ICICI Bank: Transcript for Analyst Call held on July 24, 2021

ICICI Bank Limited

Earnings conference call - Quarter ended June 30, 2021 (Q1-2022)

July 24, 2021

Certain statements in this release relating to a future period of time (including inter alia concerning our future business plans or growth prospects) are forward-looking statements intended to qualify for the 'safe harbor' under applicable securities laws including the US Private Securities Litigation Reform Act of 1995. Such forward looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties include, but are not limited to statutory and regulatory changes, international economic and business conditions, political or economic instability in the jurisdictions where we have operations, increase in non-performing loans, unanticipated changes in interest rates, foreign exchange rates, equity prices or other rates or prices, our growth and expansion in business, the adequacy of our allowance for credit losses, the actual growth in demand for banking products and services, investment income, cash flow projections, our exposure to market risks, changes in India's sovereign rating, and the impact of the Covid-19 pandemic which could result in fewer business opportunities, lower revenues, and an increase in the levels of non-performing assets and provisions, depending inter alia upon the period of time for which the pandemic extends, the remedial measures adopted by governments and central banks, and the time taken for economic activity to resume at normal levels after the pandemic, as well as other risks detailed in the reports filed by us with the United States Securities and Exchange Commission. Any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of the date of this release. ICICI Bank undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. Additional risks that could affect our future operating results are more fully described in our filings with the United States Securities and Exchange Commission. These filings are available at www.sec.gov.

This release does not constitute an offer of securities.

Moderator:

Ladies and gentlemen, good day and welcome to ICICI Bank Q4-2021 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for an operator by pressing

'*' then '0' on your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Sandeep Bakhshi -- Managing Director and CEO of ICICI Bank. Thank you. And over to you, sir.

Page 1 of 38

ICICI Bank Ltd

July 24, 2021

Mr. Bakhshi's opening remarks

Good evening to all of you and welcome to the ICICI Bank Earnings Call to discuss the results for Q1 of FY2022. Joining us today on this call are Vishakha, Anup, Sandeep Batra, Rakesh and Anindya.

We hope that you are safe and in good health. The second wave of the Covid-19 pandemic was more severe compared to the first wave in terms of cases and fatalities, and a wider geographic reach. As banking is classified as an essential service, most of our branches were open even during the months of April and May when containment measures were in place in various parts of the country. Our colleagues have shown resilience and strength and continued to serve our customers, even in this challenging environment when a number of our colleagues were themselves impacted by the virus. We are happy to share that now about 80% of the Bank's employees have received at least one dose of vaccination against Covid-19. We would like to thank the medical and health workers and other essential workers for their tireless efforts in this fight against Covid-19.

With the decline in the numbers of Covid-19 cases since June, there has been a gradual easing of restrictions across various states. The Ultra Frequency Index, comprising several high frequency indicators tracked by the Bank's Economic Research Group, which declined from 107.9 in March to 70.9 in May has improved to 99.6 in the first week of July. High frequency indicators such as power demand, e-way bill generation and the unemployment rate have shown significant improvement in June. Vehicle registrations have also improved in June compared to April and May. Going forward the pace of normalisation in economic activities will depend on the trajectory of the pandemic, the level of containment measures in place and the pace and effectiveness of vaccination.

Page 2 of 38

ICICI Bank Ltd

July 24, 2021

At ICICI Bank, we continue to steadily grow our franchise and maintain our strong balance sheet.

1. Growth in the core operating profit in a risk-calibrated manner through the focused pursuit of target market segments

Our aim is to achieve risk-calibrated growth in core operating profit through a 360- degree customer centric approach, tapping opportunities across ecosystems, leveraging internal synergies, building partnerships and decongesting processes. The core operating profit increased by 22.7% year-on-year to 86.05 billion Rupees in Q1 of 2022. The profit after tax grew by 77.6% year-on-year to 46.16 billion Rupees in Q1 of 2022.

1. Further enhancing our strong deposit franchise
   Total deposits grew by 15.5% year-on-year to 9.3 trillion Rupees at June 30, 2021. During the quarter, average current account deposits increased by 32.4% year-on- year and average savings account deposits by 21.7% year-on-year. Term deposits grew by 8.7% year-on-year. The liquidity coverage ratio for the quarter was 130%, reflecting continued significant surplus liquidity. Our cost of deposits continues to be among the lowest in the system. Our digital platforms and solutions, presence in various ecosystems and process decongestion initiatives have played an important role in the growth of our deposit franchise.
2. Growing our loan portfolio in a granular manner with a focus on risk and reward
   Retail disbursements moderated in April and May due to the containment measures in place across various parts of the country. With the gradual easing of restrictions, disbursements picked up in June and July. Credit card spends declined in April and May but improved to March levels in June, driven by spends in categories like consumer durables, utilities, education and insurance. The retail loan portfolio, excluding business banking, grew by 20.2% year-on-year and was flat sequentially at June 30, 2021.

Page 3 of 38

ICICI Bank Ltd

July 24, 2021

Credit summations in the overdraft accounts of business banking and SME customers also picked up in June and July after declining in April and May. Our business banking and SME franchises continue to grow on the back of digital offerings and platforms like InstaBIZ and Trade Online. The business banking and SME portfolios grew by 53.4% and 42.8% year-on-year respectively. The business banking portfolio grew by 6.3% sequentially and the SME portfolio saw a marginal sequential decline.

The growth of the domestic corporate portfolio was 11.4% year-on-year. The growth in performing domestic corporate portfolio, excluding the builder portfolio, was about 15% year-on-year at June 30, 2021. Overall, the domestic loan portfolio grew by 19.6% year-on-year and was flat sequentially. The non-India linked overseas corporate portfolio, declined year-on-year and sequentially, in line with the approach which we have articulated earlier.

4. Leveraging digital across our business

Our open architecture based digital platforms provide end-to-end seamless digital journeys and personalized solutions to customers and enable more effective data- driven cross-sell and up-sell. These platforms also enable us to reach out to non- ICICI Bank account holders. We have shared some details in slides 17 to 28 of the investor presentation.

We have seen significant increase in adoption of our mobile banking app, iMobile Pay, with over 2.5 million activations by non-ICICI Bank account holders since its launch six months ago. The transactions by non-ICICI Bank account holders in terms of value and volume have grown by eight times and seven times, respectively, in June 2021 compared to March 2021.

The financial transactions on our digital platform for businesses, InstaBIZ, and our supply chain platform have grown steadily in the past few quarters. The increasing adoption of our digital platforms and growth in the value and volume of transactions supports growth in CASA deposits and provides a rich base for analytics and cross- sell. The value of financial transactions through InstaBIZ more than doubled year-

Page 4 of 38

ICICI Bank Ltd

July 24, 2021

on-year in Q1 of 2022. The value of transactions through supply chain platforms grew by more than 8 times year-on-year in June 2021.

We have taken a number of initiatives to offer a convenient and frictionless experience to customers by digitising the credit underwriting process, with instant loan approvals. The proportion of end-to-end digital sanctions and disbursements across various products has been increasing steadily. About 34% of our total mortgage sanctions by volume were end-to-end digital in Q1 of 2022 compared to 19% FY2021. About 46% of personal loan disbursements by volume were end-to- end digital in Q1 of 2022 compared to 42% in FY2021. Of the total asset and liability accounts opened as well as third party products sold during June, about 40% was end-to-end digital. About 95,000 customers were onboarded using video KYC in June 2021.

We continue to strengthen our position in the digital payments ecosystem by building seamless user journeys, facilitating higher transaction throughputs and driving repeat transactions. Our strategy is to participate both directly through our own platforms and partner with third party players in the P2P and P2M space of the UPI ecosystem. We are seeing high customer engagement through repeat usage of features like Pay to Contact, Scan to Pay and bill payments on iMobile Pay. The volume of transactions through 'Pay to Contact' has grown by over five times in Q1 of 2022 over Q4 of 2021. The value of UPI P2M transactions more than doubled year-on-year and grew by over 30.0% sequentially in Q1 of 2022.

We have recently launched a digital platform called Merchant Stack, which offers an array of banking and value-added services to retailers, online businesses and large e-commerce firms such as digital current account opening, instant overdraft facilities based on point-of-sale transactions and instant settlement of point-of-sale transactions, among others. We also introduced ICICI STACK for Corporates which is a comprehensive set of digital banking solutions for corporates and their entire ecosystem of promoters, employees, dealers, and vendors. These solutions enable corporates to seamlessly meet all banking requirements of their ecosystems in a frictionless manner.

Page 5 of 38