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Business presentation
December 4, 2018
2
2nd largest non - bank mutual fund distributor2
Largest equity broker in India1
powered by ICICIdirect
Garnering scale in wealth management business
Strong online presence aided by pan India distribution
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
ISEC Today
3
Agenda
Industry overview and our performance
Strategy
4
India: Financialisation and equitisation of savings
1.8% 1.6% 1.6% 1.6%
3.0%2.6%
8.0%
FY12 FY13 FY14 FY15 FY16 FY17 FY18
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)
Growing Incremental investments in shares & debentures High growth Across financial asset Classes#
100 100 100
165
131
95
149 149
116
200 213
146
348
259
162
Equity + Derivative
ADTO
MF AUM Insurance Premium
(FY)
FY14 FY15 FY16 FY17 FY18
1% 1%
4%
6%
9%
19%
24%
9%
South
Africa
Russia Japan Brazil USA India China World
India Household saving highest among growing economies
as % of GDP 2016
Source: RBI, IRDA, AMFI, NSE, BSE, EIU; ADTO: Average daily turnover; # Indexed to 100 in FY 14
In ` trillion
6.47.3
8.3 8.8
11.310.3
31.1%32.8%
36.4% 36.1%
46.1%
41.5%
0%
10%
20%
30%
40%
50%
0
2
4
6
8
10
12
FY12 FY13 FY14 FY15 FY16 FY17
Financial Savings Financial Savings as a % of Household Savings
Rising Financial Savings
5
Market witnessing short term headwinds
Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
Nifty Index
9,238
11,130
9,998
11,739
10,153 10,930
Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
Midcap Index
19,920
17,333
21,732
18,474
17,154
20,290
19,098
Secondary market witness higher volatility
Subdued primary market, fund raising through equity slowed down
All amounts in ` Billion; Source: Prime Database
84 28 145
282
888
155
3 8
24 25
47
11
0
50
-
200
400
600
800
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
I P O/F P O/ InvIt
Issue Amount No. of IPO
139 288
144 137 622 56
17
45
20 22
53
9
-
50
100
-
200
400
600
800
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Q I P/I P P
Issue Amount No. of QIP
6
Agenda
Industry overview and our performance
Strategy
Retail: Broking
Institutional
Financial Performance
7
• Providing seamless experience
• Mutual beneficial relationship with
ICICI Bank
• Presence in 3,000+ ICICI Bank
branches
• 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
• 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
3-in-1 Platform
70%
Average daily
utilization limit to
increase capacity
>95%
brokerage
transactions
performed online(1)
>2.1 mn orders and trades
processed per day at
peak usage
>29% cash equity
transactions
through
mobile devices(2)
Amongst the Pioneers in E-Brokerage Business in India
Comprehensive Portfolio Management Tools Robust Real-Time Risk Management
Retail focused technology platform: ICICI direct
Plug-and-play architecture facilitates easy integrations enabling quick product launches
Integrated platform providing seamless trading facilities through ‘single login’
(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)7
Broking: Growing retail participation
8 Source: NSE, BSE, SEBI, NSDL, CDSL; ADTO – Average daily turnover
52% 54% 52%
58% 58% 56%
34%30%
37%
44% 46% 47%
FY14 FY15 FY16 FY17 FY18 H1-19
Equity Derivative
22 2325
28
3234
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Increased retail participationRise in demat accounts
In million
32% 32% 32% 34% 31% 27%
68% 68% 68% 66% 69% 73%
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Delivery ADTO Non-delivery ADTO ADTO
11% 12% 11% 8% 7% 5%
89% 88% 89% 92% 93% 95%
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Equity Derivative
Growing share of trading volume Secondary market volume growth led by derivative volume
In ` billionIn ` billion
131 212 200 241 336 350970 1,368 1,525 2,409 4,143 5,735
Broking: Regulatory and business environment
9
• Compliance: Protecting client interest, raising compliance standard
• Broadening market: Allowing new products and variants
• e-infrastructure: Enabling regulatory, payments and increasingly digital
ecosystem
Regulatory
developments
• Competition: Diverse access of competition
• Consolidation of market share with organised players
• Diversifying away from pure brokerage business model
Business
environment
More digital and democratised ecosystem
ISEC: Leading equity broker in India
10 #Source: NSE, Trailing 12 month
2.52.8
3.2
3.6
4.04.2
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Consistently growing operational clients base
In million
Active client in thousand#
Retail Brokerage (In ` million)
501
595560
618
798 844
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
4,621
7,027
6,070
7,019
9,174
4,218
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
44 65
101
187
372
510
FY14 FY15 FY16 FY17 FY18 H1-19
4.7% 6.6% 7.8% 9.0%4.5% 8.9%
Market Share
ADTO ` in billion
11
Agenda
Industry overview and our performance
Strategy
Retail: Investment products
Institutional
Financial Performance
12
Digital one stop shop supported by physical
• 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
Multiple 3rd party products supporting “one-stop shop” proposition
• Presence over 75+ cities with
~200 branches
• 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
Nationwide Distribution Network
Investment Protection Assets/Wealth creation
As on 30th
Sep 18
Saving landscape: Increasing managed equity
13 Source: AMFI; Data Compass by CAMS, ~90-96% of Industry
8.310.8
12.3
17.5
21.4 22.1
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Mutual Fund AUM Growing share of B15 cities in MF AUM
439672
445
FY 17 FY 18 H1-19
More systematic retail participation through SIP
180399 560 956 1,477 1,520
9.0%
11.0%
13.6%
15.4%16.4%
16.0%
0%
5%
10%
15%
20%
0
500
1,000
1,500
2,000
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-18
Direct Plan Equity AUM % Share of Industry
Direct plan gaining market share
SIP flow in ` billion
(Exit AUM) in ` trillion
` billion
92 92 91 91 82 81
8 8 9 9 18 19
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Top 45 Others
Investment and protection witnessing traction
14 Source: IRDA, Prime Database, RBI, NHB, Industry estimates
774 884 1,0051,180
3,1433,281
3,669
4,185
FY 14 FY 15 FY 16 FY 17
Pvt Total
295348
410506
1,1961,131
1,387
1,750
FY 14 FY 15 FY 16 FY 17
Pvt Total
Life insurance industry growth led by private insurers Private players continue rapid penetration in individual
business segment
424
94
338295
51
272
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Retail debt mobilisation (` in billion) Housing Loan book Size ` trillion
8.9
10.7
12.4
14.4
16.8
FY14 FY15 FY16 FY17 FY18
First year premium `billion
Total premium ` billion
Wealth Management: Rapid growth
15 Source: SEBI
1.2
0.7 0.81.1
1.6 1.5
0.4 0.5 0.60.8 0.9 1.0
1.4
1.8 1.71.9
2.3
1.8
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Discretionary Non-discretionary Advisory
43 41 46
71
114128
5 3 4 5 5 6103 2 1 2 2
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Discretionary Non-discretionary Advisory
PMS (Exit AUM) in ` trillion PMS clients in thousand
131 226389
843
1,6511,796
40 95227
410
853 976
32 74 182351
614749
FY 14 FY 15 FY 16 FY 17 FY 18 Q1-19
Commitments raised Funds raised Investments made
Activities of AIF in ` billion
Investments: Regulatory and business environment
16
• 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
Regulatory
developments
• Backward/Forward integration by manufacturers/ partners
• Fintech, new entrants
• Broadening market: Increasing penetration in B30 (from B15); awareness
campaigns
Business
environment
Focus on simpler, cheaper, client focused growth
ISEC: 2nd largest non - bank mutual fund distributor
17
76
120
160
212
302
347
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
43
75
108
143
218
258
FY14 FY15 FY16 FY17 FY18 H1-19
MF Average AUM in ` billion Average Equity AUM in ` billion
MF SIP Count in million MF Revenue ` million
0.12
0.20
0.25
0.38
0.63
0.70
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
789
1,540
1,117
1,657
2,847
1,504
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
SIP Count: Triggered as on last month of period
18
ISEC: Life Insurance
Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP, CAGR: FY18 vs FY14
Life Insurance Revenue in ` million Life Insurance Premium in ` million
371
465
586
713
483
210
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
4,129
5,625
6,816
8,390
9,038
3,821
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Premium growth of CAGR 22%
High persistency
19
ISEC: Distribution Business helping diversify revenues…
Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP, CAGR: FY18 vs FY14
1,867
2,669 2,541
3,497
4,665
2,440
FY14 FY15 FY16 FY17 FY18 H1-19
Distribution
Distribution revenue ` million
Distribution revenue CAGR 26%
Revenue contribution increased to 27% from 23%
… leveraging retail franchise
20
735
830 830
983
1,237
1,105
FY-14 FY-15 FY-16 FY-17 FY-18 H1-19
Active client (All products) in thousands
Active client CAGR of 14%
CAGR: FY18 vs FY14
21
Agenda
Industry overview and our performance
Strategy
Retail
Financial Performance
Institutional: Broking
Institutional broking: DIIs becoming more relevant
22
10%
12%
14%
16%
18%
20%
22%
Sep
-15
Dec-15
Mar-1
6
Ju
n-16
Sep
-16
Dec-16
Mar-1
7
Ju
n-17
Sep
-17
Dec-17
Mar-1
8
Ju
n-18
Sep
-18
FPIs Domestic institutional
Source: NSDL, SEBI, Bloomberg, I-Sec research
Holding % of market capitsalistion Equity Flow in USD billion
13.7
18.1
-1.5
8.4
3.4
-4.1
-9.0
-3.6
12.3
4.5
17.7
8.3
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
FPI DII
Equity ADTO in ` billion Derivative ADTO in ` billion
28
44 4347
54 53
610 11
15
27 28
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
FII DII
232 259 319523
767
1,131
2 6 12 15 31 39
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
FII DII
23
ISEC: Growing scale of Institutional broking business
339
527 537
740
1,069
553
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
CAGR: FY14 vs. FY18; Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP
• 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
CAGR: 33%
Servicing large cross-section of institutional clients
Institutional Brokerage (in ` million)
24
Agenda
Industry overview and our performance
Strategy
Retail
Financial Performance
Institutional: Corporate Finance
113
97
74
87
157
29
FY14 FY15 FY16 FY17 FY18 H1-19
337
643 579
536
1,899
259
FY14 FY15 FY16 FY17 FY18 H1-19
25
ECM issuance mobilisation CAGR 54%
CAGR: FY14 vs FY18; ECM : Includes IPO/FPO/InvIT, QIP/IPP, Rights Issue, Offer for Sale; Source: Prime database
No. of ECM issuance CAGR 9%
Surge in ECM markets in 5 years
ECM Issuance mobilized (` in billion) ECM Issuance
26
ISEC: Leading Investment Bank in India
Revenue crossed ` 1.4 billion in FY18,
CAGR 25%
Increased traction in advisory business
Robust deal pipeline
593638
834
1,198
1,440
606
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
CAGR: FY14 vs. FY18; Revenues for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP
Corporate Finance revenue (in ` million)
10083
182202
540
99
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
19
1615
16
27
5
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
ECM Issuance mobilized (` in billion) ECM issuance
Source: Prime database; ECM : Includes IPO/FPO/InvIT, QIP/IPP, Rights Issue, Offer for Sale
27
Agenda
Industry overview and our performance
Strategy
Retail
Financial Performance
Institutional
Consistent financial performance
28
8,123
12,095 11,246
14,042
18,610
8,940
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Revenues & PAT for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP
Revenue ` In million
908
2,939
2,387
3,386
5,535
2,680
FY 14 FY 15 FY 16 FY 17 FY 18 H1-19
Profit After Tax ` In million
Financial performance: Other key parameters
29 Revenues & PAT for FY 18 & H1-19 on Ind AS & before FY 18 on Indian GAAP
Diversification: Increasing non broking revenues share
Return on equity
38%
100%
65%
77%82%
59%
FY14 FY15 FY16 FY17 FY18 H1-19
Equity Dividend ` million
61% 62% 59% 55% 55% 53%
39% 38% 41% 45% 45% 47%
FY14 FY15 FY16 FY17 FY18 H1-19
Brokerage (excluding interest & others) Others
Cost To Income Ratio: Operating leverage
82%
63%67%
63%
54% 54%
FY14 FY15 FY16 FY17 FY18 H1-19
Equity Dividend ` million
400
1,611 1,611 2,050 3,028 1,192
47%55%
67%61% 55%
44%
0%
10%
20%
30%
40%
50%
60%
70%
80%
-
700
1,400
2,100
2,800
3,500
FY14 FY15 FY16 FY17 FY18 H1-19
Dividend (excl DDT) Dividend payout ratio (excl DDT)
30
Agenda
Industry overview and our performance
Strategy
31
Agenda
Industry overview and our performance
Strategy
Institutional
Retail
32
Key trends
Demographics
Socio economic changes
Affluence
Digitization
More savers, Young savers , Bharat savers
Long term orientation: Life cycle mindset
Stable Inflation: Diversified asset choices
Rising Affluence: Return & cost focused,
Knowledgeable: Research & information
Adoption, Infrastructure, Speed/Pace of change
Partnering wealth creation across customer lifecycle
33
Customer First : Building a partnership of trust
Life cycle basedAcross market
verticals
Across
investment,
protection and
wealth creation
Systematic and
knowledge
based
Client Acquisition
34
Increase reach by strengthening on successful
partnership with Bank:
• Increasing bank branch coverage
• Integrating with bank for tab based account
opening
• Digital integration
Reach
New age customer:
• Invest in Brand
• Create digital pull and delivery using
e-infrastructure
Brand and digital pull
Focused on self employed across the country:
• Delivery through select branch network
• Greater focus on Business Partner channel
Bharat focused
Improving reach:
• Targeted geographical presence of Wealth &
premier location
• Reaching NRI customers online and offline
Affluence
Client Engagement
35
• Complete suite across market verticals
• Enhance current range
• Enhance choice: adding partners on
different products
• Advisory based solution for UHNI
Product choice
• eATM: Balance pricing with value proposition
• Make tangible liquidity/brokerage benefit by
offering alternate product and features
Price
• Personalized user experience
• Personalized offerings
• Managing wealth holistically including tax and
portfolio management
Personalization
• Reward Programme to strengthen relationship
with loyal customer base
Loyalty
Digital Openness
36
Acquisition and
Engagement
Distribution
Risk and Operations
Technology
Readiness
Employee Outlook
Marketing and customized
delivery
Device agnostic online
trading & investment
platform
Multiple payment
methods (UPI)
CRM SolutionsImproving personalization
using analytical tools
Integrated risk
management platformMid and back office
Seamless integration with
partner systems
Building partnership for
future development
Broadening appeal for
new age workforceImproving productivity
Technology in Support for
Customer Lifecycle and Trust Manager
37
Guiding Principle
Customer Lifecycle and Trust
Customer
Acquisition
Customer
Engagement
Enabler
Digital Openness
38
Agenda
Industry overview and our performance
Strategy
Institutional
Retail
Key Trend : Corporatisation of entrepreneurship
39
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
Capital Market and Advisory Strategy
40
Private Equity /
Promoter Financing
Mergers and
Acquisitions Advisory
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)
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
Focus on strengthening
relationships with PEs
Facilitating promoter financing
and PE exits
Leverage relationship of ICICI group
Institutional broking strategy
41
• Differentiated, high value
and timely access
• Access to policy makers
• Breadth: 250 cos. under
coverage compared to 200
in FY17
• Depth: High quality hiring
• Expand FII business
• Alliance with Global players
to tap FIIs business
• Strengthening of in-house
algorithmic capabilities and
product customizations
Leverage strength in DII for expanding FII business
Gain market share Research Enhanced Corporate Access
• Differentiated, high value
and timely access
• Access to policy makers
• Breadth: 250 cos. under
coverage compared to 200
in FY17
• Depth: High quality hiring
• Expand FII business
• Alliance with Global players
to tap FIIs business
• Strengthening of in-house
algorithmic capabilities and
product customizations
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
Drive synergies across all business
verticals
Institutional business
Grow on existing strength in ECM
and with DIIs; focus on advisory
business and FII sectors
ICICI Securities
42
Way forward
Client engagement
2 mn overall active client base
Diversification
Majority revenues from non equity
broking businesses
Operating leverage
Cost to income ratio below 50%
Shareholder value
ROE over 40%
Mission FY2022
43
44
Thank you