Contrary to belief that it was under withdrawal pressure, India’s top private sector lender ICICI Bank on Sunday said that it has retired about Rs 24,000 crore expensive deposits to reduce cost and improve its bottomline. Pooh-poohing suggestions that it was under withdrawal pressures, ICICI Bank’s Joint Managing Director Chanda Kochhar said, “We ..have retired wholesale deposits of Rs 24,000 crore in the last six months. At the same time, we have increased the Current and Savings Account (CASA) by Rs 3,000 crore in this period.”

“It is our conscious decision since last year to reduce our reliance on bulk deposits and shift our focus on retail deposits to reduce our costs of carrying money,” she added.

CASA as percentage of total deposits had increased from 25 per cent in last September to 30 per cent this September and it was something that one should go by in terms of customer confidence and low-cost deposits, she added.

On reports that the bank, which fell prey to a spate of rumors casting doubts about its financial health, Kochhar said in a telephonic interview from Chennai that “on the contrary, the financial health of the bank is only improving”.

“We have shifted our focus on retail deposits and they are on the rise. During the one year ending September, retail deposits have surged to over 52 per cent of the total deposits from less than 50 per cent and bulk deposits have come down to 48 per cent from over 50 per cent,” Kochhar, who is also Chief Financial Officer of the Bank, said.

As a result of slew of measures, ICICI Bank has increased its Capital Adequacy Ratio to 14.2 per cent from 13.2 per cent, she said claiming that “we have probably the highest CAR among banks in the country”.

Elaborating, Kochhar said, “ICICI Bank’s networth is now about Rs 50,000 crore…precisely Rs 49,000 crore (up from Rs 43,000 crore in the first quarter of the current fiscal).

When we talked a month back, our CAR was 13.2 per cent and now it is 14.2 per cent because we have raised hybrid capital.”

Asked as to how much of such resources were raised during the last one month, she said, “We have not raised any thing during the last one month. Three quarters of a billion (USD 750 million or about Rs 3,750 crore) I think we raised a few months back and which we have now permission to call as recommended Tier I or Tier II hybrid to compute as capital adequacy.”

Stating that the Bank had raised Rs 20,000 crore last year, she said, “Our strategy was not to go over high-cost deposits. Clear intent was to the lower cost of funds, as we understood that there was slowdown happening. We wanted to slow down the whole process and as a result of which the bank has cut down exposure on high-cost funds.”

Asked about the appropriateness of the timing of cutting down the bulk deposits in the face of liquidity pressures being faced by the banks including ICICI, she said, “Wholesale deposits are relevant but a matter of choice. This has nothing to do with rising interest rates in September or October. This is a strategy we have been pursuing for the last one year. We will pursue as we go forward…”

“Our intention is to increase CASA,” she added and pointed that the Bank’s operational profits had gone up by 42 per cent during the July-September quarter.

source: Financialexpress

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