That ICICI Bank Ltd has been shrinking its way to stability is common knowledge. Its latest results tell us the manner of its shrinking. A year ago, on 30 September 2008, the bank’s total loan book was Rs2.22 trillion. That was whittled down to Rs1,90,900 crore in a year—a contraction of Rs31,100 crore. (The figures are approximations in round numbers, as data in dollar billion has been converted by us into rupees crore).
Over the same period, the bank’s retail loan book decreased from Rs1,22,500 crore to Rs86,400 crore—a contraction of Rs36,100 crore. That’s more than the decrease in the total loan portfolio.
In other words, it’s only the retail loans that have shrunk in the past one year, and the rest of the loan portfolio has actually grown a bit.
The bank’s overwhelming focus on the retail sector has decreased substantially. Retail loans were 63% of total advances on 30 September 2007, 55% of total advances in September 2008 and they now constitute 45% of advances. Most of the space vacated by retail loans has been filled by lending to the domestic corporate sector, loans to which increased from 11% of total advances at end-September 2008 to 18% by 30 September 2009.
Shifting focus: Customers wait in line at an ICICI Bank branch in Mumbai. Bloomberg
Intriguingly, the proportion of loans by overseas branches actually increased from 26% a year ago to 27%, despite the turmoil in the markets there.
Within the retail loan book, the share of the home loans has gone up from 51% to 57%. But since the total retail loan book has shrunk, home loans, too, have contracted. At 51% of the total retail book of Rs122,500 crore on 30 September 2008, home loans were Rs62,475 crore. At 57% of the total retail loan book of Rs86,400 crore on 30 September 2009, home loans were Rs49,248 crore—a drop of Rs13,227 crore in a year.
Personal loans were 9% of the retail book a year ago and are now 7%. Personal loans outstanding have almost halved, but the reduction in absolute numbers is much smaller than for home loans. The proportion of vehicle loans has come down from 29% of the retail book to 26%, a drop of Rs13,000 crore or so in absolute terms, almost the same as the drop in housing loans. The proportion of credit card outstandings fell only marginally from 7% of the retail loan book a year ago to 6.8%.
As the bank management has said, growth will return to the bank in the second half of the current fiscal. But the bank should not be in a hurry to erase the painful memories of the mistakes committed during the past boom.
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