In an attempt to understand and evaluate the business quality of Financial institutions (long due), I have captured some stats for HDFC and ICICI bank (Thanks to a post from Donald in another thread for trigger)
HDFC BANK
Mar '12 |
Mar '11 |
Mar '10 |
Mar '09 |
Mar '08 |
||
Revenue |
32,619.76 |
24,361.72 |
19,983.52 |
19,802.89 |
12,320.38 |
|
EBDIT |
5,167.09 |
3,926.40 |
2,948.70 |
2,244.94 |
1,590.18 |
|
Depreciation |
542.52 |
497.41 |
394.39 |
359.91 |
271.72 |
|
EBIT |
4624.57 |
3428.99 |
2554.31 |
1885.03 |
1318.46 |
|
Operating Margin |
14.18 |
14.08 |
12.78 |
9.52 |
10.70 |
|
Equity |
29,924.68 |
25,379.27 |
21,522.49 |
15,052.73 |
11,497.23 |
|
Borrowings |
23,846.51 |
14,394.06 |
12,915.69 |
2,685.84 |
4,478.86 |
|
Deposits |
246,706.45 |
208,586.41 |
167,404.44 |
142,811.58 |
100,768.60 |
|
Total Assets |
337,909.49 |
277,352.61 |
222,458.56 |
183,270.78 |
133,176.60 |
|
Equity Dilution |
0.99 |
0.98 |
0.93 |
0.83 |
0.00 |
|
Asset Turnover |
0.10 |
0.09 |
0.09 |
0.11 |
0.09 |
|
Equity / Assets (Capital Adequacy ratio) |
8.86 |
9.15 |
9.67 |
8.21 |
8.63 |
|
Deposits / Total Assets |
73.01 |
75.21 |
75.25 |
77.92 |
75.67 |
|
Borrowings / Total Assets |
7.06 |
5.19 |
5.81 |
1.47 |
3.36 |
|
|
1.37 |
1.24 |
1.15 |
1.03 |
0.99 |
|
RoA (EBIT/Total Assets)(1-tax_rate) |
0.96 |
0.87 |
0.80 |
0.72 |
0.69 |
|
Return on Equity |
15.45 |
13.51 |
11.87 |
12.52 |
11.47 |
|
ICICI BANK |
||||||
Mar '12 |
Mar '11 |
Mar '10 |
Mar '09 |
Mar '08 |
||
Revenue |
41,450.75 |
33,082.96 |
32,999.36 |
39,210.31 |
39,667.19 |
|
EBDIT |
6,465.26 |
5,151.38 |
4,024.98 |
3,758.13 |
4,157.73 |
|
Depreciation |
524.53 |
562.44 |
619.50 |
678.60 |
578.35 |
|
EBIT |
5940.73 |
4588.94 |
3405.48 |
3079.53 |
3579.38 |
|
Operating Margin |
14.33 |
13.87 |
10.32 |
7.85 |
9.02 |
|
Equity |
60,405.25 |
55,090.93 |
51,618.37 |
49,883.02 |
46,820.21 |
|
Borrowings |
140,164.91 |
109,554.28 |
94,263.57 |
67,323.69 |
65,648.43 |
|
Deposits |
255,499.96 |
225,602.11 |
202,016.60 |
218,347.82 |
244,431.05 |
|
Total Assets |
473,647.09 |
406,233.67 |
363,399.71 |
379,300.96 |
399,795.07 |
|
Equity Dilution |
1.00 |
0.97 |
1.00 |
1.00 |
0.00 |
|
Asset Turnover |
0.09 |
0.08 |
0.09 |
0.10 |
0.10 |
|
Equity / Assets (Capital Adequacy ratio) |
12.75 |
13.56 |
14.20 |
13.15 |
11.71 |
|
|
53.94 |
55.54 |
55.59 |
57.57 |
61.14 |
|
Borrowings / Total Assets |
29.59 |
26.97 |
25.94 |
17.75 |
16.42 |
|
|
1.25 |
1.13 |
0.94 |
0.81 |
0.90 |
|
RoA (EBIT/Total Assets)(1-tax_rate) |
0.88 |
0.79 |
0.66 |
0.57 |
0.63 |
|
Return on Equity |
9.83 |
8.33 |
6.60 |
6.17 |
7.64 |
Looking at the number above seems like both HDFC and ICICI are neck to neck in terms of operating margin and asset turnover. ICICI even seems to have better capital adequacy ratios. However what makes HDFC stand apart is their ability to grow their Assets under management (AUM) using mainly Deposits thereby keeping the borrowing levels pretty low as compared to that of ICICI. This in turn has resulted in drastic changes in ROE as seen in the table above.
Please share you views on what do you think makes HDFC a better business than ICICI.