Biz Wealth Creator
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Biz Wealth Creator

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    Biz Wealth Creator Biz Wealth Creator Document Transcript

    • %Bizness & Read on ................................... Wealth Creator of India foreign agencies interested in being part of the story and, ICICI Bank therefore, raising money for its activities was never a problem. In 1961 the first West German loan of DM 5 million came in from - Blazing A Trail of Success Kredenstalt and very soon the company got into raising money from the Indian market by issuing debentures to the tune of Rs 6 crore - KenSource which was largely oversubscribed. ) It started expanding its reach by s we approach the initiative of the World Bank and setting up regional offices in close of FY05, it representatives of the Indian different parts of the country and would be pertinent industry, the Union government the first two came up in Kolkata to take a look at one set up the Industrial Credit and and Chennai in 1969. Further, it of the most Investment Corporation of India set up a second entity to look after astounding success stories in the under the chairmanship of Mr A. its merchant banking activities and financial services sector, one that Ramaswami Mudaliar. The in 1972 Mr H T Parekh was has in fact changed the way intention of creating a appointed at the helm of ICICI’s Indians bank today. It’s about the development financial institution affairs. It was then that the bank which triggered cut-throat was to provide medium-term and foundation was laid for another competition in the sector and long-term project financing to successful financial institution, the transformed itself from merely Indian businesses. Very quickly Housing Development Finance being a government-regulated the ICICI emerged as a major Corporation, whose public issue institution formed with the intent source of foreign currency loans to was managed by ICICI. In 1982, of providing finance to institutions the Indian industry. The institution ICICI became the first ever Indian to one which takes care of every not only got funding from the institutional borrower to have small finance-related need of the World Bank and other multi-lateral raised money in European retail consumer as well as huge agencies but was also one of the currency and shortly after that the financial requirements of large first among Indian companies to company commenced its leasing industrial houses. We are referring have raised money from the business. In 1985, Mr. N Vaghul to the ICICI group which is present international markets. was appointed Chairman & today in almost every sphere of The success of ICICI got many Managing Director. ICICI was the financial services either singly on in the form of joint ventures. How ICICI Bank, Head Office Mumbai did ICICI manage to emerge as one of the leading financial services companies in the country? Who propelled the company to such a meteoric rise? And what does its future look like? Finding answers to these questions makes a lot of sense at a time when India is poised for a big boom in the financial services sector. The journey so far Way back in 1955, at the
    • %Bizness & Read on ................................... first institution to receive ADB first to move away from Income loans and make a public issue in a singular prime Dec-03 Dec-04 Growth the Swiss capital market. ICICI in lending rate (PLR, the Int / Disc on association with UTI set up the benchmark rate at Adv / Bills 1,466.40 1,709.91 17% Credit Rating Information Services which money is lent) to Income from of India Limited (CRISIL), India’s a three-tier PLR Investments 651.90 589.42 -10% first professional credit rating structure. It moved with agency. It also promoted the Interest on the times by adopting Shipping Credit and Investment balances 36.29 46.70 29% its initials ICICI as its Company of India Ltd (SCICI), proper name. Moving Other Interest which it later merged with itself. aggressively forward in income 65.32 32.33 -51% In 1987, the Commonwealth a de-regulated economy Total Interest Development Corporation (CDC) it took over companies Income 2,219.91 2,378.36 7% granted the first loan of £10 million like ITC Classic Finance Other Income 813.03 890.73 10% for financing projects in India. and Anagram Finance TOTAL Soon it promoted the TDICI– and also introduced a INCOME 3,032.94 3,269.09 8% India’s first venture capital new logo symbolising a company. In 1993, ICICI floated the common corporate ICICI Securities identity for the ICICI reverse merger with its banking Team ICICI and Finance group. In 1999, the subsidiary ICICI Bank in January Mr N. Vaghul, Company Ltd in company launched 2002, paving the way for creating Chairman association with its retail financing a single umbrella financial services Mr Uday M. Chitale J P Morgan and initiatives and company. It also brought in all followed this up commenced giving other subsidiaries under the fold of Mr P.C. Ghosh with the creation out car loans, home ICICI Bank. It is today the second Mr S.B. Mathur of ICICI Asset loans and loans for largest bank overall and the largest Mr L. N. Mittal Management consumer durables. private sector bank in India. With Mr Anupam Puri Company. In The shift towards a a network of 500-odd branches and 1994, it set up Mr Vinod Rai retail thrust for extension counters and over 1800 ICICI Bank, a growth thus began ATMs, ICICI Bank offers a wide Mr Somesh R. Sathe full-fledged and today drives the range of banking products and Mr P.M. Sinha retail bank. It group’s progress into financial services to corporate and Mr M.K. Sharma became the first the future. It listed on retail customers. Devising novel Prof. Marti G. Indian company the New York Stock delivery channels, it has also Subrahmanyam in the Indian Exchange and also specialized subsidiaries and financial sector issued American affiliates in the area of investment Mr V. Prem Watsa to raise GDR. But Depository Shares. banking, life and non-life Mr K.V. Kamath, ICICI really got ICICI went in for a insurance, venture capital and Managing Director & Chief aggressive asset management. On the Executive Officer under the international scene, it has Ms Lalita D. Gupte, stewardship of established its International Jt. Managing Director Mr. K V Kamath, Banking group to cater to the cross Ms Kalpana Morparia, the present border needs of clients, leveraging Dy Managing Director Managing on its domestic banking strengths Director and Ms Chanda Kochhar, to offer products internationally. It CEO of the Executive Director currently has subsidiaries in the company. US, China, UAE and Bangladesh. Dr Nachiket Mor, Dr Nachiket Mor, ICICI was the Latest financial performance Executive Director Executive Director
    • %Bizness & Read on ................................... 4% on a YoY basis to provision (up 92% on a YoY basis) Rs 1645.21 crore (Rs to Rs 145.31 crore (Rs 75.60 crore) 1706.67 crore). has kept the net profit growth However, this trend under a check. Net profit for the is not likely to quarter was Rs 517.68 crore (Rs continue much 440.10 crore) up 18% on a YoY longer as can be seen basis. from the 6% rise in Outlook the interest cost that it reported over the Total advances as at the end of September quarter. the quarter were Rs 76,092 crore and parameters (Rs 57,812 crore) up 32% from the Spreads After having reported a year ago period. The bank has stagnant September quarter, ICICI A good growth in the core maintained its growth momentum Bank has put up fairly decent income resulting in a decent in the retail segment. The total performance in the December topline growth combined with home loan disbursements during quarter with a total income of Rs lower interest cost has improved the April-December period were 2,378.36 crore (Rs 2,219.91 crore), spreads on a YoY basis. At Rs Rs 13,147 crore. In the credit cards up 8%YoY. The strict cost control 733.15 crore (Rs 513.24 crore) business too it has been growing measures have once again pepped overall spread was up 43% on a well with a base of over 3 million up its profitability. Total YoY basis. The spread as a cards at the end of December 2004, expenditure was up 6% YoY at Rs percentage also shot up to 31% the largest in India. Retail assets 3,751.41 crore (Rs 2,592.84 crore) from just 23% during the constitute around 61% of advances resulting in a 18% YoY rise in the corresponding quarter. and 54% of customer assets at the net profit to Rs 517.68 crore (Rs Sequentially, however, rising end of December. While retail 440.10 crore). interest cost has kept spreads loans have been a driving force of An improved topline comes on stagnant at 31% levels despite a 7% the banking sector credit growth, the back of a fundamental growth rise in the overall spread. there are signs of pickup in in its core activities. Interest/ industrial credit as well. While Margins discount on advances/bills was up seeking to fully leverage its 17% YoY to Rs 1,709.91 crore (Rs At Rs 852.66 crore (Rs 645.35 origination skills, the Bank also 1,466.40 crore) and this was crore), other operating cost was up focuses on syndication and supported by a 29% increase in 32% on a YoY basis but operating securitisation. Total deposits of the interest on balances. Income from profit managed to rise by 13% over bank at the end of the quarter were investments was down 10% YoY the corresponding quarter to Rs Rs 81,928 crore (Rs 60,872 crore) up while other interest income 771.22 crore (Rs 680.92 crore). 35% on a YoY basis. It has been slumped by almost 50%, restricting OPM inched up to 32% from 31% expanding its reach through the the overall interest income growth. during the same period last year. 505 branches (including extension Other income has played a major Profitability counters) against 470 branches at role in boosting ICICI’s topline. At the end of the preceding quarter. Rs 890.73 crore (Rs 813.03 crore), ICICI has been reducing its The Bank’s capital adequacy at other income was up 10% YoY. provisioning and at Rs 108.23 crore December 31, 2004 was 13.5% Interest Expended (Rs 165.22 crore) it was down 34% while net non-performing assets A focus on the retail segment on a YoY basis adding further has enabled private banks to keep strength to its overall profitability. constituted 2.3% of customer assets their interest cost on the lower side. Profit before tax rose by 29% on a against 4.7% during the For the December quarter ICICI YoY basis to Rs 662.99 crore (Rs corresponding period. Bank’s interest cost came down by 515.70 crore) but a higher tax
    • %Bizness & Read on ................................... Valuation The stock currently trading at Rs 350 levels discounts its December quarter annualised EPS of Rs 28.14 by 12 times while it discounts its 9 months annualised EPS of Rs 25.19 by a slightly higher 14 times. Financials Quarter Ended Dec-03 Sep-04 Dec-04 YoY Sequential Growth Growth Total Interest Income 2,219.91 2,230.52 2,378.36 7% 7% Other Income 813.03 835.40 890.73 10% 7% TOTAL INCOME 3,032.94 3,065.92 3,269.09 8% 7% Interest Expenses 1,706.67 1,545.31 1,645.21 -4% 6% Spread 513.24 685.21 733.15 43% 7% Operating Expenses 645.35 768.84 852.66 32% 11% Total Operating Expenses 2,352.02 2,314.15 2,497.87 6% 8% Operating Profit 680.92 751.77 771.22 13% 3% Other Provisions and Contingencies 165.22 194.70 108.23 -34% -44% Profit Before Tax 515.70 557.07 662.99 29% 19% Provision for taxes 75.60 114.99 145.31 92% 26% Profit After Tax 440.10 442.08 517.68 18% 17% Equity Capital 615.28 734.46 735.89 EPS 28.61 24.08 28.14 -2% 17% Spread (%) 23% 31% 31% Operating Profit Margin (%) 31% 34% 32% Net Profit Margin (%) 15% 14% 16% Other income / PBT (%) 158% 150% 134%