Parameswaran Subramanian

Param Subramanian questioned the thought process behind the board seeking a two-year extension for Mr. Sandeep Bakhshi instead of a full three-year term, and how stakeholders should interpret this. He also asked if the quarter-on-quarter decline of 21 basis points in yield on advances was almost entirely due to the Kisan Credit Card (KCC) reversal impact. Finally, he inquired about the soft core fee growth (6% YoY) and whether it would pick up with retail loan growth or be more dependent on unsecured/credit card segments.

Answer

Anindya Banerjee (CFO, ICICI Bank) stated that the board, in consultation with the CEO, decided on a two-year appointment, which extends the current term to almost three years from now, and it's too early to speculate beyond that. He clarified that the decline in yield on advances was not entirely due to KCC, but also influenced by the repricing impact of repo rate cuts (June) and MCLR reductions (75 basis points in the cycle), which progressively affected the loan portfolio. Mr. Banerjee acknowledged that cards and payments were a drag on fee income this quarter but expects it to pick up, noting that while loan growth should contribute, processing fees face competitive pressure. He highlighted the granular nature of fees, with 78% from retail, rural, and business banking.

Param Subramanian questioned the board's decision to seek a two-year extension for Mr. Sandeep Bakhshi instead of a full three-year term, asking how stakeholders should interpret this. He also asked if the 21 basis points quarter-on-quarter decline in yield on advances was almost entirely due to the KCC reversal impact. Finally, he inquired about the soft 6% year-on-year core fee growth and whether it would pick up with retail loan growth or if unsecured/credit cards are the key metrics to track.

Answer

Anindya Banerjee, CFO of ICICI Bank, stated that the board, in consultation with the CEO, decided on a two-year appointment, which extends Mr. Bakhshi's tenure to almost three years from now, and it's too early to speculate beyond October 2028. He clarified that the decline in yield on advances was not solely due to KCC, but also progressive repricing of repo-linked and MCLR-linked loans following rate cuts. For fees, Mr. Banerjee noted that cards and payments were a drag on year-on-year growth, but the bank hopes for a pickup, emphasizing the highly granular nature of fees, with 78% from retail, rural, and business banking.

Parameswaran Subramanian of Investec Capital Services asked for the drivers behind the significant quarterly increase in the bank's net worth, which exceeded the profit after tax. He also inquired about the future outlook for the bank's CASA (Current Account Savings Account) ratio.

Answer

Executive Anindya Banerjee clarified that the primary driver for the net worth increase was the issuance of shares related to the ICICI Securities merger, which is capital-neutral but boosts the net worth figure. On CASA, he stressed focusing on the total quantum and cost of funding rather than a specific ratio outlook, but logically concurred that CASA pressures should ease with monetary easing and improved liquidity.

Parameswaran Subramanian from Nomura requested an explanation for the quarter-on-quarter increase in net worth, which significantly exceeded the reported profit for the period.

Answer

Executive Anindya Banerjee clarified that the primary driver was the adoption of revised investment guidelines, which resulted in the recognition of an AFS (Available for Sale) reserve and retained earnings of approximately INR 32 billion, net of tax. He added that market movements and employee stock option exercises also contributed to the increase.

Parameswaran Subramanian asked for data on the maturity profile of term deposits and the amount of borrowings maturing in the next year. He also followed up on the PSL shortfall percentage and the portion of borrowings that are floating-rate hedged.

Answer

Executive Bhavin Lakhpatwala noted that detailed deposit maturity data would be in the annual report. CFO Srinivasan Vaidyanathan added that about 0.5 trillion of legacy borrowings will mature, with opportunities for cost-effective replacement. He confirmed the PSL sub-segment shortfall remains around 1%. Bhavin Lakhpatwala also stated that about 60-65% of borrowings are hedged.

Parameswaran Subramanian of Investec requested data on the maturity profile of the bank's term deposits and borrowings over the next year. He also asked about the percentage of borrowings that are floating-rate hedged and for an update on the priority sector lending (PSL) shortfall.

Answer

Executive Bhavin Lakhpatwala stated that detailed term deposit maturity data would be available in the annual report. Executive Srinivasan Vaidyanathan added that about ₹0.5 trillion in legacy bonds are set to mature, which could be replaced with cost-effective infrastructure borrowings. He noted the borrowing mix will trend down from 14% towards pre-merger levels long-term. Lakhpatwala confirmed that 60-65% of borrowings are hedged. Vaidyanathan also confirmed the PSL sub-segment shortfall remains around 1%.