Mumbai: India’s second largest lender ICICI Bank is gearing up to target the self-employed individuals, scale up its private banking and wealth management clientele and focus on family offices to build its deposit base. In an interaction with Macquarie Capital the bank said that they will target their existing clients to increase wallet share.
“Management seemed unperturbed about the recent tightness for liabilities,” a note released by Macquarie Capital said. “Their analysis of client coverage reveals that there is plenty of scope to expand their share of wallet even within their existing clients. They still have ample scope of improvement in targeting the self-employed individuals, scale up further the private banking and wealth management clientele, focus on family offices etc. So all of these can help them gain market share on the liabilities as well as asset side of the business. “
Less than 50% of the customers have a primary banking relationship with them and that gives them ample opportunities to scale up things further, it said.
In the recently held analyst call post earnings the bank management had said that its deposit flows are quite healthy to support loan growth. The bank has grown its deposits 17% on an average basis and 15% plus on a period end basis.
“The deposit rates continue to be tight, the wholesale deposit rates have not really come down during the first quarter as they usually do and of late there has been one or two hikes in the retail deposit rate also, although in one case it is at a longer tenor,” said Anindya Banerjee, Group CFO, ICICI Bank. “As far as the LDR is concerned, I think this low-to-mid 80s is the level of domestic LDR that we have historically operated at and I don’t see any big change in that.”
ICICI Bank which recently reported June quarter earnings saw advances rise 15.7% on-year while total deposits grew by 15.1%. Its CD ratio for the June quarter was at 84.2%.
“ICICI Bank continues to deliver healthy risk-adjusted margins and is well-placed on LDR as well,” said Sameer Bhise, Co-head of research, JM Financial institutional equities. “While there could be some moderation on headline growth metrics given systemic issues around liquidity/deposit growth, we believe ICICI Bank should still deliver healthy growth amongst peers.”
In its interaction with Macquarie the bank management also indicated that it is cautious and carefully monitoring the risk in the SME portfolio. The bank has not seen a down-cycle in this segment compared to the retail and corporate segments. For the lender, SME book has grown more than 20% on year and the biggest driver has been their ability to underwrite better due to GST, digital payments, account aggregator.
Like other banks, ICICI Bank has also seen rise in delinquency levels in the unsecured segment as well as credit cards but the stress levels are within the tolerance limits.
