A

RESEARCH PROJECT REPORT ON

“A STUDY ON FINANCIAL PERFORMANCE ANALYSIS OF
ICICI BANK AND HDFC BANK”

SUBMITTED TO:
(Department of Business Administration)
For the partial fulfillment of the requirement of
Masters of Business Administration
(MBA -2019-2021)

UNDER THE SUPERVISION OF:

Dr.Tulika Saxena

SUBMITTED BY:

(Mratyunjay Mishra)
MBA 2nd YEAR
Roll No 203079010048

MAHATMA JYOTIBA PHULE ROHILKHAND UNIVERSITY,

BAREILLY- 243001
 TO WHOMSOEVER IT MAY CONCERN

This is to certify that Mr/Ms. Mratyunjay Mishra is a

bonafide student of MBA Course (General/ Marketing) (2019-
2021) at Department of Business Administration, Mahatma
Jyotiba Phule Rohilkhand University, Bareilly has
satisfactorily completed the Research Project Report, titled
“A STUDY ON FINANCIAL PERFORMANCE ANALYSIS
OF ICICI BANK AND HDFC BANK”. This study is done
under the guidance of the undersigned for the partial
fulfillment of the requirement of Master of Business
Administration.
I wish him/her all the best for bright future ahead.

(Prof. Tulika Saxena) (Prof. Sanjay Mishra)

Supervisor Head & Dean
 DECLARATION

I Mratyunjay Mishra student of MBA (General) 4TH Semester

of M.J.P. Rohilkhand University, Bareilly hereby declare that
the work of studying about “A STUDY ON FINANCIAL
PERFORMANCE ANALYSIS OF ICICI BANK AND HDFC
BANK” presented in the form of this report is done by my own
efforts and is genuine to the best of knowledge and is not
submitted in any other university/institution towards the
award of any other degree. An attempt has been made by me
to provide all relevant and important details regarding the
topic to support the theoretical advice with concrete research
evidence. This will be helpful to clean the for surrounding the
various aspect of the topic. I hope that this Research project
report will be beneficial.

MRATYUNJAY
MISHRA
M.B.A.(GEN) 4th SEM
ROLL NO:-
2030790810048
 ACKNOWLEDGEMENT
The successful completion of the has been accomplished with
the valuable guidance and support of numerous people. I owe
to their constructive support, which sustained my motivation. I
take this opportunity to express my profound sense of
gratitude to all of them.I express my sincere gratitude to M.J.P
ROHILKHAND UNIVERSITY for his invaluable support
during my MBA Course.I express my sincere thanks and
heartfelt gratitude to M.J.P.R.U Bareilly for her excellent and
inspiring guidance and suggestions throughout this project
work. Without her inspiring encouragement, it would have not
been possible for me to bring out this project.I express my
splendid thanks to all my lecturers, librarian for extending
library facilities needed to complete this project. Last but not
least, my sincere thanks to everybody who has helped me
directly or indirectly for making this Research project report a
grand success.

Mratyunja Mishra
MBA(GEN) 4TH SEM
ROLL NO:-
203079010048
 Table of content
1. Introduction
 About the Topic

 Objective of the Study

 Significance of the Study

2. Industry Profile

3. Company Profile

4. Literature Review

5. Research Methodology

6. Data Analysis

7. Interpretation of Data

8. Findings

9. Conclusion

10.Suggestion

11.Limitations of the Study

12.Bibliography
INTRIDUCTION
Abstract—
The banking sector as service sector, and as one of the components of
financial system, plays an important role in the performance of any
economy. Banking institutions in our country have been assigned a
significant role in financing the process of planned economic growth. The
efficiency and competitiveness of banking system defines the strength of
any economy. Indian economy is not an exception to this and banking
system in India also plays a vital role in the process of economic growth and
development. The study is to assess the monetary execution of ICICI Bank
and HDFC Bank. The fundamental goals of the study are to assess the
financial performance of ICICI Bank and HDFC Bank.

The study covers the time of 5 years i.e. from year 2012-13 to year 2016-17.
Proportion Analysis was connected to dissect and think about the patterns in
managing an account business and monetary execution, for example, Credit
Deposit Ratio, Interest Expenses to Total Expenses, Interest Income to Total
Income, Other Income to Total Income, Net Profit Margin, Net worth Ratio,
Percentage Change altogether Income, Percentage Change altogether
Expenditure, Percentage Change in Deposits, and Percentage Change in
Advances. Mean, Standard Deviation, Standard Error, Coefficient of
Variance have been utilized to investigate the patterns in saving money
business productivity.

Keywords—Advances, Bank, Expenses, Income, Net Profit.

INTRODUCTION
The banking sector as service sector, and as one of the components of
financial system, plays an important role in the performance of any
economy. Banking institutions in our country have been assigned a
significant role in financing the process of planned economic growth. The
efficiency and competitiveness of banking system defines the strength of any
economy. Indian economy is not an exception to this and banking system in
India also plays a vital role in the process of economic growth and
development.
The banking sector is the lifeline of any modern economy. It is one of the
important financial pillars of the financial system which plays a vital role in
the success / fail of an economy. 'The banking system is fuel injection
system which spurs economic growth by mobilizing savings and allocating
them to high return investment. Research confirms that countries with a
well-developed banking system grow faster than hose with a weaker one.
The banking system reflects the economic health of the country. The
strength of the economy of any country basically hinges on the strength and
efficiency of the financial system, which, in turn, depends on a sound and
solvent banking system. A sound banking system efficiently deploys
mobilized savings in productive section and a solvent banking system
ensures that the bank is capable of meeting its obligation to the depositors.
The banking sector is dominant in India as it accounts for more than half the
assets of the financial sector.
The Indian banking system consists of commercial and cooperatives banks,
out of which commercial banks account for almost 90 percent of the total
banking system’s assets. Commercial banks play a very important role in
banking system in India and is a very important part of a banking system
irrespective of any country. A commercial bank is a profit oriented financial
institution that accepts deposits from the public and offers loan to the public.
Commercial banks can either be public banks, private banks or foreign
banks.
Till 1991, there was no concern for asset quality in Indian banking system,
the whole focused was on wide number of branches and to increase the
employment generation. It was in the year 1991, when former RBI Governor
Mr. M Narasimham was appointed to review the banking system to unleash
the potential of banking system in India in terms of increased banking
efficiency and improvised customer services.
The primary function of any bank is to deposit funds and to grant loans to
varied sectors like personal loans, housing loans, agricultural and industrial
loans. But in the recent years, the increasing non-performing assets have
been a very major concern for the banking sector due to which banks have
become very vigilant and stringent in extending loans.

OBJECTIVES OF THE STUDY

• To study the financial performance of ICICI Bank and HDFC Bank.
• To compare the financial performance of ICICI Bank and HDFC Bank.

NEED FOR THE STUDY

The financial performance of ICICI Bank and HDFC Bank have become a
fascinating topic for conversation, comment and debate. There is growing
evidence of concern by the authorities on the declining financial
performance of the banking system due to unsecured loans and advances.
The RBI pressures on banks profitability and suggest various methods to
reduce the unsecured loans and advances, with changes in the social and
economic objective of ICICI commercial banks particularly of State Bank of
India and its associates. It becomes extremely over and finds remedial
measures to reduce the financial performance in the value of new banking
philosophy. The approach of policy makers towards financial performance
has changed, with the result that low profits have become a fact of life.
Therefore, it is high time to concentrate on analysis of the financial
performance of ICICI Bank and HDFC Bank.
SCOPE OF THE STUDY
The study greatly giving attention on appraising any changes that perceived
and revealed in the financial performance of ICICI Bank and HDFC Bank.
Furthermore, the study attempted to identify areas so as to improve the
financial performance of ICICI Bank and HDFC Bank.
INDUSTRY PROFILE
INDUSTRY PROFILE

• Introduction

The Banking Industry was once a simple and reliable business that took
deposits from investors at a lower interest rate and loaned it out to borrowers
at a higher rate.

However deregulation and technology led to a revolution in the Banking

Industry that saw it transformed. Through technology development, banking
services have become available 24 hours a day, 365 days a week, through
ATMs, at online banking, and in electronically enabled exchanges where
everything from stocks to currency futures contracts can be traded.
The Banking Industry at its core provides access to credit. In the lenders
case, this includes access to their own savings and investments, and interest
payments on those amounts. In the case of borrowers, it includes access to
loans for the creditworthy, at a competitive interest rate.
Banking services include transactional services, such as verification of
account details, account balance details and the transfer of funds, as well as
advisory services that help individuals and institutions to properly plan and
manage their finances. Online banking channels have become a key in the
last 10 years.
The collapse of the Banking Industry in the Financial Crisis, however,
means that some of the more extreme risk-taking and complex securitization
activities that banks increasingly engaged in since 2000 will be limited and
carefully watched, to ensure that there is not another banking system
meltdown in the future.

• Meaning of Bank
A bank is a financial institution that accepts deposits and channels those
deposits into lending activities. Banks primarily provide financial services to
customers while enriching investors. Government restrictions on financial
activities by banks vary over time and location. Banks are important players
in financial markets and offer services such as investment funds and loans.
• Definition
The definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on

the business of banking, which is specified as:

• conducting current accounts for his customers

• paying cheques drawn on him, and
• collecting cheques for his customers

Banks act as payment agents by conducting checking or current accounts for

customers, paying cheques drawn by customers on the bank, and collecting
cheques deposited to customers' current accounts. Banks also enable
customer payments via other payment methods such as telegraphic transfer,
EFTPOS, and ATM.

Banks borrow money by accepting funds deposited on current accounts, by

accepting term deposits, and by issuing debt securities such as banknotes
and bonds. Banks lend money by making advances to customers on current
accounts, by making installment loans, and by investing in marketable debt
securities and other forms of money lending.

• Types of Banks

Central Bank

The Reserve Bank of India is the central Bank that is fully owned by the
Government. It is governed by a central board (headed by a Governor)
appointed by the Central Government. It issues guidelines for the
functioning of all banks operating within the country.

Public Sector Banks

• State Bank of India and its associate banks called the State Bank
Group
• 20 nationalized banks
• Regional rural banks mainly sponsored by public sector banks
Private Sector Banks

• Old generation private banks

• New generation private banks
• Foreign banks operating in India
• Scheduled co-operative banks
• Non-scheduled banks

Co-operative Sector

The co-operative sector is very much useful for rural people. The
cooperative banking sector is divided into the following categories:

• State co-operative Banks

• Central co-operative banks
• Primary Agriculture Credit Societies
• Urban Co-operative Banks
• Land Development Banks

Development Banks/Financial Institutions

• Industrial Finance Corporation of India (IFCI)

• Industrial Development Bank of India (IDBI)
• Industrial Credit and Investment Corporation of India (ICICI)
• Industrial Investment Bank of India (IIBI)
• Small Industries Development Bank of India (SIDBI)
• SCICI Ltd.
• National Bank for Agriculture and Rural Development (NABARD)
• Export Import Bank of India
• National Housing Bank
• North Eastern Development Finance Corporation
Indian Banking Industry

• History

Banking in India originated in the last decades of the 18th century. The first
banks were The General Bank of India which started in 1786, and the Bank
of Hindustan, both of which are now defunct. The oldest bank in existence in
India is the State Bank of India, which originated in the Bank of Calcutta in
June 1806, which almost immediately became the Bank of Bengal. This was
one of the three presidency banks, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters
from the British East India Company. For many years the Presidency banks
acted as quasi-central banks, as did their successors. The three banks merged
in 1921 to form the Imperial Bank of India, which, upon India's
independence, became the State Bank of India.

The oldest bank in existence in India is the State Bank of India, a

government-owned bank that traces its origins back to June 1806 and that is
the largest commercial bank in the country. Central banking is the
responsibility of the Reserve Bank of India, which in 1935 formally took
over these responsibilities from the then Imperial Bank of India, relegating it
to commercial banking functions. After India's independence in 1947, the
Reserve Bank was nationalized and given broader powers. In 1969 the
government nationalized the 14 largest commercial banks; the government
nationalized the six next largest in 1980.

Around the turn of the 20th Century, the Indian economy was passing
through a relative period of stability. Around five decades had elapsed since
the Indian Mutiny, and the social, industrial and other infrastructure had
improved. Indians had established small banks, most of which served
particular ethnic and religious communities.
• Current structure of Indian Banking Industry
The Indian banking system consists of 12 public sector banks, 22 private
sector banks, 44 foreign banks, 43 regional rural banks, 1,484 urban
cooperative banks and 96,000 rural cooperative banks in addition to
cooperative credit institutions. As of November 2020, the total number of
ATMs in India increased to 209,282.
According to the RBI, India’s foreign exchange reserves reached US$
580.3 billion, as of March 5, 2021. According to the RBI, bank credit and
deposits stood at Rs. 107.75 trillion (US$ 1.46 trillion) and Rs. 149.34
trillion (US$ 2.02 trillion), respectively, as of February 29, 2021.

Credit to non-food industries stood at Rs. 105.53 trillion (US$ 1.44 trillion),
as of January 15, 2021.

Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52
trillion) in FY20. Total assets across the banking sector (including public,
private sector and foreign banks) increased to US$ 2.52 trillion in FY20.

Indian banks are increasingly focusing on adopting integrated approach to

risk management. The NPAs (Non-Performing Assets) of commercial banks
has recorded a recovery of Rs. 400,000 crore (US$ 57.23 billion) in FY19,
which is highest in the last four years.

RBI has decided to set up Public Credit Registry (PCR), an extensive

database of credit information, accessible to all stakeholders. The Insolvency
and Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed
and is expected to strengthen the banking sector. Total equity funding of
microfinance sector grew 42% y-o-y to Rs. 14,206 crore (US$ 2.03 billion)
in 2018-19.

As of February 27, 2021, the number of bank accounts opened under the
government’s flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan
Yojana (PMJDY)’ reached 41.93 crore and deposits in Jan Dhan bank
accounts stood at more than Rs. 1.70 lakh crore (US$ 23.07 billion).
Rising income is expected to enhance the need for banking services in rural
areas, and therefore, drive the growth of the sector.
The digital payments revolution will trigger massive changes in the way
credit is disbursed in India. Debit cards have radically replaced credit cards
as the preferred payment mode in India after demonetisation. In February
2021, Unified Payments Interface (UPI) recorded 2.29 billion transactions
worth Rs. 4.25 lakh crore (US$ 57.68 billion).
COMPANY PROFILE
PROFILE OF ICICI BANK

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian

financial institution, and was its wholly-owned subsidiary. ICICI's
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed
on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of investors in
fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the
World Bank, the Government of India and representatives of Indian
industry. The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to
Indian businesses.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. In 1999,
ICICI become the first Indian company and the first bank or financial
institution from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and
ICICI Bank formed the view that the merger of ICICI with ICICI Bank
would be the optimal strategic alternative for both entities, and would create
the optimal legal structure for the ICICI group's universal banking strategy.
The merger would enhance value for ICICI shareholders through the merged
entity's access to low-cost deposits, greater opportunities for earning fee-
based income and the ability to participate in the payments system and
provide transaction-banking services. The merger would enhance value for
ICICI Bank shareholders through a large capital base and scale of
operations, seamless access to ICICI's strong corporate relationships built up
over five decades, entry into new business segments, higher market share in
various business segments, particularly fee-based services, and access to the
vast talent pool of ICICI and its subsidiaries.
In October 2001, the Boards of Directors of ICICI and ICICI Bank approved
the merger of ICICI and two of its whollyowned retail finance subsidiaries,
ICICI Personal Financial Services Limited and ICICI Capital Services
Limited, with ICICI Bank. The merger was approved by shareholders of
ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at
Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai
and the Reserve Bank of India in April 2002. Consequent to the merger, the
ICICI group's financing and banking operations, both wholesale and retail,
have been integrated in a single entity.
ICICI Bank is India's largest private sector bank with total consolidated
assets of Rs. 9,860.43 billion (US$ 152.0 billion) at March 31, 2017 and
profit after tax of Rs. 98.01 billion (US$ 1.5 billion) for the year ended
March 31, 2017. ICICI Bank currently has a network of 4,850 Branches and
13,882 ATM's across India.
PROFILE OF HDFC BANK
The Housing Development Finance Corporation Limited (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 RBI's
liberalisation of the Indian Banking Industry in 1994. The bank was
incorporated in August 1994 in the name of 'HDFC Bank Limited', with its
registered office in Mumbai, India. HDFC Bank commenced operations as a
Scheduled Commercial Bank in January 1995.
HDFC is India’s premier housing finance company and enjoys an
impeccable track record in India as well as in international markets. Since its
inception in 1977, the Corporation has maintained a consistent and healthy
growth in its operations to remain the market leader in mortgages. Its
outstanding loan portfolio covers well over a million dwelling units. HDFC
has developed significant expertise in retail mortgage loans to different
market segments and also has a large corporate client base for its housing
related credit facilities. With its experience in the financial markets, strong
market reputation, large shareholder base and unique consumer franchise,
HDFC was ideally positioned to promot e a bank in the Indian environment.
HDFC Bank is headquartered in Mumbai. As of March 31, 2015, the Bank’s
distribution network was at 4,014 branches in 2,464 cities.All branches are
linked on an online real-time basis. Customers across India are also serviced
through multiple delivery channels such as Phone Banking, Net Banking,
Mobile Banking and SMS based banking. The Bank’s expansion plans take
into account the need to have a presence in all major industrial and
commercial centres, where its corporate customers are located, as well as the
need to build a strong retail customer base for both deposits and loan
products. Being a clearing / settlement bank to various leading stock
exchanges, the Bank has branches in centres where the NSE / BSE have a
strong and active member base.The Bank also has a network of 11,766
ATMs across India. HDFC Bank’s ATM network can be accessed by all
domestic and international Visa / MasterCard, Visa Electron / Maestro,
Plus / Cirrus and American Express Credit / Charge cardholders.
REVIE
W OF
LITER
ATURE
REVIEW OF LITERATURE
Sumit K. Majumdar et al (1999) examined the relationship between the
levels of debt in the capital structure and performance for a sample of Indian
firms. Existing theory posits a positive relationship; however, analysis of the
data reveals the relationship for Indian firms to be significantly negative.
The structure of capital markets in India, where both short-term and long-
term lending institutions are government-owned, was hypothesized to
account for the finding of this relationship, and it asserted that corporate
governance mechanisms which work in the West will not work in the Indian
context unless the supply of loan capital was privatized.
Avinandan Mukherjee et al (2002) explored the linkage between
performance benchmarking and strategic homogeneity of Indian commercial
banks. Devises a method of benchmarking performance of Indian
commercial banks using their published financial information. Defines
performance by how a bank is able to utilize its resources to generate
business transactions and is measured by their ratio, which is then called the
efficiency. The concept of efficiency is critical from a marketing
perspective. Methodologically, in order to overcome some of the
shortcomings of simple efficiencies obtained through self‐appraisal of
individual banks, a more “democratic” concept of cross‐efficiency evaluated
with the process of peer‐appraisal has been brought in to benchmark the
banks. Clusters banks based on similarity in business policy which offers a
framework for competitive positioning in the target market and serves as a
basis for long‐term strategic focus. It found that the public-sector banks
generally outperform the private and foreign banks in this rapidly evolving
and liberalizing sector.
Rasoul Rezvanian et al (2002) used a parametric approach in the framework
of a trans log cost function and a non -parametric approach in the framework
of linear programming to examine production performance and cost
structure of a sample of Singaporean commercial banks. The results of the
parametric methodology suggested that the average cost curve of these
banks is U shaped and there were economies of scale for small and medium-
size banks. It provided evidence of economies of scope for all banks
regardless of their size. The non -parametric results indicated that the
Singaporean banks could have reduced cost by 43% had they all been
overall efficient. The sources of this cost inefficiency seem to be caused
equally by allocative and technical inefficiencies.
Richard S. Barr et al (2002) evaluated the relative productive efficiency and
performance of US commercial banks 1984‐1998. It described the CAMELS
rating system used by bank examiners and regulators; and finds that banks
with high efficiency scores also have strong CAMELS ratings. It found that
the other relationship identified and recommends the use of DEA to help
analysts and policy makers understand organizations in greater depth,
regulators and examiners to develop monitoring tools and banks to
benchmark their processes.
Ihsan Isik et al (2003) analysed the Financial deregulation and total factor
productivity change of Turkish commercial banks. It found that all forms of
Turkish banks, although in different magnitudes, have recorded significant
productivity gains driven mostly by efficiency increases rather than technical
progress. Efficiency increases, however, were mostly owing to improved
resource management practices rather than improved scales. It also indicated
that private banks began to close their performance gap with public banks in
the new environment.
Milind Sathye (2003) measured the productive efficiency of banks in a
developing country, that is, India. The measurement of efficiency was done
using data envelopment analysis. Two models have been constructed to s
how efficiency scores vary with change in inputs and outputs. The efficiency
scores, for three groups of banks, that is, publicly owned, privately owned
and foreign owned, are measured. It shown that the mean efficiency score of
Indian banks compares well with the world mean efficiency score and the
efficiency of private sector commercial banks as a group is, paradoxically
lower than that of public sector banks and foreign banks in India. The
existing policy of reducing non-performing assets and rationalization of staff
and branches may be continued to obtain efficiency gains and make the
Indian banks internationally competitive which is a declared objective of the
Government of India.
Prashanta Kumar Banerjee (2003) evaluated the operational and financial
performance of Indian Factoring Companies. Factoring is a global industry
with a vast turnover. It offers various advantages like consistent cash flow,
lower administration costs, reduced credit risks and more time for core
activities. Both the domestic and international factoring are getting
popularity at an impressive rate in all parts of the world. The factoring
services made an entry in India in the year 1991. Since then, a good number
of factoring companies namely SBI Factors and Commercial Services Ltd.,
Canbank Factors Ltd, Wipro Finance Ltd., Integrated Finance Company Ltd,
and Foremost Factors Ltd. have been offering factoring services in India. It
confirmed that operational and financial performance of the factors in India
has been improving through time.
Ali Ataullah et al (2004) provided a comparative analysis of the evolution
of the technical efficiency of commercial banks in India and Pakistan during
1988–1998, a period characterized by far-reaching changes in the banking
industry brought about by financial liberalization. Data Envelopment
Analysis was applied to two alternative input –output specifications to
measure technical efficiency, and to decompose technical efficiency into its
two components, pure technical efficiency and scale efficiency. The
consistency of the estimated efficiency scores were checked by examining
their relationship with three traditional non-frontier measures of bank
performance. In addition, the relationship between bank size and technical
efficiency was examined. It was found that the overall technical efficiency
of the banking industry of both countries improved gradually over the years,
especially after 1995. Unlike public sector banks in India, public sector
banks in Pakistan witnessed improvement in scale efficiency only. It was
also found that banks are relatively more efficient in generating earning
assets than in generating income. This was attributed to the presence of high
non -performing loans. In addition, it is found that the gap between the pure
technical efficiency of different size groups has declined over the years.
Chiang Kao et al (2004) predicted the performances of 24 commercial banks
in Taiwan based on their financial forecasts. The forecasts based on
uncertain financial data are represented in ranges, instead of as single values.
A DEA model for interval data is formulated to predict the efficiency. The
predictions of the efficiency scores are also presented as ranges. It found that
all the efficiency scores calculated from the data contained in the financial
statements published afterwards fall within the corresponding predicted
ranges of the efficiency scores which we had calculated from the financial
forecasts. It shown that even the bad performances of the two banks taken
over by the Financial Re structuring Fund of Taiwan could actually be
predicted in advance using this study.
Chien‐Ta Ho et al (2004) analysed the Performance measurement of
Taiwan's commercial banks. It has used an innovative two‐stage data
envelopment analysis model that separat es efficiency and effectiveness to
evaluate the performance of 41 listed corporations of the banking industry in
Taiwan. It found that a company with better efficiency does not always
mean that it has better effectiveness. There was no apparent correlation
between these two indicators.
Shanmugam, K. R. et al (2004) contributed to the banking efficiency
literature by measuring technical efficiency of banks in four different
ownership groups in India during the reform period, 1992–1999. It
employed the stochastic frontier function methodology for panel data. The
results indicate that the efficiency of raising interest margin is time invariant
while the efficiencies of raising other outputs-non-interest income,
investments and credits were time varying. The state bank group and foreign
banks were more efficient than their counterparts. The reform period
witnessed a relatively high efficiency for augmenting investments, which
was consistent with economic growth objective of the reform measures.
However, there were still larger gaps between the actual and potential
performances of banks.
Barathi Kamath (2007) estimated and analyzed the Value Added Intellectual
Coefficient (VAIC) for measuring the value‐based performance of the Indian
banking sector for a period of five years from 2000 to 2004. It confirmed the
existence of vast differences in the performance of Indian banks in different
segments, and there is also an improvement in the overall performance over
the study period. There was an evident bias in favour of the performance of
foreign banks compared with domestic banks.

LIMITATIONS OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from
certain limitations. Some of these are mentioned here under so that the
findings of the study may be understood in a proper perspective. The study
is based on the secondary data and the limitation of using secondary data
may affect the results. The secondary data is taken from the annual reports
of the ICICI Bank and HDFC Bank. It may be possible that the data shown
in the annual reports may be window dressed which does not show the actual
position of the banks.
Financial analysis is mainly done to compare the growth, profitability and
financial soundness of the respective banks by analysing the information
contained in the financial statements. Financial analysis is done to identify
the financial strengths and weaknesses of the two banks by properly
establishing relationship between the items of Balance Sheet and Profit &
Loss Account. It helps in better understanding of banks financial position,
growth and performance by analysing the financial statements with various
tools and evaluating the relationship between various elements of financial
statements.
RESEARCH METHODOLOGY
RESEARCH METHODOLOGY

In the present study, an attempt has been made to measure, evaluate and
compare the financial performance of ICICI Bank and HDFC Bank. The
study is based on secondary data that has been collected from annual reports
of the respective banks, magazines, journals, documents and other published
information. The study covers the period of 5 years i.e. from year 2016 to
year 2020. Ratio Analysis was applied to analyse and compare the trends in
banking business and financial performance such as Credit Deposit Ratio,
Interest Expenses to Total Expenses, Interest Income to Total Income, Other
Income to Total Income, Net Profit Margin, Net worth Ratio, Percentage
Change in Total Income, Percentage Change in Total Expenditure,
Percentage Change in Deposits, and Percentage Change in Advances. Mean,
Standard Deviation, Standard Error, Coefficient of Variance have been used
to analyse the trends in banking business profitability.
DATA ANALYSIS AND
INTERPRETATION
DATA ANALYSIS AND INTERPRETATION

Credit Deposit Ratio

Credit-Deposit Ratio is the proportion of loan-assets created by a bank from
the deposits received. Credits are the loans and advances granted by the
bank. In other words, it is the amount lent by the bank to a person or an
organization which is recovered later on. Interest is charged from the
borrower. Deposit is the amount accepted by bank from the savers and
interest is paid to them.

Table 1 shows that over the course of five financial years of study the mean
of Credit Deposit Ratio in ICICI Bank was higher (93.58%) than in HDFC
Bank (86%). In case of ICICI Bank, the credit deposit ratio was highest in
2016(103.18%) and lowest in 2020 (88.74%). But in case of HDFC Bank,
the credit deposit ratio was highest in 2019 (86.76%) and lowest in
2018(83.46). This shows that ICICI Bank has created more loan assets from
its deposits as compared to HDFC Bank.
In the table 1 the mean of ICICI bank 93.58 is high, standard deviation of
ICICI bank 5.24, standard error 2.62 and cofficent of variance 6.27 is higher
in comparison to HDFC bank.

Interest Expenses to Total Expenses

Interest Expenses to Total Expenses reveals the expenses incurred on

interest in proportion to total expenses. Banks accepts deposits from savers
and pay interest on these accounts. This payment of interest is known as
interest expenses.
Total expenses include the amount spent in the form of staff expenses, interest expenses, overhead
expenses and other operating expenses etc.
The table 2 shows that the ratio of interest expenses to total expenses in
ICICI Bank was highly volatile it decreased from 50.77% to 48.69% during
the period of 2016-17. It has been found that the ratio of interest expenses to
total expenses of ICICI Bank had been decreasing in each year from 2017-
20.The ratio of interest expenses to total expenses in HDFC Bank was also
increased from 51.49-53.08% during the period 2018-19, afterward it was
decreased . It has been found that the share of interest expenses in total
expenses was higher in case of ICICI Bank as compared to HDFC Bank,
which shows that people preferred to invest their savings in HDFC Bank
than ICICI Bank.
In the table the mean of HDFC bank 53.31 is high, standard deviation of
HDFC bank 1.40, standard error 0.70 and cofficent of vvariance2.95 is
higher in comparison to ICICI bank.

Interest Income to Total Income

Interest Income to Total Income shows the proportionate contribution of
interest income in total income. Banks lend money in the form of loans and
advances to the borrowers and receive interest on it. This receipt of interest
is called interest income. Total income includes interest income, non-interest
income and operating income.
The table 3 represents that the ratio of interest income to total income in
ICICI Bank is increasing from 73.53% to 81.98% during the period of 2016
to 2019 and in 2020 get decrease from 81.98% to 80.66%. But the ratio of
interest income to total income in HDFC Bank is increased from 84.85% to
84.94% during the year 2016 to 2017 and same in 2018 to 2019 from84.05%
to 84.88% and in 2020 it goes decrease 83.16%. Thus, the proportion of
interest income to total income in ICICI Bank was lower than that of HDFC
Bank, which shows that people preferred HDFC Bank to take loans and
advances.
In the table the mean of HDFC bank 84.37 is high, standard deviation of
ICICI bank 3.35, standard error 1.67 and cofficent of variance 4.67 is higher
in comparison to HDFC bank.

Other Income to Total Income

Other income to total income reveals the proportionate share of other income
in total income. Other income includes non-interest income and operating
income. Total income includes interest income, non -interest income and
operating income.

The table 4 shows that the ratio of other income to total income was
decreased from 26.47% in 2016 to 19.33% in 2020 in case of ICICI Bank.
However, the share of other income in total income of HDFC Bank was also
decreased from 15.14% in 2016 to 15.06% in 2017. Afterward the share of
other income in total income of HDFC Bank was increased from 15.94% ,
16.86% during 2018 ,2020 and between that take a dip in 2019 15.94% to
15.11%. The table shows that the ratio of other income to total income was
relatively higher in ICICI Bank as compared to HDFC Bank during the
period of study.
 In the table the mean of ICICI bank 21.30 is high, standard deviation of
ICICI bank 3.34, standard error 1.67 and cofficent of variance 17.58 is
higher in comparison to HDFC bank.

Net Profit Margin

Net Profit Margin reveals the financial results of the business activity and
efficiency of management in operations. The table 5 shows the net profit
margin in ICICI Bank and HDFC Bank during the period 2010-11 to 2014-
15.

The table 5 shows that the ratio of net profits to total income of HDFC Bank
was increased from 17.32% to 19.01% during the period of 2016- 18 and
decreased in 2019 to 18.32% to 19.01, whereas in case of ICICI Bank it is
not stable because the ratio of net profits to total income of ICICI Bank was
decreased to 13.30% from 1.65% during the period of 2016 to 2020 and in
2019 in take a increase of 8.69%. However, the net profit margin was higher
in HDFC Bank as compared to ICICI Bank during the period of study. But
it was continuously decreased from 2016 to 2020 and it takes a small pull
back in 2019 ,in ICICI Bank. Thus, the ICICI Bank has shown
comparatively lower operational efficiency than HDFC Bank.
In the table 1 the mean of HDFC bank 18.11 is high, standard deviation of
ICICI bank 4.08, standard error 2.04 and cofficent of variance 61.01 is
higher in comparison to HDFC bank.

Net Worth Ratio

Net worth Ratio is used for measuring the overall efficiency of a firm. This
ratio establishes the relationship between net profit and the proprietor’s
funds.
It is clear from the table 6 that the net worth ratio of ICICI Bank was
increased from 11.88% to 38.33% during the period of 2016 to 2018 ,
afterwards that it goes to decreased from 16.32% to 8.56% during the period
of 2019 to 2020.Whereas the ratio was decreased from4.11 to 2.08%during
2016 to 2020 in HDFC Bank. The table showed that the net worth ratio was
higher in ICICI Bank as compared to HDFC Bank during the period of
study, which revealed that ICICI Bank has utilized its resources more
efficiently as compared to HDFC Bank.
In the table 1 the mean of ICICI bank 18.82 is high, standard deviation of
ICICI bank 10.40, standard error 5.20 and cofficent of variance 61.78is
higher in comparison to HDFC bank.

Total Income
The total income indicates the rupee value of the income earned during a
period. The higher value of total income represents the efficiency and good
performance.
The table 7 shows that the mean value of total income was higher in ICICI
Bank (Rs.82658.69crores) as compared to that in HDFC Bank
(Rs.1005410.74crores) during the period of study. However, the total
income was higher in HDFC Bank than in ICICI Bank during the period of
study.
In the table the mean of HDFC bank 1005410.74 is high, standard deviation
of HDFC bank 24187.75, standard error 12093.88 and cofficent of variance
26.9 is higher in comparison to ICICI bank.

Total Expenditure
The total expenditure reveals the proportionate share of total expenditure
spent on the development of staff, interest expended and other overheads.
The higher value of total
The table 8 discloses that the mean value of total expenditure was lower in
ICICI Bank (Rs.73845.62crore) as compared to that in HDFC Bank
(Rs.82220.00 crore) during the period of study. Therefore, the expenditure in
HDFC Bank was that in ICICI Bank during the same period. It is clear that
HDFC Bank is successful in increasing their total expenditure as compared
to ICICI Bank. Thus, it is clear that ICICI Bank is more efficient as
compared to HDFC Bank in terms of managing expenditure.
In the table the mean of HDFC bank 82220.00 is high, standard deviation of
HDFC bank 19270.61, standard error 9635.31 and cofficent of variance 26.2
is higher in comparison to HDFC bank.

Advances
Advances are the credit facility granted by the bank. In other words, it is the
amount borrowed by a person from the Bank .It is also known as “Credit”
granted where the money is disbursed and recovery of which is made later
on.
Table 9 presents that the mean of advances of HDFC Bank was higher
(698080.03 ) as compared to mean of Advances of ICICI Bank (5287.65).
Table also shows the Change in advances over the period of 5 years. In case
of HDFC Bank advances were continuously increased than ICICI Bank over
the period of study.
In the table the mean of HDFC bank 698080.03 is high, standard deviation
of HDFC bank 189154.05, standard error 94577.02 and cofficent of
variance 30.29 is higher in comparison to ICICI bank.

Deposits
Deposit is the amount accepted by bank from the savers in the form of current deposits, savings
deposits and fixed deposits and interest is paid to them

Table 10 presents that the mean of deposits of HDFC Bank was lowere
(603295.40) as compared to mean of deposits of ICICI Bank (681485.02). .
Table also shows the Change in Deposits over the period of 5 years. In case
of ICICI Bank and HDFC Bank Deposits were continuously increasing over
the period of study.

In the table the mean of ICICI bank 681485.02 ibs high, standard deviation
of HDFC bank 275856.04 , standard error 137928.24and cofficent of
variance 51.12is higher in comparison to HDFC bank.
FINDINS
 FINDINGS

 ICICI Bank has created more loan assets from its deposits as compared to HDFC Bank.

 People preferred to invest their savings and loans and advances.in HDFC Bank than ICICI Bank.

 Ratio of other income to total income was relatively higher in ICICI Bank as compared to HDFC
Bank.

 HDFC Bank advances /deposits /total income were continuously increased .

 ICICI Bank has utilized its resources more efficiently as compared to HDFC Bank.

 Higher operational efficiency in HDFC Bank.

 ICICI Bank is more efficient managing expenditure.

CONCLUSION
The current study and discussions thereon, certainly reveals that financial
performance of ICICI Bank and HDFC Bank. Based on the study HDFC
Bank financial performance is better than ICICI Bank. But in many cases,
the financial performance of ICICI Bank and HDFC Bank are good.
SUGGESTION
SUGGESTION

 ICICI bank should increase their operational efficiency.

 Advances/deposit/total income should increase by the ICICI BANK

 HDFC bank should be managing to the expenditure.

 Better utilization of resources by HDFC

LIMMITATIONS
LIMMITATIONS

1 This study is confined only to The HDFC and ICICI.

2. The study is restricted only to 6 weeks time. In depth study was not
possible due to lack of time.
3. The findings and recommendations may be applicable at the period of
study only.
4. The study is conducted only on the basis of data provided by the bank
websites.
5.The study is based on secondary data. The data is collected from annual reports,
Journals,
Magazines and websites. So, Limitations of secondary data remain with it and also apply
to this
study.
6.In the present study only accounting and statistical tools are used i.e., Ratios etc it has
its own
limitations that also apply to this research work.
Conclusions are drawn on the basis of limited data available

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