ICICI Bank Ltd Earnings Call Nuggets: Overall PSL and Restructuring Pipeline

ICICI Bank Ltd (NYSE:IBN) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Overall PSL

Mahrukh Adajania – Standard Chartered: I just had a couple of questions on PSL first. So what was the amount of buyout included in loans in 4Q ‘13 and what was the amount in 4Q ‘12? Then how are you placed on your overall PSL?

Rakesh Jha – Director: In terms of the overall PSL, we would have achieved about 90% of the requirements, and as Kannan mentioned, the level of buyout in the loan portfolio this year have been lower than last year. So, of course, this year we would have done some bit more in the investment portfolio as which should have come in the form of PTC. But in the loan portfolio the amount is clearly lower than what we had last year.

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Mahrukh Adajania – Standard Chartered: But would you have some amounts for this year and last year for the loan portfolio?

Rakesh Jha – Director: In terms of the….?

Mahrukh Adajania – Standard Chartered: The buyouts?

Rakesh Jha – Director: It was about INR 17,000 crore last year, and it’s about INR 80 billion this year.

Restructuring Pipeline

Vishal Goyal – UBS Securities: Just needed your sense on especially on the restructuring pipeline, not only what you have let’s say on hand, but also what do you see coming in the next one year, any sense on that would be helpful?

N. S. Kannan – Executive Director and CFO: See what we have currently is about INR 6 billion to INR 7 billion of restructuring to be done, but Vishal given the current economic environment, while I do believe that there will be more restructuring it will be difficult to predict at this point in time. I just wanted to assure you that the efforts will be on to continuously monitor the portfolio very closely; to ensure that, we’d limit the asset quality issues. If you just see my opening remarks, the confidence we have in containing our credit losses to 75 basis points of the overall advances average advances, clearly deflects our grip of the portfolio we have. But it will be very difficult at this stage to predict what is going to be for the full year. But as you have seen the trend in the last two years, year before last financial year 2012, the incremental resetting was about INR 34 billion, which has reduced to half that level in financial year 2013. So the efforts are on in that direction, but I can tell you that the current pipeline is about INR 6 billion to INR 7 billion, but we will maintain the credit cost as a percentage of average loans to 75 basis points in fiscal 2014.

Vishal Goyal – UBS Securities: That’s including any NPV loss whatever you might have to incur, correct, that 75 bps?

N. S. Kannan – Executive Director and CFO: That is correct, and also based on the revised provisioning requirement of Reserve Bank of India with regard to restructured loans.

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Vishal Goyal – UBS Securities: Restructured loans, okay. One more question on fee income, can we get some breakup of fee income as you would mention about retail, transaction banking, corporate, such as broad breakup, your overall fee?

Rakesh Jha – Director: In terms of the breakup, it broadly continues to be the retail and SME form now over 50% of the total fee income. If you look at FY ’13 as a whole about 50% is coming from the retail and the SME segment. Within that further breakup of retail assets and liabilities, its again – assets will be about 15% to 16%; liabilities will be about 25%, and then rest will be coming from the SME and the other segment. On the corporate side actually the lending linked fees has come down a lot. So that now accounts for about 30% of the corporate fees and most of the fees is now coming from the transaction banking and the FX in derivative fee income.