Asiamoney Best Bank Awards 2017: India
Best domestic bank: HDFC Bank
|Aditya Puri, HDFC Bank|
India has bigger banks than HDFC Bank, particularly in the state sector. It also has some extremely successful and powerful private banks that were strong candidates for this award. But no bank in India is better run than HDFC.
It shows in the numbers it generates. ICICI Bank – founded in the same year as HDFC (1994) and for a long time its main rival as the best bank in the country – has a backlog of non-performing loans that has put pressure on its credit profile, Moody’s warned in February 2017. HDFC Bank, by contrast, has no such problem: its net and gross NPL ratios stood, as of the end of December 2016, at 0.32% and 1.05% respectively.
HDFC Bank remains the country’s most profitable private lender, which explains why its market capitalization is twice that of ICICI’s, and nearly three times that of another leading private lender, Axis Bank. Recent financials also highlight the strides HDFC Bank continues to make: net interest income is up 24% year-on-year in the 12 months to the end of March 2016; pre-tax profit and net revenues are respectively 20% and 23% higher. Earnings over the nine months to the end of 2016 are 18.3% higher on an annualized basis.
When Asiamoney sat with the bank’s highly respected managing director, Aditya Puri, he was asked why HDFC remains so far ahead of its peers. “Because we stick to our knitting,” he replied. “Others might dip in and dip out of retail banking or corporate banking, or have ups-and-downs. We stick to very clearly defined targets, we embrace technology, but we are careful when it comes to risk.”
Best digital bank: Axis Bank
Every lender in India now takes its digital banking services seriously. Prime minister Narendra Modi’s decision to effectively de-cash the economy in November 2016, which led to millions of unbanked citizens opening digital wallets and downloading mobile banking apps, made sure of that.
But some banks are a step ahead when it comes to the range and the quality of their digital offerings. And of this elite group, no domestic financial institution is on a par with Axis Bank. Its innovation lab in Bangalore employs dozens of engineers working on cutting-edge ideas that have already, or are forecast to, disrupt the banking sector, from blockchain to artificial intelligence to cloud technologies.
Axis Bank’s digital wallet has long been a winner with customers: in 2016, it doubled its user base to 2.4 million. The same year, it launched a new personal loan facility, allowing eligible customers to get pre-approved loans credited to their accounts instantly online, via ATMs, or through Axis Bank’s mobile app. Axis Bank has also been quick to benefit from the new national Unified Payments Interface, launched in April 2016, which lets customers transfer money instantly between two accounts via their smartphones.
Axis Bank was the first Indian lender to launch its UPI app, underlining its position as India’s best and most innovative digital bank.
Best bank for SMEs: ICICI Bank
No other private-sector bank in India lends more to micro or small and medium-sized enterprises. ICICI Bank has been a champion of SME lending since its formation in 1994, and it remains a consistent financial supporter of thriving young firms, which manufacture 40% of India’ exports and provide employment to 80 million people in south Asia’s largest economy.
In recent years, ICICI has rolled out a host of new digital banking services aimed at extending better and more cost-effective corporate banking services to leading Indian SMEs.
Last year, it joined forces with Chinese e-commerce giant Alibaba, launching the Trade Facilitation Center, a programme designed to make it easier to extend a host of corporate banking services to onshore SMEs, from trade finance – a vital development in a country where small firms have long struggled to secure access to working credit – and cash management solutions, to foreign exchange, bank guarantees, and cross-border remittances.
In March 2017, the Mumbai-based lender announced it was working with IndiaMart, an Indian e-commerce firm based in New Delhi, with the aim of providing escrow services to more than 50 million smaller enterprises.
Best corporate and investment bank: Kotak Mahindra Bank
Kotak Mahindra Bank
Kotak Mahindra Bank is an elite financial institution, but what often surprises people is the speed with which is has become such a mainstay across corporate and investment banking. Kotak is virtually ever-present in the corporate finance sector, banking India’s leading industrial groups, but also focusing heavily on the country’s army of future corporate stars.
Speaking to KVS Manian, Kotak Mahindra Bank’s president of corporate, institutional and investment banking, who joined in 1995, eight years before the group secured a banking licence, you hear the pride in the way he and the bank work.
He says no domestic lender can compete with Kotak’s corporate and investment banking services – and he’s right. Its corporate division posted a 24% year-on-year rise in advances in the three months to the end of December 2016, with revenues up 23% over the same period.
In investment banking, Kotak remains a consistent power player in M&A and equity capital markets deal-flow. It ranked fifth in announced, and third in completed, M&A activity in 2016, finalizing 19 deals worth $4 billion for a 12% market share, according to Dealogic.
In ECM it ranked third in 2016, completing 13 deals worth $725 million for a 7.2% share of the market. Key deals included a lead manager role on the $450 million October 2016 initial public offering of PNB Housing Finance, the home finance arm of state-run lender Punjab National Bank, and a buy-side adviser role on American Tower Corporation’s $2.1 billion acquisition of a 15% stake in Indian tower operator Viom Networks.
Best international bank: Citi
Few lenders of global scale can claim to dominate their foreign peers in a big market quite like Citi does in India. HSBC and Standard Chartered are embedded veterans of Asia’s third-largest economy, with operations spanning most of the big urban centres, but none can touch Citi. The US lender is by far the largest foreign distributor of credit cards – 1.8 million and counting – and the leading overseas player in onshore wealth management, with assets under management of $4.6 billion. Citibank India posted pre-tax profits of $872 million in the financial year to the end of March 2016.
And it goes on. Citi is the biggest non-Indian consumer bank – 1.1 million retail customers at the end of March 2016 – and one of the most financially inclusive foreign lenders. It has more assets, liabilities and revenues than its leading foreign peers, along with a lower rate of non-performing loans.
And that’s before you factor in Citi’s powerhouse investment banking team, which ranked number one in completed M&A deals in 2016, finalizing 14 deals worth $7.7 billion for a 23.2% share of the market, according to Dealogic. Citi also ranked top in equity capital markets deals in 2016, completing 15 transactions worth $1.64 billion for a 16.4% market share. It all adds up to make Citi the best foreign bank operating in the world’s fastest-growing large economy.
Best private bank: IIFL
Over the next few decades, this will be one of the most highly coveted awards in India – and perhaps the world. The number of high and ultra-high net-worth individuals is rising fast: India is now home to the fourth-highest number of HNWs in Asia, according to a 2016 Capgemini report.
Many wealth managers want to be known as the best provider of financial advice to the country’s elite, but currently there is a clear winner, and that is IIFL Wealth & Asset Management.
IIFL is a full-service wealth manager, offering asset management, retail and institutional broking, and distribution of a full suite of financial products. In recent years, it has expanded its presence at home and abroad, opening a dozen branches in large Indian cities, as well as offices in London, Dubai, Geneva, New York and Singapore.
But size matters, too, in wealth management. And here, again, IIFL rules supreme. It passed $16 billion in assets under management in December 2016, nearly double the AuM of the country’s second largest wealth manager. IIFL boasts 220 relationship managers – again more than any of its domestic peers.
In the nine months to the end of 2016, it posted an 8.3% rise in pre-tax profit and a 9% rise in the number of HNW clients. Over the past six years, earnings are up 43%, revenues up 41%, and its number of wealthy clients up 45%, on a compound basis.
Best bank for CSR: Yes Bank
India’s fifth-largest private-sector bank, Yes Bank, has been a clarion voice in India’s long drive to increase onshore financial inclusion since its formation in 2004. Later this year, its in-house business accelerator, aimed at boosting digital banking participation and unearthing the country’s next generation of great technology entrepreneurs, will open its doors in Mumbai.
But Yes Bank’s presence in the field of corporate social responsibility reaches far beyond the financial realm. It has long been a champion of green finance, being the first domestic lender ever to issue green infrastructure bonds, while mobilizing $5 billion toward mitigating the effects of climate change.
The bank has diverted capital into a host of charitable events and programmes, from promoting hygiene and sanitation – it has worked with Indian Railways to provide clean drinking water to the public at 1,000 railway stations across the country – to addressing road safety issues and funding nature reserves.
It is also a key advocate of the need to increase financial education across the country, and is actively working to increase the number of women employed directly by small and medium-sized enterprises on a path toward sustainable growth.
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