ICICI Bank aims at 15% growth

After having raised its ratio of low-cost deposits and pared unsecured loans, ICICI Bank plans to grow its balance sheet size by 15% in 2010-11, improving upon this year’s flat growth.
The bank would continue to grow its retail loans portfolio, project finance and working capital loans but would see the share of unsecured loans shrink, CEO & MD Chanda Kochhar said at the Idea Exchange programme of The Indian Express on Monday.
“The focus this year has been to change the composition of deposits and assets. We would probably end up with a flat balance sheet, but within that one could see a substantial change in the mix, with CASA (current account savings account) deposits going up and wholesale deposits coming down. Similarly, on the assets side, the secured loans might go up and the proportion of unsecured Personal loan and credit cards could come down,” Kochhar said. The bank’s CASA ratio has improved from 28% in 2008-09 to 38% now, she said.
She said the bank’s asset base will increase in 2010-11, with the pick-up in investments and credit demand in the second half of the next fiscal. “My estimate is that in these businesses (home, car loans and project and working capital finance) that we want to grow, we will be able to achieve 20-22% growth. Because some parts (unsecured loans and credit card) of our balance sheet will come down, net-net we may grow at 15% in the coming year,” Kochhar said. This would expectedly help ICICI Bank improve the market share it has been losing to rival banks.
While State Bank of India’s market share of assets rose from 15.9% in 2007-08 to 18.4% in 2008-9, ICICI Bank’s share fell from 9.7% to 7.2% during the years. HDFC Bank raised its market share from 2.6% to 3.1% in the same period. ICICI Banks’ asset base declined to Rs 3.8 lakh crore in 2008-09 from Rs 4 lakh crore in 2007-08. In the first quarters of the current fiscal, the asset base went further down to Rs 3.56 lakh crore.
She also expected investment to become the next driver of economic growth, supplementing the consumption-led growth seen in the past.
“The peculiar thing about India is that investments are being driven by underlying demand. Unlike other countries which have to force investment today, I think our investments are just fundamentally driven by demand and that is why they are much more productive.”
She said corporates are gearing up to invest and there is an up-tick in loan approvals. When asked what reform measures are needed to boost investment, she said procedural changes in areas like land acquisition, model concession agreements, termination clauses and dispute resolution would be of tremendous help. “That is more important for us to kick start investments. I don’t see big-bang reforms are required,” she added.
On the new banking licences proposed by the government, she said, “I think competition is always good for the customer. But what one has to see is the prudence and regulations in giving licences to new players. I am sure the RBI will take all that into account and come up with the detailed guidelines.”...