India s National Export Credit Agency. Investor Presentation

Transcription

1 India s National Export Credit Agency Investor Presentation

2 Presentation Outline 1 Key Credit Highlights 2 The India Story 3 The Exim Bank Story 4 Appendix 2

3 Section 2 The Key India Credit Story Highlights

4 Key Credit Highlights 1 India: Strong & Sustained Economic Growth 5 Management Strength India s Engine for Growth of International Trade EXIM: Proxy to Sovereign 2 Financial Highlights Policy Role at National Level 4 3 4

5 Section 2 The India The India Story Story

6 Nominal GDP (US$ bn) India: Strong & Sustained Economic Growth Resilient GDP Growth (1,2,3) World s 7 th largest economy based on nominal GDP in 2016 (2) o Nominal GDP for 2016: ~US$ 2.3 tn (2) World s 3rd largest economy based on GDP measured in PPP terms in 2016 (2) o GDP in PPP terms for 2016: ~US$ 8.7 tn (2) GDP growth rate for FY18 (Jul Sep) estimated at 6.3% (3) Favorable demographic profile: 66% of the population is between the age of 15 to 64 years (4) Foreign Exchange Reserves rose to US$ billion as on November 24, 2017, covering over twelve months of import. Implementation of currency exchange (demonetization) and GST to strengthen fundamentals of the economy through increased tax collection and greater financial inclusion. (5) FYxx means financial year ended March 31, 20xx. E- estimated P - Projected Source: (1) Institute of International Finance (IIF); (2) IMF World Economic Outlook October 2017; (3) Ministry of Statistics and Programme Implementation (MOSPI); (4) World Bank Database; (5) India Development Update May 2017, World Bank 6

7 Indian Economy: Key Economic Indicators General Government Debt (% of GDP) (1) Current Account Deficit (2) Currency Movement (4) Centre State FY FY FY FY FY FY FY FY FY F 17E 17E CPI Inflation Rate (2)** Key Macroeconomic Metrices 10.1% 9.3% Key Parameters FY2013 FY2017 Change Gross National Saving (% of GDP) (3) * (160 bps) 5.8% 4.9% 3.8% 3.6% Gross Domestic Investment (% of GDP) (3) * (540 bps) Capital Expenditure (% of Total Expenditure) (3) bps Revenue Deficit (% of GDP) (3) (160 bps) FY13 FY14 FY15 FY16 FY17 FY 18 (Apr-Oct) CPI Source: (1) Institute of International Finance (IIF) Database. (2) Reserve Bank of India, Press Release and Online Database (accessed online on 19/07/2017) (3) Office of the Economic Adviser, Ministry of Commerce and Industry, Government of India. (4) Reuters (Rebased to 100) * Data pertains to FY16 (as per latest available data) ** Base year for CPI Inflation FY13-FY17 is 2012=100 FDI Inflows (US$ billion) (2) % GNPA (as % of Gross Advances) (2) bps Exchange Rate (INR/US$, avg.) (2) % 7

8 Sound External Sector Trend of Merchandise Trade (1) Trend of Services Trade (2) (US$ bn) (US$ bn) 47 FY13 FY14 FY15 FY16 FY17 FY18(Apr-Sep) Expors Imports FY13 FY14 FY15 FY16 FY17 FY18(Apr-Sep) Expors Imports India s Export Pattern (1) India s Import Pattern (1) FY US$ 300 bn FY US$ 491 bn FY US$ 276 bn FY US$ 384 bn Gems & Jewellery Textiles Chemicals Petroleum Products Agri & Allied Products Transport Equipments Base Metals Machinery Others Petroleum Products Gems & Jewellery Electronics Items Chemicals Machinery Agri & Allied Products Ores & Minerals Base Metals Others Merchandise trade (exports + imports) as percentage of GDP stood at 30% in FY17 (1). India s share in global merchandise trade stood at 1.9% (2016) (3) India emerged as the 20 th largest merchandise exporter in 2016; and accounted for 1.7% of global merchandise exports in the same year (3) India is the 8 th largest exporter of services in 2016, accounting for 3.3% of global services exports (3) Source: (1) MOCI/IIF (2) Balance of Payment Statistics, RBI (3) World Trade Organization (accessed on 04/12/2017) 8

9 External Debt vis-à-vis External Reserves (US$ bn) External Debt External Reserves External Debt External Reserves 14% FY 13 6% 4% 34% FY 17 5% 13% 2% 37% 9% FY 13 2% 5% FY 17 1% 17% 24% 25% 18% Commercial Borrowings Short Term Non Resident Multilateral Bilateral Trade Credit (1) Volatile capital flows is defined to include cumulative portfolio inflows and short-term debt (RBI). For FY17, Volatile Capital Flow data pertains to end-march 17. (2) Volatile capital flows to Reserves ratio peaked at 97.4% in September 2013 (3) Source: RBI/Ministry of Finance, Government of India 89% Foreign Currency Assets Gold SDRs / Reserve Tranche 9 94%

10 India s Twin Balance Sheet problem Pre Global Financial Crisis Investment-GDP Ratio soared by 11% points to 38% in four years to FY ; Expectations of sustained double digit growth by corporates; In three years to FY , non-food bank credit doubled Bad-Loan-Encumbered Banks 11.03% of GNPA Ratio as on March 31, 2017 in PSBs; Indian Banks relatively resilient vis-à-vis Banks in US & Europe after the Global Financial Crisis Tightening of monetary policy due to rise in inflation: Repo rates increased from 4.75% in April 2009 to 8.50% October 2011; Depreciation added to the stress in FC debt servicing: USD/INR depreciated from in February 2013 to in August 2013; In 2013, 33% of corporate debt was owed by companies with ICR < 1; increased to above 40% in late 2016 Over Leveraged Corporates Post Global Financial Crisis Source: Economic Survey , Bloomberg Database * RBI * *PRC 2017 Article IV consultation, IMF Asset Quality Review (AQR) Resolution Schemes / Incentives 5:25 Flexible Refinancing, Strategic Debt Restructuring (SDR), Scheme for Sustainable Structuring of Stressed Assets (S4A) The Insolvency and Bankruptcy Code, 2016 (IBC) Announcement of INR 2.11 trillion capital infusion into state-run banks, including re-capitalisation bonds of INR 1.35 trillion 10

11 Economic and Institutional Structural Reforms : Work in Progress Make in India Liberalisation of FDI 25 Focus Sectors Aadhaar backed Direct Benefit Transfer (DBT) The Insolvency and Bankruptcy Code, 2016 (IBC) The Banking Regulation (Amendment) Act, 2017 The Real Estate (Regulation and Development) Act, 2016 (RERA) Monetary Policy Framework Agreement set up Monetary Policy Committee (MPC) Demonetisation Goods and Service Tax (GST) Bank Recapitalisation Bonds India jumped up 30 notches into the top 100 rankings on the World Bank s ease of doing business index On the taxation index, India has vaulted up 53 places. Moody's upgrades India's government bond rating to Baa2 from Baa3; changes outlook to stable from positive Based on the reforms carried out by the present Government, India s structural credit strength and global competitiveness have improved. 11

12 Section 2 The India The Exim Story Bank Story

13 EXIM Bank - India s Export Credit Agency Genesis Set up under a Act of Parliament in 1982 by the Government of India (GoI) Objectives for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country s international trade shall act on business principles with due regard to public interest (Export-Import Bank of India Act, 1981) Vision To develop commercially viable relationships with a target set of externally oriented companies by offering them a comprehensive range of products and services, aimed at enhancing their internationalisation efforts 13

14 EXIM Bank - India s Export Credit Agency Ongoing Government Support An instrument of Government policy as India s official export credit agency 100% owned by GoI 100% owned by Government of India ( GoI ) o Proxy to the India Sovereign in international debt markets o Cannot be liquidated without GoI approval Proxy to India Sovereign in International Debt Markets Equity Capital Infusion Guarantees on GoI Routed Lines of Credit Directors Appointed by GoI Board of Directors are appointed by GoI o Comprises top officials from key GoI ministries (Commerce & Industry, Finance and External Affairs) and RBI Guarantees are provided by GoI for lines of credit extended by EXIM which are on behalf of and supported by the GoI A track record of GoI capital infusions 14

15 EXIM Proxy to Sovereign (Cont d) EXIM s credit rating has been on par with India sovereign rating since its establishment Rating is Baa2 (Stable) on par with sovereign (INR bn) Government Capital Injection Rating is BBB- (Stable) on par with sovereign FY13 FY14 FY15 FY16 FY17 HY18 Continued GoI support evidenced by capital infusion Budget allocation of INR 5 bn for FY 18 from GoI towards capital, received in April

16 EXIM s Lines of Business Export Credit Finance for Export Capability Creation Projects Products Services Term Loans Working Capital Export Product Development Lines of Credit NEIA Buyer s Credit under NEIA Supplier s/buyer s Credit Pre-Shipment Credit Post-Shipment Credit Guarantees & L/Cs Export Facilitation Overseas Investment Finance Import Finance Guarantees & L/Cs 16

17 Financial Highlights Capital Strength Total Assets, Loans and Advances 15.28% 14.32% 1.57% 1.54% 15.34% 14.55% 1.54% 1.51% 15.81% 15.75% 1.52% 1.51% ,152 1,172 1, ,026 1, % 12.78% 13.80% 13.04% 14.29% 14.24% FY13 FY14 FY15 FY16 FY17 HY18 Tier I Tier II CAR (%) FY13 FY14 FY15 FY16 FY17 HY18 Total Assets (INR bn) Loans and Advances (INR bn) * Total Income Profitability % 2.67% 1.97% 2.17% 1.70% 1.30% FY13 FY14 FY15 FY16 FY17 HY18 (INR bn) FY13 FY14 FY15 Operating Profit (INR bn) FY16 FY17 HY18 Net Interest Income (INR bn) Net Profit (INR bn) NIM (%) * Includes loans and advances to industrial concerns, scheduled banks foreign, governments and other financial institutions and bills of exchange and promissory notes discounted / rediscounted. Amounts stated are net of provisions for non-performing loans (NPLs). 17

18 Asset Quality Position Non Performing Loans (1) Gross Loans o/s by Major Industries (2) (3) 2.31% 2.10% 2.94% 0.47% 0.43% 0.59% 4.17% 0.86% Current NPA primarily due to downgrade of the restructured legacy assets No significant new NPA during 1HY % 9.61% Credit watchlist of INR bn till March 31, % 4.63% FY13 FY14 FY15 FY16 FY17 HY18 Gross NPL Ratio Net NPL Ratio Financial Services Ferrous metals and Metal processing Textiles and Garments Oil and Gas Drugs and Pharmaceuticals Petroleum products EPC Services Petrochemicals Ship building Chemicals and Dyes Shipping Services Renewable energy Mining and Minerals Auto & auto components Agro & Food Processing Construction Power Engineering goods Plastic products Others 3.97% 3.79% 3.34% 2.66% 2.41% 2.40% 2.22% 1.90% 1.83% 1.71% 1.54% 1.30% 0.82% 0.82% 0.80% 0.62% 0.58% 7.05% 8.14% 15.68% Standard NPA Watchlist Note: (1) Excludes restructured standard assets (2) Excludes advances under lines of credit, buyer s credit under NEIA and staff loans which cannot be classified under any particular sector totaling to 35% of Gross Loans outstanding. (3) As on September 30,

19 Diversified Credit Exposure Aggregate Country Exposure ( 1) Funded Portfolio Outstanding INR 1,106 bn (1) Non-Funded Portfolio Outstanding INR 146bn (1) 19 Note:(1) As on September 30, 2017 (2) Includes advances under Production Equipment Finance Program, Long Term Working Capital Loan and staff loans. etc

20 Asset Liability Management Foreign Currency Asset Liability Gaps (1) Total Resources/ Loan Assets (1)(2) Rupee Assets 30% FC Assets 70% Total Lendable Resources Total Loan Assets Fully hedged position on currency and basis risk. Both Assets and Liabilities on floating LIBOR basis. Exim Bank s quasi sovereign status enables issuance at benchmark rates. Regular issuer in the International debt markets with 29 issuances under MTN Program since Debut 144A issuance for USD 1 bn in July 2016 under GMTN Program. Variety of borrowing instruments and active liability management. Issuances across currencies including AUD, CHF, CNY, JPY, MXN, SGD, TRY and ZAR. 20 (1) Data as on September 30, 2017 (2) Excluding short term interbank deposits maintained for Liquidity

21 EXIM Bank Management & Board of Directors Rita Teaotia Secretary, Department of Commerce, Ministry of Commerce and Industry Vijay Keshav Gokhale Secretary, ER, Ministry of External Affairs Ramesh Abhishek Secretary, Department of Industrial Policy & Promotion, Ministry of Commerce and Industry Arvind Subramanian Chief Economic Advisor, Ministry of Finance, GoI Pankaj Jain Joint Secretary, FS, Financial Services Department M D Patra Executive Director, RBI Rajnish Kumar Chairperson, SBI Geetha Muralidhar Chairman and MD, ECGC Ltd Rajeev Rishi Chairman and MD, Central Bank of India Mahesh Kumar Jain Managing Director and CEO, IDBI Bank Dinabandhu Mohapatra Managing Director and CEO, Bank of India David Rasquinha Managing Director Debasish Mallick Deputy Managing Director Directors representing Ministries of Commerce, External Affairs & Finance Director representing regulator - RBI 21 Directors representing major Indian Public Sector Banks Director representing India s Export Credit Insurance Company Whole Time Directors

22 EXIM Bank Senior Management Highly Experienced Management Team with Government of India (GoI)Sponsorship Mr. David Rasquinha, Managing Director Mr. David Rasquinha has been appointed by GoI as Managing Director of Export-Import Bank of India since August 16, 2017 He has been with EXIM since 1985 and prior to his current role he has held post of Deputy Managing Director. He has handled a wide range of functions including Lines of Credit & Trade Finance and was Representative at EXIM s Washington DC Rep Office from Mr. Rasquinha holds a first class graduate degree in Economics from Mumbai University and a post graduate qualification in Business Management from the XLRI, Jamshedpur Mr. Debasish Mallick, Deputy Managing Director Mr. Debasish Mallick has been appointed by GoI as Deputy Managing Director of Export-Import Bank of India since July 2014 Mr. Mallick was the Managing Director and CEO of IDBI Asset Management Company Ltd and has nearly three decades of experience in the Banking industry. He has vast experience in the areas of Corporate Banking, International Banking, Resource Mobilisation and Treasury among others He holds a post-graduate degree in Economics and is a Certified Associate of Indian Institute of Bankers 22

23 EXIM Bank Institutionalised Risk Management Culture Risk Management Group Officer of the rank of Chief General Manager designated as Chief Risk Officer for credit, market and operational risks Tasked with risk management into the Bank s business processes and driving the Bank s risk management strategy Asset-Liability Management Committee Chaired by Deputy Managing Director and comprises Group Heads of Business Groups, Treasury and Accounts Group, and Risk Management Group It addresses issues of asset-liability management, interest and exchange rate risks, liquidity risk etc Credit Risk Management Committee Integrated Risk Management Committee Audit Committee Chaired by Deputy Managing Director and comprises Group Heads of Business Groups, Treasury and Accounts Group, and Risk Management Group The CRMC addresses rating and pricing standards, prudential limits on various exposure categories (country, sector, single and group borrower and unsecured exposures, program-wise exposures etc.), provisioning, sector-wise outlook etc Chaired by Deputy Managing Director and comprises senior executives who do not have direct line responsibilities Reviews Bank s risk profile, risk concentrations, compliance with prudential limits and overseeing the operations of CRMC and ALCO Reviews the Bank s risk management policies, investment policies and strategy, and regulatory and compliance issues in relation thereto Constituted by the Board of Directors Reviews all operations of ALCO, NPA loan accounts, Bank s currency-wise liquidity position, interest rate sensitivity position and the exceeding of any prudential limits, as well as any corrective actions taken thereto on a quarterly basis 23

24 Section 2 The India Appendix Story

25 Financial Highlights (Cont d) Balance Sheet Summary Figures in INR mn FY13 FY14 FY15 FY16 FY17 FY18 (Apr-Sep) Cash and Bank Balance 68,869 51,241 45,119 54,438 36,909 44,506 Investments 24,982 39,163 49,820 53,555 51,029 52,526 Loans and Advances (1) 643, , , ,168 1,026,410 1,048,345 Fixed Assets ,041 1,002 1,298 1,279 Other Assets 22,925 34,296 39,169 52,015 56,427 66,580 Total Assets 761, , ,249 1,152,178 1,172,074 1,213,236 Paid up Capital & Reserves (2) 72,390 83,097 99, , , ,239 Deposits 30,834 23,728 20,145 20,958 3,726 3,129 Notes, Bonds and Debentures 451, , , , , ,778 Borrowings 162, , , , , ,288 Profit and Loss Account 2,630 3,390 4, Other Liabilities & Provisions 41,314 70,182 93, ,828 91,065 98,444 Total Liabilities 761, , ,249 1,152,178 1,172,074 1,213,236 Note: (1) Includes loans and advances to industrial concerns, scheduled banks, foreign governments and other financial institutions and bills of exchange and promissory notes discounted/rediscounted. Amounts stated are net of provisions for non-performing loans (NPLs). (2) Includes paid-up capital and reserves. 25

26 Financial Highlights (Cont d) Profit and Loss Summary Figures in INR mn FY13 FY14 FY15 FY16 FY17 FY18 (Apr-Sep) Interest Earned 56,071 68,464 71,479 82,938 84,411 39,871 Interest Expended 41,156 46,840 53,355 60,221 65,022 32,292 Net Interest Income 14,915 21,624 18,124 22,717 19,389 7,579 Non-Interest Income 3,724 4,301 4,728 4,873 7,942 2,445 Operating Income 18,639 25,925 22,852 27,590 27,331 10,024 Non-interest Expense 1,601 1,826 2,109 2,292 2,525 1,217 Provisions and Contingencies 9,615 17,001 13,484 22,140 24,394 8,449 Net Profit 7,423 7,098 7,259 3, Key Ratios FY13 FY14 FY15 FY16 FY17 FY18 (Apr-Sep) Net Interest Margin 2.14% 2.67% 1.97% 2.17% 1.70% 1.30% Gross NPA 2.31% 2.10% 2.94% 4.17% 9.24% 9.61% Net NPA 0.47% 0.43% 0.60% 0.86% 4.68% 4.63% ROAA 1.05% 0.86% 0.79% 0.29% 0.04% 0.06% ROAE 11.21% 9.24% 7.89% 2.93% 0.62% 0.98% CRAR 15.28% 14.32% 15.34% 14.55% 15.81% 15.75% 26

27 Geographic Presence About 54% of the Bank s gross loan assets are located outside India 70% of Bank s Gross Loan Assets are Foreign Currency (Non-rupee) assets Branch in London & Representative Offices in 8 countries Lines of Credit Project Exports Buyer s Credit Marketing Advisory Services Overseas Investment Finance Working Capital Direct Equity Investment Overseas Office 27

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