Credit risk analysis of HDFC Bank and SBI Bank using credit analysis ratios and Atman’s Z score


The viability of Indian banks holds prime importance as it relates to financial investments and funding. The terms of credit have shifted away from traditional times to the modern scenario today. The impact of the recent crisis provides attractive opportunities to research on financial distress. The basic intent is to evaluate the terms of credit and ensure repayment.

Banks that fail to undertake proper risk management are most vulnerable to losses and become the focus of regulators. This study attempts to assess the financial performance of select Indian public and private sector banks. It includes a sample size of two banks – HDFC Bank and SBI.

The paper mainly focuses on profitability of select banks, measured by select credit risk indicator ratios and Edward Altman’s Z score. Secondary data is gathered from the annual reports of State Bank of India and HDFC Bank for ten years (2009 to 2018). The score determines the financial status and health of the bank. It also includes regression analysis for dependent and multiple independent variables.

Key words: Credit risk, Z score, Regression Analysis


One of the major issues the financial sector faces is non-performing assets, or bad debts. Lending is an essential and inseparable part of any bank; hence, formulation and execution of sound lending policies play a vital role in efficient credit management.

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