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MOB Ratio Analysis

MOB Ratio Analysis

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Published by Naval Maheshwari

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Published by: Naval Maheshwari on Aug 22, 2011
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02/13/2012

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PGDM2010-12

Management of Banks
HDFC Bank Ratio Analysis
Submitted to : Prof: Samiksha Ojha

Submitted by: Group No. 15 Naval Maheshwari 033 Nishant Mishra 036 KandarpVyas

02 . This ratio signifies the total liquidity position of the bank with respect to its total deposit.02 Yield on assets 0.12 is very small and hence bank need to focus on this issue and need to have more cash and balance in hand. we can say that bank has already invest very carefully in liquid asset as of now. It may be because of the competitions in the industry.39 is not very high.07 Profitability Ratio ROE 8.. ROA 0.1. hence we can say that bank needs to have more liquidity all the time as compared to other bank which is a negative aspect. This ratio signifies the need for bank to invest in more liquid asset. analysis of the ratio is as follows: Ratio name Value 1.07 is a very small no.51 is a very good figure and it indicates that investing in HDFC bank s stocks is a good option.51 This ratio measures the return for shareholder investment. Since 0. 0.10 Net operating margin 0. Liquidity Ratio Demand to time deposits Demand deposit ratio 0.12 C& B excluding RBI/Total Deposit 0. Almost similar to ROA. But seeing the ratio.10 Analysis This ratio signifies the demand of liquidity for the bank. bank has perform very badly and thus need to improve its yield on asset Bank s net operating margin is very less.39 C& B excluding RBI/Total Demand Deposit 0. This ratio signifies how well the bank uses its assets and other resources to generate income. it does not need to invest more in liquid asset This ratio signifies that how much money a bank has in liquid so as to fulfill its sudden demand deposit need. It is running its business on a very slight thin margin. It needs to have much higher operating margin. 0. In this ratio. Higher the ratio more will be the demand for liquidity.HDFC Bank Ratio Analysis:Based on the values calculated in Xls. 8. It clearly indicates that bank need to focus and has to improve this ratio otherwise it can be in liquidity crunch in the future. it is more than 1. Since for HDFC. we can say that bank has perform poorly in this part and need to improve in this regard as soon as possible. this ratio also gives us the clue about the return/dividend on bank assets.

18 . better is its financial position.58 Total Borrowing/Total Asset 0. However 0. This ratio signifies the amount of borrowing a bank has as compared to its total asset. higher will be its ROE. Higher the ratio.05 is not good. But is this case ratio of 0.Risk Ratio Equity Multiplier 541.8. Higher the ratio means that bank has good alternative source of income .11 is a moderate figure for this ratio however it is always good to have lesser ratio than this. This ratio signifies how well the bank is doing its business. Since HDFC has got a fairly good EM. We have in this case as .which is significantly good.76 2.58 is not a bad figure and a higher figure is considered better.it means that net income of bank from risk business of loans is less which is always better to have. Credit/Deposits Contingent Liability/Total Asset 0.05 Efficiency and Expense Control Ratio operating efficiency 0. it is responsible for good ROE for bank. Here the bank is operating at 5%cost of funds.05 Cost Income Ratio 0.02 is a good ratio which tells us that bank has actually almost 8 times more deposits in its account as compared to its total capital. better the financial leverage a company is. This ratio signifies the level of money that a bank has given as advancements versus its deposits. HDFC need to operate in better efficiency mode as so survive in the long run. 2. Contingent liability includes all those obligations which can become liability in future.02 Total Borrowings/Total Capital 0. Cost of Funds 0.03 Operating efficiency provides us the details of bank processes and procedures. This ratio suggeststhat how much a bank has taken money in terms of borrowing for its normal operation.18 which means that almost one fifth of the bank s income is coming from other sources which indeed a good sign for a bank. 0.58 is the ratio which suggest that bank has somewhat balanced its borrowing and equity capital.11 Productivity Ratio Total Deposits /Total Capital 8. It is the ratio of non interest income to net total income. Lower the value better will be the processes followed in bank. Lesser is the value of cost of fund for the bank. Here HDFC has got 30% efficient process which is moderate as compared to industry standards.53 Higher the EM of the bank. Its shows that bank is highly productive in this regard.

Similarly. Thus its capacity to perform well and do not fall in liquidity crunch is less. Productivity ratios of the bank are also good. .Conclusion: Overall we can say that bank has managed to have fairly good liquidity ratios. Thus bank need to maintain its risk ratios very carefully. ROE is almost 8 times which is a good indicator that bank is getting good return on its equity. risk ratios of bank are also fairly high which suggest that bank is has invested good amount of its capital in risky assets and loans.

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