3 6 46 645 PDF
3 6 46 645 PDF
3 6 46 645 PDF
An apparaisal of financial performance: A comparative analysis of HDFC bank and ICICI bank
Dr. Ajaz Ahmad Mir
Department of commerce Islamia College of science and commerce, Srinagar, Jammu And Kashmir, India
Abstract
Banks play an active role in the economic development of a country. Their ability to make positive contribution in igniting the
process of growth depends on the effective banking system. Financial analysis is done to identify the financial strengths and
weaknesses of the two banks by properly establishing relationship between the items of Balance Sheet and Profit & Loss Account.
It helps in better understanding of banks financial position, growth and performance by analyzing the financial statements with
various tools and evaluating the relationship between various elements of financial statements.
The present research paper is aimed to analyze and compare the Financial Performance of HDFC and ICICI Bank and offer
suggestions for the improvement of efficiency in select banks. For the purpose of analysis of comparative financial performance of
the select banks, an attempt is made to critically examine the financial performance of the banks using various accounting and
statistical techniques to arrive at conclusion.
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International Journal of Commerce and Management Research
Hypotheses ICICI Bank has created more loan assets from its deposits as
From the above objectives of the following hypothesis is compared to HDFC.
formulated to test the financial efficiency of the select banks:
Ho = “There is no significant difference between financial Interest expense to total expense
performance of HDFC and ICICI Bank.”. Interest Expenses to Total Expenses reveals the expenses
incurred on interest in proportion to total expenses. Banks
Limitation of the Study accepts deposits from savers and pay interest on these
Due to constraints of time and resources, the study is likely to accounts. This payment of interest is known as interest
suffer from certain limitations. Some of these are mentioned expenses. Total expenses include the amount spent in the form
here under so that the findings of the study may be understood of staff expenses, interest expenses, overhead expenses and
in a proper perspective. The limitations of the study are: other operating expenses etc.
1. The study is based on the secondary data and the limitation
of using secondary data may affect the results. Table 2: Interest Expenses to Total Expenses of Hdfc and Icici Bank
2. The secondary data was taken from the annual reports of the (IN PERCENT)
HDFC and ICICI Bank. It may be possible that the data shown Year HDFC ICICI
in the annual reports may be window dressed which does not 2010 45.708 60.72
show the actual position of the banks. 2011 46.15 61.73
2012 54.78 65.96
For the purpose of analysis of comparative financial 2013 54.71 65.36
performance of the select banks, the following parameters 2014 55.83 61.84
have been studied: MEAN 51.435 63.122
1. Credit Deposit Ratio CGR 22.145% 1.84%
2. Interest Expenses to Total Expenses Source: Annual Reports of HDFC and ICICI from 2009-10 to 2013-14
3. Interest Income to Total Income
4. Other Income to Total Income Analysis
5. Net worth Ratio Table 1.2shows that the ratio of interest expenses to total
6. Percentage Change in Net Profits expenses in ICICI was highly volatile. It increased from
7. Percentage Change in Total Income 60.72%to 65.36% during the period 2010-2013. Then again
8. Percentage Change in Total Expenditure decreased to 61.12% in the year 2014. Whereas the ratio of
9. Percentage Change in Advances interest expenses to DFC as total expenses in HDFC was
10. Percentage Change in Deposits increased from 45.71% to 55.83% during the period of the
11. Debt-Equity Ratio study. From the above analysis, it has been found that the share
of interest expenses in total expenses was higher in case of
Analysis and interpretation HDFC as compared to ICICI, which shows that people
Credit deposit ratio: The credit deposit ratio popularly known preferred to invest their savings in HDFC than ICICI.
as CD ratio is the ratio of how a bank lends out of the deposit
it has mobilized. RBI does not stipulate a minimum or Other Income to Total Income
maximum level for the ratio, but a very low ratio indicates Other income to total income reveals the proportionate share
banks are not making full use of their resources. Alternatively, of other income in total income. Other income includes non-
a high ratio indicates more reliance on deposits for lending and interest income and operating income. Total income includes
a likely pressure on resources. CD ratio helps in interest income, non-interest income and operating income.
assessing banks liquidity and indicates its health.
Table 3: Other Income to Total Income in Hdfc and Icici Bank
Table 1: Credit deposit ratio of HDFC and ICICI Bank (In Percent) (IN PERCENT)
Analysis Analysis
Table 1.1 depicts that over the course of five financial periods Table 1.4 shows that the ratio of other income to total income
of study the mean of Credit Deposit Ratio in ICICI was higher was decreased from 19.07% in 2009-2010 to 16.14% in 2013-
(97.18%) than in HDFC (78.91%). But the Compound Growth 2014 in case of HDFC. However, the share of other income to
Rate in HDFC lowers (9%) than in ICICI (13.71%). In case of total income of ICICI was also decreased from 22.09% in
HDFC the credit deposit ratio was highest in 2013-14 and 2009-2010 to 19.09% in 2013-2014. The table shows that the
lowest in 2009-10, and in case of ICICI credit deposit ratio was ratio was relatively higher in ICICI (19.14%) as compared to
also highest in 2013-14 and lowest in 2009-10. This shows that HDFC (17.11%) during the period of study.
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Growth in profits Table 7: Growth in Total Expenditure of Hdfc and Icici Bank (IN
Excess of revenues over outlays and expenses in a business CRORES)
enterprise over a given period of time, usually a year shows Total %age Total %age
us the growth of profit expenditure change expenditure change
Year HDFC ICICI
Table 5: Growth of Profit in Hdfc and Icici (In Crores) 2010 17034.82 100% 28974.37 100%
2011 20336.96 119.38% 27470.56 94.81%
HDFC ICICI
2012 27362.90 160.62% 34580.16 119.34%
Year Profit % Change Profit % Change
2013 35191.21 206.58% 40095.83 138.38%
2010 2948.70 100% 4024.98 100%
2014 40576.80 238.19% 44795.55 154.60%
2011 3926.40 133.15% 5151.38 127.98%
MEAN 28100.54 35183.29
2012 5167.09 175.23% 6465.26 160.62%
CGR 138.19% 54.60%
2013 6726.28 228.11% 8325.47 206.84% Source: Annual Reports of HDFC and ICICI from 2009-10 to 2013-14
2014 8478.38 287.53% 9810.48 243.73%
Mean 5449.37 6755.14
Analysis
CGR 187.529% 143.799%
Source: Annual Reports of HDFC and ICICI from 2009-10 to 2013-14
Table 1.8 discloses that the mean value of total expenditure
was higher in ICICI (Rs 35183.29 crores) as compared to that
Analysis in HDFC (Rs 28100.54 crores) during the study period. But the
Table 1.6 highlights the mean value of net profit was higher in rate of growth regarding expenditure in ICICI was (54.60%)
ICICI (Rs 6755.14 crores) as compared to that in HDFC (Rs than that in HDFC (138.19%) during the same period. It is clear
5449.37 crores) during the period of study. But the compound that ICICI is successful in decreasing their total expenditure as
growth rate of net profits was highest in HDFC (187.53%) than compared to HDFC. The table also highlights that the annual
that in ICICI (143.80%) during the period of study. The table growth rate of expenditure in HDFC was highest (238.19%) in
also shows that the annual growth rate of profit in HDFC was the year 2013-14 and was lowest (119.38%) in the year 2010-
highest in the year 2013-1014 (8478.38 crores) and lowest in 11. In ICICI the annual growth rate of expenditure was also
the year 2009-2010 (2948.70 crores), whereas, in ICICI, the lowest in the year 2010-11 and highest in the year 2013-14
annual growth rate of profit was also highest in 2013-2014 respectively. Hence, it is clear that ICICI is more efficient as
(9810.48 crores) and lowest in the year 2009-2010 (4024.98 compared to HDFC in terms of managing expenditure.
crores).
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International Journal of Commerce and Management Research
Table 8: Growth in Total Advances of Hdfc and Icici Bank (IN CRORES)
Total advances %age change Total advances %age change
Year HDFC ICICI
2010 125830.59 100% 181205.60 100%
2011 159982.67 127.14% 216365.90 119.40%
2012 195420.03 155.30% 253727.66 140.02%
2013 239720.64 190.51% 290249.44 160.177%
2014 303000.27 240.88% 338702.65 186.92%
MEAN 204790.84 256050.25
CGR 140.80% 86.92%
Source: Annual Reports of HDFC and ICICI from 2009-10 to 2013-14
Table 9: Growth in Total Deposits of Hdfc and Icici Bank (IN CRORES)
Total deposits %age change Total deposits %age change
Year HDFC ICICI
2010 167404.44 100% 202016.60 100%
2011 208586.41 124.60% 225602.11 111.67%
2012 246706.45 147.37% 255499.96 126.47%
2013 296246.98 176.96% 292613.63 144.84%
2014 367337.48 219.43% 331913.66 164.30%
MEAN 257256.35 261529.19
CGR 119.43% 64.30%
Source: Annual Reports of HDFC and ICICI from 2009-10 to 2013-14
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International Journal of Commerce and Management Research
period the banks were restructured, shed the flab of over 10. Brown Craig O, Dinc I. Serdar the Politics of Bank
employment, embraced technology and ventured into related Failures: Evidence from Emerging Markets Quarterly
new businesses. The financial analysis helped in better Journal of Economics. 2005, 1413-1443.
understanding of banks, their financial position, growth and
performance. While evaluating the credit deposit ratio, it was
concluded that ICICI bank created more loan assets from its
deposits as compared to HDFC. While analyzing the interest
expense to total expense of HDFC and ICICI, it was found that
the share of interest expense to total expense was higher in case
of HDFC as compared to ICICI, which shows that people
preferred to invest their savings in HDFC than ICICI.T he
proportion of interest income to total income in ICICI was
higher than HDFC, which shows that people preferred ICICI
to take loans and advances as compared to HDFC. The ratio of
other income to total income was relatively higher in ICICI
than HDFC. The net worth ratio was higher in HDFC than
ICICI which revealed that HDFC has utilized its resources
more efficiently than ICICI. The annual growth rate of profit
in HDFC was highest in the year 2013-2014 (8478.38 crores)
and lowest in 2009-2010 (2948.70 crores). In ICICI also it was
highest in the year 2013-2014 (9810.48 crores) and lowest in
the year 2009-2010 (4024.98 crores). The growth regarding
total income was higher in HDFC than ICICI. While analyzing
the growth in total expenditure, it was found that ICICI is more
efficient than HDFC in terms of managing expenditure. It is
revealed from analyzing the growth in total advances that the
advances in both these banks were continuously increased.
While analyzing the growth in total deposits it was revealed
that deposits in both these banks were continuously increasing.
The debt-equity ratio of HDFC bank is less as compared to
ICICI bank, so we can say that debt-equity ratio of HDFC bank
has been decreasing during the period and hence long-term
solvency is well in HDFC.
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