MANAGEMENT DISCUSSION & ANALYSIS

In fiscal 2024, the Bank maintained its strategic focus on profitable growth in business within the guardrails of risk and compliance. The Bank grew its credit portfolio with a focus on granularity and saw healthy growth across segments. The Bank continued to focus on customer 360-degree approach and holistically serving across ecosystems and micromarkets. The Bank sought to maintain and enhance its liability franchise. The Bank focused on maintaining a strong balance sheet, with adequate liquidity, prudent provisioning and healthy capital adequacy. The Bank’s capital adequacy ratios were well above regulatory requirements as of March 31, 2024.

Going forward, the Bank would focus on maximizing the profit before tax excluding treasury within the guardrails of compliance and risk management. The Bank believes there are significant opportunities for profitable growth across various sectors of the Indian economy. The Risk Appetite and Enterprise Risk Management framework articulates the Bank’s risk appetite and drills it down into a limit framework for various risk categories. The Bank is fostering a strong risk and compliance culture that underpins our dealing with customers. The Bank has laid strong emphasis on continuous strengthening of operational resilience for seamless delivery of services to customers. A strong focus was also laid on deepening coverage and enhancing delivery capabilities while continuing the focus on risk calibrated profitable growth. We continue to focus on simplifying banking for improved customer experiences and enhance customer engagement. The Bank will focus on growing its loan portfolio in a granular manner with a focus on risk and reward, with return of capital and containment of provisions within targeted levels being a key imperative. There are no specific targets for loan mix or segment-wise loan growth. The Bank would aim to continue to grow its deposit franchise, maintain a stable and healthy funding profile and competitive advantage in cost of funds.

See also “Integrated Report – Our Business Strategy”.

Summary

Profit before tax (excluding treasury gains) increased by 28.3% from ₹ 424.73 billion in fiscal 2023 to ₹ 544.79 billion in fiscal 2024. Core operating profit (i.e. profit before provisions and tax, excluding treasury gains) increased by 18.3% from ₹ 491.39 billion in fiscal 2023 to ₹ 581.22 billion in fiscal 2024 primarily due to an increase in net interest income by ₹ 121.77 billion and fee income by ₹ 27.95 billion, offset, in part, by an increase in operating expenses by ₹ 62.60 billion. Gain from treasury-related activities was ₹ 0.09 billion in fiscal 2024 as compared to a loss of ₹ 0.52 billion in fiscal 2023. Provisions and contingencies (excluding provision for tax) decreased by 45.3% from ₹ 66.66 billion in fiscal 2023 to ₹ 36.43 billion in fiscal 2024. Profit after tax increased from ₹ 318.96 billion in fiscal 2023 to ₹ 408.88 billion in fiscal 2024.

Net interest income increased by 19.6% from ₹ 621.29 billion in fiscal 2023 to ₹ 743.06 billion in fiscal 2024 due to an increase in the net interest margin (NIM) and an increase in the average interest-earning assets.

Fee income increased by 15.5% from ₹ 180.01 billion in fiscal 2023 to ₹ 207.96 billion in fiscal 2024. Dividend from subsidiaries/joint ventures/associates increased by 16.2% from ₹ 17.84 billion in fiscal 2023 to ₹ 20.73 billion in fiscal 2024. Operating expenses increased by 19.0% from ₹ 328.73 billion in fiscal 2023 to ₹ 391.33 billion in fiscal 2024.

Provisions and contingencies (excluding provision for tax) decreased by 45.3% from ₹ 66.66 billion in fiscal 2023 to ₹ 36.43 billion in fiscal 2024 primarily due to a decrease in contingency provision made on a prudent basis and provision for investments, offset, in part, by an increase in provisions for non-performing and other assets and provision for standard assets. Provision for non-performing and other assets was ₹ 9.45 billion in fiscal 2024 as compared to a write-back of ₹ 6.23 billion in fiscal 2023. During fiscal 2024, there were higher net additions to non-performing loans primarily in retail and rural loans, offset, in part, by recoveries and upgrades in non-retail loans.

The provision coverage ratio on NPAs decreased from 82.8% at March 31, 2023 to 80.3% at March 31, 2024.

During fiscal 2023, the Bank had made an additional contingency provision ₹ 56.50 billion on a prudent basis. The Bank held contingency provision of ₹ 131.00 billion at March 31, 2024.

The income tax expense increased from ₹ 105.25 billion in fiscal 2023 to ₹ 136.00 billion in fiscal 2024. The effective tax rate increased from 24.8% in fiscal 2023 to 25.0% in fiscal 2024 primarily due to change in composition of income.

Net worth increased by 18.8% from ₹ 2,007.16 billion at March 31, 2023 to ₹ 2,383.99 billion at March 31, 2024 primarily due to accretion to reserves out of retained profit, offset, in part, by payment of dividend for fiscal 2023

Total assets increased by 18.1% from ₹ 15,842.07 billion at March 31, 2023 to ₹ 18,715.15 billion at March 31, 2024. Total advances increased by 16.2% from ₹ 10,196.38 billion at March 31, 2023 to ₹ 11,844.06 billion at March 31, 2024 primarily due to an increase in domestic advances by 16.8%. Total investments increased by 27.5% from ₹ 3,623.30 billion at March 31, 2023 to ₹ 4,619.42 billion at March 31, 2024. Cash and cash equivalents increased by 17.2% from ₹ 1,194.38 billion at March 31, 2023 to ₹ 1,399.26 billion at March 31, 2024.

The weighted average high-quality liquid assets maintained during the three months ended March 31, 2024 were ₹ 3,940.11 billion (three months ended March 31, 2023: ₹ 3,234.60 billion). The average liquidity coverage ratio was 122.84% for the three months ended March 31, 2024 as against the requirement of 100.00%.

Total deposits increased by 19.6% from ₹ 11,808.41 billion at March 31, 2023 to ₹ 14,128.25 billion at March 31, 2024. Term deposits increased by 27.7% from ₹ 6,395.79 billion at March 31, 2023 to ₹ 8,169.53 billion at March 31, 2024. Current and savings account (CASA) deposits increased by 10.1% from ₹ 5,412.62 billion at March 31, 2023 to ₹ 5,958.72 billion at March 31, 2024. Average CASA deposits increased by 6.5% from ₹ 4,758.90 billion in fiscal 2023 to ₹ 5,067.47 billion in fiscal 2024. Borrowings increased by 4.7% from ₹ 1,193.25 billion at March 31, 2023 to ₹ 1,249.68 billion at March 31, 2024.

The Bank had a business center (branch) network of 6,523 branches, and network of 17,190 ATMs/CRMs at March 31, 2024.

The Bank is subject to Basel III capital adequacy guidelines stipulated by RBI. The total capital adequacy ratio of the Bank at March 31, 2024 (after deducting proposed dividend for fiscal 2024 from capital funds) in accordance with RBI guidelines on Basel III was 16.33% as compared to 18.34% at March 31, 2023. The Tier-1 capital adequacy ratio was 15.60% at March 31, 2024 as compared to 17.60% at March 31, 2023. The Common Equity Tier 1 (CET-1) ratio was 15.60% at March 31, 2024 as compared to 17.12% at March 31, 2023.

The following table sets forth, for the periods indicated, the operating results data.

1. ¹ Includes merchant foreign exchange income, income on customer derivative transactions and income on sale of priority sector lending certificates (PSLCs).
2. ² All amounts have been rounded off to the nearest ₹ 10.0 million
3. ³ Prior period figures have been re-grouped/re-arranged, where necessary.

Key ratios

The following table sets forth, for the periods indicated, the key financial ratios.

1. ¹ Return on average equity is the ratio of the net profit after tax to the quarterly average equity share capital and reserves.
2. ² Return on average assets is the ratio of net profit after tax to average assets.
3. ³ Cost represents operating expense. Income represents net interest income and non-interest income.

The return on average equity, return on average assets and earnings per share increased primarily due to an increase in profit after tax.

Net interest income and spread analysis

The following table sets forth, for the periods indicated, the net interest income and spread analysis.

1. ¹ All amounts have been rounded off to the nearest ₹ 10.0 million.

Net interest income increased by 19.6% from ₹ 621.29 billion in fiscal 2023 to ₹ 743.06 billion in fiscal 2024 primarily due to an increase in the net interest margin by 5 basis points and an increase of 18.3% in the average interest-earning assets.

Net interest margin increased by 5 basis points from 4.48% in fiscal 2023 to 4.53% in fiscal 2024. The loan book of the Bank got repriced faster because of higher proportion of repo and other floating rate linked book, while the cost of deposits increased with a lag given the fixed rate nature of the term deposit book. As a result, the net interest margin increased from 3.96% in fiscal 2022 to 4.48% in fiscal 2023 and to 4.53% in fiscal 2024. Net interest margin was 4.01% in Q1-2023 and started increasing from Q2-2023, peaking at 4.90% in Q4-2023. The net interest margin thereafter starting declining, reflecting the peaking of asset yields and rise in deposit cost to 4.40% in Q4-2024.

The yield on average interest-earning assets increased by 84 basis points from 7.87% in fiscal 2023 to 8.71% in fiscal 2024 primarily due to an increase in yield on average advances and investments and an increase in proportion of average advances. The cost of funds increased by 93 basis points from 3.93% in fiscal 2023 to 4.86% in fiscal 2024 primarily due to an increase in cost of term deposits. The interest spread decreased by 9 basis points from 3.94% in fiscal 2023 to 3.85% in fiscal 2024.

The following table sets forth, for the periods indicated, the trend in yield, cost, spread and margin.

The yield on average interest-earning assets increased by 84 basis points from 7.87% in fiscal 2023 to 8.71% in fiscal 2024 primarily due to the following factors:

• The yield on domestic advances increased by 77 basis points from 9.16% in fiscal 2023 to 9.93% in fiscal 2024. The yield on advances increased primarily due to full impact of re-pricing of existing floating rate loans linked to the repo rate and the Bank’s Marginal Cost of funds based Lending Rate (MCLR) to a higher rate and new lending at higher rates. At March 31, 2023, of the total domestic loan book 49% had interest rate linked to repo rate, 32% had fixed interest rates, 17% had interest rate linked to MCLR and other older benchmarks and 2% had interest rate linked to other external benchmarks.

  The Bank’s 1-year MCLR increased by 150 basis points in phases during FY2023 and by 35 basis points in phases during FY2024 from 8.75% in March 2023 to 9.10% in January 2024. RBI increased the repo rate by 250 basis points from 4.00% in May 2022 to 6.50% in February 2023. The impact of increase in repo rates from May 2022 started reflecting in overall yield through repricing of the repo and T-bill linked portfolio from Q2-2023 and onwards. For MCLR linked loans, the effect on the yields is based on respective reset dates of underlying loans. Further, the future movement in the yield on advances will depend on the increase/decrease in the repo rate and the systemic interest rates.

  The yield on overseas advances increased by 285 basis points from 3.90% in fiscal 2023 to 6.75% in fiscal 2024 primarily due to repricing of floating rate advances and new lending at higher rates on account of the rate hike by the US Federal Reserve. The yield on overseas advances was also positively impacted due to higher interest collection on NPAs during the fiscal 2024.

The overall yield on average advances increased by 89 basis points from 8.94% in fiscal 2023 to 9.83% in fiscal 2024.

• The yield on average interest-earning investments increased by 61 basis points from 6.57% in fiscal 2023 to 7.18% in fiscal 2024. The yield on Indian government investments increased by 54 basis points from 6.62% in fiscal 2023 to 7.16% in fiscal 2024. This was primarily due to reset of yields on floating rate bonds linked to treasury bills (T-bills) at higher rates pursuant to a significant increase in treasury bill yields, and new investment in government securities at higher market yields (both to replace maturing securities and as fresh purchases).

  The yield on non-SLR investments increased by 118 basis points from 6.16% in fiscal 2023 to 7.34% in fiscal 2024 primarily due to an increase in yield on pass through certificates, commercial paper, foreign government securities and an increase in proportion of average pass through certificates.

• The yield on other interest-earning assets decreased by 48 basis points from 3.38% in fiscal 2023 to 2.90% in fiscal 2024. The decrease was primarily due to a decrease in income on funding swaps, a decrease in average interest earning LAF (Liquidity Adjustment Facility) lending to RBI and an increase in average balance with RBI, which does not earn any interest. The decrease in yield on other interest-earning assets was offset, in part, by an increase in yield on call and term money lent and an increase in yield on balance with other banks.

  Interest on income tax refund increased from ₹ 1.14 billion in fiscal 2023 to ₹ 2.65 billion in fiscal 2024. The receipt, amount and timing of such income depends on the nature and timing of determinations by tax authorities and are hence neither consistent nor predictable.

  The cost of funds increased by 93 basis points from 3.93% in fiscal 2023 to 4.86% in fiscal 2024 primarily due to the following factors:

• The cost of average deposits increased from 3.66% in fiscal 2023 to 4.61% in fiscal 2024 primarily due to an increase in cost of domestic term deposits. The cost of domestic term deposits increased by 142 basis points from 4.80% in fiscal 2023 to 6.22% in fiscal 2024 primarily due to repricing of deposits at higher rates, offset, in part, by benefit of pre-mature withdrawals of existing deposits which were re-invested by customers at the new higher rates. The peak rate for retail term deposits increased significantly in phases from 5.75% in May 2022 to 7.10% in February 2023 on account of significant increase in repo rate.

The cost of savings account deposits increased marginally from 3.16% in fiscal 2023 to 3.17% in fiscal 2024. The average CASA deposits decreased from 44.7% of total average deposits in fiscal 2023 to 40.4% of total average deposits in fiscal 2024. Average CASA deposits were 35.9% of the total funding (i.e., deposits and borrowings) for fiscal 2024 as compared to 39.7% for fiscal 2023.

• The cost of borrowings increased by 89 basis points from 5.97% in fiscal 2023 to 6.86% in fiscal 2024. The cost of domestic borrowings increased by 28 basis points from 6.66% in fiscal 2023 to 6.94% in fiscal 2024 primarily due to an increase in cost of refinance borrowings, call money borrowings and interbank participatory certificates, offset, in part, by a decrease in proportion of average bond borrowings. The cost of overseas borrowings increased by 287 basis points from 3.29% in fiscal 2023 to 6.16% in fiscal 2024 primarily due to an increase in cost of term borrowings, bond borrowings and an increase in cost of margin deposit received for treasury products.

The Bank’s interest income, yield on advances, net interest income and net interest margin are impacted by systemic liquidity, the competitive environment, level of additions to non-performing loans, regulatory developments, monetary policy and economic and geopolitical factors. Interest rates on about 51% of Bank’s domestic loans are linked to external market benchmarks. The differential movements in the external benchmark rates compared to cost of funds of the Bank impact the Bank’s net interest income and net interest margin.

The following table sets forth, for the period indicated, the trend in average interest-earning assets and average interest-bearing liabilities:

1. ¹Average borrowing and average advances have been grossed up for average participation certificate and average bills rediscounting.
2. ² Average investments and average borrowings include average short-term repurchase transactions.
3. ³ All amounts have been rounded off to the nearest ₹ 10.0 million.

The average interest-earning assets increased by 18.3% from ₹ 13,872.53 billion in fiscal 2023 to ₹ 16,412.08 billion in fiscal 2024 due to an increase in average advances by ₹ 1,892.95 billion and average investments by ₹ 806.08 billion, offset, in part, by a decrease in average other interest-earning assets by ₹ 159.48 billion.

Average advances increased by 20.2% from ₹ 9,390.62 billion in fiscal 2023 to ₹ 11,283.57 billion in fiscal 2024 due to an increase of 21.5% in average domestic advances, offset, in part, by a decrease of 10.5% in average overseas advances.

Average interest-earning investments increased by 25.3% from ₹ 3,180.93 billion in fiscal 2023 to ₹ 3,987.01 billion in fiscal 2024 Average interest-earning investments in Indian government securities increased by 23.1% from ₹ 2,809.55 billion in fiscal 2023 to ₹ 3,459.66 billion in fiscal 2024. Average interest-earning non-SLR investments increased from ₹ 371.38 billion in fiscal 2023 to ₹ 527.35 billion in fiscal 2024.

Average other interest-earning assets decreased by 12.3% from ₹ 1,300.98 billion in fiscal 2023 to ₹ 1,141.50 billion in fiscal 2024 primarily due to a decrease in call and term money lent and Rural infrastructure development fund (RIDF) and related deposits, offset, in part, by an increase in balance with RBI.

Average interest-bearing liabilities increased by 17.7% from ₹ 11,998.16 billion in fiscal 2023 to ₹ 14,121.39 billion in fiscal 2024 primarily due to an increase in average deposits by ₹ 1,922.70 billion and an increase in average borrowings by ₹ 200.53 billion.

Average deposits increased by 18.1% from ₹ 10,634.91 billion in fiscal 2023 to ₹ 12,557.61 billion in fiscal 2024 due to an increase in average term deposits and average CASA deposits.

Average borrowings increased by 14.7% from ₹ 1,363.25 billion in fiscal 2023 to ₹ 1,563.78 billion in fiscal 2024 primarily due to an increase in refinance borrowings and inter-bank participatory certificates, offset, in part, by a decrease in subordinated bonds

Fee income primarily includes fees from retail customers such as loan processing fees, fees from cards business, account servicing charge, income from foreign exchange transactions and third party referral fees and commercial banking fees such as loan processing fees and transaction banking fees, income from foreign exchange transactions and margin on derivative transactions

Fee income increased by 15.5% from ₹ 180.01 billion in fiscal 2023 to ₹ 207.96 billion in fiscal 2024 primarily due to an increase in payment and cards fees, income from forex and derivatives products, lending linked fees and commercial banking fees.

Dividend from subsidiaries/joint ventures/associates increased by 16.2% from ₹ 17.84 billion in fiscal 2023 to ₹ 20.73 billion in fiscal 2024.

The following table sets forth, for the periods indicated, the details of dividend received from subsidiaries/joint ventures/ associates:

1. ¹ 0.00 represents insignificant amount.
2. ² All amounts have been rounded off to the nearest ₹ 10.0 million.

Other income

Other income decreased from ₹ 0.98 billion in fiscal 2023 to ₹ 0.80 billion in fiscal 2024.

Operating expenses

The following table sets forth, for the periods indicated, the principal components of operating expenses.

1. ¹ All amounts have been rounded off to the nearest ₹ 10.0 million.

Operating expenses primarily include employee expenses, depreciation on assets and other administrative expenses. Operating expenses increased by 19.0% from ₹ 328.73 billion in fiscal 2023 to ₹ 391.33 billion in fiscal 2024.

Payments to and provisions for employees

Employee expenses increased by 25.6% from ₹ 120.60 billion in fiscal 2023 to ₹ 151.42 billion in fiscal 2024 primarily due to an increase in salary cost, provision for performance bonus and performance-linked retention pay, offset, in part, by a decrease in provision requirement for retirement benefit obligations. Salary cost increased primarily due to annual increments and promotions and an increase in average staff strength (number of employees at March 31, 2023: 129,020 and at March 31, 2024: 141,009).

The employee base includes sales executives, employees on fixed term contracts and interns.

Other administrative expenses

Other administrative expenses primarily include rent, taxes and lighting, advertisements, sales promotion, repairs and maintenance, direct marketing expenses, depreciation, premium paid towards priority sector lending certificates and other expenditure. Other administrative expenses increased by 15.3% from ₹ 208.13 billion in fiscal 2023 to ₹ 239.91 billion in fiscal 2024 primarily due to an increase in technology related expenses, reward point expenses, direct marketing agency expenses and advertisement and sales promotion expenses.

Gains from treasury-related activities include gains on sale of investments and unrealised profit/(loss) on account of revaluation of investments in the fixed income portfolio, equity and preference share portfolio, units of venture funds and security receipts issued by asset reconstruction companies.

Gain from treasury-related activities was ₹ 0.09 billion in fiscal 2024 as compared to a loss of ₹ 0.52 billion in fiscal 2023. Treasury income in FY2024 includes transfer of accumulated translation loss of ₹ 3.40 billion related to closure of Bank’s Offshore Banking Unit, SEEPZ Mumbai, to profit and loss account.

The following tables set forth, for the periods indicated, the components of provisions and contingencies.

1. ¹ Includes restructuring related provision
2. ² Includes nil contingency provision during the year ended March 31, 2024 (March 31, 2023: ₹ 56.50 billion)
3. ³ All amounts have been rounded off to the nearest ₹ 10.0 million.

Provisions and contingencies (excluding provisions for tax) decreased from ₹ 66.66 billion in fiscal 2023 to ₹ 36.43 billion in fiscal 2024 primarily due to a decrease in contingency provision made on a prudent basis and provision for investments, offset, in part, by an increase in provisions for non-performing and other assets and provision for standard assets.

Provision for non-performing and other assets was ₹ 9.45 billion in fiscal 2024 as compared to a write-back of ₹ 6.23 billion in fiscal 2023. During fiscal 2024, there were higher net additions to non-performing loans primarily in retail and rural loans, offset, in part, by recoveries and upgrades in non-retail loans. During fiscal 2023, there were higher recoveries and upgrades from non-performing assets resulting in net write-back of provision, offset, in part, by an increase in provisioning rate for certain categories of non-performing assets.

The provision coverage ratio (excluding cumulative technical/prudential write-offs) on NPAs decreased from 82.8% at March 31, 2023 to 80.3% at March 31, 2024.

Provision for investments decreased from ₹ 13.00 billion in fiscal 2023 to ₹ 6.89 billion in fiscal 2024. During fiscal 2024, the Bank made a provision of ₹ 5.41 billion on its investments in Alternate Investment Funds (AIFs) pursuant to RBI guideline dated December 19, 2023 and provision made on equity shares on conversion of loan. During fiscal 2023, the Bank primarily made a provision on equity shares and debentures on conversion of loan and additional provision made on security receipts.

Provision for standard assets increased from ₹ 5.80 billion in fiscal 2023 to ₹ 11.55 billion in fiscal 2024 primarily due to an increase in domestic loans and upgrade of stage 3 exposure in overseas location to stage 2. The cumulative general provision held at March 31, 2024 was ₹ 58.63 billion (March 31, 2023: ₹ 47.02 billion).

Other provisions and contingencies decreased from ₹ 54.09 billion in fiscal 2023 to ₹ 8.54 billion in fiscal 2024. During fiscal 2023, the Bank had made an additional contingency provision ₹ 56.50 billion on a prudent basis. The Bank held contingency provision of ₹ 131.00 billion at March 31, 2024.

The income tax expense increased from ₹ 105.25 billion in fiscal 2023 to ₹ 136.00 billion in fiscal 2024. The effective tax rate increased from 24.8% in fiscal 2023 to 25.0% in fiscal 2024 primarily due to change in composition of income

Assets

The following table sets forth, at the dates indicated, the principal components of assets.

1. ¹ Banks in India are required to maintain a specified percentage, currently 18.00% (at March 31, 2024), of their net demand and time liabilities by way of investments in instruments referred as SLR securities by RBI or liquid assets like cash and gold.
2. ² Bill Rediscounting Scheme (BRDS)/Interbank Participatory Certificate (IBPC).
3. ³ Deposits made in Rural Infrastructure Development Fund and other related deposits pursuant to shortfall in the amount required to be lent to certain specified sectors called priority sector as per RBI guidelines.
4. ⁴ All amounts have been rounded off to the nearest ₹ 10.0 million.

Total assets of the Bank increased by 18.1% from ₹ 15,842.07 billion at March 31, 2023 to ₹ 18,715.15 billion at March 31, 2024, due to a 27.5% increase in investments, a 17.2% increase in cash and cash equivalents and a 16.2% increase in advances.

Cash and cash equivalents

Cash and cash equivalents include cash in hand and balances with RBI and other banks, including money at call and short notice. Cash and cash equivalents increased by 17.2% from ₹ 1,194.38 billion at March 31, 2023 to ₹ 1,399.26 billion at March 31, 2024 The increase is primarily due to an increase in balance with RBI, money at call & short notice in India, SDF (Standing Deposit Facility) lending to RBI and foreign currency term money lending, offset, in part, by a decrease in balance with US Federal Reserve and term money lending in India

Investments

Total investments increased by 27.5% from ₹ 3,623.30 billion at March 31, 2023 to ₹ 4,619.42 billion at March 31, 2024. Investments in Indian government securities increased from ₹ 3,057.69 billion at March 31, 2023 to ₹ 3,755.74 billion at March 31, 2024. Other investments increased from ₹ 565.61 billion at March 31, 2023 to ₹ 863.68 billion at March 31, 2024 primarily due to an increase in investment in bonds and debentures, pass through certificates, certificate of deposits and equity investment in I-Process Services (India) Private Limited and ICICI Lombard General Insurance Company Limited.

At March 31, 2024, the Bank had an outstanding net investment of ₹ 0.29 billion in security receipts issued by asset reconstruction companies as compared to ₹ 2.11 billion at March 31, 2023.

Advances

Net advances (gross of BRDS/IBPC) increased by 17.3% from ₹ 10,345.09 billion at March 31, 2023 to ₹ 12,137.60 billion at March 31, 2024. Net advances (net of BRDS/ IBPC) increased by 16.2% from ₹ 10,196.38 billion at March 31, 2023 to ₹ 11,844.06 billion at March 31, 2024.

Net domestic advances increased by 16.8% from ₹ 9,855.28 billion at March 31, 2023 to ₹ 11,509.55 billion at March 31, 2024 primarily due to an increase in retail advances. Retail advances increased by 19.4% from ₹ 5,578.17 billion at March 31, 2023 to ₹ 6,662.61 billion at March 31, 2024. Advances of rural business increased by 17.2% from ₹ 874.31 billion at March 31, 2023 to ₹ 1,024.46 billion at March 31, 2024. The business banking portfolio increased by 29.3% from ₹ 721.12 billion at March 31, 2023 to ₹ 932.28 billion at March 31, 2024. SME advances increased by 24.6% from ₹ 482.21 billion at March 31, 2023 to ₹ 600.95 billion at March 31, 2024. The domestic corporate portfolio increased by 10.0% year-on-year.

Net advances of overseas branches decreased by 1.9% from ₹ 341.10 billion at March 31, 2023 to ₹ 334.51 billion at March 31, 2024.

Fixed and other assets

Fixed assets (net block) increased by 13.1% from ₹ 96.00 billion at March 31, 2023 to ₹ 108.60 billion at March 31, 2024

Other assets increased by 1.6% from ₹ 732.01 billion at March 31, 2023 to ₹ 743.81 billion at March 31, 2024 primarily due to an increase in interest accrued on loans and investments and margin deposit paid for treasury products, offset, in part, by a decrease in RIDF and other related deposits and mark-to-market on foreign exchange and derivative transactions. The Bank is an active participant in the interest and foreign exchange derivative market. While the positive mark-to-market on such transactions are accounted in ‘Other Assets’, the negative mark-to-market on offsetting transactions are accounted in ‘Other Liabilities’.

The following table sets forth, at the dates indicated, the principal components of liabilities (including capital and reserves).

1. ¹ All amounts have been rounded off to the nearest ₹ 10.0 million.

Total liabilities (including capital and reserves) increased by 18.1% from ₹ 15,842.07 billion at March 31, 2023 to ₹ 18,715.15 billion at March 31, 2024, due to a 19.6% increase in deposits, a 18.8% increase in net worth and a 14.4% increase in other liabilities.

Deposits

Deposits increased by 19.6% from ₹ 11,808.41 billion at March 31, 2023 to ₹ 14,128.25 billion at March 31, 2024.

Term deposits increased by 27.7% from ₹ 6,395.79 billion at March 31, 2023 to ₹ 8,169.53 billion at March 31, 2024. Savings account deposits increased by 5.9% from ₹ 3,797.76 billion at March 31, 2023 to ₹ 4,023.00 billion at March 31, 2024 and current account deposits increased by 19.9% from ₹ 1,614.86 billion at March 31, 2023 to ₹ 1,935.72 billion at March 31, 2024. CASA deposits increased by 10.1% from ₹ 5,412.62 billion at March 31, 2023 to ₹ 5,958.72 billion at March 31, 2024.

The average current account deposits increased by 12.0% from ₹ 1,324.77 billion in fiscal 2023 to ₹ 1,483.26 billion in fiscal 2024. The average savings account deposits increased by 4.4% from ₹ 3,434.14 billion in fiscal 2023 to ₹ 3,584.21 billion in fiscal 2024. Average CASA deposits increased by 6.5% from ₹ 4,758.90 billion in fiscal 2023 to ₹ 5,067.47 billion in fiscal 2024. The average CASA deposits were 40.4% of total average deposits for fiscal 2024 as compared to 44.7% for fiscal 2023. Average CASA deposits were 35.9% of the total funding (i.e., deposits and borrowings) for fiscal 2024 as compared to 39.7% for fiscal 2023.

Deposits of overseas branches increased by 2.5% from ₹ 147.82 billion at March 31, 2023 to ₹ 151.48 billion at March 31, 2024.

Total deposits at March 31, 2024 formed 91.9% of the funding (i.e., deposits and borrowings) as compared to 90.8% March 31, 2023.

Borrowings

Borrowings increased by 4.7% from ₹ 1,193.25 billion at March 31, 2023 to ₹ 1,249.68 billion at March 31, 2024 primarily due to an increase in foreign currency term money borrowings, refinance borrowings, call money borrowings in India and bullion borrowings, offset, in part, by a decrease in subordinated bonds. Net borrowings of overseas branches increased from ₹ 258.14 billion at March 31, 2023 to ₹ 295.72 billion at March 31, 2024.

Other liabilities

Other liabilities increased by 14.4% from ₹ 833.25 billion at March 31, 2023 to ₹ 953.23 billion at March 31, 2024 primarily due to an increase in total creditors, security deposits and miscellaneous liabilities. The Bank is an active participant in the interest and foreign exchange derivative market. While the positive mark-to-market on such transactions are accounted in ‘Other Assets’, the negative mark-to-market on offsetting transactions are accounted in ‘Other Liabilities’.

Equity share capital and reserves

Equity share capital and reserves increased by 18.8% from ₹ 2,007.16 billion at March 31, 2023 to ₹ 2,383.99 billion at March 31, 2024 primarily due to accretion to reserves out of retained profit, offset, in part, by payment of dividend for fiscal 2023. At March 31, 2024, the Bank’s Tier-1 capital adequacy ratio was 15.60% as against the requirement of 9.70% and total capital adequacy ratio was 16.33% as against the requirement of 11.70%.

The following table sets forth, for the periods indicated, the principal components of contingent liabilities.

1. ¹ All amounts have been rounded off to the nearest ₹ 10.0 million.

The Bank is an active market participant in the interest rate and foreign exchange derivative market for trading and market making purposes, which are carried out primarily for customer transactions and managing the proprietary position on interest rate and foreign exchange risk. The notional amount of interest rate swaps and currency options increased from ₹ 25,089.18 billion at March 31, 2023 to ₹ 28,197.21 billion at March 31, 2024 primarily due to an increase in market making activities and client flow.

The Bank enters into foreign exchange contracts in its normal course of business, to exchange currencies at a prefixed price at a future date. With respect to the transactions entered into with its customers, the Bank generally enters into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding transactions, and hence a large value of gross notional principal of the portfolio, while the net market risk is lower. The notional principal amount of outstanding forward exchange contracts increased from ₹ 15,330.22 billion at March 31, 2023 to ₹ 15,600.22 billion at March 31, 2024 primarily due to an increase in trading and market making activities in forwards to facilitate client flow and capture opportunities in the forward market.

The Bank follows a policy of portfolio diversification and evaluates its total financing exposure to a particular industry in the light of its forecasts of growth and profitability for that industry. The Bank’s Credit Risk Management Group monitors all major sectors of the economy and specifically tracks industries in which the Bank has credit exposures. The Bank monitors developments in various sectors to assess potential risks in its portfolio and new business opportunities. The Bank’s policy is to limit its portfolio to any particular industry (other than retail loans) to 15.0% of its total exposure. In addition, the Bank has a framework for managing concentration risk with respect to single borrower and group exposures, based on the internal rating and track record of the borrowers. The exposure limits for lower rated borrowers and groups are substantially lower than the regulatory limits.

The following tables set forth, at the dates indicated, the composition of the Bank’s exposure.

The exposure to the top 20 non-bank borrowers as a percentage of total exposure decreased from 8.5% of total exposure of the Bank at March 31, 2023 to 8.3% at March 31, 2024. All top 20 borrowers as of March 31, 2024 are rated A- and above internally. The exposure to the top 10 borrower groups decreased marginally from 10.1% of total exposure of the Bank at March 31, 2023 to 10.0% at March 31, 2024.

The following table sets forth, at the dates indicated, the composition of the Bank’s outstanding net advances:

The Bank’s capital allocation framework is focused on growth in granular retail, SME/ business banking and rural lending and lending to the corporate sector with a focus on increase in lending to higher rated corporates. Net retail advances increased by 19.4% in fiscal 2024 compared to an increase of 16.2% in total advances. The share of net retail advances increased from 53.9% of net advances at March 31, 2023 to 54.9% of net advances at March 31, 2024. Including non-fund based outstanding, the share of retail portfolio was 46.8% of the total portfolio at March 31, 2024.

The overseas loan portfolio in USD terms declined by 3.4% year-on-year at March 31, 2024. The year-on-year decrease in the overseas loan portfolio was primarily on account of repayment of short-term trade advances. The overseas loan portfolio was 2.8% of the overall loan book at March 31, 2024. The corporate fund and non-fund outstanding, net of cash/bank/financial institutions/ insurance backed lending, was USD 3.11 billion at March 31, 2024. Out of USD 3.11 billion, 91.2% of the outstanding was to Indian corporates and their subsidiaries and joint ventures and 5.7% of the outstanding was to non-India companies with Indian or India-linked operations and activities. The portfolio in this segment is primarily to well-rated companies and the Indian operations of these companies are target customers for the Bank’s deposit and transaction banking franchise. The Bank would continue to pursue risk-calibrated opportunities in this segment. The non-India linked corporate portfolio reduced by 10.1% from about USD 305.6 million year-on-year to USD 274.9 million at March 31, 2024.

The following table sets forth, at the dates indicated, the composition of the Bank’s net outstanding retail advances.

1. ¹Includes loans against securities and dealer financing.
2. ²Gross of Bill Rediscounting Scheme (BRDS)/Interbank Participatory Certificate (IBPC) amounting to ₹ 82.5 billion at March 31, 2023 and ₹ 150.0 billion at March 31, 2024.
3. ³All amounts have been rounded off to the nearest ₹ 10.0 million.

The following table sets forth, at the dates indicated, the composition of the Bank’s net outstanding rural advances:

1. ¹Based on internal ratings.
2. ²Includes net non-performing loans.
3. ³Includes business banking, SME, domestic, corporate and overseas loans.

The following table sets forth, at the dates indicated, information regarding asset classification of the Bank’s gross non-performing assets (net of write-offs, interest suspense and derivative income reversals).

1. ¹Include advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares.
2. ²All amounts have been rounded off to the nearest ₹ 10.0 million.

The following table sets forth, at the dates indicated, information regarding the Bank’s non- performing assets (NPAs).

1. ¹Net of write-offs, interest suspense and derivatives income reversal.
2. ²Include advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares.
3. ³All amounts have been rounded off to the nearest ₹ 10.0 million.

The following table sets forth, for the periods indicated, the composition of gross non-performing assets (net of write-offs) by industry sector.

1. ¹ Includes home loans, automobile loans, commercial business loans, dealer financing, personal loans, credit cards and loans against securities.
2. ²Other industries primarily include textile, metal and metal products, shipping, food and beverages, chemical and fertilizers, services-finance, cement, drugs and pharmaceuticals, FMCG, automobiles and developer financing.
3. ³All amounts have been rounded off to the nearest ₹ 10.0 million.

The gross additions to NPAs were ₹ 190.27 billion in fiscal 2024 (₹ 186.41 billion in fiscal 2023). The net additions to NPAs were ₹ 34.04 billion in fiscal 2024 (₹ 20.38 billion in fiscal 2023). In fiscal 2024, the Bank recovered/upgraded non-performing assets amounting to ₹ 156.23 billion (₹ 166.03 billion in fiscal 2023), wrote-off non-performing assets amounting to ₹ 60.92 billion (₹ 44.66 billion in fiscal 2023) and sold non-performing assets amounting to ₹ 5.35 billion (₹ 3.08 billion in fiscal 2023). As a result, gross NPAs (net of write-offs) of the Bank decreased from ₹ 311.84 billion at March 31, 2023 to ₹ 279.62 billion at March 31, 2024.

Net NPAs increased from ₹ 51.55 billion at March 31, 2023 to ₹ 53.78 billion at March 31, 2024. The ratio of net NPAs to net customer assets decreased from 0.48% at March 31, 2023 to 0.42% at March 31, 2024. The provision coverage ratio at March 31, 2024 was 80.3% as compared to 82.8% at March 31, 2023.

At March 31, 2024, gross non-performing loans in the retail portfolio were 1.23% of gross retail loans compared to 1.28% at March 31, 2023 and net non-performing loans in the retail portfolio were 0.47% of net retail loans compared to 0.47% at March 31, 2023.

The total non-fund based outstanding to borrowers classified as non-performing was ₹ 36.71 billion at March 31, 2024 (March 31, 2023: ₹ 37.80 billion). The Bank held a provision of ₹ 20.90 billion at March 31, 2024 (March 31, 2023: ₹ 20.05 billion) against these non-fund based outstanding.

The gross outstanding loans to borrowers whose facilities have been restructured decreased from ₹ 45.08 billion at March 31, 2023 to ₹ 30.59 billion at March 31, 2024. The net outstanding loans to borrowers whose facilities have been restructured decreased from ₹ 43.30 billion at March 31, 2023 to ₹ 29.15 billion at March 31, 2024. The aggregate non-fund based outstanding to borrowers whose loans were restructured was ₹ 2.48 billion at March 31, 2024 (March 31, 2023: ₹ 3.32 billion). Additionally, Bank holds provision of ₹ 8.31 billion on restructured accounts.

At March 31, 2024, the outstanding loans and non-fund facilities to borrowers in the corporate and small and medium enterprises portfolio rated BB and below were ₹ 55.28 billion which includes the outstanding loans and non-funded facilities under resolution amounting to ₹ 6.45 billion.

For a discussion on accounting policy for classification on loans, see “Financial Statement (Schedule 17- Significant Accounting Policies) – Provision/write-offs on loans and other credit facilities”.

RBI in its guidelines on "segmental reporting” has stipulated specified business segments and their definitions, for the purpose of public disclosures on business information for banks in India. The business segments as defined by RBI for standalone segmental report are Retail Banking, Wholesale Banking, Treasury and Other Banking. Additionally, Unallocated includes items such as income tax paid in advance net of provision for tax, deferred tax and provisions to the extent reckoned at entity level.

Framework for transfer pricing

All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirement and directed lending requirements.

Retail banking segment

The profit before tax of the segment increased from ₹ 175.34 billion in fiscal 2023 to ₹ 188.49 billion in fiscal 2024 primarily due to an increase in net interest income and non-interest income, offset, in part, by an increase in operating expenses and provisions.

Wholesale banking segment

The profit before tax of the segment increased from ₹ 157.85 billion in fiscal 2023 to ₹ 199.72 billion in fiscal 2024 primarily due to an increase in net interest income, non-interest income and higher recoveries on non-performing loans, offset, in part, by an increase in operating expenses.

Treasury segment

The profit before tax of the segment increased from ₹ 142.72 billion in fiscal 2023 to ₹ 148.99 billion in fiscal 2024 primarily due to an increase in net interest income and non-interest income, offset, in part, by an increase in operating expenses and provisions.

Other banking segment

Profit before tax of the other banking segment increased from ₹ 4.80 billion in fiscal 2023 to ₹ 7.68 billion in fiscal 2024.

Unallocated

During FY2023, the Bank had made an additional contingency provision ₹ 56.50 billion on a prudent basis as compared to a nil contingency provision during FY2024. The contingency provision was not allocated to any segment and included in unallocated.

The consolidated profit after tax increased from ₹ 340.37 billion in fiscal 2023 to ₹ 442.56 billion in fiscal 2024 primarily due to an increase in the profit of ICICI Bank and subsidiaries namely ICICI Securities, ICICI Prudential Asset Management Company, ICICI Securities Primary Dealership, ICICI Home Finance Company, ICICI Bank Canada, ICICI Bank UK, ICICI Lombard General Insurance Company (ICICI General) and ICICI Prudential Life Insurance Company.

The consolidated assets of the Bank and its subsidiaries and other consolidating entities increased from ₹ 19,584.90 billion at March 31, 2023 to ₹ 23,640.63 billion at March 31, 2024. Consolidated advances increased from ₹ 10,838.66 billion at March 31, 2023 to ₹ 12,607.76 billion at March 31, 2024.

At March 31, 2024, the Bank’s consolidated Tier-1 capital adequacy ratio was 15.43% as against the requirement of 9.70% and consolidated total capital adequacy ratio was 16.14% as against the requirement of 11.70%.

During fiscal 2024, the Board of Directors of the Bank approved to increase shareholding in ICICI General in multiple tranches up to 4.0% additional shareholding and make the Company, a subsidiary of the Bank. Post necessary regulatory approval(s), the Bank through stock exchange mechanism had acquired additional stake in ICICI General in multiple tranches, resulting into an increase in shareholding to more than 50.0%. Consequently, ICICI General ceased to be an associate and became a subsidiary of the Bank w.e.f. February 29, 2024.

During fiscal 2024, the Board of Directors of the Bank approved to make I-Process Services (India) Private Limited (I-Process) a wholly-owned subsidiary of the Bank. Post necessary regulatory approval(s), the Bank entered into a share purchase agreement in relation to investment in equity shares of I-Process from off-market transactions. Consequently, I-Process ceased to be an associate and became a subsidiary of the Bank w.e.f. March 20, 2024 and subsequently became a wholly-owned subsidiary of the Bank w.e.f. March 22, 2024.

ICICI Bank Canada

The core operating profit of ICICI Bank Canada increased from CAD 61.2 million in fiscal 2023 to CAD 100.9 million in fiscal 2024 primarily due to an increase in net interest income and fee income, offset, in part, by an increase in operating expenses. The profit after tax of ICICI Bank Canada increased from CAD 46.4 million (₹ 2.82 billion) in fiscal 2023 to CAD 73.3 million (₹ 4.50 billion) in fiscal 2024 primarily due to an increase in core operating profit.

TThe total assets decreased from CAD 5.98 billion at March 31, 2023 to CAD 5.88 billion at March 31, 2024. Loans and advances increased from CAD 5.17 billion at March 31, 2023 to CAD 5.23 billion at March 31, 2024. The net impairment ratio increased from 0.08% at March 31, 2023 to 0.24% at March 31, 2024 primarily due to change in estimates and revision in macro-economic factors. ICICI Bank Canada had a total capital adequacy ratio of 17.8% at March 31, 2024 as compared to 17.3% at March 31, 2023.

ICICI Bank UK

The core operating profit of ICICI Bank UK increased from USD 18.3 million in fiscal 2023 to USD 34.5 million in fiscal 2024 primarily due to an increase in net interest income and fee income, offset, in part, by an increase in operating expenses. Profit after tax of ICICI Bank UK increased from USD 13.0 million (₹ 1.05 billion) in fiscal 2023 to USD 28.8 million (₹ 2.39 billion) in fiscal 2024 primarily due to higher core operating profit, offset, in part, by an increase in impairment provisions.

Total assets increased from USD 2.14 billion at March 31, 2023 to USD 2.21 billion at March 31, 2024. Net advances increased from USD 0.99 billion at March 31, 2023 to USD 1.04 billion at March 31, 2024. The net impairment ratio decreased from 3.3% at March 31, 2023 to 1.1% at March 31, 2024. ICICI Bank UK had a total capital adequacy ratio of 23.3% at March 31, 2024 compared to 27.1% at March 31, 2023.

ICICI Prudential Life Insurance Company (ICICI Life)

The Annualised Premium Equivalent of ICICI Life increased by 4.7% from ₹ 86.40 billion for fiscal 2023 to ₹ 90.46 billion for fiscal 2024. The Value of New Business (VNB) decreased by 19.5% from ₹ 27.65 billion for fiscal 2023 to ₹ 22.27 billion for fiscal 2024. The VNB margin decreased from 32.0% for fiscal 2023 to 24.6% in fiscal 2024. The total premium earned increased by 8.3% from ₹ 399.33 billion in fiscal 2023 to ₹ 432.36 billion in fiscal 2024. The total assets under management increased from ₹ 2,511.91 billion at March 31, 2023 to ₹ 2,941.40 billion at March 31, 2024.

Net premium earned increased by 8.3% from ₹ 385.60 billion in fiscal 2023 to ₹ 417.60 billion in fiscal 2024. The profit after tax increased from ₹ 8.11 billion in fiscal 2023 to ₹ 8.52 billion in fiscal 2024 primarily due to an increase in investment income in the shareholder segment due to favourable market conditions, offset, in part, by higher new business strain in annuity and non-participating protection segments.

ICICI Lombard General Insurance Company (ICICI General)

The Gross Domestic Premium Income of ICICI General increased by 17.8% year-on-year from ₹ 210.25 billion in fiscal 2023 to ₹ 247.76 billion in fiscal 2024. The profit after tax increased from ₹ 17.29 billion in fiscal 2023 to ₹ 19.19 billion in fiscal 2024 primarily due to an increase in premium income and reversal of tax provision, offset, in part, by an increase in claims and benefits paid.

ICICI Prudential Asset Management Company (ICICI Prudential AMC)

As per Indian GAAP, the profit after tax of ICICI AMC increased from ₹ 15.08 billion in fiscal 2023 to ₹ 18.15 billion in fiscal 2024 primarily due to an increase in fee income, offset, in part, by an increase in operating expenses.

ICICI Securities

As per Indian GAAP, the consolidated profit after tax of ICICI Securities increased from ₹ 11.40 billion in fiscal 2023 to ₹ 17.33 billion in fiscal 2024 primarily due to an increase in fee income and net interest income, offset, in part, by an increase in staff cost and other administrative expenses.

ICICI Securities Primary Dealership (I-Sec PD)

As per Indian GAAP, the profit after tax of I-Sec PD increased from ₹ 1.28 billion in fiscal 2023 to ₹ 4.14 billion in fiscal 2024 primarily due to an increase in net interest income and higher trading gains.

ICICI Home Finance Company Limited (ICICI HFC)

As per Indian GAAP, profit after tax increased from ₹ 3.65 billion in fiscal 2023 to ₹ 5.32 billion in fiscal 2024 primarily due to an increase in core operating profit and release in provisions. The core operating profit increased primarily due to an increase in net interest income and fee income, offset, in part, by an increase in operating expenses. Provision decreased from a charge of ₹ 0.56 billion in fiscal 2023 to a write back of ₹ 0.10 billion in fiscal 2024 primarily due to recovery.

Net NPAs decreased from ₹ 3.53 billion at March 31, 2023 to ₹ 2.88 billion at March 31, 2024

ICICI Venture Funds Management Company (ICICI Venture)

The profit after tax of ICICI Venture increased from ₹ 61.9 million in fiscal 2023 to ₹ 110.3 million in fiscal 2024 primarily due to an increase in management fees received from launch of new funds, offset, in part, by an increase in operating expenses.

The following table sets forth, for the periods and at the dates indicated, the profit/(loss) and total assets of our principal subsidiaries as per Indian GAAP.

1. ¹Total assets are as per classification used in the consolidated financial statements and hence the total assets as per subsidiary’s financial statements may differ.
2. ²Entity ceased to be an accounted as per the equity method as prescribed by Accounting Standard – 23 – “Accounting for Investments in Associates in Consolidated Financial Statements” and became subsidiary of Bank w.e.f. February 29, 2024 and consolidated as per Accounting Standard-21- “Consolidated Financial Statements”.
3. ³Total assets as per financial statements of ICICI Lombard General Insurance Company Limited.
4. ⁴See also “Financials- Statement pursuant to Section 129 of the Companies Act, 2013”.
5. ⁵All amounts have been rounded off to the nearest ₹ 10.0 million.