HDFC Bank Ltd.

Ratio Analysis

1
 INDEX

Sr. No Title Page No

1 Introduction 3

2 Balance Sheet And P & L 4-7

3 Ratios & Interpretations 8-11

4 Director’s Report 12

5 Auditor’s Report 13

6 Conclusion 14

2
 INTRODUCTION
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.

As of June 30, 2022, the Bank had a nationwide distribution network of 6,499 branches and
18,868 ATMs in 3,226 cities/towns.
HDFC Bank Limited 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 capitalisation as of April 2021. It is the third largest company by market capitalisation
of $122.50 billion on the Indian stock exchanges. It is also the fifteenth largest employer in
India with nearly 150,000 employees.
Founder-
Founded in 1977 by Hasmukhbhai Parekh, the entrepreneur who would also develop the
institution that became ICICI Bank, HDFC by now
had a strong brand name as a trusted provider of
housing finance.
An economics graduate from Mumbai. And he had
a banking family. Also, a B.Sc. degree in Banking
& Finance holder from London School of
Economics. He learned banking expertise from his
father.
CEO –
Sashidhar Jagdishan has been appointed as Chief Executive Officer, Managing Director of the
Company effective 10/27/2020. He joined the Bank
in the year 1996 as a Manager in the Finance
function.
He became Business Head- Finance in 1999 and
was appointed as Chief Financial Officer in the
year 2008. He has played a critical role in
supporting the growth trajectory of the Bank.

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 BALANCE SHEET

Equities & Mar 2022 Mar 2021 Mar 2020 Mar 2019 Mar 2018
Liabilities
Share Capital 554 551 548 544 519
Reserves & 239,538 203,169 170,437 148,661 105,775
Surplus
Deposits 1,559,217 1,335,060 1,147,502 923,140 788,770
Borrowings 184,817 135,487 144,628 117,085 123,104
Liabilities & 84,407 72,602 67,394 55,108 45,763
Provisions
Total Liabilities 2,068,535 1,746,870 1,530,511 1,244,540 1,063,934

Assets
Fixed Assets 6,083 4,909 4,431 4,030 3,607
Loans & 1,368,820 1,132,836 993,702 819,401 658,333
Advances
Investments 455,535 443,728 391,826 290,587 242,200
Other Assets 184,817 135,487 144,628 117,085 123,104
Total Assets 2,068,535 1,746,870 1,530,511 1,244,540 1,063,934

Other Info
Capital Adequacy 18 18 18 17 14
Ratios (%)

Gross NPA (%) 1.00 1.00 1.00 1.00 1.00

Net NPA (%) 0.32 0.40 0.36 0.39 0.40
Contingent 1,395,442 971,097 1,128,953 1,024,715 875,488
Liabilities

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 PROFIT & LOSS STATEMENT

PROFIT & LOSS MAR 22 MAR 21 MAR 20 MAR 19 MAR 18

ACCOUNT
INCOME
Interest / Discount on 98,512.02 94,834.54 91,787.88 77,544.19 62,661.79
Advances / Bills
Income from 26,046.13 23,214.27 20,633.32 19,997.46 16,222.37
Investments
Interest on Balance 2,552.37 2,341.25 1,828.93 635.70 523.88
with RBI and Other
Inter-Bank funds
Others 642.59 468.17 562.52 794.70 833.31
TOTAL INTEREST 127,753.12 120,858.23 114,812.65 98,972.05 80,241.36
EARNED
Other Income 29,509.90 25,204.89 23,260.82 17,625.88 15,220.30
TOTAL INCOME 157,263.02 146,063.12 138,073.47 116,597.94 95,461.66
EXPENDITURE
Interest Expended 55,743.53 55,978.66 58,626.40 50,728.83 40,146.49
Payments to and 12,031.69 10,364.79 9,525.67 7,761.76 6,805.74
Provisions for
Employees
Depreciation 1,599.80 1,302.41 1,195.85 1,140.10 906.34
Operating Expenses 23,810.70 21,055.42 19,976.01 17,217.51 14,978.30
(excludes Employee
Cost & Depreciation)
TOTAL 37,442.19 32,722.63 30,697.53 26,119.37 22,690.38
OPERATING
EXPENSES
Provision Towards 13,346.03 11,644.77 9,833.15 12,129.61 10,107.25
Income Tax
Provision Towards -1,291.91 -1,102.31 516.69 -1,008.12 -896.68
Deferred Tax
Other Provisions and 15,061.83 15,702.85 12,142.39 7,550.08 5,927.49
Contingencies

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 TOTAL 27,115.95 26,245.31 22,492.23 18,671.57 15,138.06
PROVISIONS AND
CONTINGENCIES
TOTAL 120,301.66 114,946.59 111,816.15 95,519.77 77,974.93
EXPENDITURE
NET PROFIT / 36,961.36 31,116.53 26,257.32 21,078.17 17,486.73
LOSS FOR THE
YEAR
NET PROFIT / 36,961.36 31,116.53 26,257.32 21,078.17 17,486.73
LOSS AFTER EI &
PRIOR YEAR
ITEMS
Profit / Loss Brought 73,652.79 57,492.40 49,223.30 40,453.42 32,668.94
Forward
TOTAL PROFIT / 110,614.15 88,608.93 75,480.62 61,531.58 50,155.67
LOSS AVAILABLE
FOR
APPROPRIATIONS
APPROPRIATIONS
Transfer To / From 9,240.34 7,779.13 6,564.33 5,269.54 4,371.68
Statutory Reserve
Transfer To / From 666.47 2,291.68 1,123.85 105.34 235.52
Capital Reserve
Transfer To / From 0.00 0.00 0.00 0.00 0.00
Revenue And Other
Reserves
Dividend and 3,592.40 0.00 0.00 0.00 3,390.58
Dividend Tax for The
Previous Year
Equity Share Dividend 0.00 0.00 6,540.31 4,052.59 0.00

Tax On Dividend 0.00 0.00 0.00 0.00 0.00

Balance Carried Over 93,185.67 73,652.79 57,492.40 49,223.30 40,453.42
To Balance Sheet
TOTAL 110,614.15 88,608.93 75,480.62 61,531.58 50,155.67
APPROPRIATIONS

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 OTHER
INFORMATION
EARNINGS PER
SHARE
Basic EPS (Rs.) 66.80 56.58 48.01 78.65 67.76
Diluted EPS (Rs.) 66.35 56.32 47.66 77.87 66.84
DIVIDEND
PERCENTAGE
Equity Dividend Rate 1,550.00 650.00 250.00 750.00 650.00
(%)

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 RATIO ANALYSIS
Liquidity Ratio:
Liquidity ratios are an important class of financial metrics used to determine a debtor's ability
to pay off current debt obligations without raising external capital. Liquidity ratios measure a
company's ability to pay debt obligations and its margin of safety through the calculation of
metrics including the current ratio, quick ratio, and operating cash flow ratio.

Liquidity Ratio 2022 2021 2020 2019 2018

Current Ratio 1.02 0.63 0.80 0.89 0.81

Current Ratio (Inc. 0.05 0.03 0.04 0.05 0.04

ST Loan)

Quick Ratio 18.77 17.58 16.62 16.61 17.48

Fixed Assets Turnover 0.07 0.08 0.09 0.09 0.09

Ratio

Interpretation:
The greatest liquidity ratio is in the year 2022. There is slight distinction between the ratios of
2019 and 2020. It reveals that the bank was in good running position in 2019 and 2020 as
compared to the years 2018, 2019 and 2018.

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Profitability Ratio:
Profitability ratios are a class of financial metrics that are used to assess a business's ability to
generate earnings relative to its revenue, operating costs, balance sheet assets, or shareholders'
equity over time, using data from a specific point in time. Profitability ratios can be compared
with efficiency ratios, which consider how well a company uses its assets internally to generate
income (as opposed to after-cost profits).

Profitability Ratio 2022 2021 2020 2019 2018

Operating Margin 16.52 14.69 12.66 15.87 22.23

(%)

Cash Margin (%) 24.52 22.19 19.88 19.05 19.26

Return on Net 15.39 15.27 15.35 14.12 16.45

Worth (%)

Interpretation:
From the above table it has been found that the net profit ratio of the HDFC Company was
highest in the year 2018 which was 16.45. It states that the company was in most profitable
state in year 2018, when the company was sure about the satisfactory money back on its
investment. The company was in position to defend itself from the economic crisis in 2018 in
comparison with other four years.

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Per Share Ratios:
The earnings per share ratio or the EPS is the net company of the company divided by the
number of common shares issued. The earnings per share ratio is a widely used indicator of
how much a company earns per share of its stock and is used to estimate its corporate value.

Per Share Ratio 2022 2021 2020 2019 2018

Basic EPS (Rs.) 66.80 56.58 48.01 78.65 67.76

Diluted EPS (Rs.) 66.35 56.32 47.66 77.87 66.84

Cash EPS (Rs.) 69.54 58.81 50.07 81.59 70.88

Book Value [Excl. Reval 432.95 369.54 311.83 547.89 409.60

Reserve]/Share (Rs.)

Book Value [Incl. Reval 432.95 369.54 311.83 547.89 409.60

Reserve]/Share (Rs.)

Dividend/Share (Rs.) 15.50 6.50 2.50 15.00 13.00

Operating Revenue / Share 219.23 209.39 363.43 309.20

(Rs.)

Net Profit/Share (Rs.) 66.65 56.44 47.89 77.40 67.38

Interpretation:
The bank has gained maximum benefit from its invested money in the year 2019 which is
77.40. The performance in the matter of benefit from the invested money is lowest in the year
2020. The profit generation from invested capital is increasing with every successive year.

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Valuation Ratio:
A valuation ratio is any one of several calculations that determines whether a particular security
is cheap or expensive when compared to a certain measure, such as profits or enterprise value.
In other words, valuation ratio helps an investor to determine the cost of an investment with
respect to the value or benefits of owning that investment.

Valuation 2022 2021 2020 2019 2018

Ratio
Enterprise 2,429,205.81 2,196,567.47 1,692,584.96 1,624,316.38 1,298,053.53
Value (Rs.
Cr)
EV Per Net 19.01 18.17 14.74 16.41 16.18
Sales (X)
Price To 3.40 4.04 2.76 4.23 4.62
Book Value
(X)
Price To 6.38 6.81 4.12 6.37 6.12
Sales (X)
Retention 100.00 100.00 75.09 80.77 100.00
Ratios (%)
Earnings 0.05 0.04 0.06 0.03 0.04
Yield (X)

Interpretation:
Enterprise value has increased so the profitability of firm from the ordinary stakeholder’s point
has increased, Retention ratio indicates that profit is not distributed to equity shareholders per
share. Earnings Yield ratio for some years is zero which shows that company does not pay any
dividend may be because losses. Which is not a good sign for company growth. And negative
dividend ratio is typically bad sign it means company use existing cash to pay divided. Price
Earnings Ratio is showing that stock’s current market price is increasing and its expensive

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Directors Report:
Your directors take great pleasure in presenting the 28th Annual Report on the business and
financial operations of your Bank together with the audited accounts for the year ended March
31 2022.
Like last year let me start by wishing all of you health and happiness on behalf of the HDFC
Bank family. The entire world has learnt the importance of this all over again during the
pandemic.
The good news is that the pandemic more or less appears to be behind us thanks to the pick-up
in the vaccination program rolled out by the Union Government and the virus mutants being
less and less dangerous. As the shadow over the health of individuals lifts the health of the
economy has been improving too.
India's GDP grew by 8.7 per cent in FY 2021-22 compared to a contraction of 6.6 percent in
FY 2020-21 as per the Central Statistical Organisation (CSO) surpassing-pandemic levels of
output. The biggest drivers of growth were pick up in investment and exports. Capital
expenditure was led by the Union Government with the private sector playing a supporting
role. The Government and the RBI also announced a host of measures to contain the impact of
the second wave on domestic economic activity. This was followed by stepping up allocation
on capital expenditure in the Union Budget for FY 2022-23 by 24.5per cent to Rs.7.5 lakh
crore.
The economy now faces headwinds from rising inflationary pressures brought about by supply
chain disruptions and geopolitical tensions particularly the Ukraine crisis. This can affect
private consumption lead to reduced profit margins due to rising input costs and slowdown the
recovery in the private sector capital expenditure cycle.
In an effort to contain inflation the RBI on May 4 2022 in an off-cycle announcement hiked
the policy rate by 40 basis points to 4.4 per cent and increased the Cash Reserve Ratio by 50
basis points to 4.5 per cent. It further hiked the Repo Rate by another 50points to 4.90 per cent
in the June 8 2022 Monetary Policy announcement.
To sum up despite the current headwinds India is expected to be the fastest growing economy
in the world in FY 202223 clocking a 7.3 per cent growth rate and is well poised to withstand
any external volatility and shocks.
In spite of the challenges your Bank continued on its growth path by conducting its business
responsibly and reinforcing its commitment to the environment and community at large.
Financial Parameters
Your Bank recorded an improvement in a majority of its key financial parameters largely due
to its prudent credit evaluation of targeted customers and diversified loan book across customer
segments products and sectors. Managing risk- return decisions with discipline was an
important element in the Bank's performance. Net Profit at Rs.36961.3crore went up by 18.8
per cent. Net Interest Income at Rs.72009.6 crore rose 11.0 percent. Net Interest Margin stood
at 4.0 per cent. Gross Non-Performing Assets (NPAs) at1.17 per cent was among the lowest in
the industry.

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Auditors Report:
We have audited the standalone financial statements of HDFC Bank Limited ("the Bank")
which comprise the Balance Sheet as at March 31 2022 the Profit and Loss Account the
Statement of Cash Flows for the year then ended and notes to the standalone financial
statements including a summary of significant accounting policies and other explanatory
information.
In our opinion and to the best of our information and according to the explanations given to us
the aforesaid standalone financial statements give the information required by the Banking
Regulation Act 1949 as well as the Companies Act 2013 ("the Act") in the manner so required
for Banking Companies and give a true and fair view in conformity with the Accounting
Standards prescribed under section 133 of the Act read with Companies (Accounts) Rules 2014
as amended and other accounting principles generally accepted in India of the state of affairs
of the Bank as at March 31 2022 and its profit and its cash flows for the year ended on that
date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified under
Section 143(10) of the Act. Our responsibilities under those Standards are further described in
the Auditor's Responsibilities for the Audit of the Standalone Financial Statements section of
our report. We are independent of the Bank in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India together with the ethical requirements that are
relevant to our audit of the standalone financial statements under the provisions of the Act and
the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgement were of most
significance in our audit of the standalone financial statements for the year ended
March312022. These matters were addressed in the context of our audit of the standalone
financial statements as a whole and in forming our opinion thereon and we do not provide a
separate opinion on these matters.

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Conclusion:
In this study we checked the profitability of HDFC bank. According to the current ratio HDFC
had the higher liquidity in the 2018 which was 1.3. HDFC had highest profitability in 2018 as
per the net profit ratio. The topmost return of capital employed of HDFC bank was in the year
2018. The assets turnover ratio of HDFC was 18.7 in 2018 which was highest among all the
years. The bank has to improve the efficiency of utilization of their assets. The bank should
pay attention to the long-term investments more as per record of the previous years. The bank
has needed to improve the liquidity position. HDFC bank should focus on the operating
expense. They should do more funding from equity as compared to the funding from the debt.

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