ICICI Group: Strategy & Performance. November 2009

Transcription

1 ICICI Group: Strategy & Performance November 2009

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 6.1% compared to 5.8% in Q Industrial production grew 9.1% in September 2009, on the back of 10.4% growth in August 2009 Strong capacity utilization in key sectors like steel, aluminium and cement Increased momentum in home and car sales and debit card spends Strong fundamentals driven by domestic demand 4

5 Key banking sector indicators Comfortable systemic liquidity: About Rs. 1 trillion lent to RBI on a daily basis 10 year G sec yields remain volatile Borrowing programme for first half of FY2010 completed successfully Borrowing programme for second half of FY2010 substantially lower Non-food credit growth muted at 10% at end- October 2009 Growth expected to pick up in second half of FY2010 RBI s projection for credit and deposit growth for FY2010 at 18% 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 selected 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 Reduction in absolute level of net NPAs Deceleration in retail NPA growth Well capitalized for a period of sustained growth 8

9 Focus on CASA deposits Savings deposits (Rs. bn) CAGR 48% Mar- 03 Mar- 04 Mar- 05 Mar- 06 Mar- 07 Mar- 08 Mar- 09 Sep- 09 Mar 2003 Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009 Sep 2009 CASA ratio 15.5% 23.0% 24.3% 22.7% 21.8% 26.1% 28.7% 36.9% Branches ,262 1,419 1,520 Implementation underway for 580 new branches; target to open by March

10 High capitalisation levels Capital adequacy ratio 20% 15% 10% 5% 0% 17.7% ICICI Bank 16.5% 15.7% 14.7% 14.7% 14.5% 14.1% 13.8% Other top 9 Indian banks Tier-1 Tier % 11.9% As per the latest available financials (September 30, 2009) 10

11 Stringent cost control Cost/average assets 2.6% 2.4% 2.2% 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 2.5% 2.3% 2.3% 2.4% 2.2% 1.8% 1.6% FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 H Rs. bn FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 H Operating expenses Including DMA 11

12 Domestic credit strategy ICICI Bank moderated credit growth from end of FY2008 anticipating risks in the environment Moderation in system non-food credit growth from 22.3% in FY2008 to 17.5% in FY2009 and 10.3% at end-october 2009 ICICI Bank using the opportunity to rebalance its funding profile Areas of growth: mortgages, vehicle loans, project finance and commercial banking Personal loan disbursements and new credit card issuances reduced substantially from FY2008 levels 12

13 International business strategy Strong term deposit mobilisation capability in UK and Canada subsidiaries To be selectively deployed primarily in India-linked assets Asset repayments in international branches being used to repay maturing liabilities Limited growth in overall international balance sheet 13

14 Non-banking subsidiaries strategy ICICI Life: Focus on consolidating position as largest private sector life insurer, while maintaining new business profit margins ICICI General: Focus on maintaining leadership, while improving underwriting profitability ICICI AMC: Maintain market position among the top three mutual funds ICICI Securities: 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 Standalone profit after tax of Rs billion in Q % sequential increase in standalone profit after tax from Rs billion in Q Profit after tax in Q was Rs billion Consolidated profit after tax 1 of Rs billion in Q % sequential increase in consolidated profit after tax 1 from Rs billion in Q % increase over consolidated profit after tax 1 of Rs billion in Q Unaudited 16

17 Overview: Q Sequential improvement in operating trends Net interest income for Q at Rs billion compared to Rs billion for Q Net interest margin increased from 2.4% in Q to 2.5% in Q Net interest income in Q was Rs billion Fee income of Rs billion in Q compared to Rs billion in Q Fee income in line with the reduced investment and mergers & acquisition activity in the corporate sector, reflecting the change in market conditions in the second half of fiscal

18 Overview: Q Sequential improvement in operating trends Continued reduction in operating expenses 8% sequential decrease in operating & DMA expenses Cost/average asset ratio for Q at 1.5% compared to 1.6% for Q and 1.7% for Q % sequential decline in total provisions to Rs billion in Q from Rs billion in Q

19 Balance sheet highlights CASA ratio of 36.9% at September 30, 2009 compared to 30.0% at September 30, 2008 and 30.4% at June 30, 2009 Increase of Rs bn in savings deposits and Rs bn in current deposits during the quarter Total capital adequacy of 17.7% and Tier-1 capital adequacy of 13.3% as per RBI s Basel II framework Net NPA ratio of 2.19% at September 30, 2009; at the same level as June 30,

20 Performance of subsidiaries ICICI Life: Increased market share from 5.5% in April 2009 to 9.3% in September 2009 New business margin maintained at about 19% ICICI General: Maintained profitability and market share despite continued impact of de-tariffing ICICI AMC: Maintained market position among the top three mutual funds ICICI Securities: Increase in revenues and profitability in line with market volume growth, driven by retail broking platform 20

21 21 Thank you

22 22 Annexure

23 23 Unconsolidated financials

24 Profit & loss statement (Rs. in billion) FY2009 Q H Q Q H Q2-o-Q2 growth NII (5.2)% Non-interest income (2.8)% - Fee income (26.1)% - Treasury income 4.43 (1.53) (7.47) Dividend income % -Other income (65.5)% Total income (4.1)% Operating expenses (12.0)% DMA expenses (85.6)% Lease depreciation (13.2)% Operating profit % 24

25 Profit & loss statement FY2009 Q H Q Q (Rs. in billion) H1- Q2-o-Q growth Operating profit % Provisions % Profit before tax % Tax (6.7)% Profit after tax % 25

26 Balance sheet: Assets Sep 30, 2008 Mar 31, 2009 Jun 30, 2009 (Rs. in billion) Sep 30, Y-o-Y 2009 growth Cash & bank balances (17.8)% Investments , , , % -SLR investments % - Equity investment in subsidiaries % Advances 2, , , , (14.0)% Fixed & other assets (13.0)% Total assets 3, , , , (4.8)% 1. Investment in security receipts of asset reconstruction companies at September 30, 2009 was Rs bn. Credit derivative exposure (including off balance sheet exposure) of Rs bn at September 30, 2009 (underlying comprises Indian corporate credits). Including impact of exchange rate movement 26

27 Rural 6% Composition of loan book: September 30, 2009 Overseas branches 27% 3 Retail business group 45% Personal loans 7% Other secured 2% Credit cards 6.8% 2 Vehicle loans 26% 1 STPL 0.2% Home 57% Domestic corporate 18% SME 4% 27 Total loan book: Rs. 1,909 bn 1. STPL: Small ticket personal loans 2. Vehicle loans includes auto loans 11%, commercial business 14% and two wheelers 1% 3. Retail business group includes builder loans and dealer funding of Rs bn Total retail loan book: Rs. 864 bn

28 Equity investment in subsidiaries (Rs. in billion) Sep 30, 2008 Mar 31, 2009 Sep 30, 2009 ICICI Prudential Life Insurance ICICI Bank Canada ICICI Bank UK ICICI Home Finance ICICI Lombard General Insurance ICICI Bank Eurasia LLC ICICI Securities Primary Dealership ICICI Securities Limited ICICI AMC ICICI Venture Funds Mgmt Co Others Total

29 Balance sheet: Liabilities Net worth - Equity capital -Reserves Preference capital Deposits -Savings - Current Borrowings Other liabilities Total liabilities Sep 30, , , Mar 31, , , Jun 30, , , Sep 30, , , (Rs. in billion) Y-o-Y growth 5.4% 0.1% 5.5% - (11.4)% 14.2% 0.9% 5.2% (3.2)% (4.8)% Credit/deposit ratio of 75% on the domestic balance sheet at September 30, 2009 Figures include impact of exchange rate movement 29

30 Composition of borrowings Domestic Jun 30, Capital instruments Other borrowings Overseas - Capital instruments Sep 30, (Rs. in billion) Sep 30, Other borrowings Total borrowings Capital instruments contribute 53% of domestic borrowings 1. Includes short term borrowings Figures include impact of exchange rate movement 30

31 Capital adequacy (Basel II) Rs. billion except % Mar 31, 2009 Jun 30, 2009 Sep 30, 2009 Total Capital % % % -Tier I % % % -Tier II % % % Total RWA 3, , , On balance sheet 2, , , Off balance sheet

32 Key ratios (Percent) FY2009 Q 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% 30.0% 30.4% 1. Based on quarterly average net worth 2. Annualised for all interim periods 32

33 Asset quality and provisioning Gross NPAs Less: Cumulative provisions Net NPAs Net NPA ratio Outstanding general provision on standard assets Mar 31, % Jun 30, % (Rs. in billion) Sep 30, % Gross retail NPLs at Rs bn and net retail NPLs at Rs bn at September 30, % of net retail NPLs are from unsecured products Net restructured loans of Rs bn at September 30, Gross NPAs and cumulative provisions include technical write-offs of Rs bn at September 30, 2009

34 34 Overseas subsidiaries

35 35 2 ICICI Bank UK asset profile 4 Asset backed securities 2% Other assets & investments 4% Bonds/notes of financial institutions 27% ` India linked investments 5% 3 Loans & advances 50% Total assets: USD 8.0 billion Cash & liquid securities 12% 1. Includes cash & advances to banks and certificates of deposit 2. Includes US$ 165 mn of India-linked credit derivatives 3. Includes securities reclassified to loans & advances in FY Does not include US$ mn of ABS reclassified as loans & receivable in FY Net profit of USD 12.6 million in Q Capital adequacy ratio at 16.3% Net MTM write-back of USD 61.0 million (post-tax) in reserves in Q2-2010

36 ICICI Bank UK liability profile Syndicated loans & interbank borrowings 9% Other liabilities 5% Net worth 7% Long term Debt 14% ` Demand deposits 22% Total liabilities: USD 8.0 billion Term deposits 43% Proportion of retail term deposits in total deposits increased from 35% at September 30, 2008 to 65% at September 30,

37 ICICI Bank Canada asset profile Asset backed securities 2% Other assets & investments 8% Cash & liquid securities 11% 1 2 India linked investments 3% ` Federally insured mortgage 15% Net profit of CAD 13.8 million in Q Capital adequacy ratio at 23.2% Loans to customers 61% 37 Total assets: CAD 5.8 billion 1. Includes cash & advances to banks, government securities and banker s acceptances/depository notes 2. Includes CAD 139 mn of India-linked credit derivatives

38 ICICI Bank Canada liability profile Net worth 17% Other liabilities 2% Borrowings 1% Demand deposits 11% ` Term deposits 69% Total liabilities: CAD 5.8 billion ICICI Bank Canada balance sheet funded largely out of retail term deposits 38

39 ICICI Bank Eurasia 1 Retail loans 16% Cash & liquid securities 37% Other assets 1% Loans to corporates & banks 39% Corporate bonds 7% Total assets: USD 453 million Total borrowings of USD 370 million at September 30, 2009 Capital adequacy of 21.4% at September 30, 2009 Financial breakeven in H Includes cash, balances with central bank, nostro balances, govt bonds & placements with banks 39

40 40 Key non-banking subsidiaries

41 ICICI Life APE Renewal premium Total premium New Business Profit (NBP) NBP margin Statutory Loss Assets Under Management Expense ratio (Rs. in billion) Q Q % 19.2% (3.08) (0.69) % 10.8% Continued market leadership in private sector During the half year ended September 30, 2009 on new business retail weighted received premium basis.

42 ICICI General (Rs. in billion) Q Q Gross premium PBT PAT Continued market leadership in private sector 2 1. Excluding remittances from third party motor pool 2. During the half year ended September 30,

43 Other subsidiaries Profit after tax ICICI Securities Ltd. ICICI Securities PD ICICI Venture ICICI Prudential Asset Management Company ICICI Home Finance Company 1 Q (Rs. billion) Q Consolidated profit after tax increased by 76% from Rs billion in Q to Rs billion in Q Loan book of ICICI HFC was Rs bn at September 30, 2009 (June 30, 2009: Rs bn; September 30, 2008: Rs bn)