2007 09 icici bank&pru life investor presentation

8/8/2019 2007 09 ICICI Bank&Pru Life Investor Presentation

http://slidepdf.com/reader/full/2007-09-icici-bankpru-life-investor-presentation 1/35

ICICI Group: Strategy andPerformance

September 2007



2

Contents

Financial Performanceinancial Performance

Opportunities & Strategy

Key Subsidiariesey Subsidiaries



4

Consumption and InvestmentHouseholds in Rs. 90,000-Rs. 1,000,000income bracket expected to increase from53.0 mn (28% of total) in 2002 to 108.0 mn(46%) in 2010 1

Share of population in deprived class to dropby more than half by 2025 with more than291 mn people expected to rise out ofpoverty and enter middle class

Households in Rs. 90,000-Rs. 1,000,000income bracket expected to increase from53.0 mn (28% of total) in 2002 to 108.0 mn(46%) in 2010 1

Share of population in deprived class to dropby more than half by 2025 with more than291 mn people expected to rise out ofpoverty and enter middle class

Consumption

Strong corporate performance with highcash accruals; large investment pipeline inboth manufacturing and infrastructure

Increasing volume of cross border M&As:Volume of outbound M&A at US$ 21.2 bn inCY2006 (2)

Strong corporate performance with highcash accruals; large investment pipeline inboth manufacturing and infrastructureIncreasing volume of cross border M&As:Volume of outbound M&A at US$ 21.2 bn inCY2006 (2)

Investment

1. National Council For Applied Economic Research2. Source: Bloomberg, Including Tata Corus deal

announced in December 2006



5

Multiple opportunities in financial services

Favourabledemographics

Manufacturing

Infrastructure

Knowledgecapital

Internationalexpansion

CreditSavingsInvestment banking

Insurance

Asset management

Rising disposableincome

Investment Personal Consumption

Housing

Transportation

Personal credit



6

The ICICI Group: Our strategy

S

h

eh

lde

v

u

Domestic RetailBanking

Enhance share of retaildeposits and sustain leadership

position in credit franchise

Global Corporateand Investment

Banking

Leverage corporate

relationships, structuringexpertise, balance sheet andglobal syndication capability

International RetailBanking

Leverage NRI opportunity andtechnology capabilities

Rural Banking Invest for future growth

Insurance & AssetManagement

Enhance and leverage marketleadership position

…multi-specialist financial

services group



7

Our retail banking platformLeadership position with demonstratedpricing powerFull range of products distributed through in-house network and external agent forceCentralized credit & operations

Leadership position with demonstratedpricing powerFull range of products distributed through in-house network and external agent forceCentralized credit & operations

Credit

Superior deposit gathering franchise: highestsavings account deposit per branch in theindustryLow cost, scalable technology architecture:only 10% of transactions occur at branches

Superior deposit gathering franchise: highestsavings account deposit per branch in theindustryLow cost, scalable technology architecture:only 10% of transactions occur at branches

Deposits

Diversified fee income streams: loans, cards,

transaction banking & distributionFocus on cross sell of insurance and assetmanagement products

Diversified fee income streams: loans, cards,transaction banking & distributionFocus on cross sell of insurance and assetmanagement products

Fee income



8

Innovative SME business model

Market Segmentation based on risk profile:industry clusters, corporate channel partnersand other SMEsLending predominantly focused on

Pre-selected clustersCorporate linkagesParameterisation

Market Segmentation based on risk profile:industry clusters, corporate channel partnersand other SMEsLending predominantly focused on

Pre-selected clusters

Corporate linkagesParameterisation

Focusedlending

Innovative deposit product for SMEs:Roaming current accountComprehensive non-fund based productsuite: trade, cash management, foreignexchange and risk management

Innovative deposit product for SMEs:Roaming current accountComprehensive non-fund based productsuite: trade, cash management, foreignexchange and risk management

Deposits andtransaction

banking



9

Corporate & investment banking

Origination Structuring Syndication

Leveraging domesticcorporate relationshipsProject appraisal

capabilitiesM&A advisory

Leveraging domesticcorporate relationshipsProject appraisal

capabilitiesM&A advisory

Structuring skillsBalance sheetsupport –

domestic andinternational

Structuring skillsBalance sheetsupport –

domestic andinternational

India and globaldistributioncapability

Focus on riskdiversification andreturn optimization

India and globaldistributioncapability

Focus on riskdiversification andreturn optimization

Ranked #1 in India syndicated loans

Combined with efficient transaction banking and treasuryproducts



10

International bankingFocus on fee and liability generation

India linked products for NRIs; distribution ofthird party investment productsPlatform to capture large remittance flowsinto India and in other corridors; Market shareof 28% in remittances into IndiaTechnology-driven direct banking platform inUK and Canada

Focus on fee and liability generationIndia linked products for NRIs; distribution ofthird party investment productsPlatform to capture large remittance flows

into India and in other corridors; Market shareof 28% in remittances into IndiaTechnology-driven direct banking platform inUK and Canada

International

retail banking

Presence in 18 countries outside IndiaNorth America, UK, Europe, Russia, Middle-east, South Africa, South-East & North Asia

International assets account for 20% of

consolidated banking assetsProfitability with scale: ICICI Bank UK profitafter tax of US$ 18.7 mn in Q1-2008

Presence in 18 countries outside IndiaNorth America, UK, Europe, Russia, Middle-east, South Africa, South-East & North Asia

International assets account for 20% ofconsolidated banking assetsProfitability with scale: ICICI Bank UK profitafter tax of US$ 18.7 mn in Q1-2008

Internationalfranchisesnapshot

Largest international balance

sheet among Indian banks



11

Rural banking: Investing for future growth

Strategy to comprehensively cover anidentified rural geography with branches,partnerships & technology based channelsBranches at major agricultural marketsFranchisees, internet kiosks, micro financeinstitutions & corporate partners

Strategy to comprehensively cover anidentified rural geography with branches,partnerships & technology based channelsBranches at major agricultural marketsFranchisees, internet kiosks, micro financeinstitutions & corporate partners

Comprehensivechannel strategy

Multi-product suite for catering to variouscustomer segments: farmer financing,agri-businesses, commodity-basedfinancing and micro-creditSavings and investment productsInsurance

Multi-product suite for catering to variouscustomer segments: farmer financing,agri-businesses, commodity-basedfinancing and micro-creditSavings and investment productsInsurance

Comprehensiveproduct strategy



12

Contents

Financial Performance

Opportunities & Strategypportunities & Strategy

Key Subsidiariesey Subsidiaries



13

Profit & loss statement

58.59

1.88

15.24

49.79

125.50

9.02

50.12

59.14

66.36

FY 2007

15.64

0.43

3.83

14.79

34.69

3.27

14.28

17.55

17.14

Q1-2008

(2.2%).91MA2 expenses

28.8%

(14.0%)

37.0%

26.8%

59.5%

35.3%

39.4%

16.2%

Q-o-QGrowth

12.14

0.50

10.80

27.35

2.05

10.55

12.60

14.75

Q1-2007

Core operating profit

Lease depreciation

Operating expenses

Core operating income

- Others (includingdividend from subsidiaries)

- Fee income 1

Non-interest income

NII

(Rs. in billion)

1. Includes merchant forex income and margin on customer derivative transactions2. Represents commissions paid to direct marketing agents (DMAs) for origination

of retail loans. These commissions are expensed upfront



14

Profit & loss statement

31.10

5.38

36.48

22.26

58.74

9.99

10.14

58.59

FY 2007

155.5%.52 12.16rovisions & w-off

29.8%9.727.49Profit before tax

(11.7%).35.67ess: Premium amort onSLR

7.75

1.97

15.24

1.95

15.64

Q1-2008

25.0%

52.7%

57.9%

-

28.8%

Q-o-QGrowth

6.20

1.29

9.65

0.18

12.14

Q1-2007

Core operating profit

Treasury income

Profit after tax

Tax

Operating profit

(Rs. in billion)

1. Includes impact of higher proportion of non-collateralised loans in the retailportfolio and seasoning of the retail portfolio



15

Key balance sheet items

26.1%,307.88,830.06,305.10eposits

8.4%46.8627.7043.13et worth3,446.58

1,958.66

Mar 31,2007

3,569.32

1,982.77 1

June 30,2007

34.1%

34.7%

Y-o-Ygrowth

2,662.65

1,471.84

June 30,2006

Total assets

Advances

(Rs. in billion)

1. Net of sell-down of about Rs. 38.50 bn in Q1-2008



16

Key ratios

7.08% 58.60%.42%Tier I11.03%2.46%1.69%apital adequacy

40.5

40.2

2.6269.8

34.8

13.4

FY2007

43.3

44.3

2.5254.4

27.8

11.1

Q1-2007

272.9ook value (Rs.)

42.2ee to income

43.7ost 3/ income

2.3 2NIM4

34.6eighted avg EPS (Rs.) 4

13.0 1Return on average networth 4

Q1-2008

(Percent )

1. RoE including profit of banking subsidiaries and excluding investment ininsurance – 15.9%

2. Impact of higher cash reserve ratio (CRR) and non-payment of interest on CRR

resulted in NIM being lower by 20 bps as compared to Q1-2007 and Q4-20073. Excludes direct marketing agent (DMA) expenses4. Annualized for Q1-2007 and Q1-20085. Does not include capital raised through public issue in India and American

Depositary Share offering, which would be reflected in the quarter endingSeptember 30, 2007



17

1.0%

20.19

28.31

48.50

Mar 31, 2007

1.3%

27.42

33.01

60.43

June 30, 2007

Net NPA ratio

Net NPAs

Less: Cumulative w/offs &provisions

Gross NPAs

Asset quality and provisioning(Rs. in billion)

Gross retail NPLs as on June 30, 2007: Rs. 38.67 bn (of which 54% were non-collateralised)Net retail NPLs as on June 30, 2007: Rs. 19.43 bn (of which 46% were non-collateralised)

Net restructured loans: Rs. 49.26 bn (Mar 31, 2007: Rs. 48.83 bn)

Increase in NPAs reflects portfolio ageing, lower growthand changing portfolio mix



18

Contents

Financial Performanceinancial Performance

Opportunities & Strategypportunities & Strategy

Key Subsidiaries



19

L i fe in s u r a n c e p e n e t r a ti o n & p e r c a p i ta ( 2 0 0 6 )

1 8 93 343

1 4 8 01 7 9 0

2 8 2 9

5 1 4 0

13.1%

8.3% 7.9%

4.0%

1.3% 1.7%

4.1%3.2%

0

1 0 0 0

2 0 0 0

3 0 0 0

4 0 0 0

5 0 0 0

6 0 0 0

U K Ja p an U S K o re a M alay s i a B raz i l C h in a In d i a

Inu

an

p

cpta

USD)

0 . 0 %

2 . 0 %

4 . 0 %

6 . 0 %

8 . 0 %

1 0 . 0 %

1 2 . 0 %

1 4 . 0 %

In

uan

p

ra

o

India life insurance opportunity

Source : Swiss Re

Only a third of the target population of 400 mn is insured



20

Source: IRDA, Swiss Re

Penetration (as a% of GDP)

Insurance premiumper capita (Rs )

Number of players

1.2%

~280

1

FY 00

NB premium (Rs bn) 64.00

3.0%

15

FY 06

359.00

~963

Total premium (Rs bn) 270.00 1,059.00

CAGR of 33%

CAGR of 26%

Evolution of industry since liberalisation

4.1%

16

FY 07

754.00

~1,510

1,696.00

110%

60%



21

Y-O-Y Growth 16% 17% 34% 92%

Industry growth

Source : IRDA, Weighted New Business Premiums for individual business

40%

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

FY 03 FY 04 FY 05 FY 06 FY 07 Y TD Ju ly

07

R

b

LIC Pr ivate



22

YTD July 07Market share

1. Source : IRDA2. Weighted New Business Premiums for individual business

ICICI Prudential Life Insurance

Total mkt : Rs 117.91 bn (USD 2915 mn)

LIC, 61.0%

ICICIPrudential ,

10.2%

SBI Life,2.9%

Others,14.0%

HDFCStandard ,

3.9%

Bajaj Allianz,8.0%

LIC, 84.2%

Others, 6.0%CICIPrudential,

6 .6%

SBI Life,3 .2%

Total mkt : Rs 32.25 bn (USD 797 mn)

Retail 2

Group



23

Rapid distribution ramp-up

We continue to create a nationwide agency network, complemented by

increased focus on non-agency distribution

Advisors (‘000)

Non agency share

Branches

Locations

Mar 05 Mar 06

74 132

107 177

57 72

30% 37%

Aug 07

535

717

226

37%



24

2.54

7.0612 .56

21 .63

43 .81

8.34

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

50.00

R

b

FY 03 FY 04 FY 05 FY 06 FY 07 Q1-2008

Growth in new business : APE 1

4 year CAGR - 104%

1. Annualized Premium Equivalent



25

Value creation: NBP 1

1. New Business Profit (Unaudited)

0 . 7 1

2 . 0 43 . 1 2

5 . 2 8

8 . 8 1

1 . 6 5

19.7%20.1%

24.4%

28.2% 29.3%

25.1%

0 . 0 01 . 0 02 . 0 0

3 . 0 04 . 0 05 . 0 06 . 0 07 . 0 0

8 . 0 09 . 0 0

1 0 . 0 0

F Y 0 3 F Y 0 4 F Y 0 5 F Y 0 6 F Y 0 7 Q 1 -2 0 0 8

R

b

0 . 0 %

5 . 0 %

1 0 . 0 %

1 5 . 0 %

2 0 . 0 %2 5 . 0 %

3 0 . 0 %

3 5 . 0 %

Magn

N B P N B P %



26

6.100 . 5 6

13 . 2 8

3 . 3 52 7 . 8 3

10 . 4 84 2 . 5 2

4 5 . 6 9

6 3 . 10

9 5 . 0 9

7 2 . 8 1

111.9 4

0 . 0 0

2 0 . 0 04 0 . 0 0

6 0 . 0 0

8 0 . 0 0

1 0 0 . 0 0

1 2 0 . 0 01 4 0 . 0 0

1 6 0 . 0 0

1 8 0 . 0 0

2 0 0 . 0 0

R

b

F Y 0 3 F Y 0 4 F Y 0 5 F Y 0 6 F Y 0 7 Q 1 - 2 0 0 8

D e b t E q u ity

Robust growth in assets held

Crossed the Rs 200.00 bn milestone in August 07Linked funds constitute 85% of total assets held

6.6616.63

38.31

88.21

158.18

184.75



27

Flat expense ratio despite aggressive expansion

Expense ratio trend

Expense ratio: Operating Expenses / (Total Premium less 90% of Single Premium &50% of Limited Pay products)

1 4 % 1 4 %

7 4 %

5 4 %

2 6 %

1 7 %

0%

10%

20%

30%

40%

50%

60%

70%

80%

FY 02 FY 03 FY 04 FY 05 FY 06 FY 07



28

Summary of key achievementsSustained private market leadership: 6 years in a row

More than 5 million policies sold

Over Rs 200.00 bn (USD 4.9 bn) of assets held

Ranked most respected private life insurer by Business World

Fitch rating of ‘AAA (Ind)’

NBP of Rs 1.65 bn (USD 40.4 mn) in Q1 FY 08

Total premiums of Rs 18.01 bn (USD 441.9 mn) in Q1-2008



29

ICICI Lombard General Insurance

9% growth in gross written premium (GWP) to Rs.8.87 bn in Q1-2008

GWP increased by 20% in the retail segment butwas flat in corporate segment due to impact of

de-tariffingNon-corporate business at 51% of GWP

9% growth in gross written premium (GWP) to Rs.8.87 bn in Q1-2008

GWP increased by 20% in the retail segment butwas flat in corporate segment due to impact of

de-tariffingNon-corporate business at 51% of GWP

Market leadership in private sector with marketshare of 31.0% 1

Market leadership in private sector with marketshare of 31.0% 1

Highlights

Marketleadership

Financial

performanceProfit after tax of Rs. 453.7 mn in Q1-2008Profit after tax of Rs. 453.7 mn in Q1-2008

1. For YTD July31, 2007



30

Leader in the private sector

Source: IRDA (Q1-2008)

11.9%otal

2.1%thers

1.7%viation

19.6%iabilities

19.5%ealth & accident

1.8%otor

11.0%arine14.1%ngineering

11.7%ire

Rank inprivate sector

Market Shareroduct



31

ICICI Prudential Asset Management

Among the top two mutual funds in IndiaFunds under management (FUM) of Rs. 506.59 bnMarket share of 10.8% 1

Among the top two mutual funds in IndiaFunds under management (FUM) of Rs. 506.59 bnMarket share of 10.8% 1

Highlights

Marketleadership

Financial

performance

Equity assets increased by 16.2% in the quarterended June 30, 2007

Equity assets constitute 34.4% of overall FUM

Equity assets increased by 16.2% in the quarterended June 30, 2007

Equity assets constitute 34.4% of overall FUM

Profit after tax of Rs. 276.0 mn in Q1-2008compared to Rs. 160.4 mn in Q1-2007

Profit after tax of Rs. 276.0 mn in Q1-2008

compared to Rs. 160.4 mn in Q1-2007

1. As on August 31, 2007



32

Significant growth in FUM and profits year on year

ICICI Prudential AMC - Performance

FUM (Rs Bn) PBT (Rs Mn)

0

10 0

20 0

30 0

40 0

50 0

60 0

M ar 05 Mar 06 M ar 07 Au g 07

CAGR = 59%

26 4

47 4

73 6

41 3

0

10 0

20 0

30 0

40 0

50 0

60 0

70 0

80 0

FY 05 FY 06 FY 07 Q1-2008

CAGR =

67%

32



33

Demonstrating value creationICICI Bank

ICICI Life

ICICI General

ICICI AMC

74%

74%

51%

ICICI Bank

ICICI Life

ICICI General

ICICI AMC

74%

74%

51%

94.1% ICICI FinancialServices

New subsidiary to raise capital for meeting future capitalrequirements of insurance subsidiariesReceived definitive offers for investment of Rs. 26.50 bn for5.9% stake, valuing the company at Rs. 446.00 bn on post-issue basisProposal subject to regulatory approvals



34

Except for the historical information contained herein, statements

in this Release which contain words or phrases such as 'will','would', ‘indicating’, ‘expected to’ etc., and similar expressions orvariations of such expressions m ay constitute 'forward-lookingstatements'. These forward-looking statements involve a numberof risks, uncertainties and o ther factors that could cause actualresults to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but arenot limited to our ability to successfully implem ent our strategy,future levels of non-performing loans, our growth and expansionin business, the impact of any acquisitions, the adequacy of ourallowance for credit losses, technological implementation andchanges, the actual growth in demand for banking products andservices, investment income, cash flow projections, our exposureto market risks as well as other risks detailed in the reports filed by

us with the United S tates Securities and Exchange Commission.ICICI Bank undertakes no obligation to update forward-lookingstatements to reflect events or circumstances after the datethereof.



35

Thank you

2007 09 icici bank&pru life investor presentation

Documents