HDFC BANK

CMP- Rs. 2,091.60 DATE- 25.06.2018

HIGHLIGHTS:

Banking sector is sufficiently

capitalized and well regulated in

Indian economy. Total money

supply increased at a CAGR of

11.4%, lending and deposits

increased at a CAGR of 20.7% and

19% respectively. Strong growth in

savings amid rising disposable

income levels are the major

factors influencing deposits

growth. Roughly, the contribution

of the Banking sector to GDP is

about 7.7%.

HDFC Bank Limited is a major

Indian commercial bank in the

private sector. It was incorporated

in 1994.This Bank is engaged in

providing a range of banking and

financial services including retail

banking, wholesale banking and

treasury operations. HDFC Bank

has recorded a healthy market

capitalization of Rs. 544,506.16

Cr. The financial performance of

Bank during the year ended 31st

march 2018 remained healthy

with Income increasing by 17.64 %

to Rs. 10,134,445 lakh from Rs.

8,614,899 Lakh in the previous

financial year 2016-17. Over the

course of 5 periods Income grew

from Rs. 5,085,252 lakh in FY

2013-14 to Rs. 10,134,445 lakh in FY 2017-18, its compound annual growth rate or its overall return was

14.79%. NII increased by 21.79 % and stood at Rs. 4,290,636 lakh in FY 2017-18 as against Rs. 3,522,977

lakh in previous FY 2016-17.Total expenses of the Bank reached to Rs 8,278,361 lakh by an increase of

COMPANY DETAILS

INDUSTRY BANKING & FINANCIAL SERVICES

MARKET CAP Rs. 544,506.16 Cr

52 WEEKS LOW / HIGH 1644.05/2170.05

BSE/ NSE CODE 500180/HDFCBANK

HEADQUATERS MUMBAI , MAHARASTRA, INDIA

FINANCIALS (In Lakh)

ITEMS 2015-16 2016-17 2017-18

INCOME 7,437,322 8,614,899 10,134,445

EXPENDITURE 6,155,589 7,086,158 8,278,361

PROFIT 1,280,133 1,525,303 1,851,002

NII 2,909,199 3,522,976 4,290,636

ASSETS 73,026,182 89,234,416 110,318,617

TOTAL BUSINESS 103,316,371 122,861,524 148,840,898

NPA (%) 0.28% 0.33% 0.40%

SHARE HOLDING PATTERN

SEGMENT WISE REVENUE

25.66%

12.08%40.43%

21.83%

Promoters

Mutual Fund

Foreign portfolio Investors

Others

13%

48%

27%

12% TREASURY

RETAIL BANKING

WHOLESALE BANKING

OTHER BANKING OPERATIONS

16.82 % from the FY 2016-17. Net Profit for the FY 2017-18 was Rs. 1,851,002 lakh, higher by 21.35% as

compared to previous FY 2016-17. Total Business (Deposit + Advances) has recorded Rs 148,840,898

lakh in FY 2017-18. HDFC Bank is the second largest private bank in India as measured by assets. NPA has

increased from 0.33% in FY 2016-17 to 0.40 % in FY 2017-18.It is the largest bank in India by market

capitalization. Bank has two subsidiaries, HDB Financial Services Limited and HDFC Securities Limited. As

per the shareholding pattern, Foreign portfolio investors held 40.43 % of total shares , afterwards

Promoters, Mutual Funds and Others held 25.66%,12.08% ,& 21.83% respectively. The Bank earned

more revenue from retail banking segment which was 48% of the total revenue. In Previous FY 2016-17

it was 50% of total revenue.

FINACIAL PERFORMANCE:

PARTICULARS 2016-17 2017-18

(Rs. In lakh)

NET WORTH 9,179,395 10,959,912

BORROWINGS 9,841,564 15,644,208

INVESTMENTS 21,077,711 23,846,092

ADVANCES 58,548,099 70,003,384

NET PROFIT MARGIN (%) 17.71 18.26

EPS(Rs.) 59.16 70.76

ROA (%) 1.71 1.68

ROE (%) 16.62 16.89

The financial performance of the Bank remained healthy during the FY2017-18 with Net worth

increasing by 19.40 % to Rs. 10,959,912 lakh from Rs. 9,179,395 lakh in the previous FY 2016-17.The

Bank posted borrowings & Investments of Rs. 15,644,208 lakh & Rs. 23,846,092 lakh respectively for the

FY 2017-18 as against Rs. 9,841,564 lakh & Rs. 21,077,711 lakh respectively for the FY 2016-17.Advances

stood at Rs. 70,003,384 lakh in FY 2017-18.Net profit margin of the bank has increased to 18.26 % in FY

2017-18 from 17.71 % In FY 2016-17. EPS has increased by 19.60 % from Rs. 59.16 in FY 2016-17 to Rs.

70.76in FY 2017-18.ROA & ROE stood at 1.68 % &16.89 % respectively in FY2017-18.

FINANCIAL ANALYSIS:

SHAREHOLDERS' FUND:

By considering the above graph we can analyze, shareholder’s Fund of the company increased Y-O-Y.

Shareholders’ Fund stood at Rs. 10,959,912 Lakh for the FY 2017-18, increased by 19.40 % as compared

to the previous FY 2016-17 mainly on account of increase in share capital of 1.27 % and reserve and

surplus of 19.50 %.Reserve and surplus stood at Rs. 10,908,011 Lakh in FY 2017-18 on the back of

increase in Statutory reserve, General reserve, Share premium account, Capital reserve and Foreign

currency translation account respectively.

ASSETS:

As like shareholders’ Fund, assets of the Bank has recorded as impressive growth in Y-O-Y basis .In FY

2017-18, It has increased by 23.63 % to reach at Rs 110,318,617 Lakh as against as Rs 89,234,416 Lakh in

4,416,573

6,315,4077,430,413

9,179,395

10,959,912

2013-14 2014-15 2015-16 2016-17 2017-18

SHAREHLODERS' FUND (In Lakh)

50,361,99660,709,652

73,026,182

89,234,416

110,318,617

2013-14 2014-15 2015-16 2016-17 2017-18

ASSETS (In Lakh)

FY 2016-17 mainly on account of an increase in Cash and balances with Reserve Bank of India of 176.15

% , Balances with banks and money at call and short notice of 61.16%, Investments of 13.13% and

Advances of 19.57% etc.

TOTAL BUSINESS:

The above graph depicts that both deposits & advances is moving up Y-O-Y. The total Business of the

bank registered a growth of 21.15 % to reach at Rs. 148,840,898 lakh as on 31st mar 2018, while the

total deposits increased by 22.58 % to reach Rs. 78,837,514 lakh & total advances grew by 19.57 % to

reach Rs. 70,003,384 lakh as on 31st mar, 2018. Strong growth in savings amid rising disposable income

levels are the major factors influencing deposit growth.

CASA:

By considering the above graph we see that both saving deposits and current deposits are moving

upward momentum in Y-O-Y basis. Savings Account Deposits grew by 15.61 % to Rs. 22,379,687 lakh

36,708,033 45,028,365 54,587,329 64,313,425 78,837,51431,541,886 38,340,79748,729,042

58,548,09970,003,384

2013-14 2014-15 2015-16 2016-17 2017-18

TOATL BUSINESS

DEPOSITS (In Lakh) ADVANCES (In Lakh)

10,313,261 12,492,660 14,788,612 19,357,863 22,379,6876,129,7497,333,874

8,827,424

11,536,98511,901,021

2013-14 2014-15 2015-16 2016-17 2017-18

CASA

SAVING DEPOSITS (In Lakh) CURRENT DEPOSITS (In Lakh)

while Current Account Deposits grew by 3.16 % to Rs. 11,901,021lakh as on March 31, 2018. The

proportion of Current and Savings Deposits to total deposits was at 48.97 per cent as on March 31,

2018.

INVESTMENTS:

By looking the above graph it could be analyze that, Investment of the bank has grown Y-O-Y. The

Investment portfolio of the Bank has reached to Rs. 23,846 092 Lakh as on 31st mar 2018, which

increased by 13.13 % from the previous year due to more investment in Government securities, shares,

Debentures and bonds, in India & also other investment in outside India.

INCOME VS. EXPENDITURE:

11,957,10614,945,441 16,168,334

21,077,71123,846,092

2013-14 2014-15 2015-16 2016-17 2017-18

INVESTMENTS (In Lakh)

5,085,2526,021,218

7,437,3228,614,899

10,134,445

4,208,8024,951,213

6,155,5897,086,158

8,278,361

2013-14 2014-15 2015-16 2016-17 2017-18

INCOME VS. EXPENDITURE

INCOME (In Lakh) EXPENDITURE (In Lakh)

By considering the above graph we can analyze that both the income & expenditure line have increased

in same manner. In FY 2017-18, Income & Expenditure stood at Rs. 10,134,445 lakh & Rs. 8,278,361

Lakh respectively.

INCOME:

The financial performance of HDFC Bank during the year ended march 31st , 2018 remained tough with

total income increasing by 17.64 % to Rs. 10,134,445 lakh from Rs. 8,614,899 Lakh in the previous

financial year march 31st 2017.

Income growth was driven by an increase in both interest earned & other income. Interest earned

was up by 16.39 % from Rs. 7,327,135 lakh in FY 2016-17 to Rs. 8,528,784 lakh in FY 2017-18 due to

increase in discount on advances, Income from investments, and others

Other Income grew 24.69 % over that of the previous year to Rs. 1,605,660 lakh during the year

ended 31st March 2018. The largest component of Other Income was Commission, exchange and

brokerage. The other income drivers were Profit on sale of investments, Profit on sale of building

and other assets, Profit on exchange / derivative transactions and Miscellaneous income.

NET INTEREST INCOME:

NII recoded an impressive growth of Rs. 4,290,636 lakh in FY 2017-18 as against as Rs. 3,522,977 lakh in

FY 2016-17which grew by 21.79%.

EXPENSES:

Total expenditure stood at Rs. 8,278,361 lakh in FY 2017-18.

1,910,9572,337,803

2,909,199

3,522,977

4,290,636

2013-14 2014-15 2015-16 2016-17 2017-18

NET INTEREST INCOME (In Lakh)

Interest expanded increased by 11.40 % to reach at Rs. 4,238,148 lakh in the year ended 31st March

2018 mainly on account of Interest on deposits, Interest on RBI / inter-bank borrowings etc.

Operating expenses grew by 15.30 % to reach at Rs. 4,238,148 lakh in the year ended 31st Mar 2018

because of increase in Payments to and provisions for employees, Rent, taxes and lighting, Printing

and stationery, Advertisement and publicity, Depreciation on bank's property, Auditors' fees and

expenses, Law charges, Postage, telegram, telephone etc, Repairs and maintenance, Insurance etc.

Total Provisions and Contingencies were Rs. 1,647,490 lakh for the year ended March 31, 2018 as

compared to Rs. 1,206,893 lakh in the year ended 31st March 2017 year. Bank’s provisioning

policies remain higher than regulatory requirements.

NET PROFIT:

By looking the 5 years performance, it could be analyzed that, Net profit of the bank has grown Y-O-Y.

The net profit for the year ended March 31st, 2018 was Rs. 1,851,002 lakh, up 21.35% over the year

ended March 31st 2017 owing to increase in net interest income, profit on sale of investments, profit

on revaluation of investments etc.

NET PROFIT MARGIN:

874,3491,068,889

1,280,1331,525,303

1,851,002

2013-14 2014-15 2015-16 2016-17 2017-18

NET PROFIT (In Lakh)

17.19

17.75

17.21

17.71

18.26

2013-14 2014-15 2015-16 2016-17 2017-18

NET PROFIT MARGIN (%)

During the FY 2017-18, Net profit Margin stood at 18.26% , as against 17.71 % in the previous year 2016-

17 .It has increased 0.55 % as compared to its previous FY 2016-17 because of well control of expenses.

EPS VS. BPS:

Earnings per share has increased from Rs. 59.16 in the year ended 31st March 2017 to Rs. 70.16 in the

year ended 31st March 2018 , primarily on account of increase in Net profit of the company.

During the FY 2017-18, Book value per share grew at Rs. 64.12 from the previous financial year ended 31

march 2018 due to increase in Net worth as well as No. of outstanding common shares. In FY 2017-18,

BPS stood at Rs. 422.33.

RETURNS:

36.31 43.6 50.24 59.16 70.76

184.1251.96

293.9358.2138972

422.332609

2013-14 2014-15 2015-16 2016-17 2017-18

EPS VS. BPS

EPS (Rs.) BPS (Rs.)

1.74 1.76 1.75 1.71 1.68

19.8016.93 17.23 16.62 16.89

2013-14 2014-15 2015-16 2016-17 2017-18

RETURNS

ROA(%) ROE (%)

Return on Equity reached to 16.89 % in the fiscal year ended 31st Mar 2018, marginally higher by 0.27 %

as compared to previous year ended 31st Mar 2017. Return on Assets for the year 2017-18 was 1.68 %,

which was a little bit lower as compared to previous year 2016-17.

NPA:

Net NPA was 0.40 % in the year ended 31st march 2018 as against 0.33 % in the year ended 31st march

2017 due to increase Provisions & contingencies.

CASH FLOW ANALYSIS:

By considering the above graph it could be analyzed that, Net cash flow was negative in FY 2014-15

mainly on account of Purchase of fixed assets, Investment in subsidiaries and / or joint ventures,

Dividend paid. After this year, company has positive cash flow. In FY 2017-18, net cash flow of the

company was Rs. 7,375,043 lakh due to positive cash flow in financing activities and operating activities.

0.25 0.250.28

0.33

0.40

2013-14 2014-15 2015-16 2016-17 2017-18

NET NPA (%)

1,238,226

-338,701

254,2461,024,224

7,375,044

2013-14 2014-15 2015-16 2016-17 2017-18

NET CASH FLOW (In Lakh)

CONCLUSION:

HDFC Bank has positioned itself as a bank which gives higher standard of services through product

innovation for the diverse need of individual & corporate clients. In FY 2017-18, the financial

performance was healthy, impressive & also recorded a positive cash flow.

CONSOLIDATED BALANCE SHEET OF HDFC BANK Rs. In Lakh

PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18

CAPITAL AND LIABILITIES

Capital 47,891 50,130 50,564 51,251 51,902

Reserves and surplus 4,368,682 6,265,277 7,379,849 9,128,144 10,908,011

Minority interest 15,174 16,163 18,062 29,144 35,633

Deposits 36,708,033 45,028,365 54,587,329 64,313,425 78,837,514

Borrowings 4,959,672 5,947,825 7,176,345 9,841,564 15,644,208

Other liabilities and provisions

4,262,455 3,401,893 3,814,033 5,870,888 4,841,349

Total 50,361,996 60,709,652 73,026,182 89,234,416 110,318,617

ASSETS

Cash and balances with Reserve Bank of India

2,535,722 2,752,229 3,007,658 3,791,055 10,468,821

Balances with banks and money at call and short

notice

1,455,621 900,413 899,230 1,140,057 1,837,335

Investments 11,957,106 14,945,441 16,168,334 21,077,711 23,846,092

Advances 31,541,886 38,340,797 48,729,042 58,548,099 70,003,384

Fixed assets 302,328 322,494 347,970 381,470 381,056

Other assets 2,569,303 1,966,457 3,873,948 4,296,024 3,781,929

Total 50,361,996 60,709,652 73,026,182 89,234,416 110,318,617

Contingent liabilities 72,317,291 97,527,860 85,352,738 81,828,429 87,577,697

Bills for collection 2,094,306 2,230,493 2,349,000 3,084,804 4,275,383

CONSOLIDATED PROFIT & LOSS OF HDFC BANK Rs. In Lakh

PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18

INCOME

Interest earned 4,255,502 5,066,649 6,316,156 7,327,135 8,528,784

Other income 829,750 954,568 1,121,165 1,287,763 1,605,660

INCOME 5,085,252 6,021,218 7,437,322 8,614,899 10,134,445

EXPENDITURE

Interest expended 2,344,545 2,728,846 3,406,957 3,804,158 4,238,148

Operating expenses 1,246,965 1,457,752 1,783,188 2,075,107 2,392,722

Provisions and contingencies 617,291 764,615 965,443 1,206,893 1,647,490

EXPENDITURE 4,208,802 4,951,213 6,155,589 7,086,158 8,278,361

PROFIT

Net profit for the year 876,451 1,070,005 1,281,733 1,528,740 1,856,084

Less : Minority interest 2,465 1,441 1,972 3,672 5,134

Add : Share in profits of associates

36,316 32,494 37,278 234 52

Consolidated profit for the year attributable to the Group

874,349 1,068,889 1,280,133 1,525,303 1,851,002

Impact on amalgamation [Refer Schedule

2,745

Balance of profit brought forward

1,147,594 1,520,747 1,955,086 2,482,559 3,453,233

2,021,942 2,589,636 3,235,220 4,010,606 5,304,235

APPROPRIATIONS

Transfer to Statutory Reserve 216,145 262,387 318,093 377,716 456,203

Proposed dividend 164,335 200,520 240,178

Tax (including cess) on dividend

28,497 42,454 51,235 2,560 5,077

Dividend (including tax / cess thereon) pertaining to previous

year paid during the year

485 84 -1,171 -169 339,058

Transfer to General Reserve 85,584 103,859 122,962 145,496 174,867

Transfer to Capital Reserve 5,827 22,492 22,215 31,341 23,552

Transfer to / (from) Investment Reserve Account

322 2,754 -852 429 -4,420

Balance carried over to Balance Sheet

1,520,747 1,955,086 2,482,559 3,453,233 4,309,898

Total 2,021,942 2,589,636 3,235,220 4,010,606 5,304,235

EPS (Face value Rs. 2/- per share)

Basic 36.58 44.10 50.85 59.95 71.73

Diluted 36.31 43.60 50.24 59.16 70.76

CONSOLIDATED CASH FLOW STATEMENT OF HDFC BANK Rs. In Lakh

PARTICULARS 2013-14 2014-15 2015-16 2016-17 2017-18

Cash flows from operating activities

Consolidated profit before income tax

1,318,964 1,606,829 1,949,499 2,333,115 2,841,311

Adjustments for:

Depreciation on fixed assets 68,868 68,045 73,803 88,619 96,678

(Profit) / loss on revaluation of investments

-651 -5,563 1,737 -875 15,704

Amortization of premier on held to maturity investments

8,065 8,055 10,028 17,566 35,991

(Profit) / loss on sale of fixed assets

-337 -1,113 12 162 118

Provision / charge for non performing assets

185,062 203,774 251,799 370,243 575,533

Provision for dimunition in value of investments

-412 -382 1,465 -764 3,081

Floating provisions 5,768 3,220 11,500 2,500

Provision for standard assets 23,435 31,035 46,489 43,123 65,757

Provision for wealth tax 77 77

Contingency provisions -29,339 5,904 2,186 3,884 39,612

Share in current year's profits of associates

-363 -325 -373 -234 -52

1,579,136 1,919,556 2,348,146 2,857,339 3,673,734

Adjustments for:

(Increase) / decrease in investments (excluding

investments in subsidiaries and joint ventures)

-867,704 -4,502,040

-1,235,750 -1,732,577 -2,823,105

(Increase) / decrease in advances -7,004,150

-7,035,602

-10,660,130

-10,189,050

-12,030,537

Increase / (decrease) in deposits 7,098,856 8,320,332 9,558,964 9,726,096 14,524,089

(Increase) / decrease in other assets

-661,787 663,282 -384,857 -448,553 523,364

Increase / (decrease) in other liabilities and provisions

697,616 -928,892 313,247 2,283,377 -1,145,118

Increase / (decrease) in borrowings

- -

841,967 -1,563,364

-60,381 2,496,631 2,722,428

Direct taxes paid (net of refunds) -420,903 -564,734 -707,309 -768,472 -1,000,990

Net cash flow (used in) / from operating activities

421,063 -2,128,098

-767,690 1,728,159 1,721,438

Cash flows used in investing activities

Purchase of fixed assets -85,309 -77,236 -87,716 -115,776 -160,819

Proceeds from sale of fixed assets 1,300 3,311 1,161 1,008 77,033

Investment in subsidiaries and / or joint ventures

-22,658 -7,157 - -1,433

Net cash used in investing activities

-106,666 -81,082 -86,555 -114,768 -85,219

Cash flows from financing activities

Increase in minority interest 4,030 4,915 1,900 8,186 6,666

Money received on exercise of stock options by employees

72,329 99,542 122,290 226,152 272,591

Increase / (decrease) in borrowings (excluding subordinate

debt, perpetual debt and upper tier II instruments)

981,380 976,968 1,344,965 -338,987 5,010,144

Proceeds from issue of shares under Qualified Institutions

Placement and American Depository Receipt offering (net of

issue expenses)

- 972,279 - 1,000,000

Proceeds from issue of upper and lower tier II capital instruments

23,000 50,000 -

Redemption of subordinated debt - -41,400 -120,200 -190,845 -207,500

Dividend paid during the year -131,407 -164,928 -200,917 -240,831 -283,127

Tax on dividend -22,318 -27,989 -42,371 -52,973 -61,007

Net cash generated from financing activities

927,015 1,869,387 1,105,667 -589,297 5,737,766

Effect of exchange fluctuation on translation reserve

-3,185 1,092 2,824 -2,826 1,059

Cash and cash equivalents on amalgamation

2,956

Net increase / (decrease) in cash and cash equivalents

1,238,226 -338,701 254,246 1,024,224 7,375,044

Cash and cash equivalents as at April 1st

2,753,116 3,991,343 3,652,642 3,906,888 4,931,112

Cash and cash equivalents as at March 31st

3,991,343 3,652,642 3,906,888 4,931,112 12,306,156

REFERENCE:

http://www.hdfcbank.com/

https://en.wikipedia.org/wiki/HDFC_Bank