ICICI to grow loan book 3-4% ahead of system growth

At a time when credit growth has been under pressure for most lenders, ICICI Bank — the country’s largest private sector lender — is confident of growing its loan book three-four per cent ahead of the system.

“We expect to sustain domestic loan growth in the range of 18-20 per cent, driven by about 25 per cent growth in the retail segment. In the domestic corporate portfolio, we expect growth of 10-15 per cent, driven primarily by increasing lending to higher-rated clients. The bank would continue to calibrate corporate loan growth to the trends in the environment,” said N S Kannan, executive director, in conference call with analysts.

Experts believe this should not be tough for ICICI in the past two years. It has managed to grow ahead of the system. In the last financial year, when credit in the system rose by only 9.5 per cent, ICICI managed to grow its advances by 14 per cent. In FY15, retail advances for the lender grew at 24.6 per cent on a year-on-year basis. In the same period, the domestic corporate loan book grew at 9.6 per cent.

Even in previous years, the bank had managed to grow its advances three-four per cent ahead of the system. In FY14, its advances rose by 17 per cent at a time when credit growth in the sector had inched up by 13.8 per cent. However, between FY11 and FY13, the lender's advances grew at a slower pace compared with the sector.

But with the focus on retail lending, the bank has seen an uptick in the pace of growth of its advances in the past couple of years.

The lender also said it planned to continue to maintain a selective approach in lending to the corporate and small and medium enterprises (SME) sectors.

Going ahead, it would also look at increasing lending to higher-rated clients, it said in an investor presentation.

The management believes a revival in economic growth will present several growth opportunities, including in retail. Within specific segments, such as auto, it planned to focus on profitability. In the business banking segment the target will be to scale up growth.

ICICI expects a better loan growth as compared to last year from branches.

“With respect to overseas branches, the bank would focus on selective lending opportunities and will continue to calibrate growth to conditions in the funding markets. We expect the loan portfolio of these branches to grow by 8-10 per cent,” Kannan said.

In the past financial year, in rupee terms, the net advances of branches increased by 4.9 per cent on a year-on-year basis. The net advances of overseas branches decreased marginally by about 1.6 per cent on a sequential basis in dollar terms.

To further its growth, the bank also plans to continue to focus on technology. In the investor presentation, the lender said, “Costs contained while continuing scale up in distribution & investments in technology.”

The cost-to-income ratio reduced to 36.8 per cent in FY15 from 38.2 per cent a year ago.