Item 2
ICICI Limited
Performance Review - Nine month period ended Dec. 31, 2000
The Board of Directors of ICICI at its meeting held in Mumbai today, approved
the audited accounts of ICICI (NYSE: IC) for the nine month period ended
December 31, 2000. The Board also considered the consolidated unaudited US GAAP
financial statements of ICICI for the nine month period ended December 31,
2000.
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 (excluding
extraordinary gains) in the nine month period ended December 31, 2000 at Rs.
794 crore as against Rs. 792 crore in the nine month period ended December 31,
1999. ICICI's profit after tax (excluding extraordinary gains) for the quarter
ended December 31, 2000 was Rs. 253 crore compared to Rs. 252 crore in the
quarter ended December 31, 1999 (excluding extraordinary gain of Rs. 19 crore
(net of tax) on sale of property).
During the nine month period ended December 31, 2000, the profit before net
capital gains/(loss) and other income was Rs. 820 crore compared to Rs. 684
crore in the nine month period ended December 31, 1999, resulting in a growth
of 20%. The profit after tax for the nine month period ended December 31, 2000
was impacted by the following items:
Adverse impact of Rs. 183 crore on account of lower capital gains- Against a
net capital gain of Rs. 180 crore in the nine month period ended December 31,
1999 there was a loss of Rs. 3 crore in the nine month period ended December
31, 2000;
A higher provisioning requirement of about Rs. 44 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
Additional interest expense of about Rs. 63 crore - As ICICI replaced a
significant portion of its preference shares by lower-cost borrowings
consequent to the increase in the distribution tax rate. Net loans and
debentures were Rs. 54,325 crore at December 31, 2000, an increase of 20%
compared to December 31, 1999. Shareholders' equity was Rs. 8,812 crore at
December 31, 2000, an increase of 10% compared to December 31, 1999.
Results - US GAAP
Net income before change in accounting policy and gain on sale of property
decreased 7% to Rs. 608 crore (US$ 130 million) in the nine month period ended
December 31, 2000 compared to Rs. 652 crore (US$ 140 million) in the nine month
period ended December 31, 1999. Consolidated net income of ICICI reflects 62%
of ICICI Bank's net income in the nine month period ended December 31, 2000
compared to 74% of ICICI Bank's net income in the corresponding period last
year.
Net interest revenue increased 40% to Rs. 1,319 crore in the nine month period
ended December 31, 2000 from Rs. 944 crore in the corresponding period last
year. In the same period, fees and commissions increased 63% to Rs. 476 crore
from Rs. 293 crore.
Net income was adversely impacted due to depressed market conditions in equity
and debt markets compared to the corresponding period last year. Against a gain
of Rs. 380 crore in the nine month period ended December 31, 1999 there was a
loss of Rs. 55 crore arising from trading and capital gains in the nine month
period ended December 31, 2000. If we exclude income from trading and capital
gains, income before tax increased 78% to Rs. 841 crore from Rs. 472 crore.
Further, operating expenses increased 84% to Rs. 581 crore from Rs. 316 crore
on account of the higher expenses in respect of ICICI's retail initiatives and
entry into new businesses.
Total assets as per US GAAP were Rs. 86,089 crore (US$ 18.4 billion) at
December 31, 2000, an increase of 16% compared to December 31, 1999.
Stockholders' equity as per US GAAP was Rs. 7,663 crore (US$ 1.6 billion) at
December 31, 2000.
Business Operations
During the nine month period ended December 31, 2000, ICICI's approvals
aggregated Rs. 44,751 crore, as against Rs. 32,866 crore for the corresponding
period in the previous year, thereby registering a 36% growth. During the same
period, ICICI's disbursements increased 37% to Rs. 23,501 crore from Rs. 17,176
crore in the nine month period ended December 31, 1999.
ICICI has been able to record healthy business growth while improving the risk
profile of its asset portfolio, by continued focus on better-rated corporates,
structured infrastructure finance and retail business. ICICI's continued focus
on doing business with highly rated corporates was reflected in disbursements
to companies rated 'A' and above increasing to 91% of total disbursements in
the nine month period ending December 31, 2000 from 82% in the nine month
period ended December 31,1999. Similarly, approvals to companies rated 'A' and
above increased to 94% from 90%.
Retail Initiatives
ICICI Group's continued strong growth in retail business was driven by its
customer-centric strategies. This was reflected in a rapid growth in customer
base and retail portfolio. During the nine month period ended December 31,
2000, ICICI's retail business accounted for 6% of total approvals and 9% of
total disbursements. With the launch of life insurance products, ICICI Group
now offers retail customers a complete range of financial products and
services. At present, ICICI Group offers automobile finance loans in 41 cities,
home loans in 30 cities, consumer durable loans and personal loans in 21 cities
and dealer funding in 26 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 also emerged as a key player in
the housing finance market.
Launch of Life Insurance business
Insurance Regulatory and Development Authority (IRDA) approved the commencement
of life insurance business of ICICI Prudential Life Insurance Company Limited
(ICICI Prudential) on November 24, 2000. ICICI Prudential has a capital of Rs.
150 crore with ICICI holding 74% of the equity and the balance 26% held by
Prudential group of the UK.
ICICI Prudential commenced its operations on December 12, 2000 in Mumbai and
Delhi. ICICI Prudential has received IRDA's approval for 8 products. Currently,
ICICI Prudential has 283 licensed agents and another 1,800 are undergoing
training and development. ICICI Prudential has 217 employees.
Reaping returns from ICICI Infotech
With a view to strengthen the existing relationship with Emirates Bank of the
UAE, ICICI divested 8% of its stake in ICICI Infotech, the IT and software
services arm of ICICI to the Emirates Bank at a company valuation of Rs. 720
crore. ICICI Infotech already has a joint venture with Emirates Bank, which is
involved in marketing software products and services in West Asia. ICICI
realised Rs. 58 crore from the divestment thereby recovering more than its
total equity investment in ICICI Infotech of Rs. 33 crore.
During the quarter, ICICI Infotech also acquired Ajax Software Solutions Ltd.,
a company specialising in software solutions for treasury operations. ICICI
Infotech has also successfully integrated the operations of two technology
companies in the United States which were acquired
earlier in the year. ICICI Infotech now employs about 950 professionals, of
which about 120 are employed in the United States. ICICI Infotech's profit
after tax increased significantly to Rs. 21.5 crore in the nine month period
ended December 31, 2000 from Rs. 6.5 crore in the nine month period ended
December 31,1999.
Asset Quality
ICICI continued its two-pronged approach of tackling the NPA problem through
improved quality of incremental disbursements and focus on aggressive
settlements. The net NPAs outstanding at December 31, 2000, were Rs. 4,215
crore. ICICI's net NPA ratio declined to 7.2% at December 31, 2000 from 7.6% at
March 31, 2000. The trend in gross NPAs in the past few years is given below.
Rs. crore
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Mar 31, Mar 31, Mar 31, Mar 31, Dec 31,
1997 1998 1999 2000 2000
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Gross NPAs 2,821 4,212 5,489 6,018 6,460
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% increase 48% 49% 30% 10% 7%
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There has been an increasing trend by banks and financial institutions in
emerging markets to increase their provision cover against the NPAs in view of
the rising impact of volatility in the global economy on such markets. The
higher provision cover also provides a cushion to the banks and financial
institutions in periods when corporates face financial stress on account of
slowdown in the economy or other reasons. Thus, despite the slower growth of
gross NPAs, ICICI may consider increasing its provision coverage against NPAs
to levels above regulatory requirements with a view to bringing down the
percentage of net NPAs to around 5% over a period of time.
Capital Adequacy
ICICI's total capital adequacy ratio was 16.7% at December 31, 2000, of which
Tier-1 capital accounted for 11.0%.
Public recognition to ICICI
In the last quarter, ICICI received several awards from renowned organisations
in recognition of the best practices followed by it in terms of employee
welfare, transparency in financial reporting and in discharging its
responsibilities as a corporate citizen. The Far Eastern Economic Review in its
survey of Asian Companies adjudged ICICI as the fourth among the top 10 leading
companies in India. Similarly, Hewitt - the HR consulting firm adjudged ICICI
as the fourth best company to work for in India, in a survey done for the
Business Today magazine. ICICI also bagged the award for the best presented
accounts given by the Institute of Chartered Accountants of India. ICICI has
won this award for the second consecutive year in the category of 'Banks and
FIs'. Finally, ICICI also received the "Rio Tinto Award for long term
commitment" from the Secretary General of the Commonwealth in London recently.
The award has been instituted by "Worldaware," a UK based charity organisation,
and is given to a Commonwealth based company which has demonstrated consistent
commitment over a number of years to involvement in development.
Summary Profit and Loss Statement (Indian GAAP)
Rs. crore
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Q3: Q3: Apr-Dec Apr-Dec
2000 2001 1999 2000 FY2000
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Fund based income 1,959 2,079 5,671 6,101 7,585
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Less: Interest and depreciation
charges 1,646 1,760 4,764 5,109 6,381
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Net fund based income 313 319 907 992 1,204
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Add: Fees and commissions 65 113 205 381 324
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Add: Dividend income 18 6 101 67 210
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Net income from operations 396 438 1213 1,440 1,738
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Less: Operating expenses 70 99 205 288 297
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Profit from operations 326 339 1,008 1,152 1,441
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Less: Provisions and write-offs
for loans & debentures 135 118 324 332 462
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Profit before net capital gain /
(loss) & other income 191 221 684 820 979
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Add: Net capital gain / (loss) 85 37 180 (3) 294
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Add: Other income 3 20 14 51 34
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Profit before tax 279 278 878 868 1,307
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Less: Provision for tax 27 25 86 74 120
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Profit after tax (excluding
extraordinary gains) 252 253 792 794 1,187
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Add: Extraordinary Gains 19 - 19 - 19
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Profit after tax 271 253 811 794 1,206
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Summary Balance Sheet (Indian GAAP)
Rs. crore
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Dec 31, Dec 31, Growth Mar 31,
1999 2000 % 2000
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Net loans and debentures 45,194 54,325 20.2 48,299
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Other Investments 3,114 3,971 27.5 3,075
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Current assets 11,502 6,943 (39.6) 9,171
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Fixed assets 4,432 5,087 14.8 4,499
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Miscellaneous expenditure 315 322 2.4 346
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Total assets 64,557 70,648 9.4 65,390
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Shareholders' equity and reserves 8,016 8,812 9.9 8,023
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Of which : Equity capital 768 785 2.2 783
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Preference capital 1,308 350 (73.2) 1,308
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Borrowings 50,799 57,076 12.4 50,881
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Current liabilities 4,434 4,410 (0.5) 5,178
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Total liabilities 64,557 70,648 9.4 65,390
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Except for the historical information contained herein, statements in this
release which contain words or phrases such as "will", "would", "would ensure",
"would attempt", "may", "may consider", "aim", "will likely result", "believe",
"expect", "will continue", "anticipate", "estimate", "intend", "plan",
"consider", "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.
For press queries please call Madhvendra Das at 91-22-653 6812 or email at
das@icici.com
For investor queries please call Sandeep Guhagarkar at 91-22-653 6899 or email
at guhagarkar@icici.com
January 25, 2001
END