Performance Review FY2001 May 3, 2001


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Performance Review FY2001 May 3, 2001

  1. 1. Performance Review FY2001 May 3, 2001
  2. 2. <ul><li>Business Overview </li></ul><ul><li>Financial Performance </li></ul><ul><li>Asset Composition and Quality </li></ul><ul><li>Capital and Shareholders </li></ul>Agenda
  3. 3. Major achievements during the year... Expanding retail franchise, Market Leader in automobile finance Unlocking value in ICICI Infotech and ICICI Eco-net Continued diversification of corporate assets portfolio Launching of life insurance business
  4. 4. Business Growth High Quality Corporate Credit Structured Project Financing Retail Credit
  5. 5. The Growth Proposition Customer Centric Organisation Comprehensive Range of Products & Services Multi- Channel Distribution Network
  6. 6. Focus on “total” client profitability Risk-based pricing and focus on fee income Increased “share of wallet” across all services Structured Solutions
  7. 7. Resulting in robust growth in credit portfolio... Rs. in billion CAGR: 20.5%
  8. 8. Project Finance Leveraging client relationships across product spectrum... Corporate Relationships Retail Credit Insurance Web Trade Payroll Accounts IT Services Retail Bonds Project Finance Structured Fin Investment Banking Corporate Finance Channel Financing Venture Capital
  9. 9. Fee Income: Extracting value from client relationships Fees offset lower spreads on higher quality assets Fees as % of assets
  10. 10. Enhanced wallet share case study Project/ Corporate Credit Consumer Loans PowerPay Accounts Supplier Finance Corporate Banking Dealer Finance International Automobile Manufacturer
  11. 11. Wide suite of products in the retail portfolio <ul><li>Mutual Funds </li></ul><ul><li>Demat Accounts </li></ul><ul><li>IPOs </li></ul><ul><li>Relief Bonds (9%) </li></ul><ul><li>Insurance </li></ul><ul><li>E-broking </li></ul><ul><li>Bill payments </li></ul><ul><li>Fixed Deposits </li></ul><ul><li>Bonds </li></ul><ul><li>Depository Services </li></ul><ul><li>Resident bank accounts </li></ul><ul><li>NRI bank accounts </li></ul><ul><li>Kid-e-bank account </li></ul><ul><li>Bank @ campus </li></ul><ul><li>Power Pay </li></ul><ul><li>Credit Card </li></ul><ul><li>Debit Card </li></ul><ul><li>Relief Bonds (9%) </li></ul><ul><li>Loans against Shares </li></ul><ul><li>Auto Loans </li></ul><ul><li>Consumer Loan </li></ul><ul><li>Personal Loans </li></ul><ul><li>Two Wheeler Loans </li></ul><ul><li>Home Loans </li></ul><ul><li>Insurance </li></ul><ul><li>Motor insurance </li></ul><ul><li>Health </li></ul><ul><li>Property </li></ul><ul><li>Customised policies </li></ul><ul><li>Life insurance </li></ul>Considerable potential for cross-selling products
  12. 12. ICICI - Click and brick delivery architecture 380 Branches m-Banking 518 ATMs Internet Banking 16 Call Centers 96 ICICI Centers Delivery Channels Online Brokerage Online Bill Payment Product and channel structure increasingly becoming customer-centric
  13. 13. Auto loans - Riding on the Virtuous Cycle... <ul><li>Manufacturer & dealers </li></ul><ul><li>Leverage corporate relationships </li></ul><ul><li>Volume-driven approach </li></ul><ul><li>Higher subventions </li></ul><ul><li>Pass subventions to customers </li></ul><ul><li>Lower cost to customers </li></ul><ul><li>First choice of customers </li></ul><ul><li>Better credit </li></ul><ul><li>Higher volumes </li></ul>
  14. 14. Resulting in industry leadership in volumes and credit quality of auto-loans... Rs. mn
  15. 15. Similar achievements in other retail products... <ul><li>Increasing market share in home-finance </li></ul><ul><li>Over 220,000 credit cards issued in one year of operations </li></ul><ul><li>Clear market leader in online trading </li></ul><ul><ul><li>Over 60% market-share by number of customers as well as volume </li></ul></ul>
  16. 16. Life insurance business launched... <ul><li>IRDA license received on November 24, 2000 </li></ul><ul><li>ICICI Prudential Life Insurance amongst the first private companies to issue an insurance policy on December 12, 2000 </li></ul><ul><li>5 products with innovative riders launched </li></ul><ul><li>Operations cover 5 cities </li></ul><ul><li>2,100 agents already on the field </li></ul><ul><li>Over 6,350 policies sold till March 31, 2001 </li></ul>
  17. 17. Reduction of stake in ICICI Bank <ul><li>During the year, RBI reiterated its requirement of reduction of ICICI’s holding in ICICI Bank as per the license condition, and advised ICICI to draw up a firm plan for dilution of ICICI’s stake </li></ul><ul><li>In line with the RBI’s directive to reduce its stake in ICICI Bank to 40%, as a first step ICICI sold about 10% of ICICI Bank’s equity capital in FY2001 </li></ul><ul><ul><li>ICICI now holds about 46% of ICICI Bank’s equity capital </li></ul></ul><ul><li>Strategy of working within the regulatory framework to exploit group synergies remains unchanged </li></ul>
  18. 18. Agenda <ul><li>Business Overview </li></ul><ul><li>Financial Performance </li></ul><ul><li>Asset Composition and Quality </li></ul><ul><li>Capital and Shareholders </li></ul>
  19. 19. It was a year of extreme challenges... <ul><li>Significant part of the year marked by depressed capital markets & volatility in interest rates and forex markets </li></ul><ul><li>Continued restructuring and consolidation in key manufacturing sectors </li></ul><ul><ul><li>Accordingly, to improve long-term viability and de-stress the portfolio, ICICI restructured certain assets </li></ul></ul><ul><li>Business was further constrained by </li></ul><ul><ul><li>Lukewarm response to Government’s efforts to attract investment in the infrastructure sector </li></ul></ul><ul><ul><ul><li>Systemic issues continued to dissuade private investments particularly in the power sector </li></ul></ul></ul><ul><li>Changes in regulatory & taxation guidelines </li></ul>
  20. 20. Significant regulatory & taxation changes <ul><li>Revision in RBI’s NPL provisioning guidelines for doubtful assets: Resulting in a higher provisioning requirement of about Rs. 0.66 bn </li></ul><ul><li>Increase in dividend distribution tax rate: Replacement of preference shares (Rs. 10.00 bn) by lower-cost borrowings, leading to additional interest expense of about Rs. 0.90 billion </li></ul><ul><li>Revised RBI guidelines on investment valuation </li></ul><ul><li>New guidelines for restructured / rescheduled loan assets </li></ul><ul><li>Tax deductibility available only on actual write-offs and not on provisions </li></ul>
  21. 21. Despite environmental constraints, profit to equity holders increased 21% in FY2001, after adding back accelerated provisions and write-offs
  22. 22. ICICI proposes to make accelerated provisions against NPLs as a more prudent policy... <ul><li>Coverage on NPLs as per Indian GAAP was about 35% </li></ul><ul><li>However, higher provision could provide additional cushion in periods when borrowers face financial stress due to economic slowdown or other reasons </li></ul><ul><li>As per the recent credit policy, RBI has urged banks to voluntary set apart provisions much above the minimum prudential levels prescribed by the RBI as a desirable practice </li></ul>
  23. 23. Proposed provisioning policy from FY2001... <ul><li>ICICI would hold a cumulative provision of 50% against NPLs in 3 years compared to 5 & 1/2 years as per the existing RBI guidelines </li></ul><ul><li>Revised provisioning policy </li></ul><ul><ul><li>First year of NPL - 15% provision </li></ul></ul><ul><ul><li>Second year of NPL - cumulative 30% provision </li></ul></ul><ul><ul><li>Third year of NPL - cumulative 50% provision </li></ul></ul><ul><li>Total accelerated provisioning of Rs 8.13 billion in FY2001 </li></ul>As a result, provision cover against NPLs would increase to 50.2% from about 35%
  24. 24. Profit and Loss Statement Rs. in billion (1) Operating expenses have been adjusted for rent & other recoveries from subsidiaries.
  25. 25. Profit and Loss Statement Rs. in billion
  26. 26. Profit and Loss Statement Rs. in billion Dividend maintained at 55%
  27. 27. Balance Sheet Rs. in billion
  28. 28. Balance Sheet Rs. in billion
  29. 29. Summary Ratios (Indian GAAP)... (1) After adding back accelerated provisions and write-offs of Rs. 8.13 billion (2) EPS for FY2000 and FY2001 has been calculated based on 785 million shares outstanding.
  30. 30. Performance of Subsidiaries/Affiliates Rs. in million
  31. 31. US GAAP... <ul><li>During the year, ICICI Bank ceased to be a subsidiary of ICICI </li></ul><ul><ul><li>Accordingly, ICICI Bank has been consolidated as per equity method of accounting for FY2001 unlike the line-by-line consolidation in FY2000 </li></ul></ul><ul><ul><li>As a result, financial statements of FY2001 and FY2000 are not strictly comparable </li></ul></ul>
  32. 32. Reconciliation of net income - US GAAP Rs. in billion (1) Includes accelerated provisions and write-offs of Rs. 8.13 billion. <ul><li>If we exclude income from trading and capital gains, net income registered a marginal decline of 2% to Rs. 4.96 bn from Rs. 5.04 bn </li></ul>
  33. 33. Agenda <ul><li>Business Overview </li></ul><ul><li>Financial Performance </li></ul><ul><li>Asset Composition and Quality </li></ul><ul><li>Capital and Shareholders </li></ul>
  34. 34. Approvals: Continued growth and diversification... Corporate Finance 61% Infra 14% Mfg. Projects 15% Retail 2% Oil & Gas 8% Corporate Finance 58% Infra 21% Mfg. Projects 12% Retail 7% Oil & Gas 2% Rs. 435.23 billion Rs. 560.92 billion FY 2000 FY 2001
  35. 35. Improving quality of approvals... AAA AA A BBB BB and lower Approvals to clients rated ‘A’ and above up from 89% to 92% FY2000 FY2001
  36. 36. Disbursements: Continued growth and diversification...... Corporate Finance 70% Infra 6% Mfg. Projects 15% Retail 3% Oil & Gas 6% Corporate Finance 69% Infra 8% Mfg. Projects 11% Retail 11% Oil & Gas 1% Rs. 258.36 billion Rs. 319.65 billion FY2000 FY2001
  37. 37. Improving quality of disbursements... Disbursements to clients rated ‘A’ & above up from 82% to 89% AAA AA A BBB BB and lower FY2000 FY2001
  38. 38. Diversified and De-risked Asset Portfolio... March 31, 1997 March 31, 2001 Reduced Risk and Volatility of Earnings Stream Oil & Gas 9% Infrastructure 13% Mfg. Project Finance 73% Mfg. Project Finance 36% Corp. Finance 9% Infrastructure 9% Corp. Finance 40% Oil & Gas 8% Retail 3% Rs. 297.83 billion Rs. 628.29 billion
  39. 39. Top 10 Industry-wise Outstanding * Excluding retail finance % to total
  40. 40. Asset Classification In percentage
  41. 41. Non-Performing Loans (Indian GAAP) Rs. in billion (1) Includes only those debentures that are in the nature of advance as per the RBI guidelines. (2) Net of accelerated provisions and write-offs amounting to Rs. 8.13 billion.
  42. 42. Clear slow-down in incremental NPLs... Rs. in billion (1) Cases relating to ITC Classic have been written-off from the books and debentures not in the nature of advance are excluded (as per the RBI guidelines). (2) Net of accelerated provisions and write-offs amounting to Rs. 8.13 billion.
  43. 43. Top 10 Industry-wise NPAs
  44. 44. Continued Settlements... Aggregate Settlements Rs. in billion 6.62
  45. 45. Agenda <ul><li>Business Overview </li></ul><ul><li>Financial Performance </li></ul><ul><li>Asset Composition and Quality </li></ul><ul><li>Capital and Shareholders </li></ul>
  46. 46. Capital Adequacy... 14.6% March 31, 2000 March 31, 2001 17.2% Despite accelerated provisioning, capital adequacy maintained at healthy levels.
  47. 47. Shareholding Pattern
  48. 48. Safe Harbour <ul><ul><ul><li>Except for the historical information contained herein, statements in this release which contain words or phrases such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions may constitute &quot;forward-looking statements&quot;. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion, the adequacy of our allowance for credit losses, our provisioning policies, technological changes, investment income, cash flow projections, our exposure to market risks as well as other risks detailed in the reports filed by ICICI Limited with the Securities and Exchange Commission of the United States. ICICI Limited undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. </li></ul></ul></ul>
  49. 49. Thank You