Tag: ICICI

HDFC Bank Vs ICICI Bank…who is speeding up?, BFSI News, ET BFSI

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HDFC Bank suffered at least the fourth outage on Tuesday in the last three years as customers experienced downtime on their internet and mobile banking with services not accessible to them for several hours.

This led to an almost 4% drop in the bank’s shares in afternoon trade on Wednesday in a market, which saw across the board sell-off due to Covid worries. At the same time, the drop in ICICI Bank was just 2%.

While it has a lot of catching up to do, ICICI Bank is fast narrowing the gap with HDFC Bank and larger peers.

Why is ICICI Bank surging

Experts said the worst is behind ICICI Bank. It has gone through a period of tremendous amounts of credit cost related issues and write-offs taking place. Secondly, it is focusing more to be a retail bank which is contributing to growth. On top of it, ICICI was trading at a substantial discount in terms of its valuation to its larger peers. The discount is also narrowing down and has contributed to this outperformance.

ICICI Bank’s performance has now become comparable with HDFC Bank’s (industry best) and as comfort on asset quality/ credit-cost improves, this should translate into stable growth in net profits as well, experts said.

It has improved the velocity (pace and direction) of operating profit over the past two years reflecting improved topline and cost efficiencies. An improvement in velocity of ICICI Bank’s operating profit growth & steady credit cost will bring down volatility in earnings, which has been a key reason for a 55% discount in valuation versus HDFC Bank. Lower volatility can reduce Beta, which can bridge the valuation gap by half. The rest reflects the gap in growth & ROE – this can be partly bridged with improved growth in clients/ CASA. Brokerage Jefferies has raised its price target to Rs 780 and hold it among its top picks in the sector.

ICICI Bank versus HDFC Bank

ICICI Bank trades at 55% discount to HDFC Bank in terms of valuations – ICICI Bank at 1.9x FY22 adjusted PB and HDFC Bank at 3.4x. This reflects a combination of HDFC Bank’s better growth, ROE and lower Beta. With a lower volatility in earnings, HDFC Bank’s Beta is at 1 whereas ICICI’s is around 1.2-1.3. Brokerage Jefferies said that consistency in earnings growth/ asset quality will help ICICI Bank bring down Beta closer to 1. This can lift-up the theoretical PB from 1.9x now to 2.5x – closing the gap with HDFC Bank by 30%.

CASA deposits

ICICI Bank has seen steady growth in CASA deposits. During Q3, ICICI Banks saw average CASA growth of 19% YoY whereas HDFC Bank saw 30% YoY growth.

Jefferies sees an improvement in earnings and profitability from FY22 as credit costs stabilise alongside steady growth in topline. It has raised its price target on the bank to Rs 780 (from Rs 700) and target multiple to 2.4x Mar-23E adjusted PB.

At a valuation of Rs 1.7-1.8 lakh crore, ICICI Bank has a big branch network and stability and clean up that has been brought about in the business in the last three years under the new leadership, while HDFC has a market cap of close to about Rs 8 lakh crore.



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ICICI Bank launches instant EMI facility on internet banking, BFSI News, ET BFSI

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Private lender, ICICI Bank has launched an instant EMI facility on its internet banking platform. called ‘EMI @ Internet Banking’, the facility aims to offer increased affordability to millions of pre-approved customers, as it enables them to convert their high-value transactions up to Rs. 5 lakh into easy monthly instalments.

It also brings in enhanced customer experience as customers get the benefit of EMIs instantly and in a fully digital manner.

ICICI Bank is the first in the industry to introduce instant EMI facility on its internet banking platform. The Bank has tied up with BillDesk and Razorpay, leading online payment gateway companies to offer this facility.

Presently, the ‘EMI @ Internet Banking’ has been enabled for over 1000 merchants in categories like online shopping portals, insurance, travel, education- school fees and electronic chains.

The Bank endeavours to partner with more payment gateway companies, merchants and add categories under this facility in the near future.

Sudipta Roy, Head- Unsecured Assets, ICICI Bank said, “We have observed that many of our customers undertake high-value transactions for payments of insurance premiums, school fees, purchasing electronics, or paying for vacations through the Bank’s internet banking platform. Our latest offering of ‘EMI @ Internet Banking’ brings in enhanced affordability for customers by providing them with flexibility of EMIs for high value transactions.”

He added, “It also offers immense convenience to the customers as the entire experience is completely digital and instant. We believe this facility will empower millions of our pre-approved customers to purchase or shop for their needs in a completely contactless, instant, digital and secure manner.”

Ajay Kaushal, Co-founder and Director BillDesk said, “This will help ICICI Bank customers easily finance their online purchases using convenient monthly instalment payments across merchants supported by BillDesk.”

Khilan Haria, Head- Payments Product, Razorpay said, “This EMI on internet banking feature will be a major value-add to our partner businesses by providing them with higher conversion rates and benefit end-consumers by now making large payments easier and affordable.”



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Suryoday Small Finance Bank wants to raise Rs. 582 via IPO, BFSI News, ET BFSI

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The Reserve Bank of India had made it mandatory for the Small Finance Banks to hit the capital market within three years of operations. Pandemic slowdown the process for many of the SFBs, Just after Utkarsh Small Finance Bank filed for an IPO, Suryodaya too disclosed its plans.

Suryoday has decided to launch their initial public offer of equity shares of face value of ₹10 each on 17th March 2021. The Issue will close on 19th March 2021. The price band of the Offer has been fixed at ₹303 to ₹305 per Equity Share.

The Issue comprises of a fresh issue of up to 8,150,000 Equity Shares and an offer for sale of up to 10,943,070 Equity Shares. The Issue includes a reservation of up to 500,000 Equity Shares for subscription by eligible employees under the “Employee Reservation Portion” which is hereinafter referred to as “Net Issue”.

The Bank and the Selling Shareholders in consultation with the Book Running Lead Managers, may offer a discount of up to 10% (equivalent of ₹ 30 per equity share) of the issue price to eligible employees bidding in the Employee Reservation Portion (“Employee Discount”).

Suryoday Small Finance Bank said in a statement, “The bank has undertaken a Pre-IPO placement of 5,208,226 Equity Shares comprising (i) a private placement of 3,084,833 Equity Shares to SBI Life Insurance Company Ltd, 1,713,795 Equity Shares to Axis Flexi Cap Fund, 342,760 Equity Shares to Axis Equity Hybrid Fund, 66,838 Equity Shares to Kiran Vyapar Ltd.”

The Issue is being made through the Book Building Process, wherein not more than 50% of the Net Issue shall be allocated on a proportionate basis to Qualified Institutional Buyers, provided that the Bank and the Selling Shareholders may, in consultation with the Book Running Lead Managers, allocate up to 60% of the QIB Portion to Anchor Investors on a discretionary basis in accordance with the SEBI ICDR Regulations.

In the event of under-subscription, or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the Net QIB Portion. Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis only to Mutual Funds, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs.

Further, not less than 15% of the Net Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue shall be available for allocation to Retail Individual Bidders in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Issue Price.

All potential Bidders (except Anchor Investors) are required to mandatorily utilise the Application Supported by Blocked Amount (“ASBA”) process providing details of their respective ASBA accounts, and UPI ID in case of RIBs using the UPI Mechanism, if applicable, in which the corresponding Bid Amounts will be blocked by the SCSBs or under the UPI Mechanism.

Axis Capital Limited, ICICI Securities Limited, IIFL Securities Limited and SBI Capital Markets Limited are the Book Running Lead Managers to the Issue



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ICICI Bank to buy stakes in two fintech companies for Rs 6.03 crore, BFSI News, ET BFSI

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ICICI Bank on Tuesday said it will buy stakes in two fintech companies — CityCash and Thillais Analytical Solutions — for a total cash consideration of Rs 6.03 crore.

CityCash is a bus transit-focused payments technology company which provides ticketing system technology to state transport corporations.

Thillais Analytical Solutions operates a neo-banking platform Vanghee, which facilitates connected banking solutions for corporates and MSMEs, and helps banks deepen their customer relationships.

As per two separate deals entered by the bank on Tuesday, ICICI Bank will buy 5.40 per cent stake in CityCash for Rs 4.93 crore (Rs 49.34 million) and 9.65 per cent in Thillais Analytical Solutions Pvt Ltd for Rs 1.1 crore (Rs 11 million).

Both the deals are expected to be completed by the end of March 2021, ICICI Bank said in separate filings to stock exchanges.

Post investment, ICICI Bank will hold 5.40 per cent shareholding in Tap Smart Data Information Services Pvt Ltd (CityCash) through acquisition of 5,492 equity shares. The 9.65 per cent stake in Thillais Analytical Solutions will be through acquisition of 10 equity shares and 100 CCPS (Compulsory Convertible Preference Shares).



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ICICI Bank to buy stakes in two fintech companies for Rs 6.03 crore, BFSI News, ET BFSI

Banking & Finance

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ICICI Bank on Tuesday said it will buy stakes in two fintech companies — CityCash and Thillais Analytical Solutions — for a total cash consideration of Rs 6.03 crore.

CityCash is a bus transit-focused payments technology company which provides ticketing system technology to state transport corporations.

Thillais Analytical Solutions operates a neo-banking platform Vanghee, which facilitates connected banking solutions for corporates and MSMEs, and helps banks deepen their customer relationships.

As per two separate deals entered by the bank on Tuesday, ICICI Bank will buy 5.40 per cent stake in CityCash for Rs 4.93 crore (Rs 49.34 million) and 9.65 per cent in Thillais Analytical Solutions Pvt Ltd for Rs 1.1 crore (Rs 11 million).

Both the deals are expected to be completed by the end of March 2021, ICICI Bank said in separate filings to stock exchanges.

Post investment, ICICI Bank will hold 5.40 per cent shareholding in Tap Smart Data Information Services Pvt Ltd (CityCash) through acquisition of 5,492 equity shares. The 9.65 per cent stake in Thillais Analytical Solutions will be through acquisition of 10 equity shares and 100 CCPS (Compulsory Convertible Preference Shares).



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Concerns ahead despite good Q3 results

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Third quarter results of banks have indicated banks show a rise in net profit but concerns are evident ahead. Bank of Baroda reported a standalone net profit of ₹1,061 crore in the third quarter against a net loss of ₹1,407 crore in the year-ago quarter. Private sector lender ICICI Bank reported a 19.1 per cent increase in its standalone net profit in the third quarter of the fiscal at ₹4,939.59 crore.

The bank had a net profit of ₹4,146.46 crore in the same period last fiscal. However, Axis Bank reported a 36.4 per cent drop in its net profit in the third quarter this fiscal despite a robust rise in net interest income as provisions rose sharply. For the quarter ended December 31, 2020, Axis Bank’s standalone net profit stood at ₹1,116.60 crore as against ₹1,757 crore in the same period a year ago.

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ICICI Bank’s Q3 net profit increases 17 pc to Rs 5,498 cr, BFSI News, ET BFSI

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ICICI Bank on Saturday reported a 17.73 per cent jump in its December quarter consolidated net profit at Rs 5,498.15 crore, as against Rs 4,670.10 crore in the year-ago period. On a standalone basis, the country’s second largest private sector lender by assets showed a 19.12 per cent rise in the post-tax profit at Rs 4,939.59 crore for the reporting quarter, up from Rs 4.146.46 crore in the October-December 2019 period.

Its total income increased to Rs 24,416 crore from the year-ago’s Rs 23,638 crore, while the total expenditure was lower at Rs 15,596 crore as against Rs 16,089 crore.

The reported gross non-performing assets ratio was at 4.38 per cent, but would have been 5.42 per cent if not for the Supreme Court order asking banks not to classify non-paying loan accounts as NPAs after the end of the loan repayment moratorium.

Its overall provisions increased to Rs 2,741 crore from the year-ago period’s Rs 2,083 crore, but lower when compared to the preceding quarter’s Rs 2,995 crore, as per its exchange filing.

It made a contingency provision of Rs 3,012.16 crore for borrower accounts not classified as NPAs pursuant to the interim order of the Supreme Court and utilised Rs 1,800 crore of the Rs 8,772.30 crore in provisions for the pandemic made earlier.

As at December 31, 2020, the bank held an aggregate COVID-19 related provision of Rs 9,984.46 crore, including contingency provision amounting to Rs 3,509.46 crore, it said.

It said the provisions held by it are more than what is required by the RBI and the bank’s capital and liquidity position are strong.

Its overall capital adequacy stood at 18.04 per cent as of December 31, 2020.



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HDFC Bank signals IT issues may not be fixed by March, BFSI News, ET BFSI

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HDFC Bank has indicated in its conference call with analysts that the lender might not complete fixing its back-end IT issues during the current fiscal. The bank said that its action plan relating to disaster recovery would take 12-18 months, while its immediate plans would take 10-12 weeks.

The country’s largest private bank had reported its Q3 results on Saturday — the first after the RBI pulled up the lender for repeated problems faced by customers in accessing digital banking.

The bank had reported an 18% year-on-year growth in earnings. The bank’s share price rose by over 1% after the results on a day the sensex fell by nearly 1% after its record profit of Rs 8,758 crore.

According to Macquarie research analyst Suresh Ganapathy, the tech resolution will take time and could spill over to end of June 2021.

“They want to be very sure everything is in place, ramp up capacity and then call the RBI for due diligence … As of now, inability to give credit cards has not affected account openings … But if this continues beyond June, we can see some impact coming in the near term… Meanwhile, for others like ICICI and Axis, this is an opportunity to ramp up their credit card base,” said Ganapathy.

The RBI has barred the bank from launching digital initiatives and issuing credit cards until it fixes issues with its IT system and ensures that multiple outages of online services that happened in the past do not repeat.

According to analysts, though it would take time to fix the issues, the bank was optimistic of getting permission from the RBI for a digital lending platform for auto loans.

According to Siji Philip of Axis Securities, the bank has made a representation to the regulator for digital lending for four-wheelers and two-wheeler loans.

“On the restrictions imposed by the RBI on December 2, the bank has made progress according to the plan provided to the regulator. The bank expects to complete the process in 10–12 weeks, which will then be subject to RBI inspection,” a note by Edelweiss said. It added that the bank aims to introduce a digital platform for auto loans in 90 days.

ICICI Securities said that the bank’s credit card portfolio was up 9% quarter-on-quarter despite the ban on acquiring new customers coming into effect from mid-December.



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ICICI Bank launches prepaid cards for MSME workers in collaboration with Niyo, BFSI News, ET BFSI

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Private lender ICICI Bank announced a tie-up with FinTech Niyo to issue prepaid cards to MSME workers. The lender said MSME blue-collar workers would be able to get the ‘ICICI Bank Niyo Bharat Payroll Card’ which Allowed customers to receive funds of upto Rs 1 lakh.

ICICI Bank in a statement said the card, thorugh which MSMEs could also disburse worker salaries, was in line with Niyo’s aim of reaching 5 million blue-collar workers in 5 years. Through the card, workers could withdraw funds at ATMs, make online transactions at e-commerce portals, and also make payments at POS terminals.

Sudipta Roy, Head – Unsecured Assets at ICICI Bank said “We at ICICI Bank constantly strive to introduce facilities that foster inclusivity and extend the reach of the formal banking ecosystem. In line with this, we are delighted to partner with Niyo for the ‘ICICI Bank Niyo Bharat Payroll Card’. This partnership is yet another initiative by us to make banking products easily accessible to the underbanked population,”

“We believe that armed with this card, workers of MSMEs will be able to enjoy the convenience and safety of digital banking,” he further added.

Niyo’s Co-founder and CEO Vinay Bagri further noted “The Niyo Bharat Digital Salary Solution has the potential to bring millions of blue collared salaried workforces into the formal economy and also support the nation’s successful march towards Digital India,” further adding “Our primary objective is to provide digital banking solutions for the blue-collar segment to not only foster financial inclusion but also inculcate a long-term saving habit among them.”



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