Annual Report 2021-22
Independent Auditors’ Report – Financial Statements
Financial Statements of ICICI Bank Limited
Independent Auditors’ Report – Consolidated Financial Statements
Consolidated Financial Statements of ICICI Bank Limited and its Subsidiaries
ICICI Bank aims to continuously evaluate the various risks impacting its business, and develop strategies to monitor and manage these risks, while meeting the objective of risk-calibrated growth and long-term sustainability.
The complex and evolving risk environment demands continuous strengthening of the Bank’s risk management approach. The Bank continuously reviews and enhances the methods for identification and assessment of risks, and sets appropriate metrics and controls, and mitigants for managing significant risks. The Bank has recently initiated steps to embed climate risk assessment and climate risk management as part of the Bank’s risk management framework. As a first step, a dedicated team within the Risk Management Group has been set up to develop a framework to assess the physical and transition risks of companies in the Bank’s portfolio, and manage these risks as part of the credit evaluation process.
Fiscal 2022 was a challenging year as incidences of increase of Covid-19 infection continued during the year. While the economic outlook improved, uncertainties continued as geo-political events, particularly the Russia-Ukraine crisis and rise in global crude oil and commodity prices impacted domestic economic parameters.
The Bank has been closely monitoring developments in the global and Indian economy, including country risk and sector-specific risks. The Bank does not have any direct exposure to Russia, and is continuously evaluating the likely second-order impact of the crisis.
The continuing Covid-19 pandemic and economic developments made credit risk a key focus for the Bank during the year.
The Bank ensured effective risk management across business segments, strengthened by ongoing reviews for early identification and stress testing. The Bank’s net non-performing assets decreased from 1.14% at March 31, 2021 to 0.76% at March 31, 2022. Credit cost as a percentage of average advances reduced from 1.75% in fiscal 2021 to 1.12% in fiscal 2022.
The Bank maintained strong capital and liquidity positions, which were significantly above regulatory requirements
Movements in interest rates, foreign exchange rates, credit spreads and equity prices remained largely stable during fiscal 2022. However, tightening monetary policy and exchange rate movements are expected to pose challenges going forward and could impact our net interest margin, the value of the trading portfolio, income from treasury operations and the quality of the loan portfolio. Further, deposits are an important source of funding, which are primarily short-term in nature, and banks face the risk of asset-liability mismatches if not rolled over by depositors.
The Investment Policy, Asset Liability Management Policy and Derivatives Policy, approved by the Board of Directors, govern the treasury activities and the associated risks and contain the limits structure. The Asset Liability Management Committee which includes the MD & CEO, Wholetime Directors and senior executives periodically reviews the Bank’s business profile and its impact on asset liability management. Periodic monitoring is done by the Market Risk Management Group which recommends changes in policies, processes and methodologies. Building a strong liability franchise is a core strategic focus for the Bank.
There has been an increase in ransomware risk globally in recent years. In a digital economy, the Bank also leverages partnerships with third parties and these could also be sources of information security risk.
The Bank has been investing on building resilience and responding effectively to cyberattacks. The Bank has laid significant focus on data privacy and data loss prevention mechanisms and continued to make progress in fiscal 2022. There were no material incidents of security breaches or data loss during fiscal 2022.
The growing customer dependence on digital transactions and increasing volumes of such transactions requires banks, including us, to focus on the availability and scalability of our systems. Misalignment between business and IT strategies is also a formidable risk.
The Bank’s focus on technology and the transformation journey of Bank to Bank Tech has enabled it to respond to the changing technological dynamics in an agile and responsive manner. The Information Technology Strategy Committee, which is a Board-level Committee, ensures that information technology strategy is aligned with the business strategy and with appropriate policies and control frameworks. The Bank’s IT systems remained stable and service delivery was largely uninterrupted during fiscal 2022.
The ability to attract, motivate and retain talented professionals and the availability of skilled management is critical for the successful implementation of the Bank’s strategy and competing effectively. Employee well-being remained a key focus during fiscal 2022.
The Bank’s human capital strategy is based on key value propositions of fair compensation policy, learning and growth, empowerment and care. Skilling and awareness efforts continued during fiscal 2022 with particular focus on digital upskilling and data analytics. The Bank conducted vaccination drives for employees and their immediate family during the year.
The Bank’s compliance with regulatory requirements and changes is a key priority for the Bank. Failure to comply with applicable regulations could lead to inquiries or investigations by regulatory and enforcement authorities either against the Bank, or employees, its representatives, agents and third-party service providers.
The Bank is committed to ensuring compliance with regulations and laws, and proactively monitors these developments. The Bank has put in place well-articulated policies and controls to ensure compliance. The Bank seeks to have a strong compliance culture driven by the organisation’s leadership. This would help in building stakeholder confidence and trust, and also ensure timely action to mitigate associated reputational risks.