Post on 29-Jan-2015
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INDIAN BANKING SECTOR
1) Robust asset growth: Increase to USD1.5 trillion in FY12 from USD1.3 trillion
in FY10
2) Revenue increases: grew almost four-fold from US$ 11.8 billion to US$ 46.9 billion
3) Growing lending and deposit: Total lending and deposits have increased at CAGR
of 22.8 per cent and 21.2 per cent, respectively
4) Higher ATM penetration: Total number of ATMs in India have increased to
1,04,500 in 2012
5) Rising rural penetration: Due to Financial Inclusion Plan (FY10-13), the
banking connectivity in India increased more than threefold to 211,234 villages in
2013
Indian Banking Overview
Reserve Bank of India
Banks Financial Institutions
Scheduled CommercialBanks (SCBs)
Cooperative creditinstitutions
Public sector banks (27)
Private sector banks (22)
Foreign banks (41)
Regional Rural Banks (RRB) (62)
Urban cooperative banks(1,674)
Rural cooperative credit institutions (96,751)
Source: RBI - Reserve Bank of India, Aranca Research Note: The data on number of banks belongs to FY12
All-India financial institutions
State-level institutions
Other institutions
Indian Banking Sector GrowthGrowth in credit off-take over past few years (USD
billion)
Growth in deposits over the past few years (USD billion)
High growth of the Indian Economy
Favourable Demographics
Financial Inclusion(FI)
Private Banking and Wealth Management
Infrastructure Financing
Technology Innovation
Growth Drivers of Banking Sector
Basel III norms
Intensifying Competition
Increasing NPA
Licensing Requirement
Key Challenges
PEST Analysis on the Banking IndustryFactors Affecting the Industry
- Monetary Policy- Regulatory Framework- Budget & Budget Measures- Changes in interest rates
Political Factors Economic Factors
- More savings- More Capital Formation- Increase in productionof goods and Services
- Banking Channels
Social Factors
- Increase in population- Changes in lifestyle- Easy way of lending money- Exploring banking facilities inrural areas
Technological Factors
- Internet Banking- IT Services & Mobile Banking- Credit Cards- Improvement in efficiency
P E
S T
Michael Porter Five Forces
Licensing Requirements are very tough
Product differentiation very difficult
NBFCs, Mutu alfunds, Govern ment Securities and t-bills increasing rapidly
Large no. of banks
Low switching costs
High fixed costs
High exitbarriers
Banks have to meet many regulatory criteria, made by the RBI (fairly complex in India)
Provides homogenous kinds of services, so there is high chance that customers switch their banks
Threat
of n
ew
entran
ts
Threat
of n
ew
substitutes
Compe
titive
Rivalry
Bargaining
Pow
er of
Supp
liers
Bargaining
Pow
er of
Custom
ers
Entry Barriers in the Industry
High MediumLow
Indian Banking Industry : Not Attractive, unless differentiated
HDFC Bank
• Established in 1994, HDFC Bank is the second largest private sector bank in India. HDFC was amongst the first to receive an 'in principle' approval from the RBI to set up a bank in the private sector
• Divisions – Retail banking, Wholesale banking and Treasury operations
• Size – Number of branches and extensions: 3,062*• Number of ATMs: 10,743*• Number of employees: 66,076 as on March
31, 2012• Total assets: USD73.5 billion*
• Recognition –• Best Retail Bank in India (Asian Banker:2012)• Best Performing Bank – Private (CNBC
TV18:2011)
Net profit USD (millions)
Source: Company Annual Reports, Aranca ResearchNote: * - As on March 2013
Note: * CAGR - Compound Annual Growth Rate, CAGR*: is calculated in INR terms
FY13**: Data till February 2013
237.8
331.3467.7
614.3
818.0
1,076.5
1,235.8
FY07 FY08 FY09 FY10 FY11 FY12 FY13
CAGR: 31.6%
HDFC BANK
147.6264.1
452.7 485.4
753.0
936.4
998.0
FY07 FY08 FY09 FY10 FY11 FY12 FY13
Axis Bank
• Established in 1994, Axis Bank is the third largest private sector bank in India. The bank is capitalised to the extent of USD86.0 million with the public holding at 54.1 per cent as on 31st March, 2012
• Divisions – Treasury, retail banking, corporate/wholesale banking and other banking business
• Size – Number of branches and extensions: 1,947*• Number of ATMs: 11,245*• Number of employees :
31,738 31,2012• Total assets: USD63 billion*
as on March
• Recognition –• Most Productive Private
Sector (FIBAC:2011)Bankaward
• 3rd strongest bank in Asia Pacific region (Asian Banker: 2011)
Net profit USD (Millions)
Source: Company Annual Reports, Aranca Research Note: FIBAC - FICCI and Indian Banks’ Association Conference
* - As on December 2012
CAGR: 37.5%
AXIS BANK
Income break-up (FY13) Advances and deposits (USD billion)
Source: Company Annual Reports, Aranca Research
60%
34%
6%
Net Interest income
Fee Income
Other Income
8 12
12 17
22
3035
46
18
2429
3946
36
FY07 FY08 FY09 FY10
Advances
FY11 FY12 FY13
Deposits
ICICI BANK
•ICICI Bank was founded in 1954 as an Indian multinational bank and financial services company headquartered in Mumbai. Based on 2013 information, it is the second largest bank in India by assets and third largest by market capitalisation.
• Divisions – Treasury, retail banking, , life and non-life insurance, venture capital and asset management, corporate/wholesale banking and other banking business
• Size – Number of branches and extensions: 3350* & 10486 ATM’s & has a presence in 19 countries
•Recognition – •ICICI Bank Limited has been conferred the Best Remittance Business award •Ms. Chanda Kochhar, MD & CEO, was also featured in the Power List 2013 of 25 most powerful women in India by India Today, for the third year in a row
ICICI Bank