PRIVATE SECTOR BANK- HDFC Bank Limited

HDFC Bank Limited is headquartered in Mumbai, Maharashtra. It is a subsidiary of

Housing Development Finance Corporation. It is India's largest private sector bank by
asset and by market capitalisation. It is the third largest company by market
capitalisation on the Indian stock exchanges. It is also the thirteenth largest employer
in India.
HDFC Bank provides a number of products and services including wholesale banking,
retail banking, treasury, auto loans, two-wheeler loans, personal loans, loans against
property, consumer durable loan, lifestyle loan and along with this, various digital
products are Payzapp and SmartBUY.

CASA Table
Year 2020-21 2019-20 2018-19

CASA Deposit (in INR cr.) 615682 484625 391198

Percentage change (%) 27.04 23.88 -

Savings account deposit table

Year 2020-21 2019-20 2018-19
Savings Account (in INR cr.) 403500 310377 248700

Percentage change (%) 30.00 24.80 -

Current account deposit table

Year 2020-21 2019-20 2018-19
Current account (in INR cr.) 212182 174248 142498
Percentage change (%) 21.77 22.28 -

Reason of change in CASA

HDFC Bank Limited has shown a strong growth for quite some years now, even in the
times of COVID19 pandemic the bank isn’t affected much.
This growth along with strong financials and their risk management framework has
led to the increase in the deposits for all the three financial years.
The growth in deposits is because of the tendency of the customers to keep more
amounts with banks during the pandemic. Aggressive marketing programs and ability
to invest has benefitted HDFC Bank in previous financial years
HDFC delivered a double-digit growth in earnings in the year 2020-21. Lower cost to
income ratio of 36.3% has also contributed to the progress.
CASA deposits accounted for 46.1% in FY20-21 claiming an increase from nearly 42%
in FY18-19 and FY19-20.
Earning growth will continue to be the driver as the economy opens up.

NIM (Net Interest Margin)

NET INTEREST MARGIN = NET INTEREST INCOME

AVERAGE INTEREST EARNING ASSET(LOANS)

Net interest margin (NIM) is a measurement of comparing the net interest income of
a financial firm that generates from credit products like loans and mortgages, with
the outgoing interest it pays to the holders of savings accounts and certificates of
deposit.
It denotes the difference between the interest income earned and the interest paid
by a bank or financial institution relative to its interest-earning assets like cash.
Net Interest Income at 64,879.6 crore rose 15.5 per cent.

NIM Table
YEAR 2020-21 2019-20 2018-19
NIM (%) 4.1 4.3 4.3
 Reason for change
Total revenue rose up by 20% in FY2019-20, due to uncompromised asset quality and
managing risk return. Gradual recovery in economic activities after opening up of
economy, banking industry saw a pick-up in loan growth.
It was supported by the higher CAPEX spending by the government.

The NIM and other income growth trajectory was less in FY2020-21. NIM in 2020-21
was 4.1% compared to previous financial years which witnessed 4.3% NIM. The
change is substantial given the pandemic situation.

In 2020-21, total revenue (net interest income + other income) rose by 13%. NII grew
by 15.5% due to acceleration in loan growth.

Government spending, consumer spending and better technological advances are

the pillars on which the pace of future growth is depended.

PUBLIC SECTOR BANK – BANK OF BARODA

Bank of Baroda (BOB) is an Indian government owned banking and financial services
company. It is under the ownership of Ministry of Finance, Government of India. It is
the third largest government owned bank in India, with 132 million customers, a
total business of US$218 billion, and a global presence of 100 overseas offices.
Based on 2019 data, it is ranked 1145 on Forbes Global 2000 list.
It was merged with Dena Bank and Vijaya Bank in 2018 to create the country's
second largest lender.

CASA TABLE

Year 2020-21 2019-20 2018-19

CASA (in INR crore) 368027.6 315951.4 208403.8

Percentage Change (%) 16.48235 51.60539 -

Year 2020-21 2019-20 2018-19

Savings Account 306418.5 266301.3 174076.2

(in INR crore)
Percentage Change (%) 15.06459 52.97973

SAVINGS DEPOSIT TABLE

CURRENT DEPOSIT TABLE

Year 2020-21 2019-20 2018-19

Current account 61609 49650.1 34327.6

(in INR crore)
Percentage Change (%) 24.08636 44.63609

Reason for CASA change

The benefit of structural changes undertaken by the Government and Reserve Bank
of India (RBI) finally bore fruit in FY 2019. The implementation of the Insolvency and
Bankruptcy Code (IBC) has led to improvement in cash recovery in the banking
system. In addition, the ratio of non-performing loans has also started to come
down. Banks have raised interest rates on deposits to mobilise them and this will
lead to higher inflow of resources to the banking system.
Besides introducing new products, the Bank undertook strategic initiatives for
improving CASA deposit base.
Benefits in the form of higher CASA ratio, declining cost-income ratio and improving
asset quality
During FY 2021, the Bank’s financial performance was resilient amidst the challenges.
The asset quality has improved with GNPA ratio trending down to 8.87% from 9.40%
in the previous year. The credit growth in select segments such as housing, auto and
agriculture was above industry during the year. Bank’s domestic CASA deposits
increased by 16.48% as on March 31, 2021 and CASA ratio increased to 42.87%, an
increase of 380 bps over March 2020.

NIM TABLE

YEAR 2020-21 2019-20 2018-19

 NIM (%) 2.71 2.73 2.72

Reason for NIM change

The various steps taken towards transformation of processes and augmentation of

products has led to a consistent improvement in the operating performance of the
Bank. On consolidated basis, the operating profit increased by 14.4% to 15,519
crores. In the first year of the merger itself, the Bank reduced its cost-income ratio by
more than 4.0%, increased operating profit as well as reduced non-performing
assets.
There hasn’t been any significant change in the NET INTEREST MARGIN in the past 3
financial years. The minute change in FY21 can be witnessed due to the pandemic.

INTER-BANK COMPARISON

Known as India’s International Bank, Bank of Baroda has served over 127 million customers
across 21 countries and its consumer base is only growing with each passing day.
Being the largest private bank in the country in terms of total assets and market
capitalization, HDFC Bank is one of the top-performing and best private banks in India.
When we talk about brand value, it is within the 100 Most valuable Global Brands across the
world.
Both banks show strong financials but HDFC is a clear winner in terms of net income, NIM
and profits.
HDFC is among the top banks in India. Bank of Baroda is now being benefitted by the merger
and various government policies. The merger is finally showing results.
Both banks provide various banking services, ranging from different type of loans to net
banking, etc. but HDFC is technologically better than its counterpart.