ICICI Group: Strategy & Performance. February 2010

Transcription

1 ICICI Group: Strategy & Performance February 2010

2 Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More information about these factors is contained in ICICI Bank's filings with the Securities and Exchange Commission. All financial and other information in these slides, other than financial and other information for specific subsidiaries where specifically mentioned, is on an unconsolidated basis for ICICI Bank Limited only unless specifically stated to be on a consolidated basis for ICICI Bank Limited and its subsidiaries. Please also refer to the statement of unconsolidated, consolidated and segmental results required by Indian regulations that has been filed with the stock exchanges in India where ICICI Bank s equity shares are listed and with the New York Stock Exchange and the US Securities Exchange Commission, and is available on our website 2

3 Agenda Market developments Strategy & execution Financial performance 3

4 Key economic indicators Q GDP growth at 7.9% compared to 6.1% in Q Industrial production grew 11.7% in November, average growth of 10.4% in August-November Strong capacity utilization in key sectors like steel, aluminium and cement Increased momentum in home, car and commercial vehicle sales Strong fundamentals driven by domestic demand 4

5 Liquidity, interest rates & credit growth Comfortable systemic liquidity: About Rs. 1.0 trillion lent to RBI on a daily basis Increase in CRR by 75 bps will reduce systemic liquidity by about Rs. 360 billion 10 year G sec yields increased by about 45 bps in Q WPI inflation increased to 7.3% for December Inflation figures continue to be impacted by base effect and high food prices RBI s projection at 8.5% by end March 2010 Non-food credit growth muted at 14.4% on Jan 15 RBI s revised projection at 16% for FY2010 5

6 Agenda Market developments Strategy & execution Financial performance 6

7 Strategy for FY2010 CASA Increase the proportion of low cost CASA deposits Reduce the proportion of wholesale deposits Position balance sheet for next phase of growth Capital Maintain high capital adequacy Cost Keep stringent control on operating expenses Credit Focus on select credit opportunities and reduce unsecured retail portfolio 7

8 Progress in execution of strategy Substantial progress in achievement of near term targets Robust growth in CASA deposits Reduction in operating expenses Sharp reduction in retail NPL formation Increase in net interest margin to 2.6% Well capitalized for a period of sustained growth 8

9 Focus on CASA deposits Savings deposits (Rs. bn) CAGR 47% Mar- 03 Mar- 04 Mar- 05 Mar- 06 Mar- 07 Mar- 08 Mar- 09 Dec- 09 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar Dec CASA ratio 15.5% 23.0% 24.3% 22.7% 21.8% 26.1% 28.7% 39.6% Branches ,262 1,419 1,626 Target to reach about 2,000 branches by April

10 High capitalisation levels 20.0% 19.4% 18.3% 16.8% Capital adequacy ratio 15.0% 10.0% 5.0% 14.6% 14.4% 14.3% 13.8% 13.6% 13.5% 11.5% 0.0% ICICI Bank Other top 9 Indian banks Tier-1 Tier-2 As per the latest available financials (December 30, ) 10

11 Stringent cost control Cost/average assets 2.7% 2.5% 2.3% 2.1% 1.9% 1.7% 1.5% 2.5% 2.3% 2.3% 2.4% 2.2% 1.8% 1.6% FY2004 FY2005 FY2006 FY2007 FY2008 FY 9M-2010 Rs. bn FY2004 FY2005 FY2006 FY2007 FY2008 FY 9M Operating expenses Including DMA 11

12 Domestic credit strategy Enhanced focus on growth going forward Participate in consumption growth through mortgages, and vehicle loans Capitalise on growing infrastructure and corporate project pipeline Increase market share in commercial banking Further reduce the proportion of unsecured personal loans and credit cards 12

13 Strategy for international business Retail business Focus on the needs of non-resident Indians Remittances into India Savings & Investment products Funding franchise Lending & trade Build a stable & diversified funding base Develop retail deposit franchise by leveraging low cost technology Tap long term sources of funding like bonds and syndicated loans to diversify funding Lending to Indian corporates Leverage domestic relationships Trade finance Including select non-india exposures linked to imports to India 13

14 Non-banking subsidiaries strategy ICICI Life ICICI General ICICI AMC ICICI Securities Focus on consolidating position as the largest private sector life insurer, while maintaining new business profit margins and cost efficiencies Focus on maintaining leadership, while improving underwriting profitability Maintain market position among the top three mutual funds Capitalize on retail broking platform and market opportunities to increase revenues and profitability 14

15 Agenda Market developments Strategy & execution Financial performance 15

16 Overview: Q % increase in standalone profit after tax to Rs billion in Q from Rs billion in Q Standalone profit after tax lower compared to Rs billion in Q3- due to absence of treasury income in Q compared to treasury income of Rs billion in Q3- Standalone profit after tax of Rs billion in 9M compared to Rs billion in 9M- Consolidated profit after tax increased by 18% to Rs billion in 9M-2010 from Rs billion in 9M- 16

17 Continued improvement in operating trends Net interest income increased to Rs billion in Q from Rs billion in Q3- and Rs billion in Q Net interest margin increased from 2.4% in Q3- and 2.5% in Q to 2.6% in Q Fee income increased to Rs billion in Q from Rs billion in Q3- and Rs billion in Q

18 Continued improvement in operating trends Continued reduction in operating expenses 20% year-on-year and 3% sequential decrease in operating & DMA expenses to Rs billion in Q from Rs billion in Q3- and Rs billion in Q Cost/average asset ratio for Q at 1.5% compared to 1.8% for Q3- Total provisions decreased sequentially to Rs billion in Q from Rs billion in Q

19 Balance sheet highlights CASA ratio of 39.6% at December 31, compared to 27.4% at December 31, 2008 and 36.9% at September 30, Increase of about Rs billion in savings deposits during April-December Year-on-year CASA deposits growth of 36.4% Net NPA ratio of 2.19% at December 31, ; at the same level as September 30, 19

20 Rural 7% Composition of loan book: December 31, Overseas branches 26% 2 Retail business group 45% Other secured 2% Personal loans 7% Vehicle loans 25% 1 Credit cards 6% Home 60% Domestic corporate 18% SME 4% Total loan book: Rs. 1,793 bn Total retail loan book: Rs. 807 bn 1. Vehicle loans includes auto loans 10%, commercial business 14% and two wheelers 1% 2. Retail business group includes builder loans and dealer funding of Rs bn 20

21 Key ratios (Percent) FY Q3- Q Q Return on average net worth 1, Weighted avg EPS (Rs.) Book value (Rs.) Net Interest Margin Fee/income Cost/income (incl. DMA) Cost/average assets (incl. DMA) % CASA ratio 28.7% 36.9% 39.6% 1. Based on quarterly average net worth. 2. Annualised for all interim periods 21

22 Asset quality and provisioning (Rs. in billion) Mar 31, Jun 30, Sep 30, Dec 31, Gross NPAs Less: Cumulative provisions Net NPAs Net NPA ratio 1.96% 2.19% 2.19% 2.19% Outstanding general provision on standard assets Gross retail NPLs at Rs bn and net retail NPLs at Rs bn at December 31, 51% of net retail NPLs are from unsecured products Net restructured loans of Rs bn at December 31, 22

23 23 Thank you

24 24 Annexure

25 25 Unconsolidated financials

26 Profit & loss statement (Rs. in billion) FY Q3-9M- Q Q M Q3-o- Q3 Growth NII % Non-interest income (33.5)% - Fee income % - Lease and other income % - Treasury income (0.26) Total income (17.2)% Operating expenses (16.9)% DMA expenses (69.9)% Lease depreciation (63.0)% Operating profit (14.5)% Includes profit of Rs billion related to transfer of merchant acquiring operations to new entity 81% owned by First Data.

27 Profit & loss statement (Rs. in billion) FY Q3-9M- Q Q M Q3-o- Q3 growth Operating profit (14.5)% Provisions (0.6)% Profit before tax (22.5)% Tax (45.8)% Profit after tax (13.4)% 27

28 Balance sheet: Assets Dec 31, 2008 Mar 31, Sep 30, Dec 31, (Rs. in billion) Y-o-Y growth Cash & bank balances % Investments 1, , , , % -SLR investments % - Equity investment in subsidiaries % Advances 2, , , , (15.6)% Fixed & other assets (18.7)% Total assets 3, , , , (4.9)% 1. Investment in security receipts of asset reconstruction companies at December 31, was Rs bn. Credit derivative exposure (including off balance sheet exposure) of Rs bn at December 31, (underlying comprises Indian corporate credits). Including impact of exchange rate movement 28

29 Equity investment in subsidiaries ICICI Prudential Life Insurance Dec 31, (Rs. in billion) Mar 31, Dec 31, ICICI Bank Canada ICICI Bank UK ICICI Home Finance ICICI Lombard General Insurance ICICI Bank Eurasia ICICI Securities Primary Dealership ICICI Securities Limited ICICI AMC ICICI Venture Funds Mgmt Others Total

30 Balance sheet: Liabilities Net worth - Equity capital -Reserves Preference capital Deposits -Savings - Current Borrowings Other liabilities Total liabilities Dec 31, , , Mar 31, , , Sep 30, , , (Rs. in billion) Dec 31, , , Y-o-Y growth 4.4% 0.1% 4.5% - (5.5)% 32.4% 44.6% (7.7)% (8.7)% (4.9)% Credit/deposit ratio of 71% on the domestic balance sheet at December 31, Figures include impact of exchange rate movement 30

31 Composition of borrowings Domestic - Capital instruments - Other borrowings Overseas - Capital instruments - Other borrowings Total borrowings Dec 31, Sep 30, (Rs. in billion) Dec 31, Capital instruments constitute 65% of domestic borrowings Figures include impact of exchange rate movement 31

32 Capital adequacy (Basel II) Rs. billion except % Mar 31, Sep 30, Dec 31, Total Capital % % % -Tier I % % % -Tier II % % % Total RWA 3, , , On balance sheet 2, , , Off balance sheet

33 33 Overseas subsidiaries

34 Bonds/notes of financial institutions 25% 34 2 ICICI Bank UK asset profile 4 India linked investments 6% Asset backed securities 2% Other assets & investments 4% ` Cash & liquid securities 11% 3 Loans & advances 52% Total assets: USD 7.5 billion 1. Includes cash & advances to banks and certificates of deposit 2. Includes US$ 169 mn of India-linked credit derivatives 3. Includes securities reclassified to loans & advances in FY 4. Does not include US$ 156 mn of ABS reclassified as loans & receivable in FY 1 Net profit of USD 7.3 million in Q Capital adequacy ratio at 17.0% Net MTM write-back of USD 14.1 million (post-tax) in reserves in Q3-2010

35 ICICI Bank UK liability profile Syndicated loans & interbank borrowings 10% Other liabilities 4% Net worth 8% Long term Debt 15% ` Demand deposits 22% Total liabilities: USD 7.5 billion Term deposits 41% Proportion of retail term deposits in total deposits at 64% at December 31, 35

36 ICICI Bank Canada asset profile Asset backed securities Other assets & investments 6% 1 Cash & liquid securities 13% 2% India linked investments 3% ` 2 Federally insured mortgage 15% Net profit of CAD 4.8 million in Q Capital adequacy ratio at 23.5% Loans to customers 61% 36 Total assets: CAD 5.8 billion 1. Includes cash & advances to banks, government securities and banker s acceptances/depository notes 2. Includes CAD 132 mn of India-linked credit derivatives

37 ICICI Bank Canada liability profile Net worth 17% Other liabilities 1% Term deposits Borrowings 67% 1% ` Total liabilities: CAD 5.8 billion Demand deposits 14% ICICI Bank Canada balance sheet funded largely out of retail term deposits 37

38 1 Cash & liquid securities 24% ICICI Bank Eurasia Retail loans 15% Other assets & investments 3% Loans to corporates & banks 54% Total borrowings of USD 344 million at December 31, Capital adequacy of 19.8% at December 31, Financial breakeven in 9M-2010 Corporate bonds 4% Total assets: USD 459 million 1. Includes cash, balances with central bank, nostro balances, govt bonds & placements with banks 38

39 39 Domestic subsidiaries

40 ICICI Home Finance Fixed & other assets 2% Investments 10% Shareholders funds 9% Deposits 27% Loans 88% Borrowings 64% 40 Total assets/liabilities: Rs. 138 billion Net profit of Rs billion in Q compared to Rs billion in Q Capital adequacy ratio of 13.9% at December 31, Net NPA ratio: 1.3%

41 ICICI Life APE Renewal premium Total premium New Business Profit (NBP) NBP margin Statutory Profit/(Loss) Assets Under Management Expense ratio (Rs. in billion) Q3- Q % 18.9% (1.35) % 8.3% Continued market leadership in private sector 1 Statutory loss of Rs billion in 9M During April - December on new business retail weighted received premium basis.

42 ICICI General Gross premium 1 PBT PAT (Rs. in billion) Q3- Q Continued market leadership in private sector 2 1. Excluding remittances from third party motor pool 2. During April - December 42

43 Other subsidiaries Profit after tax ICICI Securities Ltd. ICICI Securities PD ICICI Venture ICICI Prudential Asset Management Company Q (0.14) (Rs. billion) Q