DATA ANALYSIS AND INTERPRETATION

4.0 DATAANALYSIS AND INTERPRETATION

4.1 Secondary data analysis: Secondary data analysis, the imperative part of this
study has been undertaken to analyse the performance of HDFC bank in
bancassurance so far and the contribution of bancassurance to the progress of the
bank in the form of increase in ROA, revenue etc., using ratio analysis. Since
HDFC bank has started earning revenue for the sale of insurance policies from
2015 that the analysis includes from the year 2015-2017.
TABLE 4.1.1
HDFC BANK’S EARNINGS FOR THE SALE OF HDFC STANDARD LIFE
INSURANCE POLICIES FROM 2004-2006
Year 2015 –16 2016 -17 2017- 18
Revenue earned 16,99 lacs 88,14 lacs 112,09 lacs
for the sale of
insurance policies

CHART 4.1.1

Revenue earned for the sale of insurance policies

120
112.09
100 88.14
80
60 Revenue (in lacs)
40
16.99
20
0
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be seen that there has been an impressive
growth in the revenue over the years for the sale of HDFC standard life insurance
policies by HDFC bank.
TABLE 4.1.2
RETAIL SEGMENT PROFIT FROM THE YEAR 2004 TO 2006: Retail
banking segment is undertaking bancassurance. And it is the fastest growing
banking business segment. One of the reasons being the bank’s dealing with the
sale of insurance policies to its retail customers. It has been mentioned even in the
director report of HDFC bank. Thus a glimpse at its profit would be imperative.

Year 2015-16 2016-17 2017-18

Profit earned by 520,64 lacs 701,67 lacs 875,71 lacs
the retail segment
of HDFC bank

CHART 4.1.2:

Profit earned by the Retail Segment

1000 875.71
800 701.67
Revenue Earned
600 520.64
(in Lacs)
400
200
0
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that there has been a
phenomenal increase in the profit of retail segment from 2015 -2017 , which
symbolizes the bancassurance contribution.
TABLE 4.1.3

RETAIL SEGMENT ASSETS FROM THE YEAR 2004 TO 2006: Retail

segment asset can also be increased by way of bancassurance operation. Let us take
a look at its asset position from the year 2015-16 to 2017-18.

Year 2015 –16 2016 -17 2017- 18

Retail assets 24,469,93 38,571,09 50,100,34

CHART 4.1.3

Growth of Retail Assets

6000000
5010034
5000000
3857109
4000000
Retail Assets Value(in
3000000 2446993 Lakhs)

2000000

1000000
0
2015-16 2016-17 2017-18

INFERENCE: From the above, we can infer that there has been a phenomenal
increase in the growth of retail assets over the years that it indicates the
contribution of bancassurance to it.
TABLE 4.1.4:

OPERATING EXPENSES FROM THE YEAR 2015 TO 2017 : Bancassurance

will lead to a reduction in the operating expenses of the bank as it can have the
opportunity of economies of scale. Thus let us took a look at the operating expenses
of HDFC bank from the year 2015-16 to 2017-18.

Year 2015 –16 2016 -17 2017- 18

Operating 1,085,40 1,691,09 2,420,80
expenses

CHART 4.1.4:

Operating Expenses - An overview

3000000
2,420,80
2500000
Operating
2000000 1,691,09 Expenses (in
1500000 Lakhs)
1,085,40
1000000
500000
0
2015-16 2016-17 2017-18

INFERENCE: From the chart, we can observe that there has been an increase in
the operating expenses of the bank. Since, HDFC bank is only in its infant stage in
bancassurance, it can perform more to reduce the same in the long run.
TABLE 4.1.5:

NON-INTEREST INCOME AS A PERCENTAGE OF TOTAL REVENUE:

As bancassurance revenue leads to an increase in the non-interest income, the non-
interest income as a % of total revenue from the year 2015-2017 is as follows:

Year 2015-16 2016-17 2017-18

Non interest 651,34 1,123,98 1,516,23

income
Total revenue 3,744,83 5,599,32 8,405,25
Ratio 17.39 20.07 18.03

Chart 4.1.5:

Non-interest income as a percentage of total revenue

21
20
19
Ratio
18
17
16
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that non-interest income as a

% of total revenue though increased in the year 2016,it has been decreased in the
year 2017.
TABLE 4.1.6:

NON-INTEREST INCOME AS A % OF OPERATING PROFIT: Non-

interest income as a contribution to the % of operating profit from the year
2015-2017 is shown as below:

Year 2015-16 2016-17 2017-18

Non-interest 651,34 1,123,98 1,516,23
income
Operating 1,156,02 1,733,84 2,562,86
profit
Ratio 56.34% 64.82% 59.16%

Chart 4.1.6:

Non-interest income as a % of operating profit

66%
64%
62%
60%
Ratio
58%
56%
54%
52%
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that non-interest income as a

% percentage of operating profit has been increasing from 2015 to 2016.But it has
been decreased in the year 2017-18.

Note: Operating profit = (interest income + other income – interest expense –

operating expense –amortization of premia on investments - profit/(loss) on sale
of fixed assets).
Business ratios (As per the director’s report of HDFC bank)

TABLE 4.1.7:

NON – INTEREST INCOME AS A % OF WORKING FUNDS: Non-interest

income as a % of working funds is shown as below:

Year 2015-16 2016-17 2017-18

Non interest income 1.44% 1.79% 1.76%
as a % of working
funds

Chart 4.1.7:

Non interest income as a % of working funds

2.00%
1.50%
`
1.00%
Ratio
0.50%
0.00%
2015-16 2016-17 2017-18

INFERENCE: From the chart it can be observed that non-interest income as a%

percentage of working funds though increased in the year 2016 ,it has been
decreased in the year 2017.
TABLE 4.1.8:
RETURN ON ASSETS (AVERAGE): The best opportunity for the banks, which
undertakes bancassurance operation is that, it can increase its return on assets.
Hence, the return on assets of the bank from 2015-2017 is as follows:
 Year 2015-16 2016-17 2017-18
Return on 1.47% 1.38% 1.33%
Assets
(Average)

Chart 4.1.8:

Return on assets
1.50%

1.45%

1.40%
Ratio
1.35%

1.30%

1.25%
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that the return on assets of the
bank has been decreased from the year 2015 – 2017.

TABLE 4.1.9;
BUSINESS PER EMPLOYEE: The business per employee from 2003-2006 is as
follows:
Year 2015-16 2016-17 2017-18
Business Per 806 758 607
Chart 4.1.9:

Business per Employee

900
800
700
600
500
Ratio
400
300
200
100
0
2015-16 2016-17 2017-18

INFERENCE: From the above, it is clear that the business per employee of the
bank over the years has been on the decreasing trend.

TABLE 4.1.10

PROFIT PER EMPLOYEE: Profit per employee from 2004-2006 is as follows:

Year 2015-16 2016-17 2017-18

Profit per 8.80 7.39 6.13
employee
Chart 4.1.10:

Profit per Employee

10

6 Profit per
4 employee

0
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that profit per employee of the
bank over the years has been on the decreasing trend.

RBI guidelines: As per the RBI guidelines for the banks to enter into the
insurance sector, The CRAR of the bank should not be less than 10 per cent,
and the level of Non Performing Assets (NPAs) should be reasonable. Hence,
analysis of such ratios is also important.

Capital adequacy ratio: Capital adequacy ratio from the year 2015-2017 can
be shown as follows: (As the total capital includes tier-1 and tier-2, it can be
viewed separately.)
TABLE 4.1.11 Tier 1 capital:
 Year 2015-16 2016-17 2017-18
Tier 1 capital 3,96,216 5,149,91 6,352,71

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92
Ratio 9.60% 8.55% 8.57%

TABLE 4.1.12 Tier 2 capital:

Year 2015-16 2016-17 2017-18

Tier 2 capital 1,054,73 1,720,71 3,339,99

Risk weighted assets

and contingents 41,27,103 60,217,62 74,081,92
Ratio 2.56% 2.86% 4.51%

Where,

Tier –1 capital includes paid up capital, statutory reserve, general reserve,

balance in profit and loss account and amalgamation reserve. From this,
outstanding deferred tax asset, if any, is deducted.
Tier– 2 capital includes general loan loss reserves, investment fluctuation
reserve and subordinated debt.

TABLE 4.1.13 Total Capital:

Year 2015-16 2016-17 2017-18

Total capital 5,016,89 6,870,62 9,692,70

Risk weighted
assets and 41,27,103 60,217,62 74,081,92
contingents

Ratio 12.16% 11.41% 13.08%

 Chart 4.1.11:

Capital Adequacy Ratio

13.5%
13.0%
12.5%
Ratio
12.0%
11.5%
11.0%
10.5%
2015-16 2016-17 2017-18

INFERENCE: From the above, it can be seen that the capital adequacy ratio
though decreased in the year 2016,it has been increased in the year 2017-18.

TABLE 4.1.14:

Year 2015-16 2016-17 2017-18

Percentage of net 0.20% 0.36% 0.38%
non performing

PERCENTAGE OF NET NON PERFORMING ASSETS TO CUSTOMER

ASSETS: The percentage of net non-performing assets to customer assets is
shown as below from the year 2004-2006:
Chart 4.1.12:

Percentage of Net Non-performing assets to

Customer assets

0.40%

0.30%

0.20% Ratio
0.10%

0.00%
2015-16 2016-17 2017-18

INFERENCE: From the above, it is clear that the percentage of net non-
performing assets to customer assets has been increasing from the year 2015-2017

TABLE 4.1.15

PERCENTAGE OF NET NON-PERFORMING ASSETS TO NET

ADVANCES: The percentage of net non-performing assets to net advances from
the year 2015-2017 are shown as follows:

Year 2015-16 2016-17 2017-18

Percentage of net 0.24% 0.44% 0.43%

non performing
assets to net
advances
Chart 4.1.13:

Percentage of Net Non-performing assets to net

advances

0.50%
0.40%
0.30%
0.20% Ratio
0.10%
0.00%

201 -16 2016-17 2017-18

INFERENCE: From the above, it can be observed that the percentage of net
non-performing assets to net advances has been increased from the year 2015 to
2016 and it has been decreased in the year 2017.

TABLE 4.1.16

PERCENTAGE OF GROSS NON-PERFORMING ASSETS TO GROSS

ADVANCES: The percentage of gross non-performing assets to gross advances
from the year 2015- 2017 are shown as follows:

Year 2015-16 2016-17 2017-18

Percentage of 1.69% 1.32% 1.32%

gross non
performing assets
to gross advances
Chart 4.1.14:

Percentage of gross non performing assets to gross

advances
2.00%
1.50%
1.00%
Ratio
0.50%
0.00%

2015-16 2016-17 2017-18

INFERENCE: From the above, it can be observed that the percentage of gross
non-performing assets to gross advances has been decreasing from the year 2015
–2017.