ICICI Bank Financial Statements Analysis

25th April 2023 Financial Statements Analysis CIA III Presented To: Prof. JAYASHREE BHATTACHARYA Presented By: 20111310, 20111311, 20111330, 20111357, 20111360, 20111363 6 BBA A | Banking and Insurance | School of Business and Management

Industry Page 2 Profile Executive summary Key Facts Branch network: ICICI Bank has Who we are a widespread branch network Market share: ICICI Bank is one across India, with over 5,500 ICICI Bank is one of the largest of the leading private sector branches and more than 15,000 private sector banks in India. It banks in India and has a ATMs as of March 2021. was founded in 1994 and is significant market share in the headquartered in Mumbai, banking industry Financial performance: ICICI India. The bank provides a wide Bank has been performing well range of financial products and Branch network: ICICI Bank has financially in recent years. As of services, including personal a widespread branch network March 2021, the bank's total banking, corporate banking, across India, with over 5,500 assets were around INR 15.8 investment banking, and wealth branches and more than 15,000 trillion (approximately USD 211 management services. ATMs as of March 2021. billion), and its net profit for the year was INR 16.9 billion (approximately USD 226 million).

Company profile Page 3 ICICI Bank has consistently been one of the top-performing private sector banks in India, with a strong focus on technology and innovation. Here are some key financial highlights from its previous annual reports: Overall, ICICI Bank is a well-established and successful player in the Indian banking industry, with a strong focus on technology and innovation. Technology: ICICI Bank is known for its use of technology to improve its services and customer experience. The bank has introduced various digital initiatives, including internet banking, mobile banking, and digital wallets.

Financial Overview Total assets: ICICI Net interest income: eNet profit: ICICI Bank's Bank's total assets ICICI Bank's net net profit has fluctuated have been interest income has over the years due to consistently growing also been growing various factors such as over the years, from steadily, from INR 43.2 provisioning for bad INR 5.03 trillion billion (approximately loans and market (approximately USD USD 578 million) in conditions. However, the 67.3 billion) in 2016 to 2016 to INR 83.7 bank has maintained a INR 14.9 trillion billion (approximately positive net profit, with (approximately USD USD 1.1 billion) in INR 98.7 billion 199.3 billion) in 2020. 2020. (approximately USD 1.3 billion) in 2020.

Accounting Page 5 Standards Banking Sector (India) What is the difference between banks financial and other companies Accounting Standards In India, the banking sector is regulated by the Reserve Bank of India (RBI) and accounting standards for banks are regulated by the Institute of Chartered Accountants of India (ICAI) and the RBI. The main accounting standards applicable in the Indian banking sector are: Indian Accounting Standards (Ind AS): ICAI has published Ind AS. This standard is integrated with International Financial Reporting Standards (IFRS) and applies to all listed companies, including banks, with net assets of more than Rs. 500 crore Banks not included in the Ind AS framework have to follow existing Accounting Standards (AS) issued by ICAI. RBI Guidelines: RBI has issued various guidelines for the banking sector which are applicable in preparation and presentation of financial statements. These guidelines cover various aspects such as provisions for bad debts, classification of assets and liabilities, valuation of investments and disclosure requirements. Sound Codes: RBI also sets sound codes for asset classification, revenue recognition and bad debt provisions. These standards require banks to classify their assets into various categories such as standard assets, non-performing assets (NPAs), bad debts and non-performing assets and prepare for bad debts accordingly.

What is the Page 6 difference between banks financial and other companies Key Differences: Statement of Cash Flows: Banks are required to provide a declaration of coins flows beneath both Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). This declaration details the cash inflows and outflows from operating, making an investment, and financing activities. However, not all other businesses are required to produce this declaration. Assets and Liabilities: Banks normally have one of a kind styles of belongings and liabilities compared to different groups. For example, banks have cash and coins equivalents, loans and advances, and financial investments, at the same time as different organizations may have inventory, belongings, and system. Similarly, banks have deposits, borrowings, and other financial liabilities, whereas other corporations may have money owed payable and accumulated charges. Regulatory Requirements: Banks are concern to precise regulatory necessities, and their monetary statements ought to follow the rules and recommendations set via regulatory bodies inclusive of the Securities and Exchange Commission (SEC) or the Federal Reserve. This can affect the presentation and disclosure of economic facts in their economic statements. Revenue Recognition: Banks usually understand sales in another way as compared to different companies. For example, interest income on loans and securities is a full- size source of revenue for banks, and it is recognized over the existence of the loan or funding. In contrast, different groups may additionally apprehend sales at a point in time, along with when a product is sold or a provider is rendered. Risk Management: Banks generally consist of more data on their chance control practices of their economic statements compared to other agencies. This is because banks are uncovered to numerous risks including credit risk, liquidity risk, and marketplace threat, and their financial statements ought to provide ok statistics to traders and regulators on how they control those dangers.

INTERPRETATIONS Page 7 Income Breakdown Based on the financial data provided, we can see that ICICI's total income has been increasing over the years. In 2023, the total income is INR 1,86,178.80 crores, which is a significant increase compared to the previous years. This increase in total income can be attributed to the growth in Interest/Discount on Advances/Bills, Income from Investments, and Others. Interest/Discount on Advances/Bills is the largest contributor to ICICI's total income, accounting for INR 87,929.24 crores in 2023. This figure has been increasing steadily over the years, which indicates that ICICI's loan portfolio has been growing. This growth in the loan portfolio can be attributed to the bank's focus on lending to both retail and corporate customers. Payments to and Provisions for Employees include the salaries, bonuses, and other benefits paid to the bank's employees. In 2023, ICICI's payments to and provisions for employees were INR 15,234.17 crores, which has been increasing steadily over the years. This increase can be attributed to the bank's focus on hiring and retaining talented employees. Overall, the financial data indicates that ICICI has been investing in growing its loan portfolio, hiring talented employees, and expanding its operations. However, the bank has also been conservative in its risk management approach by setting aside provisions and contingencies for potential losses. Net Profit vs. Year The financial data provided shows the net profit of ICICI over the years, and it includes projections for the future years based on past data. Net profit is the amount of money a company has left after deducting all its expenses from its total revenue.

INTERPRETATIONS Page 8 According to the data, ICICI's net profit has been increasing steadily over the years, indicating a positive trend in the bank's financial performance. In 2023, the bank's net profit was INR 34,463.02 crores, which increased to INR 55,558.13 crores in 2026, based on the projection. The bank's net profit has been driven by its strong performance in its core business operations, such as lending and investing. Additionally, the bank has been able to manage its expenses and has set aside provisions and contingencies to mitigate potential losses. In terms of useful insights related to banking, this data highlights the importance of managing expenses, investing in core business operations, and diversifying income streams. Additionally, it emphasizes the need for banks to adopt a long-term approach to financial planning and forecasting to ensure sustainable growth. Asset Allocation The financial data provided shows the composition of ICICI's assets over the years. Understanding the composition of assets is important because it helps assess a bank's financial health and the degree of risk associated with its operations. According to the data, ICICI's total assets have been increasing steadily over the years, primarily driven by its strong performance in its core business operations. As of 2023, the bank's assets were INR 1,958,489.50 crores, which is a significant increase from INR 1,479,967.44 crores in 2019. Contingent Liability Bills for collection refers to the unpaid bills of exchange or promissory notes that are held by the bank on behalf of its customers. In 2023, the amount of bills for collection was 0, indicating that the bank did not have any unpaid bills held on behalf of its customers. This is a positive sign as it indicates that the bank's customers are able to pay their bills on time.

KPIs Page 9 Loan-To-Deposit ratio LDR stands for Loan-to-Deposit Ratio, which represents the amount of loans a bank has issued as a proportion of its deposits. In general, a higher LDR means that the bank is lending out more of its deposits, which can lead to higher profits but also greater risk. From the values provided, we can see that the LDR has been decreasing over the years, with a slight increase in 2023. This could indicate a more conservative lending approach or a decrease in demand for loans. Cost to Income Ratio CIR stands for Cost-to-Income Ratio, which measures the operating expenses of a bank as a proportion of its income. A lower CIR indicates that the bank is able to generate more income from its operations relative to its expenses, which is generally seen as a positive sign. From the values provided, we can see that the CIR has been decreasing over the years, indicating an improvement in the bank's cost management. Net Interest Margin NIM stands for Net Interest Margin, which represents the difference between the interest earned by a bank on its assets and the interest paid to its liabilities. A higher NIM indicates that the bank is able to generate more income from its lending activities. From the values provided, we can see that the NIM has been increasing over the years, indicating an improvement in the bank's profitability.

Visualisations LDR, CIR and NIM Asset Allocations Net Profit vs Year

Visualisations Contingent Liabilities Liability ROE vs Year

Visualisations Expense Breakdown ROA vs Year Income Breakdown

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