India’s National Export Credit Agency Investor Presentation
Presentation Outline Exim Key Credit Highlights The India Story The Exim Bank Story Appendix 2
Exim Key Credit Highlights
Exim Key Credit Highlights 1 Set up under an Act of Parliament in 1981 by the Government of India India: Strong Macro 100% owned by the Government of India (“GoI”). backed by supportive policy Environment Role in policy formulation and also project selection under Economic 5 2 Diplomacy. Management Exim: India’s engine Strength Proxy to Sovereign for growth of International investment grade ratings at par with Sovereign . International Trade Policy Business Guaranteed / Insured by the Sovereign . Policy Role at Financial Strength Strong regulatory capital position. National Level 4 3 Access to multiple sources of liquidity, both onshore and offshore. 4
The India Story
India: Strong Macro backed by supportive Policy Environment Resilient GDP Growth (1,2,3) 8.2% 8.0% 7.7% 7.3% 6.9% 7.4% 7.1% 7.2% 7.0% 6.7% 6.6% 2786 2626 6.3% 6.1% 2287 2148 2043 3.8% 3.6% 3.6% 3.3% 53.8% 54.4% 52.8% 52.5% 51.8% 2.9% 29.7% 29.1% 2.3% 29.3% 29.8% 2.2% 30.0% 1.9% 17.1% 18.2% 17.7% 17.9% 15.9% CY 2017 CY 2018 CY 2019 P CY 2020 P FY 15 FY 16 FY 17 FY 18 FY 19E India China United States World Agriculture (%) Industry (%) Services (%) Real GDP Growth (%) • World’s 7th largest economy based on nominal GDP in CY 2018. (2) o Nominal GDP for CY 2018: ~US$ 2.7 tn. (2) • World’s 3rd largest economy based on GDP measured in PPP terms in CY2018. (2) GDP in PPP terms for CY 2018: ~US$ 10.5 tn. (2) o • India is set to become the 5th largest economy based on nominal GDP by 2019 (2) • India jumped up 23 notches to the 77th position from 100 during 2017-18 on the World Bank’s ‘Ease of Doing Business’ Index 2019 . • Favorable demographic profile: 66% of the population is between the age of 15 to 64 years . (4) 6 Source: (1) Institute of International Finance (IIF); (2) IMF World Economic Outlook April 2019. Data for CY; (3) Ministry of Statistics and Programme Implementation (MOSPI); (4) World Bank Database; CY means calendar year ; FYxx means financial year ended March 31, 20xx.; E- IIF Estimates; P – IMF Projections
Indian Economy: Key Economic Indicators General Government Debt (% of GDP) (1) Key Macroeconomic Metrices Key Parameters FY17 FY18 FY19 Change 68.9 68.6 68.3 66.6 65.2 Gross Domestic Saving (% of GDP) (3) - 30.3 30.5 - 17.1 15.2 19.8 20.2 15.6 Gross Domestic Investment (% of GDP) (3) - 30.9 32.3 - Gross Fixed Capital Formation (% of GDP) (3) 30 bps 28.2 28.6 28.9 51.4 51.5 49.6 49.1 48.1 Fiscal Deficit (% of GDP) (3) (10 bps) 3.5 3.5 3.4 Revenue Deficit (% of GDP) (3) (40 bps) 2.1 2.6 2.2 FDI Inflows (US$ bn) (2) 5.60% FY 15 FY 16 FY 17 FY 18 FY 19E 60.2 61.0 64.4 Centre State Exchange Rate (INR/US$, avg.) (2) 4.10% 67.07 64.45 67.07 Inflation/ Policy Rates (2)* Banking Sector Statistics(2) FY19 # Key Parameters FY17 FY18 Change 77.6 ## Credit Deposit Ratio 73.0 74.2 340 bps 13.7 13.8 13.7 (10 bps) Banking Sector CRAR Banking Sector NPAs 8.58 11.22 10.10 ## (112 bps) Provision Coverage Ratio 43.5 48.3 52.4 410 bps 22.1 22.8 21.0 (-180 bps) NBFC CRAR 6.1 5.8 6.1 30 bps NBFC NPAs 7 Source: (1) Institute of International Finance (IIF) Database; (2) Reserve Bank of India, Press Releases and Online Database (accessed online on 22/05/2019); (3) Central Statistics Office; E- IIF Estimates; # Data pertains to April 2018-September 2018 ; ## Data pertains to April 2018-December 2018; * Base year for CPI Inflation FY15-FY19 is 2012=100
Sound External Sector Trade Trends (1)(2) Composition of CAD (2) 639 150 584 535 100 499 19.7% 480 439 20.1% 50 (US$ bn) 19.9 % (US$ bn) 0 39.1% 38.4% 37.1% -50 -1.9% -0.6% 80.3% -100 79.9% 80.1% 60.9% -150 61.6% 62.9% -14.4 -200 -2.6% -48.7 -51.8 -250 FY17 FY18 FY19 FY17 FY18 FY19 (Apr-Dec) Trade Deficit Services Surplus Primary Income Services Exports Services Imports Merchandise Exports Merchandise Imports Secondary Income Current Account Deficit CAD (% of GDP) Services Trade Pattern in FY18 (2) Merchandise Trade Pattern in FY 19 (1) US$ 330 bn Exports 46 40 44 37 29 28 25 27 53 US$ 195 bn Export 80 28 17 5 19 46 Imports 141 65 48 55 46 34 32 20 73 US$ 513 bn Imports 6 20 18 6 37 31 US$ 118 bn Petroleum Products Gems & Jewellery Chemicals Telecom, computer & info services Travel Electronics Items Machinery Ores & Minerals Transport Financial services Base Metals Transport Equipment Others Other Business services Others 8 Agri & Allied Products Textiles Source: (1) MOCI; (2) Balance of Payment Statistics, RBI
Sound External Sector Major Trading Partners (1) Regional Trade Direction (1) USA China Latin CIS, Baltics & Latin CIS, Baltics & Saudi Arabia Rep. of Korea America , 0.3 Others, 2% America , 5% 17 Others, 2% Hong Kong UAE Switzerland 4% Singapore Africa , Indonesia Germany Africa , 8% Malaysia 9% Belgium (US$ bn) Japan Iraq Iran North 88 87 North Asia , 60 America , America , Imports Exports 49% 34 8% 31 28 24 24 21 21 19 18 17 17 17 17% Asia , Europe , 62% -5 -4 -5 -8 15% -6 -12 -4 -54 -10 -11 -17 Europe , -21 -23 20% Total Trade Trade Balance India’s Export Markets (1) India’s Import Sources (1) China USA 14% 16% USA 7% UAE 9% UAE 6% China 5% Saudi Arabia 6% Hong Kong 4% Iraq 4% Singapore 4% Switzerland 4% UK 3% Hong Kong 4% Bangladesh 3% Rep. of Korea 3% Germany 3% Singapore 3% Netherlands 3% Indonesia 3% Nepal 2% 9 Note: Data for North America does not include Mexico; Mexico has been included in Latin America Source: (1) MOCI
External Debt vis-à-vis External Reserves Analysis of External Debt vs External Reserves 163.1% External Reserves : (US$ bn) External Debt FC Assets : External Debt 86.2% 75.9% External Debt 521.2 71.0% Volatile Capital Flows: External Reserves 395.6 External Reserves FCA: Short-term debt* As on Dec 2018 External Debt External Reserves As on Dec 2018 As on Dec 2018 1% 2% Commercial Borrowings 5% 5% Foreign Currency Assets 11% Short Term 37% Gold Non Resident 24% Multilateral SDRs / Reserve Tranche Bilateral 20% 94% Trade Credit India has the 7 th largest total reserves in the world [4] 10 (1) ‘Volatile Capital Flows’ is defined to include cumulative portfolio inflows and short-term debt (RBI). For FY18, Volatile Capital Flow data pertains to end-Jun’18; (2) Volatile Capital Flows to Reserves ratio peaked at 97.4% in September 2013; (3) Source: RBI/Ministry of Finance, Government of India; [4] Source: https://data.worldbank.org/indicator/FI.RES.TOTL.CD?view=chart&year_high_desc=true accessed on 22/05/2019 (Data pertains to 2017; as per latest data available); * Short-term debt with residual maturity
India’s Twin Balance Sheet Problem Investment-GDP Ratio soared by 11% points to 38% in four years to FY08. GNPA Ratio for Scheduled Commercial Banks (SCBs) soared from 2.3% as on March 31, 2008, to 10.1% as on December 2018. GNPA ratio for Public Sector Expectations of sustained double digit growth by corporates. Banks (PSBs) as on September 30, 2018 was 14.8%*. In three years to FY09, bank credit doubled. SCB’s GNPA Ratio projected to decrease to 10.3% by March 2019 and that of Indian companies aggressively acquired companies overseas (e.g.: TATA Steel’s PSBs is projected to decline to 14.6%*. acquisition of Corus Steel, Hindalco’s acquisition of Novelis Inc). Bunching of bad loan recognition due to previous regulatory forbearance. Not a systemic failure - exogenous factors/ delay in recognition. Bad-Loan- 1 3 Pre Global Financial Crisis Encumbered Banks 4 2 Post Global Financial Crisis Resolution Asset Quality Review (AQR). Accommodative monetary policy tightened due Schemes - 5:25 Flexible Refinancing, Strategic Debt Restructuring (SDR), to rise in inflation: Scheme for Sustainable Structuring of Stressed Assets (S4A) - withdrawn w.e.f. February 12, 2018. o Repo rates increased from 4.75% in April 2009 to 8.50% in October 2011. The Insolvency and Bankruptcy Code, 2016 (IBC). INR Depreciation added to the stress in FC debt servicing: 4Rs approach of recognition, resolution, re-capitalisation and reforms followed. o USD/INR depreciated from 52.97 in February 2013 to 68.36 in August 2013. An amount of close to ` 3 tn has already been recovered. Recapitalisation has In 2013, 33% of corporate debt was owed by companies with ICR < 1; increased been done in PSBs with total investment of ` 2.6 tn. to above 40% in late 2016. Capital infusion of ` 482.39 bn in 12 PSBs for regulatory capital requirement Capacity Utilization in Industry declined from 80.9% in Q3FY10 to 75.9% in and growth recently. Q3FY19. 11 Source: RBI Economic Survey 2016-17 & 2017-18, Bloomberg Database. * Financial Stability Report, RBI, December 2018; # Monetary Policy Report, RBI, April 2019
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