Opening speech of Mr. Sandeep Batra, Executive Director, ICICI Bank at media call for the Quarter ended September 30, 2021

October 23, 2021

Media call on October 23, 2021: opening remarks

Certain statements in this release relating to a future period of time (including inter alia concerning our future business plans or growth prospects) are forward-looking statements intended to qualify for the 'safe harbor' under applicable securities laws including the US Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include, but are not limited to statutory and regulatory changes, international economic and business conditions, political or economic instability in the jurisdictions where we have operations, increase in non-performing loans, unanticipated changes in interest rates, foreign exchange rates, equity prices or other rates or prices, our growth and expansion in business, the adequacy of our allowance for credit losses, the actual growth in demand for banking products and services, investment income, cash flow projections, our exposure to market risks, changes in India’s sovereign rating, and the impact of the Covid-19 pandemic which could result in fewer business opportunities, lower revenues, and an increase in the levels of non-performing assets and provisions, depending inter alia upon the period of time for which the pandemic extends, the remedial measures adopted by governments and central banks, and the sustenance of economic activity at normal levels after the pandemic, as well as other risks detailed in the reports filed by us with the United States Securities and Exchange Commission. Any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of the date of this release. ICICI Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov.

This release does not constitute an offer of securities.

Good evening everyone. Joining me today for this call is our Group Chief Financial Officer- Rakesh Jha. Thank you all for joining us today. We hope that you are safe and in good health.

India has witnessed a steady decline in Covid-19 cases and a massive pickup in the vaccination programme since June. India has now crossed the milestone of administering 100 crore vaccinations. We would like extend our gratitude to the efforts and dedication of all essential service providers for their untiring efforts in the recovery from the pandemic and our employees for their service to customers in these challenging times. We are happy to share that now almost all our employees have received at least one dose of the vaccine.

During the challenging period of the last 18 months, we at ICICI Bank have continued to strengthen our franchise and delivery and servicing capabilities, with a range of digital initiatives; and our loan portfolio has performed well in the face of the challenges posed by the two waves of the pandemic, behaving either in line with or better than our expectations.

Our Board has today approved the financial results of ICICI Bank for the quarter ended September 30, 2021. I would like to highlight some key numbers:

A. Profit and capital

1. Core operating profit i.e. profit before provisions and tax, excluding treasury income grew by 23% year-on-year to ₹ 9,518 crore in Q2-2022.
2. Net interest income increased by 25% year-on-year to ₹ 11,690 crore in Q2-2022 from ₹ 9,366 crore in Q2-2021.
3. The net interest margin increased to 4.00% in Q2-2022 from 89% in Q1-2022.
4. Fee income grew by 21% year-on-year to ₹ 3,811 crore in Q22022 from ₹ 3,139 crore in Q2-2021.
5. The profit after tax grew by 30% year-on-year to ₹ 5,511 crore in Q2-2022 from ₹ 4,251 crore in Q2-2021.
6. The consolidated profit after tax grew by 25% year-on-year to ₹ 6,092 crore in Q2-2022 from ₹ 4,882 crore in Q2-2021.
7. At September, 2021, the Bank had a net worth of about ₹ 1.6 lakh crore and a CET-1 ratio of 17.33%, Tier 1 ratio of 18.53% and total capital adequacy ratio of 19.52% including the profits for H12022.
8. ICICI Bank UK repatriated capital of 200 million US dollars to the parent bank i.e. ICICI Bank India during Q2-2022.

B. Deposit growth

1. Total deposits increased by 17% year-on-year to ₹ 977,449 crore at September 30, 2021
2. Average current account deposits increased by 36% year-onyear in Q2-2022 and average savings account deposits increased by 25% year-on-year in Q2-2022
3. Term deposits increased by 12% year-on-year to ₹ 526,745 crore at September 30, 2021.

C. Loan growth

1. With the increase in economic activity, disbursements across all retail products increased sequentially in Q2-2022. Mortgage disbursements were close to the level seen in March 2021 quarter reflecting the increase in demand coupled with the Bank’s seamless customer onboarding experience through preapproved offers and digitisation. Disbursements of personal loans and auto loans were also close to Q4-2021 levels. The value of credit card spends grew by 47% sequentially in Q2-2022. The Bank continues with its focus on providing the full suite of banking products to corporate clients and their ecosystems and focused on lending to well-rated corporates.
2. The domestic loan portfolio grew by 19% year-on-year and 4% sequentially at September 30, 2021. Total advances increased by 17% year-on-year and by 4% sequentially at September 30, 2021.
3. The retail loan portfolio grew by 20% year-on-year and 5% sequentially and comprised 62% of the total loan portfolio at September 30, 2021. Including non-fund outstanding, the retail loan portfolio was 52% of the total portfolio at September 30, 2021. The business banking portfolio grew by 43% year-on-year and 12% sequentially at September 30, 2021. The SME portfolio grew by 42% year-on-year and 11% sequentially at September 30, 2021. Growth in the domestic wholesale banking portfolio was 14% year-on-year at September 30, 2021.

D. Digital initiatives

1. The Bank’s digital platforms are continuously evolving to enable best-in-class end-to-end seamless digital journeys, offer personalized solutions and value added features to customers and enable more effective data-driven cross-sell and up-sell. These platforms also enable Bank to acquire new customers.
2. In December 2020, the Bank had expanded its state-of-the-art mobile banking app, iMobile, to iMobile Pay which offers payment and banking services to customers of any bank. There were about 15 lakh activations from non-ICICI Bank account holders in the current quarter, taking the total activations to 40 lakhs as of end-September. The transactions by non-ICICI Bank account holders in terms of value and volume respectively, were three times and 13 times higher in September 2021 compared to June 2021. We are seeing a rapid rise in payment transactions through repeat use of features such as ‘Pay to Contact’ and ‘Scan to Pay’.
3. The Bank continues to expand the suite of services offered through iMobile Pay to achieve high engagement levels with users. Recently, the Bank launched a facility which enables its savings account holders to manage dues of credit cards of any bank through iMobile Pay. The Bank also launched a contactless payment facility on iMobile Pay which enables users of android based smartphones to make credit and debit card payments on POS terminals in a safe and secure manner by tapping their phones.
4. The business banking and SME franchise continues to grow on the back of digital offerings and platforms like InstaBIZ. InstaBIZ offers various services such as instant overdraft facility, payment of GST, foreign exchange deal booking, business loans based on revenues reported in GST returns, automatic bank reconciliations and inward and outward remittances. The value of financial transactions on InstaBIZ has grown by about 80% year-on-year in Q2-2022. The Bank has onboarded about 200 corporate customers on these supply chain platforms. About 70% of the dealers of these customers are active on the supply chain platforms. The value of transactions through these platforms increased 4.7 times year-on-year in Q2-2022.
5. The proportion of end-to-end digital sanctions and disbursements across various products has been increasing steadily. About 32% of Bank’s mortgage sanctions and 40% of our personal loan disbursements, by volume, were end-to-end digital in H1 of 2022. About 95% of the overdraft facilities set up for business banking current account customers were end-to-end digital in H1 of 2022. 40% of asset and liability accounts opened and third party products sold during September were through digital channels.
6. The value of the Bank’s merchant acquiring transactions through UPI more than doubled year-on-year and grew by 34% sequentially in Q2-2022. The Bank is the market leader in electronic toll collections through FASTag. The Bank had a market share of 37% by value in electronic toll collections through FASTag in Q2-2022, with a 63% year-on-year growth in collections.
7. Recently, the Bank had launched ICICI STACK for corporates. The Bank has created 19 industry specific STACKs which provide bespoke and purpose-based digital solutions to corporate clients and their ecosystems. The volume of transactions through these solutions grew 2.4 times year-on-year in Q2-2022. These solutions along with the depth of the Bank’s coverage have supported the strong growth in average current account deposits. Further, the Bank is well positioned to capture the opportunities arising from the growing FDI and capital market flows.
8. The Bank is focusing holistically on the merchant ecosystem, both directly and through partnerships. The Super Merchant current account which offers various benefits such as digital account opening and instant overdraft facilities based on pointof-sale transactions has received a good response from customers. The Bank has partnered with Amazon India to offer instant overdraft to sellers, including non-ICICI Bank customers, on its portal.

E. Asset Quality

1. The net non-performing assets declined by 12% sequentially to ₹ 8,161 crore at September 30, 2021.
2. The net NPA ratio declined from 1.16% at June 30, 2021 to 0.99% at September 30, 2021, the lowest since December 2014.
3. The net addition to gross NPAs during the quarter was ₹ 96 crore. The gross NPA additions were ₹ 5,578 crore. Recoveries and upgrades of NPAs, excluding write-offs and sale, were ₹ 5,482 crore in Q2-2022.
4. The gross NPAs written off were ₹ 1,717 crore in Q2-2022.
5. The provision coverage ratio on NPAs was 80.1% at September 30, 2021.
6. The outstanding to all borrowers where resolution was implemented as per Covid-19 framework 2.0 was ₹ 4,158 crore.
7. The total fund based outstanding to all standard borrowers under resolution as per the various extant regulations/ guidelines was ₹ 9,684 crore or about 1.3% of total advances at September 30, 2021 compared to ₹ 4,864 crore at June 30, 2021.
8. The Bank holds provisions amounting to ₹ 1,950 crore against these borrowers under resolution as of September 30, 2021. In addition, the Bank continues to hold Covid-19 provisions of ₹ 6,425 crore as of September 30, 2021.

Looking ahead, we are optimistic about the growth of the Indian economy and we see many opportunities to grow our core operating profit in a risk calibrated manner. Using ICICI STACK, we will create digital journeys and offer personalized and customized solutions to the customers to suit their life-stage and business needs. We will continue to build flexibility and agility in the Bank to tap into opportunities across ecosystems. We believe that our ongoing investments in technology, people and distribution network, our prudent risk management practices and our strong balance sheet will enable us to drive growth in our core operating profit in a risk-calibrated manner. We continue to be guided by our philosophy of “Fair to Customer, Fair to Bank”, emphasising the need to deliver fair value to customers while creating value for shareholders. We will continue to focus on delivering consistent and predictable returns to our shareholders.

With this, I conclude my opening remarks. I will be happy to take your questions.