Item 2
ICICI Limited
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:
(a) 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;
(b) 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
(c) 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%.
<PAGE>
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
<PAGE>
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:
<TABLE>
---------------------------------------------------------------------------------------------
Rs Crore Mar 31, 1997 Mar 31, 1998 Mar 31, 1999 Mar 31, 2000 Sep 30, 2000
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gross NPAs 2,821 4,212 5,489 6,018 6,331
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% increase 48% 49% 30% 10% 5%
=============================================================================================
</TABLE>
Capital Adequacy
ICICI's total capital adequacy ratio was 16.9% at September 30, 2000, of which
tier-1 capital accounted for 11.3%.
<PAGE>
Summary Profit and Loss Statement (Indian GAAP)
<TABLE>
Rs. crore
--------------------------------------------------------------------------------------------
Q2 - 2000 Q2 - 2001 H1-2000 H1-2001 FY 2000
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
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Add: Fees and commissions 78 169 139 268 324
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Add: Dividend income 56 10 83 61 210
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Net income from operations 391 477 817 1,002 1,738
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Less: Operating expenses 62 97 134 189 297
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Profit from operations 329 380 683 813 1,441
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Less: Provisions and write-offs for
loans and debentures 101 99 190 214 462
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Profit before net capital gain/(loss)
and other income 228 281 493 599 979
--------------------------------------------------------------------------------------------
Add: Net capital gain / (loss) 75 (19) 95 (40) 294
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Add: Other income 7 15 11 31 55
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Profit before tax 310 277 599 590 1,328
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Less: Provision for tax 32 23 59 49 122
--------------------------------------------------------------------------------------------
Profit after tax 278 254 540 541 1,206
============================================================================================
</TABLE>
Summary Balance Sheet (Indian GAAP)
<TABLE>
Rs. crore
---------------------------------------------------------------------------------------
Sep 30, 1999 Sep 30, 2000 Growth % Mar 31, 2000
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loans and debentures 44,106 52,072 18.1 48,299
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Other Investments 2,951 3,683 24.8 3,075
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Current assets 10,337 7,081 (31.5) 9,171
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Fixed assets 4,366 5,251 20.3 4,499
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Miscellaneous expenditure 333 332 (0.6) 346
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Total assets 62,093 68,419 10.2 65,390
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Shareholders' equity and reserves 7,739 8,559 10.6 8,023
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Of which: Equity capital 744 785 5.5 783
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Preference capital 1,308 350 (73.2) 1,308
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Borrowings 48,984 54,996 12.3 50,881
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Current liabilities 4,062 4,514 11.1 5,178
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Total liabilities 62,093 68,419 10.2 65,390
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</TABLE>
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.
October 20, 2000
For further investor queries:
Contact: A.P Singh at 91-22-653 6262 or email at [email protected]
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