source: bse banking structure public sector banks (26 nos) nationalized banks (19 nos) sbi &...

Indian Banking: M&A Perspective

Banks in Sensex

17.38%

82.62%

Banks Other

(As on June 17, 2010)

SOURCE: BSE

Banking Structure

Banking Structure

Public Sector Banks (26 nos)

Nationalized Banks (19 nos)

SBI &

Associates (7

nos)

Other

PSU Banks (1 nos)

Private Banks (23 nos)

Old Private Banks

(15 nos)

New Private Banks (8 nos)

Foreign Banks (31 nos)

Deposit & Advances Trend

Deposit & Advances Trend

NIM and Deposit Growth

2003-04 2004-05 2005-06 2006-07 2007-08 2008-090%

5%

10%

15%

20%

25%

30%

3.72% 3.69% 3.50% 3.34%2.74% 2.73%

NIM & Deposit Growth (Public Sector Banks)

Net Interest Margin Deposit Growth

2003-04 2004-05 2005-06 2006-07 2007-08 2008-090%

10%

20%

30%

40%

3.01% 3.06% 3.22% 3.28% 3.11% 3.38%

NIM & Deposit Growth (Private Banks)

Net Interest Margin Deposit Growth

Credit/Deposit and CRAR Trend

Per employee trend

Net NPA Ratio

Why M&A in Indian Banking?To develop better brand equity, and create a strong

identity to win the confidence of depositors.

To have a pan-India presence and easier addition of branch network.

To compete on a global platform.

To curtail operational costs. RBI’s guideline to takeover distressed banks.

“Sometimes the deal doesn't make sense, but regulators force it through. "The merger of banks in India is

typically driven by regulatory factors”

Market led Mergers in Indian Banking Space

Assumptions

- Number of branches lower than 700

-Rationale: Historically all acquisition targets have lower than 500 branches and region rich

•PPE: Profit per employee•NIM: Net Interest Margin•ROE: Return on Equity

Valuation Metrics

Geographical Reach

• Indusind Bank• Karnataka Bank• ING Vysya Bank• J & K Bank• Federal Bank

Top 5 Targets' Key metrics

ICICI – Bank of Rajasthan Deal Analysis