>ICICI BANK (IIFL)

● ‘4C’ position bank for future growth: Progress on the ‘4C’ strategy (CASA, capital conservation, cost control and credit charges) over 9MFY10 has been good. As of 3QFY10, CASA rose to 40% from 29% in FY09, the bank was well-capitalised with total CAR of 19.4%, operating cost declined to 1.6% of average assets (from 1.8% in FY09) and gross NPL declined 7% YoY. Management has now set its sights on achieving the RoE target of 14% by FY12.

Traction in 4C strategy, broad-based growth

● Growth to be broad-based: Whereas growth in the past has been mainly retail-driven, the bank is now looking to grow its large corporate and SME segment loan book as well. Management indicated that a large part of the credit demand is from the infrastructure sector, primarily from power and road sectors. However, since these are project finance loans, the draw-down would happen over 2-3 years. These are typically 7-10-year loans with three-year reset clauses. However, there is not much fee-generating opportunity in
infrastructure lending.

● Focusing on secured retail loans: Within the retail segment, which still constitutes 45% of the loan book, the bank expects home loans, auto loans, and CV loans to drive consumer loans. However, the bank is no longer a price leader in any of these segments. Also, about Rs350bn of retail loans—Rs30bn per month—are up for repayment in FY09. So, growing the retail loan book remains a challenge.

To read the full report: ICICI BANK