icici bank ltd share price Management discussions

OPERATING ENVIRONMENT

Global growth momentum is expected to slow from 2.7% year-on-year in calendar year 2022 to 2.1% in calendar year 2023 led primarily by a weaker outlook in developed market (DM) economies with risks to the outlook being to the downside. The lagged effect of monetary tightening undertaken over calendar year 2022 along with weakening credit markets will work as the main headwinds in terms of pulling global growth lower. At the same time, headline inflation is expected to drop-off reflecting easing in supply-side inflation pressures. However, DM core inflation remains elevated and a concern that will restrict the ability of DM central banks to turn accommodative over calendar year 2023. Risks to the global growth outlook are to the downside reflected in: (a) possibility of further strain in the DM banking sector and (b) a further escalation in geopolitical tensions.

Domestically, India recovered from the Covid-19 pandemic as the third wave started receding from January 2022. However, just when the Covid-19 pandemic was getting over, the world witnessed another major shock in the form of the Russia-Ukraine crisis, leading to a spike in commodity prices. The subsequent sanctions on Russia further disrupted commodity markets, increased volatility and uncertainty, and kept an upward pressure on inflation. Consequently, domestic inflation averaged 6.7% during fiscal 2023, putting pressure on consumption growth. Overall, Indias Gross Domestic Product (GDP) grew 7.2% in fiscal 2023 mainly driven by strong investments and exports growth.

Growth

In the fourth quarter of fiscal 2023, Indias real Gross Value Added (GVA) grew 6.5% year-on-year. Real GDP growth came at 6.1% year-on-year in the fourth quarter of fiscal 2023, taking fiscal 2023 growth to 7.2%. The notable development emerged from industry (particularly manufacturing) which recorded higher growth than implied in the Second Advance Estimates (SAE) due to a turnaround in profitability on the back of lower raw material prices. Agriculture recorded a growth of 5.5% year-on-year during the fourth quarter of fiscal 2023, the highest quarterly growth since March 2020. Services sector grew 6.9% year-on-year, mainly due to an uptick in trade and travel services. From the expenditure side, consumption recorded muted growth. Private consumption grew just 2.8% year-on-year, while government consumption grew

2.3% year-on-year. Investments, as represented by real Gross Fixed Capital Formation (GFCF), grew 8.9% year-on-year up from 8.0% in the third quarter and 4.9% in the fourth quarter of fiscal 2023 on the back of infrastructure thrust by the government and good growth in capital expenditure.

Inflation

Inflation, as measured by the Consumer Price Index (CPI), softened from 7.0% year-on-year in March 2022 to 5.7% year-on-year in March 2023, compared to an average inflation of 6.7% year-on-year in fiscal 2023. Food inflation too eased to 4.2% year-on-year, while core inflation was lower at 5.2% year-on-year. The most important factor working in favour of inflation is lower global commodity and oil prices. Given the above backdrop along with muted commodity prices, inflation estimates have been lowered to 5.1% year-on-year in fiscal 2024 as compared to 5.3% earlier. However, upside risks due to a below normal rainfall (led by El-Nino) could push the food prices higher in case of pulses and rice.

Interest rates

In May 2022, the Monetary Policy Committee (MPC) delivered its first post-pandemic hike of 40 basis points, taking the repo rate to 4.4%. More rate hikes followed: 50 basis points in June 2022, 50 basis points in August 2022, 50 basis points in September 2022, 35 basis points in December 2022 and 25 basis points in February 2023, taking the cumulative rate hikes to 250 basis points during fiscal 2023. However, the MPC surprised markets by keeping the policy rate unchanged at 6.5% in the meeting held in April 2023, while the stance remained unchanged. System liquidity reduced from an average of 6.39 trillion in March 2022 to 32.36 billion in March 2023. The transmission of monetary policy resulted in increase in interest rates in the banking system. Between April 2022 and March 2023, the weighted average lending rate (WALR) of commercial banks on fresh rupee loans increased by 169 basis points.

Financial markets

During fiscal 2023, the Rupee depreciated by 8.4% from

Rs.75.79 per USD at March 31, 2022 to Rs.82.18 per USD at March 31, 2023. With the global turmoil due to the continuing Russia-Ukraine war, the Rupee touched Rs.82.99 per USD at October 19, 2022. The benchmark S&P BSE Sensex increased by 0.7% during fiscal 2023 compared to

18.3% in fiscal 2022. The yields on the benchmark 10-year government securities increased from 6.84% at March 31, 2022 to 7.31% at March 31, 2023. The yield fluctuated during the year, with the highest at 7.62% on June 16, 2022. It cooled down to 7.29% by July 6, 2022.

Banking sector trends

Non-food credit of the banking system displayed robust growth during fiscal 2023, with growth of 15.4% compared to 8.7% in fiscal 2022, with incremental credit growth of

Rs.18.2 trillion in the year. With the latest sectoral break-up of credit data available till April 2023, credit growth was led by services (21.6% year-on-year) and personal credit (19.4% year-on-year). In addition, industry credit also showed an uptick in growth at 7.0% year-on-year. According to RBIs Financial Stability Report of December 2022, non-performing assets (NPAs) of scheduled commercial banks continued to decline in fiscal 2023, with gross NPA ratio at 5.0% and net NPA ratio at 1.3% at September 30, 2022 compared to a gross NPA ratio of 6.9% and net NPA ratio of 2.3% at September 30, 2021. Restructuring of loans for the MSME sector impacted by the second Covid-19 wave under Resolution Framework 2.0 stood at 2.3% of total MSME advances as on September 30, 2022.

Outlook

The MPC expectedly kept the repo rate unchanged at the June 2023 review. It also kept the stance of monetary policy unchanged at ‘withdrawal of accommodation. A long pause on rates by the MPC is expected, with rate cuts possible in the first few months of calendar year 2024.

STRATEGY

In fiscal 2023, 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 retail, business banking and wholesale portfolios. The Bank continued to focus on holistically serving its clients and their ecosystems. The Bank sought to maintain and enhance its liability franchise. The Bank focused on maintaining a strong balance sheet, with robust liquidity, prudent provisioning and healthy capital adequacy. The Banks capital adequacy ratios were significantly above regulatory requirements as of March 31, 2023.

Going forward, the Bank would focus on maximizing the profit before tax (excluding treasury gains) 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 Banks risk appetite and drills it down into a limit framework for various risk categories. 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".

STANDALONE FINANCIALS AS PER INDIAN GAAP

Summary

Profit before tax (excluding treasury gains) increased by 43.0% from 297.06 billion in fiscal 2022 to 424.73 billion in fiscal 2023. Core operating profit (i.e. profit before provisions and tax, excluding treasury gains) increased by 28.1% from Rs.383.47 billion in fiscal 2022 to Rs.491.39 billion in fiscal 2023 primarily due to an increase in net interest income by Rs.146.63 billion and fee income by Rs.23.14 billion, offset, in part, by an increase in operating expenses by Rs.61.40 billion. Provisions and contingencies (excluding provision for tax) decreased by 22.9% from Rs.86.41 billion in fiscal 2022 to Rs.66.66 billion in fiscal 2023. Gains from treasury-related activities decreased from a gain of Rs.9.03 billion in fiscal 2022 to a loss of Rs.0.52 billion in fiscal 2023. Profit after tax increased from Rs.233.39 billion in fiscal 2022 to Rs.318.96 billion in fiscal 2023.

Net interest income increased by 30.9% from Rs.474.66 billion in fiscal 2022 to Rs.621.29 billion in fiscal 2023 due to an increase in the net interest margin (NIM) and an increase in the average interest-earning assets.

Fee income increased by 14.8% from Rs.156.87 billion in fiscal 2022 to Rs.180.01 billion in fiscal 2023. Dividend from subsidiaries/joint ventures/associates decreased by 2.5% from Rs.18.29 billion in fiscal 2022 to Rs.17.84 billion in fiscal 2023. Operating expenses increased by 23.0% from Rs.267.33 billion in fiscal 2022 to Rs.328.73 billion in fiscal 2023.

Provisions and contingencies (excluding provision for tax) decreased by 22.9% from Rs.86.41 billion in fiscal 2022 to

Rs.66.66 billion in fiscal 2023 primarily due to a write-back of provision for non-performing and other assets, offset, in part, by an increase in contingency provisions made on a prudent basis, and provision for investments. There was a write-back of Rs.6.23 billion in provision for non-performing and other assets in fiscal 2023 compared to a provision of Rs.61.64 billion in fiscal 2022. During fiscal 2023, there were higher recoveries and upgrades from non-performing assets (NPA) resulting in net write-back of provision, offset, in part, by an increase in provisioning rate for certain categories of NPAs. During fiscal 2023, the Bank changed its provisioning norms on NPAs to make them more conservative. In fiscal 2022, the provision for non-performing and other assets also included provision on loans restructured under Resolution Framework for COVID-19.

The provision coverage ratio on NPAs increased from 79.2% at March 31, 2022 to 82.8% at March 31, 2023. During fiscal 2023, the Bank made a contingency provision amounting to Rs.56.50 billion (fiscal 2022: write-back of

Rs.0.25 billion), on a prudent basis, to further strengthen the balance sheet. The Bank held a total contingency provision of Rs.131.00 billion at March 31, 2023.

The income tax expense increased from Rs.72.70 billion in fiscal 2022 to Rs.105.25 billion in fiscal 2023. The effective tax rate increased from 23.7% in fiscal 2022 to 24.8% in fiscal 2023 primarily due to change in composition of income.

Net worth increased by 17.7% from Rs.1,705.12 billion at March 31, 2022 to Rs.2,007.16 billion at March 31, 2023 primarily due to accretion to reserves out of retained profit, offset, in part, by payment of dividend for fiscal 2022. Total assets increased by 12.3% from Rs.14,112.98 billion at March 31, 2022 to Rs.15,842.07 billion at March 31, 2023. Total advances increased by 18.7% from Rs.8,590.20 billion at March 31, 2022 to Rs.10,196.38 billion at March 31, 2023 primarily due to an increase in domestic advances by 20.5%. Total investments increased by 16.8% from

Rs.3,102.41 billion at March 31, 2022 to Rs.3,623.30 billion at March 31, 2023. Cash and cash equivalents decreased by 28.8% from Rs.1,678.22 billion at March 31, 2022 to

Rs.1,194.38 billion at March 31, 2023.

The weighted average high-quality liquid assets, maintained during the three months ended March 31, 2023 were Rs.3,234.60 billion (three months ended March 31, 2022: Rs.3,197.27 billion). The average liquidity coverage ratio was 124.13% for the three months ended March 31, 2023 as against the requirement of 100.00%.

Total deposits increased by 10.9% from Rs.10,645.72 billion at March 31, 2022 to Rs.11,808.41 billion at March 31, 2023. Total deposits increased by 8.3% from Rs.10,900.08 billion at September 30, 2022 to Rs.11,808.41 billion at March 31, 2023. Term deposits increased by 17.1% from Rs.5,461.35 billion at March 31, 2022 to Rs.6,395.79 billion at March 31, 2023. Current and savings account (CASA) deposits increased by 4.4% from Rs.5,184.37 billion at March 31, 2022 to Rs.5,412.62 billion at March 31, 2023. Average CASA deposits increased by 13.3% from

Rs.4,198.86 billion in fiscal 2022 to Rs.4,758.90 billion in fiscal 2023. Borrowings increased by 11.3% from Rs.1,072.31 billion at March 31, 2022 to Rs.1,193.25 billion at March 31, 2023.

The Bank had a business center (branch) network of 5,900 branches, and network of 16,650 ATMs/CRMs at March 31, 2023.

The Bank is subject to Basel III capital adequacy guidelines stipulated by RBI. The total capital adequacy ratio of the Bank at March 31, 2023 (after deducting proposed dividend for fiscal 2023 from capital funds) in accordance with RBI guidelines on Basel III was 18.34% as compared to 19.16% at March 31, 2022. The Tier-1 capital adequacy ratio was 17.60% at March 31, 2023 as compared to 18.35% at March 31, 2022. The Common Equity Tier 1 (CET-1) ratio was 17.12% at March 31, 2023 as compared to 17.60% at March 31, 2022.

OPERATING RESULTS DATA

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

Rs.in billion, except percentages

Particulars	Fiscal 2022	Fiscal 2023	% change
Interest income	Rs 863.75	Rs.1,092.31	26.5%
Interest expense	389.09	471.02	21.1
Net interest income	474.66	621.29	30.9
Fee income1	156.87	180.01	14.8
Dividend from subsidiaries/joint ventures/associates	18.29	17.84	(2.5)
Other income	0.98	0.98	-
Core operating income	650.80	820.12	26.0
Operating expenses	267.33	328.73	23.0
Core operating profit	383.47	491.39	28.1
Treasury gains	9.03	(0.52)	-
Operating profit	392.50	490.87	25.1
Provisions, net of write-backs	86.41	66.66	(22.9)
Profit before tax	306.09	424.21	38.6
Tax, including deferred tax	72.70	105.25	44.8
Profit after tax	Rs.233.39	Rs.318.96	36.7%

1 Includes merchant foreign exchange income and margin on customer derivative transactions.

2 All amounts have been rounded off to the nearest Rs.10.0 million.

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.

Particulars	Fiscal 2022	Fiscal 2023
Return on average equity (%)1	14.77	17.28
Return on average assets (%)2	1.84	2.16
Net interest margin (%)	3.96	4.48
Cost to income (%)3	40.51	40.11
Provisions to core operating profit (%)	22.53	13.57
Earnings per share ()	33.66	45.79
Book value per share ()	245.38	287.44

1 Return on average equity is the ratio of the net profit after tax to the quarterly average equity share capital and reserves.

2 Return on average assets is the ratio of net profit after tax to average assets.

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.

Rs.in billion, except percentages

Particulars	Fiscal 2022	Fiscal 2023	% change
Interest income	Rs Rs.863.75	Rs Rs.1,092.31	26.5%
Interest expense	389.09	471.02	21.1
Net interest income	474.66	621.29	30.9
Average interest-earning assets	11,979.51	13,872.53	15.8
Average interest-bearing liabilities	Rs.10,478.20	Rs.11,998.16	14.5%
Net interest margin	3.96%	4.48%	-
Average yield	7.21%	7.87%	-
Average cost of funds	3.71%	3.93%	-
Interest spread	3.50%	3.94%	-

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

Net interest income increased by 30.9% from Rs.474.66 billion in fiscal 2022 to Rs.621.29 billion in fiscal 2023 primarily due to an increase in the net interest margin by 52 basis points and an increase of 15.8% in the average interest-earning assets.

Net interest margin increased by 52 basis points from 3.96% in fiscal 2022 to 4.48% in fiscal 2023. The yield on average interest-earning assets increased by 66 basis points from 7.21% in fiscal 2022 to 7.87% in fiscal 2023. The cost of funds increased by 22 basis points from 3.71% in fiscal 2022 to 3.93% in fiscal 2023. The interest spread increased by 44 basis points from 3.50% in fiscal 2022 to 3.94% in fiscal 2023. The full impact of rise in interest rates from the beginning of fiscal year 2023 is expected to be reflected in the cost of domestic term deposits during fiscal 2024.

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

Particulars	Fiscal 2022	Fiscal 2023
Yield on interest-earning assets	7.21%	7.87%
- On advances	8.27	8.94
- On investments	5.98	6.57
- On SLR investments	6.22	6.62
- On other investments	4.72	6.16
- On other interest-earning assets	4.04	3.38
Cost of interest-bearing liabilities	3.71	3.93
- Cost of deposits	3.53	3.66
- Current and savings account (CASA) deposits	2.27	2.28
- Term deposits	4.54	4.78
- Cost of borrowings	5.37	5.97
Interest spread	3.50	3.94
Net interest margin	3.96%	4.48%

The yield on average interest-earning assets increased by 66 basis points from 7.21% in fiscal 2022 to 7.87% in fiscal 2023 primarily due to the following factors:

• The yield on domestic advances increased by 52 basis points from 8.64% in fiscal 2022 to 9.16% in fiscal 2023. The yield on advances increased primarily due to re-pricing of existing floating rate loans linked to the repo rate and the Banks 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, 30% had fixed interest rates, 45% had interest rates linked to repo rate, 20% had interest rates linked to MCLR and other older benchmarks and 5% had interest rates linked to T-bills.

RBI increased the repo rate by 250 basis points from 4.00% in May 2022 to 6.50% in February 2023. The Banks 1-year MCLR increased by 150 basis points in phases during fiscal 2023 from 7.25% in March 2022 to 8.75% in March 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 239 basis points from 1.51% in fiscal 2022 to 3.90% in fiscal 2023 primarily due to repricing of floating rate advances and new lending at higher rates on account of the ongoing rate hike cycle by the US Federal Reserve. The yield on overseas advances was also positively impacted by higher interest collection on NPAs.

The overall yield on average advances increased by 67 basis points from 8.27% in fiscal 2022 to 8.94% in fiscal 2023.

• The yield on average interest-earning investments increased by 59 basis points from 5.98% in fiscal 2022 to 6.57% in fiscal 2023. The yield on Indian government investments increased by 40 basis points from 6.22% in fiscal 2022 to 6.62% in fiscal 2023. This was primarily due to reset of 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 yields.

The yield on non-SLR investments increased by 144 basis points from 4.72% in fiscal 2022 to 6.16% in fiscal 2023 primarily due to an increase in yield on bonds and debentures, foreign government securities and commercial paper.

• The yield on other interest-earning assets decreased by 66 basis points from 4.04% in fiscal 2022 to 3.38% in fiscal 2023. The decrease was primarily due to a decrease in interest income on funding swaps and an increase in average balance with RBI which does not earn any interest. During first quarter of fiscal 2023, RBI had increased the cash reserve ratio from 4.00% to 4.50%. The decrease in yield on other interest-earning assets was offset, in part, by an increase in yield on call money lent and an increase in yield on balance with other banks.

Interest on income tax refund decreased from Rs.2.43 billion in fiscal 2022 to Rs.1.14 billion in fiscal 2023. 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 22 basis points from 3.71% in fiscal 2022 to 3.93% in fiscal 2023 primarily due to the following factors:

• The cost of average deposits increased from 3.53% in fiscal 2022 to 3.66% in fiscal 2023 primarily due to an increase in cost of domestic term deposits. The cost of domestic term deposits increased by 23 basis points from 4.57% in fiscal 2022 to 4.80% in fiscal 2023. 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 by the Reserve Bank of India.

The full impact of the rise in interest rates on deposits from the beginning of fiscal year 2023 will be reflected in the cost of domestic term deposits during fiscal 2024.

The cost of savings account deposits increased marginally from 3.15% in fiscal 2022 to 3.16% in fiscal 2023. The average CASA deposits increased from 44.5% of total average deposits in fiscal 2022 to 44.7% of total average deposits in fiscal 2023. Average CASA deposits were 39.7% of the total funding (i.e., deposits and borrowings) for fiscal 2023 as compared to 40.1% for fiscal 2022.

• The cost of borrowings increased by 60 basis points from 5.37% in fiscal 2022 to 5.97% in fiscal 2023. The cost of domestic borrowings increased by 28 basis points from 6.38% in fiscal 2022 to 6.66% in fiscal 2023 primarily due to an increase in cost of short term money market borrowings and refinance borrowings, offset, in part, by a decrease in cost of bond borrowings. The cost of overseas borrowings increased by 218 basis points from 1.11% in fiscal 2022 to 3.29% in fiscal 2023 primarily due to an increase in cost of term borrowings on account of ongoing rate hike cycle by the US Federal Reserve.

The Banks 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 49.9% of Banks 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 Banks net interest income and net interest margin in fiscal 2024.

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

Particulars	Fiscal 2022	Fiscal 2023	% change
Advances	Rs.7,716.34	Rs Rs.9,390.62	21.7%
Interest-earning investments1	2,744.51	3,180.93	15.9
Other interest-earning assets	1,518.66	1,300.98	(14.3)
Total interest-earning assets	11,979.51	13,872.53	15.8
Deposits	9,433.39	10,634.91	12.7
Borrowings1	1,044.80	1,363.25	30.5
Total interest-bearing liabilities	Rs Rs.10,478.20	Rs Rs.11,998.16	14.5%

1 Average investments and average borrowings include average short-term repurchase transactions.

2 All amounts have been rounded off to the nearest Rs.10.0 million.

The average interest-earning assets increased by 15.8% from Rs.11,979.51 billion in fiscal 2022 to Rs.13,872.53 billion in fiscal 2023 due to an increase in average advances by

Rs.1,674.28 billion and average investments by Rs.436.42 billion, offset, in part, by a decrease in average other interest-earning assets by Rs.217.68 billion.

Average advances increased by 21.7% from Rs.7,716.34 billion in fiscal 2022 to Rs.9,390.62 billion in fiscal 2023 due to an increase of 23.0% in average domestic advances, offset, in part, by a decrease of 1.7% in average overseas advances.

Average interest-earning investments increased by 15.9% from Rs.2,744.51 billion in fiscal 2022 to Rs.3,180.93 billion in fiscal 2023 primarily due to an increase in average investment in Indian government securities, offset, in part, by a decrease in average investments in foreign government securities.

Average other interest-earning assets decreased by 14.3% from Rs.1,518.66 billion in fiscal 2022 to Rs.1,300.98 billion in fiscal 2023 primarily due to a decrease in call 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 14.5% from Rs Rs.10,478.20 billion in fiscal 2022 to Rs.11,998.16 billion in fiscal 2023 primarily due to an increase in average deposits by Rs Rs.1,201.52 billion and an increase in average borrowings by Rs.318.45 billion.

Average deposits increased by 12.7% from Rs Rs.9,433.39 billion in fiscal 2022 to Rs.10,634.91 billion in fiscal 2023 due to an increase in average term deposits and average CASA deposits.

Average borrowings increased by 30.5% from Rs Rs.1,044.80 billion in fiscal 2022 to Rs Rs.1,363.25 billion in fiscal 2023 primarily due to an increase in bond borrowings, term money borrowings, refinance borrowings and repo borrowings.

FEE INCOME

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 fees from corporate clients includes loan processing fees, transaction banking fees, income from foreign exchange transactions and margin on derivative transactions.

Fee income increased by 14.8% from Rs.156.87 billion in fiscal 2022 to Rs Rs.180.01 billion in fiscal 2023 primarily due to an increase in transaction banking fees, income from foreign exchange and derivatives products and lending linked fees, offset, in part, by a decrease in fee income from third party product distribution. The fee income during the first half of fiscal 2023 increased by 24.1% as compared to the first half of fiscal 2022 primarily due to the lower base effect resulting from the second-wave of Covid-19 pandemic.

DIVIDEND FROM SUBSIDIARIES/JOINT VENTURES/ASSOCIATES

Dividend from Subsidiaries/joint ventures/associates decreased by 2.5% from Rs Rs.18.29 billion in fiscal 2022 to Rs Rs.17.84 billion in fiscal 2023.

The following table sets forth, for the periods indicated, the details of dividend received from Subsidiaries/joint ventures/ associates: Rs Rs.in billion

Name of the entity	Fiscal 2022	Fiscal 2023
ICICI Bank Canada	Rs.0.88	Rs.1.06
ICICI Bank UK PLC	-	0.80
ICICI Prudential Life Insurance Company Limited	1.48	0.40
ICICI Lombard General Insurance Company Limited	1.89	2.24
ICICI Prudential Asset Management company Limited	6.14	6.22
ICICI Securities Limited	5.98	5.44
ICICI Securities Primary Dealership Limited	1.81	1.36
ICICI Home Finance Company Limited	-	0.16
ICICI Venture Funds Management Company Limited	-	0.05
India Infradebt Limited	0.11	0.11
ICICI Prudential Trust Limited	0.00	0.00
Total	Rs.18.29	Rs.17.84

1 0.00 represents insignificant amount.

2 All amounts have been rounded off to the nearest Rs.10.0 million.

Other income

Other income remained at a similar level at Rs.0.98 billion in fiscal 2022 and fiscal 2023.

Operating expenses

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

Rs.in billion, except percentages

Particulars	Fiscal 2022	Fiscal 2023	% change
Payments to and provisions for employees	Rs.96.73	Rs.120.60	24.7%
Other administrative expenses	170.60	208.13	22.0
Total operating expenses	Rs.267.33	Rs.328.73	23.0%

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

Operating expenses primarily include employee expenses, depreciation on assets and other administrative expenses. Operating expenses increased by 23.0% from Rs.267.33 billion in fiscal 2022 to Rs.328.73 billion in fiscal 2023.

Payments to and provisions for employees

Employee expenses increased by 24.7% from Rs.96.73 billion in fiscal 2022 to Rs.120.60 billion in fiscal 2023 primarily due to an increase in salary cost, provision for retirement benefit obligations, provision for performance bonus and performance-linked retention pay and fair value accounting of employee stock options. Salary cost increased primarily due to impact of annual increments, promotions and an increase in average staff strength (number of employees at March 31, 2022: 105,844 and at March 31, 2023: 129,020). Provision for retirement benefit obligations increased primarily due to impact of change in assumptions for salary escalation and dearness allowance.

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 22.0% from Rs.170.60 billion in fiscal 2022 to

Rs.208.13 billion in fiscal 2023 primarily due to an increase in technology related expenses, advertisement and sales promotion expenses and direct marketing agency expenses.

PROFIT/(LOSS) ON TREASURY-RELATED ACTIVITIES (NET)

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.

Loss from treasury-related activities was Rs.0.52 billion in fiscal 2023 as compared to a gain of Rs.9.03 billion in fiscal 2022.

PROVISIONS AND CONTINGENCIES (EXCLUDING PROVISIONS FOR TAX)

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

Rs.in billion, except percentages

Particulars	Fiscal 2022	Fiscal 2023	% change
Provision for non-performing and other assets1	Rs.61.64	Rs.(6.23)	-
Provision for investments (including credit substitutes) (net)	3.77	13.00	-
Provision for standard assets	4.49	5.80	29.2
Others2	16.51	54.09	-
Total provisions and contingencies (excluding
provision for tax)	Rs.86.41	Rs.66.66	(22.9%)

1 Includes restructuring related provision.

2 Includes contingency provision amounting toRs.56.50 billion on a prudent basis for the year ended March 31, 2023 (March 31, 2022: write-back of Rs.0.25 billion).

3 All amounts have been rounded off to the nearest Rs.10.0 million.

For a discussion on provisioning norms and policies, see

"Financial Statement (Schedule 17- Significant Accounting Policies) – Provision/write-offs on loans and other credit facilities".

Provisions and contingencies (excluding provisions for tax) decreased from Rs.86.41 billion in fiscal 2022 to

Rs.66.66 billion in fiscal 2023 primarily due to a decrease in provision for non-performing and other assets, offset, in part, by an increase in contingency provisions made on a prudent basis, and provision for investments.

Provision for non-performing and other assets decreased from a provision of Rs.61.64 billion in fiscal 2022 to a write-back of Rs.6.23 billion in fiscal 2023. 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. In fiscal 2022, the provision for non- performing and other assets also included provision on loans restructured under Resolution Framework for COVID-19.

The provision coverage ratio (excluding cumulative technical/prudential write-offs) on NPAs increased from 79.2% at March 31, 2022 to 82.8% at March 31, 2023.

Provision for investments increased from Rs.3.77 billion in fiscal 2022 to Rs.13.00 billion in fiscal 2023 primarily due to an increase in provision on debentures, equity shares and security receipts.

Provision for standard assets increased from Rs.4.49 billion in fiscal 2022 to Rs.5.80 billion in fiscal 2023. The cumulative general provision held at March 31, 2023 was

Rs.47.02 billion (March 31, 2022: Rs.40.94 billion).

Other provisions and contingencies increased from Rs.16.51 billion in fiscal 2022 to Rs.54.09 billion in fiscal 2023. During fiscal 2023, the Bank made a contingency provision amounting to Rs.56.50 billion (fiscal 2022: write-back of

Rs.0.25 billion), on a prudent basis, to further strengthen the balance sheet. The Bank holds a total contingency provision of Rs.131.00 billion at March 31, 2023.

TAX EXPENSE

The income tax expense increased from Rs.72.70 billion in fiscal 2022 to Rs.105.25 billion in fiscal 2023. The effective tax rate increased from 23.7% in fiscal 2022 to 24.8% in fiscal 2023 primarily due to change in composition of income.

FINANCIAL CONDITION

Assets

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

Rs.in billion, except percentages

Assets	At March 31, 2022	At March 31, 2023	% change
Cash and bank balances	Rs.1,678.22	Rs.1,194.38	(28.8%)
Investments	3,102.41	3,623.30	16.8
- Government and other approved investments1	2,563.78	3,057.69	19.3
- Equity investment in subsidiaries	67.13	69.78	3.9
- Other investments	471.50	495.83	5.2
Advances (net of BRDS/IBPC)2	8,590.20	10,196.38	18.7
- Domestic	8,177.36	9,855.28	20.5
- Overseas branches	412.84	341.10	(17.4)
Fixed assets (including leased assets)	93.74	96.00	2.4
Other assets	648.41	732.01	12.9
- RIDF and other related deposits3	264.19	216.22	(18.2)
Total assets	Rs.14,112.98	Rs.15,842.07	12.3%

1 Banks in India are required to maintain a specified percentage, currently 18.00% (at March 31, 2023), 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 Bill Rediscounting Scheme (BRDS)/Interbank Participatory Certificate (IBPC).

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

Total assets of the Bank increased by 12.3% from Rs.14,112.98 billion at March 31, 2022 to Rs.15,842.07 billion at March 31, 2023, due to a 18.7% increase in advances and a 16.8% increase in investments, offset, in part, by a 28.8% decrease in cash and cash equivalents.

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 decreased by 28.8% from Rs.1,678.22 billion at March 31, 2022 to

Rs.1,194.38 billion at March 31, 2023 primarily due to a decrease in short term lending to RBI and foreign currency term money lent.

Investments

Total investments increased by 16.8% from Rs.3,102.41 billion at March 31, 2022 to Rs.3,623.30 billion at March 31, 2023. Investments in Indian government securities increased from Rs.2,563.78 billion at March 31, 2022 to Rs.3,057.69 billion at March 31, 2023. Other investments increased from Rs.538.63 billion at March 31, 2022 to Rs.565.61 billion at March 31, 2023 primarily due to an increase in investment in bonds and debentures and pass through certificates, offset, in part, by a decrease in investment in foreign government securities.

At March 31, 2023, the Bank had an outstanding net investment of Rs.2.11 billion in security receipts issued by asset reconstruction companies as compared to Rs.8.07 billion at March 31, 2022.

RBI through its circular dated December 8, 2022, extended the dispensation of enhanced HTM limit of 23.0% of Net Demand and Time Liabilities (NDTL) up to March 31, 2024. The enhanced HTM limit of 23.0% shall be restored to 19.5% in a phased manner, beginning from the quarter ending June 30, 2024.

Advances

Net advances (gross of BRDS/IBPC) increased by 20.2% from Rs.8,603.70 billion at March 31, 2022 to Rs.10,345.09 billion at March 31, 2023. Net advances (net of BRDS/ IBPC) increased by 18.7% from Rs.8,590.20 billion at March 31, 2022 to Rs.10,196.38 billion at March 31, 2023 primarily due to an increase in retail advances.

Net domestic advances increased by 20.5% from

Rs.8,177.36 billion at March 31, 2022 to Rs.9,855.28 billion at March 31, 2023. Retail advances increased by 22.7% from

Rs.4,546.35 billion at March 31, 2022 to Rs.5,578.17 billion at March 31, 2023. Advances of rural business increased by 13.8% from Rs.768.30 billion at March 31, 2022 to Rs.874.31 billion at March 31, 2023. The business banking portfolio increased by 34.9% from Rs.534.37 billion at March 31, 2022 to Rs.721.12 billion at March 31, 2023. SME advances increased by 19.2% from Rs.404.50 billion at March 31, 2022 to Rs.482.21 billion at March 31, 2023. The domestic corporate portfolio increased by 21.2% year-on-year. Net advances of overseas branches decreased by 17.4% from Rs.412.84 billion at March 31, 2022 to Rs.341.10 billion at March 31, 2023.

Fixed and other assets

Fixed assets (net block) increased by 2.4% from Rs.93.74 billion at March 31, 2022 to Rs.96.00 billion at March 31, 2023.

Other assets increased by 12.9% from Rs.648.41 billion at March 31, 2022 to Rs.732.01 billion at March 31, 2023 primarily due to an increase in mark-to-market on foreign exchange and derivative transactions and interest accrued on loans and investments, offset, in part, by a decrease in RIDF and related deposits. 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.

LIABILITIES

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

Rs.in billion, except percentages

Liabilities	At March 31, 2022	At March 31, 2023	% change
Equity share capital	Rs.16.56	Rs.21.58	30.3%
Reserves	1,688.56	1,985.58	17.6
Deposits	10,645.72	11,808.41	10.9
- Savings deposits	3,599.57	3,797.76	5.5
- Current deposits	1,584.80	1,614.86	1.9
- Term deposits	5,461.35	6,395.79	17.1
Borrowings (excluding subordinated debt)	933.80	1,110.44	18.9
- Domestic	614.59	852.30	38.7
- Overseas branches	319.21	258.14	(19.1)
Subordinated debt (included in Tier-1 and Tier-2 capital)	138.51	82.81	(40.2)
Other liabilities	689.83	833.25	20.8
Total liabilities	Rs.14,112.98	Rs.15,842.07	12.3%
1 All amounts have been rounded off to the nearest Rs.10.0 million.

Total liabilities (including capital and reserves) increased by 12.3% from Rs.14,112.98 billion at March 31, 2022 to

Rs.15,842.07 billion at March 31, 2023, due to a 17.7% increase in net worth, a 10.9% increase in deposits and a 20.8% increase in other liabilities.

Deposits

Deposits increased by 10.9% from Rs.10,645.72 billion at March 31, 2022 to Rs.11,808.41 billion at March 31, 2023. Term deposits increased by 17.1% from Rs.5,461.35 billion at March 31, 2022 to Rs.6,395.79 billion at March 31, 2023. Savings account deposits increased by 5.5% from

Rs.3,599.57 billion at March 31, 2022 to Rs.3,797.76 billion at March 31, 2023 and current account deposits increased by 1.9% from Rs.1,584.80 billion at March 31, 2022 to

Rs.1,614.86 billion at March 31, 2023. CASA deposits increased by 4.4% from Rs.5,184.37 billion at March 31, 2022 to Rs.5,412.62 billion at March 31, 2023.

The average current account deposits increased by 13.5% from Rs.1,167.28 billion in fiscal 2022 to Rs.1,324.77 billion in fiscal 2023. The average savings account deposits increased by 13.3% from Rs.3,031.58 billion in fiscal 2022 to Rs.3,434.14 billion in fiscal 2023. Average CASA deposits increased by 13.3% from Rs.4,198.86 billion in fiscal 2022 to Rs.4,758.90 billion in fiscal 2023. The average CASA deposits were 44.7% of total average deposits for fiscal 2023 as compared to 44.5% for fiscal 2022. Average CASA deposits were 39.7% of the total funding (i.e., deposits and borrowings) for fiscal 2023 as compared to 40.1% for fiscal 2022.

Deposits of overseas branches increased by 50.7% from

Rs.98.11 billion at March 31, 2022 to Rs.147.82 billion at March 31, 2023.

Total deposits remained at similar level at 90.8% of the funding (i.e., deposits and borrowings) at March 31, 2023 and March 31, 2022.

Borrowings

Borrowings increased by 11.3% from Rs.1,072.31 billion at March 31, 2022 to Rs.1,193.25 billion at March 31, 2023 primarily due to an increase in refinance borrowings and bond borrowings, offset, in part, by a decrease in subordinated debt, foreign currency term money borrowings and foreign currency bond borrowings. Net borrowings of overseas branches decreased from Rs.319.21 billion at March 31, 2022 to Rs.258.14 billion at March 31, 2023.

Other liabilities

Other liabilities increased by 20.8% from Rs.689.83 billion at March 31, 2022 to Rs.833.25 billion at March 31, 2023 primarily due to an increase in mark-to-market on foreign exchange and derivative transactions and contingency provision. 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 17.7% from

Rs.1,705.12 billion at March 31, 2022 to Rs.2,007.16 billion at March 31, 2023 primarily due to accretion to reserves out of retained profit, offset, in part, by payment of dividend for fiscal 2022.

At March 31, 2023, the Banks Tier-1 capital adequacy ratio was 17.60% as against the requirement of 9.70% and total capital adequacy ratio was 18.34% as against the requirement of 11.70%.

OFF BALANCE SHEET ITEMS, COMMITMENTS AND CONTINGENCIES

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

Rs.in billion

Particulars	At March 31, 2022	At March 31, 2023
Claims against the Bank, not acknowledged as debts	Rs.82.84	Rs.81.96
Liability for partly paid investments	0.01	0.01
Notional principal amount of outstanding forward exchange contracts	10,645.24	15,330.22
Guarantees given on behalf of constituents	1,037.75	1,238.18
Acceptances, endorsements and other obligations	462.81	441.91
Notional principal amount of currency swaps	498.34	564.63
Notional principal amount of interest rate swaps and currency options and interest rate futures	25,912.44	25,089.18
Other items for which the Bank is contingently liable	37.33	85.57
Total	Rs.38,676.76	Rs.42,831.66

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

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

Rs.10,645.24 billion at March 31, 2022 to Rs.15,330.22 billion at March 31, 2023 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 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 decreased from Rs.25,912.44 billion at March 31, 2022 to Rs.25,089.18 billion at March 31, 2023.

LOAN CONCENTRATION

The Bank follows a policy of portfolio diversification and evaluates its total financing exposure to a particular industryinthelightofitsforecastsofgrowthandprofitability for that industry. The Banks 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 Banks 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 Banks exposure.

Rs.in billion, except percentages

Industry	March 31, 2022		March 31, 2023
	Total exposure	% of total exposure	Total exposure	% of total exposure
Retail finance1	Rs.6,043.07	36.3%	Rs.7,751.65	38.3%
Services – finance	1,476.68	8.9	1,766.80	8.7
Rural retail	973.18	5.8	1,250.80	6.2
Banks	1,320.71	7.9	1,208.52	6.0
Wholesale/retail trade	551.86	3.3	819.20	4.0
Electronics and engineering	702.80	4.2	804.99	4.0
Crude petroleum/refining and petrochemicals	678.01	4.1	764.57	3.8
Services – non-finance	492.76	3.0	668.24	3.3
Road, ports, telecom, urban development and other infrastructure	538.29	3.2	609.28	3.0
Power	400.71	2.4	477.22	2.4
Construction	385.13	2.3	471.72	2.3
Iron and steel (including iron and steel products)	367.01	2.2	446.44	2.2
Chemical and fertilisers	265.07	1.6	382.83	1.9
Automobiles	210.21	1.3	261.26	1.3
Manufacturing products (excluding metal and metal products)	173.32	1.0	250.49	1.2
Textile	152.86	0.9	220.59	1.1
Metal and metal products (excluding iron and steel)	179.73	1.1	203.47	1.0
Other industries2	1,736.52	10.5	1,886.74	9.3
Total	Rs.16,647.92	100.0%	Rs.20,244.81	100.0%

1 Includes home loans, automobile loans, commercial business loans, dealer financing, personal loans, credit cards and loans against securities.

2 Other industries primarily include developer financing portfolio, gems and jewelry, mining, cement, food & beverages, mutual funds, shipping, drugs and pharmaceuticals, asset reconstruction company, venture capital funds and FMCG.

3 All amounts have been rounded off to the nearest Rs.10.0 million.

The exposure to the top 20 non-bank borrowers as a percentage of total exposure decreased from 9.6% of total exposure of the Bank at March 31, 2022 to 8.5% at March 31, 2023. All top 20 borrowers as of March 31, 2023 are rated A+ and above internally. The exposure to the top 10 borrower groups decreased from 10.3% of total exposure of the Bank at March 31, 2022 to 10.1% at March 31, 2023.

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

Rs.in billion

Particulars	March 31, 2022	March 31, 2023
Advances	Rs.8,590.20	Rs.10,196.38
- Domestic book	8,177.36	9,855.28
- Retail	4,546.35	5,578.17
- Rural	768.30	874.31
- Business banking	534.37	721.12
- SME	404.50	482.21
- Corporate and others	1,923.84	2,199.47
- Overseas book	Rs.412.84	Rs.341.10

The Banks 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 22.7% in fiscal 2023 compared to an increase of 18.7% in total advances. The share of net retail advances increased from 52.9% of net advances at March 31, 2022 to 53.9% of net advances at March 31, 2023. Including non-fund based outstanding, the share of retail portfolio was 45.7% of the total portfolio at March 31, 2023.

The overseas loan portfolio in USD terms declined by 23.8% year-on-year at March 31, 2023. The year-on-year decrease in the overseas loan portfolio was primarily due to decline in the India-linked trade finance book. The overseas loan portfolio was 3.3% of the overall loan book at March 31, 2023. The corporate fund and non-fund outstanding, net of cash/bank/financial institutions/insurance backed lending, was USD 2.70 billion at March 31, 2023. Out of USD 2.70 billion, 88.7% of the outstanding was to Indian corporates and their subsidiaries and joint ventures and 7.4% of the outstanding was to non-India companies with Indian or India-linked operations and activities. The portfolio in this segment are primarily to well rated companies and the Indian operations of these companies are target customers for the Banks 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 52.3% from about USD 641.2 million year-on-year to USD 305.6 million at March 31, 2023.

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

Rs.in billion, except percentages

	March 31, 2022		March 31, 2023
	Total retail advances	% of total retail advances	Total retail advances	% of total retail advances
Home loans	Rs.2,930.63	64.5%	Rs.3,446.96	61.8%
Personal loans	628.73	13.8	880.55	15.8
Automobile loans	418.84	9.2	518.78	9.3
Commercial business	261.67	5.8	275.41	4.9
Credit cards	250.62	5.5	378.41	6.8
Others1	55.86	1.2	78.06	1.4
Total retail advances2	Rs.4,546.35	100.0%	Rs.5,578.17	100.0%

1 Includes loans against securities and dealer financing.

2 All amounts have been rounded off to the nearest Rs.10.0 million.

The following table sets forth, at the dates indicated, the composition of the Banks net outstanding rural advances: Rs.in billion

Particulars	March 31, 2022	March 31, 2023
Farmer finance	Rs.226.47	Rs.234.05
Jewel loan	207.09	228.86
Rural business credit	189.87	239.10
Others1	144.87	172.30
Rural advances	Rs.768.30	Rs.874.31

1 Includes term loans for farm equipment, self-help groups, loans to microfinance institutions for on-lending to individuals and inventory funding.

The following table sets forth, at the dates indicated, the rating wise categorisation of the Banks net outstanding advances other than retail and rural advances: Rs.in billion, except percentages

Ratings category1	March 31, 2022	March 31, 2023
AA- and above	36.1	46.9
A+, A, A-	35.7	26.6
A- and above	71.8	73.5
BBB+, BBB, BBB-	24.5	24.3
BB and below2	2.9	1.2
Unrated	0.8	1.0
Total	100.0	100.0
Total net advances3	Rs.3,275.55	Rs.3,826.41

1 Based on internal ratings.

2 Includes net non-performing loans.

3 Includes business banking, SME, domestic, corporate and overseas loans.

DIRECTED LENDING

The following table sets forth, for the periods indicated, ICICI Banks average priority sector lending:

Particulars	Fiscal 2022			Fiscal 2023
	Amount (Rs.billions)	% of adjusted net bank credit	Amount (Rs.billions)	% of adjusted net bank credit	Target (% of adjusted net bank credit)
Agriculture Sector	Rs.1,226.50	17.8%	Rs.1,423.58	17.7%	18.0%
- Small and marginal farmers	636.37	9.2%	794.72	9.9%	9.5%
- Non-corporate farmers	873.81	12.7%	1,068.17	13.3%	13.8%
Micro, small and medium enterprises	1,473.72	-	1,729.04	-	-
- Micro enterprises	550.66	8.0%	661.21	8.2%	7.5%
Other priority sector	145.18	-	178.32	-	-
Total priority sector lending	Rs.2,845.40	41.3%	Rs.3,330.94	41.5%	40.0%
- Weaker sections	762.02	11.1%	Rs.910.20	11.3%	11.5%

1 The above includes the impact of Priority Sector Lending Certificate purchased/sold by the Bank.

There was a marginal shortfall in the achievement of target for lending to the agriculture sector.

CLASSIFICATION OF LOANS

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

Rs.in billion

Particulars	March 31, 2022	March 31, 2023
Non-performing assets
Sub-standard assets	Rs.85.32	Rs.68.79
Doubtful assets	181.48	127.00
Loss assets	72.40	116.05
Total non-performing assets1	Rs.339.20	Rs.311.84

1 Include advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares.

2 All amounts have been rounded off to the nearest Rs.10.0 million.

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

Rs.in billion, except percentages

Year ended	Gross NPA1	Net NPA	Net customer assets	% of net NPA to net customer assets2
March 31, 2020	414.09	101.14	7,166.74	1.41%
March 31, 2021	413.73	91.80	8,025.90	1.14
March 31, 2022	339.20	69.61	9,160.87	0.76
March 31, 2023	311.84	51.55	10,816.41	0.48%

1 Net of write-offs, interest suspense and derivatives income reversal.

2 Include advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares.

3 All amounts have been rounded off to the nearest Rs.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.

Rs.in billion, except percentages

Particulars	March 31, 2022		March 31, 2023
	Amount	%	Amount	%
Retail finance1	Rs.80.72	23.8%	Rs.71.79	23.0%
Construction	55.50	16.4	54.21	17.4
Rural retail	37.08	10.9	37.29	12.0
Crude petroleum/refining and petrochemicals	26.69	7.9	26.84	8.6
Power	31.67	9.3	21.91	7.0
Services – non-finance	14.13	4.2	15.37	4.9
Road, ports, telecom, urban development and	14.49	4.3	13.75	4.4
other infrastructure
Electronics and engineering	16.93	5.0	12.52	4.0
Mining	10.93	3.2	11.78	3.8
Wholesale/retail trade	6.37	1.9	7.77	2.5
Iron/steel and products	6.16	1.8	5.48	1.8
Manufacturing products	3.19	0.9	3.53	1.1
Gems and jewelry	2.83	0.8	3.19	1.0
Other industries2	32.51	9.6	26.41	8.5
Total	Rs.339.20	100.0%	Rs.311.84	100.0%

1 Includes home loans, automobile loans, commercial business loans, dealer financing, personal loans, credit cards and loans against securities.

2 Other 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 All amounts have been rounded off to the nearest Rs.10.0 million.

The gross additions to NPAs were Rs.186.41 billion in fiscal 2023 (Rs.192.91 billion in fiscal 2022). The net additions to NPAs were Rs.20.38 billion in fiscal 2023 (Rs.29.28 billion in fiscal 2022). In fiscal 2023, the Bank recovered/upgraded non-performing assets amounting to Rs.166.03 billion ( Rs.163.63 billion in fiscal 2022), wrote-off non-performing assets amounting to Rs.44.66 billion (Rs.99.46 billion in fiscal 2022) and sold non-performing assets amounting to Rs.3.08 billion (Rs.4.35 billion in fiscal 2022). As a result, gross NPAs (net of write-offs) of the Bank decreased from

Rs.339.20 billion at March 31, 2022 to Rs.311.84 billion at March 31, 2023.

Net NPAs decreased from Rs.69.61 billion at March 31, 2022 to Rs.51.55 billion at March 31, 2023. The ratio of net NPAs to net customer assets decreased from 0.76% at March 31, 2022 to 0.48% at March 31, 2023. The provision coverage ratio at March 31, 2023 was 82.8% as compared to 79.2% at March 31, 2022.

At March 31, 2023, gross non-performing loans in the retail portfolio were 1.28% of gross retail loans compared to 1.76% at March 31, 2022 and net non-performing loans in the retail portfolio were 0.47% of net retail loans compared to 0.74% at March 31, 2022.

The total non-fund based outstanding to borrowers classified as non-performing was Rs.37.80 billion at March 31, 2023 (March 31, 2022: Rs.36.40 billion). The Bank held a provision of Rs.20.05 billion at March 31, 2023 (March 31, 2022: Rs.20.51 billion) against these non-fund based outstanding.

The gross outstanding loans to borrowers whose facilities have been restructured decreased from Rs.82.67 billion at March 31, 2022 to Rs.45.08 billion at March 31, 2023. The net outstanding loans to borrowers whose facilities have been restructured decreased from Rs.79.84 billion at March 31, 2022 to Rs.43.30 billion at March 31, 2023. The aggregate non-fund based outstanding to borrowers whose loans were restructured was Rs.3.32 billion at March 31, 2023 (March 31, 2022: Rs.5.65 billion). Additionally, Bank holds provision of Rs.12.02 billion on restructured accounts.

At March 31, 2023, the outstanding loans and non-fund facilities to borrowers in the corporate and small and medium enterprises portfolio rated BB and below were

Rs.47.04 billion which includes the outstanding loans and non-funded facilities under resolution amounting to Rs.7.74 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".

SEGMENT INFORMATION

RBIinitsguidelineson"segmentalreporting"hasstipulated 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

Rs.114.00 billion in fiscal 2022 to Rs.175.34 billion in fiscal 2023 primarily due to an increase in net interest income and non-interest income and a decrease in provisions, offset, in part, by an increase in operating expenses.

Wholesale banking segment

The profit before tax of the segment increased from

Rs.90.53 billion in fiscal 2022 to Rs.157.85 billion in fiscal 2023 primarily due to an increase in net interest income and non-interest income and a decrease in provisions, offset, in part, by an increase in operating expenses.

Treasury segment

The profit before tax of the segment increased from

Rs.98.20 billion in fiscal 2022 to Rs.142.72 billion in fiscal 2023 primarily due to an increase in net interest income, offset, in part, by a decrease in non- interest income and an increase in provisions and operating expenses.

Other banking segment

Profit before tax of the other banking segment increased from Rs.3.11 billion in fiscal 2022 to Rs.4.80 billion in fiscal 2023.

Unallocated

During fiscal 2023, the Bank on a prudent basis has made an additional contingency provision of Rs.56.50 billion as compared to a write-back of Rs.0.25 billion in fiscal year 2022. The contingency provision was not allocated to any segment and included in unallocated.

CONSOLIDATED FINANCIALS AS PER INDIAN GAAP

The consolidated profit after tax increased from Rs.251.10 billion in fiscal 2022 to Rs.340.37 billion in fiscal 2023 primarily due to an increase in the profit of ICICI Bank and subsidiaries namely ICICI Home Finance Company, ICICI Bank Canada, ICICI Prudential Asset Management Company and ICICI Prudential Life Insurance Company and an increase in share of profit from associate namely ICICI Lombard General Insurance Company, offset, in part, by a decrease in profit of certain subsidiaries namely ICICI Securities and ICICI Securities Primary Dealership.

The consolidated assets of the Bank and its subsidiaries and other consolidating entities increased from

Rs.17,526.37 billion at March 31, 2022 to Rs.19,584.90 billion at March 31, 2023. Consolidated advances increased from

Rs.9,203.08 billion at March 31, 2022 to Rs.10,838.66 billion at March 31, 2023.

At March 31, 2023, the Banks consolidated Tier-1 capital adequacy ratio was 17.33% as against the requirement of 9.70% and consolidated total capital adequacy ratio was 18.09% as against the requirement of 11.70%.

ICICI Bank Canada

The core operating profit of ICICI Bank Canada increased from CAD 26.2 million in fiscal 2022 to CAD 61.2 million in fiscal 2023 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 29.2 million (Rs.1.74 billion) in fiscal 2022 to CAD 46.4 million (Rs.2.82 billion) in fiscal 2023 primarily due to an increase in core operating profit. The total assets increased from CAD 5.74 billion at March 31, 2022 to CAD 5.98 billion at March 31, 2023. Loans and advances increased from CAD 4.98 billion at March 31, 2022 to CAD 5.17 billion at March 31, 2023. The net impairment ratio increased from 0.01% at March 31, 2022 to 0.08% at March 31, 2023. ICICI Bank Canada had a total capital adequacy ratio of 17.3% at March 31, 2023 as compared to 17.2% at March 31, 2022.

ICICI Bank UK PLC (ICICI Bank UK)

The core operating profit of ICICI Bank UK increased from USD 11.7 million in fiscal 2022 to USD 18.3 million in fiscal 2023 primarily due to an increase in net interest income and fee income, offset, in part, by a decrease in other income. Profit after tax of ICICI Bank UK increased from USD 10.9 million (Rs.0.81 billion) in fiscal 2022 to USD 13.0 million (Rs.1.05 billion) in fiscal 2023 primarily due to higher core operating profit, offset, in part, by an increase in impairment provisions.

Total assets decreased from USD 2.24 billion at March 31, 2022 to USD 2.14 billion at March 31, 2023. Net advances decreased from USD 1.32 billion at March 31, 2022 to USD 1.09 billion at March 31, 2023. The net impairment ratio increased from 2.0% at March 31, 2022 to 3.3% at March 31, 2023. ICICI Bank UK had a total capital adequacy ratio of 27.1% at March 31, 2023 compared to 23.0% at March 31, 2022.

ICICI Prudential Life Insurance Company (ICICI Life)

The Annualised Premium Equivalent of ICICI Life increased by 11.7% from Rs.77.33 billion for fiscal 2022 to Rs.86.40 billion for fiscal 2023. The Value of New Business (VNB) increased by 27.8% from Rs.21.63 billion for fiscal 2022 to

Rs.27.65 billion for fiscal 2023. The VNB margin increased from 28.0% for fiscal 2022 to 32.0% in fiscal 2023. The total premium earned increased by 6.6% from Rs.374.58 billion in fiscal 2022 to Rs.399.33 billion in fiscal 2023. The total assets under management increased from Rs.2,404.92 billion at March 31, 2022 to Rs.2,511.91 billion at March 31, 2023.

Net premium earned increased by 6.2% from Rs.363.21 billion in fiscal 2022 to Rs.385.60 billion in fiscal 2023. The profit after tax increased from Rs.7.54 billion in fiscal 2022 to Rs.8.11 billion in fiscal 2023 primarily due to lower Covid-19 related death claims (net of reinsurance), offset, in part, by a decrease in shareholder surplus.

ICICI Lombard General Insurance Company (ICICI General)

The Gross Domestic Premium Income of ICICI General increased by 17.0% year-on-year from Rs.179.77 billion in fiscal 2022 to Rs.210.25 billion in fiscal 2023. The profit after tax increased from Rs.12.71 billion in fiscal 2022 to

Rs.17.29 billion in fiscal 2023 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 Prudential AMC increased from Rs.14.36 billion in fiscal 2022 to

Rs.15.08 billion in fiscal 2023 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 decreased from Rs.13.98 billion in fiscal 2022 to Rs.11.40 billion in fiscal 2023 primarily due to decrease in fee income.

ICICI Securities Primary Dealership (I-Sec PD)

As per Indian GAAP, the profit after tax of I-Sec PD decreased from Rs.3.30 billion in fiscal 2022 to Rs.1.28 billion in fiscal 2023 primarily due to a decrease in net interest income and lower trading gains.

ICICI Home Finance Company Limited (ICICI HFC)

As per Indian GAAP, profit after tax increased from Rs.0.93 billion in fiscal 2022 to Rs.3.65 billion in fiscal 2023 primarily due to an increase in core operating profit and decrease 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. Net NPAs decreased from Rs.5.16 billion at March 31, 2022 to Rs.3.53 billion at March 31, 2023.

ICICI Venture Funds Management Company (ICICI Venture)

The profit after tax of ICICI Venture increased from

Rs.2.2 million in fiscal 2022 to Rs.61.9 million in fiscal 2023 primarily due to an increase in management fees received from launch of new fund, 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/associates as per Indian GAAP.

Rs.in billion

Company	Profit after tax		Total assets1
	Fiscal 2022	Fiscal 2023	At March 31, 2022	At March 31, 2023
ICICI Bank Canada	Rs.1.74	Rs.2.82	Rs.348.35	Rs.363.46
ICICI Bank UK PLC	0.81	1.05	170.77	176.13
ICICI Prudential Life Insurance Company Limited	7.54	8.11	2,441.54	2,558.47
ICICI Lombard General Insurance Company Limited2,3	12.71	17.29	508.48	550.86
ICICI Prudential Asset Management Company Limited	14.36	15.08	21.48	24.89
ICICI Securities Limited (consolidated)	13.98	11.40	135.20	154.71
ICICI Securities Primary Dealership Limited	3.30	1.28	202.30	344.01
ICICI Home Finance Company Limited	0.93	3.65	157.58	187.01
ICICI Venture Funds Management Company Limited	0.004	0.06	Rs.2.84	Rs.3.02

1 Total assets are as per classification used in the consolidated financial statements and hence the total assets as per subsidiarys financial statements may differ.

2 The entity have been accounted as per the equity method as prescribed by Accounting Standard – 23 – "Accounting for Investments in Associates in Consolidated Financial Statements".

3 Total assets as per financial statements of ICICI Lombard General Insurance Company Limited.

4 0.00 represents insignificant amount.

5 See also "Financials- Statement pursuant to Section 129 of the Companies Act, 2013".

6 All amounts have been rounded off to the nearest Rs.10.0 million.