India’s largest private sector bank
At India’s largest private sector bank, the management have a long track record of managing risks prudently, while maintaining industry-leading return-on-assets (ROAs) across economic cycles and periods of disruption.
The main reason for its impressive track record is its strong deposit franchise (the bank has more than 5,000 branches across India and around 50 million customers), which has given it a funding cost advantage. It also has a diversified loan book focused on retail customers, which has generated high risk-adjusted yields without incurring the same amount of stress that most other corporate lenders in India have experienced.
Although 60% of loans and deposits in India are still controlled by inefficient state-owned banks, well-run private banks have been gaining market share rapidly and we expect them to continue doing so. High-quality private banks enjoy many of the same growth drivers as consumer categories, with long-term tailwinds of rising incomes and greater financial inclusion. As such, we believe this and other leading private banks in India should have significant growth potential ahead of them.
Earnings per share (EPS) is calculated as a company's profit divided by the outstanding shares of its common stock
Return On Assets (ROA) is a measure of a company's profitability relative to its total assets.
Source: Company Annual Reports, Indian Banks Association, Bloomberg, as at 31 March 2022.
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