Key policy interventions by India, announced in Q2FY2020 including FDI (Foreign Direct Investment) policy reforms, recapitalisation of public sector banks, and cuts announced in corporate tax rate started helping market sentiments and attracting flows into our capital market despite weak macros, resulting in a broader market rally with the NIFTY and Sensex touching their lifetime highs in January 2020. The third phase commenced in early March with the tide rapidly turning, starting with the crude shock, followed by the rapid proliferation of COVID-19 pandemic. India enforced one of the strictest and longest lockdowns in the world on March 25, 2020, resulting in a plunging drop in consumption and production. Flight to safety triggered major sell-offs and emerging economies also saw huge capital outflows, growing bond spreads and currency depreciations. NIFTY recorded one of its biggest quarterly fall, declining by 29% during the quarter, falling 23% in March alone. For the full year, NIFTY, was down 26%; while NIFTY midcap 100 and NIFTY smallcap 100 indices fell by 36% and 46% respectively.

The regulatory stance continued to centre around retail customers and the SEBI (Securities & Exchange Board of India) came out with a slew of regulations to ensure that the retail investors remain in control of their securities. These changes did not impact our Company as we have always followed utmost standards of responsibility while dealing with clients’ securities and monies. Our clients have full control over their funds and securities at all times. In fact some of these practices central to our model coupled with the trust investors put in our brand are tailwinds for our Company and have helped us gain newer customers.

In order to propel the Company to the next phase of growth and transform into a company with a broader positioning, we articulated a strategy at the start of the year comprising focus on five elements viz. scale creation, capturing the full wallet share of our clients, providing better engagement experience, bringing in digital agility, and enhancing operational efficiency. Towards this, we executed various initiatives during the course of the year which held us in good stead on various performance metrics.

We expanded our scale through various distribution and product interventions. We enhanced focus on ICICI Bank partnership to penetrate deeper into the affluent client segment. In another significant initiative, we launched completely digital on-boarding process whereby clients can open ICICIdirect Insta accounts from the comfort of their homes all by themselves. We went open architecture in design of this process, allowing all bank customers to open these accounts, giving us access to a large market. We also focussed on scaling up our partner network, which grew by 32% to reach over 9,400 IFAs (Independent Financial Associates), IA (Independent Associates), sub brokers and APs (Authorised Persons). This resulted in a run rate of clients sourced through partners growing by over 70% during the year. Further, we made available our full array of loan products comprising home loan, two-wheeler loans, auto loans, personal loans, loan against property, gold loans, lease rent discounting, credit/travel cards etc. on our platform.

These initiatives have helped expand the depth and breadth of our distribution network. This was supported by the launch of a new product proposition – ICICIdirect Prime, a subscription-based plan whereby our clients get privileged pricing, curated research and a high eATM (a unique offering that allows clients to avail near real-time liquidity of their equity sale proceeds) limit. As at March 31, 2020, we have over 0.31 million Prime subscribers.

These initiatives have helped us gain market share in terms of active clients from 9.6% in Q4FY2019 to 10% in Q4FY2020 as well as increase volume market share of equity average daily turnovers consistently through the year from 7.4% in Q4FY2019 to 9.1% in Q4FY2020. To augment our scope of offering and capture a higher wallet share of our clients’ financial journey, we launched various initiatives and product lines. In the equities business, we focussed on interest income generating products like MTF (Margin Trading Facility) and ESOP (Employee Stock Option Plan) Financing, scaling up synergistic loan books which helped us gain clients as well add interest income generating product line. Together with the subscription fees, non-brokerage income line items have started contributing 12% to the equities revenues for FY2020.

We expanded our depth and breadth of distribution business by making available a full array of loan products comprising home loan, two-wheeler loans, auto loans, personal loans, loan against property, gold loans, lease rent discounting, credit/travel cards etc. on our platform. Strategically, these initiatives are notable in our journey to transform ICICI Securities into a broader digital marketplace.

We also reorganised our wealth management business to specifically cater to the HNI/UHNI (High/Ultra High Network Individuals) clients with a dedicated wealth management team. The focus is to service our 32,000+ clients holistically on their overall wealth portfolio.

With the intention of enhancing client experience, engaging clients digitally and offering simple clutter-free product and solutions, we launched One-Click investment products, comprising baskets of research-advised mutual funds, Exchange Traded Funds, and individual stocks. We also worked with our principals to launch intuitive product combinations such as ‘SIP Protect’, combining MF (Mutual Fund), SIP (Systematic Investment Plan) investments with free insurance cover. These products enable simple, disciplined investing to our clients in a simple, clutter-free format.

With the combined set of initiatives, we have been able to enhance the total number of revenue giving clients (active clients) by 16% and within that, increase in revenue giving clients in equity business (NSE Active clients) by 27%; diversify our revenue sources, grow the market share both in terms of NSE (National Stock Exchange) active clients and equity volumes, and demonstrate growth in equity business revenues.

Our consolidated revenues were ₹17,249 million, while PAT (Profit After Tax) grew by 10% to ₹5,420 million. While the revenue remained broadly flat for the full year, it grew by 13% in the last quarter of the fiscal led by over 32% growth in equity and allied business as above-mentioned strategy started playing out.

We were able to diversify and granularise our revenue sources in all businesses. In the retail equity business, non-brokerage revenue, comprising interest income, subscription annual fees etc., contributed 14% to overall revenue in Q4FY2020 up from 9% in Q4FY2019. In distribution business, while mutual fund distribution revenues declined as a result of regulatory changes pertaining to TER (Total Expense Ratio), we were able to grow non MF (Mutual Fund) revenues by 13% (Q4FY2020 vs. Q4FY2019) led by fixed income, life insurance distribution revenues.

Similarly, in the institutional equities business, increased revenues from block deals enhanced our market shares in equity as well as futures segments. In the Issuer Services and Advisory business, revenue contribution from non-IPO (Initial Public Offerings) deals increased in a year which was tepid for IPOs.

Our focus on operating efficiencies have helped us reduce non-finance costs by 3%. In fact, accounting for two one-off impacts in FY2020, the like-to-like non-finance expenses reduced by 6.5%.

The full year Return on Equity stood at a robust 48%. The Board has proposed a final dividend of ₹6.75 per share. With this, the dividend for full year stands at ₹11 per share which translates into 65% of Profit after Tax for the year as payout ratio, in line with our philosophy of being asset-light and high shareholder return Company.

In the current fiscal, COVID-19 outbreak impacted in the last few days of March which tested the resilience of business models across industries. For our Company, the challenges emanated from a strict lockdown regime coupled with unprecedented spike in volatility as well as transaction volumes on our platform. The resilience of our business model and our capabilities, on which we have invested over the years, got tested and I am happy to report that we came out stronger and resilient.

ICICI Securities, being linked to the capital markets, comes under essential services and has been in operation consistently during the lockdown period. Our predominantly digital business model, with 97% of equity transactions and 94% of MF transactions conducted online by clients themselves, held us in good stead.

Our digital capabilities ensured that the platform was available for our customers at all times and was able to handle the unprecedented spike in volumes reaching 3.2 million orders plus trades per day, against earlier peak of 2 million, and over 64,000 concurrent customers being served, compared to average of 23,000, and earlier peak of 48,000. Our proactive and real-time risk management framework ensured that we dealt with market volatility satisfactorily.

We enabled our teams to work-from-home and took steps to make our workplace safer. Our business continuity protocols and technological capabilities ensured minimalistic onsite presence.

The Company also played its role as a corporate citizen to mitigate the impact of COVID-19 on the community. Apart from contributing ₹100 million towards PM CARES Fund, and distributing personal protective equipment, we also tied up with IIT Kanpur towards development of affordable ventilators.

The near term and the medium-term outlook at a macroeconomic level, for capital markets as well as for our industry would be very strongly influenced by the outcomes pertaining to the COVID-19 pandemic and the manner and duration of recovery.

The post COVID-19 world is going to be different. During this outbreak, we have witnessed new ways of operating. Consumers are embracing digitisation at scales nobody has visualised before. Now that we have seen its benefits, we will be focussed on making this business as usual.

We believe that our strategy of broad-basing our business model is more relevant now than ever and we would continue to focus on all five elements of our strategy with renewed intensity. In addition, we would put enhanced focus on accelerating digitalisation across all levels to make as many products and services available online as possible.

In an uncertain and challenging environment that we are likely to face in the immediate term, operating leverage becomes extremely critical and cost efficiency would be the second area of enhanced focus. Using technology, we are evaluating the opportunity to bring down the need of physical processes and infrastructure etc.

We will continue to invest in cutting-edge technologies to remain in the forefront. Our technology infrastructure and digital capabilities are a key differentiator in helping us compete in the emerging environment. It is our intention to deepen our technological edge by investing in advanced capabilities. Key focus areas are on building advanced data analytics capabilities and infrastructure implementing best-in-class CRM (customer relationship management) tools, enhancing cyber security, and improving user interface for enhanced customer experience.

We feel that the current time is an opportunity to help us in transforming the Company by infusing high quality talent with contemporary skills into our existing talent pool.

The outlook of the financial securities industry appears challenging in the immediate short term on the macroeconomic front as the time taken for and manner of a full macro-economic recovery cannot be precisely estimated. However, given the liquidity scenario prevailing globally, capital markets may not get impacted to the extent of underlying fundamentals of the economy. As a proactive Company, we are undertaking every possible measure to remain ahead of the curve.

We believe our business construct has inherent strengths like having low balance sheet risk from credit risk perspective, no physical inventory, low receivables risk, digital delivery of products and services, high RoE, and a strong liquidity position. In the current environment, investors are looking at sound advice, trusted partner, and a reliable platform, and we feel ICICI Securities scores high on all these. Our approach is to build lifetime associations with our clients and thereby maximise the lifetime value for us. Our inherent strengths coupled with tailwinds of massive under penetration in our products and services, growing affluence and changing consumer preference towards trusted partners, and digital manner of engagement present a very exciting opportunity for us.

I once again thank all our stakeholders for their unstinted support. Your trust and confidence in us have helped us build a remarkable organisation, whose future has never been more promising.