This is in line with the expected reduction in total expense ratio (TER) under the new regulation effective April 1, 2019.
ICICI Securities (I-Sec), a part of the ICICI Group, on Monday announced its financial results for the quarter ending June 30, 2019 (Q1FY20). Consolidated profit after tax (PAT) for Q1FY20 stood at Rs 114 crore against Rs 134 crore in Q1FY19, a decline of 15%. The company reported a consolidated revenue of Rs 402 crore in Q1FY20, against Rs 436 crore in Q1FY19, a decline of 8%.
“PAT declined due to tepid activity in equity capital markets, changes in the MF distribution income on account of the new TER regime and four fewer trading days in Q1FY20. In addition, accounting impact of migration to a new accounting standard IndAs 116 led to a rise in expense compared to Q1FY19,” said Vijay Chandok, MD and CEO at ICICI Securities.
Total brokerage revenue (excluding interest income) stood at Rs 220 crore for Q1FY20, down 4% against Q1FY19. Adjusting for lower trading days during the quarter — Q1FY20 had four fewer trading days — broking revenue was flat y-o-y. Broking business contributed 55% towards the company’s overall topline. While retail brokerage revenue declined by 6% y-o-y, institutional business grew by 12%. Distribution revenue stood at Rs 99 crore in Q1FY20 against Rs 116 crore in Q1FY19, down 15%. This is in line with the expected reduction in total expense ratio (TER) under the new regulation effective April 1, 2019.
The company has recently expanded its distribution business by launching digital distribution of retail loans. While the average AUM of the mutual funds distributed by the company increased by 7% on-year to Rs 36,800 crore in Q1FY20.
However, its revenue in investment banking stood at Rs 17 crore in Q1FY20, a decline of 48% from Rs 32 crore in Q1FY19 due to subdued equity capital market activity. “Digital is going to be a key piece in the whole journey and I-Sec is actively working with various fintechs to identify winning solutions which can be offered to our customers through our platform,” added Chandok.