Indian banking sector

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  • 1. 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
  • 2. Reserve Bank of India Banks Financial Institutions Scheduled Commercial Banks (SCBs) Cooperative credit institutions 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
  • 3. Growth in credit off-take over past few years (USD billion) Growth in deposits over the past few years (USD billion)
  • 4.  High growth of the Indian Economy  Favourable Demographics  Financial Inclusion(FI)  Private Banking and Wealth Management  Infrastructure Financing  Technology Innovation
  • 5.  Basel III norms  Intensifying Competition  Increasing NPA  Licensing Requirement
  • 6. - Monetary Policy - Regulatory Framework - Budget & Budget Measures - Changes in interest rates Political Factors Economic Factors - More savings - More Capital Formation - Increase in production of goods and Services - Banking Channels Social Factors - Increase in population - Changes in lifestyle - Easy way of lending money - Exploring banking facilities in rural areas Technological Factors - Internet Banking - IT Services & Mobile Banking - Credit Cards - Improvement in efficiency P E S T
  • 7. Michael Porter Five Forces  Licensing Requirements are very tough  Product differentiation very difficult  NBFCs, Mutu al funds, Govern ment Securities and t-bills increasing rapidly  Large no. of banks  Low switching costs  High fixed costs  High exit barriers  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 Threatofnewentrants Threatofnewsubstitutes CompetitiveRivalry BargainingPowerofSuppliers BargainingPowerofCustomers Entry Barriers in the Industry High Medium Low Indian Banking Industry : Not Attractive, unless differentiated
  • 8. 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 Research Note: * - As on March 2013 Note: * CAGR - Compound Annual Growth Rate, CAGR*: is calculated in INR terms FY13**: Data till February 2013 237.8 331.3 467.7 614.3 818.0 1,076.5 1,235.8 FY07 FY08 FY09 FY10 FY11 FY12 FY13 CAGR: 31.6% HDFC BANK
  • 9. 147.6 264.1 452.7 485.4 753.0 936.4 998.0 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) Bank award • 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
  • 10. 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 30 35 46 18 24 29 39 46 36 FY07 FY08 FY09 FY10 Advances FY11 FY12 FY13 Deposits
  • 11. 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