M. B. Mahesh

M B Mahesh asked about the low growth in savings account deposits and the underlying reasons. He also sought clarification on the proportion of institutional savings accounts within the bank's deposit base. Additionally, he inquired about the bank's internal expectations regarding lowering its share of high investment-grade (AA and above) corporate loans.

Answer

Anindya Banerjee (CFO, ICICI Bank) explained that while retail savings account growth remained strong, a reduction in balances from institutional banking savings accounts (government entities) dampened overall savings growth. He stated that institutional savings accounts constitute 10-12% (less than 15%) of the average SAR base. Regarding investment grades, Mr. Banerjee indicated comfort with the 'A family and above' ratings due to their stability and better risk-adjusted returns, and that BBB-rated loans are handled selectively within established limits, without a specific target to lower the share of AA/AAA.

M B Mahesh asked for comments on the low growth observed in savings account deposits. He also inquired about the bank's internal expectations regarding the share of AA and high investment-grade loans, specifically how much lower the bank is willing to take this proportion.

Answer

Anindya Banerjee, CFO of ICICI Bank, explained that retail savings account growth remained strong, but a reduction in institutional banking savings accounts (government entities/schemes) led to lower overall savings growth. He noted that institutional savings accounts are less than 15% of the average SA base. Regarding investment-grade loans, Mr. Banerjee stated the bank is comfortable with the A-family and above ratings due to their stability and better risk-adjusted returns, and that BBB exposure is managed selectively within internal limits, without being fixated on AA/AAA.

M B Mahesh of Kotak Securities Limited asked for quantification of the repo rate cut pass-through on the loan book, whether the soft demand environment is a demand or pricing issue, and if the bank is permitted to restructure standard assets.

Answer

Anindya Banerjee, Group CFO, stated that the June repo rate cut had not yet significantly impacted the loan book and would mostly flow through in Q2. He suggested the demand environment softness is due to multiple factors, including a need to improve distribution throughput. He definitively stated that the bank is not allowed to restructure standard assets.

M B Mahesh of Kotak Securities Limited asked to quantify the pass-through of repo rate cuts to the loan book, whether the demand environment or pricing was the main factor in unsecured loan growth, and if the bank could restructure certain standard assets.

Answer

Anindya Banerjee, Group CFO, detailed that the February and April repo cuts have largely passed through, while the June cut's impact will be felt in Q2. He suggested that for personal loans and cards, growth is a matter of focusing on distribution and throughput, not just demand. He gave a definitive 'No' to the question about restructuring standard assets in SMA categories.

M. B. Mahesh of Kotak Securities asked about the accounting treatment for income from bad loan recoveries, such as NPA sales. He also questioned the impact of lending rate competition from public sector banks and whether slippages in unsecured loans have peaked.

Answer

Executive Anindya Banerjee clarified that cash proceeds from NPA sales are treated as a provision write-back, not interest income. He acknowledged that pricing competition from large competitors presents challenges but is a manageable aspect of the business. On unsecured loans, he stated that NPL formation is broadly stable and that the performance of recently originated portfolios provides a good degree of comfort.

M. B. Mahesh asked for reasons behind the slowdown in the commercial banking space, specifically emerging corporates. He also inquired if the bank has a specific loan growth number in mind, given its strategy to grow below the industry average.

Answer

CFO Srinivasan Vaidyanathan explained that the slowdown in emerging corporates is due to rate sensitivity. He stated that loan rates in this segment are not moving in tandem with market bond spreads, and the bank is unwilling to lend below its required price for that quality of asset, leading to calibrated growth. Regarding a specific loan growth target, Vaidyanathan reiterated that the bank is not managing to a single number and will remain flexible, balancing various parameters like cost, price, and priority sector needs.

M. B. Mahesh asked for an explanation for the sharp increase in miscellaneous income and the corresponding slowdown in fee income, which was largely driven by third-party products.

Answer

CFO Srinivasan Vaidyanathan clarified that the movements were largely seasonal and offsetting. The rise in miscellaneous income was driven by seasonal dividends from subsidiaries and credit recoveries, while the decline in fee income reflected the typical post-March quarter slowdown in third-party product distribution.

M. B. Mahesh asked for an explanation for the sharp increase in miscellaneous income and the corresponding slowdown in fee income, which appeared to be driven by third-party products.

Answer

CFO Srinivasan Vaidyanathan explained that the movements were due to offsetting seasonal factors. The miscellaneous income line was boosted by seasonal credit recoveries and dividends from subsidiaries. This was offset by the predictable seasonal decline in third-party product distribution fees, which are typically highest in the March quarter and lower in the first quarter of the fiscal year.