A Critical Analysis of Post-merger performance of PNB and HDFC Bank Ltd

This study undertakes a comparative analysis of post-merger performance between one public sector bank, Punjab National Bank (PNB), which merged with Oriental Bank of Commerce and United Bank of India in April 2020, and one private sector bank, HDFC Bank Ltd., which merged with HDFC Ltd. in July 2022. The objective is to evaluate the impact of mergers and acquisitions (M&As) on key financial indicators such as profitability, liquidity, capital adequacy, and operating performance using secondary data over a three-year post-merger period. The research methodology employs ratio analysis, trend analysis, and paired sample t-tests. Key ratios analyzed include Return on Assets (ROA), Return on Equity (ROE), Net Profit Margin, Capital Adequacy Ratio (CAR), and Cost-Income Ratio. HDFC Bank showed significant growth in profitability, with ROE improving from 16.5% pre-merger to 19.2% post-merger, and CAR rising from 17.6% to 18.9%, indicating enhanced capital strength. On the other hand, PNB's ROE saw a modest increase from 5.1% to 6.3%, while CAR improved from 12.6% to 14.1% post-merger, reflecting gradual improvement. Paired t-test results confirmed statistically significant improvements (p < 0.05) in HDFC Bank’s profitability and operational efficiency, whereas PNB's results were mixed, with some parameters failing to reach statistical significance. The findings support the rejection of null hypotheses for HDFC Bank across profitability, capital adequacy, and operational efficiency, while partially rejecting them for PNB. The study concludes that M&As have a positive impact on financial performance, particularly in private sector banks where integration is faster and more agile. These insights hold policy implications for future consolidation strategies in the Indian banking sector.