 "BS JURY: Leading from the front")
In a year when economic activity was at its lowest, its impact on the financial sector was inevitable, particularly for a country which is bank-dominated. So, it was hardly surprising that almost all the public-sector banks were screened out in the initial short-listing for the prestigious Business Standard Banker of the Year, 2013-14.
For the screening, three filters were used: banks' total asset size must be at least Rs 50,000 crore; compound annual growth rate of net profit of five per cent in 2013-14; and net profit CAGR of 15 per cent in the previous two financial years.
With public-sector banks experiencing maximum stress on asset quality, most reported flat or lower profit for the period under consideration. Only one public-sector bank made it to the shortlist of nine banks that were in contention for the award.
The jury team was headed by former deputy governor of the Reserve Bank of India (RBI) and director of research at Brookings India, Dr Subir Gokarn. He made it clear that while numbers would have prominent weight, subjective aspects and leadership qualities would also be taken into consideration while choosing the banker of the year.
Some of the financial parameters that were taken into account were: asset and liability growth, efficiency ratios like return on assets and return on equity, margin, non-performing assets and provisions, market capitalisation, fee income, cost-to-income ratio and business per employee. In addition, non-financial parameters like corporate governance, customer service and technology initiatives were also looked at.
The other members of the jury were Bharat Doshi, director at Mahindra & Mahindra; Anil Singhvi, chairman, Ican Investment Advisors; Diwakar Gupta, former managing director of State Bank of India; and Saurabh Mukherjea, chief executive officer, Institutional Equities, Ambit Capital.
After an hour-long discussion, the jury zoomed in on three candidates - all from the private-sector banking space. Finally, two of India's lead bankers entered the last lap to the prestigious award.
It was not an easy choice, as the two banks differed in size. While one exhibited its capability to withstand a slowing economy, which was reflected in its non-performing assets, the other took the bank to a different platform by tapping newer opportunities that promise to yield rich dividends as and when economic activity picks up.
Finally, it was unanimously decided that Romesh Sobti, managing director and chief executive officer of IndusInd Bank, is the Business Standard Banker of the Year 2014-15, as he steered the institution through a period of low economic growth and high inflation that resulted in elevated interest rates and rising non-performing assets.
"Purely looking at the financial parameters during the period under consideration, the bank definitely ranks high. Over the years also, not only did the banking business expand, but control over asset quality was remarkable," said the jury head, Gokarn.
The bank's gross non-performing asset ratio was a mere 1.12 per cent as on March 31, 2014, compared to a banking industry average of four per cent. Net profit in 2013-14 jumped 33 per cent to Rs 1,408 crore, operating profit was up 41 per cent at Rs 2,596 crore, while net interest income grew 29 per cent to Rs 2,891 crore. Advances grew 24 per cent and deposits were up 12 per cent during the year. The share of low-cost current account savings account (CASA) deposits improved to 32.55 per cent, from 29.32 per cent.
The full year earnings per share (EPS) worked out to Rs 26.85 in 2013-14, compared to Rs 21.83 a year earlier.
IndusInd Bank ranked first in two parameters among the banks in contention - asset growth and net profit growth - and featured in the top three for all other parameters.
Significantly, Sobti, who was appointed the CEO of the bank in 2008 (he was the India CEO of ANZ Grindlays Bank), inherited a relatively weak bank and turned it around into a formidable force, particularly by building a strong liabilities franchise.
Apart from consistent performance over the last few years, the jury was also impressed by Sobti's ability to retain both mid-management and senior management teams (which comprise a few from ANZ) intact over the last six years.
Not only has Sobti kept his employees motivated, he also offered IndusInd Bank's shareholders and customers a reason to cheer. The growth in market capitalisation in 2013-14 was highest for IndusInd Bank among the banks that entered the final lap. IndusInd is also one of the few banks that were not fined by the banking regulator during the period under review. RBI levied heavy penalties on many banks in 2013-14 after a sting operation had exposed poor customer service practices.
For the screening, three filters were used: banks' total asset size must be at least Rs 50,000 crore; compound annual growth rate of net profit of five per cent in 2013-14; and net profit CAGR of 15 per cent in the previous two financial years.
With public-sector banks experiencing maximum stress on asset quality, most reported flat or lower profit for the period under consideration. Only one public-sector bank made it to the shortlist of nine banks that were in contention for the award.
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A five-member BS Jury sat on a Saturday afternoon at the business centre of the iconic Taj Mahal Hotel located in posh south Mumbai, overlooking the Arabian Sea and the Gateway of India.
The jury team was headed by former deputy governor of the Reserve Bank of India (RBI) and director of research at Brookings India, Dr Subir Gokarn. He made it clear that while numbers would have prominent weight, subjective aspects and leadership qualities would also be taken into consideration while choosing the banker of the year.
Some of the financial parameters that were taken into account were: asset and liability growth, efficiency ratios like return on assets and return on equity, margin, non-performing assets and provisions, market capitalisation, fee income, cost-to-income ratio and business per employee. In addition, non-financial parameters like corporate governance, customer service and technology initiatives were also looked at.
The other members of the jury were Bharat Doshi, director at Mahindra & Mahindra; Anil Singhvi, chairman, Ican Investment Advisors; Diwakar Gupta, former managing director of State Bank of India; and Saurabh Mukherjea, chief executive officer, Institutional Equities, Ambit Capital.
After an hour-long discussion, the jury zoomed in on three candidates - all from the private-sector banking space. Finally, two of India's lead bankers entered the last lap to the prestigious award.
It was not an easy choice, as the two banks differed in size. While one exhibited its capability to withstand a slowing economy, which was reflected in its non-performing assets, the other took the bank to a different platform by tapping newer opportunities that promise to yield rich dividends as and when economic activity picks up.
Finally, it was unanimously decided that Romesh Sobti, managing director and chief executive officer of IndusInd Bank, is the Business Standard Banker of the Year 2014-15, as he steered the institution through a period of low economic growth and high inflation that resulted in elevated interest rates and rising non-performing assets.
"Purely looking at the financial parameters during the period under consideration, the bank definitely ranks high. Over the years also, not only did the banking business expand, but control over asset quality was remarkable," said the jury head, Gokarn.
The bank's gross non-performing asset ratio was a mere 1.12 per cent as on March 31, 2014, compared to a banking industry average of four per cent. Net profit in 2013-14 jumped 33 per cent to Rs 1,408 crore, operating profit was up 41 per cent at Rs 2,596 crore, while net interest income grew 29 per cent to Rs 2,891 crore. Advances grew 24 per cent and deposits were up 12 per cent during the year. The share of low-cost current account savings account (CASA) deposits improved to 32.55 per cent, from 29.32 per cent.
The full year earnings per share (EPS) worked out to Rs 26.85 in 2013-14, compared to Rs 21.83 a year earlier.
IndusInd Bank ranked first in two parameters among the banks in contention - asset growth and net profit growth - and featured in the top three for all other parameters.
Significantly, Sobti, who was appointed the CEO of the bank in 2008 (he was the India CEO of ANZ Grindlays Bank), inherited a relatively weak bank and turned it around into a formidable force, particularly by building a strong liabilities franchise.
Apart from consistent performance over the last few years, the jury was also impressed by Sobti's ability to retain both mid-management and senior management teams (which comprise a few from ANZ) intact over the last six years.
Not only has Sobti kept his employees motivated, he also offered IndusInd Bank's shareholders and customers a reason to cheer. The growth in market capitalisation in 2013-14 was highest for IndusInd Bank among the banks that entered the final lap. IndusInd is also one of the few banks that were not fined by the banking regulator during the period under review. RBI levied heavy penalties on many banks in 2013-14 after a sting operation had exposed poor customer service practices.