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ICICI

ICICI. Wealth Management. A positive Outlook for India. 2nd fastest growing economy with 7% growth rate over the last decade. World Bank and IMF expect India to grow at 6% average rate by 2050 and the economy will be the 3 rd largest by 2025.

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ICICI

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  1. ICICI Wealth Management

  2. A positive Outlook for India 2nd fastest growing economy with 7% growth rate over the last decade. World Bank and IMF expect India to grow at 6% average rate by 2050 and the economy will be the 3rd largest by 2025. Indian economy is relatively stable and the political environment is good for business. The government has shifted away from socialism ,reforming and opening up the economy. Over the past five years the BSE had an annualized 40% return. Unlike China India will not have an aging population until 2050. In 2009, more deregulatory changes expected.

  3. Wealth of individuals is increasing as a result of the growing economy. By 2012, the number of: -Ultra High Net Worth (UHNW) will be 10,500. (income greater than $30 million) -Super High Net Worth (SHNW) will be 42,000 (between US$10 and $30 million) -High Net Worth (HNW) will be 320,000 (between US$1 million and $10 million) -Super Affluent (SA) will be 350,000 (between US$125,000 and $1 million) -Mass Affluent (MA) will be 1.8 million (between US$25,000 and $125,000) -Mass Market (MM) will be 39 million (between US$5,000 and $25,000)

  4. An Opportunity Today the market for wealth management is estimated at $220 billion. It is expected to increase to $1 trillion by 2012. Suppose a company worth $17 billion in 2008 manages to capture 3% market share by 2012. That represents a 37% annual growth rate even if the firm just sits on its CD!

  5. ICICI • Established in 1955 by World Bank and Indian government to offer mid-term and long-term financing for Indian business • Late 1990s, ICICI bank transferred into a financial service entity and expanse its customer targets • In 1999, ICICI bank listed on NYSE • In 2002, ICICI bank and other ICICI subsidiaries merged into one single entity – ICIC Bank Ltd.

  6. The Business Sector: FinanceIndustry: BANKS-FOREIGN ICICI Bank offers a wide range of banking products and services to corporate and retail customers through a variety of delivery channels. ICICI bank was first founded as a retail commercial bank. But now its businesses are diversified in variety of functions. ICICI’s primary source of revenue is the fees that it charges for its financial services and product offerings. ICICI maintains a competitive advantage through the widespread use of technology. ICICI is a global bank with a presence in 18 countries.

  7. WHY ICICI? • India’s 2nd largest lender • Largest capital base among Indian private banks–$24B • Has an effective and proven management team. • Provides the most comprehensive product portfolio. • Maintains a presence in 18Countries. • Awards (2007-2008) • The Asian Banker Leadership Achievement Award • Most Improved Market Profile by EuroWeek • Best "Trade Finance Bank and Provider" in India

  8. Has the largest private financial product and services distribution • network in India. • The firm’s follows a robust Cross-Selling Strategy. • Strong presence in Middle East, Europe and Canada. • ICICI is poised to provide convenient Remittance Services to the large Non-Resident Indian base. • The firm is rapidly expanding its Wealth Management and Private Banking departments. • ICICI recognizes the political situation and has positioned itself strategically for the best interest of the firm that is in line with India’s socialistic government.

  9. ICICI has followed a healthy Acquisition Policy to establish a foothold in foreign and domestic markets. • Vigilant Debt Repossession and Recollection policy • Management’s ability to Raise Equity

  10. ICICI operating expansion from 2007 to 2008 * All units are in million

  11. The Management • CEO and MD: K.V. Kamath • Graduated from the Indian Institute of Management and became the CEO of ICICI in 1996. Veteran of the financial industry both in India and oversea. CFO Chanda Kochhar, has been with the company since 1984 and was a key player in developing the strategic direction of the bank. The management at ICICI are made up of experts who have worked well together for a long time. -Even though ICICI has its presence in 18 countries and international banking revenues now account for 25% of its total revenues, it has zero exposure in current sub-prime crisis.

  12. Competitive landscape - There is no official data of market share. • Major players of the field: • State Bank of India (SBI) • Bharti AXA Life Insurance • ABN AMRO India • Citigroup • HDFC Bank • ICICI Bank

  13. SBI: • Indian largest lender • Started to offer wealth management services since 2005 • Focus on middle and lower income group in agricultural sector • Service: strictly focus on HNW and VHNW Induviduals • Bharti AXA: • Joint in the game lately in 2006, but has grown quite fast • Focus on telecom, agricultural business • No concrete financial data is available • ABN AMRO: • Dutch bank • Present in India since 1920, but only started wealth management service in 2002 • Operating only at 4 large cities: Mumbai, Dehli, Bangalore and Chennai.

  14. CityGroup: • American bank • Been in India for more than 100 years • India’s largest foreign direct investor • Customers: high net-worth individuals • -Services: finance, banking, investment, trust and advisor services • HDFC: • Established in 1994, has grown very fast • Rated as “Best Private Bank in the Super Affluent Category in India

  15. Comparison

  16. Future Outlook FY 2008 FUTURE • High Net Income Growth – 27% 20% • After Tax Profit Growth – 34% 25% • Net Interest Income - 30% 25% • Fee Income - 32% 25% • Perpetuity Growth after 5 Fiscal Years – 6%

  17. DISCOUNTED CASH FLOW ANALYSIS ICICI Bank Ltd. Current Price – $44.26

  18. ICICI Growth

  19. Downturn: • Real estate market • Government tries to control inflation • Rise of international interest rate due to sub-prime crisis Result: • Stock is undervalued • Perfect time to buy

  20. Conclusion ICICI: • Leader in most segments • Sound management team • Good strategies • Diverse subsidiaries • Solid growth both during up and downturns of the economy.

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