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India Banking Industry Report - 2015

India Banking Industry Report - 2015

This report profiles India’s banking industry, discussing market trends through 2014 and outlook for 2015 and beyond. The report also highlights leading players in the sector including State Bank of India, HDFC Bank and ICICI Bank

The Indian banking industry saw a period of consistent growth during the last decade, with a consistent rise in the number of reporting offices, along with banks and their customers embracing robust systems and processes. With the Reserve Bank of India stressing the policy of financial inclusion, there has been a renewed emphasis on rural expansion.

The sector saw a story of two conflicting sides during 2014. On one hand, were the private sector banks which recorded a stable performance yet again in terms of profitability and asset quality; while on the other hand, were the public sector banks which continued their struggle with bad loans, declining margins and profitability woes. Industrial slowdown and sticky consumer price inflation created a hostile environment for the country’s banking sector during the first half of 2014. As a result, the Reserve Bank of India (RBI) did not cut the benchmark policy rates during the year. Although private banks were not much affected, most banks in the public sector felt the heat. The cost of servicing debt rose, leading to an increase in bad loans in the rate sensitive sectors. As a result, the profitability of nationalised players also suffered.

However, going forward in 2015, the economic fundamentals of the country might turn for the better. The recent decline in inflation to record low levels is expected to bring some recovery in the sector. The lower inflation might also induce rate cuts by RBI. The long-term outlook for the Indian banking sector is also stable backed by sound regulatory structure. Rising per capita income, growing urbanization and consistent economic growth will drive the growth of this sector in the years to come.

Key Points:

During 2007-14, the total assets of scheduled commercial banks grew at a CAGR of 17.5%. Public sector banks led by State Bank of India and its associates dominated the Indian banking system in terms of asset size, accounting for 72% of the total assets.

Total credit disbursed by scheduled commercial banks grew at a CAGR of 19% during 2003-14, while total deposits of scheduled commercial banks grew at a CAGR of 17% during 2003-13.

The asset quality of scheduled commercial banks, particularly public sector banks, has deteriorated during the last two years. A steep rise in interest rates together with industrial contraction led to a sharp increase in non-performing assets. Gross NPA ratio of SCBs grew from 3.4% in FY13 to 4.1% in FY14.

Gross bank credit grew by 9.6% y/y in December 2014 compared to 14.5% y/y in December 2013. This was also lower than the long term credit growth trend.

1. Industry Profile
1.1 Sector overview
1.2 Sector size
1.3 Asset profile
1.4 Liability profile
1.5 Competitive landscape
1.6 Environmental scanning

2. Market Trends and Outlook
2.1 Key economic indicators-India
2.2 Monetary policy
2.3 Credit growth
2.4 Deposit growth
2.5 Capital adequacy
2.6 Asset quality
2.7 Profitability
2.8 Market outlook

3. Leading Players and Comparative Matrix
3.1 Leading Players
3.1.1 State Bank of India (SBI)
3.1.2 HDFC Bank Ltd (HDFC Bank)
3.1.3 ICICI Bank Ltd (ICICI Bank)
3.2 Comparative matrix
3.3 SWOT analysis

4. Tables and Charts
Table 1: List of major scheduled commercial banks operating in India
Table 2: Priority sector lending targets and sub-targets
Table 3: Basel III implementation draft guidelines issued by RBI
Table 4: Key financial ratios of the leading players

Chart 1: Number of reporting offices-All scheduled commercial banks
Chart 2: Reporting offices by location
Chart 3: Number of scheduled commercial banks in India
Chart 4: Reporting offices by type of banks
Chart 5: Total assets of the SCBs
Chart 6: Asset share by type of banks
Chart 7: Breakup of assets of SCBs
Chart 8: Total advances disbursed by the SCBs
Chart 9: Bank credit approved by sectors
Chart 10: Segment wise breakup of industrial loans
Chart 11: Segment wise breakup of service sector loans
Chart 12: Segment wise breakup of personal loans
Chart 13: Total investments done by SCBs
Chart 14: Breakup of investments done by SCBs
Chart 15: Breakup of liabilities of SCBs
Chart 16: Total deposits in SCBs
Chart 17: Type of deposits of SCBs
Chart 18: Ratio of savings deposit and term deposits to total deposits
Chart 19: India's top ten banks in terms of total assets
Chart 20: Changing demographics of India
Chart 21: Quarterly GDP growth rate-India
Chart 22: Average Monthly USD to INR Exchange Rate
Chart 23: Inflation-India
Chart 24: Repo rate
Chart 25: Cash reserve ratio
Chart 26: MSF rate
Chart 27: Y/Y growth in credit-Sector wise
Chart 28: Y/Y growth in credit-Segment wise
Chart 29: Deposits during last five years
Chart 30: Y/Y growth in deposits
Chart 31: Capital adequacy ratios of SCBs during last five years
Chart 32: Gross NPA ratio of SCBs
Chart 33: Banks with high Net NPA ratios
Chart 34: Net interest margins of SCBs
Chart 35: Return on assets of SCBs
Chart 36: Loans disbursed by SBI-Annual
Chart 37: Net interest margin of SBI
Chart 38: Asset quality of SBI
Chart 39: Loans disbursed by HDFC Bank-Annual
Chart 40: Net interest margin of HDFC Bank
Chart 41: Asset quality of HDFC Bank
Chart 42: Loans disbursed by ICICI Bank-Annual
Chart 43: Net interest margin of ICICI Bank
Chart 44: Asset quality of ICICI Bank

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