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Business Policy, Income and Expense Analysis

Business policy:

Business Responsibility has been a signifcant tenet or growth. In anenvironment with growing recognition or businesses contributing to

community development, HDF Ban! has progressed urther in their e"ortstowards inclusive growth and development o the communities they operatein.

Having evaluated the perormance in Business Responsibility last year, theymoved steadily towards improving their systems and processes in order toadopt an inclusive approach.

#t HDF Ban!, governance o $ustainability, orporate $ocial Responsibility%$R& and Business Responsibility is driven by a Board'level $R ommitteewhich is entrusted with ormulating, revising and updating their $R (olicy. Itgoverns the implementation o all $R initiatives with due compliance to

$ection )*+ o ompanies #ct, -)*. he aim is to integrate communitydevelopment, responsible governance, sta!eholder inclusiveness andenvironmental responsibility into business practices and operations.

he our main aspects o Business Responsibility at HDF Ban! are /thical0overnance, $ta!eholder /ngagement and /nvironmental and $ocialResponsibility.

he business policy has a frm commitment towards ma!ing a di"erence inthe lives o the people and contributing to the welare o the society. hisincludes empowerment o individuals through sustainable livelihoodinitiatives, other fnancial inclusion initiatives as well as community

development initiatives in the areas o education and s!illing throughdonations and grants.

In F1 -)*'-)2, HDF ban! has spent -.3*4 o proft ater ta5 %or the yearending *) 6arch -)2& towards these initiatives and appro5imately ).*24 oaverage proft ater ta5 or the last three fnancial years. 7ith the new$ection )*+ enacted by the ompanies #ct -)*, we have ormulated our$R (olicy and identifed areas o intervention. raining and orientationprograms are being devised to ensure that employees understand the socialand environmental impact o the Ban!, the undamentals o sustainabilityand how it can move towards becoming a more sustainable organisation.

8ver the ne5t ew years, HDF aims to drive concentrated e"orts towards asustainable 9ourney resulting into e:uitable growth and development or bothbusiness and the society.

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Income Analysis:

YEAR INTERESTINCOME

OTHER INCOME TOTA INCOME

--;'-<

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he eight years data shows Interest income is the ma9or source oincome or the ban! and it has varied in between 3-'324 share o theotal income.

he 8ther Income has varied in between );')=4 share o total income.

he percentage share o 8ther Income is showing a decreasing trendand Interest Income is showing an increasing trend in the past 2 years.

otal income was Rs 3

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Amoun! is in C"o"es#

?nli!e manuacturing or services companies that spend a lot o moneyon raw materials and employees respectively, the biggest e5pense ora ban! is the interest it pays on its own borrowings %which is its rawmaterial&.

he ma$o" expenseo the otal e5penses are in the orm o @Interest/5pendedA on deposits rom individual depositors li!e public,borrowings rom the RBI and other ban!s, and other interest. heoperating e5pense is the ne5t highest e5pense and the rest o the partis other e5penses.

he percentage share o Interest /5pense is showing an increasingtrend over the years studied rom fnancial year --< to -)2. It hasvaried in between *

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-)) );=32.3 ';.

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Ne! NPA (s Ne! Ad)ance :

1earet (#> et#dvances

--2 -.);

--+ -.2

--; -.22

--< -.2*

--3 -.2C Ban?

Goan growth to surpass industry, albeit slower than its historical recordgiven muted activity in the corporate segment.

6argins to remain stable to moving upwards given benefts o lowercost o unds.

Fee income to continue to grow below trend owing to challenges in the

retail segment and high base o last year on ore5 income. ost ratios to start inching up post several :uarters o consolidation

putting pressure on ((8( growth.

#sset :uality to be stable !eeping credit costs benign

S!a!e Ban? o- India

6argins to remain largely under pressure due to ocus on the low'yielding corporate and mortgage segments though to be o"set bybetter margins in the international boo!

Domestic loan growth to be tepid in line with industry. However, globalgrowth will be aided by the overseas branches.

Focused e"orts on cost eKciencies will continue, leading toimprovement in cost'to'income ratio.

$lippages to marginally come o" rom S) levels. However, guidance onuture restructuring is important post cancellation o the coal bloc!s.

Ban? o- Ba"oda

Domestic loan growth will be slower than historical trac! record,reCecting muted credit o"'ta!e. Goan growth to be still higher at T)

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Pun$a Na!ional Ban?

Domestic loan growth to be muted at )-4 in line with industry. 0lobal

growth estimates to be T)24, driven by growth in overseas balancesheet supported by rupee depreciation.

Deposit growth to trac! loan growth with #$# moving up T=4 andterm deposit cloc!ing )24 growth.

Reported proft growth to spurt substantially due to absence o 66provision.

#ter the drop in resh restructuring in S), restructuring is e5pected topic! up in S. $lippages will remain at elevated levels. However,intensifed recovery e"orts will translate into better recoveryperormance.

ICICI Ban?

Goan growth to e5ceed industry growth rates at T)24, supported byhigher growth in retail at T-4, which will o"set slower traction seenin corporate segment.

6argins to be stable to improving, a reCection o improved liabilityprofle.

Fee income to grow in line with balance sheetU though crystallisation ooreign currency translation reserves could lend support.

#sset :uality trend to be stable to improving in line with currentguidance. However, uture guidance critical given the bac!drop o coalbloc! cancellation.

Financial Ratio Analysis

Financial ratios are useul indicators o a frmPs perormance andfnancial situation. hese ratios help us to

o !now whether the company is ma!ing enough proft or not o evaluate the fnancial strength o the company o 9udge the ability o the company to generate enough cash and

cash e:uivalents and their timing

**

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o !now the uture growth prospects

Ratios can be classifed into

Return on Investment %R8I& ratios $olvency ratios Gi:uidity ratios /Kciency or urnover ratios (roftability ratios

Some @ey Ra!ios

Qey Ratios123

51234

1231

1233

1232

122

1229

1228

1227

1226

1225

1224

redit'Deposit%4&3).

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redit'Deposit %4&

It indicates how much o a ban!Ps core unds are being used or lending, themain ban!ing activity. 7e could see rom -)- onwards there is a higherratio which indicates more reliance on deposits or lending.

redit'deposit ratio, Investment>Deposit N ash>Deposit ratio are debtcoverage ratios. he debt coverage ratio is used in ban!ing to determine acompanies ability to generate enough income in its operations to cover thee5pense o a debt

Return on et worth %R87&

It reveals how much proft a company generates with the money that thee:uity shareholders have invested. I we compare R87 or HDF ban! withother ban!s we could see that R87 or HDF is higher than most o theban!s.

Interest e5pense ratio %Interest /5penses to otal Income&

Interest'/5pense Ratio is a measurement o fnancial eKciency and isdetermined based on inormation derived rom a business or armoperations fnancial statements specifcally using the fnancials thatdetermine gross arm income.he lower the percentages the better, abusiness or arm should be no higher than +4 to be considered strong. #Interest'/5pense ratio higher than )-4 indicates that the business or arm isspending too much o its gross income paying interest on borrowed money.