Ebay News 2004 7 21 Earnings

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  • Ebay News 2004 7 21 Earnings

    1. 1. Doing Business in India The Big Picture A Banker’s Perspective US – India Business Summit November 29, 2006 Dr. Anil K Khandelwal Chairman & Managing Director Bank of Baroda March 25, 2009 US – India Business Summit, 2006 1
    2. 2. Indian Economy – A Snapshot  One of the fastest growing in the world  Consumption growth fuelling economic growth – consumption expenditure forming 78% of GDP  Services sector contributing over 60% to GDP  Emerging as a hub of manufacturing excellence. new growth engines of Indian economy include IT, ITes, pharmaceuticals, bio- technology, nano technology, agri. businesses  Where forces of competition are at work  Innovation driving enterprises  Economic reforms well on course – entering second phase        March 25, 2009 US – India Business Summit, 2006 2
    3. 3. Indian Economy – A Snapshot  “Inclusive growth” occupying central place  High untapped potential in rural / agri - economy  Indian companies on acquiring spree and going global  Indian companies pursuing global best practices and producing world-class managers March 25, 2009 US – India Business Summit, 2006 3
    4. 4. Improved Ranking on Business Front World Bank – IFC Report on Doing Business in India for 2007 has given a higher rank to India compared to last year because : - India has cut the time to start a business from 71 to 25 days - Reduced the Corporate Income Tax rate from 36.59% to 33.66% - Supreme Court’s decision has made enforcing collateral simpler – easing access to credit - Reforms to Stock Exchange Regulations have toughened investor protection March 25, 2009 US – India Business Summit, 2006 4
    5. 5. The Indian Financial Sector  Robust financial system  Well established institutions  Strong supervisory system  Progressive integration of financial markets - banking, insurance, mutual funds, securities, commodities  High competition marked by innovation  High technology absorption  Rediscovery of the Indian customer  21st century customer driving innovations in banking  Banking plus financial services becoming the new offerings March 25, 2009 US – India Business Summit, 2006 5
    6. 6. The Indian Financial Sector  Alternate e-delivery channels becoming popular with Indian customers  Financial sector bracing to meet life cycle and life style needs of the great Indian middle class  “Cradle to Grave” becoming the new spectrum of life cycle needs  Banking graduating beyond traditional boundaries of vanilla banking  Indian customer demanding TOTAL FINANCIAL SOLUTIONS  Banking sector bracing itself to offer customized and structured products March 25, 2009 US – India Business Summit, 2006 6
    7. 7. The Indian Financial Sector  Banking sector entering newer areas like wealth management, private banking, doorstep banking, electronic banking, credit cards, investment advisory services, etc.  Indian banks in a war game to acquire and retain customers  Indian middle class being reached out and wooed by banks  Indian middle class and financial sector beginning to dream together and weave a new bond of relationship  Financial products like mutual funds, life policies, non-life policies competing with traditional banking products  Banking sector fully geared for helping Indian middle class realize its dream  Banking sector in good health – with low non-performing assets and prudential accounting standards in place  Indian banking entering the phase of consolidation (2nd Phase of Reform) – on way to acquire global size March 25, 2009 US – India Business Summit, 2006 7
    8. 8. Robust & Resilient Banking Sector  A free & open banking sector where most businesses are now covered at the market-determined rates  Full banking license system  Highly Stable Sector despite a series of Exogenous Shocks like the Asian Crisis, Sanctions due to Nuclear Explosions, Record High Oil Prices and Large Corrections in Stock Markets  Significant improvement in the Asset Quality: Net NPAs (%) have decreased from 8.1% at end-March 1997 to 2.0% at end-March 2006 despite tightening of prudential norms  Capital Adequacy Ratio (%) of the banking sector has increased from 10.4% at end-March 1997 to 12.8% at end-March 2006  Operating Expenses of SCBs have declined from 2.1% of Total Assets in 1992 to 1.8% in 2005 indicative of improved efficiency  Intermediation costs of SCBs have declined from 2.9% in 1995-96 to 2.1% in 2005-06 March 25, 2009 US – India Business Summit, 2006 8
    9. 9. Indian Banks – in good health…  Strong Regulatory & Supervisory system  RBI has strengthened prudential norms with respect to income recognition, disclosures and capital adequacy  India complies with BIS 26 norms of best practices of supervisory criteria, country risk & convertibility  Indian banks are well on road towards BASEL II compliance  Credit Deposit Ratio is increasing – PSB : 66.2%, Pvt. Banks : 76.3%  Bank credit is growing by about 30%  Indian banks compare favourably with its Asian peers in asset quality  Indian banking sector grew by 6 times in the last decade – from Rs. 5,984 bn in 1995 to Rs. 36,105 bn.  KYC norms and Anti Money Laundering regulations in force  Indian banks are serving the “Two Faces” of India – the Underprivileged, the Progressive & the Opulent – with equal aplomb March 25, 2009 US – India Business Summit, 2006 9
    10. 10. Indian Banks – in good health… • PSBs : 72%  About 70000 strong branch network – More • Pr.Bks : 19% than 60% presence in Rural areas • Fgn. Bks.: 7% • Others include UCBs, RRBs, LABs & NBFCs  Consistent growth in profitability – Spread is • Spread : 3.2% getting healthier – from 3.1% in 2004-05 to • CAR : 12.0% • ROA : 1.0%+ 3.2% in 2005-06 • Gross NPA : 3.34%  NPL Ratios compare favourably with global • Net NPA : 2.00% trends TRS Apr 01 – Apr 05 • PSU Banks : 61.2%  Consistently out-performing stock indices – • India Banking : 51.3% Total Return to Shareholders continues to be • Old Private : 40.0% • New Private : 33.9% attractive March 25, 2009 US – India Business Summit, 2006 10
    11. 11. Banks – Major Financiers of Growth  India has one of the strongest financial sector with low systemic risk  Upturn in economic activity is mirrored in the sustained growth in “Demand for Bank Credit”  Bank credit has increased sharply from 30% of GDP at end-March 2000 to 48% at end-March 2006  Non-food credit by SCBs increased by an average of 26.1% between 2002-2006 versus its long-term average of 17.8% from 1970 to 2006  Deployment of credit is quite broad-based with increasing flows going to infrastructure , SMEs, agriculture and retail sector (especially residential mortgages) during the past three years March 25, 2009 US – India Business Summit, 2006 11
    12. 12. Indian Banks in the Best of the League of Asian Peers According to Moody’s Investor Services Analysis :  Indian lenders have highest Return on Equity (ROE) in Asia (20.38%), followed by Indonesia (20.19%), New Zealand (18.83%), Japan (-6.42%)  Average gross bad loans as share of total loans – India (8.18%), Philippines (15.05%), Thailand (13.08%), China (11.80%) and Malaysia (9.73%)  Cost to Income Ratio in India at 44.56% is in line with the best regulated Asian countries like Singapore (44.15%), Taiwan (42.61%) and Hong Kong (40.05%) March 25, 2009 US – India Business Summit, 2006 12
    13. 13. Financial Sector Reforms – Going Ahead Requirements Fulfillments  Banking Regulations • Deregulated Interest rate • Greater freedom to banks • Significant steps towards Full capital • Account Convertibility  Credit & Recovery • SARFAESI Act 2002 • Debt Recovery Tribunal (DRT)  Payment Systems • Real Time Gross Settlements(RTGS) • Electronic Clearing System (ECS) • Electronic Fund Transfer (EFT) • Cheque Truncation - in the pipeline  Communications & Infrastructure • Internet Banking, E-Banking, On-line • Tax Payment / Utility Payments, • ATM, Mobile Banking March 25, 2009 US – India Business Summit, 2006 13
    14. 14. Significant Steps for Improvement… Area Status  Capital Norms - Min. Capital @ 9% as against 8% by BIS - Indian Banks are ahead in Basel II readiness – implementation road-map targets March 2009 - Min. Capital requirement for entry set @ Rs. 3 bn. for all banks in private sector  Credit Information - Credit Information Bureau of India Ltd - List of defaulters on RBI website  Financial Track record - No financial crisis – escaped contagion effect of South East Asian meltdown  Other Regulatory Initiatives - Strong Regulatory Practice & Prudence in place for “Managing Affluence” - Regulatory provisions to bring NBFCs & UCBs under uniform prudential norms March 25, 2009 US – India Business Summit, 2006 14
    15. 15. Indian Banks are on a high growth track… 1. Overall banking sector is growing by – 18% 2. Retail Sector (CAGR – 5 years) - Housing Loan : 50.% - Consumer Durables : 16% - Credit Card : 45% - Two Wheeler Loan : 31% - Car Loans : 26% - Other Personal Loans : 38% More than 25% of the Bank Loan Assets are in Retail sector ensuring high returns - likely to cross Rs. 5700 bn by 2010 March 25, 2009 US – India Business Summit, 2006 15
    16. 16. Indian Banks are on a high growth track… Online Banking in India . . . Growth of e-Commerce Transactions 2002-03 2003-04 2004-05 2005-06 2006-07 • Estimated 4.6* million Indian Internet users are Banking Online today 2500 • Indians paying bills online is expected to 2000 increase from the current 0.3 million in 2300 1500 2005-06 to 1.8 million by 2007-2008. 1180 Rs. CR • E-commerce transactions will cross the Rs 1000 570 2000 crore mark (2006-2007) which 500 255 130 translates into an increase of over 300% 0 from financial year 2004-05. March 25, 2009 US – India Business Summit, 2006 16
    17. 17. Doing Business in India …  Is there any Untapped Potential in Indian Financial Market ?  What is the ‘Big Picture’ ? March 25, 2009 US – India Business Summit, 2006 17
    18. 18. The Big Picture… Consumption boom in India Consumer Loans / Mortgages / GDP(%) GDP(%) 40 60 37 58 35 50 30 India India 25 40 Thailand 36 Thailand 20 Malaysia 30 17 Malaysia 26 Taiwan 15 13 Taiwan 20 Korea 10 9 Korea 13 5 4 10 8 0 0 India Thailand Malaysia Taiwan Korea India Thailand Malaysia Taiwan Korea Other Retail Loans / GDP Credit Cards / GDP (%) (%) 140 121.9 45 41 120 40 100 India 35 82.4 India 30 Thailand 80 Thailand 25 Malaysia 60 Malaysia 20 17 Taiwan 16 Taiwan 40 15 Korea Korea 8 10 20 4 9.8 5 2.8 0.4 0 0 India Thailand Malaysia Taiwan Korea India Thailand Malaysia Taiw an Korea March 25, 2009each In of the US – India Business Summit, 2006 area, huge untapped potential left 18
    19. 19. The Big Picture… Mutual Funds – Global Perspective Mutual Funds as a % of GDP 100 87 90 80 72 70 60 50 Global Investment Fund Asset Pool 40 30 30 23 21 1600 20 13711396 1400 6 5 10 1200 0 Brazil UK US$bn India Korea USA Japan Australia 1000 800 635 600 468 493 512 399 344 400 274 177 200 77 44 11 1 0 Luxembourg Philippines Ireland UK Korea India Hong Kong Australia Singapore Zealand Italy Japan Taiwan France New Low Penetration – Indian industry still in early stages March 25, 2009 US – India Business Summit, 2006 19 Source : CLSA Asia Pacific Markets
    20. 20. The Big Picture… Insurance Penetration – Global Landscape Life premium/ GDP (%) Insurance density (US$ premiums per 10 8.9 8.32 9 7.27 capita) 8 7.08 7 6 4.14 5 3.6 3.51 4 2.53 Country Life Non Life 3 1.78 2 0.82 1 UK 3287 1311 0 Indonesia Australia Malasiya France Korea India China Japan South UK US Japan 2954 790 France 2474 1093 US 1753 2122 Australia 1366 1203 Non Life premium/ GDP (%) South Korea 1211 495 Malasiya 188 95 6 5.01 India 18 4.5 5 3.55 4 China 13 16 3.13 3.09 2.98 3 2.22 Indonesia 10 10 1.82 2 0.92 0.7 0.61 1 0 Indonesia Malasiya Australia Japan France South Korea India China US UK Low Penetration – A large potential still untapped March 25, 2009 US – India Business Summit, 2006 20 Source : Swiss Re Report 2005
    21. 21. The Big Picture… Growth of Card Spending in India . . . Growth of Credit and Debit Cards in India  Increasing trend of Plastic Spend  High Technology Banking Products 8 7  Need for value added services on card 6 products 5 7.3 NUMBER OF 4 CARDS IN Cr Growth of ATMs in India 3 4.9 30000 2 2.8 1 25000 0 2004 2005 2006 20000 15000  Larger Number of Access Points for No of ATMs Customers 10000  Convenience to customer is the key 5000  Shared network is the future 0 2000 2001 2002 2003 2004 2005 2006 March 25, 2009 US – India Business Summit, 2006 21
    22. 22. Wealth Management & Private Banking – New Growth Opportunities…  India - one of 10 fastest-growing population of HNWIs globally  There are at least 23 Indian citizens amongst the richest people on the planet  Non Resident Indians can invest in all Indian Asset Classes  No. of HNWIs in India – 100,000 (19.3% growth in 2005)  Salary increases in India – 13.9% is the highest in the world  Increasing Investment avenues – Art, Realty Funds, Commodities  Penetration level of wealth management services in India - 10% in comparison to European markets (60-90%)  The number of companies listed on the Bombay Stock Exchange, at more than 6,000, is second only to NYSE.  Each year 2,500 tonnes of gold is mined (fifth of the world's gold output.) and 3,500 tonnes is consumed, of which 1,000 tonnes is consumed in India alone. March 25, 2009 US – India Business Summit, 2006 22
    23. 23. The Big Picture… India is fast emerging as the “Back Office” of the World & the “Global Knowledge Hub”  100 Global Companies outsource from India  Top Global Banks are present in India  Largest talent pool  World class educational / professional institutions  Increasing Trade activities  Cost of operations – low March 25, 2009 US – India Business Summit, 2006 23
    24. 24. The Story Continues…  Savings Rate @ 29% is low – Offers high potential from an increasingly affluent community  Less than 40% of Indian household has a bank account  Bulging Middle Class – likely to exceed 300 mn  Only 2% of the Indian population have insurance cover  Less than 1% of the population is actively participating in the Stock market  Number of high net worth households (> Rs. 500,000) is likely to grow from 200,000 to 400,000 by 2010  Consumer Finance stands at about 2% to 3% of GDP as compared to 25% in European market  Real Estate Market is projected to touch USD 50 bn by 2008  SME Sector is catching up fast creating huge prospect of growth March 25, 2009 US – India Business Summit, 2006 24
    25. 25. Challenges Ahead….  Capital Requirements – to compete with Foreign banks in the post 2009 phase  Financial Inclusion – to remove imbalances in economic growth  Banking Sector Consolidation – for improving competitiveness – need for a clear road-map for “Managed Consolidation”  HR Challenges – Changing working conditions, re-skilling, compensation etc.  Coping with the massive technology adoption programme – change management – from employees’ as well as customers’ perspectives March 25, 2009 US – India Business Summit, 2006 25
    26. 26. Challenges Ahead….  High intermediation costs  Low Productivity  Better Corporate Governance – higher level of accountability  Improvement in productivity and efficiency in line with advanced markets  Transformation from Plain Vanilla banking’ to “multi-specialist” banking March 25, 2009 US – India Business Summit, 2006 26
    27. 27. Thank You March 25, 2009 US – India Business Summit, 2006 27

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