Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Where technology is a way of life - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 2, 2000

    Where technology is a way of life

    Its High on Technology:
    HDFC Bank's 57 branches as of March 1999 are all computerised. Hence they are able to provide services like tele-banking, on-line banking and have around 105 ATMs after their marger with Times Bank. Since March they have added many new branches and ATMs.

    As it was one of the first few banks to introduce banking on the net, it has managed to muster up a large number of on-line banking customers. It is also planning to set up off-site ATMs. They have tied up with credit card companies for allowing the cardholders of these companies to use their branch network. During FY99 they became members of Visa International Plus and Master Card International ATM Network. They also tied up with American express to provide ATM cash access to its card members. It has also recently launched a debit card in a tie-up with Visa International. All these activities will help HDFC Bank spruce up its fee income in future.

    Continues to concentrate on retail deposits
    HDFC Bank has always concentrated on increasing its retail deposits to keep its costs low. Its current and saving deposits contributed to 45.6% of total deposits as on March'99. HDFC Bank plans to aggressively expand its branch network, hence it will be in a position to reach a higher number of retail customers. This will help it increase its base not only for deposits but also give it a platform to sell its retail banking products like loans against shares, consumer loans etc.

    Merger with Times Bank favourable
    As part of its aggressive growth strategy HDFC Bank has acquired Times Bank at a ratio of 1:5.75. This is because of HDFC Bank's higher profitability and larger asset base. After this merger HDFC Bank will gain by adding 38 more branches to its network and 48 ATMs across 22 cities. As there are very few overlaps in their branches, HDFC Bank will benefit from this higher branch network.

    The negative factor in this merger is Times Bank's higher NPLs. As of March'99 Times Bank's net NPL was 3.01% and HDFC Bank's net NPLs was only 0.73%. Also another concern was Times Bank's deposit rates which are higher than HDFC Bank's deposit rates, however these will eventually come down in line with HDFC Bank.

    Encouraging 3QFY2000 results In continuing with its good performance HDFC Bank has reported a net profit of Rs 282 m for the 3QFY2000, a growth of 55% over the corresponding period of the previous year. Its interest income went up from Rs 992 m to Rs 1,600 m for the 3QFY2000 a growth of 61%, while interest costs grew by 44%. Its operating margins improved slightly from 27.6% in the 3QFY1999 to 28.2% for the 3QFY2000.

    (Rs m) 3QFY2000 3QFY1999 Change
    Interest Income 1,600.4 992.4 61.3%
    Other Operating Income 348.0 153.9 126.1%
    Operating expenses 488.5 197.0 148.0%
    Interest Expenses 910.0 632.9 43.8%
    Depreciation 79.4 31.1 155.3%
    Profit before Tax 470.5 285.3 64.9%
    Tax 188.8 103.4 82.6%
    Profit after Tax 281.7 181.9 54.9%
    Net profit margin 14.5% 15.9%  

    Comparison with other banks
    On a comparison with its peer banks HDFC Bank looks attractive on many parameters, especially in comparison to the public sector banks, as it is a lean organisation hence its operating profit per employee and assets per employee is higher than the public sector banks and is also more efficient as can be seen from its operating profit to assets and its operating expenses to total income.

    Future looks bright
    As HDFC is on a strong growth spree, they could have the risk of higher NPLs like they did in the Times Bank merger, however as they have a prudent policy of writing off their bad debts this should not be a factor to be concerned about too much as they have been very careful about quality of lending and currently enjoy very low level of NPLs. Also though its operating expenses will go up in the next couple of years due to higher branch expansion in the long run due to higher volumes of business the expenses ratios will again be on track.



    Equitymaster requests your view! Post a comment on "Where technology is a way of life". Click here!


    More Views on News

    HDFC: Red Flag in Developer Loans (Quarterly Results Update - Detailed)

    Aug 10, 2017

    HDFC starts FY18 on robust loan growth but asset quality slips on increased exposure to developer loans.

    HDFC: Conservative Provisioning tempers down FY17 earnings (Quarterly Results Update - Detailed)

    May 9, 2017

    HDFC ends FY17 on a tepid note as it remains conservative on the asset quality front.

    HDFC: High Provisioning Drags Down Earnings Growth (Quarterly Results Update - Detailed)

    Feb 7, 2017

    HDFC declared its results for the third quarter (3QFY17). The institution has reported 18.4% YoY growth in net interest income while net profits have grown by 11.9% YoY during 3QFY17.

    Shriram Trans Fin: FY17 Ends on a Tepid Note due to Regulatory Headwinds (Quarterly Results Update - Detailed)

    Jun 22, 2017

    Demonetisation led slowdown coupled with shift to stringent bad loan norms keep Shriram Transport Finance on a slow wicket.

    Power Finance Corp: Alignment with RBI Norms Knocks Down FY17 Earnings (Quarterly Results Update - Detailed)

    Jun 14, 2017

    Power Finance Corporation earnings hit by RBI mandated higher provision on state government power generation projects where the recovery continues to be 100%.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 (Close)



    Compare Company With Charts