Swot Analysis Of Hdfc Bank 1z6e1m

SWOT ANALYSIS OF HDFC BANK Strengths

HDFC bank is the second largest private banking sector in India having 2,201 branches and 7,110 ATM’s

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

The bank’s 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, Euro money awards for excellence, Finance Asia country awards etc

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

Weakness

HDFC bank doesn’t 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 of banking services.

HDFC lacks in aggressive marketing strategies like ICICI The bank focuses mostly on high end clients

Some of the bank’s product categories lack in performance and doesn’t have reach in the market

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

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 of maintaining corporate salary s

HDFC bank has improved it’s 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

Threats

HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a slight variation it’s 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.

COMPETITION ANALYSIS

1) Industry Structure (Using Porter’s five forces model)

PORTER'S FIVE FORCES MODEL

Porter's five forces analysis is a framework for industry analysis and business strategy development formed by Michae l E. Porter of Harvard Business School in 1 979. It draws upon industrial organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness i n this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven to normal profit.

Three of Porter's five forces refer to competition from external sources. The remainder are internal threats

They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a business unit to reassess the marketplace given the overall change in industry information.

INDUSTRY ANALYSIS OF HDFC BANK

FIVE FORCE

HIGH/ MEDIUM/ REMARK

LOW

Threat of new entrants

Low

For any new entrants permission

should be granted from RBI, and it is

not easy to have the permission. There

was many political and legal issue.

And the early investment was very

high.

Bargaining power of Medium Customer can switch to any other bank customers

very easily if service was not good

because switching cost is low. But

most of time customers are having their

in most of the bank and they

know that every bank provide similarly

the same service.

Bargaining power of Low In bank industry there is no such suppliers

supplier.

Threat of substitutes

High Because there are many public and

private bank. And also the post office

provide some of the services, many

private firm provide easy loan scheme

to attract the customers. People also

started investing their money instead of

saving them like stock market, mutual

funds , property etc.

Degree of rivalry

High There are large numbers of public and

private bank and market growth rate

was also high. The switching cost was

also very low and the services provide

by all the bank was same.

2) Competitive Profile Matrix (Based on Key Success factors)

HDFC Bank has revised its deposit rates. The rates have been changed for maturities ranging from six months 17 days to five years. The bank is also offering a maximum of 8.75% interest on its retail term deposits.

ICICI Bank, the largest private sector lender in the country, pared deposit rates by 50 basis points. The revised rates are effective from Tuesday, the bank said on its website. The lender has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75% interest on retail term deposit compared to 9.25% earlier.

Axis Bank has also reduced its deposit rates by at least 25 basis points from Tuesday.

The moves hardly surprised the industry analysts as they have been expecting lenders to reduce their deposit rates to protect dilution in their interest margins.

Last week, State Bank of India (SBI), the largest commercial bank in the country had pared its deposit rates by 50-100 basis points. Analysts expect other state-run and private banks to mirror this move.

The net interest margin of banks has been under stress as the increase in cost of deposits has outpaced the rise in yield on advances in the past one year. As loan demand has remained largely muted so far this year the pressure on the margins is expected to intensify further.

Bank

New Rates

Effective Date

HDFC Bank

4.00 - 8.75

12-Sep-12

ICICI Bank

4.75 - 8.75

11-Sep-12

Axis Bank

3.50 - 9.25

11-Sep-12

Note: The new rates are applicable on deposits up to Rs 1 cr.