10
12
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Debt Equity Ratio
HDFC
ICICI
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Efficiency Analysis:
Cash Deposit Ratio:
Cash Deposit Ratio
Mar 07 Mar 08 Mar 09 Mar 10 Mar 11HDFC 6.84 10.49 10.71 9.35 10.79
ICICI 6.99 10.12 10.14 10.72 11.32
0
2
4
6
8
10
12
Mar '07 Mar '08 Mar '09 Mar '10 Mar '11
Cash Deposit Ratio
HDFC
ICICI
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The comparative cost and other data is attached along with the project.
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
2006-07 2007-08 2008-09 2009-10 2010-11
Trend Analysis - Profit
net profit - icici
Net Profit - hdfc
0.00%
50.00%
100.00%
150.00%
200.00%
250.00%
300.00%
350.00%
2006-07 2007-08 2008-09 2009-10 2010-11
Trend Analysis - Income
Interest Earned - HDFC
interest income - ICICI