ICICI Bank: Turning Over A New Leaf
Given its legacy and rapid growth over the last decade, ICICI Bank ranks as the second largest financial giant, its total assets and income surpassing Rs 12.43 lakh crore. It has a huge asset base of Rs 1.12 lakh crore, and growing. Despite its size, in FY18 its total assets grew at a commendable 14 per cent.
Over the past few years, it has been focusing on enhancing its strategic priorities to improve its portfolio, expand its franchise, and further strengthen its balance and businesses. Toward this end, it enlarged its low-cost deposit base. CASA (current and savings account deposits) have increased to 51.7 per cent of deposits. The cost of deposits also was a low less-than-5-per-cent, one of the lowest in the last five years.
For some time now, the bank has been shifting its portfolio mix from corporate to retail loans. The effort is now paying off. The proportion of retail loans by March 31, 2018 increased to 56.6 per cent. Also, of its corporate borrowers, it has a high proportion disbursed to customers rated A- and above.
Technology has been one of the main pillars of its growth. It continues to invest in mobility, analytics, blockchain, and other cutting-edge technologies to offer enhanced banking services.
Over the last few years, it has invested in several value-creating subsidiaries, which it has monetised and unlocked for shareholders. It has unlocked more than Rs 14,000 crore of capital in its subsidiaries. The market value of its listed subsidiaries stands at Rs 94,289 crore.
Financially, the bank is on a strong wicket. On March 31, 2018, it had a tier-1 capital adequacy of 15.92 per cent, and total capital adequacy of 18.42 per cent.
It is now gearing up under the stewardship of the new managing director and CEO, Sandeep Bakhshi, stepping up its lending processes, and gearing up to provide more value-added services. A sharp increase in non-performing assets in the entire banking sector after the RBI initiated an asset quality review in 2015 dented its growth. Much of this was due to the rapid acceleration of its loan book during the go-go years of 2010-12, leading to stressful situations in later years. That, though, is now a thing of the past.
“Various banks including ICICI Bank have undergone annual regulatory assessments and were required to report divergences in asset classification and provisions assessed by the regulator based on thresholds prescribed in the guidelines. For March 2017, no such reporting was required to be made by ICICI Bank,” said Bakhshi, former COO, and now managing director and CEO.
The focus now for the bank is to continue to de-risk its business, and enhance its franchise. It now operates through its subsidiaries a gamut of services: risk, advisory, insurance, investment banking, and so on. It is also focusing on the retail segment as segments such as business banking, credit cards and personal loans are booming. Also, it has one of the largest portfolios in housing finance. As retail is the segment to watch, the bank is expected to see an increasing proportion of retail loans.
The bank’s business goes way beyond banking. The ICICI Foundation for inclusive growth has set up skill-training centres, with the ICICI Academy for Skills having opened 24 such centres across key areas since October 2013. Last year, ICICI Bank and ICICI Foundation launched the ICICI Digital Villages initiative, which covers 600 villages, providing a host of facilities. The ICICI Foundation has, till March 31, 2018, imparted skill training to over 267,000 individuals, 52 per cent women. This is one area where the bank is showing the way.
