Imagine selling rock guitars when classical music comes into vogue! Surely, a difficult external environment can overwhelm the best of them. B&E profiles three key sectors that merit a mention for profitable or not-so-profitable reasons. psus, of course have been included for their prominence in the list
Sub-prime?: Who is he?
Despite global slowdown, interest rate uncertainties & mounting inflation, Indian banks have a great opportunity to move ahead. But consolidation is also looming on the horizon, says gyanendra kashyap
The paradigm shift in the dynamics of the banking
industry is overwhelming; thanks to the continued strong economic cycle. A total of 23 banks made it to the B&E Power 100 list this year. This shows that we are either quite immune from the sub-prime crisis or the impact is yet to come.
Bankex, which trailed around the 3,000 mark a couple of years ago, crossed the 12,000 mark on January 14, 2008. Once dominated by public sector entities, the industry is witnessing unprecedented changes and shareholders are having the last laugh (even though 19 of the 23 are PSBs); and why not, for Indian banking has topped the charts in value creation in FY ’08 (Boston Consulting Group’s report entitled “Managing Shareholder Value in Turbulent Times”). What is more interesting is the sharp decline in NPAs (from 8% in 2000 to about 1% today). Private players as well as their foreign counterparts are making deep inroads into the highly untapped markets; on the backdrop of an efficient technological set up and customer service; and slowly and steadily increasing their market share. Estimates suggest that the duo have been adding 1% of market share on an annualised basis. Their growth in terms of market share (by total assets) has been phenomenal; in 2003, market share of private banks was 17.5% and of foreign banks was 6.9%; by the end of 2007, the private sector banks commanded 21.5% of the market share, while their foreign counterparts increased their share to 8% (Moody’s report). ICICI, HDFC and AXIS are challenging the PSBs both in terms of quality and profitability; nevertheless the banking major State Bank of India (SBI) still tops the charts as far as profitability is concerned. Market capitalisation of ICICI bank (on June 24, 2008) was at $18.01 billion (as compared to SBI’s mcap of $17.71 billion); ample reasons to suggest why Brand Finance Plc. has rated the brand value & mcap of ICICI as ‘very strong’; HDFC bank has been rated strong on the same parameters. Going by the current rate of growth and promises that the new players show (AXIS, HDFC & ICICI banks have respectively registered 62%, 39% & 34% surge in profitability), the day may not be too far when more of them occupy the coveted B&E Power 100 ranks....Continue
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
Read also :-
Sub-prime?: Who is he?
Despite global slowdown, interest rate uncertainties & mounting inflation, Indian banks have a great opportunity to move ahead. But consolidation is also looming on the horizon, says gyanendra kashyap
The paradigm shift in the dynamics of the banking
industry is overwhelming; thanks to the continued strong economic cycle. A total of 23 banks made it to the B&E Power 100 list this year. This shows that we are either quite immune from the sub-prime crisis or the impact is yet to come.Bankex, which trailed around the 3,000 mark a couple of years ago, crossed the 12,000 mark on January 14, 2008. Once dominated by public sector entities, the industry is witnessing unprecedented changes and shareholders are having the last laugh (even though 19 of the 23 are PSBs); and why not, for Indian banking has topped the charts in value creation in FY ’08 (Boston Consulting Group’s report entitled “Managing Shareholder Value in Turbulent Times”). What is more interesting is the sharp decline in NPAs (from 8% in 2000 to about 1% today). Private players as well as their foreign counterparts are making deep inroads into the highly untapped markets; on the backdrop of an efficient technological set up and customer service; and slowly and steadily increasing their market share. Estimates suggest that the duo have been adding 1% of market share on an annualised basis. Their growth in terms of market share (by total assets) has been phenomenal; in 2003, market share of private banks was 17.5% and of foreign banks was 6.9%; by the end of 2007, the private sector banks commanded 21.5% of the market share, while their foreign counterparts increased their share to 8% (Moody’s report). ICICI, HDFC and AXIS are challenging the PSBs both in terms of quality and profitability; nevertheless the banking major State Bank of India (SBI) still tops the charts as far as profitability is concerned. Market capitalisation of ICICI bank (on June 24, 2008) was at $18.01 billion (as compared to SBI’s mcap of $17.71 billion); ample reasons to suggest why Brand Finance Plc. has rated the brand value & mcap of ICICI as ‘very strong’; HDFC bank has been rated strong on the same parameters. Going by the current rate of growth and promises that the new players show (AXIS, HDFC & ICICI banks have respectively registered 62%, 39% & 34% surge in profitability), the day may not be too far when more of them occupy the coveted B&E Power 100 ranks....Continue
Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
Read also :-
