Performance Review. May 3, 2002

Transcription

1 Performance Review May 3, 2002

2 Agenda ICICI Bank today Retail banking Corporate banking & structured finance Merger process Financial performance 2

3 ICICI Bank today Large capital base Vast talent pool Low operating costs Technology focus Strong corporate relationships India s largest private sector bank and and one one stop stop financial solutions provider with with a diversified and and derisked business model de- 3

4 ICICI Bank today (contd.) Diversified portfolio March Proforma merged March Merged 33% Project finance 5% 7% 23% Corporate finance Retail finance 12% Reserves & cash Investments 4% 12% 3% 36% Other assets 34% 8% 23% Rs billion Rs. 1, billion the asset composition change on account of statutory requirements and increase in retail assets is contributing to de-risking the portfolio 4

5 ICICI Bank today (contd.) De-risked portfolio Capital adequacy ratio of 11.44% Net NPA ratio of 4.7% Fair valuation adjustment of Rs billion (Rs. in billion) Gross book Existing Fair value Total Coverage value provision provision provision Non-performing % loans Other loans % Mark-to-market of investments 9.25 Total fair valuation adjustment

6 ICICI Bank today (contd.) Retail banking Corporate banking Structured finance ICICI Bank is well positioned to redefine the banking model by focussing on the untapped potential in the profitable retail business segments and leveraging its superior delivery capabilities and lower operating costs in the under-served corporate banking business 6

7 Contents ICICI Bank today Retail banking Corporate banking & structured finance Merger process Financial performance 7

8 Size Retail loan disbursements (Rs. in billion) CAGR CAGR 32% 32% ICICI estimates Mortgages Other retail loans Despite the fast growth, the Indian retail market continues to be under-penetrated in comparison to its peers 8

9 Consumer loans outstanding (USD in billion) Benchmarking % % 54% % % 100 2% 0 India Thailand Malaysia Taiwan Korea USA Total consumer loans outstanding Consumer loans outstanding / GDP (%) Source: Salomon Smith Barney 80% 70% 60% 50% 40% 30% 20% 10% 0% Consumer loans outstanding / GDP (%) The under-penetration is reflected even within the subsegments 9

10 Benchmarking (contd.) Consumer loans / Total loans Mortgages / GDP 37.0% 58.0% 8.0% 13.0% 26.0% 36.0% USA - 51% 9.0% 1.0% 13.0% 17.0% India Thailand Malaysia Taiwan Korea India Thailand Korea Malaysia Taiwan Credit cards / Population 121.9% Other retail loans / GDP 41.0% USA - 235% 82.4% USA - 24% 16.0% 17.0% % 2.8% 9.8% India Thailand Malaysia Taiwan Korea India Thailand Malaysia Taiwan Korea 0.8% 8.0% India Thailand Taiwan Malaysia Korea Source: Salomon Smith Barney India s retail market is at a nascent stage and is expected to grow rapidly on account of the current trend in upward migration of household income levels

11 Household segment migration No. of households (million) CAGR CAGR 48% 48% ~ Rich (> Rs. 0.5 mn p.a.) Mass (Rs mn p.a.) Source: 1996, 1999 data is from NCAER study for top 24 cities, 2002 data is estimated by ICICI Bank Mass affluent (Rs mn p.a.)

12 ICICI Bank s strategy to capture retail potential Strong corporate relationships Achieving leadership in retail financial services Brand Technology 12 the core of this strategy is our relentless focus on the customer and crossselling of products Operational excellence

13 Catalyzing cross-sell Internet Banking Call Centers 500 Outlets 1005 ATMs Customized cross-selling by leveraging relationships, brand and technology Fixed deposits Bonds Life insurance Health insurance Power Pay Consumer loans Auto & home loans Credit & debit cards 13

14 Operational excellence Prudent credit policies Bolstered by a company wide 6 sigma initiative Adequate fraud control Rigorous collection mechanism These measures have ensured that we have followed a cautious approach while maintaining high growth rates and profitability in all segments 14

15 Our growth in retail (contd.) (Rs. in billion) Outstanding loans 5.15 Growth Growth rate rate 167% 167% Home loans Other retail loans Home loans grew at 230% in FY 2002 Amongst the leading providers of home loans in India Other retail loans grew at 130% in FY 2002 Home & others Bank accounts Credit cards 15

16 Our growth in retail (contd.) (million) Internet Internet banking banking customers customers Bank Bank customer customer accounts accounts Bank accounts grew at 53% in FY 2002 Internet customer accounts grew at 100% in FY 2002 Comprised 25% of bank accounts Among top twelve internet banks in the world Home & others Bank accounts Credit cards

17 Our growth in retail (contd.) Number Number of of credit credit cards cards (million) Growth Growth rate rate 100% 100% Home & others Bank accounts Credit cards 17

18 In summary Mortgages Other retail loans Credit cards Nascent Developing Matured Commoditized ICICI Bank analysis - For mortgages & other retail loans: Nascent <1% of GDP, Commoditized >30% of GDP. For credit cards: Nascent <0.1% penetration, Commoditized > 50% penetration We entered the retail market at the beginning of the growth stage and are now harnessing the untapped potential in all the profitable business segments 18

19 Contents ICICI Bank today Retail banking Corporate banking & structured finance Merger process Financial performance 19

20 Corporate banking and structured finance Maximize value of client relationships Leverage technology to enhance delivery capabilities Strategy Proactive portfolio management For efficient capital utilisation and lower balance sheet exposure The aim is to provide state-of-the-art, low cost and efficient banking services, with a focus on increasing fee-based income Corporate Banking Structured Finance 20

21 Corporate banking and structured finance Grow market share in fee-based products and services Fee market size 13% 4% 51% Corporate Retail Government Forex Overseas branches 14% 18% Market size: Rs billion Corporate Banking Structured Finance 21

22 Corporate banking and structured finance Strategy Corporate Solutions Group Reach the entire universe of current and potential clients (over 1300) and offer tailor-made solutions Government Solutions Group Develop comprehensive banking relationships with all central, state and local governmental entities Small & Medium Enterprises Group Develop comprehensive banking relationships with small & medium sized enterprises leveraging corporate linkages Focus on agri-lending to help in compliance with priority sector norms Corporate Banking Structured Finance 22

23 Corporate banking and structured finance Strategy Leverage expertise to facilitate loan origination and ensure sell down leading to Reduced concentration of risk Optimal risk-return trade-off Aggressively pursue cross-sell opportunities for all ICICI group products Significant opportunities for funding well-structured projects with in-built risk mitigation Corporate Banking Structured Finance 23

24 Corporate banking and structured finance Strategy Infrastructure Projects Group Create a balanced portfolio across sub-sectors Telecom, Power, Transportation, Urban Infrastructure Focus on non-fund based activities Manufacturing Projects Group Consolidation and modernization in core sectors Cement, Steel, Textiles, Chemicals Structured opportunities in certain emerging sectors Oil & gas, Mining, Retail, Agri infrastructure Corporate Banking Structured Finance 24

25 Contents ICICI Bank today Retail banking Corporate banking & structured finance Merger process Financial performance 25

26 Merger process Challenges Obtaining regulatory approvals within a short timeperiod of 6 months Compliance with SLR & CRR requirements Compliance with directed lending norms Stipulated at 50% on residual net bank credit Regulatory Fair valuation of loans Merger accounting 26

27 Merger process All regulatory approvals obtained Compliance status Full compliance with SLR & CRR requirements Raised Rs billion in 5 months Without distortion of yield curve With minimal asset-liability mismatch Directed lending norms Home loans of less than Rs. 1.0 million qualify for priority sector lending Innovative approach to agri-financing to meet priority sector objectives while mitigating credit risks Regulatory Fair valuation of loans Merger accounting 27

28 Merger process Valuation Fair valuation of loans done by Deloitte Haskins & Sells Comprehensive review of credit rating methodology Robust approach to evaluation Examination of loan files and review of collateral Analysis of projections and restructuring schemes (if any) to estimate future cashflows Discounted value of cashflows on the loan calculated to estimate the fair value Provisioning requirement ascertained by above process extrapolated to the balance portfolio Equity & related investment portfolio marked to market Regulatory Fair valuation of loans Merger accounting 28

29 Merger process Best practices Accounting for the merger under purchase method Fair valuation reflected through additional provisions Partly in ICICI s accounts prior to the Appointed Date Balance adjusted against ICICI s reserves transferred to ICICI Bank on the Appointed Date Leading to a de-risked portfolio Gross book Existing Fair value Total Coverage value provision provision provision Non-performing % loans Other loans % Mark-to-market of investments 9.25 Total fair valuation adjustment % cover against the total performing portfolio (Rs. in billion) Regulatory Fair valuation of loans Merger accounting 29

30 Contents ICICI Bank today Retail banking Corporate banking & structured finance Merger process Financial performance 30

31 Profit & loss statement 1 ICICI Bank (Rs. in billion) Q4- Q4- Inc FY01 FY02 FY01 FY02 % Interest income Interest expense Net interest income Non-interest income Core fee income Trading gains Operating expenses Operating profit Prov. & contingencies Profit after tax Includes operations of ICICI, ICICI PFS and ICICI Caps from the Appointed Date i.e., Mar 30,

32 Balance sheet: Assets ICICI Bank (Rs. in billion) FY01 FY02 FY02 Standalone Merged Cash, balances with banks & SLR - Cash & balances with RBI & banks - SLR investments Advances Debentures & bonds Other investments Fixed assets Other assets Total assets ,

33 Balance sheet: Liabilities ICICI Bank (Rs. in billion) FY02 FY02 FY01 Standalone Merged Net worth Equity capital Reserves Preference capital Deposits Savings deposits Current deposits Term deposits Borrowings Of which: Sub-debt Other liabilities Total liabilities ,

34 US GAAP: Income statement (Rs. in billion) FY01 FY02 Inc. % ICICI Bank Interest revenue Interest expense NII Provision for credit losses Non-interest revenue Non-interest expense Income before tax Income tax & others Net income

35 US GAAP: Net income reconciliation ICICI Bank FY2001 (Rs. in billion) FY2002 As per Indian GAAP Profit of ICICI, ICICI Capital & ICICI PFS for - (0.08) two days included under Indian GAAP Deferred taxation Provision for credit losses (0.40) 0.10 MTM on trading & AFS portfolio (0.41) (0.05) Premium & processing fee amortisation (0.10) (0.34) Business combination in respect of Bank - (0.17) of Madura merger Others 0.16 (0.21) Total adjustments as per US GAAP (0.30) (0.54) As per US GAAP

36 In conclusion Having complied with all regulatory requirements, the merged entity, with an established brand and strong technology focus, is now well placed to harness the vast retail potential and consolidate its position in corporate banking to emerge as the leading financial solutions provider in India 36

37 Safe Harbour Except for the historical information contained herein, statements in this release which contain words or phrases such as will, aim, will likely result, would, believe, may, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue 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 to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion, the adequacy of our allowance for credit losses, our provisioning policies, technological changes, investment income, cash flow projections, our exposure to market risks as well as other risks detailed in the reports filed by ICICI Bank Limited with the Securities and Exchange Commission of the United States. ICICI Bank Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. 37

38 38 Thank You

39 Profit & loss statement ICICI standalone (Rs. in billion) Q4 Q4 FY01 FY02 Inc.% FY01 FY02 Fund based income Less: Interest & related expenses & Lease dep. Net fund based income Fees and commissions (9.6) Net i/c from operations Operating expenses Profit from operations

40 Profit & loss statement ICICI standalone Q4 FY01 Q4 FY02 (Rs. in billion) FY01 FY02 Inc.% Profit from operations Less: Provisions & write-offs Add: Dividend Add: Net capital gains (31.2) Add: Other income (69.8) Profit before tax and additional items (4.2) Less: Additional prov. & inv. write down Less: Provision for tax (0.34) (0.84) Profit after tax (2.57) (1.94)