Admiral Yamamoto on the Pearl harbour attack “I can run wild for six months … after that, I have no expectation of success”.
Nirmal Bang writes…ICICI Bank – Mr Anup Bagchi and AXIS Bank- Mr Amitabh Chaturvedi have guided that they are looking to grow in high teens in the Auto loan category. As a matter of fact there are products which are launched by them to promote disbursements which sound like “Sirf 2mins”. Reminds me of Maggi. ICICI Bank calls its “Insta Auto loan”
Last 5 years has been glorious for HDFC Bank, Kotak Mahindra Bank & everyone who did not suffer from NPA attack as
- ICICI Bank and Axis Bank were busy cleaning the mess around their own house-(mess is a small word, it was Nagasaki)
- 40% of their book grew without they making any effort given 3large Credit segments grew from 2014 1.Auto loans 2.Loan Against Property and NBFC lending
The total Auto Loan market in India (excluding CVs, Tractors, Large Vehicles) is Rs 1.5Lcrs/Rs 1.7Lcrs Pa. along with the Realty+ Lap+ NBFC= ~ 6/7Lcrs … that book will now see at least ten entities trying to grab the pie – whatever they get with all Banks trying convert short-term liabilities (deposits) to long-term assets (loans). Some banks also used reserve to create Assets. The business from 2013-18 was relatively simple given most of other competitors were busy clearing their book after the NPA attack they suffered from (Very similar to USA- They prospered more versus the other countries more because no war was fought on their Land, baring One –Pearl harbour)
However come 2019..things are going to be tough as
- Giants have not only cleaned their Bomb attacks , but they are ready with their Bazookas to hit their neighbors-(why?, just because they are jealous & want to grow too)
2) The 2/3 key growth areas have slowed down considerably 1) Best Case Auto growth for FY20/21 is 5% CAGR, 2) NBFC growth is expected @ 10/12%. 3)LAP/Realty may grow ( >15%) , however it can be the sole driver of the book growth. Personal loans is another category which will see all ten large liabilities franchises attacking at the same time (there is an ad of Allahabad bank offering personal loans from 8.5%)
Conclusion
India Banking for next 2/3 years will be like a Dog eat Dog world …to make matters worst for HDFC Bank, KMB.. The PSU banks will also be there on ground -given that their Asset side has been corrected to a large extent and liability will see growth at the same rate as GDP, which is sufficient for them to get that 12/13% growth rate.
On Trailing P/B Dep(Rs bn)
HDFC Bank 5.91 9050
KMB 5.24 2058
ICICI 2.44 8151
AXIS Bank 3.07 6114
IIB 4.66 1800
BOB 1.03 6538
CBK 0.73 5247
Syndicate 0.83x 270
J&K 0.63x 860 f
Its going to a Harbor attack by All Gordon Pranges and it’s run run run to value ones