Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (September 2017)
48 slides from Icici Bank's debt investor presentation, September 2017
Slide 1: ICICI Group: Performance & Strategy
ICICI Group: Performance & Strategy September 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 3.4% in August 2017; aggregate rate cut of 200 bps since January 2015 Strong external sector trends Current account deficit at 0.7% of GDP in FY2017 Stable currency vis-à-vis other emerging markets Foreign exchange reserves of ~ US$ 400 billion;
Slide 6: Significant structural reforms
Significant structural reforms • Domestic consumption and investments driven by favourable demographics and rising income levels • Per capita GDP1 crossed USD 1,700 • Government policies laying the foundation for sustainable growth • Government spending supporting growth while maintaining fiscal pru
Slide 7: Key challenges
Key challenges • 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 •Retail credit / GDP1: ~10% potential •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 Average capital adequacy for the system at Capital adequacy 13.6%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 Focus on asset Tools such as flexible
Slide 11: Private sector banks gaining market share
Private sector banks gaining market share1,2 March 1995 March 2017 6 .7% 6 .7% 6 .7% 6 .7% 8 6 .6% 8 6 .6% Public sector banks Private sector banks Foreign banks Public sector banks Private sector banks Foreign banks 1. Based on total assets 2.Source: Reserve Bank of India 11
Slide 12: Trends impacting the financial sector
Trends impacting the financial sector A growing Growing Under- Rising savings adoption of penetration of formalisation pool digital trends financial services of economy Healthy growth opportunities for the financial sector 12
Slide 13: Agenda
Agenda Indian economy and banking sector ICICI Group International Key business regulatory developments 13
Slide 14: ICICI Group
ICICI Group Savings Protection Investments Capital Credit flows Spanning the spectrum of financial services 14
Slide 15: Leadership across financial sector
Leadership across financial sector Life Business Market capitalisation Key highlightsof ~ ₹ 594 billion1 Insurance Private sector market leader Private sector market leader General First non-life insurer to seek listing Insurance through an IPO2 Sustained position of largest mutual AMC fun
Slide 16: ICICI Bank
ICICI Bank Largest private sector bank in India in terms of total assets 1 Tier I capital adequacy of 14.80%2 at June 30, 2017 as per RBI’s guidelines on Basel III norms Diversified loan portfolio Largest branch and ATM network among private sector banks Leadership in technology Global presence in 1
Slide 17: 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 17
Slide 18: Performance highlights
a ICICI Bank Performance highlights __ ae
Slide 19: Continued healthy retail loan growth
Continued healthy retail loan growth Loan portfolio Y-o-Y growth (%) Total domestic 10.9% Retail 18.6% SME 18.4% Corporate (2.8)% Overseas1 (25.0)% Total loans of ₹ 4,640.75 billion at June 30, 2017 1. Overseas portfolio decreased by 22.0% y-o-y in US$ terms Balance sheet (assets): slide 37 19
Slide 20: Growth trends for retail segments
Growth trends for retail segments 2 1 Retail loan growth at 18.6% Total retail loans at ` 2,475 y-o-y billion at Jun 30, 2017 1. Vehicle loans include auto loans: 10.6%, commercial business: 6.0% and two-wheeler loans: 0.1% 2. Others include dealer funding: 1.0% and loan against securities: 0.7% 20
Slide 21: Corporate business: focus on selective lending
Corporate business: focus on selective lending Continued focus on lending to higher rated corporates Domestic corporate portfolio declined by 2.8% y-o-y; excluding non-performing loans, restructured loans and loans to companies included in drilldown exposures, there was a growth in the domestic corp
Slide 22: Robust increase in deposits
Robust increase in deposits Total deposit growth healthy at 14.7% y-o-y CASA deposits increased by 24.4% y-o-y at Jun 30, 2017; period-end CASA ratio at 49.0% 25.4% y-o-y growth in average CASA deposits in Q1-2018 Balance sheet (liabilities): slide 38 22
Slide 23: Leadership in technology
a ICICI Bank Leadership in technolog
Slide 24: Leadership in technology
Leadership in technology Highest rated1 500 85% Paperless Internet and ‘ICICI Digital capability mobile banking Villages’ in for branch in India FY2018 transactions Over a million Over 41.5 million automated ~85% transactions daily New savings Debit & accounts opened credit cards through tab banking
Slide 25: Leadership in digital platforms
Leadership in digital platforms Ranked amongst top 20 banks globally in mobile banking1 Over 250 services across internet and mobile banking • Digital wallet • Over 6.5 million downloads; significant interest from non-ICICI Bank users Launched ‘Mera iMobile’: India’s first mobile banking application
Slide 26: Adoption of digital offerings
Adoption of digital offerings Over 95% of financial and non-financial transactions of our savings account customers are now done outside the1 branches Share of digital channels like internet & mobile banking, POS and call centre in total savings account transactions1 increased to 81% in Q1-2018 1. F
Slide 27: Leadership in digital payments
Leadership in digital payments • Over 3.3 mn VPAs1 have been created using ‘iMobile’ and ‘Pockets’ • Enabled both online and offline acceptance for merchants • Single mobile-based application for merchants to collect payments using several options • Over 130,000 merchants added Touch & Pay: Mobile b
Slide 28: Credit quality
Credit quality NPA and restructuring trends June 30, March 31, June 30, ` billion 2016 2017 2017 Net NPAs (A) 153.08 254.51 253.06 Net restructured loans (B) 72.41 42.65 23.70 Total (A+B) 225.49 297.16 276.76 Total as a % of net customer assets 4.44% 5.70% 5.31% • Asset quality in corporate sector i
Slide 29: Proceedings under IBC
Proceedings under IBC1 • RBI advised banks to initiate insolvency resolution process in respect of 12 accounts under the provisions of IBC, 2016 and also required banks to make higher provisions for these accounts during the year • The Bank, at June 30, 2017, had loans outstanding to nine borrowers
Slide 30: Improving core income & expense trends
Improving core income & expense trends • 8.4% y-o-y growth in net interest income • 10.3% y-o-y growth in fee income • Growth in operating expenses reduced to 12.5% y-o-y, compared to a growth of 16.3% in FY2017 • The standalone PAT at ₹ 20.49 billion in Q1-2018 compared to ₹ 20.25 billion in Q4-201
Slide 31: Significant value in subsidiaries (1/3)
Significant value in subsidiaries (1/3) FY2016 The Bank sold 4.0% shareholding in ICICI Life to Hasham Traders (Premji Investments) and 2.0% to Temasek The Bank sold 9.0% shareholding in ICICI General to Fairfax Financial Holdings 31
Slide 32: Significant value in subsidiaries (2/3)
Significant value in subsidiaries (2/3) FY2017 Completed initial public offer of ICICI Life in Q2-2017 The Bank sold 12.63% stake in an IPO at ₹ 334 per share; shareholding of 54.9% after the sale ICICI Life had market capitalisation of ₹ 593.70 billion on Sep 19, 2017; among eleven largest financia
Slide 33: Significant value in subsidiaries (3/3)
Significant value in subsidiaries (3/3) FY2018 IPO of ICICI General underway First non-life insurance IPO in India; issue size of ~` 57 bn Company valuation at ~` 300 bn ICICI Bank continues to own ~55.9% shareholding in the company after the IPO 33
Slide 34: Strong capital position
Strong capital position Standalone • Capital ratios significantly higher 17.89%1 14.80%1 than regulatory requirements • Tier-1 capital is composed almost CAR Tier I entirely of core equity capital • Substantial scope to raise Additional Jun 30, 2017 Tier-1 and Tier-2 capital Excess Tier-1 ratio of 6
Slide 35: 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 36: Thank you
— ICICI Bank Thank you eee
Slide 37: Balance sheet: assets
Balance sheet: assets June 30, March 31, June 30, Y-o-Y ` billion 2016 2017 2017 growth Cash & bank balances 387.31 757.13 425.10 9.8% Investments 1,683.22 1,615.07 1,854.08 10.2% - SLR investments 1,184.59 1,085.40 1,327.39 12.1% - Equity investment in subsidiaries 107.63 103.23 103.23 (4.1)% Advan
Slide 38: Balance sheet: liabilities
Balance sheet: liabilities June 30, March 31, June 30, Y-o-Y ` billion 2016 2017 2017 growth Net worth 919.50 999.51 1,006.241 9.4% - Equity capital 11.64 11.65 12.83 10.2% - Reserves 907.86 987.86 993.42 9.4% Deposits 4,240.86 4,900.39 4,862.54 14.7% - Savings 1,382.15 1,718.38 1,699.50 23.0% - Cur
Slide 39: Asset quality trends (1/2)
Asset quality trends (1/2) Movement of NPA ` billion FY2017 Q3-2017 Q4-2017 Q1-2018 Opening gross NPA 267.21 325.48 380.85 425.52 Add: gross additions 335.44 70.37 112.89 49.76 - of which: slippages from restructured assets 45.20 2.39 18.03 14.76 - of which: Slippages from exposure to ‘below investm
Slide 40: Asset quality trends (2/2)
Asset quality trends (2/2) NPA and restructuring trends June 30, March 31, June 30, ` billion 2016 2017 2017 Gross NPAs 275.63 425.52 431.48 Less: cumulative provisions 122.55 171.01 178.42 Net NPAs 153.08 254.51 253.06 Net NPA ratio 3.01% 4.89% 4.86% June 30, March 31, June 30, Retail NPAs (` billi
Slide 41: Sector-wise exposures
Sector-wise exposures Top 10 sectors1: % of total March 31, March 31, March March March June 30, exposure of the Bank 2013 2014 31, 2015 31, 2016 31, 2017 2017 Retail finance 18.9% 22.4% 24.7% 27.1% 31.9% 32.5% Electronics & engineering 8.3% 8.2% 7.6% 7.3% 6.9% 7.0% Services – finance 6.0% 4.9% 4.2%
Slide 42: Aggregate exposure to key sectors
Aggregate exposure to key sectors % of total March March March March March March June 30, exposure of 31, 2012 31, 2013 31, 2014 31, 2015 31, 2016 31, 2017 2017 the Bank Power 7.3% 6.4% 5.9% 5.5% 5.4% 5.1% 4.8% Iron/steel 5.2% 5.1% 5.0% 4.8% 4.5% 3.6% 3.6% Mining 2.0% 1.7% 1.7% 1.5% 1.6% 1.8% 1.8% C
Slide 43: 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 Promoter entities internally ‘below investment grade’ 2 where the underlying is partly linked to the key sectors Fund-based limits
Slide 44: Further drilldown: sector-wise details
Further drilldown: sector-wise details At March 31, 2017 At June 30, 2017 % of total % of total ` billion Exposure 1,2,3,5 Exposure 1,2,3,5 exposure exposure Power 62.31 0.7% 70.76 0.8% Mining 52.33 0.6% 55.90 0.6% Iron/steel 39.73 0.4% 39.93 0.4% Cement 2.94 0.0% 3.23 0.0% Rigs 0.43 0.0% 0.42 0.0%
Slide 45: Further drilldown: movement
Further drilldown: movement ₹ billion Aggregate exposure1,2,3,4,6 Q1-2018 Opening balance 190.39 Net increase in exposure 2.59 Upgrades to ‘investment grade’ - Downgrades to ‘below investment grade’ 14.20 Classified as non-performing5 (3.59) Closing balance 203.58 1. Aggregate fund based limits and
Slide 46: Profit & loss statement (1/2)
Profit & loss statement (1/2) FY Q1- Q4- Q1- Q1-o-Q1 ` billion 2017 2017 2017 2018 growth NII 217.37 51.59 59.62 55.90 8.4% Non-interest income 195.05 34.29 30.17 33.88 (1.2)% - Fee income 94.52 21.56 24.46 23.77 10.3% - Other income1 14.76 5.05 0.68 1.53 (69.7)% - Treasury income 85.772 7.68 5.03 8
Slide 47: Profit & loss statement (2/2)
Profit & loss statement (2/2) FY Q1- Q4- Q1- Q1-o-Q1 ` billion 2017 2017 2017 2018 growth Operating profit 264.87 52.15 51.12 51.84 (0.6)% Provisions1,2 152.08 25.15 28.98 26.09 3.7% Profit before tax 112.79 27.00 22.14 25.75 (4.6)% Tax 14.78 4.68 1.89 5.26 12.4% Profit after tax 98.01 22.32 20.25 2
Slide 48: Key ratios
Key ratios FY Q1- Q4- Q1- Percent 2017 2017 2017 2018 Return on average networth1,2 10.3 9.9 8.3 8.2 Return on average assets1 1.35 1.27 1.10 1.09 Weighted average EPS1,3 15.3 14.0 12.8 12.8 Book value3 (`) 1562 144 156 157 Fee to income 22.9 25.1 27.2 26.5 Cost to income 35.84 39.3 43.1 42.3 Averag
ICICI Bank — Debt Investor Presentation (September 2017) on 6ix