Business presentation. December 4, 2018

Size: px

Start display at page:

Download "Business presentation. December 4, 2018"

Agnes Robbins
5 years ago
Views:

1 Business presentation December 4, 2018

2 ISEC Today Largest equity broker in India 1 powered by ICICIdirect Strong online presence aided by pan India distribution 2nd largest non - bank mutual fund distributor 2 Garnering scale in wealth management business Leading investment bank in equity capital market 1. By brokerage revenue and active customers on the NSE 2. Source: AMFI (in terms of revenue), period: FY18 2

3 Agenda Industry overview and our performance Strategy 3

4 India: Financialisation and equitisation of savings India Household saving highest among growing economies as % of GDP % 1% South Africa 4% 6% Growing Incremental investments in shares & debentures 9% 19% 24% 9% Russia Japan Brazil USA India China World Rising Financial Savings Financial Savings Financial Savings as a % of Household Savings 46.1% In ` trillion 41.5% 50% 36.4% 36.1% 31.1% 32.8% 40% 30% % 10% 0% FY12 FY13 FY14 FY15 FY16 FY17 High growth Across financial asset Classes# 1.8% 1.6% 1.6% 1.6% 3.0% 2.6% 8.0% FY14 FY15 FY16 FY17 FY FY12 FY13 FY14 FY15 FY16 FY17 FY18 Equity + Derivative ADTO MF AUM Insurance Premium (FY) 4 Include investment in shares and debentures of credit / non-credit societies and investment in mutual funds (other than Specified Undertaking of the UTI) (Source: RBI, MOSPI) Source: RBI, IRDA, AMFI, NSE, BSE, EIU; ADTO: Average daily turnover; # Indexed to 100 in FY 14

5 Market witnessing short term headwinds Secondary market witness higher volatility Nifty Index 11,130 11,739 Midcap Index 19,098 21,732 20,290 19,920 10,153 10,930 18,474 9,238 9,998 17,333 17,154 Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Subdued primary market, fund raising through equity slowed down 800 Issue Amount I P O/F P O/ InvIt 47 No. of IPO Q I P/I P P Issue Amount No. of QIP All amounts in ` Billion; Source: Prime Database

6 Agenda Industry overview and our performance Retail: Broking Institutional Financial Performance Strategy 6

7 Retail focused technology platform: ICICI direct 3-in-1 Platform Amongst the Pioneers in E-Brokerage Business in India Providing seamless experience Mutual beneficial relationship with ICICI Bank Presence in 3,000+ ICICI Bank branches >2.1 mn orders and trades processed per day at peak usage >95% brokerage transactions performed online (1) 70% Average daily utilization limit to increase capacity >29% cash equity transactions through mobile devices (2) Comprehensive Portfolio Management Tools Visibility - consolidated portfolio view across asset classes Analytics ability to track multiple portfolio parameters; in-depth portfolio analysis reports and tax implications Accessibility - In-house designed mobile application providing device agnostic access Integrated platform providing seamless trading facilities through single login Robust Real-Time Risk Management Three tier disaster recovery system with built-in redundancy High speed switching between principal and backup systems Fully integrated risk management systems Real time tracking of trigger prices Enables dynamic changes in margin requirements Plug-and-play architecture facilitates easy integrations enabling quick product launches 7 7 (1) By notional value in H1-19; (2) Compared to 8% of cash equity transactions on NSE Mobile in H1-19 (Source: SEBI and NSE)

8 Broking: Growing retail participation Rise in demat accounts Increased retail participation In million Equity 52% 54% 52% Derivative 58% 58% 56% 34% 30% 37% 44% 46% 47% Growing share of trading volume FY14 FY15 FY16 FY17 FY18 H1-19 Secondary market volume growth led by derivative volume In ` billion In ` billion Equity Derivative Delivery ADTO Non-delivery ADTO ADTO ,368 1,525 2,409 4,143 5,735 68% 68% 68% 66% 69% 73% 89% 88% 89% 92% 93% 95% 32% 32% 32% 34% 31% 27% 11% 12% 11% 8% 7% 5% 8 Source: NSE, BSE, SEBI, NSDL, CDSL; ADTO Average daily turnover

9 Broking: Regulatory and business environment Compliance: Protecting client interest, raising compliance standard Regulatory developments Broadening market: Allowing new products and variants e-infrastructure: Enabling regulatory, payments and increasingly digital ecosystem Business environment Competition: Diverse access of competition Consolidation of market share with organised players Diversifying away from pure brokerage business model More digital and democratised ecosystem 9

10 ISEC: Leading equity broker in India Consistently growing operational clients base Active client in thousand # In million Market Share Retail Brokerage (In ` million) 4.5% 4.7% 6.6% 7.8% 9.0% 8.9% ADTO ` in billion ,621 7,027 6,070 7,019 9,174 4,218 FY14 FY15 FY16 FY17 FY18 H #Source: NSE, Trailing 12 month

11 Agenda Industry overview and our performance Retail: Investment products Institutional Financial Performance Strategy 11

12 Digital one stop shop supported by physical Multiple 3rd party products supporting one-stop shop proposition Investment Protection Assets/Wealth creation Mutual Fund IPOs, OFS, public bond offerings 3rd party corporate fixed deposits National Pension System Life Insurance : ICICI Prudential Life Insurance General Insurance : ICICI Lombard General Insurance Loan products referrals Portfolio management services Alternate investment funds Presence over 75+ cities with ~200 branches Nationwide Distribution Network 1,450+ relationship managers and product specialists Wealth management solutions for HNIs/Family offices 350+ member team Over 600 cities with 6,200+ sub-brokers, authorized persons, IFAs and IAs Significant presence in the Tier-II and Tier-III cities 12 As on 30 th Sep 18

13 Saving landscape: Increasing managed equity Mutual Fund AUM Growing share of B15 cities in MF AUM (Exit AUM) in ` trillion Top 45 Others More systematic retail participation through SIP Direct plan gaining market share SIP flow in ` billion FY 17 FY 18 H1-19 2,000 1,500 1, Direct Plan Equity AUM % Share of Industry 15.4% 16.4% 16.0% ` billion 13.6% 11.0% 9.0% ,477 1,520 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep % 0% 13 Source: AMFI; Data Compass by CAMS, ~90-96% of Industry

14 Investment and protection witnessing traction Life insurance industry growth led by private insurers Total premium ` billion Pvt Total 4,185 3,669 3,143 3,281 Private players continue rapid penetration in individual business segment First year premium ` billion Pvt 1,196 1,131 Total 1,387 1, ,005 1, FY 14 FY 15 FY 16 FY 17 FY 14 FY 15 FY 16 FY 17 Retail debt mobilisation (` in billion) Housing Loan book Size ` trillion FY14 FY15 FY16 FY17 FY18 14 Source: IRDA, Prime Database, RBI, NHB, Industry estimates

15 Wealth Management: Rapid growth PMS (Exit AUM) in ` trillion Discretionary Non-discretionary Advisory Discretionary Non-discretionary Advisory PMS clients in thousand Activities of AIF in ` billion Commitments raised Funds raised Investments made 1,796 1, FY 14 FY 15 FY 16 FY 17 FY 18 Q Source: SEBI

16 Investments: Regulatory and business environment Regulatory developments Reducing cost to customer: Reduction of TER for mutual funds and decline in first year life insurance commissions Right selling focus: Trail based commission structure for MF Backward/Forward integration by manufacturers/ partners Business environment Fintech, new entrants Broadening market: Increasing penetration in B30 (from B15); awareness campaigns Focus on simpler, cheaper, client focused growth 16

17 ISEC: 2nd largest non - bank mutual fund distributor MF Average AUM in ` billion Average Equity AUM in ` billion FY14 FY15 FY16 FY17 FY18 H1-19 MF SIP Count in million MF Revenue ` million , ,540 1,117 1,657 1, SIP Count: Triggered as on last month of period

18 ISEC: Life Insurance Premium growth of CAGR 22% High persistency Life Insurance Revenue in ` million Life Insurance Premium in ` million 713 8,390 9, ,129 5,625 6,816 3, Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP, CAGR: FY18 vs FY14

19 ISEC: Distribution Business helping diversify revenues Distribution revenue CAGR 26% Revenue contribution increased to 27% from 23% Distribution revenue ` million Distribution 3,497 4,665 1,867 2,669 2,541 2,440 FY14 FY15 FY16 FY17 FY18 H Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP, CAGR: FY18 vs FY14

20 leveraging retail franchise Active client CAGR of 14% Active client (All products) in thousands ,237 1,105 FY-14 FY-15 FY-16 FY-17 FY-18 H CAGR: FY18 vs FY14

21 Agenda Industry overview and our performance Retail Institutional: Broking Financial Performance Strategy 21

22 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Institutional broking: DIIs becoming more relevant Holding % of market capitsalistion Equity Flow in USD billion 22% 20% 18% 16% FPIs Domestic institutional FPI 12.3 DII % 12% 10% Equity ADTO in ` billion Derivative ADTO in ` billion FII DII FII DII 1, Source: NSDL, SEBI, Bloomberg, I-Sec research

23 ISEC: Growing scale of Institutional broking business Institutional Brokerage (in ` million) CAGR: 33% 1, Servicing large cross-section of institutional clients Significant India coverage supplemented by Asia Pacific and USA Growing Direct market access business Research coverage of 230+ Indian stocks across sectors Macro and thematic coverage ~40 member research team Leading procurement in IPOs, QIPs, OFSs and Block deal Strong Corporate Access to compliment research Strength in execution 23 CAGR: FY14 vs. FY18; Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP

24 Agenda Industry overview and our performance Retail Institutional: Corporate Finance Financial Performance Strategy 24

25 Surge in ECM markets in 5 years ECM Issuance mobilized (` in billion) ECM Issuance 1, FY14 FY15 FY16 FY17 FY18 H1-19 FY14 FY15 FY16 FY17 FY18 H1-19 ECM issuance mobilisation CAGR 54% No. of ECM issuance CAGR 9% 25 CAGR: FY14 vs FY18; ECM : Includes IPO/FPO/InvIT, QIP/IPP, Rights Issue, Offer for Sale; Source: Prime database

26 ISEC: Leading Investment Bank in India Corporate Finance revenue (in ` million) 1,440 1, Revenue crossed ` 1.4 billion in FY18, CAGR 25% Increased traction in advisory business Robust deal pipeline ECM Issuance mobilized (` in billion) ECM issuance Source: Prime database; ECM : Includes IPO/FPO/InvIT, QIP/IPP, Rights Issue, Offer for Sale 26 CAGR: FY14 vs. FY18; Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP

27 Agenda Industry overview and our performance Retail Institutional Financial Performance Strategy 27

28 Consistent financial performance Revenue ` In million 18,610 8,123 12,095 11,246 14,042 8,940 Profit After Tax ` In million 5,535 2,939 2,387 3,386 2, Revenues & PAT for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP

29 Financial performance: Other key parameters Diversification: Increasing non broking revenues share Cost To Income Ratio: Operating leverage Brokerage (excluding interest & others) Others 82% 39% 38% 41% 45% 45% 47% 63% 67% 63% 54% 54% 61% 62% 59% 55% 55% 53% FY14 FY15 FY16 FY17 FY18 H1-19 FY14 FY15 FY16 FY17 FY18 H1-19 Equity Dividend ` million Return on equity 3,500 2,800 Dividend (excl DDT) 67% 47% 55% Dividend payout ratio (excl DDT) 61% 55% 44% 80% 70% 60% 100% 65% 77% 82% 59% 2,100 50% 40% 38% 1, ,611 1,611 2,050 3,028 1,192 FY14 FY15 FY16 FY17 FY18 H % 20% 10% 0% FY14 FY15 FY16 FY17 FY18 H Revenues & PAT for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP

30 Agenda Industry overview and our performance Strategy 30

31 Agenda Industry overview and our performance Strategy Retail Institutional 31

32 Key trends Demographics More savers, Young savers, Bharat savers Socio economic changes Long term orientation: Life cycle mindset Stable Inflation: Diversified asset choices Affluence Rising Affluence: Return & cost focused, Knowledgeable: Research & information Digitization Adoption, Infrastructure, Speed/Pace of change 32

33 Partnering wealth creation across customer lifecycle Life cycle based Across market verticals Across investment, protection and wealth creation Systematic and knowledge based Customer First : Building a partnership of trust 33

34 Client Acquisition Increase reach by strengthening on successful partnership with Bank: Increasing bank branch coverage Integrating with bank for tab based account opening Reach New age customer: Brand and digital pull Invest in Brand Create digital pull and delivery using e-infrastructure Digital integration Bharat focused Focused on self employed across the country: Improving reach: Affluence Delivery through select branch network Greater focus on Business Partner channel Targeted geographical presence of Wealth & premier location Reaching NRI customers online and offline 34

35 Client Engagement Product choice Complete suite across market verticals Enhance current range Enhance choice: adding partners on different products Price eatm: Balance pricing with value proposition Make tangible liquidity/brokerage benefit by offering alternate product and features Advisory based solution for UHNI Personalization Personalized user experience Personalized offerings Managing wealth holistically including tax and portfolio management Loyalty Reward Programme to strengthen relationship with loyal customer base 35

36 Digital Openness Technology in Support for Acquisition and Engagement Marketing and customized delivery Device agnostic online trading & investment platform Multiple payment methods (UPI) Distribution CRM Solutions Improving personalization using analytical tools Risk and Operations Integrated risk management platform Mid and back office Technology Readiness Seamless integration with partner systems Building partnership for future development Employee Outlook Broadening appeal for new age workforce Improving productivity 36

37 Customer Lifecycle and Trust Manager Guiding Principle Customer Lifecycle and Trust Customer Acquisition Customer Engagement Enabler Digital Openness 37

38 Agenda Industry overview and our performance Strategy Retail Institutional 38

39 Key Trend : Corporatisation of entrepreneurship Changing Corporate structures Life-cycle approach Maturing business models Insurance, Asset Management Companies, Small Finance Banks, Health care Family ownership giving way to professional management P/E ownership going up Government ownership declining Intermediation of savings Greater role for domestic institutions 39

40 Capital Market and Advisory Strategy Private Equity / Promoter Financing Focus on strengthening relationships with PEs Facilitating promoter financing and PE exits Mergers and Acquisitions Advisory De-Leveraging, Asset Monetisation, Non-Core assets, Structure Finance Domestic corporates keen on inorganic growth / Sector Consolidation Strengthen international IB network for Cross Border opportunities Equity Capital Markets Strengthening the IPO Pipeline & delivering high quality IPOs Focus on Block Deals for investors in our IPOs New Products: Real Estate Investment Trust (ReITs) and Infrastructure Investment Trusts (InvITs) Leverage relationship of ICICI group 40

41 Institutional broking strategy Leverage strength in DII for expanding FII business Gain market share Research Enhanced Corporate Access Expand FII business Alliance with Global players to tap FIIs business Strengthening of in-house algorithmic capabilities and product customizations Breadth: 250 cos. under coverage compared to 200 in FY17 Depth: High quality hiring Differentiated, high value and timely access Access to policy makers 41

In summary India Growth story robust Maturing economy and savings Increasing corporatisation Retail business Life cycle & trust based approach to drive customer acquisition and activation

42 In summary India Growth story robust Maturing economy and savings Increasing corporatisation Retail business Life cycle & trust based approach to drive customer acquisition and activation Digital openness ICICI Securities Drive synergies across all business verticals Institutional business Grow on existing strength in ECM and with DIIs; focus on advisory business and FII sectors 42

43 Way forward Client engagement 2 mn overall active client base Diversification Majority revenues from non equity broking businesses Mission FY2022 Operating leverage Cost to income ratio below 50% Shareholder value ROE over 40% 43

44 44 Thank you

Performance review 9M-FY2019. January 14, 2019

Performance review 9M-FY2019. January 14, 2019 Performance review 9M-FY2019 January 14, 2019 Natural beneficiary of transforming savings environment Leading equity broker in India 1 powered by ICICIdirect Strong online presence aided by pan India distribution