208133712 HDFC Bank Strategy

BANKING INDUSTRY-
HDFC
Submitted By-
Aditya Aggarwal
Aditya Narayanan
Anand Chandran
Ankita Kunwar
Kevin Abraham
Pulkit Kabra
Saket Deepak
About HDFC
• Housing Development Finance Corporation Limited, more popularly
known as HDFC Bank Ltd, was established in the year 1994, as a part of
the liberalization of the Indian Banking Industry by Reserve Bank of India
(RBI). It was one of the first banks to receive an 'in principle' approval from
RBI, for setting up a bank in the private sector
• The bank was incorporated with the name 'HDFC Bank Limited', with its
registered office in Mumbai. The following year, it started its operations as
a Scheduled Commercial Bank. Today, the bank boasts 1412 branches and
over 3275 ATMs across India
About HDFC
Network
• More than 2000 branches and 5998 ATM’s in the country
• Operating in more than 990 cities
• All branches are OLRT connected
• 500 locations serviced through internet banking
• Representatives in Hong Kong, New York, London and Singapore

History Of HDFC Bank
1994
 The Bank was Incorporated on 30th August. A new private sector Bank
promoted by housing Development Corporation Ltd
 The bank is the first of its kind to receive an in-principle approval from the
RBI for establishment of a bank in the private sector
1995
 The Bank opened its first branch in Ramon House at Churchgate, Mumbai
on January 16th
1996
 HDFC Bank set up a state-of-the-art dealing room to handle all

transactions possible in Indian financial markets
 The Certificates of Deposits were awarded a PP1+ rating

1997
 HDFC installed state-of-the-art systems to facilitate inter-connectivity

between branches and link up with on line system
 HDFC Bank, planned to set up an all-India on-line automated teller

machine (ATM) network
 Proposed to launch tele-banking for the first time in June
 Becomes the first private sector bank to conclude a structured interest

rate option deal
1997
 HDFC Bank entered into strategic alliances with 10 overseas banks to

provide customers with a wide range of derivatives including interest rate
and foreign currency swaps
 Introduced ATMs that converse in a regional language
 Introduced the Freedom Account for the average retail customer
 Launched an account across India that seeks to free depositors from

minimum balance requirement, for the first time in the country
1998
 Signs an agreement with the National Stock Exchange (NSE) which will
give it a second charge over the brokers deposit for providing loan against
share facility to NSE brokers
 Becomes the first bank in India to link up its ATM network with all the
three major payment systems world-wide
 Ties up with Master Card and Visa

1998
 First bank in the Asia-Pacific region to connect the American Express

(Amex) payment system
 Sony India Ltd (SIL) joined hands with HDFC Bank to work out an
innovative car finance package
 Tied up with BPL Ltd to offer Internet-enabled supply-chain management

and business-to-consumer (B2C) e-commerce services to corporates
1998
 Hutchison Max Telecom and HDFC Bank introduced the country's first-ever
mobile-banking services
2000
 Become the first bank in the country to offer wireless application protocol
(WAP) services to customers
 Tied up with financial portals, e-brokerages and the National Stock

Exchange to enable broker payments for e-broking ventures
2000
 Launched its first B2C payment gateway which allows Visa and MasterCard
credit card-holders to do transaction online and realtime
 Launched `eInstant Car Loans' a new scheme for offering customers a

range of net-enabled loan products
 Launched depository services on the net
 Tied up with portal brainvisa.com to retail education loans to students

2001
 The Bank has launched the international Maestro debit card in association
with Master Card
 Launches its credit card in June through link-ups with MasterCard and Visa
 Entered into a strategic tie-up with Tally Solutions Pvt. Ltd. to offer online
real time accounting services to SMEs
2002
 HDFC Bank opens first overseas representative office
 Unveils Gold and Silver Cards
 Launched new products to its wealth management programme to increase

its customer base. It introduced a non-interactive product named Financial
Planner, which would be available for all its customers for an annual fee
starting from Rs 10,000
2003
 Unveils resident foreign currency account
 Unveils co-branded credit card with e-Seva
 HDFC Bank, IRCTC in tie up for online railway booking
 Introduces 'HDFC Bank Health Plus Credit Card‘
 Launches India's first mobile payment solution

2005
 Launches loyalty rewards programme for its debit and credit cardholders
under the name InstaWonderz
 Unveils credit card for farmers
2006
 Osim to join hands with HDFC Bank for consumer loans
 Inaugurates VbV facility for online shopping

2007
 Signed an agreement with Tata Pipes to offer credit facilities to farmers

across the country
2008
 HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of
1:29
 Launches India’s First Online Market Linkage Programme For Self Help
Groups
2009
 HDFC Bank launches ‘Meritus’ Scholarship Programme
 The Asian Banker declares HDFC Bank the Best Retail Bank
2010
 Decided to pay variable interest rate on recurring deposits

Amalgamations
In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a
private sector bank promoted by Bennett, Coleman & Co. / Times Group).
With this, HDFC and Times became the first two private banks in the New
Generation Private Sector Banks to have gone through a merger. In 2008,
RBI approved the amalgamation of Centurion Bank of Punjab with HDFC
Bank. With this, the Deposits of the merged entity became Rs. 1,22,000
crore, while the Advances were Rs. 89,000 crore and Balance Sheet size
was Rs 163000 crore
Capital Structure
At present, HDFC Bank boasts of an authorized capital of Rs 550 crore
(Rs5.5 billion), of this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion).
In terms of equity share, the HDFC Group holds 19.4%. Foreign
Institutional Investors (FIIs) have around 28% of the equity and about
17.6% is held by the ADS Depository (in respect of the bank's American
Depository Shares (ADS) Issue). The bank has about 570,000 shareholders.
Its shares find a listing on the Stock Exchange, Mumbai and National Stock
Exchange, while its American Depository Shares are listed on the New York
Stock Exchange (NYSE), under the symbol 'HDB'
Awards
• CNBC TV18's Best Bank & Financial Institution Awards
Best Bank
• Dun & Bradstreet Banking Awards 2011 - Best Private Sector Bank
- SME Financing
• ISACA 2011 award for IT Governance - Best practices in IT
Governance and IT Security
• Euromoney Awards for Excellence 2011 - Best Bank in India
• FINANCE ASIA Country Awards 2011: India - Best Bank, Best Cash
Management Bank, Best Trade Finance Bank
• Asian Banker - Strongest Bank in Asia Pacific
• Bloomberg UTV's Financial Leadership Awards 2011 - Best Bank
Awards
• IBA Banking Technology Awards 2010
Winner
1) Technology Bank of the Year
2) Best Online Bank
3) Best Customer Initiative
4) Best Use of Business Intelligence
5) Best Risk Management System
• IDC FIIA Awards 2011 - Excellence in Customer Experience
• The Banker and PWM 2010 Global Private Banking Awards-Best Private
Bank in India
Awards
• Forbes Asia- Fab 50 Companies - 5th year in a row
• NDTV Business Leadership Awards 2010- Best Private Sector Bank
• Business Today Best Employer Survey- Listed in top 10 Best Employers in
the country
• Asian Banker Excellence Awards 2010
• Best Retail Bank in India
• Excellence in Automobile Lending
• Best M&A Integration
• Technology Implementation
HDFC Credit Card Vs Debit Card
HDFC Credit Card Vs Debit Card
• For HDFC, one of the largest private sector banks of India, the number of
credit cards and debit cards have been comparable, unlike other banks
such as ICICI and SBI, whose credit card – debit card deficit have been
significant
• Over a span of 2 years, the number of debit cards have gone up by 71.85%
to 4.36 million by the end of March 2011, whereas the number of credit
cards have increased by 19.53 % to 5.22 million. On comparing HDFC with
ICICI and SBI, we discovered two interesting patterns: HDFC is the only
bank among the three whose credit cards outnumber debit cards.
Secondly, the absolute numbers of cards are considerably fewer than that
of ICICI and SBI
Most Social Engagement Bank
Stock prices
Facts
• Despite macroeconomic headwinds, the bank was able to maintain its net
non-provisioning assets at 0.2 per cent on a sequential basis. At 81.3 per
cent, the provision coverage ratio was also healthy
• It is better placed than many peers to maintain its asset quality. However,
it has significant exposure (around 15 per cent) to the small and medium
enterprises (SME) segment
• HDFC Bank’s loan growth stood at a healthy 25.6 per cent, up 560 basis
points over the June quarter. According to the management, while retail
loan growth remained on track, growth in the corporate lending segment
was mainly led by working capital loans and ongoing loans. The loan book
was boosted by 38-40 per cent year-on-year growth in business banking
loans to SMEs, commercial vehicle, construction equipment and home
segments
Facts
• Though the deposit growth has nearly halved from 30.4 per cent in the
year-ago quarter, at 18.1 per cent, it was higher than the 15.4 per cent
seen in the June quarter, and in line with the management’s aim
• Despite the tough macroeconomic environment, at 4.1 per cent, the bank
was able to control its net interest margin compression to 10 basis points.
This is within the management’s target range of 3.9-4.2 per cent
Industry Analysis
Porters Forces
Bargaining power of
suppliers
• RBI rules and
regulations
Threat of new entrants Threat of competitors Threat of substitutes

• Product differentiation • Large number of banks • Deposits in posts
very difficult • Strong exit barriers • Non Banking financial
• Entry barriers • Low switching costs sector growing rapidly
Bargaining power of
consumer
• Numerous alternatives
• Low switching costs
• Increasing consumer
awareness
Porters Forces
Threat of Competitors
 Large number of banks

There are so many banks competing against each other for the same
set of people
 Strong exit barriers

There are a lot of customers who are at stake and numerous legal
obligations which need to be fulfilled
 Low switching cost

Costumers switching cost is very low, they can easily switch from one
bank to another bank
Porters Forces
Bargaining power of suppliers
 RBI rules and regulations

RBI lays down rules and regulations according which the banks are
governed
Porters Forces
Bargaining power of consumers
 Numerous Alternatives
There are numerous banks competing against each other for the same
set of people
 Low switching cost

Costumers switching cost is very low, they can easily switch from one
bank to another bank
 Increasing consumer awareness

With the increasing amount of information available to the consumer,
banks have to be more competitive and customer friendly to serve
them. If not, the consumer can easily switch to their competitors
Porters Forces
Threat of new entrants
 Product differentiation very difficult

Services provided by banks are not highly differentiated which
increases the bargaining power of consumers
 Entry Barriers
Reserve Bank of India has laid out a stagnant rules and regulation for
new entrant in Banking Industry
Porters Forces
Threat of substitutes
 Non-Banking financial sector

These are financial resources outside the traditional banking system
which has witnessed a tremendous growth in recent years in India
NBFC is a close substitute of banking in respect of raising funds.
 Deposit in Posts
Post office provides services like fixed deposits, savings account,
recurring account etc. The interest rate
of saving account is higher than private banks. Since
it is fully secured by the government, people
who do not want to take risks look at post office saving as a good
substitute
Industry Size
India’s GDP (USD Billion PPP) – 4057
Share of Services (% of GDP) – 55.2
Banking and Insurance Size (USD Billion) – 395.96
Composition of Service Sector

0.18%
1.81% Storage
9.40% 2.53% Transport
11.36% Railways
2.74%
Hotels & Rest.
Commu.
14.67%
9.76% Banking & Insurance
Trade
Real Estate
Other Services
20.61% Public Admin. & Defence
26.94%
Source:http://www.interlinkre.com
Growth
Annual growth in Banking and Insurance sector which
forms a part of India’s services
25.00%
20.60%
20.00%
15.90% 16.70%
14.00% Annual Growth
15.00%
11.30%
10.00%
5.00%
0.00%
2005-06 2006-07 2007-08 2008-09 2009-10
Source:http://www.interlinkre.com
Segmental Analysis
Reserve Bank of
India
Scheduled Non-Scheduled
Commercial Bank Commercial Bank
Commercial Bank Co-operative Bank Local Area Bank
Foreign24 Regional rural6 Urban Bank State Bank
Public Sector26 Private Sector22
SBI Group7 Nationalized19 New7 Old15

Segmental Analysis
PSU Banks
Government of India holds majority of stakes in PSU banks. They are the
largest category in the Indian banking system
Regional Rural Banks

Established during 1967-1987, they are jointly owned by the Central
government, State Government and a sponsoring public sector commercial
bank
Private Sector Banks

They have major portion of the share capital with private individuals and
corporates. Non-nationalized are old private banks and nationalized in
1993 are termed as new private banks
Foreign Banks
They have their head offices in a foreign country but operate their
branches in India
Segmental Analysis
50000 44901
39257 Profit during the year
40000
30000 Public Sector Banks
17712 Private Sector Banks
20000 13111
7719 Foreign Banks
10000 4741
Amount in Crore Rupees
0
2010 2011
Growth in profit during
80.00% 62.81% the year
60.00% Public Sector Banks
35.09%
40.00% Private Sector Banks
14.38% Foreign Banks
20.00%
0.00%
2011
Source:http://rbidocs.rbi.org.in
Basis of Competition
The following factors have influenced the increase in competition in the
banking sector
 Profitability - Higher profitability compared to the past or international

standards. This attracts new entrants which increases the competition in
the industry
 Technological Changes – This enable quicker and more efficient service
 Product Innovations – Features such as home banking, ATMs etc are
making the industry fiercely competitive
 Entry/Exit Norms – Though regulatory barriers have been eased,
desirable barriers exist in the form of capital and other requirements
 Increasing consumer awareness - consumers of banking services are
getting increasingly agile, enlightened, cost and quality conscious. They are
already forcing the pace of competition on price, product and quality
products
Critical Success Factors
IT
Diversified New
Products
Critical Technology
Success
Factors
Low
Managing
Employee
NPAs
Cost
There are 5 critical success factors applicable in the banking sector
 IT and New technology – Technology has the potential to change

approached to marketing, advertising, designing, pricing and distributing
financial products and services and cost savings in
the form of an electronic, self-service medium. Technology holds the
key to the future success of Indian Banks
Features like internet banking, anytime, anywhere banking, tele-banking,

remote access, multi city chequing facilities etc have become a key
differentiator
 Low employee cost – Focusing on increasing employee efficiency by

adopting people centric policies. There are various methods that are used
to achieve this.
 Managing NPAs – NPAs have been on of the major problems for Indian
banks. However due to the active steps taken by the regulatory authorities
and the banks, the gross NPA level has been reduced. To ensure long-term
profitability, banks have to manage NPAs effectively by adopting the many
techniques
 Diversified Products – Diversification in the product set gives the

customer a wider variety of choices which enhances the banks competitive
edge.
Innovation/New product is a key driver of growth that surprises and

delights the customer with new, differentiated and relevant benefits
Demand Drivers
High Economic Growth
Increase in purchasing Sectors showing

power growth
Retail Infrastructure Telecom Rural Markets Exports/Imports

Demand Drivers
 Retail – Increase in demand for housing, car, personal loans etc
 Infrastructure – Increase in this
 Telecom – 3G and broadband spectrum auction have increased credit

demand
 Rural Markets – As the economy grows there will be more penetration

of private banks in rural areas
 Exports/ Imports – An increase in the export and imports would directly

increase the business of banks through their transactions, loans, bills etc
Key Events
Main mergers and acquisitions in the Indian banking sector
 HDFC Bank acquires Centurion Bank of Punjab (May '08)
 Standard Chartered acquires ANZ Grindlays Bank (November '00)
 Bank of Baroda acquires South Gujarat Local Area Bank Ltd (June '04)
 ICICI Bank acquires Bank of Madura (March '01)
 Oriental Bank of Commerce acquires Global Trust Bank Ltd (August '04)
Regulations
Banks in India are governed by the Reserve Bank of India.
Banking Regulation Act, 1949

As per Section 5(c) of Banking Regulation Act, 1949 a "Banking Company"
means any company which transacts the business of banking in India.
Explanation: Any company which is engaged in the manufacture of goods

or carries on any trade and which accepts the deposits of money from
public merely for the purpose of financing its business as such
manufacturer or trader shall not be deemed to transact the business of
banking within the meaning of this clause.
As per Section 5(b) of Banking Regulation Act, 1949 , banking means the
accepting, for the purpose of lending or investment, of deposits of money
from the public, repayable on demand or otherwise, and withdrawable by
cheque, draft, order or otherwise.
Regulations
Banking Regulation Act, 1949 (continued)
As per Section 5(d) of Banking Regulation Act, 1949 , company means any
company as defined in Section 3 of the Companies Act, 1956 and includes
a foreign company within the meaning of Section 591 of that Act.
As per section 51 of Banking Regulation Act, 1949 , certain provisions of

the Banking Regulation Act are also applicable to the State Bank of India ,
any corresponding new bank, a regional rural bank and any subsidiary
bank. "Corresponding new bank" has been defined under clause(ee)of
section 2 of the DICGC Act to mean a corresponding new bank constituted
under the Banking Companies (Acquisition and Transfer of Undertakings )
Acts of 1970 or 1980.
Source: http://fiuindia.gov.in
Competitor Analysis
Strategies to enhance revenue
• Efficient delivery of products and services can strengthen customer

relationship which will reduce operational costs.
• Banks are automating routine transaction and redesigning branches to

suit local preferences for products , services and pricing.
• Banks are also adding customer facing functions that are specifically
designed for their business.
Financial Analysis Deposits
(Rs. Crore)
Foreign Banks; 240689
Private Sector
Banks; 1002759
Public Sector
Banks; 4372985
Source-
http://www.rbi.org.in/home.aspx
Deposits of Different Banks (Rs. Crore)
1400000
1245862
1200000
1000000
800000
600000
400000
225602 208586 189237
200000
0
Deposits
SBI & Associates ICICI HDFC AXIS
CAR of Different Banks (%)
25.00%
20.00% 19.50%
16.20%
15.00%
11.98% 12.65%
10.00%
5.00%
0.00%
CAR
SBI & Associates ICICI HDFC AXIS
BUSINESS MODEL
Business Strategy
• Increase the market share in India
• Expand the product range and the customers
• Improve the quality of customer service
• Innovate on the product and service range to attract more customers and address the
existing inefficiencies
• Maintain a disciplined credit risk management
• Reduce bank’s cost of funds
• HDFC’s diverse loan portfolio along with superior lending practices de-risks its
business model
• Lower operating costs along with stable margins and high asset quality ensures
sustainable profitability
Business Philosophy
Operational
Excellence
People
Based on 4 Customer
Core Values Focus
Product
Leadership
Improved Technology Adaptation
• HDFC adopts the latest technology to provide the best for its customers
• ATM facilities increased in number
• Net banking, Phone banking etc. introduced and promoted

Retail Banking Products
• Loan products
o Auto loans, loans against securities, personal loans, credit cards, home
loans, commercial vehicle finance etc.
• Depository products
o Savings, Current, Fixed deposits
• Other products/services
o Debit cards, mutual fund sales, insurance sales, NRI services, bill
payment services
Retail
• Retail mortgage accounts for around 2/3rds of the total loan
• Majority is of individual borrowers – default rates are minimal
• Majority is for middle class, salaried employees; greater focus in Tier 2 and
3 cities – ensures diversification of the retail portfolio
Wholesale Banking Products
• Commercial Banking
– Working capital, term loans, bill collection, Forex and Derivatives,
Letters of Credit, Guarantees
• Transactional Banking
– Cash management, custodial services, clearing bank services, tax
collections, banker to public issues
Wholesale
• HDFC is a financier to real estate developers – increased chance of
defaults
• Stringent norms like low loan-to-value(LTV) ratio of less than 65%

[proportion of loan value to property value]
• Funding highly rated corporate
• Loans for acquisition of property in IT parks and industrial zones

HDFC Services
2001 2008
2% 1% Branches 1%
Branches
14% ATMs 25% 17%
ATMs
43% Phone
Banking Phone Banking
Internet
Internet 12%
40% 45% Mobile
Mobile
SEGEMENTAL PRESENCE of HDFC
Key Segments
Treasury
Retail
Banking
Services
Wholesale
Banking
Services
ASSOCIATED COMPANIES
HDFC Asset HDFC Standard Life

HDFC Bank Management Insurance HDFC Sales
Company Ltd Company Limited
HDFC ERGO
HDFC Trustee HDFC Developers HDFC Investments
General Insurance
Company Ltd. Ltd. Ltd.
Company ltd
HDFC Property
Ventures Ltd.
Wholesale Banking Services
• The Bank’s target market ranges from large manufacturing companies in the Indian
corporate to small & mid-sized corporate and agri-based businesses
• HDFC 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 to corporate customers, mutual funds, stock
exchange members and banks
Small and Medium Financial Institutions and

Corporate-
Enterprises- Trusts-
• Funded Services • Funded Services • BANKS- Sub-
• Non Funded Services • Non Funded Services Membership ,RTGS –
• Value Added Services • Specialized Services sub membership, Fund
• Internet Banking • Value added services Transfer, ATM Tie-ups, Tax
• Collection Financial
Internet Banking Institutions
• Mutual Funds
• Stock Brokers
• Insurance Companies
• Commodities Business
Wholesale Banking - Facts
• The business from this segment registered a healthy growth, The
wholesale deposits grew by around 27.4%, while wholesale advances
showed a growth of over 26.7%
• Consolidated its position as a leading player in the cash management

business
• Wholesale banking branch are also in Bahrain, a branch in Hong Kong and
two representative offices in UAE and Kenya. The branches offer the
Bank’s suite of banking services including treasury and trade finance
products to its corporate clients
Retail Banking Services
• HDFC Bank was the first bank in India to launch an International Debit
Card in association with VISA (VISA Electron). The Bank launched its
credit card business in late 2001
• 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 / credit
cards acceptance at merchant establishments
• The Bank also has a wide array of retail loan products including Auto
Loans, Loans against marketable securities, Personal Loans etc.
• 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.
• The products through alternative delivery channels like ATMs, Phone
Banking, Net Banking and Mobile Banking
Retail Services
Investment &
Loan Product Deposit Product- Cards and Services-
Insurance-
• Auto Loan • Saving a/c • Mutual Fund • Credit Card
• Loan Against • Current a/c • Bonds • Debit Card
Property • Fixed deposit • Insurance • Prepaid Card
• Personal loan • Demat a/c • Equity and • Bill pay
• Credit card • Safe Deposit Derivatives • Direct Pay
• Commercial Lockers • Mudra Gold Bar • Visa Money
vehicles finance Transfer
• Home loans • Online Payment of
• Retail business Direct Tax
banking • Mobile Banking
• Working Capital • ATM
Finance • Phone Banking
• Health Care • Email Statements
Finance • Branch Network
• Education Loan
• Gold Loan
Retail Banking - Facts
• The growth in retail banking business was robust during the financial year
ended March 31, 2011. The Bank’s total retail deposits grew by over 23.3%
to - 139,961 crore in the financial year ended March 2011, driven by retail
savings balances which grew much faster at 28.0% during the same period
• The Bank’s retail assets grew by 26.8% to - 80,113 crore driven primarily
by a growth in mortgages, business banking, commercial vehicle loans and
auto loans
Comparison
70 1200
60 1000
50 800
40
Wholesale
Wholesale
600
Retail
30 Retail
400
20
200
10
0
0
2006 2007 2008
2006 2007 2008
Figure 1 NET REVENUES Figure 2 TOTAL DEPOSITS
• HDFC Bank is a consistent player in the private sector bank and have a
well-balanced product and business mix in the Indian as well as overseas
markets.
• Customer segments (retail & wholesale) account for 84% of Net
revenues ( FY 2008)
• Higher retail revenues partly offset by higher operating and credit costs.
• Equally well positioned to grow both segments
Treasury
Local Currency
Foreign Exchange
Money Market & Equities
and Derivatives
Debt Securities
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
Treasury
• The treasury group is responsible for compliance with reserve
requirements and management of liquidity and interest rate risk on the
Bank’s balance sheet
• During the financial year ended March, 2011, revenues from foreign
exchange and derivative transactions grew by 26.2% to Rs. 786.3 crore
• These revenues were distributed across large corporate, emerging

corporate, business banking and retail customer segments
Geographical Revenue
Segmentation Index
Revenue Domestic Growth% Foreign Growth %
2006 1 1
2007 1.15 16 1.44 44
2008 2.46 113 1.99 38
2009 1.49 (39) 2.77 39
2010 1.23 (17) 3.17 14
• Revenue has been increased from 2006 to 2010 and is still

growing at acceptable pace
• There is a negative growth in terms of domestic revenues
Geographic Spread of HDFC
No. of Branches
6%
34%
32% Rural
Semi-Urban
Urban
Metro-Politian
28%
Segmental Growth
FY07 FY08 FY09 FY10
Retail Banking 94% 77%
Wholesale Banking 99% 78%
Treasury 191% 331% 101% 83%
Life Insurance 115% 112%
General Insurance 121% 107%
Venture Fund 53%
Management
• In the last few years Retail Banking has been shrinking

• Venture Fund Management has added another revenue potential
Overall market share
• For the quarter ended September 2011, its total income was 7,929.4
crore, an increase of 37.4% over 5,770.7 crore, for the quarter ended
September 30, 2010
• Net revenues (net interest income plus other income) were 4,156.2 crore
as compared to 3,487.0 crore for the corresponding quarter of the previous
year
• Total deposits were 230,676 crore, up by 18.1% from last year
• Savings account deposits at 69,017 crore increased 15.9%
• The Bank’s branch network stood at 2,150 branches in 1,141 cities (an
increase of 385 branches from 1,765 branches
• 6,520 ATMs, (an increase of 1,799 ATMs from 4,721)

Information Technology
• Bank has made substantial investments in its technology platform and
systems, built multiple distribution channels
• That including an electronically linked branch network, automated

telephone banking, internet banking and banking through mobile phones,
to offer its customers convenient access to various products.
Highlights of 2010-11
• Net Profits of Rs. 3926 Crore, an increase of 33% over the previous year
• Balance Sheet Size Rs. 277,353 Crore as on 31 st March, 2011
• Total Deposits of Rs. 208,586 Crore, an increase of 24.6% over previous

year
• Network of 1986 Branches and 5471 ATMs in 996 cities as on 31 st March,

2011
• Bank’s Capital Adequacy Ratio as on 31 st March ,2011 stood at 16.2% as

against regulatory minimum of 9%
• Total Advances were Rs. 159,983 Crore, an increase of 27.1% over the
previous year
Net Revenues
• 2006-07 : 498,471 Lacs
• 2007-08 : 751,103 Lacs
• 2008-09 : 1,071,176 Lacs
• 2009-10 : 1,236,953 Lacs
• 2010-11 : 1,487,828 Lacs
Profit After Taxes
• 2006-07 : 114,145 Lacs

• 2007-08 : 159,018 Lacs
• 2008-09 : 224,493 Lacs
• 2009-10 : 294,870 Lacs
• 2010-11 : 392,640 Lacs
Profit Margin= Profit/Revenues
• 2006-07 : 22.89%
• 2007-08 : 21.17%
• 2008-09 : 20.95%
• 2009-10 : 23.84%
• 2010-11 : 26.39%
Profit After Tax in (Rs. Crore)
4500
4000 3926
3500
3000 2949
2500 2245
2000
1590
1500
1141
1000
500
0
Years
2007 2008 2009 2010 2011
Non Performing Assets (%)
2.00%
1.80% 1.74%
1.60% 1.54%
1.40%
1.20%
1.00%
0.80%
0.60% 0.48%
0.40%
0.20%
0.00%
Year
2009 2010 2011
DPS (Rs.)
18
16.5
16
14
12
12
10
10
8.5
8 7
6
4
2
0
Year
2007 2008 2009 2010 2011
EPS (Rs.)
90 85
80
70 67.6
60
52.9
50 46.2
40 36.3
30
20
10
0
Year
2007 2008 2009 2010 2011
Balance Sheet Size (Rs. Crore)
300000 277353
250000 222459
200000 183271
150000
100000
50000
0
Year
2009 2010 2011
Advances (Rs. Crore)

200000
159983
150000 125831
98883
100000
50000
0
Years
2009 2010 2011

Deposits (Rs. Crore)
250000
208586
200000 167404
150000 142812
100000
50000
0
Year
2009 2010 2011
Savings Deposits (Rs. Crore)

80000
63448
60000 49877
40000 34915
20000
0
Year
2009 2010 2011
Retail Assets (Rs. Crore)
100000 80113
80000 63161
60000 53548
40000
20000
0
Year
2009 2010 2011
Net Interest Margin (%) (Denotes Core NIM)

4.5
4.4
4.4
4.3
4.2 4.2
4.2
4.1
4
Year
2009 2010 2011
Capital Adequacy (%)
18
17.5 17.4
17
16.5 16.2
16 15.7
15.5
15
14.5
Year
2009 2010 2011
Return on Capital (%)

17 16.8
16.8
16.6 16.5
16.4 16.2
16.2
16
15.8
Year
2009 2010 2011
ATMs (Nos.)
6000 5471
5000 4232
4000 3295
3000
2000
1000
0
Year
2009 2010 2011
Cities (Nos.)
1200
1000
800
2009
600 2010
400 2011
200
0
Year
Debit Cards (Nos. in Lacs)
120 115.5
90.8 98.3
80
40
0
Year
2009 2010 2011
Credit Cards (Nos. in Lacs)

55
50.5
50
45 43.9 44.5
40
Year
2009 2010 2011
Rupee Earned in 2010-11
0.71%
3.24%
14.82% Interest from Advances =
62.18%
Interest from Investments =
19.05%
Commision, Exchange &
Brokerage = 14.82%
19.05% FX & Derivative Income =
62.18% 3.24%
Other Interest Income =
0.71%
Rupee Spent in 2010-11
Rupee Spent
3.96%
6.15% Interest Expense = 41.48%
8.36% Operating Expense =
31.62%
Provisions = 8.43%
41.48%
8.43% Tax = 8.36%
Transfer to Reserve =
6.15%
Dividend & Tax on Div-
idend = 3.96%
31.62%
FINANCIAL PERFORMANCE (in crore)
March 31, 2011 March 31, 2010
Deposits and Other 222,980.5 180,320.1
Borrowings
Advances 159,982.7 125,830.6
Total Income 24,263.4 20,155.8

Profit before 6,316.1 4,683.5
Depreciation and Tax
Net Profit 3,926.4 2,948.7
Profit brought forward 4,532.8 3,455.6
Total Profit available 8,459.2 6,404.3
for Appropriation
Financial Analysis
As shown in the graphs :
• HDFC Bank has a consistent high CAR Ratio, which signifies the solid position
of the bank.
• NPAs of HDFC Bank are very low. This shows the banks good relations with
its customer.
• Deposits are increasing continuously which shows the good services
provided by the bank.
• NIM for the bank is also good which further solidifies its position in the
market.
• Profit margins are increasing year by year.
Market Capitalization
• Market Capitalization depends upon the future performance of the company
to a large extent
• It is different from profit margin and profitability
• PE Ratio = Market Capitalization

Profit
Market Capitalization ( MC)
MC= PE Ratio* Profit After Tax
2006/07 = 26.29 * 114145 lacs = 3000872 lacs

2007/08 = 28.80 * 159018 lacs = 4579718 lacs
2008/09 = 18.42 * 224493 lacs = 4135161 lacs
2009/10 = 28.62 * 294870 lacs = 8439179 lacs
2010/11 = 27.59 * 392640 lacs = 10832937 lacs
Leading banks by market
capitalization
Banks Majority Market Cap Stock Listing
shareholding (Billion $)
SBI Government 36.6 Mumbai,

London
ICICI Private 25.26 Mumbai, New

York
PNB Private 7.6 Mumbai

IDBI Government 2.9 Mumbai
HDFC Private 22.2 Mumbai
AXIS Bank Private 11.6 Mumbai,

London
Capital Structure
• As on 30th June 2010, the authorized capital is Rs 550 Crore
• The paid up capital is 459,60,07,030
• HDFC Group holds 23.63% of the banks equity
• American Depository shares hold around 17.05% of equity
• 27.45% is held by Foreign Institutional Investors ( FII)
• The bank has about 433078 number of shareholders

Competitive Analysis
• India’s banks have grown at a rapid pace over the past 2 decades after the
financial liberalization
• This growth has still lacked in meeting the massive demand in the need of
financial intermediation. It has led to the growth on non-banking
financing companies (NBFCs) and microfinance companies
• Major banks in India are either state owned or previous government

owned institutions which have been fully privatized like ICICI and HDFC
Bank
State Bank of India (SBI)
SBI is India’s Largest Bank which is majority owned by the government. The
Company has a number of Subsidiaries and has been a market
outperformer in recent times. Revenues of $22 billion. The SBI has 7
subsidiaries of which 2 have been merged and 5 are remaining
– State Bank Bikaner Jaipur

– State Bank of Hyderabad
– State Bank of Mysore
– State Bank of Patiala
– State Bank of Travancore
ICICI Bank
 This is the largest Indian Private Bank with operations in all Financial
Services Sectors. The Company has faced a bad time during the Lehman
downturn but has recovered well
 Revs of $12.5 billion. ICICI Bank is also strong in almost all sectors of the
financial industry and has one of the strongest management teams in the
country
 The company which overextended itself in the 2007-2008 boom has now
reduced the size of its risky segments and is again back on the growth
trajectory.
Punjab National Bank
 Punjab National Bank (PNB) , is the second largest PSU bank with about
5000 branches across 764 cities
 The Bank like BOB and SBI has shown good growth while at the same time
managed to control bad debt
Axis Bank
 Axis Bank has been the best performing private bank along with HDFC
Bank showing excellent growth in top line and bottom line
 The Bank has been expanding into insurance and investment banking
(acquired Enam)
 The Bank was promoted jointly by UTI, LIC and other state owned general
insurers
Market Share
12.32%
ICICI
30.07%
HDFC
Axis
Kotak
26.34% YES Bank
Others
4.05%
10.46%
16.76%
Growth Rate – ICICI Bank
 This fiscal's credit growth would be 18 per cent, aided by corporate as
well as retail segment
 ICICI Bank has reported a 77.5 per cent jump in its consolidated net profit
at Rs 2,039 crore for the third quarter (Q3) ended December 31, 2010, driven
by a rise in interest income and lower provisioning against bad loans
 On stand-alone basis, ICICI Bank's net profit increased 30.5 per cent to Rs
1,437 crore in Q3, from Rs 1,101 crore in the same period a year ago
Growth Rate – State Bank of India
 The bank, which controls a quarter of Indian bank loans and deposits
along with its associates, and rivals ICICI Bank and HDFC Bank are seeing
strong demand for loans and asset quality improvement on the back of a
rapidly growing economy
 State Bank posted a net profit of 28.28 billion rupees ($620 million) in the
fiscal third quarter ended December 2009, versus 24.79 billion rupees
 Gross advances grew 22 percent to reach 7.40 trillion rupees as on end-

December 2010 from 2009
 The bank's net non-performing asset ratio fell to 1.61 percent in the
quarter from 1.88 percent a year ago as improved consumer and business
sentiment resulted in slowdown in bad loans pile up
Growth Rate – State Bank of India
 Shares of State Bank of India, valued at $35 billion, rose nearly 24 percent
in 2010, compared with a 17 percent rise in the main market and 33 percent
gain in the banking sector index
Growth Rate – Punjab National Bank
 The Bank posted a net Profit of Rs.3233 crore during April-December
2010 compared to Rs.2770 crore in the corresponding period of previous
financial year registering a YOY growth of 16.7%
 Operating Profit for the same nine months stood at Rs 6548 crore as
against Rs 4994 crore in the previous financial year recording a YOY growth
of 31.1%
 Total Business of the Bank crossed the landmark of Rs 5 lakh crore to

reach Rs.5,10,125 crore as compared to Rs. 4,04,373 crore in Dec' 2009,
showing a YOY growth of 26.2%
 Deposits of the Bank rose to Rs.2,88,873 crore as on 31.12.2010 as

compared to Rs 2,33,946 crore exhibiting a YOY growth of 23.5%
Direct Comparison – HDFC Bank Vs
Axis Bank
Interest on Advances – Q2 FY2010
 HDFC Bank’s Q2 is Rs.3673.18 Cr and its improvement over previous qtr is

10.95%
 Axis Bank’s Q2 is Rs.2429.03 Cr and its improvement over previous Qtr is

5.11%
Inference
 HDFC has an edge of 51.22 % on Axis Bank’s numbers in Q2 in respect of

interest on Advances
Axis Bank
Interest Earned – Q2 FY2010
 HDFC Bank’s Q2 is Rs.4810 Cr – which is more by 8.82% over previous Qtr
 Axis Bank’s Q2 is Rs.3624.25 Cr – which is more by 8.98% over previous

Qtr
Inference
 Axis has reduced the edge of HDFC Bank at this level to 32.72% - primarily
on higher investment income and income from balances with RBI etc
Axis Bank
Total Income – Q2 FY2010
 HDFC Bank’s Q2 is Rs.5770.70 Cr which is higher by 7.66% on previous

Qtr
 Axis Bank’s Q2 is Rs.4657.49 Cr, which is higher by 7.65% over previous

Qtr
Inference
 At this level, Axis has further reduced the Edge of HDFC Bank to just
23.9% - because of higher other income
 Axis Bank is scoring in income from investments, income from balances

with RBIs etc, and other Income, whereas, HDFC Bank is scoring well in
respect of Interest on Advances
Axis Bank
Interest Expended – Q2 FY2010
 HDFC Bank’s Q2 is Rs.2283.72 Cr – higher by 13.11% over previous Qtr
 Axis Bank’s Q2 is Rs.2009.15 Cr – higher by 10.89% over previous Qtr
Inference
 Axis Bank has a clear edge of 13.67% in respect of lower interest

expended compared to HDFC Bank
Axis Bank
Employees Cost – Q2 FY2010
 HDFC Bank’s Q2 is Rs.710.57 – more by 6.52% over previous Qtr
 Axis Bank’s Q2 is Rs.405.30 Cr – down by 2.67% over previous Qtr
Inference
 In this expense item, Axis has a huge edge of 75.32% over HDFC Bank
Axis Bank
Other Operating Expenses – Q2 FY2010
 HDFC Bank’s Q2 is Rs.969.31 Cr – up by 4.76% over previous Qtr
 Axis’s Q2 is Rs.756.69 Cr – up by 16.76% over previous Qtr
Inference
 Axis Bank has an edge of 28.1% over HDFC Bank in this item of expense
Axis Bank
Operating Profit – Q2 FY2010
 HDFC Bank’s Q2 is Rs.1807.10 Cr – higher by 3.34% over previous Qtr
 Axis’s Q2 is Rs.1486.35 Cr – higher by 2.5% over previous Qtr
Inference
 HDFC Bank has an edge of 21.58% over Axis Bank at operating level
Axis Bank
Provisions – Q2 FY2010
 HDFC Bank’s Q2 is Rs.454.48 Cr – down by 18.11% over previous Qtr
 Axis Bank’s Q2 is Rs.378.76 Cr – up by 13.74% over previous Qtr
Inference
 HDFC Bank’s provisions are higher by 19.99% compared to Axis Bank

Axis Bank
Tax Expense – Q2 FY2010
 HDFC Bank’s Q2 is Rs.440.48 – up by 15.31% over previous Qtr
 Axis’s Q2 is Rs.372.45 – down by 0.73% over previous Qtr
Inference
 HDFC Bank pays more tax by 18.27% compared to Axis Bank

Axis Bank
Net Profit – Q2 FY2010
 HDFC Bank’s Q2 is Rs.912.14 Cr – up by 12.37% over previous Qtr
 Axis’s Q2 is Rs.735.14 Cr – down by 0.91% from previous Qtr
Inference
 HDFC Bank has 24.08% more in net profit level over Axis Bank
Paid-up Equity
HDFC Bank’s equity is Rs.462.60 Cr while Axis has Rs.408.84 cr. HDFC Bank
has 13.15% more of equity
Axis Bank
Capital Adequacy Ratio – Q2 FY2010
HDFC Bank’s CAR is 17 against Axis Bank’s 13.68 – which gives HDFC Bank an
edge of 24.27%
Axis Bank
Basic EPS – Q2 FY2010
 HDFC Bank has a Basic EPS of Rs.19.8 against Axis Bank’s Rs.18.01 - more
by 9.94% over Axis Bank
Inference
 At this level, Axis Bank has closed the performance Gap considerably
Axis Bank
Percentage of Gross/Net NPA– Q2 FY2010
HDFC Bank’s Q2 is 0.3 and Axis Bank’s Q2 also is 0.34 which is very close for
both
Axis Bank
Market Price and PE Ratio – Q2 FY2010  HDFC Bank
 The Market Price of HDFC Bank is Rs.2343
 HDFC Bank’s Q2 EPS is Rs.19.8. Annualising this EPS ( x 4) the annual EPS
is around Rs.79.2
 The PE Ratio on this Basis is 29.58

Axis Bank
Market Price and PE Ratio – Q2 FY2010  Axis Bank
 The Market price of Axis Bank is Rs.1465
 Its Q2 EPS is Rs.18.01. Annualising this EPS ( x 4) the annual EPS is Rs.
72.04
 The PE Ratio on this basis is 20.34

Axis Bank
Market Price and PE Ratio – Q2 FY2010  Inference
While HDFC Bank may quote at a premium over Axis based on size, yet, Axis
Bank appears to be quite underpriced for its growth rates at this point of
time
Strategic Decisions
Key Focus
• Understanding of customers’ financial needs and providing banking
solutions
• Wide range of products and services to cater both retail and wholesale
customer segments
• Market Leaders in various products of retail banking such as Credit Cards

and Auto Loans
• Main focus on balancing growth with diversified revenues, appropriate

margins and healthy asset quality
Key Focus
• Providing financial services to the under banked and rural sector
• Helping Farmers with products like Tractor Loan, Kissan Gold Card, Loan
against Warehousing Receipts etc
• In line with growth strategy today 30% of the branches are located in rural
and under banked areas
Mission & Objectives
• Aim to become ‘ World Class Indian Bank’
• Objective is to build sound customer franchises across distinct businesses
• To achieve healthy growth in profitability with the Bank’s Risk Appetite
• To do all this and maintain high level of ethical standards and corporate
governance
Merger with CBoP
About Centurion Bank of Punjab
 Was one of the leading private sector bank in India
 Strong nationwide presence with 394 Branches and 452 ATMs in 180 Cities
 Employee base of more than 7500
 Was listed in major stock exchanges
 Strong player in FOREX services, personal loans, mortgages and

agricultural loans
Merger with CBoP
Reasons of Merger
 HDFC wanted to add scale, geography and experienced staff to its

franchise
 CBoP was the right fit in terms of culture, strategic intent and approach to
business
 Merger was Win-Win situation for both the banks
 Combined entity became even more strong in the banking market

Merger with CBoP
Details of Merger
 Finalised on 26th Feb., 2008
 Swap Ratio of 1:29 (1 share of HDFC Bank for every 29 shares of CBoP
Bank)
 Acquisition came for Rs.9510 Crores, one of the largest merger in banking
history of India
 Merger was EPS Dilutive for HDFC Bank in the interim

Merger with CBoP
Details of Merger
 Merger gave access of 394 branches of CBoP to HDFC Bank, increasing its
presence in northern and southern India
 CBoP’s strong SMEs relationship helped expanding HDFCs Base
 Created India’s 7th Largest Bank
 Induction of experienced work force in HDFC

Merger with CBoP
Details of Merger
 Nation Wide network of 1148 Branches largest in India
 Strong Deposit Base of Rs. 120000 Crores and Net Advances of around Rs.
85000 Crores
Past & Current Strategies
Current Business Strategy
• Develop innovative products and services that attract its targeted
customers and address inefficiencies in the Indian financial sector
• Leverage its technology platform and open scaleable systems to deliver

more products to more customers and to control operating costs
• Focus on healthy earnings growth with low volatility

Current Business Strategy
• To increase the market share in the growing banking industry by following a
disciplined growth strategy, focusing on quality and not on quantity and
delivering high customer service
• To maintain the current high standards for asset quality through disciplined
credit risk
• To develop innovative products and services that attract the targeted

customers
• To continue developing products and services that reduce the cost of funds.
Segmentation Strategy
Demographic variables
• Location
Targeting the Metro cities and the developing cities
• Occupation
They are also focusing on targeting the business men and the salaried
class people
• Age
Their main focus is on the middle aged grouped people but they are trying
to attract the senior citizens and the minors also.
Segmentation Strategy
Psychographic Variables
• Lifestyle
They are targeting people who believe in modern banking with higher set
of services , i.e internet banking , mobile banking etc.
• Class
They are focusing on lower middle class, middle class , upper middle class
and upper class people as a major chunk of people who avails the banking
facility fall in this category and is still growing.
Targeting Strategy
Target market
• Corporate Banking Market
This market target the industries and fulfills the financial needs
• Capital Market
This segment is targeted on the long term needs of the individuals
• Retail Banking Market
This segment is for retail investors and provides them with short term
financial credit for personal and household needs.
Positioning strategy
HDFC has positioned itself as a bank which gives higher standard of
services through product innovation for the diverse needs of the
individuals and other corporate clients. So they look at highlighting the
following points in their positioning :
• Customer centric
• Service oriented
• Product Innovation
Acquisition Strategy
• Customer Segment as an acquisition strategy
Banks are now not targeting customer who want to associate themselves
with foreign banks just for status symbol as it wastes a lot of banks
resources
• Value Proposition as an acquisition strategy
The bank has to provide world class services to all types of customers if it
wants to retain them and increase the value of the bank.
• Pricing as an acquisition strategy
HDFC has come up with a strategy of giving better services to its customers
by reducing the minimum balance requirements. Otherwise in international
banks the minimum balance required is Rs 10,000 but HDFC has brought it
down to Rs 5000
Growth Opportunity Strategy
• It is starting to focus in the rural India and with the country’s GDP is
poised to grow at 8% plus over the next few years, so it has well
positioned itself to take this opportunity to full use
• The bank is coming up with innovative offering such as, offering loans
against gold as the gold prices are continuously rising
• Giving loans against gold helps them tab business from small shop keepers
as well
• It is acquiring banks in the north and south parts of the country which will
get them more customers and will help them grow faster
Customer Retention Strategy
HDFC has started following the below mentioned strategies to retain its
customer in order to retain its customers
• All petty charges for its primes customers have been waived off
• Services like locker, de mat etc is now charged at 50% only
• The debit card charges have been taken off
• The bank keeps updating with the customer as to the new service that
they introduce
• Also informs the customer about the charges that have been waived off
Marketing Strategy
• Scientific marketing campaigns are being undertaken using customer data,

usage pattern , preferences etc
• The marketing analytics initiatives helps the bank come up with different
ways in which they can measure the efficacy of the campaigns that they
organize
• This also helps then to test or try new campaigns the way they want ,
experimenting with creative’s etc.
Other strategies
• Building the trust of the customers
• Providing a large number of products and services
• Location of the branches and ATM’s
• Providing customers with services like Home banking, Mobile banking, Net
banking etc
New Products and Services
SCENARIO
• Growth in mortgages, business banking, commercial vehicle loans and
auto loans (2010-11)
• Customer base grew to 21.9 million customers
• Increased its network and product penetration initiatives
• Increased visibility of net banking and phone banking

SCENARIO
• Success of bank’s multi-channel strategy – 80% of customer initiated
transactions serviced through the non-branch channels
• Focus on the credit card portfolio
• 5 million credit cards as of March 2011

NO-LIMIT CREDIT CARDS
• HDFC Bank, the largest credit card issuer in the country, has launched
India's first ultra-premium credit card for the “UBER” rich
• Aptly named “INFINIA", the card comes with virtually “no limits” ― not
just in terms of spend, but also the luxuries such customers are
accustomed to.
• The card will be initially offered to a select 5000 individuals.

FOREXPLUS PLATINUM CARD
• Premium Forex card for the Global Indian
• Prepaid traveller’s card
• Chip based card
• Best-in-class security
• 0.5% cash-back on purchases
• Offers free lounge access across major international airports
• Available for Euro, Dollar and Pound

Additional features
• Additional features include industry’s best netbanking features like online
back-up card activation, online hotlisting, statements and e-commerce
transactions
• Free SMS alert across the world on the customer’s local number
VODAFONE INDIA
• Mobile Bank account with Vodafone “m-paisaTM” aimed at rural areas
• Basic banking transactions on the mobile phone and even deposit and
withdraw cash at appointed Vodafone m-paisaTM outlets, without having
to go to bank branches
• Open a savings account and transact
• Sense of trust and security

ZAFIN LABS
• Product called “miRevenue”
• Used in the retail business area
• Planning to extend the scope
• Attained reduction in the time for charging the customers

DUAL RATE LOANS
• Special home loans
• Fixed rate till a date (March 31,2012) and the applicable floating rate for
the balance term
• 8.25% Fixed Rate up to 31.3.11 , 9% for period between 1.4.11 and

31.3.12 and Floating Rate for the Balance term
Loans
• Available for all new home loan customers of Indian origin applying before
January 31,2010
• Same fixed rate, irrespective of the amount
• Very attractive rates compared to the other large players in the market
offering similar products
• Overwhelming response
MOVE IN HOME LOANS
• Available for “Ready to move” or Resale properties
• Loans are facilitated with minimal delays
• Made available quickly

QUICKREMIT
• Online remittance service
• From Singapore and UK
• Completely online mode to remit money to India, without the need to visit
a bank
• Tie-up with DBS Bank in Singapore
• Accessible through any bank in UK

HDFC – QATAR BANK
• Tied up with the International Bank of Qatar (IBQ) to launch banking
services in Qatar
• Allows Indian expatriates in Qatar to access HDFC Bank’s products and

services
• Combination of NRE account in India and NRI account in Qatar – facilities

like centralized banking, fee waiver on debit card and remittance services
etc
SWIFT
• Personal loans
• Processed in 24 hours
• Available for all those who holds an account with HDFC Bank
• From September 2011

DEBT FUND FOR CANCER CURE
• Mixing finance with philanthropy
• Mutual fund product
• Money from investors invested purely in debt markets(80-100% money

market and 0-20% in Government bond market)
• Cannot withdraw for 3 years
• Dividends earned passed on to the Indian Cancer society (50-100% of

dividend)
Strategies Used by Key
Competitors
State Bank of India
• State Bank of India (SBI) is the largest nationalized commercial bank in
India in terms of assets, number of branches, deposits, profits and
workforce. With the liberalization of the Indian banking industry in the
mid-1990s, SBI faced stiff competition from the private sector and foreign
banks which resulted in significant loss of its market share.
ICICI Bank
• ICICI Bank Second largest bank in India
• Strong diversified financial services franchise in India
• ICICI Bank has taken up specific initiatives to ramp up financial literacy as well
as intermediation to the underserved and under-banked segments in both
rural and urban areas
• ICICI Bank offers a complete suite of products and services to meet the
individual financial requirements of customer segments. Savings, investments
and insurance products are made available to its rural and agri customer base
• The Bank also offers microfinance services to low-income households and

crop loans, farm equipment loans, commodity based loans to farmers.
Axis Bank
• 3rd largest private sector bank
• Aggressive branch and ATM expansion to 1021 branches and 371 ATMs to
be upcoming in tier II and Tier III cities.
• Expanding global reach by way of setting up 3 branch offices in Singapore ,

Dubai and Hong Kong and 2 representative offices in Shanghai and Dubai
recently
• Axis Bank offers a vast spectrum of services encompassing Large and Mid-
Corporate Banking, SME Banking, Agri-Business Banking, Retail Banking
and International Banking.
Axis Bank
• Axis Bank's network of over 1,200 branches and 4,900 ATMs is spread
across more than 680 cities and towns across the country
• Instead of piecemeal efforts of promoting their debit card, the bank has
launched what it calls the first ever filmi Platinum debit and credit card
across 25 cities in India. The objective — to offer movie deals on movie
tickets through one exclusive card. The bank therefore hopes to carve out
a niche in a space not fully explored by competition
Mergers and Acquisitions
• Standard Chartered Acquires ANZ Grindlays Bank (November '00)
Intent
Standard Chartered wanted to capitalise on the high growth forecast for the
Indian economy. It aimed at becoming the world's leading emerging markets
bank and it thought that acquiring Grindlays would give it a well-established
foothold in India and add strength to its management resources. For ANZ,
the deal provided immediate returns to its shareholders and allowed it to
focus on the Australian market. Grindlays had been a poor performer and
the Securities Scam involvement had made ANZ willing to wind up.
Benefits
Standard Chartered became the largest foreign bank in India with over 56
branches and more than 36% share in the credit card market.
ICICI Bank Ltd. Acquires Bank of Madura (March '01)
Intent
ICICI Bank Ltd wanted to spread its network, without acquiring RBI's
permission for branch expansion. BoM was a plausible target since its cash
management business was among the top five in terms of volumes. In
addition, there was a possibility of reorienting its asset profile to enable
better spreads and create a more robust micro-credit system post merger.
BoM wanted a (financially and technologically) strong private sector bank
to add shareholder value, enhance career opportunities for its employees
and provide first rate, technology-based, modern banking services to its
customers
Benefits
The branch network of the merged entity increased from 97 to 378, including
97 branches in the rural sector. ICICI gained an additional 1.2 million
customer accounts, besides making an entry into the small and medium
segment. It possessed the largest customer base in the country, thus
enabling the ICICI group to cross-sell different products and services.
Motives Behind Consolidation
• Growth - Organic growth takes time and dynamic firms prefer

acquisitions to grow quickly in size and geographical reach
• Synergy - The merged entity, in most cases, has better ability in terms
of both revenue enhancement and cost reduction
• Managerial efficiency - Acquirer can better manage the resources of

the target whose value, in turn, rises after the acquisition
• Strategic motives - Two banks with complementary business interests

can strengthen their positions in the market through merger.
Motives Behind Consolidation
• Market entry - Cash rich firms use the acquisition route to buyout an
established player in a new market and then build upon the existing
platform
• Tax shields and financial safeguards - Tax concessions act as a catalyst for
a strong bank to acquire distressed banks that have accumulated losses
and unclaimed depreciation benefits in their books
• Regulatory intervention - To protect depositors, and prevent the de-

stabilisation of the financial services sector, the RBI steps in to force the
merger of a distressed bank.
SWOT Analysis for Banking
Sector
SWOT ANALYSIS FOR
THE INDUSTRY
STRENGTH
• Indian banks have compared favourably on growth, asset quality and
profitability with other regional banks over the last few years. The banking
index has grew at a compounded annual rate of over 51 per cent since
April 2001 as compared to a 27 per cent growth in the market index for
the same period
• Bank lending has been a significant driver of GDP growth and employment
• Extensive reach through vast networking & growing number of branches &
ATMs
• The government's regular policy for Indian bank since 1969 has paid rich
dividends with then nationalization of 14 major private banks of India
• According to a report by ICRA Limited, a rating agency, the public sector
banks hold over 75% of total assets of the banking industry, with the
private and foreign banks holding 18.2% and6.5% respectively
WEAKNESS
• PSBs need to fundamentally strengthen institutional skill levels especially
in sales and marketing, service operations, risk management and the
overall organizational performance ethic & strengthen human capital
• The cost of intermediation remains high and bank penetration is limited to
only a few customer segments and geographies
• Structural weaknesses such as a fragmented industry structure,
restrictions on capital availability and deployment, lack of institutional
support infrastructure, restrictive labour laws, weak corporate governance
and ineffective regulations beyond Scheduled Commercial Banks (SCBs)
• Refusal to dilute stake in PSU banks: The government has refused to dilute
its stake in PSU banks below 51%
• Opposition from Left and resultant cautious approach from the North
Block in terms of approving merger of PSU banks may hamper their
growth prospects in the medium term
OPPORTUNITY
• Growth driven by new products and services that include opportunities in
credit cards, consumer finance and wealth management on the retail side,
and in fee-based income and investment banking on the wholesale banking
side
• With the growth in the Indian economy expected to be strong for quite
some time especially in retail banking, mortgages and investment services
• Reserve Bank of India (RBI) has approved a proposal from the government
to amend the Banking Regulation Act to permit banks to trade in
commodities and commodity derivatives
• Given the demographic shifts resulting from changes in age profile and
household income, consumers will increasingly demand enhanced
institutional capabilities and service levels from banks
THREAT
• Threat of stability of the system: failure of some weak banks has often
threatened the stability of the system
• Rise in inflation figures which would lead to increase in interest rates
• Increase in the number of foreign players would pose a threat to the PSB
as well as the private players
• Increase in CRR rate

SWOT Analysis HDFC
STRENGTH
• Leader in home loan segment
• Right strategy for products
• Distribution structure
• Brand image
• High degree of customer satisfaction
• Alliance between HDFC and Standard Life giving a strong brand backing
• Robust Risk control Framework
• Network of 500 branches and agents across 700 cities
WEAKNESS
• Strict policy of funding
• Not very aggressive on M&A
• Mere international presence
• Standard Life were accused of smearing a policy-holder. Controversies like

job cuts, racism and data loss have affected image
OPPORTUNITIES
• Untapped rural market
• Home loan segment
• Fast growing insurance business

THREAT
• Risk of fraud and NPA
• Major private players
• RBI policies
• Increase in funding cost
• Economic instability and global crisis

SWOT Analysis Competitors
SWOT - ICICI
STRENGHTS
• ICICI is now a global player in International Banking through its operations
18 countries
• ICICI is considered as the pioneer in usage of Internet services for Online

Banking
• Advanced infrastructure with sound IT base

SWOT - ICICI
WEAKNESS
• High Bank Service Charges: ICICI bank charges highly to
customers for the services provided by them when compared to other
bank & that is why it is only in the reach of higher class of society
• Less Credit Period: ICICI bank provides credit facilities but only up
to limited period
SWOT - ICICI
OPPURTUNITIES
• Rise in upper and middle class population due to increase in GDP,
therefore could introduce economical version of their services
• Largely unexplored market in regions where only PSBs operate

SWOT - ICICI
THREATS
• ICICI Bank is facing tight competition locally as well as internationally.
Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also provide
equivalent facilities like ICICI do and also ICICI do not have consistency in
its international operation
• ICICI levies higher service charges for various transactions making it
expensive for major sections of the society
• ICICI Bank provides all services through electronic computerized machines.
This creates problems to the less educated people
SWOT – Axis Bank
STRENGTH
• Banking Services Include Corporate Credit, Retail Banking, Business
Banking, Capital Markets, Treasury And International Banking
• Sound technological platform with Centralized Database and Operations
• Corporate Banking: Current Account deposits grew by 24%yoy, from Rs.
20,045 cr as at end March’08 to Rs. 24,822crores as at end March’09
• Retail Banking: Savings Bank Deposits Grew To Rs. 25,822 cr.
On 31st March 2009 From Rs. 19,982 Cr. As On 31st March2008 Showing A
Year On Year Growth Of 29%
SWOT – Axis Bank
WEAKNESS
• Market capitalization is very low
• Not having Image UTI (fraud)
• Higher cost
• Customer service
SWOT – Axis Bank
OPPORTUNITY
• Large retail and corporate market
• Wide scope in rural India
• Other Activity (Non Banking Activity)
• People are become more service oriented

SWOT – Axis Bank
THREAT
• Other better Saving, investment option available (like Insurance, Mutual
fund, Real-estate, Gold)
• Government Rules And Regulation
• Very high competition with Private sector (ICICI Bank, HDFC bank) or
public sector (BOB, PNB) Bank
• Capital Market slow-down
• Rising Rates
SWOT - Yes Bank
STRENGTH
• High Quality, Customer Centric, Service Driven, Private Indian Bank
Catering To The “Future Industries Of India”
• The bank has adopted International Best Practices, the highest standard of
service, quality and operational excellence
• Credible And Transparent Performance Management Process
• Total Deposits Rs 1,61,694 million
• Net Advances Rs 124,031 million
• Net NPA 0.33%
SWOT - Yes Bank
WEAKNESS
• Less wide network
• Not in every state
• Less promotional activity
• Unknown brand
SWOT - Yes Bank
OPPORTUNITY
• Very wide market
• Other activity(insurance, stock broking, mutual fund)
• Wide scope in rural area

SWOT - Yes Bank
THREAT
• Very high competition Private bank market (ICICI Bank, HDFC bank), In
public sector (BOB, PNB)
• Government Policy
• Other better Saving, investment option available (like Insurance, Mutual

fund, Real-estate, Gold)
SWOT - SBI
STRENGTH
• Strong domestic market position, sustaining reach and customer
confidence
• SBS merger further hastens SBI and its associate banks merger and
helping defend its leadership position
• Wide Distribution Network: Excellent penetration in the country with
more than 10000 core branches and more than 5100 branches of
associate banks (subsidiaries)
• Government owns 60% stake in SBI. This gives SBI an edge over private
banks in terms of customer security
• SBI offers very low transition costs which attracts small customers
SWOT - SBI
WEAKNESS
• The existing hierarchical management structure of the bank, although
strength in some respects, is a barrier to change
• Though SBI cards are the 2nd largest player in the credit card industry, it
has the highest non performing assets (NPAs) in the industry, which stand
out to be at 16.28 % (Dec 2007)
• Susceptible to political intervention
• SBI lags with respect to private players in terms of modernisation of its
processes, infrastructure, centralisation, etc.
SWOT - SBI
OPPORTUNITIES
• SBI could be the highest beneficiary from increasing adoption of E-
transactions
• Investment in information technology will decrease transaction cost
• Growth in general insurance will help increasing market share
• Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a
mega bank which streamlines operations and unlocks value
• Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will
further increase its reach
SWOT - SBI
THREATS
• Opening of Indian Banking Sector in 2009 will cause intense competition.
Large numbers of MNC banks are mushrooming in the Indian market due
to the friendly policies adopted by the government. This can increase the
level of competition and prove a potential threat for the market share
of SBI bank
• Large numbers of MNC banks are mushrooming in the Indian market due
to the friendly policies adopted by the government. This can increase the
level of competition and prove a potential threat for the market share
of SBI bank
• Private banks have started venturing into the rural and semi-urban sector,
which used to be the bastion of the State Bank and other PSU banks
• here was an employee strike in the year 2006 which disrupted SBI’s
activities. This can be repeated in the future
Critical Analysis
PORTER’s 5 Force Model –
INDIAN BANKING INDUSTRY
• Large no of banks • Non banking financial • Bargaining power of

• High market growth rate sector increasing rapidly consumer is very high
• Low switching costs • Deposits in posts • Large no. of alternatives
• Undifferentiated services • Stock Market • Low switching costs
• High fixed cost • Mutual Fund • Undifferentiated services
• High exit barriers • Full information
Threat of Threat of Threat of

competitors Substitute Buyer
• Nature of suppliers • Product differentiation is

• Few alternatives very difficult
• RBI rules and regulations • Licensing requirement
• Suppliers are not
concentrated forward
integration
Threat of Threat of
Supplier New Entrants
Past Strategies of HDFC
Introduction of FIVE “S” , PART OF KAIZEN WORK PLACE TRANSFORMATION
focuses on effective work place organization and believes in “ Small changes lead
to large improvement”.
S-1 SORT
SEIRI
S-5 SUSTAIN S-2

SHITSUKE SYSTEMATIZ
E SEITON
S-4
S-3 SPIC-N-
STANDARDIZ
SPAN SEIRO
E SEIKETSU
5 S of Kaizen
• SORT - It focus on eliminating unnecessary items from the work place. It
is excellent way to free up valuable floor space. It segregate items as per
“require and wanted”. Frequently Less Required Frequently Remove
Required everything from workplace Wanted but not Required Junk
• SYSTEMATIZE - Systematize is focus on efficient and effective Storage

method. That means it identify, organize and arrange retrieval. It largely
focus on good labelling and identification practices. Objective :- “A place
for everything and everything in its place”
• SPIC- n – SPAN - Spic-n-Span focuses on regular clearing and self

inspection. It brings in the sense of ownership
5 S of Kaizen
• STANDERDIZE - It focus on simplification and standardization. It involve
standard rules and policies. It establish checklist to facilitates
autonomous maintenance of workplace. It assign responsibility for doing
various jobs
• SUSTAIN - It focuses on defining a new status and standard of organized

work place. Sustain means regular training to maintain standards
developed. It brings in self- discipline and commitment towards
workplace organization
Successful Strategies
• Focusing on the expansion of retail and rural banking
• Increasingly customer - centric in their approach
• Mergers and acquisitions
• Strong national network
• Mission is to be "a World Class Indian Bank", benchmarking themselves

against international standards.
• Best practices in terms of product offerings, technology, service levels, risk
management and audit & compliance
• Develop new product and technology is the main business strategy
• Increase 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 our technology platform and open scalable systems to deliver
more products to more customers and to control operating costs
• Develop innovative products and services that attract the targeted

customers that reduce bank’s cost of funds
• Focus on high earnings growth with low volatility

Where Did They Go Wrong?
• FOCUS ONLY ON HIGH END CUSTOMERS: The bank targets only the top
bracket of clients and does not cater to the needs of small customers. Due
to this reason the bank may sometimes loose good clients
• Not Equal to International Standard
• Highly depended on individuals loans
• Major Stake held by American financial group which are under stress in
economic slow down
Where Did They Go Wrong?
• Managerial international presence
• No next line of leadership
• Lack of infrastructure in rural area
• Minimum balance to open a account is very high
• Extension overseas holds lots of risk
• Credit card department is not active

THANK YOU

208133712 HDFC Bank Strategy

Uploaded by

Copyright:

Available Formats

208133712 HDFC Bank Strategy

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

208133712 HDFC Bank Strategy

Uploaded by

Copyright:

Available Formats

BANKING INDUSTRY-

• Operating in more than 990 cities

• All branches are OLRT connected

• 500 locations serviced through internet banking

• Representatives in Hong Kong, New York, London and Singapore

 HDFC Bank set up a state-of-the-art dealing room to handle all

 The Certificates of Deposits were awarded a PP1+ rating

 HDFC installed state-of-the-art systems to facilitate inter-connectivity

 HDFC Bank, planned to set up an all-India on-line automated teller

 Proposed to launch tele-banking for the first time in June

 Becomes the first private sector bank to conclude a structured interest

 HDFC Bank entered into strategic alliances with 10 overseas banks to

 Introduced ATMs that converse in a regional language

 Introduced the Freedom Account for the average retail customer

 Launched an account across India that seeks to free depositors from

 Ties up with Master Card and Visa

 First bank in the Asia-Pacific region to connect the American Express

 Tied up with BPL Ltd to offer Internet-enabled supply-chain management

 Tied up with financial portals, e-brokerages and the National Stock

 Launched `eInstant Car Loans' a new scheme for offering customers a

 Launched depository services on the net

 Tied up with portal brainvisa.com to retail education loans to students

 HDFC Bank opens first overseas representative office

 Unveils Gold and Silver Cards

 Launched new products to its wealth management programme to increase

 Unveils resident foreign currency account

 Unveils co-branded credit card with e-Seva

 HDFC Bank, IRCTC in tie up for online railway booking

 Introduces 'HDFC Bank Health Plus Credit Card‘

 Launches India's first mobile payment solution

 Unveils credit card for farmers

 Osim to join hands with HDFC Bank for consumer loans

 Inaugurates VbV facility for online shopping

 Signed an agreement with Tata Pipes to offer credit facilities to farmers

 HDFC Bank launches ‘Meritus’ Scholarship Programme

 Decided to pay variable interest rate on recurring deposits

• CNBC TV18's Best Bank & Financial Institution Awards

• IDC FIIA Awards 2011 - Excellence in Customer Experience

Threat of new entrants Threat of competitors Threat of substitutes

 Large number of banks

 Strong exit barriers

 Low switching cost

 RBI rules and regulations

 Low switching cost

 Increasing consumer awareness

 Product differentiation very difficult

 Non-Banking financial sector

Composition of Service Sector

Commercial Bank Co-operative Bank Local Area Bank

Foreign24 Regional rural6 Urban Bank State Bank

Public Sector26 Private Sector22

SBI Group7 Nationalized19 New7 Old15

Regional Rural Banks

Private Sector Banks

 Profitability - Higher profitability compared to the past or international

 IT and New technology – Technology has the potential to change

Features like internet banking, anytime, anywhere banking, tele-banking,

 Low employee cost – Focusing on increasing employee efficiency by

 Diversified Products – Diversification in the product set gives the

Innovation/New product is a key driver of growth that surprises and