A

Training Project Report On

“COMPARATIVE FINANCIAL ANALYSIS OF ICICI BANK AND
HDFC BANK AT APEX CAPITAL, JABALPUR”

In the partial fulfillment for the award of the Degree of

Master of Business Administration

Under the guidance of

Dr. Meghna Jain
(Associate Professor)

Submitted By
Shivangini Vishwakarma
MBA III SEM
Roll No. - 21311957
(Batch- 2021-23)

Gyan Ganga Institute of Technology& Sciences, Jabalpur, M.P.

Submitted To

Rani Durgavati Vishwavidyalaya, Jabalpur (M.P.)

Jabalpur (M.P.)
Year- 2022
 GYAN GANGA INSTITUTION OF

TECHNOLOGY & SCIENCE

FORWARD
I hereby forward the project entitled on the topic “COMPARATIVE
FINANCIAL ANALYSIS OF ICICI BANK AND HDFC BANK AT APEX
CAPITAL, JABALPUR” submitted by Shivangini Vishwakarma, student of
MBA Department, Gyan Ganga Institute of Technology& Science in
partial fulfillment of the requirement for the award of the degree of
Master of Business Administration for the subject MS- 303 Evaluation
of On-Site Training Report and Viva Voce of the syllabus of Rani
Durgavati Vishwavidyalaya, Jabalpur (M.P.).

I
CERTIFICATE OF THE COMPANY

II
GYAN GANGA INSTITUTION OF

TECHNOLOGY & SCIENCE

DECLARATION
I hereby declare that the project entitled “COMPARATIVE FINANCIAL
ANALYSIS OF ICICI BANK AND HDFC BANK AT APEX CAPITAL,
JABALPUR which is being submitted in partial fulfillment of the
requirement for the award of the degree of MBA Subject MS- 303
Evaluation of On-Site Training Report and Viva Voce of the syllabus
of Rani Durgavati Vishwavidyalaya, Jabalpur, (M.P.) is an authentic
record and all the information and facts furnished by me are true to
my knowledge and are based on the information collected through
primary and secondary research done by me.
The matter reported in this project is neither being used elsewhere
nor has been submitted earlier for the award of degree of Master of
Business Administration.

Date - Signature-

Place-

III
 ACKNOWLEDGEMENT

It is with the sense of gratitude; I acknowledge the efforts of several

people who have helped me directly or indirectly to conduct this
project work.

I would like to thank Shreesh Jain without whom I would have not got
this exposure of learning.

Words fail to express adequately my feeling of deep sense of gratitude

which I owe from deep of my heart to Dr. Narendra Shukla; Dr. Meghna
Jain and all the faculty members for their valuable support and
counseling, constant help, and guidance without which the completion
of the project would not have been possible.

I am grateful to my Parents who brought me up with love and

encouragement to this stage and have always stood beside me as my
pillars of strength and guidance.

And last but not the least I would like to thank Almighty who has
always guided me to walk on the right path of life.

Shivangini
Vishwakarma

IV
 INDEX
S.NO. Particulars Page No.
1. Forward I
2. Certificate of the Company II
3. Declaration III
4. Acknowledgement IV

5. Executive Summary 1
6. Introduction 2
7. Company Profile 9
8. Objective of the Study 19
9. Research Methodology 20
10. Data Analysis and Interpretation 23
11. Findings 60
12. Conclusion 61
13. Suggestions 62
14. Bibliography 63
 EXECUTIVE SUMMARY

Financial analysis is the method of reviewing companies, programs, expenditures, and other
activities relevant to finance to assess their performance and appropriateness. Financial analysis
can be done through various tools and techniques which help in interpretation of financial
performance and position of the company.

The following report is about the financial analysis of the two leading companies of
banking sector, HDFC Bank Ltd. and ICICI Bank Ltd. “The Indian banking industry is
sufficiently capitalised and well-regulated,'' says RBI. The sector has witnessed innovation and
growth in the past couple of years. An increase in the working population and the government‟s
schemes for financial inclusion is expected to give a good boost to the Indian banking sector. The
government is keen to improve the banking system more and more with the flagship financial
inclusion drive Pradhan Mantri Jan Dhan Yojna. Speedy implementation of projects like these
and continuous growth in the banking sector is expected to strengthen the Indian banking system.
In this operational performance of both the banks is analyzed along with their financial
performance.

The procedure of analysis is based on the learning during the training period in the company,
Apex Capital. It is a financial planning and wealth management firm. The topic covered in this
report is “COMPARATIVE FINANCIAL ANALYSIS OF ICICI BANK AND HDFC BANK AT APEX
CAPITAL, JABALPUR”. Comparative Analysis is the process of comparing items to one another
and distinguishing their similarities and differences. It allows to understand the issue in a better
way and form strategies in response.

Comparative Statement Analysis is tool used in the analysis of financial statements two private
sector banks. Comparative statements analysis includes Comparative Balance Sheet and
Comparative Profit & Loss Statement of HDFC Bank Ltd. and ICICI Bank Ltd. It also consists
of analysis of various items of Balance Sheet and Profit & Loss Account for the period of five
years. It includes both horizontal analysis and vertical analysis, where horizontal analysis
represents changes over years or periods, while vertical analysis represents amounts as
percentages of a base figure. The main intent of this research is to check the efficiency of two
banks and to know which bank is financially stable and healthy.

This report finds that the HDFC Bank Ltd. is more stable, profitable, and consistent than ICICI
Bank Ltd. It also has better growth rate and more financially sound than ICICI Bank.

1
 INTRODUCTION

Financial statements are prepared primarily for decision making. They play a dominant role in
setting the framework of managerial decisions. But the information provided in the financial
settlements is not an end in itself as no meaningful conclusions can be drawn from these
statements alone. However, the information provided in the financial statements is of immense
use in making decisions through analysis and interpretation of financial statements. Financial
analysis is the „process of identifying the financial strengths and weaknesses of the firm by
the properly establishing relationship between the items of the balance sheet and the profit
and loss account’. There are various methods or techniques used in analyzing financial
statements, such as comparative statements, trend analysis, common-size statements, schedule of
changes in working capital, fund flow and cash flow analysis, cost-volume-profit analysis and
ratio analysis.

 MEANING OF FINANCIAL ANALYSIS-

The term „financial analysis‟, also known as analysis and interpretation of financial statements,
refers to the process of determining financial strengths and weaknesses of the firm by
establishing strategic relationship between the items of the balance sheet, profit and loss account
and other operative data.

The purpose of financial analysis is to diagnose the information contained in financial

statements so as to judge the profitability and financial soundness of the firm. Just like a doctor
examine his patient by recording his body temperature, blood pressure, etc. before making his
conclusion regarding the illness and before giving his treatment statement, a financial analyst
analysis the financial statement with various tools of analysis before commenting upon the
financial health and weakness of an enterprise.

2
  IMPORTANT TERMS UNDER FINANCIAL ANALYSIS-
The term „financial statement analysis‟ includes both „analysis‟ and „interpretation‟. A
distinction should, therefore, be made between the two terms. These two terms are separately
explained below-

Analysis- The term „analysis‟ is used to mean the simplification of financial data by
methodical classification of the data given in the financial statements.

Interpretation- The term „interpretation‟ means explaining the meaning and significance of
the data in the simplified form.

However, both analysis and interpretation are interlinked and complementary to each other.
Analysis is useless without interpretation and interpretation without analysis is difficult or even
impossible. In fact, The term „analysis‟ used only to cover the meaning of both analysis and
interpretation as the objective of analysis is to study the relationship between various items of
financial statement by interpretation. Even the term ‘financial statement analysis’ or simply
‘financial analysis’ is used to cover the meaning of both analysis and interpretation.
Overall, a central focus of financial analysis is evaluating the company‟s ability to earn a return
on its capital that is at least equal to the cost of that capital, to profitably grow its operations, and
to generate enough cash to meet obligations and pursue opportunities.

 FINANCIAL ANALYSIS OUTCOMES

The outcome of financial analysis may be any of these decisions:

 Whether to invest in a business, and at what price per share.

 Whether to lend money to a business, and if so, what terms to offer.
 Whether to invest internally in an asset or working capital, and how to finance it.

The goal of financial analysis is to analyze whether an entity is stable, solvent, liquid, or
profitable enough to warrant a monetary investment. It is used to evaluate economic trends, set
financial policy, build long-term plans for business activity, and identify projects or companies
for investment.

3
  WHAT IS FINANCIAL STATEMENT?

Financial statement is an organized collection of data which contains summarized information of

the firm‟s financial affairs, organized systematically. Its purpose is to convey an understanding
of the financial aspects of the business concern. The statements which include under financial
statement are given below:-

FINANCIAL STATEMENTS

Balance Sheet Profit & Loss Statement of changes Statement of

Or Account in Owner‟s Equity changes in

Position Statements or Financial

Income Position

Statement

Fund Flow Cash Flow

Statement Statement

4
  IMPORTANCE OF FINANCIAL STATEMENT-
The primary objective of financial statement analysis is to understand and diagnose information
contained in financial statement with a view to judge the profitability and financial soundness of
the firm and to make forecast about future prospects of the firm. The purpose of analysis depends
upon the person interested in such analysis and his objects. However, the following purposes or
objectives of financial statement analysis may be stated to bring out the significance of such
analysis:

 To assess the earning capacity or profitability of the firm.

 To assess the operational efficiency and managerial effectiveness.
 To assess the short term as well as long term solvency position of the firm.
 To make inter-firm comparisons.
 To identify the reasons for change in profitability and financial position of the firm.
 To make forecast about future prospects of the firm.
 To help in decision making and control.
 To guide or determine the dividend actions.
 To provide and important information for granting credit.
 To assess the progress of the firm over a period of time

 TOOLS OR METHODS OF FINANCIAL ANALYSIS-

The analysis and interpretation of financial statements is used to determine the financial position
and results of operations as well. A number of methods are used to study the relationship
between different statements. An effort is made to use those devices which clearly analyze the
position of the enterprise.

Following methods generally used for financial analysis:

 Comparative statement
 Common-size statements.
 Trend analysis.
 Fund flow analysis.
 Cash flow analysis.
 Ratio analysis.
 Cost-volume-profit analysis.

5
Under this report, the tool or method which is used for analysis for the financial performance is
Comparative Statements Analysis. Further in this report the comparison of their financial
statement is shown.

Comparative statements or comparative financial statements are statements of financial position

of a business at different periods. These statements help in determining the profitability of the
business by comparing financial data from two or more accounting periods. Comparative
financial statements are one of the most commonly used tools for undertaking the financial
analysis of the statements generated by the business.

-TOOLS OF FINANCIAL STATEMENT ANALYSIS

6
  WHAT IS COMPARATIVE STATEMENT?
The comparative financial statements are statements of the financial position at different periods
of time. The elements of financial position are shown in a comparative form so as to give an idea
of financial position at two or more periods. Any statement prepared in a comparative form will
be covered in comparative statements.

From practical point of view, generally, to financial statements are prepared in comparative
form for financial analysis purposes. Not only the comparison of the figures of two periods but
also be relationship between balance sheet and income statement enable an in depth study of
final position and operative results.

The comparative statement may show:

1. Absolute figures (rupee amounts).

2. Changes in absolute figures i.e. increase or decrease in absolute figures.
3. Absolute data in terms of percentages.
4. Increase or decrease in terms of percentages.

COMPARATIVE
STATEMENT

COMPARATIVE
COMPARATIVE
BALANCE
INCOME
SHEET
STATEMENT

7
  COMPARATIVE BALANCE SHEET- Comparative balance sheet is on two
different dates that can be used for comparing assets and liabilities and finding out an
increase or decrease in those items. The changes in periodic balance sheet items reflect
the conduct of the business. The comparative balance sheet has two columns for the date
of original balance sheets. A third column is used to show changes in absolute figures.

While interpreting Comparative Balance Sheet the an entrepreneur is affected to study the
following aspects-

 Current financial position and liquidity position.

 Long-term financial position.
 Profitability of the concern.

 COMPARATIVE INCOME STATEMENTS - The income statement shows

net profit or net loss on account of operations of a business. The comparative income
statement gives an idea of the progress of a business over a period of time. A comparative
income statement will show the absolute figure for two or more period, absolute change
from one period to another and change in terms of percentage, if required.

8
 COMPANY PROFILE-

 COMPANY-

 ABOUT-
Apex Capital is a financial planning and wealth management firm. Using our proprietary tool, it
helps individuals in planning for their dreams. Apex Capital provides original research, opinions
and strategies to understand and invest in Indian financial market. It helps in avoiding common
mistakes in individuals investing journey using its experience of more than half a decade.

Apex Capital is founded by Sheersh Jain. He is CFA, Chartered Financial Analyst. Apex Capital
provides training on fundamental analysis of a stock of related company. It trains interns how to
research about the company by using financial statements and annual report to know that the
concerned company is worth to invest or not.

It helps to align individual‟s financial investments as per the goals, it also aim to maximize the
savings to match the future objectives. It builds a roadmap to help in optimizing individual‟s
financial planning. It says “we realize the potential for your investments and sync them with your
goals.”

 LOGO OF THE COMPANY-

9
HDFC BANK

CEO:

Sashidhar Jagdishan

Founded:

August 1994, Mumbai

Headquarters:

Mumbai

Number of employees:

141,579 (2022)(Approximately)

Owner:

Housing Development Finance Corporation (25.7%)

Listed on:

• BSE- Bombay Stock Exchange.

• NSE- national Stock Exchange.
• The New York Stock Exchange.

Part of the following Indices:

• Nifty 50
• BSE Sensex
• Nifty Bank
• Nasdaq 100
• S&P 500

10
 INTRODUCTION-
HDFC Bank Limited (also known as HDB) is an Indian banking and financial services
company headquartered in Mumbai. It is India's largest private sector bank by assets and
world's 10th largest bank by market capitalization as of April 2021. HDFC Bank was
incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in
Mumbai, India. The bank commenced operations as a Scheduled Commercial Bank in
January 1995.

HDFC Bank Limited is a publicly held banking company engaged in providing a range of
banking and financial services including retail banking wholesale banking and treasury
operations. Headquartered in Mumbai HDFC Bank is a new generation private sector bank
providing a wide range of banking services covering commercial and investment banking on
the wholesale side and transactional/branch banking on the retail side.

 LOGO AND TAGLINE OF BANK-

11
 HISTORY-
HDFC Bank was incorporated in 1994 as a subsidiary of the Housing Development Finance
Corporation, with its registered office in Mumbai, Maharashtra, India. Its first corporate
office and a full-service branch at Sandoz House, Worli were inaugurated by the then
Union Finance Minister, Manmohan Singh.

As of 30 June 2022, the bank's distribution network was at 6,378 branches across 3,203
cities. It has installed 430,000 POS terminals and issued 23,570,000 debit cards and 12
million credit cards in FY 2017.[15] It has a base of 1,52,511 permanent employees as of 30
June 2022.

 SUBSIDIARIES –

 HDFC Investments Limited.

 HDFC Holdings Limited.
 HDFC Property Ventures Limited.
 HDFC Venture Capital Limited.
 HDFC Education and Development Services Private Limited.
 HDFC Capital Advisors Limited.
 HDFC Venture Trustee Company Limited.
 HDFC Trustee Company Limited.

12
 SERVICES AND PRODUCTS-
Personal Banking:

• Accounts & Deposits

• Loans
• Cards
• FOREX
• Investments & Insurance

NRI Banking:

• Accounts & Deposits.

• Remittances.
• Investments & Insurance Loans Payment Services.

Wholesale Banking:

• Corporate.
• Small & Medium Enterprises.
• Financial Institutions & Trusts.
• Government Sector.

 HDFC BANK APPS-

APPS USES

 HDFC MobileBanking APP It helps you to get access to best in class

features & services for all banking needs.

 SmartHub Vyapar App is a one-stop platform to provide all

the banking solutions for small and
medium merchants.
 PayZapp PayZapp is a mobile payment apps by
HDFC Bank, allows to pay all your bills
online, buy movie tickets, etc.

13
ICICI BANK

CEO:

Sandeep Bakhshi

Headquarters:

Mumbai

Founded:

1994, Vadodara

Founder:

Industrial Credit and Investment Corporation of India.

Total assets:

17.53 lakh crores INR (US$230 billion, 2022

Listed On:

• Bombay Stock Exchange.

• National Stock Exchange of India Ltd.
• New York Stock Exchange.

Part of the following Indices:

• Sensex
• Nifty
• BSE-100
• BSE-200
• S&P CNX 500

14
  INTRODUCTION-
ICICI Bank Limited is an Indian Private bank. It is headquartered at Mumbai. It offers a wide
range of banking products and financial services for corporate and retail customers through a
variety of delivery channels and specialized subsidiaries in the areas of investment banking, life,
non-life insurance, venture capital and asset management.

ICICI Bank is a large private sector bank in India offering a diversified portfolio of financial
products and services to retail, SME and corporate customers. The Bank has an extensive
network of branches and ATMs. It is at the forefront of leveraging technology and offering
services through digital channels like mobile and internet banking.

The Bank has over 5275 branches, and 15589 ATMs spread all over the country. The Bank
launched internet banking in 1998. The Bank has branches in over 17 countries.

 LOGO AND TAGLINE OF BANK-

15
  HISTORY-
The Industrial Credit and Investment Corporation of India (ICICI) was established on 5 January
1955 and Sir Arcot Ramasamy Mudaliar was elected as the first Chairman of ICICI Ltd. It
was structured as a joint-venture of the World Bank, India's public-sector banks and public-
sector insurance companies to provide project financing to Indian industry. ICICI Bank was
established by ICICI, as a wholly owned subsidiary in 1994 in Vadodara. The bank was founded
as the Industrial Credit and Investment Corporation of India Bank, before it changed its name to
ICICI Bank. The parent company was later merged with the bank.

 SERVICES AND PRODUCTS-

ICICI Bank offers various retail loans and deposit products. The Bank also provides Credit
and Debit Cards for the convenience of the customers. The various products offered by the
Bank at large are given below:

 Savings Bank Account and Current Account.

 Fixed Deposit and Recurring Deposit
 Internet Banking and mobile banking.
 Auto Loans.
 Home Loans.
 Personal Loan.
 Life Insurance.
 Health Insurance.
 General Insurance.
 Two-Wheeler Loans.
 Investment for Tax Exemption.

16
 SUBSIDIARIES OF ICICI BANK

17
  ICICI BANK APPS-

APPS USES

 IMobile Pay iMobile Pay is ICICI Bank‟s mobile

banking applications that lets you
transfer funds, pay bills and other online
services.

 InstaBIZ InstaBIZ is a business banking super

mobile app that provides all services
under one roof to help with daily
business needs.

 ICICI Bank Money2India Used to transfer money from anywhere

to India. Instant money transfers to
individuals or businesses.

18
 OBJECTIVE OF THE STUDY-
Analysis of financial statements is an attempt to assess the efficiency and performance of the
two banks. For that there are some objectives which are described as under.

1. To measure the financial performance of HDFC Bank and ICICI Bank

during the year 2017-2022 at Apex Capital, with the help of various heads
of Balance Sheet and Profit & Loss Account .
2. The purpose of financial statement analysis is to assess the financial
potential of businesses.
3. The purpose of financial statements analysis is to make a comparative study
of the profitability of banks engaged in similar business.
4. To compare the HDFC Bank and ICICI Bank financial statements to
understand their neck to neck standing.
5. To understand the changes and growth over the period of five years by
comparing their actual figures given in financial statements.

19
 RESEARCH METHODOLOGY-
 MEANING OF RESEARCH METHODOLOGY-

Research is a process of systematic inquiry that entails collection of data; documentation of

critical information; and analysis and interpretation of that data/information, in accordance
with suitable methodologies set by specific professional fields and academic disciplines.

The search for knowledge is closely linked to the object of study; that is, to the
reconstruction of the facts that will provide an explanation to an observed event and that at
first sight can be considered as a problem. It is very human to seek answers and satisfy our
curiosity.

According to the American sociologist Earl Robert Babbie, “Research is a systematic inquiry
to describe, explain, predict, and control the observed phenomenon. It involves inductive and
deductive methods.”

 RESEARCH DESIGN-

The research design refers to the overall strategy that you choose to integrate the different
components of the study in a coherent and logical way, thereby, ensuring you will effectively
address the research problem; it constitutes the blueprint for the collection, measurement, and
analysis of data.

 DATA COLLECTION METHODS AND TECHNIQUES-

20
 RESEARCH METHODOLOGY ADOPTED-

The method section of a report details how the research was conducted, the research methods
used and the reasons for choosing those methods. It should outline:

 The participants and research methods used, e.g. surveys/questionnaire, interviews

refer to other relevant studies.
 The methodology is a step-by-step explanation of the research process.

This report adopts the descriptive method of study, where the financial performance of two
banks, ICICI bank and HDFC bank was analyzed. The balance sheet of both the firms has
been compared and then necessary suggestions are given on the basis of interpretation and
analysis. The data is taken from the Balance Sheet and Profit & Loss Accounts for the term
of five years from 2018 to 2022. The research was conducted by using the secondary data
collected from various websites, articles, journals, books, etc.

The study in present is mainly based on secondary sources of data.

 NATURE OF DATA-

In research methodology, data must be collected. And there are two sources of collection of
data, i.e.

SECONDARY DATA:

Secondary data means data that are already available i.e., refer to the data which have
already been collected and analyzed by someone else. When the researcher utilized
secondary data, then he has to look into various sources from where it can be obtained. In
this case certainly he is not conformed to the problem that is usually associated with
collection of original data.

Annual report- The financial analysis of the company is done with the help of the annual
report published by the company during the period.

Booklets, Catalogs & files and website- Various other information of the company is
taken by the various other manuals of the company. This report is based on the secondary
data collected through various sources. Data has been collected by the various documents
available in the finance department. The theory has been collected from the details available
on the internet. This data consists of information that has been previously gathered.

21
Therefore, data is collected from published academics, journals, company report, newspaper
relevant to the topic that has been considered to carryout research while selecting secondary
data, due care has been taken for its reliability, relevancy & consistency in nature.

 TOOLS AND ANALYSIS-

The tabulated data has been analyzed thoroughly through various ratios and graphs, which is
used for the comparison. It is essential to use a systematic research methodology for the
assessment of project because without the use of a research methodology analysis of any
company or organization will not be possible. In the present analysis mostly secondary data
has been used. It is worth a while to mention that I have used the following types of
published data:

 BALANCE SHEET
 PROFIT & LOSS ACCOUNT

 LIMITATIONS OF THE STUDY-

 The research work is mainly based on secondary data that is, it is based on audited
accounts and if its audited accounts are ambiguous then the result will be misleading.
 Less importance has been given to primary data which is actually the original data
and more reliable.
 The research work is completed in three months, which is not enough for any type of
proper and reliable research work.

 ANALYSIS AND INTERPRETATION-

For the purpose of Analysis and Interpretation, statement of Current Assets and Current
Liabilities, master tables and graphs were used for the effective presentation.

 TOOLS FOR DATA COLLECTTION-

The data so collected from various annual reports & financial statements of past 5 years have
been classified & tabulated for better understanding & to give a complete picture at first
place.

22
 DATA ANALYSIS AND INTERPRETATION-

 COMPARISON OF BALANCE SHEET OF HDFC BANK

AND ICICI BANK –

COMPARATIVE BALANCE SHEET-

It is the most commonly used technique for analyzing financial statements. This technique
determines the profitability and financial position of a business by comparing financial
statements for two or more time periods. Hence, this technique is also termed as Horizontal
Analysis. Typically, the income statements and balance sheets are prepared in a comparative
form to undertake such an analysis.

A business owner or a financial manager should study the following aspects of a comparative
balance sheet:

1. WORKING CAPITAL-Working capital refers to the excess of current assets over current
liabilities. This helps a financial manager or a business owner to know about the liquidity
position of the business.

2. CHANGES IN LONG-TERM ASSETS, LIABILITIES, AND CAPITAL-The next

component that a financial manager or a business owner needs to analyze the change in the fixed
assets, long-term liabilities and capital of a business. This analysis helps each of the stakeholders
to understand the long-term financial position of a business.

3. PROFITABILITY-Working capital refers to the excess of current assets over current

liabilities. This helps a financial manager or a business owner to know about the liquidity
position of the business.

23
STEPS TO PREPARE A COMPARATIVE BALANCE SHEET-
A comparative statement has five columns. Following are the steps to be followed in preparation
of the comparative statement:

1. STEP 1:
Firstly, the absolute figures of assets and liabilities relating to the accounting periods considered
for analysis. These amounts are mentioned in Column I and Column II of the comparative
balance sheet.

2. STEP 2:
Find out the absolute change in the items mentioned in the balance sheet. This is done by
subtracting the previous year‟s item amounts from the current year ones. This increase or
decrease in the absolute amounts is mentioned in Column III of the comparative balance sheet.

3. STEP 3:
Finally, calculate the percentage change in the assets and liabilities of the current year relative to
the previous year. This percentage change in assets and liabilities is mentioned in Column IV of
the comparative balance sheet.

The formula which is used to calculate percentage change:

FORMULA FOR CALCULATION OF PERCENTAGE CHANGE-

 Percentage Change = (Absolute Increase or

Decrease)/Absolute Figure of the Previous Year’s Item) *
100

24
COMPARATIVE BALANCE SHEET OF ICICI BANK LIMITED

FOR THE YEAR ENDED MARCH 31, 2022 (in „000s)

INTERPRETATION-
 The comparative balance sheet of the bank reveals that during the FY 2021-2022 there has
been an increase in cash and balances with RBI of 14,089,296 million i.e. 30.6%. Cash
and balances with RBI include cash in hand and balances with RBI in current account.
Where, cash in hand increases at lower margin than balance in RBI in current year.

25
 The investment of the bank has increased with the rate of 10.29%, but if total investments
are bifurcate into investments outside India which stands at 205,857,818 in previous year
and 150,406,483 in current year has decreased by 26.93% while investments in India
which stands at 2,067,007,581 in previous year and 2,952,003,541 in current year which
has increased by 13.27%.

 The advances given by the bank has increased by 17.07%, which means bank lends more
money to customers which will further helps in generating more revenue through interest.

 Fixed assets of the bank shows an increase with the rate of 5.58%shows that the bank is
dedicated towards continuous expansion, while other assets including Deposits in Rural
Infrastructure and Development Fund, Tax paid in advance has decreases with the rate of
11.67%.

 The capital of the company has increased from 13,834,104 to 13,899,662. The company
has raised money from equity shares.

 Reserves and surplus includes various reserves such as statutory reserve, special reserve,
securities premium reserve, revaluation reserve, capital reserve etc. Balance of reserve and
surplus increases in the current years which shows that the bank is saving money as a
safety in the form of reserves. Surplus or retained earnings increases to 1,688,555,941, this
indicates that bank has reinvested profits back in the company instead of paying dividend
to shares holders.

 The deposits of the bank has increased from 9,325,221,605 to 10,645,716,132 with the
rate of 14.45%, which may help in earning more interest from RBI if bank keeps this
money in central bank accounts.

 The borrowings of the firm have increased by 17.02%, means the company has borrowed
funds in the form of bonds and debentures and it will affect in lowering the net profit.

 Total Liabilities of the company have increased from 12,304,326,758 to 14,112,977,420

with the rate of 14.69%, which leads to cash outflow for the repayment of the liabilities.

 The Contingent liabilities of the company increased by 46.02%. Increase in Contingent

liabilities may negatively impact the financial performance and health of a company, thus
it threatens to reduce the company's assets and net profitability.

26
COMPARATIVE BALANCE SHEET OF HDFC BANK LIMITED

FOR THE YEAR ENDED MARCH 31, 2022 (in „000s)

INTERPRETATIONS-
 The comparative balance sheet of the HDFC shows that the total assets and total
liabilities of the company show an increase of 3,216,645,266 million which is 18.41%
change.

27
  Cash and balances with RBI have increased from 973,407,363 to 1,299,956,352 with the
percentage change of 33.54%. It shows that the bank‟s liquidity position has becomes
better from previous year.
 Balances with banks and money at call and short notice includes money at bank in India
and outside India. Balance in India on March 31, 2022 is 8,260,399 which decreased by
83,223 and Balance outside India on March 31, 2022 is 223,312,892 which increased by
2,016,298 with a total change of 0.91%.
 The investment of the bank has increased with the rate of 2.66 %, but if total investments
are bifurcate into investments Outside India which stands at 23,681,247 in previous year
and 26,224,243 in current year is increased by 10.73% while investments In India which
stands at 4,413,601,674 in previous year and 4,529,132,687 in current year which is
increased by 2.61%.
 In the current year bank has provided more advances than previous year, it increased by
20.83%.
 Fixed Assets of the firm includes Premises, Other fixed assets and Assets on lease which
will be interpreted with the help of a table:-

Note- Increase/Decrease on Fixed Assets is the values compared to the previous year.

 The capital of the company has increased from 5,545,541 million to 5,512,776 million
with the increase of 0.5%. The company has raised money from equity shares.
 Balance of the reserves and surplus account has increased by 363,688,333, percentage
increase of 17.9. It means that the firm has retained its earnings as a part of shareholder‟s
equity. The company may marks them for specific purposes like buying fixed assets,
payment for legal settlements, debt repayments , payment of dividends etc.
 Deposits of the bank have increased by 2,241,572,192 with the rate of 16.79%. It
includes demand deposit, saving bank deposits and term deposits.
 Borrowing of the bank has increased by 36%. In the current year bank has borrowed
more funds from other institutions and agencies rather than repaying it.
 Contingent liability of the bank has increased by 4.43%; it shows that bank forecasts the
happening uncertain events in the near future.

28
COMPARATIVE INTERPRETATION-

 Capital of ICICI bank is almost double as compared to HDFC bank which helps it to
operate comfortably without giving a thought about lack of money.

 HDFC Bank has more money in Reserves and Surplus Account than ICICI bank, which
shows that HDFC Bank has retained its earning instead of distributing it to shareholders.

 HDFC bank has a better deposit base than ICICI Bank which might impact the
profitability of the bank.

 HDFC bank has borrowed more funds than ICICI Bank.

 HDFC bank has almost double Cash and balances with RBI which further provide
liquidity to the firm and helpful in rotating working capital.

 ICICI bank has fewer advances than HDFC Bank. ICICI might be getting less interest in
return than HDFC Bank.

 ICICI bank has Fixed Assets more than HDFC bank and its growth rate is also better than
HDFC Bank.

 ICICI has fewer Bills for Collection. Hence, ICICI Bank needs to pay lesser amount to
the importers.

29
 COMPARISON OF VARIOUS HEADS GIVEN IN THE
BALANCE SHEET OF HDFC BANK AND ICICI BANK
OVER THE PERIOD OF LAST FIVE YEARS-

1) DEPOSITS-

Deposits are the primary source of funds for a bank without which it cannot operate. This is
because the bank uses the money it receives from deposits to lend to borrowers.

There are different types of deposits that contribute to the overall deposit base of a bank. These
include deposits from:

Current accounts Time deposits Fixed deposits, etc.

and Savings accounts (certificate of
(CASA). deposits).

HDFC Bank v/s ICICI Bank Deposits (2017-2022)

(Amount in billion)

The graphical representation of this data is given in the next page.

30
 GRAPH OF TOTAL DEPOSITS-
Deposits are liability to banks. There are four types of bank deposits in India, which are- Current
Account, Recurring Deposits, Savings Accounts, and Fixed Deposit Accounts. All such deposits
shape total deposits. The table which shows figures of deposits and its yearly growth is given
above.

The graphical chart given below, shows amount of total deposits for the period of 5 years in
ICICI Bank and HDFC Bank.

TOTAL DEPOSITS
AMOUNTS (in m)

INTERPRETATION:

 Clearly, HDFC Bank has a higher deposit base than ICICI Bank. Also, HDFC Bank
has been growing its deposit base at a faster rate than ICICI Bank.
 HDFC Bank's deposit base has grown at a CAGR (Compound Annual Growth Rate)
of 14.6% over the last five years. ICICI Bank's average deposit growth was 13.3%
during the same period.

31
 2) ADVANCES-

Advance is the amount that banks lend to individuals and companies. They charge interest on
loans. Interest rates vary depending on the terms and conditions of such credit. Banks raise
money to lend through different sources like deposits, money market and so on.

Now, let's take a look at the other side of the equation, which are loans. Banks use their deposits
to disburse loans or advances as they call it in banking parlance. The growth of advances should
keep up with the growth of a bank's deposits. Some examples of loans and advances-

Based on • Secured Loan

• Unsecured Loan
Security
Based on • Time Loan
• Installment Loan
Repayment • Demand Loan

The following table compares the advances of HDFC Bank and ICICI Bank.

HDFC Bank v/s ICICI Bank Advances (2017-2022)

(Amounts in million)

The graphical representation of this data is given in the next page.

32
GRAPH OF TOTAL ADVANCES-
Advances are assets to banks. Banks provide advances in the form of loan, cash credit, bank
overdraft, discounting of a bill, investments of funds etc. The table which shows figures of
advances and its yearly growth is given above.

The graphical chart given below, shows amount of total advances for the period of 5 years in
ICICI Bank and HDFC Bank.

TOTAL ADVANCES
AMOUNTS (in M)

INTERPRETATION-

 HDFC Bank's advances have grown faster than that of ICICI Bank. For the last 5 years,
HDFC Bank's advances have grown at a CAGR of 15.2% compared to ICICI Bank's
10.2% CAGR during the same period.
 It also shows that HDFC Bank is efficient in managing their deposits than ICICI Bank.

33
 3) ADVANCES TO DEPOSITS-

Advances to Deposits ratio refers to the relationship between the advances offered by the bank in
a year with comparison to its deposits in a particular year. . A ratio of 100% or less shows that
the bank is funding all its loans from deposits rather than relying on wholesale funding (funding
from the capital markets or other banks). The advances to deposits ratio measures loans
(advances) as a percentage of deposits. It is also called LTD ratio (loans to deposits).

HDFC Bank v/s ICICI Bank Advances to Deposits (2017-2022)

The graphical representation of this data is given in the next page.

CACULATION OF ADVANCES TO DEPOSITS RATIO-

FORMULA- ADVANCES GIVEN IN A YEAR/DEPOSIES IN A
YEAR *100
Taking the example of 2021-2022 of HDFC Bank:

Advances- 14,209,423

Deposits- 15,580,030

ADVANCES TO DEPOSIT RATIO OF 2021-2022=14209423/15580030 *

100
34
= 91.20%
 GRAPH OF ADVANCES TO DEPOSITS-
The loan-to-deposit ratio is used to assess a bank's liquidity by comparing a bank's total loans to
its total deposits for the same period. The advances to deposits ratio measures loans (advances)
as a percentage of deposits. The table which shows advances to deposits percentages and its
yearly growth is given above.

The graphical chart given below, shows advances to deposits ratio for the period of 5 years in
ICICI Bank and HDFC Bank.

ADVANCES TO DEPOSITS RATIO

( IN PERCENTAGE)

INTERPRETATION-

 For the Financial Year 2022, HDFC Bank's advances were 91.2% of its total deposits.
ICICI Bank's total advances stood at 84.3% of total deposits.
 Average of Advances to Deposits ratio of HDFC Bank is 89.4% and that of ICICI Bank
is 84.5%.

Clearly, HDFC Bank is more efficient than ICICI Bank in terms of utilizing its deposit base.

35
 4) BORROWINGS-
Every company needs additional capital for its business from time to time. The company can
meet such requirement of capital, to an extent, by the issue of share, and at times has to raise
loans. Borrowing can be defined as a means through which companies arrange financial
funds through external sources like bank loans, shareholders, public investment, etc.
Borrowing is an external source of raising money.

SOURCES OF
LOAN FROM COMMERCIAL BANKS
BORROWINGS
LOANS FROM FINANCIAL INSTITUTION
ISSUE OF DEBENTURES
PUBLIC DEPOSITS
TRADE CRESITS

The following table compares the borrowings of HDFC Bank and ICICI Bank.

HDFC Bank v/s ICICI Bank Total Borrowings (2017-2022)

The graphical representation of this data is given in the next page.

36
 GRAPH OF TOTAL BORROWINGS-
Liabilities are a broader term, and debt constitutes a part of liabilities. Debt refers to money that
is borrowed and is to be paid back at some future date. Bank loans are a form of debt. Hence, it
only arises out of borrowing activities.

The graphical chart given below, shows amount of total borrowings for the period of 5 years in
ICICI Bank and HDFC Bank.

TOTAL BORROWINGS
AMOUNT (in M)

INTERPRETATION-

 Above graph shows that the borrowings of ICICI bank is continuously decreasing which
shows that bank is focused towards reducing its dependency on external or long-term
borrowings.
 Where HDFC Bank is increasing its borrowings dependency.
 Borrowings of a bank include borrowings in India and borrowings outside India.

Hence, ICICI Bank has efficient management of borrowings and its dependency on borrowings
is less as compared to ICIC Bank.

37
5) FIXED ASSETS-
The term fixed asset refers to a long-term tangible piece of property or equipment that a firm
owns and uses in its operations to generate income. The general assumption about fixed
assets is that they are expected to last, be consumed, or be converted into cash after at least
one year.

Fixed assets are items that a company plans to use over the long term to help generate
income.

FIXED ASSETS OF A BANK OR BANK ASSETS- A bank can have different

types of assets, including physical assets, such as equipment and land; loans, including
interest from consumer and business loans; reserves, or holdings of deposits of the central
bank and vault cash; and investments, or securities.

The following table compares the fixed asset of HDFC Bank and ICICI Bank.

HDFC Bank v/s ICICI Bank Total Bank Assets (2017-2022)

The graphical representation of this data is given in the next page.

38
 GRAPH OF TOTAL BANK ASSETS-
The assets are the financial instruments that either the bank is holding (its reserves) or those
instruments where other parties owe money to the bank. A bank‟s net worth is also referred to as
bank capital.

The graphical chart given below, shows value of bank assets for the period of 5 years in ICICI
Bank and HDFC Bank.

TOTAL FIXED ASSETS

AMOUNT (in M)

INTERPRETATION-

 ICICI Bank has huge base of fixed assets, while HDFC Bank has less fixed assets
 Fixed assets of ICICI Bank is approximately 150% than that of HDFC Bank.
 Fixed assets of HDFC Bank is increasing with a higher growth rate, where the growth
rate of ICICI Bank is comparatively low.
 These fixed assets are used by the company to generate revenue. They are not sold to
customers or held for investment purposes.

39
 6) CONTINGENT LIABILITIES-
A contingent liability is a liability that may occur depending on the outcome of an uncertain
future event. Contingent liabilities are recorded if the contingency is likely and the amount of
the liability can be reasonably estimated. The liability may be disclosed in a footnote on the
financial statements.

HDFC Bank v/s ICICI Contingent Liabilities (2017-2022)

The graphical representation of Contingent Liabilities of both the banks is given in the next page.

40
 GRAPH OF CONTINGENT LIABILITIES-
Contingent liabilities adversely impact a company‟s assets and net profitability. As a result,
knowledge of both contingencies and commitments is extremely important, because they
represent the encumbrance of potentially material amounts of resources during future periods,
and thus affect the future cash flows available to creditors and investors.

The graphical chart given below, shows amount of contingent liabilities for the period of 5 years
in ICICI Bank and HDFC Bank.

CONTINGENT LIABILITIES
AMOUNT (in M)

INTERPRETATION-

 ICICI Bank has more contingent liabilities than HDFC Bank.

 The balance of contingent liabilities of ICICI Bank is consistently increasing with
huge margin but, there is a fluctuation in HDFC Bank.
 There is a decrease in the balance of contingent liabilities in the year 2020-2021,
it might be because of pandemic.

Hence, ICICI Bank has more contingent liabilities than HDFC Bank but it may
adversely affects the profitability if its too high.

41
  COMPARISON OF INCOME STATEMENT OF HDFC
BANK AND ICICI BANK –

COMPARATIVE PROFIT & LOSS ACCOUNT-

A comparative income statement or Profit & Loss statement showcases the operational results of
the business for multiple accounting periods. It helps the business owner to compare the results
of business operations over different periods of time. Furthermore, such a statement helps in a
detailed analysis of the changes in line-wise items of the income statement.

The main advantages which make comparative income statements useful are:

 It expedites and simplifies financial analysis as past figures can easily be compared with
current figures without the need to refer to individual past statements.
 These statements display percentage change in all income statement line items, making
interpretation and analysis of top line (sales) and bottom line (net profit) informative.
 It also allows comparison across organizations which help in analyzing the efficiency at
both Gross and Net profit levels.

STEPS TO PREPARE A COMPARATIVE INCOME STATEMENT-

1. Step1
Firstly, specify absolute figures of items such as cost of goods sold, net sales, selling expenses,
office expenses, etc. relating to the accounting periods considered for analysis. These amounts
are mentioned in Column I and Column II of the comparative income statement.

2. Step 2
Find out the absolute change in the items mentioned in the income statement. This is done by
subtracting the previous year‟s item amounts from the current year ones. This increase or
decrease in absolute amounts is mentioned in Column III of the comparative income statement.

3. Step 3
Finally, calculate the percentage change in the income statement items of the current year
relative to the previous year. This percentage change in items is mentioned in Column IV of the
comparative income statement.

42
COMPARATIVE PROFIT & LOSS ACCOUNT OF ICICI BANK LIMITED

FOR THE YEAR ENDED MARCH 31, 2022 (in „000s)

INTERPRETATION-

 The comparative income statement of the ICICI Bank shows that income from interest
earned by the bank has increased from 791,182,710 million to 863,745,452 million which
changed 9.17% from previous year. The change of 72,562,742 million is majorly
contributed by interest on advances, about 85%.

43
 In the year 2022, other sources of income show a decline of 4,509,975 million. Previous
year it stands at 189,685,274 million and 185,175,299 million, reason being, for the year
ended March 31, 2021, includes gain on sale of a part of equity investment in ICICI
Lombard General Insurance Company Limited, ICICI Prudential Life Insurance
Company Limited and ICICI Securities Limited (subsidiaries of ICICI Bank).

 Total expenditure has decreased from 818,941,143 million to 815,525,844 million with
the percentage change of 0.41% where, interest expended lower this year while operating
expenses higher this year as compared to previous year.

 The comparative income statement of the year 2022 of ICICI Bank Ltd. shows that the
net profit has increased from 161,926,841 million to 161,926,841 million with the rate
44.13%. In the FY22 net profit of the company increased with exceptional rate.

 The bank has paid the dividend of 13,852,335 million which was due for previous year
that is FY20-21 which has an impact on profit margin of the current year.

 Inn many reserves account bank has no balance, because the bank might have used this
amount when the company is in need.

 Earnings Per Share is divided into two categories which are Basic and Diluted.

 Basic earnings per share is the earning which takes into account only those shares that
are available for trading in the market. Previous year it was 24.01 rupees and current
year it was 33.66 rupees with the percentage change of 40.19%.

 Diluted earnings per share is simply a company‟s net income divided by its shares
outstanding. Earnings for the year 2021-2022 has increased from23.67 to 32.98 rupees,
approximately percentage change is 39.34%.

It may be concluded that in bank‟s income shows an increase with a positive rate while
expenses of the bank decreases, which is always a good and satisfactory condition for
any company.

44
COMPARATIVE PROFIT & LOSS ACCOUNT OF HDFC BANK LIMITED

FOR THE YEAR ENDED MARCH 31, 2022 (in „000s)

INTERPRETATION-
 Comparative Statement of the HDFC Bank shows that the income of the bank has
increased by the 68,948,926 with percentage change of 0.77%. Total income includes
income from interest and other sources like commission, exchange and brokerage, profit
on sale of assets and investments, income earned from dividend and subsidiaries, etc.

45
 The total expenditure has decreased from 1,149,465,940 to 1,203,016,643 with the
percentage change of 4.65%, where interest expended lower this year while operating
expenses higher this year as compared to previous year.

 It shows that the rate of increase in total expenditure approximately 6 times that of total
income, it shows that the expenditure/application of fund must be taken into
consideration by the management.

 The comparative income statement of the year 2022 of HDFC Bank Ltd. shows that the
net profit has increased from 311,165,252 to 369,613,552 with the rate of 18.78%. The
average growth of the profit for the last five years is 15%.

 The bank has paid the dividend which was due for previous year that is FY20-21 which
reduces profit margin of the current year.

 Earnings Per Share is divided into two categories which are Basic and Diluted.

 Basic earnings per share is the earning which takes into account only those shares that
are available for trading in the market. Previous year it was 56.58 rupees and current
year it was 66.80 rupees with the percentage change of 18.06%.

 Diluted earnings per share is simply a company‟s net income divided by its shares
outstanding. Earnings for the year 2021-2022 has increased from 56.32 to 66.35
rupees, approximately percentage change is 17.87%.

It may be concluded that there is a satisfactory progress in the company and overall
profitability of the company is good. Average profit growth of the bank for the period of
last 10 years is 22% while the average profit growth for the period of 5 years is 20%.

46
COMPARATIVE INTERPRETATION-

 Interest earned by HDFC Bank is approximately 50% more than that of ICICI bank and it
has a direct effect on PBT.

 HDFC bank is spending more interest than ICICI Bank also HDFC Bank has lower
declining rate in current year as compared to ICICI Bank.

 Operating expenses of HDFC Bank is more than that of ICICI Bank but, ICICI bank has
an increasing growth rate of operating expenses during last few years.

 Net profit of HDFC Bank is more in actual amount than that of ICICI Bank. But, during
the last 5 years ICICI bank has better growth rate.

 HDFC bank has more balance in the reserves account than ICICI Bank. ICICI bank may
have used its reserves balance during pandemic.

 EPS of HDFC bank is more than ICICI bank. But growth rate of ICICI bank in current
year is better than that of HDFC bank. Their growth rate is given below:

BASIC EPS DILUTED

EPS
ICICI 40.19 39.39
BANK
HDFC 18.06 17.8
BANK

47
  COMPARISON OF VARIOUS HEADS GIVEN IN THE
INCOME STATEMENT OF HDFC BANK AND ICICI BANK
OVER THE PERIOD OF LAST FIVE YEARS-

1) NET PROFIT -

A company‟s net profit is also known as its net income, net earnings or bottom line. It represents
the financial standing of a company after all its expenses have been paid off from its total
revenue. Notably, it accounts for all financial transactions of a firm other than tax payment. On
the basis of this fundamental concept, business owners can avoid miscalculations and develop
sound financial strategies.

Typically, net profit in the balance sheet is registered at the financial statement‟s bottom line.

The net profit formula is expressed as –

NET PROFIT = TOTAL REVENUE – TOTAL EXPENSES

-To calculate Net profit of a company, its total expenses are deducted from the
total revenue it generates.

The following table compares the net profit and its growth of HDFC Bank and ICICI Bank

HDFC Bank v/s ICICI Bank Net Profit (2017-2022)

The graphical representation of net profit of both the banks is given in the next page.

48
 GRAPH OF NET PROFIT –
The Net Profit of a company is the amount of money a business earns after deducting
interest, operating expenses, and tax over a defined period. Net Profit is also called Profit
After Tax (PAT). Net Profit determines the financial health of the business. The table which
shows figures of Net Profit and its yearly changes is given above.

The graphical chart given below, shows amount of net profit for the period of 5 years in
ICICI Bank and HDFC Bank.

TOTAL NET PROFIT

AMOUNT (in M)

INTERPRETATION-

 HDFC Bank's net profit has grown at a CAGR of 15.5% over the last five years. This is
compared to ICICI Bank's net profit growth of 27.3%.
 Despite higher provisions, ICICI Bank's net profit growth is higher than HDFC Bank,
indicating operational efficiency.

HDFC Bank has reported relatively higher and stable margins as compared to ICICI Bank.
However, ICICI Bank isn't far behind.

49
 2) NET PROFIT MARGINS-

The net profit margin, or simply net margin, measures how much net income or profit is
generated as a percentage of revenue. It is the ratio of net profits to revenues for a company or
business segment.

The net profit margin is equivalent to net income divided by the total revenue earned. The net
profit ratio formula or net profit margin ratio is expressed as –

Net profit margin formula:

Net profit margin = (net income/revenue) x 100

where,

Net income = Revenue - COGS - Operating expenses - Interest -Taxes

The following table shows the net profit margins of HDFC Bank and ICICI Bank-

HDFC Bank v/s ICICI Bank Net Profit Margin (2017-2022)

The graphical representation of net profit margin of both the bank is given in the next page.

50
 GRAPH OF NET PROFIT MARGIN-
Net profit margin is a profitability ratio that calculates how much percentage of the
company‟s earnings is left after deducting all the operating and non-operating expenses (also
called net profit) in a given quarter/year. . The table which shows figures of Net Profit
Margin and its yearly changes is given above.

The graphical chart given below, shows net profit ratio for the period of 5 years in ICICI
Bank and HDFC Bank.

NET PROFIT MARGIN

(IN PERCENTAGE)

INTERPRETATION-

 The five-year average net profit margin of HDFC Bank is 23.6%, while for ICICI Bank it
is 15.4%.
 Net Profit Margin of ICICI Bank has more fluctuations over the years than HDFC Bank.
 The net profit margin of ICICI Bank is increasing at a fast rate. But it shows a decline in
the year 2018-19 because of higher expenses and provisions.

51
 3) NET INTEREST INCOME (NII)-

The banking industry is extremely competitive. A bank wants you to park your money with it
and not with its peers. In a bid to acquire more deposits, a bank offers you incentives on your
deposits. This incentive is called interest which is calculated as a percentage of your deposits.
Interest paid to depositors is a major cost incurred by a bank. It constitutes a large chunk of its
total expenses.

On the other hand, a bank charges interest on loans offered. Interest earned through loans is a
major source of revenue for a bank and constitutes a large chunk of its total revenue.

The interest charged to borrowers is always higher than the interest offered to depositors.
The difference between the interest earned and interest paid is the bank's gross income.
This differential is also known as net interest income (NII).

The following table shows how HDFC Bank and ICICI Bank net interest income against each
other.

HDFC Bank v/s ICICI Bank interest income (2017-2022)

The graphical representation of this Net Income Interest (NII) is given in the next page.

52
 GRAPH OF NET INTEREST INCOME-
The net interest income of some banks is more sensitive to changes in interest rates than others.
This can be the result of several factors such as the type of assets and liabilities that are held as
well as whether or not the assets and liabilities have fixed or variable rates. Naturally, banks with
variable rate assets and liabilities will be more sensitive to changes in the interest rates than those
with fixed-rate holdings. The table which shows figures of NII and its yearly changes is given
above.

The graphical chart given below, shows net interest income for the period of 5 years in ICICI
Bank and HDFC Bank.

NET INTEREST INCOME

AMOUNT (in M)

INTERPRETATION-
 HDFC Bank's NII has grown at a CAGR of 12.5% over the last five years. ICICI
Bank's NII has grown at a CAGR of 14.2% during the same period.

Though HDFC Bank has higher net interest income, ICICI Bank is leading in terms of NII
growth.

53
 4) NET INTEREST MARGIN (NIM)-
Net interest margin (NIM) is a measure of the difference between the interest income generated
by banks or other financial institutions and the amount of interest paid out to their lenders (for
example, deposits), relative to the amount of their (interest-earning) assets.

Net interest margin (NIM) is basically net interest income divided by the total amount of loan
disbursed by a bank. It is one of the measures of a bank's profitability. Therefore, the higher the
NIM the better it is for banks.

This ratio talks about the NIM, means how much interest an investor receives over how much
they pays out.

Here’s the formula-

Net Interest Margin = (Interest Received – Interest Paid) / Average

Invested Assets

The following table shows the net interest margins of HDFC Bank and ICICI Bank-

HDFC Bank v/s ICICI Bank Net Interest Margins (2017-2022)

The graphical representation of this Net Interest Margin (NIM) is given in the next page.

54
 GRAPH OF NET INTEREST MARGIN-
A positive net interest margin means an enterprise is running profitably. At the same time, a
negative figure indicates the inefficiency of the investment. A firm can take corrective action in
the latter scenario by applying funds to outstanding debt or transferring those assets to more
profitable investments. . The table which shows figures of NIM and its yearly changes is given
above.

The graphical chart given below, shows net interest margin for the period of 5 years in ICICI
Bank and HDFC Bank.

NET INTEREST MARGIN

AMOUNT (in M)

INTERPRETATION-

 Despite having a higher interest income, HDFC Bank's net margin is lower in than ICICI
Bank in the last FY21-22.
 HDFC Bank's net interest income has been quite stable over the years and averages at
4.3%. This is compared to ICICI Bank's average of 3.8%.

55
 5) DIVIDENT PAID-
Investors tend to invest in companies that pay dividends to their shareholders.

Dividends are a company's accrued profits distributed equally among shareholders. A company
may pay a dividend when it doesn't have any immediate expenses to pay for. The Dividend
Payout Ratio (DPR) is the amount of dividends paid to shareholders in relation to the total
amount of net income the company generates.

The following table shows the dividend paid by HDFC Bank and ICICI Bank to their
shareholders over the last five years.

The following table shows the dividend paid by HDFC Bank and ICICI Bank-

HDFC Bank v/s ICICI Bank Dividend (2017-2022)

The graphical representation of Dividend paid by both the banks is given in the next page.

56
 GRAPH OF DIVIDEND PAID-
A dividend is a reward paid to the shareholders for their investment in a company‟s equity, and it
usually originates from the company's net profits. Though profits can be kept within the
company as retained earnings to be used for the company‟s ongoing and future business
activities, a remainder can be allocated to the shareholders as a dividend.

The graphical chart given below, shows dividend payout for the period of 5 years in ICICI Bank
and HDFC Bank.

DIVIDEND PAID
AMOUNT (IN RUPEE)

INTERPRETATION-

 HDFC Bank has paid an average of Rs 7.7 as dividend to each shareholder over
the last five years. This is compared to ICICI Bank's average of Rs 1.9 during the
same period.

 The dividend payout ratio is significant for the investors to look for. The dividend
payout ratio determines how much dividend a company is paying from its
earnings.

 The five-year average dividend payout ratio of HDFC Bank and ICICI Bank is
11.4% and 9.7%, respectively.

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6) EARNINGS PER SHARE-
Earnings per share or EPS is an important financial measure, which indicates the profitability
of a company. It is calculated by dividing the company‟s net income with its total number of
outstanding shares.

EPS is the portion of a company‟s profit that is allocated to every individual share of the
stock. It is a term that is of much importance to investors and people who trade in the stock
market. The higher the earnings per share of a company, the better is its profitability.

What is Outstanding Shares?

Shares outstanding refer to a company's stock currently held by all its shareholders, including
share blocks held by institutional investors and restricted shares owned by the company‟s
officers and insiders. Outstanding shares are shown on a company‟s balance sheet under the
heading “Capital Stock.”

HDFC Bank v/s ICICI Earnings Per Share (2017-2022)

The graphical representation of EPS by both the banks is given in the next page.

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 GRAPH OF EARNINGS PER SHARE-
Commonly, the earnings are measured by reducing the cost of sales, operating expenses, and
taxes from all the sales revenue for a specific period. They are measured in different ways,
depending on the analysts. The most common measure of profitability is the calculation of
earnings per share.

The graphical chart given below, shows earnings per share for the period of 5 years in ICICI
Bank and HDFC Bank.

EARNINGS PER SHARE

AMOUNT (IN RUPEE)

YEARS

INTERPRETATION-

 HDFC Bank has higher EPS that means it is profitable enough to pay out more money to
its shareholders while ICICI Bank has less earnings left for shareholders after deducting
all the expenses.
 The average EPS paid over the period of 5 years is 63.04 rupees where ICICI Bank paid
16.87 rupees.
 It can also be noticed that Earnings Per Share depends on the number of outstanding
shares a company has in their capital account. If the number of shares is more, then EPS
decreases and if the number of shares is less, then EPS increases.

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 FINDINGS-

 The deposits base of the HDFC Bank is higher than that of ICICI Bank. It can also be
noticed that the growth rate is better as compared to ICICI Bank.

 Advances base of HDFC Bank is greater than ICICI Bank. ICICI Bank advances grow
with a slower rate.

 During the year 2017-18 ICICI bank has LTD (Loans to Deposits) of 96.8% but with
the passage of time its LTD is decreases to 84.3% where, HDFC bank‟s LTD is 91.2%
in current year which higher than ICICI Bank.

 HDFC bank has more borrowing than ICICI bank which shows the dependency of
HDFC bank‟s operation on its borrowings.

 Fixed Assets of HDFC bank is less as compared to ICICI Bank. Fixed Assets have
direct impact on the earning capacity of a company.

 Net profit margin of HDFC Bank has been consistent over the period of last 5 years
where net profit margin of ICICI Bank shows fluctuations and also has a negative
growth rate during the year 2018-19.

 Net Interest Income of HDFC Bank is more than ICICI Bank. NII of both the banks is
continuously increasing with a positive rate.

 Net Interest Margin is lowest in the current year but it has been consistent for the past
few years while, NIM of ICICI Bank is increasing positively every year and it is
highest in the current year.

 HDFC Bank paid highest dividend in the current year. ICICI Bank has paid very less
dividend every year as compared to HDFC Bank.

 Earnings Per Share of HDFC bank is better than ICICI bank. It is approximately
double than ICICI bank. It indicates that HDFC bank has better profitability.

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 CONCLUSION-

Banks plays an important role in developing the economy of the country. So, it is very important
to evaluate their overall financial performance. Under this report, financial soundness of the two
major banks is analyzed and interpreted by Comparative Financial Statement tool. Comparative
study looks between the differences between two systems in relation or coexisting to each other.
It is helpful in comparing quantitative information .Final Accounts of HDFC bank and ICICI
bank were reviewed and some important parameters which were taken from company‟s Balance
Sheet and Profit & Loss Account were examined to compare the financial health and growth of
the same.

Analysis shows that the HDFC bank is in the better financial position that ICICI bank. HDFC
bank is efficient in optimum utilization of resources and has a positive growth rate year by year
on its assets and profits. HDFC bank is also focused towards creating shareholders wealth. It can
also be noticed that HDFC bank has managed to keep its financials healthy, while, ICICI bank is
growing fastest in the banking sector. Both of these banks have their own advantages and
drawbacks, like HDFC is undergoing major changes because of its merger, ICICI is witnessing a
change in its strategy with its focus now on retail.

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 SUGGESTIONS-

 ICICI bank should improve its deposits and advances base which helps in earning profit.

 ICICI bank should focus on efficient management of converting deposits into advances
which is also called Advance to Deposits.

 HDFC bank should sight towards decreasing its dependency on borrowings / external
liabilities.

 HDFC bank should work on increasing its fixed assets because they are the foundation of
any company.

 ICICI bank has a huge base of contingent liabilities, the bank should examine about the
optimum future requirements of continent liabilities otherwise it may adversely affect the
company in future.

 ICICI bank has week net interest income in comparison of HDFC. It should be higher
than the current year.

 HDFC bank should focus to maintain a good net interest margin. NIM of HDFC Bank
has been consistent during the last few years but in the current year it is lesser than ICICI
bank.

 ICICI bank should try to provide dividend at consistent rate because there is too much
fluctuations. It also helps keeping the interest of shareholders intact in the company and it
seeks new investors.

 EPS (Earnings Per Share) should be seriously taken into consideration because its
performance was below average over the past years of ICICI bank.

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 BIBLIOGRAPHY-

WEBSITES-

 https://quickbooks.intuit.com/in/resources/accounting/comparative-financial-statements/
 https://www.equitymaster.com/detail.asp?date=01/06/2022&story=7&title=HDFC-Bank-
vs-ICICI-Bank-Which-Stock-is-
Better#:~:text=As%20of%2030%20June%202022,India%20as%20of%20June%202022.
 https://www.ndtv.com/business/stock/hdfc-bank-ltd_hdfcbank/reports
 https://en.wikipedia.org/wiki/HDFC_Bank
 https://en.wikipedia.org/wiki/ICICI_Bank
 https://www.hdfcbank.com/
 https://www.icicibank.com/

BOOKS-

Financial Management – By Shashi K Gupta

ANNUAL REPORT-

 Annual Report for FY 2021-2022: HDFC BANK LTD.

 Annual Report for FY 2021-2022: ICICI BANK LTD.

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