Commercial Bank Management

Report on
Bank Performance and Profitability Analysis
of


and



Submitted to : Prof D.N.Panigrahi

Submitted by: Group 3, ABC1
Abhinav Kohale (2013004)
Abirbira Samal (2013007)
Anil Kumar Reddy (2013031)
Anshul Rajora (2013046)
B.N.V. Kartik (2013072)
Ganesh Kamath (2013100)
INTRODUCTION

ABOUT HDFC
HDFC Bank was incorporated in 1994 by Housing Development Finance Corporation Limited (HDFC), India's
largest housing finance company. It was among the first companies to receive an 'in principle' approval
from the Reserve Bank of India (RBI) to set up a bank in the private sector. The Bank started
operations as a scheduled commercial bank in January 1995 under the RBI's liberalization policies.
Times Bank Limited (owned by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank Ltd., in 2000.
This was the first merger of two private banks in India. Shareholders of Times Bank received 1 share of HDFC Bank for
every 5.75shares of Times Bank. In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches
tomorrow than 1,000. The amalgamated bank emerged with a base of about Rs. 1, 22,000 crore and net
advances of about Rs.89, 000 crore. The balance sheet size of the combined entity is more than Rs. 1, 63,000
crore
ABOUT SBI
State Bank of India is a multinational banking and financial services company based in India. It is a
government-owned corporation with its headquarters in Mumbai, Maharashtra. As of December 2013,
it had assets of US$170 billion, making it the largest banking and financial services company in India
by assets.
[3][4]
State Bank of India is one of the Big Four banks of India, along with ICICI Bank, Punjab
National Bank and Bank. The bank traces its ancestry to British India, through the Imperial Bank of
India, to the founding, in 1806, of the Bank of Calcutta, making it the oldest commercial bank in the
Indian Subcontinent. Bank of Madras merged into the other two "presidency banks" in British India,
Bank of Calcutta and Bank of Bombay, to form the Imperial Bank of India, which in turn became the
State Bank of India. Government of India owned the Imperial Bank of India in 1955, with Reserve
Bank of India (India's Central Bank) taking a 60% stake, and renamed it the State Bank of India. In
2008, the government took over the stake held by the Reserve Bank of India.
State Bank of India is a regional banking behemoth and has 20% market share in deposits and loans
among Indian commercial banks

RECENT DATA ABOUT HDFC & SBI (In 2014)
Bank Number of employees Number of branches Number of
ATMs
HDFC 68165 3403 11256
SBI 222033 15869 100000

BALANCESHEETS OF SBI AND HDFC (Rs in Cr )
Bank SBI HDFC
Parameter FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
Deposits 933933 1043647 1202740 1394409 208586 246706 296247 367337
Growth/change(YOY) 16% 12% 15% 16% 25% 18% 20% 24%
Advances 756719 867579 1045617 1209829 159983 195420 239721 303000
Growth 20% 15% 21% 16% 27% 22% 23% 26%
Total business mix
(deposits+advances)
1690652 1911226 2248357 2604238 368569 442126 535968 670337
Growth 18% 13% 18% 16% 26% 20% 21% 25%
Savings A/C deposits 323394 359847 414907 469262 63448 73998 88211 103113
Current A/C deposits 107059 98273 110581 150273.9 46460 45408 52310 61488
CASA ratio 46.1% 43.9% 43.7 % 44.4 % 52.7% 48.4% 47.4% 44.8%
(CASA/Total
deposits)
Shareholders equity 635.08 671.13 684.12 746.57 465.23 469.34 475.88 479.81
TOTAL ASSETS 1223736 1335519 1566261 1792235 277352 337909 400332 491600

Interpretation:
Though the deposits and advances of HDFC bank is lesser than SBI bank; the growth rate
is higher for HDFC bank because of aggressive business strategy.
The CASA ratio for HDFC bank is higher than SBI bank but it is decreasing year by year.
As other banks like YES bank and Kotak Mahindra bank are providing more interest on
saving deposits.
PROFIT & LOSS STATEMENT
Bank SBI HDFC
Parameter (in Rs. Cr.) FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
1.Interest income
81394 106521 119657 136351 19928 27874 35065 41135
2. Interest expenditure 48868 63230 75326 87069 9385 14989 19254 22653
3.Net interest income (NII) (1-2) 32526 43291 44331 49282 10543 12885 15811 18482
4. Non interest income 15825 14351 16035 18553 4335 5783 6853 7920
5. Total Operating income (1+4) 97219 120872 135692 154904 24263 33657 41918 49055
6. Net operating income(3+4) 48351 57642 60366 67835 14878 18668 22664 26402
7. Operating expenditure 23015 26069 29284 35726
7153 9278 11236 12042
8. Operating profit (6-7) 25336 31573 31082 32109 7725 9390 11428 14360
9. Provisions & contingencies 17071 19866 16977 21218
3799 4223 4701 5882
10. Profit after tax (8-9) 8265 11707 14105 10891 3926 5167 6727 8478


ASSET QUALITY
Banks SBI HDFC
Parameter (in Rs. Cr.) FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
1.Gross loans or Credit
756719 867579 1045617 1209829 159982 195420 239721 303000
2.Gross NPA
25326 39676 51189 61605
1694 1999 2335 2989
3.NPA provisions
12979 23857 29233 30509
1398 1647 1866 2169
4.Net NPA (2-3) 12347 15819 21956 31096 296 352 469 820
5. Net loan or credit (1-3) 743740 843722 1016384 1179320 158584 193773 237855 300831
6. Gross NPA ratio (Gross
NPA to Gross Credit)= 2/1
3.35% 4.57% 4.90% 5.09% 1.06% 1.02% 0.97% 0.99%
7. Net NPA ratio (Net NPA
to Net Credit) = 4/5
1.66% 1.87% 2.16% 2.64% 0.19% 0.18% 0.20% 0.27%
8.Povision Coverage Ratio
(PCR) = 3/2
51.25% 60.13% 57.11% 49.52% 82.53% 82.39% 79.91% 72.57%

*All value in Rs. Cr.


Interpretation:
Both the gross and net NPA ratio is higher for SBI bank as compared to HDFC bank. It
shows that NPA is managed effectively by HDFC bank.
PCR is lesser for SBI bank, which should be minimum 70 % as per RBI guidelines.
HDFC bank has maintained this ratio
PRODUCTIVITY
Parameters
SBI HDFC
(in Rs. Cr.) FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
Avg. profit per
employee (Net
Income/avg. no. of
employees) 0.037075582 0.05433 0.061784 0.049051 0.070419 0.078198 0.097401 0.124375
Avg. business per
employee (Bus. Mix/
avg. no. of
employees)
7.5840178 8.86958 9.84843 11.7291 6.61087 6.69117 7.76034 9.83404
Avg. profit per
branch
0.61032344 0.83046 0.95201 0.68631 1.97684 2.03105 2.19693 2.49133
Avg. business per
branch
124.845075 135.577 151.752 164.109 185.584 173.792 175.039 196.984



INTERPRETATION:
Average profit per employee, average profit per branch and average business mix per branch is
higher for HDFC bank as compared to SBI bank. So, HDFC bank is more efficient in utilizing its
resources.
Though average business mix per employee is increasing for SBI bank, the average profit per
employee is decreasing.
VULNERABILTY

Basel 2


Banks SBI HDFC
Parameter FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
Tier-1 capital
63901 82125 94947 112333 23718 28067 33881 42154
Tier-2 capital 34629 34200 34415 33512 7743 11898 17519 15424
Total capital funds (T-1 + T-2) 98530 116325 129362 145845 31461 39965 51400 57578
CAR or CRAR (Basel-1)
15.32% 15.71%
15.94%
CAR or CRAR (Basel-2) 11.98% 13.86% 12.92% 12.96% 16.22% 16.52%
16.80% 16.10%

INTERPRETATION:
Both SBI and HDFC bank have maintained the minimum CAR of 9% as per RBI
guidelines.
HDFC bank has maintained a higher CAR as compared to SBI bank. This will help
HDFC bank to protect depositors and promote the stability and efficiency of financial
systems around the world in better way.
PERFORMANCE AND PROFITABILITY
SBI HDFC
Parameter FY 11 FY 12 FY 13 FY 14 FY 11 FY 12 FY 13 FY 14
NIM
2.69% 3.38% 3.06% 2.93% 1.02% 4.19% 4.28% 4.14%
Cost to income
ratio
0.4760 0.4523 0.4851 0.5267 0.4808 0.4970 0.4958 0.4561
% of Non
interest income
to Total
operating
income
16.28% 11.87% 11.82% 11.98% 17.87% 17.18% 16.35% 16.15%
Overhead
efficiency
(Non Int.
Income/Non
Int. Exp.)
68.76% 55.05% 54.76% 51.93% 60.60% 62.33% 60.99% 65.77%
Efficiency
Ratio
0.2367 0.2157 0.2158 0.2306 0.2948 0.2757 0.2680 0.2455
ROA
(AU*NPM)
0.68% 0.88% 0.90% 0.61% 1.42% 1.53% 1.68% 1.72%
AU 7.94% 9.05% 8.66% 8.64% 8.75% 9.96% 10.47% 9.98%
NPM 8.50% 9.69% 10.39% 7.03% 16.18% 15.35% 16.05% 17.28%
ROE
(ROA*EM)
13.01% 17.44% 20.62% 14.59% 8.44% 11.01% 14.14% 17.67%
EM (A/E) 1926.90 1989.96 2289.45 2400.63 596.16 719.97 841.25 1024.57





INTERPRETATION:
NIM of HDFC bank is higher as compared to SBI bank.
Cost to income ratio for HDFC bank is higher than SBI bank from 2011 to 2013 and it
has decreased drastically and lesser than SBI bank.
Overhead efficiency of SBI bank is in the range of 50 to 70% and for HDFC bank it is in
the range of 60 to 66%.
Return on Assets is higher for HDFC bank than SBI bank & it is increasing year by year.
Return on Equity of HDFC bank is lower than SBI bank and it id increasing year by year.