Analysis

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Overview of HDFC Bank

Housing Development Finance Cooperation Ltd.

1st – Bank to receive an “in principle approval” from RBI.

Incorporated in August 1994,in the name of “HDFC Bank Ltd.”

1st – Registered Office in Mumbai

HDFC Bank commenced operations as a Scheduled

Commercial Bank in January 1995.2

Business FocusMISSION :

“World Class Indian Bank”.

- OBJECTIVE :

Maintain Ethical Standards, Professional Integrity &

Cooperate Governence.

- Business Philosophy : Based on 4 Core Values -

a) Operational Excellence

b) Customer Focus

c) Product Leadership

d) People 3

Capital Structure and Shareholding Pattern

The authorized capital of HDFC Bank is Rs550 crore( Rs 5.5bn) Paid-up capital is Rs 424.6 crore (Rs 4.2 bn). The HDFC Group holds 19.4% of the bank's equity. 28% of the equity is held by FIIs. 11.86% is held by the General Public. The Bank has about 570,000 shareholders. The shares are listed on the BSE & NSE. The bank's American Depository Shares are listed on the New

York Stock Exchange (NYSE) under the symbol ‘HDB’.

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Strong Vast Network

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Wide Range of Products

• V

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RETAIL BANKING

Loan Products: Depository Products

- Auto Loans - Savings - Loans against Securities - Current - Personal Loans - Fixed Deposits - Credit Cards - 2-Wheeler Loans - Home Loans - Commercial Vehicles Finance

Other Products / Services: -- POS Terminals- Debit Cards- Depository Accounts- Mutual Fund Sales- Insurance Sales- NRI Services- Bill Payment Services

Wholesale Banking

Commercial Banking: - Working Capital - Credit Substitutes - Term Loans - Bill Collection - Forex & Derivatives - Wholesale Deposits - Letters of Credit - Guarantees

Transactional Banking: - Cash Management - Custodial Services - Clearing Bank Services - Correspondent Banking - Tax Collections - Banker to public issues

Key Segments:

- Large corporate - Supply Chain - Emerging Coop - Financial Inst - Government

TreasuryProducts: Other Functions: - Foreign Exchange - Asset Liability Management- Debt Securities - Statutory Reserve

Management- - Derivatives- - Equity

One – Stop Shop to meet Diverse Customer Needs

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Business Model

RETAIL WHOLESALE TREASURY

HDFC BANK

REVENUE

INTEREST REVENUE NON- INTEREST

Less: INTEREST & NON-INTEREST EXPENSES

NET INTEREST INCOME NON INTEREST INCOME

Income Statement

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Particulars () FY 05-06 FY 06-07 FY 07-08

Sales Turnover4475.34 44.69%

6889.02 53.93%

10115.00 46.83%

Other Income1123.98 72.56%

1516.23 34.89%

2283.15 50.58%

Total Income5599.32 49.52%

8405.25 50.11%

12398.15 47.50%

Total Expenses 2416.31 3587.05 5230.40

Operating Profit 2059.03 25.31%

3301.97 60.37%

4884.60 47.93%

Gross Profit 3183.01 38.72%

4818.20 51.37%

7167.75 48.76%

PBT 1253.51 1638.75 2280.63

Net Profit 870.78 30.84%

1141.45 31.08%

1590.18 39.31%

Deposits

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0

20000

40000

60000

80000

100000

120000

2005-062006-07

2007-08

55796.8268297.94

100768.6

Deposits

Deposits

In Crores

Net Worth of HDFC Bank

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0

2000

4000

6000

8000

10000

12000

2005-06 2006-07 2007-08

5299.6

6433.15

11497.23

Net Worth - in Crores

Net Worth - in Crores

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Implications of important terms

• CRR – 7.5% -- Affects Liquidity

• SLR – Min. 25% -- Affects Liquidity and secure insolvency

• REPO RATE – 9% -- Affects Lending rates and Liquidity

• REVERSE REPO RATE – 6% -- Affects Liquidity

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Key Financial Ratios

Particulars FY2003-04

FY2004-05

FY2005-06

FY2006-07

FY2007-08

RONW 20.14% 20.44% 17.47% 19.40% 16.05%

PE Ratio 21.10 25.03 27.74 26.29 28.80

EPS 17.95 22.92 27.92 36.29 46.22

Dividend Per share

3.50 4.50 5.50 7.00 8.50

MERGER OF CBOP WITH HDFC BANK

CBoP = HDFC

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC Bank was formally approved by RBI.

Shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of CBoP, valuing CBoP at INR 95bn.

The balance sheet size of the combined entity would be over Rs. 1,63,000 crore.

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Future Expected Earnings Post Merger *estimates provided by Indiabulls Research

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Particulars FY 07-08 (Cr.) FY 08-09E* (Cr.) FY 09-10E* (Cr.)

Sales Turnover10115.00 16671.00

64.81%19132.00 14.76%

Other Income2283.15 3630.00

58.99%5025.00 38.43%

Total Income12398.15 20301.00

63.74%24157.00 18.99%

Total Expenses 5230.40 8823.00 10556.00

Operating Profit 4884.60

7848.00 60.67%

8576.00 9.28%

Gross Profit 7167.75 11478.00 60.13%

13601.00 18.50%

PBT 2280.63 3377.00 4117.00

Net Profit 1590.18

2296.00 44.39%

2799.00 21.91%

Camel’s Approach

Camel’s Approach It is a method for evaluating bank

performance and healthy position of the bank since it considers all areas of banking operations.

Camel Means C = “Capital Adequacy Ratio” A= “Asset quality” M= “Management quality” E= “Earnings quality” L= “Liquidity”

2003-2004 2004-2005 2005-2006 2006-2007 2007-20080.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

8.03%

9.60%8.55% 8.57%

10.30%

3.63%

2.56%

2.86%

4.51%

3.30%

Tier 2Tier 1

Capital Adequacy Ratio HDFC BANK has

maintained Capital Adequacy ratio of more than 13% which is above the RBI norms of 9%.

Maintaining higher CAR will ensure high expansion possibilities as and when opportunity arises for HDFC bank.

Asset Quality

2004 2005 2006 2007 2008 0

2

4

6

8

10

12

14

12.01

7.24

3.28 3.24 3.04

0.450.8600000000000010.6900000000000010.6900000000000010.670000000000006

GROSS NPA/ NET ADVANCESPROVISIONS/GROSS NPA

Non Performing Asset means an asset or account of borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset.

Management Quality

2004 2005 2006 2007 2008 150

350

550

750

950

2

3

4

5

6

7

8

9

10

866

806

758

607

506

9.39

8.8

7.39

6.13

4.97

BUSINESS PER EMPLOYEES (Rs. In lakhs) PROFITS PER EMPLOYEE(Rs.lakhs)

Axi

s Ti

tle

Earnings quality

2004 2005 2006 2007 2008 3.4

3.6

3.8

4

4.2

4.4

4.6

3.8

3.9

4 4

4.4

Net Interest Margin

Net Interest Margin difference between interest income and interest expenses, usually expressed as a percentage of average earning assets.

Earnings quality

2004 2005 2006 2007 2008 1

1.5

2

2.5

3

3.5

2.56 2.56

2.75

2.98

3.13

Operating Profit/ Average Working Funds

Operating Profit/ Average Working Funds

Liquidity

2004 2005 2006 2007 20080%

5%

10%

15%

20%

25%

30%

35%

40%

45%40%

33%

38%35%

32%

SLR RequirementFree Float

SLR REQUIREMENT 25%

2004 (in Lac) 2005 (in Lac) 2006 (in Lac) 2007 (in Lac) 2008 (in Lac)

NDTL 285849 345303 521844 643274 985434

SLR requirement 71462.75 86325.5 130461.75 160818 246358

Held for Trading 4244 1278 2945 1637 12535

Available for Sale 84437 31309 30007 32685 47639

Held to Maturity 26623 79682 163374 191119 256480

Total 115305 112270 196328 225442 316655

Free Float 43843 25944 65867 64623 70297

HDFC v/s SENSEX – 1 year

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“Thank You”

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