Performance Review - Half Year ended September 30, 2000
The Board of Directors of ICICI at its meeting held
in Mumbai today, approved the audited accounts of ICICI (NYSE: IC) for
the half year ended September 30, 2000 (H1-2001). The Board also considered
the consolidated unaudited US GAAP financial statements of ICICI for H1-2001.
Results - Indian GAAP
In a period marked by environmental constraints on
account of the depressed equity capital markets, increase in interest
rates and volatile foreign exchange markets, ICICI maintained its profit
after tax in H1-2001 at Rs. 541 crore as against Rs. 540 crore in the
half year ended September 30, 1999 (H1-2000). During H1-2001, the profit
before net capital gains/(loss) and other income was Rs. 599 crore compared
to Rs. 493 crore in H1-2000, resulting in a growth of 21%.
The profit after tax for H1-2001 was impacted by the
following items:
adverse impact of Rs. 135 crore - Against a net capital gain of Rs.
95 crore in H1-2000 there was a loss of Rs. 40 crore in H1-2001;
a higher provisioning requirement of about Rs. 30 crore - Consequent
to the revision of the Reserve Bank of India provisioning guidelines
whereby sub-standard assets are to be classified as doubtful assets
after 18 months of an asset being classified as NPA instead of 24 months;
and
additional interest expense of about Rs. 34 crore - As ICICI redeemed
a significant portion of its preference shares consequent to the increase
in the distribution tax rate.
If we exclude the impact of higher provisioning requirement and additional
interest expense due to redemption of preference shares, the profit after
tax for H1-2001 would have been Rs. 600 crore, an increase of 11% over H1-2000.
Total assets were Rs. 68,419 crore at September 30,
2000, an increase of 10% compared to September 30, 1999. Net loans and
debentures were Rs. 52,072 crore at September 30, 2000, an increase of
18% compared to September 30, 1999. Shareholders equity was Rs. 8,559
crore at September 30, 2000, an increase of 11% compared to September
30, 1999.
Results - US GAAP
Net income as per US GAAP increased 6% to Rs. 450 crore
(US$ 98 million) in H1-2001 compared to Rs. 425 crore (US$ 92 million)
in H1-2000. ICICI's holding in ICICI Bank (a consolidating subsidiary)
has reduced to 62% in H1-2001 from 74% in H1-2000 following the ADS issue
by ICICI Bank in March 2000. Hence, consolidated net income of ICICI reflects
62% of ICICI Bank's net income in H1-2001 compared to 74% of ICICI Bank's
net income in H1-2000.
Total assets as per US GAAP were Rs. 81,410 crore (US$
17.67 billion) at September 30, 2000, an increase of 15% compared to September
30, 1999. Stockholders' equity as per US GAAP was Rs. 7,430 crore (US$
1.61 billion) at September 30, 2000.
Business Operations
During the half-year ended September 30, 2000, ICICI's
approvals aggregated Rs. 31,719 crore, as against Rs. 24,130 crore for
the corresponding period in the previous year, thereby registering a 31.5%
growth. During the same period, ICICI's disbursements aggregated Rs. 16,745
crore, as against Rs. 11,040 crore for the corresponding period in the
previous year, registering a growth of 51.7%.
ICICI has been able to record healthy business growth
while improving the risk profile of its asset portfolio, by continued
focus on top quality corporate finance and structured infrastructure finance.
Assistance to the corporate finance sector accounted for 55% of approvals
and 73% of disbursements, while assistance to the infrastructure and oil
and gas sectors accounted for 29% of approvals and 8% of disbursals. The
traditional manufacturing sector accounted for just 11% of total approvals
and 11% of total disbursements. Finally, personal financial service loans,
which recorded rapid growth during the period under review, accounted
for about 5% of approvals (1% in the corresponding period in the previous
year) and 8% of disbursals (1% in the corresponding period in the previous
year).
ICICI's continued focus on doing business with highly
rated corporates was reflected in disbursals to companies rated 'A' and
above increasing from 82% of total disbursals to 89%. Similarly, approvals
to companies rated 'A' and above increased from 89% to 92%.
Retail Initiatives
ICICI Group has steadily increased its retail business
presence, and today offers customers with a comprehensive range of retail
products, designed to meet a variety of diverse needs. At present, ICICI
Group offers automobile finance loans in 32 cities, home loans in 17 cities,
consumer durable loans in 25 cities, personal loans in 21 cities, dealer
funding in 19 cities and credit cards in 11 cities. ICICI has emerged
as the clear leader in the automobile finance segment and enjoys preferred
financier status with almost all major car manufacturers. ICICI Group
has emerged as a key player in the housing finance market. ICICI Bank
has also rapidly expanded its base of credit card holders, and has issued
over 75,000 cards.
ICICI further strengthened its retail distribution
network during the half year period, and presently has 87 fully operational
ICICI Centers, covering 75 cities. ICICI also expanded its call-center
network, and at present has 10 state-of-the-art call centers.
In an endeavor to consolidate its position as a one-stop
financial services provider, ICICI has recently tied-up with Prudential
of the UK for life-insurance products and with Lombard of Canada for non-life
insurance products. The two joint ventures are expected to commence operations
once all the regulatory formalities are completed.
E-Commerce Initiatives
ICICI's online trading service offered through ICICI
Web Trade Limited -a wholly owned subsidiary was able to achieve rapid
growth. The web-broking service has achieved over 75,000 registrations
and over 30,000 active users. The service presently has average trading
volumes of over Rs. 4 crore per day.
Consistent with its efforts to deepen relationships
with customers, and become a leading player in the online financial services
space, ICICI launched two financial portals. ICICImoneymanager.com - a
comprehensive retail finance portal, provides customers with a single
point of contact for their entire relationship with the ICICI group. For
its corporate clients, ICICI launched ICICImarkets.com - a wholesale finance
portal offering customers with real-time news and stock-quotes, online
ALM, yield calculators and company specific information.
ICICI's e-commerce investments have commenced generating
significant value. Two of these investments - billjunction.com and traveljini.com
- were recently valued at Rs. 160 crore. A leading Indian horizontal portal
has picked up a stake of 5% in billjunction and 10% in traveljini, valuing
these investments at Rs 160 crore. This valuation is more than thrice
the amount of ICICI's total e-commerce investments.
Asset Quality
ICICI's net NPA ratio declined from 7.6% at March 31,
2000, to 7.3% at September 30, 2000. The decline in the NPA ratio was
a consequence of ICICI's aggressive approach towards tackling the NPA
problem, which included focussed recovery efforts on existing NPA cases
and increased monitoring of stress cases. The net NPAs outstanding at
September 30, 2000, were Rs. 4,136 crore.
Slowdown in NPA growth:
The past years have witnessed a significant slowdown
in additions to levels of gross NPAs. This is reflected in the table below:
Rs Crore
31-Mar-97
31-Mar-98
31-Mar-99
31-Mar-00
30-Sep-00
Gross NPAs
2,821"
4,212"
5,489"
6,018"
6,331"
% increase
48%
49%
30%
10%
5%
Capital Adequacy
ICICI's total capital adequacy ratio was 16.9% at September
30, 2000, of which tier2 capital accounted for 11.3%.
Summary Profit and Loss Statement (Indian GAAP)
Rs. crore
Q2
- 2000
Q2
- 2001
H1-2000
H1-2001
FY
2000
Fund based income
1,839
2,012
3,711
4,013
7,577
Less : Interest and depreciation
charges
1,582
1,714
3,116
3,340
6,373
Net fund based income
257
298
595
673
1,204
Add : Fees and commissions
78
169
139
268
324
Add : Dividend income
56
10
83
61
210
Net income from operations
391
477
817
1,002
1,738
Less : Operating expenses
62
97
134
189
297
Profit from operations
329
380
683
813
1,441
Less : Provisions and write-offs
for loans & debentures
101
99
190
214
462
Profit before net capital
gain / (loss) & other income
228
281
493
599
979
Add: Net capital gain /
(loss)
75
29
95
-40
294
Add: Other income
7
15
11
31
55
Profit before tax
310
277
599
590
1,328
Less : Provision for tax
32
23
59
49
122
Profit after tax
278
254
540
541
1,206
Summary Balance Sheet (Indian GAAP)
Rs. crore
30-Sep-99
30-Sep-00
Growth
%
31-Mar-00
Net loans and debentures
44,106
52,072
18.1
48,299
Other Investments
2,951
3,683
24.8
3,075
Current assets
10,337
7,081
-31.5
9,171
Fixed assets
4,366
5,251
20.3
4,499
Miscellaneous expenditure
333
332
-0.6
346
Total assets
62,093
68,419
10.2
65,390
Shareholders' equity and
reserves
7,739
8,559
10.6
8,023
Of which : Equity capital
744
785
5.5
783
Preference capital
1,308
350
-73.2
1,308
Borrowings
48,984
54,996
12.3
50,881
Current liabilities
4,062
4,514
11.1
5,178
Total liabilities
62,093
68,419
10.2
65,390
Except for the historical information contained
herein, statements in this release which contain words or phrases such
as "will", "aim", "will likely result", "believe", "expect", "will continue",
"anticipate", "estimate", "intend", "plan", "contemplate", "seek to",
"future", "objective", "goal", "project", "should", "will pursue" 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, the adequacy of our allowance for credit losses,
technological changes, investment income, cash flow projections, our exposure
to market risks as well as other risks detailed in the reports filed by
ICICI Limited with the Securities and Exchange Commission of the United
States. ICICI undertakes no obligation to update forward-looking statements
to reflect events or circumstances after the date thereof.