ICICI Bank Ltd (IBN) 2009 Q2 法說會逐字稿

Good evening, ladies and gentlemen. I am Priyanka, the moderator for this conference. Welcome to the ICICI Bank conference call. For the duration of the presentation all participants' lines will be in the listen-only mode. I will be standing by for the question and answer session. I would now like to hand over to Ms. Chanda Kochhar. Thank you and, over to you, ma'am.

Good afternoon, good morning to all of you. I'll just give a brief summary of our performance because the presentation is already with you.

I'll just in a minute kind of summarize it to say that we had a very robust increase in core operating profit. And the core operating profit has gone up by about 42%. And this is really coming on the back of two, three major improvements, such as the net interest income has increased to 20 -- by 20%, fee income has increased by 26% and the operating and DMA expenses have actually gone down by 12%. So all this together has led to a very good increase in core operating profits.

Our net profit is 1,014 crores, that's INR10.14b. And even our addition to NPAs have actually been on a moderate level compared to the quarter one of the last year, in the sense that our addition to specific provisions is actually a little lower than the addition to specific provisions last quarter. And our addition to gross NPLs is also a little lower compared to our addition to gross NPL in the last quarter.

But, beyond that, I will actually take questions as you have.

Thank you very much, ma'am. We will now begin the Q&A interactive session. (Operator Instructions). First in line we have Mr. Sanjeev from DBS Bank. Please go ahead with your question, sir.

Good evening, madam. This is [Sanjeev Kumar] from DBS Bank.

Yes.

I want to check with you because, if I look at the performance for the quarter, I could see that some of it has been made up with cutting down of the cost, in the employee cost and relating to marketing expenses as well. I want to check whether -- how sustainable these cost-cutting measures are.

These are very sustainable measures because it's really a mix of many things. One is, yes, we have rationalized a whole lot of our marketing efforts. Since we have increased branches our reliance on the direct marketing agents and tele-calling channel has been reduced substantially. Plus we have rationalized a whole lot of other promotional expenses.

Then, given the levels of -- economies of scale at which we are operating, we have been able to derive many more economies of scale in terms of vendor negotiations. We have been able to do many things through straight through processing and improved productivity. So these are measures which are sustainable. And we will continue to see the costs moving in this direction even as we go forward.

Okay. Madam, the other query on the interest earned portion, there is an entry of others in the interest earned which shows some significant variation from the previous-year quarter, September 30, 2007 numbers. If you could tell me as to what these numbers are, what this stands for.

If you compare with the previous June quarter as well, that number was there in the other interest income. That other interest income primarily includes all the income that comes on our swap positions. For example, if I have a fixed rate and I swap it into floating rate, the impact of that comes in this line item. So a higher borrowing cost number reflects a lower number there, or a lower borrowing cost is reflecting the higher number there. It's only a net adjustment that is reflected there. So the relevant number is the overall NII for the Bank.

Okay. And would you have any [sense as to] how will this number be for the year end?

It will not be -- as I said, it is a function of how the floating rates move. So overall it will not be possible to project this number. But this doesn't impact the NII of the number -- of the Bank as such. Because on the swap side this number (inaudible) income. There will be higher expense on the borrowing part as well because it's a fixed rate.

Thank you. That's it that I have.

Thank you very much, sir. Next in line we have Mr. Dipankar from Deutsche Bank. Please go ahead with your question, sir.

Hi, just a couple of clarifications on our UK business. The 41.7m MTM in the first half, is it the entire amount which passed through the reserves and surplus, because you intended to make about approximately 28m additionally on Lehmans? In the context of that, the figure looks a bit small. So could you clarify this?

And a related question is that if I'm reading the numbers right the capital adequacy of the UK business has increased in the second quarter over first quarter. So could you just clarify these two?

This 41.7m number pertains to actually our AFS book, for which the impact goes into the balance sheet. This is over and above -- no, the 41m is the impact -- yes, of course. But the impact from the trading book we take it through the P&L. So there is an additional MTM provision has been made to the P&L.

And if you see -- we have given details there on the presentation to say that to start with there is an operating income in the UK. And after making all the provisions, adequate provisions, not only against Lehman, but against the entire other trading book as well, we have a loss in UK -- a net loss in UK for H1 to the extent of 35.5m.

And the capital adequacy?

The capital adequacy has gone up to 18.4. That's because as per our yearly plan we have included $100m equity in UK during this quarter.

Sorry, I missed it. $100m?

Dollars equity in UK during this quarter.

Okay, great.

That was as per the plan as we what had decided at the beginning of the year itself.

Okay. And what's your -- whatever loss in the AFS book which passes through reserves and surplus, that is excluded obviously in the capital adequacy calculation, right?

That's right, yes.

Okay. And another related question which is a bit of an open ended question is that considering what is happening in the international markets and how difficult it is for rollover borrowings. How do you see the outlook for the rest of this year?

Our growth plan going forward is coming mainly only out of the retail deposits that we have been raising both in UK and Canada. And the flow of these retail deposits continues at a healthy pace as what it was even earlier. As far as for -- therefore, actually for growth we have the source available as retail deposits.

As far as repayment is concerned, we do not -- most of our borrowings that we have raised in the past, a lot of them are really long dated. So if we look at the next six months or so, we have maybe in terms of borrowings about $1.4m of net borrowings to be repaid -- sorry, billion dollars of net borrowings to be repaid. And we feel that we will have enough sources as we go along to pay this.

Okay.

It's not a very large amount, actually.

Thank you, ma'am. That's it.

Thank you very much, sir. Next in line we have Mr. Arun Khurana from UTI Mutual Fund. Please go ahead with your question, sir.

Good evening, ma'am. Ma'am, what is your long-term business plan for the foreign subsidiary bank that you have? And what is the core sustainable advantage that you feel it's going to have on the overall scheme of things for the next two to three years? What is the proportion of balance sheet side you propose to build up as a proportion of the total -- overall balance sheet side of the Bank?

Our core strengths are -- first of all, our core driving of -- the strategic drive behind the international business continues to remain what it was as we started the international business, that is, to really fund the global requirements of the Indian customer. So, essentially, we have been taking care of the requirements of the NRIs as well as the global requirements of the Indian corporates. So the basic premise on which we started the strategy essentially continues to remain the same.

As far as rates of growth is concerned, yes, in the past we actually were using three major sources of funding to fund this growth; the long-term issuance of bonds and debt instruments, and bilateral lines of credit, and retail deposits, as well as the markets have moved. For the last one year we really haven't made any issuance of long-term bond or debt. So we are not now really relying on that source of funds to fund the future growth.

But, clearly, we still have a very strong flow of deposits coming. And therefore our growth is being funded to the extent of the deposits that we're raising both in UK and Canada.

The competitive strength really comes from the fact that that gives us, one, as a Bank the ability to fund the total requirements of the Indian customer because the Indian corporates today have certain requirements in rupee and certain requirements in foreign currency. And this gives the ability to meet both the requirements.

And, secondly, as we are using retail funds to really fund this requirement, the retail deposits come at a very, very cost-effective manner. For example, in Canada we can still raise five-year money that's about LIBOR plus 125, which is a very effective cost of funding to sustain our growth.

Ma'am, of the total provisions that you've made of INR923 crores for the current quarter, would you be in a position to give us the break up?

The broad break up is the specific provisions; out of that is INR868 crores. And in fact the rest of it is general provisions. And the specific provisions of INR868 crores is, in fact, INR10 crores lower than the specific provision that we made the previous quarter, which was INR878 crores.

Ma'am, the break up, I would mean the break up of UK provision, break up for investment depreciation provisions, if you could enlighten us on that account ma'am.

Rakesh, this is actually all towards loans and advances.

This is all towards loans and advances only. But after market impact, it becomes a Treasury income line item. This will all be towards the loans, the specific provision that Chanda mentioned of INR868 crores and the balance is the general provision. And, as we have said, on the agricultural loans we have given the waiver impact. During the first quarter we had taken a write back of about INR470m, which subsequently RBI came out with guidelines and that has been reversed in the current quarter.

Okay. And as on date, as per your estimates, how much would be the amount that the Bank may need to basically provide for on the estimated residual valuation on the investments that you have in the foreign subsidiary banks?

No, I don't think -- we believe we have made adequate provision on the investments that we have in the foreign subsidiaries because we have finalized the accounts. And the numbers that we are declaring is after discussing with the auditors and finalizing the accounts. So we feel that there is absolutely adequate provision.

Does that mean that you feel that going forward you may not need to make any more provisions, if the current environment within banking were not to change going forward?

No, the issue is with the current environment one just doesn't know how the market changes. So it could -- spreads in general in the market could widen. Spreads in general in the market could actually tighten. So we don't which way the entire market will move. So in the current scenario one can't make that kind of a forward-looking statement. But, given the situation today, our provisions are adequate.

And one last question relates to the borrowing figures, ma'am. How has the borrowings been shaping up in the current quarter versus the last quarter?

And, finally, how is -- if you can give us the figures on deposits as on date. As on date means maybe October 20 or October 25, or whatever is available, ma'am.

You're talking about deposits internationally or domestically?

Domestic deposits, ma'am.

The domestic deposits we gave the September 30 number, because we don't really talk of day-to-day movements of deposits. But September 30 number if you see on a year-on-year basis, we had increased the current and savings deposits by INR90b, which is 16% year-on-year increase.

As far as the wholesale term deposits is concerned, we had anyway outlined in the beginning of the year that gradually we would be reducing our reliance on the wholesale term deposits. So, in fact, our CASA growth has been very robust during the year and CASA percentage has improved from 25% as of last September to 30% as of this September.

And how much have been the net borrowings as on date, ma'am, versus the last figure, ma'am?

The total borrowings in the parent Bank is -- in the presentation we have INR948m as of September 30 compared to about INR863m as of March 31.

Thank you.

Thank you very much, sir. I repeat, participants are requested to ask only two questions at a time due to time constraints. Next in line we have Ms. Poonam Sharma from IBFC Mutual Fund. Please go ahead, ma'am.

Ma'am, I just wanted to know that of the INR990 crores of incremental slippages, could you just tell us on what account are these, and also the trend in the retail NPLs that you have?

Yes, Rakesh.

The addition to the NPLs is about INR990 crores. And in addition we have sold 30m retail NPLs to Arcil during the quarter. On a gross basis, the additions will be close to about INR12m. And the additions will mainly be in the retail sector during the current quarter. We have given the retail NPL numbers in the presentation.

Okay. Thank you so much.

Thank you very much, ma'am. Next in line we have Mr. Rajiv Verma from Merrill Lynch. Please go ahead, sir.

Hi, Chanda and Rakesh. Just a couple of things. One is if you could just highlight on the loan mix. I know you've obviously shown on your retail and the overseas, but what are the main drivers?

And separately also on the branch expansion, I just wanted to have an idea of the status, how many you opened etc? And have you got any fresh licenses, or are you looking for that?

In terms of branches, we are now close to 1,400 branches. So, in effect, 18 months ago we were 750 branches. Then we acquired Sangli Bank, and then after that we implemented all the licenses that we had got.

Of course, the implementation really mainly happened between February and May. So the real benefit of these branches we would see over the next year, year and a half. But, indeed, they have been implemented and they are now operational. We haven't yet applied for any new set of branches. But clearly, yes, we are looking at now further expanding our branch network and we will soon be making an application.

On the break up of the advances (inaudible), Rakesh.

The loan book, Rajiv, is given in the presentation in terms of the break up that we have seen as of September 30. And in line with the trend we saw in the earlier quarter, the retail -- the growth has been much lower than the last year. And the growth has come essentially on the corporate side and the overseas branches, which you will have to look into in the context of the fact that, given that the dollar has appreciated, a lot of that growth of overseas branches is just because of the rupee being at INR47 level as of September 30 compared to about INR40 level at March 31.

Right, okay. And I guess just one last thing. In terms of spreads, you did mention that most of your (inaudible) will come from the retail side etc.? But are you starting to see any early signs of stress in the corporate portfolio, even though it's a much smaller proportion for you?

No, as of now we are not seeing any stress on the corporate side as far as credit quality is concerned. What we are definitely seeing is the whole set of caution in terms of really quickly jumping into new projects and so on. And people are wanting to conserve their cash and cash accrual. So we're just implementing the projects that we have on hand rather than really planning of new things. But, specifically on credit quality, we haven't seen stress.

Okay, thanks.

Thank you very much, sir. Next in line we have Ms. Tabassum from UBS. Please go ahead, ma'am.

Yes. Hi, Chanda, hi Rakesh.

Hi.

I just wanted to check on your margin. Now, clearly, for the last three quarters you have not seen any improvement in margin. And your NII growth has been driven for, at least this quarter -- to some extent it's been year on year and a little bit on asset growth. So how do you see this going forward because, clearly, if you're not growing your asset book, your NII growth will get impacted in the next few quarters?

Yes, on a quarter-on-quarter basis probably what you're saying is correct. But if you also see that there are some factors which are seasonal, for which you definitely need to look at the first and the second quarter on a year-on-year basis, because most of the priority sector advances that you take up in March actually come off only during Q1 and Q2. And these are normally lower yield advances. So, in that sense, net-net basis that also has been taken into account while maintaining NIMs.

Secondly, of course, what has happened is that the cost of wholesale money is actually rising. So in a way it is good that we increased CASA because at least the impact of the rising wholesale money has really been absorbed by the improvement in CASA.

But, yes, this is something that we will have to keep watching because we'll have to see the cost of wholesale money adjusts as we go forward. And since that is going to be more a market-related phenomena, I think what's in our hand is really to actually bring down the dependence on wholesale term deposits. And that's clearly what we are doing. Our CASA ratio has gone up to 30% by this September.

And should we assume that this trend will continue given the current environment, and where we are seeing a lot of banks also seeing their CASA reducing and term deposits going up because interest rates have been high?

Yes. But for us actually you will see CASA going up and term deposits going down. I think the essential difference is that for others you would see CASA ratio probably going down and term deposits going up because they are in a higher growth mode. So they are raising more funds to fund the growth, whereas, we are consciously at moderate levels of credit growth. And therefore, for us, actually CASA has improved.

Just one last thing. In terms of your loan to customers in Canada and UK, is this mainly Indian corporates or would this be -- the loans I'm talking about, not investments. Would this include even local corporates?

80% of this is really to Indian customers.

Okay, great. Thank you very much.

Thank you very much, ma'am. Next we have Mr. Krishnan from Ambit Capital. Please go ahead with your question, sir.

Hi. This is a little bit of continuation to what one of the things that was -- that has been asked already. I just wanted to understand about the margins. The reason why you've been able to maintain the margins at the current levels is because the liability side hasn't quite grown, whereas, you have -- if I would look at the first -- if I would look at the June numbers as well as the September numbers on the deposit side, it's been far more muted when compared to the (inaudible) when you have a look at the loans. That also reflects in the spreads as far as the credit deposit ratio is concerned. I just wanted some light on that.

I think -- first of all, I think on the deposit growth, clearly, from the beginning of the year we had articulated the strategy. But since this is a rising interest rate scenario we will consciously reduce our dependence on wholesale deposits. So clearly indeed we have paid off much of the wholesale deposits that may have become due rather than renewing them, because the interest rates were running high.

But at the same time the focus on CASA has continued. And we have seen a robust growth in CASA, INR9,000 crores year on year, and even if you just look at the quarter the increase in CASA is INR3,000 crores.

It's -- okay, I do understand about that aspect. What I don't understand is you're running almost neck to neck as far as your credit deposit ratio is concerned. I just had some concern there.

But I think [credit] deposit ratio if you're looking at -- I don't know what number you would look at. But if you're looking at incremental over the years, you have to also take into account that in fact we raised equity. And a lot of funds came in also on account of raising of equity. Rakesh, do you want to clarify here?

And also the credit (inaudible) you would be considering the overseas branches' loan book, which, as we said earlier, is essentially funded out of borrowing. If you look at the domestic credit and the deposit ratio, it will be in the region of about 70%, 75% because the balance is funded out of some of the Tier II capital and equity that we have raised. So overseas branches is essentially funded out of borrowing. That is the reason why the overall CD ratio appears high.

Okay. Just two more things. Number one, I just needed a break up of the CASA. If you could -- can throw some light on where it is as of September '08 and how does that compare to September '07. That's one.

And, secondly, your exposure to overseas assets as a part of your loan book, that's at around 26%. Out of this, how much is your exposure to the BFSI space?

On the deposits, about INR432m is the savings deposits as of September 30. And the current account is about INR237m. The same numbers for last year was INR348m of savings deposits and INR229m of current account.

Okay. And as far as the loan book composition is concerned, you've got about total 26% exposure to overseas. How much of that would be just to the BFSI space?

BFSI space when you say, what do you refer to?

The kind of sense that you've seen across the financial services space and what has happened in the case of Lehman Brothers.

Yes, so that exposure which is actually a composition of loan book is on that slide. We have separately said in the UK subsidiary we have close to $3.5m of non-India investments, within which the exposure to financial institutions and banks is about $2.8m.

$2.8m.

But that is out of the investment book.

Yes, sure, understood. Yes, sure, and thanks.

Thank you very much, sir. Next in line we have Mr. [Jatinder] from ABN Amro. Please go ahead, sir.

Hi, just one question. All your equity investments are investments in subsidiaries. It was 81.34b as of March 2008. It stands at 99.93b as of September 2008. Can we have a broad break up as to where all this money has been invested?

We did about $100m in UK.

Perfect.

And in the insurance company about INR3m. And in general insurance about INR3.5m. These are the main investments done in the quarter.

That's all within the quarter, right?

Yes.

Okay. Thank you.

Thank you very much, sir. Next in line we have Mr. [Arnund] from [NGFC] Mutual Fund. Please go ahead, sir.

Hi, Chanda. I just wanted to know, you mentioned the liquidity of your total deposit. In the UK you say 39%, or is it term deposit? I just wanted to know was that invested in euro deposit would term deposit means more a year deposit or what?

And so -- also I just wanted to know what was this proportion as of March '08?

Yes, Rakesh.

Yes, in terms of the tenure of these deposits, it will be about 12 months to 18 months.

Okay.

And the proportion on March '07. (Inaudible) -- okay, March '08. That was (inaudible) you have the number.

I'll come back to you later on that.

Fine. Another thing I want to know, you say your total -- you could [stand a] loss of $35m after providing. How much on the margin of losses for [$10m]?

No, no. $45m is the provision to the balance sheet for the AFS book.

Sorry.

The rest of the provision is in the P&L. What we have said is that after taking into account all the operating income that we had, and after making the adequate provision, the net loss in the P&L is $36m.

So the provision you could have is somewhere around [$8m]?

Yes, in that range.

Fine.

And this -- we have the number now of the term deposits; as of March '08, it was 20%.

Okay. So, as you just mentioned that as going forward you'll be increasing your proportion of term deposit, hello --?

Yes.

-- going forward. Do we see margin on the international business to expand further and probably for whole year they will see a positive number?

Yes, on the focus between term and current and savings, in India the focus will be on CASA. So, yes, internationally it would be more on term deposit. (Inaudible) that we have talked about in credit (inaudible), Rakesh. We don't talk about predicted (inaudible), but I would only say that even our (inaudible) on the advances are going up substantially in the current scenario.

Fine, thanks.

Thank you very much, sir. Next in line we have Miss. [Valmerdal] from (inaudible) Securities. Please go ahead, ma'am.

Yes, hi. Good evening, ma'am. Just one question on you loan growth. Firstly, this is the first time your retail growth has actually shown a de-growth; minus 7% year on year. Firstly, I wanted to know what explains this. And, given that retail is still sizable portion, any particular focus areas you would like to concentrate on going forward?

Actually, we have been branching out with most of the lines of business on retail, except for the fact that let's say, something like small (inaudible) personal loans. We exited completely around November 11 of last year, so that business which was 7 the similar time last year is not present now because we exited that that.

And in businesses like credit cards and (inaudible) loans etc. we have tightened our credit loans substantially. So we are at present in most of the lines of businesses that we were in last year but, clearly, our growth rate has been -- it's just that the growth rates have been moderate. And additionally you ought to remember that the decline appears because also that we did our collections on time, so our increments have been coming at a pace which (inaudible).

Okay. I just also wanted to confirm one thing on ICC Bank UK subsidiary. Essentially, you've taken the trading loss through the P&L, so that roughly translates to some $78m. And the balance, $42m, you have taken to the results.

Yes. That the $42m is to the reserve and MTMs versus the trading book is in the P&L.

Okay, so that's the total loss you have booked for (inaudible)?

Yes, 41 to the reserve and the rest (inaudible) is to P&L.

Got it. Okay, thanks.

Thank you very much, ma'am. Next in line we have Mr. [Prashan Poddar] from ICC Prudential.

Good evening, ma'am. I just needed a clarification on the same thing. There was a 41m provision which was made to reserves and there was additional provision taken to P&L which eventually resulted into this $35m loss.

That's right.

Okay, so the accumulative provision would be the 41 plus the losses through P&L.

That's it.

Okay. And, ma'am, what is the kind of growth that we're looking at in advances for the full -- whole year?

From the beginning of the year we have said that our growth rate would be moderate, based on our conscious strategy of on focusing on CASA and trading keeping the credit parameters size. But I think the first half is a good indicator to go by, broadly in line with that strategy. We'll continue to follow a similar strategy going forward as well.

Okay. Would we be looking at maybe further running down the asset book?

No, we're not really running down the asset book, but we are really disbursing as for our credit parameters and credit loan. And as I said, on the other hand, we are getting the (inaudible) from the existing customers. So there is no conscious effort of running down the book, but there's a conscious strategy of being cautious and disbursing only as for the tight credit loan.

Have you provided fully for Lehman Brothers now?

We have provided adequately for Lehman Brothers.

Okay, thank you very much, ma'am.

Thank you very much, sir. Next in line we have Mr. Hiren Dasani from Goldman Sachs. Please go ahead, sir.

Hi. Just two questions on the -- if you can give a broad picture on the ALM weighted average assets in (inaudible) ICC UK (inaudible) Canada?

Rakesh.

Sorry, the weighted average?

Duration of assets and liabilities.

The reserve is in the UK and the Canada book, we are not really running any significant mismatch. We see it in the UK book we do have a high proportion of current and savings deposits but, against that, we have the investment portfolio which is -- of about $3.5b. And a large cover that portfolio we can deploy as well to the (inaudible). And in terms of the liquidity available in the UK balance sheet, (inaudible) close to $2b currently.

Okay. And -- but are you in a position to disclose any number in terms of weighted average duration of assets and liabilities or --?

The duration will be in (inaudible) in interest rates when everything in terms of maturity and (inaudible). For example, the investment book is typically at about two to three-year maturity. But in terms of liquidity, prior to the current market conditions they were absolutely liquid and were classified as [satisfactory] in the first budget of the ALM marketing. In the current environment we can -- if required, we can pull on these investments to generate liquidity if required.

Okay. And will we -- by removing the securities would be like -- you would need to take a big haircut in terms of -- how does the --?

This is where the profitability available (inaudible) with us with the Central Bank. For example, the Bundesbank, we can deposit securities with them.

Okay.

It is essentially asset business, no significant (inaudible) which is there. And in the Canadian balance sheet the deposits are mainly term deposits and the average maturity there will be three years plus.

Okay. On the loan book side on the international, both in the parent bank as well as in the subsidiaries, would there be a significant amount of loan book which is backed by the collateral of shares?

The loan book in the overseas branch industry will include loans which are backed by shares. So that is a part of the overall portfolio. And we have various activities which are (inaudible) on all the loans that we have.

And would this again be Indian promoters only, Indian shares only.

This will largely be Indian exposures. As we said earlier, close to 90% of the Bank exposures are loan exposure in the overseas branches is to Indian (inaudible) countries. And about 80% of the UK and Canada loan book is again exposure to India.

Okay. Any ballpark number in terms how much of the book would be against collateral of shares?

There is no specific number asset that we have given on that.

Okay. One question on the growth in (inaudible) addition. We have seen a run rate of about INR12m on a quarter-on-quarter basis. Do we expect that run rate to come down in the future because the old legacy book of [SDP] and on the other assets which we are no longer booking or running down? Or we should expect that kind of run rate to continue?

I think, indeed, (inaudible) one (inaudible) they would actually be beneficial for this book winding down. But there is some period who would wish this would wind down. This won't happen immediately; I mean three, four quarters. But at least I think one good thing to assume is that one has probably seen the most of the impact that would have happened.

Okay. One last question on the employee cost. We have number of branches which have gone up from 950 to 1,400, whereas, the employee cost on a year-on-year basis have actually shown a decline. So what's driving this?

No, one is that we have been driven with our various productivity measures, in fact, we have been able to find employee within the existing [Qatar] employees themselves who could man the new branches. So we haven't had to do really too much of wholesale recruitment to man the new branches. We were able to manage within our [motivated] existing employee base.

The second is in the past our increment level used to be between 15% and 17% and so on. This year, as we had said in April (inaudible), our increment level on an average was around 7.5% to 8%.

Okay. Thanks a lot.

Thank you very much, sir. Next in line we have Mr. [Rukadana] from UGN Mutual Fund. Please go ahead, sir.

Ma'am, given the fact that some of the bond which have been issued by ICICI Bank according had some discount in the overseas markets, does it not make sense for the Bank to deposit $2m of cash lying in the UK subsidiary or to buy all these bonds at (inaudible) which are appearing to be very attractive right now? And also can you give a sense of liquidity and (technical difficulty)?

Indeed, actually (inaudible) make a whole lot of profitable investment option to go ahead and buy those bonds. But you know there are regulatory restrictions that subsidiaries cannot real invest in the parent bonds. Most of these bonds are issued by the parent company.

And I'm thinking of some color on what would prevent the parent from buying all these bonds in the overseas market [now]?

Yes. But these (inaudible) we may use some amount of our liquidity there but, given the right market conditions, it will (inaudible) for a couple of days. Again, there would some (inaudible) buyer or seller (inaudible) who would go ahead and spoil the market. So actually in the market (inaudible) is irrational, but I'm not sure whether this will finally give much liquidity to the market as such -- I mean become better stability to the market as such.

Ma'am, this is about your insurance ventures. Ma'am, when do you see operations breaking even at actually the net level as against the [BNP] level that we normally give out?

And, secondly, when do you see this company actually getting listed and what will be the bare level -- minimum level of valuation that you would be looking forward to as and when you would like to -- like the company to get listed?

The breakeven level depends on the rate of growth. And I think that in the current scenario [making us] make a forward-looking statement into the future. So I don't think I would like to make that.

In terms of listing the company, well, that option exists but clearly we would want to do it at a time when markets are more rational and more stable. And therefore, in that context, the answer to your first question, the minimum level of valuation that (inaudible) current level that's really quite difficult to talk about. So I think just that at the current market levels, I don't think we will get fair value. (Multiple speakers).

(Inaudible), what is the proportion of business -- the overall business (inaudible) that you want to capture to your own subsidiaries and the proportion of your total business of (inaudible)?

No, we don't go by setting a target of what proportion of business should come from what segment. We just look at every segment and see what are the growth opportunities there and how to make sure that those growth opportunities are proportioned, actually (inaudible) are determined as a consequence. So we'll continue to follow our strategy in all the separate segments of business and finally what proportion it comes to will (inaudible).

But do you have to maintain risk management measures which would (multiple speakers) to a particular level of -- on the balance sheet size?

So some internal risk management process where we have actually very, very tight risk management processes. And, therefore, we -- it's not just like what proportion of business in that sense we have. We have various limits even in terms geographical lines (inaudible) that we can take. That is (inaudible) exposure then made to a particular country to a particular region and so on. And so that measure is measuring the management, the risks are quite big and quite well defined.

Then, thanks a lot, ma'am.

Thank you.

Thank you very much, sir. There are no more questions. Next in line we have Mr. [Josef] from [ICSES]. Please go ahead, sir.

Hello, this Josef from Barclays. I just have one question on the liquidity position of ICICI UK. Firstly, how much does deposit change this quarter in [ICSU] UK? And how much does wholesale funding take in the total funding mix? Thank you.

In terms of the total deposits, at June 30 were about $5b, which is -- about $5.1b, which is about $4.9b as of September 30. And in terms of the wholesale borrowings, the total borrowings are about $2.5b. That includes the long-term debt that we have raised in the form of bond issuances and the syndicated loans.

Thank you very much, sir. Next in line Mr. [Undev] from Merrill Lynch.

Hi, good evening. Just a couple of questions again on your overseas book. One, is there any ballpark internal target as far the growth in overseas advances is concerned for the full year '09?

And, secondly, has ICICI raised any money in the offshore market in the [big three] currencies in this particular financial year? If yes, how much would be that number? Thanks a lot.

No, in fact, we don't get driven by a growth target in the business. As I explained earlier, really the growth -- the strategy that we have worked out now is that we would grow the business on the basis of the money that we are able to raise through our retail deposits. Now those retail deposits continue to flow at a robust rate, both in UK and Canada, and that is where they are grow. But we will mainly grow or calibrate our growth rate on the basis of the retail deposits' growth. In fact, we haven't made any issuance of a syndicated loan or bond since the last October.

Just to follow up, has there been any -- would you be in a position to disclose and bilateral borrowings in the [GP] markets?

We won't be able to disclose that but, yes, we have bilateral borrowing both in our subsidiaries and our branches.

Thanks a lot.

Thank you very much, sir. Next we have Mr. [Shrikan] from Nomura Securities. Please go ahead, sir.

Hi. I do have one from the international business. One is in terms of that losses you have taken the AFS book which have been taken direct to the reserve but not related to the focus of Tier 1. I wanted to know if there is any pressure -- greater pressure would be that if the loses stay on the book for x amount of time, then it has to (inaudible) Tier 1 capital.

No, there is no access -- no sense -- timeframe which is there. But obviously there is a temporary impairment which gets taken through the reserve. So this (inaudible) valuation which is done by the management and confirmed by the auditors of the portfolio. And as long as we can do the impairment, it is adjusted in the reserve.

So the fact that (inaudible) and the auditors feel that the impairment is not temporary and become (inaudible) in nature, then you have to give it back (inaudible).

What is (inaudible) before? Is it (inaudible) Tier 1 capital?

The $40m is [the full tax] number for this current half year. And as of March 31 it was close to about $100m both sides.

Okay, (inaudible) [40m]?

Yes.

Second thing is on the funding of the UK book. I think in the initial part of the call it was told that the net borrowing of $1.5m in the next six months.

No, that was not for the UK book. That was for the international branches.

Okay, that's for the international branches. So essentially for you to maintain the same level (inaudible) book as it is now, you just said you'll have to raise some [particular] deposits of $1.4m for the next six months (inaudible).

No, that's not the point. The point is that to succeed our growth, we have to flow retail deposits. We don't have to be waiting for deposits really to fund any of our increment obligations. In fact, most of our debt that has been raised in the UK book is actually much more long term and not -- no substantial increment is due in the near future. And the deposit flow continues to be strong. And we have, of course, enough liquidity vis a vis that deposit flow.

Ma'am, actually I didn't get this point. The fact there is net borrowing of $1.5m, so use of credit to the wholesale or the retail is but not (inaudible).

No, let me break up our international operation into branches, which are part of the parent book and subsidiaries, okay. So as far as UK's concerned, UK and Canada are subsidiaries. They will not have really any major net [impairment] coming up in the near future. Their balance sheet is really comprised mainly of the retail deposits which continue to flow as they are. And that is the total funding for our growth. We don't really need any funds really to make any increments coming up in the near future because no real large increments are coming up in the near future.

As far as the branches are concerned, there is a net increment of about $1.4b due up to this -- end of this financial year. And that is (inaudible) we will have to raise funds to rebate them, but there is enough bilateral lines, (inaudible) programs (inaudible) which we are still seeing are getting renewed. And, therefore, we are quite confident that for the parent, for the entire Bank as a whole, $1.5b or $1.4b is a small number to manage for the next six months' period.

(Multiple speakers). Sure, (inaudible) obviously is a very small number. But just my confidence on the fact that the (inaudible) structures the way they are, even $1.4b (inaudible) lines that you will having. How is it done.

If you look at the last couple of quarters as well as you mentioned, and there we have been doing bilateral loans and syndicated loans. Even in the -- towards the end of September we have done a couple of bilateral transactions to raise money. So -- and this requirement is over the next six months. It's not just in the next few weeks or months (inaudible). So we believe we will be able to raise this money through bilateral or syndicates loans. In addition, we also on a regular basis do sell down our loan portfolio from the overseas branches. So that is a further option of raising liquidity which is there.

Okay, fair point. The second question was on the [access fee]. What kind of total development in the (inaudible) segment this quarter, including the home finance company?

The total disbursements will be -- is about INR43m.

Hello.

Thank you very much, sir. At this moment, I would like to hand over the floor back to Miss. Chanda Kochhar for final remarks.

Okay, well, I only want to say thank you. I think we spent a lot of time discussing most of the questions. So thank you, and happy Diwali to all of you.

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