Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (June 2017)
43 slides from Icici Bank's debt investor presentation, June 2017
Slide 1: ICICI Group: Performance & Strategy
ICICI Group: Performance & Strategy June 2017
Slide 2: Agenda
Agenda Indian economy and banking sector ICICI Group International Key business regulatory developments 2
Slide 3: India: strong long term fundamentals
India: strong long term fundamentals Favourable Healthy savings demographics rate Key drivers of growth Rising per capita Strong potential for income investment 3
Slide 4: India: strong long-term fundamentals
India: strong long-term fundamentals Favourable demographic profile A young population with median age of 25 years 1,432 1,501 1,432 1,0531,053 Rising share of working age population • Addition of around 12 million to the 840840 workforce every year for next five years • Working age population excee
Slide 5: Recent trends in the Indian economy
Recent trends in the Indian economy Inflation at 2.99% in April 2017; aggregate rate cut of 175 bps since January 2015 Strong external sector trends Current account deficit in control at 1.4% of GDP in Q3-2017 Stable currency vis-à-vis other emerging markets Foreign exchange reserves of ~ US$
Slide 6: Significant structural reforms
Significant structural reforms • Withdrawal of legal tender of ₹ 500 and ₹ 1,000 currency notes to curb shadow economy and use of counterfeit notes • Increase in formal financial savings • Decrease in interest rates • Increased tax compliance • Impetus to digital payments • Legislation on the GST1 e
Slide 7: Key challenges
Key challenges • Weak global economic environment • Subdued private sector investments • Industrial sector impacted by weak demand • High leverage in certain sectors 7
Slide 8: Banking sector
a ICICI Bank Banking sector
Slide 9: Banking sector framework
Banking sector framework •Bank credit / GDP1: ~58% Growth potential •Retail credit / GDP1: ~10% •Mortgage / GDP1: ~5% Funding •High proportion of deposit funding profile •Conservative equity to assets •20.0% of net demand and time liabilities (NDTL) invested in government securities Asset profile •4
Slide 10: Banking sector framework
Banking sector framework Conservative regulatory framework Average capital adequacy for the system at Capital adequacy 13.3%1 Implementation of Basel III in FY2014 Capital requirements 1% higher compared to BCBS Higher risk weights on certain secured loan categories e.g. consumer loans Too
Slide 11: Private sector banks gaining market share
Private sector banks gaining market share1,2 March 1995 March 2016 6 .7% 2 3 .8% 6 .7% 6 .7% 6 .3% 6 .7% 8 6 .6% 8 6 .6% 6 9 .9% Public sector banks Private sector banks Foreign banks Public sector banks Private sector banks Foreign banks Public sector banks Private sector banks Fo 1. Based on total
Slide 12: Agenda
Agenda Indian economy and banking sector ICICI Group International Key business regulatory developments 12
Slide 13: ICICI Group
ICICI Group Savings Protection Investments Capital Credit flows Spanning the spectrum of financial services 13
Slide 14: Strong franchise
Strong franchise Private Sustained sector private India’s largest Largest online retail market sector mutual fund2 broking platform leader market Strong fund Strong franchises; Strong leadership1 performance market-linked profitability Healthy returns businesses Strong and growing reta
Slide 15: ICICI Bank
ICICI Bank Largest private sector bank in India in terms of total assets 1 Tier I capital adequacy of 14.36%2 at March 31, 2017 as per RBI’s guidelines on Basel III norms Diversified loan portfolio Large physical footprint in India: 4,850 branches and 13,882 ATMs Leadership in technology Global pres
Slide 16: Global presence
Global presence UK Belgium Canada Germany China USA Hong Kong Bahrain DIFC Bangladesh Qatar Malaysia UAE Singapore Sri Lanka Indonesia South Africa Subsidiaries Overseas Branches Representative Offices 16
Slide 17: Performance highlights
0 ICICI Bank Performance highlights a
Slide 18: Continued healthy retail loan growth
Continued healthy retail loan growth Y-o-Y Loan portfolio growth (%) Total domestic 14.0% Domestic loan growth at end-Mar Retail 18.5% 2017 about 820 bps higher than system SME 17.5% Corporate 5.8% Total loans of ` 4,642.32 billion (6.7% y-o-y growth) Overseas1 (20.1)% Increasing share of retail loa
Slide 19: Growth trends for retail segments
Growth trends for retail segments 3 1 2 Retail loan growth at 18.5% y-o- Total retail loans at ` 2,403 y; sequential increase of 7.2% billion at Mar 31, 2017 1. Dealer funding loans were reclassified from ‘Business banking’ to ‘Others’ in June 2016 2. Vehicle loans include auto loans: 10.6%, commerc
Slide 20: Corporate business: focus on selective lending
Corporate business: focus on selective lending Continued focus on lending to higher rated corporates Growth in domestic corporate portfolio at 5.8% y-o-y; growth in corporate loans, other than non-performing loans, restructured loans and loans to companies included in drilldown exposures, was signif
Slide 21: Robust increase in deposits
Robust increase in deposits • Accretion of ₹ 376.08 billion to SA deposits and ₹ 161.14 billion to CA deposits in FY2017 • Accretion of ₹ 64.27 billion to SA deposits and ₹ 84.33 billion to CA deposits in Q4-2017 • 27.8% y-o-y growth in period end CASA deposits at March 2017 • Proportion of retail d
Slide 22: Leadership in technology
a ICICI Bank Leadership in technolog
Slide 23: Digital leadership driven by simplified, personalised digital experiences
Digital leadership driven by: 1 Simplified, personalised digital experiences 2 On-the-go payments & transactions 3 Improved customer service 4 Efficient operations 5 Digital acquisition & engagement Supported by scalable, secure & reliable systems 23
Slide 24: Unique digital offerings
Unique digital offerings • Best-in-class mobile application Mobile • More than 250 services banking • Highest overall score in 20161 • Pockets: comprehensive digital wallet • Amongst the top 4 wallet apps in terms of time spent on the app2 • Over 6.2 million downloads • Over 2.4 mn2 VPAs on UPI have
Slide 25: Adoption of digital offerings
Adoption of digital offerings 1 Channel mix of transactions2 for FY2017 Over 94% of financial and non-financial transactions of our savings account customers are now done outside the branches 1. Includes touch banking, phone banking & debit cards POS transactions 2. Financial and non-financial trans
Slide 26: Credit quality
Credit quality NPA and restructuring trends March 31, December March 31, ` billion 2016 31, 2016 2017 Net NPAs (A) 132.97 201.55 254.51 Net restructured loans (B) 85.73 64.07 42.65 Total (A+B) 218.70 265.62 297.61 Total as a % of net customer assets 4.40% 5.21% 5.70% • Asset quality in corporate sec
Slide 27: Operating performance
Operating performance Granular revenue streams Margins were lower in FY2017 primarily on account of non-accrual of interest income on NPAs Focus on margins for incremental business Healthy operating efficiency Cost-income (%) Excluding gain on sale of shares of ICICI Life, the cost-income rati
Slide 28: Significant value in subsidiaries (1/2)
Significant value in subsidiaries (1/2) FY2016 The Bank sold 6.0% stake in ICICI Prudential Life Insurance Company Limited (ICICI Life) and 9.0% stake in ICICI Lombard General Insurance Company Limited (ICICI General) in FY2016; aggregate gains of about ₹ 33.74 billion ICICI Life valued at ~₹ 325 bi
Slide 29: Significant value in subsidiaries (2/2)
Significant value in subsidiaries (2/2) FY2017 Completed initial public offer of ICICI Life in Q2-2017 The Bank sold 12.63% stake in the IPO and realised gains of about ₹ 56.82 billion in Q2-2017; shareholding of 54.9% after the sale ICICI Life had market capitalisation of ₹ 606.43 billion on Jun 8,
Slide 30: Strong capital position
Strong capital position Standalone • Capital ratios significantly higher 17.39%1 14.36%1 than regulatory requirements • Tier-1 capital is composed almost CAR Tier I entirely of core equity capital • Substantial scope to raise Additional Mar 31, 2017 Tier-1 and Tier-2 capital Excess Tier-1 ratio of 6
Slide 31: Way forward: 4x4 agenda
Way forward: 4x4 agenda Improvement in portfolio Portfolio Monitoring focus quality mix Concentration risk Resolution of stress cases reduction Digital leadership & strong Enhancing franchise Robust funding profile customer franchise Focus on capital efficiency Continued cost efficiency including va
Slide 32: Thank you
0 ICICI Bank Thank you 3)
Slide 33: Balance sheet: assets
Balance sheet: assets March 31, December March 31, Y-o-Y ` billion 2016 31, 2016 2017 growth Cash & bank balances 598.69 611.67 757.13 26.5% Investments 1,604.12 1,689.87 1,615.07 0.7% - SLR investments 1,104.06 1,227.35 1,085.40 (1.7)% - Equity investment in subsidiaries 107.63 105.82 103.23 (4.1)%
Slide 34: Balance sheet: liabilities
Balance sheet: liabilities March 31, December March 31, Y-o-Y ` billion 2016 31, 2016 2017 growth Net worth1 897.36 975.14 999.51 11.4% - Equity capital 11.63 11.64 11.65 0.2% - Reserves 885.73 963.50 987.86 11.5% Deposits 4,214.26 4,652.84 4,900.39 16.3% - Savings 1,342.30 1,654.11 1,718.38 28.0% -
Slide 35: Portfolio composition over the years
Portfolio composition over the years % of total March March March March March March advances 31, 2012 31, 2013 31, 2014 31, 2015 31, 2016 31, 2017 Retail 38.0% 37.0% 39.0% 42.4% 46.6% 51.8% Domestic corporate 28.6% 32.5% 30.1% 28.8% 27.5% 27.3% SME 6.0% 5.2% 4.4% 4.4% 4.3% 4.8% International1 27.4%
Slide 36: Sector-wise exposures
Sector-wise exposures Top 10 sectors1: % of total March 31, March 31, March March March March exposure of the Bank 20122 20132 31, 2014 31, 2015 31, 2016 31, 2017 Retail finance 16.2% 18.9% 22.4% 24.7% 27.1% 31.9% Electronics & engineering 8.1% 8.3% 8.2% 7.6% 7.3% 6.9% Banks 10.1% 8.8% 8.6% 7.8% 8.0
Slide 37: Key sectors impacted by operating environment uncertainties
In April 2016, the Bank had identified power, iron & steel, mining, cement and rigs sectors as the key sectors impacted by the uncertainties and challenges in the operating environment 37
Slide 38: Exposure to key sectors
Exposure to key sectors % of total March 31, March 31, March 31, March 31, March 31, March 31, exposure of 2012 2013 2014 2015 2016 2017 the Bank Power 7.3% 6.4% 5.9% 5.5% 5.4% 5.1% Iron/steel 5.2% 5.1% 5.0% 4.8% 4.5% 3.6% Mining 2.0% 1.7% 1.7% 1.5% 1.6% 1.8% Cement 1.2% 1.4% 1.4% 1.5% 1.2% 1.1% Rig
Slide 39: Further drilldown: approach
Further drilldown: approach All internally ‘below investment grade’ rated companies 1 in key sectors across domestic corporate, SME and international branches portfolios 2 Promoter entities internally ‘below investment grade’ where the underlying is partly linked to the key sectors Fund-based limits
Slide 40: Further drilldown: exposure
Further drilldown: exposure At March 31, 2017 % of total ` billion Exposure 1,2,3,5 exposure Power 62.31 0.7% Mining 52.33 0.6% Iron/steel 39.73 0.4% Cement 2.94 0.0% Rigs 0.43 0.0% Promoter entities4 32.66 0.3% 1. Aggregate fund based limits and non-fund based outstanding 2. Excludes net exposure o
Slide 41: Profit & loss statement (1/2)
Profit & loss statement (1/2) FY Q4- Q3- Q4- FY Q4-o-Q4 ` billion 2016 2016 2017 2017 2017 growth NII 212.24 54.05 53.63 59.62 217.37 10.3% Non-interest income (excl. gains on stake sale in subsidiaries) 119.48 29.78 39.39 30.17 138.23 1.3% - Fee income 88.20 22.12 24.95 24.46 94.52 10.5% - Other in
Slide 42: Profit & loss statement (2/2)
Profit & loss statement (2/2) FY Q4- Q3- Q4- FY Q4-o-Q4 ` billion 2016 2016 2017 2017 2017 growth Operating profit 204.89 49.77 55.24 51.12 208.05 2.7% Gains on stake sale in subsidiaries 33.74 21.31 - - 56.82 - Operating profit (incl. gains on stake sale in subsidiaries) 238.63 71.08 55.24 51.12 26
Slide 43: Key ratios
Key ratios FY Q4- Q3- Q4- FY Percent 2016 2016 2017 2017 2017 Return on average networth1,2 11.3 3.2 10.1 8.3 10.32 Return on average assets1 1.49 0.41 1.30 1.10 1.35 Weighted average EPS1 16.8 4.9 16.7 14.1 16.8 Book value (`) 154 154 168 172 1722 Fee to income 24.1 21.0 26.8 27.2 22.9 Cost to inco