Chanda Kochhar, the new chief executive officer and managing director of ICICI Bank. Kochhar took over from KV Kamath on May 1 told the bank is planning an aggressive increase of current account and saving account (CASA) to 33 per cent from the present level of 28 per cent by next year. Thus in view of this bank is planning to increase the growth once the deposit base mix gets aligned to a higher percentage of low-cost deposits.
As on March 31, 2009 the total deposits of the bank stood at Rs 218,348 crore compared to Rs 244,431 crore on March 31, 2008. Even the CASA ratio also showed improvement of 28.7 per cent of total deposits on March 31, 2009 from 26.1 per cent on March 31, 2008.
In an exclusive interview with Financial Chronicle, Kochhar told the bank will be rolling out to 580 new branches to build up the CASA deposits. Kochhar added, “The next phase of growth will come after we rebalance our deposit structure. By next year, we will be able to grow on a much more balanced balance sheet. We have sufficient branch licenses. We will reduce our dependence on bulk deposit because interest rates on these deposits are more volatile. Through CASA we will have a more stable interest rate”.
Kochhar added the bank will also review its shareholding in life insurance companies and the asset management company, but that the process will be slow.
She explained, “We will wait for the right time and right value and do it over a period of time. The IPO (initial public offering) of ICICI Prudential will also happen, but we have fixed no specific time frame now. We will definitely look at monetizing investments. We are in no desperate need to raise capital”.
Chanda, 48-year old, has been ranked 28th in the Fortune list of most powerful women in business, said she can already see recovery indications in the economy.
She pointed out, “Maybe in the next one year, we would get back to the next phase of growth. But it is too early to say which segments we will focus. It would depend on demands of the environment at that time”.
During the financial year 2008-09 the banking system observed a credit growth of 17 per cent while the ICICI Bank’s loan book slide down by 3.2 per cent.
Kochhar, while intricate on the present strategy of the bank that will propel it to the next round of growth explained, “We have controlled a lot of our credit losses and credit quality by tightening our credit parameters. We have cut back on products that used to contribute to our losses because we have realized that risks on these products have increased substantially. Losses are more or less controlled. We have stopped small-ticket personal loans, where the average size is about Rs 30,000 and less and some other unsecured loans”.
The bank has been able to build up gross non-performing assets (NPAs) of Rs 9,929 crore, of which 70 per cent has come from retail advances. However, Kochhar stated she is not more worried on the NPA levels.
She added, “I am not worried about the NPAs because it will peak out in a few quarters. But on the corporate side, there will be some restructuring required, but again no NPA surprises here”.
In bank books the total restructured assets include Rs 6,100 crore of debt out of which the major portion is of corporate debt.
In the fourth quarter bank restructured around Rs 1,100 crore of assets while about Rs 2,000 crore worth of assets are lined up to be restructured.
Kochhar told, “Most of the restructured assets are from the corporate side. Going forward, we expect more restructuring from wholesale lending but expect no NPAs".
Meanwhile the bank is not having any capital raising programs because refinancing requirement will be funded through the deposit base.
Speaking about the international front, Kochhar said the bank is having a repayment liability of $1 billion, due for repayment this year. Majority of the refinancing dues will be funded by the deposits.
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