presentation1 hdfc& cbop

8/9/2019 Presentation1 hdfc& cbop

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HDFC BANK

AND

CENTURION

BANK OF

PUNJAB


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BASICS

What is merger?

What is Acquisition?

Why merger and Acquisition ?


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Special about the topic

HDFC bank acquire CBOP

28th February 2008


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HDFC BANK

Promoted by HDFC in 1995

11 million customer

Branches

Earnings


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MANAGEMENT

Aditya puri

Managing Director

Mr. Harish Engineer

Mr. PareshSukthankar

Mr. KekiM.Mistry

Mr. CM Vasudev

Dr. Pandit PalandeMr. Ashim Samanta

Mrs. Renu Karnad

Managing Director Directors


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CENTURION BANK OF PUNJAB

Formed in 2005

Customer Strength

Branches

Earnings


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MANAGEMENT

Riana Talwar

Y KModi Kamlesh Vilkamsey

S V Venkiteswaran

K K Abdul Razak

Anju Kumar S K Jain

Managing Director Directors

Mr. SailendraBhandari


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KEY BUSINESS PARAMETERS

HDFC BANK CBOP

Branches (Nos) 754 394

ATM (Nos) 1906 452

Customer a/c 10 2

Debit card 5 1.1

Credit cards 3.2 0.2

(figures are in million)


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WHYMERGER- HDFCAND CBOP

Increase in HDFCs advances and deposits by 20 %

Expected increase in banks branch network from 754 to 1148

branches.

The employees are highly talented and efficient

The CBOP bank has strong leadership in market


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WHYMERGER-CBOP

Premium valuation of CBOP

Increase in CASA ratios of CBOP

Technological benefits

Ability to deliver world class service with rapid response

time


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MAJOR ISSUES INVOLVED

Valuation of CBOP is critical as HDFC will have to pay 1/3rd of values getting from its own branches

CBOP has workers union inherited from lord Krishna

Bank where as HDFC has worked under union freeenvironment

CBOP- low cost of operations and low cost of products

HDFC- more universal and sophisticated

More positives than negatives and merger was on righttrack

A friendly merger


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AWIN-WIN SITUATION

Both companies have strong points.

The deal will increase footprint and asset holding.

Network concentration in different parts

CBOP has 170 branches in north and 140 in south region whereas HDFC has 250 in north and 150 in south

The HDFC has net margin of 4.3 % and CBOP has 3.6 %


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The CASA ratio stands at 50.9% for HDFC and 24.5% forcbop

The capital adequacy for HDFC Bank stands at 13.8% asagainst 11.5% for CBoP.

CBOP has good amount of foreign holding

Advances: cbop has 15000 crores and hdfc has 71500crores.

Deposits: 20000 crores with cobp whereas 100000 crorewith HDFC

On financial parameters the merger would create strongbanking entity


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AFTERMATH OFMERGERNetwork expansion

-Network expansion in terms of state wise branches

-Dominance in areas of two-wheelers, mortgages, personal loans and

commercial vehicles.

HDFC have emerged as biggest private banks in terms of branches

Positive aspects of merger

Negative aspects of merger


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The CASA ratio stands at 50.9% for HDFC and 24.5% forcbop

The capital adequacy for HDFC Bank stands at 13.8% asagainst 11.5% for CBoP.

CBOP has good amount of foreign holding

Advances: cbop has 15000 crores and hdfc has 71500crores.

Deposits: 20000 crores with cobp whereas 100000 crorewith HDFC

On financial parameters the merger would create strongbanking entity


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MAJOR BENEFITSACCRUED

Region wise distribution

reach:

Particulars CBOP HDFC

Metro 127 287

Non- metro 267 467

Metro

proportion

32% 38%

Non-metro

proportion

68% 62%


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Complementary overlay

Higher productivity to help HDFC bank to bring down cost toincome ratio.

Strong and experienced management team would add tointernational business

Performance improvement and benefits to accrue over mediumterm

HDFC CBOP


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POST MERGER SCENARIO

Retail segment would continue to be main focus

Post merger the HDFCs stake was expected to fall by18.7%

Issue of 26.3 million share to maintain its 23.28%

stake HDFC was to infuse 39 bn to maintain ownership

CBoP with weaker asset profile with net NPAs of1.6% as against 0.4% for HDFC Bank. Going forward,HDFC Bank (combined entity) would aim to maintain

its NPA profile at these levels, which would require acharge of ~Rs2bn.

In addition, it is expected that HDFC Bank wouldprovide for another Rs1.5bn towards any potentialNPAs.


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POST MERGER SNAPSHOT RSMNParameters HDFC CBOP Merged entity

Branch 754 394 1148

ATM 1906 452 2358

Deposits 993869 207100 1200969

CASA ratio% 51 25 46

Share capital 3541 1873 4301

Net Worth 113584 19633 225742

Total Assets 1,314,395 254039 1660959

PAT 11415 1214 12629


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GROWTH IN PAT

Post merger in FY 09 PAT rose from 15902 to

22450 rs mn

EPS also increased from 44.9 rs to 52.8 rs.

presentation1 hdfc& cbop

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