DuPont Decomposition
Why does HDFCBANK earn its ROE?
Breaking down Return on Equity into profitability, efficiency, and leverage.
ROE = Net Margin × Asset Turnover × Equity Multiplier
8.8% = 28.4% × 0.05 × 6.28
Latest: FY2025
Profitability
Net Margin
28.4%
37.9% →28.4%
How much profit per ₹ of revenue
Efficiency
Asset Turnover
0.05x
0.05x →0.05x
Revenue per ₹ of assets
Leverage
Equity Multiplier
6.28x
8.43x →6.28x
Assets funded by equity vs debt
Trend Analysis
ROE declined by 6.6 pp over 4 years. Driven by net margin declining (37.9% → 28.4%), leverage falling (8.43x → 6.28x). High financial leverage (equity multiplier > 4x) amplifies returns but also risk.
Historical Decomposition
Last 4 years
| Year | Revenue | PAT | Net Margin | Asset TO | Leverage | ROE |
|---|---|---|---|---|---|---|
| FY2022 | ₹0Cr | ₹0Cr | 37.9% | 0.05 | 8.43 | 15.4% |
| FY2023 | ₹0Cr | ₹0Cr | 41.1% | 0.05 | 8.84 | 17.0% |
| FY2024 | ₹0Cr | ₹0Cr | 31.3% | 0.05 | 6.35 | 9.0% |
| FY2025 | ₹0Cr | ₹0Cr | 28.4% | 0.05 | 6.28 | 8.8% |
How to read DuPont
- • Rising ROE from margin = pricing power, operational improvement (good)
- • Rising ROE from turnover = better asset utilization (good)
- • Rising ROE from leverage = more debt, amplified risk (caution)
- • Falling ROE across all three = structural deterioration (red flag)
DuPont decomposition from audited annual financials. Factual analysis, not investment advice.