ICICI Bank Limited
Q3 2013 Earnings Call Transcript

Published: 31 Jan 2013

[Operator:]

Ladies and gentlemen, good day, and welcome to the ICICI Bank Q3 FY '13 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand over the conference to Mr. N.S. Kannan. Thank you and over to you, sir.

[N. S. Kannan:]

Thank you, good evening all of you. Welcome to the conference call of the financial results of ICICI Bank for the quarter ended December 31, 2012, which is the third quarter of the current financial year 2013, that is Q3 of 2013. As always, I'll start, and my team will revolve around 4 broad areas

[Operator:]

[Operator Instructions] We have the first question from the line of Mahrukh Adajania from Standard Chartered.

[Mahrukh Adajania:]

I just wanted to know that CNBC and other TV channels are flashing some comments on expectations that most of the management is guiding to margin improvement. So how would that be possible enough following the rate environment? I know you have a lag in repricing, but if you could explain in better detail.

[N. S. Kannan:]

Yes, Mahrukh, the outlook continues to be what I had articulated in my earlier calls, that margins, we expect them to hold the margins, and actually, continue to improve them, which we have done in the last couple of quarters as well. The factors which we believe will work in our favor in the short term are the international net interest margins. If you remember, we have gone up to about 1.4% to 1.5% a couple of quarters back, but because of the excess liquidity we were carrying in October for the redemption, our margins had come down to about 1.22% in the previous quarter, and in Q3, to about 1.31%. So we do believe that the normalized level for the kind of business we are doing would be more like 1.4% to 1.5%. So that is going to clearly give us a benefit in terms of overall net interest margins. Even on the domestic lending, we will continue to look at protecting the margins. So our outlook of, over the medium-term, improving our margins will continue.

[Mahrukh Adajania:]

Okay. But just on the domestic front, if base rates are cut, how will your margins behave like?

[N. S. Kannan:]

Yes, base rate cutting is actually in our hands. So whenever -- we will look at cutting our base rate when we see a sort of moment in our deposit rates. And if we see a moment in deposit rates downwards, we will be happy to cut the base rates. But it will really depend on the deposit rate moment. So in doing so, our endeavor would be to protect the domestic margins.

[Mahrukh Adajania:]

Okay. And any [indiscernible] pressure on savings deposits growth, any medium term outlook on that?

[N. S. Kannan:]

On savings bank?

[Mahrukh Adajania:]

Yes, growth in savings deposit.

[N. S. Kannan:]

Yes, the outlook for us is like in the subsequent quarters, we expect the numbers to be higher than what we have seen in the third quarter. In the third quarter, our incremental customer acquisition has been quite robust. We have looked at the numbers, we don't have any concerns on that. Including the fact that during the quarter, the accretion on the daily average basis savings account has been quite positive. That's why we have been able to maintain the daily average CASA ratio at 37.5%. So those are the sort of positives. During the quarter, we also had to contend with the phenomenon of it being a festive quarter, because of this there has been some movement of deposits towards consumption. And that is something which we had to contend with during the quarter. But as I mentioned earlier, we are quite happy with the incremental customer acquisition. We are happy with the daily average accretion to savings account, and we do believe that we will be able to increase the savings account accretion in the coming quarters.

[Operator:]

We have the next question from the line of Vishal Goyal from UBS Securities.

[Vishal Goyal:]

My question is actually about the loan growth which we are seeing for next year, and some color on the same, how you think it will be coming through projects or retail or how will it be break down for the loan?

[N. S. Kannan:]

Yes, see, our outlook for the loan growth in the next year, as we had said earlier will -- on the domestic side will continue to be ahead of the systemic loan growth. That is something which we believe that we can achieve. Within the loan growth, the focus would be, on the corporate side, on the working capital loans, which we have seen some pick up. We will also seek to grow the retail even better because if you look at our performance of consumer loans over the last 3 quarters, on a year-on-year basis, we have been improving the growth somewhere about 10% to 14% to 17% now. In the medium-term, we do believe that we have an ability to grow it at about 20% plus. So those 2 areas would be clear focus of the [indiscernible] Project disbursements, et cetera, will really be a function of whether new projects, large new projects, do get announced or not. As of now, we do believe that for the next couple of quarters, we will continue to have disbursements on projects based on the past sanctions we have done. Beyond that, we'll have to really wait and see how the incremental sanctions really develop. On the overseas side, it's going to be pretty much a function of the appetite from the borrowers in terms of their preference of foreign currency loans over rupee loans, depending on the relative industry regimes, plus our ability to raise money market funds. So that, we will calibrate as we go along. But that could -- the outlook for growth on that segment is going to be obviously less than the domestic loan growth rate. So those -- that is the sort of color I can give you today for the loan growth for the next few quarters.

[Vishal Goyal:]

Can we say that working capital, retail and project all will grow at pretty much the same 20% kind of rate? Would they know -- I mean I don't see anything growing faster than that. Product retail will be growing 20%; working capital, maybe around 20%; and project also would reflect the current?

[N. S. Kannan:]

Yes, see, we are a bank who starts with a very lower base of working capital. So normally, even if you do follow the system, our growth rate is normally higher in working capital. That's what I have seen. Project finance growth rate in the past has been much higher than the 20% news I just heard. So over a period of time it may move to the kind of numbers you are talking about. So to answer your question, yes, working capital will be 20-plus clearly. And probably retail, our endeavor would be to take it to 20-plus.

[Vishal Goyal:]

Okay, okay. And one more question on the life insurance company. I think the accounting profit definitely seems to be plateauing. And what is the outlook here? Because I think -- I don't know, the big amount of -- big margin business, I think, is definitely behind, and new business is definitely coming at low margins. So what is the outlook here?

[N. S. Kannan:]

In the foreseeable future in terms of next few quarters, we do expect them to continue to deliver a profit, which will be like a 30% return on the invested capital. So that kind of numbers we do see. Yes, there'll be mutual growth compared to the kind of sharp growth we have seen in the past because we have achieved towards that high level of profitability. Today, we look at it as the next few quarters, getting about INR 750 million approximately of dividend every quarter from that company is something you should expect. So that is the way we are sort of running the company. And this quarter we had a bit higher number at about INR 900 million. But in a ballpark in that range for the next few quarters on a regular basis is something we are expecting.

[Vishal Goyal:]

Is it -- sorry to ask this again. On the accounting profit, will it be tracking the AP growth? Will it be tracking the banking profit because banking profit will be growing much faster.

[N. S. Kannan:]

Yes, we do believe that the banking growth will be faster than the Life company profit growth. And -- but that is something that has already happened in the last few quarters, but that trend will continue.

[Operator:]

Your next question is from the line of Kashyap Jhaveri from Emkay Global.

[Kashyap Jhaveri:]

I have a question on your international book. The growth has sort of plateaued, as you said, in constant currency terms in this quarter on a sequential basis. Even if I look at Y-on-Y business, probably the book on constant currency basis would have remained stable or would have declined. Commensurate with that [indiscernible] the numbers which come from RBI in terms of external commercial borrowings, in the last 2 months we have seen by far the highest ECB rating by the Indian corporates. So what is the view on that business, and particularly when other banks are sort of getting aggressive, why are we being a little cautious on all -- or why has our loan growth have been modest on that front?

[N. S. Kannan:]

Our loan growth has been modest on that front because our prepayments out of the past have been very strong for us. If you remember, we had articulated earlier that in this financial year, we levered a payment of close to $2.5 billion from the opening book, and that is something which is playing out. So on the liability side, if we look at it, we had a large bond prepayment of about $2.5 billion. So for us it's starting with the larger book. And even if you do a $2.5 billion kind of incremental disbursement, the book will stay flat. So we are just going through that phenomenon. But in terms of our ability to access resources has only approved today, given this cause from a global perspective. So money is available. The way we are looking at this disbursement [ph] is that it has to be closely linked to our domestic corporate strategy because largely this corporation is borrowing funds, financing [ph] loans through this book is only domestic corporate, so it has make sense from a strategy perspective of funding domestic corporates. Second, it has to make sense from a fundraising perspective. And as I mentioned earlier, our fundraising is quite all right today. So we have to calibrate it depending on the global bond rating environment. Third, is that we are quite disciplined about doing at least 1.4% to 1.5% margin on the incremental business. So I would say that these 3 will build the boundary conditions under which we will grow. So apart from that and our ability to do the business, the demand is not really a problem. These 3 boundary conditions will have to be satisfied for us to expand this book. And that's the way we look at this book.

[Kashyap Jhaveri:]

So if I look at your peers in the same business on the international front, they have actually a slightly bigger sized loan book than what you have at this juncture. And that loan book has sort of grown at about 20%, 30%. But if I take a look at margins, sort of you would have taken over them in terms of margins in this quarter. So I just want to understand in an e-business which is less than 140, 150 basis points we probably would not touch, unless the risk is also commensurate?

[N. S. Kannan:]

Yes, you can assume that anything which is less than 1.4%, 1.5% we will not touch at all. But the way we look at it is that we are in a situation today where our internal assets has really caught up very nicely to the sort of the best in class. So if you have to do that 1.6%, 1.7% of return on assets, I have to be achieving a 1.4%, 1.5% kind of margin on the international book. We are today at no different situation operational profitability compared to what we were about 2 years back. So that becomes a primary consideration for us to drive this business. So you can assume that, that will be the philosophy going forward as well.

[Kashyap Jhaveri:]

And second question is on, you must be looking at sort of data which comes also from RBI, and you must have your own sort of associates in the investment market. What's your outlook on the kind of borrowers there that one can see in the excellent commercial borrowing market? Has the quality deteriorated? Because we see a lot of infra [ph] names and power sector names now in the industrial market, which probably in the local market we probably wouldn't have like them in the bank's loan book. So what's your outlook over there?

[N. S. Kannan:]

No, no. It is -- the quality has not really changed really.

[Kashyap Jhaveri:]

I'm not asking for you. I'm generally asking only from an industry perspective.

[N. S. Kannan:]

[indiscernible] also. I would really look at this business foreign industry as less -- as being quite cyclical depending on the domestic interest rate regime. So in times like this, where you had high domestic interest rate, borrowing money through ECB route even on a fully hedged basis makes more sense, [indiscernible] the economics in that manner. But going forward, depending on what happens to the domestic interest rate regime, this situation can change. So we have to really look at the cyclical business, depending on the flavor of the market, and differential interest rates. And so quality to me is -- I'm not seeing any difference for the industry as well.

[Kashyap Jhaveri:]

Okay. Just as a continuation of the comment that you made. If you could just help us with in terms of borrowing costs for corporate overseas. What could be latest spreads over LIBOR and the ForEx hedge cost?

[N. S. Kannan:]

See if you look at earlier, 5 year, MIBOR type of thing, today's will be about 6.5%. So we are really talking about a 6.5% LIBOR swapping to 6.5% on a MIBOR basis, plus you add the credit spread. So it's really a good corporate, that's what's called cheaper than doing on domestic borrowing.

[Kashyap Jhaveri:]

You said 6.5% is the total. Is this cost including hedging?

[N. S. Kannan:]

Yes, at LIBOR.

[Kashyap Jhaveri:]

Plus LIBOR?

[Rakesh Jha:]

[indiscernible] swap plus LIBOR.

[N. S. Kannan:]

Swap plus LIBOR. Then you start depending on the credit rating of the company.

[Rakesh Jha:]

That would be from 300 to 500 [indiscernible] .

[N. S. Kannan:]

500, and if you look [indiscernible] the ECP guidelines today for 5 years, it is LIBOR plus 5 caps. So you have to look at it between 3% to 5%, as Rakesh mentioned, LIBOR adding 6 .5% on MIBOR basis. And for several corporates, it does make sense today.

[Operator:]

[Operator Instructions] We have the next question from the line of Manish Karwa from Deutsche Bank.

[Manish J. Karwa:]

My question is on your staff cost. Sequentially, if I look at it on an absolute basis, your staff cost if coming down. And even your cost-to-income on an overall basis have declined despite the fact that our retail disbursement and retail loans have been growing. Now is it just because of the bonus provision that will get corrected in the fourth quarter? Or we should read something else on the cost-to-income front?

[N. S. Kannan:]

The cost income front, there are 2 reasons for ratio coming down. On the denominator impact, our incomes as you have seen, have been quite robust, including some of the areas like Treasury income. We had a very healthy year-on-year and sequential movement. So that has really helped in terms of the denominator impact on the cost-to-income ratio. If you really look at the numerator impact, I don't think there will be any bump up in the fourth quarter on account of bonus or any other bonus type of expenditures. That may not be there. But the variations we are looking at quarter-to-quarter in terms of staff expenses have been predominantly on account of pension valuation, which does get done based on several parameters. So that is the only variation we see. Apart from that, it has been a smooth kind of numbers across quarters. So I don't -- there is no specific pattern beyond the 2 specifications I talked about.

[Manish J. Karwa:]

Okay. So going by what you're saying, most likely the cost-to-income should sustain at around 39%, 40% range?

[N. S. Kannan:]

Yes, see, as we have said earlier for the year as a whole, we still want to be between 41% and 42%. That's the kind of numbers we have talked about. As of now, I would stay with that. And if we are able to prove it, it is well and good.

[Manish J. Karwa:]

And also one more question on your overseas banking subsidiaries. Despite things getting better in the overseas market, our ROEs in those subsidiaries still continue to remain fairly low. Now over the next 1 or 2 years, do we see ROEs in those businesses improving or we will be saddled with these low ROEs for a pretty long time?

[N. S. Kannan:]

Our endeavor would be to improve the ROEs over a period of next 3 years to anything between 10% and 15% depending on the geography. But organically, expanding the loan book to achieve that is going to be quite difficult. So what we will seek to do is through a combination of identifying India linked, trade type of opportunities, we will grow the book. At the same time, we will also look at regulation taking dividend from those geographies. And also look at -- also incorporate capital rationalization with the approval of the respective regulators. So it has to be a combination of a little bit of organic growth in our 2 areas, which fits in with our strategy, and a little bit of dividend and capital -- dividend -- getting dividends and a bit of capital rationalization subject to regulatory approvals. We think that this combination of these 3 things will only lead to achieving an acceptable ROE. But I just want to assure all of you that this is something which we continuously are focused on in internally and continuously discussing it. So hopefully, we'll be able to push those numbers to higher levels from where they are today.

[Manish J. Karwa:]

And lastly, what would be your outlook on fee income? That number has just continuously remained pretty low on a growth perspective.

[N. S. Kannan:]

Of fee income, yes, the growth was only about 4% on a year-on-year basis for the quarter. The outlook in the medium term is to endeavor to get the growth [ph] close to the balance sheet growth. That sort of continuous. That outlook in the medium-term continuous. In the short term, we would continue to push things like ForEx, CapEx and banking and third party [indiscernible] distribution on the retail side. Those would be the areas. On the corporate side, given that the project new -- big, new project sanctions are still not happening, we would still have a weakness in that particular front-end fee type of revenue stream. So we are quite prepared for that. And then we're trying to push all the other line items to get to close -- to get the growth close to the balance sheet type of growth in the medium-term. So that's the kind of outlook we can see.

[Manish J. Karwa:]

Okay, so next year, fiscal year '14 or fiscal year '13, hopefully we should see a much better growth, which will be much closer to balance sheet growth?

[N. S. Kannan:]

Definitely a better growth. But depending on the environment we'll have to assess whether we are able to do these balance sheet kind of growth levels. But definitely much better growth that we have so far this year.

[Operator:]

We have the next question from the line of Abhishek Kothari from Violet Arch Securities.

[Abhishek Kothari:]

I joined the call late. Could you give me the CDR in pipeline?

[N. S. Kannan:]

CDFRS, what we had mentioned was that we have about INR 9 billion to INR 10 billion of our loan yet to be restructured. We would have expected some of that restructuring to happen in the third quarter itself, but because of the packages being worked on out various stages, we could not implement it. So that is the number we are seeing happen over the next quarter or so. So that's the number we have.

[Abhishek Kothari:]

And the current quarter, the slippages there? I mean, just run me up -- run through the break up of NPLs?

[N. S. Kannan:]

Current quarter, we had a gross -- additions to the gross NPL of about INR 8.5 million we had. And we had about INR 5.7 billion of deletions leading to a net NPL ratio of 0.64%.

[Abhishek Kothari:]

So recovery, where to that you know?

[N. S. Kannan:]

INR 5.7 billion.

[Abhishek Kothari:]

Total?

[N. S. Kannan:]

Yes, for the quarter.

[Abhishek Kothari:]

And just wanted to know this INR 3.5 billion that you added to restructure, what was the largest account and the sector?

[N. S. Kannan:]

We don't give specific largest account numbers. But you could...

[Abhishek Kothari:]

In terms of amount?

[N. S. Kannan:]

In terms of -- it was -- this time it was 7 [indiscernible] actually.

[Operator:]

We have the next question from the line of Rajeev Varma from Bank of America Merrill Lynch.

[Rajeev Varma:]

I just wanted to know -- you have been having this discussion I guess in the past with the Canadian authorities on their capital. I was wondering, where are you on that now? I mean, any progress? And I got a second one on the repayments on the international book. How much are the repayments for this year? I mean just -- I mean, for -- actually for this calendar of fiscal '14?

[N. S. Kannan:]

On the Canadian issue which you talked about, I can only say that we continue to discuss and the period of the next 12 months to 18 months, we are hopeful of getting something. But in between, if you remember we got a dividend payout of about INR 1 billion. We're hoping that, going forward, another INR 1 billion we can get. Depending on when they give the approval, it can come in that particular quarter. So about INR 1 billion per annum of dividend is something which we are looking at in the immediate term. But these are all regulatory discussions, so we can't be sure of the timing of such decisions. But we will continue to engage them, and we are very hopeful. That's all I can say. On the repayments on the overseas branch's book, about -- close to about $2 billion is the repayment we see for fiscal 2014. And again, you know that, that amount is matched on both sides. That is -- the elements quite match, so about $2 billion is what we'll review [ph].

[Operator:]

Your next question is from the line of Saikiran from Espirito Santo.

[Saikiran Pulavarthi:]

Sir, your capital consumption in the last 7 quarters have not been in sync with the balance sheet. Just wondering like why is it so, and then how it might pan out going forward?

[Rakesh Jha:]

Couple of things are there. One is that in terms of efficiency of capital, we have tried to get more and more of our portfolio externally rated. So that has helped. And secondly, on the -- in addition to the [indiscernible] on the market risk side, we have not seen -- we will not see commensurate increase in the risk-weighted assets as happened on the balance sheet in the site. If you saw in the current quarter the Tier 1 actually went up compared to September. The only thing to keep in mind is that typically the dividend payout will come in, in the March quarter. So in the last quarter of the financial year, we do see a more substantial drop in the Tier 1 ratio.

[Saikiran Pulavarthi:]

Okay, yes. But this quarter leads would be attributable to the fact of like what you mentioned on the rating of your portfolios in the [indiscernible]?

[Rakesh Jha:]

This quarter in specific was just the addition of the profit for the quarter. And there was actually some decline on the risk-weighted assets equally for the market risk side.

[Saikiran Pulavarthi:]

Understood. And just a couple of data core points. What will be your outstanding builder loan portfolio? And also on the auto side, what will be the outstanding dealer portfolio?

[Rakesh Jha:]

The builder loan portfolio continues to be in the region of about 3% of the loan book.

[Saikiran Pulavarthi:]

And on the vehicle loans, what will be the outstanding dealer's portfolio?

[Rakesh Jha:]

Less than 1% of total loans.

[Saikiran Pulavarthi:]

And also if you can help us with the provision break up. In terms of provision break up, the NPL provisions as a level of standard of inclusions and then other miscellaneous ones.

[Rakesh Jha:]

Of the total provisions, actually, it is -- we have made general provision on standard assets and including the increase on the restructured loans. So that was about INR 1 billion. The rest of the other [ph] provision is almost all for specific provisioning against NPL.

[Operator:]

The next question is from the line of Manish Chawdhary from IDFC Securities.

[Manish Chowdhary:]

Just a couple of questions from my side. Firstly on the asset quality this quarter, could you give us some flavor in terms of what is from corporate and how much from retail? And secondly on the fees, I mean, you had mentioned earlier that retail fees are very much healthier than corporate. Could you give us an indicator of growth rates on each of these segments if possible.

[Rakesh Jha:]

On asset quality, we actually don't give specific break up into each of the categories. But as we have said in the past and Kannan mentioned early, we have seen slippage mainly on the SME side which has been coming through in the last several quarters. Given that our overall portfolio in the SME segment is about 5% of the total loans, it doesn't impact us on an overall basis. But we have seen slippages on the SME portfolio. That has continued. On retail side, gross slippages are there but we have kind of an equal in number, which is kind of going -- getting recovered as well. So on a net addition basis, it is close to 0, but there will definitely be some gross addition and growth deletion on the retail side. Corporate side, really we have not seen any material slippage at all during the quarter.

[Manish Chowdhary:]

Secondly on the fee side, if you could give us relative growth rates on the fee income between corporate and retail?

[Rakesh Jha:]

So fee income, as again Kannan mentioned, that in the corporate side we actually would see a year-on-year decline on the fee income side. So -- which is mainly coming through the lending linked fees, the loan processing fees, indication fees. Those fees have come down, while we have continued to grow the commercial banking and FX fees. Overall, despite reasonably good growth on the effects of commercial banking on the corporate side, we have seen some decline on the overall corporate fees. For the retail fees, across various categories, the growth has ranged between 10% to 20%. And at the higher end, we have seen the 20% kind of growth on the third party distribution and FX fees.

[Operator:]

We have the next question from the line of Vijay Sarathi from Nomura.

[Vijay Sarathi:]

Is it possible for you to share the new customer acquisition per quarter? On the retail side? On the banking side?

[Rakesh Jha:]

We are not disclosing that. Generally, that's the only reason. So maybe going forward, we will look at doing that.

[Operator:]

Your next question is from the line of Sudanshu Asthana from Axis Mutual Fund.

[Sudanshu Asthana:]

I just wanted to understand the general growth which is coming in, in the credit book. If I look at 12 months, you've done a delta of almost INR 40,600 crores of credit. Out of that if I remove the overseas book which is seen because of the dollar movements of INR 4,000 crores, so your core growth is around INR 36,500 crores, out of which, the corporate book has grown by INR 21,700 crores approximately. So that's almost 60% of incremental growth. So I wanted to understand that if you look at this number, which is a 33% growth on the corporate book, how much has come from disbursements made for projects that were sanctioned? How much has come through new loans being disbursed? And how much has come through working capital? Because if I remove the international book then you have a 20% growth in credit. But the incremental disbursement on that part of the book, 60% comes from the corporate book. So I just wanted to get an idea on that. And the second part of the question is that, your housing volumes are increasing more and CVs have fallen. So will retail growth be dominated by housing and non-CDR 2?

[Rakesh Jha:]

On the 9-month growth in the corporate loan book during the previous call in September...

[Sudanshu Asthana:]

I'm thinking the 12-month period. I mean December to December, 12 month volume.

[Rakesh Jha:]

Great. So we had said that during this period, during the year, we typically do a reasonable amount of short-term lending to corporate, which matures out before the end of the financial. So the growth that you see during the year would typically be higher than when we end up for the year. So for the year, we are looking at corporate growth to be in the region of 20% to 25%. So the growth that we have seen till now, we have seen increase in the short term loans to the higher-rated clients. As Kannan mentioned earlier, we have seen reasonably good growth on the working capital side of it. Of course, our overall share in the fan base working capital has been on the lower side in the past. So we have seen good growth there. On the project finance, from the past sanctions we have seen disbursements coming in. Really nothing much on the incremental side. So it has been a mix of, I would say, these 3 elements of working capital or the other short-term loans that we do, which are less than 6 months or 1 year in maturity. And the increase in the project finance disbursement from the existing...

[Sudanshu Asthana:]

Could you give us a number on how much has been disbursed on past projects over the last 12 months rolling? That could you give us a fair idea about what has happened to short-term loans or working capital.

[Rakesh Jha:]

Yes. So we actually do not give specific breakups into that -- those...

[Sudanshu Asthana:]

But on a percentage basis if you would just tell us how much it was.

[Rakesh Jha:]

We don't give a specific number, but as I said that overall the working capital book would've grown at higher than the growth that we have seen for the corporate book. If you are comparing, say, March to December, then the one more element which will be there is that in March we had sold down a part of our corporate loan portfolio as part of IDBC. We have done about INR 45 billion, which came back into the portfolio in September quarter. So that increase is, in that sense, not an additional credit that we had taken, but that was something which had sold down as part of IDBC for 6 months and came back in the book. That was the other element. And project finance, as I said it's only happening from the past disbursement. So that growth on that book will not be more than 20% or so.

[Sudanshu Asthana:]

Could you just comment on the retail, please?

[Rakesh Jha:]

Retail, yes, you're right that, going forward, if you look at the near term, the growth will be driven largely by mortgages and then the car loans. On the commercial vehicle side, clearly we have seen that incremental disbursement volumes have come down for us as it has happened in the market as well. So while we would be quite keen to grow the commercial vehicle portfolio, but in the current environment, in the near term, it does look like that the book, the portfolio growth will be lower than what we see on mortgages and passenger cars.

[Operator:]

We have the last question from the line Hatim Broachwala from KARVY Stock Broking.

[Hatim K. Broachwala:]

There are a lot of competition increase in the retail segment. So are we worried about compression in margins in this segment?

[N. S. Kannan:]

Yes, it continues to be a very competitive segment. And actually we have seen that play out in the last 3 quarters. Some of the banks have been aggressive on the mortgages side and the automobile loans. But overall perspective, we have been looking at the incremental yields, but we do believe that we'll be able to maintain the margins. The approach we have taken is that, in the automobile segment for example when it was very competitive, we thought that rather than chasing the market share, we should just continue to look at our volumes. And if we are satisfied with some base level of volumes, it is quite fine. And also, we should remember that we are operating at the market share of about 8% to 10% across products. To be able to maintain this kind of market share and probably slightly to grow it to be in line with the lower 20% growth aspiration, we don't have to really chase market share by undercutting. So I think given our aspirations of about 20% in retail and given the fact that our market share is lower at about 8% to 10%, and given that we also are pushing an agenda of margin improvements for the bank as a whole, we don't think we need to really compromise on volumes.

[Hatim K. Broachwala:]

Also, we're seeing a good amount of improvement in the quality for past many quarters? How do we see going ahead?

[N. S. Kannan:]

As I mentioned earlier, the provision cost is pretty much under control. We do think that earlier expectation of that being less than 75 basis points of average loans, that is something which we don't have to revise, of course. If you look at the infield ratios are very comfortable. Again, we don't expect that increase to sort of move up significantly. The only area where have been watching closely is the restructured assets. Well, so far, that has held off very well. As I mentioned, about INR 9 billion to INR 10 billion of loans are yet to be restructured. So that is the only area where I can see some kind of addition to this portfolio. But overall when look at the performance of past restructured assets and so on, we don't have any big concerns. So I would say that it is an environment to bear. For our book we are seeing a stable asset quality. That's how I summarize it. But the need to monitor closely is very much day-to-day given the operating environment. A stable business, close monitoring, That's how I will summarize the situation.

[Hatim K. Broachwala:]

I also missed NIMs on the domestic side?

[N. S. Kannan:]

For the quarter, the NIM on the domestic book came in at 3.47%.

[Operator:]

I would now like to hand the floor back to Mr. N. S. Kannan for closing comments. Over to you, sir.

[N. S. Kannan:]

Yes, thank you. And thanks to everyone for joining the call. And my team and I will be available to take any further questions off-line. Thank you, bye-bye.

[Operator:]

Thank you, sir. Ladies and gentlemen, on behalf of ICICI Bank, that concludes this conference call. Thank you for joining us. You may now disconnect your lines. Thank you.