Tag: ICICI Bank Ltd.

Shares of HDFC Bank rise as RBI lifts credit card ban, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: Shares in HDFC Bank Ltd jumped after the Reserve Bank of India (RBI) said it would allow the lender to issue new credit cards, partially removing a months-long ban.

The lender will roll out the preparations and strategies it has put in place to “come back with a bang” in credit cards, it said in a statement. It will also “continue to engage with RBI and ensure compliance on all parameters,” it said.

The stock gained as much as 3.4%, the most since May 21, after the bank confirmed the easing of curbs in a stock exchange filing Wednesday, following a Bloomberg News report. Shares were trading 0.6% higher at 1:55 pm in Mumbai.

Still, the central bank will retain a ban on the lender launching new digital products “until further review.”

While recommending a ‘buy’ for HDFC Bank given its attractive valuation, Jefferies India analyst Prakhar Sharma wrote that the bank needs to enhance investment in its technology capacities and strengthen backend monitoring. This will give the RBI greater comfort for lifting the remaining restrictions.

Online glitches

About eight months ago, the country’s most valuable lender was penalized by the RBI for repeated online glitches that hurt its 50 million customers. Following the curbs, the bank, India’s top credit card issuer, lost out to peers including State Bank of India, ICICI Bank Ltd and Axis Bank Ltd.

HDFC Bank’s credit card outstandings shrank by 6.5% in the June quarter from the previous three months, hurting its overall retail portfolio.

The bank has been in the process of setting up digital and enterprise units to strengthen its online infrastructure and handle a larger volume of transactions.

In February, the banking regulator appointed an external audit firm to look into the recurring outages.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

S&P revises ICICI Bank outlook to stable from negative, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: S&P Global Ratings on Friday said it has revised the rating outlook on ICICI Bank Ltd to stable from negative on grounds that the lender will benefit from the sale of stake in subsidiaries.

The rating agency affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term issuer credit ratings on ICICI Bank.

“We revised the rating outlook to reflect our view that ICICI Bank will maintain its strong capital position over the next 24 months. The bank will benefit from the sale of a stake in subsidiaries and gradual normalization of earnings, which should reduce risks associated with its capital position,” it said.

In a statement, S&P forecast that ICICI Bank will maintain a risk-adjusted capital (RAC) ratio of more than 10 per cent over the next 24 months.

“Our expectation factors in 13-14 per cent credit growth for the bank, an improvement in earnings, and sale of stake in insurance subsidiaries over the period,” it said.

ICICI Bank’s stressed loans (non-performing loans and restructured loans) are likely to remain high when compared to that of international peers.

The bank’s stressed loans are expected to peak at 6 per cent of total loans in the fiscal year ending March 2022, lower than the estimate of 11-12 per cent for the Indian banking industry.

“The bank’s new non-performing loans (NPLs) are likely to stay elevated in fiscal 2022 owing to the impact of the second wave of COVID-19 infections. In our view, localized lockdowns will hit small and midsize enterprise (SME) borrowers the most,” it said.

Retail loans, especially unsecured personal loans and credit card debt, are also vulnerable.

For ICICI Bank, SME loans (accounting for 4.2 per cent of total loans), personal loans (6.7 per cent), credit cards (2.4 per cent) and rural loans (10 per cent) could contribute to the increase in NPLs.

ICICI Bank has made COVID-19 related provisions to the tune of 1 per cent of advances.

This, S&P said, should help smoothen the hit from pandemic-related losses.

“The bank’s better customer profile and underwriting relative to the Indian banking system should limit losses,” it added.

ICICI Bank’s lower credit costs than in the past should enhance its profitability, it said estimated core earnings at 1.3-1.6 per cent of assets over the next two years, with further upside possible from the sale of stake in subsidiaries.

“The stable outlook reflects our view that ICICI Bank’s capitalization will remain strong over the next 24 months, aided by better earnings and profit from the sale of a stake in subsidiaries. We factor in a slight deterioration in the bank’s asset quality and performance due to COVID-19,” it said.

In its base case, ICICI Bank will maintain its strong market position, strong capital, better-than-system asset quality, and good funding and liquidity over the next 24 months.

“An upgrade of ICICI Bank is unlikely in the next one to two years because that would require an improvement in the bank’s financial profile as well as the sovereign credit rating on India.

“Our assessment of ICICI Bank’s financial profile may improve if the bank’s asset quality strengthens to levels in line with international peers, and it maintains its capitalization at a strong level,” it said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

Group of Advisors to RBI’s Regulations Review Authority invites feedback and suggestions, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India has set up a Regulations Review Authority (RRA 2.0) initially for a period of one year from May 01, 2021. The RRA will review the regulatory prescriptions internally and seek suggestions for simplification and ease of implementation from RBI controlled entities and other stakeholders.

The RRA has formed an Advisory Group made up of representatives from regulatory entities, including compliance officers, to help the RRA achieve the objectives set out in RRA 2.0’s terms of reference. The Group will assist by finding areas/regulations/guidelines/returns that can be rationalised and submitting reports to RRA with recommendations/suggestions on a regular basis. The composition of the Group is as under:

1. S. Janakiraman, Managing Director, State Bank of India Chairman
2. T. T. Srinivasaraghavan, Former MD & Non-Executive Director, Sundaram Finance Member
3. Gautam Thakur, Chairman, Saraswat Co-operative Bank Ltd. Member
4. Subir Saha, Group Chief Compliance Officer, ICICI Bank Ltd Member
5. Ravi Duvvuru, President & CCO, Jana Small Finance Bank Member
6. Abadaan Viccaji, Chief Compliance Officer, HSBC India Member

The Group has decided to invite feedback and suggestions from all regulated entities, industry bodies, and other stakeholders to undertake its preparatory work. Suggestions and feedback should be emailed latest by June 15, 2021, with the subject line Suggestions to the Advisory Group of RRA.

Follow and connect with us on , Facebook, Linkedin



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

ICICI Bank pushes on retail as other lenders slow down, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


– By Shashank Singhal

ICICI Bank Ltd. reported strong fourth-quarter earnings, with revenues and core income increasing and asset quality remaining stable driven by loan growth and higher profitability.

Credit Growth:

The Total advances of the bank increased by 14% year-on-year to 733,729 crores on March 31, 2021 from ` 645,290 crore on March 31, 2020. Bank’s credit growth was mainly driven by retail segment. On March 31, 2021, the retail loan portfolio had grown by 20% year on year and 7% sequentially which has been double the system retail loan growth. Retail accounted for 67% of the overall portfolio. Retail mortgages grew by 22% year on year being the largest incremental contributor to growth. Banks continue to push for higher retail loan growth. Disbursements to higher rated corporates and public sector undertakings (PSUs) across various sectors drove growth in the performing domestic corporate portfolio by about 13% year on year.

Among other retail segments, business loans increased by 40% year over year, while rural loans (which include 50% Jewel loans) increased by 27% year over year. The book in the CV, two-wheeler, and credit card segments increased Quarter on quarter, but the book in the CV, two-wheeler, and credit card segments remained flat.

Bank’s retail growth can be attributed to digitization. Digital initiative such as ‘EMI @ Internet Banking’ which allows preapproved customers to convert their high value transactions into instant EMIs at the time of purchase on their retail internet banking platform and graining traction in the cards business through digital platform boosted the retail growth. The growth was also aided by the bank’s expansion of footprint in tier 2, 3 and 4 cities and low interest rates.

Slippages

According to CLSA, ICICI Bank’s slippage at Rs 5,500 crore (0.75 per cent of loans) was a positive surprise. Retail slippage increased by less than 2x to 2.4 per cent in FY21 vs 1.4 per cent in FY20 which, the brokerage believes, is manageable given the pandemic which indicates that Bank has been cautious rather aggressive in lending retail loans.

Asset Quality

ICICI Bank’s gross non-performing asset ratio stood at 4.96% compared with 5.42% in the October-December quarter while the net NPA ratio declined to 1.14% on March 31, 2021 from 1.26% (on a proforma basis on December 31, 2020) and 1.41% on March 31, 2020.Bank maintains healthy specific provision coverage ratio of 78% of NPAs and contingent buffer at 1% of loans.

HDFC slows down on Retail

HDFC Bank reported 14% year-on-year growth in domestic advances on 31st March 2020 mainly driven by growth in wholesale loans which grew by 21.7% from last year while as per regulatory [Basel 2] segment classification, domestic retail loans grew only by 6.7%. Wholesale loans now form 53% of the total loan book. Retail loans accounted for 47% compared to 67% of ICICI Bank showing different target segments of the Banks.

For the first time in many years, ICICI Bank’s loan growth exceeded that of HDFC Bank. The Overall domestic loan growth of 18% year-on-year (6% quarter-on-quarter) of ICICI has been 3x that of system loan growth and 400 basis points above HDFC Bank.

Banks cautious on Retail loans

Amid the uncertainty provided by the pandemic other lenders such as Kotak has also cut down on the retail front. Banks are taking cautious stance on extending credit to avoid a spike in asset quality issues. Banks are falling back on the secure options.

ICICI Securities in a note recently said, “Kotak Mahindra Bank’s management had highlighted that unsecured retail and CV (bus operator segment) portfolios were reflecting disproportionate stress. Beside this, MTM gain on investment portfolio, cost agility and low cost deposit based will cushion earnings impact.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

Profit surges 261% to Rs 4,403 crore, misses Street estimates, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: ICICI Bank on Saturday reported a 261 per cent year-on-year (YoY) rise in net profit at Rs 4,403 crore compared with a profit of Rs 1,221.40 crore in the corresponding quarter last year.

Analysts in an ET NOW poll had projected the profit figure at Rs 4,980 crore.

Net interest income (NII) for the quarter rose 17 per cent YoY to Rs 10,431 crore compared with Rs 8,927 crore in the year-ago quarter. ET NOW poll had forecast the NII figure at Rs 10,306 crore.

The net interest margin (NIM) for the quarter came in at 3.84 per cent compared with 3.67 per cent in December quarter and 3.87 per cent in the year-ago quarter.

The bank made a net provision of Rs 2,883 crore for the quarter, which included Rs 1,000 crore in Covid-related provisions. The private lender had made provisions worth Rs 5,967 crore in the year-ago quarter.

“During Q4, the bank utilised contingency provision amounting to Rs 3,509 crore towards proforma NPAs as of December 31, 2020, as these loans have now been classified as per the RBI guidelines. Further, the bank made additional Covid-19 related provisions of Rs 1,000 crore during Q4-2021,” it said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

IPO boom prompts ICICI Bank to hire more investment bankers, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


By Baiju Kalesh

India’s second largest private lender ICICI Bank Ltd. is making its biggest hiring push in investment banking and institutional equities in four years, as it anticipates a rise in companies going public.

The Mumbai-based firm plans to add five mid-to-senior level hires in each of the two units, which currently have 130 bankers in total, according to Ajay Saraf, head of investment banking and institutional equities at ICICI Securities Ltd. The new roles will be concentrated in sectors such as technology and health care, he said.

“We have not hired these kinds of numbers since 2017,” Saraf said in a phone interview last week. “We see investor interest disproportionately higher for these sectors in the next 12 months.”

India is joining the global share sale frenzy thanks to ample liquidity in the market with foreign investors and even retail buyers looking for new ideas to invest in. The booming local tech scene, which earlier in April minted six unicorns in a single week, is also expanding the initial public offering pipeline for bankers.

So far in 2021, nearly $3 billion has been raised through IPOs in India, the best start to the year since 2018, according to data compiled by Bloomberg. It could even surpass 2020’s $4.6 billion haul as companies such as Zomato Pvt., Policybazaar and Nykaa E-Retail Pvt. are set to go public in Mumbai as as soon as this year, Bloomberg News has reported.

ICICI Securities ranks first for equity offerings in India so far in 2021, according to the Bloomberg league table, a leap from 2020 when it finished 10th.

Saraf expects there to be more deals to go around as high-quality firms come to market in the next three to six months.

“The deal activity on the primary market will be stronger than 2021,” he said. “The number of transactions will be widespread but the rise in volume will depend on the issuers’ decisions on the size.”

The banker doesn’t see those listings taking the form of special purpose acquisition companies. Investors have flooded into SPACs, vehicles that raise money from public listings in order to merge with private companies, and Indian targets are not immune to the frenzy. The country’s biggest renewable power producer ReNew Power agreed to merge with a U.S. SPAC in February, giving it an $8 billion enterprise value, and some bankers in India predict more blank-check firm deals to come.

Saraf is skeptical of a sharp rise in SPAC activity in the country. “What you need for a SPAC is the size, and path to profitability,” he said. “Not many companies pass that muster in India.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,