Buoyed by the digitisation drive, ICICI Bank under Sandeep Bakshi’s watch has kept the retail loan flag flying high while keeping the risks calibrated during the Covid-19 pandemic period. Barring the sharp drop in debit card numbers, the bank has been able to maintain a double-digit growth in all segments of the retail book for the fiscal fourth quarter. The corporate loan book has also performed with a well-rated asset book.
With its close rival HDFC Bank spending most of its energies on beefing up its technology backbone after being barred by the regulator from launching any new digital product, ICICI Bank has been able to lap up the opportunities. Having invested heavily into technology, the bank has been able to digitise both its credit delivery and underwriting process, which is helping in faster loan disbursals. With the big public sector banks like Bank of Baroda, Punjab National Bank, Union Bank of India and Canara Bank busy digesting their respective mergers, this is also providing space for banks like ICICI Bank, which had made huge investments in technology, to reap the benefits despite the pandemic.
The bank’s biggest growth in the fiscal fourth quarter has come in its mortgage loans. Disbursements in the home loan segment touched nearly Rs 17,897 crore for the quarter ended 31 March 2021, 8% higher than the preceding quarter. The home loan book of the bank stood at Rs 2,43,654 crore at the end of the 31 March, growing 21.7% more than the year-ago period.
“On the mortgage side, I must add that again decongestion, the fact of the matter is that we were slightly under penetrated in our own customer base and competitive pricing and the fact that we had used our physical distribution, but more than that on the digital tilt, I would say it did help us in gaining share,” Anup Bagchi, ICICI Bank executive director in charge of retail lending, told analysts.
The bank has improved its underwriting abilities on the digital footprint, helping it to pre-approve and tighten the whole process of credit delivery. Digitisation has helped the credit delivery move faster, better and to good profile customers. Video KYC has also made the process of approving loans digitally very secure and safe. “Even credit decisions have become digital,” Bagchi said, while explaining the bank’s strong growth numbers in the quarter ended 31 March 2021.
The vehicle loans grew by Rs 1,705 crore during the quarter to Rs 64,154 crore, reporting a 10% growth over the previous year. This was led by a strong demand for passenger cars as people preferred private travel to public modes of transport.
The auto finance segment grew by 12.5% to Rs 36,239 crore over the previous year. Sequentially, the loans grew by 4.3% as the bank financed 86% new cars and 14% used cars, with demand coming from Tier 2 cities. Digitising the loan disbursal process also helped in expanding the market share as credit decisions were taken online.
The commercial vehicle finance segment grew by 7.6% to Rs 26,516 crore. However, the two-wheeler loans degrew by 4.4% over the previous year to Rs 1,399 crore.
ICICI Bank continued to take some risks growing its unsecured lending. Personal loans and credit cards held up well despite the Covid-19 pandemic. While personal loans rose 9% year-on-year to Rs 49,345 crore, sequentially it grew 6.4%.
The bank’s credit card business rose 10.6% YoY to Rs 17,311 crore and 0.3% sequentially. The number of cards rose to 10.6 million at the end of the fourth quarter, from 9.9 million in the preceding quarter. The tie-up with Amazon Pay to launch a co-branded card also paid off, with the bank securing 1.6 million co-branded cards at the end of March 2021.
The number of debit cards, however, fell sharply to 39 million in the March quarter, from 45.4 million in the preceding quarter. Efforts were obviously made to weed out inactive and delinquent card holders. The spends on the cards also slipped to Rs 18,663 crore in Q4 of FY21, from Rs 19,395 crore a quarter ago.
ICICI Bank is looking to grow its corporate loans. “I feel quite nice about the portfolio and we'll, of course, have to watch,”
Vishakha Mulye, the bank’s head of corporate lending, told analysts after the fourth quarter financial results.
Withstanding the Covid-19 shock, the bank’s corporate side of the book is growing at the rate of 13%-14%, with less than 1% of it getting restructured when the Reserve Bank of India (RBI) came out with the special restructuring scheme.
“We don't look at just what we are making from the corporate client or what opportunities are there with the corporate client. Along with the retail team, the corporate team works to look at what all we can do with the employees of the corporate on raising deposits, issuing credit cards, lending. Similarly, on the dealer, vendor, the SME part of the business – all this works along,” said Mulye.
The bank is focusing not just on the corporate revenue but the retail and SME opportunities. “That is something which is very helpful in maintaining the profitability despite the focus on the higher rated clients,” Mulye said.
The corporate loans of the bank grew by Rs 6,551 core during the quarter to Rs 1,76,635 crore, up 4.7% over the previous quarter. Corporate loans comprised 24% of the bank’s total loan book.
