A Project Report on


Submitted to the University of Mumbai In partial fulfillment for award of the Degree of BACHELOR OF COMMERCE (BANKING & INSURANCE)



CONTENTS No. Chapter Name Page no.

I II III IV Chapter 1 Chapter 2


Chapter 3 Chapter 4

Financial Statement Analysis – A Theoretical View Financial Statement Analysis of HDFC Bank

Chapter 5 V VI VII




I express my sincere thanks to my Prof. SINGH HEMANT OMPRAKASH T. feedbacks. R. edits or suggestions.Any accomplishment requires the effort of many people & this work is no different. BANKING & INSURANCE List of Tables . the faculty member. understanding & keen interest helped me to present the study in this form after a few reviews. Manju Jaisinghani. My thanks go to all those people who helped me whether through their comments. Miss. Dombivli (E). M. I am also grateful to Dr. This project is a product of many hands & countless hours from many people. Nair the Principal of Model College. whose support.Y. encouragement.

no. 2.5 Name of Table Branches ATMs CITES Profit after tax Dividend per share Earning per share Capital adequacy Return on capital Page no.1 4.Fig.1 2. .2 4.4 4.3 4.3 4.2 2.

.CHAPTER – 1 AN INTRODUCTION CHAPTER – 1 AN INTRODUCTION Financial statement analysis is very helpful in spanning bank’s internal operations and its relations with the outside world.

Their claims are short term. The financial statement analysis can be used by investors for deciding about their investments. complete. The accuracy of the financial statement can be identified from the report of the auditors. Creditors are primary interested in the liquidity of a bank. consistent and comparable. The debenture holders.Therefore. The bank itself and outside providers of capital – creditors and investors – all undertake financial statement analysis. The investors relay on the financial statement and judge the bank and ensure that these statements are correct. The present project seeks to discuss the framework for investment & financing decision and also helps to expound several analytical methods which are in practice. creditors. are long . on the other hand. employees and government can also use the financial statements for different purposes. the financial information must be organized into an understandable. The claims of bound holders. Data from the financial statement analysis can be used to quickly calculate and examine financial ratios. coherent and sufficiently limited set of data. and the ability of the bank to pay these claims quickly is best judged by an analysis of the bank’s liquidity. The type of analysis varies according to the specific interests of the party involved. An attempt has been made to analysis the financial statement of HDFC Bank. The financial institutions also use these statements while granting loans to the banks.

the financial manager must assess the bank’s present financial position and evaluate opportunities in relation to current position.term. To bargain effectively for outside funds. Accordingly. bound holders are more interested in the cash – flows ability of the bank to service debt over a long period of time. To plan for future. Internally. It is a useful tool for management of bank. management also employs financial analysis for the purpose of internal control and to better provide what capital suppliers seek in financial condition and performance from the bank. ABOUT THE REPORT  TITLE OF THE STUDY: . the financial manager needs to be attuned to all aspects of financial analysis that outside suppliers of capital use in evaluating the bank.

The present study is made with special reference to HDFC Bank. • Statements. • • • To apply the theoretical knowledge of the To highlight the important methods used in To analyze the financial statement of bank. various methods of analysis in to practice. analysis of financial statement of bank. To highlight the importance of financial  PERIOD OF THE STUDY: The period of the study is from July 2010 to September 2010  SCOPE OF THE STUDY: .The present study is titled as “Financial Statement Analysis of A Bank – A Case Study”.  OBJECTIVES OF THE STUDY: The following are the objectives of the present study.

internet. 2.  LIMITATIONS OF THE STUDY: The present study could be influenced by personal judgment of the analysts.The present project helps management for their decisionmaking.  CHAPTER LAYOUT: The present study is arranged as follows: . The secondary data is collected from books. 1. control and review. All the tools of financial analysis for this study have its own limitation. Analysis of financial statements helps banks. magazines. The primary data is collected from bank visits and interviewing concerned person. investments analysts and public in general. newspaper and journals.  METHODOLOGY OF STUDY: For the purpose of the present study both primary and secondary data is used.

. Chapter 5 –  It contains “Summary of Findings. Chapter 2 –  It contains “Profile of HDFC Bank”. Suggestions and Conclusion” to the topic. Chapter 3 –  It contains “Theoretical view” of the topic. Chapter 4 –  It contains “Financial Statement Analysis of HDFC Bank”. Chapter 1 – It contains “An Introduction” to the title and to the report.

CHAPTER – 2 HDFC BANK – A PROFILE Chapter – 2 HDFC Bank – A Profile .

INTRODUCTION: In August. HDFC was one of the first organizations to receive in principle approval from RBI. • Bank’s business philosophy is based on four core values .  • Objective: HDFC Bank is a young and dynamic bank. HDFC was ideally positioned to promote a bank in the Indian market with its experience and strong reputation in market of finance. HDFC has a large corporate client base for housing related credit facilities. The HDFC Bank has its registered office in Mumbai. the operations of HDFC Bank as a commercial bank has commenced. HDFC has maintained a healthy growth and a consistency in its operations and remained as a leader in market of mortgages. Product Leadership and People. The Reserve Bank of India has approved in principle to set up private banks. Bank believes that the ultimate . Operational Excellence.Customer Focus. In January 1995. 1994 the Housing Development Finance Corporation Limited (HDFC) was incorporated in the name of HDFC Bank Limited. In India and in international markets HDFC has an impeccable track record. with a youthful and enthusiastic team determined to accomplish the vision of becoming a world-class Indian bank. The portfolio of HDFC’s outstanding loan has a million dwelling units.

consistent with the Bank’s risk appetite. professional integrity. risk management and audit & compliance. Bank is committed to do this while ensuring the highest levels of ethical standards. corporate governance and regulatory compliance. Bank business strategy emphasizes the following: • Increase bank’s market share in India’s expanding banking and financial services industry by following a disciplined . developing. The objective is to build sound customer franchises across distinct businesses so as to be a preferred provider of banking services for target retail and wholesale customer segments. service levels. motivating and retaining the best people in the industry. For this reason. benchmarking bank against international standards and best practices in terms of product offerings. HDFC Bank is the most preferred employer in banking industry in India. HDFC Bank has been recognized as 'Best Bank in India' in the magazine rankings as well as surveys year on year. and to achieve a healthy growth in profitability. bank is committed to hiring.identity and success of bank will reside in the exceptional quality of our people and their extraordinary efforts.  Mission: Bank mission is to be “a World Class Indian Bank”. technology.

Develop innovative products and services that attract targeted customers and address inefficiencies in the Indian financial sector. Aditya Puri. You just have to feel the waves. •  Vision: Visions don’t change quite often.” It may be quite a unique distinction but HDFC Bank hasn’t seen a change in the leadership since day one. The country’s second largest private bank still strives to become a “world-class Indian bank”. • Leverage technology platform and open scalable systems to deliver more products to more customers and to control operating costs. has continued to surprise industry critics and consistently . Frank Herbert says: “There’s no secret to balance. it doesn’t ruffle the top management of Housing Development Financing Corporation (HDFC) Bank.growth strategy focusing on quality and not on quantity and delivering high quality customer service. • Maintain current high standards for asset quality through disciplined credit risk management. in his capacity as MD and CEO. Call them less aggressive or more conservative. As American author. a vision that was documented in its first annual report back in 1995. • • Continue to develop products and services that reduce cost of funds. Focus on high earnings growth with low volatility. Near-term objectives do.

” he quips. and fall back to mediocrity. • • • Operational Excellence Customer Focus Product Leadership .delivered a growth of around 25-30% (Quos) in net profit for the past 40-50 quarters. “It may look less glamorous. anywhere banking. What makes this success even more remarkable is the fact that the last 10 years have seen a fair amount of volatility in the macroeconomic environment. the Rs 54. in terms of a lazy quarter. domestically as well as globally. Today.000-crore bank services over 11 million customers and operates from more than 1. while some 2. but personally this achievement has been much more valuable.200 branches in 444 Indian towns and cities.500-odd ATMs offer anytime.  Strengths: Highest level of ethical standards • • • Professional integrity Corporate governance Regulatory compliance  Business Philosophy: The four values are the bank’s business philosophy. this consistent performance has been his defining moment at the bank. For HDFC Bank executive director Paresh Sukthankar. It’s very easy to have a great quarter.

• Board of Directors The members of the HDFC bank’s Board of Directors are senior banking professionals with experience in abroad and India. Since its inception in 1977. Jadish Capoor has taken the responsibilities of the bank as Chairman. Its outstanding loan . Aditya Puri is the managing director of the HDFC bank.  PROMOTERS: HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. • Managing Director Mr. who head various businesses. before he was with Citibank as a head for operations in Malaysia.• People  Management: • Chairman In July 2001 Mr. He was a Deputy Governor of the RBI. the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages.

portfolio covers well over a million dwelling units. large shareholder base and unique consumer franchise. professional integrity.Operational Excellence. HDFC Bank's business philosophy is based on four core values . consistent with the bank's risk appetite.  CAPITAL STRUCTURE: At present. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. 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. corporate governance and regulatory compliance.4%. Customer Focus.6% is held by the ADS Depository . a strong market reputation. Product Leadership and People. and to achieve healthy growth in profitability. With its experience in the financial markets. the HDFC Group holds 19.4.6 crore (Rs. In terms of equity share. The bank is committed to maintain the highest level of ethical standards. HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.  BUSINESS FOCUS: HDFC Bank's mission is to be a World-Class Indian Bank.2 billion). of this the paid-up amount is Rs 424.5 billion). Foreign Institutional Investors (FIIs) have around 28% of the equity and about 17. HDFC was ideally positioned to promote a bank in the Indian environment.

The bank has about 570.(in respect of the bank's American Depository Shares (ADS) Issue). under the symbol 'HDB'.000 shareholders. The HDFC bank is appreciated with so many awards like: • • • • • Asian Banker Excellence Awards 2009 The Asset Triple A Awards Financial Insights Innovation Awards 2010 Global Finance Awards 2010 Business World Best Bank Award 2009 BRANCHES: HDFC Bank has 1.  Awards: Awards with its strengths and its talented people the HDFC banks have made all its efforts to achieve its mission to be World Class Indian bank.725 branches in India. Its shares find a listing on the Stock Exchange. Its services are recognized not only nationally but also internationally. while its American Depository Shares are listed on the New York Stock Exchange (NYSE). . Mumbai and National Stock Exchange.

232 ATMs in India.2 CITES: HDFC Bank in 779 cites in India. 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2008 2009 2010 Fig. 2.2000 1800 1600 1400 1200 1000 800 600 400 200 0 2008 2009 2010 Fig.1 ATMs: HDFC Bank has 4. 2. .

900 800 700 600 500 400 300 200 100 0 2008 2009 2010

Fig. 2.3

CHAPTER – 3 Financial Statement Analysis - A Theoretical View

Chapter – 3 Financial Statement Analysis - A Theoretical View

Definition of Financial Statement:
According to Hampton John “A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a movement of times as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement.”

Objectives of financial statements:
The objectives of financial statement are to provide information about the financial position, performance and changes in financial position of an enterprise that are useful to wide range of users in making economic decision. Financial statements are prepared for this purpose to meet common need of most users. And it also shows the accountability of management for the resources entrusted to it. In short objectives of financial statement is to provide factual and interpretative information about transaction and other events which are useful for prediction, comparing, and evaluating enterprise’s earning power.

Financial Statements Provides:

operating or other problem area. Information about financial position.1. 3. Financial analysis is an integral part of the interpretation of result disclosed by financial statements. Information for economic decision. It supplies to decision . Financial analysis can be used as a preliminary screening tool in the selection of the stock in the primary and secondary market. FINANCIAL STATEMENTS USING TOOLS OF FINANCIAL ANALYSIS: Financial Analysis: Financial analysis is a study of relationship among the various financial factors in a business. It can be used as a forecasting tool of future financial condition and result. Information about performance of an enterprise. It may be used as a process of evolution and diagnosis’s of managerial. 2. The process of financial statement analysis can be described in various ways depending on the objective to be obtained.

4. crucial financial information and points out the problem areas.makers. 6. Comparisons of the various inter connected figures with others. which are properly termed as ratio analysis. 2. Devising suitable tools of analysis. Supplementing with sound comments. which can be investigated. Objectives of Financial Statement Analysis: . Methodical classification of data. Scientific arrangement of the classified group of data. Requirement of Financial Statement Analysis: 1. Financial analysis reduce reliance on institution guesses and thus narrows the areas of uncertainty that is present in all decision making process. 5. 3. Systematic compilation and study of financial data.

2. These common size statements are often called common measurement or component percentage statement. Advantages: . 4. To understand the long term and short-term solvency of the firm. To gauge the debt serving capacity of the firm. since each statement is reduced to the total of 100 and each individual component of the statement is represented as a percentage of the total of 100. which invariably serves as the base. To judge the financial health of the firm.  Tools of Financial Analysis: Common Size Statement: The statement is prepared to bring out the ratio of each asset or liability to the total of balance sheet and the ratio of each item of expense or revenue to interest earned. To evaluate the profitability of the enterprise. 5.1. To know the return on capital employed invested. 3.

1. 2. Common size analysis reveals the sources of capital and all other sources of funds and the distribution or use or application of the total funds in the asset of a bank. Common size statements do not show variation in the various account items from period to period. Comparison of common size statement over a number of years will clearly indicates the changing proportions of the various components of assets. liabilities. interest earned and profits. comparative study of common size statement will be misleading. If financial statements of a particular business organization are not prepared year after year on a consistent basis. Common size statements are regarded by many as useless as there are no established standard proportions of an asset to the total assets or of an item of expense to the interest earned. 3. 3. Comparative Financial Statement: . Comparison of common size statement of two or more banks will assist evolution and ranking. 2. Disadvantages: 1.

Changes in absolute data in percentages. Comparative Income Statement: . Ratio 5. Percentages to totals. Changes in absolute data in terms of rupees. 2. In order to calculate the percentage change. Absolute data for each of the periods stated. the absolute change in the various account figures are divided by their respective base year figures and multiplied by 100. 3. This is done to facilitate easy identification of their significant differences. 4. Columns may be drawn to accommodate absolute changes as well as percentage changes side by side. Comparative Financial Statement can thus be prepared to show: 1. Preparation of Comparative Financial Statement These statements are prepared by placing the various items in rows and years in the columns.Comparative financial statements are statement of financial position of a business so designed as to facilitate comparison of different accounting variables from drawing useful inferences.

Comparative balance sheet is useful to study the trends in the financial position of a bank. Comparative Balance Sheet: Balance sheet as on two or more different dates is used to compare the assets. and the absolute change from one period to another since the figure are shown side by side the user can quickly understand the operation. 2.A comparative income statement shows the absolute figures for two or more periods. Advantages: 1. Disadvantages: . liabilities and net worth of the bank. Comparative financial statements indicate trends in interest earned profit etc. It uses to compare the performance of a bank with the average performance of the other banks and helps in identification of weakness of the bank and remedial measures can be taken accordingly. and help to evaluate performance of the bank.

policies if followed differently. Types of Financial Ratios: . inventory valuation etc. and recession. 2. There are several ratios at the disposal of an analysis but the group of the ratio would prefer depends on the purpose and the objective of analysis. Procedure with regards to depreciation. the comparison can be mislead. Ratio analysis can be used both in trends and static analysis. Ratio analysis is an attempt to drive quantities measure or guide concerning the financial health and profitability of a business enterprise. Comparison of different periods can also be misleading if the period has witness changes in accounting policies.1. Ratio Analysis: Ratio analysis is the method or process by which the relationship or item or group of item in the financial statement are computed determine and presented to determine a particular aspect of organization or company. inflation.

The important liquidity ratios are Current Ratio and Liquid Ratio. Liquidity ratios are generally based on current assets and current liabilities. Therefore it is necessary to know whether it is earning adequate profits. usually a year. Every business organization has to earn profit in order to survive and grow. Liquidity Ratios: Liquidity refers to the ability of a firm to meet its obligations in the short run. Debt – Equity Ratio. Profitability Ratios: Profitability is the final result of business operations. The profitability ratios are Return on Investment. The solvency ratios are Proprietory Ratio. 3. The liquid ratio is designed to show the amount of cash available for meeting immediate payments. Return on Equity. etc. The solvency ratios are sub – set of other financial ratios. 4. Solvency Ratios: Solvency of a firm is indicated by its ability to meet its immediate commitments. Whether the firm is solvent or otherwise is determined by adequacy of its quick assets as compared to its immediate liabilities. Interest Coverage Ratio. Leverage Ratios: .1. 2. These ratios measure the ability of a firm to meet its current obligations and indicate its short term financial stability.

Ratios Relevant For Equity Shareholders: These ratios are of primary interest to the company’s shareholders. The ratios are: a) Earning Per Share b) Price to Earnings Ratio c) Dividend Payout Ratio d) Dividend Yield Ratio e) Book Value Per Share Advantages of Ratio Analysis: . 5.Leverage is an ability of a firm to use fixed cost assets or funds to magnify the return to its owners. Total Assets Turnover. The efficiency ratios are Average Collection Period. production process. The leverage ratios are Interest Coverage Ratio. and Funded Debt to Net Working Capital. Net Worth Turnover and Net Working Capital Turnover. Efficiency Ratios: Efficiency ratios are useful for measuring the company’s managerial efforts in managing inventories. These are very useful in judging the performance of a company. Shareholder’s Equity to Total Capital. credit and assets and effectiveness of marketing and sales force. Debt – Equity Ratio. The leverage ratios are useful as an analytical tool for creditors. Inventory Turnover. financial institutions and debenture holders. 6.

the basic data.1. Ratios ignore qualitative factors. The ratio is helpful in deciding about their efficiency or other wise in the past and likely performance in the future. Disadvantages of Ratio Analysis: 1. Reliability of ratios depends upon the correctness of An Individual ratio may by itself be meaningless. Ratios are not always comparable. Makes Intra – firm Comparison Possible: Ratio analysis also makes possible comparison of the performance of different division of the firm. 3. Useful in judging the efficiency of a business. 3. Ratio tells the whole story of changes in the financial condition of the business. 4. Simplifies Financial Statement: Ratio analysis simplifies the comprehension of financial statement. It is used for the purpose of comparative study of financial statements over a number of years. Out of the periods under study. 2. one year is taken as the base year and each item in this year is taken . 2. 4. In case of trend analysis a minimum of three financial year’s data is a must. Useful in improving future performance. Trend Analysis: Trend analysis is also termed as trend percentage.

2. The undue importance must not be laid down on the percentage when there is a small number in the base year in such a case even a slight variation will be magnified by the percentage change. Cash Flow Statement: . Disadvantages of Trend Analysis: 100. The trend analysis facilitates an efficient comparative study of the financial performance of a business enterprise over a period of time. A trend analysis indicates in which direction a business is moving i. Trend Percentage = Amount of year under study / Amount of base year * 100 Advantages of Trend Analysis: 1. 2. During the inflationary periods the data over a period of time becomes incomparable unless the absolute rupee is adjusted. upwards or downwards.e. Trend percentages are computed by dividing amount of each item in the statement of each remaining year with the corresponding item in the base statement and the result is expressed in percentage.

A cash flow statement is prepared in order to analyse the past movement of cash in an organization. 2.A cash flow statement shows the inflows and outflows of cash including bank balances and cash equivalents of an enterprise during a particular period. Cash flow statement is prepared to explain the cash movements between two points. etc. If the final value is positive it is termed as cash flows generated from operating activities and if it is negative it is termed as cash flows used in operating activities. They are explained as follows. A cash flow analysis is done at the completion of the financial year in order to analyse the cash movement position during the financial year. Cash Flows from Operating Activities: In operating activities all items of Adjusted Profit and Loss Account and Changes in Working Capital (except Cash and Bank balance) are considered here and provision for income tax is deducted in order to obtain Net cash flows generated from operating activities. paying dividends. A cash flow statement is used for making short term future plans which will assist the management to assess their ability to meet immediate requirements like paying creditors. Cash Flows from Investing Activities: . 1. Cash flow statement divided into three main parts.

The following items are reported under investing activities: I. Interest / Dividend received on long term investments. Issue of Preference Share Capital / Debentures V. Purchase of long term investments. V. II. 3. Cash Flows from Financing Activities: Under financing activities items that result from long term sources of finance are included. Long term loan obtained VIII. Buyback of Equity Share Capital III. Issue of Equity Share Capital II. IV. A positive value is a debit effect and a negative value is a credit effect. Interest paid on Debentured / Long term loans . Sale of long term investments. Sale of Fixed Assets. Purchase of Fixed Assets. Preference Dividend paid VII. III. Equity Dividend paid IV. Redemption of Preference Share Capital / Debentures VI. Repayment of long term loan IX. The following are the transaction reported under financing activities: I.Under investing activities transactions resulting in long term investments in fixed assets (both tangible n intangible) and long term investments are reported. Here a positive value reported indicates a cash inflow and a negative value indicates a cash outflow.

forecasting and budgeting the cash resources of the company. 4. etc. to plan temporary investment of excess cash. A cash flow statement helps in indicating the changes in the liquidity position of the company. In a cash flow statement to the net cash flows obtained the opening cash and bank balances are added in order to obtain the closing cash and bank balances.g. A positive value is a debit effect and a negative value is a credit effect. A cash flow statement is used for planning. E.Here a positive value reported indicates a cash inflow and a negative value indicates a cash outflow. 2. A cash flow statement helps in understanding how the cash from the sale of assets or issue of shares have been utilized. . A cash flow statement is helpful to find out whether the cash balance has increased or decreased and what the reasons are for the same. Importance of Cash flow Statements: 1. obtaining bank loans to buy new assets. 3.


369 29.76 0.92 Borrowings 129.841.81 91.135 0.314 3.114 0.115.841 6.17 Money at Call and Short notice Investments 586.95 Fixed Assets 21. In 000’s) Particulars CAPITAL AND LIABILITIES: Capital Equity Share Warrants Reserves and Surplus Employees’ Stock Options Amount 2010 4.044.22 7.441 9.001 % Amount 2009 4.433.830.488 32.4.272. 2010 (Rs.000.832.27 162.147 6.591.112 7.253.86 Total 2.96 135.158 142.055 2.495 2.000 compare to last year i.35 588.707.93 Other Assets 59.374 5 Other Liabilities and Provisions 206.21 _ 9.209.428.009.156.707.224.003 % Outstanding Deposits 1.636.47 Total 2.460 54. There is increase in capital to Rs.50 39.175.305.832.577.925 5.832.228.159.585.585.732 100 INTERPRETATION: 1. But 0.433 _ 210. Common Size Balance Sheet As On 31st March.076.794.394 75.697 100 1.841 4.258.e.870 0. .674.732 100 ASSETS: Cash and Balances with 154.23 0.56 988.47 0.067. Although the bank has issued shares in order to raise fund.09 Advances 1.253.800 77.229 8.68 63.CHAPTER – 4 FINANCIAL STATEMENT ANAYLSIS OF HDFC BANK In The Books of HDFC Ltd.473 53.224.02 % has been decrease current year.618.38 Reserve Bank of India Balances with Banks and 144. Rs.577.697 100 1.161 26.551.25 1.568.290 0.95 17.939 56.4.428.

6. which shows that the bank has got more deposits in current year. 3.272.56% which shows that bank granted more advances and loans to customer. There is increase in balance with banks and money at call and short notice from 2.42 % has been decreased current year.e.35%.000. which shows bank maintaining its liquidity. Common Particulars Size Income Statement Amount for the % year ended % 31st March.68%.95%. Rs.841. 2010 (Rs.154.50% this shows that bank has invested its deposits in other bank. 4. 8.832.000 compare to last year i.112. There is decrease in investments from 32. Fixed assets have increase from 0. In 000’s) Amount .135. In The Books of HDFC Ltd. 5. There is increase in advances from 53. This shows that bank has made purchase of fixed assets. There is increase in borrowings from 5% to 5. which shows that bank has sold some of its investments. There is decrease in other assets from 3.2. this shows that the bank has deposited money with RBI.81% this shows that company has raise funds through borrowings. 9. There is increase in deposits but percentage has decreased to 2.09% to 26. There is increase in cash and balances with RBI to Rs.95% to 56.67%.47% to 2. But 0.17% to 6. 7.93% to 0.

737 5.82 1.16 29.646 89.322.106 199.64 21.44 0.994.900) Amount 45.253.658 48.035 196.328.667 2.195.INCOME: Interest earned Other Income Total 161.15% 123.939 938.60 0.701 1.56 3.111.254 22.54 123.810. 2.044 55.08) % 21.40 0.612.228.841 722.449.097 PROFIT: Net Profit for the year 29.752 Proposed dividend 5.54 48.392 25.60 4.919 Tax(including cess) on dividend 912. There is decrease in total expenditure from 106.15 120.23 21.15 54.14 35.52 105.906.746.76 29.644.195.30 18. .305 Dividend(including tax / cess 9.550) Amount 34.01) % 28.988 Operating expenses 57.343 thereon) pertaining to previous year paid during the year Transfer to General Reserve Transfer to Capital Reserve Transfer to/(from) Investment Reserve Account Particulars Balance carried over to Balance Sheet Total 64.244.88 17.152 173.827 Provisions and Contingencies 34.30%.03 39.779.60 2.805. In which other income is increased and income from interest is less.900 100 20.371.345 48.23 (0.40% to 105.318.555.51 INTERPRETATION: 1.51 3. which shows operating inefficiency.042.492.862.076.555.487.948.658 Total 64.56 0.40 13.737 1.37 39.940 5.611 32.003 EXPENDITURE: Interest expended 77.282 Total 170.667 APPROPRIATIONS: Transfer to Statutory Reserve 7.660 (138.327.349 4.042.75 15.599 (14. Total incomes have increased from 120.56 33.340.058 29.729.000 38.44 2.948 1.01 163.54%.96 106.57 (0.37 0.106 100 23.009 Profit brought forward 34.

592 (4.870 4.135 323.909 (25.253.158) 68.577.10 (46.369 29.735) 7.90) 2009 Year 2010 Increase / (Decrease) Increase / (Decrease) . 54.408. Bank has made more profit compare to last year.61 (100) 48.618.23%.009.841 4. Comparative Balance Sheet As On 31st March. In The Books of HDFC Ltd. In 000’s) % Year Particulars CAPITAL AND LIABILITIES: Capital Equity Share Warrants Reserves and Surplus Employees’ Stock Options Outstanding 4.75% to 18. Profit has increased from 13. 2010 (Rs.433 _ 210.158 142.

076.697 391.428.32) Total 1.585.965 21.147 19.832.272.495 (4.38 INTERPRETATION: The bank has increased the total funds increased by 21.224.35 ASSETS: Cash and Balances with Reserve Bank of India Balances with Banks and Money at Call and Short notice Investments Advances Fixed Assets 135.044.551 162.551.928.314 59.466 21.520.965 17.055 154. . 263.473 17.016.95%.258.46% increase in cash and balances with RBI.832.161 (2.38% in 2010 compare to 2009.85%.092 588.160.830.925 37.732 2.38 14.25 24.394 254.797.224. 27.591.099.305. and increase in borrowings by 40.36) 27.067.707.877.636.729 104.674.475.36% in investment and decrease in other assets also compare to 2009.488 988.877.114 4.46 263.92 21.115.38 % Particulars Other Assets Year Year Increase / Increase / 2009 2010 (Decrease) (Decrease) 63.156.939 269.824 (0.35% increase in balance with banks and money at call and short notice.707.585.95 28.Deposits Borrowings Other Liabilities and Provisions 1. This increase of funds is met by increase in capital 7.290 586.594 91.800 1.832.85 40.212 Total 1.25% in advances and 24.38% in fixed assets. On the assets side there is 14.175.441 43.732 2. increase in deposits by 17.112 39.374 129.819) (6.697 391.229 206.327) 1.159.568. There is slight decrease of 0.428.61%.228.560.841 144.731.794.

254 170.809.64 .779.22 32. In 000’s) % Year 2010 Increase / (Decrease) Increase / (Decrease) 163.930 (1.461.906.316.071 3.000 32.058 29.392 25.106 89.827 34.988 57.318.035 38.111.617 8.611) 5.097 PROFIT: Net Profit for the year Profit brought forward Total APPROPRIATIONS: 22.228.130 18.170.345 48.658 64.076.88 2009 (Rs.644.449.99) 31.611 161.769 4.646 199.729.555.157) 7.042. Comparative Income Statement for the year ended 31st March.322.470.746.593.152 77. 2010 Year Particulars INCOME: Interest earned Other Income EXPENDITURE: Interest expended Operating expenses Provisions and Contingencies Total 173.737 29.487.044 55.In The Books of HDFC Ltd.460 (0.340.82 (11.056) (12.248.282 (1.195.328.009 34.62) 2.667 (3.810.19 5.106 Total 196.037.313 15.576.846.98) 15.35 34.862.805.71 1.

900) 703.327.195.762 1.612.930 31.343 Increase / (Decrease) 3.35% in 2010 compare to 2009 increase the net profit.35 29.371.667 10.660 (138.948 64. 31.599 (14. Thus reduction in expenditure leads to profit.650 31.550) 2.772.Transfer to Statutory Reserve Proposed dividend Tax (including cess) on dividend 5.17 32.62% in the year 2010 as compare to 2009.88 There is 0.305 1.078 189.98% decrease in interest earned and also decrease in interest expended 12.36 2.042.365 31.658 48.055.492.244.253.900 Year 2010 9.737 45.290 15.19 % Particulars Dividend(including tax / cess thereon) pertaining to previous year paid during the year Transfer to General Reserve Transfer to Capital Reserve Transfer to/(from) Investment Reserve Account Balance carried over to Balance Sheet Total INTERPRETATION: Year 2009 5.701 1.49 89.940 7.846.443 Increase / (Decrease) 58.35 112.13 26.403 1.759.349 4.841 722.555.919 912.25 34.948.752 5. .239.939 938.939 123.994.

44% = Profit Available for Appropriation / Profit After Tax = 6404.876.000 + 210.498.133 * 100 Tier 1 Capital Ratio = 16.487.000 / 457.009.498.3 (crores) / 294.12% = Capital Funds / Risk Weighted Assets * 100 = 2.009 / 182.272 = 470.577.704.885 / 15.433.9 (crores) Book Value Per Share = 21.439. of equity shares = 29. of Equity Share = 4.487.000 .Nil / 436.301 *100 Dividend Payout Ratio = 17.72% = Equity Share Capital + Reserves & Surplus / No. = Net profit for the year / Average Networth * 100 = 29.56 Rs.054.079 / 15.369.Ratio Analysis: For 2010 Name of Ratio Earning Per Share (Rs.743.) Calculation For 2010 =Profit after tax-Preference Dividend / Weighted no.26% = Total Capital / Risk Weighted Assets * 100 = 2. .301 * 100 Total Capital Ratio = 13.628.12 Rs.573 Return On Average Networth = 67.

58% = 15.42 = Rs.56 Dividend Per Share For 2009 Name of Ratio Earning Per Share (Rs. = 18.0% and bank’s ratio is 17.44%.26%.67. The Return on Average Networth is also increased compare to previous year. 31st March. As per Basel II minimum Tier 1 Capital Ratio should be 6% and HDFC bank has 13.62 = Rs. = 973.69% = 22.50 Rs. The Bank’s basic earning per share increased from Rs. 2.72%.52.56 per equity share. The Total Capital Ratio in accordance with Basel II should be 9. = 16.12 .31 Rs. There is decrease in Dividend Payout Ratio from 22.) Return On Average Networth Tier 1 Capital Ratio Total Capital Ratio Dividend Payout Ratio Book Value Per Share Market Price Per Share As At 31st March.10 = 28.85 to Rs.Name of Ratio Calculation For 2010 Market Price Per Share As At = 1933. 2009 as per NSE Price to Earning Ratio Dividend Per Share INTERPRETATION: 1. 4. For 2009 = 52.50 / 67. 3.05% = 10.85 Rs.40 Rs. 2010 as per NSE Price to Earning Ratio = Market Price Per Equity Share / Earning Per Share = 1933.17% to 21.17% = 344.

42.973. Price to Earning Ratio is increase to 28. Earning on share is increases from past year. 8.62 from 18.12.40 because of market fluctuation. 7. Trend Analysis of Balance Sheet (Rs. In 000’s) Particulars CAPITAL AND LIABILITIES: Year 2008 Year 2009 Year 2010 % 2008 % 2009 % 2010 .31 to Rs. There is increase in book value per share from Rs.470. The bank gives dividend of Rs. due to increase in Equity Share capital and Reserves & Surplus. Market price increase to Rs.12 per share for financial year 2009 – 2010.344.50 from Rs.1933.5. 6.

80 100 100 100 100 100 119.268.685.044.76 123.229 199.870 4.411 63.585.382 588.251.394 45.766.841 4.369 29.032 1.433 _ 210.032 1.460 54.800 1.112 154.04 100 107.09 99.531.949.925 163.636.61 167.135 100 _ 100 _ 120.290 21.65 198.577.766.61 118.076 _ 4.209.495 Total 988.34 % 2008 % 2009 % 2010 100 177.832.115.441 100 100 100 141.84 649.428.551.482 162.732 2.38 137.009.910 1.02 129.228.43 281.55 126.02 _ _ 1.305.935.08 155.473 1.331.62 189.707.841 100 137.39 180.329 _ 111.055 144.697 22.72 166.697 ASSETS: Cash and Balances with Reserve Bank of India Particulars Balances with Banks and Money at Call and Short notice Investments 493.314 59.Capital Equity Share Warrants Reserves and Surplus Employees’ Stock Options Outstanding Deposits Borrowings Other Liabilities and Provisions 3.067.374 129.428.258.15 _ _ 127.428.544.794.568.707.159.674.147 Year 2008 Year 2009 Year 2010 125.832.766 135.36 Total 1.114 Other Assets 44.488 586.732 2.161 Advances 634.622 39.158.235 91.90 145.939 Fixed Assets 11.65 135.591.253.26 167.830.585.917 144.158 142.224.04 .750.

168 21.097 PROFIT: Net Profit for the year 15. and fixed assets. with other banks and money at call and short notice.582 173.59 141.16 182.88 160.34 159.805.254 170.644.646 199.512 196.71 153.90 134. 2.035 38.729.058 29.77 158.228.000 22.076.03 .831.779.862.425 48.79 157.988 57.32 147. In 000’s) Particulars INCOME: Interest earned Other Income Total EXPENDITURE: Interest expended Operating expenses Provisions and Contingencies Total 108.009 100 100 160.487.611 161.282 100 100 100 100 100 100 % 2009 % 2010 161.456.268 89.981.318. 3.146 37. Trend Analysis of Income Statement (Rs.89 144.827 34.044 55.340.152 77.47 159. The capital.087 163.INTERPRETATION: 1.17 185.392 29.871.901.43 Year 2008 Year 2009 Year 2010 % 2008 101.328.752. deposits and borrowings showing raising trend and it indicate growth of the bank.13 166. There is decrease in Investments and Other Assets of the bank and it indicates the investment may be sold and current assets are liquidated.106 123.930 22.27 161. The funds are invested in balance with RBI.810.322.906.150.449.

253.737 5.555.658 48.660 (138.5 Year 2008 _ 385. The total expenditure is decrease as compare to previous year.20 182.900 34.305 9.371.195.483 3.994.667 100 100 134.82 141.492.22 176.005 621 25.667 7.397 35.17 185.327 3.752 5.550) Year 2010 1.18 950.345 35. 2.43 141.83 181.612.343 100 100 100 100 100 100 133.349 4.680 512.012.327.042.940 5.33 141.327 34.Profit brought forward Total APPROPRIATIONS: Transfer to Statutory Reserve Proposed dividend Tax (including cess) On dividend Dividend(including tax/ cess thereon) pertaining to previous year paid during year Particulars Transfer to Capital Reserve Transfer to/(from) Investment Reserve Account Balance carried over to Balance Sheet Total 19.900) % 2008 _ 100 % 2009 _ (35.06 136.841 722. The total income is showing a raising trend thereby indicating a smooth income of bank over the years.975.08 1504.222.83 181.345 48. 3.919 912.82 INTERPRETATION: 1.658 64.737 45.948 64.599 (14.222.87) 25.195.86 136.555.000 Year 2009 938.9) % 2010 _ (3.042.320.26 178.746.20 178. The profit of bank is more this year due to increase in income and decrease in expenditure as compare to previous year. .746.

551 245.917 30.854.056 .737 40.364.389.In The Books of HDFC Ltd.924.576 (2.242) 72.639.928. In 000’s) Particulars Cash flow from operating activities: Net profit before income tax Adjustments for: Depreciation (Profit) / Loss on Revaluation of Investments Amortisation of premia on Investments Loan Loss provisions Floating Provisions Provision against standard assets Provision for wealth tax Contingency provisions (Profit) / Loss on sale of fixed assets Adjustments for: (Increase) / Decrease in Investments (Increase) / Decrease in Advances Increase / (Decrease) in Borrowings Increase / (Decrease) in Deposits (Increase) / Decrease in Other assets Increase / (Decrease) in Other liabilities and provisions Amount 42.408.528 19.891.594 2.019. 2010 (Rs.639 107.758) 38. Cash Flow Statement For the year ended 31st March.943.283) (289.134 (40.082 4.365 3.511.292 500.500 1.185.000 _ 5.339.

637. The bank has generated Rs.167 299.156) 93.586 _ (665. 5.000 for purchase of operating activities.122.122) 5. The bank has generated net cash from financing activities Rs.900.000 from The bank has used Rs.989.637. 93.898.104) _ 124.989.118) 121.996 (5.Direct taxes paid (net of refunds) Net cash flow from / (used in) operating activities Particulars Cash flow from investing activities: Purchase of fixed assets Proceeds from sale of fixed assets Net cash used in investing activities Cash flows from financing activities: Money received on exercise of stock options by employees Proceeds from issue of Convertible Warrants Proceeds from issue of equity shares Proceeds from issue of Upper & Lower Tier II capital instruments Redemption of subordinated debt Dividend paid during the year Tax on Dividend Net cash generated from financing activities Effect of Exchange Fluctuation on Translation reserve Cash and cash equivalents on amalgamation Net increase in cash and cash equivalents Cash and cash equivalents as at April 1st Cash and cash equivalents as at March 31st (14.515.685 _ 36.515.898.147.080. 5. fixed assets and net amount used in investing activities is Rs.066.184) (722. 2.000) (4.940) 35.118.559.000 through issue of shares.357.423.025.988 INTERPRETATION: 1.821 175.147 (15.263.000 3. 35.900 Amount (5. PROFIT AFTER TAX: .

12 in year 2009 – 2010.Profit after Tax is Rs. 4.2 EARNING PER SHARE: Earning per share is Rs. 14 12 10 8 6 4 2 0 2008 2009 2010 Fig.1 DIVIDEND PER SHARE: Dividend per share is Rs.2949 crores in the financial year 2009 – 2010.6 n year 2009 – 2010. 3500 3000 2500 2000 1500 1000 500 0 2008 2009 2010 Fig.67. 4. .

00% 2008 2009 2010 Fig.4 RETURN ON CAPITAL: Return on capital is 16. 4. 17.00% 16.80% 15.00% 15.00% 10.80% 16.80 60 40 20 0 2008 2009 2010 Fig. 4. 20.00% 5.3 CAPITAL ADEQUACY: Capital adequacy is 17. 2.8% for 2009 – 2010.00% 0.60% 16.4% for 2009 – 2010.00% 15.60% 2008 2009 2010 Fig.5 .20% 16.40% 16.


55.26%.805. which resulted in higher infrastructure.1 crores. The bank is giving dividend per share Rs.106. The NPA coverage ratio based on specific provision was at 74. Tier I CAR was 13.076. well above the regulatory minimum of 9. The bank’s provisioning policies for specific loan loss provisions remained higher than regulatory requirements.009. The bank made a profit on sale / revaluation of investments of Rs. in the financial year 2009 – 2010. Sound risk management and balancing risk – reward . Net profit increased by 31. Operating expenses grew at a much lower pace than net revenues and increased from Rs.827. 345. Other income registered a growth of 15.44%. 29.392. The bank has opened 300 new branches.000 in the previous year to Rs.199.000 in the current year.000.000.106. 2010 remain healthy with total income of Rs.10. 22.000 in the previous year to Rs. 38. that’s why the operating expenses have increased.328.487.35% from Rs. 57.7% over that in the previous year to Rs.12 as compared to last year Rs.8%.449.000 in the year ended 31st March. and staffing expenses. This growth was driven primarily by an increase in fees and commissions earned and income from foreign exchange and derivatives. Taking on various types of risk is integral to the banking business.644.The financial performance during the year ended 31st March.0%. 2010. Bank’s total Capital Adequacy Ratio calculated in the line with Basel II framework stood at 17.058.

The identification. Book Value Per Share and Price to Earning Ratio are increasing from year to year. The HDFC Bank faces increasing competition. BIBLIOGRAPHY . measurement. the bank can become leader in the – offs are critical to a bank success. pressure for their product and services. The bank has to manage its cost efficiently because as the services increase they may not able to manage to keep their operating cost low in future. monitoring and management of risks accordingly remain a key focus area for the bank. As an investor point of view the bank is profitable to invest as Earning Per Share ratio. If the bank improves cost and operational efficiency. Dividend Per Share.

com  .wikipedia.Name of Book Name of Book Author WEBLIOGRAPHY 

ANNEXTURE Annual Report: .

 Profit and Loss Account of HDFC Bank Limited.  Cash Flow Statement of HDFC Bank Limited. Balance Sheet of HDFC Bank Limited. .

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