“REVIEW ON INTERNSHIP REPORT OF FINANCIAL ANALYSIS OF HDFC BANK LTD”

SUBMITTED BY

DASANNAGARI SINDHU

REG NO: 17418130

SUBMITTED TO

FACULTY MENTOR

PROF.TANUSHREE SODHANI

JAIN COLLEGE

BANGALORE

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ACKNOWLEDGEMENT

It is really a matter of pleasure for me to get an opportunity to thank all the persons who
contributed directly or indirectly for the successful completion of the internship, “Financial Analysis
of HDFC bank”.

I am thankful to my faculty guide prof. Tanushree Sodhani from Jain College for being a source of
support during this internship period.

I wish to express my gratitude to the branch manager Mr. MARUTI UPENDRAM of HDFC BANK,
MADANAPALLE for giving me an opportunity to be a part of their esteem organization and
enhance my knowledge by granting permission to do internship.

Last but not the least I am grateful to all the staff members of HDFC Bank for their kind
cooperation and help during the course of my project.

Dasannagari Sindhu

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 TABLE OF CONTENTS

SNO CONTENT PAGENO

1 INTRODUCTION 4

2 COMPANY PROFILE 5

3 PROGRESS IN THE 6 – 11
REPORT (FINANCIAL
ANALYSIS OF HDFC
BANK)

4 LEARNING 12

5 CONCLUSION 12

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INTRODUCTION:

The HDFC Bank was incorporated on August 1994 by the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced its operations as a Scheduled
Commercial Bank in January 1995. The Housing Development Finance Corporation (HDFC) was
amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set
up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in
1994.

HDFC bank merged with Times bank in February 2000 it was the first merger of two private banks
in the new generation in private sector banks category. And in 2008 centurion bank was acquired
by HDFC Bank. HDFC bank board approved the acquisition of CBoP for 95.1 BILLION INR is one
of the largest mergers in the financial sector in India.

Objectives of HDFC bank:

To enhance the residential housing stock in the country through the provision of housing finance in
a systematic and professional manner and to promote home ownership.

MEANING OF BANKING:

Banks are vital to the prosperity and well-being of any society or country. Banks enable a society
to create the platform for the satisfaction of wants of its people by managing and maintaining the
flow of money to carry out transactions. The role of banks may be likened to the heart in a human
being, circulating and managing money through economy, thereby playing a crucial role for its
good health.

Banks in India and their activities are regulated by the banking regulation act,1949.

BANKING:

Under section 5(b) of the said act “BANKING” means,

 Accepting deposits of money from public for the purpose of lending or investing.
 These deposits are repayable on demand or otherwise and can be withdrawn by cheque
draft or otherwise.

BANKING COMPANY:

Any bank which transacts business as stated in section 5(b)of the act in India is called a banking
company. But merely accepting public deposits by a company for financing its own business shall
not make it a bank.it may be mentioned that the banking regulation act 1949 is not applicable to a
primary agricultural society a cooperative land mortgage bank and any other co-operative society.

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COMPANY PROFILE:
Type Private

Traded as
BSE: 500180
NSE: HDFCBANK
NYSE: HDB
Industry Banking and financial services

Founded August 1994

Head quarters Mumbai,maharastra,India

Area served India

Key people Aditya puri – CEO (1994- till now)

Products Credit cards, consumer banking,

corporate banking finance, insurance,
investment banking, private equity and
wealth management.

Revenue RS 81,602 crore (2017)

Operating income RS 25,732 crore (2017)

Net income RS 14,550 crore (2017)

Total assets RS 8,63,840crore (2017)

Number of employees 84,325

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PROGRESS IN THE REPORT:

“Financial starts where accounting ends.so in order to make financial analysis first step is,
preparation of financial statements”.

The accounting system of a bank is substantially different from that of a trading or manufacturing
enterprise. A bank maintains a large number of accounts of various types for its customers as a
safeguard against any payment being made in the account of a customer in excess of the amount
standing to his credit or a cheque of a customer being dishonored due to mistake in the balance in
his account, it is necessary that customer’s accounts should be keep up-to-date and check
regularly.

Now a day banks no more follow manual entry of transactions in primary books then secondary
books followed by trial balance with financial statements but everything is done electronically just
to enter transaction remaining all done by the system.

Till now I have collected all the data required for financial analysis of HDFC BANK LTD from
various sources

1. Balance sheet
2. Profit and loss account
3. Cash flow statement

The following are the financial statements of HDFC BANK LIMITED for the year ending on march
2017 and 2018:

I. Balance sheet of HDFC BANK LTD AS ON MARCH 2017 AND 2018

Parameter MAR'18 MAR'17

(₹ Cr.) (₹ Cr.)

SOURCES OF FUNDS

Share Capital 519.02 512.51

Share warrants & Outstanding’s 0.00 0.00

Total Reserve 1,05,775.98 88,949.84

Shareholder's Funds 1,06,295.00 89,462.35

Deposits 7,88,770.64 6,43,639.66

Borrowings 1,23,104.97 74,028.87

Other Liabilities & Provisions 45,763.72 56,709.32

TOTAL LIABILITIES 10,63,934.32 8,63,840.19

APPLICATION OF FUNDS:

Cash and balance with Reserve Bank of India 1,04,670.47 37,896.88

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Balances with banks and money at call and short notice 18,244.61 11,055.22

Investments 2,42,200.24 2,14,463.34

Advances 6,58,333.09 5,54,568.20

Gross Block 10,932.58 10,157.66

Less : Accumulated Depreciation 7,281.13 6,486.68

Less : Impairment of Assets 0.00 0.00

Net Block 3,651.45 3,670.98

Lease Adjustment -44.25 -44.25

Capital Work in Progress 0.00 0.00

Other Assets 36,878.70 42,229.82

TOTAL ASSETS 10,63,934.32 8,63,840.19

Contingent Liability 8,75,488.23 8,17,869.59

Bills for collection 42,753.83 30,848.04

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II. PROFIT AND LOSS ACCOUNT OF HDFC BANK LTD FOR THE YEAR ENDING MARCH
2017 AND 2018:

Parameter MAR'18 MAR'17

(₹ Cr.) (₹ Cr.)

I. INCOME

Interest Earned 80,241.36 69,305.96

Other Income 15,220.30 12,296.50

Total Income 95,461.66 81,602.46

II. EXPENDITURE

Interest Expended 40,146.49 36,166.73

Operating Expenses 22,690.38 19,703.34

PBIDT 32,624.78 25,732.38

Provisions and Contingencies 5,927.49 3,593.31

Profit Before Tax 26,697.29 22,139.07

Taxes 9,210.57 7,589.43

Total 77,974.93 67,052.81

III. Profit & Loss

PAT 17,486.73 14,549.64

Extraordinary Items 0.00 0.00

Profit brought forward 32,668.94 23,527.69

Adjusted Net Profit 0.00 0.00

Total Profit & Loss 17,486.73 14,549.64

Appropriations 50,155.67 38,077.33

Equity Dividend (%) 650.00 550.00

Earnings Per Share (in ₹) 67.38 56.78

Book Value (in ₹) 409.60 349.12

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III. CASH FLOW STATEMENT OF HDFC BANK LTD FOR THE YEAR 2017 AND 2018

Parameter MAR'18 MAR'17

(₹ Cr.) (₹ Cr.)

Net Profit Before Taxes 26,697.29 22,139.08

Adjustments for Expenses & Provisions 7,377.47 4,631.00

Adjustments for Liabilities & Assets 2,215.50 4,674.53

Cash Flow from operating activities 26,074.07 23,585.40

Cash Flow from investing activities -533.10 -1,956.25

-
Cash Flow from financing activities 48,411.43
11,567.63

Effect of exchange fluctuation on translation reserve 10.59 -28.26

Net increase/(decrease) in cash and cash equivalents 73,952.40 10,061.52

Opening Cash & Cash Equivalents 48,952.10 38,918.84

Cash & Cash Equivalent on Amalgamation / Take over / Merger 0.00 0.00

Cash & Cash Equivalent of Subsidiaries under liquidations 0.00 0.00

Translation adjustment on reserves / op cash balances foreign

0.00 0.00
subsidiaries

Effect of Foreign Exchange Fluctuations 0.00 0.00

Closing Cash & Cash Equivalent 1,22,915.08 48,952.10

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FINANCIAL ANALYSIS

The basis for financial analysis, planning and decision making is financial statements which mainly
consists of balance sheet and profit and loss account and cash flow statement. The profit and loss
account shows the operating activities of the concern and the balance sheet depicts the balance
value of acquired assets and liabilities at a particular point of time.

There are certain analytical tools which help in financial analysis and planning. The main tools are
ratio analysis and cash flow analysis.

RATIO ANALYSIS:

In general, ratio means “the indicated quotient of two mathematical expressions and as the
relationship between wo or more things.” But from the finance aspect ratio means financial ratio or
accounting ratio which is a mathematical expression of the relationship between accounting
figures.

Ratio analysis is based on the fact that a single accounting figure by itself may not communicate
any meaningful information but when expressed as a relative to some other figure it may definitely
provide some significant information.

Ratios include:

 Investment valuation ratios

 Profitability ratios
 Balance sheet ratios
 Debt coverage ratios
 Leverage ratios
 Cash flow indicator ratios

CASH FLOW ANALYSIS:

Cash flow statement is a statement which discloses the changes in cash position between two
periods. Along with changes in the cash position the cash flow statement also outlines the reasons
for such cash inflows and cash out flows which in turn helps to analyze the functioning of a
business.

UTILITY OF CASH FLOW ANALYSIS:

Any enterprise needs sufficient cash to meet its various obligations in the near future such as
payment for purchase of fixed assets, payment of debts maturing in the future, expenses of the
businesses etc. A historical analysis of the different sources and applications of cash will enable
the management to make reliable cash flow projections for the immediate future. It may then plan
out for investment of surplus or meeting the deficit if any.

Presentation of cash flow statement:

The cash flow statement should report cash flows during the period classified into three categories:

i. Operating activities
ii. Investing activities
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 iii. Financing activities

Operating activities:

Cash flow from operating activities are primarily derived from the principle revenue producing
activities. Therefore, they generally result from the transactions and other events that enter into the
determination of net profit or loss.

Some examples of operating activities of a bank are:

1. Interest paid on deposits

2. Interest received on loans
3. Refund of income taxes unless they can be specially identified with financing and investing
activities etc.

Investing activities:

The activities of acquisition and disposal of long term assets and other investments not included in
cash equivalents are investing activities. Separate disclosure of cash flows arising from investing
activities is important because the cash flows represent the extent to which expenditures have
been made for resources intended to generate future income and cash flows.

Some examples of investing activities:

1. Cash payment to acquire assets

2. Cash receipts from disposal of assets
3. Cash receipts / payments for future contracts

Financing activities:

financing activities are those activities which result in change in size and composition of owner’s
capital and borrowings of the organization.

Some examples of financing activities:

1. Cash proceeds from issue of shares

2. Cash proceeds from issuing debentures, bonds
3. Cash repayments of amount borrowed

NOTE:

All the calculations with respect to ratios and cash flow analysis are explained in detail in the report
with all the figures and interpretations.

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LEARNING:

Two months of internship in HDFC BANK made me to learn things beyond expected. First three
weeks of my learning was entirely on the basic principles of banking regulations, a detailed study
on private sector banks under ‘scheduled commercial banks’ how exactly the HDFC bank
functions.

Next I have learnt how actually the financial statements of a bank would be and how it actually
differs from other companies. New revised format of balance sheet and profit and loss account is
under the third schedule of the banking regulation act. Format of balance sheet comes under “third
schedule of FORM A” and format of profit and loss account comes under “third schedule of FORM
B”. (The banking regulation act, 1949 prescribes schedules from 1 to 16 only).

Financial statements would not stop with balance sheet and profit and loss account but for the
better understanding of the financial statements, accordingly banks in addition to the above 16
schedules, may prepare schedule 17 for notes on accounts and schedule 18 for disclosure of
accounting policies.

Even though I learnt a drop from the ocean it would definitely helps me to make a detail research
on financial analysis of HDFC bank.

CONCLUSION:

At the end I would like to conclude that this internship program helped me to get a good knowledge
on all the banking concepts and its procedures. A detailed study on financial statements regulated
by The Banking Regulation Act,1949.

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