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CHAPTER 3: SWOT ANALYSIS

STRENGTHS

HDFC bank is the second largest private banking sector in India having 2,201 branches and

7,110 ATMs

HDFC bank is located in 1,174 cities in India and has more than 800 locations to serve

customers through Telephone banking

The banks ATM card is compatible with all domestic and international Visa/Master card,

Visa Electron/ Maestro, Plus/cirus and American Express. This is one reason for HDFC cards

to be the most preferred card for shopping and online transactions

HDFC bank has the high degree of customer satisfaction when compared to other private

banks

The attrition rate in HDFC is low and it is one of the best places to work in private banking

sector

HDFC has lots of awards and recognition, it has received Best Bank award from various

financial rating institutions like Dun and Bradstreet, Financial express, Euromoney awards

for excellence, Finance Asia country awards etc

HDFC has good financial advisors in terms of guiding customers towards right investments.

HDFC is the strongest and most venerable play on Indian mortgages over the longterm. The

management of the bank is termed to be one of the best in the country.

HDFC has differentiated itself from its peers with its diversified network andrevamped

distribution strategy.

HDFC has been highly proactive in passing on the cost and benefit to customers.

Besides the core business, HDFCs insurance, AMC, banking, BPO, and real estate private

equity businesses are also growing at a rapid pace and the estimated value of

itsinvestments/subsidiaries explains ~30% of HDFCs market capitalization.

High degree of customer satisfaction.

Lower response time with efficient and effective service.

Dedicated workforce aiming at making a long-term career in the field.

Products have required accreditations.9. Superior customer service vs. Competitors.

Large share of low-cost deposits, higher net interest margin.

Better quality of assets, NPA of 0.4 per cent.

Free float available, FIIs can buy its stock.

Higher profitability

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WEAKNESSES

HDFC bank doesnt have strong presence in Rural areas, where as ICICI bank its direct

competitor is expanding in rural market

HDFC cannot enjoy first mover advantage in rural areas. Rural people are hard core loyals in

terms of banking services.

HDFC lacks in aggressive marketing strategies like ICICI

The bank focuses mostly on high end clients

Some of the banks product categories lack in performance and doesnt have reach in the

market

The share prices of HDFC are often fluctuating causing uncertainty for the investors

High dependence on individual loans. Major stake held by American financial groups which are under stress due to

economicslowdown.

Customer service staff needs training.

Processes and systems, etc need to be better managed5. Management cover insufficient.

Sectoral growth is constrained by low unemployment levels and competition for staff.

Marginal international presence.

No next line of leadership.

Not very aggressive in M&A space, growing only organically.

Possible takeover target

Opportunities

HDFC bank has better asset quality parameters over government banks, hence the profit

growth is likely to increase

The companies in large and SME are growing at very fast pace. HDFC has good reputation in

terms of maintaining corporate salary accounts

HDFC bank has improved its bad debts portfolio and the recovery of bad debts are high

when compared to government banks

HDFC has very good opportunities in abroad

Greater scope for acquisitions and strategic alliances due to strong financial position.

Fast growing insurance business in the country.

Untapped rural markets.

Could extend to overseas broadly.

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Fast-track career development opportunities on an industry-wide basis.

An applied research centre to create opportunities for developing techniques to provideadded-

value services.

Unique partnership to createjob opportunities for IFBIs PGDBO students.

HDFC bank automates business processes with Staff ware; HDFC Bank anticipatesmajor cost

savings whilst maintaining high levels of customer service thanks to newenterprise software

agreement.

HDFC Bank plans to set up a non-banking finance company (NBFC) to undertakefund-based

activities

In recent times, India has witnessed entry of many international banks like CITI

Bank, YES Bank etc which posses an external entrant threat to HDFC Bank as

thisBanks are known for their art of working and maintain high standards of customer service.

After showing a significant growth overall, India is able to attractmany international financial

& banking institutes, which are knownfor their state of art working and keeping low

operation costs.

Threats

HDFCs nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a slight

variation its not a good sign for the financial health of the bank

The non banking financial companies and new age banks are increasing in India

The HDFC is not able to expand its market share as ICICI imposes major threat

The government banks are trying to modernize to compete with private banks

RBI has opened up to 74% for foreign banks to invest in Indian market.

Loss of market share to commercial banks and HFCs.

Higher than expected increase in funding cost.

Risk of fraud and NPA accretion due to increase in interest rates and fall in property prices is

inherent to the mortgage business.

Lack of infrastructure in rural areas could constrain investment.

High volume/low cost market is intensely competitive.

Very high competition prevailing in the industry.

Extension overseas holds a lot of risk.

Threat from credit card collections dept.

Varying and In-Convenient ECS dates.

Unlike Government Banks, an account needs a minimum balance of Rs.10,000.