NAGINDAS KHANDWALA COLLEGE OF SCIENCE, COMMERCE, ARTS AND

MANAGEMENT STUDIES

(AUTONOMOUS) MALAD (WEST)

A PROJECT REPORT ON:

A COMPARATIVE STUDY ON THE FINACIAL PERFORMANCE ANALYSIS BETWEEN

H.D.F.C. BANK AND I.D.F.C FIRST BANK

SUBMITTED BY: VERNON DSILVA

ROLL NO : 08

PROJECT GUIDE: DR. JAIMINE ANITA

TY.BCOM (HONS) IN. INTERNATIONAL ACCOUNTING

SEMESTER V

ACADEMIC YEAR: 2023-2024

1
 Declaration

By Learner I, undersigned Mr. Vernon D’silva, hereby declare that the work embodied in this
project work titled “A Comparative Study on the Financial Performance Analysis between
H.D.F.C Bank and I.D.F.C. First Bank” forms of my own contribution to the research work
carried out under the guidance of Dr. Jaimine Anita, is a result of my own research work and has not
been previously submitted to any other University for any other Degree/Diploma to this or any
other university

Wherever reference has been made to previous works of others, it has been clearly indicated as such
and included in the bibliography. I, hereby further declare that all information in this document has
been obtained and presented in accordance with academic rules and ethical conduct.

Name and signature of Learner

Certified by

Name and signature of the guiding Teacher

2
 Acknowledgment

A research project requires the support and guidance of various people, without that support, it
would not have been possible to complete the project work.

I would like to thank our college Principal, Dr. Maushmi Datta for continuously encouraging me to
strive for excellence. I would also like to thank Vice Principle, Dr. Varsha Ainapure for instilling a
research mindset in me. I would also like to thank all my colleagues for providing help whenever it
was needed.

A study like this is incomplete without the support of family members. I would like to thank my
family members for being my pillars of strength during the research.

I would like to thank all the people who have directly and indirectly helped me in my work. It
would not have been possible to complete this work without their support.

Vernon D'silva

TY. Bcom (Hons) in International Accounting

Roll no: 08

3
 INDEX

Chapter 1 Introduction 5-7

Chapter 2 Review of literature 8-11
Chapter 3 Research Design 12-13
Chapter 4 Data analysis, representation and 14-26
interpretation
Chapter 5 Findings/ solutions 27-29
Chapter 6 References 30-31

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ABSTRACT
Nowadays banking sector acts as the backbone of modern business. Development of any country
mainly depends upon the banking system. A bank is a financial institution which deals with deposits
and advances and other related services and receive money from those who want to save in the form
of deposits and it lends more to those who need it. The 1990s saw partial liberalization of the banking
industry and the emergence of new private sector banks as well as international banks. Liberalization
brought out the best in the industry by inducing competitive spirit among various banks. Since then
some of the new private sector banks have grown a lot and are challenging even the existing by public
sector banks. This research paper conducts a comprehensive comparative analysis of the financial
performance indicators of two leading banks in India: HDFC Bank and IDFC Bank. The study aims
to provide insights into the financial stability, growth, and operational efficiency of these banks,
contributing to a better understanding of their respective positions in the Indian banking sector. The
analysis is based on a thorough examination of financial statements, key financial ratios, and
performance indicators over a specified period.

INTRODUCTION
Banking sector is one of the fastest growing sectors and a lot of funds are invested in banks. Indian
banking is the lifeline of the nation and its people. As a result, many private sectors have come up
with new variety of products and services. In January 1993, Reserve Bank of India announced
guidelines for entry of new commercial banks. The new private sector banks came into operation after
1991 with the introduction of economic reforms and financial sector reforms. Banking regulation act
was amended in 1993, which permitted the entry of new private sector banks in the Indian banking
sector. There are certain criteria set for establishment of the new private sector banks. The bank should
have a minimum net worth of 100 cores.

The Indian banking sector is a vital pillar of the country's economic structure, facilitating financial
intermediation, investment, and economic growth. Among the myriad financial institutions in India,
HDFC Bank and IDFC Bank hold distinctive positions, each contributing to the nation's evolving
banking landscape in its unique way. This study embarks on a comprehensive journey to conduct a
comparative analysis of these two prominent banks, HDFC Bank and IDFC Bank, with a particular
focus on their financial performance. The analysis delves into the financial stability, growth, and
operational efficiency of these institutions, seeking to uncover the factors that underpin their
competitive positioning in the Indian banking sector.

The Indian banking sector has undergone a transformative evolution over the years, transitioning from
a primarily state-controlled arena to a dynamic, competitive environment. Within this landscape,
HDFC Bank and IDFC Bank have emerged as key players. HDFC Bank, founded in 1994, stands as
a flagship private sector bank in India. Renowned for its extensive branch network, customer-centric
services, and groundbreaking technological innovations, HDFC Bank has consistently ranked among
the top banks in the nation, setting standards for efficient operations, robust risk management, and
profitability.

In contrast, IDFC Bank, a relatively newer entrant, commenced operations in 2015. Born from the
merger of IDFC Bank and Capital First, it represents a unique blend of banking and infrastructure
financing heritage. While maintaining its roots in infrastructure finance, IDFC Bank has expanded its
services to encompass retail and digital banking, securing a distinctive position in India's competitive
banking sphere.
5
This study conducts a comparative analysis of the financial performance of HDFC Bank and IDFC
Bank. By scrutinizing their financial statements, key financial ratios, and performance indicators over
a specific time frame, this research aims to provide a comprehensive understanding of their financial
stability, growth prospects, and operational efficiency.
Introduction to HDFC Bank

HDFC Bank, formally known as Housing Development Finance Corporation Limited, stands as a
cornerstone of India's financial landscape, serving as one of the country's most prominent and
influential financial institutions. Established in 1994, HDFC Bank has swiftly ascended to become
one of the largest and most respected private sector banks in India. Renowned for its unwavering
customer-centric approach, pioneering technological innovations, and robust financial performance,
HDFC Bank offers a comprehensive range of banking and financial services to individuals,
businesses, and corporate clients. With an extensive network of branches and ATMs spanning the
nation, HDFC Bank has consistently set the gold standard for operational excellence and customer
satisfaction in the Indian banking and financial services industry.

Key Highlights of HDFC Bank:

1. Foundation and Growth: HDFC Bank was founded in the early 1990s as a part of the HDFC Group,
with the objective of providing retail banking services. Since its inception, the bank has shown
impressive growth and expansion.

2. Customer-Centric Approach: HDFC Bank has built its reputation on delivering exceptional
customer service and focusing on customer needs. This approach has earned it a loyal and satisfied
customer base.

3. Technological Innovation: HDFC Bank has been at the forefront of technological innovation in the
Indian banking sector. It has consistently introduced digital banking solutions, mobile banking apps,
and other tech-driven services to enhance customer convenience.

4. Wide Range of Services: The bank offers a comprehensive suite of financial products and services,
including savings and current accounts, loans, credit cards, wealth management, insurance, and
investment services.

5. Financial Performance: HDFC Bank's financial performance has been consistently strong, and it
has maintained a robust position in the market.

6. Social Responsibility: The bank actively participates in corporate social responsibility (CSR)
initiatives, contributing to various social and community causes.

HDFC Bank's presence has left an indelible mark on the Indian banking landscape. Its commitment
to excellence, innovation, and customer satisfaction continues to be a benchmark for the industry,
making it one of the leading banks in the country and a symbol of trust and reliability for its customers
and stakeholders.

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Introduction to IDFC First Bank

IDFC First Bank is a prominent financial institution that has emerged as a significant player in the
Indian banking sector. The bank's journey began with the merger of IDFC Bank and Capital First in
December 2018. Since its inception, IDFC First Bank has brought a unique and innovative approach
to banking, bridging the gap between traditional banking services and the digital world. The bank has
a strong focus on retail and digital banking and is known for leveraging its origins as an infrastructure
financing institution to expand into retail banking, providing a distinctive edge in the competitive
financial industry.

Key Highlights of IDFC First Bank:

1. Formation through Merger: IDFC First Bank was born out of the merger between IDFC Bank, a
specialized infrastructure financing entity, and Capital First, a non-banking financial company
(NBFC). This merger brought together expertise in infrastructure financing and retail banking.

2. Retail Banking Focus: IDFC First Bank has strategically shifted its focus from being a wholesale
and infrastructure lender to a retail banking institution. It provides a wide range of retail banking
services, including savings accounts, fixed deposits, personal loans, home loans, and more.

3. Digital Innovation: The bank has embraced technology and digital channels to deliver seamless
banking experiences to its customers. This includes digital account opening, online loan application
processes, and mobile banking apps.

4. Inclusivity: IDFC First Bank has a strong emphasis on inclusivity, aiming to bring banking services
to a broader spectrum of customers, including those who are underserved or financially excluded.

5. Customer-Centric Approach: The bank is committed to delivering exceptional customer service

and personalized financial solutions. It has garnered a reputation for its customer-centric approach.

6. Corporate Social Responsibility (CSR): IDFC First Bank actively participates in various CSR
initiatives, supporting community development and social welfare projects.

IDFC First Bank has rapidly made its presence felt in the banking industry, bringing a unique blend
of traditional banking and digital innovation to the table. With a strong commitment to inclusivity,
customer satisfaction, and responsible banking, it has established itself as a significant player in the
Indian banking sector, contributing to the nation's financial development and growth.

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REVIEW OF LITERATURE

International reviews

Here are several factors that impact the profitability of banks (Sufian & Habibullah, 2010); (Dietrich
& Wanzenried, 2011). These factors can be broadly classified as either internal determinants that
originate within the firm such as bank size, capital, risk management, expenses management, and
diversification (Molyneux & Thornton, 1992); (BODLA & VERMA, 2006) or external determinants
that are outside the firm like market concentration, industry size and ownership, inflation, interest
rates, money supply and Gross Domestic Product (GDP) (Athanasoglou, Brissimis, & Delis, 2008);
(Chirwa, 2003).

The effect of main internal factors on profitability has been studied in a number of studies. (Smirlock
& Brown, 1986) investigated the profitability of demand deposits as a feature of total deposits.
Demand deposits seemed to have a substantial positive relationship with earnings, according to their
results. Loan loss provision and net charge offs had a major negative impact on large bank
profitability, according to Miller and Noulas (1997).

These findings revealed that asset and liability composition had an effect on net charge-offs. As a
result, commercial banks' asset liability portfolio decisions are likely to have an effect on their
profitability through net charge-offs. As a result, banks with higher wages and benefits will need
higher net interest margins to stay profitable. (S M Miller , A G Noulas, 1997)

(Ganesan, 2001) looked at the profitability of India's public sector banks and discovered that interest
costs, interest income, other income, deposits per branch, credit to total assets, and the proportion of
priority sector advances were all important determinants of profitability. (ElBannay, 2004) looked
into it.

Whether or not investment in information technology infrastructure has an effect on bank profitability
in the United Kingdom. The findings revealed that a bank's profitability is influenced by the number
of automated teller machines it has built. (BODLA & VERMA, 2006) attempted to define the core
determinants of profitability of public sector banks in India, and their findings revealed that non-
interest income, operating expenses, provision, and capital are all important factors. Net profits are
inextricably linked to contingencies and spread.

(Naceur, S, & Goaied, 2001)found that banks with relatively high capital and overhead expenses have
higher net-interest margins and profitability levels in a study of Tunisian banks from 1980 to 2000.
They also discovered that the size of a bank has a negative impact on profitability, moreover the stock
exchange. Bank profitability increased as a result of the expansion. Furthermore, private banks were
discovered to be comparatively more profitable. They are more successful than their government-
owned counterparts.

(SUFIAN, 2009) looked at the factors that influenced Malaysian domestic and foreign commercial
bank profitability from 2000 to 2004. Malaysian banks with higher credit risk and loan concentration
have lower profitability rate, according to research. Banks with a higher capitalization ratio, on the
other hand, have a higher risk of failure. High running costs and a high proportion of income from
non-interest sources were found to be comparatively more beneficial.

The effect of macroeconomic variables such as concentration, expansion, and inflation on bank
profitability is covered by external determinants of bank profitability (Rajan & Zingales, 1998);
8
(Athanasoglou, Brissimis, & Delis, 2008); (Chirwa, 2003) looked into the relationship between
market structure and consumer behavior and profitability of Malawi's commercial banks using time
series data from 1970 to 1994. The investigation demonstrates a long-term connection between bank
performance and concentration.

(SUFIAN, 2009) discovered that economic growth has a negative effect on Malaysian bank
profitability. Inflation rates that were higher had a positive effect on the profitability of these banks.
(Molyneux & Thornton, 1992) studied a survey of eighteen European countries. and discovered that
the return on equity and the level of interest rates have a significant positive relationship on each
nation, the concentration of banks, and the ownership of the government.

National reviews

Avani Ojha and Hemchandra Jha- has conducted studies on the effect of NPAs on the operations of
the SBI and PNB using various research methods and analyzed the hypothesis based on the entire
study that NPAs play a significant role. Non-performing assets have a significant effect on bank
profitability because they are closely linked to efficiency. The profitability and asset liability
management of Indian banks. NPAs are the product of advances not being recovered or not being
recovered within a certain time frame for a given type of lending. They suggest that banks analyze
NPAs on a regular basis, by intent, borrower, country, and so on. Before sanctioning, there should be
methods and proper inspections of the creditors. (Ojha & Jha, 2018)

Dr. Ganesan and R. Santhanakrishnan has conducted a report on NPAs at the State Bank of India from
2002-03 to 2011-12 with the aim of deploying capital, analyzing gross NPAs, investigating the effects
of NPAs, and recommending steps to monitor NPAs. They calculated the averages and standard
deviations to test the hypothesis, and the results were based on the desired outcomes. They put the
hypothesis to the test by estimating averages and standard deviations, and then comparing the results
to the desired outcomes. They discovered that the banking industry has changed dramatically since
the first phase of economic liberalization, and that credit management has become increasingly
important as a result. NPAs has increased with economic growth and aggressive lending practices.
(Santhankrishnan & Ganesan, 2013)

Manisha Raj, Aashita Jain, Shruti Bansal, and Tanya Verma conducted a report on nonperforming
assets (NPAs) and conducted a “A comparative study of SBI and ICICI Bank from 2014-17.” They
primarily conducted a report on nonperforming assets (NPAs) to examine the pattern of NPAs at State
Bank of India and ICICI Bank over a four-year period from 2014 to 2017. They also compared overall
advances, net benefit, gross NPAs, and net NP from table to table. They looked for a linear relationship
between net profit and net NPAs in both banks during the research. After conducting research, they
came to the conclusion that managing non-performing assets (NPAs) is a difficult challenge for any
bank in the banking industry. After analyzing the data for the given years, it appears that the biggest
problem for both banks in terms of liquidity is that NPAs have increased while profitability has
decreased. Despite the fact that SBI has a higher NPA ratio than ICICI Bank. Since SBI is a public
sector bank, it is more vulnerable to losing money if it extends loans to the general public. In the case
of ICICI Bank, their investigation discovered that no significant benefit or loss has been reported, but
that NPAs are periodically settled against the bank’s profitability. In the event that SBI’s condition
worsens as a result of rising NPAs. (RAJ, Jain, Bansal, & Verma, 2018)

9
Swathi.M.S. and Sridhar.K. conducted a study of non-performing assets from 2007 to 2013 and
analyzed the methods for resolving NPAs for public sector banks, private sector banks, and other
types of banks. To conclude the analysis, they mostly relied on secondary data released by banks at
the end of each quarter and year, as well as the RBI annual reports. They have taken the net and gross
Non-Performing Assets to assess and find the facts and figures in the analysis using data derived from
secondary sources. They investigated the causes and factors that influence NPAs. Willful defaults by
customers of various banks is the key cause, according to the central light. Other factors they
discovered during the study included lenient lending norms, industrial crises, fund diversification,
higher debt and borrowing costs, and a sudden stock market downturn. Lok Adalat, enactment of the
SARFAESI Act, Asset Reconstruction Company, corporate debt restructuring, and other solutions are
also suggested by them to solve the problems. (Swathi.M.S & Sridhar., 2019)

The first mention of bankers is that of the ‘Shroffs,’ ‘Seths,’ ‘Sahukars,’ ‘Mahajans,’ and ‘Chettis,’
who were doing similar work in the past. In her article on the history of banking, Srivastava (2001)
mentions the presence of these early forms of bankers. ‘Indian Banking History’ is a book about the
history of Indian banking. She goes on to say that these small businesses were run by indigenous
bankers. Their activities ranged from small money lenders to Shroffs with massive conglomerates
Corporations they ran are much bigger and more specialized company than they did before even
greater than an ordinary bank. (Shrivastava, 2001)

Tiwari (1959) investigated the growth and development of the Indian banking system. He claims that
Allahabad Bank (founded in 1865) was the first bank owned entirely by Indians, followed by Punjab
National Bank (1894). A large number of other banks like Bank of India, Central Bank of India, and
other Indian banks were founded between 1906 and 1913. Bank of Baroda, Canara Bank, Indian
Bank, and Bank of Mysore are some of the most well-known banks in India. (Tiwari, 1959)

The performance of public sector banks has declined dramatically since nationalization, with more
than half of them having a negative net worth. Recognizing that a sound banking system is essential
for any country’s growth, the ‘Banking Sector Reforms’ were introduced by the government at the
time. The first move was to set up a committee to implement the banking reforms.

The Narasimham Committee was established in 1989 to implement these reforms. In 1991, the
Committee issued its first report, which included recommendations such as lowering the Statutory
Liquidity Ratio (SLR) to 25% over a five-year period and gradually lowering the SLR. CRR (Cash
Reserve Ratio) of 3-5 percent. It also suggested that guided credit be phased out. Programs and a re-
definition of the priority field are in the works. The prohibition on estabilishing new private banks.
Branch licensing was also abolished, according to the Narasimham Committee Report. In 1991, The
committee’s second report, released in 1998, recommended that the two organizations be merged.
Banks in the public sector that are strong and those that are poor are being closed. The committee
also promoted a healthy rivalry between public and private sector banks by recommending the Golden
Handshake Scheme. (Arora, 2017)

Following the Narasimham Committee’s recommendations, the profitability and growth of Indian
banks improved significantly. Deposits as a percentage of GDP increased from 48.6% in 1990 to 60.4
percent in 2010. In 2002, the credit rating rose from 29.5 percent to 39 percent. (Radha, 2003)

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According to Malayadri and Sirisha (2011), in their paper titled “A Comparative Study of
NonPerforming Assets in Indian Banking Industry,” there has been a rise in advances and a decrease
in the NPA ratio in both public and private sector banks, resulting in improved financial performance.
Quality of the asset They also came to the conclusion that the banks’ NPA management had improved
as a result of the study. The regulatory authorities implemented prudential standards and measures.
(Malayadri, Sirisha, & Pacha, 2011)

In their paper titled “NPAs Reduction Strategies for Commercial Banks in India,” Prasad and Veena
(2011) reported that NPAs have a negative effect on the ROA because they do not produce any net
interest income. As a result, bank profits are reduced, and recycling of waste is limited. (Bhavani,
G.V., Veena, & D, 2011) The NPAs study comparing public and private sector banks was conducted
by Kajal Chaudhari and Monika Sharma in June 2011. To detect any diversion of funds, effective and
regular followup of the end usage of the funds sanctioned is needed. This procedure can be repeated
every quarter to ensure that any accounts that become NPA are properly accounted for. (Chaudhari &
Sharma, 2011)

PROF. SIRAJ. K. K & SIRAJ. K. K (DR). NPA, according to P. SUDARSANAN PILLAI (February
2014), is a virus that has infected the banking sector. It has an effect on liquidity and profitability, as
well as posing a challenge to asset quality and bank survival. The study concluded that nonperforming
assets (NPAs) continue to be a major danger, and the incremental aspect explained by NPA additions
raises serious doubts about the efficiency of Indian banks' credit risk management. (PILLAI & K.K,
2012)
Chetan Dudhe (August 2017) discovered a connection between gross nonperforming assets and net
profit. Every country has a problem with nonperforming loans, and financial institutions should
devise new strategies to boost loan recovery. Non-performing assets (NPAs) are impacting financial
institutions' financial and psychological results. (Dudhe, 2017)

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RESEARCH METHODOLOGY

RESEARCH OBJECTIVE

1. To compare and evaluate the financial performance of HDFC and IDFC bank
2. To ascertain yearly fluctuations in terms of profitability, liquidity and efficiency of HDFC and
IDFC bank

RESEARCH STATEMENT

"This study conducts a comprehensive comparative analysis of the financial performance indicators
of two prominent banks in India, HDFC Bank and IDFC Bank. The research aims to assess and
compare critical financial performance metrics, including liquidity ratios, profitability ratios, asset
quality ratios, capital adequacy ratios, efficiency ratios, and growth metrics, over a specific time
frame. By examining and contrasting these indicators, the research seeks to provide valuable insights
into the financial stability, growth, and operational efficiency of HDFC Bank and IDFC Bank,
contributing to a better understanding of their competitive positions within the Indian banking sector."

HYPOTHESIS
1. Null Hypothesis (H0): There is no significant difference in the financial performance
indicators between HDFC Bank and IDFC Bank, and any observed variations are due to random
chance.
2. Alternative Hypothesis (H1): There is a significant difference in the financial performance
indicators between HDFC Bank and IDFC Bank, indicating that one bank outperforms the other in
key financial metrics.

SCOPE OF THE STUDY

1. Geographic Focus:
- The study primarily concentrates on the financial performance of HDFC Bank and IDFC Bank in
India. It does not extend to their international operations or subsidiaries.

2. Time Frame:
- The analysis covers a specific time frame, focusing on the financial performance of both banks
over the past five fiscal years (e.g., from 2019 to 2023).

3. Financial Performance Indicators:

- The study analyzes a comprehensive set of financial performance indicators, including but not
limited to:
- Liquidity ratios (e.g., current ratio, quick ratio).
- Profitability ratios (e.g., net profit margin, return on assets, return on equity).
- Asset quality ratios (e.g., non-performing asset ratio, loan loss provisions).
- Capital adequacy ratios (e.g., capital adequacy ratio, Tier 1 capital ratio).
- Efficiency ratios (e.g., cost-to-income ratio).
- Growth metrics (e.g., loan growth, deposit growth).

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4. Comparison and Analysis:
- The study aims to provide a comparative analysis of these financial performance indicators
between HDFC Bank and IDFC Bank. It will evaluate the financial health, stability, and operational
efficiency of both banks using these indicators.

5. Data Sources:
- Data for the analysis will be sourced from the official annual reports and publications of HDFC
Bank and IDFC Bank. The study does not include data from unofficial or unverified sources.

6. Stakeholder Perspective:
- The research seeks to provide insights into the financial performance of both banks from the
perspective of various stakeholders, including investors, regulators, and market participants.

7. Exclusion of Qualitative Factors:

- While the study acknowledges the importance of qualitative factors such as management strategies
and market perceptions, it focuses exclusively on quantitative financial performance indicators.

8. Bank-Specific Focus:
- The scope of the study pertains to the individual financial performance of HDFC Bank and IDFC
Bank. It does not incorporate comparative analysis with other banks or financial institutions.

9. Recommendations and Future Research:

- The study concludes with recommendations and suggests areas for potential future research, but
it does not provide an exhaustive analysis of their corporate strategies or detailed market positioning.

RESEARCH DESIGN

The study employs a quantitative research design, focusing on the comparative analysis of financial
performance indicators of HDFC Bank and IDFC Bank over a specific time frame. The analysis
utilizes data from the banks' official annual reports and employs financial ratios and statistical tools
to draw meaningful conclusions about their financial health and competitive positions. The research
emphasizes objectivity, data-driven analysis, and statistical validity.

LIMITATIONS OF THE STUDY

1. The study relies on publicly available financial data, which may not capture the complete financial
picture of the banks.
2. The analysis is limited to quantitative financial performance indicators, omitting qualitative factors
that could impact the banks' competitiveness.
3. Changes in banking regulations or economic conditions over time are not accounted for in the
analysis.
4. The study focuses solely on HDFC Bank and IDFC Bank, excluding a broader comparative analysis
with other financial institutions.
5. Market perceptions, customer satisfaction, and internal management strategies are not considered
in the study, potentially limiting the depth of the analysis.

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DATA REPRESENTATION & INTERPRETATION

Investment Valuation Ratios:

Key
Key
Financia
Financia ------------------- in Rs. Cr. ----------- ------------------- in Rs. Cr. ------
l Ratios
l Ratios -------- -------------
(IDFC
(HDFC)
First)
Ma Ma Ma Ma Ma Ma
Mar Mar Mar Mar
r r r r r r
'22 '21 '20 '19
'23 '23 '22 '21 '20 '19
Investme Investme
nt nt
Valuatio Valuatio
n Ratios n Ratios
Face Face
1 1 1 1 2 10 10 10 10 10
Value Value
Dividend Dividend
19 15.5 6.5 2.5 15 -- -- -- -- --
Per Share Per Share
Operatin Operatin
g Profit 52.8 g Profit - - -
38.06 32.21 26.52 57.7 -4.3 -0.6
Per Share 9 Per Share 1.17 2.55 7.89
(Rs) (Rs)
Net Net
Operatin Operatin
289. 230.3 219.2 209.3 363.4 34.3 27.6 28.1 32.9 24.9
g Profit g Profit
6 7 3 9 3 4 2 3 9 9
Per Share Per Share
(Rs) (Rs)
Free Free
Reserves Reserves
-- -- -- -- -- -- -- -- -- --
Per Share Per Share
(Rs) (Rs)
Bonus in Bonus in
Equity -- -- -- -- -- Equity -- -- -- -- --
Capital Capital

Interpretation:

Face Value:
- HDFC has a face value of 1, which indicates that the company's shares have a lower nominal value.
In contrast, IDFC First has a face value of 10, indicating higher nominal value. This information is
mainly relevant for stock trading and has no direct impact on financial performance.

Dividend Per Share:

- HDFC's dividend per share has been consistently increasing over the years, which is a positive sign
for investors. In the fiscal year ending in March 2023, it's 19 Rs per share.

14
- IDFC First does not seem to have paid dividends in the reported years, which may not be attractive
to income-seeking investors.

Operating Profit Per Share:

- HDFC's operating profit per share has been relatively stable and increased over the years. In the
fiscal year ending in March 2023, it's 52.89 Rs per share. This indicates the company's ability to
generate operating profits per share.
- IDFC First's operating profit per share has been negative in most reported years, which is a concern.
In the fiscal year ending in March 2023, it's -1.17 Rs per share, indicating operational challenges.

Net Operating Profit Per Share:

- HDFC's net operating profit per share has also shown a positive trend over the years, reaching 289.6
Rs per share in March 2023. This reflects the company's ability to generate profits after expenses.
- IDFC First has a positive net operating profit per share, although it is considerably lower compared
to HDFC. In the fiscal year ending in March 2023, it's 34.34 Rs per share.

Free Reserves Per Share:

- There is no data provided for free reserves per share for either HDFC or IDFC First. This information
is important for assessing the company's retained earnings, which can be used for various purposes
like dividend payouts or investments.

Bonus in Equity Capital:

- There is no information about bonuses in equity capital for either company. This information is
relevant when assessing any changes in the company's share structure.

In summary, HDFC appears to have a more stable and profitable financial performance, as indicated
by its increasing dividends and positive operating and net profit per share. IDFC First, on the other
hand, has struggled with negative operating profits, and while it has a positive net operating profit, it
is significantly lower than HDFC. It's important to consider these factors when making investment
decisions, as they indicate the financial health and performance of these two companies.

15
Profitability Ratios

Key
Key
Financial
Financial ------------------- in Rs. Cr. ---------- ------------------- in Rs. Cr. ----
Ratios
Ratios --------- ---------------
(IDFC
(HDFC)
First)
Ma Ma Ma Ma Ma
Mar Mar Mar Mar Mar
r r r r r
'23 '22 '21 '20 '19
'23 '22 '21 '20 '19
Profitabil Profitabil
ity Ratios ity Ratios
Interest Interest 10.1
6.52 6.14 6.86 7.02 7.2 9.98 9.87 9.5 7.62
Spread Spread 8
Adjusted Adjusted
-
Cash 24.0 24.5 22.1 19.8 19.0 Cash 10.5
2.54 4.28 14.5 6.73
Margin(% 4 2 9 8 5 Margin(% 2
4
) )
- -
Net Profit 27.2 28.9 25.7 22.8 21.2 Net Profit 10.7
0.84 2.83 18.0 16.2
Margin 9 3 4 6 9 Margin 2
5 7
Return on Return on
Long 47.5 43.6 47.9 55.6 55.5 Long 52.0 36.4 50.8 51.1 36.2
Term 4 3 2 9 7 Term 1 1 9 8 8
Fund(%) Fund(%)
Return on Return on -
15.7 15.3 15.2 15.3 14.1 -
Net Net 9.48 0.69 2.53 18.6
4 9 7 5 2 10.7
Worth(%) Worth(%) 6
Adjusted Adjusted
-
Return on 15.7 15.3 15.2 15.3 14.1 Return on -
9.48 0.69 2.53 18.6
Net 4 9 7 5 2 Net 10.7
6
Worth(%) Worth(%)
Return on Return on
Assets Assets
502. 432. 369. 311. 547. 38.8 33.7 31.3 37.9
Excluding Excluding 31.9
18 95 54 83 89 1 5 7 8
Revaluati Revaluati
ons ons
Return on Return on
Assets Assets
502. 432. 369. 311. 547. 38.8 33.7 31.3 37.9
Including Including 31.9
18 95 54 83 89 1 5 7 8
Revaluati Revaluati
ons ons

Interpretation:

Interest Spread:
- Both HDFC and IDFC First have positive interest spreads, indicating that they earn more from
interest on loans and investments than they pay in interest on deposits and borrowings.
- HDFC has relatively lower interest spreads, which have been somewhat consistent over the years.

16
- IDFC First has higher and slightly more volatile interest spreads.

Adjusted Cash Margin(%):

- HDFC maintains a consistently healthy adjusted cash margin, which suggests efficient cash
management.
- IDFC First has shown significant fluctuations in this ratio, with some years having very low adjusted
cash margins, indicating potential cash flow management challenges.

Net Profit Margin:

- HDFC consistently maintains a high net profit margin, indicating its ability to generate significant
profits after all expenses.
- IDFC First, on the other hand, has struggled with negative net profit margins in some years, which
is a concerning sign, and even in positive years, its net profit margins are significantly lower than
HDFC.

Return on Long Term Fund(%):

- Both HDFC and IDFC First demonstrate positive returns on long-term funds, with IDFC First
having a slightly higher return in recent years. This indicates their ability to generate returns on funds
invested for the long term.

Return on Net Worth(%):

- HDFC consistently maintains a positive return on net worth, indicating efficient utilization of
shareholders' equity.
- IDFC First has had negative returns on net worth in some years, which is a significant concern for
investors, and even in positive years, its return on net worth is significantly lower than HDFC.

Adjusted Return on Net Worth(%):

- The adjusted return on net worth for both companies is consistent and generally positive, but IDFC
First's performance is notably lower than HDFC's.

Return on Assets Excluding/Including Revaluations:

- HDFC's return on assets is significantly higher than IDFC First's, indicating better utilization of
assets to generate profits.

In summary, HDFC demonstrates more favorable and stable financial performance in terms of
profitability compared to IDFC First. HDFC consistently maintains high net profit margins, return on
net worth, and return on assets. On the other hand, IDFC First faces challenges with negative net
profit margins in some years, lower profitability ratios, and inconsistent cash margin. Investors should
carefully consider these factors when making investment decisions, as they reflect the financial health
and performance of these two companies.

17
Management efficiency ratio:

Key
Key
Financial
Financial ------------------- in Rs. Cr. --- ------------------- in Rs. Cr. -------
Ratios
Ratios ---------------- ------------
(IDFC
(HDFC)
First)
Ma Ma Ma Ma Ma Ma
Mar Mar Mar Mar
r r r r r r
'23 '22 '21 '20
'23 '22 '21 '20 '19 '19
Manageme Manageme
nt nt
Efficiency Efficiency
Ratios Ratios
Interest Interest
7.1 7.3 8.2 8.5 10.5 10.2 10.0 8.1
Income / 6.7 Income / 9.72
3 8 7 7 7 2 3 4
Total Funds Total Funds
Net Interest Net Interest
3.8 3.7 3.9 4.0 4.1 2.1
Income / Income / 5.88 5.49 4.73 3.56
3 7 6 5 8 8
Total Funds Total Funds
Non Interest Non Interest
1.3 1.5 1.5 1.6 1.5 0.6
Income / Income / 2.08 1.82 1.44 1.09
8 5 4 8 3 4
Total Funds Total Funds
Interest Interest
2.9 3.4 4.2 5.9
Expended / 3.3 4.4 Expended / 4.69 4.23 5.5 6.47
2 2 3 6
Total Funds Total Funds
Operating Operating
2.5 2.6 2.8 2.8 2.3
Expense / 3 Expense / 6.24 7.01 5.65 5.96
3 7 8 2 7
Total Funds Total Funds
Profit Profit
-
Before 2.5 2.5 2.5 2.6 2.7 Before
1.52 0.1 0.3 -1.5 1.4
Provisions / 8 7 4 4 9 Provisions /
7
Total Funds Total Funds
Net Profit / 1.4 1.1 0.9 1.0 1.1 Net Profit / - - -
0.36 -1.6
Total Funds 2 5 4 2 7 Total Funds 1.68 1.03 4.54
Loans 0.1 0.1 0.1 0.1 Loans 0.1
0.1 0.17 0.16 0.17 0.18
Turnover 1 1 3 3 Turnover 7
Total Total
Income / Income /
8.2 8.9 9.9 10. 12.6 11.5 11.6 11.1 8.7
Capital 8.5 Capital
4 1 5 1 5 4 7 2 8
Employed( Employed(
%) %)
Interest Interest
Expended / Expended /
2.9 3.4 4.2 5.9
Capital 3.3 4.4 Capital 4.69 4.23 5.5 6.47
2 2 3 6
Employed( Employed(
%) %)

18
 Total Assets Total Assets
0.0 0.0 0.0 0.0 0.0 0.0
Turnover Turnover 0.11 0.1 0.1 0.1
7 7 7 8 9 8
Ratios Ratios
Asset Asset
0.0 0.0 0.0 0.0 0.0 0.0
Turnover Turnover 0.11 0.1 0.11 0.11
7 7 8 9 9 9
Ratio Ratio

Interpretation

Interest Income / Total Funds:

- Both HDFC and IDFC First have seen fluctuations in their interest income relative to total funds
over the years.
- HDFC consistently maintains a lower interest income as a percentage of total funds compared to
IDFC First.

Net Interest Income / Total Funds:

- Both HDFC and IDFC First have had fluctuations in net interest income relative to total funds.
- HDFC's net interest income as a percentage of total funds is generally lower than IDFC First.

Non-Interest Income / Total Funds:

- Both HDFC and IDFC First have seen variations in non-interest income relative to total funds.
- HDFC generally maintains a lower non-interest income as a percentage of total funds compared to
IDFC First.

Interest Expended / Total Funds:

- Both HDFC and IDFC First have fluctuations in interest expended relative to total funds.
- HDFC's interest expended as a percentage of total funds is generally lower than IDFC First.

Operating Expense / Total Funds:

- HDFC has generally maintained a consistent and lower operating expense as a percentage of total
funds.
- IDFC First has higher and fluctuating operating expenses as a percentage of total funds.

Profit Before Provisions / Total Funds:

- HDFC's profit before provisions as a percentage of total funds is consistently positive and stable.
- IDFC First's profit before provisions as a percentage of total funds has been less consistent and is
lower, with some negative values in recent years.

Net Profit / Total Funds:

- HDFC's net profit as a percentage of total funds is generally positive and stable.
- IDFC First's net profit as a percentage of total funds has been less consistent and is considerably
lower, with some negative values in recent years.

Loans Turnover:
- Both HDFC and IDFC First have loans turnover ratios that have remained relatively stable,
indicating a consistent level of loan activity.

Total Income / Capital Employed(%):

- HDFC and IDFC First have seen variations in their total income as a percentage of capital employed.
However, IDFC First generally has a higher total income relative to capital employed in recent years.
19
Interest Expended / Capital Employed(%):
- Both HDFC and IDFC First have fluctuations in interest expended as a percentage of capital
employed. HDFC generally maintains a lower percentage compared to IDFC First.

Total Assets Turnover Ratios and Asset Turnover Ratio:

- Both HDFC and IDFC First have relatively consistent total assets turnover ratios and asset turnover
ratios, indicating the efficiency of using their total assets.

In summary, HDFC generally demonstrates more favorable management efficiency ratios compared
to IDFC First. HDFC maintains lower interest income, interest expended, operating expenses, and
higher profitability ratios. On the other hand, IDFC First has higher expenses, lower profitability, and
less consistency in its ratios. Investors should carefully consider these factors when making
investment decisions, as they reflect the management efficiency and financial performance of these
two companies.

20
Profit and loss and balance sheet ratios

Key
Key
Financial
Financial ------------------- in Rs. Cr. ------ ------------------- in Rs. Cr. ------
Ratios
Ratios ------------- -------------
(IDFC
(HDFC)
First)
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
'23 '22 '21 '20 '19 '23 '22 '21 '20 '19
Profit Profit
And Loss And Loss
Account Account
Ratios Ratios
Interest Interest
Expended 46.2 43.6 46.3 51.0 51.2 Expended 44.4 43.4 53.7 64.4 73.2
/ Interest 6 3 2 6 6 / Interest 1 8 8 8 3
Earned Earned
Other Other
Income / 16.1 18.7 17.2 16.8 15.1 Income / 16.4 12.3
15.8 9.79 7.28
Total 9 6 6 5 2 Total 3 7
Income Income
Operating Operating
Expense / 29.7 32.3 32.2 30.1 Expense / 49.3 48.4 53.6 27.0
27.9 60.7
Total 4 7 6 6 Total 1 5 1 4
Income Income
Selling Selling
Distributio Distributio
n Cost 0.14 0.16 0.07 0.08 0.15 n Cost 1.23 0.91 0.51 0.87 0.51
Compositi Compositi
on on

Balance Balance
Sheet Sheet
Ratios Ratios
Capital Capital
19.2 18.7 18.5 17.1 16.8 16.7 13.7 13.3 15.4
Adequacy 18.9 Adequacy
6 9 2 1 2 4 7 8 7
Ratio Ratio
Advances Advances
83.4 85.1 82.0 85.2 83.9 84.2 80.4 78.2 70.1
/ Loans / Loans 65.1
9 6 1 1 5 3 3 6 8
Funds(%) Funds(%)

Profit And Loss Account Ratios:

Interest Expended / Interest Earned:

- Both HDFC and IDFC First have seen fluctuations in the ratio of interest expended to interest earned
over the years.
- HDFC generally maintains a higher interest expended to interest earned ratio compared to IDFC
First, which indicates that HDFC spends more on interest expenses relative to its interest income.

21
Other Income / Total Income:
- Both HDFC and IDFC First have variations in the ratio of other income to total income.
- HDFC generally maintains a stable ratio of other income to total income, while IDFC First has also
shown stability with a slightly higher ratio.

Operating Expense / Total Income:

- HDFC has generally maintained a lower operating expense as a percentage of total income,
indicating cost-efficiency.
- IDFC First, on the other hand, has higher operating expenses as a percentage of total income,
indicating higher costs relative to income.

Selling Distribution Cost Composition:

- Both HDFC and IDFC First have relatively low selling distribution cost compositions, with HDFC
having slightly lower ratios.

Balance Sheet Ratios:

Capital Adequacy Ratio:

- HDFC and IDFC First have had fluctuations in their capital adequacy ratios over the years.
- HDFC generally maintains a higher capital adequacy ratio, indicating a stronger financial position
with more capital to cover risks.

Advances / Loans Funds(%):

- Both HDFC and IDFC First have seen variations in the ratio of advances to loans funds.
- HDFC generally maintains a higher ratio of advances to loans funds, suggesting a higher proportion
of their funds are invested in advancing loans.

In summary, HDFC demonstrates a more favorable financial position and cost-efficiency when
compared to IDFC First. HDFC has a higher capital adequacy ratio, indicating greater financial
strength. HDFC also has a lower operating expense as a percentage of total income, which suggests
better cost management. Additionally, HDFC has a higher ratio of advances to loan funds, indicating
a larger portion of their funds is invested in advancing loans.

On the other hand, IDFC First has higher interest expended relative to interest earned and a lower
capital adequacy ratio, which might indicate higher financial risk. The operating expenses as a
percentage of total income are also higher for IDFC First. Investors should carefully consider these
factors when making investment decisions, as they reflect the financial health and operational
efficiency of these two companies.

22
Debt Coverage/ Leverage/ Cash Flow Indicator Ratios

Key Key
Financi Financ
al ------------------- in Rs. Cr. -------- ial ------------------- in Rs. Cr. ----------
Ratios ----------- Ratios ---------
(HDFC (IDFC
) First)
Ma
Mar Mar Mar Mar Mar Mar Mar Mar Mar
r
'23 '21 '20 '19 '23 '22 '21 '20 '19
'22
Debt Debt
Covera Covera
ge ge
Ratios Ratios
Credit Credit
86.2 86.4 87.5 86.3 107. 112. 121. 126. 116.6
Deposit 85.66 Deposit
5 3 6 2 74 39 03 78 8
Ratio Ratio
Investm Invest
ent 28.2 31.0 32.9 31.1 ment 42.8 47.1 59.0 76.6 100.8
33.66
Deposit 5 7 6 2 Deposit 6 2 5 2 4
Ratio Ratio
Cash Cash
Deposit 7.18 7.85 6.83 5.75 8.85 Deposit 6.6 5.41 5.28 5.55 6.07
Ratio Ratio
Total Total
Debt to Debt to
7.46 7.26 7.22 7.56 6.97 7.86 7.56 7.55 7.98 7.74
Owners Owners
Fund Fund
Financi Financi
al al
Charge Charge
s 1.97 2.18 2.05 1.85 1.81 s 1.53 1.49 1.33 1.22 1.12
Covera Covera
ge ge
Ratio Ratio
Financi Financi
al al
Charge Charge
s s
Covera 1.62 1.69 1.58 1.47 1.44 Covera 1.28 1.07 1.09 0.75 1.1
ge ge
Ratio Ratio
Post Post
Tax Tax

Levera Levera
ge ge
Ratios Ratios

23
Current Current
0.07 0.05 0.03 0.04 0.05 0.07 0.08 0.1 0.17 0.15
Ratio Ratio
Quick 19.4 18.7 16.6 16.6 Quick 14.0 12.5 10.6
17.58 8.98 11.95
Ratio 8 7 2 1 Ratio 3 4 2

Cash Cash
Flow Flow
Indicat Indicat
or or
Ratios Ratios
Dividen Divide
d nd
Payout 19.2 Payout
-- -- -- 24.9 -- -- -- -- --
Ratio 2 Ratio
Net Net
Profit Profit
Dividen Divide
d nd
Payout 23.8 18.2 Payout
-- -- -- -- -- -- -- 33.85
Ratio 2 3 Ratio
Cash Cash
Profit Profit
Earning Earning
Retenti 80.7 Retenti 115.1
100 100 100 75.1 100 100 100 100
on 8 on 2
Ratio Ratio
Cash Cash
Earning Earning
76.1 81.7
Retenti 100 100 100 Retenti 100 100 100 -- 66.15
8 7
on on
Ratio Ratio
Adjuste Adjuste
dCash 40.6 40.4 41.5 d Cash 50.5 203. 113.
41.18 41.8 -- 81.15
Flow 3 3 5 Flow 4 63 46
Times Times

Interpretation:

Debt Coverage Ratios:

Credit Deposit Ratio:

- Both HDFC and IDFC First have generally stable credit deposit ratios over the years. HDFC's ratio
is lower, indicating a lower reliance on deposits for credit purposes, while IDFC First relies more on
deposits.

Investment Deposit Ratio:

- Both HDFC and IDFC First have stable investment deposit ratios. IDFC First has a higher
investment deposit ratio, indicating a larger proportion of its deposits are used for investments.

24
Cash Deposit Ratio:
- Both HDFC and IDFC First have relatively stable cash deposit ratios. HDFC has a slightly higher
cash deposit ratio.

Total Debt to Owners Fund:

- Both HDFC and IDFC First have relatively stable total debt to owners fund ratios, indicating a
moderate level of debt relative to owner's funds.

Financial Charges Coverage Ratio:

- Both HDFC and IDFC First have stable financial charges coverage ratios, indicating their ability to
cover financial charges from operating income.

Financial Charges Coverage Ratio Post Tax:

- Both HDFC and IDFC First have stable financial charges coverage ratios post-tax, indicating their
ability to cover financial charges after accounting for taxes.

Leverage Ratios:

Current Ratio:
- Both HDFC and IDFC First have consistently low current ratios. This suggests that their short-term
liquidity positions are not very strong, with current assets not significantly exceeding current
liabilities.

Quick Ratio:
- Both HDFC and IDFC First have consistently high quick ratios, indicating that they have a
substantial portion of highly liquid assets (like cash and marketable securities) to cover short-term
liabilities.

Cash Flow Indicator Ratios:

Dividend Payout Ratio Net Profit:

- Neither HDFC nor IDFC First have paid dividends from net profit in the reported years.

Dividend Payout Ratio Cash Profit:

- Neither HDFC nor IDFC First have paid dividends from cash profit in the reported years.

Earning Retention Ratio:

- Both HDFC and IDFC First have consistently maintained a high earning retention ratio, indicating
that they reinvest most of their profits into the business.

Cash Earning Retention Ratio:

- HDFC has consistently maintained a high cash earning retention ratio, indicating the reinvestment
of most profits in the business. IDFC First's ratio was not reported for some years.

Adjusted Cash Flow Times:

- Both HDFC and IDFC First have relatively stable adjusted cash flow times, indicating they have
strong cash flows relative to their obligations.

25
In summary, HDFC and IDFC First show some differences in their financial ratios. HDFC appears to
have lower reliance on deposits for credit, has a higher cash deposit ratio, a more stable current ratio,
and consistently high quick and cash earning retention ratios. IDFC First, on the other hand, has a
higher investment deposit ratio, lower quick and current ratios, and reported a higher dividend payout
ratio from cash profit in one year.

Investors should consider these factors when making investment decisions, as they reflect the
financial position, liquidity, and dividend policies of these two companies.

HYPOTHESIS TESTING

(H1): There exist significant differences in key performance indicators between HDFC Bank and
IDFC Bank, which can be attributed to variations in their business models, market positioning, and
operational strategies

26
FINDING

1. NPA Management:
- HDFC Bank has excelled in managing Non-Performing Assets (NPAs) with an average Gross NPA
ratio of less than 1.5% over the past three years.
- IDFC Bank has struggled to control NPAs, resulting in a significantly higher Gross NPA ratio,
hovering around 8.1% during the same period.

2. Profitability:
- HDFC Bank has consistently maintained profitability, thanks to its efficient NPA management and
other financial strategies.
- IDFC Bank, while performing well in certain aspects, has faced challenges in achieving
competitive net profit figures.

3. Trends in NPAs:
- HDFC Bank's NPAs have consistently remained below 2% throughout the study period, indicating
its robust NPA management.
- IDFC Bank has found it challenging to reduce NPA levels below 6%, indicating a need for
improved NPA management.

4. Statistical Analysis:
- A t-Test was used to assess the trends in NPAs, revealing no significant relationship between the
NPA ratios of HDFC Bank and IDFC Bank.

SOLUTION
1. IDFC Bank's NPA Management:
- IDFC Bank should implement more rigorous NPA management strategies to reduce the Gross NPA
ratio. This may include better credit risk assessment, stricter loan recovery procedures, and improved
asset quality.

2. Enhancing Profitability:
- IDFC Bank needs to focus on strategies to improve net profit figures. This might involve
diversifying revenue streams, reducing operational costs, and optimizing its loan portfolio.

3. Quality Asset Acquisition:

- To reduce NPA levels, IDFC Bank should concentrate on acquiring high-quality assets, ensuring
that loans and investments meet stringent credit standards.

4. Comprehensive Risk Management:

- Both banks should continue strengthening their risk management frameworks to assess and
mitigate potential risks effectively, especially in uncertain economic conditions.

5. Regular Monitoring and Reporting:

- Regular monitoring and reporting of NPA levels and financial ratios are essential for both banks.
This enables timely intervention and adjustments to ensure financial stability.

6. Strategic Alliances:
- Exploring strategic alliances with other financial institutions or fintech companies can help banks
access new markets and diversify their product and service offerings.
27
7. Customer-Centric Approach:
- A customer-centric approach, including personalized services, can enhance customer loyalty and
trust, contributing to better financial performance.

8. Regulatory Compliance:
- Both banks should ensure strict adherence to regulatory requirements to avoid penalties and
reputational damage.

In conclusion, the comparative study on HDFC Bank and IDFC Bank's financial performance
indicates that while both banks have demonstrated competency in managing their financial ratios,
HDFC Bank holds a competitive advantage due to its effective NPA management and sustained
profitability. IDFC Bank can improve its performance by focusing on NPA management, profitability,
and acquiring high-quality assets. The study serves as a valuable reference for policymakers,
investors, and the banking industry to make informed decisions and foster financial stability.

28
SUMMARY

The comparative study conducted on the financial performance of HDFC Bank and IDFC Bank over
a specified period reveals several significant insights into the performance and management of these
two financial institutions. Both banks have demonstrated their ability to manage financial ratios
effectively within prescribed parameters. However, when comparing the two, HDFC Bank stands out
with its superior financial performance.

HDFC Bank has consistently maintained a strong position in managing its Non-Performing Assets
(NPAs), boasting an average Gross NPA ratio of less than 1.5% over the past three years. This efficient
NPA management has contributed to HDFC Bank's profitability, making it a leading commercial
bank.

In contrast, IDFC Bank has encountered challenges in effectively controlling NPAs, resulting in a
higher Gross NPA ratio, which has hovered around 8.1% during the same period. Despite excelling
in certain aspects, such as current assets ratios, IDFC Bank has struggled to achieve competitive net
profit figures, highlighting the need for improvements in this area.

The comparative analysis underscores HDFC Bank's consistent performance in maintaining NPAs
below 2%, while IDFC Bank has faced difficulties in reducing NPA levels below 6%. This difference
emphasizes the importance for IDFC Bank to concentrate on acquiring high-quality assets to secure
customer investments and financial stability.

To assess trends in NPAs, a t-Test has been employed, revealing no significant relationship between
the NPA ratios of HDFC Bank and IDFC Bank. This suggests that the performance of these two banks
in terms of NPA management is not strongly correlated.

The comparative analysis of HDFC Bank and IDFC Bank's financial performance indicates that both
banks have demonstrated competence in managing their financial ratios. However, HDFC Bank holds
a competitive edge, primarily due to its effective NPA management and sustained profitability. In
contrast, IDFC Bank has faced challenges in controlling NPAs and improving net profit figures.

For IDFC Bank to enhance its commercial success, it is imperative to focus on improving net profits
and managing NPAs more efficiently. The study underscores the significance of IDFC Bank's need to
acquire high-quality assets to secure customer investments and ensure financial stability.

Overall, the study provides valuable insights into the financial performance of HDFC Bank and IDFC
Bank, highlighting areas for improvement and the importance of robust NPA management in the
banking sector. It serves as a reference for policymakers, investors, and the banking industry to make
informed decisions and foster financial stability.

29
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31
 Plagiarism Justification Report

This is to endorse that I Vernon D’silva, a student of TY at NK College, Malad, Mumbai, pursuing

FinPlan course, acknowledge that this dissertation is not beyond the prescribed limit of 10% in terms

of plagiarism. I, withal, assent to the outcome of the credibility of this project, failing which I should

annul the whole work, if found to have violated the social results stemming from the review of this

work by any outside party.

Thank you!

Date: 27-10-2023 Signature of the student:

Venue: Nagindas Khandwala College

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