“We have always said we would grow higher than the market in the areas that we choose to grow and this (retail loans) is one of those markets”
ICICI Bank on Friday reported a 12% growth in Q2 net profit and an increase in slippages from the restructured book. In an interaction with reporters, the bank’s managing director & CEO, Chanda Kochhar, said corporate credit growth is expected to reach double digits by the end of the year.
What is your guidance on credit growth?
Retail credit continues to grow 25% per year and corporate credit growth could get a little better from here. Right now, it is mainly working capital growth. Our domestic credit has grown about 17% and we would actually be at a growth rate of 18-20% by the time the year ends. We expect some pickup, but, right now, I think its is driven by the upwards of 25% growth in retail credit and some more pickup in the working capital side from the corporate sector.
The retail consumer growth rate for the banking sector is about 17-18% and a market leader like us gains market share every quarter. We have always said we would grow higher than the market in the areas that we choose to grow and this is one of those markets.
Next year, I think, loan demand will be better and this year it will be more or less at the current rates. It will get better for us by end of this year and we are working on more and more newer clients where we don’t have that much exposure. By the end of the year, we will get to a double-digit growth on the corporate side.
Going ahead, how do you expect asset quality to move?
We don’t give very specific guidance, but overall for the year, we had said that we expect NPA addition to be lower than the total additions last year and, I think, we are on track for that. The fresh NPA addition in this quarter was Rs 1,300 crore and it is mainly coming from the corporates. A lot depends on the rate at which some of the existing projects start generating cashflows, but a lot of work is going on in that direction. We are talking of reviving some of the major projects that are not yet operational.
Where does your restructured book stand?
The restructured stock now is Rs 11, 868 crore, which is actually a reduction from R12,604 crore at the beginning of the quarter. We have done 5/25 for around Rs 2,000 crore of loans, but those are for companies that are viable and have taken loans in the past of short-term nature, whereas the life of their assets justify that they can have longer term loans. We have used the Reserve Bank of India’s strategic debt restructuring scheme in one case.
With less than 10% of savings account transactions being done through branches, will there a shift in the branch expansion policy?
Branches are still an important part of the channel, so we will continue to set up branches. I think there is clearly an impact in terms of the size of the branch required and the number of people required and the ability of the branches to, therefore, do other advisory and sales of third-party products and increase fee income.
Clearly, it changes the profitability substantially and reduces our cost of operations; that is why, you see our cost-to-income ratios are clearly under control. In terms of number of branches, the addition plan does not change.
How are your digital channels performing?
We have seen activation of iMobiole app increasing by 140% y-o-y in the first six months of FY16. There has been a robust growth in mobile banking transactions and the bank has 32% market share based on the value of mobile banking transactions in June and July 2015.
Currently, about 61% of our total transactions of savings account customers are done through the internet and mobile. Less than 10% of the transactions are done through branches and transactions of over Rs 2 lakh crore are processed through our internet banking platform and the website sees around 15 million unique visitors every month.