ICICI Group: Strategy & Performance spends Strong fundamentals driven by domestic demand ... zAreas...
Transcript of ICICI Group: Strategy & Performance spends Strong fundamentals driven by domestic demand ... zAreas...
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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 www.icicibank.com.
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Key economic indicators
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
Q1-2010 GDP growth at 6.1% compared to 5.8% in Q4-2009
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Key banking sector indicatorsComfortable systemic liquidity: About Rs. 1 trillion lent to RBI on a daily basis
10 year G–sec yields remain volatileBorrowing 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%
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Strategy for FY2010
Position balance sheet for next phase of growth
Cost• Keep stringent control on
operating expenses
Credit• Focus on selected credit
opportunities and reduce unsecured retail portfolio
CASA• Increase the proportion of low
cost CASA deposits• Reduce the proportion of
wholesale deposits
Capital• Maintain high capital adequacy
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Progress in execution of strategy
Robust growth in CASA deposits
Reduction in operating expenses
Reduction in absolute level of net NPAs
Deceleration in retail NPA growth
Substantial progress in
achievement of near term
targets
Well capitalized for a period of sustained growth
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-50
100150200250300350400450500550
Mar-03
Mar-04
Mar-05
Mar-06
Mar-07
Mar-08
Mar-09
Sep-09
Focus on CASA deposits
1,419
28.7%
Mar 2009
1,5201,262755614562469446Branches
36.9%26.1%21.8%22.7%24.3%23.0%15.5%CASA ratio
Sep 2009
Mar 2008
Mar 2007
Mar 2006
Mar 2005
Mar 2004
Mar 2003
CAGR 48%
Implementation underway for 580 new branches; target to open by March 2010
Sav
ings
dep
osi
ts (R
s. b
n)
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High capitalisation levelsC
apita
l ad
equa
cy r
atio
ICICI Bank
Other top 9 Indian banks
As per the latest available financials(September 30, 2009)
11.9%
14.1% 13.8%13.5%
14.5%14.7%14.7%
16.5%17.7%
15.7%
0%
5%
10%
15%
20%
Tier-1 Tier-2
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Stringent cost control
68.35
FY2009
28.72
H1-2010
79.7265.0247.2533.7125.98Operating expenses1
FY2008FY2007FY2006FY2005FY2004Rs. bn
Co
st/a
vera
ge a
sset
s
1. Including DMA
2.2%
1.8%
1.6%
2.3%
2.5%
2.4%
2.3%
1.0%1.2%
1.4%
1.6%
1.8%2.0%
2.2%
2.4%
2.6%
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 H1-2010
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Domestic credit strategyICICI 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
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International business strategyStrong 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
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Non-banking subsidiaries strategyICICI 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
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Overview: Q2-2010
Standalone profit after tax of Rs. 10.40 billion in Q2-2010
18% sequential increase in standalone profit after tax from Rs. 8.78 billion in Q1-2010Profit after tax in Q2-2009 was Rs. 10.14 billion
Consolidated profit after tax1 of Rs. 11.45 billion in Q2-2010
11% sequential increase in consolidated profit after tax1 from Rs. 10.35 billion in Q1-201076% increase over consolidated profit after tax1 of Rs. 6.51 billion in Q2-2009
1. Unaudited
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Overview: Q2-2010
Net interest income for Q2-2010 at Rs. 20.36 billion compared to Rs. 19.85 billion for Q1-2010
Net interest margin increased from 2.4% in Q1-2010 to 2.5% in Q2-2010Net interest income in Q2-2009 was Rs. 21.48 billion
Fee income of Rs. 13.87 billion in Q2-2010 compared to Rs. 13.19 billion in Q1-2010
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 2009
Sequential improvement in operating trends
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Overview: Q2-2010
Continued reduction in operating expenses8% sequential decrease in operating & DMA expensesCost/average asset ratio for Q2-2010 at 1.5% compared to 1.6% for Q1-2010 and 1.7% for Q2-2009
19% sequential decline in total provisions to Rs. 10.71 billion in Q2-2010 from Rs. 13.24 billion in Q1-2010
Sequential improvement in operating trends
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Balance sheet highlightsCASA 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. 48.59 bn in savings deposits and Rs. 40.94 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, 2009
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Performance of subsidiariesICICI 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
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Profit & loss statement(Rs. in billion)
148.8%1.551.020.531.690.413.35- Dividend income
(65.5)%0.420.380.041.591.133.01- Other income
24.35
0.46
0.21
13.58
38.60
2.97
13.87
18.24
20.36
Q2-2010
22.85
0.52
1.45
15.43
40.25
(1.53)
18.76
18.77
21.48
Q2-2009
39.99
1.04
3.73
31.77
76.53
(7.47)
38.34
34.15
42.38
H1-2009
25.29
0.52
0.27
14.67
40.75
7.14
13.19
20.90
19.85
Q1-2010
49.64
0.98
0.48
28.25
79.35
10.11
27.06
39.14
40.21
H1-2010
-4.43- Treasury income
(4.1)%159.70Total income
6.6%
(13.2)%
(85.6)%
(12.0)%
(26.1)%
(2.8)%
(5.2)%
Q2-o-Q2growth
5.29DMA expenses
89.25
2.10
63.06
65.24
76.03
83.67
FY2009
Operating profit
Lease depreciation
Operating expenses
- Fee income
Non-interest income
NII
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Profit & loss statement(Rs. in billion)
10.14
3.47
13.61
9.24
22.85
Q2-2009
17.42
5.41
22.83
17.16
39.99
H1-2009
8.78
3.27
12.05
13.24
25.29
Q1-2010
10.40
3.24
13.64
10.71
24.35
Q2-2010
19.18
6.51
25.69
23.95
49.64
H1-2010
6.6%89.25Operating profit
16.0%38.08Provisions
37.58
13.59
51.17
FY2009
2.6%
(6.7)%
0.2%
Q2-o-Q2growth
Profit before tax
Profit after tax
Tax
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Balance sheet: Assets(Rs. in billion)
1. Investment in security receipts of asset reconstruction companies at September 30, 2009 was Rs. 37.26 bn.
Credit derivative exposure (including off balance sheet exposure) of Rs. 54.08 bn at September 30, 2009 (underlying comprises Indian corporate credits).
Including impact of exchange rate movement
23.4%778.34704.86633.87630.73- SLR investments
21.1%121.00120.97120.9799.93- Equity investment in
subsidiaries
3,849.71
302.25
2,219.85
971.48
356.13
Sep 30, 2008
3,674.19
245.42
1,981.02
1,142.47
305.28
Jun 30, 2009
23.5%1,199.651,030.58Investments
3,663.74
262.82
1,908.60
292.67
Sep 30, 2009
(4.8)%
(13.0)%
(14.0)%
(17.8)%
Y-o-Y growth
3,793.01
279.66
2,183.11
299.66
Mar 31, 2009
Total assets
Fixed & other assets
Advances
Cash & bank balances
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Credit cards6.8%
Other secured
2%
STPL0.2%
Personal loans
7%
Home57%
Vehicle loans26%
Composition of loan book: September 30, 2009
1. STPL: Small ticket personal loans2. 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. 27.41 bn
Total loan book: Rs. 1,909 bn Total retail loan book: Rs. 864 bn
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SME4%
Rural6%
Retail business
group45%
Overseas branches
27%
Domestic corporate
18%
3
2
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Equity investment in subsidiaries(Rs. in billion)
99.93
0.14
0.05
0.61
0.87
1.58
3.00
10.96
10.47
23.24
14.59
34.42
Sep 30, 2008
120.97
0.14
0.05
0.61
0.87
1.58
3.00
10.96
11.12
23.25
33.50
35.90
Mar 31, 2009
11.12ICICI Home Finance
23.25ICICI Bank UK
0.61ICICI AMC
33.50ICICI Bank Canada
3.00ICICI Bank Eurasia LLC
10.96ICICI Lombard General Insurance
1.58ICICI Securities Primary Dealership
0.14Others
121.00
0.05
0.87
35.93
Sep 30, 2009
Total
ICICI Venture Funds Mgmt Co.
ICICI Securities Limited
ICICI Prudential Life Insurance
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Balance sheet: Liabilities(Rs. in billion)
Credit/deposit ratio of 75% on the domestic balance sheet at September 30, 2009
Figures include impact of exchange rate movement
5.2%997.73908.81928.05948.49Borrowings
14.2%493.18444.59410.36431.74- Savings
0.9%236.12195.18216.32237.40- Current
3,849.71
177.25
2,234.02
3.50
475.32
11.13
486.45
Sep 30, 2008
3,663.74
171.61
1,978.32
3.50
501.44
11.14
512.58
Sep 30, 2009
(4.8)%
(3.2)%
(11.4)%
-
5.5%
0.1%
5.4%
Y-o-Y growth
3,793.01
182.65
2,183.48
3.50
484.20
11.13
495.33
Mar 31, 2009
3,674.19
157.59
2,102.36
3.50
490.80
11.13
501.93
Jun 30, 2009
Total liabilities
Other liabilities
Deposits
Preference capital
- Reserves
- Equity capital
Net worth
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Composition of borrowings
908.81
505.71
16.21
521.92
137.54
249.35
386.89
Jun 30, 2009
504.10 578.53 Overseas
234.42 159.14 - Other borrowings1
259.21 210.82 - Capital instruments
997.73
487.82
16.28
493.63
Sep 30, 2009
948.49
562.65
15.88
369.96
Sep 30, 2008
Total borrowings
- Other borrowings
- Capital instruments
Domestic
(Rs. in billion)
Capital instruments contribute 53% of domestic borrowings
Figures include impact of exchange rate movement1. Includes short term borrowings
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Capital adequacy (Basel II)
718.32
2,556.08
3,274.40
140.77
428.42
569.19
Jun 30, 2009
4.3%
13.1%
17.4%
3,240.323,564.63Total RWA
2,501.212,758.15- On balance sheet
739.11806.48- Off balance sheet
141.67
431.42
573.09
131.59
421.97
553.55
3.7%
11.8%
15.5%
Mar 31, 2009
4.4%
13.3%
17.7%
Sep 30, 2009
- Tier II
- Tier I
Total Capital
Rs. billion except %
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Key ratios(Percent)
1. Based on quarterly average net worth2. Annualised for all interim periods
1.51.61.71.8Cost/average assets (incl. DMA)2
36.9%30.4%30.0%28.7%CASA ratio
42.5
47.2
2.4
437
36.1
8.4
Q2-2009
37.1
32.8
2.4
451
31.6
7.0
Q1-2010
36.441.4Fee/income
43.4
2.4
445
33.8
7.7
FY2009
460Book value (Rs.)
36.1
2.5
37.1
8.1
Q2-2010
Cost/income (incl. DMA)
Net interest margin2
Weighted avg EPS (Rs.)2
Return on average net worth1, 2
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Asset quality and provisioning(Rs. in billion)
Gross retail NPLs at Rs. 64.22 bn and net retail NPLs at Rs. 30.12 bn at September 30, 200958% of net retail NPLs are from unsecured productsNet restructured loans of Rs. 48.57 bn at September 30, 2009
1. Gross NPAs and cumulative provisions include technical write-offs of Rs. 1.26 bn at September 30, 2009
14.36Outstanding general provision on standard assets
2.19%2.19%1.96%Net NPA ratio
46.67
50.28
96.95
Jun 30, 2009
46.19
53.10
99.29
Mar 31, 2009
45.58
49.13
94.71
Sep 30, 2009
Net NPAs
Less: Cumulative provisions
Gross NPAs
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ICICI Bank UK asset profile1
1. Includes cash & advances to banks and certificates of deposit
2. Includes US$ 165 mn of India-linked credit derivatives3. Includes securities reclassified to loans & advances in
FY20094. Does not include US$ 157.4 mn of ABS reclassified as
loans & receivable in FY2009
Total assets:USD 8.0 billion
2
4
Net profit of USD 12.6 million in Q2-2010
Capital adequacy ratio at 16.3%
Net MTM write-back of USD 61.0 million (post-tax) in reserves in Q2-2010
Loans & advances
50%
Asset backed securi ties
2%
Other assets & investments
4%
Ind ia l inked investments
5%
Cash & l iquid securi ties
12%
Bonds/notes o f financ ial insti tutions
27% `3
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ICICI Bank UK liability profile
Total liabilities:USD 8.0 billion
Proportion of retail term deposits in total deposits increased from 35% at September 30, 2008 to 65% at September 30, 2009
Long term Debt14%
Net worth7%
Term deposi ts43%
Other l iab i l i ties
5%
Syndicated loans &
interbank borrowings
9%
Demand deposi ts
22%`
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ICICI Bank Canada asset profile
1. Includes cash & advances to banks, government securities and banker’s acceptances/depository notes
2. Includes CAD 139 mn of India-linked credit derivatives
Total assets:CAD 5.8 billion
1
2
Net profit of CAD 13.8 million in Q2-2010
Capital adequacy ratio at 23.2%
Loans to customers
61%
Ind ia l inked investments
3%
Asset backed securi ties
2%
Other assets & investments
8%
Federal ly insured
mortg age15%
Cash & l iquid securi ties
11%
`
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ICICI Bank Canada liability profile
Total liabilities:CAD 5.8 billion
ICICI Bank Canada balance sheet funded largely out of retail term deposits
Term deposi ts69%
Other l iab i l i ties
2%
Demand deposi ts
11%
Net worth17%
Borrowings1%
`
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ICICI Bank Eurasia
• Total borrowings of USD 370 million at September 30, 2009
• Capital adequacy of 21.4% at September 30, 2009
• Financial breakeven in H1-2010
1. Includes cash, balances with central bank, nostrobalances, govt bonds & placements with banks
Total assets:USD 453 million
1
Corporate bonds
7%
Retail loans16%
Other assets1%
Cash & liquid securit ies
37%
Loans to corporates &
banks39%
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ICICI Life
14.8%
301.07
(3.08)
18.7%
2.81
36.56
18.73
15.06
Q2-2009
10.8%
500.93
(0.69)
19.2%
2.33
36.34
23.97
12.12
Q2-2010
Expense ratio
Assets Under Management
NBP margin
New Business Profit (NBP)
Renewal premium
APE
Statutory Loss
Total premium
(Rs. in billion)
Continued market leadership in private sector1
1. During the half year ended September 30, 2009 on new business retail weighted received premium basis.
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ICICI General
Continued market leadership in private sector2
1. Excluding remittances from third party motor pool
2. During the half year ended September 30, 2009
0.590.04PBT
0.510.01PAT
8.018.48Gross premium1
Q2-2010Q2-2009
(Rs. in billion)
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Other subsidiaries(Rs. billion)
0.280.18ICICI Home Finance Company1
0.16
0.10
0.09
0.10
Q2-2009
0.48ICICI Prudential Asset Management Company
0.38ICICI Securities Ltd.
0.14
-
Q2-2010Profit after tax
ICICI Venture
ICICI Securities PD
Consolidated profit after tax increased by 76% from Rs. 6.51 billion in Q2-2009 to Rs. 11.45 billion in Q2-2010
1. Loan book of ICICI HFC was Rs. 120.04 bn at September 30, 2009 (June 30, 2009: Rs. 109.34 bn; September 30, 2008: Rs. 115.90 bn)