Strategic analysis of hdfc bank

HDFC BANK

1 | P a g e

PROJECT REPORT

On

STRATEGIC ANALYSIS OF HDFC BANK

Submitted as a part of

CONTINUOUS ASSESSMENT- 1

For the partial fulfilment of award of degree of

Master of Business Administration

Submitted by Submitted toBatch 4, Group 5 Dr. Hemraj VermaPradeep Tiwari(1103102183)

SCHOOL OF BUSINESS

Oct 2012

HDFC BANK

2 | P a g e

TABLE OF CONTENT

S. No. Chapters Page No.

Executive Summary 3

1 Introduction to the company 4

2 Analysis of Vision, Mission & Core values 6

3 The External Environment Analysis 8

4 The Internal Environment Analysis 11

5 SWOT Analysis 20

6 Competition Analysis Industry Structure (Using Porter’s Five forces model) Competitive Profile Matrix (Based on Key Success factors)

22

7 BCG matrix 26

8 Conclusion 28

References 29

HDFC BANK

3 | P a g e

EXECUTIVE SUMMARY

Banking sector is going to be the most watched sector in the coming quarters. There are

reasons for this, RBI has reduced the CRR rate and repo rates. The debt/GDP ratio of the

Government is scary at 80% essentially meaning that the Government cannot borrow much

without jeopardizing stability of banking sector. Given project is an attempt to identify and

analyse the vision and mission of HDFC bank, as well as comparing the position and

strategies of the bank with its major competitor.

Project:

Provides all the crucial information on HDFC Bank Limited required for business and

competitor intelligence needs.

Contains a study of the major internal and external factors affecting HDFC Bank

Limited in the form of a SWOT analysis as well as a breakdown and examination of

strategies of HDFC Bank Limited.

Major factors contributing the success of HDFC.

Industrial analysis of HDFC through Porter’s five forces model as well as comparing

that with its competitor ICICI.

Analysis done on BCG matrix

With this project we have tried to understand the different business process identified by the

bank, as well as analyzing its strength and weakness as compared to other banks. Our project

is mainly concentrated on the comparative analysis of HDFC and competitor ICICI. The

source of information is secondary that is through internet and different newspapers and sites

of HDFC and ICICI as well as some of the journals.

HDFC BANK

4 | P a g e

INTRODUCTION TO THE COMPANY

HDFC Bank Limited is an Indian financial services company based in Mumbai,

Maharashtra that was incorporated in August 1994. HDFC Bank is the fifth or sixth largest

bank in India by assets and the second largest bank by market capitalization as of February

24, 2012. The bank was promoted by the Housing Development Finance Corporation, a

premier housing finance company (set up in 1977) of India. HDFC Bank has 1,986 branches

and over 5,471 ATMs, in 996 cities in India, and all branches of the bank are linked on an

online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82

billion. For the fiscal year 2010-11, the bank has reported net profit of

3,926.30 crore (US$742.07 million), up 33.1% from the previous fiscal. Total annual

earnings of the bank increased by 20.37% reaching at 24,263.4 crore (US$4.59 billion) in

2010-11. HDFC Bank is one of the Big Four banks of India, along with: State Bank of

India, ICICI Bank and Punjab National Bank.

BUSINESS FOCUS

HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail

Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for

providing working capital finance, trade services, corporate finance, and merchant banking. It

is also providing sophisticated product structures in areas of foreign exchange and

derivatives, money markets and debt trading And Equity research.

Wholesale banking services

Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and

agri-based businesses. For these customers, the Bank provides a wide range of commercial

and transactional banking services, including working capital finance, trade services,

transactional services, cash management, etc. The bank is also a leading provider of the

above services to its corporate customers, mutual funds, stock exchange members and banks.

Retail banking services

HDFC Bank was the first bank in India to launch an International Debit Card in association

with VISA (Visa Electron) and issues the MasterCard Maestro debit card as well. The Bank

launched its credit card business in late 2001. By March 2009, the bank had a total card base

(debit and credit cards) of over 13 million. The Bank is also one of the leading players in the

“merchant acquiring” business with over 70,000 Point-of-sale (POS) terminals for debit /

HDFC BANK

5 | P a g e

credit cards acceptance at merchant establishments. The Bank is positioned in various net

based B2C opportunities including a wide range of internet banking services for Fixed

Deposits, Loans, Bill Payments, etc. With Finest of Technology and Best of Man power in

Banking Industry HDFC BANK's retail services have become by and large the best in India

and since the contribution to CASAi,e total number of current and savings account of more

than 50%, HDFC BANK has full potential to become Indias No.1 Private Sector Bank.

Treasury

Within this business, the bank has three main product areas - Foreign Exchange and

Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services

are provided through the bank's Treasury team. To comply with statutory reserve

requirements, the bank is required to hold 25% of its deposits in government securities. The

Treasury business is responsible for managing the returns and market risk on this investment

portfolio

HDFC BANK

6 | P a g e

ANALYSIS OF VISION, MISSION & CORE VALUES

VISION

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined

to accomplish the vision of becoming a world-class Indian bank.

MISSION

HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against

international standards and best practices in terms of product offerings, technology, service

levels, risk management and audit & compliance. The objective is to build sound customer

franchises across distinct businesses so as to be a preferred provider of banking services for

target retail and wholesale customer segments, and to achieve a healthy growth in

profitability, consistent with the Bank's risk appetite. They are committed to do this while

ensuring the highest levels of ethical standards, professional integrity, corporate governance

and regulatory compliance.

ANALYSIS

PARAMETER HDFC BANK

Markets YES

Technology YES

Survival growth and profit YES

Philosophy YES

Self- concept YES

Public image NO

Employees YES

Customers YES

Products Services YES

HDFC BANK

7 | P a g e

Increase the market share in India’s expanding banking and financial services industry by

following a disciplined growth strategy focusing on quality and not on quantity and

delivering high quality customer service.

Leverage the technology platform and open scalable systems to deliver more products to

more customers and to control operating costs.

Maintain the current high standards for asset quality through disciplined credit risk

management.

Develop innovative products and services that attract the targeted customers and address

inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce the cost of funds.

Focus on high earnings growth with low volatility.

HDFC BANK

8 | P a g e

ENVIRONMENTAL ANALYSIS

Business environment includes set of conditions or situation that affects business activities or

decision making. These conditions are broadly classified into internal environment and

external environment.

THE EXTERNAL ENVIRONMENT ANALYSIS

External environment include factors which are outside the control of the business

organization but it provide opportunities or pose threats. External environment is further

classified into two categories micro environment and macro environment.

1) Political Factor

Government and RBI policies affect the banking sector. Sometimes looking into the

political advantage of a particular party, the Government declares some measures to

their benefits like waiver of short-term agricultural loans, to attract the farmer’s

votes. By doing so the profits of the bank get affected.

FDI move to increase the limits to 49 percent from 26 percent.

The Union Budget 2009-10 extended the debt waiver scheme by six more months for

farmers owing more than 2 hectare of land The Union Budget 2008-09 allowed these

farmers 25% rebate on loan if they repay 75%of their overdue within stipulated period

of 30th June 2009.

2) Economic Factor

Cash Reserve Ratio (CRR) reduced by 0.25% to 4.5% of net demand and time

liabilities (NDTL) to potentially inject primary liquidity of Rs. 170 billion; token

reduction in lending rates expected, given comfortable liquidity position and the

recent revisions in deposit rates and lending rates for certain products undertaken by

some Banks.

Benchmark Repo rate maintained at 8.0%; Reverse Repo and Marginal Standing

Facility (MSF) stand unchanged at 7.0% and 9.0%, respectively. Bank Rate also

maintained at 9.0%.

HDFC BANK

9 | P a g e

Following a 1% reduction in July 2012, Statutory Liquidity Ratio (SLR) kept

unchanged at 23% of NDTL.

The primary focus of monetary policy remains inflation control and anchoring of

inflation expectations, despite increasing risks to economic growth. The Reserve Bank

of India (RBI) highlighted that inflationary pressures and risks related to fiscal deficit

and current account deficit constrain it from providing a stronger monetary policy

response to boost economic growth. As policy measures to stimulate growth

materialize, monetary policy to reinforce the positive impact of such actions while

retaining a focus on managing inflation.

Guidance provided that liquidity management by the RBI would ensure adequate

credit flows to the productive sectors of the economy and appropriate responses to

shocks brought on by external developments.

3) Social Factor

HDFC announced its plans to make an entry into education sector. The group plans to focus

on small towns wherein it would either set up schools or take over weak performing boarding

schools. According to McKinsey Global Institute’s Bird of Gold report, the discretionary

spending on education is set to increase from 5% in 2005 to 6% in 2015. HDFC will foray

into this sector through a separate subsidiary. It is widely believed that many schools are

planning to set up model, which is profitable and scalable, as operating under trusts makes it

difficult to segregate profits. As a result, HDFC could look to adopt those schools that are

open to the ‘takeover model’. HDFC already has an educational loan unit – Credila Financial

Services – in which it owns 62.3% stake. Credila plans to boosts the distribution network and

customer base of HDFC Bank in order to expand and also lower the cost of funds. The

group’s likely entry into education sector could be beneficial in the long run.

HDFC Bank ,is partnering with the city’s municipal authorities to educate people about the

danger posed by plastic bags to the environment, and to offer recycle paper bags instead.The

bank reinforced the Kolkata Municipal Corporation(KMC) intiated anti-plastic awarness

drive by distributing recycled and eco-friendly paper bags to retailers and customers across

nine markets in the city.“Encourage citizens to use environment friendly and cost effective

paper bags as the best substitute.

HDFC BANK

10 | P a g e

4)Technological Factor

Productivity ratio of HDFC is increasing significantly over the years. Number of employees

of the group increased to 1,607 in FY2011, as compared to 797 in FY2010 and 727 in

FY2009. While, profit per employee increased significantly to $491,900, as compared to

$117,500 and $7,500 in FY2010 and FY2009 respectively. Administration cost per asset ratio

decline to 0.30% in FY2011, as compared to 0.49 in FY2010 and 0.76 in FY2009. Similarly,

cost to income ratio improved to 7.7% in FY2011 from 13.8% and 30.9% in FY2010 and

FY2009 respectively. Improving productivity would likely enhance the group’s profit margin.

ATM The latest developments in terms of technology in computer and

telecommunication have encouraged the bankers to change the concept of branch

banking to anywhere banking.

Credit card facility has encouraged an era of cashless society.

Today MasterCard and Visa card are the two most popular cards used world over.

Smartcards or debit cards to be used for making payments. These are also called as

electronic purse

Today banks are also using SMS and Internet as major tool of promotions and giving

great utility to its customers. For example SMS functions through simple text

messages sent from your mobile.

CORE BANKING SOLUTIONS -It is the buzzword today and every bank is trying to

adopt it is the centralize banking platform through which a bank can control its entire

operation the adoption of core banking solution will help bank to roll out new product

and services

HDFC BANK

11 | P a g e

THE INTERNAL ENVIRONMENT ANALYSIS

Internal environment consists of factors which are within the control of the organization.

Business ethics, Objective of the firm, Value system, Management structure, Physical assets,

Technological resources, financial resources, Stakeholders, Human resources etc. are part of

the internal environment of business.

1)VISION AND MISSION

HDFC BANK

VISION

HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to

accomplish the vision of becoming a world-class Indian bank.

MISSION

HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against

international standards and best practices in terms of product offerings, technology, service

levels, risk management and audit & compliance. The objective is to build sound customer

franchises across distinct businesses so as to be a preferred provider of banking services for

target retail and wholesale customer segments, and to achieve a healthy growth in

profitability, consistent with the Bank's risk appetite. They are committed to do this while

ensuring the highest levels of ethical standards, professional integrity, corporate governance

and regulatory compliance.

Business strategy emphasizes the following :

Increase the market share in India’s expanding banking and financial services

industry by following a disciplined growth strategy focusing on quality and not on

quantity and delivering high quality customer service.

Leverage the technology platform and open scalable systems to deliver more

products to more customers and to control operating costs.

Maintain the current high standards for asset quality through disciplined credit

HDFC BANK

12 | P a g e

risk management.

Develop innovative products and services that attract the targeted customers and

address inefficiencies in the Indian financial sector.

Continue to develop products and services that reduce the cost of funds.

Focus on high earnings growth with low volatility.

ICICI BANK

VISION

To be the leading provider of financial services in India and a major global bank

MISSION

We will leverage our people, technology, speed and financial capital to

Be a banker of first choice of customer by delivering high quality, world class

product and services

Expand the frontiers of our business globally

Maintain high standers of governance and ethics

Create value of our stake holder

Contribute positively to the various countries and market in which operate.

ANALYSIS:

ICICI banks main focus as we can analyse from its vision and mission is on, people

technology and increasing market capital. It also wants to add value to its stake holder.

Delivering quality is also their main focus of interest. They have not mentioned about any

Corporate social responsibility but maintain ethics is something in their agenda.

HDFC BANK

13 | P a g e

COMPERATIVE ANALYSIS OF HDFC AND ICICI BANK

PARAMETER HDFC BANK ICICI BANK

Markets YES YES

Technology YES YES

Survival growth and profit YES YES

Philosophy YES YES

Self- concept YES YES

Public image NO NO

Employees YES NO

Customers YES YES

Products Services YES YES

2) LONG TERM OBJECTIVE

HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build sound

customer franchises across distinct businesses so as to be the preferred provider of banking

services for target retail and wholesale customer segments, and to achieve healthy growth in

profitability, consistent with the bank’s risk appetite. The bank is committed to maintain the

highest level of ethical standards, professional integrity, corporate governance and regulatory

compliance. HDFC Bank’s business philosophy is based on four core values: Operational

Excellence, Customer Focus, Product Leadership and People.

3) LEADERSHIP

HDFC bank own the leadership awards the Best Bank at Bloomberg UTV's Financial

Leadership Awards 2011 and declared the Best Bank in the Private Sector category at the

NDTV Business Leadership Awards 2010.therefore we can conclude that HDFC is better in

leadership than ICICI bank.

HDFC BANK

14 | P a g e

Key executive for HDFC bank

Name Board Relationships Title Age

Aditya Puri 15 Relationships Managing Director, Director, Member of Investors Grievance (Share) Committee, Member of Credit Approval Committee, Member of Risk Policy & MonitoringCommittee, Member of Fraud Monitoring Committee, Member of Premises Committee and Member of Customer Service Committee

61

Sashi Jagdishan No Relationships Head of Finance 47

Bhavesh Zaveri 46 Relationships Head of Operations, Head of Wholesale Banking Operations and Head of Cash Management

46

Sunil Shah B.com Mba 15 Relationships Managing Director of HDFC Securities Limited and Director of HDFC Securities Limited

54

Abhay Aima 5 Relationships Head of Equities & Private Banking - Third Party Products & NRI Banking

50

HDFC bank limited board members

Name Board Relationships Primary Company Age

C. M. Vasudev 32 Relationships HDFC Bank Ltd. 69

Aditya Puri 15 Relationships HDFC Bank Ltd. 61

Harish Engineer 15 Relationships HDFC Bank Ltd. 63

Paresh Sukthankar 15 Relationships HDFC Bank Ltd. 49

Sunil Shah B.com Mba 15 Relationships HDFC Bank Ltd. 54

4) POLICY

RBI is the policy maker of all the banks which is followed by every bank in India

All the monetary policy controlled by RBI

CRR,SLR,REPO RATE.REVERSE REPO RATE is decided by RBI and base rate

decided by individual banks under the guidance of RBI

5) ORGANISATION STRUCTURE

Top to lower level

HDFC BANK

15 | P a g e

6) FINANCIAL ANALYSIS

HDFC BankConsolidated Balance Sheet ------------------- in Rs. Cr. -------------------

Mar '12 Mar '11 Mar '10 Mar '09 Mar '08

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:

Total Share Capital 469.34 465.23 457.74 425.38 354.43

Equity Share Capital 469.34 465.23 457.74 425.38 354.43

Share Application Money 0.00 0.00 0.00 400.92 0.00

Preference Share Capital 0.00 0.00 0.00 0.00 0.00

Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00

Preference Share Application Money

0.00 0.00 0.00 0.00 0.00

Employee Stock Opiton 0.30 0.00 2.91 5.49 0.00

Reserves 29,741.11 25,120.83 21,158.15 14,262.74 11,180.72

Revaluation Reserves 0.00 0.00 0.00 0.00 0.00

Net Worth 30,210.45 25,586.06 21,615.89 15,089.04 11,535.15

Deposits 246,539.58 208,287.21 167,297.78 142,644.80 100,631.38

Borrowings 26,334.15 14,650.44 13,171.80 2,775.84 4,478.86

Total Debt 272,873.73 222,937.65 180,469.58 145,420.64 105,110.24

Minority Interest 183.66 121.66 75.89 43.35 36.92

Policy Holders Funds 0.00 0.00 0.00 0.00 0.00

Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00

Other Liabilities & Provisions 37,786.88 29,317.57 20,783.21 22,844.24 16,510.76

Total Liabilities 340,871.06 277,841.28 222,868.68 183,353.92 133,156.15



Assets

Cash & Balances with RBI 14,991.63 25,100.89 15,483.31 13,527.22 12,553.18

Balance with Banks, Money at Call

6,183.53 4,737.39 14,594.88 4,009.94 2,274.80

Advances 198,837.53 160,831.42 126,162.73 99,027.37 63,426.90

Investments 96,795.11 70,276.67 58,508.28 58,715.15 49,288.01

Gross Block 6,024.90 5,328.86 4,777.65 4,019.68 2,437.58

Accumulated Depreciation 3,646.99 3,127.91 2,628.59 2,287.40 1,241.29

Net Block 2,377.91 2,200.95 2,149.06 1,732.28 1,196.29

Capital Work In Progress 0.00 0.00 0.00 0.00 0.00

Other Assets 21,869.30 13,626.33 5,205.07 5,528.89 4,453.89

Minority Interest 0.00 0.00 0.00 0.00 0.00

Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00

Total Assets 341,055.01 276,773.65 222,103.33 182,540.85 133,193.07

Contingent Liabilities 844,393.94 559,718.86 466,309.73 396,639.98 208,498.36

Bills for collection 39,610.71 28,869.10 20,940.13 17,939.62 17,092.85

Book Value (Rs) 128.74 549.97 472.23 345.29 325.45

HDFC BANK

16 | P a g e

P/L accountHDFC Bank Previous Years »

Profit & Loss account ------------------- in Rs. Cr. -------------------



Income

Interest Earned 27,286.35 19,928.21 16,172.90 16,332.26 10,115.00

Other Income 5,333.41 4,433.51 3,810.62 3,470.63 2,205.38

Total Income 32,619.76 24,361.72 19,983.52 19,802.89 12,320.38

Expenditure

Interest expended 14,989.58 9,385.08 7,786.30 8,911.10 4,887.12

Employee Cost 3,399.91 2,836.04 2,289.18 2,238.20 1,301.35

Selling and Admin Expenses 2,647.25 2,510.82 3,395.83 2,851.26 974.79

Depreciation 542.52 497.41 394.39 359.91 271.72

Miscellaneous Expenses 5,873.42 5,205.97 3,169.12 3,197.49 3,295.22

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00

Operating Expenses 9,241.64 8,045.36 7,703.41 7,290.66 3,935.28

Provisions & Contingencies 3,221.46 3,004.88 1,545.11 1,356.20 1,907.80

Total Expenses 27,452.68 20,435.32 17,034.82 17,557.96 10,730.20



Net Profit for the Year 5,167.09 3,926.40 2,948.70 2,244.94 1,590.18

Extraordionary Items -2.12 -2.65 -0.93 -0.59 -0.06

HDFC BANK

17 | P a g e

Profit brought forward 6,174.24 4,532.79 3,455.57 2,574.63 1,932.03

Total 11,339.21 8,456.54 6,403.34 4,818.98 3,522.15

Preference Dividend 0.00 0.00 0.00 0.00 0.00

Equity Dividend 1,009.08 767.62 549.29 425.38 301.27

Corporate Dividend Tax 163.70 124.53 91.23 72.29 51.20

Per share data (annualised)

Earning Per Share (Rs) 22.02 84.40 64.42 52.77 44.87

Equity Dividend (%) 215.00 165.00 120.00 100.00 85.00

Book Value (Rs) 127.52 545.53 470.19 344.44 324.38

Appropriations

Transfer to Statutory Reserves 1,250.08 997.52 935.15 641.25 436.05

Transfer to Other Reserves 516.70 392.64 294.87 224.50 159.02

Proposed Dividend/Transfer to Govt

1,172.78 892.15 640.52 497.67 352.47

Balance c/f to Balance Sheet 8,399.65 6,174.24 4,532.79 3,455.57 2,574.61

Total 11,339.21 8,456.55 6,403.33 4,818.99 3,522.15

HDFC Bank Previous Years »

Cash Flow ------------------- in Rs. Cr. -------------------



Net Profit Before Tax 7513.17 5818.66 4289.14 3299.25 2280.63

Net Cash From Operating Activities -11355.61 -375.83 9389.89 -1736.14 3583.43

Net Cash (used in)/fromInvesting Activities

-686.85 -1122.74 -551.51 -663.78 -619.82

HDFC BANK

18 | P a g e

Net Cash (used in)/from Financing Activities

3286.19 1227.99 3598.91 2964.66 3628.34

Net (decrease)/increase In Cash and Cash Equivalents

-8731.11 -273.56 12435.78 564.74 6591.95

Opening Cash & Cash Equivalents 29668.83 29942.40 17506.62 14778.34 8074.54

Closing Cash & Cash Equivalents 20937.73 29668.83 29942.40 15343.08 14666.49

ANALYSIS BASED ON KEY FINANCIAL RATIOS

Ratios Mar 2012 Mar 2011 Mar 2010 Mar 2009 Mar 2008

Dividend per share

4.3 16.5 12 10 8.5

Earning per share 22.01 84.42 64.33 52.68 44.85

Current ratio 0.58 0.5 0.28 0.27 0.26

QUICK / LIQUID RATIO

6.2 6.89 7.14 5.23 4.89

NET PROFIT RATIO

22.69 22.72 21.72 22.16 22.16

EARNING PER SHARE

Earning per share reduces because company introduces equity share capital in the market

during the financial year as a result dividend per share also declines

CURRENT RATIO

Ideal current ratio with 2:1 (or) more is considered as satisfactory position of the firm.

Which indicate that current assets should be twice as compared to the current liabilities. So in

that organization the current ratio is very high that will not indicate a favourable position. As

it means that there is excessive investment in current assets is made. This will result in

decreasing in profitability due to blocking of large funds in working capital.

HDFC BANK

19 | P a g e

QUICK / LIQUID RATIO

Quick ratio is more rigorous test of liquidity than the current ratio. The term liquidity refers

to the ability to pay its short term obligations as and when they become due. As a rule of

thumb quick ratio of 1:1 is considered satisfactory.

Quick Ratio = Quick/ liquid Assets

Current liabilities

OPERATING RATIO

Operating ratio establishes the relationship between cost of goods sold and other

operating expenses on the one hand and sales on the other hand. Operating ratio

indicates the percentage of net sales that is consumed by operating cost. Higher the

operating ratio is less favourable for the company because it would have small

margin to cover interest, income tax , dividend and reserve.

The operating profit ratio is used to measure the relationship between net profits and sales of

a firm. Depending on the concept, it will decide. Operating profit is the profit arising out of

business operations on.

NET PROFIT RATIO

Net profit ratios establish a relationship between net profit after tax and sales and

indicate the efficiency of the management in controlling the expenses of the

company.

Net profit ratio = Net profit after tax * 100

Net sales

HDFC BANK

20 | P a g e

SWOT ANALYSIS OF HDFC BANK

Strengths

HDFC bank is the second largest private banking sector in India having 2,201

branches and 7,110 ATM’s

HDFC bank is located in 1,174 cities in India and has more than 800 locations to

serve customers through Telephone banking

The bank’s ATM card is compatible with all domestic and international Visa/Master

card, Visa Electron/ Maestro, Plus/cirus and American Express. This is one reason

for HDFC cards to be the most preferred card for shopping and online transactions

HDFC bank has the high degree of customer satisfaction when compared to other

private banks

The attrition rate in HDFC is low and it is one of the best places to work in private

banking sector

HDFC has lots of awards and recognition, it has received ‘Best Bank’ award from

various financial rating institutions like Dun and Bradstreet, Financial express, Euro

money awards for excellence, Finance Asia country awards etc

HDFC has good financial advisors in terms of guiding customers towards right

investments

Weakness

HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank its

direct competitor is expanding in rural market

HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard core

loyals in terms of banking services.

HDFC lacks in aggressive marketing strategies like ICICI

The bank focuses mostly on high end clients

Some of the bank’s product categories lack in performance and doesn’t have reach in

the market

The share prices of HDFC are often fluctuating causing uncertainty for the investors

HDFC BANK

21 | P a g e

Opportunities

HDFC bank has better asset quality parameters over government banks, hence the

profit growth is likely to increase

The companies in large and SME are growing at very fast pace. HDFC has good

reputation in terms of maintaining corporate salary accounts

HDFC bank has improved it’s bad debts portfolio and the recovery of bad debts are

high when compared to government banks

HDFC has very good opportunities in abroad

Greater scope for acquisitions and strategic alliances due to strong financial position

Threats

HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a

slight variation it’s not a good sign for the financial health of the bank

The non banking financial companies and new age banks are increasing in India

The HDFC is not able to expand its market share as ICICI imposes major threat

The government banks are trying to modernize to compete with private banksRBI has opened up to 74% for foreign banks to invest in Indian market.

COMPETITION ANALYSIS

1) Industry Structure (Using Porter’s

PORTER'S FIVE FORCES MODEL

Porter's five forces analysis is a framework for industry analysis and business strategy

development formed by Michael E. Porter

upon industrial organization (IO) economics

competitive intensity and therefore attractiveness of a

refers to the overall industry profitability. An "unattractive" industry is one in which the

combination of these five forces acts to drive down overall profitability. A very unattractive

industry would be one approaching "pure competition", in which available profits for all

firms are driven to normal profit.

Three of Porter's five forces refer to competition from external sources. The remainder are

internal threats

They consist of those forces close to a

and make a profit. A change in any of the forces normally requires a business unit to re

the marketplace given the overall change in

COMPETITION ANALYSIS

Structure (Using Porter’s five forces model)

MODEL

is a framework for industry analysis and business strategy

Michael E. Porter of Harvard Business School in 1979. It draws

industrial organization (IO) economics to derive five forces that determine the

etitive intensity and therefore attractiveness of a market. Attractiveness in this context


n of these five forces acts to drive down overall profitability. A very unattractive


.


They consist of those forces close to a company that affect its ability to serve its customers

. A change in any of the forces normally requires a business unit to re

given the overall change in industry information.

HDFC BANK

22 | P a g e

is a framework for industry analysis and business strategy

1979. It draws

to derive five forces that determine the

. Attractiveness in this context


n of these five forces acts to drive down overall profitability. A very unattractive



that affect its ability to serve its customers

. A change in any of the forces normally requires a business unit to re-assess

HDFC BANK

23 | P a g e

INDUSTRY ANALYSIS OF HDFC BANK

FIVE FORCE HIGH/ MEDIUM/ LOW

REMARK

Threat of new entrants Low For any new entrants permission should be granted from RBI, and it is not easy to have the permission. There was many political and legal issue. And the early investment was very high.

Bargaining power of customers

Medium Customer can switch to any other bank very easily if service was not good because switching cost is low. But most of time customers are having their account in most of the bank and they know that every bank provide similarly the same service.

Bargaining power of suppliers

Low In bank industry there is no such supplier.

Threat of substitutes High Because there are many public and private bank. And also the post office provide some of the services, many private firm provide easy loan scheme to attract the customers. People also started investing their money instead of saving them like stock market, mutual funds , property etc.

Degree of rivalry High There are large numbers of public and private bank and market growth rate was also high. The switching cost was also very low and the services provide by all the bank was same.

HDFC BANK

24 | P a g e

2) Competitive Profile Matrix (Based on Key Success factors)

HDFC Bank has revised its deposit rates. The rates have been changed for maturities ranging

from six months 17 days to five years. The bank is also offering a maximum of 8.75%

interest on its retail term deposits.

ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis

points. The revised rates are effective from Tuesday, the bank said on its website. The lender

has cut rates across maturities ranging from 91 days to less than five years. It now offers a

maximum 8.75% interest on retail term deposit compared to 9.25% earlier.

Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.

The moves hardly surprised the industry analysts as they have been expecting lenders to

reduce their deposit rates to protect dilution in their interest margins.

Last week, State Bank of India (SBI), the largest commercial bank in the country had pared

its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to

mirror this move.

The net interest margin of banks has been under stress as the increase in cost of deposits has

outpaced the rise in yield on advances in the past one year. As loan demand has remained

largely muted so far this year the pressure on the margins is expected to intensify further.

Note: The new rates are applicable on deposits up to Rs 1 cr.

Bank New Rates Effective Date

HDFC Bank 4.00 - 8.75 12-Sep-12

ICICI Bank 4.75 - 8.75 11-Sep-12

Axis Bank 3.50 - 9.25 11-Sep-12

HDFC BANK

25 | P a g e

ANALYSIS ON THE BASIS OF KEY SUCCESS FACTOR

key HDFC BANK ICICI BANK SBI BANK

FACTORS WEIGHT RATING WAS RATING WAS RATING WAS

No. ofBranches .1

4 0.4 4 0.4 5 0.5

NPA .2

4 0.8 3 0.6 2 0.4Business perEmployee .3 3 0.9 4 1.2 2 0.6SERVICES .3

4 1.2 4 1.2 2 0.6Revenue .1

3 0.3 1 0.1 4 0.4Total score 1.0

19 3.6 16 3.5 15 2.5average

3.8 3.2 3.0

Since average of HDFC bank is higher than SBI bank and ICICI bank that’s means HDFC

bank is more preferred bank than any other bank. The reason behind this is HDFC bank have

low NPA ratio and service provided by the bank is also better than any other bank.

HDFC BANK

26 | P a g e

BCG MATRIX

The BCG matrix is a chart that had been created by Bruce Henderson for the Boston

Consulting Group in 1970 to help corporations with analyzing their business units or product

lines. This helps the company allocate resources and is used as an analytical tool in brand

marketing, product management, strategic management, and portfolio analysis.

HDFC Bank

HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high market

growth and they also have high market share. There is a lot of growth potential for the

banking industry because of increasing disposable income of customers, increasing working

class, more volatility in other markets also increasing importance of savings and already

discussed almost 30% of the market is still untapped.

HDFC BANK

27 | P a g e

HDFC Insurances

In insurance sector HDFC’s most of the products are in star position. HDFC insurance

products have high market share and high growth rate. So we have lot of opportunity for

investment.

HDFC Mutual Funds

Mutual fund stands at cash cow. This shows that HDFC high market share and low market

growth rate in mutual funds. This means we should only focus on profitable products and try

to investment on those products which are low market growth rate but perform well if proper

investment is theirs.

HDFC BANK

28 | P a g e

CONCLUSION

Banking is also now being regarded as a versatile financial planning tool. Research indicates

that Indians have four basic financial needs during their life asset accumulation (such as

buying a house or car), protecting their family, securing their children’s education, and

provision for their retirement. India being a country having a huge population of around one

billion people with only 32% of the banking population in India possessing banking the

country has a vast potential, which has been left untapped till now.

With this prospect HDFC is continuously working in this direction, but there are several

competitors already in the market with the similar strategy. This project concludes that with

the changing economical and political scenario bank sector faces many ups and downs but in

order to maintain the position HDFC needs to follow some differentiating strategy. Because it

has a very fine line of difference with its competitor ICICI and can outshine HDFC.

The project has given the clear cut vision as to how to differentiate its strategy from other

competitors an how to use the strength and convert the weakness of others as an opportunity.

HDFC BANK

29 | P a g e

REFERENCES

1. www.moneycontrol.com

2. www.economictimes.com

3. www.hdfc.com

4. www.icici.com

5. www.sbi.in

6. www.10paisa.com

7. http://investing.businessweek.com/research/stocks/private/people.asp?privcapId=101677

8. http://www.marketing91.com/swot-analysis-hdfc/

9. http://www.rbi.org.in/scripts/ATMView.aspx

10. www.wikipedia.com

Data & Analytics

Strategic analysis of hdfc bank