Are indian banks in better shape than their global peers?

High profitsHike in lending ratesHike in deposit ratesEffect of lending ratesIncreased bank’s earning due to higher interest on loansImpact of deposit ratesRecognized at the time of maturityIndian banks vs. Global banks

Brief Comparison

Impact of subprime crisisBank’s losses from:Non-payment by corporates especially SMEs.Share market badly affectedICICI lost 13.76% to end at Rs. 757.40.HDFC faced change of -15.81%Switching over to retail banking from investment banking.High cut in CRR of 100 pointsRetail sector badly affectedInflation lowered.

Market ConditionHDFC BankICICI Bank

…contd…AXIS BankCITIGROUP

Subprime Crisis – A ComparisonICICI Bank CitibankLoss of $264m.Due to depreciation in the value of securities it bought in the international marketsMade additional $70m provisioning for lossesICICI face market change of -31.36% Loss of $18bn.Due to bad mortgage debt.Cut in dividend to 41% i.e. from 54 cents to 32 per share.Job cutting to 20,000Revenues fell 70% from a year earlier to $7.2bn

FDI vs. FIIIndian BanksGlobal BanksFII is good rather FDIFII also known as speculators or fair weather friends.FII inflows are called hot moneyBenefits: Reduced cost of capitalStability to balance of paymentsImproving market efficiencyStrengthening corporate governancePreferring FDI to FIIGot management interest (10% of voting stock in a company)Easy tool to enter a economy.Huge returns from developing countries like India.

Conclusion Comparing oranges with apples

Ratio

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