Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (February 2014)
64 slides from Icici Bank's debt investor presentation, February 2014
Slide 1: ICICI Group: Strategy & Performance
ICICI Group: Strategy & Performance
Slide 2: Agenda
Agenda India: macroeconomic scenario Indian banking sector ICICI Group 2
Slide 3: Strong long term growth fundamentals
Growth Strong long term growth fundamentals indicators Favourable Healthy savings & demographics investment rates Key drivers of growth High potential for Rising per capita infrastructure income development 3
Slide 4: Favorable demographic profile
Capital Demography Favorable demographic profile A young population with median age of 25 years 1,432 1,501 1,432 1,501 Rising share of working age population 1,053 1,053 • Addition of around 11 million to the 840 840 workforce every year for next five years • Working age population to exceed 50% of
Slide 5: Strong domestic demand
Domestic demand Strong domestic demand Per Capita GDP (USD) 1,432 1,501 1,053 840 1,414 Rising per capita GDP 7 accelerating domestic demand 749 2005 2013 Healthy private consumption driven by favourable demographics and rising income levels 5
Slide 6: Increased investment in infrastructure sector
Investment Increased investment in infrastructure sector ~35% ~25% Savings & investment rates continue to be in excess of 30% FY2003 FY2013 6
Slide 7: Structurally high growth potential
Growth trends Structurally high growth potential GDP growth % 7.2% 6.7% 5.6% 5.8% 3.9% 1970s 1980s 1990s 2000s 2010-2013 Domestic driven growth model 7 Source: CSO
Slide 8: Macro environment: recent developments
Macro Recent developments environment • Moderation in GDP growth to less than 5%; industrial growth subdued • Slowdown in investments and savings Key concerns • Inflationary pressures resulting in tight monetary policy • Substantial reduction in trade deficit and current account deficit in current y
Slide 9: Agenda
Agenda India: macroeconomic scenario Indian banking sector ICICI Group 9
Slide 10: Indian financial sector: a transformation
Banking sector Indian financial sector: a transformation The Today Pre-reform 1990s Extensive Liberalisation Competitive and Indian regulation Globalisation global corporate Focus on Structural sector economy industrial change – Buoyant services sector services sector Highly Openin
Slide 11: Private sector banks gaining market share
Market Granular Private sector banks gaining market share1 share income FY1995 FY2013 At December 31, 2013 ICICI Bank is the largest private sector bank in terms of total assets 1. Based on total assets 11 Source: RBI
Slide 12: Under penetrated sector
Growth potential Under penetrated sector • Bank credit / GDP: ~58% Growth • Retail credit / GDP: ~10% potential • Mortgage / GDP: ~5% Funding • High proportion of deposit funding profile • Conservative equity to assets • About 23% of net demand and time liabilities (NDTL) invested in government secu
Slide 13: Conservative regulatory framework
Regulatory Conservative regulatory framework framework Average capital adequacy for the system Capital adequacy ~13% Implementation of Basel III in FY2014 Capital requirements 1% higher as compared to BCBS Countercyclical Proactive regulatory approach capital and Increase in provisioning r
Slide 14: Agenda
Agenda India: macroeconomic scenario Indian banking sector ICICI Group 14
Slide 15: Transformation over the years
ICICI Granular Transformation over the years Group income International Insurance Retail Serving Banking Indian MNCs, Commercial NRIs and Banking First mover Becoming a local Development universal Finance Capitalising in communities consumption bank on Project led growth liberalisation finance oppor
Slide 16: Strong diversified financial services franchise
ICICI Strong diversified financial services franchise Group ICICI Bank Largest private sector bank Life Insurance Largest private sector life 74% (JV with Prudential) insurer General Insurance Largest private sector 74% (JV with Fairfax) general insurer Asset Management Among top three mutual 51% (J
Slide 17: Growth over the years
ICICI Growth over the years Bank 19951 CAGR Current Branches 6 40% ~3,600 ATMs - 11,215 Employee base ~1,200 24% ~71,500 Assets (US$ billion) 3 21% 114 Profit after tax (US$ billion)2 0.1 19% 1.5 Consolidated PAT (US$ billion)2 0.1 20% 1.8 1. ICICI Limited and ICICI Bank combined 2. Current PAT refe
Slide 18: Investment grade ratings
ICICI Investment grade ratings Bank Rating Moody’s Baa2 S&P BBB- Ratings for senior unsecured debt 18
Slide 19: Our strategic path
Our strategic path FY2012 FY2010 FY2011 onwards Position the Resume balance Accelerate balance sheet for sheet growth growth growth • 4Cs: CASA, • Further • On the back of Costs, Credit improve improved Quality & Capital funding mix liability through retail structure & term deposit RoA growth • Leve
Slide 20: Significant improvement in asset and funding profile
Significant improvement in asset and funding profile 20
Slide 21: Healthy mix and calibrated growth
Lending Healthy mix and calibrated growth 4% 5% 27% 6% 25% 7% 27% 25% 31% 33% 29% 28% 37% 36% 35% 37% 2% 1% 1% 2% Mar 2011 Mar 2012 Mar 2013 Dec 2013 Unsecured retail Secured retail Domestic corporate Overseas branches SME Retail segment expected to be key growth driver going forward 21
Slide 22: Building a low cost and granular base
Funding Building a low cost and granular base CASA deposits Retail deposits 43% 42% ~70% 43% 45% 42% 29% ~50% ~50% ~30% Mar Mar Mar Mar Mar Dec 2009 2010 2011 2012 2013 2013 Mar 2009 Dec 2013 Retail/domestic Wholesale/domestic Savings Current Increasing proportion of CASA and retail deposits 22
Slide 23: Asset quality: improvement in trends over years
Asset Improvement in trends over years quality Net NPA ratio 1.96% 1.87% 0.94% Net NPA ratio well below industry average 0.81% 0.62% 0.64% Mar 2009 Mar 2010 Mar 2011 Mar 2012 Mar 2013 Dec 2013 Provisioning coverage healthy at 70.0% at December 2013 23
Slide 24: Strong capital position
Capital Strong capital position Capital 16.8% 11.5% Including profits for 9M-2014, Basel III tier 1 ratio at over 12.5% at December CAR Tier I 31, 2013 Dec 31, 2013 Among the best capitalised large Indian banks 24
Slide 25: Sustained improvement in financial performance
Sustained improvement in financial performance 25
Slide 26: Sustained improvement across businesses
Granular Sustained improvement across businesses income Domestic NIM 3.65% 3.67% 3.63% 3.51% Improvement in funding base 3.04% 2.98% FY2011 FY2012 FY2013 Q1-2014 Q2-2014 Q3-2014 International NIM 1.81% 1.70% Bond/loan repayments covered 1.60% 1.34% by asset maturities; no 1.23% refinancing risk 0.88
Slide 27: Substantial increase in overall NIMs
Granular Substantial increase in overall NIMs income Overall NIM 3.31% 3.32% 3.27% Driven by profit and 3.11% margin focus across 2.73% domestic and international 2.64% businesses FY2011 FY2012 FY2013 Q1-2014 Q2-2014 Q3-2014 ~65 bps improvement in overall NIM since FY2011 27
Slide 28: Steady fee streams
Granular Steady fee streams income Retail fees Forex & derivative Focus on building granular and stable revenues Commercial banking Overall fee growth of 13% y-o-y in 9M-2014 28
Slide 29: Regular and increasing dividend income
Granular Regular and increasing dividend income income • Diversified financial services franchise yielding high returns • Remains healthy with increased payout by ICICI Life FY2010 FY2012 FY2013 Contributing to increase in non-interest income 29
Slide 30: Driving efficiency on larger network and business
Operating Driving efficiency on larger network and business efficiency Cost-income % 43% 42% • Sustaining best in class 41% cost-income ratios 38% • Despite significant scale up in infrastructure FY2011 FY2012 FY2013 9M-2014 Focus on cost efficiency to continue 30
Slide 31: Significant scale up in physical presence
Investment in infrastructure Significant scale up in physical presence Branch network •Network of 3,588 at Dec 2013; Metro Urban Semi Urban Rural largest in private sector banks 4,000 3,588 • Supplemented by >11,000 3,500 3,100 2,752 ATMs 3,000 2,529 2,500 •Largest rural branch network 2,000 1,707 a
Slide 32: Efficiency & differentiated customer proposition
Technology Efficiency & differentiated customer proposition Leveraging social networking platforms Advanced mobile 24x7 electronic banking platform branch; Tab banking Supporting customer service & cost Enhanced ATM efficiency “Money2India Mobile App” for functionality NRIs “MySavings Rewards” progr
Slide 33: Subsidiaries: healthy trends
Subsidiaries Healthy trends •Life insurance: sustained profitability; growth and margins to stabilise following regulatory changes Insurance •General insurance: maintains leadership position in private sector; healthy profitability •Focus on maintaining market position Asset management & •Business p
Slide 34: Consistent delivery against stated objectives
Return profile Consistent delivery against stated objectives Standalone RoA 9M-2014 1.73% FY2013 Over 70 bps improvement FY2009 1.66% over FY2009 <1.0% Consolidated RoE 9M-2014 FY2013 15.1% Near doubling of 14.7% consolidated RoE since FY2009 FY2009 <8.0% 34
Slide 35: Key strengths
Key strengths Well capacitised for future growth Diversified • Presence across all segments of business financial services lines Build up of • Scaled up to 3,588 branches at December 31, 2013 branch • Largest branch network among private network sector banks1 Strong • CAR of 16.81%2 with Tier 1 rati
Slide 36: Thank you
Thank you Aicici Bank ee
Slide 37: Financial results
Financial results 0a ICICI Bank ee
Slide 38: Profit & loss statement
Profit & loss statement (` billion) FY Q3- 9M- Q2- Q3- 9M- Q3-o-Q3 2013 2013 2013 2014 2014 2014 growth NII 138.66 34.99 100.63 40.44 42.55 121.19 21.6% Non-interest income 83.46 22.15 61.38 21.66 28.01 74.52 26.5% - Fee income 69.01 17.71 51.26 19.94 19.97 57.84 12.8% - Other income 9.50 1.93 6.09
Slide 39: Profit & loss statement
Profit & loss statement (` billion) Q3- 9M- Q2- Q3- 9M- Q3-o-Q3 FY 2013 2013 2013 2014 2014 2014 growth Operating profit 131.99 34.53 95.95 38.88 44.39 121.41 28.6% Provisions 18.03 3.69 13.42 6.25 6.95 19.13 88.3% Profit before tax 113.96 30.84 82.53 32.63 37.44 102.28 21.4% Tax 30.71 8.34 22.32 9.
Slide 40: Balance sheet: Assets
Balance sheet: Assets (` billion) December September December Y-o-Y 31, 2012 30, 2013 31, 2013 growth Cash & bank balances 411.29 335.81 325.26 (20.9)% Investments 1,668.42 1,688.29 1,719.85 3.1% - SLR investments 924.11 986.20 999.45 8.2% - Equity investment in subsidiaries 124.53 120.23 120.23 (3.
Slide 41: Loan book classification: reporting from March 2013
Loan book classification: reporting from March 2013 Nature of loan Earlier reported in Now reported in Builder finance Retail - home Domestic corporate Loans to small Retail - business SME businesses banking Retail - other Retail - business Dealer funding secured banking Rural retail i.e. portfolios
Slide 42: Composition of loan book (y-o-y)
Composition of loan book (y-o-y) December 31, 2012 December 31, 2013 1 1 3 3 2 2 Total loan book: ` 2,868 bn Total loan book: ` 3,326 bn 1. Including impact of exchange rate movement 2. Domestic corporate loans include builder finance 3. Including buyouts & inter-bank participation certificates 42
Slide 43: Composition of retail loan book (y-o-y)
Composition of retail loan book (y-o-y) December 31, 2012 December 31, 2013 1 2 Total retail loan book: ` 999 bn Total retail loan book: ` 1,222 bn • Total retail advances growth of 22.3% 1. December 31, 2012 :Vehicle loans includes auto loans 10.0%, commercial business 15.1% 2. December 31, 2013: V
Slide 44: Composition of loan book (q-o-q)
Composition of loan book (q-o-q) September 30, 2013 December 31, 2013 1 3 2 Total loan book: ` 3,178 bn Total loan book: ` 3,326 bn 1. Including impact of exchange rate movement 2. Domestic corporate loans include builder finance 3. Including buyouts & inter-bank participation certificates 44
Slide 45: Composition of retail loan book (q-o-q)
Composition of retail loan book (q-o-q) September 30, 2013 December 31, 2013 1 2 Total retail loan book: ` 1,151 bn Total retail loan book: ` 1,222 bn 1. September 30, 2013: Vehicle loans includes auto loans 10.5%, commercial business 11.7% 2. December 31, 2013: Vehicle loans includes auto loans 11.
Slide 46: Equity investment in subsidiaries
Equity investment in subsidiaries (` billion) December September December 31, 2012 30, 2013 31, 2013 ICICI Prudential Life Insurance 35.93 35.93 35.93 ICICI Bank Canada 33.50 30.51 30.51 ICICI Bank UK 23.25 21.20 21.20 ICICI Lombard General Insurance 13.48 14.22 14.22 ICICI Home Finance 11.12 11.12
Slide 47: Balance sheet: Liabilities
Balance sheet: Liabilities (` billion) December September December Y-o-Y 31, 2012 30, 2013 31, 2013 growth Net worth 671.19 731.03 740.57 10.3% - Equity capital 11.53 11.54 11.55 0.2% - Reserves1 659.65 719.49 729.02 10.5% Deposits 2,864.18 3,090.46 3,169.70 10.7% - Savings 814.63 935.35 957.25 17.5
Slide 48: Composition of borrowings
Composition of borrowings (` billion) December September December 31, 2012 30, 2013 31, 2013 Domestic 779.59 697.12 692.17 - Capital instruments1 388.37 387.71 386.88 - Other borrowings 391.22 309.42 305.29 Overseas2 691.90 756.44 817.23 - Capital instruments 18.65 21.24 20.97 - Other borrowings 673
Slide 49: Capital adequacy
Capital adequacy Standalone Basel III September 30, 2013 December 31, 2013 ` bn % ` bn % Total Capital1 820.38 16.50% 843.87 16.81% - Tier I 563.24 11.33% 578.70 11.53% - Tier II 257.14 5.17% 265.17 5.28% Risk weighted assets 4,971.00 5,018.83 -On balance sheet 3,798.66 3,863.45 -Off balance sheet 1
Slide 50: Asset quality and provisioning
Asset quality and provisioning (` billion) December September December 31, 2012 30, 2013 31, 2013 Gross NPAs 98.03 100.78 104.48 Less: Cumulative provisions 76.18 73.71 73.27 Net NPAs 21.85 27.07 31.21 Net NPA ratio 0.64% 0.73% 0.81% Gross retail NPLs at ` 44.43 bn and net retail NPLs at ` 7.88 bn
Slide 51: Overseas subsidiaries
51 Overseas subsidiaries 0a ICICI Bank ee
Slide 52: ICICI Bank UK asset profile
ICICI Bank UK asset profile September 30, 2013 December 31, 2013 1 1 2 2 Total assets: USD 4.2 bn Total assets: USD 4.4 bn 1. Includes cash & advances to banks, T Bills 2. Includes securities re-classified to loans & advances 52
Slide 53: ICICI Bank UK liability profile
ICICI Bank UK liability profile September 30, 2013 December 31, 2013 Total liabilities: USD 4.2 bn Total liabilities: USD 4.4 bn Profit after tax of US$ 8.5 mn in Q3-2014 compared to US$ 5.4 mn in Q3-2013 Capital adequacy ratio at 24.4% Proportion of retail term deposits in total deposits at 3
Slide 54: ICICI Bank Canada asset profile
ICICI Bank Canada asset profile September 30, 2013 December 31, 2013 2 2 1 1 Total assets: CAD 5.3 bn Total assets: CAD 5.3 bn 1. Includes cash & advances to banks and government securities 2. Based on IFRS, securitised portfolio of CAD 1,815 mn and CAD 1,818 mn considered as part of Insured mortgag
Slide 55: ICICI Bank Canada liability profile
ICICI Bank Canada liability profile September 30, 2013 December 31, 2013 1 1 Total liabilities: CAD 5.3 bn Total liabilities: CAD 5.3 bn Profit after tax of CAD 10.0 mn in Q3-2014 compared to CAD 8.3 mn in Q3-2013 Capital adequacy ratio at 31.6% 1. As per IFRS, proceeds of CAD 1,809 mn and CAD 1
Slide 56: ICICI Bank Eurasia asset profile
ICICI Bank Eurasia asset profile September 30, 2013 December 31, 2013 1 1 Total assets: USD 182 mn Total assets: USD 144 mn Total borrowings of USD 67 mn at December 31, 2013 Capital adequacy of 41.6% at December 31, 2013 Net profit of USD 0.1 mn in Q3-2014 compared to USD 2.4 mn in Q3-2013 1.
Slide 57: Domestic subsidiaries
Domestic subsidiaries 0a ICICI Bank ee
Slide 58: ICICI Home Finance
ICICI Home Finance September 30, 2013 December 31, 2013 Total assets: ` 69.68 bn Total assets: ` 71.68 bn Profit after tax of ` 516.7 mn in Q3-2014 compared to ` 533.7 mn in Q3-2013 Capital adequacy ratio of 32.2% at December 31, 2013 Net NPA ratio: 0.8% At December 31, 2013: Networth ` 15.1
Slide 59: ICICI Life
ICICI Life (` billion) Q3-2013 Q3-2014 FY2013 New business received premium 11.05 9.33 48.08 Renewal premium 21.02 20.95 87.30 Total premium 32.07 30.28 135.38 Annualised premium equivalent (APE) 9.04 8.68 35.32 New Business Profit (NBP) 1 1.36 0.95 5.29 NBP margin 15.0% 10.9% 15.0% Statutory profit
Slide 60: ICICI General
ICICI General (` billion) Q3-2013 Q3-2014 FY2013 Gross premium1 16.87 17.38 64.20 PAT 0.95 0.76 3.062 Profit after tax of ` 4.35 billion for 9M-2014 compared to ` 2.79 billion in 9M-2013 Market share based on gross written premium was 9.6%3 for April-November 2013 1. Excluding remittances from t
Slide 61: Other subsidiaries
Other subsidiaries (` billion) Profit after tax Q3-2013 Q3-2014 FY2013 ICICI Securities (Consolidated) 0.28 0.35 0.64 ICICI Securities Primary Dealership 0.23 0.48 1.22 ICICI Venture 0.04 0.07 0.20 ICICI Prudential Asset Management 0.28 0.47 1.10 16.9% increase in consolidated profit after tax fro
Slide 62: Key ratios
0a ICICI Bank ee
Slide 63: Key ratios (consolidated)
Key ratios (consolidated) (Percent) FY Q3- 9M- Q2- Q3- 9M- 2013 2013 2013 2014 2014 2014 Return on average networth1,2 (consolidated) 14.7 15.7 14.6 14.6 15.0 15.1 Weighted avg EPS (`)2 83.3 91.0 81.9 92.7 98.7 95.6 Book value (`) 607 598 598 657 668 668 1. Based on quarterly average networth 2. Ann
Slide 64: Key ratios (standalone)
Key ratios (standalone) (Percent) FY Q3- 9M- Q2- Q3- 9M- 2013 2013 2013 2014 2014 2014 Return on average networth1 12.9 13.6 12.5 13.0 13.7 13.4 Return on average assets1 1.66 1.76 1.61 1.70 1.75 1.73 Weighted avg EPS (`)1 72.2 77.4 69.3 80.8 87.0 82.3 Book value (`) 578 582 582 633 641 641 Net inte
ICICI Bank — Debt Investor Presentation (February 2014) on 6ix