IGI Logo

India Financials Conference 2022 – Key takeaways

We concluded the action-packed ICICI Securities India Financials Conference 2022 from November 16-18 with the underlying theme ‘New-Age, New-Edge, New- Pledge’. The deep and intense conversations with >35 corporates and >140 domestic institutional investors and foreign investors during >700 meetings, were essentially enriching and insightful. True to the theme, there was consensus amongst everyone present that market participants need to set the wheels in motion to transform themselves with the ultimate aim of becoming a part of new- age organisation. Financial entities continue to work diligently with an aim to re- emerge amidst constant changes in customer expectations and adopt the new normal. Institutions are constantly evolving and adopting new capabilities to make it a competitive edge. This specific push towards achieving operational efficiencies, improving customer experience, leveraging new digital tools to gain deeper insights for decision making, product innovation, portfolio expansion, and few more will be a game changer. The strategic objective is to make the organisation future-ready and provide an ultimate ecosystem to consumers with unique value proposition for customer centricity.

In this conference compendium, we detail the insights, opinions and views shared and the perspectives gained from various sessions and meetings organised over the three days (Nov 16-18) spreading across a wide gamut of financial service sub segments

* Eminent speaker, Dr. Rakesh Mohan, President & Distinguished Fellow, Centre for Social & Economic Progress (CSEP), emphasised how India is managing the impossible trinity of capital account convertibility, exchange rate management and monetary policy framework. Also, he sounded confident that India’s financial system is well positioned for growth.

* Dr. Sreeram Chaulia, Professor & Dean at Jindal University of International Affairs articulated that exogenous shocks for India are no more a black swan event, but these events are now happening at faster pace. Fed’s stance of lowering rates post heading towards recession and stabilisation in oil prices can provide breather to currency depreciation. Also, India is not so vulnerable to any geopolitical conflicts.

* Banks, having sailed through the covid phase, are now more confident of dealing with credit risk. A leading bank highlighted that the industry is going through the most benign credit cycle ever. Financiers are upbeat on growth momentum as green shoots are visible in some of the corporate segments with sustained growth in retail and SME.

* Interestingly, corporate pricing is getting better with higher credit offtake and drawdown of surplus liquidity. Working capital is stable and some capex-led demand is driving incremental growth. Also, banks are getting more constructive on unsecured lending with enhanced ability to analyse data.

* Loan repricing benefit, asset mix change with deployment of liquidity for advances growth and outperformance of unsecured lending will support surge in NIMs.

* Deposit growth continues to lag credit growth expanding the C/D ratio and banks are focused on accelerating the granular deposit engine. This may exert some deposit cost pressure.

* Given the continuous investment in technology and roll-out of retail products, operating expenses are likely to remain elevated for the next few quarters. Operating leverage benefit should flow as growth gains momentum.

* Vehicle financiers are witnessing very strong CV demand, especially in SCV and LCV, despite the inflationary environment and high fuel cost. The same reflects in the strong rebound in carriage load availability post covid.

* Affordable housing financiers are relatively slow in hiking rates as they are optimising on the borrowing cost as well. They are contemplating raise of 50- 70bps rise in Q3/Q4. Also, customer demand is not linked to interest rates, but competition intensity is high on incremental loans.

* Incrementally MFI players are focusing more on new customer acquisition to drive AUM growth, given that customer acquisition was muted over the past two years due to covid uncertainties.

* AMC and insurance companies sounded constructive on ‘financialisation of savings’ theme in India. AMCs and distributors are likely to see lower pressure on yields as majority of the industry AUM has been churned on new rates. However, change in AUM mix can lead to decline in overall yields. AMCs are starting to seeing good traction in debt passive category, target maturity funds etc.

* Regulatory tailwinds (like BIMA Sugam, optimisation of cost ratios etc) are likely to further enhance insurance penetration in India. General insurance companies highlighted trends of an aggressive pricing in the motor segment. Health and protection products are likely to be the biggest beneficiaries going forward.

* Financial conglomerates are leveraging technology and data analytics to drive synergies across their group ecosystems through cross-sell and upsell, which will contribute to the bottom line.

To Read Complete Report & Disclaimer Click Here

For More ICICI Securities Disclaimer https://www.icicisecurities.com/AboutUs.aspx?About=7  SEBI Registration number is INZ000183631

Above views are of the author and not of the website kindly read disclaimer