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ICICI Group

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A presentation on ICICI Bank's strategy in FY 2010 with a brief on it's strategic history. Also included is an overview of the Indian banking industry.

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ICICI Group
Current Economic Environment GDP growth 7.9% as on Sep-09 Industrial production grew by 9.1% in Sep-09 Strong capacity utilization in key sectors like steel, aluminum & cement Comfortable systemic liquidity : Approximately Rs.1 trillion lent to RBI on daily basis
Current Economic Environment RBI’s projection for credit / deposit growth for FY 2010 is 18% Increased momentum in home & car sales in the period Q2-FY10 Increased card spending Growth in economy backed by domestic demand
Indian Banking Industry The above structure shows number of entities of each type ICICI Bank is a Scheduled Private Commercial Bank INDIAN BANKING SYSTEM SCHEDULED COMMERCIAL BANKS (96) REGIONAL RURAL BANKS (86) LOCAL AREAS BANKS (4) COOPERATIVE BANKS (97782) PSU BANKS (27) PRIVATE BANKS (31) FOREIGN BANKS (38) NBFC (12740) URBAN BANKS (1721) RURAL BANKS (96061)
Indian Banking Industry Total asset size : INR 60 trillion Total deposit size : INR 45 trillion
Indian Banking Industry Asset size of SCBs (Scheduled Commercial Bank) : INR 52 trillion Asset size of Private SCBs : INR 11 trillion Total SCB branches : 64608 Total SCB ATMs : 43651
ICICI…an overview India’s second largest bank with total assets worth INR 4 trillion Present in 18 countries 1548 branches and 4816 ATMs Stock listed on NSE, BSE. ADRs listed on NYSE
ICICI…an overview 10 domestic subsidiaries and 7 international subsidiaries Key businesses : Retail banking, Corporate & SME Banking, Project finance, International banking, Rural & Agri Banking, Life/general Insurance, venture capital, Asset management & securities trading Total number of employees : 35000 Net income : INR 160 billion Consolidated PAT : INR 36 billion
Key Domestic Subsidiaries
Strategic milestones Banking corporation setup by ICICI in 1994. Acquired Bank of Madura in 2001 New entitity formed by reverse merger of ICICI with ICICI Bank in 2002 Opened subsidiaries in UK & Canada in 2003 Setup representative offices in Singapore, Dubai and China in 2003
Strategic milestones Representative offices setup in Bangladesh & South Africa Commenced it’s Russian operations in 2005 by taking over Investitsionno Kreditny Bank Opened offices in Belgium & Germany in 2007 Launched it’s tremendously successful pure online savings brand ‘HiSAVE’ in UK & Canada in 2006. Acquired Sanglii Bank in 2007 with it’s 198 branches and 888 crore of deposits
Strategic milestones Commenced branch operations in NewYork in 2008 Hived the Point of Sale (POS) terminal business to FirstData corp for $80 million to unlock the value for shareholders Received full service bank approval from Singapore Govt. to setup 20 branches Stake sale in 3i Infotech and Firstsource solutions on cards
Key Ratios Downturn in certain key ratios due to economic environment in FY-09.
Key Ratios – Comparison to Industry CASA, Credit quality emerge as clear focus areas Conserving capital, optimising costs required for higher profitability The Bank adopted the ‘4C STRATEGY’ for FY-10
The 4C Strategy 4C 4C CASA Ratio improvement CREDIT quality improvement CAPITAL conservation COST optimization
Key enablers to 4C 40% increase in branch base targeted for FY-10 Thrust on new account sourcing through branches Increase in wallet share by cross-selling at various contact points Muted growth on wholesale banking to reduce high cost liabilities 4C CASA Credit quality Capital Lean Costs
Key enablers to 4C In housing collection for specific products and NPA buckets Dedicated pre delinquency management Changes in field agency management Moderated disbursement of personal loans & credit cards 4C CASA Credit quality Capital Lean Costs
Key enablers to 4C Adherence to Basel norms High capital adequacy maintained vis-à-vis competitors Measured capital expenditure 4C CASA Credit quality Capital Lean Costs
Key enablers to 4C Reduction in account sourcing costs by focusing more on branches vis-à-vis Direct Marketing Agencies Slowdown on hiring, wages & promotion to reduce wage costs Focus on realignment of existing workforce 4C CASA Credit quality Capital Lean Costs
The 4C effect as on Q2… Net interest margin increase by 10 basis points to 2.5% 28% increment in low cost CASA ratio at 36.9% Capital adequacy enhancement to 17.7% vs. BASEL II requirement of 13.3% Net NPA in control at 2.19%
SWOT analysis THREATS Banking reforms enabling foreign banks to gain more business OPPORTUNITIES Rural financing & Loans to small enterprises Growth in general insurance market WEAKNESS Over dependence on domestic market for major revenue High levels of Non performing assets Brand value erosion due to slew of media reports ranging from Bank’s recovery practices to exposure to subprime assets STRENGTHS Largest Private Sector Bank in India Large retail franchise base 24*7 support via ATM, Callcentre & Internet Diverse product portfolio covering almost all financial needs International expansion supporting profitability
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ICICI Group

  • 2. Current Economic Environment GDP growth 7.9% as on Sep-09 Industrial production grew by 9.1% in Sep-09 Strong capacity utilization in key sectors like steel, aluminum & cement Comfortable systemic liquidity : Approximately Rs.1 trillion lent to RBI on daily basis
  • 3. Current Economic Environment RBI’s projection for credit / deposit growth for FY 2010 is 18% Increased momentum in home & car sales in the period Q2-FY10 Increased card spending Growth in economy backed by domestic demand
  • 4. Indian Banking Industry The above structure shows number of entities of each type ICICI Bank is a Scheduled Private Commercial Bank INDIAN BANKING SYSTEM SCHEDULED COMMERCIAL BANKS (96) REGIONAL RURAL BANKS (86) LOCAL AREAS BANKS (4) COOPERATIVE BANKS (97782) PSU BANKS (27) PRIVATE BANKS (31) FOREIGN BANKS (38) NBFC (12740) URBAN BANKS (1721) RURAL BANKS (96061)
  • 5. Indian Banking Industry Total asset size : INR 60 trillion Total deposit size : INR 45 trillion
  • 6. Indian Banking Industry Asset size of SCBs (Scheduled Commercial Bank) : INR 52 trillion Asset size of Private SCBs : INR 11 trillion Total SCB branches : 64608 Total SCB ATMs : 43651
  • 7. ICICI…an overview India’s second largest bank with total assets worth INR 4 trillion Present in 18 countries 1548 branches and 4816 ATMs Stock listed on NSE, BSE. ADRs listed on NYSE
  • 8. ICICI…an overview 10 domestic subsidiaries and 7 international subsidiaries Key businesses : Retail banking, Corporate & SME Banking, Project finance, International banking, Rural & Agri Banking, Life/general Insurance, venture capital, Asset management & securities trading Total number of employees : 35000 Net income : INR 160 billion Consolidated PAT : INR 36 billion
  • 10. Strategic milestones Banking corporation setup by ICICI in 1994. Acquired Bank of Madura in 2001 New entitity formed by reverse merger of ICICI with ICICI Bank in 2002 Opened subsidiaries in UK & Canada in 2003 Setup representative offices in Singapore, Dubai and China in 2003
  • 11. Strategic milestones Representative offices setup in Bangladesh & South Africa Commenced it’s Russian operations in 2005 by taking over Investitsionno Kreditny Bank Opened offices in Belgium & Germany in 2007 Launched it’s tremendously successful pure online savings brand ‘HiSAVE’ in UK & Canada in 2006. Acquired Sanglii Bank in 2007 with it’s 198 branches and 888 crore of deposits
  • 12. Strategic milestones Commenced branch operations in NewYork in 2008 Hived the Point of Sale (POS) terminal business to FirstData corp for $80 million to unlock the value for shareholders Received full service bank approval from Singapore Govt. to setup 20 branches Stake sale in 3i Infotech and Firstsource solutions on cards
  • 13. Key Ratios Downturn in certain key ratios due to economic environment in FY-09.
  • 14. Key Ratios – Comparison to Industry CASA, Credit quality emerge as clear focus areas Conserving capital, optimising costs required for higher profitability The Bank adopted the ‘4C STRATEGY’ for FY-10
  • 15. The 4C Strategy 4C 4C CASA Ratio improvement CREDIT quality improvement CAPITAL conservation COST optimization
  • 16. Key enablers to 4C 40% increase in branch base targeted for FY-10 Thrust on new account sourcing through branches Increase in wallet share by cross-selling at various contact points Muted growth on wholesale banking to reduce high cost liabilities 4C CASA Credit quality Capital Lean Costs
  • 17. Key enablers to 4C In housing collection for specific products and NPA buckets Dedicated pre delinquency management Changes in field agency management Moderated disbursement of personal loans & credit cards 4C CASA Credit quality Capital Lean Costs
  • 18. Key enablers to 4C Adherence to Basel norms High capital adequacy maintained vis-à-vis competitors Measured capital expenditure 4C CASA Credit quality Capital Lean Costs
  • 19. Key enablers to 4C Reduction in account sourcing costs by focusing more on branches vis-à-vis Direct Marketing Agencies Slowdown on hiring, wages & promotion to reduce wage costs Focus on realignment of existing workforce 4C CASA Credit quality Capital Lean Costs
  • 20. The 4C effect as on Q2… Net interest margin increase by 10 basis points to 2.5% 28% increment in low cost CASA ratio at 36.9% Capital adequacy enhancement to 17.7% vs. BASEL II requirement of 13.3% Net NPA in control at 2.19%
  • 21. SWOT analysis THREATS Banking reforms enabling foreign banks to gain more business OPPORTUNITIES Rural financing & Loans to small enterprises Growth in general insurance market WEAKNESS Over dependence on domestic market for major revenue High levels of Non performing assets Brand value erosion due to slew of media reports ranging from Bank’s recovery practices to exposure to subprime assets STRENGTHS Largest Private Sector Bank in India Large retail franchise base 24*7 support via ATM, Callcentre & Internet Diverse product portfolio covering almost all financial needs International expansion supporting profitability