1. Indian Banking Industry An analysis
Institute for Technology and Management, Kharghar
August 2010

2. Agenda Section I Banking industry overview Section II
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

3. Section I: Banking Industry overview
Global Banking overview

4. Global banking industry overview
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.

5. Source:- Brand Finance Global banking 500 report 2010
‘Indian banks need to recognise their inherent brand value potential’…….
Global
Ranking
Banking
Rank
Bank
Domicile
Market cap
(In US $ millions)
rating
2010
2009 8 7 1
HSBC UK
193794
131577
AAA+ 45 77 10 14
Barclays
56,155
19,998 AA A-
106
138 24
Standard Chartered
51,466
16,820
AAA-
AA+ 36 54 5
Citi US
70,105
36,498 A+ A 57 69 11
JP Morgan
102,425
48,571
AA-
100
139 23 25
Morgan Stanley
45,931
15,399
187
344 70
SBI
India
29,809
9,834
440 -
110
ICICI
19,807
7,893
141
153
HDFC
15,213
7,785
Source:- Brand Finance Global banking 500 report 2010
20 Indian banks in the Brand Finance® Global Banking 500,
SBI became the first Indian bank to break into the world’s Top 50 list, its brand value tripled
ICICI Bank, the country’s largest private bank, joined it in the Top 100 list with a 130% jump in its brand value

6. Indian Banking overview

7. ‘Banks in India with stand the crisis’…….
Particulars
2008
2009
Change
(%)
No. of banks (nos.) 79 78
(1.3)
Net worth (` mn)
39,940
47,080
17.9
Deposits (`mn)
420,260
519,700
23.7
Advances (` mn)
313,540
383,890
22.4
NIM (%)
4.1
4.4
7.3
RoA (%)
1.1
0.0
CAR (%)
13.0
14.0
7.7
Net NPA / adv (%)
1.0
5.0
Opt. Profit (` mn)
83,590
1,11,349
33.2
Net Profit (` mn)
42,726
52,771
23.5
Net Int. Margin (` mn)
1,00,481
1,25,596
25.0
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.

8. Economic overview

9. ‘Economic growth fueling banking performance’…
OPERATING ENVIRONMENT
FY 09
High volatility
Economic slowdown, Weak business sentiment
Countered by fiscal and monetary measures
FY 10
Revival in growth
Abundant liquidity
Current Scenario (FY 11)
Strong growth momentum, Policy tightening
Credit demand expected to increase in retail & infrastructure sectors
Industrial production revives; average growth of 10.4% in FY10 against 2.7% in FY09
Capital goods growing at double digit point to revival in investment activity
Capacity utilisation survey of RBI indicates utilisation close to pre-crisis levels
Exports growing since November ‘09
Foreign Capital Inflows
Net FII inflow of USD 30 bn in FY10 as against net outflow in FY09
Rupee appreciation of 11.4% vis-à-vis US dollar during FY10

10. ‘Development in new sectors ensuring excellent future for banks’……
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

11. Income and expense growth rate of SCBs in India
Interest
income
Other*
Income
Total
expenses
Operating
Net profit
CAGR
( to
25%
21%
24%
30%
15%
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

12. Banking Segmention

13. Indian Banking Industry Segmentation
Reserve Bank of India
Scheduled Commercial Bank
Commercial Bank
Private Sector (22)
Old (15)
New (7)
Public Sector (26)
SBI Group (6+1)
Nationalised (19)
Foreign (24)
Regional rural (6)
Co-operative Bank
Urban Bank
State Bank
Non Scheduled Commercial Bank
Local Area Bank
Indian Banking Industry Segmentation
Source:- RBI Database
PSU banks majority stakes are held by the Government of India(GoI) & make up the largest category in the Indian banking system.
Regional Rural Banks (RRBs); established during & are owned jointly by the Central Government, concerned State Government and a sponsoring public sector commercial bank.
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’.
Foreign banks have their registered and head offices in a foreign country but operate their branches in India.

14. Growth Drivers

15. Growth Drivers to banking industry
Industrial Development
Rapid Economics Growth
Increase in Disposable income
Retail demand
Growth Sectors
Infrastructure
Telecom
Rural Markets
Export/Imports
Consolidation and Expansion
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 35% -3yr CAGR.
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

16. Competitive Landscape

17. Competitive Landscape of Indian banking industry
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.

18. Profits and income of bank group wise
Source:- RBI Database
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.

19. Banking Regulation

20. Banking regulators
Banking companies in india is governed by two main legislations
Banking regulation act 1949
The reserve bank of india act 1934
Reviewing 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

21. 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.

22. Current policy rates
Average Credit-Deposit ratio of the banking industry is -70 %
CAR: Capital Adequacy Ratio : 9%
CRR – 6 %, SLR – 25 %
Base Rate: %
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.
Source:- RBI

23. Agenda ICICI bank profile 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

24. Business Description and segmentation
ICICI Bank Limited, a private sector banking company engaged in providing a range of banking products and financial services
Investment Banking
Commercial Banking
Retail Banking
Private Banking
Asset Management
Mortgages
Credit Cards
Others
Business 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
Source:- ICICI bank website

25. Company History and Milestones
ICICI. incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry.
ICICI established Banking Corporation as a banking subsidiary
ICICI acquired Bank of Madura(est. 1943) was a Chettiar bank, Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.
ICICI Ltd merged into ICICI Bank Ltd in the year
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

26. Source:- ICICI bank website
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
Source:- ICICI bank website

27. ICICI BANK
Founded:
Headquarters:- ICICI Bank Ltd., ICICI Bank Towers, Bandra Kurla, Mumbai, India
Products: Loans, Credit Cards, Savings, Investment vehicles, Insurance
Revenue ▲ USD billion

28. ICICI Bank is also the largest issuer of credit cards in India
About ICICI BANK
ICICI Bank is India's largest private sector bank by market capitalisation and second largest overall in terms of assets.
The Bank also has a network of 1,700+ branches and about 4,721 ATMs in India and presence in 18 countries, as well as some 24 million customers.
ICICI Bank is also the largest issuer of credit cards in India

29. Prepaid Mobile Recharge Trade MIS Top Online Scams Salary ebook
Service by icici bank
Internet Banking
Bill Pay
Smart Money Order
Prepaid Mobile Recharge
Trade MIS
Top Online Scams
Salary ebook
Online Bill Payment

30. History
1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.

31. History
2001: ICICI acquired Bank of Madura . Bank of Madura was a Chettiar bank and had acquired Chettinad Mercantile Bank and Illanji Bank in the 1960s.
2002: The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank.

32. HIstory
2008: The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch.
2009: ICICI made huge changes in its organistion like elimination of loss making department and restreching outsourced staff or renegotiate their charges in consequent to the recession.

33. Peer Group Analysis

34. Icici bank standing in its peer group
Company
Market Capitalisation
(in ` crores)
Revenue
HDFC
97,771.62
12,194.20
ICICI
100,937.86
15,592.00
AXIS
54,806.57
8,950.30
KOTAK MAHINDRA
26,885.34
3,255.62
Source:- RBI Database
BANKS ->
AXIS BANK
LIMITED
HDFC BANK
LTD.
ICICI Bank
KOTAK
MAHINDRA
BANK LTD.
KARUR VYSYA
BANK LTD
2008
2009
RATIOS %
Credit - Deposit Ratio
68.09
69.48
62.94
69.24
92.30
99.98
94.69
106.27
75.07
68.93
Investment - Deposit Ratio
38.46
39.47
49.02
41.19
45.60
47.20
55.66
58.23
28.10
31.23
Ratio Of Net Interest Margin To Total Assets
2.83
2.87
4.66
4.69
1.96
2.15
5.08
5.33
2.66
2.59
Return on Assets(in %)
1.24
1.44
1.32
1.28
1.12
0.98
1.10
1.03
1.63
1.49
Return On Equity
17.60
19.12
17.74
17.17
11.63
7.77
11.19
7.36
18.49
18.57
Ratio represent a strong foundation and aggressive growth strategy for ICICI.
ICICI is still out performed by Axis bank in most margins.

35. Icici bank standing in its peer group
AXIS BANK
LIMITED
HDFC BANK
LTD.
ICICI Bank
KOTAK
MAHINDRA
BANK LTD.
KARUR VYSYA
BANK LTD
2008
2009
RATIOS %
Capital Adequacy Ratio - Tier I
10.17
9.26
10.30
10.58
11.76
11.84
14.46
16.13
12.11
14.40
Capital Adequacy Ratio - Tier II
3.56
4.43
3.30
5.11
2.20
3.69
4.19
3.88
0.47
0.52
Net NPA as % to net Advances
0.42
0.40
0.63
1.55
2.09
1.78
2.39
0.18
0.25
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.

36. Segmental Analysis

37. Geographical revenue Segmentation Index
Domestic
growth % (yoy)
Foreign
Growth% (yoy)
Base year Revenue
(INR Cr)  
 1404
2006(Base) 1
2007
1.158 16
1.444 44
2008
2.466
113
1.997 38
2009
1.499
(39)
2.776 39
2010
1.237
(17)
3.177 14
Source:- ICICI Annual Report Computed
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

38. Segmental Contribution in Revenue
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)

39. Segmental Growth in Revenue
FY07
FY08
FY09
FY10
Retail Banking -
94%
77%
Wholesale Banking
99%
78%
Consumer & Commercial Banking
154%
Treasury/ Investment banking
191%
331%
101%
83%
Other Banking Business
161%
Total revenue from Banking
162%
246%
80%
Life Insurance
115%
112%
General Insurance
121%
107%
Insurance
190%
Venture Fund Management
53%
Others
168%
1132%
119%
Source:- ICICI Annual Report Computed
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

40. Segmental Contribution in PBT
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

41. Segmental Growth in Profits
FY09
FY10
Retail Banking (Consumer) 5%
-2297%
Wholesale Banking (Commercial)
94%
107%
Treasury/ Investment banking
405%
210%
Other Banking Business
396%
127%
Life Insurance
57%
-32%
General Insurance 0%
58633%
Venture Fund Management -
37%
Others
95%
116%
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%

42. 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.
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.

43. New Segment and its impact
Venture capital
Contributing positive to revenues
Growth in revenue is as high as 57%
Growth in PBT however, is 37% only
Provide good growth as market is growing for the segment with the new industrial transformations and entrepreneurial age
Future plans
Focus on stability and recovery of the segment with negative growth and profits
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
To harness the potential of current segments rather than hitting in dark

44. Segmental Charts on the Basis of Business
Financials and Trends
Segmental Charts on the Basis of Business
Source:- ICICI Annual Reports 08, 09, 10
Source:- ICICI Annual Reports 08, 09, 10
Earning in retail banking shows decline as well as in whole sale banking.

45. Segmental Charts on the Basis of Business
Financials and Trends
Segmental Charts on the Basis of Business
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.

46. Segmental Charts on the Basis of Geography
Financials and Trends
Segmental Charts on the Basis of Geography
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.

47. Dividend per Share & Earning Per Share
Financials and Trends
Dividend per Share & Earning Per Share
Year
EPS
DPS
2006
28.55
8.5
2007
34.59 10
2008
37.37 11
2009
33.76
2010
36.10 12
Source:- ICICI Annual Report Computed
The earning per share and dividend paid out per share have shown steady rise. Represents strong earning potential and has a good image in the market.

48. “Banking stock show strong growth…”

49. Thank You Presented By: Group 4 71 Ajay Garg 50 Arun Thakur
Roll No Name
71 Ajay Garg
50 Arun Thakur
23 Ashish Shrivastava
137 Goldi
37 Gunjan Agarwal
175 Pooja Shugani
113 Ruchir Masand
22 Yash Ahuja