comparing ICICI & Axis Bank

8/10/2019 comparing ICICI & Axis Bank

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Group 8


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The assets of the Indian banking industry have increased over five times between March

2000 and March 2010 ( US$250 billion to more thanUS$1.3 trillion.) The industry has

recorded a CAGR of 18% as compared to Indias GDP growth of 7.2% during the same

period.

The industry has become more efficient and productive over the years. It should be noted

that Indian banks remained flexible and were not badly hit by the financial crisis which hit

the western economies during 2008.

The D&B report said the annual growth rate of old-time private sector banks stood at 7.1

per cent in assets, six per cent in deposits and 12 per cent in advances.

The commercial banking assets to GDP ratio has increased to nearly 100 percent while the

ratio of banks business to GDP has recorded nearly twofold, from 68 percent to 135

percent

The new age private sector banks such as HDFC, ICICI, and Axis have dominated the

growth with a year-on-year growth of 38.7% in the assets and 38.8% in deposits and 39.9%

in advances as of 2008.

Old-time private sector banks fared better in terms of profitability which stood at anaverage 30 per cent.


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GDP growth moderating to near 5% Subdued Industrial growth

Current account deficit leading to exchange

rate volatility Monetary policy: increase in short term rates


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Established in 1996 by the Industrial Credit and Investment Corporationof India, an Indian financial institution, as a wholly owned subsidiary. The parent company was formed in 1955 as a joint-venture of the World

Bank, India's public-sector banks and public-sector insurancecompanies to provide project financing to Indian industry.

In 1999, ICICI become the first Indian company and the first bank orfinancial institution from non-Japan Asia to be listed on the NYSE.

ICICI Bank Limited is an Indian diversified financial services companyheadquartered in Mumbai, Maharashtra. It is the second largest bank in India by assets and third largest by

market capitalization. ICICI Bank is Indiaslargest private sector bank in market capitalization

and second largest overall in terms of assets. The bank has a network of 1,626 branches and about 4,883 ATMs in

India and presence in 18 countries.


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The Bank has a large footprint of 2402 domestic branches(including extension counters) and 12,922 ATMs spreadacross the country as on 31st March 2014.

The overseas operations of the Bank are spread over itsseven international offices with branches at Singapore,Hong Kong, DIFC (Dubai International Financial Centre),

Colombo and Shanghai and representative offices at Dubaiand Abu Dhabi. During the year, the Bank has upgraded its representative

office in Shanghai, China to a branch to become the firstIndian private sector bank to set up a branch in China.

Axis Bank is one of the first new generation private sector

banks to have begun operations in 1994 With a balance sheet size of Rs.3,83,245crores as on 31st

March 2014, Axis Bank has achieved consistent growthand stable asset.


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Continued investment in key enablers: Branch network of 3820 (largest in private

banks)

Nearly 11000 ATMs Largest rural branch network

Increase in branch based origination of retailloans

Cautious approach to SME & corporatelending


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The Bank continues to scale up its retailbusiness and invest in strengthening thefranchise and distribution infrastructure

Granular retail deposits resulting in relativestability in funding base and costs even involatile markets

Healthy growth in retail fees driven by liability

fees, third party distribution and asset linkedfees


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Leveraging social networking platforms Advanced mobile banking platform

Enhanced ATM functionality

My Savings Rewards program Money2India mobile app for NRIs

24*7 electronic branch


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profitability

Continued focus on

granular deposits

Low credit costs

Sustaining feeincome growth

growth

Healthy growth in

secured products

like mortgages and

auto loans Strengthening of

deposit franchise

Continued

investments in

physical andtechnology

platforms

Risk management

Secured lending

portfolios driving

growth


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ICICI Bank (in Cr.)

Mar '10 Mar '11 Mar '12 Mar '13 Mar '14

Interest Earned 25,706.93 25,974.05 33,542.65 40,075.60 44,178.15

Change

0.010391

0.291391

0.194765

0.10237

Total Income

32,999.36

32,621.94

41,045.41

48,421.30

54,606.02

Change

-0.01144 0.258215 0.179701 0.127727

Employee Cost

1,925.79

2,816.93

3,515.28

3,893.29

4,220.11

Change 0.46274 0.247912 0.107533 0.083944

Total Expenses

28,974.37

27,470.56

34,580.16

40,095.83

44,795.55

Change -0.0519 0.258808 0.159504 0.117212

Net Profit for the

Year

4,024.98 5,151.38 6,465.26 8,325.47 9,810.48

Change

0.279852

0.255054

0.287724

0.17837

Total

6,834.54

8,615.76

11,483.44

15,379.70

19,712.77

Change 0.26062 0.332841 0.339294 0.28174

Earning Per

Share (Rs)

36.1 44.73 56.09 72.17 84.95

Change

0.239058

0.253968

0.286682

0.177082


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Customer convenience and cost effectivecustomer delivery

Advanced use of technology

Continue to build and strengthen RetailBanking franchise

Leverage leadership position in Infrastructurelinked Financial services

Build a full-service offering to SME customers Capture end-to-end opportunities in

Payments across customer segments


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Branches ATM

Point of sale

Internet banking Mobile banking

Call centre


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sales

Relationship

ManagersBranch leads

Credit appraisal

Business Proposals

processed throughdedicated credit

cells at 32 SME

Centers

Proposals rated

and vetted byindependent Risk

team

Post sanction and

monitoring

Disbursement &

Monitoring byseparate

Corporate Banking

Operations Team


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Axis bank (in Cr.)

Mar '10

Mar '11

Mar '12

Mar '13

Mar '14

Interest Earned

11,638.02

15,154.81

21,994.65

27,182.57

30,641.16

Change 0.302181 0.451331 0.235872 0.127236

Total Income

15,583.80

19,786.94

27,414.87

33,733.68

38,046.38

Change 0.269712 0.385503 0.230488 0.127846

Employee Cost

1,255.82

1,613.90

2,080.17

2,376.98

2,601.35

Change 0.285136 0.288909 0.142685 0.094393

Total Expenses

13,069.27

16,398.45

23,172.66

28,554.24

31,828.71

Change 0.254733 0.413101 0.232238 0.114675

Net Profit for the

Year

2,514.53

3,388.49

4,242.21

5,179.43

6,217.67

Change 0.347564 0.251947 0.220927 0.200454

Total

4,862.62

6,815.92

9,211.98

12,508.88

16,246.93

Change 0.401697 0.351539 0.357893 0.298832

Earning Per

Share (Rs)

62.06 82.54 102.67 110.68 132.33

Change

0.330003

0.243882

0.078017

0.195609


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0

5

10

15

20

25

30

35

2011 2012 2013 2014

ICICI

Axis


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Productivity is defined as the goods and services produced

per unit of labour, capital or both. The ratio of output tolabour and capital is a total productivity measure. In simplewords, productivity is the output per unit of input employed.The basic definition of productivity is:

Productivity =

Major Indicators of Productivity

Employee Productivity

1.

Deposit per Employee: This ratio reveals the deposit-collection capacity of anemployee. Higher the deposit peremployee ratio, higher the productivity per employee.


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Table No. 1 (Rs. in Crore)

Years ICICI Axis Bank

2007-08 6.00 5.94

2008-09 6.31 5.70

2009-10 5.73 6.53

2010-11 8.38 7.18

2011-12 10.11 6.94

Average

7.31

6.46

CAGR 11% 3%


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2 Advances Per Employee: These ratios reveal the contacts andconvincing skills of theemployee to disburse and invest the amountdeposited. This only ultimately results in the interest earning capacityof a particular bank. The deposits cannot be maintained unless they are

advanced for productive use by the people. As this entails involvementof employee time, this is also considered to be a ratio to measure theproductivity. Again higher the ratio, higher the productivity. The ratiosare as follows:

Table No.2

Year ICICI Axis Bank

2007-08 5.55 4.05

2008-09 6.31 3.95

2009-10 5.14 4.82

2010-11 8.03 5.41

2011-12 10.05 5.35

Average 7.02 4.72

CAGR 13% 6%


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3- Advance +Deposits Per Employee : Deposit collection and theadvance disbursementare the two basic activities of any bank.Moreover, The productivity of any bank is related to the creation anddelivery of capital. Here creation means deposits and delivery meansadvances. Both together are the net measure of productivity. If this ratiois higher, the employee of the bank is better and the productivity of thebank is more.

Table No-3


2007-08

11.55

9.99

2008-09 12.62 9.65

2009-10 10.87 11.35

2010-11 16.41 12.59

2011-12 20.16 12.29

Average

14.32

11.17

CAGR 12% 4%


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Branch Productivity

While evaluating the results in terms of infrastructural facilities utilizedby the banks at various locations, places, again eight indicators havebeen used. A brief summary of these ratios are as under:

Deposit per Branch Ratio: A Branch is the initial organizational unit inany bankwith similar environment and clientele. This also follows thesimilar policies, methodologies and structure in a particular bank. Inorder to smoothen out the individual differences, this seems to be abetter unit for measuring productivity. It reflects the organizationaleffectiveness of the bank. Higher the deposit per branch, better the

system of collection and vice-versa.Table No. 4 (Rs. in Crore)


2007-08 192.31 134.6

2008-09 152.48 141.24

2009-10 117.52 136.52

2010-11 87.95 129.62

2011-12 91.91 132.83

Average 128.43 134.96

CAGR 14% 00%


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2.Advances per Branch: In addition to employee skills, the loan policiesas well asinterest rates etc of a particular bank also affect advances.This ratio reflects this aspect of the bank. Higher the advances perbranch, better the advance policies and hence the productivity.

Table No. 5 (Rs. in Crore)


2007-08 177.51 91.65

2008-09 152.45 98.14

2009-10 105.41 100.81

2010-11 84.35 97.54

2011-12 91.27 102.45

Average 122.20 98.12

CAGR -0.12 0.02


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3- Total Business per Branch: Advances and deposits of a branchtogether reflectthe overall banking system and its productivity. Thisratio compares the productive efficiency of two banks. Hence, Higherthe ratio, better and more productive the bank.

Table No-6


2007-08 369.82 226.24

2008-09 304.93 239.4

2009-10 222.93 237.33

2010-11 172.31 227.15

2011-12 183.18 235.28

Average 250.63 233.08

CAGR -0.13 0.01


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Comprehensive Analysis of Productivity ratios

Productivity ratios ICICI Bank Axis Bank

Deposit per employee

Advances peremployee

Advance + Depositsper employee

Deposit per branch

Advances per branch

Total business perbranch


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Recommendation:

o Decrease costs and grow revenues in highly uncertain economic times.

o Operations departments should focused on substantially reducing the unitcosts of the key drivers (e.g. cost per current account). These reductions canbe achieved through a combination of automation, outsourcing.

o Longer-term sustainable cost reduction measures, such as straight-through

processing, first-time resolution and self-service channels.

o Eliminate paper, automate processes and retire physical infrastructure toright size their operating environments.

o Value chain and corresponding IT architectures should be in industry-widedata standards.

o Customer data held by one bank must be held in a format that enables it tobe processed simply and accurately by any other bank, as well as by anypotential new structures.


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comparing ICICI & Axis Bank

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