ICICI Bank Limited Q1 FY23 Earnings Conference Call Insights

Key highlights from ICICI Bank Limited (ICICIBANK) Q1 FY23 Earnings Concall

Management Update:

• ICICIBANK said employee expenses increased by 20% YonY, while non-employee expenses increased by 28.8% YonY in 1Q23, mainly due to retail business and technology related expenses.

Q&A Highlights:

• Mahrukh Adajania with Edelweiss asked about the reason for sharp increase in employee expenses. Anindya Banerjee CFO replied that in the last 12 months the bank has added about 7,250 employees. Additionally, ESOP cost is accounted for in 1Q23 of INR1.39 billion and the impact of promotions and increments becoming effective in 1Q23.

• Mahrukh Adajania with Edelweiss enquired about how the growth outlook will pan out in general. Anindya Banerjee CFO said that currently general loan growth across the sector has held up quite well. The rates have started moving from late May and there is some resilience in demand.

•  Mahrukh Adajania with Edelweiss asked about the bond portfolio, if the company had any trading gains and any mark to market loss.  Anindya Banerjee CFO said that in the AFS portfolio, the bank carries a very low duration. So the mark to market is negligible.

• Nilanjan Karfa of Nomura asked about the decline in incremental loans done at a higher rate. Anindya Banerjee CFO replied that lending rates have been competitive across segments over the last few quarters. So this will reverse out as the benchmark is up.

• Nilanjan Karfa of Nomura enquired that in the SME portfolio, in which segments the bank is seeing a lot of demand. Anindya Banerjee CFO said that the bank has been growing the SME portfolio quite consistently for the last four years or so. ICICIBANK is quite comfortable with the growth in this portfolio.

• Nilanjan Karfa of Nomura asked that in both SME and corporate loan, what percentage is working capital loan. Anindya Banerjee CFO clarified that it’s a mix of working capital and term loan. There is nothing to call out in terms of increase in working capital requirement in 1Q23 as the growth rate has been in line with what’s seen in the past.

• Jai Mundhra from B&K Securities asked about the average duration of the bank’s term deposit. Anindya Banerjee CFO said the bank doesn’t disclose the duration but publish the maturity pattern. ICICIBANK added that it should have significant proportion in 1 year plus.

• Jai Mundhra from B&K Securities asked if the company could see a higher branch addition pace vs. what’s seen over the last 2-3 years. Anindya Banerjee CFO answered that the bank could, but it would be based on the bank’s own growth strategy.

• Nitin Agarwal of Motilal Oswal enquired how sustainable are the recovery trends witnessed in past two quarters. Anindya Banerjee CFO clarified that it gives the bank confidence in its underwriting. Over the long term, on the tolerance levels, or on designing the business, the bank would continue to look at 20%-odd of provisions to PPOP.