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ICICI Group: Strategy and Performance
April 2008
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Contents
Strategy & OutlookStrategy & Outlook
Opportunities
Financial HighlightsFinancial Highlights
Key SubsidiariesKey Subsidiaries
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Robust economic growth
Agriculture
FY2005
0.7%
Industry 7.4%
Of which: manufacturing 8.1%
Services 10.2%
GDP growth
Total 7.5%
FY2006
6.0%
8.0%
9.1%
10.3%
9.0%
FY2007
2.7%
11.0%
12.3%
11.0%
9.4%
9M-2008
3.5%
9.1%
9.9%
10.4%
8.9%
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Economic growth drivers
Favourable demographics
Manufacturing
Infrastructure
Knowledge capital
International expansion
Rising disposable income
Investment Personal Consumption
Housing
Transportation
Personal credit
Investment and consumption cycles mutually re-enforcing
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Consumption drivers
Middle income: Rs. 90,000 (US$ 2,250)-Rs. 500,000 (US$ 12,500) per householdHigh income: > Rs. 500,000 (US$ 12,500) per householdSource: NCAER
Middle and high income
population -260 mn1
Middle and high income
population -260 mn1
Middle and high income
population -350 mn1
Middle and high income
population -350 mn1
2000: Per capita GDP US$ 500
2000: Per capita GDP US$ 500
2007: Per capita GDP US$ 1,000
2007: Per capita GDP US$ 1,000
35% growth
From per capita GDP of US$ 1,000 to US$ 1,500: consuming population to grow manifold
Middle and high income
population -600 mn1
Middle and high income
population -600 mn1
2015: Per capita GDP US$ 1,500
2015: Per capita GDP US$ 1,500
70% growth
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Investment drivers
High capacity utilisationand need for building infrastructure resulting in a large investment pipeline
Supported by healthy corporate balance sheets
Source: CRIS INFAC, CMIE
Capacity utilisation rates
0102030405060708090
100
Auto a
ncillia
ry
Cars
Cement
Crude
OilFo
od & b
evShip
ping
Steel
Textil
e
%
2000-2004 2005-2006
0 . 0
0 . 2
0 . 4
0 . 6
0 . 8
1 . 0
1 . 2
2 0 0 0 -0 1 2 0 0 1 -0 2 2 0 0 2 -0 3 2 0 0 3 -0 4 2 0 0 4 -0 5 2 0 0 5 -0 6 2 0 0 6 -0 7
Debt/Equity
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Opportunity spectrum for banksLow penetration of consumer finance at 13% of GDP
Supported by structural drivers of rising income levels and growing consuming class
Robust industrial and infrastructure investment pipeline estimated at about US$ 700 billion
Internationalisation of Indian industryPotential for acquisition and trade finance
Vast Indian diaspora spanning the globe Potential for credit and liability products and transaction services
Low penetration of insurance and asset management
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Contents
Strategy & Outlook
OpportunitiesOpportunities
Financial HighlightsFinancial Highlights
Key SubsidiariesKey Subsidiaries
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Our strategy
Domestic Retail Banking
Enhance share of retail deposits and sustain leadership
position in credit franchise
Global Corporate and Investment
Banking
Leverage corporate relationships, structuring
expertise, balance sheet and global syndication capability
International Retail Banking
Leverage NRI opportunity and technology capabilities
Rural Banking Invest for future growth
Insurance, Asset Mgmt & Broking
Enhance and leverage market leadership position
Shareho
lder value
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Retail banking platformLeadership position with demonstrated pricing powerFull range of products distributed through in-house network and external agent forceCentralized credit & operations
Leadership position with demonstrated pricing powerFull range of products distributed through in-house network and external agent forceCentralized credit & operations
Credit
Superior deposit gathering franchise: highest savings account deposit per branch in the industryCurrent and savings account ratio at 27% compared to 22% at March 31, 2007
Superior deposit gathering franchise: highest savings account deposit per branch in the industryCurrent and savings account ratio at 27% compared to 22% at March 31, 2007
Deposits
Diversified fee income streams: loans, cards, transaction banking & distributionFocus on cross sell of insurance and asset management products
Diversified fee income streams: loans, cards, transaction banking & distributionFocus on cross sell of insurance and asset management products
Fee income
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Corporate & investment banking strategy
Origination Structuring Syndication
Leveraging domestic corporate relationshipsProject appraisal capabilitiesM&A advisory
Leveraging domestic corporate relationshipsProject appraisal capabilitiesM&A advisory
Structuring skillsBalance sheet support –domestic and international
Structuring skillsBalance sheet support –domestic and international
Global distribution capabilityFocus on risk diversification and return optimization
Global distribution capabilityFocus on risk diversification and return optimization
Combined with transaction banking and treasury products
Involved in 88% of outbound Indian M&A financing deals in CY2007Ranked #1 in offshore corporate syndicated loans in CY2007
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International bankingFocus on fee and liability generation
Platform to capture large remittance flows into India and in other corridors; Market share of over 25% in remittances into IndiaIndia linked products for NRIs; distribution of third party investment productsTechnology-driven direct banking platform in UK and Canada
Focus on fee and liability generationPlatform to capture large remittance flows into India and in other corridors; Market share of over 25% in remittances into IndiaIndia linked products for NRIs; distribution of third party investment productsTechnology-driven direct banking platform in UK and Canada
International retail banking
Presence in 19 international locationsNorth America, UK, Europe, Russia, Middle-East, South Africa, Asia
International assets account for 23% of consolidated banking assetsNew branch opened in New YorkICICI Bank UK: present in nine retail locations in UK and opened new branch in Frankfurt
Presence in 19 international locationsNorth America, UK, Europe, Russia, Middle-East, South Africa, Asia
International assets account for 23% of consolidated banking assetsNew branch opened in New YorkICICI Bank UK: present in nine retail locations in UK and opened new branch in Frankfurt
International franchise snapshot
Largest international balance sheet among Indian banks
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Rural banking: investing for future growth
Strategy to comprehensively cover an identified rural geography with branches, partnerships & technology based channelsBranches at major agricultural marketsFranchisees, internet kiosks, MFI & corporate partners
Strategy to comprehensively cover an identified rural geography with branches, partnerships & technology based channelsBranches at major agricultural marketsFranchisees, internet kiosks, MFI & corporate partners
Comprehensive channel strategy
Multi-product suite for catering to various customer segments: farmer financing,agri-businesses, commodity-based financing and micro-creditSavings and investment productsInsurance
Multi-product suite for catering to various customer segments: farmer financing,agri-businesses, commodity-based financing and micro-creditSavings and investment productsInsurance
Comprehensive product strategy
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Contents
Strategy & OutlookStrategy & Outlook
OpportunitiesOpportunities
Financial HighlightsFinancial Highlights
Key Subsidiaries
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Life insurance: market share11M-2008
Source: IRDA, weighted new business premiums for individual business
LIC 50.3%
Bajaj Al l ianz 10.6%
SBI Li fe 4.7%
HDFC Standard 4.3%
Rel iance Li fe 3.6%
Birla Sun Li fe 3.0%
ICICI Prudential 13.1%
Others 10.4%
Total mkt : Rs 432.16 bn (USD 10.8 bn)
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ICICI Life: performance highlights
74% increase in new business weighted received premium during 9M-2008
Compared to industry growth of 23%
Assets held: Rs. 284.09 bn70% of assets in equity
74% increase in new business weighted received premium during 9M-2008
Compared to industry growth of 23%
Assets held: Rs. 284.09 bn70% of assets in equity
Business highlights
New Business Profit of Rs. 7.48 bn in 9M-2008 compared to Rs. 5.40 bn in 9M-2007
Reflecting NBP margin of about 19.3%
New Business Profit of Rs. 7.48 bn in 9M-2008 compared to Rs. 5.40 bn in 9M-2007
Reflecting NBP margin of about 19.3%
Financial performance
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ICICI Life: rapid distribution ramp-up
Creating 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%
Dec 07
855
1,065
263
37%
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General insurance
17% increase in premiums to Rs. 27.22 bn in 9M-2008
Despite the impact of de-tarifficationNon-corporate business at 57% of gross premium in 9M-2008
17% increase in premiums to Rs. 27.22 bn in 9M-2008
Despite the impact of de-tarifficationNon-corporate business at 57% of gross premium in 9M-2008
Market leadership in private sector with market share of 31.6%1
Overall market share at 12.6%1
Market leadership in private sector with market share of 31.6%1
Overall market share at 12.6%1
BusinessHighlights
Market leadership
Financial performance
Profit after tax of Rs. 1.15 bn in 9M-2008 compared to Rs. 0.49 bn in 9M-2007
Profit after tax of Rs. 1.15 bn in 9M-2008 compared to Rs. 0.49 bn in 9M-2007
1. April 2007 – December 2007; Source: IRDA
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Securities business
India’s largest online trading platform with about 1.4 million customersRanked first in terms of amount raised through domestic offerings during CY2007
India’s largest online trading platform with about 1.4 million customersRanked first in terms of amount raised through domestic offerings during CY2007
Business Highlights
Revenue of Rs. 2.57 bn in Q3-2008 and Rs. 5.27 bn in 9M-2008Profit after tax of Rs. 710 mn in Q3-2008 and Rs. 1,080 mn in 9M-2008
Revenue of Rs. 2.57 bn in Q3-2008 and Rs. 5.27 bn in 9M-2008Profit after tax of Rs. 710 mn in Q3-2008 and Rs. 1,080 mn in 9M-2008
Financial performance
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Asset management
Total FUM of Rs. 692.30 bn (including PMS & advisory AUM) at December 31, 2007Market share of 10.3% in mutual fund assets at December 31, 2007Profit after tax of Rs. 0.75 bn in 9M-2008 from compared to Rs. 0.33 bn in 9M-2007
Total FUM of Rs. 692.30 bn (including PMS & advisory AUM) at December 31, 2007Market share of 10.3% in mutual fund assets at December 31, 2007Profit after tax of Rs. 0.75 bn in 9M-2008 from compared to Rs. 0.33 bn in 9M-2007
ICICI Prudential
Asset Management
ICICI VentureLargest private equity player in India with funds under management of Rs. 96.34 bnProfit after tax of Rs. 0.52 bn in 9M-2008
Largest private equity player in India with funds under management of Rs. 96.34 bnProfit after tax of Rs. 0.52 bn in 9M-2008
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Contents
Strategy & OutlookStrategy & Outlook
OpportunitiesOpportunities
Financial Highlights
Key SubsidiariesKey Subsidiaries
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Key financial indicators1
1. Based on standalone Indian GAAP financials2. US$ amounts represent convenience
translations at US$1= Rs. 39.42
NII (Rs. bn)
FY2007(US$ mn)
1,430
Fee (Rs. bn) 1,271
NIM (%) 2.2%
Net profit (Rs. bn) 789
Growth
32%
33%
-
35%
Deposits (Rs. bn) 58,475 17%
Net NPA ratio 1.0% -
Total assets (Rs. bn) 87,432 27%
Q3-2008
19.60
17.85
2.3%
12.30
2,297.79
1.5%
3,767.00
Capital adequacy ratio 11.7% -15.8%
FY2007
56.37
50.12
2.2%
31.10
2,305.10
1.0%
3,446.58
11.7%
Q3-2007
14.85
13.45
2.3%
9.10
1,968.93
1.0%
2,958.32
13.4%
Fee/income (%) 40.5% -41.2%40.5% 39.3%
Advances (Rs. bn) 49,687 25%2,155.171,958.66 1,727.63
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The ICICI Group today
Largest private sector life insurer
Largest private sector general insurer
Leading asset management company
Largest private equity & venture fund
Leading securities and broking company
Largest private sector bank in India
Consolidated banking assets of US$ 106 bn; market cap of US$ 23bn
Largest consumer credit provider
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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 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 in business, the impact of any acquisitions, the adequacy of ourallowance for credit losses, technological implementation and changes, the actual growth in demand for banking products and services, investment income, cash flow projections, our exposureto market risks as well as other risks detailed in the reports filed by us with the United States Securities and Exchange Commission. ICICI Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
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Thank you