India & ICICI Group · PDF file•CAD decreased to ~1.3% of GDP in FY2015 from a peak of ... Significant progress on operating performance Strong retail & rural franchise 39.....

India & ICICI Group

Trends & Outlook

September 2015

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. More information about these factors is contained in

ICICI Bank's filings with the US Securities and Exchange Commission.

All financial and other information in these slides, other than financial

and other information for specific subsidiaries where specifically

mentioned, is on an unconsolidated basis for ICICI Bank Limited only

unless specifically stated to be on a consolidated basis for ICICI Bank

Limited and its subsidiaries. Please also refer to the statement of

unconsolidated, consolidated and segmental results required by Indian

regulations that has, along with these slides, been filed with the stock

exchanges in India where ICICI Bank’s equity shares are listed and with

the New York Stock Exchange and the US Securities and Exchange

Commission, and is available on our website www.icicibank.com

2

http://www.icicibank.com/

Macro-economic environment

Key trends & developments in the banking sector

1

2

3

ICICI Group: performance & strategy 3



1

2

4


Several

policy

measures

Low inflation

& declining

interest rates

Signs of

improvement in

economic

activity

Trends in the Indian economy

Strong

external

position

5

While global developments have implications for emerging market

economies, India is relatively better placed


6

India’s external position has improved

• CAD decreased to ~1.3% of GDP in FY2015 from a peak of

4.8% of GDP in FY2013

• Strong FDI inflow of ~USD 9.5 billion in Q1-2016; inflow of

USD 34.4 billion in FY2015

• RBI’s forex reserves at ~US$ 352 billion

• Import cover of about 9 months

6.50%

7.00%

7.50%

8.00%

8.50%

9.00%

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Repo rate

Significant improvement in inflation

• CPI inflation decreased from 5.3% in

Mar 2015 to 3.8% in July 2015

• WPI negative since Nov 2014; at -ve

4.1% in July 2015

0.00%

2.00%

4.00%

6.00%

8.00%

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CPI Core CPI


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• Repo rate cut of 75 bps between Jan-

August 2015

• Banks have reduced deposit & lending

rates

Easing monetary policy

Government measures

8

Investments

• Foreign investment in defence, railways and insurance

• Efforts to remove hurdles in infrastructure projects

• Auction of resources

Fiscal policy

• Direct benefit transfer of subsidies

• Diesel price deregulated

Taxation

• Commitment to a non-adversarial tax regime

Long-term projects

• ‘Make in India’ and ‘Digital India’

Several policy measures announced

Signs of improvement across several key parameters

• Growth in industrial production,

including manufacturing, has remained

positive for eight consecutive months

• IIP growth of 3.2% in Q1-2016


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-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

Jul

2014

Jun

2015

Industrial production

• Sales of passenger vehicles and

commercial vehicles have improved

•Sales growth of 11.4% in passenger vehicles

& 8.4% in commercial vehicles in July 2015

• Gradual improvement in capital goods

segment

• Pickup in coal production

Vehicle sales growth

-30.0%

-20.0%

-10.0%

0.0%

10.0%

Q4-2

01

4

Q1-2

01

5

Q2-2

01

5

Q3-2

01

5

Q4-2

01

5

Q1-2

01

6

PV CV

Step-up in government spending expected to support growth

In summary

10

India better-placed given stronger external position, lower

inflation, improved fiscal position and easing interest rates

Several policy & administrative measures undertaken;

improvement in growth indicators

Continued focused execution of these measures would enable

sustained higher growth



1

2

11


Credit growth

Robust growth in retail credit; low corporate credit offtake

• Non-food credit growth at 9.8% y-o-y at end-August 2015

• Retail credit growth healthy at ~17.0%

• Corporate credit growth at 5-6%

• Including bonds & commercial papers, growth in total

financing higher by around 2.0%

Bank credit growth expected to improve gradually

12

• Retail credit growth expected to sustain

• Corporate credit growth would be driven by public sector

capex and regular working capital demand

• Private sector capex still some time away

Deposit growth

Deposit growth currently higher than loan growth

• Total deposits grew by 11.9% y-o-y at end-August 2015

• Demand deposits grew by 13.2%

Gradual recovery in financial savings

13

Financial savings at 7.5% of GNDI1 in FY2015 compared to

7.0% in FY2013

1. GNDI: gross national disposable income

Retail credit quality stable

• Substantial improvement in credit infrastructure

• Established credit bureaus with extensive database

• Increased customer awareness

• Analytics used for credit decisions

Corporate credit quality impacted by prolonged slowdown

• Lower cash flows due

to slowdown, delays

in project

implementation & raw

material issues

• Higher leverage

Asset quality

14

Impact

• Banks working with promoters to

encourage sale of assets

• Joint lenders forums have resulted in

increased co-operation among banks

• RBI has provided tools like strategic

debt restructuring to expedite

recoveries

Actions

Asset quality: way forward

Government spending to drive growth recovery

Close co-operation amongst banks

Focused resolution of infrastructure projects

Continued focus on asset sales & deleveraging

Supportive regulatory & legal framework

15

The digital shift (1/2)

Strong digital tailwinds in India…

World No. 1 World No. 2

350 mn

internet users

~40%-mobile only

World No. 1

~41% of e-

commerce on

mobile

World No. 1

~10% of

WhatsApp users

from India

Among the

fastest in

the world

Over 55% growth

in smartphone

usage

Among the

fastest in

the world

Among fastest

growing markets

for Twitter

~32% increase

in internet users

in 2014

The digital shift (2/2)

…continuing to transform banking

Banking : then Banking : now

Evolving banking landscape

18

• Telecom companies, securities market entity, postal

service, bottom of pyramid players, payment service

providers, technology company and NBFCs

• Payments: expanding infrastructure and number & types of

players

• 11 payment bank licensees, 40 prepaid payment instrument

issuer licensees, 10+ payment aggregators

Regulator encouraging innovation

Entities with diverse sector experience & capabilities

granted payment bank licenses

Imperatives for banks

19

Constant innovation: rich functionality & high quality

customer experience

Focus on leveraging larger product suite & deeper

customer relationships

Explore mutually beneficial partnerships

Other developments

Continued progress in implementation of global capital &

liquidity standards

Steps initiated for reform & capitalisation of public sector

banks



1

2

21


Significant progress on operating performance

Strong retail & rural franchise

22

Leadership in technology

Substantial value creation within the ICICI Group



23



Performance over the years

24

Significant improvement across operating parameters

Cost-income Net interest margins

Loan mix & growth Funding profile

Approach to asset quality

25

Concentration risk management framework refined for

incremental lending

Increasing share of retail loans

Focus on lending to higher rated corporates

Close monitoring of existing exposures for resolution &

recoveries

Significant sequential decline in NPL additions in Q1-2016; no

meaningful restructuring pipeline

Performance over the years

Return ratios have improved

Strong capital position to support future growth

• About 90 bps improvement

in Standalone RoA over

FY2009

• Consolidated RoE improved

from less than 8% in

FY2009 to 15.0% in Q1-

2016

26



27



28

Enhanced retail franchise

Healthy

growth in

fee

income

Sustained

growth in

granular

deposits

Robust

loan

portfolio

growth

Stable

asset

quality

trends

The Bank continues to scale up its retail business and

invest in strengthening the franchise and distribution

infrastructure

Extensive geographical presence

29

Significant investments made in distribution

~52% of branches in semi-

urban and rural areas

Supplemented by

~12,800 ATMs

Branch network

Significant presence in rural & semi-urban markets

Network Technology

solutions

Branches

Gramin branches

BCs1 & CSPs

2

Aadhaar integration

for DBT1

Partner linkages

2,106 branches in rural & semi-urban markets

Focus on rural business (1/2)

Mobile based

remittance services

Bank on wheels &

micro ATMs

30

1. BCs: Business correspondents

2. CSPs: Customer service points

Approach to

lending

Selective geographical

approach

Collateral based

lending

Granular portfolio

Diverse product suite & granular lending

Continue to focus on growth while monitoring risks

31

Key products include loans against gold jewelry, farm

equipment loans, kisan credit card, agri term loans and

loans to Self Help Groups (SHG)

Portfolio contributes~15%

to retail loans

~33% y-o-y growth at June

30, 2015

Focus on rural business (2/2)



32




Digitizing

channels

Digitizing

experience

Digitizing

core

Leveraging digitization & mobility to strengthen franchise &

improve performance

33

• One of the largest bouquets of seamless

services

• Online dashboard - ‘My View’

• Investment management & tax services

tools

• Internet banking contributes to ~48% in

number & ~38% in value of incremental

retail term deposits

34

Digitizing channels (1/2)

Over 60% of total transactions by savings account customers

through new age digital channels

iMobile

• Integrated view of all ICICI Bank relationships

• Over 100 services available

• First in India: tagging frequent transactions as

favourites; in-app chat functionality; alerts &

notifications through ‘Google Now’; flexible recurring

deposits called ‘iWish’

Refreshed & intuitive

website

35

Digitizing channels (2/2)

Comprehensive

digital wallet

•Significant interest from non-ICICI users

•Services available include shopping, bill

payments, booking movie tickets

•Linked prepaid card for POS

transactions at more than 1 million

merchants

First digital bank in India: over 1 million downloads in four

months

Presence on social media

Innovative offerings to improve customer convenience

•Banking services available on Facebook and

Twitter

•Fan base of over 3.9 million on Facebook

•Highest among banks in India

Digitizing experience (1/2)

36

First bank in India to launch 24x7 fully automated

branches

• 101 Touch Banking branches across

33 cities in India

• Over 1,000 self service kiosks at

other branches

• State of the art robotic

technology

• Hi-tech security system & multi-

level checks

• Example of ‘Make in India’:

~80% Indian components

Smart Vault: first-of-its-kind 24x7 locker facility

Digitizing experience (2/2)

37

Debit & credit cards using near field communication

Contactless payments

Toll and transit solutions

• Transit Metro solutions

• Debit & credit cards with NFC metro smart card chip

• Auto-top up facility

• Easy recharge using SMS/internet

• Solutions for road transport

• Prepaid card with dual wallet (RFID1 chip & magnetic chip)

• Single card for bus ticket payments & retail purchases

• Electronic toll collection: prepaid RFID1 tags for vehicles

1. RFID: Radio-frequency identification

Digitizing core

Front office

• KYC through

scanned documents

• Demo videos for

products & services

• Upsell of mutual

funds & insurance

• Being introduced for

loan products

~70% of savings

accounts opened

using tablets

• Video banking app

• 24X7 face-to-face

banking

• Insta-banking

• Pre-processing of

transactions

• EFT cheques

• App-based cheque

issuance & image

based cheque

processing

• Image-based

processing of

documents

• OCR1 to reduce

data entry & error

rates

• Automated

processing

Mid office

Branch services

shifting to

customers’ mobiles

Back office

Digitizing

operations

38

1. OCR: Optical Character Recognition



39



ICICI Group

Savings

Investments

Capital

Flows

Protection

Credit

Spanning the spectrum of financial services

40

41

Life insurance

• Overall market share1 has improved from

7.2% in FY2014 to 11.3% in FY2015 and

11.7% in Q1-2016

•38.9% y-o-y growth in new business

premiums1 in Q1-2016 compared to 1.5%

y-o-y decrease for industry

Strong growth

& improvement

in market share

1. Based on retail weighted received premium

• PAT of ` 3.97 billion in Q1-2016; ` 16.34

billion in FY2015

• Return on equity of over 30%

Sustained &

strong

profitability

• ~15% y-o-y increase in AUM; at ~` 991

billion at June 30, 2015 Growth in AUM

42

General insurance

• Private sector market leadership

maintained

• Overall market share at 8.9%1 in Q1-2016

• Gross written premium grew by 14.9% y-

o-y compared to about 13% y-o-y growth

for industry

Market

position

• ~61% y-o-y increase in PAT to `1.16

billion in Q1-2016; PAT of ` 5.36 billion in

FY2015

• Return on equity at ~20%

Strong

profitability

1. Based on gross written premium

43

Other businesses

• 2nd largest AMC in India

• ~31% y-o-y increase in profits in Q1-2016

Asset

management

• Strong platforms for leveraging

favourable markets

• ICICI Securities: ~3.5 million customers

• ICICI Securities PD: amongst the leaders

in Indian fixed income & money markets

Securities &

primary

dealership

Strong franchise across segments

Investments in a range of areas including digital product

offerings and partnerships

Looking ahead

44

Targeting 17-

18%

consolidated

RoE

Focus on profitability of subsidiaries & return on capital

45

Key priorities going forward

Continue to expand retail & rural

franchise

Maintain technology leadership

Sustain operating efficiency

Selectively grow corporate portfolio

Leverage strong capital position & improve efficiency

Thank you

46

India & ICICI Group · PDF file•CAD decreased to ~1.3% of GDP in FY2015 from a peak of ... Significant progress on operating performance Strong retail & rural franchise 39.....

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