ICICI Bank Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from ICICI Bank Ltd (ICICIBANK) Q3 FY22 Earnings Concall

Management Update:

• ICICIBANK said that it aims to steadily grow the business within its strategic framework and strengthen its franchise delivery and servicing capabilities, backed by a range of digital initiatives.

• The bank had about 102,000 employees at year end and the employee count increased by about 9,900 in the last 12 months.

Q&A Highlights:

• Mahrukh Adajania from Elara Capital asked about the fee growth being strong and if cards were the biggest delta for growth. Rakesh Jha CFO said that fee growth has been strong across various segments like retail asset, credit card and payments, SME etc.  The company added that cards have been an integral part of the overall fees and will continue to be so going forward.

• Mahrukh Adajania from Elara Capital  asked another question about other Opex and what was the biggest driver of other Opex increase QoQ. Rakesh Jha CFO commented that in Q3 there is always  a higher amount of ad and promotion spend linked to the festive season. Therefore the sequential increase comes from that. And additionally, tech expense and purchase of priority sector lending certificates also contributed to the increase.

• Nitin Aggarwal with Motilal Oswal asked about the credit card business and how the revolve rates are trending in that business. Anup Bagchi ED answered that the company is doing a couple of things leading to better growth. In retail segment firstly, ICICIBANK is analyzing customer behavior and investing. Secondly, the help from Amazon has also been strong. And thirdly, the portfolio getting built up on the commercial cards. The revolver rate declined a bit in the first and second COVID wave but now it’s gradually increasing.

• Jai Mundhra from B&K Securities enquires about the bifurcation of fee income into third-party, liability related, credit card or any other. Rakesh Jha CFO commented that the company only discloses that 76% of the fee is coming from retail, business banking and SME segment.

• Jai Mundhra from B&K Securities also asked about the growth in SME and business banking and what could be the lending rate. Rakesh Jha CFO commented that, that rate is a wide range and would not be helpful. Rakesh added that for the best of the customers, the rate can go to as low as 7%, while also the company might be doing unsecured there where the rates will be well in double digits.

• Prakhar Agrawal from Edelweiss  enquires about the pressure points on the fee income side. Rakesh Jha CFO answered that there will be some element of fee that will be growing at a slower pace than overall, and also there are always some regulatory changes that keeps coming.

• B. Mahesh of Kotak Securities asked about the marked increase in borrowings and if there is any particular reason for this. Rakesh Jha CFO said that the company did about INR8,000 crores of infra bonds during the quarter which is the underlying increase that the company has done.

• B. Mahesh of Kotak Securities also asks about pricing on the mortgage side of the business. Rakesh Jha CFO answered that pricing on the mortgage side is always competitive. ICICIBANK is very clear that it doesn’t want to be price leaders in any of the segment, including mortgages. However, if the company sees the market rates where they are, it would be happy to be at par.

• M. B. Mahesh of Kotak Securities additionally asked about the customer level profitability over the last two, three years and has that been maintained well or is that under pressure? Rakesh Jha CFO answered that overall, the company is seeing a slight uptick in deposit rates, so maybe the lowering of mortgage rates, the company expects will be behind it in the near future.