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Aug 22, 2014
Comparative Analysis Of HDFC and ICICI BanksSubmitted to: Prof. Sandhya Prakash
Submitted by: Sharma Mohit Jitendrakumar PG20102197
Contents1) Company profile of HDFC BANK & ICICI BANK 2) Corporate Governance of HDFC BANK & ICICI BANK 3) Share Holding Pattern of HDFC BANK & ICICI BANK 4) Dividend Policy of HDFC BANK & ICICI BANK 5) Cost of Capital Analysis of HDFC BANK & ICICI BANK 6) Cost of Equity of Analysis of HDFC BANK & ICICI BANK 7) WACC Analysis of HDFC BANK & ICICI BANK
Company Profile of HDFC BankThe 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 the RBI's liberalization 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 Banks mission is to be a World-Class Indian Bank. The objective is to build sound customer franchises across distinct businesses so as to be the preferred provider of banking services for target retail and wholesale customer segments, and to achieve healthy growth in profitability, consistent with the banks risk appetite. The bank is committed to maintain the highest level of ethical standards, professional integrity, corporate governance and regulatory compliance. HDFC Banks business philosophy is based on four core values Operational Excellence, Customer Focus, Product Leadership and People.
Company Profile of ICICI BankICICI Bank Limited (the Bank) is a banking company. The Bank, together with its subsidiaries, joint ventures and associates, is a diversified financial services group providing a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. It operates under four segments: retail banking, wholesale banking, treasury and other banking. Retail Banking includes exposures, which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures. Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under Retail Banking. Treasury includes the entire investment portfolio of the Bank. Other Banking includes hire purchase and leasing operations and other items.
Corporate Governance Corporate governance of HDFC BankHDFC Bank recognizes the importance of good corporate governance, which is generally accepted as a key factor in attaining fairness for all stakeholders and achieving organizational efficiency. This Corporate Governance Policy, therefore, is established to provide a direction and framework for managing and monitoring the bank in accordance with the principles of good corporate governance.
Corporate governance ratingThe bank was amongst the first four companies, which subjected itself to a Corporate Governance and Value Creation (GVC) rating by the rating agency, The Credit Rating Information Services of India Limited (CRISIL). The rating provides an independent assessment of an entity's current performance and an expectation on its "balanced value creation and corporate governance practices" in future. The bank has been assigned a 'CRISIL GVC Level 1' rating for the second consecutive year, which indicates that the bank's capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices is the highest. Management Details Chairperson - C M Vasudev MD - Aditya Puri Directors - A N Roy, Aditya Puri, Anami N Roy, Arvind Pande, Ashim Samanta, Bobby Parikh, C M Vasudev, Chander Mohan Vasudev, Gautam Divan, Harish Engineer, Jagdish Capoor, Keki Mistry, Pandit Palande, Paresh Sukthankar, Partho Datta, Renu Karnad, Sanjay Dongre, Shailendra Bhandari Business Operation Bank - Private
Code of Governance policy The Bank believes in adopting and adhering to the best recognised corporate governance practices and continuously benchmarking itself against each such practice. The Bank understands and respects its fiduciary role and responsibility to shareholders and strives hard to meet their expectations. The Bank believes that best board practices, transparent disclosures and shareholder empowerment are necessary for creating shareholder value. The Bank has infused the philosophy of corporate governance into all its activities. The philosophy on corporate governance is an important tool for shareholder protection and maximization of their long term values. The cardinal principles such as independence, accountability, responsibility, transparency, fair and timely disclosures, credibility, etc. serve as the means for implementing the philosophy of corporate governance in letter and spirit.
CommitteesHDFC has the following committees: 1. 2. 3. 4. 5. 6. 7. 8. 9. Audit & Compliance Committee Risk Monitoring Committee Compensation Committee Credit Approval Committee Investor Grievance Committee Premises Committee Customer Service Committee Nomination Committee Fraud Monitoring Committee
Corporate Governance of ICICI BankCompanys philosophy on code of governance Our corporate governance policies recognize the accountability of the Board and the importance of its decisions to all our constituents, including customers, investors, employees and the regulatory authorities, and to demonstrate that the shareholders are the cause of and ultimate beneficiaries of our economic activities. The functions of the Board and the executive management are well-defined and are distinct from one another. We have taken a series of steps including the setting up of sub-committees of the Board to oversee the functions of executive management. These sub-committees of the Board which mainly consists of non-executive directors, meet regularly to discharge their objectives.
Board of DirectorsBoard consists of eight members, and is responsible for the management of our business. The Boards role, functions, responsibility and accountability are clearly defined. In addition to its primary role of monitoring corporate performance, the functions of the Board include: approving corporate philosophy and mission; participating in the formulation of strategic and business plans; reviewing and approving financial plans and budgets; monitoring corporate performance against strategic and business plans, including overseeing operations; ensuring ethical behavior and compliance with laws and regulations; reviewing and approving borrowing limits; formulating exposure limits; Keeping shareholders informed regarding plans, strategies and performance
Committees1. 2. 3. 4. 5. 6. 7. 8. 9. Audit Committee, Board Governance Remuneration & Nomination Committee Corporate Social Responsibility Committee Credit Committee Customer Service Committee Fraud Monitoring Committee Risk Committee, Share Transfer & Shareholders Investors Grievance Committee Committee of Executive Directors.
Share Holding Patterns
Share Holding Pattern of HDFCFace value No. Of Shares Indian Promoters Sub total 108643220 108643220 30/06/2011 10 No. Of % % Holding Shares Holding Promoter's holding 23.28 108643220 23.28 108643220 Non promoter's holding Institutional investors 6.77 32254112 29.23 132723097 40.37 186744925 Other investors 8.77 1.08 17.38 27.23 9.13 100 40552046 5669312 81142391 127360240 42473790 465222175 23.35 23.35 31/03/2011 31/12/2010 10 10 No. Of Shares % Holding 108643220 108643220 23.4 23.4
Banks Fin. Inst. and Insurance FII's Sub total Private Corporate Bodies NRI's/OCB's/Foreign Others GDR/ADR Govt Sub total General public Grand total
31603211 136452749 188417871
6.93 28.53 40.14
32472263 136392436 186822609
6.99 29.37 40.23
40935968 5024569 81131395 8500 127097123 42609613 466767827
8.72 1.22 17.44 27.38 9.13 100
39500903 5690568 81128819 126316781 42543842 464326452
8.51 1.23 17.47 27.2 9.16 100
Share Holding Pattern of HDFC BANKGeneral public
GDR/ADR 18% NRI's/OCB's/Foreign Others 1% Private Corporate Bodies 9% FII's 31%
Indian Promoters 24%
Banks Fin. Inst. and Insurance 7%
Share Holding Pattern of HDFC Bank includes that co. has distributed their 23.28% of shares to their Promoters and rest distributed among Non-Promoters which shows that their 40.37% of shares are distributed to their Institutional investors and rest 27.23% of shares are distributed to their other investors.
Share Holding Pattern of ICICI BankPARTICULARSDeutsche Bank Trust Company Americas (Depositary for ADS holders) FIIs, NRIs, Foreign Banks, Foreign Companies, OCBs and Foreign Nationals Insurance Companies Bodies Corporate Banks & Financial Institutions Mutual Funds 26.99 39.48 16.64 4.02 0.08 7.32
5.47 0.08 4.02
SHARE HOLDING PATTERN OF ICICI BANK7.32 26.99 Deutsche Bank Trust Company holders) FIIs, NRIs, Foreign Banks, Ins. CO. 39.48
Share holding pattern of ICICI Bank includes that the company has invested their 26.99% of shares in Deutsche Bank and 39.48% in FIIs, NRIs and in Foreign Banks and the co. has also invested their share in Insurance Co. which is ICICI Prudential as their subsidiary co. with 16.64% even in Mutual funds co. have 7.32% of shares and Individuals have 5.37% of share.
Capital Structure AnalysisCapital structure of HDFC Bank
From Year 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1995
To Year 2011