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DSP Nifty Private Bank ETF Presentation.pdf
1. *An open ended scheme replicating/ tracking Nifty Private Bank Index
^An open ended scheme replicating/ tracking Nifty PSU Bank Index
DSP NIFTY PRIVATE BANK ETF*
Banking on India’s growth & revival story!
NFO Period
17th – 21st
July
2023
DSP NIFTY PSU BANK ETF^
2. Synopsis – Why consider
Nifty Private Bank
Index
Nifty PSU Bank
Index
Long term & Structural
theme to play India growth
story
Tactical bet on turnaround
story
5. Share in index doesn’t commensurate with share in Profits
Data as on 30 June 2023. Source – DSP Internal, Bloomberg
17%
21%
Market capitalisation weight Profitability weight
Weight of Private Banks in Top 500 companies
Private banks have
made significant profit
contributions to market
capitalization-based
indices, however their
weight in these indices
is relatively lower. This
provides margin of
safety.
6. Balance sheet of private banks have become stronger
Source – RBI, CMIE. Data as on 31 Mar 2023
18.6%
14%
16%
18%
20%
2015 2016 2017 2018 2019 2020 2021 2022 2023
Capital Adequacy Ratio – Private Banks
Private banks have
been well-
capitalised to
support continued
deposit & credit
growth
7. Return Ratios have been improving
Source – ICICI Securities. Data as on 31 Mar 2023. ROE – Return on Equity, ROA – Return on Asset
15.2
16.3 16.3 16.3
14.1
13.1
10.8
9.5
6.5
10.9
12.6
15.4
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
ROE%
1.6
1.7 1.7
1.8
1.5
1.4
1.1
1
0.7
1.2
1.5
1.8
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23
ROA%
Sharp rise in private banks return ratios in the last 3 years
8. Valuations at attractive level when compared to history
Source – NSE. Data as on 28 Jun 2023
2.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Price to book Ratio
Average – 3.2
17.4
-5.0
5.0
15.0
25.0
35.0
45.0
55.0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Price to Earning Ratio
Average – 24.1
10. Net NPAs are at 8 year low
Source – CMIE. Data as on 31 Mar 2023. NPA – Non Performing Asset
2.3%
0%
1%
2%
3%
4%
5%
6%
7%
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
Gross NPA
0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Mar-15
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Sep-18
Mar-19
Sep-19
Mar-20
Sep-20
Mar-21
Sep-21
Mar-22
Sep-22
Mar-23
Net NPA
11. Source – MFIE. Data as on 28 Jun 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with
other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of the Scheme. It is
not possible to invest directly in an index.
Long term Performance
Nifty Private Bank Index has grown by
26x vs 12x by Nifty 50 Index in last 18
years
14.3%
0
5000
10000
15000
20000
25000
30000
Value of Rs.1000 invested on 01 Apr, 2005
Nifty Private Bank Nifty 50
19.5%
12. Median Rolling Returns
Nifty Private Bank
Index has
outperformed Nifty
50 Index on rolling
return basis across
duration
Source – MFIE. Data as on 30 Jun 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with
other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of the Scheme. It is
not possible to invest directly in an index.
11.9
17.8
Nifty 50 Nifty Private Bank
1 year
10.2
16.6
Nifty 50 Nifty Private Bank
3 year
11.2
17.8
Nifty 50 Nifty Private Bank
5 year
10.3
17.1
Nifty 50 Nifty Private Bank
10 year
13. PSU Banks – Revival story may have just started
14. PSU banks have started to outperform Private banks since 2021
Source – NSE. Data as on 30 Jun 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with
other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of the Scheme. It is
not possible to invest directly in an index.
-35%
-15%
5%
25%
45%
65%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
3 Year rolling returns
Nifty Private Bank Nifty PSU Bank
Decade of Private banks
outperformance
PSU banks
outperformance
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Nifty PSU Bank Index/ Nifty Private Bank Index
Advent of PSU bank
outperformance; Still a
long way to go given
historical average
15. Revival is across PSU banks
Source – Bloomberg. Data as on 30 June 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the
same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
100
150
200
250
300
350
Jun-22 Jul-22 Aug-22 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23
1 year Price returns of various PSU banks
BANK OF BARODA
BANK OF INDIA
BANK OF MAHARASHTRA
CANARA BANK
CENTRAL BANK OF INDIA
INDIAN BANK
INDIAN OVERSEAS BANK
PUNJAB & SIND BANK
PUNJAB NATIONAL BANK
STATE BANK OF INDIA
UCO BANK
UNION BANK OF INDIA
Nifty Bank
Price performance has been across PSU bank stocks
16. Revival is across PSU banks
Source – Bloomberg. Data as on 31 Mar 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute
any recommendation of the same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
ROE has been improving across PSU bank stocks in last 3 years
-10
-5
0
5
10
15
20
Stock level ROE%
Jun-20 Mar-21 Mar-22 Mar-23
-3.5
4.3
7.9
11
Return on Equity (RoE)
Overall Public sector Bank ROE
Mar-20 Mar-21 Mar-22 Mar-23
17. Net Interest Margins have improved in last 3 years
Source – RBI.
2.5
2.9 2.9
3.1
NIM %
Mar-20 Mar-21 Mar-22 Mar-23
Falling NPA &
higher recoveries
have improved NIM
of public sector
banks
18. NPAs of Public sector banks are at 9 year low
Data as on 31 Mar 2023. Source - RBI
5.0%
9.3%
11.7%
14.6%
11.6%
10.3%
9.1%
7.3%
5.0%
FY
2015
FY
2016
FY
2017
FY
2018
FY
2019
FY
2020
FY
2021
FY
2022
FY
2023
Gross NPA
3.9%
5.8%
6.9%
8.0%
4.8%
3.8%
3.1%
2.2%
1.2%
FY
2015
FY
2016
FY
2017
FY
2018
FY
2019
FY
2020
FY
2021
FY
2022
FY
2023
Net NPA
19. Representation of public sector banks is lower in broader Index
Source – NSE. Data as on 31 Mar 2023.
2.5% 2.6% 1.8% 13.8%
Nifty 500 Nifty 50 Nifty Midcap 150 Nifty Bank
% weight of Public sector bank
Weight of public sector bank
20. PSU bank merger has strengthened balance sheet & credit growth
Source – CMIE, RBI. Data as on 31 Mar 2023.
11%
12%
12%
12%
12%
13%
14%
15%
16%
FY
2015
FY
2016
FY
2017
FY
2018
FY
2019
FY
2020
FY
2021
FY
2022
FY
2023
Capital Adequacy Ratio
3.0
3.5
9.1
14.7
Credit Growth
Mar-20 Mar-21 Mar-22 Mar-23
21. Valuations
Source – Bloomberg. Data as on 30 Jun 2023. ROE – Return on Equity
-15
-10
-5
0
5
10
15
20
0
0.5
1
1.5
2
2.5
3
Price to book & ROE%
Nifty PSU ROE (RHS)
Average ROE – 13.2%
Average P/B – 1.4
Period ROE% P/B
2009-2015 13% 1.4
Current 11% 1.06
Current Valuation of
Nifty PSU bank Index
is below its historical
average. Given
increasing ROE,
sector is well-poised
for re-rating
Average – 1.12
23. Portfolio
Source: NSE. Data as on 30 Jun 2023. The sector(s)/stock(s)/issuer(s) mentioned in this document do not constitute any recommendation of the
same and the Fund may or may not have any future position in these sector(s)/stock(s)/issuer(s).
1.76
2.08
3.45
4.75
5.14
10.35
10.5
10.68
24.92
26.4
CITY UNION BANK LTD.
RBL BANK LTD.
BANDHAN BANK LTD.
IDFC FIRST BANK LTD.
FEDERAL BANK LTD.
KOTAK MAHINDRA BANK LTD.
AXIS BANK LTD.
INDUSIND BANK LTD.
ICICI BANK LTD.
HDFC BANK LTD.
Nifty Private Bank Index Nifty PSU Bank Index
0.39
1.46
1.57
1.64
2.55
5.11
6.49
7.48
11.77
11.78
20.61
29.13
PUNJAB & SIND BANK
UCO BANK
CENTRAL BANK OF INDIA
INDIAN OVERSEAS BANK
BANK OF MAHARASHTRA
BANK OF INDIA
INDIAN BANK
UNION BANK OF INDIA
PUNJAB NATIONAL BANK
CANARA BANK
BANK OF BARODA
STATE BANK OF INDIA
24. Index Features
Source: NSE. The above restrictions are based on Index methodology and the same may change in future by NSE.
Particular Nifty Private Bank Index Nifty PSU Bank Index
Universe Private Sector Banks Public Sector Banks
No of stock 10 12
Single stock exposure <33% <33%
Max exposure to top 3 stocks <= 62% <= 62%
Rebalancing Semi-Annual Semi-Annual
25. Numbers in ( ) indicates number of years of experience. The investment approach / framework/ strategy mentioned herein
are currently followed and the same may change in future depending on market conditions and other factors.
Portfolio Management / Dealing / Analysis
Aanchal Almal, CFA
(8 yrs)
Manager
Diipesh
Shah
(19 yrs)
Vice President
Anil Ghelani, CFA
(20 yrs)
Head of Passive
Investments & Products
Passive Investments Process
Review Opening Portfolios
and forecast Cash Flows
Review market liquidity to
manage impact costs
Pre - Trade Evaluation Investment Decision Post - Trade Analysis
Track mandatory and elective
Corporate Actions
Strategy for stock level
timing and pace of execution
Identify price movements and
evaluate stock lending
opportunities
Evaluate trade execution
Analyse Tracking Error
Ensure real time portfolio
weights align with underlying
index
Track Scheduled and Adhoc
rebalances
Monitor
real time market movement
Investment team & Process
In line with global best
practices - dedicated
passive investment
desk to increase focus
26. Concentration Risk
• This index provides exposure only to the Banking sector, leading to sector-level concentration risk
• This index has only 10-12 stocks, thereby leading to stock level concentration risk
High Volatility & Drawdown
• This fund can have higher volatility & drawdowns as compared to diversified equity funds
Underperformance
• This fund can underperform diversified equity funds in the short-term
Risks
27. Risk – Index can witness significant underperformance
Source – MFIE. Data as on 30 Jun 2023. Past performance may or may not be sustained in future and should not be used as a basis for comparison with
other investments. These figures pertain to performance of the index/Model and do not in any manner indicate the returns/performance of the Scheme. It is
not possible to invest directly in an index.
Year Nifty Private Bank Index Nifty PSU Bank Index Nifty 50 Index
2006 56% 18% 42%
2007 94% 73% 57%
2008 -57% -39% -51%
2009 105% 78% 78%
2010 37% 37% 19%
2011 -25% -41% -24%
2012 69% 43% 29%
2013 -2% -29% 8%
2014 70% 70% 33%
2015 -2% -32% -3%
2016 8% 5% 4%
2017 42% 25% 30%
2018 9% -17% 5%
2019 17% -18% 13%
2020 -3% -31% 16%
2021 5% 45% 26%
2022 22% 75% 6%
2023 4% -6% 5%
28. Disclaimers: This presentation / note is for information purposes only. It should not be construed as investment advice to any party. In this material DSP Asset Managers Pvt. Ltd. (the AMC) has used information that is publicly
available, including information developed in-house. Information gathered and used in this material is believed to be from reliable sources. While utmost care has been exercised while preparing this document, the AMC nor any
person connected does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient(s) before acting on any information
herein should make his/their own investigation and seek appropriate professional advice. The statements contained herein may include statements of future expectations and other forward looking statements that are based on
prevailing market conditions / various other factors and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such
statements. Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. The sector(s)/stock(s)/issuer(s) mentioned in this presentation do not
constitute any research report/recommendation of the same and the schemes of DSP mutual fund may or may not have any future position in these sector(s)/stock(s)/issuer(s). Large-caps are defined as top 100 stocks on market
capitalization, mid-caps as 101-250 , small-caps as 251 and above. Data provided is as on Jun 30, 2023 (unless otherwise specified) The figures pertain to performance of the index and do not in any manner indicate the
returns/performance of the Scheme. It is not possible to invest directly in an index. All opinions, figures, charts/graphs and data included in this presentation are as on date and are subject to change without notice. For complete
details on investment objective, investment strategy, asset allocation, scheme specific risk factors and more details, please read the Scheme Information Document, Statement of Additional Information and Key Information
Memorandum of respective scheme available on ISC of AMC and also available on www.dspim.com. There is no assurance of any returns/capital protection/capital guarantee to the investors in above mentioned Scheme. The
presentation indicates the strategy/investment approach currently followed by the above mentioned Scheme and the same may change in future depending on market conditions and other factors.
NSE Disclaimer: It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE nor does it certify
the correctness or completeness of any of the contents of the Draft Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of the ‘Disclaimer Clause of NSE’.
BSE Disclaimer: It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the SID has been cleared or approved by BSE Limited nor does it certify the
correctness or completeness of any of the contents of the SID. The investors are advised to refer to the SID for the full text of the Disclaimer clause of the BSE Limited.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer
29. DSP Nifty Private
Bank ETF
(An open ended scheme
replicating/ tracking Nifty
Private Bank Index)
This product is suitable for investors who are
seeking*
• Long-term capital growth
• Investment in equity and equity related
securities covered by Nifty Private Bank Index,
subject to tracking error.
*Investors should consult their financial advisers if
in doubt about whether the Scheme is suitable for
them.
SCHEME RISKOMETER BENCHMARK - Nifty Private Bank TRI
Product Labelling
DSP Nifty PSU Bank
ETF
(An open ended scheme
replicating/ tracking Nifty
PSU Bank Index)
This product is suitable for investors who are
seeking*
• Long-term capital growth
• Investment in equity and equity related
securities covered by Nifty PSU Bank Index,
subject to tracking error.
*Investors should consult their financial advisers if
in doubt about whether the Scheme is suitable for
them.
SCHEME RISKOMETER BENCHMARK - Nifty PSU Bank TRI
