ICICI Bank expects its revenues to be impacted in 2020-21 due to the COVID-19 crisis and said it will look to maintain adequate liquidity and focus on robust credit monitoring.
The economic conditions remain challenging going forward due to the uncertainties posed by the global health crisis and the stand-still in the economic activity, ICICI Bank said in its annual report 2019-20.
The Indian economy would be impacted by this pandemic with contraction in industrial and services output across small and large businesses, said the private sector lender.
"While systemic liquidity is abundant, the economic weakness caused by the pandemic and uncertainty regarding normalisation will impact banking sector loan growth, revenues, margins, asset quality and credit costs.
"In view of the COVID-19 pandemic, there will be an impact on revenues and an increase in rating downgrades in the portfolio and NPA formation at a systemic level and for the bank," ICICI Bank said.
The bank's immediate focus in fiscal 2021 would be towards maintaining adequate liquidity, conservation of capital and robust credit monitoring, it said further.
"Given the bank's core operating profitability, liquidity and capital adequacy, the bank believes it is well-placed to absorb the impact of the challenges in the environment. The bank would look at further strengthening the balance sheet as opportunities arise. The bank will closely monitor the evolving scenario and calibrate its business based on the assessment of risk and profitability," said the FY20 annual report of the bank.
As part of its capital raising plans for the current fiscal year, the second largest private sector lender earlier this month informed about the board's decision to raise up to Rs 15,000 crore in core capital through various routes.
Before this in June, it sold 3.96 per cent stake in its general insurance subsidiary ICICI Lombard General Insurance for Rs 2,250 crore and 1.5 per cent in life insurance subsidiary for around Rs 840 crore with an aim to strengthen the balance sheet.
In 2018-19, the bank had sold 2 per cent of its shareholding in ICICI Prudential Life Insurance Company and made a net gain of Rs 1,005.93 crore on this sale.
The private sector lender said it would continue its focus on re-engineering business processes and enhancing customer convenience leveraging technology, with digital banking having received further impetus amid the constraints on traditional ways of working imposed by the pandemic-related lockdowns.
Despite the challenging time, ICICI Bank said it is seeing opportunities to grow and strengthen its franchise and it is using these opportunities to further accelerate the digital journey of the bank and its customers.
"The bank is seeing increased utilisation of its digital channels and platforms by its customers and has ensured that the IT infrastructure is able to handle any unexpected surge in digital transactions. The bank continues to monitor the situation in the country and would 'take necessary steps to ensure safety of its people and continuity of its business operations," it said.
Bank Chairman Girish Chandra Chaturvedi in his message to shareholders said that looking ahead, there are significant challenges for the economy and the banking sector in fiscal 2021.
"A contraction in economic growth is inevitable, and regaining the confidence and momentum of activity as in the past may take some time. A health emergency of this magnitude will lead to extraordinary responses and outcomes.
"Under these circumstances, the Bank remains committed to being with its customers and ensuring seamless delivery of financial services and will participate in the relief measures to mitigate the impact of the crisis," he said.
In its upcoming annual general meeting on August 14, the bank will seek shareholders' nod for shifting its registered office from Gujarat to Maharashtra consequent to amendment to the Memorandum of Association of the Bank, the bank said in the report.
ICICI Bank had posted 135.8 per cent jump in its net profit to Rs 7,931 crore in 2019-20 as against Rs 3,363 crore in the previous year.