Retail Banking Industry

Vikas Bairoliya (4)

Khagesh
Chitalangiya (6)
Niket Khatri (17)
Jaimin Patwa (19)
 Retail Banking

 Dealing of commercial banks with individual

customers, both on liabilities and assets
side of the balance sheet.
 Comprises of three basic characteristics
 Multiple Products (deposits, credit
cards,insurance,etc)
 Multiple channels of distribution (call
centre,branch,internet,etc)
 Multiple customer group (consumers,small
businesses)
 Retail Banking Industry

 RBI’s policy stance : Unpredictability

becoming the norm
 RBI on tightening spree
 Key monitorables flashing mixed signals
 Credit growth slowdown
 Inflation too moving within a tolerance level
 Forex inflow-unabated growth
Cash Reserve Ratio
Repo Rate
Contd…
 Earnings momentum to gather pace
 Moderation in credit growth likely
 Retail credit growth to come off the
highs
 However, corporate capex increasing
 Infrastructure lending offers huge
potential
 SME-small getting bigger for banks
Contd…
 Deposit growth to mirror loan growth
 Slight moderation in margins ahead
 Continued momentum in NII growth
 Non-trading other income – healthy
growth
 Provisioning expenses to moderate
 ICICI Bank

 ICICI Bank is the best play on the

‘Emerging India’ story
 A diversified play on the India growth
story
 Strong Management
 Sum of parts greater than the whole
 Demand Forecasting

Multiple Regression Model

Dependent variable
• Profit after Tax( PAT)(Y)
 Independent Variable
• Advances (X1 )
• Interest Received (X 2)
 ICICI BANK

Income
Year PAT(Y) Advances(X1) Received(X2)

2003 1,210.89 53,279.41 9,368.06

2004 1,638.75 62,647.62 9,002.39

2005 2,006.85 91,405.15 9,409.89

2006 2,534.47 146,163.11 14,306.13

2007 3,024.85 195,865.60 22,994.29

Advances CAGR = 38.47%%

Income Received CAGR = 25%
Regression Equation

 Y = a1 + b1X1 + b2 X2 + e

 Y= 935.7641 + 0.016506X1 - 0.05118X2 + 145.0689

 a1 = 935.7641
 b1 = 0.016506
 b2 = -0.05118

 R2 = 0.979515
 Standard error( se) = 145.0689
Expected & Actual values

Year PAT
(Estimated) PAT( Actual)
2 1480 1210
3 1654 1638
4 2107 2006
5 2761 2534
6 3136 3024
7 4086 ------
------
PAT Estimated Vs Actual
6000

5000

4000

PAT(Estimated)
3000
PAT(Actual)

2000

1000

0
2003 2004 2005 2006 2007 2008 2009
Opportunities
 Rise of the Indian Middle Class
 Increase in Purchasing Power
 Liberal Attitudes towards Personal
Debt
Challenges

 Retention of customers is going to be

a major challenge.
 Rising indebtedness could turn out to
be a cause for concern in the future.
 Information technology poses both
opportunities and challenges.
 KYC Issues.
 Money laundering risks in retail
banking
Path Ahead…
 Product Development and Differentiation
 Innovation and Business Process
Reengineering
 Micro-planning
 Marketing
 Prudent pricing
 Home/Electronic/Mobile Banking
 Cost Reduction
 Cross Selling
Conclusion

 Need of constant innovation in retail

banking.
 A paradigm shift in bank financing through
innovative products and mechanisms.
 The kind of technology used and the
efficiency of operations would provide the
much needed competitive edge for success
in retail banking business.