Analysis

1
Overview of HDFC Bank

Housing Development Finance Cooperation Ltd.

1st Bank to receive an in principle approval from
RBI.

Incorporated in August 1994,in the name of
HDFC Bank Ltd.

1
st
Registered Office in Mumbai

HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995.
2
Business Focus
MISSION :
World Class Indian Bank.

- OBJECTIVE :
Maintain Ethical Standards, Professional Integrity &
Cooperate Governence.

- Business Philosophy : Based on 4 Core Values -
a) Operational Excellence
b) Customer Focus
c) Product Leadership
d) People

3
Capital Structure and Shareholding
Pattern
The authorized capital of HDFC Bank is Rs550 crore( Rs 5.5bn)
Paid-up capital is Rs 424.6 crore (Rs 4.2 bn).
The HDFC Group holds 19.4% of the bank's equity.
28% of the equity is held by FIIs.
11.86% is held by the General Public.
The Bank has about 570,000 shareholders.
The shares are listed on the BSE & NSE.
The bank's American Depository Shares are listed on the New
York Stock Exchange (NYSE) under the symbol HDB.
4
Strong Vast Network
5
Wide Range of Products
V
6
RETAIL
BANKING
Loan Products: Depository Products
- Auto Loans - Savings
- Loans against Securities - Current
- Personal Loans - Fixed Deposits
- Credit Cards
- 2-Wheeler Loans
- Home Loans
- Commercial Vehicles Finance
Other Products / Services: -
- POS Terminals
- Debit Cards
- Depository Accounts
- Mutual Fund Sales
- Insurance Sales
- NRI Services
- Bill Payment Services
Wholesale
Banking
Commercial Banking:
- Working Capital
- Credit Substitutes
- Term Loans
- Bill Collection
- Forex & Derivatives
- Wholesale Deposits
- Letters of Credit
- Guarantees

Transactional Banking:
- Cash Management
- Custodial Services
- Clearing Bank Services
- Correspondent Banking
- Tax Collections
- Banker to public issues

Key Segments:

- Large corporate
- Supply Chain
- Emerging Coop
- Financial Inst
- Government
Treasury
Products: Other Functions:
- Foreign Exchange - Asset Liability Management
- Debt Securities - Statutory Reserve Management
-- Derivatives
-- Equity
One Stop Shop to meet Diverse Customer Needs
7
8
9
10
Business Model
RETAIL WHOLESALE TREASURY
HDFC BANK
REVENUE

INTEREST REVENUE

NON- INTEREST
Less: INTEREST & NON-INTEREST EXPENSES
NET INTEREST INCOME NON INTEREST INCOME
Income Statement
12

Particulars ()

FY 05-06

FY 06-07

FY 07-08


Sales Turnover
4475.34
44.69%
6889.02
53.93%
10115.00
46.83%

Other Income
1123.98
72.56%
1516.23
34.89%
2283.15
50.58%

Total Income
5599.32
49.52%
8405.25
50.11%
12398.15
47.50%
Total Expenses 2416.31 3587.05 5230.40
Operating Profit 2059.03
25.31%
3301.97
60.37%
4884.60
47.93%
Gross Profit 3183.01
38.72%
4818.20
51.37%
7167.75
48.76%
PBT 1253.51 1638.75 2280.63
Net Profit 870.78
30.84%
1141.45
31.08%
1590.18
39.31%
Deposits
13
0
20000
40000
60000
80000
100000
120000
2005-06
2006-07
2007-08
55796.82
68297.94
100768.6
Deposits
Deposits
In Crores
Net Worth of HDFC Bank
14
0
2000
4000
6000
8000
10000
12000
2005-06 2006-07 2007-08
5299.6
6433.15
11497.23
Net Worth - in Crores
Net Worth - in Crores
15
16
Implications of important terms

CRR 7.5% -- Affects Liquidity

SLR Min. 25% -- Affects Liquidity and secure insolvency

REPO RATE 9% -- Affects Lending rates and Liquidity

REVERSE REPO RATE 6% -- Affects Liquidity

17
Key Financial Ratios

Particulars



FY
2003-04


FY
2004-05


FY
2005-06


FY
2006-07


FY
2007-08


RONW

20.14%

20.44%

17.47%

19.40%

16.05%

PE Ratio


21.10

25.03

27.74

26.29

28.80
EPS 17.95 22.92 27.92 36.29 46.22

Dividend Per
share
3.50 4.50 5.50 7.00 8.50
MERGER OF CBOP WITH
HDFC BANK
CBoP = HDFC
On May 23, 2008, the amalgamation of Centurion Bank of
Punjab with HDFC Bank was formally approved by RBI.

Shareholders of CBoP received 1 share of HDFC Bank for every
29 shares of CBoP, valuing CBoP at INR 95bn.

The balance sheet size of the combined entity would be over Rs.
1,63,000 crore.

20
Future Expected Earnings
Post Merger *estimates provided by Indiabulls Research

21

Particulars

FY 07-08 (Cr.)

FY 08-09E* (Cr.)

FY 09-10E* (Cr.)

Sales Turnover
10115.00 16671.00
64.81%
19132.00
14.76%

Other Income
2283.15 3630.00
58.99%
5025.00
38.43%

Total Income
12398.15 20301.00
63.74%
24157.00
18.99%
Total Expenses 5230.40 8823.00 10556.00
Operating Profit 4884.60

7848.00
60.67%
8576.00
9.28%
Gross Profit 7167.75 11478.00
60.13%
13601.00
18.50%
PBT 2280.63 3377.00 4117.00
Net Profit 1590.18

2296.00
44.39%
2799.00
21.91%
Camels Approach
It is a method for evaluating bank
performance and healthy position of the
bank since it considers all areas of banking
operations.
Camel Means
C = Capital Adequacy Ratio
A= Asset quality
M= Management quality
E= Earnings quality
L= Liquidity
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008
8.03%
9.60%
8.55% 8.57%
10.30%
3.63%
2.56%
2.86%
4.51%
3.30%
Tier 2
Tier 1
Capital Adequacy Ratio
HDFC BANK has
maintained Capital
Adequacy ratio of more
than 13% which is above
the RBI norms of 9%.

Maintaining higher CAR
will ensure high expansion
possibilities as and when
opportunity arises for
HDFC bank.
Asset Quality
12.01
7.24
3.28 3.24
3.04
0.45
0.86
0.69 0.69 0.67
0
2
4
6
8
10
12
14
2004 2005 2006 2007 2008
GROSS NPA/ NET ADVANCES
PROVISIONS/GROSS NPA
Non Performing Asset
means an asset or
account of borrower,
which has been
classified by a bank or
financial institution as
sub-standard, doubtful
or loss asset.
Management Quality
866
806
758
607
506
9.39
8.8
7.39
6.13
4.97
2
3
4
5
6
7
8
9
10
150
350
550
750
950
2004 2005 2006 2007 2008
A
x
i
s

T
i
t
l
e

BUSINESS PER EMPLOYEES (Rs. In lakhs) PROFITS PER EMPLOYEE(Rs.lakhs)
Earnings quality
3.8
3.9
4 4
4.4
3.5
3.6
3.7
3.8
3.9
4
4.1
4.2
4.3
4.4
4.5
2004 2005 2006 2007 2008
Net Interest Margin
Net Interest Margin
difference between
interest income and
interest expenses, usually
expressed as a
percentage of average
earning assets.
Earnings quality
2.56 2.56
2.75
2.98
3.13
1
1.5
2
2.5
3
3.5
2004 2005 2006 2007 2008
Operating Profit/ Average Working Funds
Operating Profit/ Average Working Funds
Liquidity
40%
33%
38%
35%
32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2004 2005 2006 2007 2008
SLR Requirement
Free Float
SLR REQUIREMENT 25%

2004 (in Lac) 2005 (in Lac) 2006 (in Lac) 2007 (in Lac) 2008 (in Lac)
NDTL 285849 345303 521844 643274 985434
SLR requirement 71462.75 86325.5 130461.75 160818 246358
Held for Trading 4244 1278 2945 1637 12535
Available for Sale 84437 31309 30007 32685 47639
Held to Maturity 26623 79682 163374 191119 256480
Total 115305 112270 196328 225442 316655
Free Float 43843 25944 65867 64623 70297
HDFC v/s SENSEX 1 year
30
31
32