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089 Divya Kabra
089 Divya Kabra
To the
DEPARTMENT OF COMMERCE
BHOPAL SCHOOL OF SOCIAL SCIENCES
April, 2021
Submitted by Guided by
Divya kabra Dr. Swapna Pillai
Associate Professor
Department of Commerce
CERTIFICATE
It is certified that the work contained in the project report titled “ A COMPARATIVE
ANALYSIS OF FINANCIAL PERFORMANCE OF HDFC AND ICICI BANK” by
"DIVYA KABRA", has been carried out under my/our supervision and that this work has not
been submitted elsewhere for a degree.
Department: Commerce
April, 2021
DECLARATION
I hereby declare that this project report entitled “A COMPARATIVE ANALYSIS OF
FINANCIAL PERFORMANCE OF HDFC AND ICICI BANK " was carried out by me for
the degree of BCOM Honours under the guidance and supervision of Dr. Swapna Pillai,
Associate Professor of Department of Commerce, BSSS College. The interpretations put
forth are based on my reading and understanding of the original texts and they are not
published anywhere in any form. The other books, articles and websites, which I have made
use of are acknowledged at the respective place in the text. This research report is not
submitted for any other degree or diploma in any other University.
Place: Bhopal
I would like to thank our Principal Dr.Fr. John P.J. and Vice Principal Dr. Sr.
Sonia Kurien for their immense support and blessings. I thank our HOD Dr.
Amit Kumar Nag for his support. I would like to express my special thanks of
gratitude to my research guide Dr. Swapna Pillai, Associate Professor of
Department of Commerce for her valuable suggestions and guidance and for
giving me the golden opportunity to do this wonderful research project on the
topic: A study on training and development of employees at Himalaya drug
company. Without her help it would have been difficult for me to have reached
this state of completion of my project report. Also, I would like to thank my
parents and friends who helped me a lot in the preparation of this project.
I wish to acknowledge the help of all those who have provided me information,
guidance and other help during my research period.
TABLE OF CONTENT
Chapter I: Introduction of the Topic
5.3 Conclusion
REFERENCES
ANNEXURE
Chapter-1
1.1 Rationale of the study
1.2 Introduction to the industry
1.3 introduction to the company
1.4 Justification of the company
CHAPTER 1
INTRODUCTION TO THE TOPIC
This study is conducted to check the profitability performance of the two India largest banks
as follow ICICI BANK and HDFC BANK. This study is conducted to check the financial
performance of the banks and to draw attention on the financial statement of this banks.,
This study also helps us to get the knowledge of new strategic policies of the banks.
There are many researchers and professional experts who affirms that there is high significance
of financial performance of the banks. There are many tools and techniques used to do the data
analysis of this banks such as ratio analysis, trends, simple and multiple correlation are used to
analyses the data. Also, after the privatization private banks plays an important role and in
monetary framework.
These banks imply the policy of withdrawal and accepting deposits. This study appropriate
Parametric and Non -parametric test are employed and the analysis of data presented through
the Datas, bar graphs and tabulation.
RARIo analysis is a process of computing and det determining. Anne. Presenting the
relationship of the items. All financial statements. to provide. Meaningful understanding.
Meaningful understanding. of the. Financial performance. Of bank
The banking practices is as old as the human culture. The public bank was established in Italy
in 1157 AD named as Bank of Venice, banking industry in modern form was prospered in
around 19th century. The British Companies Act, 1883 and Joint Stock Companies Act, 1833
gave birth to commercial banks in England and India respectively. In India in 1881 “Oudh
Bank” was first bank to be registered under companies act.
In India the companies act was not adequate to regulate and control banks hence, the Banking
Regulation Act, 1949 came into act on March 16, 1949.
Types of banks
1. Commercial bank
2. Reserve bank of India
3. Private banks
4. Public sector banks
5. Regional rural banks.
6. Foreign banks
7. Cooperative bank.
8. Non-scheduled banks
The organized sector includes rbi, commercial banks, and cooperative bank specialized
TYPES OF BANKS
Scheduled bank Scheduled Bank: Scheduled banks are covered under the 2nd Schedule
of the Reserve Bank of India Act, 1934. A bank that has a paid-up capital of Rs. 5 Lakhs
and above qualifies for the schedule bank category. These banks are eligible to take
loans from RBI at bank rate.
Commercial bank: Commercial Banks are regulated under the Banking Regulation
Act, 1949 and their business model is designed to make profit. Their primary function
is to accept deposits and grant loans to the general public, corporate and government
. Commercial banks can be divided into
Public sector banks: These are the nationalized banks and account for more than 75 per
cent of the total banking business in the country. Majority of stakes in these banks are
held by the government. In terms of volume, SBI is the largest public sector bank in
India and after its merger with its 5 associate banks (as on 1st April 2017) it has got a
position among the top 50 banks of the world.
Private sector banks: These include banks in which major stake or equity is held by
private shareholders. All the banking rules and regulations laid down by the RBI will
be applicable on private sector banks as well. Given below is the list of private-sector
banks in India
Foreign banks:
A foreign bank is one that has its headquarters in a foreign country but operates in India
as a private entity. These banks are under the obligation to follow the regulations of its
home country as well as the country in which they are operating. Citi Bank, Standard
Chartered Bank and HSBC are some leading foreign banks in India.
Regional rural banks: A foreign bank is one that has its headquarters in a foreign
country but operates in India as a private entity. These banks are under the obligation
to follow the regulations of its home country as well as the country in which they are
operating. City Bank, Standard Chartered Bank and HSBC are some leading foreign
banks in India.
Non Scheduled banks: As per the Second Schedule of the Banking Regulation Act of
1965 a bank must satisfy the following conditions, to get fully authorized to run banking
business in India.
Types of Cooperative banks: a) Primary Credit Societies- These institutions are formed at
village level or town level. The operations of such banks are limited to a very small area (b)
District Central Cooperative Banks- These banks operate at the district level. They act as a
link between primary credit societies and state cooperative banks (c) State Cooperative
Banks- State Cooperative Banks are biggest forms of cooperative banks. They operate at the
state level. Some of State Cooperative banks operate in multi States.
Cooperative bank: Cooperative banks are owned by their customers and follow the
cooperative principle of one person, one vote. Co-operative banks are often regulated under
both banking and cooperative legislation. They provide services such as savings and loans to
non-members as well as to members, and some participate in the wholesale markets for
bonds, money and even equities. Many cooperative banks are traded on public stock markets,
with the result that they are partly owned by non-members. Member control is diluted by
these outside stakes, so they may be regarded as semi-cooperative.
HDFC bank is the largest bank by assets.it is the largest bank by market value.
It has market capital of 8trillion.it is the third largest company of NSE national stock exchange.
HDFC banks provide many services to their customers as in the form of loans, deposits, locker
security. Auto Loans'd, two-wheeler loans, loans against the house property, credit card, net
banking and many more.
Investment
In march 2020 the bank has the investment of huge amount in the YES bank.
FORMED IN 1995 with the main of providing long term loan and medium term loan to the
businessman of india.
ICICI bank provide services like net banking ,long term loans and short term loans , locker
facility, loan against security, credit cards ,debit card, ATM cards,ICICI wallets.
ICICI bank has also listed in BSE and NSE of the India.
iCICI Bank is one of the big fourt bank of India. The bank has subsidiaries in the United
Kingdom and Canada; branches in United States, Singapore, Bahrain, Hong Kong, Qatar,
Oman, Dubai International Finance Centre, China[and South Africa] as well as representative
offices in United Arab Emirates, Bangladesh, Malaysia and Indonesia. The company's UK
subsidiary has also established branches in Belgium and Germany.
1.4 Justification of the topic
This study reveals the financial performance of the India leading banks. This study has taken
under the research to check the which banks is performing good from the last 5 year.in this I
have conducted the research with the help og secondary data available on the bank official
website.
In this study we can get the knowledge of the financial ratios, trends, balance sheet of the
banks. This study also signifies that the most of us thinks that they always work on the profit
motive of their own but this study also signifies that they also have losses and face financial
problem and face loss in annual profit.
This can be affected by the several factors either related to their marketing policies or the
professional services offered by the bank, or other value-added thing which affect the growth
of the company.
HDFC and ICICI are the two major notable banks that are often get feature as leading banks
in the private sector banks.
To get more and check the accuracy of the banks this study analyses and compare the
profitability of the banks with the help of the secondary data with five consecutive years.
Chapter 2
REVIEW OF LITREATURE
Given the continual banking system in India, competition between this two banks is explode
assuring in better services, innovation, and upgrade. Subsequently, banks in India are under
the pressure to develop, differentiate, and discover in order to attract more clients in a
competitive market. To seize a market share, banks have to actively engage in product
development and micro-planning. Moreover, prudent pricing and relevant customization of
services should be embracing to meet the needs of the customers.
Amandeep concluded that to have excellent financial performance, banks need to have
excellent performance in managing burden. In the same vein, Ashok Kumar (2020) in
his study “Opportunities and provocation in the Indian retail banking industry”
concludes that for the development of retail banking in India, a sample or specimen
shift is required in bank financing through innovative products and processs involved
in the constant up-scale of the banks internal systems and processes . He point out that
retail banking has more scope for generating profit than any other traditional methods
Cheema agrawal analyses the profitability and the financial performance of
commercial banks in India and analyses the performance of public banks, private
banks and foreign banks in India. In this analysis, public sector banks were divided into
two categories, i.e., State bank group and nationalized banks.The input variables like
owned funds, deposits, borrowings and wage bills were used. The output variables like
spread, income from non interest found were used. Among public sector banks,
Goyal and Kaur (2010) studied the financial performance of a group of private banks
(seven in number), analysing their data from2015 to 2020. The various statistical tools
like mean, standard deviation, trend ainspection testing, null hypothesis, mean,
deviation correlation.
And the secondary data is taken from the annual report of the banks.
Angadi and Devraj (1983)[4]found the factors determining the profitability and
productivity of public sector banks (PSBs) in India. The study has been primarily based
on published financial statements of respective banks. These authors have observed that
though PSBs have discharged their social responsibilities, their deficiencies in respect
of effective mobilization of funds at lower costs, attracting retail banking business,
augmenting earnings from other sources, effective cash and portfolio management etc.,
have contributed towards the lower productivity and profitability of these bankss
Sunil Kumar (2009) found that “the analysis of correlation between efficiency,
effectiveness and performance measures indicate that a positive and strong correlation
exist between effectiveness and performance measures. This suggests that banks can
improve their performance by concentrating more on their income generation capability
Sumeet Gupta et.al (2008) found that “private sector banks are trying to improve their
position by different method like mergers and acquisition .Transparency and good
governance would work as principal guiding force in present.
C.S. Balasubramaniam (2010) reported that “private sector banks like ICICI and
HDFC are well-placed in complying Basel III norms. Indian banks performance is good
as reflected by ROE, ROA but NPA is also increasing which can be reduced by good
credit appraisal procedure.” 4.
Ashwini kumar Mishra et.al (2013) concluded that “private sector banks are at the top
of list with their performance in terms of soundness being best and private sector banks
will head towards convergence faster than public sector banks.” 5
Avneet Kaur (2012) reported in her article that “to maintain a study growth rate deposits
bank should come forward to offer some subsidiary services. The banks should take
efforts to reduce the operating expenses by means of improving the efficiency of the
non-viable branches by utilizing some expert services,”
Chitra Madaan found that “performance and compensation have a strong relation in
private sector banks and foreign banks and job is less challenging and secure in public
sector banks other than two banks.”
Gupta et.al (2008) revealed that “efficiency increase in private sector banks has come
from small banks and increase in capital adequacy ratio results in higher productivity
which stems out of higher profitability of banks which increase soundness.”
Chapter 3
RESEARCH METHODOLOGY
3.1 OBJECTIVE OF THE STUDY
3.2 RESEARCH HYPOTHESIS
3.3 SCOPE OF THE STUDY
3.4 DATA COLLECTION
3.5 LIMITATION OF THE STUDY
Chapter 3
1.To study the structure of financial performance in two top banks in India financial
performance of HDFC Bank and ICICI Bank.
4. Two study the profitability performance of the HDFC and ICICI banks.
5.To give the findings and suggestions to enhance the performance of the banks.
H0= There is no significance difference between of gross profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of gross profit ratios of selected HDFC Bank
and ICICI Bank.
H0= There is no significance difference between of Net profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of Net profit ratio in selected HDFC Bank and
ICICI Bank
. H0= There is no significance difference between of Return on assets ratio in selected HDFC
Bank and ICICI Bank.
H1= There is a significance difference between of Return on assets ratio in selected HDFC
Bank and ICICI Bank.
H1= There is a significance difference between of Return on capital employed ratio in selected
HDFC Bank and ICICI Bank.
The limitation of the study is only that the data is collected by secondary source of the banks.
The data is taken from the past five years and one reports of the banks. and whatever the
outcome will come be depend on this secondary data. The data is taken from consecutive past
five years.
This study covers only 2 banks listed and actively traded on NSE and BSE out of whole
banking industries therefore the results might or might not be same for the whole banking
industry.
CHAPTER 4
Data representation & Analysis
4.1 Data representation & Interpretation
4.2 Hypothesis Testing
4.1 Data Representation and Interpretation
To interpret the data, various statistical techniques are used. The analysis is limited to Gross
Profit Ratio, Net Profit margin Ratio, Return on Asset, and Return on Capital Employed. All
the data related to these aspects are presented and discussed below.
This ratio measures the gross profit on the total net sales made or earned by the company.
The gross profit represent the excess of sales proceeds during the period under observation
over their cost, before taking into account administration, selling and distribution and financing
charges.
Importance
• This ratio shows the relationship between the gross profit and net sales
The table above, the Gross Profit Ratio of the HDFC and ICICI Banks are represented during
the time period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shoes
continuously increasing trend. The average Profit Ratio of the HDFC Bank were19.678%
during the study period. The ratio was the highest to 22.23% during 2019-20, whereas it was
the lowest to 17.35% during 2015-16.
In case of ICICI Bank the Ratio shows fluctuating trend during the study period. It was 15.37%
in 2015-16 which increased to 16.19% in 2016-17 it was highest.
In HDFC Bank the Ratio was higher during the study period. Hence the performance of HDFC
bank is good than ICICI Bank.
This is the ratio of net profit to net sales. The concept of net profit is different from net
operating profit. In calculating the net profit, all non-operating expenses and losses are also
deducted and all non-operating income is added. The net profit ratio is the overall measure of
a firm’s ability to turn each rupee of business income into profit. It indicates the efficiency with
which a business is managed. A firm with a high net profit ratio is in an advantageous position
to survive in the face of cost of firm. where the net profit is low, the firm will find it difficult
to withstand these types of adverse conditions.
It’s computed as
Where, Net profit = Net operating Profit + Non-operating Incomes- Non-operating Expenses.
Interpretation
The above table indicates the Net Profit Ratio of the HDFC and ICICI Banks during the
period of the study from 2015-16 to 2019-20. In HDFC Bank the Ratio shows fluctuating
trend. The average Profit Ratio of the HDFC Bank was 21.11% during the time of study
period. The ratio was the highest in 21.79% during 2018-19, where as it was the lowest of
20.41% during 2016-17. In case of ICICI Bank the Ratio shows decreasing trend during the
study period. This show that the ratio 22.76% in 2015-16 which decrease to 5.304% in 2019-
20 it was lowest. In HDFC Bank the Ratio was higher during the study period, Hence the
performance of HDFC bank is good than ICICI Bank except in one year.
Return on Total Assets Ratio Return on assets (ROA) is an indicator of how profitable a
company is relative to its total assets. ROA gives a manager, investor, or analyst an idea as to
how efficient a company's management is at using its assest to generate earning.
Businesses (at least the ones that survive) are ultimately about efficiency: squeezing the most
out of limited resources. Comparing profits to revenue is a useful operational metric, but
comparing them to the resources a company used to earn them cuts to the very feasibility of
that company's’ existence. Return on assets (ROA) is the simplest of such corporate bang-for-
the buck measures. ROA is calculated by dividing a company’s net income by total assets. As
a formula, it would be expressed as:
year.
Return on Capital Employed = Net Profit Before Interest and Tax/ Capital Employed
significance:
H0= There is no significance difference between of gross profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of gross profit ratio in selected HDFC Bank
This indicates that calculated value of ‘t’ is 4.4383, while table value of ‘t’ is 2.306 which is
less than the calculated value. So null hypothesis is rejected and alternative hypothesis is
accepted. It shows that there is a significance difference in Gross Profit Ratio of HDFC Bank
and ICICI Bank.
H0= There is no significance difference between of Net profit ratio in selected HDFC Bank
and ICICI Bank.
H1= There is a significance difference between of Net profit ratio in selected HDFC Bank and
ICICI Bank
This shows the result of t-test according to that calculated value of ‘t’ is 1.8926, while table
value of ‘t’ is 2.306 which is less than the calculated value. So, null hypothesis is accepted and
alternative hypothesis is rejected at 5% level of significant. It shows that there is no significance
difference in Net Profit Ratio of HDFC Bank and ICICI bank.
CHAPTER – 5
RESULTS AND DISCUSSIONS
Major finding
The major findings and outcome of these study reveal that the gross profit ratio is
found to be higher in HDFC Bank. This indicates that HDFC Bank has better profit
earning capacity and more income from ICICI bank.
Nonetheless, the net profit ratio in both the bank is found to be similar. This denotes
both the banks have the same profit margin.
,the Net profit ratio is similar in both the banks. This indicates the banks have same
earning capacity.
In terms of the return on capital employed, the study reveals that it is higher in HDFC
bank. This indicates that the bank has better earning capacity of return on capital
employed than ICICI bank.
Overall, the profitability performance of HDFC bank is higher in terms of profit ration,
and the bank possesses better earning capacity than ICICI bank.
When compared to ICICI bank, HDFC bank stands better in almost all aspects of
profitability performance.
the net profit ratio of both of the bank is found to be similar. This denotes both the banks
have the same profit margin.
5.3Conclusion
The main aim of this study to cheque the financial performance of this banks of these two
private leading banks. financial statement analysis plays an important role to check the
financial performance.
This study reveals that the performance of HDFC bank Is far more better than the performance
of ICICI bank.This study reveals the overall performance of these two banks with the respected
to their consecutive five year Past data and from these study I got to know that ICICI bank
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https://www.icicibank.com/
https://www.hdfcbank.com/
ttps://www.dhammaias.com/foundation-courses/economics/chapter-19-banking-structure-in-
indiahttps://en.m.wikipedia.org/wiki/Cooperative_banking
ttps://www.coursehero.com/file/p30j45lq/Banks-are-classified-into-scheduled-and-non-scheduled-banks-Scheduled-banks-
can/
ANNEXURE