2013 11 CLSA Conference Presentation
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Transcript of 2013 11 CLSA Conference Presentation
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ICICI Group: Strategy &
Performance
CLSA Conference
November 19, 2013
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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 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
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Agenda
Objectives and performance
Our approach
Going forward
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Healthy capital
position
Robust funding
profile
Building granular &
stable income
streams
Efficiency of
operations
Sustainable improvement in shareholder returns Our
objective
Profitability
improvement
Balance sheet
strength
Navigating volatile operating environment and markets
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Including profits for H1-2014, Basel III tier
1 ratio at over 12% at September 30,
2013
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Strong capital position Capital
Among the best capitalised large Indian banks
Sep 30, 2013
Tie
r I
CA
R
16.5% 11.3%
Capital
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Building a low cost and granular base
Retail deposits CASA deposits
Funding
Increasing proportion of CASA and retail deposits
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Healthy mix and calibrated growth
Retail segment expected to be key growth driver
going forward
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Lending
Mar 2011 Mar 2012 Mar 2013 Sep 2013
2% 1% 1% 2%
37% 37%
36% 34%
28%
29%
33%
33%25%
27%
25%
26%
7%
6%
5%
5%
Unsecured retail Secured retail Domestic corporate Overseas branches SME
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Bond/loan repayments covered
by asset maturities; no
refinancing risk
FY2011 FY2012 FY2013 Q1-2014 Q2-2014
0.88%
1.23%
1.34%
1.60%
1.80%
Improvement in funding base
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Sustained improvement across businesses Granular
income
Domestic NIM
International NIM
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Driven by profit and
margin focus across
domestic and international
businesses
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Substantial increase in overall NIMs Granular
income
~65 bps improvement in overall NIM since FY2011
Overall NIM
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Granular
income
Steady fee streams Granular
income
Forex & derivative
• Offsetting decline in corporate lending linked fees
• Improvement in overall fee growth to 17% in Q2-
2014
Commercial banking
Retail fees
Focus on building granular
and stable revenues
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• Diversified financial services
franchise yielding returns
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Regular and increasing dividend income Granular
income
FY2010 FY2013 FY2012
Contributing to increase in non-interest income
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• Sustaining best in class
cost-income ratios
• Despite significant scale
up in infrastructure
FY2011 FY2012 FY2013 H1-2014
42%
43%
40%
38%
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Driving efficiency on larger network and business Operating
efficiency
Cost-income %
Focus on cost efficiency to continue
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Near doubling of
consolidated RoE since
FY2009
Over 70 bps improvement
over FY2009
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Consistent delivery against stated objectives Return
profile
Standalone RoA
<1.0%
FY2009 1.66%
FY2013
1.72%
H1-2014
Consolidated RoE
<8.0%
FY2009
14.7%
FY2013 15.1%
H1-2014
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Agenda
Objectives and performance
Our approach
Going forward
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• Moderation in credit and deposit growth
• Increase in NPLs and restructured loans:
stress in SME and mid-corporate segments
• Continued moderation in GDP growth to <5%
• Sustained inflationary pressures and high
interest rates
• Volatility in exchange rate: policy measures
impacting markets
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Impact of weak economy on banking sector Operating
environment
Economic
conditions
Banking
sector
However, retail trends remain healthy
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Return
on
equity
Across business lines
Balanced view given operating environment Our
approach
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Continued scale up
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Growth
in fee
income
The Bank continues to scale up its retail business
and invest in strengthening the franchise and
distribution infrastructure
Sustained
growth in
granular
deposits
Pickup in
portfolio
growth
Healthy
asset
quality
trends
Retail
business
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Focus on strengthening
Retail
deposit
franchise
Sep 2012 Sep 2013
Savings deposits
Retail deposits
Sep 2012 Sep 2013
Driven by continued investments in physical and
technological infrastructure
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Significant scale up in physical presence
•Network of 3,507 at Sep 2013;
largest in private sector banks
• Supplemented by >11,000
ATMs
•Largest rural branch network
among private sector banks
• ~75% of branch additions
since March 2012 in rural and
semi-urban areas
Branch network
Investment
in
infrastructure
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Mar-10 Mar-11 Mar-12 Mar-13 Sep-13
1,707
2,529
2,752
3,100
3,507
Metro Urban Semi Urban Rural
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Efficiency & differentiated customer proposition
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Leveraging social
networking
platforms
Advanced mobile
banking platform
24x7 electronic
branch
“MySavings
Rewards” program
Enhanced ATM
functionality
“Money2India
Mobile App” for
NRIs
Technology
Supporting
customer
service & cost
efficiency
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Secured lending driving 20% portfolio growth Retail
lending
Sep 2012 Sep 2013
Home loans
Auto loans
Sep 2012 Sep 2013
• Along with continued focus on risks:
• Calibrated approach to CV lending
• Unsecured portfolio size continues to remain low
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Healthy growth in retail fees
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Healthy trends driving overall fee growth Retail
fees
Current share of fees
Driven by liability, third party distribution and asset
linked fees
~55%
~45%
Retail Non-retail
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Domestic
corporate (33%
of total loans)
Description of
the contents
SME (<5% of
total loans)
Cautious approach
Domestic
corporate &
SME
• Impact of economic
slowdown on
growth
• Weak corporate
profitability
• Continued
challenges in
current environment
Trends
• Moderation in
growth with focus
on working capital
• Continued focus on
credit selection
• Close monitoring
Approach
• Maintain low share
of SME in the near
term
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•Growth calibrated to global funding
markets; continued focus on margins
•Wholesale borrowing repayments
covered by asset maturities
Branches
Lending primarily
to Indian
corporates
•Consolidation of balance sheet
•Continued focus on capital
rationalisation: USD 100 mn from UK
& CAD 75 mn from Canada received
Subsidiaries
•Regulatory
expectations
impacting
business model
•High capital levels
Focus on profitability and returns International
business
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•Life insurance: sustained profitability
resulting in healthy returns on
invested capital and dividend payouts
•General insurance: significant
improvement in profitability
Insurance
•Focus on maintaining market position
•Business performance linked to
market conditions; however,
franchises remain profitable
Asset
management &
broking
Healthy trends Subsidiaries
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Agenda
Objectives and performance
Our approach
Going forward
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Across business lines
Return
on
equity
Focus on balanced approach to continue Way
ahead
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• Higher increase in full year margins & fee
growth
• Continue to strengthen funding profile
• Improvement in cost-income ratio
• Strong profitability in insurance businesses
• Improving returns in banking subsidiaries
• Diversified portfolio
• Selective underwriting & close monitoring
• Strong operating performance to absorb
any higher credit losses
• Domestic loan growth targeted at 2%-3%
higher than system, driven by retail
• Continued focus on secured retail loan
products; leveraging increased presence
to improve market share
• Cautious approach in corporate & SME
• Focus on growth in insurance businesses
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Profitability
Growth
Risk
management
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Thank you