India & ICICI Group Trends & Outlook November 2015
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 US 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 and Exchange Commission, and is available on our website www.icicibank.com 2
1 Macro-economic environment 2 ICICI Group: performance & strategy 3
Trends in the Indian economy Strong external position Several policy measures Low inflation & declining interest rates Signs of improvement in economic activity 4
Trends in the Indian economy India s external position has improved CAD decreased to ~1.2% of GDP in Q1-2016 from a peak of 4.8% of GDP in FY2013 FDI inflows of ~USD 11.8 billion in April-July 2015; inflow of USD 34.4 billion in FY2015 RBI s forex reserves at ~US$ 353 billion Import cover of about 10 months While global developments have implications for emerging market economies, India is relatively better placed 5
Trends in the Indian economy Significant improvement in inflation CPI inflation at 5.0% in October 2015; core CPI 1 inflation at 4.1% WPI remains negative since Nov 2014 Easing monetary policy Repo rate Repo rate cut of 125 bps between January-October 2015 Banks have reduced deposit & lending rates 1. Excluding food and fuel 6
Trends in the Indian economy Signs of improvement across several key parameters Industrial production Growth in industrial production, including manufacturing, has remained positive for eleven consecutive months Vehicle sales growth Sales of passenger vehicles and commercial vehicles have improved Gradual improvement in capital goods segment Pickup in coal production Step-up in government spending expected to support growth 7
1 Macro-economic environment 2 ICICI Group: performance & strategy 8
Significant progress on operating performance Strong retail & rural franchise Leadership in technology Substantial value creation within the ICICI Group 9
Significant progress on operating performance Strong retail & rural franchise Leadership in technology Substantial value creation within the ICICI Group 10
Performance over the years Significant improvement in funding profile ~17% CAGR in CASA deposits since Mar 2009 Retail deposits as % of domestic deposits increased from ~50% at Mar 2009 to ~77% at Sep 2015 11
Performance over the years Healthy loan mix & growth ~ 16% CAGR in domestic loans since Mar 2011 ~21% CAGR in retail loans since Mar 2012 12
Performance over the years Sustained improvement in net interest margins Overall NIM Margin improvement driven by focus across businesses Domestic margins improved by ~90 bps since FY2010 Overseas margins improved from 0.41% in FY2010 to 1.65% in FY2015 and 1.94% in H1-2016 13
Performance over the years Strong operating efficiency Cost-income Branch network Costs contained while continuing scale up in distribution & investments in technology 14
Performance over the years Asset quality trends ` billion FY2014 FY2015 H1-2016 Gross NPA additions 45.40 80.78 38.58 Of which: slippages from restructured loans 7.27 45.29 12.15 Restructuring additions 66.33 53.94 20.89 Credit costs to average loans (annualised) at 96 bps in H1-2016 compared to 109 bps FY2015 15
Approach to asset quality Increasing share of retail loans Focus on lending to higher rated corporates Concentration risk management framework refined for incremental lending Close monitoring of existing exposures for resolution & recoveries 16
Return ratios Sustained improvement in return ratios over the years About 90 bps improvement in Standalone RoA over FY2009 Consolidated RoE improved from less than 8% in FY2009 to 15.2% in H1-2016 Driven by focused execution of articulated strategy 17
Significant progress on operating performance Strong retail & rural franchise Leadership in technology Substantial value creation within the ICICI Group 18
Enhanced retail franchise Sustained growth in granular deposits Robust loan portfolio growth Healthy growth in fee income Stable asset quality trends The Bank continues to scale up its retail business and invest in strengthening the franchise and distribution infrastructure 19
Extensive geographical presence Significant investments made in distribution Branch network ~52% of branches in semiurban and rural areas Supplemented by ~12,800 ATMs Focus on cross-sell along with customer service at branches 20
Focus on rural business (1/2) Significant presence in rural & semi-urban markets Network Branches Gramin branches BCs 1 & CSPs 2 Partner linkages Technology solutions Aadhaar integration for DBT 1 Mobile based remittance services Bank on wheels & micro ATMs Approach to lending Selective geographical approach Collateral based lending Granular portfolio 2,108 branches in rural & semi-urban markets 1. BCs: Business correspondents 2. CSPs: Customer service points 21
Focus on rural business (2/2) Diverse product suite & granular lending Key products include loans against gold jewelry, farm equipment loans, kisan credit card, agri term loans and loans to Self Help Groups (SHG) Portfolio contributes~15% to retail loans ~30% y-o-y growth at September 30, 2015 Focus on growth to continue while monitoring risks 22
Significant progress on operating performance Strong retail & rural franchise Leadership in technology Substantial value creation within the ICICI Group 23
Leadership in technology Digitizing channels Digitizing experience Digitizing core Leveraging digitization & mobility to strengthen franchise & improve performance 24
Digitizing channels (1/2) Over 60% of total transactions for our savings account customers done through new age digital channels imobile Integrated view of all ICICI Bank relationships Over 100 services available First in India: tagging frequent transactions as favourites; in-app chat functionality; alerts & notifications through Google Now ; flexible recurring deposits called iwish Refreshed & intuitive website One of the largest bouquets of seamless services Online dashboard - My View Investment management & tax services tools ~15 million unique monthly visitors Transactions of over ` 2 trillion processed annually 25
Digitizing channels (2/2) Innovative offerings to improve customer convenience India s First Digital Bank: over 2.5 million downloads e-wallet for all - whether customer or not Significant interest from non-icici users Services available include shopping, bill payments, booking movie tickets Linked prepaid card for POS transactions at more than 1 million merchants Presence on social media Banking services available on Facebook and Twitter Fan base of about 4.0 million on Facebook Highest among banks in India 26
Digitizing experience (1/2) India s first bank to launch 24x7 fully automated branches 108 touch banking branches across 33 cities in India Over 1,250 self service kiosks at other branches Smart Vault: first-of-its-kind 24x7 locker facility State of the art robotic technology Hi-tech security system & multilevel checks Example of Make in India : ~80% Indian components 27
Digitizing experience (2/2) Contactless payments Debit & credit cards using near field communication Toll and transit solutions Transit Metro solutions Debit & credit cards with NFC metro smart card chip Auto-top up facility on low balance Easy recharge using SMS/internet Solutions for road transport Prepaid card with dual wallet (RFID 1 chip & magnetic chip) Single card for bus ticket payments & retail purchases Electronic toll collection: prepaid RFID 1 tags for vehicles 1. RFID: Radio-frequency identification 28
Digitizing core Front office Over 3 million savings accounts sourced through Tab banking KYC through scanned documents Demo videos for products & services Upsell of mutual funds & insurance Being introduced for loan products Mid office Branch services shifting to customers mobiles Video banking app 24X7 face-to-face banking Insta-banking Pre-processing of transactions EFT cheques App-based cheque issuance & image based processing Back office Digitizing operations Image-based processing of documents OCR 1 to reduce data entry & error rates Automated processing 1. OCR: Optical Character Recognition 29
Significant progress on operating performance Strong retail & rural franchise Leadership in technology Substantial value creation within the ICICI Group 30
ICICI Group Savings Protection Investments Capital Flows Credit Spanning the spectrum of financial services 31
Life insurance Strong growth & improvement in market share Overall market share 1 has improved from 7.2% in FY2014 to 11.3% in FY2015 and 12.4% in H1-2016 21.2% y-o-y growth in new business premiums 1 in H1-2016 compared to 0.4% y-o-y for industry Growth in AUM Sustained & strong profitability AUM at ~` 991 billion at Sep 30, 2015 PAT of ` 8.12 billion in H1-2016 Return on equity of over 30% 1. Based on retail weighted received premium 32
General insurance Market position Strong profitability Private sector market leadership maintained Overall market share at 9.0% 1 in H1-2016 Gross written premium grew by 22.0% y- o-y compared to 11.7% y-o-y growth for industry 12.1% y-o-y increase in PAT to ` 2.58 billion in H1-2016; PAT of ` 5.36 billion in FY2015 Return on equity at ~17% The Board of the Bank approved sale of 9.0% stake in ICICI General to Fairfax (JV partner) at company valuation of ` 172.25 bn 2 1. Based on gross written premium 2. Sale is subject to governmental and regulatory approvals 33
Other businesses Strong franchise across segments Asset management 2nd largest AMC in India 33.3% y-o-y increase in profits in H1-2016 Securities & primary dealership Strong platforms for leveraging favourable markets ICICI Securities: over 3.5 million customers ICICI Securities PD: amongst the leaders in Indian fixed income & money markets Investments in a range of areas including digital product offerings and partnerships 34
Looking ahead 35
Key priorities going forward Continue to expand retail & rural franchise Maintain technology leadership Sustain operating efficiency Targeting 17-18% consolidated RoE Selectively grow corporate portfolio Leverage strong capital position & improve efficiency Focus on profitability of subsidiaries & return on capital 36
Thank you 37