Financial Statement Analysis of

HDFC & ICICI Bank

Submitted By:
Gaurav Tripathi (11DCP074)
Nirvan Rustagi (11DCP085)
Yudhvir Singh (11DCP103)

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Contents
Objective ................................................................................................................................................. 3
HDFC Bank Introduction....................................................................................................................... 3
ICICI Bank Introduction ........................................................................................................................ 3
Methodology........................................................................................................................................... 4
Ratio Analysis .......................................................................................................................................... 8
Conclusion ................................................................................................ Error! Bookmark not defined.

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Objective
The objective of this project is to analyse the financial position of two leading banks in the Indian
banking sector by using trend analysis, common size analysis and ratio analysis method of evaluation
and present a comparative study over a period of 5 years from 2006-07 to 2010-11.

HDFC Bank Introduction

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an
'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalisation of the Indian Banking Industry in 1994. The bank was incorporated in
August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC
Bank commenced operations as a Scheduled Commercial Bank in January 1995.
HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound customer
franchises across distinct businesses so as to be the preferred provider of banking services for target
retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent
with the bank's risk appetite. The bank is committed to maintain the highest level of ethical
standards, professional integrity, corporate governance and regulatory compliance. HDFC Bank's
business philosophy is based on four core values - Operational Excellence, Customer Focus, Product
Leadership and People.

ICICI Bank Introduction

ICICI Bank is India's second-largest bank with total assets of Rs. 4,062.34 billion (US$ 91 billion) at
March 31, 2011 and profit after tax Rs. 51.51 billion (US$ 1,155 million) for the year ended March 31,
2011. The Bank has a network of 2,533 branches and 6,700 ATMs in India, and has a presence in 19
countries, including India.
ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and through its specialised subsidiaries in the areas
of investment banking, life and non-life insurance, venture capital and asset management.
The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and
representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia
and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.

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Methodology
Analysis of financial statements of HDFC Bank and ICICI Bank has been carried out for the
period 2006 2010. As a first step financial statements of both the companies have been
downloaded from their respective corporate website and the data that are required for our
analysis are tabulated below:

HDFC Bank
Balance Sheet

in Rs. Cr.
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Capital and Liabilities:

Total Share Capital

319.39

354.43

425.38

457.74

465.23

Equity Share Capital

319.39

354.43

425.38

457.74

465.23

Share Application Money

400.92

Preference Share Capital

Reserves

6,113.76

11,142.80

14,226.43

21,064.75

24,914.04

Revaluation Reserves

Net Worth

6,433.15

11,497.23

15,052.73

21,522.49

25,379.27

Deposits

68,297.94

1,00,768.60

1,42,811.58

1,67,404.44

2,08,586.41

Borrowings

2,815.39

4,478.86

2,685.84

12,915.69

14,394.06

Total Debt

71,113.33

1,05,247.46

1,45,497.42

1,80,320.13

2,22,980.47

Other Liabilities & Provisions

13,689.13

16,431.91

22,720.62

20,615.94

28,992.86

Total Liabilities

91,235.61

1,33,176.60

1,83,270.77

2,22,458.56

2,77,352.60

Cash & Balances with RBI

5,182.48

12,553.18

13,527.21

15,483.28

25,100.82

Balance with Banks, Money at Call

3,971.40

2,225.16

3,979.41

14,459.11

4,568.02

Advances

46,944.78

63,426.90

98,883.05

1,25,830.59

1,59,982.67

Investments

30,564.80

49,393.54

58,817.55

58,607.62

70,929.37

Gross Block

1,917.56

2,386.99

3,956.63

4,707.97

5,244.21

Accumulated Depreciation

950.89

1,211.86

2,249.90

2,585.16

3,073.56

Net Block

966.67

1,175.13

1,706.73

2,122.81

2,170.65

Capital Work In Progress

Other Assets

3,605.48

4,402.69

6,356.83

5,955.15

14,601.08

Total Assets

91,235.61

1,33,176.60

1,83,270.78

2,22,458.56

2,77,352.61

Contingent Liabilities

2,02,126.73

5,82,835.94

3,96,594.31

4,66,236.24

5,59,681.87

Bills for collection

7,211.88

17,092.85

17,939.62

20,940.13

28,869.10

Book Value (Rs)

201.42

324.38

344.44

470.19

545.53

Assets

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HDFC Bank
Profit & Loss account

in Rs. Cr.
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Income
Interest Earned

6,889.02

10,115.00

16,332.26

16,172.90

19,928.21

Other Income

1,510.24

2,205.38

3,470.63

3,810.62

4,433.51

Total Income

8,399.26

12,320.38

19,802.89

19,983.52

24,361.72

Interest expended

3,179.45

4,887.12

8,911.10

7,786.30

9,385.08

Employee Cost

776.86

1,301.35

2,238.20

2,289.18

2,836.04

Selling and Admin Expenses

727.53

974.79

2,851.26

3,395.83

2,510.82

Depreciation

219.6

271.72

359.91

394.39

497.41

Miscellaneous Expenses

2,113.28

3,295.22

3,197.49

3,169.12

5,205.97

Preoperative Exp Capitalised

Operating Expenses

2,590.66

3,935.28

7,290.66

7,703.41

8,045.36

Provisions & Contingencies

1,246.61

1,907.80

1,356.20

1,545.11

3,004.88

Total Expenses

7,016.72

10,730.20

17,557.96

17,034.82

20,435.32

Net Profit for the Year

1,382.54

1,590.18

2,244.94

2,948.70

3,926.40

Extraordionary Items

-0.35

-0.06

-0.59

-0.93

-2.65

Profit brought forward

1,455.02

1,932.03

2,574.63

3,455.57

4,532.79

Total

2,837.21

3,522.15

4,818.98

6,403.34

8,456.54

Expenditure

HDFC Bank
Cash Flow

in Rs. Cr.
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Net Profit Before Tax

1638.75

2280.63

3299.25

4289.14

5818.66

Net Cash From Operating

Activities

666.63

3583.43

-1736.14

9389.89

-375.83

Net Cash (used in)/from

investing activities

-311.4

-619.82

-663.78

-551.51

-1122.74

Net Cash (used in)/from

Financing Activities

1637.88

3628.34

2964.66

3598.91

1227.99

6591.95

564.74

12435.78

-273.56

Net (decrease)/increase In
Cash and Cash Equivalents

1993.11

Opening Cash & Cash

Equivalents

6188.66

8074.54

14778.34

17506.62

29942.4

Closing Cash & Cash

Equivalents

8181.77

14666.49

15343.08

29942.4

29668.83

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ICICI Bank
Balance Sheet

in Rs. Cr.
2006-07

2007-08

2008-09

2009-10

2010-11

Capital and Liabilities:

Total Share Capital

1,249.34

1,462.68

1,463.29

1,114.89

1,151.82

Equity Share Capital

899.34

1,112.68

1,113.29

1,114.89

1,151.82

Share Application Money

0.29

Preference Share Capital

350

350

350

Reserves

23,413.92

45,357.53

48,419.73

50,503.48

53,938.82

Net Worth

24,663.26

46,820.21

49,883.02

51,618.37

55,090.93

Deposits

2,30,510.19

2,44,431.05

2,18,347.82

2,02,016.60

2,25,602.11

Borrowings

51,256.03

65,648.43

67,323.69

94,263.57

1,09,554.28

Total Debt

2,81,766.22

3,10,079.48

2,85,671.51

2,96,280.17

3,35,156.39

Other Liabilities & Provisions

38,228.64

42,895.39

43,746.43

15,501.18

15,986.35

Total Liabilities

3,44,658.12

3,99,795.08

3,79,300.96

3,63,399.72

4,06,233.67

Cash & Balances with RBI

18,706.88

29,377.53

17,536.33

27,514.29

20,906.97

Balance with Banks, Money at Call

18,414.45

8,663.60

12,430.23

11,359.40

13,183.11

Advances

1,95,865.60

2,25,616.08

2,18,310.85

1,81,205.60

2,16,365.90

Investments

91,257.84

1,11,454.34

1,03,058.31

1,20,892.80

1,34,685.96

Gross Block

6,298.56

7,036.00

7,443.71

7,114.12

9,107.47

Accumulated Depreciation

2,375.14

2,927.11

3,642.09

3,901.43

4,363.21

Net Block

3,923.42

4,108.89

3,801.62

3,212.69

4,744.26

Capital Work In Progress

Other Assets

189.66
16,300.26

0
20,574.63

0
24,163.62

0
19,214.93

0
16,347.47

Total Assets

3,44,658.11

3,99,795.07

3,79,300.96

3,63,399.71

4,06,233.67

Contingent Liabilities

1,77,054.18

3,71,737.36

8,03,991.92

6,94,948.84

8,83,774.77

Bills for collection

22,717.23

29,377.55

36,678.71

38,597.36

47,864.06

Book Value (Rs)

270.37

417.64

444.94

463.01

478.31

Assets

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ICICI Bank
P & L Statement
Income
interest income
other income
Total
expenditure
interest expenditure
employee cost
selling and admin expenses
depriciation
miscellaneous expenses
preoperative exp capitalised
operating expenses
provisions and contingencies
total expenses
net profit

in rs Cr.
2006-07
22994.29
6962.95
29957.24

2007-08
30788.34
8878.85
39667.19

2008-09
31092.55
8117.76
39210.31

2009-10
25706.93
7292.43
32999.36

2010-11
25974.05
7108.91
33082.96

16358.5
1616.75
4900.67
544.78
3426.32
0
8849.86
1638.66
26947.02

23484.24
2078.9
5834.95
578.35
3533.03
0
10855.18
1170.05
35509.47

22725.93
1971.7
5977.72
678.6
4098.22
0
10795.14
1931.1
35452.17

17592.57
1925.79
6056.48
619.5
2780.03
0
10221.99
1159.81
28974.37

16957.15
2816.93
3785.13
562.44
3809.93
0
8594.16
2380.27
27931.58

3110.22

4157.73

3758.13

4024.98

5151.38

ICICI Bank
in Rs. Cr.
Cash Flow

Net Profit Before Tax

Net Cash From Operating
Activities
Net Cash (used in)/from
Investing activities

Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

3648.04

5056.1

5116.97

5345.32

6760.7

-11631.15

-14188.49

1869.21

-6908.92

-17561.11

3857.88

6150.73

-2108.82

1625.36

1382.62

4283.2

8907.13

-4783.61

23061.95
-18362.67

Net Cash (used in)/from

Financing activities

15414.58

29964.82

Net (decrease)/increase In
Cash and Cash Equivalents

20081.1

683.55

Opening Cash & Cash

Equivalents

17040.22

37357.58

38041.13

29966.56

38873.69

Closing Cash & Cash

Equivalents

37121.32

38041.13

29966.56

38873.69

34090.08

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-8074.57

Ratio Analysis
Liquidity Analysis: The liquidity analysis is carried to determine a companys ability to pay off.
Current Ratio: - Ability of a company to meet short term debt obligations
Liquidity Analysis
Current Ratio
Mar 07
0.04
0.09

HDFC
ICICI

Mar 08
0.04
0.11

Mar 09
0.04
0.13

Mar 10
0.03
0.14

Mar 11
0.06
0.11

Current Ratio
0.16
0.14
0.12
0.1
0.08

HDFC

0.06

ICICI

0.04
0.02
0
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

The current Ratio of both the companies is very weak. An ideal ratio is 2:1 which nowhere is
close to the existing ratio. The low current ratio is due to the high short term deposits of the
companies, which act as inventories for banks. Due to this the quick ratio is comparatively
very high as compared to the current ratio.

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Quick Ratio: - A measure of short term debt paying ability

Quick Ratio
Mar 07
4.07
6.04

HDFC
ICICI

Mar 08
4.89
14.7

Mar 09
5.23
5.94

Mar 10
7.14
6.42

Mar 11
6.89
15.86

Quick Ratio
18
16
14
12
10

HDFC

ICICI

6
4
2
0
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

The quick ratio of both the companies is very strong indicating a very healthy short term liquidity
situation.

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Profitability Analysis:- It is a measure of profitability of a company

Net Profit Ratio: - A measure of profitability of the company
Net Profit Ratio
Mar 07
13.57
10.81

HDFC
ICICI

Mar 08
12.82
10.51

Mar 09
11.35
9.74

Mar 10
14.76
12.17

Mar 11
16.09
15.91

Net Profit Ratio

18
16
14
12
HDFC

10

ICICI

8
6
4
2
0
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

The net profit ratio is very decent for both the companies and lies within the industry acceptable
standards of 10-15%. This implies that net profit is a fair margin of the total sales which further
implies that the expenses incurred to turn in the sales are paying off along with a good margin held
in sales.

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Return on Assets:- Measure of productivity of assets

Return On Assets
Mar 07
6.37%
6.12%

HDFC
ICICI

Mar 08
6.30%
7.21%

Mar 09
6.83%
7.49%

Mar 10
5.52%
6.27%

Mar 11
5.88%
6.03%

Return on Assets

8.00%
7.00%
6.00%
5.00%

ICICI

4.00%

HDFC

3.00%
2.00%
1.00%
0.00%
2007

2008

2009

2010

2011

The returns on assets of both the companies is identical but at the same time lower than the
industry norms of 10% (average). This basically means that the management of both the companies
is not able to profitably convert the assets into operating profit. This is a weak sign on the part of the
management as it gives a negative outlook to future investors of both debt and equity.

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Return on Net Worth:

Return On Net Worth
Mar 07
HDFC
23.57
ICICI
12.31

Mar 08
13.83
8.8

Mar 09
15.32
7.55

Mar 10
13.7
7.53

Mar 11
15.47
9.27

Return On net worth

25

20

15

HDFC
ICICI

10

0
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Both the companies have a very strong return to net worth ratio indicating a bright prospect for
future equity investors. Another positive sign for the companies is that even though their net worth
has constantly increased due to retained earnings added back, the company is still able to generate
operating profits in line to maintain a decent ratio indicating a good profitable picture of both the
companies.

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Leverage Analysis:- Means of using borrowed money to earn a return greater than the cost of
borrowing
Debt Equity Ratio:
Debt Equity Ratio
Mar 07
10.62
9.5

HDFC
ICICI

Mar 08
8.76
5.27

Mar 09
9.75
4.42

Mar 10
7.78
3.91

Mar 11
8.22
4.1

Debt Equity Ratio

12
10
8
HDFC

ICICI

4
2
0
Mar '07

Mar '08

Mar '09

Mar '10

Mar '11

Even though the debt equity ratio of both the companies is on the higher side, ICICI has managed to
balance it out a bit in the recent past by managing their dividend payout and retained earnings well.
Also HDFC has raised substantial capital but they have been unable to create a good balance as they
have taken a more than proportionate debt component into their capital structure. This can harm
the company in the near future as this will increase the interest component of the company and
harm the near term liquidity situation (quick) of the company which is currently strong.

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Efficiency Analysis:
Cash Deposit Ratio:
Cash Deposit Ratio
Mar 07
6.84
6.99

HDFC
ICICI

Mar 08
10.49
10.12

Mar 09
10.71
10.14

Mar 10
9.35
10.72

Mar 11
10.79
11.32

Cash Deposit Ratio

12
10
8

HDFC
ICICI

6
4
2
0
Mar '07

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Mar '08

Mar '09

Mar '10

Mar '11

Trend Analysis - Profit

300.00%
250.00%
200.00%
net profit - icici
150.00%

Net Profit - hdfc

100.00%
50.00%
0.00%
2006-07 2007-08 2008-09 2009-10 2010-11

Trend Analysis - Income

350.00%
300.00%
250.00%
Interest Earned - HDFC

200.00%

interest income - ICICI

150.00%
100.00%
50.00%
0.00%
2006-07

2007-08

2008-09

2009-10

2010-11

The comparative cost and other data is attached along with the project.

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