A PROJECT REPORT

ON

Financial Analysis of HDFC BANK

Prepared and Presented to

BACHELOR OF BUSINESS ADMINISTRATION

(Affiliated to Ch. Charan Singh University, Meerut)
Academic Session
[2022-2025]

SUBMITTED TO : SUBMITTED BY :
MS. PRACHI SRIVASTAVA VISHAL SINGH
(FACULTY OF BBA) BBA VTH SEMESTER
ROLL . No - 220879105138

HIERANK BUSINESS SCHOOL Affiliated to CCS University,

Meerut INDUSTRIAL AREA, SECTOR-62, NOIDA
A42

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 ACKNOWLEDGEMENT

“ Expression of gratitude is the least one i can do in response to favors

received” the entire journey from the very idea of this research to reality
would not have been possible without the guidelines and support of many
experienced people I would like to thanks my faculty MS. PRACHI SRIVASTAVA.
in completion of this research project report.

A heartfelt thanks to respondents surveyed whose ideas, critical insights and

suggestions have been invaluable in the preparation of this report.

Last but not the least a very warm thanks to all the faculty members of Hierank
Business School Noida Sector 62 for providing me guide lines in research project.

( VISHAL SINGH )

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 DECLARATION

I VISHAL SINGH pursuing bachelor of business administration (BBA)

Vth sem. From HIERANK BUSINESS SCHOOL NOIDA SECTOR 62

in the session (2022 - 2025) I hereby declare that this research project report

titled “ A Project report on Financial analysis of HDFC BANK”

is the outcome of my own effort under the guidance of MS. PRACHI

SRIVASTAVA .

The same report has not been submitted earlier to any institute /university for
awarding the degree of BBA or any other professional course. If there will be

any violation of IPR than I will be solely responsible to that institute/university

has right to Cancel my degree.

Date: VISHAL SINGH

Place: RollNO.220879105138

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 PREFACE

I have put my sincere efforts to accomplish my objectives within

the stipulated time. Despite all limitations, obstructs, hurdle and

hindrance, I have worked to my optimum potential to achieve

desired goals. Being neophytes in the highly competitive world of

business. I came across some difficulties and the guidance of my

supervisor. I am presenting this hand carved effort. I tried my level

best to conduct a research to gain a thorough knowledge about the

project on topic “ A Project report on financial analysis of HDFC

Bank ”. I put the best of my efforts and

have also tried to be justifiable. If anywhere something is found

unacceptable or unnecessary to the theme; you are welcomed with

your valuable suggestions.

Thanks and regards

Page 4
 INDEX

Sr- NO. PARTICULARS PAGE

NO.
1. INTRODUCTION 6-10

1.1 Financial Statement Analysis 11-27

2. COMPANY PROFILE 28-40

2.1 HDFC Bank

3. LITRATURE REVIEW 41-45

4. RESEARCH METHODOLOGY 46-49

4.1 Scope Of The Study 50

4.2 Need Of The Study 51

4.3 Objectives Of The Study 52

4.4 Hypothesis Of The Study 53-54

4.5 Limitations Of The Study 55

5. DATA ANALYSIS & INTERPRETATION 56-66

6. FINDINGS & SUGGETIONS 67-73

7. CONCLUSION 74-78

8. REFERENCE 79
1- INTRODUCTION
INTRODUCTION :

Financial statement analysis is the process of identifying financial

strengths and weaknesses of the firm by properly establishing relationship
between the balance sheet and the profit and loss account.

There are various methods or techniques that are used in analyzing

financial statements, such as comparative statements, schedule of changes
in working capital, common size percentages, funds analysis, trend
analysis, and ratios analysis.

Financial statements are prepared to meet external reporting obligations

and also for decision making purposes. They play a dominant role in
setting the framework of managerial decisions.

But the information provided in the financial statements is not an end in

itself as no meaningful conclusions can be drawn from these statements
alone.

However, the information provided in the financial statements is of

immense use in making decisions through analysis and interpretation of
financial statements.
DEFINITION :

The financial statements provide a summary of the accounts of a business

enterprise, the balance sheet reflecting the asses, liabilities and capital as
on a certain data and the income statement showing the results of
operations during a certain period.
John N. Myer

Define financial statements as, the end product of financial accounting in

a set of financial statements prepared by the accountant of a business
enterprise. That purport to reveal the financial position of the enterprise
the result of it is recent activities, and an analysis of what has been done
with earnings.

Smith and Asburne

Financial statements, essentially, are interim reports presented annually

and reflect a division of the life of an enterprise into more or less arbitrary
accounting period-more frequently a year.
Anthony
Development of accounting standards involves a process, and the
implementation of any processed quiresafew guidelines. Taking this into
perspective, the Accounting Standards Board (ASB) of Institute of
Charted Accountants of India(ICAI), which is the nation’s most
accomplished accounting body, came up with framework which provides
the fundamental basis for the development of new standards and appraisal
of the existing ones. In this article, we review some of the fundamental
concepts based on which financial statements are prepared and presented.

Components of Financial Statements :

Financial statements usually consist of the following:
1. Balance Sheet–

A balance sheet depicts the value of economic resources controlled by an

enterprise, as well as the liquidity and solvency of an enterprise. This is
used to estimate the ability of the enterprise in meeting its financial
commitments.
2. Statement of Profit and Loss-
Portrays the outcome of the functioning of the organization.
3. Cash Flow Statement–
Outlines the way of determination of income, as well assist usage.

4. Notes and Schedules–

Provides supplementary information explaining different modules of
financial statements. A few examples can be risks and uncertainties
affecting an enterprise, accounting policies etc.
Financial Statement Analysis is a method of reviewing and analyzing a
company’ accounting reports (financial statements) in order to gauge its
past, present or projected future performance.

This process of reviewing the financial statements allows for better

economic decision making. Globally, publicly listed companies are
required by law to file their financial statements with their Levant
authorities.

For example, publicly listed firms in America are required to submit their
financial statements to the Securities and Exchange Commission (SEC).
Firms are also obligated to provide their financial statements in the annual
report that they share with their stakeholders.

As financial Statements are prepared in order to meet requirements, the

second step-in the process is to analyze them effectively so that future
profitability and cash flows can beforecasted. Another important purpose
of the analysis of financial statements is to identify potential problem
areas and troubleshoot those.
1.1 - FINANCIAL STATEMENT ANALYSIS
MEANING OF FINANCE:

“Finance is the Provide of money when is required” “Finance is the

process of accumulated funds to productive funds to productive use”.
“Finance has aptly been called the science of money”. “Finance may be
defined as that administrative area or set of administrative functions in An
organization which relate with the arrangement cash and credit, so that the
organization May have the means to carryout its objective as satisfactory
as possible.

FINANCE FUNCTION :
“Finance function is the procurement of funds and their effective
utilization for Business”.

• Establishing asset management politics.

• Determining the allocation of net profit.

• Establishing and controlling cash flows and outside financing.

• Deciding upon needs and sources of new outside financing.

• Checking upon financial performance.

FINANCIAL ANALYSIS :

“Financial analysis is the process of evaluating the relationship

between component parts of financial statements to obtain a
better understanding of the firms position and performance”
“Financial analysis is the identifying strength and weakness
of the firm by properly establishing relationship between the
items of balance sheet and the profit and loss account.

FINANCIAL STATEMENT :

“A financial statement is an organized collection of data

according to logical and consistent accounting its
purpose is to convey an understanding of some financial
Aspects of a business firm. It may show a position at a
movement of time as in the case of A balance sheet or may
reveal a series of activity over a given period of times, as in the
case of an income statement.
TYPES OF FINANCIAL STATEMENT

Income statement: -

It explains what has happened to a business as a result of

Operations between two balance sheet dates.

Balance sheet: -
It is a statement of financial position of a business at a specified
Moment of time.

Statement of retained earrings: -

The term retained earning means the accumulated excess of
earnings over losses and dividend.

STEMENTS OF SHOWING CHANGES IN FINANCIAL

POSITION
Changes in the firms working capital
Changes in the firms cash position
Changes in the firms total financial position.
METHOD OR DEVICES OF FINANCIAL
ANALYSIS

The analysis and interpretation of financial statement is used to

determine the financial Position and results of operations as
well. A number of methods or devices are used to Study the
relationship between different statements. An effort is made to
use those devices which clearly analyze the position of the
enterprise.

The following methods of analysis are generally used:

o Comparative statements.
o Income statement
o Common-size statements
o Trend analysis
o Ratio
OBJECTIVE OF FINANCIAL ANALYSIS :

These future ratios are compared with the actual ratios to find variance,
if any such variance helping interpreting and taking corrective actions.

The main objectives of financial analysis are to assess:

i. The present and future earning capacity of the concern.

ii. The operational efficiency of the concern as a whole and of its

various parts.

iii. The short term and long term solvency of the concern for the benefit
of debenture holders and trade creditors.

iv. To compare the performance of the company with that of another

company or of the same company with previous performance.

TYPES OF THE FINANCIAL ANALYSIS MAY BE

o The nature of the analyst and the material used by him.

o The objective of analysis and
o The modus operandi of the analysis
Internal Analysis

The people who have assessed to the books of accounts make the internal
analysis. They are members of the analysis. Analysis of the financial
statement or other financial data for managerial is the internal type of
analysis. The internal analyst can give more reliable result than the
external analyst because every type of analysis. The internal type of
analysis can give more reliable than the external analyst because every
type of information is athis disposal.

External Analysis

It is made by those persons who aren’t connected with the enterprise’s

they don’t have the assess to the detailed record of the company and have
to depend mostly on published statements such analysis is made by
investors, credit agencies, agencies, government agencies and research
scholars.
ACCORDING TO THE OBJECTIVE OF THE ANALYSIS

Long Term Analysis –

The analysis is made in order to study the long-term financial stability,

solvency, profitability and earning capacity of a company. The purpose of
making such type of analysis is to know whether in the long run the
company will be able to earn a minimum amount, which will be sufficient
to maintain a reasonable rate of return of the investment of the company
and to meet it cot of capital. This type of analysis help the long term
financial planning which essential which essential for the continued
success of the company.

Short Term Analysis –

This is made to determine the short-term solvency and liquidity of the

company. The purpose of this analysis is to know whether in the short run
a company will have adequate funds readily available to meet its short-
term requirements and sufficient borrowing capacity to meet
contingencies in the near future. This analysis is made with reference to
items of current assets and current liabilities (working capital analysis) to
have fairly sufficient knowledge about the company’s position which
maybe helpful short-term financial planning.
KEY FINANCIAL RATIO / POSITION OF HDFC BANK
2020 2021 2022 2023
PROFIT &. LOSS ACCOUNT OF HDFC BANK
BALANCE SHEET OF HDFC BANK
TYPES OF RATIOS

HDFC Bank, like any other financial institution, uses various financial
ratios to analyze its performance and financial health.
Here are some of the key types of ratios typically used:

Profitability Ratios

o Net Interest Margin (NIM): Measures the difference between the

interest income generated and the interest paid out relative to the
amount of their interest-earning assets.
o Return on Assets (ROA): Indicateshow profitable a bank is relative
to its total assets.
o Return on Equity (ROE): Measures the profitability relative to
shareholders’ equity.

Efficiency Ratios
o Cost to Income Ratio: Measures the costs of running a bank as a
percentage of its income.
o Operating Efficiency Ratio: Reflects how efficiently a bank is
operating.

 Liquidity Ratio
o Current Ratio: Indicates the bank’s ability to pay short-term
obligations.
 o Loan to Deposit Ratio: Measures the bank’s loans relative to its
deposits.
o Liquidity Coverage Ratio (LCR):Ensures that the bank has an
adequate stock of unencumbered high-quality liquid assets
(HQLA) that can be easily converted into cash to meet its liquidity
needs for a 30 calendar day liquidity stress scenario.

Asset Quality Ratios

o Gross Non-Performing Assets (GNPA) Ratio: Indicates the
proportion of non-performing assets to total loans.
o NetNon-Performing Assets (NNPA) Ratio: Measures the net non-
performing assets after subtracting provisions.
o Provision Coverage Ratio (PCR):Indicates the proportion of
provisions (reserves) made for NPAs.

Capital Adequacy Ratios

o Capital Adequacy Ratio (CAR) or Capital to Risk (Weighted)
Assets Ratio (CRAR):Measures a bank’s capital in relation to its
risk-weighted assets.
o Tier 1 Capital Ratio: Focuses on core capital, which includes equity
capital and disclosed reserves.

Leverage Ratios
o Debt to Equity Ratio: Measures the bank’s financial leverage.
o Equity Multiplier: Indicates the proportion of a bank’s assets that
are financed by shareholders’ equity.
  Market Ratios
o Earnings Per Share (EPS):Indicates the portion of a company’s
profit allocated to each outstanding share of common stock.
o Price to Earnings (P/E) Ratio: Measures the current share price
relative to its per-share earnings.
o Price to Book (P/B) Ratio: Compares a firm’s market value to its
book value.

These ratios provide insights into various aspects of HDFC Bank’s

performance, including profitability, efficiency, liquidity, asset quality,
capital adequacy, leverage, and market valuation. Each ratio helps
stakeholders to make informed decisions about the bank’sfinancial health
and operational performance.
2- COMPANY PROFILE

2.1- HDFC BANK

COMPANY PROFILE :
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 liberalization 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. HDFC is India’s premier housing finance company and enjoys an
impeccable track record in India as well as in international markets.

Since its inception in 1977, the Corporation has maintained a consistent

and healthy growth in its operations to remain the market leader in
mortgages. Its outstanding loan portfolio covers well over a million
dwelling units.HDFC has developed significant expertise in retail
mortgage loans to different market segments and also has a large corporate
client base for its housing related credit facilities.

With its /experience in the financial markets, a strong market reputation,

large shareholder base and unique consumer franchise,HDFC was ideally
positioned to promote a bank in the Indian environment.HDFC Bank
began operations in 1995 with a simple mission: to be a “World Class
Indian Bank.” We realized that only a single minded focus on product
quality and service excellence would help us get there.
 Today, we are proud to say that we are well on our way towards that goal.
HDFC Bank Limited (the Bank) is an India-based banking company
engaged in providing a range of banking and financial services, including
commercial banking and treasury operations. The Bank has a network of
1412 branches and 3295automated teller machines (ATMs) in 528 cities
and total employees are 52687.

HISTORY OF HDFC BANK :

HDFC BANK LTD 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.

HDFC is India’s premier housing finance company and enjoys an

impeccable track record in India as well as in international markets. Since
its inception in 1977, the Corporation has maintained a consistent and
healthy growth in its operations to remain the market leader in mortgages.
Its outstanding loan portfolio covers well over a million dwelling units.

HDFC has developed significant expertise in retail mortgage loans to

different market segments and also has a large corporate client base for its
housing related credit facilities. With its experience in the financial
markets, a strong market reputation, large shareholder base and unique
consumer franchise, HDFC was ideally positioned to promote a bank in
the Indian environment.
In a milestone transaction in the Indian banking industry, Times Bank
was merged with HDFC Bank Ltd., effective February 26, 2000.

MISSION :

World Class Indian Bank. Benchmarking against international standards.

To build sound customer franchises across distinct businesses. Best
practices in terms of product offerings, technology, service levels, risk
management and audit &compliance

VISION :

The HDFC Bank is committed to maintain the highest level of ethical

standards, professional integrity and regulatory compliance. HDFC
Bank’s business philosophy is based on four core values such as:-
1. Operational excellence.
2. Customer Focus.
3. Product leadership
4. People
 MANAGEMENT OF HDFC BANK:

BUSINESS SEGMENT:

HDFC Bank offers a wide range of commercial and transactional banking

services and treasury products to wholesale and retail customers. The
bank has three key business segments
WHOLESALE BANKING SERVICES :

The Bank’s target market ranges from large, blue-chip manufacturing

companies in the Indian corporate to small & mid-sized corporate 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 structured
solutions, which combine cash management services with vendor and
distributor finance for facilitating superior supply chain management for
its corporate customers. Based on its superior product delivery / service
levels and strong customer orientation, the Bank has made significant
inroads into the banking consortia of a number of leading Indian corporate
including multinationals, companies from the domestic business houses
and prime public sector companies. It is recognized as a leading provider
of cash management and transactional banking solutions to corporate
customers, mutual funds, stock exchange members andbanks

RETAIL BANKING SERVICES :

The objective of the Retail Bank is to provide its target market customers
a full range of financial products and banking services, giving the
customer a one-stop window for all his/her banking requirements. The
products are backed by world-class service and delivered to the customers
through the growing branch network, as well as through alternative
delivery channels like ATMs, Phone Banking, Net Banking and Mobile
Banking.
The HDFC Bank Preferred program for high net worth individuals, the
HDFC Bank Plus and the Investment Advisory Services programs have
been designed keeping in mind needs of customers who seek distinct
financial solutions, information and advice on various investment
avenues. The Bank also has a wide array of retail loan products including
Auto Loans, Loans against marketable securities, Personal Loans and
Loans for Two-wheelers. It is also a leading provider of Depository
Participant (DP) services for retail customers, providing customers the
facility to hold their investments in electronic form.

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 September 30,2005, the bank had a total card base (debit
and credit cards) of 5.2 million cards. The Bank is also one of the leading
players in the “merchant acquiring” business with over50,000 Point-of-
sale (POS) terminals for debit / credit cards acceptance at merchant
establishments.

PRODUCT OF HDFC BANK :

Account & Deposits Service

Banking should be effortless. With HDFC Bank, the efforts are rewarding.
No matter what a customer’s need and occupational status, we have a
range of solutions that are second to none. Whether you’re employed in a
company and need a simple Savings account or run your own business
and require a robust banking partner, HDFC Bank not only has the perfect
solution for you, but also can recommend products that can augment your
planning for the future.
It includes these services:
• Saving accounts.
• Current accounts.
• Fix deposits.
• Demate account.
• Safe deposits locker

Savings Accounts -

These accounts are primarily meant to inculcate a sense of saving for the
future, accumulating funds over a period of time. Whatever person’s
occupation, bank have confident that person will find the perfect banking
solution. There some saving accounts like: -

Regular Saving Account -

An easy-to-operate savings account that allows you to issue cheques, draw

Demand Drafts and withdraw cash. Checkup on your balances from the
comfort of your home or office through Net Banking, Phone Banking and
Mobile Banking. If you need money urgently then you can take money
from the ATM machine. There are 1977ATM centers across the country.

Saving plus Account -

Introducing the best banking option for you with HDFC Bank Savings
plus Account. Now you can get access to some of the finest banking
facilities with HDFC Bank’s Savings plus Account. All you have to do is
maintain an Average Quarterly Balance of Rs. 10,000/-.
 Saving Max Account -

Welcome to a world of convenience. Presenting Savings Max account,

loaded with maximum benefits to make your banking experience a
pleasure. By maintaining an average quarterly balance ofjust Rs. 25,000/-
you get a host of premium services from HDFC Bank absolutely free.

Senior Citizen Account -

HDFC Bank appreciates your needs and endeavors, which is why, they
present an account especially dedicated to customer, which like a dutiful
child will help you fulfill your needs in the best manner possible.

No frills Account -

In an effort to make banking simpler and more accessible for customers,
bank has introduced the ‘No Frills’ Savings Account, which offers
customer all the basic banking facilities. Customer can even avail of
services like Net Banking, Mobile banking free of cost. In this customer
can put Zero Initial Pay-in and a Zero Balance account

Kid’s advantage account -

Start saving for your child today and secure his/her future a sentence tells
by the Hdfc bank. Open a Savings Account and transfer money every
month into customer’s Kids Advantage Account and watch the savings
grow as customer’s child grows. The accumulated savings in the Kids
Advantage Account can over the years help in meeting customer child’s
needs.
Main features and benefits of this account are as follow:-

Current accounts -
HDFC Bank Current Account gives the power of inter-city banking with
a single account and access to more than cities. From special cheques that
get treated at par with local ones in any city where branch, faster collection
of outstation cheques(payable at branch locations), free account to
account funds transfer between HDFCBank accounts to Free inter-city
clearing of up to 100 lakhs per month, bank’s priority services have
become the benchmark for banking efficiency. Supper saver facility

Safe deposit locker -

A Safe Deposit Locker with HDFC Bank is the solution to person’s fear.
Located at select branches in cities all over the country, bank’s lockers
ensure the safekeeping ofvaluables. Eligibility An individual (not minor),
firms, limited company, associations, clubs, trusts, societies, etc may hire
a locker.

Loan Services :
In today’s competitive world every thing happens only with the help of
money or through the money every person need money. But sometime a
person has not cash on hand at that time he needs lone either from any
friend or from any financial institute. Lone dose not mean that only lower
class person needs it but also upper class person it is needed. As per the
requirement of the every person there are much type of loans are there in
the HDFC bank.

Personal loan :
A person has so many dreams but some time due to scarcity of money a
dream can’t be satisfy. So, here one solution for that person this is personal
loan. From this he/she can fulfill their needs or requirement. It can be any
thing either a dream of vacation orson/daughter’s admission to college or
any wedding, so personal loan can be helpful in this entire requirement.
AS person ordered in the hotel for tea or coffee and it is immediately came
fast, same over here any person want to get a personal loan with the
nominal documents he can get the loan.

Home loan :
HDFC Bank brings, HDFC home loans to doorstep. With over 30 years
of experience, a dedicated team of experts and a complete package to meet
all housing finance needs, HDFC Home Loans, help people realize dream.

Vehicles loan :
Nowadays the life is being so fast, time value is becoming more important
so to reach at the destination of any business related occasion or for a boy
to reach college or any20.

Where at the fix time there are so many requirement ofvehicles. But every
people have no capacity to purchase vehicles with cash so for that here in
the HDFC bank vehicles loan is available. There are many types of
vehicles loan.
CARD SERVICES:
 Credit cards
 Debit card
 Kisan Card.
 Prepaid card
 Prepaid Travel Card.
 Gift plus Cards
 Prepaid Gift Card.
 Food plus Cards
 Prepaid Food Plus card.
 Money plus Card
 The Corporate Payment card

AWARDS & RECOGNITION :

3- LITERATURE REVIEW
LITERATURE REVIEW – DEFINITION :

A literature review is a comprehensive summary and analysis of the

existing research and scholarly articles on a particular topic. It involves
critically evaluating, synthesizing, and summarizing the findings and
arguments of various sources to provide a coherent narrative about what
is known, what gaps exist, and what future research directions might be
needed.
Literature reviews serve several purposes, including providing context
for a research project, demonstrating the researcher’s knowledge of the
field, and identifying trends, conflicts, and key insights within the existing
body of work. They are commonly found in research papers, theses,
dissertations, and grant proposals.

Nagalekshmi V.S, Vineetha S.Das

Found that the positive impact of merger Kotak Mahindra Bank

Ltd with ING-Vysya Bank. It also found that momentous increment
in various budgetary like operating profit, net profit, earnings per
share, interest earned, return on assets, equity share capital, income
on investment etc.,

K. Dinesh Kumar and G. Venugopal

Revealed that ICICI Bank good performance of balance sheet ratios

and Debt coverage ratios and next position of HDFC Bank. SBI and
Kotak Mahindra Bank performance is good in profitability ratios.
Murad Mohammad GalifAl-Kaseasbah and Abdel
KarimSalimIssaAlbkour
in their paper entitled, financial performance of Indian
Banking sector: A Case Study of SBI and ICICI Bank.
To examine the financial performance of SBIandICICI
Bank. During the study, it was found that the SBI
recorded fluctuating trend on the other hand ICICI failed
to manage the increasing trend.

Vinoth Kumar and BhawnaMalhothra ,

attempted has been made evaluate the performance
&financial soundness of selected private sector banks in India
for the period 2007-2017 CAMEL approach has been used.
This study concluded that the Axis Bank is ranked first
under the CAMEL analysis followed by ICICI Bank. Kotak
Mahindra Bank occupied the third position. The fourth
position occupied by HDFC Bank and the last position
is occupied by Induslndbank amongst all the selected banks.

SuruchiSatsangiPrem Das Saini

analyzed financial performance of Kotak Mahindra Bank
merger with ING Vysya Bank. The findings of the study
showed the high growth rate which is observed in the
financial performance of the Kotak Mahindra Bank after the
mergers and acquisitions.
PriyankaJha

Analyzed financial performance of Public Sector Banks

(Punjab National Bank) and Private Sector Banks
(ICICI) in India. The researcher concludes her research
PNB has lower operational efficiency comparatively than
ICICI Bank.
Jaiswal and Jain
Entitled a comparative study of financial performance SBI
and ICICI Bank in India. This study examines the financial
performance of Indian Banks with the help of CAMEL.
This Study compares a financial performance of SBI and
ICICI . The authors suggested that the SBI is performing
well as compare to the ICICI. Furthermore it was found
that the market position of SBI is better than ICICI in terms to
earning per share, price ratio per share and dividend
payout ratio. On the other hand ICICI Bank performing
well in terms of NPA and provision for NPA in comparison
of SBI bank.
 Gupta
Entitled an empirical study of financial performance of ICICI
bank a comparative analysis focused on operational control
profitability and solvency etc., this research paper aimed to
analysis and compare the financial performance of ICICI
bank and offer suggestions for the improvement of
efficiency in the bank. This study suggested that
NPAs of the ICICI Bank is more than 1percent.
Therefore ICICI should control NPAs.

Tirkeyi and Salem

Analyzed a comparative study financial statement of

ICICI and HDFC through ratio analysis examined the
financial position with the use of different ratios. It was found
that financial position of ICICI is much better than HDFC.
4 – RESEARCH METHODOLOGY
RESEARCH METHODOLOGY
A research methodology describes the techniques and
procedures used to identify and analyze information regarding a
specific research topic. It is a process by which researchers
design their study so that they can achieve their objectives using
the selected research instruments.
It includes all the important aspects of research, including
research design, data collection methods, data analysis
methods, and the overall framework within which the research
is conducted. While these points can help you understand what is
research methodology, you also need to know why it is
important to pick the right methodology.

RESEARCH DESIGN
Research design is a comprehensive plan for conducting
research. It outlines the steps and procedures necessary to
collect, measure, and analyze data systematically. The primary
goal of a research design is to ensure that the study addresses
the research problem effectively, providing reliable and valid
results.
RESEARCH APPROACH
The research approach outlines the strategy and methods to
systematically collect, analyze, and interpret data for the study.
For a financial statement analysis of HDFC Bank , a quantitative
research approach is most suitable as it involves numerical data
analysis to evaluate financial performance.

RESEARCH INSTRUMENT

Interviewing the customers personally and studying

the response from the questionnaires field.

DATA COLLECTION :
In research methodology, data collection refers to the
systematic process of gathering and measuring information on
variables of interest. This process allows researchers to obtain
a complete and accurate dataset, which can then be analyzed to
answer research questions, test hypotheses, and evaluate
outcomes.
Data collection methods can be qualitative or quantitative and
include techniques such as surveys, interviews, observations,
and experiments. The choice of method depends on the
research objectives, the nature of the variables, and the study
design.
 PRIMARY DATA –
It is the information collected directly. In the
study, it was mainly interviews with concerned
officer and staffs individually or collectively. This
study does not include any primary data.

SECONDARY DATA –
The secondary data was collected from already published
sources such as Pamphlets. Annual reports and internal records.

The data includes:

1.Collection of required data from annual reports of “The HDFC
BANK”,

2.Reference from text books and journals relating to

financial management and articles published in business dairies
like the Economic times, business line etc.
4.1- SCOPE OF THE STUDY

The current study only moves around the financial statement analysis of
the HDFCBank. The present study concentrates only on the financial
department of the HDFCBank with the use of comparative income
statement and ratio analysis
4.2- 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.

It guides a company and individual to make optimum use of money

to achieve maximum returns.

Financial analysis helps to an individual / organization to save more

and thus invest more.
4.3- OBJECTIVES OF THE STUDY

To study the financial position of the HDFC Bank .

To compare the profitability position of the company.

To analyze the liquidity position of the HDFC Bank.

To know the credit worthiness 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
4.4- HYPOTHESIS OF THE
STUDY

1. Null Hypothesis- H(o)

HDFC Bank’s profitability, as measured has not

changed over the past years.

2. Alternate Hypothesis – H(1)

HDFC Bank’s profitability, as measured has changed

over the past years.
 3. Null Hypothesis- H(o)

HDFC Bank’s Loan Growth Rate is consistent with

industry growth rates.

4. Alternate Hypothesis – H(1)

HDFC Bank’s Loan Growth Rate is higher than

industry growth rates.
4.5- LIMITATIONS OF THE STUDY

Limitation faced during the preparation of this project report on financial

statement analysis of HDFC bank as follows :

Time available for the completion of the project is very short ,hence
much information could not be undertaken.

The information collected through secondary data .

The report is based on the analysis of the last 5 years data which
may not be sufficient in some cases.

The analysis and conclusion made is as per my limited

understanding for this concern subject

Only comparative, common-size statement and ratios analysis has

been taken for the study as a tool of financial and no techniques is
used.
5- DATA ANALYSIS & INTERPRETATION
DATA ANALYSIS :
This chapter deals with data analysis and interpretation. The outcome of
the present study yields significant findings of HDFC Bank.

Some of the major ratio has been evaluated and interpreted for the purpose
of understanding the financial performance of the bank.

The following analysis shows the company’s performance. This analysis

will help to understand the HDFCs financial position.

LIQUIDITY OR SHORT TERM SOLVENCY RATIO :

1)
 2018-19 2019-2020 2020-21 2021-22 2022-23 Avg.

INTERPRETATION –

From the above calculated current ratio of HDFC it is observed that the
current ratios of the HDFC Bank is 9.15 in 2018-19, and increased to
12.45 in the year 2022-23. And the HDFC Bank is maintaining
the average current ratio as around11, is more than the standard of
current ratio
 2) QUICK RATIO :

2018-19
2019-20
2020-21
2021-22
2022- 23
 2 0 1 8 - 1 9 2 0 1 9 - 2 0 2 0 2 0 - 2 1 2 0 2 1 - 2 2 2 0 2 2 - 2 3 Avg.

INTERPRETATION –

From the above calculated quick ratio of HDFC it is observed that the
quick ratios of the HDFC Bank are 9.14 in 2018-19, and increased to
12.34 in the year 2022-23. and the HDFC Bank is maintaining the average
quick ratio as around 10.33,which is more than the standard of current
ratio.
 3) ABSOLUTE LIQUID RATIO / SUPER QUICK RATIO:

2018-19

2019-20

2020-21

2021-22

2022-23
 INTERPRETATION -

From the above calculated absolute liquid ratio of HDFC it is

observed that the absolute ratio of the HDFC Bank
is 0.314 in 2018-19, and increased to 1.547 in the
year 2022-23. And the HDFC Bank is maintaining
the average absolute ratio as around 0.6914, which is more
than the standard of current ratio.

2018-19 2019-20 2020-21 2021-22 2022-23

4) DEBT EQUITY RATIO :

2018-19

2019-20
2020-21

2021-22

2022-23
 INTERPRETATION –

From the above calculated debt equity ratio of HDFC it is

observed that the debt equity ratio of the HDFC Bank.

is 2.317 in 2018-19, and decreased to 0.572 in the

year 2022-23. And the HDFC Bank is maintaining the
average debt equity ratio as around 1.44, which is more
than the standard of debt-equity ratio.

2018-19 2019-20 2020-21 2021-22 2022-23

 5) PROFITABILITY RATIOS :

2018-19
2019-20

2020-21
2021-22

2022-23
INTERPRETATION –

The gross profit ratio of the HDFC Bank is 0.211 in 2018-

19, and decreased to0.202 in the year 2018-19. And increased
to 0.316 in the year 2022-23. And the HDFC Bank is
maintaining the working capital turnover ratio as averagely
around0.002.

2018-19 2019-20 2020-21 2021-22 2022-23

6- FINDINGS & SUGGESTIONS
FINDINGS :
From the project study the following conclusions
are drawn :

The HDFC Bank is earning satisfactory level i.e., 2.56%

The overall financial performance growth rs13000

i.e,,1.89%

The absolute liquid assets (cash & HDFC Bank

balance) has registered a growth of 11.11% which shows
the healthy credit worthiness position of the HDFC Bank.

Gross profit increased from 70,000 to 1,00,000 and in

current 157.13%

The profit available to the shareholders increased to

52.89%

The current ratio has displayed a stable trend,

consistently maintaining a healthy level of 0.35 over the past
few years.

The calculated of HDFC it is observed that the quick

ratios of the HDFC Bank is increased .
The above calculated of HDFC it is observed that the
debt equity ratio of the HDFC Bank is decreased.

The gross profit ratio of the HDFC Bank is decreased to

increased.
 SUGGESTIONS :

Digital Banking

1. Enhance mobile app functionality for seamless

transactions.
2. Introduce AI-powered chatbots for customer support.
3. Expand online loan application and approval processes.

Customer Experience

1. Implement personalized banking services using data

analytics.
2. Improve ATM and branch network accessibility.

Loan and Credit

1. Offer flexible loan repayment options for millennials.

2. Introduce credit products for low-income individuals.
Wealth Management

1. Expand investment product offerings (e.g., mutual

funds, insurance).
2. Introduce robo-advisory services for retail investors.

Payments and Partnerships

1. Strengthen partnerships with fintech companies.

2. Enhance payment gateway security and user
experience.

Risk Management

1. Implement advanced risk management systems for

credit assessment.
1. Enhance cybersecurity measures to prevent data
breaches.
Rural Banking

1. Expand banking services to rural areas through digital

channels.
2. Offer agricultural loan products with flexible repayment
terms.

Key Performance Indicators (KPIs)

1. Increase digital transaction volume by 20%.

2. Achieve 15% growth in loan book.
3. Improve customer satisfaction ratings by 10%.
4. Reduce net NPA ratio to 0.5%.
5. Increase rural banking penetration by 12%.

Strategic Partnerships

1. Collaborate with fintech companies for innovative

solutions.
2. Partner with e-commerce platforms for payment
gateways.
3. Tie up with insurance companies for bancassurance
products.
Technology Upgrades

1. Implement cloud-based infrastructure for scalability.

2. Leverage blockchain for secure transactions.
3. Develop advanced data analytics capabilities.

Workforce Development

1. Train employees on digital banking and fintech.

2. Hire experts in data science and risk management.
3. Enhance employee engagement and retention programs.

Regulatory Compliance

1. Ensure adherence to RBI guidelines and regulations.

2. Implement robust risk management and compliance
frameworks.
7- CONCLUSION
Overview:

HDFC Bank demonstrated strong financial performance

over the past five years, solidifying its position as one of
India's leading private sector banks.

Positive Trends:

1. Consistent growth in advances (18% CAGR) and

deposits (15% CAGR).
2. Improved net interest margin (NIM) to 4.3% (2023) from
3.9% (2018).
3. Significant increase in retail loans (22% CAGR).
4. Robust CASA (Current Account Savings Account) ratio
at 43% (2023).
5. Strong profitability with ROA (Return on Assets) at 2.3%
and ROE (Return on Equity) at 16.5%.
Challenges:

1. Rising NPAs (Non-Performing Assets) to 1.4% (2023)

from 1.1% (2018).
2. Moderate increase in operating expenses (12%
CAGR).
3. Dependence on wholesale deposits.

Financial Ratios:

| Ratio | 2018 | 2023 |

| --- | --- | --- |
• | NIM | 3.9% | 4.3% |
• | CASA Ratio | 38% | 43% |
• | CRAR (Capital Adequacy Ratio) | 14.5% | 17.3% |
• | NPA Ratio | 1.1% | 1.4% |
• | ROA | 2.1% | 2.3% |
• | ROE | 15.3% | 16.5% |
Valuation:

HDFC Bank's stock price increased by 15% CAGR over

the past five years, outperforming the Nifty Bank index.

Recommendations:

1. Diversify loan portfolio to mitigate NPA risks.

2. Enhance digital banking capabilities.
3. Improve operational efficiency.
4. Maintain strong capital adequacy ratio.
5. Expand retail banking presence.

Rating:

Buy (Long-term investment)

Price Target:

₹2,500 (12-month estimate)

Outlook:

HDFC Bank is well-positioned to leverage India's growing

banking sector, driven by:

1. Increasing financial inclusion.

2. Digital transformation.
3. Government initiatives (e.g., Pradhan Mantri Jan Dhan
Yojana).
 8- REFERENCES :

https://www.scribd.com/document/168562770/a-study-on-
financial-statement-analysis-of-HDFC-doc

https://www.scribd.com/document/402600364/HDFC-LINKY-doc

https://www.researchgate.net/publication/337592002_A_STUDY_
ON_FINANCIAL_ANALYSIS_AND_PERFORMANCE_OF_HD
FC_BANK

www.google.com

META AI and Chat GPT

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