The document provides an overview of the Indian banking industry and an analysis of ICICI Bank. It discusses the structure and segmentation of the Indian banking sector, as well as growth drivers and regulations. For ICICI Bank, the summary discusses the company's business segments, history, financial performance across segments from 2006-2010, and strategies for retail and SME banking. ICICI Bank is focusing on stabilizing underperforming segments and harnessing potential in current segments like SME lending and rural banking.
2. Agenda Section I Banking industry overview Global banking industry overview Indian banking industry overview Indian Banks Segmentation Growth Drivers and Challenges Competitive Landscape Banking regulation Section II ICICI bank profile Company business description and segmentation Company history and details Company milestones Company financials and trends
4. Global banking industry overview Excellent. If possible try to get global banking industry size in terms of assets / credit and Indian numbers also. It is a known fact that China banking sector is in deep mess despite being very large in size so don’t make any comparative statement with China. Source:- World Bank Database Source:- World Bank Database Due to RBI regulations banking sector is not over exposed in India as in other economies as US and China, but this also represent growth scope available to Indian banking industry. There is scope of improvement as NPA in India is more than that of developed economies. In comparison to china banking sector in this aspect is performing well.
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6. SBI became the first Indian bank to break into the world’s Top 50 list, its brand value tripled
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8. ‘Banks in India with stand the crisis’……. Excellent. Show amount in billions in the table. Try to update for FY10 numbers as banking industry has over turned in the last 2 years. In same slide / ppt all amount should be in eaither million/billiob/trillion or lakh / crores..not both Source:- RBI Database Despite economics crisis across the world; banks in India have significant growth Assets with banks have grow by 35% in FY09 as of 17% in FY08. Total assets as of end-March ‘09 is ` 4,960,064 crores Deposits have grown by 20% in FY09 as to 22% in FY08 & credits disbursed has grown by 18% in FY09 to 22% in FY08.
18. ‘Development in new sectors ensuring excellent future for banks’…… Excellent. It gives complete perspective of the condition of the current overall economy. Source:- RBI Database Rapid development in infrastructure, iron and steel and computer services have raised demand for credit projecting healthy growth in the banking sector. Gross NPAs same at 1.3% as FY08 in FY09; Loan disbursement grew by 16.04% Credit deposit ratio - down marginally to 73.9% in FY09 from 74.6% in FY08 NIM has gone up to 2.4% as compared to previous year, however it is less than the former years Interest income as a percentage of total assets has gone up to 7.4% for FY09 from 7.1 % in FY08 The Total Assets of the Banking Industry grew by 21.2% in 2009 as against 25% in 2008
19. Income and expense growth rate of SCBs in India Good. But please mention what constitutes other income (what kind of fee and commissions?). It is obvious that with revenue increase, expense also increases. Try to mention why the operating expense has reduced. Is it operational efficiency? Source:- RBI Database Source:- RBI Database Other income has show greater growth potential than interest income towards total income over the years. With increase in income a subsequent increase in expense is observed although operation expense have reduced considerably. * Other income consist of fee income, commissions
22. Regional Rural Banks (RRBs); established during 1976-1987 & are owned jointly by the Central Government, concerned State Government and a sponsoring public sector commercial bank.
23. Private Sector banks have the majority of share capital with private individuals & corporates. Non-nationalized are ‘old’ and nationalised in 1993 are stated as ‘new private banks’.
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25. Growth Drivers to banking industry Superb, can you quantify each parameter such as telecom spectrum was Rs 1 lakhcrore +? Industrial development is fueling rapid economics growth giving banking sector a major boost. Retail Demand: Increase in demand for housing, Car and personal loans Infrastructure: Infrastructure one of the biggest growth driver is expected to grow @ 35% -3yrCAGR. Telecom spectrum lending: 3G and broadband spectrum auction have increased credit demand Rural Penetration: Rural penetration by private banks is increasing Export Imports: Increase in export import enhances inland and outland bills business Consolidations and Expansions: Acquisition, merger and expansion by the industries is very much prevalent since 2009
27. Competitive Landscape of Indian banking industry Excellent. The data label in left graph – font to be reduced. Source:- RBI Database Source:- RBI Database Public sector banks enjoy over 70% share of gross loans and advances New private sector banks have shown decline in growth in terms of assets and investments Credit deposit ratio indicate Foreign banks have been much more aggressive in their lending, followed by the new private sector banks, while the public sector banks have been maintaining a mediocre path.
28. Public sector banks and private sector banks have show increasing trend in their respective profit and incomes; while foreign banks have shown a negative trend. Profits and income of bank group wise Cool Source:- RBI Database
31. The reserve bank of india act 1934Reviewing monetary policy to maintain economic and financial stability and to ensure adequate financial resources for development Meeting the currency requirement of the public Promotion of an efficient financial system Foreign exchange reserve management Quarterly monitoring visits to banks displaying financial and systemic weaknesses The department monitors cases of frauds perpetrated in banks and reported to it Other regulation: The negotiable instruments act 1881 Transfer of property act 1882 Banking secrecy act Companies act 1956 Banker’s book evidence act Banking companies act 1970/1980 – for nationalized bank only Good. Please check – generally the act names are pronouns – The Reserve Bank of India Act (all words starting with capital letter)
32. Regulations (Policy) impact on company With increase in SLR, lending resources of the banks contract and their capacity to grant credit is reduced correspondingly or vice versa CAR Ratio depicts the Solvency Position of the bank Repo Rate and Bank Rate have direct impact on cost of Fund & profitability of the banks. High credit to deposit ratio increases the profitability of the banks Regulation - Limiting Factor: Bank cant sanction loan below base rate, despite of having funds they are underutilized. Bank have to follow Quota limit while lending to the various sectors (Agriculture, Housing, Education, SSI etc.) Foreign bank in India: They have to take the permission of RBI and FEMA Take over of an Indian bank except for weak bank identified by RBI not permitted FDI limit for a foreign bank is 74% of total paid-up capital of the bank. The initial minimum paid up capital for a new bank is ` 200 crores which is increased to 300 crore with in 3 years of commencement of business International: Barriers for Indian banks Indian bank have to follow that respective country norms as well as the Basel II norms. Excellent. Cant incorrect. Cannot more appropriate word..
33. Average Credit-Deposit ratio of the banking industry is -70 % CAR: Capital Adequacy Ratio : 9% CRR – 6 %, SLR – 25 % Base Rate: 7.5 - 8% Deposit Rate: 6% - 7.5% Saving banking rate: 3.5% Repo Rate: 5.75% Reverse Repo :4.5% Although the critical rates have reduced since the global economic crisis (FY08); RBI is still maintaining a tight monetary policy in order to curb inflation and attain stability along with superior economic growth. Current policy rates Excellent. Cant incorrect. Cannot more appropriate word.. As a next step please update yourself with all the current numbers like CRR ratio and other numbers. Source:- RBI
34. Agenda Section I Banking industry overview Global banking industry overview Indian banking industry overview Indian Banks Segmentation Growth Drivers and Challenges Competitive Landscape Section II ICICI bank profile Company business description and segmentation Company history and milestones Company details Company peer group comparison Company financials and trends
42. OthersBusiness Segmentation Retail Banking- Retail assets business, Rural micro-banking. Wholesale Banking- Corporate Banking business, Banking services(for government, large corporate), Treasury, Structured finance Project Finance- Infrastructure, Oil & Gas, Manufacturing and Shipping sectors International Business & Special Assets Management-International operations Corporate Centre- Investor relations, Risk management, Corporate branding Good Source:- ICICI bank website
43. Company History and Milestones Good. Use the slide prepared by Ruchir for the below mentioned milestones. That is more exhaustive. 2006: 1st Indian bank to issue hybrid Tier-1 perpetual debt in the international markets. Opened branches in UK, Belgium & representative offices in Bangkok, Jakarta & Kuala Lumpur. 2007: Amalgamated Sangli Bank-headquartered in Sangli, in Maharashtranwhich had 158 branches in Maharashtra and another 31 in Karnataka. 2008: Launched I Mobile - banking transactions through mobile. US Federal Reserve permitted ICICI to establish branch at New York and Frankfurt. 2009: ICICI NRI Services wins Asian Banker Award for Excellence in Business Model Innovation 2010: ICICI Bank announces Base Rate (“I-Base”) at 7.50% p.a. Announced merger with Bank of Rajasthan with it through share-swap in a non-cash deal that values the Bank of Rajasthan at about Rs 3,000 crore. The Monetary Authority of Singapore (MAS) has today granted Qualified Full Banking (QFB) privileges to ICICI Bank Singapore branch. Source:- ICICI bank website
44. Company Details ICICI Bank's equity shares are listed in India on Bombay Stock Exchange National Stock Exchange American Depositary Receipts (ADRs) listed on the New York Stock Exchange (NYSE). Branches 2016 , ATMs 5,219 Employees 34,596 Presence in 18 countries including- - Branches in U.S, Singapore, Bahrain, Hong Kong - Subsidiaries in United Kingdom, Russia and Canada Excellent. Use the points from the previous slide second part here. Source:- ICICI bank website
46. Icici bank standing in its peer group Excellent.Market cap should have exact date. Also, please understand the significance of these numbers. You should know what is being presented. Source:- RBI Database Ratio represent a strong foundation and aggressive growth strategy for ICICI. ICICI is still out performed by Axis bank in most margins.
47. Icici bank standing in its peer group Excellent.Market cap should have exact date. Also, please understand the significance of these numbers. You should know what is being presented.. Understand these terminologies. Source:- RBI Database ICICI has high percentage of non-performing assets in its peers. For ICICI, CAR is higher than its closest competitors; Axis and HDFC bank.
49. Revenue from has been increased to more than 3 times from 2006 to 2010 and is still growing at acceptable pace, however pace has gone down in 2010 There is negative growth in terms of domestic revenues and needs to take care upon domestic industry. BoR acquisition can help Geographical revenue Segmentation Index Good but the table can be made to look more analytical. All numbers to be in one decimal place. Source:- ICICI Annual Report Computed
50. In last years share of retail banking is shrinking due to inclusion of various other segments Venture fund management has added another revenue potential Total banking revenue has always ahead of other non banking revenue taking together(all insurance, Venture fund, others) Segmental Contribution in Revenue Good. Analysis can be done as banking and non banking revenues and their respective sub segments.
51. Retail band wholesale banking is growth segment and grown about 77% in 2010 Treasury and investment banking business is also increasing at the pace and due to growing market it is expected to grow in the same way Venture fund provided new dimension and its growth can be significant in further years Other are also growing at good pace but could not be identified Segmental Growth in Revenue Looks confusing.. Analysis can be done as banking and non banking revenues and their respective sub segments. Source:- ICICI Annual Report Computed
52. Life insurance recovered from the losses and earned profits Contribution of wholesale banking is going down Retail banking earned negative figure which can be a concern as it form major par of revenues Treasury and investment banking can be a star product for the future Segmental Contribution in PBT Good. Analysis can be done as banking and non banking revenues and their respective sub segments.
53. Negative profit of retail banking are very much disastrous as it is major revenue base Wholesale banking growth continued and forms major revenues which is strong point for the company General insurance growth is just base effect but growth chances are high Venture fund growth in PBT is less then in revenues which is around 55% Segmental Growth in Profits Good. Analysis can be done as banking and non banking revenues and their respective sub segments.
54. Segment Focus ICICI is focusing on SME under wholesale segment. Strategies & Initiatives: SME enterprises CEO Knowledge Series- a platform to mentor and assist entrepreneurs. SME Enterprises Toolkit- an online business & advisory resource for SME Emerging India Awards- SME recognition platform ICICI is also focusing on Rural Banking under retail segment. Strategies & Initiatives: Offering micro-credit through micro financing institutions(MFI’s),micro-insurance and micro-investment products. Financial inclusion through business correspondents, farmer financing and integration of agri-value chain. Good. Relook at this slide as this is the base for forecasting in the financial modelling.
59. Want to stabilize in both domestic as well as foreign segment as especially in foreign they had a huge impact of recession and hence stabilization is their strategy
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61. Financials and Trends Segmental Charts on the Basis of Business OK but 1-2 more analysis points should be given Source:- ICICI Annual Reports 08, 09, 10 Source:- ICICI Annual Reports 08, 09, 10 Decline in treasury and other banking venture due to economic slowdown.
62. Financials and Trends Segmental Charts on the Basis of Geography Good. Source:- ICICI Annual Reports 08, 09, 10 Source:- ICICI Annual Reports 08, 09, 10 Foreign- emphasis was more on retail segment as ICICI strategy was to build more retail deposit franchise. Also was seeking to build stable wholesale funding. Domestic- emphasis was given to small and medium scale enterprises as it adopted cluster financing approach to fund small enterprises. In retail loan segment emphasis was given more to Home loan and vehicle loan.
