Last time, we took a dive into one of the largest banks in the world, Barclays. This time, we are looking to conduct a SWOT analysis of HDFC Bank.
HDFC is a large, comprehensive banking corporation based in India with a large portfolio of services provided. The bank is one of the toughest contenders in the private banking area. HDFC is counted amongst one of the most well-organised companies in its space, wooing its customers with superior servicing quality and one of the best functioning digital services wing.
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In this case study, we will do a SWOT analysis of HDFC bank to better understand the company’s position in the banking sector.
Before we begin, let us first take a detour to better understand the company and its history, competitors, services and financial position.
HDFC Limited is the promoter of the organization, which was established in 1977. Housing Development Finance Corporation Limited (HDFC) received in-principle clearance from the Reserve Bank of India in 1994 as part of the liberalization of the banking system, and it was commercialized in 1995.
The organization has a powerful network of over 3,659 branches in 2,287 towns. It promotes NRI (Non-Resident Indian) banking, the bank also has branches in Bahrain, Hong Kong, Abu Dhabi, Kenya, and Dubai.
Consolidated in 1994, HDFC Bank is the most advanced private bank to receive the endorsement of RBI in this division. It has a pan-India network that includes 5400+ banking locations in 2800+ cities, a customer base of more than 56 million, and all of its subsidiaries are linked via online real-time evidence.
The bank has developed a core banking infrastructure that is backed by Flexcube for corporate banking and i-flex solutions Ltd. for retail banking. The bank has a favoured program called HDFC Bank Plus that caters to the needs of high net worth individuals. Wealth management investment advisory services address a variety of financial demands and investment options, as well as providing advice.
|Year Founded||August, 1994|
|Origin||Mumbai, Maharashtra, India|
|No. of Employees||120,093 (2021)|
|Market Cap||$131 billion (2021)|
|Annual Revenue||$18 billion (2021)|
|Net Profit||$1.8 billion (2021)|
Services of HDFC
HDFC offers a large range of services to it’s clients, they are:
- Consumer & private banking
- Commercial banking
- Finance and insurance
- Investment banking
- Private equity & wealth management
Competitors of HDFC
HDFC is a large private bank, competing against both, public banks and other private banks:
- State Bank of India
- Axis Bank
- ICICI Bank
- Kotak Mahindra Bank
- Bank of Baroda
Now that we have an overview of what HDFC is. Let’s begin exploring the SWOT analysis of HDFC.
SWOT Analysis of HDFC
A SWOT analysis is a basic yet effective method for developing the business strategy, whether starting a business or leading an established one.
Let’s take a closer look at each aspect of the SWOT analysis in the upcoming sections.
Strengths of HDFC
HDFC’s strengths are internal, good characteristics that are under the company’s control and the reason for its success. They are as follows.
- Large Network of Branches: HDFC Bank is India’s second-largest private banking sector, with 2,201 branches and 7,110 ATMs.
- Strong Consumer Banking: The ATM card issued by the bank is compatible with all domestic and international Visa/Master cards, Visa Electron/Maestro, and American Express cards. This is one of the reasons why HDFC cards are the most popular for shopping and online transactions.
- Higher Customer Satisfaction: When compared to other private banks, it has a high level of customer satisfaction.
- High Employee Retention Rate: The bank has a low employee turnover rate and is regarded as one of the best places to work in the private banking sector.
- Brand’s Goodwill: It has received numerous awards and recognition, including the title of “Best Bank” from various financial rating institutions such as Dun and Bradstreet, Financial Express, Euromoney Awards for Excellence, and Finance Asia Country Awards.
Weaknesses Of HDFC
Weaknesses are flaws that detract from one’s strengths. These are areas that the business may need to improve to remain competitive.
- No Rural Presence: HDFC Bank does not have a strong presence in rural areas, whereas ICICI Bank is expanding in the rural market.
- Limited Market Size: Unlike ICICI, HDFC lacks aggressive marketing strategies. The bank primarily serves high-end clients.
- Underperforming Sectors: Some of the bank’s product categories are underperforming and have limited market reach.
- Fluctuating Share Prices: The share price of the bank fluctuates frequently, causing investors to be uncertain.
Opportunities of HDFC
External aspects in the business environment that are likely to contribute to the success of the company are known as opportunities. Below mentioned are the opportunities of HDFC.
- Strong Fundamentals for Growth: As HDFC Bank has better asset quality parameters than government banks, profit growth is expected to increase.
- Increasing Corporate Banking Sector: Companies, both large and small and medium-sized, are expanding at a rapid pace. HDFC has a good reputation for keeping corporate salary accounts up to date.
- Efficient Debt Settlement: When compared to government banks, HDFC Bank’s bad debt portfolio has improved and its bad debt recovery rate is high.
- Foreign Markets: Because of its strong financial position, it has very good opportunities in foreign markets, with greater scope for acquisitions and strategic alliances.
Threats of HDFC
External elements over which the bank has no control are referred to as threats. The company needs to develop contingency plans for coping with them if they arise.
- Increasing NPA: The non-performing assets (NPA) of HDFC increased from 0.18 to 0.20 percent. Even though it is a minor difference, it is not a good sign for the bank’s financial health.
- New-Age Banks: The number of non-banking financial companies and new-age banks in India is growing.
- Lack of Growth: The HDFC is unable to increase its market share because ICICI poses a significant threat.
- Increasing Competition: Government banks are attempting to modernize to compete with private banks.
- Increasing Foreign Investments: The Reserve Bank of India has granted foreign banks permission to invest up to 74 percent of their assets in the Indian market.
These are the threats faced by the company. Now we have fully covered the SWOT analysis of HDFC. So, let’s end this case study with our learnings
HDFC Group, a distinguished financial conglomerate, including performance in dwelling finance, investment, life, and non-life protection, asset superintendence, real estate funds, and teaching finance. The company is a great example of India’s advanced housing finance corporation. Yet, even as a modernised private bank with great customer servicing, they are suffering from multiple factors, such as a weakening economy and increasing competition from both traditional competitors and new-age digital banking.
Even the best brands can suffer at the hands of increasing competition in the market. In the face of rising competition, impactful marketing becomes a necessity for the company. Hence, gaining a professional understanding of digital marketing is essential if you wish to work in highly competitive industries such as banking. If marketing is something that interests you, you should definitely check out the Post Graduation Programme in Digital Marketing offered by IIDE that will help you transform into the managerial candidate in the marketing department of companies.
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