HDFC Bank (HDB)

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See all Bulls Reasons Bulls: Reasons To Buy Number of Mortgage Loans is increasing in India 0% agree Number of Mortgage Loans is increasing in India In India a lot of people are moving towards cities for new jobs in the fields of Medicine, Information Technology, KPO, BPO etc. They have started to buy new homes in these cities and the demand for housing mortgages has risen. This means new revenue for banks like HDFC. View or Edit Reason 0 votes 0% agree Indian banking sector is about to take off 0% agree Indian banking sector is about to take off Indian banking sector is set to explode in next 5 years on the backing of increasing consumer base and industrial growth. HDFC bank is the one of the top 5 banks and also very aggressive in India, surley will outperform the market. View or Edit Reason 0 votes 0% agree Bears: Reasons To Sell Feeling Bearish? Be the first to explain why this would make a poor investment Send the authors a comment or suggestion Be the first to make a suggestion See All Suggestions

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[edit] Company Overview

Headquartered in Mumbai, India, Housing Development Finance Corporation Limited Bank Limited or HDFC (NYSE : HDB) commenced operations in 1995. After growing aggressively in a relatively short span of time, HDFC is now one of the largest banks in India, with a retail network of 684 branches and over 1,605 ATMs in 316 cities for the fiscal year ending March 31, 2007. The bank enjoys favorable brand equity among Indian consumers and depositors, which enables it to keep its borrowing costs low.

The company provides a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side.

[edit] Business Areas

The bank has three key business areas:

• Retail Banking

The Retail Banking Services segment provides a comprehensive range of financial products, including deposit products, loans, credit cards, debit cards, bill payment services, third party mutual funds, investment advice and other services, to middle and upper-income individuals in India. This business area accounted for 53% of pretax income in the fiscal year ending March 31, 2007)

• Wholesale Banking

The target markets for HDFC's Wholesale Banking (WB) segment are primarily large, blue chip manufacturing companies and emerging mid-sized corporations. WB provides a wide range of commercial and transactional banking services, including working capital finance, trade services, transactional services, and cash management. The bank is also a leading provider of structured solutions, which combines cash management services with vendor and distributor finance for facilitating superior supply chain management for its corporate customers. The bank also acts as a clearing/settlement bank to various leading stock exchanges in India and has emerged as one of the largest lenders to stock brokers and equity markets, giving customers a one-stop shop for all of their banking requirements. This business area accounted for 46% of pretax income in the fiscal year ending March 31, 2007)

• Treasury

The Treasury Operations segment is responsible for managing the returns and market risk on the investment portfolio, and has three main product areas: Foreign Exchange and Derivatives, Local Currency Money Market and Debt Securities, and Equities.This business area accounted for 1% of pretax income in the fiscal year ending March 31, 2007)

[edit] Latest Movements

HDFC Bank's performance, post-merger with eCBOP, is commendable given the challenging environment.

• "Fundamentally, best placed to deal with difficult economic scene"

HDFC Bank remains best placed in the India banks universe to deal with the rising interest rate scenario. It has a strong retail franchise that enables it to maintain a high proportion of low-cost deposits, 44.9% as of June 2008.

• "Management quality a plus, we expect asset quality to be maintained..."

HDFC's tried and tested management adds to its fundamental strength. This management has seen HDFC Bank through a merger before, in 2001, and through the difficult period between 1997 and 2003.

• "low RoE, even as EPS growth gathers pace"

HDFC Bank appears fairly valued relative to peers, considering our universe's average RoE of 16.2% (FY09-10F) and EPS CAGR of 17.6% (FY09-10F). According to management, the eCBOP acquisition will become earnings accretive on a rolling basis by 2HFY10.

[edit] References

1. Company Website
2. HDFC Personal Banking
3. HDFC at Wikipedia