A PROJECT REPORT ON

FINANCIAL PERFORMANCE IN HDFC BANK LIMITD

Submitted To
Kakatiya University, Warangal,

In Partial Fulfillment for the Award of the Degree of

MASTER OF BUSINESS ADMINISTRATION
Submitted by
Mr. HARIYAL KUSAM
(HT.NO:23507C1008)

Under the Esteemed Guidance of

Ms. K.Manisha
MBA

DEPARTMENT OF BUSINESS MANAGEMENT

BHARATHI INSTITUTE OF BUSINESS MANAGEMENT
(Approved by AICTE& Affiliated to K.U)
Gangadevipalli, Warangal.
2022-24
 TO WHOM SO EVER IT MAY CONCERN

This is to certify that Mr HARIYAL KUSAM. has completed his A PROJECT REPORT

ON FINANCIAL PERFORMANCE IN HDFC BANK LIMITD, in partial fulfillment

of Master of Business Administration MBA (Finance) is record work carried out by him.

He has undergone a training program me as allotted by BHARATHI INSTITUTE OF

BUSINESS MANAGEMENT, Gangadevipalli, Warangal

He has completed the project work study successfully and during the course of his project

study his conduct has been found satisfactorily.

Authorized Signature
 CERTIFICATE

This is to certify that the Project Report titled A PROJECT REPORT ON FINANCIAL

PERFORMANCE IN HDFC BANK LIMITD . submitted in partial fulfillment for the award of

MBA Degree of Kakatiya University, Warangal, is the outcome of the successful and satisfactory

completion of the Project Work done under my guidance by Mr. HARIYAL KUSAM. with Hall

Ticket No. 23507C1008

Further, it is also to declare that the above titled project report, has never been subjected to any

publication nor submitted to any other University or Institution for the award of any

Degree/Diploma/Certificate, to the best of my knowledge and belief.

Name and Address Signature

Ms. K.Manisha Date: ________________________

Warangal
 DECLARATION

I, the undersigned student of MBA programme, hereby declare that the Project Report A PROJECT

REPORT ON FINANCIAL PERFORMANCE IN HDFC BANK LIMITD submitted by me to

the Department of Business Management, Faculty of Commerce & Business Management, Kakatiya

University, Warangal is original and is a bonafide work of mine, and it was neither submitted to any

other University or Institution for the award of any Degree/Diploma/Certificate nor published

elsewhere any time earlier.

Student’s Name and Address: Signature

Mr. Hariyal Kusam (Student)

Warangal

Date: _______________________________

ACKNOWLEDGEMENTS

I wish to express my deep sense of gratitude to the people who has given their valuable
suggestion, guidance and spent their valuable time in the successful completion of my analysis
 In the process of pursuing this project report I have been obliged to many persons. I am

extremely thankful to HDFC LIMITED for giving this opportunity to do the project

I thank to Dr.L.Kavitha, Principal, Department of Business Management, & my dear faculty

members Bharathi Institute of Business Management, for permitting me to take over the project.

I express my heart full thanks to Asst.Prof. K.Manisha, project guide, for given her valuable

guidance in carryout my project successful.

Last but not the least I would like to thank my Parents and Friends for their encouragement
and support, without whom I, wouldn’t have been able to complete this project.

(HARIYAL KUSAM)
 CONTENTS

CHAPTERS PG.NO.

CHAPTER – I 1-5
INTRODUCTION

CHAPTER – II 6-11

ORGANIZATION PROFILE

CHAPTER – III 12-17

THEORITICAL FRAME WORK

CHAPTER – IV 18-39

DATA ANALYSIS & INTERPRETATION

CHAPTER – V 40-43

SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION

APPENDICIES

BIBLOGRAPHY
 CHAPTER I

INTRODUCTION
INTRODUCTION
Meaning of Financial analysis :
It refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It
is performed by professionals who prepare reports using ratios that make use of information taken from
financial statements and other reports. These reports are usually presented to top management as one of
their bases in making business decisions. Based on these reports, management may:
Continue or discontinue its main operation or part of its business;
Make or purchase certain materials in the manufacture of its product;
Acquire or rent/lease certain machineries and equipments in the production of its goods;
Issue stocks or negotiate for a bank loan to increase its working capital.
Make decisions regarding investing or lending capital
other decisions that allow management to make an informed selection on various alternatives in the
conduct of its business.
Aspect to be assesed in financial analysis
1. Profitability-
Its ability to earn income and sustain growth in both short-term and long-term. A company's degree of
profitability is usually based on the income statement, which reports on the company's results of
operations;
2. Solvency-
Its ability to pay its obligation to creditors and other third parties in the long-term;
3. Liquidity-
Its ability to maintain positive cash flow, while satisfying immediate obligations;.
4. Stability-
The firm's ability to remain in business in the long run, without having to sustain significant losses in
the conduct of its business. Assessing a company's stability requires the use of both the income
statement and the balance sheet, as well as other financial and non-financial indicators.
Methods 0f Financial Analysis
Financial analysts often compare financial ratios (of solvency, profitability, growth...):
· Past Performance : Across historical time periods for the same firm (the last 5 years for
example),

1
 · Future Performance : Using historical figures and certain mathematical and statistical
techniques, including present and future values, This extrapolation method is the main source
of errors in financial analysis as past statistics can be poor predictors of future prospects.
· Comparative Performance : Comparison between similar firms.

REVIEW OF LITERATURE
K.Geethanjali&Dr.S.Santhakumari (2019)- Investors perception towards online trading in Coimbatore .This
research is a descriptive research study in which convenient sampling techniques is used. This survey is used to
select the sample size ,validity and reliability of the questionnaire 391 samples are selected for the study.
Dr.U.Thasli, Ariff, M.Nandhini and T.Pavithra (2019)-An investors perception towards online trading . The
study aims to identify the preference of the respondent towards online trading in Udumalpet Talak . In this
study questionnaire was collected from 100investors.The findings were analyzed using scaling technique and
simple percentage .
C.Navya ,CH.Deepthi (2019) –Investors attitude towards online trading .It aims that studying the investor’s
perception of online trading in share markets and helps to find out the present level of service provided by
identifying the area which require attention for improving its services.
Dr.IqbalThonseHawaldar, Dr.Habeeb Ur Rahiman (2019) – Investors perception towards stock market. This
study is to understand the different personal factors affecting their investment decision and the different factor
influencing various categories of investment. Chisquare test was used as a tool to arrive at a decision regarding
the association between two variables.
Dr. N. Sakthivel, A. Saravanakumar (2018)-Investors satisfaction on online share trading and technical
problem faced by the investors. Investors satisfaction on online share trading based on brokerage houses were
analyzed using percentage analysis. Primary data were collected from 620 respondents through questionnaire.
Dr.PMohanraj, P Kowsalya (2018)- A Study on the investor perception on karvy stock brokering in
Coimbatore district .This study helps to find out the service quality issues. primary data is collected from 100
respondents and it is 8 descriptive research design. Primary data is collected from convenience sampling
techniques. Dr.N.Sakthivel , A. Saravanakumar – Investor’s preference towards online share trading at
NSE .Primary data is collected from 620 respondents using questionnaire .It is suggested that all other
brokerage house in the study should design and improve their services in terms of procedures,facilities and
benefits .

2
V.Pavithra, Mr William Robert (2017) A study on customers perception towards online trading in retail
brokerage Chennai.This study influence the stock and investmentstrategies in retail brokerage. In this primary
data is collected from 100 respondents through questionnaire using convince sampling techniques.
Dr.krishnamohanvaddai and Dr.. MeruguPratima (2016)- Investors perception towards online trading in
Visakhapatnam city . A questionnaire is collected from 400 investors and chi square is used to test the
hypothesis .The study concludes that stock broking firms in order to enhance widespread use of online trading
need to organize the short term training programmes .
Dr. Shankar T. Battase (2015)- A study on investors perception on online trading and depository operations
with respect to India infolineLto ,this study highlights to know the procedure of online trading system and also
helps to study the effectiveness and functions of depositors and effectiveness and functions of depositors and
effectiveness of service provided by brokers.150 sample collected through survey method .
D.Kumari, Anitha ,Ramasamy G, Sandhya K (2013)-Investors perception towards online trading in Chennai .It
helps to find out the present level of service provided and identifying the area which require attention for
improving services .Data collected from 113 respondents in Chennai . The study suggest that share brokers
should improve services of response from the dealer , putting the order without delay.
RESEARCH GAP AND QUESTIONS
The banking sector occupies an important place in a nation’s economy. The financial performance appraisal
gives a direction to banking institutions ups and downs of financial performances. After a critical review of the
above literature, it is found that there have already been many studies on bank performances especially using
CAMEL model. However, no study was done on performances of banks for a period of recent ten years.
Studying larger period will reveal broader past and future trends in the Indian banking sector. Hence, there is
still necessity to undergo further studies on the 25 performance of banks as it shall reveal new trends in how
they are functioning. There are various methods which have been utilized for measuring the performance of
banks in world wide. CAMEL rating system has become important means of measuring the overall soundness
and safety of banks in the light of global financial crisis and bank failures. The system analyzes capital
adequacy, asset quality, management quality, earnings, and liquidity of Banks incorporating relevant financial
ratios. "CAMEL" model as a tool is very effective, efficient and accurate to be used as a performance evaluate
in banking industries and to anticipate the future and relative risk. "CAMEL" ratios are calculated in order to
focus on financial performance.

3
NEED AND IMPORTANCE OF THE STUDY
An analysis & interpretation of financial statements is very important in today‟s competitive business
world. As the study gives a clear picture of the growth & financial performance of the Bank, it helps the
company to rectify the errors & it improves in the field of weak performance.
OBJECTIVES OF THE STUDY
Objective of the study is to analyze the financial statement in terms of liquidity,
leverage, profitability and activity of the institution. To analyze view and to draw
meaningful conclusion to come to a right decision, analytical techniques are required.
 To study the ability of the Bank to meet its current obligations i.e., to determine the
liquidity of the Bank
 To study the extent to which the Bank has used its long term borrowed funds i.e.,
leverage.
 To study the overall operating efficiency & performance of the Bank
 To study history & agenda of the bank.
 To gain some practical experience about cash control & cash management.
 To know the capital structure of the bank.
 To study validity of tools of financial statements in real life situation.
.
SCOPE OF THE STUDY
The analysis & interpretation of financial statements is made by using various techniques of
analysis, each having their own merits & demerits. Moreover, the study is confined to “HDFC
Bank” only.
RESEARCH METHODOLOGY
Methodology:
Data Collection
The data collection is one of the important aspect in the research design purely because, it
is the way that how we can get answer to the research question.
Data Details:- Data relating to Bank is required for the study i.e. about the Profit & Loss
Account, Cash flow Statement, Fund flow Statement and Balance sheet for calculating various
ratios.

4
Sources of Data Collection
All the details are collected from secondary sources only. Secondary data includes the annual
reports, financial reports of the company etc., discussion with the concerned officials has also
helped to verify and evaluate the variations and results either to confirm it.
Collection of primary data:
The following tools were used for collection of primary data.
 Interaction with the branch manager.
 Observation at Bank.
Collection of secondary data:
Various references mentioned in bibliography and Annual reports of the bank have been
referred to collect secondary data necessary for the study
Sample Technique:
The sample technique cannot be applied for the available data.
Sample Size:
The financial statements of the year 2018-19, 2019-20, and 2020-21 of the bank have been
taken as sample size.
.
LIMITATIONS OF THE STUDY
This study suffers from following limitations:-
 Limited data provided by Bank.
 Limited Information provided by Manager.
 The scope of this study is limited to critical evaluation.
 No full disclosure accounts.
 Interactions with the bank professionals were limited due to their busy schedule.
 The study does not reveal complete and accurate data though it stresses on objectives of
accuracy.
 Due to lack of time, all the ratios are not calculated for the analysis purpose.

5
 CHAPTER II

ORGANIZATION PROFILE
 COMPANY PROFILE

Company Description:

Housing Development Finance Corporation Limited (HDFC Ltd.) was established in 1977 with the
primary objective of meeting a social need of encouraging home ownership by providing long-term
finance to households. Over the last three decades, HDFC has turned the concept of housing
finance for the growing middle class in India into a world-class enterprise with excellent reputation
for professionalism, integrity and impeccable service.

Company Analysis:

According to the Consolidated - Audited financial statement for the Year of 2014, total net
operating revenues increased with 34.23%, from INR 24,628.38 tens of millions to INR 33,057.95
tens of millions. The results of the period increased 31.25% reaching INR 5,273.4 tens of millions
at the end of the period against INR 4,017.69 tens of millions last year. Return on equity (Net
income/Total equity) went from 15.70% to 17.46%, the Return On Asset (Net income / Total
Asset) went from 1.45% to 1.55% and the Net Profit Margin (Net Income/Net Sales) went from
16.31% to 15.95% when compared to the same period of last year. The Debt to Equity Ratio (Total
Liabilities/Equity) was 1128.93% compared to 1086.51% of last year. Finally, the Current Ratio
(Current Assets/Current Liabilities) went from 0.51 to 0.58 when compared to the previous year.

The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled
Commercial Bank in January 1995. The Housing Development Finance Corporation (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in
1994.HDFC Bank is headquartered in Mumbai. The Bank at present has an enviable network of
over 1416 branches spread over 550 cities across India. All branches are linked on an online real-
time basis. Customers in over 500 locations are also serviced through Telephone Banking. The
Bank also has a network of about over 3382 networked ATMs across these cities. The promoter of
the company HDFC was incepted in 1977 is India's premier housing finance company and enjoys
an impeccable track record in India as well as in international markets. HDFC has developed

6
significant expertise in retail mortgage loans to different market segments and also has a large
corporate client base for its housing related credit facilities. With its experience in the financial
markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC
was ideally positioned to promote a bank in the Indian environment.

The shares are listed on the Bombay Stock Exchange Limited and The National Stock Exchange of
India Limited. The Bank's American Depository Shares ( ADS ) are listed on the New York Stock
Exchange (NYSE) under the symbol 'HDB' and the Bank's Global Depository Receipts (GDRs) are
listed on Luxembourg Stock Exchange.

On May 23, 2010, the amalgamation of Centurion Bank of Punjab with HDFC Bank was formally
approved by Reserve Bank of India to complete the statutory and regulatory approval process. As
per the scheme of amalgamation, shareholders of CBoP received 1 share of HDFC Bank for every
29 shares of CBoP.

The merged entity now holds a strong deposit base of around Rs. 1,22,000 crore and net advances
of around Rs. 89,000 crore. The balance sheet size of the combined entity would be over Rs.
1,63,000 crore. The amalgamation added significant value to HDFC Bank in terms of increased
branch network, geographic reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited (another new private
sector bank promoted by Bennett, Coleman & Co. / Times Group) was merged with HDFC Bank
Ltd., effective February 26, 2000. This was the first merger of two private banks in the New
Generation Private Sector Banks. As per the scheme of amalgamation approved by the shareholders
of both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of
HDFC Bank for every 5.75 shares of Times Bank.

HDFC Bank offers a wide range of commercial and transactional banking services and treasury
products to wholesale and retail customers. The bank has three key business segments:

Wholesale Banking Services - The Bank's target market ranges from large, blue-chip
manufacturing companies in the Indian corporate to small & mid-sized corporates and agri-based
businesses.

7
Retail Banking Services - The objective of the Retail Bank is to provide its target market customers
a full range of financial products and banking services, giving the customer a one-stop window for
all his/her banking requirements.

Treasury - Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. The Treasury business
is responsible for managing the returns and market risk on this investment portfolio.

HDFC Securities (HSL) and HDB Financial Services (HDBFSL) are its subsidiaries.

Services offered by the company:

Personal Banking

 Accounts & Deposits

 Loans
 Cards
 Forex
 Investments & Insurance

NRI Banking

 Accounts & Deposits

 Remittances
 Investments & Insurance Loans Payment Services

Wholesale Banking

 Corporate
 Small & Medium Enterprises
 Financial Institutions & Trusts
 Government Sector

8
Achievements/ recognition:-

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.

2019

 Business Standard Best Banker Award - Mr. Aditya Puri, MD, HDFC Bank
 Fe Best Bank Awards 2019 - Best Innovator of the year award for its MD Mr. Aditya Puri -
Second Best Private Bank in India - Best in Strength and Soundness Award
 Euromoney Awards 2019 - 'Best Bank in India'
 Economic Times Brand Equity & Nielsen Research annual survey 2019 - Most Trusted
Brand - Runner Up
 Asia Money 2018 Awards - 'Best Domestic Bank in India'
 IBA Banking Technology Awards 2019 - 'Best IT Governance Award - Runner up'
 Global Finance Award - 'Best Trade Finance Bank in India for 2019
 IDRBT Banking Technology Excellence Award 2019 - 'Best IT Governance and Value
Delivery'
 Asian Banker Excellence in Retail Financial Services - 'Asian Banker Best Retail Bank in
India Award 2019 '

2020

 Finance Asia Country Awards for Achievement 2020 - 'Best Bank and Best Cash
Management Bank'
 CNN-IBN - 'Indian of the Year (Business)'
 Nasscom IT User Award 2020 - 'Best IT Adoption in the Banking Sector'
 Business India - 'Best Bank 2020'
 Forbes Asia - Fab 50 companies in Asia Pacific
 Asian Banker Excellence in Retail Financial Services - Best Retail Bank 2020
 Asiamoney - Best local Cash Management Bank Award voted by Corporates
 Microsoft & Indian Express Group - Security Strategist Award 2020
 World Trade Center Award of honour - For outstanding contribution to international trade
services.

9
  Business Today-Monitor Group survey - One of India's 'Most Innovative Companies'
 Financial Express-Ernst & Young Award - Best Bank Award in the Private Sector category
 Global HR Excellence Awards - Asia Pacific HRM Congress: - 'Employer Brand of the
Year 2019 -2020' Award - First Runner up, & many more
 Business Today - 'Best Bank' Award

2021

 Dun & Bradstreet – American Express Corporate Best Bank Award 2021 - 'Corporate Best
Bank' Award
 The Bombay Stock Exchange and Nasscom Foundation's Business for Social Responsibility
Awards 2021 - 'Best Corporate Social Responsibility Practice' Award
 Outlook Money & NDTV Profit - Best Bank Award in the Private sector category.
 The Asian Banker Excellence in Retail Financial Services Awards - Best Retail Bank in
India

Asian Banker - Its Managing Director Aditya Puri wins the Leadership Achievement Award for
India

PROMOTOR

HDFC is India's premier housing finance company and enjoys an impeccable track record in India
as well as in international markets. Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market leader in mortgages. Its
outstanding loan portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and also has a large
corporate client base for its housing related credit facilities. With its experience in the financial
markets, strong market reputation, large shareholder base and unique consumer franchise, HDFC
was ideally positioned to promote a bank in the Indian environment.

10
 Date of
10-08 1994
Establishment
Revenue 0 ( USD in Millions )
Market Cap 1569316.9836555 ( Rs. in Millions )
Corporate Hdfc Bank House,Senapati Bapat Marg,Kamala Mills Compound Lower Parel
Address (West)Mumbai-400013, Maharashtra
www.hdfcbank.com
Management Chairperson - C M Vasudev
Details MD - Aditya Puri
Directors - A N Roy, Aditya Puri, Anami N Roy, Arvind Pande, Ashim Samanta,
Bobby Parikh, C M Vasudev, Gautam Divan, Harish

Vasudev, Gautam Divan, Haris

Engineer, Jagdish Capoor, Keki
Mistry, Pandit Palande, Paresh
Sukthankar, Partho Datta, Renu
Karnad, Sanjay Dongre, Shailendra Bhandari

Background The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank
Limited', with its registered office in Mumbai, India. HDFC Bank commenced
operations as a Scheduled Commercial Bank in January 1995. The Housing
Development Finance Corporation (HDFC) was amongst the first to receive an 'in
principle' approval from the Reserve Bank of India (RBI) to set up a bank in the
private sector, a
Financials Total Income - Rs. 325300.466 Million ( year ending Mar 2014)
Net Profit - Rs. Million ( year ending Mar 2014)
Company
Sanjay Dongre
Secretary
Bankers No Bankers Details in A.R
Auditors Haribhakti & Co
11
 CHAPTER III

THEORETICAL FRAMEWORK
 FINANCIAL STATEMENT ANALYSIS:

Financial analysis (also referred to as financial statement analysis or accounting

analysis) refers to an assessment of the viability, stability and profitability of a
business, sub-business or project.

It is performed by professionals who prepare reports using ratios that make

use of information taken from financial statements and other reports. These reports are
usually presented to top management as one of their bases in making business
decisions. Based on these reports, management may:

1. Continue or discontinue its main operation or part of its business;

2. Make or purchase certain materials in the manufacture of its product;
3. Acquire or rent/lease certain machineries and equipment in the production of
its goods;
4. Issue stocks or negotiate for a bank loan to increase its working capital;
5. Make decisions regarding investing or lending capital;
6. Other decisions that allow management to make an informed selection on
various alternatives in the conduct of its business.
7. Goals.

Financial analysts often assess the firm's:

1. Profitability - its ability to earn income and sustain growth in both short-term and
long-term. A company's degree of profitability is usually based on the income
statement, which reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the
long-term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate
obligations;

12
Both 2 and 3 are based on the company's balance sheet, which indicates the financial
condition of a business as of a given point in time.

4. Stability- the firm's ability to remain in business in the long run, without having to
sustain significant losses in the conduct of its business. Assessing a company's
stability requires the use of both the income statement and the balance sheet, as well
as other financial and non-financial indicators.

Methods

Financial analysts often compare financial ratios (of solvency, profitability, growth,
etc.):

Past Performance - Across historical time periods for the same firm (the last 5 years
for example),

1. Future Performance - Using historical figures and certain mathematical and

statistical techniques, including present and future values, this extrapolation
method is the main source of errors in financial analysis as past statistics can be
poor predictors of future prospects.
2. Comparative Performance - Comparison between similar firms.

These ratios are calculated by dividing a (group of) account balance(s), taken from the
balance sheet and / or the income statement, by another, for example:

n / equity = return on equity

Net income / total assets = return on assets
Stock price / earnings per share = P/E-ratio

Comparing financial ratios is merely one way of conducting financial analysis.

Financial ratios face several theoretical challenges.

13
 The term ‘financial analysis also known as analysis and interpretation of
financial statements’ , refers to the process of determining financial strength and
weaknesses of the firm by establishing strategic relationship between the items of the
balance sheet , profit and loss account and other operative data.
“Analyzing financial statements” by Metcalf and Titard
“Financial analysis is a process of evaluating the relationship between
component parts of a financial statement to obtain a better understanding of a firms
position and performance” by Myers
The purpose of financial analysis is to diagnose the information contained in
financial statements so as to Jude the profitability and financial soundness of the firm.
Just like a doctor examines his patient by recording his body temperature, blood
pressure, etc .Before making his conclusion regarding the illness and before giving his
treatment, a financial analyst analysis the financial statements with various tools of
analysis before commenting upon the financial health or weaknesses of an enterprise.
The analysis and interpretation of financial statements is essential to bring out
the mystery behind the figures in financial statements. Financial statements analysis is
an attempt to determine the significance and meaning of the financial statement data
so that forecast may be made of the future earnings, ability to pay interest and debt
maturities (both current and long term) and profitability of a sound divided policy.
Types of financial analysis:- Financial analysis into different categories depending
upon (1) The material used and
(2) The method of operation followed in the analysis or the modus
operandi of analysis
Types of financial analysis

On the basis of material used on the basis of modus operandi

External Internal Horizontal Vertical

Analysis Analysis Analysis Analysis

14
1. On the basis of material used: - According to material used, financial analysis can
be of two types

External analysis
Internal analysis
External analysis: - This analysis is done by outsiders who do not have
access to the detailed internal outsiders include investors, potential investors,
Creditors, Potential Creditors, Government Agencies, Credit Agencies and General
Public. For financial analysis, these external parties to the firm depend almost entirely
on the published financial statements.

Internal analysis:- The analysis conducted by persons who have access to the
internal accounting records of a business firm is known as internal analysis .
2 On the basis of modus operandi: - According to the modus operandi financial
analysis can also be of two types
I. Horizontal analysis
II. Vertical analysis
I. Horizontal analysis: - Horizontal analysis refers to the comparison of financial
data of a company for several years. The figures for this type of analysis are
presented horizontally over a number of columns. The figures of the various
years are compared with standard or base year. A base year is year chosen as
beginning point. This type of analysis is also called ‘dynamic analysis’ as it is
based on the data from year to year rather than on data of any one year. The
horizontal analysis makes it possible to focus attention on items that have
changed significantly during the period under view
II. b. Vertical analysis: - Vertical analysis refers to the study of relationship of the
various items in the financial statements of one accounting period. In this types
of analysis the figures from financial statement of a year are compared with a
base selected from the same year’s statement

15
 Methods of financial analysis:-
The following methods of analysis are generally used:-
1. Comparative Statements.
2. Trend Analysis.
3. Common-Size Statements.
4. Funds flow Analysis.
5. Cash Analysis
6. Ratio Analysis
7. Cost-volume-Profit Analysis
Comparative statements:-
The comparative financial statements are statements of the financial position at
different periods of time .the elements of financial position are show in a Comparative
Statement provides an idea of financial position at two or more periods. Generally two
financial statements (balance sheet and income statement) are prepared in comparative
form for financial analysis.
THE COMPARATIVE STATEMENT MAY SHOW:-
1. Absolute figures (rupee amounts)
2. Changes in absolute figures i.e. increase or decrease in absolute figures.
3. Absolute data in terms of percentages.
4. Increase or decrease in terms of percentages.
COMPARATIVE STATEMENT: -
(1) Comparative balance sheet: - The comparative balance sheet analysis is
the study of the trend of the same items, group of items and computed items in two or
more balance sheets of the same business enterprise on different dates. The change in
periodic balance sheet items reflect the conduct of a business the change can be
observed by comparison of the balance sheet at the beginning and at the end of a
period and these changes can help in forming an opinion about the progress of an
enterprise.

16
GUIDE LINES FOR INTERPRETATION OF COMPARATIVE BALANCE
SHEET:-
While interpreting comparative balance sheet the interpreter is expected to study the
following aspects:-
1. Current financial position and liquidity position
2. Long-term financial position
3. Profitability of the concern.
COMMON SIZE STATEMENT:-
The common-size statements, balance sheet and income statement are show in
analytical percentages. The figures are shown as percentages of total assets, total
liabilities and total sales. The total assets are taken as 100 and different assets are
expressed as a percentage of the total similarly, various liabilities are taken as a part of
total liabilities.
COMMON SIZE BALANCE SHEET:-
A statement in which balance sheet items are expressed as the ratio of each
asset to total assets and the ratio of each liability is expressed as a ratio of total
liabilities is called common size balance. The common size balance sheet can be used
to compare companies of differing size. The comparison of figures in different periods
is not useful because total figures may be affected by a number of factors. It is not
possible to establish standard norms for various assets. The trends of figures from year
to year may not be studied and even they may not give proper results.
TREND ANALYSIS OF BALANCE SHEET:-
Trend analysis is Very important tool of horizontal financial analysis.
This analysis enables to known the change in the financial function and operating
efficiency in between the time period chosen.
By studding the trend analysis of each item we can known the direction of changes
and based upon the direction of changes, the options can be changed.

Absolute Value of item in the statement understudy

17
Trend = ---------------------------------------------------------------- x 100
Absolute Value of same item in the base statement

18
 CHAPTER IV

DATA ANALYSIS
AND
INTERPRETATIONS
 Statement showing changes in working capital for the year ending
31st March 2019-2020
Particulars 2015-2019 2019-2020 Increase Decrease
(Rs „000s) (Rs „000s)

CURRENT ASSETS

Cash and Bank Balance 20035416 46310960 26275544 ------------

Balances with Banks and Short notice 19612868 10373850 ------------ 9239018

Advances 301037976 333515256 32477280 ------------

Other Assets 120431807 199146910 78715103 ------------

Total Current Assets 461118067 589346976

CURRENT LIABILITIES

Borrowings 63518196 69977570 ------------- 6459374

Other Liabilities And Provisions 125640529 211209272 ------------ 85568743

Total Current Liabilities 189158725 281186842

Working Capital 137467927 101267135

Net increase in Working Capital

36200792

TOTAL 137467927 137467927

18
 Statement showing changes in working capital for the year ending

31st March 2020-2021

Particulars 2019-2020 2020-2021 Increase Decrease

(Rs „000s) (Rs „000s)

CURRENT ASSETS

Cash and Bank Balance 46310960 25183085 ----------- 21127875

Balances with Banks and Short notice 10373850 17011991 6638141 ------------

Advances 333515256 374891281 41376025 -------------

Other Assets 199146910 378575279 179428369 ------------

Total Current Assets 589346976 795661636

CURRENT LIABILITIES

Borrowings 69977570 95535931 25558361

Other Liabili3ties And Provisions 211209272 358331046 147121774

Total Current Liabilities 281186842 453866977

Working Capital 227442535 193808010

Net Increase in Working Capital

33634525

TOTAL 227442535 227442535

19
 Statement showing changes in working capital for the year ending

31st March 2021-2022

Particulars 2020-2021 2021-2022 Increase Decrease

(Rs „000s) (Rs „000s)

CURRENT ASSETS

Cash and Bank Balance 25183085 38016330 12833245 ------------

Balances with Banks and Short notice 17011991 9790003 ------------ 7221988

Advances 374891281 415521514 40630233 --------------

Other Assets 378575279 222481403 ------------ 156093876

Total Current Assets 795661636 685809250

CURRENT LIABILITIES

Borrowings 95535931 87214944 8320987 --------------

Other Liabilities And Provisions 358331046 210250038 148081008

Total Current Liabilities 453866977 297464982

Working Capital 209865473 163315864

Net Increase in Working Capital

46549609

TOTAL 209865473 209865473

20
Interpretation of changes in working capital statement

According to working Capital Management Rules, an increase in current assets results in

increase in working capital, decrease in current assets results in decrease in working capital. An
increase in current liability results in decrease in working capital, decrease in current liability
results in increase in working capital.

From above statement for year ending 31-3-2019-2020, it is clear that increase in working capital
for Rs. 36200792 is due to increase in current assets‟ There from increase in cash and bank
balance, advances and other assets there is increase in working capital.

From the above statement for the year ending 31-3-2020-2021; it is clear that increase in
working capital of Rs. 33634525. There is due to decrease in current liability i.e., borrowings and
other liabilities.

From the above statement for the year ending 31-3-2021-2022; it is clear that increase in
working capital of Rs. 46549609. There is a decrease in current liability i.e., borrowings and
other liabilities. Comparing to these three years financial statement is an evident there is a proper
utilization of current assets and current liabilities in the year 2020-2021. Thus it shows the
improvement in utilization of current assets and current liabilities.

From the statements it is clear that there is a sequential increase in working capital in every year.
By this we can come to a conclusion that HDFC BANK is effectively utilizing the current assets
and current liabilities in the above mentioned years.

21
 1. TABLE SHOWING RETURN ON ASSETS RATIO:

Particulars 2019-2020 2020-2021 2021-2022

Net profit 17062349 19067715 21270385

Total Assets 734452439 974652727 895446328

ROA 2.323 1.956 2.375

ROA= net profit /Total Assets

ANALYSIS:
From the above table we can observe in the year 2019-2020 ROA is 2.323, and it
decreased to 1.956, in the year 2020-2021 and 2021-2022 it is increased to 2.375, ROA values
getting varies year to year.

GRAPH 1:Graph1 Showing Return On Assets Ratio from 2019-2020 to 2021-2022:

ROA
2.323 2.375
1.956
2.5
2
1.5
ROA
1
0.5
0

INTERPRETATION:
ROA in the company well maintained in the year 2019-2020. In the year 2020-2021 there is no
proper production of ROA and also we can observe the upward trend in the 2021-2022.

22
 2. CURRENT LIABILITIES TO NET WORTH RATIO:
This ratio indicates reliance on the equity payment of debt. It is one of the measures of solvency
of a firm and, as a rule thumb; it should not exceed 60%.

Particulars 2019-2020 2020-2021 2021-2022

Current liabilities 281186842 453866977 297464982
Net Worth 83700374 102768089 116057491
CL to NT worth 3.359 4.416 2.563
CL to Net worth=current liabilities/net worth, Net worth= equity share + reserves

ANALYSIS:

In the above table we can see that the current liabilities to net worth is 3.359 in the year 2019-
17; and as well it increased to 4.416 in the year 2020-20; but in the year 2021-21 it has been
decreased to 2.563.

GRAPH 2 : Graph2 Showing Current Liabilities to Net worth ratio:

CL to NT worth
5

2 4.416 CL to NT worth
3.359
2.563
1

INTERPRETATION:

In the above ratio, Net worth is nothing but the sum of Share Capital and Reserves & Surplus.
The bank has done well in the year 2019-19&2021-21 and the bank did not do well in 2020-20
because the bank could not utilize assets properly.

23
 3. TABLE SHOWING INTEREST EXPENSE RATIO:
This ratio shows the amount of interest that the bank has paid to the customers of the
bank on their deposits, out of the total income earned by the bank. Lower the ratio higher will be
the profits of the organization. The formula for this ratio is as follows:

Particulars 2019-2020 2020-2021 2021-2022

Interest paid 21297822 24896206 17857816

Total income 71297822 85125077 87464591

IER 29.87% 28.46% 20.95%

Interest expense ratio= (interest paid / total income)*100

ANALYSIS:

From the above table we can observe that the interest expense ratio is 29.87% in the year of
2019-17; and there is a slight decrease in the year of 2020-20 that is 28.46%; and it is decreased
to 20.95% in the year 2021-21

GRAPH3:Graph3 Showing Interest Expense Ratio from 2019-2020 to 2021-2022:

IER
29.87%
28.46%
30.00%
20.95%
20.00%
IER
10.00%

0.00%

INTERPRETATION:

Interest Expense Ratio is more in the year 2020 when compared to the 2021; but it has again
decreased to 20.95% in the year 2022. It results in increase in the Profits of the Bank.
24
 4. TABLE SHOWING CURRENT ASSETS TO NET WORTH RATIO:

If the ratios are high it can be said that the concern is having a sound financial strength if the
ratio is low then the, financial is not good.
Particulars 2019-2020 2020-2021 2021-2022
Current assets 589346976 795661636 685809250
Net worth 83700374 102768089 116057491
CA to NT worth 7.04:1 7.74:1 5.90:1
CA to Net worth = current assets , Net worth = equity share + reserves

ANALYSIS:

In the above table the current assets to net worth is 7.04:1 in the year of 2019-19;during the
year 2020-2021 it is increased to 7.74:1; but in the year 2021-21 it has been decreased to
5.90:1.The firm has to take proper decision to increase on CA.

GRAPH4:Graph4 Showing Current assets to Net Worth from 2019-2020 to 2021-2022:

CA to NT worth
7.74
8 7.04
5.9
6

4 CA to NT worth

INTERPRETATION:

In the above ratio, Net worth is nothing but the sum of Share Capital and Reserves & Surplus. In
spite of having intermittent decrease in the year 2020-2021 the bank has done well in the years
2019-2020 & 2021-2022 it has increased gradually.

25
 5.TABLE SHOWING FIXED ASSETS TURNOVER RATIO:
This ratio measures the efficiency of the assets use. This ratio shows how well the fixed assets
are being used to generate sales in the business.
Particulars 2019-2020 2020-2021 2021-2022

Net income 71297822 87464591 85125077

Fixed assets 145105463 178991091 209637078

FA turner over 0.49:1 0.48:1 0.40:1

Fixed assets turnover ratio=net income / fixed assets

ANALYSIS:

In the above table fixed assets to net worth is 0.49 in the year 2019-19; in the year 2020-
2021 we found decreased to 0.48; and it is decreased to 0.40 in 2021-2022.

GRAPH5:Graph5 Showing Fixed Assets Turnover ratio from 2019-2020 to 2021-2022:

FA turner over

FA turner over

0 0.1 0.2 0.3 0.4 0.5 0.6

INTERPRETATION :

In the year 2019-2020 the fixed assets are utilised to produce proper amount of sales and in
the year 2020-2021 we can see the down fall trend in the fixed assets but in the 2021-2022 fixed
assets are not properly utilised to get better yield.

26
 6. TABLE SHOWING NET PROFIT MARGIN RATIO:
This ratio explains per rupee profit generating capacity of operations. If the cost of
operations is lower, then the profit will be higher and then we divide it with the net income,
results is the operational efficiency.
Particulars 2019-2020 2020-2021 2021-2022
Net profit 17062349 19067715 21270385
Net income 71297822 87464591 85125077
Net profit margin ratio 23.93% 21.8% 24.98%
Net profit margin ratio = (net profit / net income)*100

ANALYSIS:

From the above table we can observe that the net profit margin ratio is 23.93% in the year 2019-
2020 and we can observe that there is a decrease to 21.8% in the year 2020-2021; at the end of
2021-2022 it has got increased to 24.98%; we easily come to know that the values are getting
varies year to year.

GRAPH6: Graph6 Showing Net profit margin ratio from 2019-2020 to 2010 -2011:

Net profit margin ratio

26.00%
25.00%
24.00% Net profit margin ratio
23.00%
22.00%
21.00%
20.00%

INTERPRETATION:

Net profit margin of the bank is good for the year 2010-2011. The ratio is at 24.98% with an
increase from of the year 2020-2021. But it is finding slight decrease in 2020-2021 i.e. 21.8%,
there is a better utilization of total capital in this year.

27
 7.TABLE SHOWING INVESTMENT DEPOSIT RATIO:
This ratio is used to measure the total disbursement of funds in investments. If the ratio is
higher, it will show that the bank has utilized its deposits to good extent for their investment.
Particulars 2019-2020 2020-2021 2021-2022
Total investment 127872577 155515611 184774223
Total deposits 369565223 418017661 481923855

IDR 34.60% 37.20% 38.34%

IDR= (total investment / total deposit)*100

ANALYSIS:

The above table shows that the investment deposit ratio is 34.60% that is in the year 2019-
2020,and in the year 2020-2021 that is 37.20% and at the end of 2021-2022 it increased to
38.34%; we can see that the bank has utilized its deposits to good extent for their investment
by year after year.

GRAPH 7: Graph7 Showing Investment deposit ratio from 2019-2020 to 2021-2022:

IDR

38.34% 34.60%

37.20%

INTERPRETATION:

From the above ratio it can be interpreted that the percentage is increase over the years
and this is possible because there is increasing in investment from their deposits, where the
deposits are mainly used for lending purpose.

28
 For the year 2021-2022 the ratio was at 38.34%, and 37.20% of during year 2020-2021; in
fact it has a good depositing ratio in the same year when compared to the previous years.

8.TABLE SHOWING NET WORKING CAPITAL FOR 3 YEARS:

Working capital is the amount of funds necessary to cover the cost of operating the enterprise.

Particulars 2019-2020 2020-2021 2021-2022

Current Assets 589346976 795661636 685809250

Current Liabilities 281186842 453866977 297464982

Working Capital 308160134 341794659 388344268

%of working 100% 110.91% 126.02%

capital
Base year = 2019-2020

ANALYSIS:

From the above table the net working capital is 100% in the year 2019-2020; and in the year
2020-2021 it increased to 110.91%; and again it increased to 126.02% in the year 2021-2022.

GRAPH8:Graph8 Showing Net working capital form 2019-2020 to 2021-2022:

%of working capital

140%
120%
100%
%of working capital
80%
60%
40%
20%
0%

INTERPRETATION:

29
 On observation of above the table, the current liabilities and net working capital position was
restively good in the year 2021-2022 which was 126.02 and there is a frequent increases in the
previous years.
9. TABLE SHOWING CURRENT ASSETS TO TOTAL ASSETS:
It is a percentage showing the contribution of current assets towards the liquidity position and
total assets of the enterprise.
Particulars 2019-2020 2020-2021 2021-2022

Current Assets 589346976 795661636 655809250

+ 17232886 23475480 24862855
Fixed Assets
Total Assets 606579862 819137116 680672105

CA to TA 97.15% 97.13% 96.34%

Total Assets =CA +FA, CA to TA= Current Assets /Total Assets

ANALYSIS
In the above table, we see current assets to total assets is 97.15% in the year 2019-2020 and in
the next financial year there is slight decrease that is 97.13% in the year 2020-2021 and again it
decreased to 96.34% in 2021-2022; it is frequently decreased liquidity position of the firm year
by year.
GRAPH9: Graph9 Showing Current Assets to Total Assets from 2019-2020 to 2021-2022:

CA to TA

97.50% 97.15% 97.13%

97.00%
96.34%
CA to TA
96.50%
96.00%
95.50%

INTERPRETATION:
It is evident from the study that the position of current assets has increased during the year 2019-
2020 and a bit of decreased in the year 2020-2021 and 2021-2022.
30
 10. TABLE SHOWING CURRENT RATIO:
Current ratio is the ratio, which expresses the relationship between current assets & Current
liabilities
Year Current assets/Current liabilities Current ratio

2019-2020 589346976/281186842 2.09:1

2020-2021 795661636/453866977 1.75:1

2021-2022 685809250/297464982 2.30:1

Current Ratio= CA/CL

ANALYSIS:

In the above table we can observe that the current ratio is 2.09:1 in the year 2019-2020; and it
has decreased to 1.75:1 in 2020-2021; and at the end of 2021-2022 it is increased to 2.30:1 we
easily observe that the Current ratio has been maintained by the Bank quite satisfactorily.

GRAPH10:Graph10 Showing current ratio from 2019-2020 to 2021-2022:

Current ratio

2.3 2.09

1.75

INTERPRETATION:

The standard current ratio is 2:1. The current ratio for three financial years i.e., from 2019-
2020 to 11 are calculated & represented. From the above graph it is clear that the current ratio
position of the bank is very good i.e., the bank has properly managed its working capital
requirements. In the year 2019-2020 has slight improvement but in the year 2021-2022 again the
company has sound financial position which is indicating upward trend.

31
 11.TABLE SHOWING ABSOLUTE LIQUID RATIO:

Absolute liquid assets include only cash and bank balance or temporary investment. The
acceptable standard of this ratio is 1:2

Year Absolute liquid assets / current liability Liquid ratio

2019-2020 56684810/281186842 0.20:1

2020-2021 42195076/453866977 0.09:1

2021-2022 47806333/297464982 0.16:1

Absolute liquid ratio = cash in hand + cash at bank/ current liabilities

ANALYSIS:

In the table the Absolute liquid ratio is 0.20:1 in the year 2019-2020; and it decreased to
0.09:1 in 2020-2021; and at the end of 2021-2022 it has increased to 0.16:1; it is fluctuating from
year to year.

GRAPH11: Graph11 Showing Absolute Liquid Ratio from 2019-2020 to 2010-2011:

Liquid ratio

0.16
0.2

0.09

INTERPRETATION:

This ratio measures the percentage of cash & receivables in total current liabilities. This ratio
indicates the amount of cash retained in bank. The standard ratio of the cash ratio is 1:1. The

32
bank has not reached the standard ratio in any of the years. But it has been decreased in the
financial year 2020-2021. We can also see there‟s an increase in the, ratio in 2021-2022.

33
 12.TABLE SHOWING DEBT EQUITY RATIO:
This is calculated to measure the relative claims of outsiders and the owners fund against the
firm‟s assets.

Year Outsiders fund / shareholder funds Debt equity ratio

2019-2020 650752065 / 83700374 7.77:1

2020-2021 871884638 / 102768089 8.48:1

2021-2022 779388837 / 116057491 6.71:1

Debt-equity Ratio = Debentures + current liabilities / shareholders fund

ANALYSIS:

In the above table we can observe that the debt equity ratio is 7.77:1 in 2019-2020 and it
increased to 8.48:1 in the year 2020-2021 and in the year of 2010-11 it decreased to 6.71:1 we
can easily come to know that the debt of the bank has been decreased & maintained wealth
against the firm‟s assets.

GRAPH12:Graph12 Showing Debt equity ratio from 2019-2020 to 2021-2022:

Debt equity ratio

6.71

8.48 Debt equity ratio

7.77

0 2 4 6 8 10

INTERPRETATION:
The standard debt equity ratio is 2:1. As per the calculation, in the year 2020-2021 has
made better performance towards debt equity ratio but it has come down to 6.71in the year 2021-
2022. The firm maintained properly its assets.
34
 13.TABLE SHOWING PROPRIETARY RATIO:
This ratio establishes the relationship between shareholder‟s funds to total assets of the firm. The
ratio of proprietor‟s funds to total funds is an important ratio for determining long term solvency
of the firm.
Years Share holders fund / total asset Proprietary ratio

2019-2020 453265597/ 734452439 0.61:1

2020-2021 520785750/ 974652727 0.53:1

2021-2022 597981346/ 895446328 0.66:1

Proprietary ratio= shareholders funds / total assets

ANALYSIS:

In the above table we can see that proprietary ratio in the year 2019-2020 it is 0.61:1 and in the
year of 2020-2021 it decreased to 0.53:1 and at the end of 2021-2022 it is slight increased to
0.66:1; it is seen that the proprietary ratio varies year to year.

GRAPH13:Graph13 Showing Proprietary Ratio from 2019-2020 to 2021-2022:

Proprietary ratio
0.8

0.6

0.4
Proprietary ratio
0.2

INTERPRETATION:

As the proprietary ratio represents the better long term solvency position of the company in
every financial year.

35
 14.TABLE SHOWING RETURN ON INVESTMENT RATIO:
Return on investment establishes the relationship between profit and the amount invested in the
firm.

Year Net profit / Capital employed ROI

2019-2020 17062349 / 144522374 11.80%

2020-2021 19067715 / 102768089 18.55%

2021-2022 21270385 / 116057491 18.32%

ROI=(net profit /capital employed) * 100

ANALYSIS:

From the above table we can observe that the return on investment ratio is 11.80% that is in
the year 2019-2020; and as well in the year 2020-2021 it increased to 18.55%; and in the year of
2021-2022 it is a bit of decreased to 18.32%.

GRAPH14: Graph14 Showing Return on investment ratio from 2019-2020 to 2010-2011:

ROI

20.00%

10.00% 18.55% 18.32% ROI

11.80%
0.00%

INTERPRETATION:
The standard ratio of ROI is 10%.acording to above calculation we can make out that the
company has fare ROI ratio in every year but there is a slight improvement in the year 2020-
2021 i.e., for 18.55; when compared to other two years. The return on investment ratio is

36
11.80% that is in the year 2019-2020; and in the year of 2021-2022 it is a bit of decreased to
18.32%.

37
 15.TABLE SHOWING FIXED ASSET TO NET WORTH RATIO:
This ratio measures the solvency of a firm, this ratio indicates the extent to which the
owner‟s cash is frozen.

Year fixed assets / share holders fund Net worth ratio

2019-2020 17232886 / 83700374 0.20:1

2020-2021 23475480 / 102768089 0.22:1

2021-2022 24862855 / 116057491 0.21:1

FA to Net Worth Ratio = FA/Share Holders Fund Share Holder Fund = Capital +
Reserves and Surplus
ANALYSIS:
The above table shows that the fixed assets to net worth ratio is 0.20:1 in 2019-2020; and
it increased to 0.22:1 in the year 2020-2021; and in the year of 2021-2022 it decreased to 0.21:1
that we can observe the fixed assets to net worth ratio is fluctuating from year to year.

GRAPH15:Graph15 Showing Fixed Assets to Net Worth Ratio from 2019-2020 to 2021-

Fixed Assets to Net worth

0.23 ratio
0.22

0.21
Net worth ratio
0.22
0.2 0.21
0.2
0.19

2022:

INTERPRETATION:

The company is having sufficient fixed assets in every year to meet the required net worth ratio
in a proper manner to maintained sound financial system.
38
 16. TABLE SHOWING INTEREST COVERAGE RATIO:

Year Operating ratio / interest paid Interest coverage ratio

2019-2020 28744470 / 21299467 1.34:1

2020-2021 31492050 / 24896206 1.26:1

2021-2022 37257972 / 17837816 2.08:1

Interest coverage ratio = Operating Profit/Interest paid, Operating profit= net profit +
depreciation

ANALYSIS:
From the above table the interest coverage ratio is 1.34:1 that is in the year of 2019-
2020; and in the subsequent year it decreased to 1.26:1; and in the year of 2021-2022 it increased
to 2.08:1; it is observed that the interest coverage ratio varies from year to year.

GRAPH16:Graph16 showing Interest Coverage Ratio from 2019-2020to 2021-2022:

Interest coverage
ratio
2.08

1.26 Interest coverage ratio

1.34

0 1 2 3

INTERPRETATION:
Usually higher interest coverage ratio is desirable. From the above table it is clear that the
interest coverage ratio has dipped to negative in the year 2020-2021. Where as in 2019-2020
there is increase in the interest coverage ratio. And it further increased in the 2020-2021, it is
earning a higher ratio is desirable.
39
 17.TABLE SHOWING SOLVENCY RATIO:
Any several formulas used to gauge a company ability to meet its long-term obligations. It is
calculated as total assets divided by total outsider‟s fund.

Year Total assets / Total outsider‟s fund Solvency ratio

2019-2020 734452439 / 650752065 1.12:1

2020-2021 974652727 / 871884638 1.11:1

2021-2022 895446328 / 779388837 1.14:1

Solvency Ratio = Total Assets/Total outsider‟s fund.

ANALYSIS:

From the above table the solvency ratio is 1.12:1 in the year of 2019-2020; and
decreased to 1.11:1 in the year of 2020-2021; and in the year of 2010-11 it increased to 1.14:1; it
is observed that the solvency ratio varies from year to year.

GRAPH17: Graph17 Showing Solvency Ratio from 2019-2020to 2021-2022:

Solvency ratio

1.14 1.12

1.11

INTERPRETATION:
Solvency ratio refers to the ability of the bank to meet its total liabilities out of its total assets.
There is no standard ratio instead of higher the standard ratio the stronger will be the financial

40
position. The above table shows that the banks financial position to meet its total liabilities out of
its total assets is high.

41
 18. TABLE SHOWING ASSETS PROPREITORY RATIO:
This ratio indicates the extent to which proprietors‟ funds are invested in current assets.
Year current assets / share holder fund Asset proprietary ratio

2019-2020 734452439 / 453265597 1.62:1

2020-2021 974652727 / 520785750 1.87:1

2021-2022 895446328 / 597981346 1.49:1

Asset proprietary ratio = current assets / share holder fund

ANALYSIS:

In the above table the assets proprietary ratio in the year 2019-2020 is 1.62:1; it is increased to
1.87:1 in 2020-2021; and in the year 2021-2022 it is decreased to 1.49:1.

GRAPH18: Graph18 Showing Assets Proprietary Ratio from 2019-2020 to 2021-2022:

Asset proprietary ratio

1.87
2
1.62
1.49
1.5

1 Asset proprietary ratio

0.5

INTERPRETATION:
There is no rule thumb for this ratio and depending upon the nature of the business there may be
different ratios for different fi

42
 CHAPTER V

SUMMARY OF FINDINGS,
SUGGESTIONS AND
CONCLUSION
 FINDINGS, CONCLUSION & SUGGESTIONS:
FINDINGS:
 The study has been undertaken to march deeply into the financial performance and to
depict the financial position of Indian Bank. The analysis has made on the statements of
the organization through various financial tools.
 The income has increased tremendously through the years, which concludes that the
products and Services by the company are finding a good market in the industry. The
overall income of the bank for the 2020-2021 is Rs.85962.07 Crore, which shows
company‟s progress.
 There is a steady increase in the Net profit of the company, which shows the profitability
position of the company. The profit of the bank are Rs. 9166.05Crore for the year 2020-
2021-22, Rs.9121.23Crore (2020-2021), Rs.6729.12Crore (2019-20), Rs.4541.65Crore
(2018-19), Rs.4407.01Crore (2016-17).
 Cash & Bank Balances with RBI has almost three times more in four years from
Rs.29076.43Crore to Rs.61290.87Crore.
 There is an increasing trend in Reserves and Surplus to Rs.65314.32Crore in the year
2021-2022 from Rs.30772.26Crore in the year 2008.
 A deposit of the bank is increasing to greater extent, which is good sign for the bank. The
deposits amounts touches to Rs.804116.23Crore in the year 2021-2022 from
Rs.435521.09 Crore in the year 07 due to increase in deposits of branches in India and
outside India.
 Borrowings of the bank have almost tripled in four years from Rs.39703.34 Crore to
Rs.103011.60 Crore in the year 2021-2022 & this is the highest borrowing when
compared last 3 years. It as increased from 53,713.68 crore of 09 to 103011.60 almost
double. The composition of the bank as been changed has been changed.
 The investment in fixed assets has shown the increasing trend from year to year. The
fixed assets of the bank were Rs.8061.92crore in the year 07 has increased to
Rs.11831.63 Crore for the year 2021-2022.
 Loans & Advances given by bank has increased to Rs.631914.51Crore from
Rs.542503.20Crore in the year 2020-2021.

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  Operating expenses has been increasing for the past three years, but the increase is
marginally lesser compare to increase in the business activity. So it will not affect the
profitability of the bank.
 The other income of the bank as increased from 17.14% of 2021-2022 to 15.86%of the
previous year.
 Current ratio of the bank is up to 9:1 which is more than the standard ratio 2:1.which is
good sign for the bank.
 Return on assets of the bank is decreasing to 1.74% of 2021-2022 from 1.89% of 2020-
2021.
 Net profit margin ratio as been decreased from 10.66% of 2020-2021 to11.92% of 2020-
2021
 Debt equity ratio is increased from 12.07% to 11.86%.
 Profit per Employee is continuously increasing from the past, which shows how
efficiently employees are working & how they are utilized effectively.
 The liability base of the bank would not provide an adequate cover for long-term
creditors.
 Interest coverage Ratio has increased in the year 2019-2020 when compared to the
2019; but it as again decreased to 0.213% in the year 2021-2022.
 Interest Expense Ratio has increased in the year 2019-2020 when compared to the 2019;
but it as again decreased to 55.05% in the year 2021-2022.
SUGGESTIONS
By the analysis and interpretation of financial statements of HDFC BANK, the
following suggestions can be put forth:
 The bank can increase its market share in India‟s expanding banking and financial
services industry by following a disciplined growth strategy and delivering high quality
customer service.
 HDFC Bank has to provide more ATMs and branches in different localities of India
such as towns and cities of it to generate maximum facilities & gather more number of
customers‟ & to facilitate their operations to maximum places.
 The bank‟s services like phone Banking, Internet banking and mobile banking as
reaching customers because of their awareness towards the bank. So they have to keep on
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 attracting customers and their attention towards the bank.
 Maximum funds are transferred to reserves; their amounts should be used for the
improvement of the business activities and for diversification.
 It is necessary to know the efficiency of the employees, which is also one of the
important indicators of the financial position of the organization. Bank has to provide
proper training facilities and utilize the employees to maximum extent.
 The company should use the shareholders‟ funds effectively, has to pay regular dividends
& has to satisfy them.
 The operating expenses should be minimized to the possible extent with efficient
budgetary control, so that the profitability position will increase.
 The bank should try to avoid the idle cash in hands & has to maximize its lending
operations.

Other Valuable Suggestions:

 Some of the activities of the bank may be out sourced to the professionals so as to
quicken the decision making process.
 Bank should obtain marketing executives and try to build brand image.

 Credit portfolio, should improve so as include lending to salaried professionals.

 Flexible credit procedure and credit standards for each type segment should be
framed and reviewed.
 Branch Manager should be given targets for both deposits and advances and they
may be accountable for recovery so that each branch becomes profit center.
 Bank should not go for deposits in surplus in other co-operatives banks, rather it
concentrate on commercial banks and Governments securities.
 To improve its credit portfolio it may go institutional sales.

 To increase the profits, it can increase the scope of bills of exchange and re-
discounting on bills of exchange.
 The profitability can be in two ways – by more effective utilization of assets or by
reducing the expenses.

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 CONCLUSION
The study of HDFC BANK” has been undertaken with the objective to analyze and interpret the
bank‟s financial performance. The analysis of the bank was undertaken with the help of ratios,
which are important tools of financial analysis.
In general, the bank has achieved tremendous progress over many years. The bank has a
healthy financial performance. The bank has been able to achieve heavy growth across multiple
parameters, including customer‟s acquisition, geographical spread, business volumes and
revenues.
The Bank has spread its roots and branches to all over India. It has the capability to go for
overseas, and some of the branches are there too on which the bank has to decide the time for
more expansion of their banking facilities in all the towns and cities of India. At present it has
5000th rural branch, 22222nd ATM‟s & over all it has 13333 branches & 2850 outlets of business
correspondents / facilitators all over India this is up to date info as on 6th February – 2012.
The company maintains well-trained, qualified employees, which is a big asset to the
company and the bank as to use them to the maximum extent for the improvement of the bank
through out India with effective performance.
Thus, ratio analysis has been a very useful technique, which has highlighted the
performance of HDFC Bank in key-areas and also has helped in the avocations of certain
strategies to be followed by HDFC Bank, which is eyeing to its future growth through
modernization techniques and tool to achieve a position of well versed bank of India.
My overall conclusion is that the HDFC bank is the one of the best banks in our India
having a good reputation towards the customers of its & with in it having a tremendous financial
performance over a past few years but it as to be strengthen in some of the key areas to achieve
even more better performance and not to fall in future. Now at present it is touching the
grassroots and sowing seeds of prosperity.

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I got all the information regarding the study of Financial Analysis of HDFC Bank with written
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Financial Analysis On HDFC Bank
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