Competitor
Content
IILM Institute for Higher Education
COMPETITOR
ASSIGNMENT-1 Banking Sector Analysis [ICICI BANK]
Academic Year: PGP/ 2012-2014 (LR)
NAME OF GROUP MEMBERS: NEETIKA GHAI PG20121258 SARAVPREET SINGH PG20121088 PANKAJ GUPTA PG20121394 YOGI RAJ GOGIA PG2012 RAMNIKA SAHNI PG2012
BANKING SECTOR ANALYSIS ICICI BANK 1. ANALYSIS OF ICICI BANK WITH AXIS BANK, HDFC BANK, AND KOTAK MAHINDRA BANK:
2. BALANCE SHEET ANALYSIS : ICICI bank , capitalization. is a second largest bank in India by assets and third largest by market
Products only offered by ICICI bank are :Corporate banking Finance and Insurance Investment banking Mortgage Loan Private Banking Wealth Management
Based on balance sheet of different banks we can conclude that ICICI bank is performing better than other three banks ,
basically ICICI bank is leading ahead of HDFC bank ( in case of net worth of ICICI bank isRs. 60,402.25 crore and net worth Rs.29,924.68 crore.
Total liabilities of excess bank is very less that is Rs. 285,627.78 crore where as total liabilities of ICICI bank is bit high than other 2 banks that is Rs.473,647.1 that is 3rd highest.
Total assets of ICICI bank is Rs. 473,647.09 crore , which is a very good sign for the company.
Book Value of ICICI bank is 524.01 crore where as book value of Axis bank is very high that is Rs. 551.99 crore (i) Ratio Analysis of all the 4 banks (Axis Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank) • Profit Margin Ratio
It measure the amount of net profit earned by each rupee of revenue is almost same for all the four banks. Ratio Bank Mar-12 Profit Margin Ratio Axis Bank 15.51 ICICI Bank HDFC Bank 16.14 15.93 Kotak Bank 15.39 Mahindra
•
Earning Per share Ratio:
This is the earning of investor on each share and the maximum earning per share is of Axis bank. Hence it is the most profitable bank for the shareholders to invest in followed by ICICI bank.
Ratio Bank Mar-12
Earning Per Share Ratio Axis Bank 102.67 ICICI Bank HDFC Bank 56.09 22.02 Kotak Bank 14.65 Mahindra
•
Capital Adequacy Ratio
This ratio is used to protect depositors and promote the stability and efficiency of the financial system around the world. ICICI bank has the highest ratio in the four banks. Ratio Bank Mar-12 Capital Adequacy Ratio Axis Bank 13.66 ICICI Bank HDFC Bank 18.52 16.52 Kotak Bank 17.52 Mahindra
•
Current Ratio:
The current ratio for all the three firms is low than the ideal ratio that should be 2:1 but ICICI bank is havng the maximum current ratio out of all the banks.
Ratio Bank Mar-12
Current Ratio Axis Bank 0.03 ICICI Bank HDFC Bank 0.13 0.08 Kotak Bank 0.05 Mahindra
3. FIVE FORCE MODEL: A.Rivalry among the Competing Firms in the industry: Rivalry among competitors is very strong in the Indian banking sector because:
1. Homogeneous product and services The services offered by banks is more homogeneous than it does the company to offer the same service at a lower rate and eat their market share from the competition.
2. Similar services Almost all the banks offer similar services. Each bank tries to copy each other services and technology to increase the level of competition. 3. A large number of banks : There are many banks and financial institutions to get the maximum market share and pull each other’s customers hence there is intense competition. 4. High market growth rate India is seen as one of the largest on the market and the growth rate of the banking industry in India is also very high. This has sparked competition. 5. Low switching cost: 6. There is a high fixed cost and High exit barriers. High exit barriers humiliate banks to gain and retain customers by providing world class services
B. BARGAINING POWER OF SUPPLIERS The Reserve Bank of India governs banking industry. The rules and regulations determined by RBI. The Suppliers of the banks are the depositors. The depositors give their savings in the bank in exchange of the interest which mostly depends on the kind of monetary policies taken by the RBI hence i n b a n k i n g i n d u s t r y suppliers have low bargaining power. 1. Few alternatives available 2. RBI rules and regulations
Banks have to behave in the away that RBI wants them to. It reduces the bargaining power of suppliers 3. Suppliers not concentrated Banking industry suppliers sure not concentrated. There are numerous with negligible portion of offer .so this reduce their bargaining power
C. BARGAINING POWER OF CONSUMERS Customers have high bargaining power because: 1.Large no of alternatives Customers have many choices, so many banks, fighting for the same pie. There are many nonfinancial institutions. All these increase preference for customers. 2.Low switching cost. 3. Similar service Bank provide merely similar service. increase. They can not be charged for differentiation. 4. Full information about the market Customers have full information about the market due to globalization and digitalization hence, the bargaining power of customers
D. POTENTIAL ENTRY OF NEW COMPETITORS Reserve Bank of India has set some rules regulating stagnation and new entrants in the banking sector. We expect mergers and acquisitions in the banking sector in the near future and also introduction of many new banks as the RBI has given license to a lot of banks that will again increase the threat for existing banks. E. POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS Every day there is one or the other new product in financial sector The wide range of choices and needs give a sufficient room for new product development and product enhancement I n p r i v a t e b a n k i n g i n d u s t r y f o l l o w i n g a r e t h e substitutes: • • Government Bond Mutual Funds
• •
Stock Market Other Investment Alternatives
COMPETITOR
ASSIGNMENT-1 Banking Sector Analysis [ICICI BANK]
Academic Year: PGP/ 2012-2014 (LR)
NAME OF GROUP MEMBERS: NEETIKA GHAI PG20121258 SARAVPREET SINGH PG20121088 PANKAJ GUPTA PG20121394 YOGI RAJ GOGIA PG2012 RAMNIKA SAHNI PG2012
BANKING SECTOR ANALYSIS ICICI BANK 1. ANALYSIS OF ICICI BANK WITH AXIS BANK, HDFC BANK, AND KOTAK MAHINDRA BANK:
2. BALANCE SHEET ANALYSIS : ICICI bank , capitalization. is a second largest bank in India by assets and third largest by market
Products only offered by ICICI bank are :Corporate banking Finance and Insurance Investment banking Mortgage Loan Private Banking Wealth Management
Based on balance sheet of different banks we can conclude that ICICI bank is performing better than other three banks ,
basically ICICI bank is leading ahead of HDFC bank ( in case of net worth of ICICI bank isRs. 60,402.25 crore and net worth Rs.29,924.68 crore.
Total liabilities of excess bank is very less that is Rs. 285,627.78 crore where as total liabilities of ICICI bank is bit high than other 2 banks that is Rs.473,647.1 that is 3rd highest.
Total assets of ICICI bank is Rs. 473,647.09 crore , which is a very good sign for the company.
Book Value of ICICI bank is 524.01 crore where as book value of Axis bank is very high that is Rs. 551.99 crore (i) Ratio Analysis of all the 4 banks (Axis Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank) • Profit Margin Ratio
It measure the amount of net profit earned by each rupee of revenue is almost same for all the four banks. Ratio Bank Mar-12 Profit Margin Ratio Axis Bank 15.51 ICICI Bank HDFC Bank 16.14 15.93 Kotak Bank 15.39 Mahindra
•
Earning Per share Ratio:
This is the earning of investor on each share and the maximum earning per share is of Axis bank. Hence it is the most profitable bank for the shareholders to invest in followed by ICICI bank.
Ratio Bank Mar-12
Earning Per Share Ratio Axis Bank 102.67 ICICI Bank HDFC Bank 56.09 22.02 Kotak Bank 14.65 Mahindra
•
Capital Adequacy Ratio
This ratio is used to protect depositors and promote the stability and efficiency of the financial system around the world. ICICI bank has the highest ratio in the four banks. Ratio Bank Mar-12 Capital Adequacy Ratio Axis Bank 13.66 ICICI Bank HDFC Bank 18.52 16.52 Kotak Bank 17.52 Mahindra
•
Current Ratio:
The current ratio for all the three firms is low than the ideal ratio that should be 2:1 but ICICI bank is havng the maximum current ratio out of all the banks.
Ratio Bank Mar-12
Current Ratio Axis Bank 0.03 ICICI Bank HDFC Bank 0.13 0.08 Kotak Bank 0.05 Mahindra
3. FIVE FORCE MODEL: A.Rivalry among the Competing Firms in the industry: Rivalry among competitors is very strong in the Indian banking sector because:
1. Homogeneous product and services The services offered by banks is more homogeneous than it does the company to offer the same service at a lower rate and eat their market share from the competition.
2. Similar services Almost all the banks offer similar services. Each bank tries to copy each other services and technology to increase the level of competition. 3. A large number of banks : There are many banks and financial institutions to get the maximum market share and pull each other’s customers hence there is intense competition. 4. High market growth rate India is seen as one of the largest on the market and the growth rate of the banking industry in India is also very high. This has sparked competition. 5. Low switching cost: 6. There is a high fixed cost and High exit barriers. High exit barriers humiliate banks to gain and retain customers by providing world class services
B. BARGAINING POWER OF SUPPLIERS The Reserve Bank of India governs banking industry. The rules and regulations determined by RBI. The Suppliers of the banks are the depositors. The depositors give their savings in the bank in exchange of the interest which mostly depends on the kind of monetary policies taken by the RBI hence i n b a n k i n g i n d u s t r y suppliers have low bargaining power. 1. Few alternatives available 2. RBI rules and regulations
Banks have to behave in the away that RBI wants them to. It reduces the bargaining power of suppliers 3. Suppliers not concentrated Banking industry suppliers sure not concentrated. There are numerous with negligible portion of offer .so this reduce their bargaining power
C. BARGAINING POWER OF CONSUMERS Customers have high bargaining power because: 1.Large no of alternatives Customers have many choices, so many banks, fighting for the same pie. There are many nonfinancial institutions. All these increase preference for customers. 2.Low switching cost. 3. Similar service Bank provide merely similar service. increase. They can not be charged for differentiation. 4. Full information about the market Customers have full information about the market due to globalization and digitalization hence, the bargaining power of customers
D. POTENTIAL ENTRY OF NEW COMPETITORS Reserve Bank of India has set some rules regulating stagnation and new entrants in the banking sector. We expect mergers and acquisitions in the banking sector in the near future and also introduction of many new banks as the RBI has given license to a lot of banks that will again increase the threat for existing banks. E. POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS Every day there is one or the other new product in financial sector The wide range of choices and needs give a sufficient room for new product development and product enhancement I n p r i v a t e b a n k i n g i n d u s t r y f o l l o w i n g a r e t h e substitutes: • • Government Bond Mutual Funds
• •
Stock Market Other Investment Alternatives
