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Industry Insight
RETAIL BANKING
November 2009
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Research Pvt Ltd., (Cygnus). While reasonable care has been taken in its preparation, Cygnus makes no representation or warranty, express or
implied, as to the accuracy, timeliness or completeness of any such information. The information contained herein may be changed without notice.
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Cygnus Business Consulting & Research Pvt. Ltd. 2009 2
Industry Insight – Retail Banking
CONTENTS
Executive Summary........................................................................................ 10
Highlights ......................................................................................................... 15
3. Global Banking Industry ............................................................................ 17
3.1 Introduction..................................................................................................................... 17
3.2 Global banking assets surpasses US$90 trillion ....................................................... 18
3.3 Rising bad debt and provisions .................................................................................... 18
3.4.Profitability plummets .................................................................................................... 19
3.5 Increased emphasis on fee-based and treasury business....................................... 19
3.6 Region-wise Analysis...................................................................................................... 20
3.6.1 US..............................................................................................................20
3.6.2 Europe.......................................................................................................20
3.6.3 Asia Pacific ................................................................................................21
3.7 Recent Trends................................................................................................................. 22
3.7.1 Level and growth rate of Household Credit............................................22
3.7.2 More Banks focus on reducing losses ......................................................22
3.7.3 Housing bubble collapses..........................................................................23
4. Indian Banking Industry.............................................................................. 24
4.1 Introduction..................................................................................................................... 24
4.2 Evolution........................................................................................................................... 24
4.3 Reforms galore................................................................................................................ 25
4.4 Current Scenario............................................................................................................ 26
4.5 Geographic Spread......................................................................................................... 27
4.6 Key Business Segments ................................................................................................. 27
4.7. Trends in Indian Banking Industry ............................................................................. 28
4.7.1 Monetary and liquidity position: Relatively stable ....................................28
4.7.2 Growth of Credit Market declines .........................................................28
6.1. Introduction.................................................................................................................... 40
6.2. Industry Structure ......................................................................................................... 40
6.3. Housing Finance Allocation......................................................................................... 41
6.4.Housing loan disbursement: ......................................................................................... 41
6.5. Lowering interest rates push up home loan disbursement ................................. 42
6.6. Housing Loan: Demand and Supply Drivers............................................................ 43
6.7. Banks overtake HFCs in housing loan disbursements .......................................... 44
6.8. Banks are aggressive on Refinancing ......................................................................... 44
6.9. Changing age profile of borrowers............................................................................ 45
6.10. Higher loan-to-value ratio......................................................................................... 45
6.11. Size of Home Loans.................................................................................................... 45
6.12. Outlook......................................................................................................................... 46
6.12.1. Rising Home Loans as percentage of GNP ...........................................46
6.12.2. Price correction may be a possible in the near future..........................46
7. AUTO FINANCE ........................................................................................ 47
7.1 Introduction:.................................................................................................................... 47
7.2 Segment-wise auto-finance........................................................................................... 48
7.3 Industry Segment-wise analysis ................................................................................... 48
7.3.1 Cars...........................................................................................................49
7.3.2 Multi-Utility Vehicles ................................................................................49
7.3.3Two Wheeler sales touch 7.44 million......................................................49
7.4 Driving Factors................................................................................................................ 50
7.4.1 Entry of Foreign Car Makers....................................................................50
7.4.2 Cheaper Loans Off take ...........................................................................50
7.4.3 Reduction in Taxes & Duties....................................................................51
7.4.4 Changing Business Dynamics....................................................................51
7.5: Indian Automobile Finance Industry Transformation............................................ 51
7.6 Recent Trends................................................................................................................. 52
7.6.1. Recession halts the growth of the market ..............................................52
7.6.2 Used Car Financing...................................................................................52
7.6.3. Auto companies tie-up with PSU Banks ..................................................53
7.7 Major Challenges ............................................................................................................ 53
7.7.1 Sustaining the growth rate........................................................................53
7.7.3. Finding a solution to slowdown in exports and manufacturing activities54
7.7.4 Integrating the entire supply chain and managing inbound logistics ........54
7.7.5 Managing Poor Monsoons ........................................................................55
7.7.6 Maintaining the pace of infrastructure development ...............................55
7.8 Outlook ............................................................................................................................ 55
8. Consumer Durable Finance ....................................................................... 57
8.1 Introduction..................................................................................................................... 57
8.2 Consumer durables credit............................................................................................ 57