India Banking Industry Report - H2, 2012
The Indian banking industry saw a period of consistent growth during the last decade, with banks along with their customers embracing robust systems and processes. The industry also recorded a consistent rise in the number of reporting offices in the last few years. With Reserve Bank of India stressing the policy of financial inclusion, there has been a renewed emphasis on rural expansion. However, a large part of the Indian rural population still remains without banks. This will require a need for Indian banks to raise the penetration levels of banking services in the country, especially in rural areas, home to more than 65% of the Indian population.
Following rapid growth in the past few years, the Indian banking industry experienced a slowdown in FY13. Persistent high inflation forced the RBI to maintain the benchmark interest rate at high levels. This slowed down the credit off-take in the country, which led to an industrial slowdown. Except agricultural loans and personal loans, all other sectors recorded subdued loan growth. High inflation also eroded domestic savings, resulting in a lower deposit growth. However, higher interest rates and volatile market conditions attracted more depositors towards the high yielding and risk free term deposits of scheduled commercial banks. The prevailing adverse economic conditions deteriorated the asset quality of commercial banks, particularly public sector banks. High interest rates during the period led to a sharp increase in non-performing assets in public sector banks, bringing their profitability under pressure. The Indian government has embarked upon a need-based recapitalization of public sector banks so that they can comply with Basel III norms. The norms will be fully phased in by March 31, 2018.
In a recent development, the Reserve Bank of India finalized the guidelines on licensing of new banks in the private sector. It also invited applications for licenses from eligible promoters with a cut-off date of July 1, 2013. Hence, the long term outlook for the Indian banking sector is stable because of a large unbanked population, rising per capita income and a growing middle class. Emergence of new players and technology upgrades will further add to the growth of this sector.
Key Points:
Following rapid growth in the past few years, the Indian banking industry experienced a slowdown in FY13. Persistent high inflation forced the RBI to maintain the benchmark interest rate at high levels. This slowed down the credit off-take in the country, which led to an industrial slowdown. Except agricultural loans and personal loans, all other sectors recorded subdued loan growth. High inflation also eroded domestic savings, resulting in a lower deposit growth. However, higher interest rates and volatile market conditions attracted more depositors towards the high yielding and risk free term deposits of scheduled commercial banks. The prevailing adverse economic conditions deteriorated the asset quality of commercial banks, particularly public sector banks. High interest rates during the period led to a sharp increase in non-performing assets in public sector banks, bringing their profitability under pressure. The Indian government has embarked upon a need-based recapitalization of public sector banks so that they can comply with Basel III norms. The norms will be fully phased in by March 31, 2018.
In a recent development, the Reserve Bank of India finalized the guidelines on licensing of new banks in the private sector. It also invited applications for licenses from eligible promoters with a cut-off date of July 1, 2013. Hence, the long term outlook for the Indian banking sector is stable because of a large unbanked population, rising per capita income and a growing middle class. Emergence of new players and technology upgrades will further add to the growth of this sector.
Key Points:
- As of March 31, 2012, total assets of Indian scheduled commercial banks were around INR 83tn (USD 1.5tn). In the period 2007-2012, total assets of the scheduled commercial banks grew at a CAGR of 19.1%.
- In January 2013, the Reserve bank of India (RBI) cut the cash reserve ratio (CRR) by 25 basis points to 4% to infuse an amount equivalent to INR 180bn in the banking system. Since January 2012, the CRR has effectively been cut by 2% points which has infused a liquidity equivalent to INR 1,325 bn into the banking system. RBI used it as an alternate route to revive growth in 2012.
- In December 2012, total loans and advances of the banking system grew by 17.6% year on year. Investments grew by 14.4% while balances with banks and money at call or short notice grew by 1.7%. Balances with RBI registered a steep decline of 15.2% as a result of reduction in the CRR rate.
- Total deposits of scheduled commercial banks grew by 11% year on year at the end of December 2012, much below its long term growth trend of 19%. High inflation caused an erosion in domestic savings, resulting in subdued growth in deposits.
1. INDUSTRY PROFILE
1.1 Sector overview
1.2 Sector size
1.3 Competitive landscape
1.4 Environmental scanning
2. MARKET TRENDS AND OUTLOOK
2.1 Key economic indicators-India
2.2 Monetary policy
2.3 Assets and liabilities
2.4 Loans and advances
2.5 Investments
2.6 Deposits
2.7 Borrowings
2.8 Capital adequacy
2.9 Asset quality
2.10 Net interest margin
2.11 Profitability
3. LEADING PLAYERS & COMPARATIVE MATRIX
3.1 Leading Players
3.1.1 State Bank of India
3.1.2 HDFC Bank
3.1.3 ICICI Bank
3.2 Comparative Matrix
3.3 SWOT analysis
4. TABLES & CHARTS
Table 1: List of major scheduled commercial banks operating in India
Table 2: Key features of the guidelines on licensing of new banks
Table 3: Priority sector lending targets and sub-targets
Table 4: Basel III implementation draft guidelines issued by RBI
Table 5: Balance sheet parameters
Table 6: Valuation matrix
Chart 1: Number of reporting offices-All commercial banks
Chart 2: Reporting offices by location
Chart 3: Number of commercial banks in India
Chart 4: Reporting offices by type of banks
Chart 5: Total assets of the scheduled commercial banks
Chart 6: Asset share by type of banks-FY12
Chart 7: India's top ten banks in terms of assets
Chart 8: Current account deficit and fiscal deficit
Chart 9: Population served per office
Chart 10: Quarterly GDP growth rate-India
Chart 11: Average Monthly USD to INR Exchange Rate
Chart 12: Inflation during calendar year 2012
Chart 13: Repo rate
Chart 14: Cash reserve ratio
Chart 15: Breakup of assets of Scheduled Commercial Banks
Chart 16: Breakup of liabilities of Scheduled Commercial Banks
Chart 17: Scheduled bank's asset position
Chart 18: Scheduled bank's liabilities position
Chart 19: Total loans and advances disbursed by the SCBs
Chart 20: Advances approved by sectors
Chart 21: Sectoral deployment of gross bank credit
Chart 22: Y/Y growth in credit-Sector wise
Chart 23: Deployment of bank credit based on industry type
Chart 24: Y/Y growth in credit-Industrial segments
Chart 25: Deployment of credit in different segments of services sector
Chart 26: Y/Y growth in credit-Segments of service sector
Chart 27: Deployment of personal loans in different segments
Chart 28: Y/Y growth in credit-Personal loan segments
Chart 29: Priority sector lending
Chart 30: Y/Y growth in credit-Priority sectors
Chart 31: Total investments done by SCBs
Chart 32: Breakup of investments done by SCBs
Chart 33: Total deposits in SCBs
Chart 34: Type of deposits of SCBs
Chart 35: Deposits during last five years
Chart 36: Ratio of savings deposit and term deposits to total deposits
Chart 37: Cash to deposit ratio of scheduled commercial banks
Chart 38: Credit to deposit ratio of scheduled commercial banks
Chart 39: Total borrowings done by the SCBs
Chart 40: Breakup of borrowings done by SCBs
Chart 41: Capital adequacy ratio of leading banks in India
Chart 42: Gross NPAs to total advances ratio
Chart 43: Gross NPA ratio of major public sector banks
Chart 44: Net interest margins of Indian banks
Chart 45: Non-interest income to asset ratio
Chart 46: Return on assets of Indian banks
Chart 47: Wage bill to total income ratio
Chart 48: Net interest margin of SBI
Chart 49: Profit margins of SBI
Chart 50: Asset Quality of SBI
Chart 51: HDFC Bank-Shareholding
Chart 52: Net interest margin of HDFC bank
Chart 53: Profit margins of HDFC bank
Chart 54: Asset quality of HDFC Bank
Chart 55: ICICI Bank-Shareholding
Chart 56: Net interest margin of ICICI Bank
Chart 57: Net profit margin of ICICI bank
Chart 58: Asset quality of ICICI Bank
1.1 Sector overview
1.2 Sector size
1.3 Competitive landscape
1.4 Environmental scanning
2. MARKET TRENDS AND OUTLOOK
2.1 Key economic indicators-India
2.2 Monetary policy
2.3 Assets and liabilities
2.4 Loans and advances
2.5 Investments
2.6 Deposits
2.7 Borrowings
2.8 Capital adequacy
2.9 Asset quality
2.10 Net interest margin
2.11 Profitability
3. LEADING PLAYERS & COMPARATIVE MATRIX
3.1 Leading Players
3.1.1 State Bank of India
3.1.2 HDFC Bank
3.1.3 ICICI Bank
3.2 Comparative Matrix
3.3 SWOT analysis
4. TABLES & CHARTS
Table 1: List of major scheduled commercial banks operating in India
Table 2: Key features of the guidelines on licensing of new banks
Table 3: Priority sector lending targets and sub-targets
Table 4: Basel III implementation draft guidelines issued by RBI
Table 5: Balance sheet parameters
Table 6: Valuation matrix
Chart 1: Number of reporting offices-All commercial banks
Chart 2: Reporting offices by location
Chart 3: Number of commercial banks in India
Chart 4: Reporting offices by type of banks
Chart 5: Total assets of the scheduled commercial banks
Chart 6: Asset share by type of banks-FY12
Chart 7: India's top ten banks in terms of assets
Chart 8: Current account deficit and fiscal deficit
Chart 9: Population served per office
Chart 10: Quarterly GDP growth rate-India
Chart 11: Average Monthly USD to INR Exchange Rate
Chart 12: Inflation during calendar year 2012
Chart 13: Repo rate
Chart 14: Cash reserve ratio
Chart 15: Breakup of assets of Scheduled Commercial Banks
Chart 16: Breakup of liabilities of Scheduled Commercial Banks
Chart 17: Scheduled bank's asset position
Chart 18: Scheduled bank's liabilities position
Chart 19: Total loans and advances disbursed by the SCBs
Chart 20: Advances approved by sectors
Chart 21: Sectoral deployment of gross bank credit
Chart 22: Y/Y growth in credit-Sector wise
Chart 23: Deployment of bank credit based on industry type
Chart 24: Y/Y growth in credit-Industrial segments
Chart 25: Deployment of credit in different segments of services sector
Chart 26: Y/Y growth in credit-Segments of service sector
Chart 27: Deployment of personal loans in different segments
Chart 28: Y/Y growth in credit-Personal loan segments
Chart 29: Priority sector lending
Chart 30: Y/Y growth in credit-Priority sectors
Chart 31: Total investments done by SCBs
Chart 32: Breakup of investments done by SCBs
Chart 33: Total deposits in SCBs
Chart 34: Type of deposits of SCBs
Chart 35: Deposits during last five years
Chart 36: Ratio of savings deposit and term deposits to total deposits
Chart 37: Cash to deposit ratio of scheduled commercial banks
Chart 38: Credit to deposit ratio of scheduled commercial banks
Chart 39: Total borrowings done by the SCBs
Chart 40: Breakup of borrowings done by SCBs
Chart 41: Capital adequacy ratio of leading banks in India
Chart 42: Gross NPAs to total advances ratio
Chart 43: Gross NPA ratio of major public sector banks
Chart 44: Net interest margins of Indian banks
Chart 45: Non-interest income to asset ratio
Chart 46: Return on assets of Indian banks
Chart 47: Wage bill to total income ratio
Chart 48: Net interest margin of SBI
Chart 49: Profit margins of SBI
Chart 50: Asset Quality of SBI
Chart 51: HDFC Bank-Shareholding
Chart 52: Net interest margin of HDFC bank
Chart 53: Profit margins of HDFC bank
Chart 54: Asset quality of HDFC Bank
Chart 55: ICICI Bank-Shareholding
Chart 56: Net interest margin of ICICI Bank
Chart 57: Net profit margin of ICICI bank
Chart 58: Asset quality of ICICI Bank
