A COMPARATIVE STUDY OF FINANCIAL

STATEMENT
OF
SBI & HDFC BANK 2009-2012

Submitted in partial fulfillment of the requirements

For the award of the degree of

Bachelor of Business Administration (BBA)

To

Guru Gobind Singh Indraprastha University, Delhi

Guide:

Submitted by:

Ms. Shilpa Arora

Atif Siddiqui
Roll No.:13524401710

Institute of Innovation in Technology & Management,

New Delhi 110058
Batch (2010-2013)

Certificate

I, Mr. AtifSiddiqui, Roll No. 13524401710 certify that the Project Report/Dissertation (BBA310) entitled A comparative study of financial statement Of SBI & HDFC Bank 2009-2012 is
done by me and it is an authentic work carried out by me at Institute of innovation in technology
and management . The matter embodied in this project work has not been submitted earlier for
the award of any degree or diploma to the best of my knowledge and belief.
Signature of the Student
Date:
Certified that the Project Report/Dissertation (BBA-310) entitled A comparative study of
financial statement of SBI & HDFC Bank 2009-2012 done by Mr. AtifSiddiqui , Roll
No.13524401710completed under my guidance.
Signature of the Guide
Date:
Name of the Guide:
Designation:
Address:
Countersigned
Director/Project Coordinator

CONTENTS

S No
1
2
3
4
5
6
7
8
9
10

Topic
Certificate (s)
Acknowledgements
Executive Summary
List of Abbreviations
Chapter-1: Introduction
Chapter-2: Methodology
Chapter-3: Data Analysis & Interpretation
Chapter-4: Summary and Conclusions
References/Bibliography
Annexure

Page No
1-12
13
14-29
30-35
36
37-44

LIST OF TABLES
Table No
1
2
3
4
5
6
7

Title
Current Ratio
Debt Equity Ratio
Total assets to debt ratio
Proprietary ratio
Working capital turnover ratio
Fixed asset turnover ratio
Gross profit ratio

Page No
16
18
20
22
24
26
28

LIST OF GRAPH
Graph No
1
2
3
4
5
6
7

Title
Current Ratio
Debt Equity Ratio
Total assets to debt ratio
Proprietary ratio
Working capital turnover ratio
Fixed asset turnover ratio
Gross profit ratio

Page No
16
18
20
22
24
26
28

Executive Summary
The Indian economic is growing. There are various factors contributing for the development of
economy. One of the industries which have revolutionized the economy is banking. Banks
channelize individual savings into capital formation, leading to faster growth of an economy. The
leading private sector and government sector banks which includes the HDFC bank and SBI.
This project is basically a financial comparison between the HDFC BANK and the SBI through
the help of ratio analysis. In this the financial position of both the banks are compared and the
best one is taken out.
I have undertaken my study in the area of ratio analysis to study and compare financial position
of HDFC bank and SBI.
The Project is titled A comparative study of financial statement of SBI & HDFC Bank 20092012.
1. In the first chapter the introduction of the project, introduction of Industry Company or
history, SWOT analysis, objectives of the study, distribution network is mentioned.
2. The second chapter of the report mainly focuses on Research methodology of the project.
3. The third chapter consists of Data analysis and interpretation.
4. The last chapter summarizes the whole report and gives the recommendations, conclusion,
suggestions and limitations.
5.

Chapter-1
INTRODUCTION
STATE BANK OF INDIA
The roots of the State Bank of India rest in the first decade of 19th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
and two other Presidency banks, namely, the Bank of Bombay (incorporated on 15 April 1840)
and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were
incorporated as joint stock companies, and were the result of the royal charters. These three banks
received the exclusive right to issue paper currency in 1861 with the Paper Currency Act, a right
they retained until the formation of the Reserve Bank of India. The Presidency banks
amalgamated on 27 January 1921, and the reorganized banking entity took as its name Imperial
Bank of India. The Imperial Bank of India continued to remain a joint stock company.
Pursuant to the provisions of the State Bank of India Act (1955), the Reserve Bank of India,
which is India's central bank, acquired a controlling interest in the Imperial Bank of India. On 30
April 1955 the Imperial Bank of India became the State Bank of India. The Govt. of India
recently acquired the Reserve Bank of India's stake in SBI so as to remove any conflict of interest
because the RBI is the country's banking regulatory authority.
In 1959 the Government passed the State Bank of India (Subsidiary Banks) Act, enabling the
State Bank of India to take over eight former State-associated banks as its subsidiaries. On 13
September 2008, State Bank of Saurashtra, one of its Associate Banks, merged with State Bank
of India.

SBI has acquired local banks in rescues. For instance, in 1985, it acquired Bank of Cochin in
Kerala, which had 120 branches. SBI was the acquirer as its affiliate, State Bank of Travancore,
already had an extensive network in Kerala.
It is the largest bank in India. It 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
theIndian Subcontinent. The Government of India nationalized the Imperial Bank of India in
1955, with the Reserve Bank of India 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.
SBI provides a range of banking products through its vast network in India and overseas,
including products aimed at NRIs. The State Bank Group, with over 16000 branches, has the
largest branch network in India. With an asset base of $250 billion and $195 billion in deposits, it
is a regional banking behemoth. It has a market share among Indian commercial banks of about
20% in deposits and advances, and SBI accounts for almost one-fifth of the nations loans. The
State bank of India is the 29th most reputed company in the world according to Forbes. State
Bank of India is one of the Big Four Banks of India with ICICI Bank, Axis Bank and HDFC
Bank.
The bank has 141 overseas offices spread over 32 countries as on 31st Dec 2009. It has branches
of the parent in Colombo, Dhaka, Frankfurt, Hong Kong, Johannesburg, London and environs,
Los Angeles, Male in the Maldives, Muscat, New York, Osaka, Sydney, and Tokyo. It has
offshore banking units in the Bahamas, Bahrain, and Singapore, and representative offices in
Bhutan and Cape Town. SBI operates several foreign subsidiaries or affiliates. In 1990 it
established an offshore bank, State Bank of India (Mauritius).In 1982, the bank established a
subsidiary, State Bank of India (California), which now has eight branches - seven branches in
the state of California and one in Washington DC that it opened on 23 November 2009. The

seven branches in California are located in Los Angeles, Artesia, San Jose, Canoga Park, Fresno,
San Diego and Bakersfield. The Canadian subsidiary, State Bank of India (Canada) too dates to
1982. It has seven branches, four in the greater Toronto area and three in British Columbia.
In Nigeria SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant
Bank and received permission in 2002 to commence retail banking. It now has five branches in
Nigeria.
In Nepal SBI owns 50% of Nepal SBI Bank, which has branches throughout the country. In
Moscow SBI owns 60% of Commercial Bank of India, with Canara Bank owning the rest. In
Indonesia it owns 76% of PT Bank Indo Monex. State Bank of India already has a branch in
Shanghai and plans to open one up in Tianjin.
There are six associate banks that fall under SBI, and together these six banks constitute the State
Bank Group. All use the same logo of a blue keyhole and all the associates use the "State Bank
of" name followed by the regional headquarters' name. Originally, the then seven banks that
became the associate banks belonged to princely states until the government nationalized them
between October, 1959 and May, 1960. In tune with the first Five Year Plan, emphasizing the
development of rural India, the government integrated these banks into State Bank of India to
expand its rural outreach. There has been a proposal to merge all the associate banks into SBI to
create a "mega bank" and streamline operations. The first step along these lines occurred on 13
August 2008 when State Bank of Saurashtra merged with State Bank of India, which reduced the
number of state banks from seven to six. Furthermore on 19th June 2009 the SBI board approved
the merger of its subsidiary, State Bank of Indore, with itself. SBI holds 98.3% in the bank, and
the balance 1.77% is owned by individuals, who held the shares prior to its takeover by the
government.

Symbol and slogan

-> Symbol is the Key Hole, whose meaning is "Welcome to SBI". ->
Slogans are:

The Symbol of State Bank of India is a Circle and not Key hole and a small man at the centre of
the Circle. Circle depicts perfection and the common man being the centre of the banks business.
The Subsidiaries of SBI till date State Bank of Indore State Bank of Bikaner & Jaipur State Bank of Hyderabad
State Bank of Mysore State Bank of Patiala State Bank of Travancore
Board of Directors
Name Designation
O P Bhatt Chairman / Chair Person R Sridharan Managing Director Dileep C Choksi Director D
Sundaram Director Rajiv Kumar Director ShyamalaGopinath Director
Name Designation
S K Bhattacharyya Managing Director Ashok Jhunjhunwala Director S Venkatachalam Director
VasanthaBharucha Director Ashok Chawla Director
HDFC Bank
HDFC Bank Ltd. is a commercial bank of India, incorporated in August 1994, after the Reserve
Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing
Development Finance Corporation, a premier housing finance company (set up in 1977) of India.

HDFC Bank has 1,412 branches and over 3,295 ATMs, in 528 cities in India, and all branches of
the bank are linked on an online real-time basis.
HDFC Bank was incorporated in the year of 1994 by Housing Development Finance Corporation
Limited (HDFC), India's premier 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
privatesector.The Bank commenced its operations as a Scheduled Commercial Bank in January
1995 with the help of RBI's liberalization policies.
In a milestone transaction in the Indian banking industry, Times Bank Limited (promoted 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. As per the scheme of amalgamation approved by
the shareholders of both banks and the Reserve Bank of India, shareholders of Times Bank
received 1 share of HDFC Bank for every 5.75 shares of Times Bank.
In 2008 HDFC Bank acquired Centurion Bank of Punjab taking its total branches to more than
1,000. The amalgamated bank emerged with a strong deposit base of around Rs. 1, 22,000 crore
and net advances of around Rs. 89,000 crore. The balance sheet size of the combined entity is
over Rs. 1, 63,000 crore. The amalgamation added significant value to HDFC Bank in terms of
increased branch network, geographic reach, and customer base, and a bigger pool of skilled
manpower.
HDFC Bank deals with three key business segments Wholesale Banking Services, Retail
Banking Services and Treasury. It has entered the banking consortia of over 50 corporates for
providing working capital finance, tradeservices, corporate finance and merchant banking. It is
also providing sophisticated product structures in areasof foreign exchange and derivatives,
money markets and debt trading and equity research.

HDFC Bank Ltd. (BSE: 500180, NYSE: HDB) is a major Indian financial services company
based in India, incorporated in August 1994, after the Reserve Bank of India allowed establishing
private sector banks. The Bank was promoted by the Housing Development Finance Corporation,
a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,725 branches
and over 4,232 ATMs, in 779 cities in India, and all branches of the bank are linked on an online
real- time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82 billion. For the
fiscal year 2008-09, the bank has reported net profit of 2,244.9 crore (US$ 509.59 million), up
41% from the previous fiscal. Total annual earnings of the bank increased by 58% reaching at
19,622.8 crore (US$ 4.45 billion) in 2008-09.

1.1) Distribution network

An HDFC Bank Branch
HDFC Bank is headquartered in Mumbai. The Bank has an network of 1,725 branches spread in
771 cities across India. All branches are linked on an online real-time basis. Customers in over
500 locations are also serviced through Telephone Banking. The Bank has a presence in all major
industrial and commercial centers across the country. Being a clearing/settlement bank to various
leading stock exchanges, the Bank has branches in the centers where the NSE/BSE have a strong
and active member base.
The Bank also has 3,898 networked ATMs across these cities. Moreover, HDFC Bank's ATM
network can be accessed by all domestic and international Visa/MasterCard, Visa
Electron/Maestro, Plus/Cirrus and American Express Credit/Charge cardholders
a) Wholesale Banking Services:The Bank's target market ranges from large, blue-chip manufacturing companies in the Indian
corp to small & mid-sized corporates 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.
b) 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 customers through
the growing branch network, as well as through alternative delivery channels like ATMs, Phone
Banking, NetBanking and Mobile Banking.
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.
c) Treasury
Within this business, the bank has three main product areas - Foreign Exchange and Derivatives,
Local Currency Money Market & Debt Securities, and Equities. These services are provided
through the bank's Treasury team. 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.
HDFC Bank branches in India
HDFC Bank Branches in Assam HDFC Bank Branches in Andhra Pradesh HDFC Bank
Branches in Bihar HDFC Bank Branches in Chandigarh HDFC Bank Branches in Chhattisgarh

 HDFC Bank Branches in Delhi HDFC Bank Branches in Goa HDFC Bank Branches in
Gujarat HDFC Bank Branches in Haryana HDFC Bank Branches in Himachal Pradesh
HDFC Bank Branches in Jammu Kashmir HDFC Bank Branches in Jharkhand HDFC Bank
Branches in Karnataka HDFC Bank Branches in Kerala HDFC Bank Branches in Madhya
Pradesh HDFC Bank Branches in Maharashtra HDFC Bank Branches in Meghalaya HDFC
Bank Branches in Orissa HDFC Bank Branches in Pondicherry HDFC Bank Branches in
Punjab HDFC Bank Branches in Rajasthan HDFC Bank Branches in Sikkim HDFC Bank
Branches in Tamil Nadu HDFC Bank Branches in Uttar Pradesh HDFC Bank Branches in
Uttaranchal HDFC Bank Branches in West Bengal
Board of Directors
Name Designation
Chander Mohan Vasudev Chairman / Chair Person Harish Engineer Executive Director
KekiMistry

Director

AshimSamanta

Director

AdityaPuri

Managing

Director

PareshSukthankarExecutive Director
Name Designation
AdityaPuri Managing Director PareshSukthankar Executive Director ArvindPande Director
PanditPalande Director Harish Engineer Executive Director

1.2 OBJECTIVES OF STUDY

compare and analyze the financial position of State Bank of India and HDFC Bank.

1.3 SCOPE OF STUDY

To collect and analyze the financial data of SBI & HDFC Bank of last three years i.e
2009-2012. For this purpose, secondary data from the published sources i.e annual reports
of SBI & HDFC Banks , Website , etc is collected. The financial data collected is attached
in the appendices

SWOT ANALYSIS OF HDFC BANK

STRENGTHS:
1. It has an extensive distribution network comprising of 319 branches in 166 cities & one
international office in dubai this provides a competitive edge over the competitions.
2. The bank has a strong retail depository base & has more than million customers.
3. Bank boasts of strong brand equity.
4. ISO 9001 certification for its depository & custody operations & for its backend
processing of retail operation & direct banking operation. The bank has a near
competitive edge in area of operations.
5. The bank has a market leader in cash settlement service for the major stock exchanges
in its country.
6. HDFC Bank is one of the largest private sector bank working in India.
7. It has a highly automated environment in terms of information technology &
communication system.
8. Infrastructure is best
9. It has many innovative products like kids Advantage scheme , NRI services
WEAKNESSES:
1. Account opening and delivery of cheque book take comparatively more time.
2. Lack of availability of different credit products like CC Limit, Bill discounting facilities.
OPPORTUNITIES:
1. Branch expansion.
2. Door step services.
3. Greater liberalization in foreign ownership via FDI in Indian Pvt. Sector Banks.

4. Infrastructure improvements & better systems for trading & settlements the govt.
securities & foreign exchange markets.
THREATS:
1. The Bank has started facing competition from players like SBI, PNB Bank in the finance
market itself. This reduces the profit margins in the future.
2. Some Pvt. Banks have 7 days banking

S W O T An a l y s i s o f S B I B a n k
STRENGTHS:
1. The biggest bank in the country.
2. Has a separate act for itself. Thus, a special privilege.
3. Biggest branch network in the country
4. First public sector to move to CBS
WEAKNESSES:
1. Huge amount of staff
2. Expected to experience high level of attrition due to retirement of its top management
3. Still carries the image of the old Govt. sector bank
OPPORTUNITIES:
1. Pool in talent to replace the going top management to serve the next generation
2. Make better use of its CRM.
3. Expansion into rural areas
THREATS:
1. Consolidation among private banks
2. New bank licenses by RBI Foreign banks that have sophisticated products.

Chapter-2
Methodology
Redman and Mory define research as a systemized effort to gain new knowledge. Some people
consider research as a movement, a movement from the known to the unknown.
Research is an academic activity and as such the term should be used in a technical sense.
Source for collecting the data:
It is based on secondary data on the reports of SBI and HDFC Bank. Ratios have been used as
tools to analyze their respective positions.
SBI and HDFC banks have been taken as model banks to understand the overall working of the
private and government banks in India.
SBI and HDFC Bank have been taken to represent the working of public and private sector banks
as the two are the leading banks in the respective areas.
2.1 Tools used for data collection Secondary data has been collected for this project (annual report of SBI and HDFC Bank that
includes balance sheet, profit & loss statement and cash flow statement).
2.2 Tools used for data analysis Ratio analysis is done based on the data and bar graphs are used.

Chapter- 3
DATA ANALYSIS & INTERPRETATION
Financial Analysis:
Financial analysis (or financial statement analysis) refers to an assessment of the viability,
stability and profitability of a business, sub-business or project. It is a study of relationship among
various financial facts and figures as set out in the financial statements, i.e., balance sheet and
profit & loss account. The process of division, establishing relationship and interpretation thereof
to understand the working and financial position of a business is known as financial statement
analysis.
In the words of Kennedy and Muller, the analysis and interpretation of financial statements are
an attempt to determine the significance and meaning of financial statement data so that the
forecast may be made of the prospects for future earnings, ability to pay interest and debt
maturities (both current and long-term) and profitability and sound dividend policy.
Ratio analysis is one of the techniques of analysis of financial statement in which ratios are
computed. It is a process of determining and interpreting relationship between the items of
financial statements to provide a meaningful understanding of the performance and financial
position of an enterprise.

Ratios can be classified into:

1) Liquidity ratios - These ratios measure the short-term solvency of the firm, i.e. the firms
ability to pay its current dues.
2) Solvency ratios - These ratios convey a firms ability to meet its long-term obligations.
3) Activity ratios - These ratios judge how well the facilities at the disposal of the enterprise
are being utilized.
4) Profitability ratios - Profitability is of utmost importance for a concern. Thus a measure
of profitability is the overall measure of efficiency.

1) Liquidity ratios: These ratios measure the short-term solvency of the firm, i.e. the firms
ability to pay its current dues.
Following come under this type:a) Current ratio- It is a relationship between current assets and current liabilities and is
computed to assess the short-term financial position of the enterprise. It indicates the
enterprises ability to meet its short-term obligations. Ratio of 2:1 is considered
satisfactory.
Formula

Current Assets
= -------------------------Current Liabilities

BANKS
SBI

FORMULA
Current Assets
--------------------Current Liabilities

CALCULATION
= 555461727 + 488576259 + 377332738
-----------------------------------1106975742

RATIOS
1.28: 1

HDFC

Current Assets
---------------------Current Liabilities

= 135272112 + 39794055 + 63568314

-----------------------------------227206229

1.05: 1

Table no. 1: Current ratio

1.2

0.8

0.6

0.4

0.2

0
HDFC

SBI

SBI

HDFC

Diagram no. 1: current ratio

Interpretation:The current ratio of SBI is better than that of HDFC Bank. A current ratio shows the number of
times the current assets are in excess of the current liabilities and thus the ability to meet current
liabilities. Generally, a ratio of 2:1 is considered satisfactory. A ratio of 1.28:1 for SBI is
therefore better than 1.05:1 of HDFC Bank. But both ratios have a scope of improvement and
increase.

2) Solvency ratios:These ratios convey a firms ability to meet its long-term obligations.
Some of the solvency ratios are:a) Debt-equity ratio - It is computed to ascertain soundness of the long-term financial
position of the firm. It expresses relationship between debt (long-term loans) and equity
(shareholders funds.

Formula: -

Debt (long-term loans)

-----------------------------------Equity (shareholders funds)

BANKS
SBI

HDFC

FORMULA
Debt (long-term loans)
----------------------------------Equity (shareholders funds

Debt (long-term loans)

----------------------------------Equity (shareholders funds

Table no. 2: Debt-equity Ratio

CALCULATION
=

RATIOS
13.73:1

537136821 + 7420731280
--------------------------------6348802 + 573128162
26858374 + 1428115800
------------------------------------4253841 + 4009158 + 54870

174.92:1

200
180
160
140
120
100
80
60
40
20
0
SBI

HDFC

SBI

HDFC

Diagram no:2
Interpretation:The debt equity ratio of SBI which is 13.73: 1 is much lower than the ratio of HDFC Bank which
is 174.92: 1. This ratio judges the long term financial position and sound ness of the long term
financial policies of the firm. Lenders of SBI are more protected than the lenders of HDFC Bank.

b) Total assets to debt ratio - It shows the relationship between total assets and total longterm debts. It measures the safety margin available to the providers of long-term debts. A
higher ratio represents higher security to lenders for extending such loans to the business.

Formula: -

Debt (long-term loans)

----------------------------------------------------

Total Funds

BANKS
SBI

HDFC

FORMULA
Debt (long-term loans)
----------------------------------Total funds

Debt (long-term loans)

---------------------------------Total funds

CALCULATION
=

7957868101
---------------------------7957868101 + 579476964

1454974174
--------------------------1454974174 + 8317869

Table no. 3: Total assets to debt ratio

RATIOS
0.93

0.99

1
0.99
0.98
0.97
0.96
0.95
0.94
0.93
0.92
0.91
0.9
SBI

HDFC

SBI

HDFC

Diagram no: 3
Interpretation:The debt to total funds ratio of SBI which is 0.93: 1 is lower than the ratio of HDFC Bank which
is 0.99: 1. This ratio judges the long term financial position and sound ness of the long term
financial policies of the firm. Lenders of SBI are more protected than the lenders of HDFC Bank.
Generally the ideal debt to total funds ratio should be as less as possible.

c) Proprietary ratio - It establishes the relationship between proprietors funds and total
assets. It indicates the general position of the enterprise and is useful for the creditors. A
high ratio indicates adequate safety for creditors.

Formula:Proprietors Funds
=

--------------------------------

Total Assets

BANKS
SBI

FORMULA
Proprietors Funds
-----------------------Total Assets

HDFC

Proprietors Funds
---------------------------Total Assets

CALCULATION
6348802 + 573128162
-------------------------------9644320807

4253841 + 4009158 + 54870

-------------------------------1832707732

Table no. 4: Proprietary ratio

RATIOS
0.06:1

0.004:1

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
SBI

HDFC

SBI

HDFC

Diagram no 4: Proprietary ratio

Interpretation: Proprietary ratio ascertains the proportion of shareholders funds in the total assets employed in
the firm. Here, when a comparison is made, the proprietary ratio of BI which is 0.06: 1 is way
higher than the proprietary ratio of HDFC Bank which is 0.004: 1. This shows that lenders and
creditors are more satisfied with the SBI in comparison to HDFC Bank.

3) Activity or turnover ratios: These ratios judge how well the facilities at the disposal of
the enterprise are being utilized.
a) Working capital turnover ratio - It shows the relationship between working capital
and sales. It indicates the number of times a unit invested in working capital produces
sales. It measures the effective utilization of working capital. Higher the ratio, better it
is. But it shouldnt be too high, which would mean inadequacy of working capital.
Formula: -

Net sales
= ----------------------Working Capital

BANKS
SBI

HDFC

FORMUA
Net Sales
--------------------Working Capital
Net Sales
---------------------Working Capital

CALCULATION
=

RATIOS

764792228
----------------314394982

2.43 times

196228646
-----------------11428252*

17.17 times

Table no. 5: Working capital turnover

20
18
16
14
12
10
8
6
4
2
0
SBI

HDFC

SBI

HDFC

Diagram no. 5: Working capital turnover ratio

Interpretation: This ratio shows the number of times the working capital has been employed in the process of
carrying on the business. The working capital turnover ratio of HDFC Bank (17.17 times) is
much more than that of SBI (2.43 times) which shows that the HDFC Bank is properly utilizing
its working capital in comparison with the SBI. Higher the ratio, better the efficiency in the
utilization of working capital.

b) Fixed asset turnover ratio - It establishes the relationship between fixed assets
and net sales indicating how efficiently they have been used in achieving the sale.
It assesses whether the investment in fixed assets is justified in relation to sales
achieved. A high ratio indicates efficient utilization of fixed assets. A low ratio
indicates inefficient utilization.
Formula:Net sales
= -----------------------Fixed Assets

BANKS
SBI

HDFC

FORMUA
Net Sales
---------------------Fixed Assets

Net Sales
----------------------Fixed Assets

CALCULATION

RATIOS
0.27 times

764792228
= -----------------------------------38378472 + 2759539569

0.32 times
196228646
= ------------------------------------17067290 + 588175488

Table no. 6: Fixed asset turnover ratio

0.32

0.31

0.3

0.29

0.28

0.27

0.26

0.25

0.24
SBI

HDFC

SBI

HDFC

Diagram no. 6: Fixed asset turnover ratio

Interpretation: The fixed asset turnover ratio of HDFC Bank (0.32 times) is higher than that of SBI (0.27
times). This shows that HDFC Bank is efficiently utilizing its fixed asset than SBI. Higher
the ratio betters the utilization.

4) Profitability ratios: Profitability is of utmost importance for a concern. Thus a

measure of profitability is the overall measure of efficiency.
a) Gross profit ratio It establishes relationship of gross profit on sales to net sales
of a firm calculated in percentage. It is a reliable guide to the adequacy of selling
prices and efficiency of trading activities. It should be adequate to cover
administrative & marketing expenses and to provide for fixed charges, dividends
and building up of reserves. The higher the ratio, the better it is.

Formula: -

Net profit
---------------------------------- * 100
Net Sales

BANKS
SBI

FORMULA

CALCULATION

Net Profit
--------------------------- * 100
Net Sales

91212265
= ------------------------ * 100
764792228

Net Profit
--------------------------- * 100
Net Sales

22449392
= ------------------------ * 100
196228646

HDFC

RATIOS
11.92 %

11.44 %

Table no. 7: Gross profit ratio

11.9

11.8

11.7

11.6

11.5

11.4

11.3

11.2
SBI

HDFC

SBI

HDFC

Diagram no. 7: Gross profit ratio

Interpretation : The net profit ratio indicates the overall efficiency of the business. Hence, the net profit ratio
of SBI (11.92 %) is higher than that of HDFC Bank (11.44 %) which shows that the overall
efficiency of SBI is better than that of HDFC Bank. Higher the net profit ratio, better the
business.

Chapter-4
CONCLUSION
RESULTS OF THE STUDY
The current ratio of SBI is better than that of HDFC Bank. A current ratio shows the number of
times the current assets are in excess of the current liabilities and thus the ability to meet current
liabilities. Generally, a ratio of 2:1 is considered satisfactory. A ratio of 1.28:1 for SBI is
therefore better than 1.05:1 of HDFC Bank. But both ratios have a scope of improvement and
increase. In layman language, SBI have more number of current assets than HDFC Bank which
shows the SBI can bear more risk in the equity market and pay back its debts easily because of
more number of current assets than current liabilities.
The debt equity ratio of SBI which is 13.73: 1 is much lower than the ratio of HDFC Bank which
is 174.92 : 1. This ratio judges the long term financial position and sound nests of the long term
financial policies of the firm. Lenders of SBI are more protected than the lenders of HDFC Bank.
Generally the ideal debt equity ratio is 2: 1. In layman language, the long term debts of SBI are
more secured than that of HDFC Bank which states that SBI can pay back its debts much more
easily than HDFC Bank.
The debt to total funds ratio of SBI which is 0.93: 1 is lower than the ratio of HDFC Bank which
is 0.99 : 1. This ratio judges the long term financial position and soundness of the long term
financial policies of the firm. Lenders of SBI are more protected than the lenders of HDFC Bank.
Generally the ideal debt to total funds ratio should be as less as possible. In layman language, the
long term borrowings of SBI are less in comparison to HDFC Bank in relation with the funds

available to them. So, it means that the lenders can easily lend money to SBI in comparison to
HDFC Bank.
Proprietary ratio ascertains the proportion of shareholders funds in the total assets employed in
the firm. Here, when a comparison is made, the proprietary ratio of SBI which is 0.06: 1 is way
higher than the proprietary ratio of HDFC Bank which is 0.004 : 1. This shows that lenders and
creditors are more satisfied with the SBI in comparison to HDFC Bank. In layman language, the
credibility of SBI is really good in front of its lenders and creditors and they have more trust on
SBI. This also states than SBI can easily borrow more amount of money if required.
This ratio measures the safety margin available to the suppliers of long term debts. The total
asset to debt ratio of SBI (1.21: 1) is lower than the ratio of HDFC Bank (1.25: 1) which shows
that the total asset to debt ratio of HDFC Bank is more ideal than SBI but there is some scope for
improvement. In layman language, HDFC Banks has more number of fixed assets than SBI
which states that in a situation of insolvency the long term debts can be paid or recovered by
selling of the fixed assets easily in the situation of HDFC Bank in comparison to SBI.
This ratio shows the number of times the working capital has been employed in the process of
carrying on the business. The working capital turnover ratio of HDFC Bank (17.17 times) is
much more than that of SBI (2.43 times) which shows that the HDFC Bank is properly utilizing
its working capital in comparison with the SBI. Higher the ratio, better the efficiency in the
utilization of working capital.

In layman language, HDFC Banks is using its working capital

much more efficiently than SBI and gaining more profits.

The fixed asset turnover ratio of HDFC Bank (0.32 times) is higher than that of SBI (0.27 times).
This shows that HDFC Bank is efficiently utilizing its fixed asset than SBI. Higher the ratio

betters the utilization. In layman language, HDFC Bank is using its fixed assets more efficiently
and effectively than SBI and gaining more profits.
The net profit ratio indicates the overall efficiency of the business. Hence, the net profit ratio of
SBI (11.92 %) is higher than that of HDFC Bank (11.44 %) which shows that the overall
efficiency of SBI is better than that of HDFC Bank. Higher the net profit ratio, better the
business. In layman language, the net profit of SBI is more than HDFC Bank because of its
overall workforce, efficiency and its large number of branches etc.

Limitations of the study

Although the project has been worked out at its best yet there are some limitations, which cannot
be overlooked. Had these limitations been overcome, the findings would be accurate.
Some of the limitations are:
1) Time constraint:
Time was really a limiting factoring the project. Its really difficult to work out such a large
project between two months time.
2) Data constraint:
All the data that has been collected for this project, has been taken from secondary sources like
websites, magazines, newspapers and book.

Suggestions

In relation to the current ratio, HDFC Bank can increase its current assets and decrease its
current liabilities to attain the ideal figure which is same applicable for the SBI as well.

The debt-equity ratio of HDFC Bank is much higher than the SBI which is not
satisfactory. So. The HDFC Banks should decrease its debts by raising money from
various other resources such as debentures, preference shares, bonds etc.

The debt to total funds ratio of SBI is less than HDFC Bank which means that the HDFC
Bank has more long term borrowings in relation to its funds available. So, the HDFC
Bank should try to decrease its long term debts.

The proprietor ratio of HDFC Bank is much less than that of SBI. Hence to improve its
goodwill, the HDFC Bank should satisfy its lenders and creditors so that it can easy
borrow if needed.

The total assets of HDFC Bank are more than that of SBI. To improve its status, SBI
should increase its fixed assets so that in a case of insolvency the debt can be paid by
selling them off.

Hence the working capital turnover ratio of HDFC Bank is way higher than that of SBI,
the SBI should utilize its working capital more efficiently and effectively by improving
its liquidity and by improving its sales. This will surely help SBI in gaining more profits.

The turnover from the fixed assets of HDFC Bank is little more than SBI. In this case, the
SBI should properly make use of its fixed assets by utilizing them in a better way.

The net profit of SBI is more than HDFC Bank because of various reasons such as overall
workforce, efficiency and its large number of branches etc. to improve its net profit, the

HDFC Bank should try various options such as opening new branches, providing
interesting schemes to the public and others, proper utilization of resources etc.

Bibliography
Web links

www.sbiglobal.in/SBI-Annual-Report

www.scribd.com/doc/Sbi-and-Hdfc-bank

www.sbiglobal.in/newsEvents/SBI-Annual-Report-09-10

www.hdfcbank.com/htdocs

Other Websites

www.moneycontrol.com / Banks - Private Sector

www.accounting4management.com

www.mca.gov.in

www.accountingbase.com

www.khanacademy.org

www.investopedia.com

www.economictimes.indiatimes.com

Books

Dr. S.N Maheshwari (2000) Financial Statements: Analysis and Interpretation

Section b, page no. B.3 and Ratio Analysis Section B, Chapter no. 2 page no.B.23.

ANNEXURE-1

Profit & Loss A/c of SBI Bank

Particulars

March-2012

March-

March-2010

2011
Income :

March2009

Interest Earned

106521.45

81394.36

70993.92

63788.43

Other Income

14351.45

14935.09

14968.15

12691.35

Total Income

120872.90

96329.45

85962.07

76479.78

Expenditure: Interest expended

63230.37

48867.96

47322.48

42915.29

16974.04

14480.17

12754.65

9747.31

Selling And Admin Expense

15625.18

1214119

7898.23

5122.06

Depreciation

1007.17

990.50

932.66

763.14

Miscellaneous Expenses

12350.13

12479.30

7888.00

8810.75

Preoperative Exp Capitalized

0.00

0.00

0.00

0.00

Operating Expenses

37563.09

31430.88

24941.01

18123.66

Provisions & Contingencies

8393.43

8660.28

4532.53

6319.60

Total Expenses

109186.89

88959.12

76796.02

67358.55

Net Profit for the year

11686.01

7370.35

9166.05

9121.23

Extraordinary Items

21.28

0.00

0.00

0.00

Profit brought forward

6.05

0.34

0.34

0.34

Total

11713.34

7370.69

9166.39

9121.57

Preference Dividend

Employee Cost

Equity Dividend

2348.66

1905.00

1904.65

1841.15

Corporate Dividend Tax

296.49

246.52

236.76

248.03

Earnings Per Share (Rs)

174.15

116.07

144.37

143.67

Equity Dividend (%)

350.00

300.00

300.00

290.00

Book Value (Rs)

1251.05

102340

1038.76

912.73

Transfer to statutory Reserves

3531.35

2488.96

6495.14

5205.69

Transfer to Other Reserves

5536.50

2729.87

529.50

306.90

Transfer to Govt.

2645.15

2151.52

2141.41

2089.18

Balance c/f to Balance Sheet

0.34

0.34

0.34

0.34

Total

11713.34

7370.69

9166.39

9121.57

Particulars

March-2012

March-

March-

March-

2011

2010

2009

Per Share Data( annualized)

Appropriations

Capital & Liabilities:

Total Share Capital

671.04

635.00

634.88

634.88

Equity Share Capital

671.04

635.00

634.88

634.88

Share Application Money

0.00

0.00

0.00

0.00

Preference Share Capital

0.00

0.00

0.00

0.00

Reserves

83280.16

64351.04

65314.32

57312.82

Revaluation Reserves

0.00

0.00

0.00

0.00

Net worth

83280.16

64351.04

65949.20

57947.70

Deposits

1043647.36

933932.81

804116.23

742073.13

Borrowings

127005.57

119568.96

103011.60

53713.68

Total Debt

1170652.93

105350177

907127.83

795786.81

Other Liabilities & provisions

80915.09

105248.39

80336.70

110.697.57

Total Liabilities

1335519.22

1223736.2

1053413.7

964432.08

Assets
Cash & Balances with RBI

54075.94

94395.50

61290.87

55546.17

Balances with Banks, Money at Call

43087.23

28478.65

34892.98

48857.63

Advances

867578.89

756719.45

631914.15

542503.20

Investments

312197.61

295600.57

285790.07

275953.96

Gross Block

14792.33

13189.28

11831.63

10403.06

Accumulated depreciation

9658.46

8757.33

7713.90

6828.65

Net Block

5133.87

4431.95

4117.73

3574.41

Capital Work in Progress

332.68

332.23

295.18

263.44

Other Assets

53113.02

43777.85

35112.76

37733.27

Total Assets

1335519.24

1223736.2

1053413.7

964432.08

Contingent Liabilities

698064.74

585294.50

429917.37

614603.47

Bills for collection

20150044

20509229

166449.04

152964.06

Book Value (Rs)

1251.05

1023.40

1038.76

912.73

ANNEXURE-2

Balance Sheet of SBI Bank

Particulars

March-2012

March-2011

March-2010

March2009

Net Profit Before Tax

7513.17

5818.66

4289.14

3299.25

Net Cash from Operating Activities

-11355.61

-375.83

9389.89

-1736.14

Net Cash from Investing Activities

-689.85

-1122.74

-551.51

-663.78

Net Cash from financing Activities

3286.19

1227.99

3598.91

2964.66

Net decrease/increase in cash and Equivalents

-8731.11

-273.56

12435.78

564.74

Opening Cash and Equivalents

29668.83

29942.4

17506.62

14778.34

Closing Cash and Equivalents

20937.73

29668.83

29942.4

15343.08

ANNEXURE-3

Profit & Loss A/c of HDFC Bank

Particulars

March-2012

March-2011

March-2010

March-2009

Interest Earned

27286.35

19928.21

16172.90

16332.26

Other Income

5333.41

4433.51

3810.62

3470.63

32619.76

24361.72

19983.52

19802.89

Interest expended

14989.58

9385.08

7786.30

8911.10

Employee Cost

3399.91

2836.04

2289.18

2238.20

Selling And Admin Expense

2647.25

2510.82

3395.83

2851.26

Depreciation

542.52

497.41

394.39

359.91

Miscellaneous Expenses

5873.42

5205.97

3169.12

3197.49

Preoperative Exp Capitalized

Operating Expenses

9241.64

8045.36

7703.41

7290.66

Provisions & Contingencies

3221.46

3004.88

1545.11

1356.20

Total Expenses

27452.68

20435.32

17034.82

17557.96

Net Profit for the year

5167.09

3926.40

2948.70

2244.94

Extraordinary Items

-2.12

-2.65

-0.93

-0.59

Profit brought forward

6174.24

4532.79

3455.57

2574.63

Income :

Total Income
Expenditure:

Total

11339.21

8456.54

6403.34

4818.98

Preference Dividend

Equity Dividend

1009.08

767.62

549.29

425.38

Corporate Dividend Tax

163.7

124.53

91.23

72.29

Earnings Per Share (Rs)

22.02

84.4

64.42

52.77

Equity Dividend (%)

215

165

120

100

Book Value (Rs)

127.52

545.53

470.19

344.44

Transfer to statutory Reserves

1250.08

997.52

935.15

641.25

Transfer to Other Reserves

516.7

392.64

294.87

224.5

Transfer to Govt.

1172.78

892.15

640.52

497.67

Balance c/f to Balance Sheet

8399.65

6174.24

4532.79

3455.57

Total

11339.21

8456.55

6403.33

4818.99

Per Share Data( annualized)

Appropriations

ANNEXURE-4

Balance Sheet of HDFC Bank

Particulars

March-2012

March-2011

March-2010

March-2009

Total Share Capital

469.34

465.23

457.74

425.38

Equity Share Capital

469.34

465.23

457.74

425.38

Share Application Money

0.3

400.92

Preference Share Capital

Reserves

29455.04

24914.04

21064.75

14226.43

Revaluation Reserves

Net worth

29924.68

25379.27

21522.49

15052.73

Deposits

246706.45

208586.41

167404.44

142811.58

Borrowings

23.846.51

14394.06

12915.69

2658.84

Total Debt

270552.96

222980.47

180320.13

145497.42

Other Liabilities & provisions

37431.87

28992.86

20615.94

22720.62

Total Liabilities

337909.51

277352.60

222458.56

183270.77

Cash & Balances with RBI

14991.09

25100.82

15483.28

13527.21

Balances with Banks, Money at Call

5946.63

4568.02

14459.11

3979.41

Advances

195420.03

159982.67

125830.59

98883.05

Capital & Liabilities:

Assets

Investments

97482.91

70929.37

58607.62

58817.55

Gross Block

5930.24

5244.21

4707.97

3956.63

Accumulated depreciation

3583.05

3073.56

2585.16

2249.90

Net Block

2347.19

2170.65

2122.81

1706.73

Capital Work in Progress

Other Assets

217721.64

14601.08

5955.15

6356.83

Total Assets

337909.49

277352.61

222458.56

183.270.78

Contingent Liabilities

844374.61

559681.87

466236.24

396594.31

Bills for collection

39610.71

28869.10

20940.13

17939.62

Book Value (Rs)

127.52

545.53

470.19

344.44