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					IDBI Bank- Reinvesting in building
       blocks, for growth
Way forward towards rebuilding a
       strong foundation


• IDBI Bank is changing…
• Capital Formation- Human and technological capital to
  generate financial capital
• Strategic initiatives going forward
• Financials for the year ended March 31,2001
   Operating Model at IDBI Bank is
    undergoing metamorphosis
• Traditional focus of the bank has been on corporate
  banking business
   – 95% of assets have been corporate assets
   – 77% of liabilities have been corporate liabilities
• Technology has been deployed mainly as business
  support and not to create business opportunities
• Organization structure has been branch driven with no
  clear focus on product suite delivery to the customer
• Key performance attribute continued to be building of
  assets and total deposits as against profitability
 Way forward towards rebuilding a
        strong foundation


• IDBI Bank is changing…
• Capital Formation- Human and technological
  capital to generate financial capital
• Strategic initiatives going forward
• Financials for the year ended March 31,2001
Recognizing Key Value Drivers


                                      Q3FY02
            Build Sales Focus

                                          Q4FY02
           De-risk Credit Portfolio


     Enhance Operational Productivity          Q3FY02
     Build Product Superiority

                                                   Q2FY02
    Complete Technology Revamp

   New Skilled Senior Management Team                   Completed
              Value Driver # 1 - People


Erstwhile Org. Structure              New Org. structure
     Branch driven                      Functional


        Top mgmt.            Retail      Corp.    Treasury Ops.&Tech




      Retail Bank +        Within each business group, creation of
      Corporate            Product and Sales Matrix to ensure superior
      Bank+ Ops. At        product suite delivery to customers
      all branches
 Building up Human Capital has been
              a priority
• Reconstitution of Senior Management Team with significant
  experience from foreign banks and private sector banks: CEO, Retail
  Bank Head, Retail Risk Head, Product Heads, Treasurer, Treasury
  Marketing Head, CFO, CTO, Ops. Head, HR Head,
• Performance Assessment changed to focus on leading indicators and
  profits
    – Formulation of KRAs, Tiering process to differentiate performers
    – Performance linked ESOP scheme initiated in Oct. 2000 covering 75% of
      employees
• Significant training initiatives undertaken
    – Relationship and sales management
    – New technology platforms
• Young Professionals (85% CAs/MBAs)with average age of 31 years
• Lower cost base than foreign banks
          Value Driver # 2: Technology
•   Corp. Banking and Trade
    Finance- Finacle (Q1)
•   Cash Management- CashTeck                                 Tech. Expenditure
    (Q1)
•   Credit Rating System- CRISIL
    (Q1)                                                                                 55
                                                    60
•   Treasury – F/Office- Reuters




                                      Rs. in crs.
    B/Office- ITMS (Q1)                                                   35
                                                    40
•   Retail Lending- (Q2)                                 19
•   Internet Banking- Bancaway (Q2)                 20
•   Tele banking- BK Systems (Q2)
•   WAP/SMS- Hexaware                                0
    (Completed)
•   ATM Switch- Oasis (Q2)                               FY00            FY01         FY02(Est.)
•   Networking – Talisma/Network                                    Financial Years
    Solutions (Q2)
•   Fixed Asset Systems ,Payables
    Systems, FTP, ALM (Q2)
       Large initial investments to
      establish Product Superiority
• In FY01, 44% of total
  operating expenses on people                      Break-up of Operating
  and technology v/s 33% in                               Expenses
  FY00
• Technology to                                                      103
                                                                           23
    – Create strong back-end                         90




                                      Rs. in crs.
                                                           63
      foundation
                                                     60         14         21
    – Create product delivery
                                                                8
      platforms                                      30
    – Free human resources to                                   41         59
      concentrate on product design                   0
      and sales                                           FY00 FY01
• Investments in human capital                                  Financial years
  and technological capital will
  create long term value                             Others      Tech.          People
      Cost Management - a Challenge
•   Increase in Operating
    Expenses/Total Income ratio mainly
    due to                                            Operating Expenses
     – Higher Investment costs
     – Accelerated depreciation policy                      Review
     – Lag between costs and resultant
       revenue benefits
                                                                         59%
•   Big focus to control consumable




                                         Percentage
    costs                                                  43%
     – Premises renegotiation (Rs. 2
       crores p.a. savings expected)
     – All vendors and supliers (Rs. 2
       crores p.a. savings)
     – Technology renegotiations (Rs.5
       crores p.a.)
     – Media Spend Negotiation (Rs. 70                   FY00        FY01
       lacs p.a.)
     – CTC concept for employees                          Cost/Total income
     – Target ratio of 50% in FY03/04
  Value Driver #3: De-Risk Corporate
               Portfolio          Rs. in crs             .


                                         FY 00   FY 01


Total Net Customer Risk Assets (A)       2772    3136


Gross NPAs plus Write-Offs (B)           45      150


Total Provisioning plus Write-Offs (C)   9       54


(C) as % of (B) – Provision Cover        20%     36%
Over 70% exposure to mid-size,
       large companies
   Turnoverwise distribution of companies-
                 Exposures


              19%
                                         29%
       4%




                    48%

  <100 crs.   100-500 crs.   500-1000 crs.   >1000 crs.
       Establishing a new Credit Risk
                  Regime
• Implementation of Credit Rating Model from CRISIL by Q1 FY02
• Formation of Remedial Team focusing on remedial accounts since
  Q3 FY01
• Reduced exposures of Rs.248 crs. across 5% of customer base
  since Q3 FY01
• Migrating up in credit quality for new exposures along with building
  Industry Approach to risk management
• No industry over-concentration of exposures
• Across products, re-priced exposures to reflect RAROC and credit
  risk
• Strategy: 25%+ growth towards a superior risk adjusted credit
  portfolio
       Value Driver #4: Enhance
   Operational Productivity and build
          Product Superiority
• Operations initiative of establishing Central/Regional
  Processing Units by Q3 FY02
• 2/3 shift operation proposed in a low cost location
• Handling of increased volumes without any business
  disruption
• Main objective to take away transaction processing from
  branches and increase thrust on sales, knowing the
  customer
   – “From Good bankers to Good salesmen”
  Way forward towards rebuilding a
         strong foundation

• IDBI Bank is changing…
• Capital Formation- Human and technological capital to
  create financial capital
• Strategic initiatives going forward
• Financials for the year ended March 31,2001
              Strategic Focus Areas

• Manage for ROE
   –   Capital Leverage
   –   Net Interest Income
   –   Other income
   –   Cost Management


• New Retail Thrust
• Reposition Corporate Banking
• Reposition Treasury
 Retail Banking: Customer Service,
       cornerstone of strategy
• Focused on taking market share in 2nd and 3rd tier towns
  before intensifying focus on Metros
• Re-branding of Bank
   – Logo, Color (Teal)
   – Customer proposition –what can i do for you?
• Retail banking thrust with twin objective of
   – Building up distributed, lower risk asset base (target to have
     25% of total asset base in retail by FY03)
   – Lowering cost of funding ( 50% of total deposits to be retail and
     40% to be low cost deposits by FY03)
               Making rapid moves

• Launched Mobile Banking         • Proposed deployment of
  during FY01 in 29 cities with     sales team for retail asset
  4000 plus customers               acquisition
• Newsletter for customers, U&I   • Upgrading ATMs for Bill
                                    Payment Presentation and
  to build credible                 personalization
  communication channel for
                                  • Upgraded Tele-banking in 17
  cross sell                        cities
• Aggressive Third Party          • Debit Card Launch in FY02
  Distribution                    • Internet Banking Launch in
   – MFs/Flexibonds/RBI Bonds
                                    Q2 FY02
   – Insurance to follow soon
                                  • Retail Broking
                                  • Credit Cards
                                     Leading indicators

                    Low Cost Deposits/Total Deposits                                                                          Retail Deposits/Total Deposits
                                                    23
               25                                                                                                                                            34




                                                          Percentage
                                                                                                                        40
Percentage




               20          17
                                                                                                                                     23
               15
                                                                                                                        20
               10
                5                                                                                                        0
                0
                                                                                                                                    FY00                     FY01
                          FY00                     FY01
                                 Financial Years                                                                                           Financial Years
                                                                                   Retail Deposits/Total Deposits

                                                                              40                                 34




                                                                 Percentage
                                                                              30         23
                                                                              20
                                                                              10
                                                                               0
                                                                                        2000                     2001
                                                                                               Financial Years




                        No. of Retail Accounts                                                                           Presence among Top 100 Deposit Centres in
                                                                                                                                          India
                                                   2.7
Nos. in lacs




               3
                          1.61                            No. of Centres                                                60                                   48
               2                                                                                                                     36
                                                                                                                        40
               1
                                                                                                                        20
               0
                                                                                                                         0
                         FY00                      FY01
                                                                                                                                    FY00                     FY01
                                 Financial Years                                                                                           Financial Years
    Corporate Banking: RAROC will be
               the driver
•   Balance focus between mid-
    market corporate customers and                       Improved provisioning
    top-tier customers                                          policy
•   Decline in asset yields due to
    improved risk profile to be arrested
                                                         200
    by lower cost of deposit and                                 36% cover
    increased fee income (Cash Mgmt.,
                                                         150




                                           Rs. in crs.
    Treasury, Trade Finance,Re-
    Pricing)                                             100     20%
•   Focus on FI and PSU clients
                                                                 Cover
•   Dynamic risk management policy                        50
    (No losses during recent capital
    markets downturn)                                      0
•   Aggressive provisioning policy                              FY00         FY01
    aimed at achieving Provision Cover
    well above statutory stipulations                      Net NPA   Prov+W/off
                   In Summary,

   Management Quality
   Brand
   Reach (Pan-India)
   Investment Resources (Technology/People)
   Process Management
   Risk Management

    Size ?
                          I




Surat
        Mhow
               Jabalpur




                              77 ATMs
                              countrywide
Way forward for rebuilding a strong
           foundation
• IDBI Bank is changing…
• Capital Formation- Creating human, technological and
  financial capital
• Strategic initiatives going forward
• Financials for the year ended March 31,2001
                   Profitability Review                        Rs. in crs.
Financial year ended            31-03-2000 31-03-2001 Change
                                                      (%)
Interest income                 424       539        27%

Interest expense                333       438        31%

Net interest income             91        101        11%
Other income                    55        70         27%
Total income                    146       171        17%
Operating Expenses              62        103        63%
Profit before prov. and taxes   84        68         (17%)
Provisions and write-offs       6         45         650%
Taxes                           17        4          (77%)
Net Profit                      61        19         (69%)
      Key Performance Indicators
                                                            Rs. in crs
Financial year ended              31-03-2000   31-03-2001


Low cost Deposits as % of total   17%          23%
deposits
Fee income as % of Total          38%          41%
Income
Net NPA to Total Net Customer     1.28%        3.04%
Risk Assets (%)
Provision Cover                   20%          36%
Capital Adequacy                  11.8%        11.72%
of which,
            Tier I Capital        8.43%        7.89%
                           Safe Harbor
Except for the historical information contained herein, statements in this release
which contain words or phrases such as “will”, “aim”, “will likely result”, “would”,
“believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”,
“contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will
pursue” and similar expressions or variations of such expressions may constitute
"forward-looking statements". These forward-looking statements involve a number
of risks, uncertainties and other factors that could cause actual results to differ
materially from those suggested by the forward-looking statements. These risks
and uncertainties include, but are not limited to our ability to successfully
implement our strategy, future levels of non-performing loans, our growth and
expansion, the adequacy of our allowance for credit losses, our provisioning
policies, technological changes, investment income, cash flow projections, our
exposure to market risks as well as other risks.IDBI Bank Limited undertakes no
obligation to update forward-looking statements to reflect events or circumstances
after the date thereof.

				
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