Submitted ByAditya Aggarwal Aditya Narayanan Anand Chandran Ankita Kunwar Kevin Abraham Pulkit Kabra Saket Deepak

About HDFC
Housing Development Finance Corporation Limited, more popularly known as HDFC Bank Ltd, was established in the year 1994, as a part of the liberalization of the Indian Banking Industry by Reserve Bank of India (RBI). It was one of the first banks to receive an 'in principle' approval from RBI, for setting up a bank in the private sector

The bank was incorporated with the name 'HDFC Bank Limited', with its registered office in Mumbai. The following year, it started its operations as a Scheduled Commercial Bank. Today, the bank boasts 1412 branches and over 3275 ATMs across India

About HDFC
Network
More than 2000 branches and 5998 ATMs in the country Operating in more than 990 cities All branches are OLRT connected 500 locations serviced through internet banking Representatives in Hong Kong, New York, London and Singapore

History Of HDFC Bank

1994 The Bank was Incorporated on 30th August. A new private sector Bank promoted by housing Development Corporation Ltd The bank is the first of its kind to receive an in-principle approval from the RBI for establishment of a bank in the private sector

History Of HDFC Bank

1995 The Bank opened its first branch in Ramon House at Churchgate, Mumbai on January 16th 1996 HDFC Bank set up a state-of-the-art dealing room to handle all transactions possible in Indian financial markets The Certificates of Deposits were awarded a PP1+ rating

History Of HDFC Bank

1997 HDFC installed state-of-the-art systems to facilitate inter-connectivity between branches and link up with on line system HDFC Bank, planned to set up an all-India on-line automated teller machine (ATM) network Proposed to launch tele-banking for the first time in June Becomes the first private sector bank to conclude a structured interest rate option deal

History Of HDFC Bank

1997 HDFC Bank entered into strategic alliances with 10 overseas banks to provide customers with a wide range of derivatives including interest rate and foreign currency swaps Introduced ATMs that converse in a regional language Introduced the Freedom Account for the average retail customer Launched an account across India that seeks to free depositors from minimum balance requirement, for the first time in the country

History Of HDFC Bank

1998 Signs an agreement with the National Stock Exchange (NSE) which will give it a second charge over the brokers deposit for providing loan against share facility to NSE brokers Becomes the first bank in India to link up its ATM network with all the three major payment systems world-wide Ties up with Master Card and Visa

History Of HDFC Bank

1998 First bank in the Asia-Pacific region to connect the American Express (Amex) payment system Sony India Ltd (SIL) joined hands with HDFC Bank to work out an innovative car finance package Tied up with BPL Ltd to offer Internet-enabled supply-chain management and business-to-consumer (B2C) e-commerce services to corporates

History Of HDFC Bank

1998 Hutchison Max Telecom and HDFC Bank introduced the country's first-ever mobile-banking services 2000 Become the first bank in the country to offer wireless application protocol (WAP) services to customers Tied up with financial portals, e-brokerages and the National Stock Exchange to enable broker payments for e-broking ventures

History Of HDFC Bank

2000 Launched its first B2C payment gateway which allows Visa and MasterCard credit card-holders to do transaction online and realtime Launched `eInstant Car Loans' a new scheme for offering customers a range of net-enabled loan products Launched depository services on the net Tied up with portal brainvisa.com to retail education loans to students

History Of HDFC Bank

2001 The Bank has launched the international Maestro debit card in association with Master Card Launches its credit card in June through link-ups with MasterCard and Visa Entered into a strategic tie-up with Tally Solutions Pvt. Ltd. to offer online real time accounting services to SMEs

History Of HDFC Bank

2002 HDFC Bank opens first overseas representative office Unveils Gold and Silver Cards Launched new products to its wealth management programme to increase its customer base. It introduced a non-interactive product named Financial Planner, which would be available for all its customers for an annual fee starting from Rs 10,000

History Of HDFC Bank

2003 Unveils resident foreign currency account Unveils co-branded credit card with e-Seva HDFC Bank, IRCTC in tie up for online railway booking Introduces 'HDFC Bank Health Plus Credit Card Launches India's first mobile payment solution

History Of HDFC Bank

2005 Launches loyalty rewards programme for its debit and credit cardholders under the name InstaWonderz Unveils credit card for farmers 2006 Osim to join hands with HDFC Bank for consumer loans Inaugurates VbV facility for online shopping

History Of HDFC Bank

2007 Signed an agreement with Tata Pipes to offer credit facilities to farmers across the country 2008 HDFC Bank and Centurion Bank of Punjab merger at share swap ratio of 1:29 Launches Indias First Online Market Linkage Programme For Self Help Groups

History Of HDFC Bank

2009 HDFC Bank launches Meritus Scholarship Programme The Asian Banker declares HDFC Bank the Best Retail Bank 2010 Decided to pay variable interest rate on recurring deposits

Amalgamations
In 2002, HDFC Bank witnessed its merger with Times Bank Limited (a private sector bank promoted by Bennett, Coleman & Co. / Times Group). With this, HDFC and Times became the first two private banks in the New Generation Private Sector Banks to have gone through a merger. In 2008, RBI approved the amalgamation of Centurion Bank of Punjab with HDFC Bank. With this, the Deposits of the merged entity became Rs. 1,22,000 crore, while the Advances were Rs. 89,000 crore and Balance Sheet size was Rs 163000 crore

Capital Structure
At present, HDFC Bank boasts of an authorized capital of Rs 550 crore (Rs5.5 billion), of this the paid-up amount is Rs 424.6 crore (Rs.4.2 billion). In terms of equity share, the HDFC Group holds 19.4%. Foreign Institutional Investors (FIIs) have around 28% of the equity and about 17.6% is held by the ADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). The bank has about 570,000 shareholders. Its shares find a listing on the Stock Exchange, Mumbai and National Stock Exchange, while its American Depository Shares are listed on the New York Stock Exchange (NYSE), under the symbol 'HDB'

Awards
CNBC TV18's Best Bank & Financial Institution Awards Best Bank Dun & Bradstreet Banking Awards 2011 - Best Private Sector Bank SME Financing ISACA 2011 award for IT Governance - Best practices in IT Governance and IT Security Euromoney Awards for Excellence 2011 - Best Bank in India FINANCE ASIA Country Awards 2011: India - Best Bank, Best Cash Management Bank, Best Trade Finance Bank Asian Banker - Strongest Bank in Asia Pacific Bloomberg UTV's Financial Leadership Awards 2011 - Best Bank

Awards
IBA Banking Technology Awards 2010 Winner 1) Technology Bank of the Year 2) Best Online Bank 3) Best Customer Initiative 4) Best Use of Business Intelligence 5) Best Risk Management System IDC FIIA Awards 2011 - Excellence in Customer Experience The Banker and PWM 2010 Global Private Banking Awards-Best Private Bank in India

Awards
Forbes Asia- Fab 50 Companies - 5th year in a row NDTV Business Leadership Awards 2010- Best Private Sector Bank Business Today Best Employer Survey- Listed in top 10 Best Employers in the country Asian Banker Excellence Awards 2010 Best Retail Bank in India Excellence in Automobile Lending Best M&A Integration Technology Implementation

HDFC Credit Card Vs Debit Card

HDFC Credit Card Vs Debit Card

For HDFC, one of the largest private sector banks of India, the number of credit cards and debit cards have been comparable, unlike other banks such as ICICI and SBI, whose credit card debit card deficit have been significant Over a span of 2 years, the number of debit cards have gone up by 71.85% to 4.36 million by the end of March 2011, whereas the number of credit cards have increased by 19.53 % to 5.22 million. On comparing HDFC with ICICI and SBI, we discovered two interesting patterns: HDFC is the only bank among the three whose credit cards outnumber debit cards. Secondly, the absolute numbers of cards are considerably fewer than that of ICICI and SBI

Most Social Engagement Bank

Stock prices

Facts
Despite macroeconomic headwinds, the bank was able to maintain its net non-provisioning assets at 0.2 per cent on a sequential basis. At 81.3 per cent, the provision coverage ratio was also healthy It is better placed than many peers to maintain its asset quality. However, it has significant exposure (around 15 per cent) to the small and medium enterprises (SME) segment HDFC Banks loan growth stood at a healthy 25.6 per cent, up 560 basis points over the June quarter. According to the management, while retail loan growth remained on track, growth in the corporate lending segment was mainly led by working capital loans and ongoing loans. The loan book was boosted by 38-40 per cent year-on-year growth in business banking loans to SMEs, commercial vehicle, construction equipment and home segments

Facts
Though the deposit growth has nearly halved from 30.4 per cent in the year-ago quarter, at 18.1 per cent, it was higher than the 15.4 per cent seen in the June quarter, and in line with the managements aim Despite the tough macroeconomic environment, at 4.1 per cent, the bank was able to control its net interest margin compression to 10 basis points. This is within the managements target range of 3.9-4.2 per cent

Porters Forces
Bargaining power of suppliers RBI rules and regulations

Threat of new entrants Product differentiation very difficult Entry barriers

Threat of competitors Large number of banks Strong exit barriers Low switching costs

Threat of substitutes Deposits in posts Non Banking financial sector growing rapidly

Bargaining power of consumer Numerous alternatives Low switching costs Increasing consumer awareness

Porters Forces
Threat of Competitors Large number of banks There are so many banks competing against each other for the same set of people

Strong exit barriers There are a lot of customers who are at stake and numerous legal obligations which need to be fulfilled Low switching cost Costumers switching cost is very low, they can easily switch from one bank to another bank

Porters Forces
Bargaining power of suppliers RBI rules and regulations RBI lays down rules and regulations according which the banks are governed

Porters Forces
Bargaining power of consumers Numerous Alternatives There are numerous banks competing against each other for the same set of people

Low switching cost Costumers switching cost is very low, they can easily switch from one bank to another bank
Increasing consumer awareness With the increasing amount of information available to the consumer, banks have to be more competitive and customer friendly to serve them. If not, the consumer can easily switch to their competitors

Porters Forces
Threat of new entrants Product differentiation very difficult Services provided by banks are not highly differentiated which increases the bargaining power of consumers

Entry Barriers Reserve Bank of India has laid out a stagnant rules and regulation for new entrant in Banking Industry

Porters Forces
Threat of substitutes Non-Banking financial sector These are financial resources outside the traditional banking system which has witnessed a tremendous growth in recent years in India NBFC is a close substitute of banking in respect of raising funds. Deposit in Posts Post office provides services like fixed deposits, savings account, recurring account etc. The interest rate of saving account is higher than private banks. Since it is fully secured by the government, people who do not want to take risks look at post office saving as a good substitute

Industry Size
Indias GDP (USD Billion PPP) 4057 Share of Services (% of GDP) 55.2 Banking and Insurance Size (USD Billion) 395.96
00

Composition of Service Sector

0 0.18% 1.81% 2.53% 2.74% 9.76% Storage

11.36% 9.40%

Transport
Railways Hotels & Rest. Commu. Banking & Insurance Trade

14.67%

20.61%

26.94%

Real Estate Other Services Public Admin. & Defence

Source:http://www.interlinkre.com

Growth
Annual growth in Banking and Insurance sector which forms a part of Indias services
25.00%

20.60%
20.00% 15.90% 16.70% 14% 11.30%

15.00%
10.00% 5.00% 0.00%

Annual Growth

2005-06 2006-07 2007-08 2008-09 2009-10

Source:http://www.interlinkre.com

Segmental Analysis
Reserve Bank of India

Scheduled Commercial Bank

Commercial Bank Co-operative Bank

Non-Scheduled Commercial Bank

Local Area Bank

Foreign24

Regional rural6

Urban Bank

State Bank

Public Sector26

Private Sector22

SBI Group7

Nationalized19

New7

Old15

Segmental Analysis
PSU Banks Government of India holds majority of stakes in PSU banks. They are the largest category in the Indian banking system Regional Rural Banks Established during 1967-1987, they are jointly owned by the Central government, State Government and a sponsoring public sector commercial bank Private Sector Banks They have major portion of the share capital with private individuals and corporates. Non-nationalized are old private banks and nationalized in 1993 are termed as new private banks Foreign Banks They have their head offices in a foreign country but operate their branches in India

Segmental Analysis
50000 40000 30000 20000 10000 0 39257 44901 Profit during the year Public Sector Banks 13111 4741 2010 100.00% 50.00% 0.00% 2011
Source:http://rbidocs.rbi.org.in

17712 7719 2011

Private Sector Banks Foreign Banks

Amount in Crore Rupees

62.81% 35.09% 14.38%

Growth in profit during the year Public Sector Banks Private Sector Banks Foreign Banks

Basis of Competition
The following factors have influenced the increase in competition in the banking sector Profitability - Higher profitability compared to the past or international standards. This attracts new entrants which increases the competition in the industry Technological Changes This enable quicker and more efficient service Product Innovations Features such as home banking, ATMs etc are making the industry fiercely competitive Entry/Exit Norms Though regulatory barriers have been eased, desirable barriers exist in the form of capital and other requirements Increasing consumer awareness - consumers of banking services are getting increasingly agile, enlightened, cost and quality conscious. They are already forcing the pace of competition on price, product and quality products

Critical Success Factors

IT

Diversified Products

Critical Success Factors

New Technology

Managing NPAs

Low Employee Cost

Critical Success Factors

There are 5 critical success factors applicable in the banking sector

IT and New technology Technology has the potential to change approached to marketing, advertising, designing, pricing and distributing financial products and services and cost savings in the form of an electronic, self-service medium. Technology holds the key to the future success of Indian Banks
Features like internet banking, anytime, anywhere banking, tele-banking, remote access, multi city chequing facilities etc have become a key differentiator Low employee cost Focusing on increasing employee efficiency by adopting people centric policies. There are various methods that are used to achieve this.

Critical Success Factors

Managing NPAs NPAs have been on of the major problems for Indian banks. However due to the active steps taken by the regulatory authorities and the banks, the gross NPA level has been reduced. To ensure long-term profitability, banks have to manage NPAs effectively by adopting the many techniques Diversified Products Diversification in the product set gives the customer a wider variety of choices which enhances the banks competitive edge. Innovation/New product is a key driver of growth that surprises and delights the customer with new, differentiated and relevant benefits

Demand Drivers
High Economic Growth

Increase in purchasing power

Sectors showing growth

Retail

Infrastructure

Telecom

Rural Markets

Exports/Imports

Demand Drivers
Retail Increase in demand for housing, car, personal loans etc

Infrastructure Increase in this

Telecom 3G and broadband spectrum auction have increased credit demand

Rural Markets As the economy grows there will be more penetration of private banks in rural areas
Exports/ Imports An increase in the export and imports would directly increase the business of banks through their transactions, loans, bills etc

Key Events
Main mergers and acquisitions in the Indian banking sector

HDFC Bank acquires Centurion Bank of Punjab (May '08)

Standard Chartered acquires ANZ Grindlays Bank (November '00) Bank of Baroda acquires South Gujarat Local Area Bank Ltd (June '04) ICICI Bank acquires Bank of Madura (March '01) Oriental Bank of Commerce acquires Global Trust Bank Ltd (August '04)

Regulations
Banks in India are governed by the Reserve Bank of India.

Banking Regulation Act, 1949 As per Section 5(c) of Banking Regulation Act, 1949 a "Banking Company" means any company which transacts the business of banking in India.
Explanation: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts the deposits of money from public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause. As per Section 5(b) of Banking Regulation Act, 1949 , banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.

Regulations
Banking Regulation Act, 1949 (continued) As per Section 5(d) of Banking Regulation Act, 1949 , company means any company as defined in Section 3 of the Companies Act, 1956 and includes a foreign company within the meaning of Section 591 of that Act. As per section 51 of Banking Regulation Act, 1949 , certain provisions of the Banking Regulation Act are also applicable to the State Bank of India , any corresponding new bank, a regional rural bank and any subsidiary bank. "Corresponding new bank" has been defined under clause(ee)of section 2 of the DICGC Act to mean a corresponding new bank constituted under the Banking Companies (Acquisition and Transfer of Undertakings ) Acts of 1970 or 1980.

Source: http://fiuindia.gov.in

Competitor Analysis
Strategies to enhance revenue

Efficient delivery of products and services can strengthen customer relationship which will reduce operational costs.
Banks are automating routine transaction and redesigning branches to suit local preferences for products , services and pricing. Banks are also adding customer facing functions that are specifically designed for their business.

Financial Analysis Deposits (Rs. Crore)

Foreign Banks, 240689

Private Sector Banks, 1002759

Public Sector Banks, 4372985

Sourcehttp://www.rbi.org.in/home.aspx

Deposits of Different Banks (Rs. Crore)

1400000 1200000 1000000 800000 600000 400000 225602 200000 0 Deposits 208586 189237 1245862

SBI & Associates

ICICI

HDFC

AXIS

CAR of Different Banks (%)

25.00% 20.00% 15.00% 10.00% 5.00% 0.00% CAR 19.50% 16.20% 11.98%

12.65%

SBI & Associates

ICICI

HDFC

AXIS

BUSINESS MODEL

Business Strategy
Increase the market share in India Expand the product range and the customers Improve the quality of customer service Innovate on the product and service range to attract more customers and address the existing inefficiencies Maintain a disciplined credit risk management Reduce banks cost of funds

HDFCs diverse loan portfolio along with superior lending practices de-risks its business model
Lower operating costs along with stable margins and high asset quality ensures sustainable profitability

Business Philosophy
Operational Excellence

People

Based on 4 Core Values

Customer Focus

Product Leadership

Improved Technology Adaptation

HDFC adopts the latest technology to provide the best for its customers
ATM facilities increased in number

Net banking, Phone banking etc. introduced and promoted

Retail Banking Products

Loan products o Auto loans, loans against securities, personal loans, credit cards, home loans, commercial vehicle finance etc. Depository products o Savings, Current, Fixed deposits Other products/services o Debit cards, mutual fund sales, insurance sales, NRI services, bill payment services

Retail
Retail mortgage accounts for around 2/3rds of the total loan Majority is of individual borrowers default rates are minimal Majority is for middle class, salaried employees; greater focus in Tier 2 and 3 cities ensures diversification of the retail portfolio

Wholesale Banking Products

Commercial Banking Working capital, term loans, bill collection, Forex and Derivatives, Letters of Credit, Guarantees Transactional Banking Cash management, custodial services, clearing bank services, tax collections, banker to public issues

Wholesale
HDFC is a financier to real estate developers increased chance of defaults Stringent norms like low loan-to-value(LTV) ratio of less than 65% [proportion of loan value to property value] Funding highly rated corporate Loans for acquisition of property in IT parks and industrial zones

HDFC Services
2001
2% 1% 14% 40% 43% Branches ATMs 25% Phone Banking Internet Mobile 12% 1% 17%

2008
Branches ATMs Phone Banking 45% Internet Mobile

SEGEMENTAL PRESENCE of HDFC

Key Segments
Treasury

Retail Banking Services

Wholesale Banking Services

ASSOCIATED COMPANIES
HDFC Bank HDFC Asset Management Company Ltd HDFC Standard Life Insurance Company Limited HDFC Sales

HDFC ERGO General Insurance Company ltd

HDFC Trustee Company Ltd.

HDFC Developers Ltd.

HDFC Investments Ltd.

HDFC Property Ventures Ltd.

Wholesale Banking Services

The Banks target market ranges from large manufacturing companies in the Indian corporate to small & mid-sized corporate and agri-based businesses HDFC provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. The bank is also a leading provider to corporate customers, mutual funds, stock exchange members and banks
Corporate Funded Services Non Funded Services Value Added Services Internet Banking Small and Medium EnterprisesFunded Services Non Funded Services Specialized Services Value added services Internet Banking Financial Institutions and Trusts BANKS- Sub-Membership ,RTGS sub membership, Fund Transfer, ATM Tie-ups, Tax Collection Financial Institutions Mutual Funds Stock Brokers Insurance Companies Commodities Business

Wholesale Banking - Facts

The business from this segment registered a healthy growth, The wholesale deposits grew by around 27.4%, while wholesale advances showed a growth of over 26.7% Consolidated its position as a leading player in the cash management business Wholesale banking branch are also in Bahrain, a branch in Hong Kong and two representative offices in UAE and Kenya. The branches offer the Banks suite of banking services including treasury and trade finance products to its corporate clients

Retail Banking Services

HDFC Bank was the first bank in India to launch an International Debit Card in association with VISA (VISA Electron). The Bank launched its credit card business in late 2001 The Bank is also one of the leading players in the merchant acquiring business with over 70,000 Point-of-sale (POS) terminals for debit / credit cards acceptance at merchant establishments The Bank also has a wide array of retail loan products including Auto Loans, Loans against marketable securities, Personal Loans etc. It is also a leading provider of Depository Participant (DP) services for retail customers, providing customers the facility to hold their investments in electronic form. The products through alternative delivery channels like ATMs, Phone Banking, Net Banking and Mobile Banking

Retail Services
Loan Product Auto Loan Loan Against Property Personal loan Credit card Commercial vehicles finance Home loans Retail business banking Working Capital Finance Health Care Finance Education Loan Gold Loan Deposit Product Saving a/c Current a/c Fixed deposit Demat a/c Safe Deposit Lockers Investment & Insurance Mutual Fund Bonds Insurance Equity and Derivatives Mudra Gold Bar Cards and Services Credit Card Debit Card Prepaid Card Bill pay Direct Pay Visa Money Transfer Online Payment of Direct Tax Mobile Banking ATM Phone Banking Email Statements Branch Network

Retail Banking - Facts

The growth in retail banking business was robust during the financial year ended March 31, 2011. The Banks total retail deposits grew by over 23.3% to - 139,961 crore in the financial year ended March 2011, driven by retail savings balances which grew much faster at 28.0% during the same period The Banks retail assets grew by 26.8% to - 80,113 crore driven primarily by a growth in mortgages, business banking, commercial vehicle loans and auto loans

Comparison
70 60 50 40 30 1200 1000 800

Wholesale Retail

Wholesale
600 400

Retail

20
10 0 2006 2007 2008 200 0 2006 2007 2008

Figure 1 NET REVENUES

Figure 2 TOTAL DEPOSITS

HDFC Bank is a consistent player in the private sector bank and have a

well-balanced product and business mix in the Indian as well as overseas markets. Customer segments (retail & wholesale) account for 84% of Net revenues ( FY 2008) Higher retail revenues partly offset by higher operating and credit costs. Equally well positioned to grow both segments

Treasury
Foreign Exchange and Derivatives Local Currency Money Market & Debt Securities Equities

To comply with statutory reserve requirements, the bank is required to hold 25% of its deposits in government securities. The Treasury business is responsible for managing the returns and market risk on this investment portfolio

Treasury
The treasury group is responsible for compliance with reserve requirements and management of liquidity and interest rate risk on the Banks balance sheet During the financial year ended March, 2011, revenues from foreign exchange and derivative transactions grew by 26.2% to Rs. 786.3 crore These revenues were distributed across large corporate, emerging corporate, business banking and retail customer segments

Geographical Revenue Segmentation Index

Revenue 2006 2007 2008 2009 2010 Domestic 1 1.15 2.46 1.49 1.23 16 113 (39) (17) Growth% Foreign 1 1.44 1.99 2.77 3.17 44 38 39 14 Growth %

Revenue has been increased from 2006 to 2010 and is still growing at acceptable pace There is a negative growth in terms of domestic revenues

Geographic Spread of HDFC

No. of Branches
6% 34% 32% Rural

Semi-Urban
Urban 28% Metro-Politian

Segmental Growth
FY07 Retail Banking Wholesale Banking FY08 FY09 94% 99% FY10 77% 78%

Treasury
Life Insurance General Insurance Venture Fund Management

191%

331%

101%
115% 121%

83%
112% 107% 53%

In the last few years Retail Banking has been shrinking Venture Fund Management has added another revenue potential

Overall market share

For
the quarter ended September 2011, its total income was 7,929.4 crore, an increase of 37.4% over 5,770.7 crore, for the quarter ended September 30, 2010 Net revenues (net interest income plus other income) were 4,156.2 crore as compared to 3,487.0 crore for the corresponding quarter of the previous year

 Total deposits were 230,676 crore, up by 18.1% from last year Savings account deposits at 69,017 crore increased 15.9% The Banks branch network stood at 2,150 branches in 1,141 cities (an increase of 385 branches from 1,765 branches

6,520 ATMs, (an increase of 1,799 ATMs from 4,721)

Information Technology
Bank has made substantial investments in its technology platform and systems, built multiple distribution channels That including an electronically linked branch network, automated telephone banking, internet banking and banking through mobile phones, to offer its customers convenient access to various products.

Highlights of 2010-11
Net Profits of Rs. 3926 Crore, an increase of 33% over the previous

year

Balance Sheet Size Rs. 277,353 Crore as on 31st March, 2011 Total Deposits of Rs. 208,586 Crore, an increase of 24.6% over previous year Network of 1986 Branches and 5471 ATMs in 996 cities as on 31st March, 2011 Banks Capital Adequacy Ratio as on 31st March ,2011 stood at 16.2% as against regulatory minimum of 9% Total Advances were Rs. 159,983 Crore, an increase of 27.1% over the previous year

Net Revenues
2006-07 : 498,471 Lacs 2007-08 : 751,103 Lacs 2008-09 : 1,071,176 Lacs 2009-10 : 1,236,953 Lacs 2010-11 : 1,487,828 Lacs

Profit After Taxes

2006-07 : 114,145 Lacs 2007-08 : 159,018 Lacs 2008-09 : 224,493 Lacs 2009-10 : 294,870 Lacs 2010-11 : 392,640 Lacs

Profit Margin= Profit/Revenues

2006-07 : 22.89% 2007-08 : 21.17% 2008-09 : 20.95% 2009-10 : 23.84% 2010-11 : 26.39%

Profit After Tax in (Rs. Crore)

4500 4000 3500 3926

3000
2500 2000 1500 1000 500 0 Years 1141

2949 2245 1590

2007

2008

2009

2010

2011

Non Performing Assets (%)

2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1.74% 1.54%

0.48%

Year

2009

2010

2011

DPS (Rs.)
18 16 14

16.5

12
10 8 6 4 2 0 7 8.5

12
10

Year

2007

2008

2009

2010

2011

EPS (Rs.)
90 80 70 67.6 52.9 46.2 36.3 85

60
50 40 30 20 10 0

Year

2007

2008

2009

2010

2011

Balance Sheet Size (Rs. Crore)

300000
200000 100000 0 2009 Year 2010 2011

183271

222459

277353

Advances (Rs. Crore)

200000 150000 100000 50000 0 2009 Years 2010 2011 98883 125831 159983

Deposits (Rs. Crore)

300000 200000 100000 0 2009 Year 2010 2011 142812 167404 208586

Savings Deposits (Rs. Crore)

100000
50000 0 Year 2009 2010 2011 34915 49877 63448

Retail Assets (Rs. Crore)

100000 50000 0 Year 2009 2010 2011 53548 63161 80113

Net Interest Margin (%) (Denotes Core NIM)

4.6 4.4 4.4

4.2
4

4.2

4.2

Year 2009 2010 2011

Capital Adequacy (%)

18
17 16 15 14 Year 2009 2010 2011 15.7 17.4 16.2

Return on Capital (%)

17 16.5 16.2

16.8

16.5

16
15.5 Year 2009 2010 2011

ATMs (Nos.)
6000 4000 2000 0 Year 3295 4232 5471

2009

2010

2011

Cities (Nos.)
1500 1000 500 0 Year 2009 2010 2011

Debit Cards (Nos. in Lacs)

150

100
50

90.8

98.3

115.5

0
Year 2009 2010 2011

Credit Cards (Nos. in Lacs)

60 50 40 2009 Year 2010 2011 50.5 43.9 44.5

Rupee Earned in 2010-11

0.71% 3.24% Interest from Advances = 62.18% Interest from Investments = 19.05% 19.05% Commision, Exchange & Brokerage = 14.82%

14.82%

62.18%

FX & Derivative Income = 3.24% Other Interest Income = 0.71%

Rupee Spent in 2010-11

Rupee Spent
Interest Expense = 41.48% 3.96% 6.15% 8.36% 8.43% 41.48% Operating Expense = 31.62% Provisions = 8.43% Tax = 8.36% Transfer to Reserve = 6.15% Dividend & Tax on Dividend = 3.96%

31.62%

FINANCIAL PERFORMANCE (in crore)

March 31, 2011 March 31, 2010

Deposits and Other Borrowings

222,980.5

180,320.1

Advances
Total Income Profit before Depreciation and Tax Net Profit Profit brought forward Total Profit available for Appropriation

159,982.7
24,263.4 6,316.1 3,926.4 4,532.8 8,459.2

125,830.6
20,155.8 4,683.5 2,948.7 3,455.6 6,404.3

Financial Analysis
As shown in the graphs : HDFC Bank has a consistent high CAR Ratio, which signifies the solid position of the bank. NPAs of HDFC Bank are very low. This shows the banks good relations with its customer. Deposits are increasing continuously which shows the good services provided by the bank. NIM for the bank is also good which further solidifies its position in the market. Profit margins are increasing year by year.

Market Capitalization
Market Capitalization depends upon the future performance of the company to a large extent It is different from profit margin and profitability PE Ratio = Market Capitalization Profit

Market Capitalization ( MC)

MC= PE Ratio* Profit After Tax 2006/07 = 26.29 * 114145 lacs = 3000872 lacs 2007/08 = 28.80 * 159018 lacs = 4579718 lacs 2008/09 = 18.42 * 224493 lacs = 4135161 lacs 2009/10 = 28.62 * 294870 lacs = 8439179 lacs 2010/11 = 27.59 * 392640 lacs = 10832937 lacs

Leading banks by market capitalization

Banks SBI Majority shareholding Government Market Cap (Billion $) 36.6 Stock Listing Mumbai, London

ICICI
PNB IDBI HDFC AXIS Bank

Private
Private Government Private Private

25.26
7.6 2.9 22.2 11.6

Mumbai, New York

Mumbai Mumbai Mumbai Mumbai, London

Capital Structure
As on 30th June 2010, the authorized capital is Rs 550 Crore The paid up capital is 459,60,07,030 HDFC Group holds 23.63% of the banks equity American Depository shares hold around 17.05% of equity 27.45% is held by Foreign Institutional Investors ( FII) The bank has about 433078 number of shareholders

Competitive Analysis
Indias banks have grown at a rapid pace over the past 2 decades after the financial liberalization This growth has still lacked in meeting the massive demand in the need of financial intermediation. It has led to the growth on non-banking financing companies (NBFCs) and microfinance companies Major banks in India are either state owned or previous government owned institutions which have been fully privatized like ICICI and HDFC Bank

Competitive Analysis
State Bank of India (SBI)
SBI is Indias Largest Bank which is majority owned by the government. The Company has a number of Subsidiaries and has been a market outperformer in recent times. Revenues of $22 billion. The SBI has 7 subsidiaries of which 2 have been merged and 5 are remaining
State Bank Bikaner Jaipur State Bank of Hyderabad State Bank of Mysore State Bank of Patiala State Bank of Travancore

Competitive Analysis
ICICI Bank
This is the largest Indian Private Bank with operations in all Financial Services Sectors. The Company has faced a bad time during the Lehman downturn but has recovered well Revs of $12.5 billion. ICICI Bank is also strong in almost all sectors of the financial industry and has one of the strongest management teams in the country The company which overextended itself in the 2007-2008 boom has now reduced the size of its risky segments and is again back on the growth trajectory.

Competitive Analysis
Punjab National Bank
Punjab National Bank (PNB) , is the second largest PSU bank with about 5000 branches across 764 cities

The Bank like BOB and SBI has shown good growth while at the same time managed to control bad debt

Competitive Analysis
Axis Bank
Axis Bank has been the best performing private bank along with HDFC Bank showing excellent growth in top line and bottom line

The Bank has been expanding into insurance and investment banking (acquired Enam)
The Bank was promoted jointly by UTI, LIC and other state owned general insurers

Competitive Analysis
Market Share

12.32% 30.07%
ICICI HDFC Axis 26.34%

Kotak
YES Bank Others

4.05%
10.46%

16.76%

Growth Rate ICICI Bank

This fiscal's credit growth would be 18 per cent, aided by corporate as well as retail segment ICICI Bank has reported a 77.5 per cent jump in its consolidated net profit at Rs 2,039 crore for the third quarter (Q3) ended December 31, 2010, driven by a rise in interest income and lower provisioning against bad loans On stand-alone basis, ICICI Bank's net profit increased 30.5 per cent to Rs 1,437 crore in Q3, from Rs 1,101 crore in the same period a year ago

Growth Rate State Bank of India

The bank, which controls a quarter of Indian bank loans and deposits along with its associates, and rivals ICICI Bank and HDFC Bank are seeing strong demand for loans and asset quality improvement on the back of a rapidly growing economy State Bank posted a net profit of 28.28 billion rupees ($620 million) in the fiscal third quarter ended December 2009, versus 24.79 billion rupees Gross advances grew 22 percent to reach 7.40 trillion rupees as on endDecember 2010 from 2009

The bank's net non-performing asset ratio fell to 1.61 percent in the quarter from 1.88 percent a year ago as improved consumer and business sentiment resulted in slowdown in bad loans pile up

Growth Rate State Bank of India

Shares of State Bank of India, valued at $35 billion, rose nearly 24 percent in 2010, compared with a 17 percent rise in the main market and 33 percent gain in the banking sector index

Growth Rate Punjab National Bank

The Bank posted a net Profit of Rs.3233 crore during April-December 2010 compared to Rs.2770 crore in the corresponding period of previous financial year registering a YOY growth of 16.7% Operating Profit for the same nine months stood at Rs 6548 crore as against Rs 4994 crore in the previous financial year recording a YOY growth of 31.1% Total Business of the Bank crossed the landmark of Rs 5 lakh crore to reach Rs.5,10,125 crore as compared to Rs. 4,04,373 crore in Dec' 2009, showing a YOY growth of 26.2% Deposits of the Bank rose to Rs.2,88,873 crore as on 31.12.2010 as compared to Rs 2,33,946 crore exhibiting a YOY growth of 23.5%

Direct Comparison HDFC Bank Vs Axis Bank

Interest on Advances Q2 FY2010 HDFC Banks Q2 is Rs.3673.18 Cr and its improvement over previous qtr is 10.95% Axis Banks Q2 is Rs.2429.03 Cr and its improvement over previous Qtr is 5.11%

Inference
HDFC has an edge of 51.22 % on Axis Banks numbers in Q2 in respect of interest on Advances

Direct Comparison HDFC Bank Vs Axis Bank

Interest Earned Q2 FY2010 HDFC Banks Q2 is Rs.4810 Cr which is more by 8.82% over previous Qtr Axis Banks Q2 is Rs.3624.25 Cr which is more by 8.98% over previous Qtr Inference Axis has reduced the edge of HDFC Bank at this level to 32.72% - primarily on higher investment income and income from balances with RBI etc

Direct Comparison HDFC Bank Vs Axis Bank

Total Income Q2 FY2010 HDFC Banks Q2 is Rs.5770.70 Cr which is higher by 7.66% on previous Qtr Axis Banks Q2 is Rs.4657.49 Cr, which is higher by 7.65% over previous Qtr Inference At this level, Axis has further reduced the Edge of HDFC Bank to just 23.9% - because of higher other income Axis Bank is scoring in income from investments, income from balances with RBIs etc, and other Income, whereas, HDFC Bank is scoring well in respect of Interest on Advances

Direct Comparison HDFC Bank Vs Axis Bank

Interest Expended Q2 FY2010 HDFC Banks Q2 is Rs.2283.72 Cr higher by 13.11% over previous Qtr Axis Banks Q2 is Rs.2009.15 Cr higher by 10.89% over previous Qtr Inference

Axis Bank has a clear edge of 13.67% in respect of lower interest expended compared to HDFC Bank

Direct Comparison HDFC Bank Vs Axis Bank

Employees Cost Q2 FY2010 HDFC Banks Q2 is Rs.710.57 more by 6.52% over previous Qtr Axis Banks Q2 is Rs.405.30 Cr down by 2.67% over previous Qtr Inference

In this expense item, Axis has a huge edge of 75.32% over HDFC Bank

Direct Comparison HDFC Bank Vs Axis Bank

Other Operating Expenses Q2 FY2010 HDFC Banks Q2 is Rs.969.31 Cr up by 4.76% over previous Qtr Axiss Q2 is Rs.756.69 Cr up by 16.76% over previous Qtr Inference

Axis Bank has an edge of 28.1% over HDFC Bank in this item of expense

Direct Comparison HDFC Bank Vs Axis Bank

Operating Profit Q2 FY2010 HDFC Banks Q2 is Rs.1807.10 Cr higher by 3.34% over previous Qtr Axiss Q2 is Rs.1486.35 Cr higher by 2.5% over previous Qtr Inference

HDFC Bank has an edge of 21.58% over Axis Bank at operating level

Direct Comparison HDFC Bank Vs Axis Bank

Provisions Q2 FY2010 HDFC Banks Q2 is Rs.454.48 Cr down by 18.11% over previous Qtr Axis Banks Q2 is Rs.378.76 Cr up by 13.74% over previous Qtr Inference

HDFC Banks provisions are higher by 19.99% compared to Axis Bank

Direct Comparison HDFC Bank Vs Axis Bank

Tax Expense Q2 FY2010 HDFC Banks Q2 is Rs.440.48 up by 15.31% over previous Qtr Axiss Q2 is Rs.372.45 down by 0.73% over previous Qtr Inference

HDFC Bank pays more tax by 18.27% compared to Axis Bank

Direct Comparison HDFC Bank Vs Axis Bank

Net Profit Q2 FY2010 HDFC Banks Q2 is Rs.912.14 Cr up by 12.37% over previous Qtr Axiss Q2 is Rs.735.14 Cr down by 0.91% from previous Qtr Inference

HDFC Bank has 24.08% more in net profit level over Axis Bank
Paid-up Equity HDFC Banks equity is Rs.462.60 Cr while Axis has Rs.408.84 cr. HDFC Bank has 13.15% more of equity

Direct Comparison HDFC Bank Vs Axis Bank

Capital Adequacy Ratio Q2 FY2010 HDFC Banks CAR is 17 against Axis Banks 13.68 which gives HDFC Bank an edge of 24.27%

Direct Comparison HDFC Bank Vs Axis Bank

Basic EPS Q2 FY2010 HDFC Bank has a Basic EPS of Rs.19.8 against Axis Banks Rs.18.01 - more by 9.94% over Axis Bank Inference At this level, Axis Bank has closed the performance Gap considerably

Direct Comparison HDFC Bank Vs Axis Bank

Percentage of Gross/Net NPA Q2 FY2010 HDFC Banks Q2 is 0.3 and Axis Banks Q2 also is 0.34 which is very close for both

Direct Comparison HDFC Bank Vs Axis Bank

Market Price and PE Ratio Q2 FY2010 HDFC Bank The Market Price of HDFC Bank is Rs.2343 HDFC Banks Q2 EPS is Rs.19.8. Annualising this EPS ( x 4) the annual EPS is around Rs.79.2 The PE Ratio on this Basis is 29.58

Direct Comparison HDFC Bank Vs Axis Bank

Market Price and PE Ratio Q2 FY2010 Axis Bank The Market price of Axis Bank is Rs.1465 Its Q2 EPS is Rs.18.01. Annualising this EPS ( x 4) the annual EPS is Rs. 72.04 The PE Ratio on this basis is 20.34

Direct Comparison HDFC Bank Vs Axis Bank

Market Price and PE Ratio Q2 FY2010 Inference While HDFC Bank may quote at a premium over Axis based on size, yet, Axis Bank appears to be quite underpriced for its growth rates at this point of time

Key Focus
Understanding of customers financial needs and providing banking solutions

Wide range of products and services to cater both retail and wholesale customer segments
Market Leaders in various products of retail banking such as Credit Cards and Auto Loans Main focus on balancing growth with diversified revenues, appropriate margins and healthy asset quality

Key Focus
Providing financial services to the under banked and rural sector Helping Farmers with products like Tractor Loan, Kissan Gold Card, Loan against Warehousing Receipts etc In line with growth strategy today 30% of the branches are located in rural and under banked areas

Mission & Objectives

Aim to become World Class Indian Bank Objective is to build sound customer franchises across distinct businesses To achieve healthy growth in profitability with the Banks Risk Appetite To do all this and maintain high level of ethical standards and corporate governance

Merger with CBoP

About Centurion Bank of Punjab Was one of the leading private sector bank in India Strong nationwide presence with 394 Branches and 452 ATMs in 180 Cities Employee base of more than 7500 Was listed in major stock exchanges Strong player in FOREX services, personal loans, mortgages and agricultural loans

Merger with CBoP

Reasons of Merger HDFC wanted to add scale, geography and experienced staff to its franchise CBoP was the right fit in terms of culture, strategic intent and approach to business Merger was Win-Win situation for both the banks Combined entity became even more strong in the banking market

Merger with CBoP

Details of Merger Finalised on 26th Feb., 2008 Swap Ratio of 1:29 (1 share of HDFC Bank for every 29 shares of CBoP Bank) Acquisition came for Rs.9510 Crores, one of the largest merger in banking history of India Merger was EPS Dilutive for HDFC Bank in the interim

Merger with CBoP

Details of Merger Merger gave access of 394 branches of CBoP to HDFC Bank, increasing its presence in northern and southern India CBoPs strong SMEs relationship helped expanding HDFCs Base Created Indias 7th Largest Bank Induction of experienced work force in HDFC

Merger with CBoP

Details of Merger Nation Wide network of 1148 Branches largest in India Strong Deposit Base of Rs. 120000 Crores and Net Advances of around Rs. 85000 Crores

Current Business Strategy

Develop innovative products and services that attract its targeted customers and address inefficiencies in the Indian financial sector Leverage its technology platform and open scaleable systems to deliver more products to more customers and to control operating costs Focus on healthy earnings growth with low volatility

Current Business Strategy

To increase the market share in the growing banking industry by following a disciplined growth strategy, focusing on quality and not on quantity and delivering high customer service To maintain the current high standards for asset quality through disciplined credit risk To develop innovative products and services that attract the targeted customers

To continue developing products and services that reduce the cost of funds.

Segmentation Strategy
Demographic variables Location Targeting the Metro cities and the developing cities Occupation They are also focusing on targeting the business men and the salaried class people Age Their main focus is on the middle aged grouped people but they are trying to attract the senior citizens and the minors also.

Segmentation Strategy
Psychographic Variables
Lifestyle They are targeting people who believe in modern banking with higher set of services , i.e internet banking , mobile banking etc. Class

They are focusing on lower middle class, middle class , upper middle class and upper class people as a major chunk of people who avails the banking facility fall in this category and is still growing.

Targeting Strategy
Target market Corporate Banking Market This market target the industries and fulfills the financial needs Capital Market This segment is targeted on the long term needs of the individuals

Retail Banking Market

This segment is for retail investors and provides them with short term financial credit for personal and household needs.

Positioning strategy
HDFC has positioned itself as a bank which gives higher standard of services through product innovation for the diverse needs of the individuals and other corporate clients. So they look at highlighting the following points in their positioning : Customer centric Service oriented Product Innovation

Acquisition Strategy
Customer Segment as an acquisition strategy Banks are now not targeting customer who want to associate themselves with foreign banks just for status symbol as it wastes a lot of banks resources Value Proposition as an acquisition strategy The bank has to provide world class services to all types of customers if it wants to retain them and increase the value of the bank. Pricing as an acquisition strategy HDFC has come up with a strategy of giving better services to its customers by reducing the minimum balance requirements. Otherwise in international banks the minimum balance required is Rs 10,000 but HDFC has brought it down to Rs 5000

Growth Opportunity Strategy

It is starting to focus in the rural India and with the countrys GDP is poised to grow at 8% plus over the next few years, so it has well positioned itself to take this opportunity to full use The bank is coming up with innovative offering such as, offering loans against gold as the gold prices are continuously rising Giving loans against gold helps them tab business from small shop keepers as well

It is acquiring banks in the north and south parts of the country which will get them more customers and will help them grow faster

Customer Retention Strategy

HDFC has started following the below mentioned strategies to retain its customer in order to retain its customers All petty charges for its primes customers have been waived off Services like locker, de mat etc is now charged at 50% only The debit card charges have been taken off The bank keeps updating with the customer as to the new service that they introduce Also informs the customer about the charges that have been waived off

Marketing Strategy
Scientific marketing campaigns are being undertaken using customer data, usage pattern , preferences etc The marketing analytics initiatives helps the bank come up with different ways in which they can measure the efficacy of the campaigns that they organize This also helps then to test or try new campaigns the way they want , experimenting with creatives etc.

Other strategies
Building the trust of the customers Providing a large number of products and services

Location of the branches and ATMs

Providing customers with services like Home banking, Mobile banking, Net banking etc

SCENARIO
Growth in mortgages, business banking, commercial vehicle loans and auto loans (2010-11) Customer base grew to 21.9 million customers Increased its network and product penetration initiatives Increased visibility of net banking and phone banking

SCENARIO
Success of banks multi-channel strategy 80% of customer initiated transactions serviced through the non-branch channels Focus on the credit card portfolio 5 million credit cards as of March 2011

NO-LIMIT CREDIT CARDS

HDFC Bank, the largest credit card issuer in the country, has launched India's first ultra-premium credit card for the UBER rich Aptly named INFINIA", the card comes with virtually no limits not just in terms of spend, but also the luxuries such customers are accustomed to. The card will be initially offered to a select 5000 individuals.

FOREXPLUS PLATINUM CARD

Premium Forex card for the Global Indian Prepaid travellers card Chip based card Best-in-class security 0.5% cash-back on purchases

Offers free lounge access across major international airports

Available for Euro, Dollar and Pound

Additional features
Additional features include industrys best netbanking features like online back-up card activation, online hotlisting, statements and e-commerce transactions Free SMS alert across the world on the customers local number

VODAFONE INDIA
Mobile Bank account with Vodafone m-paisaTM aimed at rural areas Basic banking transactions on the mobile phone and even deposit and withdraw cash at appointed Vodafone m-paisaTM outlets, without having to go to bank branches Open a savings account and transact Sense of trust and security

ZAFIN LABS
Product called miRevenue Used in the retail business area Planning to extend the scope Attained reduction in the time for charging the customers

DUAL RATE LOANS

Special home loans Fixed rate till a date (March 31,2012) and the applicable floating rate for the balance term 8.25% Fixed Rate up to 31.3.11 , 9% for period between 1.4.11 and 31.3.12 and Floating Rate for the Balance term

Loans
Available for all new home loan customers of Indian origin applying before January 31,2010 Same fixed rate, irrespective of the amount Very attractive rates compared to the other large players in the market offering similar products Overwhelming response

MOVE IN HOME LOANS

Available for Ready to move or Resale properties Loans are facilitated with minimal delays Made available quickly

QUICKREMIT
Online remittance service From Singapore and UK Completely online mode to remit money to India, without the need to visit a bank Tie-up with DBS Bank in Singapore Accessible through any bank in UK

HDFC QATAR BANK

Tied up with the International Bank of Qatar (IBQ) to launch banking services in Qatar Allows Indian expatriates in Qatar to access HDFC Banks products and services Combination of NRE account in India and NRI account in Qatar facilities like centralized banking, fee waiver on debit card and remittance services etc

SWIFT
Personal loans Processed in 24 hours Available for all those who holds an account with HDFC Bank From September 2011

DEBT FUND FOR CANCER CURE

Mixing finance with philanthropy Mutual fund product Money from investors invested purely in debt markets(80-100% money market and 0-20% in Government bond market) Cannot withdraw for 3 years Dividends earned passed on to the Indian Cancer society (50-100% of dividend)

State Bank of India

State Bank of India (SBI) is the largest nationalized commercial bank in India in terms of assets, number of branches, deposits, profits and workforce. With the liberalization of the Indian banking industry in the mid-1990s, SBI faced stiff competition from the private sector and foreign banks which resulted in significant loss of its market share.

ICICI Bank
ICICI Bank Second largest bank in India Strong diversified financial services franchise in India ICICI Bank has taken up specific initiatives to ramp up financial literacy as well as intermediation to the underserved and under-banked segments in both rural and urban areas ICICI Bank offers a complete suite of products and services to meet the individual financial requirements of customer segments. Savings, investments and insurance products are made available to its rural and agri customer base The Bank also offers microfinance services to low-income households and crop loans, farm equipment loans, commodity based loans to farmers.

Axis Bank
3rd largest private sector bank Aggressive branch and ATM expansion to 1021 branches and 371 ATMs to be upcoming in tier II and Tier III cities. Expanding global reach by way of setting up 3 branch offices in Singapore , Dubai and Hong Kong and 2 representative offices in Shanghai and Dubai recently Axis Bank offers a vast spectrum of services encompassing Large and MidCorporate Banking, SME Banking, Agri-Business Banking, Retail Banking and International Banking.

Axis Bank
Axis Bank's network of over 1,200 branches and 4,900 ATMs is spread across more than 680 cities and towns across the country Instead of piecemeal efforts of promoting their debit card, the bank has launched what it calls the first ever filmi Platinum debit and credit card across 25 cities in India. The objective to offer movie deals on movie tickets through one exclusive card. The bank therefore hopes to carve out a niche in a space not fully explored by competition

Mergers and Acquisitions

Standard Chartered Acquires ANZ Grindlays Bank (November '00) Intent Standard Chartered wanted to capitalise on the high growth forecast for the Indian economy. It aimed at becoming the world's leading emerging markets bank and it thought that acquiring Grindlays would give it a wellestablished foothold in India and add strength to its management resources. For ANZ, the deal provided immediate returns to its shareholders and allowed it to focus on the Australian market. Grindlays had been a poor performer and the Securities Scam involvement had made ANZ willing to wind up. Benefits Standard Chartered became the largest foreign bank in India with over 56 branches and more than 36% share in the credit card market.

Mergers and Acquisitions

ICICI Bank Ltd. Acquires Bank of Madura (March '01) Intent ICICI Bank Ltd wanted to spread its network, without acquiring RBI's permission for branch expansion. BoM was a plausible target since its cash management business was among the top five in terms of volumes. In addition, there was a possibility of reorienting its asset profile to enable better spreads and create a more robust micro-credit system post merger. BoM wanted a (financially and technologically) strong private sector bank to add shareholder value, enhance career opportunities for its employees and provide first rate, technology-based, modern banking services to its customers

Mergers and Acquisitions

Benefits The branch network of the merged entity increased from 97 to 378, including 97 branches in the rural sector. ICICI gained an additional 1.2 million customer accounts, besides making an entry into the small and medium segment. It possessed the largest customer base in the country, thus enabling the ICICI group to cross-sell different products and services.

Mergers and Acquisitions

Motives Behind Consolidation Growth - Organic growth takes time and dynamic firms prefer acquisitions to grow quickly in size and geographical reach Synergy - The merged entity, in most cases, has better ability in terms of both revenue enhancement and cost reduction Managerial efficiency - Acquirer can better manage the resources of the target whose value, in turn, rises after the acquisition Strategic motives - Two banks with complementary business interests can strengthen their positions in the market through merger.

Mergers and Acquisitions

Motives Behind Consolidation Market entry - Cash rich firms use the acquisition route to buyout an established player in a new market and then build upon the existing platform Tax shields and financial safeguards - Tax concessions act as a catalyst for a strong bank to acquire distressed banks that have accumulated losses and unclaimed depreciation benefits in their books Regulatory intervention - To protect depositors, and prevent the destabilisation of the financial services sector, the RBI steps in to force the merger of a distressed bank.

STRENGTH
Indian banks have compared favourably on growth, asset quality and profitability with other regional banks over the last few years. The banking index has grew at a compounded annual rate of over 51 per cent since April 2001 as compared to a 27 per cent growth in the market index for the same period Bank lending has been a significant driver of GDP growth and employment Extensive reach through vast networking & growing number of branches & ATMs The government's regular policy for Indian bank since 1969 has paid rich dividends with then nationalization of 14 major private banks of India According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and6.5% respectively

WEAKNESS
PSBs need to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organizational performance ethic & strengthen human capital The cost of intermediation remains high and bank penetration is limited to only a few customer segments and geographies Structural weaknesses such as a fragmented industry structure, restrictions on capital availability and deployment, lack of institutional support infrastructure, restrictive labour laws, weak corporate governance and ineffective regulations beyond Scheduled Commercial Banks (SCBs) Refusal to dilute stake in PSU banks: The government has refused to dilute its stake in PSU banks below 51% Opposition from Left and resultant cautious approach from the North Block in terms of approving merger of PSU banks may hamper their growth prospects in the medium term

OPPORTUNITY
Growth driven by new products and services that include opportunities in credit cards, consumer finance and wealth management on the retail side, and in fee-based income and investment banking on the wholesale banking side

With the growth in the Indian economy expected to be strong for quite some time especially in retail banking, mortgages and investment services Reserve Bank of India (RBI) has approved a proposal from the government to amend the Banking Regulation Act to permit banks to trade in commodities and commodity derivatives Given the demographic shifts resulting from changes in age profile and household income, consumers will increasingly demand enhanced institutional capabilities and service levels from banks

THREAT
Threat of stability of the system: failure of some weak banks has often threatened the stability of the system Rise in inflation figures which would lead to increase in interest rates Increase in the number of foreign players would pose a threat to the PSB as well as the private players Increase in CRR rate

STRENGTH
Leader in home loan segment Right strategy for products Distribution structure Brand image High degree of customer satisfaction Alliance between HDFC and Standard Life giving a strong brand backing Robust Risk control Framework Network of 500 branches and agents across 700 cities

WEAKNESS
Strict policy of funding Not very aggressive on M&A Mere international presence Standard Life were accused of smearing a policy-holder. Controversies like job cuts, racism and data loss have affected image

OPPORTUNITIES
Untapped rural market Home loan segment Fast growing insurance business

THREAT
Risk of fraud and NPA Major private players RBI policies Increase in funding cost Economic instability and global crisis

SWOT - ICICI
STRENGHTS ICICI is now a global player in International Banking through its operations 18 countries ICICI is considered as the pioneer in usage of Internet services for Online Banking Advanced infrastructure with sound IT base

SWOT - ICICI
WEAKNESS High Bank Service Charges: ICICI bank charges highly to customers for the services provided by them when compared to other bank & that is why it is only in the reach of higher class of society Less Credit Period: ICICI bank provides credit facilities but only up to limited period

SWOT - ICICI
OPPURTUNITIES Rise in upper and middle class population due to increase in GDP, therefore could introduce economical version of their services Largely unexplored market in regions where only PSBs operate

SWOT - ICICI
THREATS ICICI Bank is facing tight competition locally as well as internationally. Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also provide equivalent facilities like ICICI do and also ICICI do not have consistency in its international operation ICICI levies higher service charges for various transactions making it expensive for major sections of the society ICICI Bank provides all services through electronic computerized machines. This creates problems to the less educated people

SWOT Axis Bank

STRENGTH Banking Services Include Corporate Credit, Retail Banking, Business Banking, Capital Markets, Treasury And International Banking Sound technological platform with Centralized Database and Operations Corporate Banking: Current Account deposits grew by 24%yoy, from Rs. 20,045 cr as at end March08 to Rs. 24,822crores as at end March09 Retail Banking: Savings Bank Deposits Grew To Rs. 25,822 cr. On 31st March 2009 From Rs. 19,982 Cr. As On 31st March2008 Showing A Year On Year Growth Of 29%

SWOT Axis Bank

WEAKNESS Market capitalization is very low Not having Image UTI (fraud)

Higher cost
Customer service

SWOT Axis Bank

OPPORTUNITY Large retail and corporate market Wide scope in rural India

Other Activity (Non Banking Activity)

People are become more service oriented

SWOT Axis Bank

THREAT Other better Saving, investment option available (like Insurance, Mutual fund, Real-estate, Gold) Government Rules And Regulation Very high competition with Private sector (ICICI Bank, HDFC bank) or public sector (BOB, PNB) Bank Capital Market slow-down Rising Rates

SWOT - Yes Bank

STRENGTH High Quality, Customer Centric, Service Driven, Private Indian Bank Catering To The Future Industries Of India The bank has adopted International Best Practices, the highest standard of service, quality and operational excellence Credible And Transparent Performance Management Process Total Deposits Rs 1,61,694 million Net Advances Rs 124,031 million Net NPA 0.33%

SWOT - Yes Bank

WEAKNESS Less wide network Not in every state

Less promotional activity

Unknown brand

SWOT - Yes Bank

OPPORTUNITY Very wide market Other activity(insurance, stock broking, mutual fund)

Wide scope in rural area

SWOT - Yes Bank

THREAT Very high competition Private bank market (ICICI Bank, HDFC bank), In public sector (BOB, PNB) Government Policy Other better Saving, investment option available (like Insurance, Mutual fund, Real-estate, Gold)

SWOT - SBI
STRENGTH Strong domestic market position, sustaining reach and customer confidence SBS merger further hastens SBI and its associate banks merger and helping defend its leadership position Wide Distribution Network: Excellent penetration in the country with more than 10000 core branches and more than 5100 branches of associate banks (subsidiaries) Government owns 60% stake in SBI. This gives SBI an edge over private banks in terms of customer security SBI offers very low transition costs which attracts small customers

SWOT - SBI
WEAKNESS The existing hierarchical management structure of the bank, although strength in some respects, is a barrier to change Though SBI cards are the 2nd largest player in the credit card industry, it has the highest non performing assets (NPAs) in the industry, which stand out to be at 16.28 % (Dec 2007) Susceptible to political intervention SBI lags with respect to private players in terms of modernisation of its processes, infrastructure, centralisation, etc.

SWOT - SBI
OPPORTUNITIES SBI could be the highest beneficiary from increasing adoption of Etransactions Investment in information technology will decrease transaction cost Growth in general insurance will help increasing market share Merger of all the associate banks (like SBH, SBM, etc) into SBI will create a mega bank which streamlines operations and unlocks value Planning to add 2000 branches and 3000 ATMs in 2008-2009. This will further increase its reach

SWOT - SBI
THREATS Opening of Indian Banking Sector in 2009 will cause intense competition. Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of SBI bank Private banks have started venturing into the rural and semi-urban sector, which used to be the bastion of the State Bank and other PSU banks here was an employee strike in the year 2006 which disrupted SBIs activities. This can be repeated in the future

PORTERs 5 Force Model INDIAN BANKING INDUSTRY

Large no of banks High market growth rate Low switching costs Undifferentiated services High fixed cost High exit barriers Non banking financial sector increasing rapidly Deposits in posts Stock Market Mutual Fund Bargaining power of consumer is very high Large no. of alternatives Low switching costs Undifferentiated services Full information

Threat of competitors

Threat of Substitute

Threat of Buyer

Nature of suppliers Few alternatives RBI rules and regulations Suppliers are not concentrated forward integration

Product differentiation is very difficult Licensing requirement

Threat of Supplier

Threat of New Entrants

Past Strategies of HDFC

Introduction of FIVE S , PART OF KAIZEN WORK PLACE TRANSFORMATION focuses on effective work place organization and believes in Small changes lead to large improvement.
S-1 SORT SEIRI S-5 SUSTAIN SHITSUKE S-2 SYSTEMATIZ E SEITON

S-4 STANDARDIZ E SEIKETSU

S-3 SPIC-NSPAN SEIRO

5 S of Kaizen
SORT - It focus on eliminating unnecessary items from the work place. It is excellent way to free up valuable floor space. It segregate items as per require and wanted. Frequently Less Required Frequently Remove Required everything from workplace Wanted but not Required Junk SYSTEMATIZE - Systematize is focus on efficient and effective Storage method. That means it identify, organize and arrange retrieval. It largely focus on good labelling and identification practices. Objective :- A place for everything and everything in its place SPIC- n SPAN - Spic-n-Span focuses on regular clearing and self inspection. It brings in the sense of ownership

5 S of Kaizen
STANDERDIZE - It focus on simplification and standardization. It involve standard rules and policies. It establish checklist to facilitates autonomous maintenance of workplace. It assign responsibility for doing various jobs SUSTAIN - It focuses on defining a new status and standard of organized work place. Sustain means regular training to maintain standards developed. It brings in self- discipline and commitment towards workplace organization

Successful Strategies
Focusing on the expansion of retail and rural banking Increasingly customer - centric in their approach Mergers and acquisitions Strong national network Mission is to be "a World Class Indian Bank", benchmarking themselves against international standards.

Successful Strategies
Best practices in terms of product offerings, technology, service levels, risk management and audit & compliance Develop new product and technology is the main business strategy Increase market share in Indias expanding banking and financial services industry by following a disciplined growth strategy focusing on quality and not on quantity and delivering high quality customer service.

Successful Strategies
Leverage our technology platform and open scalable systems to deliver more products to more customers and to control operating costs Develop innovative products and services that attract the targeted customers that reduce banks cost of funds Focus on high earnings growth with low volatility

Where Did They Go Wrong?

FOCUS ONLY ON HIGH END CUSTOMERS: The bank targets only the top bracket of clients and does not cater to the needs of small customers. Due to this reason the bank may sometimes loose good clients Not Equal to International Standard Highly depended on individuals loans Major Stake held by American financial group which are under stress in economic slow down

Where Did They Go Wrong?

Managerial international presence No next line of leadership Lack of infrastructure in rural area Minimum balance to open a account is very high Extension overseas holds lots of risk Credit card department is not active

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