In May, FinanceAsia named the winners of its annual Country Awards for Achievement. In June, we'll present the awards at our annual awards dinner in Hong Kong.
Today, we continue with the winners from India.
BEST BANK: HDFC BANK
The award recognises HDFC Bank’s resilience in India’s banking sector, which was roiled by unprecedented frauds and surging bad debt over the past 12 months.
Concerns over the asset quality of Indian banks remain after the country’s state-owned lenders delivered disappointing results. But on a brighter note, analysts scrutinised HDFC Bank’s balance sheet and found no major increase in problem loans. In its latest financial year ended March 2018, the bank showed it has high capital buffers against any potential downside risk.
With a stable deposit base, HDFC delivered strong earnings, with consistently higher margins than its state-owned counterparts. Its net income rose 20.2% year on year to Rs174.9 billion at the end of March, while its net interest income, the difference between the interest it pays and earns, rose by 21% to Rs400.9 billion for the same period.
State Bank of India, the country’s largest lender by assets, reported a net loss of Rs771.8 crore ($1.1 billion) for the quarter to March-end, its largest-ever quarterly loss, as bad loans rose significantly. Most other state-run banks also posted losses, including Punjab National Bank, the country’s second-largest state-run lender, which delivered a $2 billion net loss after a massive fraud.
HDFC is well on track to gain a market capitalisation in excess of $100 billion by 2020, estimates Goldman Sachs, as it transforms into a digital-centric bank and enhances new areas of value creation such as credit cards. With a market-leading position, HDFC’s credit card is its one of the most profitable businesses, growing at a compound annual growth rate of 31% in the past four years.
HDFC’s market capitalisation surpassed the Rs5 trillion mark ($73 billion) in January, becoming the third Indian company and first lender to cross that milestone.
A big concern in India’s banking system this year has been the growth in bad debt. HDFC’s operating performance was largely stable and showed no signs of significant pick up in bad loans. Its gross non-performing assets stood at 1.3% in March 2018, up slightly from 1.29% at the end of December and 1.05% in March 2017.
BEST INVESTMENT BANK, BEST DCM HOUSE, BEST ECM HOUSE: AXIS BANK
Axis Bank’s and its investment-banking arm Axis Capital’s deep relationship with corporate clients in India helped it win our awards this year. Key considerations were its ability to deliver solid performances in both local debt and equity markets.
In the period under review the bank was number one in the onshore debt capital market league table, underwriting a whopping $11.39 billion-worth of domestic bonds, more than
the other top five underwriters combined, according to data compiled by Dealogic. With a market share of 38%, it held a strong lead over its closest rival ICICI Bank, which had a 13% share.
The bank was involved in all the five-largest domestic bond offerings, including the Uttar Pradesh Power Corp’s $847 million bond issued in March 2018, the largest investment-grade bond during our review period, and Reliance Industries’ $782 million bond in August 2017, the second-largest domestic bond sale.
In addition to the investment-grade market, the lender was active with domestic high-yield issuers. It was a bookrunner in Tata Power’s $229 million bond sale in November, the largest high-yield debt sale after YES Bank’s self-led $462 million deal in February this year.
In equity capital markets, the bank was involved in several high-profile domestic listings and follow-on deals, including General Insurance Corp of India’s $1.7 billion listing in October, the largest initial public offering during our review period. Axis Bank was one of the two domestic banks to win a slot as a bookrunner, joining Citi, Deutsche Bank and HSBC in the flotation of India’s largest reinsurer.
The firm also helped companies in the bloated power, iron and steel sectors to raise fresh equity funding, including a $1.5 billion share placement by India's largest power producer NTPC in August and Tata Steel’s $1.2 billion offering in March.
BEST BROKER: EDELWEISS
Edelweiss Finance is once again FinanceAsia’s pick for Best Broker in India because of its ability to identify clear market trends and investment opportunities for foreign investors.
Over the years, Edelweiss has developed a sustainable business model by providing bespoke sales and research services, putting itself in a strong foothold in front of global institutional investors like Fidelity, Blackrock and Singapore’s GIC.
A client testimony has reinforced our validation. As Prasun Gajrj, chief investment officer of HDFC Standard Life Insurance, put it: “Edelweiss has one of the best coverages on the Indian equity market and has a strong analyst team to provide differentiated and high-quality research.”
Founded in 1995, Edelweiss focuses on a wider spectrum of stock ideas and themes, including areas not well covered by the bigger international firms. As a result, company had more than 4.3% of the market in institutional brokering and 7.6% in stock futures during our review period. In the retail market, it has a 2.4% market share in securities broking and 6% in stock futures, providing mobile applications to its retail clients to trade on different products.
Edelweiss’s research team covers more than 650 domestic and international clients, offering research and sales support on more than 250 companies, or 80% of the Indian market, and it has offices in New York, London, Singapore and Hong Kong to help serve clients across different time zones.
BEST INTERNATIONAL BANK, BEST INTERNATIONAL INVESTMENT BANK: CITI
Citi’s commercial and investment banking platform continues to stand out in India, leveraging its cross-border relationships to help local companies raise fresh capital and draw foreign capital into Asia’s third-largest economy.
The US bank retained its crown in the country’s equity capital markets league table, underwriting $3.9 billion-worth of deals during our review period, according to data compiled by Dealogic. Of the country’s three largest ECM transactions in this period, the US bank was involved in two of them: General Insurance Corporation of India’s $1.7 billion initial public offering and NTPC’s $1.5 billion share placement. In May last year, it led the $350 million listing of India Grid Trust, the first investment trust IPO in the power transmission sector.
The bank played a key role in Reliance Jio Infocomm’s $3.6 billion acquisition of Reliance Communication, the largest takeover during our review period, according to Dealogic. In April, Citi also acted as an advisor to eBay’s $500 million investment in Flipkart, India’s e-commercial giant. Before that, Citi acted as an advisor to Oil and National Gas Corporation of India (ONGC) on its $5.8 billion acquisition of a 51.1% stake in Hindustan Petroleum, as part of the government’s drive to consolidate the oil and gas industry.
On the debt front, Citi helped several state-owned companies to tap international investors for funding, including Tata Steel, which pulled off a $1.3 billion dual-tranche debt sale in January despite concerns over rising interest rates. Citi was a bookrunner on the deal.
In addition to its deal-making strengths, the bank has a strong consumer franchise thanks to its 115 years in the country. As of last year Citi had more than 30,000 commercial banking clients and another 1.2 million retail customers, making it the largest foreign bank in the country.
On the profitability front, it delivered higher returns than its foreign rivals. Citi’s net profit in India rose 12% year on year to $550 million in the year to the end of March 2017, higher than closest rival Standard Chartered’s $379 million earnings result for the same period. The results reflected its strategy to focus on lending to consumer and small businesses.
As a result, its asset quality was the healthiest among foreign banks. The bank’s gross non-performing loans stood at 1.5%, compared with Standard Chartered at 10.5% and HSBC at 1.9%.
