Icici Bank Limited · NSE:ICICIBANK
Icici Bank — Debt Investor Presentation (November 2017)
53 slides from Icici Bank's debt investor presentation, November 2017
Slide 1: ICICI Group
4 ICICI Bank ICIC! Group November 2017
Slide 2: Forward-looking statements
Certain statements in these slides are forward-looking statements. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. Mo
Slide 3: Operating environment; ICICI Group: our approach
1 Operating environment 2 ICICI Group: our approach 3
Slide 4: Operating environment
1 Operating environment 2 ICICI Group: our approach 4
Slide 5: Economic environment
Economic environment Inflation and monetary policy Inflation at 3.6% in October 2017, within RBI’s comfort level Aggregate policy rate cut of 200 bps since January 2015 External sector trends Stable currency vis-à-vis other emerging markets Foreign exchange reserves of ~ US$ 400 billion; imp
Slide 6: Corporate sector challenges continue
Corporate sector challenges continue Continued weak IIP growth; growth of 2.5% in Apr-Sep 2017 compared to 5.8% in Apr-Sep 2016 Growth in the corporate Weak corporate sector sector yet to investments; project pipeline see significant yet to see traction pick up Resolution of stressed cases underway
Slide 7: Recapitalisation of public sector banks
Recapitalisation of public sector banks ` 2.11 trillion recapitalisation package announced • Recapitalisation bonds of ₹ 1.35 trillion to be issued • Budgetary support of ₹ 181 billion • ` 580 billion through raising of capital by banks while diluting government equity Likely to provide significant
Slide 8: Retail sector remains a key growth driver
Retail sector remains a key growth driver • Retail loan growth of 16.8% compared to overall credit Growth in credit (y-o-y %) growth of 7.4% at Sep 2017 18.0% 16.0% • Credit cards and personal 14.0% Retail credit loans fastest growing 12.0% segments 10.0% • Credit quality remains stable 8.0% Non-foo
Slide 9: Future opportunities
Future opportunities • 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 • Goods & Services Tax • Focus on affordable housing • Focus on digitization •
Slide 10: Implications for the financial sector
Implications for the financial sector A growing Growing Increasing Rising savings adoption of penetration of formalisation pool digital trends financial services of economy Healthy growth opportunities for the financial sector 10
Slide 11: ICICI Group: our approach
1 Operating environment 2 ICICI Group: our approach 11
Slide 12: ICICI Group
ICICI Group Savings Protection Investments Capital Credit flows Spanning the spectrum of financial services 12
Slide 13: ICICI Bank
ICICI Bank1 ₹ 10.2 trillion ₹ 2.6 trillion 18,648 Largest branch + Consolidated Granular retail ATM network assets portfolio among private sector banks 49.5% 14.85%2 ` 70 billion Period-end CASA Tier-1 capital Operating profit3 in ratio adequacy Q2-2018 1. All numbers are for quarter ended September
Slide 14: ICICI Bank: 4x4 Agenda
ICICI Bank: 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 val
Slide 15: Growth with profitability
Growth with profitability 15
Slide 16: Portfolio mix & growth
Portfolio mix & growth 1 Retail loans growing at a CAGR2 of over 22% Share of retail loans in total loans increased from ~37% at March 2013 to ~54% at September 2017 1. Movement in share of overseas branches includes impact of exchange rate 2. CAGR: compounded annual growth rate 16
Slide 17: Strong growth across retail products
Strong growth across retail products Secured loans Unsecured loans ₹ 2,339 bn ₹ 250 bn ₹ 1,030 bn ₹ 43 bn • Home loans comprise about 53% of retail loans • Proportion of unsecured loans in retail loans at 9.6% at September 30, 2017 Increased focus on growth in the business banking segment, personal
Slide 18: Corporate business and SME
Corporate business and SME Corporate business Strategy to enhance quality of portfolio and quality of earnings Quality of portfolio: focus on • Concentration risk reduction • Syndication • Lending to higher rated corporates • ~90% disbursement in the domestic corporate portfolio in H1- 2018 were to
Slide 19: Robust funding profile
Robust funding profile Period-end CASA ratio Retail deposits 49.5% 29.0% Average CASA ratio at 45.2% in Q2-2018 ~18% CAGR in CASA deposits since March 2009 Cost of deposits at 4.98% in H1-2018, lowest level since FY2005 Balance sheet: slide 43 19
Slide 20: Growth with profitability
Growth with profitability Stable net interest margin FY2017 H1-2018 Net interest margin 3.27% 3.27% Strong control on operating expenses FY2017 H1-2018 Cost growth 16.3% 8.4% Cost-to-income ratio of 38.8% in H1-20181 1. Excluding gains relating to sale of shares of insurance subsidiaries, cost-to-in
Slide 21: Improving asset quality trends
Improving asset quality trends 21
Slide 22: Declining trends in NPA additions
Declining trends in NPA additions ` billion Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Gross NPA additions 82.49 80.29 70.37 112.89 49.76 46.74 Sequential decline in gross and net NPA ratios • Gross NPA ratio declined from 7.99% on Q1-2018 to 7.87% in Q2-2018 • Net NPA ratio declined from 4.86%
Slide 23: Resolution of stress cases
Resolution of stress cases Recoveries/ net reduction in exposure of over ` 75.00 billion1 in the drilldown list2 of ` 440.65 billion at March 30, 2016 Significant recoveries from non-performing loans; recoveries and upgrades from non-performing loans aggregated ` 10.29 billion in Q2-2018 Continued f
Slide 24: Leadership in technology & digital initiatives
Leadership in technology & digital initiatives 24
Slide 25: Customer's emerging expectations
Customer’s emerging expectations 2016… 2008-2015 (Digital, 2000-2007 Analytical and (Multi-channel) Personalised) • Mobile 1990s banking • Analytics for Environment • Fully cross-sell (Self-service) (Face to face Electronic • Instant credit interactions) • ATMs branches products • Internet • Customi
Slide 26: Digitization
Digitization Acquisition Digitization: deposit account and loan origination digitization through tablets and smartphones Operations Digitization: Operations processes automated through software robotic systems Sales Digitization: Sales process automated through Sales CRM Customer Service Dig
Slide 27: Acquisition digitization
Acquisition digitization About 85% of new savings accounts sourced through tab banking Account opened within a day as against about four days earlier • Aadhaar based biometric authentication for KYC • Demo videos for products and services • Upsell of mutual fund & insurance • Faster processing of ho
Slide 28: Operations digitization
Operations digitization First bank in the country and among few, globally, to roll-out ‘Software robotic systems’ Over 500 software robotic systems perform over 1.5 million banking transactions every working day Reduced response time for customers by up to 60%; improved productivity 28
Slide 29: Blockchain technology
Blockchain technology • First bank in India and among few globally to successfully exchange and authenticate remittance transaction messages and original international trade documents using blockchain technology • Bespoke models for blockchain in remittance and trade transactions in advanced stages
Slide 30: Digitization – sales & customer service
Digitization – sales & customer service CRM • 360 degree view of customer profile, sales trending and forecasting • Real time data feeds from multiple systems • Offers based on customer response and interest Launched CRM mobile app on both Android & iOS 30
Slide 31: Leveraging Artificial Intelligence (AI)
Leveraging Artificial Intelligence (AI) • AI powered chatbot iPal handles ~ 1 million queries/ chats monthly on both website and mobile app with nearly 90% resolution • Services involve simple FAQs, financial transactions & helping discover new features Leveraging technologies like AI and machine le
Slide 32: Leadership in digital platforms
Leadership in digital platforms Ranked amongst top 20 banks globally in mobile banking1 Ranked as best bank in India in internet and mobile banking categories1 Over 250 services across internet and mobile banking 12.0 million digitally active customers at Sep 30, 2017 6.7 million downloads; signific
Slide 33: 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 the branches1 Share of digital channels like internet & mobile banking, POS and call centre in total savings account transactions increased to 81% in H1-2018 33
Slide 34: Leadership in digital payments
Leadership in digital payments • Over 5.0 mn UPI IDs 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 145,000 merchants added Touch & Pay: Mobile
Slide 35: Subsidiaries
Subsidiaries 35
Slide 36: Life insurance
Life insurance Sustained • Private market share of 24.6%1 and overall market leadership in share of 13.7%1 in H1-2018 private sector • Expanding protection business; proportion Focus on increased from 3.9% in FY2017 to 4.2% in H1- increasing 2018 value of new • VNB margins2 increased from 8.0% in FY
Slide 37: General insurance
General insurance • Completed initial public offer of ICICI Lombard General Insurance Company Limited in Q2-2018 • The Bank continues to have 55.9% shareholding • ICICI General had market capitalisation of ₹ 307.66 billion on Nov 16, 2017 ICICI ` billion Q2-2017 Q2-2018 General Sustained Gross writt
Slide 38: Mutual fund & securities
Mutual fund & securities ICICI AMC ` billion Q2-2017 Q2-2018 Sustained Assets under management 2,160 2,791 position of largest mutual fund in Profit after tax 1.30 1.56 the country ICICI Securities ` billion Q2-2017 Q2-2018 Profit after tax 0.99 1.31 Announced initial public offer of ICICI Securitie
Slide 39: Capital adequacy
Capital adequacy Standalone 17.89%1 14.85%1 • Capital ratios significantly higher than regulatory requirements • Tier-1 capital is composed almost entirely CAR Tier I of core equity capital • Substantial scope to raise Additional Tier- Sep 30, 2017 1 and Tier-2 capital Excess Tier-1 ratio of 6.50% o
Slide 40: Thank you
0 ICICI Bank Thank you 40
Slide 41: Profit & loss statement (1/2)
Profit & loss statement (1/2) FY Q2- H1- Q1- Q2- H1- ` billion 2017 2017 2017 2018 2018 2018 NII 217.37 52.53 104.12 55.90 57.09 112.99 Non-interest income 195.05 91.20 125.49 33.88 51.86 85.74 - Fee income 94.52 23.56 45.12 23.77 25.70 49.47 - Other income 14.76 3.52 8.571 1.53 4.23 5.76 - Treasury
Slide 42: Profit & loss statement (2/2)
Profit & loss statement (2/2) FY Q2- H1- Q1- Q2- H1- ` billion 2017 2017 2017 2018 2018 2018 Total income 412.42 143.73 229.61 89.78 108.95 198.73 Operating expenses 147.55 37.37 71.10 37.94 39.09 77.03 Operating profit 264.87 106.36 158.51 51.84 69.86 121.70 Provisions1 152.08 70.83 95.98 26.09 45.
Slide 43: Balance sheet: assets
Balance sheet: assets September June September ` billion 30, 2016 30, 2017 30, 2017 Cash & bank balances 525.64 425.11 533.62 Investments 1,743.49 1,854.08 1,799.35 - SLR investments 1,225.40 1,327.39 1,231.49 - Equity investment in subsidiaries 105.82 103.23 102.90 Advances 4,542.56 4,640.75 4,827.
Slide 44: Balance sheet: liabilities
Balance sheet: liabilities September June 30, September ` billion 30, 2016 2017 30, 2017 Net worth 950.16 1,006.241 1,027.881 - Equity capital 11.64 12.83 12.84 - Reserves 938.52 993.41 1,015.04 Deposits 4,490.71 4,862.54 4,986.43 - Savings 1,468.99 1,699.50 1,784.80 - Current 583.57 680.73 683.96 B
Slide 45: Key ratios
Key ratios FY Q2- H1- Q1- Q2- H1- Percent 2017 2017 2017 2018 2018 2018 Return on average networth1,2 10.3 13.2 11.5 8.2 8.0 8.1 Return on average assets1 1.35 1.70 1.49 1.09 1.08 1.08 Weighted average EPS1,3 15.3 19.2 16.6 12.8 12.7 12.8 Book value3 (`) 1562 148 148 157 160 160 Fee to income 22.9 1
Slide 46: Asset quality trends (1/2)
Asset quality trends (1/2) Movement of NPA FY Q2- Q3- Q4- Q1- Q2- ` billion 2017 2017 2017 2017 2018 2018 Opening gross NPA 267.21 275.63 325.48 380.85 425.52 431.48 Add: gross additions 335.44 80.29 70.37 112.89 49.76 46.74 - of which: slippages from -restructured assets 45.20 12.31 2.39 18.03 14.7
Slide 47: Asset quality trends (2/2)
Asset quality trends (2/2) NPA and restructuring trends September June 30, September ` billion 30, 2016 2017 30, 2017 Gross NPAs 325.48 431.48 444.89 Less: cumulative provisions 160.65 178.42 203.59 Net NPAs 164.83 253.06 241.30 Net NPA ratio 3.21% 4.86% 4.43% September June 30, September Retail NPA
Slide 48: Loans under RBI resolution schemes
Loans under RBI resolution schemes1 Standard September 2017 Drilldown Others Total restructured Strategic debt restructuring (SDR) - Implemented 4.99 24.70 10.10 39.78 - Invoked 0.13 - 0.18 0.31 Change in management outside SDR - Implemented - 55.66 - 55.66 - Invoked - 9.58 16.55 26.13 Flexible rest
Slide 49: Sector-wise exposures
Sector-wise exposures Top 10 sectors1: % of total March 31, March 31, March March March Sep 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% 32.4% Electronics & engineering 8.3% 8.2% 7.6% 7.3% 6.9% 6.8% Banks 8.8% 8.6% 7.8% 8.0% 6.0% 6.8
Slide 50: Aggregate exposure to key sectors
Aggregate exposure to key sectors % of total March March March March March March Sep 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% 5.1% Iron/steel 5.2% 5.1% 5.0% 4.8% 4.5% 3.6% 3.3% Mining 2.0% 1.7% 1.7% 1.5% 1.6% 1.8% 1.7% Ot
Slide 51: 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 52: Further drilldown: sector-wise details
Further drilldown: sector-wise details At June 30, 2017 At September 30, 2017 % of total % of total ` billion Exposure 1,2,3 Exposure 1,2,3,4 exposure exposure Power 70.76 0.8% 68.37 0.7% Mining 55.90 0.6% 57.50 0.6% Iron/steel 39.93 0.4% 40.14 0.4% Promoter entities5 33.34 0.4% 25.83 0.3% Others6 3
Slide 53: Further drilldown: movement
Further drilldown: movement ₹ billion Aggregate exposure1,2,3,4 Q2-2018 Opening balance 203.58 Net decrease in exposure (9.60) Upgrades to ‘investment grade’ - Downgrades to ‘below investment grade’ 4.485 Classified as non-performing6 (2.56) Closing balance 195.90 1. Aggregate fund based limits and
ICICI Bank — Debt Investor Presentation (November 2017) on 6ix