IDBI Bank Limited balancing rapid growth with profitability

1
Presentation
IDBI Bank Limited- balancing rapid growth with
profitability
October 2001
2
Agenda

• Key value drivers
• Business Review
• Retail banking
• Corporate banking
• Financial performance for H1FY2001-02

3
Professional skilled management -fully in place
-will continue to be key competitive advantage
Ajay Bimbhet, 46 yrs. Head Retail Banking, 24 yrs
of experience at ANZ Grindlays-India, London
Gunit Chadha, 40 yrs. MD CEO, 16 years of
experience in Citigroup-India and New York
Janak Desai, 36 yrs. Treasurer, 12 years of
experience at ABN-Amro and Standard Chartered
Vinit Kohli, 45 yrs. CFO, 20 years of experience
at HSBC and ANZ Grindlays
Sushil Kak, 45 yrs. Head Corporate Banking, 25
years of experience at Deutsche Bank and SBI
M. S. VermaChairman of the Board of
Directors Ex-Chairman, SBI
Neeraj B Bhai, 45 yrs. CTO, 23 years of
experience at SBI, ICICI and Sharekhan
Pradeep Patil, 48 yrs. Head Audit, 24 years of
experience at Union Bank of India
Prakash Jaodekar, 45 yrs. Head Risk Management,
20 years of experience at SBI-India and Frankfrut
S Kumar, 38 yrs. Head Operations, 12 years of
experience at Standard Chartered-Dubai, HDFC Bank
and Bank of America
Ulhas Deshpande, 40 yrs. Head HRD, 19 years of
experience at Parke Davis and Tata-AIG
4
Technology revamp executed as promised - focus
on back-end to create long-term capabilities
FINACLE Infosys Core Banking System Implemented
Corporate Banking
Retail Banking
Treasury
Support- Back-end
Trade Finance
Credit Rating- CRISIL
ATM Switch - Oasis Platform Implemented
Front Office - Reuters
Networking- HP
Implemented
Kondor
Q4FY02
Implemented
Cash Management- Cash Tek
Retail Lending
Back-office - ITMS
FTP systems
ALM systems (Implemented))
Implemented
Q3FY02 Apnaloan.com
Implemented
Fixed Assets systems
Payables systems Q4FY02
Internet Banking - Bancaway
Trade Finance - Finacle
Implemented
Implemented
Mobile Banking - Hexaware
Implemented
Telebanking - BK Systems
Implemented
5
Retail bank progress report products,
customers, channels and alliances

• 45 cities, 64 branches/ECs, 110 ATMs
• 3.7 lac retail customer accounts-adding
• 15000 accounts per month
• Savings bank deposits of Rs.400 crores
• Retail assets -over 60 in home loans
• 44000 phone banking customers across 26
• locations in India
• 5000 mobile banking customers
• Launched internet banking
• Over Rs. 1500 crores of Third Party Dist.
• (RBI Bonds/MFs)- Rs. 600 crores in H1FY02
• Set up regional processing centres in South,
• North and in West
• Tied up with Tata-AIG to distribute insurance
• Products
• Tied up with India Post for loans against
• Postal savings and for rolling out ATMs
• 1000 employees- inward talent migration

In next 6 months

• Project Speed (75 cities, 100 branches,
• 350 ATMs)
• Retail asset roll-out- entire retail assets
• infrastructure including sales, service and
• collection to be in place
• Roll-out of advertising and communications
• strategy
• Ramp up of sales drive on the back of strong
• operations
• All regional processing centres
• will achieve full processing capability
• Launch of debit card in Q4FY02
• Tie-ups for online broking

6
Leading indicators- the right retail trajectory
Retail Accounts
Retail Deposits/Total Deposits
000
Low Cost Deposits/Total Deposits
Cost of deposits
7
Operational productivity will support scalable
retail operations

• Centralization of retail operations to be
  completed by Q4FY02
• Initial unit customer acquisition cost (welcome
  pack, ATM, envelope etc.) reduced by over 50
• Effective central channel management for all
  delivery channels (phone banking, internet
  banking etc.)
• Retail assets operations being centralized
• Trade finance operations to be centralized by
  March 2002
• Process/operations improvements to lead to direct
  customer benefit
• Online tracking of customer deliverables
• Account statement/ Demat statement/ value of
  demat holdings on customer e-mail ID
• Strong cost management for all consumables
• Cost/income ratio will increase in H2-FY02 on
  roll out of project speed
• Target to achieve 50 cost/income ratio by
  FY03/04

Cost / Total Income
8
Corporate assets- portfolio quality upgrade -
with significant growth
3261
2466
78
64
1097
302
92

• Corporate assets growth of over 50 during last
  one year after considering aggressive exits
• 92 of incremental credit utilization in assets
  rated A and above
• Portfolio rated below BBB down to 6 from 12
• Total revenue impact of portfolio quality
  upgrade over Rs.100 crores- already fully absorbed

9
Aggressive NPA recognition and provisioning to
continue..
New Credit Risk Regime
Provision Cover

• First bank in India to adopt 90 days overdue norm
  for
• classification and provisioning of NPAs
• Target to reach over 50 provision cover level
  by
• March 31,2002

10
Strong growth in net interest margins
With quality asset build-up and aggressive
liability focused strategy, net interest margins
improved by over 50 basis points over last six
months
11
In next six months, IDBI Bank will leverage its
infrastructure to pursue aggressive growth, both
on assets and liabilities
Product scalability Home loans, Auto loans,
personal loans, loans against securities,
Debit Cards Channel expansion Internet
banking, phone banking, 350 ATMs Geographic
scale 100 branches in 75 cities Asset
growth Corporate assets growth
momentum Multifold retail asset expansion-
portfolio buy-outs Liability acquisition Cash
Management Services for current
accounts Aggressive sales drive for retail
liabilities
12
Profitability review
13
Comparative balance sheets
14
Deposits
Rs. in crores
15
Customer assets
Rs. in crores
16
Key performance ratios
As on date
17
Safe Harbor
Except for the historical information contained
herein, statements in this release which contain
words or phrases such as will, aim, will
likely result, would, believe, may,
expect, will continue, anticipate,
estimate, intend, plan, contemplate,
seek to, future, objective, goal,
project, should, will pursue and similar
expressions or variations of such expressions may
constitute "forward-looking statements". These
forward-looking statements involve a number of
risks, uncertainties and other factors that could
cause actual results to differ materially from
those suggested by the forward-looking
statements. These risks and uncertainties
include, but are not limited to our ability to
successfully implement our strategy, future
levels of non-performing loans, our growth and
expansion, the adequacy of our allowance for
credit losses, our provisioning policies,
technological changes, investment income, cash
flow projections, our exposure to market risks as
well as other risks.IDBI Bank Limited undertakes
no obligation to update forward-looking
statements to reflect events or circumstances
after the date thereof.