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Asiamoney best bank awards 2020: India


Best Domestic Bank: HDFC Bank

Best Corporate & Investment Bank: Kotak Mahindra Bank

Best International Bank: Citi

Best Digital Bank: Axis Bank

Best Bank for SMEs: ICICI Bank

Best Bank for CSR: Punjab National Bank

Best for Microfinance: Ujjivan Small Finance Bank

Award winners

Best domestic bank: HDFC Bank

Aditya Puri, HDFC Bank

Privately owned HDFC Bank – Asiamoney’s best domestic bank in India this year – is on the cusp of a leadership change. Long-serving managing director Aditya Puri is due to step down in October, and the hunt for his successor is on. Puri leaves behind a bank with impeccable credentials, strong financials and corporate governance standards that are the envy of the street.

HDFC reported a return on assets of 1.51% for the nine months ending December 2019, up from 1.39% in the same period in 2018. Its net non-performing asset ratio rose marginally to 0.48% from 0.42% over the same time frame, but is well below that of some peers. Net revenue and net profit rose 21.5% and 27.2% year on year respectively, while the share price climbed about 20% in 2019.

HDFC has a growing investment banking franchise in the face of a choppy environment over the last year, triggered by the default of a non-banking financial company and the liquidity tightening that followed.

Its clients include Vodafone Idea, Larsen & Toubro and Metropolis Healthcare. It had equity capital markets league table credits for about $1.2 billion in 2019, according to Dealogic, giving it a 5.9% market share, and it was involved in some substantial IPOs as well as a multi-billion-dollar rights issue for Vodafone Idea.

While the bank was late to jump on the digitalization bandwagon, future-proofing is now a top priority for HDFC, which has a 50-strong digital transformation unit that focuses only on innovation.

Then there is its private banking division, which boasted assets under management of $23.2 billion as of December 2019 – up an impressive 49% from the previous year. In addition to the traditional vanilla products offered to clients, HDFC Bank boosted its focus on three segments last year: alternative investment products, life insurance and bonds.

The firm also broadened its private banking reach by making headway in a few second-tier cities.

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Best corporate and investment bank: Kotak Mahindra Bank

Winning corporate and investment banking mandates in India is no easy feat: the privately owned banks are not only competing

KVS Manian, Kotak Mahindra Bank

against each other, but also against the state-owned banks and a slew of international banks that have long-standing relationships with clients.

In such a competitive environment, Kotak Mahindra Bank’s corporate and investment banking business stands out.

Under KVS Manian, group president for corporate, institutional, investment banking and wealth management, Kotak did a few things differently in 2019. Its decision to improve collaboration between the corporate and investment banking businesses is slowly but steadily starting to pay off, with more cross-selling opportunities arising, say bankers at the firm.

It also decided to shake up its business, based on its deep insight into the Indian market. With the equities market more prone to volatility – not just due to domestic issues, but also international worries – Kotak decided to focus more on its advisory business last year, adding more sector specialists.

This led to a change in its revenue stream for the CIB business: traditionally, 60% to 70% of revenues come from the equities business and the rest from advisory, but Kotak managed to reverse this and make two thirds of its CIB revenues from its advisory franchise and one third from equities.

Landmark ECM deals include Bajaj Finance’s $1.2 billion placement, its own $1 billion follow-on offering and the first real estate investment trust IPO in India.

The bank has demonstrated the depth of its franchise by working on deals across business lines, including running sell-side and buy-side deals, private equity transactions, restructurings, buy-backs and tender offers, acquisition financing and securitization trades. It has also shown its reach, with a client roster that includes Vodafone, Blackstone and Infosys.

Its custodian business has grown impressively too, making it one of India’s largest domestic custodians with assets under custody of more than $32 billion.

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Best international bank: Citi

Ashu Khullar, Citi

Citi has beaten other foreign banks in the Indian market for years now, and this year was no exception.

The bank reported profit after tax of $605 million for the financial year ending March 31, 2019, up 23% year on year. Its return on assets was 2.6%, while the net non-performing assets ratio was a marginal 0.5%.

Citi is one of the few international banks that has its fingers in pretty much every pie of India’s financial industry, from investment banking, transaction services and capital markets to credit cards and consumer banking.

The US bank’s consumer banking business in India has 2.9 million customers, as well as 18,600 small and medium-sized enterprise clients and 1.2 million liability account customers. The franchise has grown by about 28% over the last six years, from $572 million in revenue in the 2012/13 financial year to $732 million in 2018/19.

Led by Ashu Khullar, chief executive of Citi India and Citi cluster head for South Asia, the bank is ahead in several areas. It is a top credit card issuer among international firms, with a 7.7% share in card spends, and was the first bank to launch home loans linked to a Reserve Bank of India external benchmark.

A handful of things stood out in 2019. For one, Citi gave a big fillip to its digital offering to customers. It rolled out a customized mobile app for Suvidha, or professional, customers and also ramped up the acquisition of these clients, increasing new accounts by 24% over the previous year.

Next, it focused on cross-selling between the retail and cards businesses; the cross sell of credit cards to retail clients jumped 37% while the cross sell of retail to cards clients surged 84% year on year.

Citi was a force to be reckoned with in corporate and investment banking too, working on numerous headline deals. On the equities side, this included a $1.8 billion placement for Axis Bank and the first preferential issue of units for a listed infrastructure investment trust, IndiGrid.

In the international debt market, it took firms such as Greenko, Airtel and State Bank of India to the dollar bond market.

It worked on 19 equity capital markets deals last year and earned league table credits of $2.1 billion, putting it in second place with a 10.1% market share, according to Dealogic. Among G3 bond bookrunners for India, Citi ranked fifth with $1.1 billion in credits and 7.1% market share.

Its private banking business is robust, with $8.5 billion in assets under management as of December 2019. In trade and treasury services, it has a strong foothold as the leading foreign bank for electronic cash management, and is among the top for cash management and capturing trade flows.

Citi’s franchise remains unmatched; it will be a while before any other international bank knocks it off first place.

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Best digital bank: Axis Bank 

Amitabh Chaudhry, Axis Bank

Axis Bank has made digital banking an integral part of its operations for some time now, but last year, its leadership and strength really stood out.

Digital transactions accounted for a hefty 82% of the bank’s transaction mix. In mobile banking, it was among the top firms across transaction value and volumes. For instance, just in the last quarter of 2019, mobile banking spend grew 56% year on year. In the year to March 2019, 43% of all personal loans were provided digitally, versus 22% the previous year.

Axis’s app is among the more user-friendly ones, allowing customers to do everything from banking-related trades to paying for utilities and services. Even non-customers can register their unified payment interface on the app and open investment products instantly.

The bank also launched a tap-and-pay facility through which contactless payments at merchant terminals can be done, while customers can use its smart bill pay option to settle their utility bills by scanning a QR code.

Axis is using artificial intelligence and machine learning to reduce manual intervention, improving employee productivity and processing time. Online trading options are also available, while electronic payments to support cash flows between micro, small and medium-sized enterprises has been emphasized.

What’s next for Axis, led by chief executive Amitabh Chaudhry? The firm is already setting up a digital bank with a full team to rethink the traditional banking process.

Be prepared for more digital innovation from the bank.

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Best bank for SMEs: ICICI Bank 

Nearly every bank in India flags its credentials in two important areas: the digital franchise and small and medium-sized enterprise

Sandeep Bakhshi, ICICI Bank

(SME) clients. Under chief executive Sandeep Bakhshi, ICICI Bank has done a stellar job at bringing those together, tailoring its numerous digital offerings to its vast SME client base – making it Asiamoney’s best bank for SMEs.

In the 2019 financial year, privately owned ICICI launched a host of digital products specifically for SMEs, to help them meet their business and transaction banking requirements. These included an entirely digitalized current account opening process as well as an instant digitally processed overdraft facility of up to Rs1.5 million ($20,475) for these businesses. The overdraft is the first of its kind among Indian banks for micro and SME customers that doesn’t need a branch visit or physical documents.

That’s not all. The bank now also offers MSMEs loans – the extra ‘M’ stands for micro businesses – based on goods and services tax returns. This is a new working capital facility that allows MSMEs to get an overdraft based on the turnover reported in their goods and services tax returns. All MSMEs, including those that are not even customers of ICICI, can get loans worth up to Rs10 million.

ICICI also started allowing general banking transactions and export-import related deals to take place online. About 93% of trade transactions can be processed digitally by the lender through its online platform.

Money lent to SMEs made up 5.2% of total advances as of March 2019, a tiny increase from 5% the previous year and from 4.4% of total advances in March 2015.

ICICI has had to claw its way back from a difficult few years after corporate governance issues forced management changes, but one thing that hasn’t changed is the bank’s focus on SMEs.

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Best bank for CSR: Punjab National Bank

Mallikarjuna Rao, Punjab National Bank

As a state-owned bank, Punjab National Bank has a big mandate concerning corporate social responsibility. But it is a mission it has embraced wholeheartedly, making it Asiamoney’s choice for best bank for CSR for the second year in a row.

The bank’s focus is clear: work on areas that are closely linked with socio-economic development and support government schemes and programmes around alleviating poverty, creating jobs and helping the country’s development.

PNB has put its emphasis on agriculture, affordable housing, the empowerment of women and weaker sectors of society, as well as on micro, small and medium-sized enterprises. Its lending to these priority sectors, as it calls them, rose to about Rs1.8 trillion ($24.6 billion) in the year to March 2019, from about Rs1.7 trillion the previous year and Rs1.4 trillion in the 12 months ending March 2017.

But more than this lending, PNB, led by new chief executive Mallikarjuna Rao under chairman Sunil Mehta, deserves credit for its involvement in promoting three of the government’s social security schemes through its enormous branch network. PNB has managed to boost the number of people signed up to a government accident insurance scheme, a life insurance scheme and a pension scheme – no small feat in a country such as India where a unique identification system for its 1.3 billion people was only launched 11 years ago.

In addition, PNB organizes health check-up camps, tree plantation programmes and blood donation camps across different parts of the country, while also promoting sports among the underprivileged. It has set its sights on 169 villages to develop, offered monetary support to girl students and helped government schools to build toilets.

PNB is also giving farmers free training to equip them with some key skillsets, including computer learning courses.

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Best for microfinance: Ujjivan Small Finance Bank

Nitin Chugh, Ujjvan Small Finance Bank

Ujjivan Small Finance Bank, winner of Asiamoney’s award for the best firm for microfinance in India, was set up in 2005 as a micro-lending institution, so its credentials in the microfinance segment are unrivalled. 

It now boasts $1.7 billion in assets and $1.4 billion in deposits, but its core business hasn’t changed – about 85% of Ujjivan’s portfolio is still microfinance.

So what makes Ujjivan, run by chief executive Nitin Chugh, unique? First, the firm has consistently made sure to balance risk-taking with robust financials. Its net non-performing loan ratio last year, for example, was at a manageable 0.85%.

But that does not mean it is too conservative. The bank has shifted focus over the years from giving loans mostly to groups, to lending to individuals. In 2019, it went a step further than that by offering its banking products to families of its existing microfinance customers. It has also emphasized digital transformation to its microfinance clients.

Ujjivan’s loans range in size from about $70 to $2,810 and can go towards anything from home improvement and child education to working capital for businesses or agriculture. Loans can be paid within two days from application, with customers able to open a savings account in less than 20 minutes.

Ujjivan is also one of the few small finance banks to allow flexible cashless repayment options, with about $1.5 million of loans being repaid this way.

The bank is one of the first in India to use comprehensive credit card information reports for underwriting microfinance loans, giving it an early insight into risks.

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