ICICI Group: Strategy and Performance. August 2009

Transcription

1 ICICI Group: Strategy and Performance August 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, along with these slides, 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 Industrial production grew 2.7% in May 2009, registering growth for second consecutive month Six infrastructure industries grew 6.5% in June 2009 raising prospects of good industrial production growth Strong capacity utilisation in key sectors like steel, aluminium and cement Automobile sales have recovered across all segments Strong signs of improvement; impact of monsoon remains uncertain 4

5 Liquidity and interest rates High systemic liquidity: Rs trillion lent to RBI on a daily basis 10 year G-sec yields on the rise on concerns over government borrowing programme RBI announced plans for management of the programme in non disruptive way through frontloading Nearly 2/3 rd to be raised in H to avoid crowding out in second half Disinvestment plans could further alleviate pressure RBI committed to maintaining growth-supportive stance till demand revival 5

6 Credit and deposit growth Moderation in non-food credit growth compared to FY2009 Deposit growth remains healthy RBI s projection for credit and deposit growth in FY2010 at 20% and 19% respectively Credit growth expected to pick up in the second half of FY2010 Mortgages, vehicle loans, project finance and commercial banking expected to be key drivers 6

7 Agenda Market developments Strategy & execution Financial performance 7

8 Our franchise ICICI Bank 74% 74% 51% 100% 100% Second largest bank in India Life Insurance (JV with Prudential) General Insurance (JV with Lombard) Asset Management (JV with Prudential) Private Equity (Wholly owned) Investment Banking & Broking (Wholly owned) Strong diversified financial services franchise in India 8

9 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 opportunities in mortgages, project finance & commercial banking Further reduce unsecured retail portfolio 9

10 Key enablers Distribution architecture Collection architecture Human resources Enhanced branch network as focal point for customer relationship Branches responsible for customer acquisition, sales and class servicing Select "mega branches identified for commercial banking opportunities; headed by senior employees In-housing of collections for specific products and buckets Dedicated pre-delinquency management cell Changes in field agency management and incentives Retraining and redeployment of staff for new responsibilities in branches 10

11 Savings deposits (Rs. bn) 11 Focus on CASA deposits CASA ratio Branches Q Mar % 446 Mar % 469 CAGR 49% Mar % 562 Mar % 614 Implementation underway for 580 new branches; target to open by March 2010 Mar % 755 Mar % 1,262 Mar % 1,419 June % 1,456

12 Capital adequacy ratio High capitalisation levels 20% 15% 10% 5% 0% 17% ICICI Bank 15% 15% 15% 15% 14% 14% 14% 13% Other top 9 Indian banks Tier-1 Tier-2 12% 12 As per the latest available financials (June 2009)

13 Cost/average assets Stringent cost control 2.7% 2.5% 2.3% 2.1% 1.9% 1.7% 1.5% 2.3% 2.5% 2.4% 2.3% 2.2% 1.8% FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Q % Rs. bn FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Q Operating expenses Including DMA 13

14 Credit strategy ICICI Bank moderated credit growth from end of FY2008 anticipating risks in the environment Personal loan disbursements and new credit card issuances reduced substantially from FY2008 levels Moderation in system non-food credit growth from 22.3% in FY2008 to 17.5% in FY2009 and 15.8% at mid-july 2009 ICICI Bank using the opportunity to rebalance its funding profile Credit growth expected to pick up in the second half of FY2010 ICICI Bank to focus on mortgages, project finance and commercial banking 14

15 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 15

16 Strategy for insurance Life insurance market expected to see revival in growth in second half of FY2010 (first half would be impacted by high base effect) ICICI Life: focus on consolidating position as largest private sector life insurer, while maintaining new business profit margins and reducing expense ratio General insurance sector continues to witness impact of detariffing ICICI General: focus on maintaining market share and leadership, while maintaining underwriting profitability and reducing expense ratio 16

17 Agenda Market developments Strategy & execution Financial performance 17

18 Overview: Q % increase in profit before tax from Rs billion in Q to Rs billion in Q % increase in profit after tax from Rs billion in Q to Rs billion in Q % increase in consolidated profit after tax 1 from Rs billion in Q to Rs billion in Q Unaudited 18

19 Overview: Q Net interest income for Q at Rs billion compared to Rs billion for Q Decrease in NII mainly due to decrease in advances by 11.6% Net interest margin maintained at the same level as Q at 2.4% Net interest margin lower compared to 2.6% in Q due to full impact of low margin agricultural loans and maintenance of higher level of liquidity Fee income of Rs billion in Q1-2010; marginal decline from Q level Decrease in fee income from Rs billion in Q due to slowdown in corporate activity and distribution of retail savings and investment products 19

20 Overview: Q Robust treasury income of Rs billion in Q compared to a loss of Rs billion in Q Continued reduction in operating expenses 20% y-o-y and 7% q-o-q decrease in operating & DMA expenses Cost/average asset ratio for Q at 1.6% compared to 1.8% for Q and 1.9% for Q

21 Balance sheet highlights CASA ratio of 30.4% at June 30, 2009 compared to 27.6% at June 30, 2008 and 28.7% at March 31, 2009 Increase of Rs bn in savings deposits during the quarter Total capital adequacy of 17.4% and Tier-1 capital adequacy of 13.1% as per RBI s Basel II framework Advances declined by 9% in Q reflecting moderation in systemic credit offtake and the Bank s conscious strategy of risk containment Net NPA ratio of 2.19% at June 30, 2009 compared to 1.96% at March 31,

22 22 Thank you

23 23 Annexure

24 24 Unconsolidated financials

25 Profit & loss statement FY2009 Q (Rs. in billion) Q Y-o-Y growth NII (5.0)% Non-interest income % - Fee income (32.6)% - Treasury income 4.43 (5.94) Dividend income (58.6)% -Others (93.1)% Total income % Operating expenses (10.2)% DMA expenses (88.2)% Lease depreciation Operating profit % 25

26 Profit & loss statement (Rs. in billion) FY2009 Q Q Y-o-Y growth Operating profit % Provisions % Profit before tax % Tax % Profit after tax % 26

27 Balance sheet: Assets Mar 31, 2009 June 30, 2008 (Rs. in billion) June 30, Y-o-Y 2009 growth Cash & bank balances (14.1)% Investments 1, , , % -SLR investments (2.1)% - Equity investment in subsidiaries % Advances 2, , , (11.6)% Fixed & other assets (7.2)% Total assets 3, , , (6.8)% 1. Investment in security receipts of asset reconstruction companies at June 30, 2009 was Rs bn. Credit derivative exposure (including off balance sheet exposure) of Rs bn at June 30, 2009 (underlying comprises Indian corporate credits). Including impact of exchange rate movement 27

28 Composition of loan book: June 30, 2009 Rural 8% Overseas branches 26% 3 Retail business group 49% Personal loans 8% Other secured 2% Vehicle loans 27% Credit cards 7% 2 1 STPL 0.3% Home 55.7% 28 Domestic corporate 13% SME 4% Total loan book: Rs. 1,981 bn 1. STPL: Small ticket personal loans 2. Vehicle loans includes auto loans 12%, 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. 960 bn

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

30 Balance sheet: Liabilities Net worth - Equity capital -Reserves Preference capital Deposits -Savings -Current Borrowings Other liabilities Total liabilities Mar 31, , , June 30, , , June 30, , , (Rs. in billion) Y-o-Y growth 5.9% - 6.0% - (10.3)% 2.3% (8.0)% (3.1)% (13.1)% (6.8)% Credit/deposit ratio of 73% on the domestic balance sheet at June 30, 2009 Figures include impact of exchange rate movement 30

31 Composition of borrowings Mar 31, 2009 June 30, 2008 (Rs. in billion) June 30, 2009 Domestic Capital instruments Other borrowings Overseas Capital instruments Other borrowings Total borrowings Capital instruments contribute 64% of domestic borrowings Figures include impact of exchange rate movement 31

32 Capital adequacy (Basel II) Rs. billion except % Mar 31, 2009 June 30, 2009 Total Capital % % -Tier I % % -Tier II % % Total RWA 3, , On b/s 2, , Off b/s

33 Key ratios (Percent) FY2009 Q Q Return on average networth 1, Weighted average EPS (Rs.) Book value (Rs.) Net interest margin Fee to income Cost to income (incl. DMA expenses) Cost to average assets (incl. DMA expenses) CASA ratio 28.7% 27.6% 30.4% 1. Based on quarterly average net worth 2. Annualised for Q and Q

34 Asset quality and provisioning (Rs. in billion) June 30, 2008 Mar 31, 2009 June 30, 2009 Gross NPAs Less: Cumulative provisions Net NPAs Net NPA ratio 1.74% 1.96% 2.19% Outstanding general provision on standard assets Gross retail NPLs at Rs bn and net retail NPLs at Rs bn at June 30, % of net retail NPLs are from unsecured products Additions of about Rs bn to opening net restructured loans Reductions of Rs bn from opening net restructured loans, primarily due to upgradation on satisfactory performance Net restructured loans of Rs bn at June 30, Gross NPAs and cumulative provisions include technical write-offs of Rs bn at June 30,

35 35 Overseas subsidiaries

36 4 ICICI Bank UK asset profile Asset backed securities 2% 2 India linked investments 5% Other assets & investments Bonds/notes of financial institutions 25% 6% Cash & liquid securities 16% Loans & advances 46% 3 1 Net profit of USD 4.9 million in Q Capital adequacy ratio at 16.0% Net MTM write-back of USD 48.5 million (posttax) in reserves in Q Total assets: USD 8.3 billion 1. Includes cash & advances to banks and certificates of deposit 2. Includes US$ 158 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 FY2009

37 ICICI Bank UK liability profile Other Networth liabilities 6% 4% Syndicated loans & interbank borrowings 10% Demand deposits 24% Long-term Debt 14% Term deposits 42% Total liabilities: USD 8.3 billion Proportion of retail term deposits in total deposits increased from 23% at June 30, 2008 to 63% at June 30,

38 ICICI Bank Canada Asset backed securities 2% Other assets & investments 5% ` Cash & liquid securities 17% 1 India linked investments 3% 2 Federally insured mortgage 13% Net profit of CAD 8.9 million in Q Capital adequacy ratio at 22.0% Loans to customers 60% 38 Total assets: CAD 6.3 billion 1. Includes cash & advances to banks, government securities and banker s acceptances/depository notes 2. Includes CAD 144 mn of India-linked credit derivatives

39 ICICI Bank Canada liability profile Networth 15% Other liabilities 3% Term Borrowings 1% deposits 72% Total liabilities: CAD 6.3 billion Demand deposits 9% ICICI Bank Canada balance sheet funded largely out of retail term deposits 39

40 1 ICICI Bank Eurasia Retail loans 17% Cash & liquid securities 28% Other assets 2% Loans to corporates & banks 45% Total borrowings of USD 354 million at June 30, 2009 Capital adequacy of 18.3% at June 30, 2009 Financial breakeven during the period Corporate bonds 8% Total assets: USD 441 million 1. Includes cash, balances with central bank, nostro balances, govt bonds & placements with banks 40

41 41 Key non-banking subsidiaries

42 ICICI Life (Rs. in billion) Q Q APE Renewal premium Total premium New Business Profit (NBP) NBP margin 19.1% 19.0% Statutory Loss 1 (3.22) (0.36) Assets Under Management Expense ratio 14.5% 11.6% Continued market leadership in private sector 2 1. Profit before tax of Rs. (1.00) bn in Q and Rs. (3.22) bn in Q For the period April - June 2009 on new business retail weighted received premium basis 42

43 ICICI General Gross premium PBT PAT (Rs. in billion) Q Q Continued market leadership in private sector 1 1. For the period April June

44 Other subsidiaries Profit after tax ICICI Securities Ltd. ICICI Securities PD ICICI Venture ICICI Prudential Asset Management Company ICICI Home Finance Company (Rs. billion) Q Q Consolidated profit after tax increased by 68.0% from Rs billion in Q to Rs billion in Q