Aditya Arora’s Post

Meet the man who took Rs 500 from his teacher and built a 60,000 CR bank. 1. At 16, Vembu Vaidyanathan's dream of joining the Indian Air Force shattered when he fell from the roof of his one-storied house in Sunabeda, Odisha. His father sold a second-hand Kelvinator fridge for Rs 3000 for his operation. But it didn't work out. 👇 2. Even after getting a two-month extension for the medical test, Vembu still had a problem in his left eye. He could not join the force. Taking Rs 500 from his mathematics teacher, he went to Jharkhand and aced an interview to study at BIT, Mesra. Post college, he landed a job at Citibank. 💼 3. After a decade of leading Citibank's auto division, he took a challenging role at ICICI Bank as it was transitioning from a domestic project financing institution to a full-stack universal bank. He focused on lending, retail liabilities, and rural banking through a branch-rural internet kiosk approach, and magic happened. 🪄 4. By 2006, ICICI expanded to 630 branches and 4,300 kiosks, becoming India's largest retail credit provider. At 38, Vembu became the youngest executive director on the board of ICICI Bank. But he had something else going on in his mind. 🤔 6. He wanted to build his bank, and started looking for an NBFC license. He found a real estate loss-making NBFC and invested 78 CR to get a 10% stake in by pledging his home and purchasing the stock as collateral. With a new vision, he also changed the name. In 2010, Capital First was born. 🚀 7. He shut down Capital First's non-core businesses—real estate, broking, and forex—and actively pushed MSME and retail lending. But he needed funds. After getting rejected by 15 private equity funds in a year, Vembu successfully raised 810 CR from Warburg Pincus. 💰 8. By 2018, Capital First had reached 7 million retail customers with loans of 29,600 CR. Vembu had turned Capital First from a 30 CR loss in 2010 to a profit of Rs 358 crore in 2018. As it became an 8200 CR company, something was happening. 👇 9. IDFC bank wanted to move out of conventional infrastructure financing and focus on retail, and who better than to acquire the 32,000 CR retail NBFC, Capital First? On 18th December 2018, the big headline came. 📰 IDFC Bank merged with Capital First to a new entity with assets worth 102,683 CR. The mighty IDFC First Bank was born. 🚀 11. Vembu had made history but was making another as the MD of IDFC First Bank. He offered the industry's highest 7% interest on low-cost savings, taking the bank from 9% CASA to No. 2 with 51% CASA. It became one of India's top 10 valued banks. 💪 12. Today, IDFC First Bank manages deposits worth 200,965 CR with a profit of 2484 CR. It maintains a CASA of 47.2% with a default rate of just 1.88%. It is worth 60,714 CR today. 📉 ➡️ But the best part is that Vembu Vaidyanathan gifted 100,000 shares worth Rs 30 Lakhs to his mathematics teacher, who gave him Rs 500 three decades ago. 🙏 #startups #india #casestudy

Meet the man who took Rs 500 from his teacher and built a 60,000 CR bank. 1. At 16, Vembu Vaidyanathan's dream of joining the Indian Air Force shattered when he fell from the roof of his one-storied house in Sunabeda, Odisha. His father sold a second-hand Kelvinator fridge for Rs 3000 for his operation. But it didn't work out. 👇 2. Even after getting a two-month extension for the medical test, Vembu still had a problem in his left eye. He could not join the force. Taking Rs 500 from his mathematics teacher, he went to Jharkhand and aced an interview to study at BIT, Mesra. Post college, he landed a job at Citibank. 💼 3. After a decade of leading Citibank's auto division, he took a challenging role at ICICI Bank as it was transitioning from a domestic project financing institution to a full-stack universal bank. He focused on lending, retail liabilities, and rural banking through a branch-rural internet kiosk approach, and magic happened. 🪄 4. By 2006, ICICI expanded to 630 branches and 4,300 kiosks, becoming India's largest retail credit provider. At 38, Vembu became the youngest executive director on the board of ICICI Bank. But he had something else going on in his mind. 🤔 6. He wanted to build his bank, and started looking for an NBFC license. He found a real estate loss-making NBFC and invested 78 CR to get a 10% stake in by pledging his home and purchasing the stock as collateral. With a new vision, he also changed the name. In 2010, Capital First was born. 🚀 7. He shut down Capital First's non-core businesses—real estate, broking, and forex—and actively pushed MSME and retail lending. But he needed funds. After getting rejected by 15 private equity funds in a year, Vembu successfully raised 810 CR from Warburg Pincus. 💰 8. By 2018, Capital First had reached 7 million retail customers with loans of 29,600 CR. Vembu had turned Capital First from a 30 CR loss in 2010 to a profit of Rs 358 crore in 2018. As it became an 8200 CR company, something was happening. 👇 9. IDFC bank wanted to move out of conventional infrastructure financing and focus on retail, and who better than to acquire the 32,000 CR retail NBFC, Capital First? On 18th December 2018, the big headline came. 📰 IDFC Bank merged with Capital First to a new entity with assets worth 102,683 CR. The mighty IDFC First Bank was born. 🚀 11. Vembu had made history but was making another as the MD of IDFC First Bank. He offered the industry's highest 7% interest on low-cost savings, taking the bank from 9% CASA to No. 2 with 51% CASA. It became one of India's top 10 valued banks. 💪 12. Today, IDFC First Bank manages deposits worth 200,965 CR with a profit of 2484 CR. It maintains a CASA of 47.2% with a default rate of just 1.88%. It is worth 60,714 CR today. 📉 ➡️ But the best part is that Vembu Vaidyanathan gifted 100,000 shares worth Rs 30 Lakhs to his mathematics teacher, who gave him Rs 500 three decades ago. 🙏 #startups #india #casestudy

🤝 Meet the man who took Rs500 from his teacher and built a 60,000CR bank. 1. At 16, Vembu Vaidyanathan's dream of joining the Indian Air Force shattered when he fell from the roof of his one-storied house in Sunabeda, Odisha. His father sold a second-hand Kelvinator fridge for Rs 3000 for his operation. But it didn't work out. 👇 2. Even after getting a two-month extension for the medical test, Vembu still had a problem in his left eye. He could not join the force. Taking Rs 500 from his mathematics teacher, he went to Jharkhand and aced an interview to study at BIT, Mesra. Post college, he landed a job at Citibank. 💼 3. After a decade of leading Citibank's auto division, he took a challenging role at ICICI Bank as it was transitioning from a domestic project financing institution to a full-stack universal bank. He focused on lending, retail liabilities, and rural banking through a branch-rural internet kiosk approach, and magic happened. 🪄 4. By 2006, ICICI expanded to 630 branches and 4,300 kiosks, becoming India's largest retail credit provider. At 38, Vembu became the youngest executive director on the board of ICICI Bank. 🤔 5. He wanted to build his bank, and started looking for an NBFC license. He found a real estate loss-making NBFC and invested 78 CR to get a 10% stake in by pledging his home and purchasing the stock as collateral. With a new vision, he also changed the name. In 2010, Capital First was born. 🚀 6. He shut down Capital First's non-core businesses—real estate, broking, and forex—and actively pushed MSME and retail lending. But he needed funds. After getting rejected by 15 private equity funds in a year, Vembu successfully raised 810 CR from Warburg Pincus. 💰 7. By 2018, Capital First had reached 7 million retail customers with loans of 29,600 CR. Vembu had turned Capital First from a 30 CR loss in 2010 to a profit of Rs 358 crore in 2018. 👇 8. IDFC bank wanted to move out of conventional infrastructure financing and focus on retail, and who better than to acquire the 32,000 CR retail NBFC, Capital First? On 18th December 2018, the big headline came. 📰 IDFC Bank merged with Capital First to a new entity with assets worth 102,683 CR. The mighty IDFC First Bank was born. 🚀 11. Vembu had made history but was making another as the MD of IDFC First Bank. He offered the industry's highest 7% interest on low-cost savings, taking the bank from 9% CASA to No. 2 with 51% CASA. 💪 12. Today, IDFC First Bank manages deposits worth 200,965 CR with a profit of 2484 CR. It maintains a CASA of 47.2% with a default rate of just 1.88%. It is worth 60,714 CR today. 📉 ➡️ But the best part is that Vembu Vaidyanathan gifted 100,000 shares worth Rs 30 Lakhs to his mathematics teacher, who gave him Rs 500 three decades ago. 🙏 #casestudy #real🇮🇳 #branding #growth #mindset #madeinindia #brandbluidling #heartwork #banking #CapitalFirst Disclaimer : This case study post 4224 is reposted only for educational purpose only

𝐈𝐃𝐅𝐂 𝐅𝐢𝐫𝐬𝐭 𝐁𝐚𝐧𝐤 𝐐𝟒𝐅𝐘𝟐𝟒, 𝐥𝐨𝐬𝐢𝐧𝐠 𝐒𝐡𝐞𝐞𝐧? IDFC made a name for itself in the Indian Banking Landscape in a small amount of time. Under the stewardship of Mr. Vaidyanathan is making its mark. Without much preamble let's delve into details of its latest quarterly number. ⚡️𝐂𝐀𝐒𝐀 & 𝐃𝐞𝐩𝐨𝐬𝐢𝐭𝐬: CASA has been plaguing the banks lately and it is around a commendable 47.2%, and sticky Retail Deposits stand for nearly 78% of total deposits, however, they reduced the SA rate of deposits up to 1 lakh to 3%. Essentially bulk of the incremental SA deposits are hidden term deposits, so, NIM is getting crimped. As a new Banking entity, they must be provided that kind of latitude. As of this moment, the total base is Rs.1,93,743 Cr, 41.6% YOY growth,10% QoQ. CASA growth was 32% YOY. ☀𝑳𝒐𝒂𝒏𝒔 & 𝑨𝒅𝒗𝒂𝒏𝒄𝒆𝒔: Loan Book has grown by 25%, turning into a retail bank, nearly 28.5% is Mortgages, size is Rs. 2,00,965 crore, Rural, Credit Card, MSMEs are getting preferences. The Infra book is getting wound up. NIM is around 6.35%, on a downward trajectory. Yield on Funds is around 13%. The credit-to-deposit ratio is around 100%. improvement is noticed. The incremental CD ratio is 78%. Credit growth is 38% 🎢𝘼𝙨𝙨𝙚𝙩 𝙌𝙪𝙖𝙡𝙞𝙩𝙮:Colection Efficiency is around 99% for more than 2 years, GNPA is 1.88%, SMA 1,2 are exhibiting stable numbers. Though some provisioning has been done in the microfinance sector. Credit Cost has been minimal. 🎭𝐎𝐏𝐞𝐱: 47 branches are added, Cost to Income ratio is 73.20%, as a new bank one needs to spend on its infra, manpower, overhead, and compliance. Employee Costs/ Branch is around 161 lakhs/Q, Operating Costs/ Branch 310 lakhs/Qtr. ♨𝐏𝐀𝐓 & 𝐂𝐑𝐀𝐑: Tier 1 ratio is 13.36%, on a downward trajectory, total CRAR is around 16.11%. Fundraising is in the offing. Dilution would be there. PATis Rs.2,957 Cr, almost flattish growth. ROA is around 1.10%, and ROE is 10.30%, now, the goal is to take ROA to around 2% and ROE to around 20%. Miles to go, one would say. ⚠𝐂𝐚𝐮𝐬𝐞𝐬 𝐟𝐨𝐫 𝐂𝐨𝐧𝐜𝐞𝐫𝐧: Deposit growth is outpacing the Asset growth. Until and unless one is growing their advances at a rapid pace, one can't expect premium valuation in terms of P/B to sustain. Consistent fundraising activity could also put pressure on the ROE metrics. Bank is still rapidly expanding it Credit Card business which is loss-making though. Some one-off income was there last time. That cushion was missing. In their quest for deposits hope they don't take their eyes off Asset growth. Unsecured Lending is a place that is a high-stakes poker game. Could go both ways. Lets see how things pan out.

IndusInd Bank Concall Highlights. 1. Demand from private consumption and public investment derive the growth. 2. Retail deposits contributed 43.4% against 42.6% last quarter. 3. Commercial vehicles and Utility vehicles showed robust growth but tractors and two-wheelers segments remain muted. 4. Implemented a Salesforce loan originating system for cars & two-wheelers. This should further improve their efficiency and bring down turn around time for these products. 5. Second half of a year has always contributed more towards business compared to the first half and that trend should continue. 6. The growth in the corporate segment is led by small corporates who have less than Rs 500 crore of revenue. 7. Demand for diamond remain muted with sluggish growth in key consumer markets of the US and China. 8. Cost of deposits will peak out in Q2 and in Q4 they could witness a decline of 10-15 bps. 9. The 46% cost to income will come down to 45% by the end of this fiscal and in a three-year time bank targeting to further reduce it to 40%. 10. NIM (Margins) they will maintain at 4.2%-4.3% which means no decline from current levels. 11. Microfinance book will grow 18%-20% but other products shall contribute more going ahead. 12. For the last two years bank's affordable housing loan hasn't grown. They have changed the whole team now and looking to grow this book from 1700-1800 crore to 5000-5500 crore in the next 3 years. With stable asset quality, bank is on track to hit 20%-22% loan book growth till FY26.

Bandhan Bank has an unbreakable bond with NPAs and it looks like the struggle will continue. The Gross NPA stood at 7% with no significant improvement. In terms of growth, this is the first quarter in the several past quarters where the bank reported a decent loan growth of 19%. Even the deposit growth was healthy at 15%. Unlike other banks, Bandhan has managed its CASA book well, especially the decline in the CASA book. NIM or Margins too are healthy and improved both YOY and sequentially. ROA & ROE improved to 1.9% and 14%, and PAT grew 152% for the bank. But obviously, these numbers are not sustainable as this growth or improvement is artificial. Provisions have come down by 56% YOY and this drove the growth in the profitability of the bank. The worst part is the credit cost of the bank. The 2.5% credit cost for a bank that has more than 50% secured loan is clearly not acceptable. Even a large-cap bank like HDFC, ICICI, or Axis can easily deliver 15%-16% growth with stable asset quality. Probably the worst banking stock!

Considering the fact that Bank is primarily catering to microfinance sector where credit discipline is amiss. Loan waivers also do their job. It would always be a high beta stock. Should be treated to some extent a deposit taking NBFC. If one wants to partake in the journey be observant of credit and interest rate cycle.

"RBI Rings the Alarm on Personal Loans: A Deep Dive into Bank Responses and the Steadfast Approach of HDFC Bank" The apex bank has been encouraging banks and NBFCs to apply the brakes on personal loan growth. But, are PSU banks following suit? 🚨 Since the start of this year, the Reserve Bank of India has been vocal about its concern over the rising tide of demand and supply for unsecured personal loans. 🗣️ Governor Shakti Kanta Das and other top officials from the RBI have publicly shared their apprehensions on several occasions. 🛑 In July, RBI requested that banks reduce their issuance of personal loans, and more recently, they were asked to strengthen their risk management practices. .. 📢 Here's the current sentiment from the banks: 🏦 Kotak Mahindra Bank reports higher delinquencies in specific unsecured segments, especially smaller ticket loans. 🏦 ICICI Bank is noting a buildup of risk and increased defaults in loans valued under Rs 50k. 🏦 Yes Bank is slowing down in retail segments like unsecured loans due to rising delinquency rates. 🏦 RBL Bank is proactively managing risk, providing provisions for loans that remain in default for 120 days or more. 🏦 Bajaj Finance reports worsening leverage levels for loans under Rs 50k and has decreased exposure to borrowers with multiple loans under Rs 50k. 🏦 Paytm, in partnership with NBFCs, has also reduced its issuance of personal loans. .. 🤨 But what about PSU banks? 🏦 Despite acknowledging the RBI's concerns, private banks and NBFCs appear to be taking action. However, PSU banks seem unfazed. 🏦 Many dismiss concerns due to the relatively small proportion of these loans in their total portfolios and their steady recovery rates. .. 🌱 In the midst of this, HDFC Bank stands out. 🏦 Regardless of market fluctuations, HDFC Bank consistently emerges successful, thanks to its cautious lending approach, focusing on secured lending, even if it means slower growth during some periods." Follow (Siddharth Shah) for more such insights. Repost if you found it valuable Source: Economic Times, Mint #Finance #Banking #RBIAdvisory #PersonalLoans #RiskControl #HDFCBank

ICICI Bank Q3FY24 Preview We expect the second largest private sector bank to come out with healthy numbers in Q3FY24 aided by solid loan book growth and robust retail franchise. Though there would be some NIM compression continuing in Q3FY24 due to the passing of the increased cost of funds, the absolute profitability would show a double-digit growth on an annual basis. We expect RoA to be in the range of 2.3-2.5% and RoE in the range of 15-18% annualized this quarter. However, the bank’s decision to deal with an unsecured loan book will be a key thing to watch out for this quarter. Though we expect the opex cost to remain at elevated levels due to the bank’s focus on branch expansion, the profitability of the bank seems to be intact. With the uptick seen in rural demand in Q3FY23, we anticipate the bank’s business growth to be in high teens and CASA remaining constant in the range of 40-42%. Furthermore, we do not see any deterioration in the bank’s asset quality due to its strong credit profiling and high dependence on granular asset book.

𝐇𝐃𝐅𝐂 𝐁𝐚𝐧𝐤: 𝐀 𝐐𝐮𝐚𝐫𝐭𝐞𝐫 𝐨𝐟 𝐌𝐢𝐥𝐞𝐬𝐭𝐨𝐧𝐞𝐬 𝐚𝐧𝐝 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐁𝐫𝐢𝐥𝐥𝐢𝐚𝐧𝐜𝐞 𝐊𝐞𝐲 𝐇𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬 Net Revenues: INR 396 billion Net Interest Income: INR 285 billion Total Other Income: INR 111 billion Operating Expenses: INR 160 billion Profit Before Tax: INR 194 billion Net Profits After Tax: INR 164 billion Total Provisions: INR 42 billion GNPA Ratio: 1.26%, Net NPA Ratio: 0.31% 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐕𝐢𝐬𝐢𝐨𝐧 𝐟𝐨𝐫 𝐆𝐫𝐨𝐰𝐭𝐡: 𝐃𝐞𝐩𝐨𝐬𝐢𝐭 𝐆𝐫𝐨𝐰𝐭𝐡 𝐚𝐧𝐝 𝐑𝐞𝐭𝐚𝐢𝐥 𝐀𝐬𝐬𝐞𝐭 𝐄𝐧𝐡𝐚𝐧𝐜𝐞𝐦𝐞𝐧𝐭: Prioritizing deposit growth and boosting retail assets to fortify HDFC Bank's market presence. 𝐓𝐞𝐜𝐡𝐧𝐨𝐥𝐨𝐠𝐲 𝐑𝐚𝐭𝐢𝐨𝐧𝐚𝐥𝐢𝐳𝐚𝐭𝐢𝐨𝐧: Aiming for improved cost efficiencies through technology rationalization, driving down the cost-to-income ratio. 𝐁𝐫𝐚𝐧𝐜𝐡 𝐍𝐞𝐭𝐰𝐨𝐫𝐤 𝐄𝐱𝐩𝐚𝐧𝐬𝐢𝐨𝐧: Adding 146 branches to HDFC Bank's network, ensuring widespread accessibility. 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐈𝐧𝐧𝐨𝐯𝐚𝐭𝐢𝐨𝐧: Focused on digital offerings to enhance customer experience and optimize the cost-to-income ratio. 𝐏𝐫𝐨𝐟𝐢𝐭-𝐎𝐫𝐢𝐞𝐧𝐭𝐞𝐝 𝐆𝐫𝐨𝐰𝐭𝐡: Concentrating on returns rather than blind expansion, ensuring sustainable and profitable growth. 𝐌𝐚𝐫𝐤𝐞𝐭 𝐋𝐞𝐚𝐝𝐞𝐫𝐬𝐡𝐢𝐩 𝐚𝐧𝐝 𝐂𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐂𝐞𝐧𝐭𝐫𝐢𝐜𝐢𝐭𝐲: 𝐁𝐫𝐚𝐧𝐜𝐡 𝐍𝐞𝐭𝐰𝐨𝐫𝐤 𝐌𝐢𝐥𝐞𝐬𝐭𝐨𝐧𝐞: HDFC Bank's branch network now stands at 8,091 outlets, facilitating widespread accessibility. 𝐂𝐮𝐬𝐭𝐨𝐦𝐞𝐫 𝐁𝐚𝐬𝐞 𝐆𝐫𝐨𝐰𝐭𝐡: Welcoming 2.2 million new customer liability relationships this quarter, reaching a total of 93 million customers. 𝐌𝐚𝐫𝐤𝐞𝐭 𝐂𝐨𝐧𝐟𝐢𝐝𝐞𝐧𝐜𝐞: Despite competitive offerings, HDFC Bank remains confident in gaining market share, backed by a strategic focus on customer segmentation. 𝐅𝐮𝐭𝐮𝐫𝐞 𝐏𝐥𝐚𝐧𝐬 𝐚𝐧𝐝 𝐈𝐧𝐢𝐭𝐢𝐚𝐭𝐢𝐯𝐞𝐬: 𝐈𝐧𝐟𝐫𝐚𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞 𝐁𝐨𝐧𝐝𝐬: Eligible assets nearing INR 1 trillion for infra bonds, showcasing HDFC Bank's commitment to supporting crucial development projects. 𝐔𝐧𝐬𝐞𝐜𝐮𝐫𝐞𝐝 𝐋𝐨𝐚𝐧𝐬: Striking a balance between growth and profitability in HDFC Bank's approach to unsecured loans. 𝐍𝐁𝐅𝐂 𝐋𝐞𝐧𝐝𝐢𝐧𝐠: Continuing support to corporate houses through lending to NBFCs, contributing to economic development. 𝐂𝐫𝐨𝐬𝐬-𝐒𝐞𝐥𝐥 𝐌𝐞𝐭𝐫𝐢𝐜𝐬: Enhancing transparency by publishing cross-sell metrics for products like savings accounts, credit cards, and consumer durables. 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐑𝐞𝐥𝐚𝐭𝐢𝐨𝐧𝐬 𝐓𝐞𝐚𝐦: HDFC Bank's dedicated team is available for any questions, comments, or clarifications. Feel free to reach out! HDFC Bank #growth #q3results #growth #bankingindustry #finace #india