Showing posts with label ICICI Bank. Show all posts
Showing posts with label ICICI Bank. Show all posts

Tuesday, October 30, 2012

Same family, same fate?

Both public and private banks are facing a similar predicament today – the lying mirror! manish k. pandey discusses the dangers ahead, and how strong numbers during the past quarter were simply, just numbers...

There’s an old nursery rhyme – the wise man built his house upon a rock, while the foolish man built his house upon sand... and one house came tumbling down – which one? If Indian banks could answer even this ragamuffin of a question correctly, one suspects they wouldn’t have been blinded by the illusory numbers that are plumped by them as their quarterly results. Indian banks still haven’t realised the difference between reality and reverie. This commentary is a treatise on how Indian banks are living a most dangerous path by believing that the ‘good’ financial results of the last quarter were because of their strategies... they definitely were not!

No doubt, banks, both private and public sector, reported strong earnings growth ranging between 20-50% during the first quarter of FY2010. But when we analysed the earnings breakup, we saw that the meat of these earnings came mostly from one-off trading profits (which was nearly 30-60% of the total profit before tax) and not from their core net interest margins (NIMs). In truth, the NIMs were lower than even those expected. A CARE report mentions, “Higher cost of funds and lower lending rates brought down the NIMs of the top 12 banks (including State Bank of India, Bank of Baroda, Bank of India, Canara Bank, Axis Bank, HDFC Bank, ICICI Bank, IDBI Bank, Central Bank of India, Punjab National Bank, Union Bank of India and Syndicate Bank, which cover 61% of all credits in India) in the April-June quarter due to a subdued growth in the net interest income (NII).” It may sound surprising, but the truth is that the NII comprised less than 10% of the total income reported by a majority of banks. Raison d’être: The unprecedented surge in bank deposits coupled with a reluctance in issuing fresh loans (due to the threat of rising defaults playing in the bankers’ heads). This certainly has led to a problem of ‘plenty’ for many banks that have made a record by pooling large sums of monies with the Reserve Bank of India (RBI) under reverse repo.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Saturday, October 20, 2012

Will Mukesh Have the Last laugh in 2010?

It’s slated to be the largest non-pharma deal this year (till date), if successful. But the Bharti-MTN deal is much more than that, for it can potentially be a major game changer in corporate India’s most high profile sibling rivalry – that of the Ambani brothers

We still remember the blistering summer of mid-June, 2005 in Mumbai, when this magazine was launched in a glittering function at the Taj. Virtually all the guests were gracious enough to have a few words of praise for Business & Economy. But once the polite conversation got over with, it was back to the BIGGEST story of those days-the public spat and the looming split between Mukesh and Anil Ambani. There were whispers about how a battle over family crown jewels between the two had been transformed into a deeply bitter and rancorous personal feud that had ostensibly dragged even close lieutenants and spouses into the quagmire. Mumbai denizens were wondering which brother had better access to the corridors of power in Delhi. There were apocryphal tales about how the head honcho of ICICI Bank K. V. Kamath was desperately working out a deal whereby at least a public façade of an amicable split would be maintained. South Mumbai residents talked in awe of how the matriarch Kokilaben was holding all night counselling sessions at Sea Wind, the multi-storied Ambani residence in Colaba. Even as we talked a little and gossiped a lot more, mobile phones started twittering with calls and text messages announcing a final and formal split between the two. We knew what the cover feature of the second issue of Business & Economy would be.

Beyond the headlines, the real story was the gut wrenching emotions and angst that haunted Mukesh Ambani when he had to part with his brainchild, his passion and his personal tribute to his father – the late Dhirubhai Ambani. That was Reliance Infocom. Though these things can never be accurately verified, people close to the split swear that Mukesh swore that he will reclaim his dream and passion sometime in the future. Meanwhile, within weeks of the split, every company and employee of the companies that came under the control of Mukesh abandoned their Reliance phone handsets and connections.

Guess who benefited from this public demonstration of the bitter spat and subsequent split? Sunil Bharti Mittal and Airtel because Mukesh and the thousands and thousands of his employees switched over to Airtel connections!


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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