Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (February 2017)
43 slides from Icici Bank's debt investor presentation, February 2017
Slide 1: ICICI Group: Performance & Strategy
ICICI Group: Performance & Strategy February 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 investment rates Key drivers of growth High potential for Rising per capita infrastructure income development 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 1,4321,501 1,501 Rising share of working age population 1,053 1,053 840 • Addition of around 12 million to the 840 workforce every year for next five years • Working age populatio
Slide 5: India: strong long-term fundamentals
India: strong long-term fundamentals Healthy savings & investment rate Per Capita GDP (USD)1 Investment rate2 ~32% 1,432 1,501 1,432 1,501 1,053 ~25% 1,053 1,710 840 840 570 CY2003 CY2016 FY2003 FY2016 Domestic consumption and investments driven by favourable demographics and rising income levels 1.
Slide 6: Recent trends in the Indian economy
Recent trends in the Indian economy Inflation at 3.4% in December 2016; repo rate reduced by 175 basis points since January 2015 Strong external sector trends: BoP remains in surplus Current account deficit in control at 0.6% of GDP in Q2-2017 Stable currency vis-à-vis other emerging markets F
Slide 7: 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 • Temporary impact on growth but long term benefits to accrue: • Increase in formal financial savings • Decrease in interest rates • Increased tax compl
Slide 8: Key challenges
Key challenges • Weak global economic environment • Decrease in commodity prices followed by some recent recovery • Subdued private sector investments • Industrial sector impacted by weak demand • High leverage in certain sectors 8
Slide 9: Banking sector
a ICICI Bank Banking sector
Slide 10: Banking sector framework
Banking sector framework Under penetrated sector • Bank credit / GDP1: ~58% Growth • Retail credit / GDP1: ~10% potential • Mortgage / GDP1: ~5% Funding • High proportion of deposit funding profile • Conservative equity to assets • 20.5% of net demand and time liabilities (NDTL) invested in governme
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 Sustained Sustained private private India’s largest Largest online retail sector sector mutual fund3 broking platform market market Strong fund Strong franchises; leadership1 leadership2 performance market-linked Strong Healthy profitability returns businesses Strong a
Slide 15: ICICI Bank
ICICI Bank Largest private sector bank in India in terms of total assets 1 Tier I capital adequacy of 13.33%2 at December 31, 2016 as per RBI’s guidelines on Basel III norms Diversified loan portfolio Large physical footprint in India: 4,504 branches and 14,146 ATMs Leadership in technology Global p
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 12.0% Domestic loan growth approximately Retail 17.8% 7% higher than system at end-Dec 2016 SME 6.6% Maturity of ~US$ 870 mn of Corporate 4.0% overseas loans against FCNR deposits in Q3-2017 Overseas1 (16.1)% Overall
Slide 19: Growth trends for retail segments
Growth trends for retail segments 3 1 2 1 Retail loan growth at 17.8% Total retail loans at ` 2,243 y-o-y; sequential increase of 2.8% billion at Dec 31, 2016 1. Dealer funding loans were reclassified from ‘Business banking’ to ‘Others’ in June 2016 2. Vehicle loans include auto loans: 10.9%, commer
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 4.0% y-o-y; growth in corporate loans, other than non-performing loans, restructured loans and loans to companies included in drilldown exposures, was higher
Slide 21: Robust increase in deposits
Robust increase in deposits • 26.0% y-o-y growth in period-end CASA deposits; 30.3% y- o-y growth in period-end SA deposits • Accretion of ₹ 185.12 billion to SA deposits and ₹ 81.93 billion to CA deposits in Q3-2017 • Overall deposit growth healthy at 14.2% y-o-y; maturity of FCNR deposits of about
Slide 22: Leadership in technology
a ICICI Bank Leadership in technolog
Slide 23: Digital leadership driven by simplified 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 • More than 165 services Mobile • Highest overall score in 2016 India Mobile banking Banking Functionality Benchmark study conducted by Forrester • Pockets: comprehensive digital wallet • Amongst the top 4 wallet apps in terms of time spent
Slide 25: Adoption of digital offerings
Adoption of digital offerings Channel mix of transactions2 for 9M-2017 1. Includes touch banking, phone banking & debit cards POS transactions 2. Financial and non-financial transactions of savings account customers 25
Slide 26: Credit quality
Credit quality NPA and restructuring trends March 31, March 31, December ` billion 2015 2016 31, 2016 Net NPAs (A) 63.25 132.97 201.55 Net restructured loans (B) 110.17 85.73 64.07 Total (A+B) 173.42 218.70 265.62 Total as a % of net customer assets 3.84% 4.40% 5.21% • Asset quality in corporate sec
Slide 27: Operating performance
Operating performance Granular revenue streams Margins were lower in 9M-2017 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 rat
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) H1-2017 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 ₹ 511.62 billion on Feb 9
Slide 30: Strong capital position
Strong capital position Standalone • Capital ratios significantly higher 16.731% 13.331% than regulatory requirements • Tier-1 capital is composed almost CAR Tier I entirely of core equity capital • Substantial scope to raise Additional Dec 31, 2016 Tier-1 and Tier-2 capital Excess Tier-1 ratio of 5
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 December September December Y-o-Y ` billion 31, 2015 30, 2016 31, 2016 growth Cash & bank balances 377.00 525.64 611.67 62.2% Investments 1,635.43 1,743.49 1,689.87 3.3% - SLR investments 1,147.71 1225.40 1,227.35 6.9% - Equity investment in subsidiaries 110.32 105.82 105.82 (4
Slide 34: Balance sheet: liabilities
Balance sheet: liabilities December September December Y-o-Y ` billion 31, 2015 30, 2016 31, 2016 growth Net worth 895.92 950.16 975.14 8.8% - Equity capital 11.63 11.64 11.64 0.1% - Reserves 884.30 938.52 963.50 9.0% Deposits 4,073.14 4,490.71 4,652.84 14.2% - Savings 1,269.18 1,468.99 1,654.11 30.
Slide 35: Portfolio composition over the years
Portfolio composition over the years % of total March 31, March 31, March 31, March 31, March 31, December advances 2012 2013 2014 2015 2016 31, 20161 Retail 38.0% 37.0% 39.0% 42.4% 46.6% 48.9% Domestic corporate 28.6% 32.5% 30.1% 28.8% 27.5% 28.4% SME 6.0% 5.2% 4.4% 4.4% 4.3% 4.6% International2 27
Slide 36: Sector-wise exposures
Sector-wise exposures Top 10 sectors1: % of total March 31, March 31, March March March Dec 31, exposure of the Bank 20122 20132 31, 2014 31, 2015 31, 2016 2016 Retail finance 16.2% 18.9% 22.4% 24.7% 27.1% 30.0% 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
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, Dec 31, exposure of 2012 2013 2014 2015 2016 2016 the Bank Power 7.3% 6.4% 5.9% 5.5% 5.4% 5.4% Iron/steel 5.2% 5.1% 5.0% 4.8% 4.5% 3.8% Mining 2.0% 1.7% 1.7% 1.5% 1.6% 1.6% Cement 1.2% 1.4% 1.4% 1.5% 1.2% 1.1% Rigs
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 December 31, 2016 % of total ` billion Exposure 1,2,3 exposure Power 83.48 0.9% Mining 55.51 0.6% Iron/steel 44.91 0.5% Cement 56.80 0.6% Rigs 0.45 - Promoter entities3 34.21 0.4% 1. Aggregate fund based limits and non-fund based outstanding 2. Excludes net exposure of
Slide 41: Profit & loss statement (1/2)
Profit & loss statement (1/2) FY Q3- 9M- Q2- Q3- 9M- Q3-o-Q3 ` billion 2016 2016 2016 2017 2017 2017 growth NII 212.24 54.53 158.20 52.53 53.63 157.75 (1.7)% Non-interest income 153.22 42.17 102.14 91.20 39.39 164.88 (6.6)% - Fee income 88.20 22.62 66.07 23.56 24.95 70.07 10.3% - Other income1 24.42
Slide 42: Profit & loss statement (2/2)
Profit & loss statement (2/2) FY Q3- 9M- Q2- Q3- 9M- Q3-o-Q3 ` billion 2016 2016 2016 2017 2017 2017 growth Operating profit 238.63 65.60 167.56 106.36 55.24 213.75 (15.8)% Additional provisions - - - 35.88 - 35.88 - Collective contingency & related reserve 36.00 - - - - - - Other provisions1 80.67
Slide 43: Key ratios
Key ratios Movement in yield, FY Q3- 9M- Q2- Q3- 9M- costs & margins 2016 2016 2016 2017 2017 2017 (Percent)1 Yield on total interest- earning assets 8.67 8.65 8.76 8.14 7.92 8.07 - Yield on advances 9.47 9.35 9.57 8.82 8.76 8.88 Cost of funds 5.85 5.78 5.91 5.63 5.39 5.55 - Cost of deposits 5.88 5.
ICICI Bank — Debt Investor Presentation (February 2017) on 6ix