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Mumbai-based ICICI Bank (Industrial Credit and Investment Corporation of India) is one of the top private multinational banks and financial services providers in India. It has a variety of delivery channels and specialized subsidiaries in the fields of investment banking, life and non-life insurance, venture capital, and asset management. The company provides a broad range of banking products and financial services for corporate as well as retail customers.
Established as a government institution in 1955, ICICI Ltd was the first entity to come into existence, which then set up ICICI Bank in 1994. However, in 2001, ICICI Ltd and two of its other units merged with ICICI Bank, which led to the privatization of the company.
ICICI Bank was the first Indian financial institution to launch internet banking back in 1998. On September 10, 1999, the bank’s name was changed from ICICI Banking Company Limited to ICICI Bank Limited.
As of December 31, 2022, the bank had a network of 5,718 branches and 13,186 ATMs across India and had a presence in 17 countries worldwide. The bank has subsidiaries in the UK and Canada, branches in the US, Singapore, Bahrain, Hong Kong, Qatar, Oman, China, South Africa, Germany and Belgium as well as representative offices in the United Arab Emirates, Bangladesh, Malaysia, and Indonesia.
Business model of ICICI Bank
ICICI Bank’s business model revolves around providing a diverse range of financial products and services to individuals, corporates, and institutional clients, with a strong emphasis on digital innovation.
It uses an interoperable digital infrastructure for digital procurement and document acceptance. The company connects the bank to its clients through selected digital products and services, front-end apps and ecosystem hubs. There are also digitally available relationship managers, both humans and bots, who work together to serve clients. InstaBIZ is one of many apps that the bank has launched for its online users. Started in 2016, it aims at providing solutions for the self-employed, SMEs and the merchant ecosystem. The initiative has garnered 1.3 million active users to date and led to ICICI Bank winning various accolades for tech innovation.
However, the core of ICICI Bank’s business model is its retail banking segment. It offers various financial products, including savings accounts, fixed deposits, personal loans, credit cards, and home loans.
On the other hand, ICICI Bank’s corporate banking division focuses on providing customised financial solutions to large and medium-sized enterprises, public sector units, and government organizations. This includes working capital financing, term loans, trade finance, and specialised products such as cash management services, supply chain financing, and forex services.
The bank has also established a strong presence in investment banking, offering services for mergers and acquisitions, private equity placements, and capital market solutions. In addition to these core banking services, ICICI Bank has ventured into other financial services like asset management, life and general insurance, securities broking, and private banking through its subsidiaries and joint ventures.
This diversified portfolio enables the bank to generate multiple streams of revenue and leverage cross-selling opportunities. Overall, ICICI Bank’s business model is centred around creating value for its customers, shareholders, and employees through a blend of traditional banking services, digital innovation, and strategic diversification. The bank’s focus on customer-centricity, operational efficiency, and risk management has been instrumental in driving its growth and maintaining its position as a leading financial institution in India.
Performance of ICICI Bank
The ICICI Bank saw its net operating profit increase by 31.6% year over year to ₹13,235 cr (~$1.6 bn) in the quarter that ended on December 31, 2022. Profit after taxes increased by 34.2% year over year to ₹8,312 crore (~$1 bn) over the same period.
Total period-end deposits grew by 10.3% year-on-year to ₹11,22,049 cr (~$135.6 bn) on December 31, 2022. The average current account and savings account (CASA) ratio was 44.6%.
Overall loan portfolio grew by 19.7% year-on-year and the domestic loan portfolio grew by 21.4% year-on-year. Net Non-Performing Assets (NPA) ratio declined to 0.55% on December 31, 2022, from 0.61% on September 30, 2022.
The provisioning coverage ratio on non-performing assets was 82% on December 31, 2022. For the nine months ended December 31, 2022, the bank’s total Capital Adequacy Ratio (CAR) stood at 18.33% and the Tier-1 capital adequacy ratio was 17.58%, compared to the minimum regulatory requirements of 11.70% and 9.70%, respectively.
At the end of December 2022, there were around 86 lakh activations from users of non-ICICI Bank accounts on the company’s mobile banking app, iMobile Pay.
Stock movement of ICICI Bank
The company came out with its public offering of shares in India in 1998 and an equity offering in the form of American depositary receipts on the NYSE in 1999. Upon doing so, it became the first bank or financial company from Asia that was not based in Japan to be listed on the NYSE. It was also the first Indian corporation to do so.
ICICI Bank has a market capitalization of Rs 5.98 tn (~ $72.33 bn). The company’s stock has risen over 19% in the past year, as of March 22, 2023. It has a PE ratio of 18.65, and a forward PE ratio of 16.47.
The company has a price-to-book ratio of 2.85. Since April 2021, the stock has risen over 47%, hitting an all-time high in November 2022.
What’s next for ICICI Bank
Digital innovation is an important component of ICICI Bank’s financial strategy. And it intends to spend more on technological innovations in the future.
“We are embarking on a journey from Bank to BankTech. Our digital platforms are continuously evolving with the objective of enabling customer acquisition and end-to-end seamless digital journeys, offering personalised solutions and value-added features to customers and enabling more effective data-driven cross-sell and upsell,” ICICI’s Executive Director Sandeep Batra said at a press conference in January 2022.
Speaking at an investor conference in early 2023, Batra outlined the banks’ plans to shift from a product-centric IT architecture to a customer-centric one. “At the back end, we are working towards a single view of a consumer across financial relationships to execute real-time data analytics,” he explained.
Meanwhile, insight provider Axis Direct believes that the bank will continue to witness sustained growth momentum in the retail, SME and Business Banking segments in the future.
“In the corporate segment, demand from certain pockets (real estate, infra, and industrials) remains healthy. Overall, corporate growth is likely to lag behind retail credit growth. We expect ICICI to deliver a strong credit growth of ~19% CAGR over the medium term,” Axis Direct said on SmartKarma.
“Asset quality improvement should continue, which would be led by moderating slippages and strong recoveries. Credit cost trends are expected to remain benign, aiding earnings growth,” added Axis Direct.
