Contents

1.

INTRODUCTION ............................................................................................................................... 2

2. KEY PARAMETERS................................................................................................................................ 2
State Bank of India Key parameters.................................................................................................... 2
HDFC Bank Key parameters ................................................................................................................ 3
3. ASSET QUALITY RATIOS ....................................................................................................................... 3
SBI ....................................................................................................................................................... 3
HDFC.................................................................................................................................................... 4
Observations: ...................................................................................................................................... 4
4. PROFIT AND LOSS PARAMETERS: ........................................................................................................ 5
Interest income and expenses: ........................................................................................................... 6
Non-interest income: .......................................................................................................................... 6
Operating expenses: ........................................................................................................................... 6
Provisions and contingencies:............................................................................................................. 6
Profit after tax: .................................................................................................................................... 6
5. PERFORMANCE AND PROFITABLE RATIOS .......................................................................................... 7
Net Interest Margin ............................................................................................................................ 8
Cost to Income Ratio ........................................................................................................................... 8
Equity Multiplier ................................................................................................................................. 8
Asset Utilization .................................................................................................................................. 9
Net Profit Margin ................................................................................................................................ 9
Return on Assets ................................................................................................................................. 9
6.

PRODUCTIVITY RATIOS:................................................................................................................... 9
SBI: ...................................................................................................................................................... 9
HDFC: ................................................................................................................................................ 10
Analysis: ............................................................................................................................................ 10
Average Profit per Employee: ........................................................................................................... 10
Average Business per Employee: ...................................................................................................... 11
Average Profit per Branch:................................................................................................................ 11
Average Business per Branch: ........................................................................................................... 12

7.

VULNERABILITY RATIOS ................................................................................................................ 12

No.52 Total business mix (deposits+advances) 14.of Employees: 60965 No.64 CASA ratio 47.26 19.89 10. No.030.68.03 TOTAL ASSETS(INR Crores) 10.5 Shareholders’ equity(INR Crores) 634.956.36 12.409.48 19.45.226.89 46.81 10. making it the largest banking and financial services company in India by assets.61 12.64 46.14 11.90.647.356.53.36.of Employees: 228296 No.578.652.25 22.56.43 15.55 Growth(%) 16.88 635 671.65 20.24 Advances(INR Crores) 6. Maharashtra.of ATM: 10743 2.24. it had assets of US$388 billion and 16.12 Growth(%) 11. It was incorporated in 1994.48.of ATM: 32752 HDFC Bank Limited is an Indian financial services company based in Mumbai.23 9.67.932.748. a premier housing finance company (set up in 1977) of India. KEY PARAMETERS State Bank of India Key parameters Parameter FY 2010 FY 2011 FY 2012 FY 2013 Deposits (INR Crores) 8.of Branches: 3062 No.05 17.45 8.693.719. As of December 2013.11.75 15.of Branches: 14816 No. Maharashtra.57 Growth/change(YOY)(%) 8.51 47.1.15 7.81 13.02.73 13.000 branches.616. INTRODUCTION State Bank of India (SBI) is a multinational banking and financial services company based in India. The bank was promoted by the Housing Development Finance Corporation.04.75 14.38 16.914.96 (CASA/Total deposits) .43.31. It is a government-owned corporation with its headquarters in Mumbai.79 17.739.36 16.33.04 684. HDFC Bank is the fifth largest bank in India by assets and the largest bank by market capitalization as of 1 November 2012.116. including 190 foreign offices.37.

59.586.09% 1.28 20.41 2.25.03 2.08 4.89 2.23 469.982.75% 1.4 Shareholders’ equity(INR Crores) 457.Gross loans or Credit (Crores) 2. Net NPA ratio (Net NPA to Net Credit) = 4/5 893613 1078557 869756 1049324 .706.22 24.03 3.428.22 CASA ratio 52 51 48.44 2.720.967.235.85 FY 2012 FY 2013 18.63 Growth(%) 21.60 Advances(INR Crores) 1.22.64 Growth(%) 27.88 TOTAL ASSETS(INR Crores) 2.69 19.68.971.246.67 1.08 22. ASSET QUALITY RATIOS SBI Parameter 03/10 03/11 03/12 03/13 641480 771802 19535 25326 39676 51189 3.47 5.389.37.NPA provisions (Crores) 8665 12979 23857 29233 4.99 Growth/change(YOY)(%) 17.14 Total business mix (deposits+advances) 2.4 47.96 21.28% 4. Net loan or credit (1-3) (Crores) 6.420.HDFC Bank Key parameters Parameter FY 2010 FY 2011 Deposits (INR Crores) 1.32 25.77.25 27. Gross NPA ratio (Gross NPA to Gross Credit)= 2/1 7.Net NPA (2-3) (Crores) 10870 12347 15819 21956 632815 758823 3.44% 4.00.51 4.67 (CASA/Total deposits) 3.93.05% 3.34 475.08.44 2.39.46.82% 2.96.404.35.Gross NPA (Crores) 5.15 22.67.74 465.72% 1.830.42.59 1.126.556.569.63% 1.95.78 3.

9% while for HDFC it’s about 23. Net NPA ratio (Net NPA to Net Credit) = 4/5 8.32% *RBI target for PCR is 70% by Sept.17 2373.32% 0.76 1698.99%.36% 51.21% 78. for SBI it is as large as 4.8. 3.0 239720. 5.48 2003.44% 1. Provisioning Coverage Ratio (PCR) of 70 percent of gross NPAs was prescribed by RBI. Nonperforming assets of SBI is obviously greater than HDFC.62 354.75%.13% 57.5 times that of HDFC 2. HDFC has not only achieved Provisioning Coverage Ratio (PCR) target of 70 percent right from 2010 but is much greater at around 80% which is much greater than SBI.Povision Coverage Ratio (PCR) = 3/2 124405.Gross NPA (Crores) 1816.91 4.03% 0. 4.NPA provisions (Crores) 1424. HDFC is better performer in growth terms while SBI is a bank with larger assets.18% 0.19% 0.42% 82.9%.05 298. with a view to augmenting provisioning buffer in a counter-cyclical manner when the banks were making good profits. In absolute figures SBI has assets which is almost 4. 6.8 193771. as a macro-prudential measure. Gross NPA ratio (Gross NPA to Gross Credit)= 2/1 7.7 9 6 5 1. Advance growth rate (CAGR) for SBI is about 18.Gross loans or Credit (Crores) 125830.99% 0. for HDFC it is gradually decreasing. 2010 for All Commercial Banks Observations: 1.11% HDFC Parameter 03/10 03/11 03/12 03/13 1. While for HDFC it is at only 0.2 491.Net NPA (2-3) (Crores) 392.86 1648.6 159982. Thus HDFC is a better performer even in these terms. .25% 60. However HDFC is better performer in terms of NPA ratios as well. Net loan or credit (1-3) (Crores) 6.32% 79.92 3.0 237837.Povision Coverage Ratio (PCR) = 3/2 44.8 158582.6 6 3 6 2.06% 1. While NPA’s for SBI is gradually increasing every year.6 195420.97 1882.42% 82. Though SBI has this ratio increasing it is still very much less at 57%.01 5.71 1399.

078.550.58 32.112.33 28.47. Profit after tax (8-9) Parameter 1. Operating profit (6-7) 10.185.84 67.771.14 1.18 32.860. Net interest income (NII) (12) 4.79 33.391.06 Parameter 1. Operating profit (6-7) 9.33 86.313.232.212.261.080.637.209.992. the intricate differences are explored in the following sections.73 66.298.06.086.581. Net operating income(3+4) HDFC 2010 .45 8.59 93.04 36.47.33.644.132.60 23.888.207.40 35.22 45.31 24.16 20.52 5.569. Non-interest income 5.60 9.757.20 51.636.40 2012 1.193.090.71 15.77 8.28 16.77 3.794.71 16.92 1.863.669.079.38 34. The explanation given in this section is just the simple description of the difference.688.40 2011 2012 2013 16.824.70 10.820.76 9.57 4.016.04 57.05 5.Interest income(HDFC) 2.52 2.85 42. Operating expenditure 8.23 33.319.42 5.160.Interest income(SBI) 2.978. Provisions & contingencies 10.13 13.861.53 7.893.618.425.00.197.42 6.165. SBI 2010 1.44 2.10 34.98 12.14 10.91 33. Net operating income(3+4) 7.32 7.34 74. Total Operating income (1+4) 6.695. Net interest income (NII) (12) 4.51 2011 1.44 68.877.63 81.58 2.93 7.741. Interest expenditure 3.924.011.993.39 89.691. Provisions & contingencies 3.47 11.55 2013 1. PROFIT AND LOSS PARAMETERS: This section gives a bird’s eye view of the comparison of SBI and HDFC by relating various elements of the profit and loss statements for the consecutive years from 2010 to 2013.891.585.74 14.043.15 15. Profit after tax (8-9) 7.12 19.4.628.307. Operating expenditure 1.843.36 9.090.20 47.350.63 62. Total Operating income (1+4) 6.611.23 19.84 61.65 79.96 20. Interest expenditure 3. The subsections given below explore the causes for the difference.97 2.00.334.67.568.74 20.869.442.203.817.214.02 7.83 1.435.797.667.406.70 1.443.106.60 34.087.76. Non-interest income 5.851.537.57 4.72 42.48 29.13.33 87.32 4.173.383.443.24 4.69 26.559.18 13.

This is due to lower interest expenses and lower provisions and contingencies for HDFC. Non-interest income: The percentage of non-interest income on the interest income for HDFC is close to 25%.Interest income(SBI) 2.000. which again is due to the fact of the learning curve position of SBI.00 1. .00 0. Interest expenditure 2013 Looking at the graphs it is clearly seen that there is a substantial difference in the interest income and expenses is considerably high. This is due to the fact that the advisory services provided by SBI with a network of over 13000 branches is quite huge compared to HDFC.000.00 2.00. This difference can be attributed to the fact that SBI is a much established and a public sector bank and hence a higher risk appetite.00.00.Interest income and expenses: INTEREST INCOME INTEREST EXPENSE 2. Provisions and contingencies: The percentage of provisions and contingencies on the interest income for HDFC is approximately 22% and for SBI is more than 26% which again is due to the higher risk appetite of a well-established bank like SBI.00. But if the percentage of interest expense on interest income for SBI is close to 66%.000. and for SBI it is close to 33%. Operating expenses: The operating expenses as a percentage of interest income is around 4% for SBI and close to 6% for HDFC.00 2010 2011 2012 2013 2010 2011 2012 1. Interest expenditure 1.00 1. whereas for HDFC it is less than 50%. HDFC being a private player is playing safe on its expenses.000.00 0.Interest income(HDFC) 2. Profit after tax: The profit after tax as a percentage of interest income for SBI is 36% and for HDFC it is 45%.

It also indicates that HDFC is diversifying in other areas.60% 45.05% 54.75% 47.29 0.28% 11. But over the time both the banks have increased their NIM. It means that HDFC has scope to increase the PAT margin by just increasing the efficiency. . It may be due to high operating cost like salary to staff etc. It means that core bank operations have improved (lending) and tells that they are playing more important role.38 NPM 10.79% 47. Overhead efficiency of SBI has reduced considerable when compared to HDFC.41% 16.04% 12.23% 48.23% 48.84% 16. Income/Non Int.38 0.95% 0.5. This may be due to the fact that more cross selling of products is done in HDFC than SBI. Exp/(Net Int.36% 55.87% 45.03573 AU Net interest margin of the SBI is very less when compared to the net interest margin of HDFC.09% 2.68% 3.51% % of Non-interest income to Total operating income 17.50% 9. PERFORMANCE AND PROFITABLE RATIOS Parameter NIM Mar-10 SBI Mar-11 Mar-12 Mar-13 3. Recently government has infused capital into public sector banks and this ratio is expected to come down in new financial year. SBI needs to increase the equity because it is an indicator of CAR (capital adequacy ratio).05% 68.05% 15. It can be observed that HDFC has higher percentage when compared to SBI. Income) ROA (AU*NPM) 81. Lower NIM may be contributed due to the government restrictions on lending to priority sector by public sector banks.39% ROE (ROA*EM) 14. Equity multiplier of SBI is high compared to HDFC but still ROE is less than the HDFC. Exp. To maintain higher CAR as per the new Basel norms it is important to increase equity.71836 4. It means that overall lending rates of the industry might have increased or deposit rates might have reduced.) Efficiency Ratio (Non Int.40% 3. This would have major impact on the return on assets and other profit measuring rations.53962 4.68% 10.85% 3. This can be attributed to the fact that NIM is less.32% 3. HDFC is less efficient than SBI which is indicated by efficiency ratio.66% 8. Income + Non Int. Return on assets of the SBI is less than HDFC.32 0.87% 11. It is clearly observed that NPM and sales turn over (AU) of SBI is less than HDFC.79% 47.82% Overhead efficiency (Non Int.72% 3. It means that SBI is not able to utilize its assets efficiently.36133 4. Non-interest income as percentage of total income has reduced considerable for both the banks.94% EM (A/E) 4.34% Cost to income ratio (Operating Expenses) 47.51% 3.

00% 50.25 0.00% 4.00% 45.00% 48.4 0.05 0 HDFC SBI 2010 2011 2012 2013 .00% 44.00% 47.1 0.00% HDFC SBI 2010 2011 2012 2013 Cost to Income Ratio 6 4 HDFC 2 SBI 0 2010 2011 2012 2013 Equity Multiplier 0.00% 2010 2011 2012 2013 Net Interest Margin 51.00% 43.00% 49.All the above factors led to the lower NPM (net profit margin) of SBI when compared to HDFC.00% SBI 0.3 0.00% HDFC 2.35 0.2 0.15 0. 6.00% 46.00% 42.

00% 2010 2011 2012 2013 Net Profit Margin 8.00% 0.38 2 1248450746 2012 543296.24 7 1149191741 2011 370739.245 1 98484204.81 6 1355767894 2013 617838. PRODUCTIVITY RATIOS: SBI: (All values in Rupees) Parameters Average Profit Per Employee Average Business Per Employee Average Profit Per Branch Average Business Per Branch 2010 457615.00% HDFC 10.4 9 8304603.Asset Utilization 20.00% SBI 5.00% 6.00% HDFC 4.00% 2010 2011 2012 2013 Return on Assets 6.39 1 1517518224 .00% SBI 2.864 3 71694317 7335147.00% 0.00% 15.160 7 88695801.7 2 9520113.0 7 6103234.190 7 75836776.

500 5 59002081. .2 7 1750385369 Analysis: Average Profit per Employee: Average Profit Per Employee 1200000 1000000 800000 600000 400000 200000 0 2010 2011 SBI 2012 2013 HDFC Over past four years from 2010 to 2013.HDFC: (All values in Rupees) Parameters Average Profit Per Employee 2010 568339.4 1 17095652.0 7 21966035.6 5 1855835851 2012 781978. This can be supported by Average Profit per Employee chart distribution given above.5 9 1737916667 2013 973865.984 2 66108659.1 7 1774782609 Average Business Per Employee Average Profit Per Branch Average Business Per Branch 2011 704189.328 66911738 20310534.199 4 77603417. HDFC Bank has higher Average Profit per Employee figures when compared to SBI Bank.7 8 19768378.

HDFC Bank has higher Average Profit per Branch figures when compared to SBI Bank. . This can be supported by Average Profit per Branch chart distribution given above. SBI Bank has higher Average Business per Employee figures when compared to HDFC Bank.Average Business per Employee: Average Business Per Employee 120000000 100000000 80000000 60000000 40000000 20000000 0 2010 2011 SBI 2012 2013 HDFC Over past four years from 2010 to 2013. This can be supported by Average Business per Employee chart distribution given above. Average Profit per Branch: Average Profit Per Branch 25000000 20000000 15000000 10000000 5000000 0 2010 2011 SBI 2012 2013 HDFC Over past four years from 2010 to 2013.

Average Business per Branch: Average Business Per Branch 2E+09 1. This can be supported by Average Business per Branch chart distribution given above.2E+09 1E+09 800000000 600000000 400000000 200000000 0 2010 2011 SBI 2012 2013 HDFC Over past four years from 2010 to 2013. HDFC Bank has higher Average Business per Branch figures when compared to SBI Bank. We have taken two banks to identify their Tier-I Capital trends in the last four years: Tier-II Capital Ratio Tier-I Capital Ratio 15 6 10 4 5 2 0 0 Jan-10 Jan-11 SBI Tier-II Capital Ratio Jan-12 HDFC Jan-13 Jan-10 Jan-11 SBI Jan-12 HDFC Jan-13 . 7. and not pay any dividends or distributions that would affect its capital.8E+09 1.4E+09 1. non-cumulative preferred stock. and sometimes nonredeemable.6E+09 1. to be classified as well-capitalized. A firm must have a Tier 1 capital ratio of 6% or greater. VULNERABILITY RATIOS Tier-I Capit al: A firm’s core equity capital is known as its Tier-I capital and it is the measure of bank’s financial strength based on sum of its equity capital and reserves.

It helps identify the quality of assets that a bank possesses. has coupons not deferrable without triggering default.93% 8. Summary of the Vulnerability Ratios of two banks SBI and HDFC is given as follows: STATE BANK OF INDIA Parameter Mar-13 Mar-12 Mar-11 Mar-10 Tier-I Capital 8. An NPA are those assets for which interest is overdue for more than 90 days (or 3 months). The NPA ratio is one of the most important ratios in the banking sector. Tier-II Capital ratio of HDFC bank has shown a steep increase in the last couple of years. the difference between their respective ratios has shown a decrease in the last two years.5 2 1. Net NPAs are calculated by reducing cumulative balance of provisions outstanding at a period end from gross NPAs.5 1 0.5% 6. Tier-II capital is further divided into two levels: Upper Tier-II capital is being perpetual. senior to preferred capital and equity. hybrid instruments and subordinated term debt. undisclosed reserves.Tier 2 capital is supplementary bank capital that includes items such as revaluation reserves. HDFC bank has shown higher Tier-I capital ratio than SBI throughout the period of time which was a good sign.5 0 Jan-10 Jan-11 SBI Jan-12 Jan-13 HDFC SBI has continued to maintain higher net NPA ratio than its private counterpart HDFC. we can clearly see a differentiation between those two banks: Net NPA Ratio 2. However. which was initially equal to SBI’s Tier-II Capital ratio. having deferrable coupons and Lower Tier 2 is relatively cheap for banks to issue. Higher ratio reflects rising bad quality of loans.46% . Non-performing asset ratio The net NPA to loans (advances) ratio is used as a measure of the overall quality of the bank's loan book. If we look at the chart below.23% 8.

05% 3.22% 1.22% 3.00% Parameter Tier-I Capital Tier-II Capital Total Capital % of NPA to Net Advance CAR (Basel .67% 3.0% 11.1 11.82 12.19 15.94% 15.2 15.51% 11.II) HDFC Bank Mar-13 Mar-12 Mar-11 Mar-10 10.00% 2.94% 0.71% 0.05% 1.71% 15.45% .76% 3.31 16.54% 12.50% 5.18 15.99% 11.95% 15.II) 2.32% 0.69% 1.69% 3.72 12.Tier-II Capital Total Capital % of NPA to Net Advance CAR (Basel .55% 12.76% 10.43% 4.32% 16.45% 0.56% 12.63 10.