Tag: ICICI Bank

Top banks in fray for Citi’s India credit card business

Banking & Finance

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Amidst increasing bullishness about the credit card market, a handful of top domestic banks including HDFC Bank and Kotak Mahindra Bank are being seen as front runners to acquire Citi’s credit card division in India.

According to sources, about 5-6 banks are in the fray to bid for Citi’s credit card business in India. These include HDFC Bank, ICICI Bank, Kotak Mahindra Bank and DBS Bank India, the sources said.

HDFC Bank, ICICI Bank and Kotak Mahindra Bank did not respond to an e-mail from BusinessLine.

DBS Bank India and Citi declined to comment on a similar e-mail query sent by BusinessLine.

Many Indian lenders have been looking to scale up their credit card business and Citi’s high-quality customer portfolio will be a useful addition, noted a source.

Opportunities

Brokerage firm Jefferies said in in a note in April that Citi’s exit from the retail business in India may open opportunities for Indian private banks, credit-card players and foreign banks in the country.

Citigroup had in April this year announced its decision to exit its consumer banking operations in India as part of an ongoing strategic review, which was part of strategic actions in the Global Consumer Banking space across 13 markets.

Citi has, however, been losing its market share in the country and valuations could prove to be an issue.

Market share

According to data from the Reserve Bank of India, Citi Bank had 25.93 lakh outstanding credit cards at the end August 2021, compared to 26.21 lakh at end of April 2021 and 27.39 lakh at the end August 2020.

It is estimated to have about a 4 per cent market share in the credit card segment in terms of numbers and 5 per cent in terms of spending.

Any sale of assets willrequire approval from the RBI and is likely to take at least another 4-5 months.

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Mcap of five of top-10 most valued firms down by over Rs 1.42 lakh cr; HUL, RIL most hit, BFSI News, ET BFSI

Personal Finance

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New Delhi, The combined market valuation of five of the top-10 most valued companies eroded by Rs 1,42,880.11 crore last week, with Hindustan Unilever, Reliance Industries and Tata Consultancy Services emerging as major laggards. Last week, the 30-share BSE benchmark Sensex declined by 484.33 points or 0.79 per cent. Market benchmarks — Sensex and Nifty — declined for the fourth consecutive session on Friday.

The market valuation of Hindustan Unilever Ltd (HUL) tumbled Rs 45,523.33 crore to reach Rs 5,76,836.40 crore.

Reliance Industries Ltd (RIL) valuation eroded by Rs 45,126.6 crore to Rs 16,66,427.95 crore and Tata Consultancy Services (TCS) market worth tanked by Rs 41,151.94 crore to Rs 12,94,686.48 crore.

The market capitalisation (Mcap) of Bajaj Finance plunged Rs 8,890.95 crore to Rs 4,65,576.46 crore and that of HDFC Bank Ltd fell by Rs 2,187.29 crore to Rs 9,31,371.72 crore.

In contrast, Kotak Mahindra Bank added Rs 30,747.78 crore taking its valuation to Rs 4,30,558.09 crore.

ICICI Bank‘s market valuation zoomed by Rs 22,248.14 crore to reach Rs 5,26,497.27 crore.

The valuation of HDFC jumped Rs 17,015.22 crore to Rs 5,24,877.06 crore and that of State Bank of India gained Rs 11,111.14 crore to Rs 4,48,863.34 crore.

Infosys added Rs 1,717.96 crore taking its valuation to Rs 7,29,410.37 crore.



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ICICI Bank Q2 profit jumps 30% to ₹5,511 crore

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Private sector lender ICICI Bank reported a near 30 per cent jump in its standalone net profit for the second quarter of the fiscal with robust growth in net interest income and lower provisions.

The bank’s net profit was ₹5,510.95 crore for the second quarter ended September 30, 2021, a growth of 29.6 per cent over ₹4,251.33 crore in the same period last fiscal.

Sandeep Batra, Executive Director, ICICI Bank, said in a media call on Saturday, “This was the highest quarterly net profit ever. The bank’s capital is growing, the economy is growing.

Net interest income up 25%

Net interest income increased by 25 per cent year-on-year to ₹11,690 crore in the second quarter of the fiscal from ₹9,366 crore in the second quarter last fiscal.

The net interest margin increased to 4 per cent in the July to September 2021 quarter from 3.89 per cent in the quarter ended June 30, 2021 and 3.57 per cent in the second quarter last fiscal.

Other income grew by 19.08 per cent on a year-on-year basis to ₹4,797.18 crore in the second quarter of this fiscal.

Provisions (excluding provision for tax) declined by 9 per cent year-on-year to ₹2,714 crore in the second quarter of the fiscal from ₹2,995 crore a year ago.

“The bank continues to hold Covid-19 provisions of ₹6,425 crore as of September 30, 2021, the same level as June 30, 2021,” ICICI Bank said in a statement.

The lender’s asset quality also improved further with net non-performing assets at 0.99 per cent of net customer assets was at the lowest level since December 2014.

Gross NPA was 5.12 per cent of gross advances as on September 30, 2021 as compared to 5.51 per cent as on June 30, 2021 and 5.63 per cent as on September 30, 2020.

Net NPA was 1.06 per cent of net advances at the end of the second quarter compared to 1.09 per cent as on September 30, 2020.

The net NPAs declined by 12 per cent sequentially to ₹8,161 crore at September 30, 2021 from ₹ 9,306 crore at June 30, 2021.

The net addition to gross NPAs declined to ₹96 crore  from ₹ 3,604 crore in the first quarter.

Recoveries and upgrades of NPAs, excluding write-offs and sale, increased to ₹5,482 crore in the second quarter  from ₹3,627 crore in the first quarter of the fiscal.

Restructuring

ICICI Bank restructured 1,543 accounts with an exposure of ₹3,737.66 crore under the Reserve Bank of India’s Resolution Framework 1.0. Of this, ₹61.22 crore slipped into NPAs in the first half of the fiscal and ₹0.76 crore was written off. The lender has exposure of ₹4,158.2 crore to accounts where resolution plan has been implemented under the Resolution Framework 2.0.

Disbursements

Batra said  that with the increase in economic activity, disbursements across all retail products increased sequentially in the second quarter of the fiscal. Mortgage disbursements were close to the level seen in the quarter ended March 31, 2021 while disbursements of personal loans and auto loans were also close to the levels of the fourth quarter 2020-21.

The bank’s total advances increased by 17 per cent year-on-year to ₹7,64,937 crore at September 30, 2021 and total deposits also grew by a similar 17 per cent year on year to ₹9,77,449 crore as of September 30, 2021.

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ICICI Bank Q2 profit up 25% to Rs 6,092 crore, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: ICICI Bank on Saturday reported 24.7 per cent rise in consolidated net profit at Rs 6,092 crore for September quarter 2021-22.

The private sector lender had posted a net profit of Rs 4,882 crore in the same quarter of the previous fiscal year.

Total income however grew marginally to Rs 39,484.50 crore in the quarter from Rs 39,289.60 crore in the same period of 2020-21, ICICI Bank said in a regulatory filing.

On standalone basis, the net profit jumped 30 per cent to Rs 5,511 crore during the quarter, as against Rs 4,251 crore. Income was up at Rs 26,031 crore from Rs 23,651 crore.

The bank’s asset quality showed improvement as gross non-performing assets (NPAs) fell to 4.82 per cent of gross advances as of September 30, 2021 as against 5.17 per cent by the year-ago period.

Net NPAs (bad loans) too fell to 0.99 per cent from 1 per cent.



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Will the lender report another quarter of blockbuster earnings?, BFSI News, ET BFSI

Banking & Finance

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MUMBAI: ICICI Bank is expected to have another quarter of strong earnings performance aided by its cards and retail lending operations.

The private sector lender is likely to report a 19.7 per cent year-on-year growth in net profit to Rs 5,086.7 crore for the quarter ended September. The bank is expected to report a 20 per cent on-year rise in net interest income to Rs 11,227 crore for the reported quarter.

ICICI Bank will report its September quarter earnings on Saturday.

The lender’s provisions in the quarter are expected to decline on a sequential basis, although, they will increase on a year-on-year basis. Analysts suggested that the bank could dip into its COVID-19 provisions created in prior quarters to accommodate a likely increase in slippages in the quarter.

“We are building slippages of 2.1% (Rs 4,000 crore) but we see a solid commentary on recovery to normalized levels of their loan book from an asset quality perspective,” said brokerage firm Kotak Institutional Equities.

On the lending front, brokerage firm Sharekhan expects the bank to report a 20 per cent year-on-year growth in loans during the quarter. The growth is likely to be led by the company’s retail loans operations and credit cards business.

ICICI Bank’s operating performance will continue the recent strength as analysts see a 13.6-14.8 per cent year-on-year growth in pre-provision operating profit for the lender in the reported quarter. The net interest margin is also expected to remain stable at 3.8-3.9 per cent.

Besides the earnings, investors will keenly await the management’s commentary on the lending business, especially, in the backdrop of a robust economic recovery post the second wave of the pandemic.



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ICICI Bank seeks buyers for Rs 338-crore exposure to Soma Infrastructure

Banking & Finance

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In an order dated September 20, the Hyderabad ‘B’ bench of the Income Tax Appellate Tribunal had said that Soma Infrastructure was a subsidiary of Soma Enterprise.

ICICI Bank on Monday sought expressions of interest (EoIs) from asset reconstruction companies (ARCs) for its Rs 338-crore exposure to Soma Infrastructure. The asset is being offered on a full-cash basis. Soma Infrastructure is a Hyderabad-based company that owes ICICI Bank over Rs 149 crore in principal dues, and another Rs 189 crore in accrued interest and other charges.

In an order dated September 20, the Hyderabad ‘B’ bench of the Income Tax Appellate Tribunal had said that Soma Infrastructure was a subsidiary of Soma Enterprise. “…it is clear that assessee is a subsidiary company and assessee has diverted the funds sanctioned by ICICI Bank to the step down subsidiaries i.e. Beta Infratech P. Ltd. and Soma Jabalpur Rewa Tollway Pvt. Ltd.(SPV),” the tribunal observed in the order.

The tribunal further said that Soma Infrastructure is a company incorporated and active in providing consultancy services to its parent company and has no other business connections with the other step-down subsidiaries of Soma Enterprise, except related concern. “The assessee was utilised by the parent company to source the funds from the bank after giving the required bank guarantee. “The funds were utilised by the step down companies and we notice that assessee has advanced to M/s Beta Infratech as long term unsecured loan,” the order said. The funds were utilised in the business for the purpose of making payments for fixed assets and capital work-in-progress. At the same time, Soma Jabalpur Rewa Tollway received the loan from Soma Infrastructure and diverted it to the holding company, the appellate tribunal said.

In February this year, lenders to the parent company Soma Enterprise, led by State Bank of India, had also initiated the process for selling their loans. The loans to this company stood at Rs 2,099 crore as on March 31, 2020, while investments in it were to the tune of Rs 1,345 crore.

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At least seven lenders, including Axis Bank, HDFC Bank and ICICI Bank harness GIFT City facilities, BFSI News, ET BFSI

Banking & Finance

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At least seven lenders, including Axis Bank, HDFC Bank and ICICI Bank, are harnessing the GIFT City facilities to mark a robust Indian presence in the non-deliverable forward (NDF) currency derivatives market, potentially paving the way for eventual currency convertibility that’s considered a draw-card for overseas investments. Average daily volumes in over-the-counter trades at Gujarat GIFT City surged to an estimated $1.5-2 billion from $100-200 million about a year ago, four bankers told ET.

Among the other major participants in the NDF trade are State Bank of India, IndusInd Bank, Kotak Mahindra and Standard Chartered, executives said. “Daily average volumes have surged for offshore OTC NDF trades during the onshore time,” said Bhaskar Panda, executive vice president at HDFC Bank. “This has helped bridge gaps between offshore and onshore prices bringing in relative stability in the exchange rate. This in turn will help attract foreign investors, who always prefer full currency market convertibility.” IndusInd, Kotak and SBI didn’t comment.

The differential between one-month onshore and offshore forwards trade is now less than a paise, which would have been about four-five paise in normal circumstances. A wider differential encourages speculators to tap arbitrage opportunities short-selling rupees or dollars, a potential source for heightened volatility. The one-month Rupee Options Volatility index is now at 4.51 percent versus 7.63 percent nearly a year ago, show data from Financial Benchmarks India (FIBIL). “Axis Bank IBU Branch has been playing a significant role in the NDF markets at GIFT City,” said Lalit Jadhav, CEO – Axis Bank IBU Branch, GIFT City.

“We have a full-fledged Treasury Desk with robust risk controls and look at trading opportunities in this segment which can potentially help reduce volatility and drive price convergence between offshore and on-shore markets.” Before local banks were allowed to tap the NDF market at GIFT City, the Reserve Bank of India was unable to control NDF moves on the rupee-dollar. Now, the central bank even directs private banks along with traditional public sector lenders to buy or sell units, which is known as NDF market intervention.

“NDF business would be one of the core pillars of our business strategy at GIFT City that provides an excellent platform to meet the global banking needs,” said Anupam Verma, head – international banking unit, IFSC GIFT City, ICICI Bank. RBI had permitted Indian banks, which hold a licence to operate in the International Financial Services Centre in GIFT City – Ahmedabad, to participate in the NDF market from June 1 in 2020. “The liquidity has significantly improved in the NDF market at GIFT City with large local banks transacting,” said Anindya Banerjee, currency analyst at Kotak Securities.

“We are gradually moving towards full capital account convertibility making our exchange rate easily available.” RBI deputy governor T Rabi Shankar Thursday called for a preparedness to meet challenges related to full capital account convertibility as foreign investors get full access to India’s debt market under a dedicated route meant for global bond index inclusion.

“A key aspect of currency convertibility is integration of financial markets,” Shankar said at the fifth Foreign Exchange Dealers’ Association of India (FEDAI) annual day. “An effort has already commenced in the interest rate derivative segment.” “NDF-onshore spreads have substantially narrowed after allowing Indian banks into the NDF space,” he said.



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Four Indian banks rise in Asian rankings on stock market boom, BFSI News, ET BFSI

Banking & Finance

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Four Indian banks have featured among the 20 largest banks in the Asia-Pacific region in terms of market capitalisation in the third quarter of 2021, according to S&P Global Market Intelligence.

HDFC Bank was ranked seventh with a market cap of $119 billion, a quarter on quarter increase of 6.7 per cent while the next was ICICI Bank at 12th spot, with its market cap rising 11.2 per cent quarter on quarter to $65.5 billion.

The State Bank of India rose two spots to 17th on the list as its market cap rose 8.1 per cent to $54.5 billion. Kotak Mahindra Bank‘s market capitalisation rose 17.5%, the highest on the list.

S&P Global’s banking outlook

The global banking sector will continue to slowly stabilize as the economic rebound gains momentum and as support is gradually withdrawn. Should a re-intensification of risks occur, more support from authorities for the real economy would be required. This in turn would help banks maintain a stabilizing trajectory. Strategies and tactics to combat Covid vary enormously across banking jurisdictions. This includes the progress with vaccination campaigns that affects a range of factors, particularly trade and travel.

Corporate default rates will fall from their COVID-19 peak. However, problematic corporate lending and other exposure will likely continue to strain banks’ asset quality metrics, it said.

Some corporate sectors have experienced no credit deterioration, such as grocery and essential retail, and technology software, while other corporate sectors are recovering sooner than previously expected. Still other sectors, however, such as autos, hotels and airlines won’t likely recover until 2023 or beyond, S&P Global said.

With debt levels at or near record highs, some corporates and governments remain vulnerable to credit deterioration and defaults if income recovers more slowly than expected. This is especially if interest rates rise, S&P Global added.

Indian banks’ outlook

Banks are likely to post over 20 per cent jump in profit in the second quarter with analysts expecting a decent sequential improvement in almost all indicators from loan growth to gross bad loan ratios.

According to Bloomberg estimates, for the 19 lenders — five public sector and 14 private banks – profit would grow 21.7 per cent to Rs 32,075 crore in Q2 year on year.

Private banks are likely to report PPoP growth of 9% YoY (3.8% QoQ) and net profit growth of 14% YoY (17.3% QoQ). Earnings are likely to pick up, led by a recovery in business growth / fee income and a gradual reduction in credit costs.

“Loan growth would pick up, led by revival in economic activity and the opening up of the economy. Demand going into the festive season and commentary around the FY22 outlook would be key monitorables. Retail and SME segment is likely to show strong recovery; though growth in the Corporate segment is likely to remain soft and recovery within this segment would be another monitorable,” according to Motilal Oswal Securities.



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Lenders get set for festive season; offer home, vehicle, gold loans at attractive rates, BFSI News, ET BFSI

Banking & Finance

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Lenders in the BFSI space are gearing up for the festive season, offering reduced interest rates on home and vehicle loans, and other discounts to customers.

Punjab National Bank, State Bank of India and Kotak Mahindra Bank are among the banks providing festive offers, while Mahindra Finance is among the non-bank lenders offering discounts on its loan products.

Also read: Ahead of festive season, banks slash interest rate on home loans. Get the details here

Here are the latest updates, so far, this week:

Mahindra Finance
Mahindra Finance on Wednesday launched festive offers on its vehicle loans for two months, providing offers and discounts to customers at competitive rates.

‘Shubh Utsav’ has been launched with immediate effect, and will continue till the end of November. It has special finance schemes, specifically for customers who plan to avail vehicle loans during these two months.

The offers can be availed across India. Below are the offers:
>SUV Loans (Mahindra brand) at interest rates starting 7.35%

>Up to 100% funding

>Loan tenure up to 7 years

>Buy now and pay after 60 days

>50% waiver on processing fees

>Pre-owned car loans at interest rates starting 12%

>Loan on tractor Implements at zero processing fee

>Quarterly and half yearly EMI for select customers for Car and Tractor loans

Punjab National Bank

PNB on Wednesday cut its gold loan rates by 145 basis points, and is now offering loans against sovereign gold bond at 7.20% and against gold jewellery at 7.30%.

The bank is also offering a full waiver of service charges and processing fee on the loans against gold jewellery and sovereign gold bond.

Earlier, the bank, as part of its festive offers, had announced a cut in home loan rate, which now starts from 6.60%, car loan rate, starting from 7.15%, and personal loan rate, from 8.95%.

ICICI Bank

ICICI Bank on Tuesday announced the launch of ‘Home Utsav’, a virtual property exhibition that digitally showcases real estate projects across cities. The exhibition will offer convenience to prospective home buyers as they can select their home by browsing through projects, approved by the bank, and avail benefits.

The offer is from October 7,2021, to December 31, 2021.

Attractive interest rate on home loans, special processing fees and digital sanction of loans and exclusive offers from developers are among the benefits that are being offered to the customers.

Furthermore, anyone, including those who are not customers of ICICI Bank, can avail of these benefits on buying a property through the exhibition, the bank said. Customers of ICICI Bank can further avail for the bank’s pre-approved home loan offers.



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