The Banking and Strategy Initiative

ICICI Bank in the mirror | Advantage zyaada

Let’s face it, India is a land of scandals, scams and belittled frequently for its lack of infrastructure and semi-literate breed of urban professionals called bank salesmen and other staff.. It is so. No the diatribe just hides the fact that ICICI Bank has been caught with its pants down in the market and lost most of the loan book gains it had made in 1999-2007 , Kamath’s golden goose years.

ICICI Bank taught the world how India and India’s urban professionals can be made to live in a hurry and make do with the proverbial “jugaad” reduced to inane cuts in service and channel access and still achieve INR 4 trillion in assets. So much so that the gold plating and almost irreverent wealthy access provided by urban MNC branches of international banks created a great divide between the deserving SEC A1 and othr section of the “consumable” Indian twenty somethings, professionals and retired executives across all possible SEC profiles on the marketing side.

Well, mint has hopped on the “find the truth about ICICI” bandwagon with great strides in access to balance sheet data and long unavailable clarity regarding India’s story’s financials. Tamal’s story here, in the yet cornily titled “Bankers Trust”, any of Tamal’s flaws can easily be forgiven if he continues to time ICICI Bank’s time for recovery with the right data. Chanda Kochchar is a little alone in this sojourn and the SCBs and the HSBCs are here with Asian capital ready to make a splash as access remains a distant dream for the larger population and India’s urban population knows they are a privileged lot with a “stone’s throw” access to all private banking services, asset applications and quick approvals.

I do not need to go into ICICI Bank’s retail asset sales practices here, most readers would realise they have been rushed and taking on exposure to the loan book in truly desi fashion without any operational audit for thoroughness or matching with possibility of securitisation sales. This is as likely in a Citi in the US or a Lloyds in the UK when growth is at hand..However, to quote figures from Tamal, SBI has grown its market share to 18.4% from 16%(15.9%) in March 2007 and ICICI Bank’s
asset book has dwindled to INR 3.56 Trillion a drop of 11% from March 2007 as of December 2009

If one excludes treasury gains and focuses only on net interest and core fee income, ICICI Bank’s average RoE in the past few years has been 7.5% against SBI’s 17%, HDFC Bank’s 20% and Axis Bank’s 19%.

Many a local brokerage analysts hopelessly muddle in stories about India’s IT and Finance sectors and use longwinded exclamations for trending assumptions for Indiabulls. India’s retail finance assets growth will continue and with a hopeless structure from ICICI Bank in no hope of being repaired despite the lads from Mckinsey dripping in the lard in the next few months, Chanda will still be recognised as a great leader by the time she leaves/gets reelected in 2014. Such is the media’s wear and care (for which they are demanding their pound of flesh) But the lack of information has not stopped India’s consumer from making informed decisions about each purchase of house , car and durables financed by personal loans and mortgages. India’s bone collectors however and the 1/3 of any year’s graduate output (that is unemployable without adequate skills and unfit for retraining) however has to step up with their own personal efforts in cleanliness, hygiene and commonsense before they go selling and trying to collect these loans and assets..

In PE updates, KKR has finally signed that elusive Coffee Day Resorts deal as Lead and we are going to see VG Sidharth’s new chain of Farmville inspired holidays throughout the land..keep smiling and find that RJ you are listening to a li’l something to treasure

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