Large players slow down. Private sector individual APE growth fell to 16% in January 2018 from high growth 23-33% during the past six months. While the overall momentum seems to be slowly moderating, the weakness last month was driven by two large players, viz. ICICI Life and SBI Life; private sector growth excluding these two players was 32% as compared to 27-37% during the past six months. Inflows to equity mutual funds again moderated a bit (`208 bn in January 2018, `229 bn in December 2017 from `256 bn in November 2017).
15% overall APE growth in January 2018
Exhibit 1 shows that private sector players reported 15% growth in overall APE in January 2018, down from 21% in December 2017 and 23-74% in the preceding eight months. LIC’s growth rate moderated to 7% from 14% yoy in December 2017. On YTD basis, private sector is up 27% and LIC is up 16%.
32% growth for private sector ex-ICICI Prudential Life and SBI Life in individual APE
Exhibit 2 shows that private players delivered 16% growth in individual APE, down from 22% in December 2017 and 30%+ in the preceding few quarters. Excluding two large players, viz. ICICI Prudential Life and SBI Life, the rest of the private sector grew by 32% in January 2018.
Gradual softening in equity MF inflows
Equity MF inflows moderated further to `208 bn from `229 bn in December 2017 and `256 bn in November 2017. These trends likely indicate that the overall growth momentum in financial savings is slowly softening across the industry.
High base of ICICI Prudential Life; SBI weak as well
ICICI Prudential Life was down 10.7% yoy in individual APE; this compares with 2.4% in December 2017, 10.7% growth in November 2017, about 15-25% growth during June-October 2017 and over 100% in the first two months of FY2018. Management had highlighted that they are consciously working on reducing the seasonality of their business and hence growth rate on a low base of 1H was higher and will likely be lower in 2H. Its ticket size in individual non-single segment was down 5% yoy and 3% qoq.
SBI Life reported 11.7% growth in individual APE as compared to 45-50% growth over the past six month. The company has been on a high growth trajectory with 37-38% growth in FY2016 and FY2017 as well. Its ticket size in individual non-single segment was up 14% yoy. The reason for slowdown in January is not clear; we will closely track this trend.
HDFC Life moderates but remains healthy
HDFC Life reported 29% growth in individual APE as compared to 84% growth in December 2017, 65% in November 2017 and 25-70% between June and October 2017. The company is enjoying a low base effect (HDFC Bank was slow last year). We don’t read much in the mom moderation to 29% from 84% - its growth still remains healthy. HDFC Life’s dependence on HDFC Bank remains high; this may temper its growth rate to some extent until other channels ramp up.
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