ICICI Bank Ltd

NSE:ICICIBANK

Earnings Call Transcript 2021-Q1

[Sandeep Bakhshi, MD, CEO & Executive Director]

Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the Q1 of 2021 results. Joining us today on this call are Vishakha, Anup, Sandeep Batra, Rakesh and Anindya. Thank you, everyone, for joining us today. We hope that all of you are safe, healthy and doing well. During this period of the COVID-19 pandemic, the health care workers, sanitation workers, police and all the essential service providers have shown utmost resilience in keeping us safe and their dedication motivates us. As the country has gradually reopened, many Indians have gone back to work, supporting the path of normalization. Team ICICI is thankful to all of them. We also appreciate the efforts of our employees who continue to serve our customers in these unprecedented times. Nearly all our branches and ATMs across the country are functional currently. We have seen a gradual rise in the customer footfalls in our branches in June and the first fortnight of July compared to April and May. Excluding the employees working at the branches and some of the team members from operations and IT, the majority of the employees continue to work from home. Since June, India has seen a resumption of economic activity. Some high-frequency indicators, such as electronic and physical toll collections and generation of electronic permits for transportation of goods have shown an improvement, and are close to pre-COVID levels. GST collections have increased in June compared to April and May 2020. Indicators such as kharif sowing, water reservoir levels, tractor sales volumes and sales of fertilizers reflect a relatively stronger rural economy. Of course, the trajectory of the pandemic and the pace and sustenance of the improvement in economic activity needs to be monitored carefully over the next few months. At ICICI Bank, we continue to steadily grow our franchise and maintain a strong balance sheet within our well-defined strategic framework. This framework has the following key elements: Number one, growth in the core operating profit in a risk-calibrated manner through the focused pursuit of target market segments. We were able to take the core operating profit from INR 189.40 billion in financial year 2018 to INR 268.08 billion in financial year 2020. The growth in core operating profit improved from 5.7% in financial year 2018 to 21.5% in financial year 2020. In Q1 of 2021, a significant decline in fee income due to the disruption in customer activities was more than offset by robust growth in net interest income and some decline in operating expenses, resulting in a core operating profit of INR 70.14 billion, which is a 14.8% growth on a year-to-year basis. Excluding the impact of higher interest income on income tax refund in the first quarter last year, the year-on-year core operating growth -- profit growth was 18%. Number two, further enhancing our strong deposit franchise. Our business and core operating profit are driven by our deposit franchise. During the quarter, we continued to see robust deposit flows, resulting in high liquidity and a liquidity coverage ratio of 146% for the quarter. Our cost of deposits is amongst the lowest in the system, and during the quarter we reduced the interest rate offered on savings accounts as well as key retail deposit rate by 50 basis points each. Total deposits increased by 21.3% year-on-year at June 30, 2020. Average savings account deposits increased by 14% year-on-year. Average current account deposits increased by 19.8% year-on-year during the quarter, reflecting healthy inflows into current accounts, which we see as a positive indicator of the business health of our customers as well as a result of the growth of our franchise. Our digital platforms and efforts towards process decongestion have played an important role in the growth of our deposit franchise. Number three, growing our loan portfolio in a granular manner with a focus on risk and reward. We have continued to increase the share of the granular diversified lending to retail and small business customers in our overall portfolio. Our retail portfolio is largely secured based on proprietary data and analytics in addition to bureau checks and well-priced in relation to the risk. Our strong deposit franchise enables us to offer competitive pricing to the selected customer segments. In our corporate portfolio, we have emphasized reduction in concentration risk and improvement in the rating mix of our business. Our approach is to provide a full suite of banking products to corporate clients and their ecosystems of employees and business partners. Rakesh will give further details on our various portfolios as we had done in the last earnings call. Loan origination was impacted due to the nationwide lockdown in April and May. The year-on-year loan growth declined and the loan book decreased sequentially, though month-wise trends indicate an improvement as the lockdown has been relaxed. In line with the approach we had articulated for the overseas branches -- overseas business, the overall overseas branches portfolio and the non-India linked corporate portfolio declined both year-on-year and sequentially. Number four, leveraging digital across our business. The growth of our franchise is driven to a significant extent, by the digital platforms and technology-led solutions that we offer our customers. The ICICI STACK, our API banking portal and our iMobile, InstaBIZ and Internet banking platforms as well as bespoke solutions in place for corporate and institutional customers provide seamless banking services digitally to our customers. During Q1 of 2021, an online food delivery platform used our insta wallet offering to launch its digital wallet. We introduced a video KYC facility to onboard new savings accounts and personal loan customers and customers availing the Amazon Pay Credit Card, and we crossed 1 million users on our WhatsApp banking platform. We have seen significant growth and improvement in the market share in UPI transactions in the person-to-merchant or acquiring segment. Our digital trade solutions for corporates and SMEs have proved particularly relevant in the current environment. Number five, protecting the balance sheet from potential risks. Our approach with respect to asset quality and provisioning has been: one, to construct the portfolio in a manner that does not deliver concentrated shocks; two, to build an operating profit base that can absorb required provisions; and three, to be proactive in provisioning with the objective of ensuring that the balance sheet is robust and the impact on earnings is recognized on a prudent basis. We continue to have a high provisioning coverage ratio on NPAs with the PCR increasing further to 78.6% at June 30, 2020. As part of the regulatory measures following the outbreak of the pandemic, banks have been permitted to grant moratorium on loan repayments to borrowers. This is a policy and regulatory support to customers facing sudden cash flow depletion and -- depletion or potential future uncertainty. Our approach to the moratorium has been to permit the same for customers seeking it, after due engagement. From about 30% of total loans being under moratorium at end-April, the loan to customers where moratorium was effected for June repayments were about 17.5% of total loans at June 30, 2020. This trend is in line with our expectations and the gradual resumption of economic activities in June. Rakesh will provide additional comments later on the call. While moratorium trends would continue to evolve, we do not see this as a conclusive indicator of eventual outcomes. We monitor and analyze our portfolios with reference to a wide range of markers, including cash flows, deposit account data, income levels, leverage, sources of income, the industry in which they operate or are employed and repayment behavior. We are confident that the approach we have adopted in building the portfolio, which I outlined earlier, would hold us in good stead. Our intention has been to cushion the balance sheet from the potential risk arising out of uncertainties around the trajectory of the pandemic and the pace and level of economic activity. We had made COVID-19 related provisions of INR 27.25 billion in Q4 of 2020 against standard assets to further strengthen the balance sheet. As a prudent measure, the bank has made further COVID-19 related provisions of INR 55.50 billion during Q1 of 2021 with the objective of completely cushioning the balance sheet from the impact of COVID-19. Number six, maintaining a strong capital base. During the quarter, the bank monetized 1.5% and 4% stake respectively in its life and general insurance subsidiaries, further strengthening the balance sheet by about INR 30 billion, which is reflected in the treasury income for the quarter. The capital position of the bank after making the further COVID-19 related provisions with the objective of completely cushioning the balance sheet from the impact of COVID-19 continued to be healthy with the CET1 ratio of 13.6% as of June 30, 2020, including the profits for the quarter. Over the medium term, we see favorable prospects for the Indian economy. We expect India's strong domestic consumption and investment drivers to continue to support healthy rates of growth in the normal environment. Given our strong deposit franchise and robust technology platforms, we will seek to benefit from the growing formalization of the economy and the rapid adoption of technology in banking. We seek to achieve profitable growth through identification and focus on pre-selected customer segments and micro-segments and geographical micro-markets that offer an opportunity for growth. We aim to provide all relevant deposit, credit and fee-based products and services to these segments and in these markets with digital delivery and decongested process as a key enabler. This approach has aided in growth in core operating profit in last year, even as the NPL additions and related provisions have declined. We will continue to build our business on this basis. We have also created a significant provisioning buffer with the objective of protecting the balance sheet from potential risks. The Board of Directors of the bank has approved raising of equity capital of an amount up to INR 150 billion, subject to regulatory, shareholders and other approvals as may be required. The proposed capital raising, subject to necessary approvals and market conditions, is aimed at further strengthening our capital adequacy and improving our competitive positioning. With these opening remarks, I will now hand the call over to Rakesh.

[Rakesh Jha, Chief Financial Officer]

Thank you, Sandeep. I will talk about the balance sheet growth, credit quality, P&L details, capital, performance of subsidiaries and loan portfolio information. Starting with the balance sheet. The overall loan portfolio grew by 6.5% year-on-year as of June 30, 2020. The domestic loan growth was 9.6% year-on-year compared to 12.9% year-on-year as of March 31, 2020. The domestic loan book declined by 1.2% sequentially. The retail portfolio grew by 11.3% year-on-year and declined by 0.8% sequentially. Within the retail portfolio, the mortgage loan portfolio grew by 9.3%, business banking by 33.7%, rural lending by 14.3% and commercial vehicle and equipment loans by 6.6%, while the auto loan portfolio was flat year-on-year. Growth in the personal loan and credit card portfolio also reduced to 22% year-on-year. This portfolio was INR 587.09 billion or 9.3% of the overall loan book as of June 30. The Bank has extended the Emergency Credit Line Guarantee Scheme to eligible MSME borrowers based on its credit assessment. Till July 22, we have sanctioned about INR 50 billion to about 19,000 borrowers under this scheme, of which about INR 38 billion has been disbursed.The SME business comprising of borrowers having a turnover of less than INR 2.5 billion, grew by 17.9% year-on-year to INR 208.57 billion at 30th June. The growth of the performing domestic corporate portfolio was about 8%. During the quarter, we closely engaged with highly rated corporates to meet their short-term funding needs. We also used TLTRO funds during the quarter to lend through corporate bonds. The international loan portfolio declined by 21.1% year-on-year in rupee terms and 27.9% year-on-year in U.S. dollar terms at June 30. The international loan portfolio was 7.5% of the overall loan book at June 30. We had mentioned in our previous quarter call that we would be progressively exiting our non-India linked exposure in a planned manner. Excluding exposures to banks and retail lending against deposits, the total corporate fund and non-fund standing of overseas branches, net of cash or bank or insurance bank lending, was USD 6.41 billion at 30th June compared to USD 7.48 billion at March 31, 2020. The non-India linked corporate portfolio reduced by 40% year-on-year and 16% sequentially at June 30. 63% of the outstanding at 30th June was to Indian corporates and their subsidiaries and joint ventures. 17% of the outstanding was to non-India companies with Indian or India-linked operations and activities. As we had stated on the last earnings call, the portfolio in this segment is generally well-rated and the Indian operations of these companies are target customers for the bank's deposit and transaction banking franchise, and the bank would continue to pursue risk-calibrated opportunities in this segment. 7% of the outstanding was to companies owned by NRIs/PIOs; 13% of the outstanding was to the other non-India companies, which is less than 1% of the total portfolio of the bank. Coming to the funding side, we continue to focus on growing the daily average CASA balances. Daily average savings account deposits increased by 14% year-on-year, and average current account deposits increased by 19.8% year-on-year during the quarter. Total term deposits grew by 27.4% year-on-year to INR 4.6 trillion at June 30. Coming to credit quality. Gross NPA additions during the quarter were INR 11.6 billion. The gross NPA additions from the retail portfolio were INR 6.02 billion. Of the corporate and SME gross NPA additions of INR 5.58 billion, there were slippages of INR 1.71 billion from corporate and SME borrowers rated BB and below at March 31, the details of which are given on Slide 25 of the investor presentation. The lower gross NPA additions reflect the asset classification standstill benefit on loans under moratorium. Recoveries and upgrades excluding write-offs were INR 7.57 billion in the current quarter. There were recoveries and upgrade of INR 4.17 billion from the retail portfolio and INR 3.40 billion from the corporate portfolio. The gross NPAs written-off during the quarter aggregated to INR 14.26 billion. The bank did not sell any NPAs in this quarter. The total net nonperforming assets were INR 86.75 billion at 30th June compared to INR 101.14 billion at March 31. The gross NPA ratio at 30th June was 5.46%, and the net NPA ratio was 1.23%. The provision coverage ratio, excluding write-offs, increased further to 78.6% at 30th June. The loans and non-fund based outstanding to borrowers rated BB and below, excluding NPAs, were INR 171.10 billion at 30th June compared to INR 166.68 billion at 31st March, of which the non-fund based outstanding to nonperforming borrowers was INR 48.29 billion at June 30 compared to INR 50.63 billion at 31st March. The bank holds provisions of INR 13.98 billion at 30th June against this non-fund based outstanding. The fund and non-fund based outstanding to borrowers under RBI resolution scheme was INR 14.6 billion as of 30th June compared to INR 15.33 billion at March 31. The fund and non-fund outstanding to restructured borrowers was INR 1.68 billion at 30th June; and the balance INR 106.53 billion of fund-based and non-fund based outstanding to borrowers rated BB and below, includes INR 70.69 billion related to cases with an outstanding greater than INR 1 billion and INR 35.84 billion related to cases with an outstanding of less than INR 1 billion. Similar to the position at 31st March, other than 3 accounts, one each in the telecom, power and construction sector, the maximum single borrower outstanding in the BB and below portfolio was less than INR 6 billion at 30th June. On Slide 27 of the presentation, we have provided the movement in our BB and below portfolio during the quarter. The rating downgrades from investment-grade categories, excluding fund-based outstanding to accounts that were also downgraded to NPA in the same period, were INR 14.73 billion in Q1. The downgrades were granular in nature and spread across sectors. There were rating upgrades to the investment-grade categories and a net decrease in outstanding of INR 8.6 billion, and there was a reduction of INR 1.71 billion due to slippage of some borrowers into nonperforming category and devolvement of non-fund based outstanding to existing NPAs. As Sandeep mentioned, our approach in recent years has been to make provision upfront for potential losses and risks. For example, in the case of certain corporate NPL additions, we had made provisions substantially covering the outstanding amount in the quarter of NPL addition, as opposed to phasing out the same as permitted by applicable regulations. In Q4, last year, we had on a prudent basis made COVID-19 related provisions of INR 27.2 billion. In this quarter, we have made additional COVID-19 related provisions of INR 55.5 billion on a prudent basis with the objective of completely cushioning the balance sheet from the impact of COVID-19. We have taken into account the following: the lower-rated, that is, BB and below corporate and SME portfolio; the loans under moratorium in portfolios such as commercial vehicle loans and builder loans that were experiencing challenges even before the outbreak of the pandemic; loans under moratorium in certain other portfolios based on the nature of the product, collateral, borrower segment and underlying economic activity. These provisions, we believe, are prudent in the context of uncertainties around the trajectory of the pandemic and the pace and sustenance of the improvement in economic activity. The total outstanding provisions at 30th June excluding provisions for nonperforming assets, considered in the computation of the provisioning coverage ratio was INR 143.68 billion, or 2.3% of loans. These include the COVID-19 related provisions, provisions held against the non-fund based outstanding to NPAs, general provisions on standard assets and other standard asset provisions. Coming to P&L. Net interest income increased by 19.9% year-on-year to INR 92.8 billion. Interest on income tax refund was INR 0.24 billion this quarter compared to INR 1.84 billion in Q1 of last year. The net interest margin was at 3.69% in this quarter compared to 3.61% in Q1 last year and 3.87% in the Q4. The domestic NIM was 3.91% in this quarter compared to 4.14% in Q4 and 3.93% in Q1 of last year. International margins were at 0.33% in this quarter. The impact of interest on income tax refund and interest collections from NPAs was about 4 basis points at a similar level compared to Q4 of last year. The margins were lower in Q1 compared to the previous quarter, primarily due to the higher liquidity as deposit flows continue to be robust with fewer lending opportunities. Noninterest income, excluding treasury income, declined by 26.7% year-on-year to INR 23.8 billion this quarter. Fee income declined by 30.8% year-on-year to INR 21.04 billion this quarter due to lower borrowing and investment activity by customers and lower consumer spend in the lockdown period. Retail fee income also declined by 31.9% year-on-year and constituted about 70% of overall fees in the current quarter. Dividend from subsidiaries was INR 1.87 billion this quarter compared to INR 1.91 billion in Q1 last year. The bank's operating expenses decreased by 4.7% year-on-year this quarter. The cost-to-income ratio, excluding gains from sale of stake in subsidiaries, was 37.5% compared to 43.9% in Q4 and 43.7% in Q1 last year. Employee expenses increased by 10.9% year-on-year during the quarter. This increase in employee expenses reflect the increase in provisions on retirals and other employee benefits due to decline in yields this quarter. The bank had 96,682 employees at June 30. Non-employee expenses decreased by 15.1% compared to Q1 of last year. The decrease in non-employee expenses was due to lower business volumes during the lockdown period and lower administrative and infrastructure related expenses, partly offset by increasing technology related expenses. We would expect business related expenses to increase in future quarters as business volumes increase from the current level. As a result of the above, the core operating profit increased by 14.8% to INR 70.14 billion this quarter. Excluding the impact of higher interest income on income tax refund in the corresponding quarter last year, the core operating profit grew by 18% year-on-year. The treasury income was INR 37.63 billion this quarter compared to INR 2.42 billion in Q4. The gains of INR 30.36 billion through sale of shares of ICICI Life and ICICI General are reflected in treasury gains for this quarter. Provisions, other than the COVID-19 related provisions, declined by 41.5% year-on-year to INR 20.44 billion this quarter. Profit before tax increased by 14% to INR 31.83 billion this quarter compared to INR 27.93 billion in Q1 last year. The profit after tax increased by 36.2% to INR 25.99 billion in Q1 compared to INR 19.08 billion in Q1 last year. Coming to the capital position, the CET1 ratio including the profits for Q1 was 13.60% at 30th June compared to 13.39% at March 31. Including profits for Q1, the Tier 1 ratio was 14.93%, and total capital adequacy ratio was 16.32% at 30th June. Now I'll talk about the loan portfolio. The retail loans as a proportion of total loans were 64.1% at 30th June. Including the non-fund based outstanding, the share of the retail portfolio was 54.4% of the total portfolio at 30th June. As we had mentioned in our previous quarter's earnings call, the portfolio level build-up strategy for the retail loan book has been based on utilizing the existing customer database for sourcing in key retail asset products to cross-sell and up-sell. We monitor the performance at a subsegment level and in view of the current of environment, customer selection and underwriting loans have been reviewed and are being monitored constantly with necessary policy strengthening carried out at micro-market and subsegment level. The disbursements across various retail products, which had virtually stopped in the months of April and May have picked up in June. The disbursements across home and auto loans decreased by about 65% and personal loans and commercial business decreased by about 85% in this quarter compared to Q4. The incremental sourcing during Q1 was primarily to existing customers of the bank. Our mortgage portfolio was about 50% of the retail loan portfolio and about 32% of the total loan portfolio at 30th June. Of the total mortgage portfolio, home loans comprise about 70%, top-up loans given to existing home loan customers based on their track record comprise 8%, office premises loans are about 5% and loan against property comprises about 17%. About 70% of the mortgage customers have an existing liability relationship with the bank. The home loan portfolio is granular in nature with an average ticket size of about INR 3.5 million. It is geographically well diversified and has been built on fundamental premises of cash flow assessment of the underlying borrower as well as meeting the legal and technical standards of the bank for the property being mortgaged. Average loan-to-value ratio of the home loan portfolio is about 65%. The loan against property portfolio has conservative loan-to-value ratios and lending is based on cash flows of business and individuals with limited reliance on the value of collateral. The valuation of the property is carried out internally with average to loan-to-value ratio of the loan against property loan portfolio being 55%. The commercial business portfolio, including commercial vehicles, comprises 4% of the overall portfolio. With the gradual opening up of the economy, we have seen the utilization of commercial vehicles go up. Electronic toll collections through FASTag, where we are a market leader, fell to about 35% pre-COVID levels in the last week of April and 60% in May before improving to above 80% in June and the first fortnight of July, mainly due to the demand for transportation of essential commodities. The utilization levels of commercial vehicles based on daily average distance covered have recovered to about 80% of the pre-COVID level in the first fortnight of July from a low of about 27% in April. The e-commerce sector, in particular, is seeing more than 100% logistics utilization compared to pre-COVID levels. The bank has a well-diversified commercial vehicle portfolio with the top 20 customers contributing to 3% of the book. Around 60% of our commercial vehicle portfolio comprises customers with long vintage. These customers are well-seasoned and have witnessed multiple cycles in this business. Auto loans comprise 5% of the overall portfolio. Overall, the passenger car industry has started showing recovery and we understand that wholesale billing has reached 50% of the average of the last fiscal in June '20. Retail trends too have been promising in the month of June and are estimated to have reached 70% to 80% of inquiries and bookings seen in pre-COVID times. Auto loan disbursement volumes in June have reached around 65% of the pre-COVID level. Here about 87% of our auto loan portfolio comprises new vehicles and about 13% is used vehicles. About 50% of the new vehicle customers and 40% of the used vehicle customers have an existing relationship with the bank. Our personal loan and credit card portfolio is about 9% of the total loan portfolio. We have grown this portfolio from a low base primarily to cross-sell. About 70% of the personal loan and credit card portfolio is to the existing customer base, which provides liability information for credit assessment. Around 85% of the portfolio comprises salaried individuals. About 75% of the customers in the salaried segment are employed with well-rated corporates, including MNCs and government entities, and have stable income streams. The bank has in place conservative underwriting norms in terms of higher income cut-offs, lower leverage norms and loan caps among other for this -- for the customers in the salaried segment. Our analysis of pre-moratorium bureau data suggest that the delinquencies in our unsecured retail portfolio were lower than both the industry average and the average for private sector banks. With respect to the moratorium, we see that, adjusted for the usual attrition levels, about 97% of our personal loan and credit card customers, who have availed the moratorium, continue to receive salary credits. Credit card spends have recovered to around 65% of pre-COVID levels in June and we have observed a shift in consumer spending patterns with spends in categories such as travel and restaurants being replaced by health and wellness, insurance, electronics and e-commerce transactions. Our rural portfolio comprises 9% of the total portfolio. Within this, gold loans comprise 3%, and Kisan credit cards comprised another 3%. Our overall micro-finance loans are very small and negligible. The economic activity in the rural segment has been relatively less impacted by the pandemic. This, coupled with the satisfactory indicators Sandeep alluded to earlier, has led to healthy farm income and strong growth in the rural sector. The same has been witnessed in the increase in tractor sales. Disbursements in the rural portfolio have picked up and are close to pre-COVID levels. Gold loans, for example, grew by 32% year-on-year at 30th June. Our business banking portfolio accounts for 4% of the total portfolio. Average ticket size here is INR 10 million to INR 15 million. The portfolio is fully collateralized with about 85% of the portfolio having a collateral cover of more than 100%. The primary collateral is in the form of charge on current assets and is backed by self-occupied residential or commercial or industrial properties. Our focus, in this segment, is on parameterized and program-based lending, digital channels, granularity, collateral and robust monitoring. The portfolio is well diversified, spans multiple sectors and industries and is well spread across geographically as well. Prior to the outbreak of COVID-19, the delinquency trends were low. With the gradual resumption of economic activities, credit summations in the overdraft accounts of small business customers have nearly reached pre-COVID levels in the last week of June. Even before the outbreak of COVID-19, we were using an artificial intelligence-based pre-delinquency management engine, which uses more than 100 variables to create multiple micro-segments and accurately forecast almost 80% of our bounces for the right intervention at the right time. It was further sharpened during this quarter with additional markers such as zones under lockdown, industries directly impacted by COVID-19 and salary uploads among others. We strengthened our collections team by reorganizing teams from sales, credit, operations and customer service. We have been able to connect to over 400,000 customers on a daily basis using cloud telephony and voice bots to counsel them on the moratorium. We are using API-based integrations with large payment channels to ensure timely credit of the overdue amount. Our collection efficiencies have improved month-on-month, and June were about 80% of pre-COVID levels. The corporate, international and SME portfolios were 35.9% of the total loans as of June 30. Including non-fund based outstanding, the share of the corporate, international and SME portfolio was 45.6% of the total portfolio at 30th June. SME portfolio comprising exposures to companies with a turnover of up to INR 2.5 billion was 3% of total loans. Our focus in this portfolio is on granularity, collateral security and more parameterized lending. The average ticket size of the incremental sanctions in this portfolio has reduced by about 50% over the past few years and is about INR 0.1 billion now. Collateral cover has also improved significantly. Almost all the sanctions in financial year 2020 were through program-based lending. Customer sourcing has been largely through the internal channels of branches, wealth management and private banking. We have seen positive trends for customers as the lockdown has been gradually lifted. Besides certain industry segments like gems and jewelry, retail trade, hospitality and textile in certain higher impacted regions, the recovery of cash flows for customers in other industry segments and regions has been positive. Average credit summation for clients who have opted for moratorium is generally similar to those who have not opted for moratorium. As Sandeep mentioned earlier, in our corporate portfolio, we have emphasized reduction in concentration risk and improvement in the rating mix of business. We believe that our approach of granular exposures and focus on higher rated corporates is standing us in good stead in this environment, and we'll continue with this approach. Our approach is to provide a full suite of banking products to corporate clients and their ecosystems of employees and business partners. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital loans was INR 218.48 billion or about 3% of our total loan portfolio. As mentioned in our previous calls, our portfolio is granular in nature with the larger exposure being to well-established builders. About 12% of our builder portfolio at 30th June was either rated BB and below internally or was classified as nonperforming. The total outstanding to NBFCs and HFCs was INR 441.62 billion at 30th June compared to INR 397.55 billion at 31st March or about 5% of our total outstanding loans at 30th June. Our exposure is largely to well-rated entities with long vintage, PSUs, and entities owned by banks and well-established corporate groups. Sequential increase in the outstanding to NBFC and HFC during the quarter reflects this. The proportion of the NBFC and HFC portfolio internally rated BB and below or nonperforming is about 1%. In line with the approach for the overseas business that we had articulated earlier, in our international business, we focus on nonresident Indians for deposits, wealth and remittance businesses. We are also focused on deepening relationships with Indian corporates in international markets and multinational companies present in international as well as domestic markets for maximizing the India-linked trade, transaction banking and lending opportunities. The non-India linked overseas corporate portfolio declined by about 16% or USD 460 million sequentially this quarter. RBI had permitted banks to grant moratorium on amounts falling due between March 1 and May 31. During the month of May, RBI extended the period for which moratorium could be granted till 31st August. Various banks have adopted different approaches towards the grant of moratorium as well as disclosures regarding the same, including in the financial statements for the year ending March 31, 2020. As per the latest Financial Stability Report released by RBI, about 31% of loans of private sector banks were under moratorium at April 30, 2020. As Sandeep mentioned, our approach to the moratorium has been to permit the same for customers seeking it, after due engagement. From about 30% of total loans being under moratorium at end-April for us, the loans to customers where moratorium was effected for June repayments was about 17.5% of total loans at 30th June. This trend is in line with our expectations and the gradual resumption of economic activities in June. For the moratorium up to May 31, we had granted automatic moratorium on certain categories, with customers being able to opt-out. For the moratorium from June 1, there is no opt-out category, other than for operational convenience reasons in some small ticket size portfolios like jewel loans, and all retail borrowers are required to opt-in for the moratorium in each of the months of June, July and August. About 90% of the portfolio under moratorium at end-June comprises loans that were also under moratorium at end-May. The percentage of loans under moratorium was higher for some portfolios such as commercial vehicle loans and builder loans, which have been experiencing challenges even prior to the outbreak of COVID-19. Apart from the above, there is no major difference in moratorium levels in the key portfolios, and hence the mix of moratorium loans would largely reflect the overall portfolio mix. There would be a set of customers who availed moratorium prior to end-May and have not availed the moratorium from June so far, but have overdues. We are engaging with these customers and should they also come under moratorium based on the pool of such loans, the overall moratorium level may increase by up to a couple of percentage points later. Coming to subsidiaries. The details on financial performance of subsidiaries is covered in Slides 37 to 38 and 59 to 64 in the investor presentation. Value of new business of ICICI Life was INR 2.01 billion in Q1 compared to INR 3.09 billion in Q1 of last year. The new business margin increased from 21.7% in fiscal 2020 to 24.4% in Q1. The protection based annualized premium equivalent remained stable year-on-year at INR 2.14 billion and accounted for 26% of the total annualized premium equivalent in Q1. The new business premium was INR 14.99 billion in Q1. Gross direct premium income of ICICI General declined by 5.3% year-on-year to INR 33.02 billion in Q1 compared to INR 34.87 billion in Q1 last year. The combined ratio was 99.7% in Q1 compared to 100.4% in Q1 of last year. The profit after tax grew by 28.5% Y-o-Y to INR 3.98 billion in Q1 from INR 3.1 billion in Q1 of 2020. The profit after tax of ICICI AMC was INR 2.57 billion in the current quarter compared to INR 2.19 billion in Q1 of last year. The profit after tax of ICICI Securities on a consolidated basis was INR 1.93 billion in the current quarter compared to INR 1.14 billion in Q1 of last year. ICICI Bank Canada had a profit after tax of CAD 4.8 million in the current quarter compared to a net loss of CAD 7.5 million in Q4, and profit of CAD 11.8 million in Q1 last year. ICICI Bank UK had a net profit of USD 5 million this quarter compared to a net loss of USD 6.8 million in Q4 and a net profit of USD 10.1 million in Q1 last year. As mentioned in our earlier calls, the focus for the overseas subsidiaries is similar to that for the branches, primarily around NRI and India-related opportunities. The non-India corporate portfolio subsidiaries has reduced over the last 1 year and during the quarter, they are working on a further planned reduction going forward. ICICI Home Finance had a profit after tax of INR 0.01 billion in the current quarter compared to a profit after tax of INR 0.64 billion in Q4 and a loss of INR 0.06 billion in Q1 last year. The profit was higher in Q4 due to gains from sell-down of loans. The consolidated profit after tax was INR 31.18 billion in Q1 compared to INR 12.51 billion in Q4 of last year and INR 25.14 billion in Q1 of last year. With this, we conclude our opening remarks, and we'll be happy [indiscernible]

[Operator]

Sir, we're not able to hear you. [Technical Difficulty]Participants, we'll disconnect the line for the management speakers and call them again. Request you all to please stay connected. Sorry for the delay participants, we have the line now reconnected for the management speakers. [Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara.

[Mahrukh Adajania, Analyst]

I just had 2 questions. Firstly, on the moratorium. Of the moratorium 1 customers who've not shifted to moratorium 2, how many of them are overdue? You had mentioned that they are, but could you give a proportion like some banks have said that 70% of moratorium 1 have paid. So any rough range that you could give?

[Rakesh Jha, Chief Financial Officer]

Mahrukh, when I said that we think that the moratorium percentage could go up by up to a couple of percentage points that is a part of portfolio of customers who had taken moratorium 1 and have not opted for moratorium 2, but would not have made the payment for the month of June. And as we speak, we would be engaging with them in terms of their plan for the payment. So that number of 17.5% could go up by another couple of percentage points.

[Mahrukh Adajania, Analyst]

Okay. So just a couple of percentage points.

[Rakesh Jha, Chief Financial Officer]

Yes. That is what the expectation is, yes.

[Mahrukh Adajania, Analyst]

Okay. And the other thing is I wanted to know about your drawdown policy -- provisioning drawdown policy. As in that, you have mentioned that your COVID provisions are again -- some BBs that were in trouble pre-COVID and then some other segments who've taken moratorium. So what will be your drawdown policy as in that as and when these accounts lift, you will draw down, right? You will not make fresh provisions. Is that the right way to look at it?

[Rakesh Jha, Chief Financial Officer]

Yes, Mahrukh, these provisions have been taken as a contingency provision. Like you said, I broadly outlined the portfolios that we have taken into consideration while making this provision. So as we see slippages happening from this portfolio, the provisions would be drawn down in that sense. Of course, I must add that the provision that we took in March quarter, INR 27.25 billion, we could have drawn down on that as well during the current quarter because many of those customers would have made payments during the quarter. But our plan is to let the moratorium period get over, and then reassess the provisions instead of doing it in the interim.

[Mahrukh Adajania, Analyst]

Got it. But after the moratorium gets over you will draw down, right? You will not keep that as a buffer. That's my question.

[Rakesh Jha, Chief Financial Officer]

So the intention of these provisions is to be utilized for the impact that could come in from COVID-19. So yes, we would utilize the provisions.

[Mahrukh Adajania, Analyst]

And there you're marked against specific pools of assets?

[Rakesh Jha, Chief Financial Officer]

Against portfolios. It's not against individual loans. It's like a contingency provision. So that would not be against specific loans per se.

[Operator]

The next question is from the line of Rahul from Goldman Sachs.

[Rahul M. Jain, Executive Director]

Just 2, 3 questions again on moratorium to start with. So Rakesh, you said a couple of percent could further go up because some of the customers in morat 1 are still in the overdue categories. So the customers who started paying, so they have paid the full June installment that was due or that's a part collection? How do you classify those customers out of moratorium?

[Rakesh Jha, Chief Financial Officer]

So the moratorium -- Rahul, the moratorium is, if a customer has taken moratorium, he was not required to make payments from March to May for the moratorium 1. From June, the normal billing would have started for the customers who have not opted for moratorium 2. So there will be a set of customers who would have paid their installments for the month of June and not opted for moratorium 2. And there will be a set of customers who have -- who would have not paid yet. And this is a set of customers who we are engaging with and because of that, we do expect that the 17.5% number can go up by another couple of percentage points.

[Rahul M. Jain, Executive Director]

So -- again, yes. So just to clarify, so this collection of EMI would be 100% of the billed amount or it could be like a lower number also. Just wanted to clarify?

[Rakesh Jha, Chief Financial Officer]

Typically it will be full EMI gets paid over the quarter.

[Rahul M. Jain, Executive Director]

Got it. Got it. The second question was you talked about -- Rakesh, about certain portfolios like CVs and builder loans facing the stress. So is it possible to get some more color of this 17.5% number? Can you throw some light on what could be the mix between secured and unsecured? Or individual portfolios like salaried versus self-employed, what could those cuts look like?

[Rakesh Jha, Chief Financial Officer]

Generically, we believe that customers, of course, have also got impacted by the pandemic. But there are a set of customers who have taken it as an additional buffer as well. So it is a mix of both factors, which is there. So generically, what we have found is that the moratorium percentages across portfolio is not very divergent. The reason we called out commercial vehicle and the builder loans. And maybe you can add dealer funding to that portfolio as well. These 2 or 3 segments are where the moratorium percentages would be much higher than the average of 17.5% that we have seen. For the other portfolios, it will be in that region. So like in April, we had said around 30%. This time, one can say around 18%, 20% will be the moratorium portfolio across various portfolios. For these commercial vehicle and builder loans, it is a higher percentage.

[Rahul M. Jain, Executive Director]

Got it. Just one more question on the provisions that you've made, which is 7.5% of the moratorium book. So what is the policy now going -- on a go-forward basis? Do you plan to add some more contingent provisions in the next quarter? Or you think 7.5% is good enough, taking into account the PDs and the LGDs also?

[Rakesh Jha, Chief Financial Officer]

No, so I think like we said, I think the objective here was to completely cushion the balance sheet against the possible impact from COVID-19. So we have taken this provision. Going forward, we'll, of course, have to look at how things evolve from here, assuming a base case, we have made the entire provision that we would have wanted to make in that sense from a contingency point of view. I think from September quarter and of course, December and March quarter, once the moratorium gets over. In any case, one will start seeing the actual payment collections and delinquency numbers coming up.

[Operator]

The next question is from the line of Krishnakumar from Sundaram Mutual Fund.

[S. Krishnakumar]

And congrats on a set of good performance in tough times. So from all that you have done in terms of provisioning credit cost and outlook, but we -- I just want to understand why do you want to raise more capital at this juncture, given you have a fairly strong capital position at this point in time?

[Rakesh Jha, Chief Financial Officer]

No. I think the capital raising that we have announced. And of course, we are in the process of seeking shareholder approval for the raising. So of course, it is from the point of view of strengthening our capital adequacy further. And from the point of view of the competitive positioning as well, if you look at the overall landscape, which is there. So that is the objective, which is there behind the capital raising. We see growth opportunities to be there from a medium-term perspective for the banking system, in particular, the private banks. And we would want to be competitively placed to capitalize on that opportunity.

[S. Krishnakumar]

Sure. And could you guide a little bit in terms of your thoughts across various loan portfolios in terms of growth for this year, given the way that we are opening up, where do you see you focusing upon in terms of fresh lending, et cetera? We do see some peers have gone ahead with a lot of corporate lending. So how are we thinking about the rest of the year in terms of loan growth?

[Rakesh Jha, Chief Financial Officer]

So I think from an overall perspective, as we said earlier, we don't have any specific loan growth targets. So we will look at the opportunities, the risk and the return and then kind of look at the deployment of funds that we have. If you look at across the portfolios, on the corporate side, indeed, there is some more opportunity to lend but a lot of it is at very fine pricing. And if it is for longer terms, longer maturity, then we are not sure whether at the current cost, one would want to do it. But we are very happy to do short-term lending there. So that's something that we'll continue to explore. On the retail side, like we said, April and May was virtually no business. I think from the month of June, we have started to see a pickup happening. And we expect gradually the numbers to increase through the rest of the year. Rural, of course, has held up pretty well during this period, and we expect that to be running at normal levels through the year. Again, so it will be a very, very focused thing from wherever we are comfortable with the underlying credit and the returns are appropriate, we are happy to lend. But at the same vein, just because we have surplus liquidity, we would not be in any significant hurry to deploy the funds. Because the negative carry of liquidity is not too much for us to worry and kind of start lending in a big way. So it will be a balance that we will do based on the risk return opportunities that we see.

[Operator]

[Operator Instructions] The next question is from the line of Parth Gutka from Macquarie.

[Nishant Shah, Research Analyst]

Am I audible?

[Rakesh Jha, Chief Financial Officer]

Yes.

[Nishant Shah, Research Analyst]

This is Nishant from Macquarie. So I had like a couple of questions around your credit card business. So if I look at the industry level data, so your market share of spends is roughly around 300 or 400 basis points lower than your market share of cards outstanding? So could you perhaps explain why this is? Is this to do something with a lower share of corporate spends in your mix? Or could you perhaps like quantify what is your 30-day active card number? So that's question one. Question 2 would be around Amazon Pay co-branded card. So the terms of the card are fairly onerous. So could you probably explain like some thoughts around that card? Why such a high cash back and also origination fee? And like just the thoughts around this card portfolio, how much of your cards today are being sourced from Amazon? And the final question is on the mix of internal versus external sourcing. If you could quantify that for your unsecured portfolio or like your card portfolio in specific, that would be helpful.

[Anup Bagchi, Head of Retail Banking & Executive Director]

So generically, the way we are constructing the card portfolio. So as you know, there are 2 ends of the spectrum on the card portfolio. You can have pure transactors or you can have people who will revolve. And we have to balance both. Because if we don't balance both, then we'll always have a problem in cards, one, either on profitability or on the loan losses. So that is one. Second is what has been our approach in building up the card. You can bump up the spends, as you yourself actually have answered. We can bump up the spend by having a mix of very large commercial and then individual and person volume. Now on the commercial part, as you know, while volumes will come, it is unlikely that you'll make any money out of it or if at all, you'll make very, very tiny money out of it. And in our bank, we are quite focused on 2 things. One is card is an integral part of a portfolio, a personal banking portfolio because it is for us one of the very few products, which has high-frequency usage. And so from a brand perspective, it is a very, very important thing, both credit cards as well as debit cards, which is not true when you use it for commercial cards. Although we have a commercial card portfolio. As Rakesh had alluded earlier and before that Sandeep had alluded earlier, we are quite focused that things should make money for us, and it should be fair to the customer, but it should also be fair to the bank. Coming to Amazon. And most of it is now fully sort of internally to our internal customers. And the whole affluence bit is actually only one. We get customers from the liability side. We get well-profiled customers on the liability side. We create preapproved base, and then we go out and then give them and cross-sell other products, including cards. Coming back to Amazon, I think it is a fantastic product. The pickup of Amazon has been very, very good. And I would -- everybody who is on the call, I would request all of you to pick up the Amazon card. I think you'll really like it. Whether it is 5% or 3% or whatever it is certain, it is very beneficial to all of you. And let me also assure you, it is quite beneficial to the bank as well. Because once you become a primary card, it is not that you are spending all of your life in Amazon. It's just a weighted average of 5% Amazon, but also other non-Amazon. There are very, very few people who just only use it for Amazon and use some other cards for non-Amazon. So slowly it becomes a primary card. And then you'll start to make money if they start revolving a little bit on that. Our approach to credit card is to increase high-quality cards in force, ensure that there is activation and ensure that we have the lesser chronic revolvers on the card, but we have more episodic revolvers in the card. For example, one of the reasons why people use our card is because if you're getting a 10% discount, but you don't have the cash today. Your revolver rates are low compared to the 10% that you get. So for a 1 month, it is a very, very good instrument of getting your discount, but at a very reasonable rate. So that's how the card movement is. And if you see our spend rate or if you look at a revolver rate, it is among the better quality direction. And from our cards perspective, it is a certainty which we are driving, which is moving up and what we have done on the cards as against physical, which -- where we are present. But post COVID and even before that we have started to move on digital cards. As you know, most of our cards now, you can instantly have a digital card instantly issued. And so you don't have to wait for a physical card to reach you, and you can start using it on e-com platform. And as you know now, it is the e-com platform cards digitally is getting used much, much, much more than the physical side. So from our perspective, just strategically, more digital, push towards more primary, push towards more primary accounts and making it a primary card, ensuring that there is a very good mix of transactors and revolvers. And when there are transactors, making sure that you have got 360-degree of the customers. When it is revolver, ensuring that there are not too many chronic revolvers because cards with that revolver rate, chronic revolvers, they don't last pretty long. And ensuring that our OpEx are low because, as you know, credit card is a high OpEx business as well. So making the OpEx low and you make OpEx low by 2 things. One is reducing the cost of acquisition, which is through your own customer base and then making sure that the overall operating expenses of administering the card gets better because of decongestion. And so when we look at because we know our numbers and we know one of the card companies are listed. When we look at it vis-à-vis, then we are quite sort of favorably poised on the cards portfolio.

[Nishant Shah, Research Analyst]

Fair. That's a comprehensive answer. Just one small thing. Could you quantify what is your 30-day active card rate? Like what percentage of your cards are active on a 30-day deposits?

[Anup Bagchi, Head of Retail Banking & Executive Director]

Deposit, we have not disclosed it. So I'll not be able to quantify but I'll urge all of you to take the Amazon card, it's really very good.

[Operator]

Next question is from the line of Manish Karwa from Axis Capital.

[Manish J. Karwa, Executive Director of BFSI]

Sir, I just want to ask on the cost to income. Now this quarter, obviously, the cost have declined sharply. Now how much of this cost decline will be structural? And how much do you think it will come back once the growth starts picking up?

[Rakesh Jha, Chief Financial Officer]

No. So like I said, Manish, I think a lot of the cost is business linked. The retail sourcing costs, which are there. The cost, the advertisement sales promotion, those expenses have been much lower this quarter in line with the lower business opportunities. So a lot of those costs will indeed bounce back as we start seeing the business moving up. Of course, we also have got a fair bit of benefit from lower travel costs, printing and stationery costs, some of the rental that we have been able to renegotiate for this period. So some of those elements are also there. Of course, we continue to spend on technology. So that is a cost, which is still increasing at a reasonable level. You saw our employee expenses. I think a large part of the increase, which you are seeing in the employee expenses is coming from the retiral provisions itself. Otherwise, the increase should be -- clearly be lower than what we saw for the quarter. So it is a mixed bag, but a lot of the expenses will indeed come back with the business going up, and that will also reflect on the fee revenues because fee revenues have also come down meaningfully in this quarter.

[Anup Bagchi, Head of Retail Banking & Executive Director]

So Rakesh, I just want to sort of add-on to what you are saying. See our philosophy on the cost side has been to allocate the cost in such a way so that the good quality cost, which is an investment, which is coming in an OpEx way goes towards generating our PPOP, that is operating profit -- pre-provision operating profit. And the other part of cost, it doesn't have a direct linkage with the operating profit, we try and manage those costs very, very aggressively and efficiently. So that while the -- actually, we don't run with a cost income target or an absolute cost. But what we certainly internally run with is to ensure that every rupee that is spent, where do you get the returns from and whether it is positively correlated with the business that you get. And if I were to give you an example from health, it is like a bad cholesterol and good cholesterol. So actually, all costs are not bad costs. There are good costs. And we really think that some of the costs will bounce back as the market comes back to normalcy. And we would certainly want that cost to come back when the market remains, by we will -- using this opportunity that is there in the environment, would certainly cut costs, which doesn't have either a direct linkage or because of the shift in customer demands or because of the shift in consumer behavior, those costs are no longer valid or no longer required. So we would try to take out costs from there but -- and reinvest. But we would not want to put cap on what is the cost, but we will certainly want to be accountable to ourselves, so to ensure that every rupee that we spend, we get returns on that.

[Manish J. Karwa, Executive Director of BFSI]

Sure. And the another question would be on investment. Now obviously, this quarter, we have seen a sharp jump in investment, both G-sec and other investments. Quite likely because of a very strong jump in -- a decent jump in deposits as well. But what is the nature of these investments, especially the non-G-sec-related investment? And is it a longer duration investment that we are doing? Can you just throw some light on that?

[Rakesh Jha, Chief Financial Officer]

So if you look at the investment money, the large part of increase actually has come on the SLR book itself, if you look at the numbers between -- if you're comparing from March to June, the increase there is about INR 37,000 crores increase is in the SLR book itself. The rest of the increase that is there is, one, of course, is that we had participated in TLTRO, and we have invested in some of the corporate bonds. But there -- I think from a credit point of view, we are very comfortable, I would say, on that book. Otherwise, nothing much in terms of -- so even if there is any long duration, that will be AAA, AA. Otherwise, those will be shorter duration and rating wise, very comfortable. This reflects, one, of course, the TLTRO and the other is the surplus liquidity which clearly we had during this quarter, and we will have in this September quarter as well.

[Manish J. Karwa, Executive Director of BFSI]

Okay. And Rakesh, just a last small one. On the morat number of about 17% -- 16%, 17% that we have, is there a wide dispersion between a corporate segment versus a retail versus a SME segment? I think it's pretty obvious to assume that the SME and retail would be higher than corporate, but is it significantly different, one versus the other?

[Rakesh Jha, Chief Financial Officer]

So the number is 17.5% for us. And like I said, I think if you're looking at a significant difference that is there in commercial vehicle portfolio, which we report as part of retail. The builder loans, the [ real estate ] portfolio, there, it is much higher than 17.5% and dealer funding would again be much higher than 17%. Rest of it is reasonably at a similar level across the portfolio.

[Anup Bagchi, Head of Retail Banking & Executive Director]

Rakesh, if I may add to what you are saying, the way we look at moratorium is that if you look at parts of the portfolio, they, in an equivalent format because such is the time that they already had comorbidity. Actually, if you look at the commercial vehicle or if you look at builder portfolio, it is not a new stage that has suddenly come on to the market. They already had comorbidity. And so naturally, the moratorium there would be higher. Now for the rest of the portfolio, which was performing quite well, it has 2 components. Morat will have 2 component. One is the stress component. And the other one will be a liquidity insurance component. And when we look at all the data and Rakesh actually expanded in every portfolio and in great detail he gave data on those. When we look at this, it certainly is that a very, very large proportion of them are using it for liquidity insurance. And -- which is why I think as the economy resumes we saw that in almost all places, morat 2.0 is much lower, statistically lower than morat 1.0. So it is a function of cash flows. We also see credit submissions in our even BLG book or the smaller SME book, et cetera, that the payment -- credit submissions are increasing, and we are tracking it very closely. At the end of it, all of us are actually focused not much on moratorium, but we are trying to have a fix on what is the portfolio at risk and what will the eventual credit losses. Actually, I'm sure all of us are focused on that. Morat is an intermediate number therefore, want of any other number, we have started to focus because with morat there, now we cannot track NPL. So what is the proxy for that, so morat has suddenly come in, more than become a proxy for that. So I just wanted to give you some comfort that when we look at our portfolio and portfolio at risk, certainly, things are rapidly improving. In July, I must also add that because of localized lockdown it had started to taper a little bit in those geographies. But rest of the geographies, it has moved. If you look at our FASTag data, et cetera, which is a very, very real proxy for commercial vehicle movement. There are many, many states, which is higher than pre-COVID levels. There are many -- most parts of rural is higher than pre-COVID levels. So it certainly -- it looks like that demand comes back. Of course, there are certain sectors where it is a factor of 2 things. How much will demand come back and how quickly will the demand come back? That will actually decide and how leverage is that sector. Actually, these 3 variables will finally decide the portfolio at risk. In many of them, our exposure itself is very, very small. And in many places where this is moving, where demand has come back, and it is moving up. We certainly see a corresponding increase in cash flows and credit submissions and deposit balances, et cetera. And so I understand this whole issues, and we also track -- it's not that we don't track morat, but we certainly track more. We try to assess what is the portfolio at risk, what is the stress? And what is the leverage and what is the underlying sort of resilience of our consumer, how much reserves do they have and so on and so forth. And which is why Rakesh has really given out a lot of details on each of the individual portfolios.

[Operator]

The next question is from the line of Saurabh Kumar from JPMorgan.

[Saurabh S. Kumar, Senior Analyst]

Sir, 2 questions. One is, essentially, how will the growth on deposits, essentially current accounts and savings accounts be on a daily average basis, on a quarter-on-quarter basis? And the second is essentially on the corporate advances, I mean the other private sector banks, which have reported seem to have grown at a faster rate and so is this just conservatism? Or what do you think is driving that?

[Rakesh Jha, Chief Financial Officer]

Yes. On the CASA, while I talked about the Y-o-Y growth numbers compared to Q4 as well, the growth has been quite healthy, both on savings and current size. The overall increase in daily average balance for CASA was about INR 19,000 crore in Q1 compared to Q4. And within that, savings would have been close to INR 15,000 crores, current account around INR 3,000 crores kind of a number, which was there. So the trend has been positive in that sense. On the corporate portfolio, I think -- I don't think it is from a risk -- credit risk point of view that there is any averseness which is there. As I said, we are happy to do more of shorter-term lending. And it's a function of the return that is -- that we expect versus, we would, of course, not want to do very long-term lending, even if it is very high-rated corporates because the pricing right now would not be appropriate from a long-term lending perspective. So that is something. Otherwise, there is no difference in terms of our approach there. And going forward, maybe you could see better numbers as well. But I would say that a lot of this corporate lending that you are seeing, and we have also done -- it's just that we also had a fair bit of repayments and prepayments which came in. A lot of this lending is actually akin to liquidity deployment because these are 3 months, 6 months, less than 12-month kind of lending at pretty fine pricing.

[Operator]

Next question is from the line of Mahesh from Kotak Securities.

[M.B. Mahesh, Associate Director & Senior Analyst]

Just a couple of questions from my side. One, if you could -- while you've kind of given clarity that the international loan book would keep declining? If you could just give us a status update on if there has been any further developments on the situation on the ground? Have you -- have you kind of seen any fresh stress emerging? The second question is on the market, right. You seem to be seeing very strong flow of deposits on the term side, largely kind of now is going into the investment book. Any thought process on how are you approaching this? And the third one is on the moratorium numbers, if you could just give us an update. Does 17.5% represents customers who have not paid any installment for the last 4 quarters -- 4 months, sorry?

[Rakesh Jha, Chief Financial Officer]

Yes. Yes, Mahesh. So on the overseas book, you talked about numbers, so you would have that in terms of how the portfolio has declined. There is no real incremental specific worry compared to where we were when we spoke in May. Of course, in Q4, we had a couple of reasonably large exposures, which slipped into NPA, and that's something which was a miss on our part. We have continued to be focused on planned exit from the non-India portfolio, and that continues to be the case as we speak. And during the year, we would expect to see reasonable amount of reduction in that portfolio. And we will be looking at all opportunities, whether it is getting prepayments or at the time of renewal, reducing the limits which are there. And also looking at exiting through sale of exposure. So we are looking at it in -- from all perspective in terms of bringing down the portfolio. Like we mentioned earlier, it is not because of any specific worry that we have on the portfolio. It is more to do with the fact that this is identified as being not core to our overseas business strategy, and we would not really want to spend our bandwidth on this portfolio, and that's the reason we are looking at bringing down the folio. On the margin -- Mahesh, what was the exact question in the sense that, of course, we are seeing the liquidity surpluses to be pretty high, and even as we speak in July, that situation continues, and the expectation is in the next few months, it will continue. From our point of view, we have been reducing deposit rates wherever possible. We have brought down the savings deposit rate also last quarter. We have reduced our retail term deposit rates, wholesale rates. So at some stage, I guess, the deposit flows would also come down. But otherwise, we will live with surplus liquidity and the impact it has on margin in the near term. And I think we said that in our last results call to say that our margin will be impacted by surplus liquidity, by lack of credit demand. So that is something which has reflected in the current quarter numbers. Going forward, as and when we start seeing the loan growth picking up is when the liquidity gets deployed and margins should see more stability in that sense. And bulk of the decline that we have seen on the margin is coming from the surplus liquidity. Because what is happening is that, that surplus liquidity, we are able to deploy it at a very minimal margin, maybe 30, 40, 50 basis points. And it adds a humongous number to the denominator, while contributing only 30 basis points. So overall, the margin comes down. But if you, for a moment, strip it out, then in terms of the loan yields or other investment deals, we have been able to bring down our deposit costs also in line. So it is not that from a perspective of the business spreads that has declined meaningfully. It is more of the surplus liquidity, which is adding to the denominator.

[M.B. Mahesh, Associate Director & Senior Analyst]

Got it. Perfect. Perfect. Yes. And on the moratorium, if you could just give us some clarity as to what -- you said the last time there was opt out, right? So in the sense that customers had the option of paying, but it was given to the overall portfolio. If you could just kind of walk through what's happened? Are these customers paying how much of your loan book, which is currently at 17.5%, how much of them have not paid anything so far? Some color to the texture to the book that would be helpful.

[Rakesh Jha, Chief Financial Officer]

So Mahesh, it is like you have seen, I think all the banks have said that largely, the moratorium 2, the customers who have taken this moratorium were from the customers who had taken moratorium 1. So in our case, also, that would be true. 90% of the customers who have taken moratorium 2 would have taken the moratorium 1. So to that extent, they have generally would have not been paying for the last 3 or 4 months, some of them would have paid as well. But broadly, it would be fair to assume that these are the morat 1 customers continuing into morat 2. There's a very small segment of the customers who had not taken moratorium 1 and have kind of said that they want a break on payment from June.

[M.B. Mahesh, Associate Director & Senior Analyst]

So just want to clarify this, it is not like the customers -- it's like customers actually have no balances at this point of time? The position of the customer is quite weak right now? Or do you say, look, the customer is liquid, but he's uncertain about his future?

[Rakesh Jha, Chief Financial Officer]

So it is a mix of both. The fact that there is uncertainty, for example, I talked about that there will be a fair number of salaried customers who have taken moratorium. But we find that based on the salary credit that bulk of the customers adjusted for the usual attrition, are getting their salary credits as well. So it is a mix which is there. So moratorium like Anup kind of expanded earlier, it is -- if looked at as a single item, it is not a very good indicator of the quality of the credit per se. Because it will have a mix of both the customers who have genuine challenge in repaying, but it will also have a good amount of customers who, based on the uncertainty currently want to conserve on their cash and liquidity. And that is the reason, for example, why what was at 30% of our portfolio on 30th April and like we had said at that point of time, the number would have gone up a bit in May as well. It has now come down to 17.5%. And of course, like I said, it can add a couple of percentage point more. So say, 20%. So that is what is reflecting the fact that it is not only because of some genuine payment challenge that customers have taken moratorium. So when we look at moratorium internally, we look at moratorium -- the customer has taken moratorium. We look at many other factors in terms of bureau score, cash flows, collateral and all of that and then assess the credit position for the customer.

[Operator]

The next question is from the line of Jai from Batlivala & Karani Securities.

[Jai Mundhra, Research Analyst]

Sir, if you can share what is the progress that we have made on the overdue loans, which were there as of Feb end. So as per your annual report, the March 2020 balance was somewhere around INR 12,000 crores. What is the outstanding balance of these accounts?

[Rakesh Jha, Chief Financial Officer]

So we have not, unfortunately, disclosed that separately. But clearly, there would be -- there would have been a meaningful decline in that particular amount of portfolio. Of course, since then, there would have been other customers who would have taken -- would have got into overdue. But if you look at the static position of those customers, there would have been a meaningful decline on that. We have not disclosed the numbers separately, unfortunately.

[Jai Mundhra, Research Analyst]

Sure, sir. So that overdue number is not static, right? Because those people who were in SMA-0 you would keep on adding, right? Is that the understanding or no? Because I thought that pool was static because there is a DPD fees there.

[Rakesh Jha, Chief Financial Officer]

No. So the thing was that it was the customers who have taken moratorium, moratorium 1. Of course, for them, it would become static, but then there would be a set of customers who have not taken moratorium 2. So from June onwards, that would again start adding. So it is a function -- if customer has taken moratorium 1 and 2, of course, then the past due status remains the same as it was.

[Anup Bagchi, Head of Retail Banking & Executive Director]

Actually, when we speak to customers -- this is Anup, when we speak to the customers, see, it is very clear that in this kind of -- whenever there's uncertainty, the liquidity is an important criteria. And so liquidity insurance then becomes an important criteria, and then it becomes the key in this market. And actually, one should not be too much averse in providing liquidity provided one establishes viability. Because if there is liquidity, if there's viability and it is liquidity, it is a cash flow mismatch issue, and the customers will also come out well. And from a bank perspective, because full interest is charged. And so we don't lose anything on the NPV basis, it is not a very bad thing. So we should not look at it very negatively if a customer has taken a moratorium because in uncertain times, liquidity is a very, very good strength. And we have to only look at viability and unviability of the situation. And if there is viability and it is only a matter of either a confidence issue, like in many cases because we have seen even from the best of the best of the best corporates and best of the best profile of the customers, they have also taken moratorium. So it is confidence level, it is liquidity level, it is behavioral level, but we certainly have to be mindful of the viability level. So if there is viability positive, cash flow -- there is cash flow mismatch, somebody takes a moratorium, it's fine. Just like it is about protection, then it is about any insurance. This is really the issue, viability, nonviability. That is the real core issue, which is why we track in addition to [indiscernible] not many other factors, which Rakesh alluded to earlier.

[Jai Mundhra, Research Analyst]

So sir, in that sense, you also explained earlier, I think that the PAR is much lower than the moratorium. So maybe can you provide some color on the PAR or maybe the viable and nonviable portion? Is it significantly lower than moratorium? And how do you look at that number because, of course, it is -- as you said, you are more concerned on the viability and nonviability portion. But in terms of numbers, if you can throw any sort of number?

[Anup Bagchi, Head of Retail Banking & Executive Director]

We have to look at this. Moratorium, nonmoratorium, NPA, gross, this, that is only a path towards final credit losses. So that is the approach. I'm saying because in absence of many other things, moratorium has become a focal point. But what I'm just trying to sort of communicate is that the issue is PAR. What is the portfolio at risk? What are the factors that a portfolio is? How are we monitoring our portfolio, which is why I think Rakesh, this time, decided to give a far more expansive disclosure than for us we have ever given because it is very important that all of us understand how we think through these issues, how we are tackling these issues? What is our approach to these issues? And how do we look at portfolio? How will we look at provisioning? How do we look at contingency provisioning? How do we look at fundraising in this context? Because these are 2 different things, creating a moat on the balance sheet, creating a forecast by balance sheet is very different from the portfolio that we have. Plus, the other thing is that we certainly expect that post this, certainly, we will be among the stronger banks, who will be able to then capture a much larger opportunity at that point of time. We should have everything, we should be well positioned to capture that opportunity. By way of liability franchise, by way of very, very deep analytics of understanding the customer, by way of our underwriting and making it better and more agile, looking at micro markets, looking at deeper and deeper and deeper customer segments. And of course, also supported by capital. So that is how we are positioning our bank overall. So we certainly think, and we all should pray and hope that this passes soon. But when we are on the other part of that tunnel, certainly, our -- we are confident, and we hope and pray that it passes soon. And we will emerge much stronger. And that's how we are working very hard to position our bank accordingly. Because the banking capacity in some ways will get restricted given whatever is happening. So that is where our position is.

[Jai Mundhra, Research Analyst]

Sure, sir. And sir, just last question, sir. I mean in your commentary, you mentioned that the reduction from 30% to 17.5% is as per your expectations. Just wanted to check, sir, if you can broadly share your expectation as to what would this book become by August end? I mean just to understand how are you looking into that? If you can share those expectations?

[Rakesh Jha, Chief Financial Officer]

So we will not be able to make such forward-looking statements in terms of what that position will be at August 31.

[Operator]

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing remarks. Over to you.

[Rakesh Jha, Chief Financial Officer]

Thank you, everyone, for spending time this Saturday evening. Apologies for the questions that we could not take. Anindya and I will be happy to take that subsequently. Stay safe and take care. Thank you. Bye.

[Operator]

Thank you very much members of management. Ladies and gentlemen, on behalf of ICICI Bank, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.