business presentation · 2019-08-20 · broking institutional brokerage (` million) institutional...
TRANSCRIPT
Business
Presentation
August 2019
Agenda
• ICICI Securities at a glance
• Strategy
• Business Performance
• Financial Results
• Industry Overview
ICICI Securities at a glance
3
Mass Affluent
Large growing franchise
Active clients (mn)
Operational accounts and active clients growth of 12% CAGR
Operational accounts (mn)
2.5
4.4
FY-14 FY-19
0.7
1.3
FY-14 FY-19
4
Market share
Growing market share across categories
Equity & Derivative
market share (%)
7.5
4.1
7.7
8.6
Equity Derivative
FY14 (4.5%) FY19 (8.5%)
MF AuM market share
(%)
2.3
0.6
2.6
0.9
Equity Debt
FY 14 (1.1%) FY 19 (1.9%)
MF revenue market share
(%)
2.9
4.0
FY-14 FY-19
5
Equity Capital Markets
Strong position in equity capital market (ECM)
IPOs market share
(amount raised)ECM market share
(amount raised)
Advisory market share
(amount raised)
0%
38%
FY-14 FY-19
30%
41%
FY-14 FY-19
4%
7%
FY-14 FY-19
6
ICICI Securities has built an enviable franchise…
7
4.51
mn Growing customer base
Largest Equity broker in terms of revenue
2nd
Largest non-bank mutual fund distributor by revenue2
1st
Rank in the IPO/ InvIT (Investment trusts) by value3
2nd
ECM league table by value4
…and a sticky customer base over the years
High Customer Stickiness
Revenue contribution by customers who have been
with us for more than 5 years
This trend is consistent and is reflected
continuously for the five prior years including the
recently ended FY19
8
> 65%
Agenda
• ICICI Securities at a glance
• Strategy
• Business Performance
• Financial Results
• Industry Overview
Our Strategy
Ramping Scale
and Value
• ICICI Bank
partnership shifting
focus on
• Affluent & wealth
segments
• NRI
• Open architecture
digital acquisition
• Scale up business
partners with digital
integration
10
Monetize Client
Value
• Insta Digital loans
distribution
• Home loan top up
• Personal loans
• Credit cards
• Loan against
shares
• Auto loans
• Two wheeler loans
• Home loans
• Online Health
Insurance
• Proprietary PMS
Active Client
Engagement
• Basic advice based
on profiling through
digital RM
• Augmenting tools in
partnership with
fintechs for traders
to build and test
trading strategies
• Using advanced
analytics for micro
segmenting
Digital Agility
• Build digital agility
using API
architecture
• Infuse specific skills
in data and decision
science; Big data
and cloud experts &
UI/UX experts
• Build big data stack
• Improve web user
interface and
revamp mobile
platform
Cost Efficiency
• Closing of low
productivity
branches
• Eliminating
redundancies of
overlapping roles
• Inculcating cost
culture
Making business model more broad based and diversified
Agenda
• ICICI Securities at a glance
• Strategy
• Business Performance
• Financial Results
• Industry Overview
Broking
9.72%
9.70%
9.63%
9.59%
9.55%
9.53%
9.50%
9.47%
9.48%
9.48%
9.50%
9.45%
9.38%
9.40%
9.61%
9.67% 9
.77%
9.81%
Jan
-18
Feb
-18
Mar-18
Ap
r-18
May-18
Ju
n-18
Ju
l-18
Au
g-18
Sep
-1
8
Oct-18
No
v-1
8
Dec-18
Jan
-19
Feb
-19
Mar-19
Ap
r-19
May-19
Ju
n-19
ICICI Securities market share1 in active client
base (NSE) at 18 month high
Strong traction in new initiatives
• Prime launched, well received, ~1 lac subscriptions as at
end Q1-FY20
• New bank arrangement, initial results encouraging,
activation rates up by 40%
• Launched e-ATM facility on NSE to further strengthen
liquidity proposition of ICICIdirect Prime
Growing client base and engagement
• 4.52
million strong base of operational accounts
• 9.42
lac overall active clients
• 8.82
lac NSE active clients, market share at 18 month high
• Online account opening; paperless onboarding of existing
ICICI Bank clients
Retail franchise intact and growing
12
Broking
Blended market share
4.5%
4.7% 6
.6%
7.8%
9.0%
8.5%
9.2%
7.4%
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
Derivative market share
4.1%
4.4%
6.5% 7.8%
9.1%
8.6%
9.3%
7.4%
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
I-sec ADTO (` billion)
44
65 10
1 18
7
37
2
53
3
46
6
64
1
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
Equity market share
7.5%
7.4%
7.4%
7.1% 7.4% 7
.7%
7.4%
8.1%
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
13
Broking
Retail Brokerage (` million)
Leading equity broker in India
3-in-1 Platform
• Providing seamless experience
• Mutual beneficial relationship with ICICI Bank
• Presence in 3,7501+ ICICI Bank branches
• 3-tier disaster recovery system
• Fully integrated risk system
• Real-time tracking of trigger prices
• Over 95% broking transactions performed
online
4,6
21
7,0
27
6,0
70
7,0
16
9,1
74
8,1
54
2,0
24
1,8
93
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 12%
14
Broking
Institutional Brokerage (` million)
Institutional broking – Growing scale
33
9 52
7
53
7 74
0
1,0
69
1,1
74
27
4
30
6
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 28%
• Significant India coverage supplemented by
Asia Pacific and USA
• Growing Direct market access business
• Research
• coverage of 249 Indian stocks
• 37 member research team
• Leading procurement in IPOs, QIPs, OFSs and
Block deals
15
Distribution
Strong online presence aided by pan India distribution
• Presence in over 75+ cities with ~193 branches
• 1,300+ relationship managers and product specialists
• Wealth management solutions for HNIs/Family offices,
315+ member team
• Over 700+ cities/towns with 7,500+ sub-brokers,
authorized persons, IFAs and IAs
• Significant presence in the Tier-II and Tier-III cities
Distribution revenues (₹ million)
1,8
67
2,6
69
2,5
41 3,4
97
4,6
65
4,6
35
1,1
64
98
6
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 20%
Distribution as % of total revenues increased from 23% in FY14 to 27% in FY19
16
Distribution
MF AUM (` billion)
2nd
Largest non bank Mutual Fund distributor
Mutual Funds revenue (` million)
78
9
1,5
40
1,1
17
1,6
57
2,8
47
2,6
95
77
3
56
2
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 28%
76
12
0
16
0 21
2
30
2
34
7
34
3
36
8
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 36%
17
Distribution
Non MF distribution revenue (` million)
Enhanced focus on non Mutual Fund distribution; up 9% in Q1-FY20
1,0
78
1,1
28
1,4
24
1,8
39
1,8
18
1,9
40
39
1
42
4
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 12%
Investments
• IPOs, OFS, public bond offerings
• 3rd party corporate fixed deposits
• National Pension System
Protection
• Life /General Insurance
Assets/Wealth creation
• Loan products referrals
• Portfolio management services
• Alternate investment funds
YoY growth 9%
Launched Digital loans; ~ 0.5 million customers pre-approved for instant loan
18
Corporate Finance
Corporate Finance Revenue (` million)
• Strengths
• Sector expertise
• Corporate relationships
• Strong distribution franchise
• Expected to benefit from the robust deal
pipeline
Leading Investment Bank in India
59
3
63
8
83
4
1,1
98
1,4
40
99
1
32
3
16
7
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 11%
19
Corporate Finance: Q1-FY20 snapshot
• IPOs/InvIT: Indiamart Intermesh Ltd, Oriental
Infratrust
• OFS: L&T Technology Services
• Advisory: Dvara Kshetriya Gramin, Fuji Electric,
Music broadcast ltd
• Ranked 3rd
among domestic financial advisors by
value and ranked 2nd
by number of deals in merger
market league table
• 3 M&A deals in Q1-FY2020 vs 2 deal in Q1-FY2019
• Ranked 1st
in IPOs1
league table
• Robust IPO pipeline of over ` 1802
bn
• Left lead banker in 13 deals
• Buyback: SQS India BFSI Ltd.
• Rights: Bharti Airtel Ltd.
• Block deal: Shriram Transport Finance Co.
1. IPOs: IPO/FPO/InvIT/REIT 2. Source: SEBI, Prime database, 3. ECM: IPO/FPO/InvIT/REIT, QIP/IPP, Rights issue
IPO Consolidation product
Advisory Major deals
Period: Q1-FY2020 vs Q1-FY201920
Agenda
• ICICI Securities at a glance
• Strategy
• Business Performance
• Financial Results
• Industry Overview
Financials
Revenue diversification1 (%)
Strong financial performance
Revenue (` million)
8,12
3
12
,0
95
11
,2
46
14
,0
42
18
,6
10
17
,2
70
4,3
59
4,0
21
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 16%
61
%
62
%
59
%
55
%
55
%
54
%
53
%
55
%
39
%
38
%
41
%
45
%
45
%
46
%
47
%
45
%
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
Brokerage revenue Others
22
Asset light agency business with high returns
Dividend payout (` million)
Consistent dividend payout, Consistently high ROE due to asset light model
40
0
1,6
11
1,6
11
2,0
50
3,0
28
3,0
28
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19
FY14 to FY19
CAGR 50%
PAT (` million)
90
8
2,9
39
2,3
87
3,38
6
5,53
5
4,9
07
1,3
38
1,1
38
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
FY14 to FY19
CAGR 40%
Dividend payout ratio increased from 44% in FY14 to 62% in FY1923
Consolidated P&L
24
(` million)
Particulars FY-2019 Q1-FY19 Q4-FY19 Q1-FY20 Y-o-Y%
Revenue1
17,270 4,359 4,283 4,021 (8) %
Employee benefits expenses 5,545 1,366 1,328 1,274 (7) %
Operating expenses 1253 252 306 245 (3) %
Finance costs2
423 131 100 178 36%
Other expenses2
2477 584 660 564 (5) %
Total Expenses 9,698 2,333 2,394 2,261 (3) %
Profit before tax 7,572 2,026 1,889 1,760 (13) %
Tax expense 2665 688 674 622 (10) %
Profit after tax 4,907 1,338 1,215 1,138 (15) %
Other comprehensive income (OCI) -26 -16 -4 -35 -
Total comprehensive income (TCI) 4,881 1,322 1,211 1,103 (17) %
Segment performance
25
Note –Advisory services includes Financial advisory services such as equity-debt issue management services, merger and
acquisition advice and other related activities
Period: Y-o-Y: Q1-FY20 vs Q1-FY19
(` million)
Particulars FY-2019 Q1-FY19 Q4-FY19 Q1-FY20 Y-o-Y%
Segment Revenue
Broking & commission 15,807 3,967 3,835 3,637 (8)%
Advisory services 991 323 129 167 (48)%
Investment & trading 265 69 112 69 -
Income from operations 17,270 4,359 4,283 4,021 (8)%
Segment Profit before tax
Broking & commission 6,976 1,801 1,757 1,647 -9%
Advisory services 253 170 -122 16 -91%
Investment & trading 137 55 47 -51 -192%
Total Result 7,572 2,026 1,889 1,760 -13%
Balance Sheet : Assets(` million)
26
1. As on 31st
March 2019, settlement obligation pertaining to an offer for sale amounting to ` 17,362 mn were pending for
payment 2. Lease assets capitalised as per Ind AS 116 are being reported as Right of use assets under non-financial assets
ASSETS At Mar 31, 2019 At Jun 30, 2019
Financial assets (A) 43,697 26,645
Cash/Bank and cash equivalents1
31,486 16,634
Securities for trade 2,563 2,679
Receivables 4,770 1,243
Loans 4,033 4,860
Investments 28 28
Other financial assets 817 1,201
Non-financial assets (B) 2,949 5,064
Deferred tax assets (net) 737 680
Right-of-use assets2
- 1,945
Fixed assets, CWIP & Intangible assets 476 508
Current tax assets & other non financial assets 1,736 1,931
Assets (A+B) 46,646 31,709
Balance Sheet : Equity and Liabilities
(` million)
27
1. As on 31st
March 2019, settlement obligation pertaining to an offer for sale amounting to ` 17,362 mn is pending for
payment. 2. Lease liabilities are being capitalised in financial liabilities as per Ind AS116 applicable from April 1, 2019
EQUITY AND LIABILITIES At March 31, 2019 At June 30, 2019
Financial liabilities (A) 30,182 14,856
Derivative financial instruments 17 2
Payables1
23,362 3,172
Debt securities 4,473 7,453
Lease liabilities2
- 1,909
Deposits & Other financial liabilities 2,330 2,320
Non-financial liabilities (B) 5,991 5,250
Equity (C) 10,473 11,603
Equity share capital 1,611 1,611
Other equity 8,862 9,992
Equity and Liabilities (A+B+C) 46,646 31,709
Agenda
• ICICI Securities at a glance
• Strategy
• Business Performance
• Financial Results
• Industry Overview
6.4 7.3 8.3 8.811.3 10.3
31.1% 32.8%36.4% 36.1%
46.1%41.5%
0%
20%
40%
60%
0
5
10
15
FY-12 FY-13 FY-14 FY-15 FY-16 FY-17
Financial Savings
Financial Savings as a % of Household Savings
India: Financialisation and equitisation of savings
29
1.8% 1.6% 1.6% 1.6%
3.0%2.6%
8.0%
FY-12 FY-13 FY-14 FY-15 FY-16 FY-17 FY-18
Growing incremental investments in shares & debentures High growth across financial asset classes#
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
In ` trillion
Rising financial savings
165 131
95 149 149
116
200 213
146
348
259
162
491
289
179
Equity + Derivative
ADTO
MF AUM Insurance Premium
(FY)
FY-15 FY-16 FY-17 FY-18 FY-19
Market witnessing headwinds
30
Secondary market witness higher volatility
Subdued primary market, fund raising through equity slowed down
ECM Issuance mobilized (` billion) ECM Issuance count
Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Nifty Index12,089
9,238
11,130
9,998
11,739
10,030
Apr-17 Jul-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19
Midcap Index
19,920
17,333
21,732
18,474
18,259
20,290
643 579 536
1899
569
124
636
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
97
7487
157
66
18 20
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-19 Q1-20
Broking: Retail participation
31
Retail participationRise in demat accounts (In million)
Growing share of trading volume (` billion) Secondary market volume growth led by derivative volume#
In ` billion
213 202 244 338 1,368 1,525 2,409 4,143 6,251352
2325
28
32
36 37
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
54% 52%58% 58% 56% 55%
30%37%
44% 46% 47% 46%
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
Equity Derivative
364
68% 68% 66% 70% 74% 75%
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
Delivery ADTO Non-Delivery ADTO
8,559
88% 89% 92% 93% 96% 97%
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
Equity Derivative
Institutional broking: Increased FII flow in Q1-FY2020
32
Holding % of market capitalisation Equity Flow in USD billion
Derivative ADTO in (` billion)Equity ADTO in (` billion)
(3.0)
2.5 2.1
(2.7)
(1.4)
(2.6)
8.2
3.2
6.5
4.23.8
5.6
2.7
3.7
(1.8)
0.6
Q2-FY18 Q3-FY18 Q4-FY18 Q1-FY19 Q2-FY19 Q3-FY19 Q4-FY19 Q1-FY20
FII DII
44 43 47
54 52 55
10 1115
27 27 26
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
FII DII
259 319 523
767
1,310
2,293
6 12 15 31 40 38
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
FII DII
10.0%
15.0%
20.0%
25.0%
Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19
FPIs Domestic institutional
Saving landscape: Increasing managed equity
33
Mutual Fund (Exit) AUM (` trillion) Growing share of beyond top 35 cities in MF AUM
More systematic retail participation through SIP Mutual Fund folio
SIP flow (` billion) Folio Count (million)
10.812.3
17.5
21.4
23.8 24.3
FY-15 FY-16 FY-17 FY-18 FY-19 Q1-FY20
40 4248
55
71
82
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19
92% 92% 91% 91%82% 80%
FY-14 FY-15 FY-16 FY-17 FY-18 FY-19
Top 35 Others
439
672
927
245
FY-17 FY-18 FY-19 Q1-FY-20
Safe harbor
34
Except for the historical information contained herein, statements in this release which contain words or
phrases such as 'will', ‘would’, ‘indicating’, ‘expected to’, etc., 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, opportunities and growth
potential to differ materially from those suggested by the forward-looking statements. These risks and
uncertainties include, but are not limited to, the actual growth in demand for broking and other financial
products and services in the countries that we operate or where a material number of our customers reside,
our ability to successfully implement our strategy, including our use of the Internet and other technology, our
growth and expansion in domestic and overseas markets, technological changes, our ability to market new
products, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are or
become a party to, the future impact of new accounting standards, our ability to implement our dividend
policy, the impact of changes in broking regulations and other regulatory changes in India and other
jurisdictions as well as other risk detailed in the reports filed by ICICI Bank Limited, our holding company with
United States Securities and Exchange Commission . ICICI Bank and ICICI Securities Limited undertake no
obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
This release does not constitute an offer of securities.
Thank you