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