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20 Jan 2020

ICICI Securities Q3FY2020 performance

Q3FY20 Performance Highlights

  • Revenue at ` 423 crore, up 4% YoY
  • PAT at ` 137 crore, up 36% YoY
  • Retail equities and allied revenue up 5% YoY at ` 228 crore
  • Blended equity broking market share up 80 bps YoY to 8.9%
  • 1.4 million active clients; ~94,000 new clients added during the quarter

Mumbai, January 20, 2020  - ICICI Securities (I-Sec), a part of the ICICI Group and India's leading retail led equity franchise, distributor of financial products, and investment banker, today announced its financial results for the nine month (9MFY20) and quarter ending December 31, 2020 (Q3FY20).

The company reported consolidated revenue of ` 423 crore in Q3FY20, against ` 405 crore in Q3FY19, up 4%, aided by growth in retail equities & allied business. Consolidated Profit after tax (PAT) for Q3FY20 stood at ` 137 crore, Vs ` 101 crore in Q3FY19, up 36% , on account of growth in revenue, reduction in expenses, and changes in statutory tax rates.

Return on Equity (RoE) remained robust at ~ 51%.

For the 9MFY20 period, revenue stood at ` 1,243 crore, down 4% YoY, and PAT stood at` 386 crore, up 5%.

Business Highlights

I-Sec has 4.7 million operational accounts, of which about 94,000 were added during the quarter. The company has 1.4 million active clients (those having traded in the last 12 months) and ~1 million NSE active clients (those having traded on the NSE in the last 12 months). During the quarter, I-Sec's blended equity market share grew 80 basis points on-year to 8.9%.

The ICICI Bank-led customer acquisition arrangement continues to ramp up well with client activation rates further increasing to 58% vs 44% sequentially, and almost double from the same quarter last year. Pace of tab-based account opening (T20) has also picked up with monthly run rate of ~11,500 in Q3FY20 vs ~9,500 in Q2FY20.

In Q3FY20, the Indian equity markets were buoyant and headline indices ended the calendar year on a high note. The small-cap and mid-cap indices rose 8% and 9% respectively in Q3FY20.

During the quarter, our Retail Equities and Allied Business revenue rose 5% to ` 228 crore vs ` 216 crore in Q3FY19. The allied business comprises lending towards ESOP & MTF, and Prime subscription fees. Our ESOP & Margin Trade Funding book has grown to ` 1,153 crore, with interest income rising 43% year on-year to ` 26 crore in Q3FY20. Prime subscription income has grown 37% sequentially to ~` 6 crore in Q3FY20.

The company continues to receive encouraging response to "Prime", its annual subscription based plan that provides a package of privilege pricing, exclusive research, and higher eATM (payout within 30 mins of selling stocks) limits per day. Currently there are over 2.3 lakh Prime subscribers.

Institutional equities business during the quarter declined by 2% on-year to ` 28 crore due to reduced traction in block deals.

Distributionrevenue stood at` 103 crore in Q3FY20 down 4% against Q3FY19 due to the anticipated reduction arising due to changes in regulations pertaining to Mutual Fund distribution. Sequentially, distribution revenue was down 3%.

I-Sec is India's second largest non-bank MF distributor by revenue with a 4% revenue market share (based on FY19 revenue). Average AUM of the mutual funds distributed by the company increased by 9% on-year to ` 37,500 crore in Q3FY20. It earned ` 58 crore of revenue through MF distribution during the quarter, vs ` 60 crore in Q3FY19.

With increased focus on other products like home loans, fixed income products, corporate bonds and deposits, insurance, AIF, PMS, SGBs, NPS, etc., non-MF distribution revenue rose 6% in Q3FY20 vs Q3FY19, to `41 crore.

During the quarter, the company expanded its distribution business by launching new products like SIP Protect (free term insurance with MF SIP investments on over 70 MF schemes by 4 leading AMCs) and EIP (ETF Intelligent Portfolios, a unique investment product that invests in multi asset basket of low cost ETFs based on clients' risk profile)

The company has a network of 178 ICICIdirect branches (vs 198 in Q3FY19) and a nationwide network of business partners, consisting of sub-brokers, authorized persons, IFAs & IAs, which grew by a third to 8,600+.

Our Investment Banking revenue stood at ` 18 crore in Q3FY20, down 31% on-year, primarily due to lower number of high value deals. I-Sec is ranked 1st in the IPO (incl. InvIT, REIT, FPOs) league by value and 1st among domestic financial advisors by number of deals. The company handled 7 investment banking deals in Q3FY20 and has an IPO pipeline (as per SEBI filling) of seven deals amounting to over ` 8,600 crore.

Our Treasury income, surged to ` 18 crore in Q3FY20 from ` 3 crore in Q3FY19, aided by higher interest income earned arising from debt positions that we have built.

Management Commentary

Mr. Vijay Chandok, Managing Director and Chief Executive Officer, said, "We continued to focus on executing our strategy of offering appropriate products and solutions to varied clientele across a spectrum of needs. We are continuously working towards building for the future with client interest at the center and a keen focus on using digitization to contain cost, enhance productivity and efficiency.

"During the quarter, we saw an uptick in retail participation due to large, mid, and small caps participating in the rally, and If the momentum in the broader market sustains, it will be beneficial for a franchise like ours.

"In the current environment, where investors are looking for trust, transparency, and safety especially in the light of recent market developments, we believe we are well positioned to capitalize on it. At I-Sec, clients' funds and securities remain theirs and accessible by them at all points in time.

"In light of demand for comprehensive solutions by customers, we have been and would continue to invent in new product and services, thereby, broad-basing our revenue pool. Many of our recent initiatives have been towards this objective and will be unveiled in the coming months.

"As a virtual financial supermarket, our continuing endeavor is to meet all the three need sets of our customers - wealth management and investments, protection of life & assets, and their borrowing needs. Digital is the centre piece to this strategy and we are working with fintechs and startups to launch winning solutions. "

About ICICI Securities

ICICI Securities Limited (I-Sec) is a subsidiary of ICICI Bank Ltd. The company began its operation in May 1995 and continues to grow its operation through expanding its client base and providing different type of services.

I-Sec operates www.icicidirect.com, India's leading virtual financial supermarket, meeting the three need sets of its clients- investments, protection, and borrowing. Through its three lines of businesses -- broking, distribution of financial products, and investment banking-- I-Sec serves customers ranging from the retail and institutional investors to corporates to high net-worth individuals to government.

I-Sec is listed on National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). For details, visit: www.icicisecurities.com

Disclaimer

Except for the historical information contained herein, statements in this release which contain words or phrases such as 'will', 'expected to', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the actual growth in broking business and other financial services in the countries that we operate or where a material number of our customers reside, our ability to successfully implement our strategy, including our use of the Internet and other technology our exploration of merger and acquisition opportunities, our ability to integrate mergers or acquisitions into our operations and manage the risks associated with such acquisitions to achieve our strategic and financial objectives, our growth and expansion in domestic and overseas markets, technological changes, our ability to market new products, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are or become a party to, the future impact of new accounting standards, our ability to implement our dividend policy, the impact of changes in insurance regulations and other regulatory changes in India and other jurisdictions on us. ICICI Securities Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.

For further details, contact:

ICICI Securities Ltd.
Rabin Ghosh
rabin.ghosh@icicisecurities.com
+91 9820530306
Adfactors PR Ltd.
Rasika Badshah
rasika.badshah@adfactorspr.com
+91 9821631379