Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (May 2016)
45 slides from Icici Bank's debt investor presentation, May 2016
Slide 1: ICICI Group: Performance & Strategy
ICICI Group: Performance & Strategy May 2016
Slide 2: Agenda
Agenda Indian economy 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 Favorable 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 population
Slide 5: India: strong long term fundamentals
India: strong long term fundamentals Healthy savings & investment rate Per Capita GDP (USD)1 Investment rate2 ~34% 1,432 1,501 1,432 1,501 1,053 ~25% 1,053 1,688 840 840 749 FY2005 FY2015 FY2003 FY2015 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 Strong external position Several policy measures Low inflation & declining interest rates Signs of improvement in economic activity 6
Slide 7: Improvement across key parameters
Improvement across key parameters Inflation & interest rates Fiscal deficit • Inflation remained within RBI’s target • Government adhered to the fiscal deficit range; 5.4% in April 2016 target of 3.9% of GDP in FY2016; likely to continue on the fiscal roadmap of • RBI reduced repo rate by 150 basis
Slide 8: Several policy measures announced
Several policy measures announced Foreign investments Infrastructure • Introduction of composite cap in foreign • Over 10,000 km of road projects investments awarded • FDI limits hiked for insurance, railways • Selection of first 20 cities for Smart City and defence sectors project announced • More
Slide 9: However, some concerns remain
However, some concerns remain • Growth in Index of Industrial Production remained volatile through the year; growth of 2.4% in FY2016 compared to 2.8% in FY2015 • Growth in gross capital formation remained subdued; grew by 5.2% during 9M-2016 compared to 4.7% in 9M- 2015 • Global commodity price tre
Slide 10: Agenda
Agenda Indian economy ICICI Group International Key business regulatory developments 10
Slide 11: ICICI Group
ICICI Group Savings Protection Investments Capital Credit flows Spanning the spectrum of financial services 11
Slide 12: Strong franchise
Strong franchise Sustained Sustained private private India’s largest Largest online retail sector sector mutual fund1 broking platform market market Strong fund Strong franchises; leadership1 leadership1 performance market-linked Strong Healthy profitability returns businesses Strong a
Slide 13: ICICI Bank
ICICI Bank Largest private sector bank in India in terms of total assets 1 Tier I capital adequacy of 13.09% at March 31, 2016 as per RBI’s guidelines on Basel III norms Diversified loan portfolio Large physical footprint in India: 4,450 branches and 13,766 ATMs Leadership in technology Global prese
Slide 14: Performance highlights
a ICICI Bank Performance highlights a — 14
Slide 15: Healthy loan growth driven by retail
Healthy loan growth driven by retail 1 1 Overall loan growth at 12.3% Total loans at ` 4,353 bn at y-o-y Mar 31, 2016 1. Overseas portfolio decreased by 6.0% y-o-y in US$ terms 15
Slide 16: Strong growth across retails segments
Strong growth across retails segments 1 Retail loan growth at 23.3% Total retail loans at ` 2,028 y-o-y bn at Mar 31, 2016 1. March 31, 2016: Vehicle loans includes auto loans 11.0%, commercial business 6.3%, two-wheeler loans 0.1% 16
Slide 17: Robust funding profile
Robust funding profile Period-end CASA ratio • Accretion of ` 193.70 billion to savings account deposits and ` 93.50 billion to current account deposits in FY2016 16.6% y-o-y growth in total deposits; proportion of retail deposits continues to be healthy at about 74% 17.2% y-o-y growth in average CA
Slide 18: Technology leadership
Technology leadership Growing payments franchise Debit cards Credit cards 18
Slide 19: Technology leadership
Technology leadership Best-in-class mobile application iMobile More than 140 services Industry first features: Favourites for faster transactions Chat services & authenticated call Rail ticket booking Touch ID Login & Watch Banking Forex purchases Only Bank to offer insta-banking fac
Slide 20: Technology leadership
Technology leadership Innovative offerings to improve customer convenience India’s First Digital Bank: over 3.6 million downloads • Amongst the top 4 wallet apps in terms of time spent on the app1 Significant interest from • Only bank app to figure in non-ICICI Bank customers the top wallet apps Pre
Slide 21: Technology leadership
Technology leadership Adoption of digital offerings Branch 6.4% Others 5.9% Way forward Continue to rollout ATM 24.8% technology initiatives with focus on • Innovation Internet & mobile 62.9% • Customer experience • Cross-sell • Operating efficiency • Analytics Channel mix of transactions for FY2016
Slide 22: Credit quality (1/2)
Credit quality (1/2) Trends impacted by environmental factors and RBI’s objective of early and conservative recognition of stress and provisioning March 31, March 31, ` billion 2015 2016 Gross NPAs 152.42 267.21 Less: cumulative provisions 89.17 134.24 Net NPAs 63.25 132.97 Net NPA ratio 1.40% 2.67%
Slide 23: Credit quality (2/2)
Credit quality (2/2) NPA and restructuring trends March 31, March 31, ` billion 2015 2016 Net NPAs (A) 63.25 132.97 Net restructured loans (B) 110.17 85.73 Total (A+B) 173.42 218.70 Total as a % of net customer assets 3.84% 4.40% Impact of Reserve Bank of India (RBI) Asset Quality Review fully consi
Slide 24: Operating performance
Operating performance Granular revenue streams Margin focus across businesses Domestic margins improved by ~90 bps since FY2010 Overseas margins improved from 0.41% in FY2010 to 1.86% in FY2016 Margins were lower in Q4-2016 primarily on account of non-accrual of interest income on high NPAs
Slide 25: Significant value in subsidiaries
Significant value in subsidiaries Commenced value unlocking in H2-2016 • Sale of 4.0% shareholding to Hasham Traders ICICI Life (Premji Investments) and 2.0% to Temasek • Company valuation at ₹ 325.00 bn • Sale of 9.0% shareholding to joint venture partner ICICI General Fairfax Financial Holdings •
Slide 26: Strong capital position
Strong capital position Standalone • Capital ratios significantly higher 16.64% 13.09% than regulatory requirements • Tier-1 capital is composed almost CAR Tier I entirely of core equity capital • Substantial scope to raise Additional March 31, 2016 Tier-1 and Tier-2 capital Excess Tier-1 ratio of 5
Slide 27: 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 28: In summary (1/3)
In summary (1/3) Positive indicators in some sectors e.g. roads, logistics, 1 railways, defence expected to lead to credit demand We will grow by selectively capturing these 2 opportunities Limit framework in place for enhanced management 3 of concentration risk 4 Continuing momentum in retail lendi
Slide 29: In summary (2/3)
In summary (2/3) Maintaining leadership in digital and technology- 6 enabled customer convenience Close monitoring of existing portfolio with focus on 7 resolution and reduction of vulnerable exposures The Bank will provide a quarterly update on key 8 exposures Created collective contingency and rel
Slide 30: In summary (3/3)
In summary (3/3) Strong capital base with Tier-1 capital adequacy of 10 13.09% 11 Substantial value creation in subsidiaries 30
Slide 31: Thank you
— ICICI Bank Thank you ae
Slide 32: Balance sheet: assets
Balance sheet: assets March 31, December March 31, Y-o-Y ` billion 2015 31, 2015 2016 growth Cash & bank balances 423.05 377.00 598.69 41.5% Investments 1,581.29 1,635.43 1,604.12 1.4% - SLR investments 1,056.02 1,147.71 1,104.06 4.5% - Equity investment in subsidiaries 110.89 110.32 107.63 (2.9)% A
Slide 33: Balance sheet: liabilities
Balance sheet: liabilities March 31, December March 31, Y-o-Y ` billion 2015 31, 2015 2016 growth Net worth 804.29 895.92 897.36 11.6% - Equity capital 11.60 11.63 11.63 0.3% - Reserves 792.70 884.30 885.66 11.7% Deposits 3,615.63 4,073.14 4,214.26 16.6% - Savings 1,148.60 1,269.18 1,342.30 16.9% -
Slide 34: Portfolio composition over the years
Portfolio composition over the years % of total March March March March March March advances 31, 2011 31, 2012 31, 2013 31, 2014 31, 2015 31, 2016 Retail 39.3% 38.0% 37.0% 39.0% 42.4% 46.6% Domestic corporate 28.2% 28.6% 32.5% 30.1% 28.8% 27.5% SME 7.0% 6.0% 5.2% 4.4% 4.4% 4.3% International1 25.5%
Slide 35: Sector-wise exposures
Sector-wise exposures Top 10 sectors1: % of total March March March March March March exposure of the Bank 31, 2011 31, 2012 31, 2013 31, 2014 31, 2015 31, 2016 Retail finance 17.4%2 16.2%2 18.9% 22.4% 24.7% 27.1% Banks 9.8% 10.1% 8.8% 8.6% 7.8% 8.0% Electronics & Engineering 7.8% 8.1% 8.3% 8.2% 7.6
Slide 36: Uncertainties in respect of certain sectors
There are uncertainties in respect of certain sectors due to: • Weak global economic environment • Sharp downturn in the commodity cycle • Gradual nature of the domestic economic recovery • High leverage • Among the top 10 sectors, power and iron & steel sectors are the key sectors in this context •
Slide 37: Exposure to key sectors (1/2)
Exposure to key sectors (1/2) % of total March 31, March 31, March 31, March 31, March 31, March 31, exposure of 2011 2012 2013 2014 2015 2016 the Bank Power 7.1% 7.3% 6.4% 5.9% 5.5% 5.4% Iron/Steel 5.1% 5.2% 5.1% 5.0% 4.8% 4.5% Mining 1.4% 2.0% 1.7% 1.7% 1.5% 1.6% Cement 1.6% 1.2% 1.4% 1.4% 1.5% 1.
Slide 38: Exposure to key sectors (2/2)
Exposure to key sectors (2/2) • Proportion of exposure to key sectors gradually decreasing over the last three years • Net increase in exposure to key sectors of about ` 59.40 billion in FY2016 was entirely in A- and above category 38
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 Exposure1,2 at % of total exposure ` billion March 31, 2016 of the Bank Power 119.60 1.3% Mining 90.11 1.0% Iron/Steel 77.76 0.8% Cement 66.43 0.7% Rigs 25.13 0.3% Promoter entities3 61.62 0.7% Net reduction of about ₹ 20.00 billion4 in FY2016 in exposure to companies cov
Slide 41: Our approach
Our approach Working with borrowers for reduction and resolution of 1 exposure through asset sales and deleveraging Created collective contingency and related reserve of 2 ₹ 36.00 billion Strong Tier-1 capital adequacy of 13.09% with 3 substantial scope to raise Additional Tier-1 and Tier-2 capital
Slide 42: Way forward
Way forward The Bank has a monitoring and action plan with focus on reducing these exposures The Bank will provide a quarterly update on these exposures Credit quality: slide 23 42
Slide 43: Profit & loss statement (1/2)
Profit & loss statement (1/2) Q4- Q3- Q4- Q4-o-Q4 ` billion FY2015 FY2016 2015 2016 2016 growth NII 190.40 50.79 54.53 54.05 212.24 6.4% Non-interest income 121.76 34.96 42.17 51.09 153.22 46.1% - Fee income 82.87 21.37 22.62 22.12 88.20 3.5% - Other income1 21.96 6.33 5.13 7.07 24.42 11.7% - Treasu
Slide 44: Profit & loss statement (2/2)
Profit & loss statement (2/2) Q4- Q3- Q4- Q4-o-Q4 ` billion FY2015 FY2016 2015 2016 2016 growth Operating profit 197.20 54.68 65.60 71.08 238.63 30.0% Provisions 39.00 13.45 28.44 33.26 80.67 - Profit before collective contingency and related reserve and tax 158.20 41.24 37.16 37.82 157.96 (8.3)% Co
Slide 45: Key ratios
Key ratios Percent FY2015 Q4-2015 Q3-2016 Q4-2016 FY2016 Return on average networth1 14.3 14.6 13.6 3.2 11.3 Return on average assets1 1.86 1.92 1.82 0.41 1.49 Weighted average EPS1 19.3 20.5 20.7 4.9 16.8 Book value1 (`) 139 139 154 154 154 Fee to income 26.5 24.9 23.4 21.0 24.1 Cost to income 36.8