performance review fy2001 may 3, 2001
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TRANSCRIPT
Performance ReviewFY2001
May 3, 2001
2
Business Overview
Financial Performance
Asset Composition and Quality
Capital and Shareholders
Agenda
3
Major achievements during the year...
Expanding retail franchise,Market Leader in automobile finance
Expanding retail franchise,Market Leader in automobile finance
Unlocking value in ICICI Infotech and ICICI Eco-net
Unlocking value in ICICI Infotech and ICICI Eco-net
Continued diversificationof corporate assets portfolio
Continued diversificationof corporate assets portfolio
Launching oflife insurance business
Launching oflife insurance business
4
BusinessGrowth
BusinessGrowth
High QualityCorporate Credit
High QualityCorporate Credit
StructuredProject
Financing
StructuredProject
Financing
Retail CreditRetail Credit
5
The Growth Proposition
CustomerCentric
Organisation
ComprehensiveRange ofProducts
& Services
Multi-Channel
DistributionNetwork
6
Focus on “total” client profitabilityFocus on “total” client profitability
Risk-based pricingand focus
on fee income
Increased“share of wallet”across all services
StructuredSolutions
7
Resulting in robust growth in credit portfolio...
285.51
366.84
453.18
519.08
600.71
1997-Mar 1998-Mar 1999-Mar 2000-Mar 2001-Mar
Rs. in billion
CAGR: 20.5%
8
Project Finance
Retail Credit Insurance
Web
Tra
de
Payroll Accounts IT Services
Reta
il B
on
ds
Leveraging client relationships across product spectrum...
CorporateRelationships
Project FinanceS
tru
ctu
red
Fin
Investment Banking
Corporate Finance Channel Financing
Ven
ture
Cap
ital
9
0.30%
0.43%
0.82%
0.57%
1996 1998 2000 2001
Fees offset lower spreads on higher quality assets
Fees as % of assets
Fee Income: Extracting value from client relationships
10
Enhanced wallet share case study
Project/Corporate
Credit
ConsumerLoans
PowerPayAccounts
SupplierFinance
CorporateBanking
DealerFinance
InternationalAutomobile
Manufacturer
11
Wide suite of products in the retail portfolio
Mutual FundsDemat AccountsIPOsRelief Bonds (9%)Insurance
E-broking Bill payments
Fixed DepositsBonds Depository Services
Resident bank accountsNRI bank accountsKid-e-bank accountBank @ campusPower Pay Credit CardDebit CardRelief Bonds (9%)Loans against Shares Auto Loans
Consumer LoanPersonal LoansTwo Wheeler LoansHome Loans
InsuranceMotor insuranceHealth Property Customised policiesLife insurance
Considerable potential for cross-selling products
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
Auto loans - Riding on the Virtuous Cycle...
Manufacturer & dealers• Leverage corporate relationships • Volume-driven approach
Manufacturer & dealers• Leverage corporate relationships • Volume-driven approach
Higher subventions• Pass subventions to customers• Lower cost to customers
Higher subventions• Pass subventions to customers• Lower cost to customers
First choice ofcustomers• Better credit• Higher volumes
First choice ofcustomers• Better credit• Higher volumes
14
Resulting in industry leadership in volumes and credit quality of auto-loans...
273 8321,215
2,472
4,258
7,304
10,114
14,630
Q1-FY00
Q2-FY00
Q3-FY00
Q4-FY00
Q1-FY01
Q2-FY01
Q3-FY01
Q4-FY01
Rs. mn
15
Similar achievements in other retail products... Increasing market share in home-
finance
Over 220,000 credit cards issued in one year of operations
Clear market leader in online trading Over 60% market-share by number
of customers as well as volume
16
Life insurance business launched... IRDA license received on November 24, 2000 ICICI Prudential Life Insurance amongst the first
private companies to issue an insurance policy on December 12, 2000
5 products with innovative riders launched Operations cover 5 cities 2,100 agents already on the field Over 6,350 policies sold till March 31, 2001
17
Reduction of stake in ICICI Bank
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
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 ICICI now holds about 46% of ICICI Bank’s equity
capital Strategy of working within the regulatory
framework to exploit group synergies remains unchanged
18
Agenda
Business Overview
Financial Performance
Asset Composition and Quality
Capital and Shareholders
19
It was a year of extreme challenges... Significant part of the year marked by depressed
capital markets & volatility in interest rates and forex markets
Continued restructuring and consolidation in key manufacturing sectors Accordingly, to improve long-term viability and de-
stress the portfolio, ICICI restructured certain assets
Business was further constrained by Lukewarm response to Government’s efforts to
attract investment in the infrastructure sectorSystemic issues continued to dissuade private
investments particularly in the power sector Changes in regulatory & taxation guidelines
20
Significant regulatory & taxation changes Revision in RBI’s NPL provisioning guidelines for
doubtful assets:Resulting in a higher provisioning requirement of about Rs. 0.66 bn
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
Revised RBI guidelines on investment valuation New guidelines for restructured / rescheduled
loan assets Tax deductibility available only on actual write-
offs and not on provisions
21
Despite environmental constraints, profit to equity holders increased 21% in FY2001, after adding back accelerated provisions and write-offs
22
ICICI proposes to make accelerated provisions against NPLs as a more prudent policy... Coverage on NPLs as per Indian GAAP was
about 35% However, higher provision could provide
additional cushion in periods when borrowers face financial stress due to economic slowdown or other reasons
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
23
Proposed provisioning policy from FY2001... 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
Revised provisioning policy First year of NPL - 15% provision Second year of NPL - cumulative 30%
provision Third year of NPL - cumulative 50% provision
Total accelerated provisioning of Rs 8.13 billion in FY2001As a result, provision cover against NPLs
would increase to 50.2% from about 35%
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Profit and Loss Statement
Q499-00
Q400-01
FY2000
FY2001
Inc.%
Fund based income 19.02 20.73 75.64 81.44 7.7Less: Interest & relatedexpenses and Lease dep. 16.04 17.66 63.59 68.45 7.6Net fund based income 2.98 3.07 12.05 12.99 7.8Fees and commissions 1.19 1.42 3.24 5.22 61.4Net i/c from operations 4.17 4.49 15.29 18.21 19.2Operating expenses (1) 0.88 0.87 2.89 3.37 16.6Profit from operations 3.29 3.62 12.40 14.84 19.7
Rs. in billion
(1) Operating expenses have been adjusted for rent & other recoveries from subsidiaries.
25
Profit and Loss Statement
Q4 99-00
Q4 00-01
FY2000
FY2001
Inc.%
Profit from operations 3.29 3.62 12.40 14.84 19.7Less : Provisions & write-offs 1.37 2.76 4.62 6.08 31.7Profit before income frominvestments and otherincome 1.92 0.86 7.78 8.76 12.6Dividend 1.09 0.40 2.10 1.08 (48.6)Net capital gains 1.13 3.47 2.94 3.44 17.2Other income 0.14 0.49 0.46 0.63 36.1Profit before tax andaccelerated provisions 4.28 5.22 13.28 13.91 4.7
Rs. in billion
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Profit and Loss Statement
Q4 99-00
Q4 00-01
FY2000
FY2001
Inc.%
Profit before tax andaccelerated provisionsand write-offs 4.28 5.22 13.28 13.91 4.7Accelerated provisionsand write-offs - 8.13 - 8.13 -Less : Provision for tax 0.33 (0.34) 1.22 0.40 -Profit after tax 3.95 (2.57) 12.06 5.37 -Less: Preference div 0.28 - 1.09 0.18 -Profit to equity holders 3.67 (2.57) 10.97 5.19 -Profit to equity holdersafter adding backaccelerated provision 3.67 5.56 10.97 13.32 21.5
Rs. in billion
Dividend maintained at 55%
27
Balance SheetAssets Mar 31,
2000Mar 31,2001
Inc.%
Net loans & Debentures 483.34 560.02 15.9
- Rupee loans 324.76 400.43 23.3- Retail loans 4.54 20.40 349.5
- Debentures 74.85 67.48 (9.8)
- FC loans 89.91 84.75 (5.7)
- Less : Provisions 10.72 13.04 21.6
Other investments 30.75 44.04 43.2
Current assets 91.36 75.83 (17.0)
Leased assets 36.09 40.69 12.7
Other fixed assets 8.90 10.42 17.1
Miscellaneous Exp. 3.46 3.14 (9.0)
Total assets 653.90 734.14 12.3
Rs. in billion
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Balance Sheet
Liabilities Mar 31,2000
Mar 31,2001
Inc.%
Shareholders’ equity 80.23 79.73 (0.6)- Equity capital 7.83 7.85 0.2- Reserves and surplus 72.39 71.88 (0.7)Preference capital 13.08 3.50 (73.2)Borrowings 508.81 598.35 17.6- Rupee funds 415.31 497.34 19.8- Foreign currency funds 93.50 101.01 8.0Current liabilities 51.78 52.56 1.5Total liabilities 653.90 734.14 12.3
Rs. in billion
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Summary Ratios (Indian GAAP)...
FY2000 FY20011
EPS (Rs) (2) 14.0 17.0
Return on Assets (%) 2.1 2.1
Return on Net Worth (%) 16.8 16.4
Overheads / Net Assets 0.5 0.5
(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.
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Performance of Subsidiaries/Affiliates
PAT Assets
FY 2000 FY 2001 FY 2000 FY 2001
ICICI Bank 1,050.0 1,610.0 120,726.3 197,370.0
ICICI Securities 720.8 538.0 22,673.5 17,377.8
ICICI Infotech 105.1 279.3 489.4 3,564.0
ICICI Venture Fund 383.5 104.5 466.1 339.3
ICICI PFS 53.2 30.6 668.3 649.4
ICICI Capital 20.2 31.5 125.9 215.3
ICICI Home 0.5 15.6 599.0 7,358.7
Total of above 2,288.1 2,588.9 145,748.5 226,874.5
Rs. in million
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US GAAP...
During the year, ICICI Bank ceased to be a subsidiary of ICICI Accordingly, ICICI Bank has been
consolidated as per equity method of accounting for FY2001 unlike the line-by-line consolidation in FY2000
As a result, financial statements of FY2001 and FY2000 are not strictly comparable
32
Reconciliation of net income - US GAAP Rs. in billion
FY2000 FY2001
As per Indian GAAP 12.06 5.371
Provisions for credit losses (2.03) 3.96
Amortisation of loan origination fees 0.01 (1.01)
Business combination in respect of mergers (0.09) (0.11)
Investment diminution (0.91) (0.58)
Preference dividend payout (1.09) (0.18)
Unrealized gain / (losses) on trading portfolio 0.17 (0.81)
Investment in equity affiliates 0.04 (0.47)
Net income of consolidated subsidiaries 1.11 (0.31)
Others (0.19) (0.05)
Total adjustments as per US GAAP (2.98) 0.44
As per US GAAP (1) 9.08 5.81
(1) Includes accelerated provisions and write-offs of Rs. 8.13 billion. 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
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Agenda
Business Overview
Financial Performance
Asset Composition and Quality
Capital and Shareholders
34
Approvals: Continued growth and diversification...
Corporate Finance
61%
Infra14%
Mfg. Projects15%
Retail2% Oil & Gas
8%
Corporate Finance
58%
Infra21%
Mfg. Projects12%
Retail7% Oil & Gas
2%
Rs. 435.23 billion Rs. 560.92 billion
2000FY 2001
35
Improving quality of approvals...
32%
22%
35%
9% 2%
AAA AA A BBB BB and lower
Approvals to clients rated ‘A’ and above up from 89% to 92%
25%
33%
6% 2%
34%
2000 2001
36
Disbursements: Continued growth and diversification......
Corporate Finance
70%
Infra6%Mfg.
Projects15%
Retail3% Oil & Gas
6%
Corporate Finance
69%
Infra8%
Mfg. Projects
11%
Retail11%
Oil & Gas1%
Rs. 258.36 billion Rs. 319.65 billion
2000 2001
37
Improving quality of disbursements...
Disbursements to clients rated ‘A’ & above up from 82% to 89%
AAA AA A BBB BB and lower
31%
18%33%
13%5%
29%
27%
33%
9% 2%
2000 2001
38
Diversified and De-risked Asset Portfolio...
31 1997March , 31 2001March ,
Reduced Risk and Volatility of Earnings Stream
Oil & Gas9%
Infrastructure13%
Mfg. Project Finance
73%
Mfg. Project Finance
36%
Corp. Financ
e9%
Infrastructure9%
Corp. Finance
40%Oil & Gas
8%
Retail3%
Rs. 297.83 billion Rs. 628.29 billion
39
Top 10 Industry-wise Outstanding
Industry March 31,2000
March 31,2001
Services 11.1 14.2Iron & Steel 10.7 10.9Power 9.7 10.8Crude petroleum & refining 9.5 9.5Chemical & chemical products 7.6 7.7Textiles 7.2 7.5Cement 3.1 4.0Transport equipment 3.9 3.3Telecom 2.9 3.3Fertilisers and pesticides 3.9 2.8Total outstanding* (Rs. billion) 541.12 607.89
*Excluding retail finance
% to total
40
Asset Classification
March 31,2000
March 31,2001
Standard assets 92.4 94.8
Of which: Restructuredstandard assets - 2.2Sub-standard assets 3.4 1.5
Doubtful assets 4.2 3.7
Loss assets - -
Total loan assets 100.0 100.0
In percentage
41
Non-Performing Loans (Indian GAAP)
March 31, 2000 March 31, 2001
Gross NPLs 60.18 59.881
Net NPLs 39.59 29.822
Net loan assets 521.27 575.06
Net NPL ratio 7.6% 5.2%Mar 31, 1998
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
Clear slow-down in incremental NPLs...
Mar 31,1997
Mar 31,1998
Mar 31,1999
Mar 31,2000
Mar 31,2001
Gross NPLs 28.21 42.12 54.89 60.18 59.881
% increase 48% 49% 30% 10% (0.5%)
Net NPLs 19.54 28.11 37.33 39.59 29.822
% increase 63% 44% 33% 6% (25%)
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
Top 10 Industry-wise NPAs
Industry March 2000 March 2001
NPA O/sRs. bn
% to TotalNPA O/s
NPA O/sRs. bn
% to TotalNPA O/s
Textiles 4.92 12.4 5.14 17.2Manmade fibres 4.45 11.3 3.39 11.4Iron & steel 3.85 9.7 2.74 9.2Basic chemicals 3.30 8.3 2.06 6.9Metal products 2.66 6.7 1.95 6.5
Food products 1.94 4.9 1.80 6.0Drugs 1.98 5.0 1.23 4.1Electrical Equipment 1.05 2.7 1.11 3.7Electronics 1.90 4.8 1.05 3.5Cement 0.89 2.3 1.02 3.4
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3.80
5.15
FY1999 FY2000 FY2001
Continued Settlements...
Aggregate SettlementsRs. in billion
6.62
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Agenda
Business Overview
Financial Performance
Asset Composition and Quality
Capital and Shareholders
46
Capital Adequacy...
11.59.6
5.7
5.0
0
2
4
6
8
10
12
14
16
18
20Per
cent
Tier-2Tier-1
14.6%
March 31, 2000 March 31, 2001
17.2%
Despite accelerated provisioning, capital adequacymaintained at healthy levels.
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Shareholding Pattern
Mar 31, 2000
6.86%
22.31%
3.24%11.08%
8.24%
15.62%
32.65%
Mar 31, 2001
6.63%
23.47%
3.11%10.32%8.71%
15.11%
32.65%
UTI
Insurancecos.
Banks and FIs
Individuals
Corporatesand MFs
ADR holders
FIIs & NRIs
48
Safe HarbourExcept 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 "forward-looking statements". 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.
49
Thank You