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


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.
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 create job 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 servic
e.
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.