Strategic analysis of hdfc bank

HDFC BANK
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PROJECT REPORT
On
STRATEGIC ANALYSIS OF HDFC BANK
Submitted as a part of
CONTINUOUS ASSESSMENT- 1
For the partial fulfilment of award of degree of
Master of Business Administration
Submitted by Submitted to
Batch 4, Group 5 Dr. Hemraj Verma
Pradeep Tiwari(1103102183)
SCHOOL OF BUSINESS
Oct 2012

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TABLE OF CONTENT
S. No. Chapters Page No.
Executive Summary 3
1 Introduction to the company 4
2 Analysis of Vision, Mission & Core values 6
3 The External Environment Analysis 8
4 The Internal Environment Analysis 11
5 SWOT Analysis 20
6 Competition Analysis
 Industry Structure (Using Porter’s Five forces model)
 Competitive Profile Matrix (Based on Key Success factors)
22
7 BCG matrix 26
8 Conclusion 28
References 29

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EXECUTIVE SUMMARY
Banking sector is going to be the most watched sector in the coming quarters. There are
reasons for this, RBI has reduced the CRR rate and repo rates. The debt/GDP ratio of the
Government is scary at 80% essentially meaning that the Government cannot borrow much
without jeopardizing stability of banking sector. Given project is an attempt to identify and
analyse the vision and mission of HDFC bank, as well as comparing the position and
strategies of the bank with its major competitor.
Project:
 Provides all the crucial information on HDFC Bank Limited required for business and
competitor intelligence needs.
 Contains a study of the major internal and external factors affecting HDFC Bank
Limited in the form of a SWOT analysis as well as a breakdown and examination of
strategies of HDFC Bank Limited.
 Major factors contributing the success of HDFC.
 Industrial analysis of HDFC through Porter’s five forces model as well as comparing
that with its competitor ICICI.
 Analysis done on BCG matrix
With this project we have tried to understand the different business process identified by the
bank, as well as analyzing its strength and weakness as compared to other banks. Our project
is mainly concentrated on the comparative analysis of HDFC and competitor ICICI. The
source of information is secondary that is through internet and different newspapers and sites
of HDFC and ICICI as well as some of the journals.

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INTRODUCTION TO THE COMPANY
HDFC Bank Limited is an Indian financial services company based in Mumbai,
Maharashtra that was incorporated in August 1994. HDFC Bank is the fifth or sixth largest
bank in India by assets and the second largest bank by market capitalization as of February
24, 2012. The bank was promoted by the Housing Development Finance Corporation, a
premier housing finance company (set up in 1977) of India. HDFC Bank has 1,986 branches
and over 5,471 ATMs, in 996 cities in India, and all branches of the bank are linked on an
online real-time basis. As of 30 September 2008 the bank had total assets of Rs.1006.82
billion. For the fiscal year 2010-11, the bank has reported net profit of
3,926.30 crore (US$742.07 million), up 33.1% from the previous fiscal. Total annual
earnings of the bank increased by 20.37% reaching at 24,263.4 crore (US$4.59 billion) in
2010-11. HDFC Bank is one of the Big Four banks of India, along with: State Bank of
India, ICICI Bank and Punjab National Bank.
BUSINESS FOCUS
HDFC Bank deals with three key business segments. - Wholesale Banking Services, Retail
Banking Services, Treasury. It has entered the banking consortia of over 50 corporate for
providing working capital finance, trade services, corporate finance, and merchant banking. It
is also providing sophisticated product structures in areas of foreign exchange and
derivatives, money markets and debt trading And Equity research.
Wholesale banking services
Blue-chip manufacturing companies in the Indian corp to small & mid-sized corporates and
agri-based businesses. For these customers, the Bank 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 of the
above services to its corporate customers, mutual funds, stock exchange members and banks.
Retail banking services
HDFC Bank was the first bank in India to launch an International Debit Card in association
with VISA (Visa Electron) and issues the MasterCard Maestro debit card as well. The Bank
launched its credit card business in late 2001. By March 2009, the bank had a total card base
(debit and credit cards) of over 13 million. 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 /

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credit cards acceptance at merchant establishments. The Bank is positioned in various net
based B2C opportunities including a wide range of internet banking services for Fixed
Deposits, Loans, Bill Payments, etc. With Finest of Technology and Best of Man power in
Banking Industry HDFC BANK's retail services have become by and large the best in India
and since the contribution to CASAi,e total number of current and savings account of more
than 50%, HDFC BANK has full potential to become Indias No.1 Private Sector Bank.
Treasury
Within this business, the bank has three main product areas - Foreign Exchange and
Derivatives, Local Currency Money Market & Debt Securities, and Equities. These services
are provided through the bank's Treasury team. 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

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ANALYSIS OF VISION, MISSION & CORE VALUES
VISION
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined
to accomplish the vision of becoming a world-class Indian bank.
MISSION
HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.
ANALYSIS
PARAMETER HDFC BANK
Markets YES
Technology YES
Survival growth and profit YES
Philosophy YES
Self- concept YES
Public image NO
Employees YES
Customers YES
Products Services YES

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Increase the market share in India’s 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.
Leverage the technology platform and open scalable systems to deliver more products to
more customers and to control operating costs.
Maintain the current high standards for asset quality through disciplined credit risk
management.
Develop innovative products and services that attract the targeted customers and address
inefficiencies in the Indian financial sector.
Continue to develop products and services that reduce the cost of funds.
Focus on high earnings growth with low volatility.

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ENVIRONMENTAL ANALYSIS
Business environment includes set of conditions or situation that affects business activities or
decision making. These conditions are broadly classified into internal environment and
external environment.
THE EXTERNAL ENVIRONMENT ANALYSIS
External environment include factors which are outside the control of the business
organization but it provide opportunities or pose threats. External environment is further
classified into two categories micro environment and macro environment.
1) Political Factor
 Government and RBI policies affect the banking sector. Sometimes looking into the
political advantage of a particular party, the Government declares some measures to
their benefits like waiver of short-term agricultural loans, to attract the farmer’s
votes. By doing so the profits of the bank get affected.
 FDI move to increase the limits to 49 percent from 26 percent.
 The Union Budget 2009-10 extended the debt waiver scheme by six more months for
farmers owing more than 2 hectare of land The Union Budget 2008-09 allowed these
farmers 25% rebate on loan if they repay 75%of their overdue within stipulated period
of 30th June 2009.
2) Economic Factor
 Cash Reserve Ratio (CRR) reduced by 0.25% to 4.5% of net demand and time
liabilities (NDTL) to potentially inject primary liquidity of Rs. 170 billion; token
reduction in lending rates expected, given comfortable liquidity position and the
recent revisions in deposit rates and lending rates for certain products undertaken by
some Banks.
 Benchmark Repo rate maintained at 8.0%; Reverse Repo and Marginal Standing
Facility (MSF) stand unchanged at 7.0% and 9.0%, respectively. Bank Rate also
maintained at 9.0%.

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 Following a 1% reduction in July 2012, Statutory Liquidity Ratio (SLR) kept
unchanged at 23% of NDTL.
 The primary focus of monetary policy remains inflation control and anchoring of
inflation expectations, despite increasing risks to economic growth. The Reserve Bank
of India (RBI) highlighted that inflationary pressures and risks related to fiscal deficit
and current account deficit constrain it from providing a stronger monetary policy
response to boost economic growth. As policy measures to stimulate growth
materialize, monetary policy to reinforce the positive impact of such actions while
retaining a focus on managing inflation.
 Guidance provided that liquidity management by the RBI would ensure adequate
credit flows to the productive sectors of the economy and appropriate responses to
shocks brought on by external developments.
3) Social Factor
HDFC announced its plans to make an entry into education sector. The group plans to focus
on small towns wherein it would either set up schools or take over weak performing boarding
schools. According to McKinsey Global Institute’s Bird of Gold report, the discretionary
spending on education is set to increase from 5% in 2005 to 6% in 2015. HDFC will foray
into this sector through a separate subsidiary. It is widely believed that many schools are
planning to set up model, which is profitable and scalable, as operating under trusts makes it
difficult to segregate profits. As a result, HDFC could look to adopt those schools that are
open to the ‘takeover model’. HDFC already has an educational loan unit – Credila Financial
Services – in which it owns 62.3% stake. Credila plans to boosts the distribution network and
customer base of HDFC Bank in order to expand and also lower the cost of funds. The
group’s likely entry into education sector could be beneficial in the long run.
HDFC Bank ,is partnering with the city’s municipal authorities to educate people about the
danger posed by plastic bags to the environment, and to offer recycle paper bags instead.The
bank reinforced the Kolkata Municipal Corporation(KMC) intiated anti-plastic awarness
drive by distributing recycled and eco-friendly paper bags to retailers and customers across
nine markets in the city.“Encourage citizens to use environment friendly and cost effective
paper bags as the best substitute.

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4)Technological Factor
Productivity ratio of HDFC is increasing significantly over the years. Number of employees
of the group increased to 1,607 in FY2011, as compared to 797 in FY2010 and 727 in
FY2009. While, profit per employee increased significantly to $491,900, as compared to
$117,500 and $7,500 in FY2010 and FY2009 respectively. Administration cost per asset ratio
decline to 0.30% in FY2011, as compared to 0.49 in FY2010 and 0.76 in FY2009. Similarly,
cost to income ratio improved to 7.7% in FY2011 from 13.8% and 30.9% in FY2010 and
FY2009 respectively. Improving productivity would likely enhance the group’s profit margin.
 ATM The latest developments in terms of technology in computer and
telecommunication have encouraged the bankers to change the concept of branch
banking to anywhere banking.
 Credit card facility has encouraged an era of cashless society.
 Today MasterCard and Visa card are the two most popular cards used world over.
 Smartcards or debit cards to be used for making payments. These are also called as
electronic purse
 Today banks are also using SMS and Internet as major tool of promotions and giving
great utility to its customers. For example SMS functions through simple text
messages sent from your mobile.
 CORE BANKING SOLUTIONS -It is the buzzword today and every bank is trying to
adopt it is the centralize banking platform through which a bank can control its entire
operation the adoption of core banking solution will help bank to roll out new product
and services

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THE INTERNAL ENVIRONMENT ANALYSIS
Internal environment consists of factors which are within the control of the organization.
Business ethics, Objective of the firm, Value system, Management structure, Physical assets,
Technological resources, financial resources, Stakeholders, Human resources etc. are part of
the internal environment of business.
1)VISION AND MISSION
HDFC BANK
VISION
HDFC Bank is a young and dynamic bank, with a youthful and enthusiastic team determined to
accomplish the vision of becoming a world-class Indian bank.
MISSION
HDFC mission is to be “World Class Indian Bank", benchmarking ourselves against
international standards and best practices in terms of product offerings, technology, service
levels, risk management and audit & compliance. The objective is to build sound customer
franchises across distinct businesses so as to be a preferred provider of banking services for
target retail and wholesale customer segments, and to achieve a healthy growth in
profitability, consistent with the Bank's risk appetite. They are committed to do this while
ensuring the highest levels of ethical standards, professional integrity, corporate governance
and regulatory compliance.
Business strategy emphasizes the following :
 Increase the market share in India’s 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.
 Leverage the technology platform and open scalable systems to deliver more
products to more customers and to control operating costs.
 Maintain the current high standards for asset quality through disciplined credit

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risk management.
 Develop innovative products and services that attract the targeted customers and
address inefficiencies in the Indian financial sector.
 Continue to develop products and services that reduce the cost of funds.
 Focus on high earnings growth with low volatility.
ICICI BANK
VISION
To be the leading provider of financial services in India and a major global bank
MISSION
We will leverage our people, technology, speed and financial capital to
 Be a banker of first choice of customer by delivering high quality, world class
product and services
 Expand the frontiers of our business globally
 Maintain high standers of governance and ethics
 Create value of our stake holder
 Contribute positively to the various countries and market in which operate.
ANALYSIS:
ICICI banks main focus as we can analyse from its vision and mission is on, people
technology and increasing market capital. It also wants to add value to its stake holder.
Delivering quality is also their main focus of interest. They have not mentioned about any
Corporate social responsibility but maintain ethics is something in their agenda.

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COMPERATIVE ANALYSIS OF HDFC AND ICICI BANK
PARAMETER HDFC BANK ICICI BANK
Markets YES YES
Technology YES YES
Survival growth and profit YES YES
Philosophy YES YES
Self- concept YES YES
Public image NO NO
Employees YES NO
Customers YES YES
Products Services YES YES
2) LONG TERM OBJECTIVE
HDFC Bank’s mission is to be a World Class Indian Bank. The objective is to build sound
customer franchises across distinct businesses so as to be the preferred provider of banking
services for target retail and wholesale customer segments, and to achieve healthy growth in
profitability, consistent with the bank’s risk appetite. The bank is committed to maintain the
highest level of ethical standards, professional integrity, corporate governance and regulatory
compliance. HDFC Bank’s business philosophy is based on four core values: Operational
Excellence, Customer Focus, Product Leadership and People.
3) LEADERSHIP
HDFC bank own the leadership awards the Best Bank at Bloomberg UTV's Financial
Leadership Awards 2011 and declared the Best Bank in the Private Sector category at the
NDTV Business Leadership Awards 2010.therefore we can conclude that HDFC is better in
leadership than ICICI bank.

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Key executive for HDFC bank
Name Board Relationships Title Age
Aditya Puri 15 Relationships Managing Director, Director, Member of Investors
Grievance (Share) Committee, Member of Credit Approval
Committee, Member of Risk Policy & Monitoring
Committee, Member of Fraud Monitoring Committee,
Member of Premises Committee and Member of Customer
Service Committee
61
Sashi Jagdishan No Relationships Head of Finance 47
Bhavesh Zaveri 46 Relationships Head of Operations, Head of Wholesale Banking
Operations and Head of Cash Management
46
Sunil Shah B.com Mba 15 Relationships Managing Director of HDFC Securities Limited and
Director of HDFC Securities Limited
54
Abhay Aima 5 Relationships Head of Equities & Private Banking - Third Party Products
& NRI Banking
50
HDFC bank limited board members
Name Board Relationships Primary Company Age
C. M. Vasudev 32 Relationships HDFC Bank Ltd. 69
Aditya Puri 15 Relationships HDFC Bank Ltd. 61
Harish Engineer 15 Relationships HDFC Bank Ltd. 63
Paresh Sukthankar 15 Relationships HDFC Bank Ltd. 49
Sunil Shah B.com Mba 15 Relationships HDFC Bank Ltd. 54
4) POLICY
 RBI is the policy maker of all the banks which is followed by every bank in India
 All the monetary policy controlled by RBI
 CRR,SLR,REPO RATE.REVERSE REPO RATE is decided by RBI and base rate
decided by individual banks under the guidance of RBI
5) ORGANISATION STRUCTURE
Top to lower level

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6) FINANCIAL ANALYSIS
HDFC Bank
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 469.34 465.23 457.74 425.38 354.43
Equity Share Capital 469.34 465.23 457.74 425.38 354.43
Share Application Money 0.00 0.00 0.00 400.92 0.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00
Preference Share Application
Money
0.00 0.00 0.00 0.00 0.00
Employee Stock Opiton 0.30 0.00 2.91 5.49 0.00
Reserves 29,741.11 25,120.83 21,158.15 14,262.74 11,180.72
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Net Worth 30,210.45 25,586.06 21,615.89 15,089.04 11,535.15
Deposits 246,539.58 208,287.21 167,297.78 142,644.80 100,631.38
Borrowings 26,334.15 14,650.44 13,171.80 2,775.84 4,478.86
Total Debt 272,873.73 222,937.65 180,469.58 145,420.64 105,110.24
Minority Interest 183.66 121.66 75.89 43.35 36.92
Policy Holders Funds 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Other Liabilities & Provisions 37,786.88 29,317.57 20,783.21 22,844.24 16,510.76
Total Liabilities 340,871.06 277,841.28 222,868.68 183,353.92 133,156.15
Assets
Cash & Balances with RBI 14,991.63 25,100.89 15,483.31 13,527.22 12,553.18
Balance with Banks, Money at
Call
6,183.53 4,737.39 14,594.88 4,009.94 2,274.80
Advances 198,837.53 160,831.42 126,162.73 99,027.37 63,426.90
Investments 96,795.11 70,276.67 58,508.28 58,715.15 49,288.01
Gross Block 6,024.90 5,328.86 4,777.65 4,019.68 2,437.58
Accumulated Depreciation 3,646.99 3,127.91 2,628.59 2,287.40 1,241.29
Net Block 2,377.91 2,200.95 2,149.06 1,732.28 1,196.29
Capital Work In Progress 0.00 0.00 0.00 0.00 0.00
Other Assets 21,869.30 13,626.33 5,205.07 5,528.89 4,453.89
Minority Interest 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Total Assets 341,055.01 276,773.65 222,103.33 182,540.85 133,193.07
Contingent Liabilities 844,393.94 559,718.86 466,309.73 396,639.98 208,498.36
Bills for collection 39,610.71 28,869.10 20,940.13 17,939.62 17,092.85
Book Value (Rs) 128.74 549.97 472.23 345.29 325.45

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P/L account
HDFC Bank Previous Years »
Profit & Loss account ------------------- in Rs. Cr. -------------------
Income
Interest Earned 27,286.35 19,928.21 16,172.90 16,332.26 10,115.00
Other Income 5,333.41 4,433.51 3,810.62 3,470.63 2,205.38
Total Income 32,619.76 24,361.72 19,983.52 19,802.89 12,320.38
Expenditure
Interest expended 14,989.58 9,385.08 7,786.30 8,911.10 4,887.12
Employee Cost 3,399.91 2,836.04 2,289.18 2,238.20 1,301.35
Selling and Admin Expenses 2,647.25 2,510.82 3,395.83 2,851.26 974.79
Depreciation 542.52 497.41 394.39 359.91 271.72
Miscellaneous Expenses 5,873.42 5,205.97 3,169.12 3,197.49 3,295.22
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Operating Expenses 9,241.64 8,045.36 7,703.41 7,290.66 3,935.28
Provisions & Contingencies 3,221.46 3,004.88 1,545.11 1,356.20 1,907.80
Total Expenses 27,452.68 20,435.32 17,034.82 17,557.96 10,730.20
Net Profit for the Year 5,167.09 3,926.40 2,948.70 2,244.94 1,590.18
Extraordionary Items -2.12 -2.65 -0.93 -0.59 -0.06

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Profit brought forward 6,174.24 4,532.79 3,455.57 2,574.63 1,932.03
Total 11,339.21 8,456.54 6,403.34 4,818.98 3,522.15
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 1,009.08 767.62 549.29 425.38 301.27
Corporate Dividend Tax 163.70 124.53 91.23 72.29 51.20
Per share data (annualised)
Earning Per Share (Rs) 22.02 84.40 64.42 52.77 44.87
Equity Dividend (%) 215.00 165.00 120.00 100.00 85.00
Book Value (Rs) 127.52 545.53 470.19 344.44 324.38
Appropriations
Transfer to Statutory Reserves 1,250.08 997.52 935.15 641.25 436.05
Transfer to Other Reserves 516.70 392.64 294.87 224.50 159.02
Proposed Dividend/Transfer to
Govt
1,172.78 892.15 640.52 497.67 352.47
Balance c/f to Balance Sheet 8,399.65 6,174.24 4,532.79 3,455.57 2,574.61
Total 11,339.21 8,456.55 6,403.33 4,818.99 3,522.15
HDFC Bank Previous Years »
Cash Flow ------------------- in Rs. Cr. -------------------
Net Profit Before Tax 7513.17 5818.66 4289.14 3299.25 2280.63
Net Cash From Operating Activities -11355.61 -375.83 9389.89 -1736.14 3583.43
Net Cash (used in)/from
Investing Activities
-686.85 -1122.74 -551.51 -663.78 -619.82

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Net Cash (used in)/from Financing
Activities
3286.19 1227.99 3598.91 2964.66 3628.34
Net (decrease)/increase In Cash
and Cash Equivalents
-8731.11 -273.56 12435.78 564.74 6591.95
Opening Cash & Cash Equivalents 29668.83 29942.40 17506.62 14778.34 8074.54
Closing Cash & Cash Equivalents 20937.73 29668.83 29942.40 15343.08 14666.49
ANALYSIS BASED ON KEY FINANCIAL RATIOS
Ratios Mar 2012 Mar 2011 Mar 2010 Mar 2009 Mar 2008
Dividend per share 4.3 16.5 12 10 8.5
Earning per share 22.01 84.42 64.33 52.68 44.85
Current ratio 0.58 0.5 0.28 0.27 0.26
QUICK / LIQUID
RATIO
6.2 6.89 7.14 5.23 4.89
NET PROFIT
RATIO
22.69 22.72 21.72 22.16 22.16
EARNING PER SHARE
Earning per share reduces because company introduces equity share capital in the market
during the financial year as a result dividend per share also declines
CURRENT RATIO
Ideal current ratio with 2:1 (or) more is considered as satisfactory position of the firm.
Which indicate that current assets should be twice as compared to the current liabilities. So in
that organization the current ratio is very high that will not indicate a favourable position. As
it means that there is excessive investment in current assets is made. This will result in
decreasing in profitability due to blocking of large funds in working capital.

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QUICK / LIQUID RATIO
Quick ratio is more rigorous test of liquidity than the current ratio. The term liquidity refers
to the ability to pay its short term obligations as and when they become due. As a rule of
thumb quick ratio of 1:1 is considered satisfactory.
Quick Ratio = Quick/ liquid Assets
Current liabilities
OPERATING RATIO
Operating ratio establishes the relationship between cost of goods sold and other
operating expenses on the one hand and sales on the other hand. Operating ratio
indicates the percentage of net sales that is consumed by operating cost. Higher the
operating ratio is less favourable for the company because it would have small
margin to cover interest, income tax , dividend and reserve.
The operating profit ratio is used to measure the relationship between net profits and sales of
a firm. Depending on the concept, it will decide. Operating profit is the profit arising out of
business operations on.
NET PROFIT RATIO
Net profit ratios establish a relationship between net profit after tax and sales and
indicate the efficiency of the management in controlling the expenses of the
company.
Net profit ratio = Net profit after tax * 100
Net sales

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SWOT ANALYSIS OF HDFC BANK
Strengths
 HDFC bank is the second largest private banking sector in India having 2,201
branches and 7,110 ATM’s
 HDFC bank is located in 1,174 cities in India and has more than 800 locations to
serve customers through Telephone banking
 The bank’s ATM card is compatible with all domestic and international Visa/Master
card, Visa Electron/ Maestro, Plus/cirus and American Express. This is one reason
for HDFC cards to be the most preferred card for shopping and online transactions
 HDFC bank has the high degree of customer satisfaction when compared to other
private banks
 The attrition rate in HDFC is low and it is one of the best places to work in private
banking sector
 HDFC has lots of awards and recognition, it has received ‘Best Bank’ award from
various financial rating institutions like Dun and Bradstreet, Financial express, Euro
money awards for excellence, Finance Asia country awards etc
 HDFC has good financial advisors in terms of guiding customers towards right
investments
Weakness
 HDFC bank doesn’t have strong presence in Rural areas, where as ICICI bank its
direct competitor is expanding in rural market
 HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard core
loyals in terms of banking services.
 HDFC lacks in aggressive marketing strategies like ICICI
 The bank focuses mostly on high end clients
 Some of the bank’s product categories lack in performance and doesn’t have reach in
the market
 The share prices of HDFC are often fluctuating causing uncertainty for the investors

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Opportunities
 HDFC bank has better asset quality parameters over government banks, hence the
profit growth is likely to increase
 The companies in large and SME are growing at very fast pace. HDFC has good
reputation in terms of maintaining corporate salary accounts
 HDFC bank has improved it’s bad debts portfolio and the recovery of bad debts are
high when compared to government banks
 HDFC has very good opportunities in abroad
 Greater scope for acquisitions and strategic alliances due to strong financial position
Threats
 HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a
slight variation it’s not a good sign for the financial health of the bank
 The non banking financial companies and new age banks are increasing in India
 The HDFC is not able to expand its market share as ICICI imposes major threat
 The government banks are trying to modernize to compete with private banks
RBI has opened up to 74% for foreign banks to invest in Indian market.

COMPETITION ANALYSIS
1) Industry Structure (Using Porter’s
PORTER'S FIVE FORCES MODEL
Porter's five forces analysis is a framework for industry analysis and business strategy
development formed by Michael E. Porter
upon industrial organization (IO) economics
competitive intensity and therefore attractiveness of a
refers to the overall industry profitability. An "unattractive" industry is one in which the
combination of these five forces acts to drive down overall profitability. A very unattractive
industry would be one approaching "pure competition", in which available profits for all
firms are driven to normal profit.
Three of Porter's five forces refer to competition from external sources. The remainder are
internal threats
They consist of those forces close to a
and make a profit. A change in any of the forces normally requires a business unit to re
the marketplace given the overall change in
COMPETITION ANALYSIS
Structure (Using Porter’s five forces model)
MODEL
is a framework for industry analysis and business strategy
Michael E. Porter of Harvard Business School in 1979. It draws
industrial organization (IO) economics to derive five forces that determine the
etitive intensity and therefore attractiveness of a market. Attractiveness in this context
n of these five forces acts to drive down overall profitability. A very unattractive
.
They consist of those forces close to a company that affect its ability to serve its customers
. A change in any of the forces normally requires a business unit to re
given the overall change in industry information.
HDFC BANK
22 | P a g e
is a framework for industry analysis and business strategy
1979. It draws
to derive five forces that determine the
. Attractiveness in this context
n of these five forces acts to drive down overall profitability. A very unattractive
that affect its ability to serve its customers
. A change in any of the forces normally requires a business unit to re-assess

HDFC BANK
23 | P a g e
INDUSTRY ANALYSIS OF HDFC BANK
FIVE FORCE HIGH/ MEDIUM/
LOW
REMARK
Threat of new entrants Low For any new entrants permission
should be granted from RBI, and it is
not easy to have the permission. There
was many political and legal issue.
And the early investment was very
high.
Bargaining power of
customers
Medium Customer can switch to any other bank
very easily if service was not good
because switching cost is low. But
most of time customers are having their
account in most of the bank and they
know that every bank provide similarly
the same service.
Bargaining power of
suppliers
Low In bank industry there is no such
supplier.
Threat of substitutes High Because there are many public and
private bank. And also the post office
provide some of the services, many
private firm provide easy loan scheme
to attract the customers. People also
started investing their money instead of
saving them like stock market, mutual
funds , property etc.
Degree of rivalry High There are large numbers of public and
private bank and market growth rate
was also high. The switching cost was
also very low and the services provide
by all the bank was same.

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2) Competitive Profile Matrix (Based on Key Success factors)
HDFC Bank has revised its deposit rates. The rates have been changed for maturities ranging
from six months 17 days to five years. The bank is also offering a maximum of 8.75%
interest on its retail term deposits.
ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis
points. The revised rates are effective from Tuesday, the bank said on its website. The lender
has cut rates across maturities ranging from 91 days to less than five years. It now offers a
maximum 8.75% interest on retail term deposit compared to 9.25% earlier.
Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.
The moves hardly surprised the industry analysts as they have been expecting lenders to
reduce their deposit rates to protect dilution in their interest margins.
Last week, State Bank of India (SBI), the largest commercial bank in the country had pared
its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to
mirror this move.
The net interest margin of banks has been under stress as the increase in cost of deposits has
outpaced the rise in yield on advances in the past one year. As loan demand has remained
largely muted so far this year the pressure on the margins is expected to intensify further.
Note: The new rates are applicable on deposits up to Rs 1 cr.
Bank New Rates Effective Date
HDFC Bank 4.00 - 8.75 12-Sep-12
ICICI Bank 4.75 - 8.75 11-Sep-12
Axis Bank 3.50 - 9.25 11-Sep-12

HDFC BANK
25 | P a g e
ANALYSIS ON THE BASIS OF KEY SUCCESS FACTOR
key HDFC BANK ICICI BANK SBI BANK
FACTORS WEIGHT RATING WAS RATING WAS RATING WAS
No. of
Branches .1
4 0.4 4 0.4 5 0.5
NPA .2
4 0.8 3 0.6 2 0.4
Business
per
Employee .3 3 0.9 4 1.2 2 0.6
SERVICES .3
4 1.2 4 1.2 2 0.6
Revenue .1
3 0.3 1 0.1 4 0.4
Total score 1.0
19 3.6 16 3.5 15 2.5
average
3.8 3.2 3.0
Since average of HDFC bank is higher than SBI bank and ICICI bank that’s means HDFC
bank is more preferred bank than any other bank. The reason behind this is HDFC bank have
low NPA ratio and service provided by the bank is also better than any other bank.

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26 | P a g e
BCG MATRIX
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1970 to help corporations with analyzing their business units or product
lines. This helps the company allocate resources and is used as an analytical tool in brand
marketing, product management, strategic management, and portfolio analysis.
HDFC Bank
HDFC BANK stands at star position in BCG matrix. As HDFC bank have the high market
growth and they also have high market share. There is a lot of growth potential for the
banking industry because of increasing disposable income of customers, increasing working
class, more volatility in other markets also increasing importance of savings and already
discussed almost 30% of the market is still untapped.

HDFC BANK
27 | P a g e
HDFC Insurances
In insurance sector HDFC’s most of the products are in star position. HDFC insurance
products have high market share and high growth rate. So we have lot of opportunity for
investment.
HDFC Mutual Funds
Mutual fund stands at cash cow. This shows that HDFC high market share and low market
growth rate in mutual funds. This means we should only focus on profitable products and try
to investment on those products which are low market growth rate but perform well if proper
investment is theirs.

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28 | P a g e
CONCLUSION
Banking is also now being regarded as a versatile financial planning tool. Research indicates
that Indians have four basic financial needs during their life asset accumulation (such as
buying a house or car), protecting their family, securing their children’s education, and
provision for their retirement. India being a country having a huge population of around one
billion people with only 32% of the banking population in India possessing banking the
country has a vast potential, which has been left untapped till now.
With this prospect HDFC is continuously working in this direction, but there are several
competitors already in the market with the similar strategy. This project concludes that with
the changing economical and political scenario bank sector faces many ups and downs but in
order to maintain the position HDFC needs to follow some differentiating strategy. Because it
has a very fine line of difference with its competitor ICICI and can outshine HDFC.
The project has given the clear cut vision as to how to differentiate its strategy from other
competitors an how to use the strength and convert the weakness of others as an opportunity.

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REFERENCES
1. www.moneycontrol.com
2. www.economictimes.com
3. www.hdfc.com
4. www.icici.com
5. www.sbi.in
6. www.10paisa.com
7. http://investing.businessweek.com/research/stocks/private/people.asp?privcapId=1016
77
8. http://www.marketing91.com/swot-analysis-hdfc/
9. http://www.rbi.org.in/scripts/ATMView.aspx
10. www.wikipedia.com

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