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A Comparative Study on the Financial Performance of SBI and HDFC Bank

based on CAMEL Model

Article · May 2021

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

A Comparative Study on the Financial Performance of SBI and HDFC

Bank based on CAMEL Model.
1 2
Dr. Seema Pandit & Jash Gandhi
1
Assistant Professor, Accounting & Finance, Faculty of Business Administration, GLS University.
2
Alumni, Faculty of Business Administration, GLS University.

---------------------------------------------------------------------***---------------------------------------------------------------------
Abstract - The contribution of the Indian Banking sector in the problems of deteriorating asset quality (on both
the economic development of the country is significant. The corporate as well as retail fronts), capping of the tenures
banking industry fuels the growth of various sectors by of the CEOs of banks to 15 years loom over the banking
providing the financial assistance. But over the past few years, industry, the governance issues, slowdown in the
the banking sector is also facing various challenges in the economic activities due to the outbreak of the Covid –
form of deteriorating asset quality, corporate governance 19 pandemic, slower acceleration of the vaccination
issues and economic slowdown, in addition to the pandemic drive, global trade concerns and a lackluster earnings
over the last year. The performance of the banks is directly
impacted due to these factors. An attempt has been made to cycle pick up etc. has added to the concerns of the
study the performance of the banks on the basis of various Indian Banking Industry. For long, the competition in
parameters like capital adequacy, asset quality, management the banking industry has been limited largely due to the
efficiency, earnings and liquidity – CAMEL model. A fact that the competition largely came from a small
comparative study of State Bank of India and HDFC Bank has number of similar entities with the Reserve Bank of
been done by applying the CAMEL model. The results point India ensuring that only the institutions meeting
out that HDFC Bank has outperformed State Bank of India on stringent requirements are provided with the licenses
the parameters of Capital Adequacy, Asset Quality and ensuring the least number of banks entered the market to
Management whereas State Bank of India has outperformed
HDFC Bank on the parameter of Liquidity. Both the banks
compete with them.
have performed equal in terms of Earnings quality.
But as it happens in any business, technological
innovation and the regulator's delay in waking up to
developments have allowed a new set of companies to
Key Words: Capital Adequacy, Asset
play the role of financial intermediaries with a different
Quality, Management, Earnings, Liquidity.
name (The Economic Times).

Despite of all these challenges there are various

1.INTRODUCTION growth triggers ahead that present huge opportunities for
The development of any economy depends on the banking sector. This includes, internet and mobile
the development of the financial sector of the economy. banking supported by the increased internet penetration,
The banking industry forms an important part of the lower penetration level of banking services among
financial system by providing financial assistance to Indians, increased savings and investments along with
various sectors of the economy. This includes not only financialization of savings etc.
the corporate sector but also the agriculture and the
household sectors. In fact, the banking industry’s Analysis of the financial performance of the
performance is seen as a replica of the economic public and private sector banks will help us in
activities of the nation as healthy banking system acts as identifying those pockets in the banking industry that
the bedrock of solid economic growth of the nation. have strong financials and are well placed to grow once
the difficult times are behind us and make a good
Indian Banking Industry has contributed investment bet in the current environment.
significantly to the economic development of the
country. Banks in India are segregated into different
groups such as Scheduled Banks, Unscheduled Banks,
Commercial Banks, Public Sector Banks, Private Banks, 2.1 LITERATURE REVIEW
Foreign Banks and Co-operative Banks. All these banks Gupta (2014) analyzed the performance of public sector
are regulated by the Reserve Bank of India (RBI). The banks in India with the help of CAMEL Model for the
Banking industry is a valuable contributor to the GDP, period of five years from 2009 to 2013. For the purpose
works under a regulated environment and has of the study the financial data of 26 Public sector banks
government support. was taken. For determining whether there is any
significant difference between the means of CAMEL
The Indian Banking Industry has also gone ratios ANNOVA had been applied. The study concluded
through various developments in the recent past. While that Andhra bank performed the best (secured the

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

highest position i.e. First on majority of the CAMEL results suggested that the performance of Syndicate bank
parameters followed by Bank of Baroda while United on the parameters of Capital Adequacy, Asset Quality,
Bank performed the worst and secured the least position Management Efficiency and Earnings is satisfactory.
th
i.e. 26 But the performance on the parameter of Liquidity is not
satisfactory.
Kumar and Sharma (2014) analyzed the banking
sector on the basis of the CAMEL Model (Capital Subalakshmi, Grahlakshmi and Manikandan (2018)
Adequacy, Asset Quality, Management, Earnings and examined the asset liability portfolio of SBI and also
Liquidity). Eight banks (HDFC, ICICI, SBI, Kotak analyzed the various aspects like deposit mobilization,
Mahindra Bank, AXIS, BOB, BOI, PNB) with the investment position, earnings, profitability and
highest market capitalization have been taken for a efficiency, loans and advances and non-performing
period of 6 years from 2007-08 to 2012-13. The study assets by applying the technique of ratio analysis. The
concluded that Kotak Mahindra Bank is on the top study covered the period from 2009-2016.The findings
position in terms of Capital Adequacy. SBI has the suggested that there has been sufficient improvement in
highest Non – Performing Assets followed by ICICI the performance of the bank in terms of credit deposit
bank. Earnings quality of Punjab National Bank and ratio, Deposits to Total Assets ratio, Return on Equity,
State Bank of India are in top. Kotak Mahindra Bank Profit Margin.
and ICICI are most efficient in managing the liquidity.
Chaudhuri (2018) conducted a comparative study on
Karri, Meghani and Mishra (2015) studied the the performance of SBI and ICICI for a period of five
financial performance and position of Bank of Baroda years from 2011-12 to 2015-16 using the CAMEL
and Punjab National Bank for a period of five years model. The results concluded that both the banks are
from 2010-2014. The results of t-test suggest that there
is no significant difference in the financial performance complying the required standards and are profitable.
of Bank of Baroda and Punjab National Bank during the However, the performance of ICICI is better than SBI
period of study. on the parameter of earnings and management
efficiency.
Sodhi, Simran and Waraich (2016) conducted
fundamental analysis of three public and two private 2.2 RESEARCH METHODOLOGY
sector banks in India. The objective was to analyze the
profitability position of the selected banks with respect Objectives of the Study
to various financial economic and industrial parameters
that influence the risk return of securities. They To study the financial performance of the State Bank of
examined and compared the various aspects of India and HDFC Bank with respect to various
performance of selected public and private sector banks parameters like Capital Adequacy, Asset Quality,
in India for five years starting from 2010-11 to 2014-15. Management, Earnings Quality and Liquidity
The results of the study showed that the private sector
banks have performed better than public sector banks in To examine whether there is significant difference in the
terms of growth and profitability. performance of State Bank of India and HDFC bank

Gajera (2016) analyzed the financial performance of Hypothesis Testing

banks on the basis of selected financial performance
parameters which are divided into seven heads such as H0 – There is no significant difference in the
Capital Adequacy ratios, Debt Coverage parameters, performance of State Bank of India and HDFC Bank
Balance Sheet parameters, Management Efficiency
parameters, Profitability parameters, Employee ’s H1 - There is significant difference in the performance
of State Bank of India and HDFC Bank
Efficiency parameters and Non-Performing Assets
parameters. For analysis CAMEL Model has been used. Data Sources
Four public 29 parameters 10 parameters showed
significant financial difference at all level of data Secondary Data: The present study is based on the
analysis. Among 10 parameters private sector bank secondary data. The secondary data is collected from
proved superiority over public sector bank 4 parameters Websites, Annual Reports of the banks, Newspaper
while public sector banks prove superiority over private Articles and Magazines.
sector banks in remaining 6 parameters.

Susmitha & Mouneswari (2017) examined the Sample Selection

financial performance of Syndicate Bank by applying
the CAMEL Model. They analyzed the performance of The banks selected for the study have been on the basis
the bank for a period of five year from 2013-17. The of their market capitalization. One bank each from

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

public sector and private sector have been selected on Asset Quality
the basis of market capitalization. Accordingly, State
Bank of India has been selected from the public sector The capability and strength of a bank lies on the quality
and HDFC bank has been selected from the private of its assets. A comprehensive analysis of asset quality
sector. is vital to assess the current state of affairs and future
viability of the bank. The efficiency of bank in assessing
Data Analysis credit risk and recovering debts in in indicated by Net
Non- Performing Assets (NNPA) to Total Asset (TA)
The performance of the banks has been evaluated on the ratio. The lower the ratio the better will be the
basis of CAMEL Model. The various ratios under the performance of bank. NNPA as a percentage of Net-
model have been computed for a period of seven years Advances is the most standard measure of asset quality.
from 2013-14 to 2019-20 for both the banks. In order to Following are the ratios categorized under Asset
test whether there is significant difference in the Quality:
performance of both the banks, ANOVA has been
applied.   Net NPA’s to Total Assets Ratio
 Net NPA’s to Total Advances
 Total Investments to Total Assets Ratio
2.3 CONCEPTUAL FRAMEWORK  Percentage Change in NPA
The CAMEL Approach is used to analyze the
financial performance and the efficiency of banks. The Management
approach was developed in US. It helps to evaluate
banks with complete coverage of factors affecting bank The development and endurance of a bank is ensured by
creditworthiness. In 1995, a rating system for domestic its management. The management of a bank plays a very
as well as foreign banks based on international CAMEL crucial role in making decisions depending on their risk
Model was introduced by RBI. CAMEL Model as a tool perception. It sets the vision and goals for the bank and
is very effective, efficient and accurate to be used as a sees that they are achieved within the given time period.
performance evaluation in banking industries and to Following are the ratios categorized under Management
anticipate the future and relative risk. There are five Capacity:
factors which are represented by the acronym
“CAMEL”:  Total Advances to Total Deposits Ratio
 Profit Per Employee
C – Capital Adequacy  Business Per Employee
 Return on Net Worth
A – Asset Quality
Earnings
M – Management Quality
Profitability of the bank and also its ability to earn
E – Earnings Quality consistently can be easily determined by its earning
quality measure. The earning of a bank reflects its
L – Liquidity growth capacity and financial health. Strong earnings
and profitability profile of banks reflects the ability to
Capital Adequacy support present and future operations.
Capital adequacy is regarded as one of the key elements Following are the ratios categorized under Earnings
of the CAMEL model to assess the financial health of a Quality:
bank. It indicates the bank’s capacity to meet
unexpected losses. Under capital adequacy, the banks  Operating Profit to Average Working Funds
are assessed under four different sub-parameters namely  Net Profit to Average Assets
capital adequacy ratio, debt-equity ratio,  Spread Ratio
 Percentage Change in Net Profit
Advances/Asset ratio, and government  Non-Interest Income to Total Income
securities/investments. Capital adequacy ratio refers to  Interest to Total Income
the amount of a bank’s capital expressed as a percentage
of its risk weighted assets exposure. It also helps to Liquidity
reduce risk of defaults.
Liquidity is very crucial for any organization which
Following are the ratios categorized under Capital deals with money. It is all the more important for banks.
Adequacy: Poor liquidity management not only leads to dwindling
bank earnings but can also jeopardize its continued
 Capital Adequacy Ratio
 Debt Equity Ratio
operations. The parameter assesses the ability of a bank
 Total Advances to Total Assets to meet the demand from the deposit holders in a
 Government Securities Investments  particular time. The higher the ratio, the better off will
be the banks.

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

Following are the ratios categorized under Liquidity: be said that HDFC Bank provides its depositors and
creditors with higher protection as against SBI.
 Government Securities to Total Assets
 Liquid Assets to Total Assets
 Liquid Assets to Total Deposits Table -3 Total advances to Total Assets
 Approved Securities to Total Assets
 Liquid Assets to Demand Deposits Year HDFC SBI
2013-14 61.63 67.5
2.4 DATA ANALYSIS 2014-15 61.89 63.4
2015-16 65.6 64.8
Capital Adequacy Ratios 2016-17 64.2 58.06

Table – 1 Capital Adequacy Ratio 2017-18 61.88 56.01

2018-19 65.84 59.38
Year HDFC SBI 2019-20 64.93 58.85
2013-14 16.10 12.44 Average 63.71 61.14
2014-15 16.80 12.00 Rank 1 2
2015-16 15.50 13.12 The average Total Advances to Total Assets Ratio of
2016-17 14.60 13.11 HDFC Bank stands at 63.71% which is higher than that of
2017-18 14.80 12.60 SBI which stands at 61.14%. This implies that HDFC
2018-19 17.10 12.72 Bank is more aggressive in the lending activities as
2019-20 18.50 13.06
compared to SBI, which may lead to higher profitability
for HDFC Bank compared to SBI.
Averages 16.20 12.72
Ranks 1.00 2.00 Table -4 Government Securities Investment

Year HDFC SBI

Capital Adequacy reveals the overall financial condition 2013-14 78.25 78.25
of the bank and also how effectively the bank can 2014-15 72.32 77.45
manage its need for additional capital requirements. RBI
2015-16 76.7 77.2
has prescribed a threshold of 12%. The average capital
adequacy ratio of both SBI and HDFC bank is higher 2016-17 75.73 76.25
than the threshold limit. However, the capital adequacy 2017-18 77.95 80.95
ratio of HDFC Bank is well above the stipulated level. 2018-19 82.85 79.99
Thus, this implies that HDFC bank has a higher capacity
2019-20 82.66 78.35
to absorb losses in the event of winding up and thus
promises better protection to the depositors. Average 78.07 78.35
Rank 2 1
Table -2 Debt Equity Ratio

Year HDFC SBI This ratio indicates the risk involved in bank’s
2013-14 935.58 1333.71 investments. The government securities are assumed to
2014-15 799.89 1387.39 be risk free. Therefore, a higher ratio indicates lesser
2015-16 824.75 1354.99 risk involved in bank’s investment. The investments of
SBI are relatively more secure than HDFC Bank as the
2016-17 802.2 1254.71
average Government securities Investment ratio of SBI
2017-18 857.87 1400.31 stands at 78.35% as compared to HDFC bank whose
2018-19 734.1 1500.32 Average Government Securities Investment Ratio stands
2019-20 795.11 1532.83 at 78.07%.
Average 821.36 1394.89
Asset Quality Ratios
Rank 1 2
The Debt Equity ratio signifies the proportion of Table -5 Net NPA to Total Assets
borrowed capital to owned capital. The average Debt-
Equity Ratio of HDFC stands at 821.636 which is Year HDFC SBI
relatively lower when compared to SBI which has a Debt 2013-14 0.17 1.73
Equity Ratio of 1394.89%. Thus, from this it can 2014-15 0.15 1.35

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

2015-16 0.19 3.09 income of the bank. The average Total Investment to
2016-17 0.21 2.00 Total Assets ratio of HDFC bank stands at about 24.66%
2017-18 0.24 3.21 which is slightly lower as compared to SBI whose
2018-19 0.26 1.79 average Total Investment to Total Assets ratio stands at
2019-20 0.23 1.31 25.61%. It can be said that HDFC bank is better placed
Average 0.21 2.07
in terms of Total Investment to Total Assets ratio when
compared to SBI.
Rank 1 2
This ratio measures the quality of assets. The lower the Table -8 Percentage Change in NPA
ratio, the better the quality of advances. The average Net
NPAs to Total Assets Ratio of HDFC Bank stands at Year HDFC SBI
about 0.21%, while that of SBI stands at about 2.07%. 2013-14 -35 22.38
This shows that the quality of advances of HDFC Bank is 2014-15 7.4 17.51
far better than that of SBI. 2015-16 10.71 -79.72
2016-17 17.86 2.62
Table -6 Net NPAs to Net Advances
2017-18 -21.21 -54.45
Year HDFC SBI 2018-19 2.5 47.39
2013-14 0.27 2.57 2019-20 7.69 26
2014-15 0.25 2.12 Average -1.44 -2.61
2015-16 0.28 3.81 Rank 2 1
2016-17 0.33 3.71
2017-18 0.4 5.73
2018-19 0.39 3.01 It measures the movement in net NPA in realtion to
2019-20 0.36 2.23
previous year.The lower the percentage change the
better the quality of assets. The average percentage
Average 0.33 3.31
decrease in the Net NPAs of SBI ws about 2.61%, which
Rank 1 2
is higher than that of HDFC Bank whose percentage
decrease in Net NPAs is 1.44%. Thus it can be
It is used as a measure of overall quality of bank’s loan concluded that SBI stands at a better position than
book. The average Net NPAs to Net Advances of HDFC Bank in terms of Percentage Change in NPAs.
HDFC bank stands at 0.33% while that of SBI stands at Management Efficiency Ratios
about 3.31%. This points out that HDFC bank has better
quality loans in its loan book as compared to SBI. Table -9 Total Advances to Total Deposits

Table -7 Total Investments to Total Assets Year HDFC SBI

2013-14 82.5 86.76
Year HDFC SBI
2014-15 81.08 82.44
2013-14 24.6 22.22
2015-16 85.02 84.6
2014-15 28.19 24.17
2016-17 86.16 76.83
2015-16 23.1 21.1
2017-18 83.46 71.49
2016-17 24.83 28.31
2018-19 88.76 75.08
2017-18 22.76 30.71
2019-20 86.6 71.73
2018-19 23.55 26.27
Average 84.8 78.42
2019-20 25.6 26.5
Rank 1 2
Average 24.66 25.61
Rank 1 2 This ratio measures the efficiency of management in
converting the deposits available with the bank into
advances. Both HDFC bank and SBI are in the range of
This ratio is an important tool for measuring the 78-85% but as HDFC Bank has a higher Total Advances
percentage of total assets locked up in investments, to Total Deposits ratio of 84.8% as compared to SBI who
which conventionally doesn’t form the part of the core has a Total Advances to Total Deposits ratio of

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

78.42%, it (HDFC Bank) is relatively more efficient in Year HDFC SBI

converting the deposits into high interest earning 2013-14 20.9 10.49
advances or loans. 2014-15 20.36 11.17
2015-16 17.97 7.74
Table -10 Profit per Employee (in Crores)
2016-17 18.04 7.25
Year HDFC SBI 2017-18 18.22 -3.78
2013-14 0.12 0.05 2018-19 15.2 0.48
2014-15 0.13 0.06 2019-20 16.4 7.74
2015-16 0.14 0.05 Average 18.16 5.87
2016-17 0.17 0.05 Rank 1 2
2017-18 0.2 -0.02
2018-19 0.22 0
2019-20 0.22 0.06 It measures the profitability of the company. The
Average 0.17 0.03
average Return on Net Worth of HDFC Bank stands at
about 18.16% which is significantly higher than that of
Rank 1 2
SBI which stands at about 5.87%. Thus, this indicates
that HDFC Bank is more efficient in generating higher
This ratio measures the efficiency of the employee at the
returns on the shareholders equity than SBI.
branch level. The average Profit per Employee ratio of
HDFC Bank stands at appx. 17 lakhs which is Earnings
significantly higher than that of SBI which stands at appx.
3 lakhs. Thus, it can be concluded that HDFC Bank is Table -13 Operating Profit to Average Working Funds
more efficient as compared to SBI. Considering the fact Ratio
that SBI has more employees than HDFC bank, still the
profit per employee of HDFC bank is far more than SBI. Year HDFC Bank SBI
2013-14 3.39 1.78
Table -11 Business Per Employee (in Crores) 2014-15 3.44 1.94
2015-16 9.4 1.92
Year HDFC SBI
2016-17 3.32 1.99
2013-14 9.83 10.64
2017-18 3.6 1.72
2014-15 10.7 12.34
2018-19 3.58 1.71
2015-16 11.55 14.11
2019-20 3.73 1.49
2016-17 14.21 16.24
Average 4.35 1.79
2017-18 16.4 16.7
Rank 1 2
2018-19 16.87 19.81
2019-20 17.49 22.32
Average 13.86 16.02
The operating profit to average working funds ratio of
Rank 2 1 HDFC Bank is about 4.35% which is 83% higher than
the operating profits to average working funds ratio of
SBI, which stands at 1.79%. It can be concluded that
This ratio measures the efficiency of all employees of HDFC Bank is in better position than SBI in terms of
the bank in generating business for the bank. Business Operating Profits to Average Working Funds.
implies total advances and total deposits. SBI has a
higher business per employee ratio which stands at about Table -14 Net Profit to Average Assets
16.02 Crores as compared to HDFC Bank whose
Business per employee ratio stands at 13.86 crores. Year HDFC SBI
Thus, it can be concluded that employees of SBI are 2013-14 2 0.65
more efficient in generating business for the bank as 2014-15 2.02 0.68
compared to that of HDFC Bank. 2015-16 1.92 0.46
2016-17 1.88 0.41
Table -12 Return on Net Worth
2017-18 1.93 -0.19

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2018-19 1.83 0.02 It shows the percentage change in net profit from last
2019-20 1.89 0.38 year. The average Percentage change in net profit of
Average 1.92 0.34 HDFC Bank Stands at 21.51%, while that of SBI stands
Rank 1 2 at 215.75%. The profitability of SBI has seen a
significant improvement in 2019-20 as compared to
2018-19 on account of the multiple factors including
This ratio measures return on assets employed or the better asset quality, higher NIMs on account of better
efficiency in utilisation of the assets. The average of net yields on advances and lower cost of funds and
Profit to Average Asstes ratio of the last 7 years of recoveries on some of the large written off accounts.
HDFC Bank stands at 1.92% which is nearly 5 times
that of SBI. Thus it can be said that HDFC Bank has Table -17 Non-Interest Income to Total Income
higher ability to earn profits on its average assets as
Year HDFC SBI
compared to SBI.
2013-14 16.14 11.98
Table -15 Spread Ratio 2014-15 15.66 12.9
2015-16 15.15 14.68
Year HDFC SBI 2016-17 15.07 16.81
2013-14 4.4 2.75 2017-18 15.94 16.83
2014-15 3.79 2.67 2018-19 15.12 13.15
2015-16 3.89 2.52 2019-20 16.85 14.95
2016-17 3.84 2.29 Average 15.7 14.47
2017-18 3.77 2.17 Rank 2 1
2018-19 3.88 2.4
2019-20 3.67 2.48
Average 3.89 2.47 This ratio measures the income from operations other
Rank 1 2 than lending as percentage of total income. The Non-
Interest income to total income ratio of HDFC bank
which stands at about 15.7% is higher that of SBI which
It is an important measure of a bank’s core income- stands at about 14.47%, which indicates that SBI is at a
namely the lending operations. It is the difference better position in comparison with HDFC Bank in terms
between the interest income and interest expended as of non-Interest income to total income ratio.
percentage of total assets. The average Spread ratio of
HDFC Bank stands at about 3.89% as compared to SBI Table -18 Interest Income to Total Income
whose average spread ratio stands at about 2.47%. It can
Year HDFC SBI
be concluded that HDFC bank has an ability to generate
2013-14 83.86 88.02
higher gross profitability on the total assets as compared
2014-15 84.34 87.1
to SBI.
2015-16 84.85 85.32
Table -16 Percentage Change In Net Profit 2016-17 84.93 83.19
2017-18 84.06 83.17
Year HDFC SBI
2018-19 84.88 86.85
2013-14 26.05 -22.79
2019-20 83.15 85.05
2014-15 20.49 20.3
Average 84.3 85.53
2015-16 20.36 -24.05
Rank 2 1
2016-17 18.37 5.36
2017-18 20.2 -162.45
2018-19 20.54 113.17 This ratio measures the income from lending operations
2019-20 24.57 1580.74 as percentage of total income. The Interest income to
Average 21.51 215.75 total income ratio of HDFC Bank stands at 84.30%
Rank 2 1 which is lower as compared to SBI whose Interest
income to total income ratio stands at about 85.53%
which indicates that SBI is at a better position in
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 International Journal of Scientific Research in Engineering and Management (IJSREM)
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comparison with HDFC Bank in terms of Interest 2013-14 64.38 117.06

income to total income ratio. 2014-15 49.39 140.36
2015-16 44.01 119.78
Liquidity Ratios
2016-17 42.35 112.83
Table -19 Liquid Assets to Total Assets 2017-18 103.04 100.91
2018-19 57.09 108.07
Year HDFC SBI 2019-20 49.71 110.45
2013-14 8.05 7.4 Average 58.57 115.64
2014-15 6.15 8.54 Rank 2 1
2015-16 5.49 7.41
2016-17 5.67 6.35
2017-18 11.55 5.55
This ratio measures the ability of a bank to meet the
demand from demand deposits in a particular year. The
2018-19 6.54 6.04
average Liquid Assets to Demand Deposits ratio of HDFC
2019-20 5.66 6.35
Bank stands at 58.57% which is lower when compared to
Average 7.02 6.81 SBI whose Liquid Assets to demand deposits ratio stands
Rank 1 2 at 115.64%, which indicates that SBI is better placed as
compared to HDFC Bank in terms of Liquid Assets to
The Liquid assets to total assets ratio of HDFC Bank Demand Deposits ratio
stands at 7.02% which is higher when compared to SBI
who’s Liquid assets to total assets stands at 6.81% Table -22 Approved Securities to Total Assets
indicating that HDFC Bank has a better liquidity position
when compared to SBI. This implies that HDFC Bank Year HDFC SBI
stands ahead of SBI in terms of Liquid assets to total 2013-14 19.25 17.39
assets Ratio. 2014-15 20.39 18.72
2015-16 17.73 16.4
Table -20 Government Securities to Total Assets
2016-17 18.8 21.58
Year HDFC SBI 2017-18 17.74 25.21
2013-14 19.25 17.39 2018-19 19.51 21.01
2014-15 20.39 18.72 2019-20 21.16 20.76
2015-16 17.73 16.4 Average 19.23 20.15
2016-17 18.8 21.58 Rank 2 1
2017-18 17.74 25.21
2018-19 19.51 21.01
Approved Securities are investments made in state
2019-20 21.16 20.76
associated bodies like electricity boards, housing boards,
Average 19.23 20.15
corporation bonds, shares of regional rural banks. The
Rank 2 1
Approved Securities to Total Assets of HDFC Bank
stands at 19.23% which is lower when compared to SBI
This ratio measures the proportion of risk-free liquid
whose Approved Securities to Total Assets ratio stands
assets invested in government securities as a percentage
at 20.15%. Thus, it can be concluded that SBI is at a
of total assets. The average Government Securities to
better position as compared to SBI in terms of Approved
Total Assets ratio of HDFC Bank Stands at 19.23% which
Securities to Total Assets ratio.
is lower when compared to SBI whose Government
Securities to Total Assets ratio stands at 20.15%. This Table -23 Liquid Assets to Total Deposits
clearly points out that SBI is at a better position as
compared to SBI in terms of Government Securities to Year HDFC SBI
Total Assets ratio. 2013-14 11.85 9.5
2014-15 8.06 11.09
Table -21 Liquid Assets to Demand Deposits
2015-16 7.12 9.68
Year HDFC SBI 2016-17 7.61 10.9

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

2017-18 15.58 7.09 HDFC bank

2018-19 8.81 7.64
2019-20 7.55 7.75
Average 9.51 9.09 There is no significant
Rank 1 2 difference between in
6 the net NPA’s to total 0.000664 Rejected
This ratio measures the liquidity available to the deposits advances ratio of SBI
of a bank. The Liquid Assets to Total Deposits ratio of and HDFC bank.
HDFC Bank stands at 9.51% which is slightly higher as
There is no significant
compared to SBI who’s higher the Liquid Assets to Total difference between in
Deposits ratio stands at 9.09%, representing that the 7 the total investments to 0.566715 Accepted
depositors of HDFC Bank enjoy a higher liquidity when total assets ratio of SBI
compared to SBI. HDFC Bank is better placed as and HDFC bank
compared to SBI in terms of higher the Liquid Assets to
Total Deposits ratio. There is no significant
difference between in
2.5 HYPOTHESIS TESTING 8 the percentage change 0.952854 Accepted
In order to test whether there is any significant difference in NPA ratio of SBI and
in the various ratios of State Bank of India and HDFC, HDFC bank
ANOVA was applied. The following table displays the p-
value at 5% level of significance. There is no significant
difference between in
Table 24- Findings of Hypothesis Testing 9 the total advances to 0.076397 Accepted
deposits ratio of SBI
Sr. and HDFC Bank.
Null Hypothesis P Value Remarks
No. There is no significant
difference between in
There is no significant 10 the profit per employee 0.001233 Rejected
difference between in 0.000814 Rejected ratio of SBI and HDFC
1 the capital adequacy bank
ratio of SBI and HDFC
bank There is no significant
difference between in
There is no significant 11 the business per 0.008843 Rejected
difference between in employee ratio of SBI
3.2182E- and HDFC bank
2 the debt equity ratio of 05 Rejected
SBI and HDFC bank
There is no significant
difference between in
12 the return on net worth 0.000456 Rejected
There is no significant
ratio of SBI and HDFC
difference between in
bank
3 the total advances to 0.212346 Accepted
total assets ratio of SBI There is no significant
and HDFC bank difference between in
the operating profit to
There is no significant 13 0.021374 Rejected
average working funds
difference between in 0.823334
ratio of SBI and HDFC
4 the government Accepted
bank
securities investments
of SBI and HDFC bank There is no significant
difference between in
There is no significant
14 the net profit to average 6.14E-06 Rejected
5 difference between in Rejected
assets ratio of SBI and
the net NPA’s to total 0.00069
HDFC bank.
assets ratio of SBI and

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

There is no significant On the basis of the various ratios calculated for both the
difference between in banks, overall ranks are given. The overall ranking is
15 the percentage change 0.428998 Accepted done for each parameter namely- Capital Adequacy,
in net profit ratio of SBI Asset Quality, Management, Earnings and Liquidity.
and HDFC bank The following table presents the ranking of both banks
on the CAMEL parameters.
There is no significant
difference between in Table – 25 – Average Ranking of Banks
16 the spread ratio of SBI 1.67E-06 Rejected
and HDFC bank Parameters HDFC SBI

Capital Adequacy 1.25 1.75

There is no significant
difference between in Asset Quality 1.25 1.75
17 the non-interest income 0.167019 Accepted
to total income ratio of Management 1.25 1.75
SBI and HDFC bank
Earnings 1.50 1.50
There is no significant
difference between in Liquidity 1.60 1.40
0.43762
18 the interest income to Accepted
7 Average 1.37 1.63
total income ratio of
SBI and HDFC Bank.

There is no significant
difference between in
19
the government
0.502306 Accepted Figure – 1 – Average Rankings of Banks
securities to total assets
ratio of SBI and HDFC
Average Rankings of Banks on CAMEL
bank Parameteres
There is no significant 2,00
difference between in
1,25
1,75
1,25
1,75
1,25
1,75

1,50

1,40
1,37
1,50

1,60

1,63
20 the liquid assets to total 0.850072 Accepted 1,50
Ranks

assets ratio of SBI and 1,00

HDFC bank
0,50
There is no significant
difference between in 0,00
21 the liquid assets to total 0.799438 Accepted
deposits ratio of SBI
and HDFC bank

There is no significant
difference between in HDFC Bank State Bank of India
0.59578
22 the approved securities Accepted
9
to total assets ratio of
HDFC bank has performed better than the State Bank of
SBI and HDFC bank
India on three parameters of out of five parameters,
There is no significant namely Capital Adequacy, Asset Quality and
difference between in Management. The in terms of Earnings parameter. The
0.02340 overall ranking of HDFC bank is 1.37 while that of State
23 the liquid assets to Rejected
2 Bank of India is 1.63. Hence it can be concluded that
demand deposits ratio
of SBI and HDFC bank HDFC has outperformed State Bank of India on
‘CAMEL ‘parameters.

3.2. LIMITATIONS
3.1. CONCLUSIONS
a. The present research is limited to only two banks
and the data of only seven years is considered,

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 International Journal of Scientific Research in Engineering and Management (IJSREM)
Volume: 05 Issue: 05 | May - 2021 ISSN: 2582-3930

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