ICICI Bank Ltd

NSE:ICICIBANK

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the ICICI Bank Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sandeep Bakhshi, Managing Director and CEO of ICICI Bank. Thank you, and over to you, sir.

[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 results for Q4 of financial year 2021. Joining us today on this call are Vishakha, Anup, Sandeep Batra, Rakesh and Anindya. Thank you all for joining us today. We hope that you are safe and in good health. The level of economic activity saw an increasing trend from January to March. The Ultra Frequency Index, comprising several high-frequency indicators tracked by our bank's economic research group, rose from 106.3 in mid-January to 108.2 in March, indicating activity sustaining above pre-COVID levels. This was on the back of robust industrial activity indicators such as power demand, GST collections, rail freight revenues, e-way bill generation and higher vehicle registration. Property registrations also continued to increase during the quarter. However, the sharp rise in COVID-19 cases in recent weeks has led to the reimposition of restrictions in various states and cities which has impacted mobility indicators and economic activity. This is visible in the tapering off of the Ultra Frequency Index, which has fallen to 92.3 in the week of April 18. Going forward, economic activity will depend on the trajectory of the second wave of COVID-19, the progress of the vaccination program, the intensity of restrictions on movement and the period for which they continue. We would like to thank the medical and health workers' fraternity for their tireless efforts in this fight against COVID-19. We express gratitude to our colleagues who continue to serve our customers despite the challenging environment. At ICICI Bank, we have continued to steadily grow our business and franchise while maintaining and enhancing the strength of our balance sheet. Number one, growth in the core operating profit in a risk-calibrated manner through the focused pursuit of target market segments. Our aim is to achieve risk-calibrated growth in core operating profit through a 360-degree customer-centric approach, tapping opportunities across ecosystems, leveraging internal synergies, building partnerships and decongesting processes. The core operating profit increased by 19.8% year-on-year to INR 85.65 billion in Q4 of 2021. This is after an estimated impact of INR 1.75 billion of the required refund of interest on interest and related amounts charged during the moratorium period, which has been reduced from the interest income. For financial year 2021, the core operating profit grew by 16.9% year-on-year to INR 313.51 billion. Excluding dividend income from subsidiaries, core operating profit grew by 17.9% year-on-year in financial year 2021. The profit after tax was INR 44.03 billion in Q4 of 2021 compared to INR 12.21 billion in Q4 last year. For the full year, profit after tax was INR 161.93 billion compared to INR 79.31 billion in financial year 2020. In line with the applicable guidelines, the Board has recommended a dividend of INR 2 per share for financial year 2021 subject to requisite approvals. Number two, further enhancing our strong deposit franchise. Deposit growth continues to be robust with total deposits growing at 21% year-on-year at March 31, 2021. During the quarter, average current account deposits increased by 33.9% year-on-year and average savings accounts deposits by 21.2% year-on-year. For financial year 2021, the growth in average current account deposits was 25.5% year-on-year, and the growth in average savings accounts deposits were 16.7% year-on-year. Term deposits grew by 18.4% year-on-year to INR 5.0 trillion at March 31, 2021. The liquidity coverage ratio for the quarter was 138%, reflecting continued significant surplus liquidity. Our cost of deposits continues to be amongst the lowest in the system. We are focused on tapping into various ecosystems like payments, merchant and corporate ecosystems, including the employees, start-ups, dealers and vendors. Our digital offering and 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. Mortgage disbursements continued to increase this quarter over the previous quarter, driven by our efforts to offer a convenient and frictionless experience to customers by digitizing the entire underwriting process with instant loan approvals. Disbursements of commercial vehicles and equipment loans also increased further in Q4 over Q3. The growth in business banking continues to be robust as we continue to leverage our distribution network and our digital platform such as InstaBIZ and Trade Online. Till April 19, 2021, we have disbursed about INR 127 billion under the ECLGS 1.0 scheme, and about INR 15 billion has been disbursed under the ECLGS 2.0 scheme. Credit card spend increased substantially in Q4 of 2021 over the previous quarter, driven by spend across electronics, wellness and jewelry categories. The total Amazon Pay credit cards at March 31, 2021, are about 1.6 million. The growth in rural portfolio was driven by jewel loans. The retail loan portfolio grew by 19.9% year-on-year and 6.6% sequentially. The growth of the performing deposit -- domestic corporate portfolio was 13.2% year-on-year and 4.7% sequentially. Overall, the domestic loan portfolio grew by 17.7% year-on-year and 6.1% sequentially. The overseas branches portfolio had within that, the non-India linked corporate portfolio declined both sequentially and year-on-year, in line with the approach which we have articulated earlier. Number four, leveraging digital across the business. Our micro market strategy to tap opportunities based on the market potential and 360-degree customer coverage using ICICI STACK have played a significant role in expanding our franchise and deepening relationships with our customers. We continue to strengthen our position in the digital payments ecosystem by building seamless user journey, facilitating higher transaction throughputs and driving repeat transactions. Our strategy is to participate more directly through our own platforms and partner with third-party players in the P2P and P2M space of the UPI ecosystem. We look at the transformation in payments as an opportunity to derive rich data from transactions. In December 2020, we had expanded our state-of-the-art mobile banking app, iMobile to iMobile Pay, which offers payments and banking services to customers of any bank. We have seen over 1.5 million activations of iMobile Pay from non-ICICI Bank customers within 4 months of its launch. We are seeing high customer engagement to repeat usage of features like Pay2Contact, Scan to Pay and bill payments amongst others. We've also invested in the merchant ecosystem over the last few quarters and put together a best-in-class payment stack. The monthly transaction value on our merchant acquisition platform, Eazypay, has increased 4x in March 21 over June 2020. We have further strengthened our API stack to ensure that our customers are given best-in-class payment solutions. This has led to greater funds flow, growth in CASA deposits and cross-sell opportunities. With our robust digital platforms and strong partnerships, we will continue to enhance our capabilities to compete. We are building a vast data lake to derive insights into customer behavior, build new use cases to improve our product penetration, increase customer stickiness and improve our Net Promoter Scores. We are also investing in new journeys and innovating existing journeys for higher-value transactions through NEFT and RTGS, which remain at the core of high-value financial transaction. Number five, protecting the balance sheet from potential risks. The gross NPA additions, excluding borrowers in the pro forma NPAs as of December 31, 2020, were INR 55.23 billion in Q4 of 2021. The pro forma NPA has been appropriately classified as per the RBI guidelines issued following the final judgment of the Supreme Court. For the full year financial 2021, the gross additions to NPA was INR 161.23 billion. or about 2.2% of the opening customer assets. In addition, excluding NPA, the total fund-based outstanding to all borrowers, including MSE -- MSME borrowers under resolution as per various guidelines that are in place, was INR 39.27 billion or 0.5% of the total loan portfolio at March 31, 2021. These are in line with or better than our expectations of NPA additions and loans under resolution. At December 31, 2020, the bank held aggregate COVID-19 provisions of INR 99.84 billion, including contingency provisions of INR 35.09 billion for pro forma NPAs. During the quarter, the bank utilized the contingency provision of INR 35.09 billion held against pro forma NPAs as these loans have now been classified as per the RBI guideline. The provisioning coverage on NPAs continued to be robust at 77.7% as of March 31, 2021. Further, the bank has made additional COVID-19 related provision of INR 10 billion, and thus, at March 31, 2021, the outstanding COVID-19-related provisions were INR 74.75 billion. The performance of the portfolio in the face of the pandemic has demonstrated the robustness of our underwriting and portfolio selection in recent years. Even after taking into account the higher NPA additions due to the pandemic, we have maintained a healthy provisioning coverage, including by making a provisioning policy more conservative. Further, we continue to hold COVID-19-related provisions of INR 74.75 billion. While the formation of gross nonperforming assets in financials 2022 will depend on the trajectory of the second wave of COVID-19, the progress of the vaccination program and the pandemic-related restriction and the periods for which they continue, the portfolio performance in financial 2021 and the strength of the balance sheet give us significant comfort. Six, maintaining a strong capital base. The capital position of the bank continued to be strong with the CET1 ratio of 16.80% at March 31, 2021. Further, the market value of the bank's investment in listed subsidiaries is about INR 812 billion. Looking ahead, we see many opportunities in the medium term to grow the core operating profit in a risk-calibrated manner. We calibrate our growth in the near term based on the operating environment and conditions resulting from the second wave of the COVID-19 pandemic. We have a wide physical distribution network, and our best-in-class digital platforms provide seamless onboarding and transacting experience for our customers. We continue to innovate, invest in technology and drive analytics to get deeper insights into customer behavior. Our solutions are aligned to provide the full range of banking services and capture the opportunities concentrated around economic ecosystems. Our extensive franchise focused on digitization and seamless delivery of products and services to customers with a 360-degree coverage and strong balance sheet offer us immense opportunities to grow in a risk-calibrated manner. Our approach of ‘One Bank, One RoE’ with a delayered organization architecture at the leadership level over the last 2 years has helped us to leverage internal synergies. We continue to be guided by our philosophy of “Fair to Customer, Fair to Bank” emphasizing the need to deliver fair value to customers by creating value for shareholders. We'll continue to focus on delivering consistent and predictable returns to our shareholders. 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 balance sheet growth, credit quality, P&L details, capital adequacy, portfolio trends and the performance of subsidiaries. Starting with the balance sheet growth. The overall loan portfolio grew by 13.7% year-on-year at March 31. The domestic loan portfolio grew by 17.7% year-on-year and 6.1% sequentially at March 31. The retail portfolio grew by 19.9% year-on-year and 6.6% sequentially. Within the retail portfolio, the mortgage loan portfolio grew by 21.7% year-on-year, business banking by 40.5%, rural loans by 26.9%, commercial vehicle and equipment loans by 7.6% and the auto loan portfolio by 12.5%. Growth in the personal loan and credit card portfolio was 9.4% year-on-year. This portfolio was INR 666.56 billion or 9.1% of the overall loan book at March 31. The SME business comprising borrowers with a turnover of less than INR 2.5 billion grew by 32.5% year-on-year to INR 302.84 billion at March 31. The growth of the performing domestic corporate portfolio was 13.2% year-on-year and 4.7% sequentially, driven by disbursements to higher-rated corporates and PSUs across various sectors to meet their working capital and capital expenditure requirements. The overseas loan portfolio declined by 27.9% year-on-year at March 31. The overseas loan portfolio was 5.1% of the overall loan book at March 31. We had mentioned in our previous quarter earnings call that we would be progressively exiting our non-India-linked exposures in a planned manner. The non-India linked corporate India -- corporate portfolio reduced by 56% or about USD 1.6 billion year-on-year and 24% or about USD 391 million sequentially at March 31. Coming to the funding side, we continue to focus on growing the daily average CASA balances and retail term deposits. Average savings account deposits increased by 21.2% year-on-year, and average current account deposits increased by 33.9% year-on-year during the quarter. For the full year FY 2021, the growth in average current account deposits was 25.5% year-on-year, and the growth in average sales account deposits was 16.7% year-on-year. The total term deposits grew by 18.4% year-on-year to INR 5 trillion at March 31. Coming to credit quality. The gross NPA additions, excluding borrowers in the pro forma NPAs as of December 31, was INR 55.23 billion in Q4. The gross NPA additions from the retail portfolio, excluding borrowers in the pro forma NPAs, were INR 43.55 billion. The gross NPA additions from the corporate and SME portfolio, excluding borrowers in the pro forma NPA, were INR 11.68 billion, of which INR 10.67 billion was from the portfolio rated BB and below as of December 31. The corporate and SME NPA additions include one account in the construction sector, which was rated BB and below at December 31 and was classified as nonperforming during Q4 and upgraded also in the same quarter post the implementation by all lenders of a resolution plan as per RBI's framework. Recoveries and upgrades, excluding recoveries from pro forma NPAs as of December 31, write-offs and sales were INR 25.6 billion in the quarter. There were recoveries and upgrades of INR 8.2 billion from the retail portfolio and INR 17.4 billion from the corporate and SME portfolio. The gross NPAs written off during the quarter were INR 27.45 billion. The net nonperforming assets were INR 91.8 billion at March 31 compared to INR 96.3 billion on a pro forma basis at December 31. The gross NPA ratio declined to 4.96% at March 31 from 5.42% on a pro forma basis at December 31, and the net NPA ratio also declined to 1.14% at March 31 from 1.26% on a pro forma basis at December 31. Till the last quarter, we used to report nonfund outstanding to NPAs as a part of the BB and below portfolio. From this quarter, we have excluded it from the BB and below portfolio and will report it separately. The non-fund-based outstanding to borrowers classified as nonperforming was INR 44.05 billion as of March 31, similar to the level at December 31. The bank holds provisions amounting to INR 14.92 billion at March 31 against this nonfund-based outstanding. Excluding NPA, the total fund base outstanding to all borrowers, including MSME borrowers under resolution as per various guidelines was about INR 39.27 billion or about 0.5% of the total loan portfolio at March 31. Of the above fund-based outstanding, INR 20.12 billion was from the retail loan portfolio. The bank holds provisions of INR 7.16 billion against these borrowers, which is in excess of the requirement as per RBI guidelines. The percentage of performing retail EMI products and the credit card portfolio, which was overdue at March 31, was marginally higher compared to pre-COVID levels, about 1.5% higher at December end and 4% higher at September end. The percentage of the performing SME and business banking portfolio, which was overdue, had reached pre-COVID levels at September end and continue to remain so at March end as well. The percentage of the performing rural portfolio, which was overdue at March 31, was about 2.5% higher than the normal pre-COVID trend compared to about 1.5% at December end. About 2% of the performing domestic corporate portfolio was overdue at march end, which was similar to the level that we had at December and September. Coming to P&L details. Net interest income increased by 16.8% year-on-year to INR 104.31 billion. The interest on income tax refund was to INR 0.11 billion this quarter compared to INR 1.96 billion in the previous quarter and INR 0.27 billion in Q4 of last year. The net interest margin was at 3.84% in Q4 compared to 3.67% in the previous quarter and 3.87% in Q4 of last year. The impact of interest on income tax refund and interest collections from NPAs was about 4 basis points this quarter compared to about 11 basis points in the previous quarter and about 4 basis points in Q4 of last year. As per the judgment of the Supreme Court, an estimated amount of INR 1.75 billion of the required refund of interest and interest and related amounts accrued on loans during the moratorium period has been reduced from the interest income in Q4. The domestic NIM was at 3.94% this quarter compared to 3.78% in Q3 and 4.14% in Q4 last year. International margins were at 0.44%. The cost of deposits was 3.80% in Q4 compared to 3.97% in Q3. Coming to noninterest income. The noninterest income, excluding treasury income, grew by 3.1% year-on-year to INR 41.37 billion in Q4. The fee income increased by 6% year-on-year to INR 38.15 billion in Q4. Retail fees grew by 9.4% year-on-year and constituted about 77% of the total fees in Q4. The dividend income from subsidiaries was INR 3.57 billion in Q4 compared to INR 3.38 billion in Q4 last year. On costs, the bank's operating expenses increased by 3.6% year-on-year in Q4. The employee expenses decreased by 10% year-on-year primarily due to decline in provisions for retirals reflecting the increase in yields on government securities during the current quarter compared to the declining yields in Q4 last year. The bank had 98,750 employees at March 31. The nonemployee expenses increased by 12.3% year-on-year in Q4 due to increase in retail business-related costs and technology-related expenses, partly offset by a decrease in advertisement and sales promotion expenses. For the full year FY 2021, employee expenses decreased by 2.2% year-on-year, and nonemployee expenses increased by 0.9% year-on-year. We continue to make all required investments in technology and to grow our franchise. The core operating profit increased by 19.8% year-on-year to INR 85.65 billion in Q4. For FY 2021, the core operating profit grew by 16.9% year-on-year to INR 313.51 billion. Excluding dividend income from subsidiaries, core operating profit grew by 17.9% year-on-year in FY 2021. There was a treasury loss of INR 0.25 billion this quarter compared to a profit of INR 7.66 billion in Q3. The loss during the current quarter reflects the increase on fixed income and government securities. The net provisions made during the quarter were INR 28.83 billion. At December 31, the bank held aggregate COVID-19 provisions of INR 99.84 billion, including contingency provisions of INR 35.09 billion for pro forma NPAs During the quarter, the bank utilized the contingency provision of INR 35.09 billion held against pro forma NPAs as these loans have not been classified as per the RBI guidelines. The provisioning coverage on NPAs continues to be robust at 77.7% at March 31. Further, the bank has made additional COVID-19-related provisions of INR 10 billion, and thus, at March 31, the outstanding COVID-19-related provision was INR 74.75 billion. At March 31, the total outstanding COVID-related provisions, provisions for nonfund-based outstanding to NPAs, general provision on standard assets and other standard asset provisions were INR 141.44 billion or about 1.9% of the total loans. The total net provisions made during the full year were INR 162.14 billion. These include COVID-19-related provision made during the year, net of utilization during the year of INR 47.50 billion and additional provisions made reflecting the change in our provisioning policy of about INR 26 billion, which we talked about in Q3. Excluding the same, the provisions were INR 88.64 billion or about 1.5% of average advances in FY 2021. In our previous earnings call, we have mentioned that the normalized credit cost level for our portfolio would be about 1.2% to 1.3%. Compared to our expected normalized level of credit costs, the provisions, excluding COVID-19-related provisions and the impact of change in provision policy, were higher by about 15 basis points or about INR 10 billion. As Sandeep mentioned, the performance of the portfolio in the face of the pandemic has demonstrated the robustness of our underwriting and portfolio collection in recent years. We have high provisioning coverage on NPA, and in addition, we continue to hold COVID-19-related provisions of INR 74.75 billion, which is about 1% of total loans and substantially higher than the provisions in excess of the normalized level that we saw in FY 2021. We are therefore confident of the strength and resilience of our balance sheet. The profit before tax was INR 56.57 billion in Q4 compared to INR 14.23 billion in Q4 last year. The tax expense was INR 12.54 million in Q4 compared to INR 2.02 billion in the corresponding quarter last year. The profit after tax was INR 44.03 billion in Q4 this year compared to INR 12.21 billion in Q4 last year. The profit after tax was INR 161.93 billion for the full year FY 2021 compared to INR 79.31 billion last year. The consolidated profit after tax was INR 48.86 billion this quarter compared to INR 54.98 billion in Q3 and INR 12.51 billion in Q4 last year. For the full year, the consolidated profit after tax was INR 183.84 billion,compared to INR 95.66 billion in FY 2020. Coming to capital. The CET1 ratio was 16.8% at March 31 compared to 16.79% at December 31. The Tier 1 ratio was 18.06%, and the total capital adequacy ratio was 19.12% at March 31. Regarding the portfolio, we are focused on growing our loan portfolio in a granular manner with a focus on risk and reward. Our retail portfolio is built 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. The portfolio level build-up strategy for the retail loan book has been based on utilizing the existing customer database for sourcing key retail asset products through cross-sell and upsell. The loan disbursements across various retail products had increased beyond pre-COVID levels in Q4, driven by pickup in economic activity and our efforts towards process decongestion and digitization of underwriting and customer onboarding process. We had calibrated our sourcing towards stronger profiles immediately after the onset of COVID-19 last year and are continuing with the same approach. We have also been cautious in underwriting proposals related to sectors directly impacted by COVID-19. We are prepared for additional calibrated response in view of the second wave of the COVID-19 pandemic and are watching the developments closely. We have given further information on our portfolio in slides 32 to 42 of our investor presentation. The loan and nonfund-based outstanding to corporate and SME borrowers rated BB and below, excluding fund and non-fund based outstanding to NPAs, was INR 130.98 billion at March 31 compared to INR 136.54 billion at December 31, details of which are given on Slide 34 of the presentation. Other than 2 accounts, one each in construction and telecom sector, the maximum single borrower outstanding in the BB and below portfolio was less than INR 6 billion at March 31. On Slide 35, of the presentation, we have provided the movement in our BB and below portfolio during Q4. In Q4, the rating downgrades from investment-grade categories was INR 11.87 billion. The downgrades were largely from the infrastructure sector. The upgrade and net decrease in outstanding were INR 14.97 billion. There was a reduction of INR 10.67 billion due to slippage of borrowers to the nonperforming category, and there were upgrades of INR 8.21 billion from NPA to below investment grade categories. Except a few accounts with outstanding of about INR 4 billion, all corporate and SME borrowers under resolution were rated below investment grade at March 31, 2021. This mainly includes one lease rental discounting account and a couple of projects under implementation in the commercial real estate sector. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital loans was INR 226.71 billion at March 31 or about 3% of our total loan portfolio. As mentioned in our previous calls, our portfolio is granular in nature with the larger exposures being to well-established builders. About 13% of our portfolio at March 31 was either rated BB and below internally or was classified as nonperforming. The total outstanding to NBFCs and HFCs was INR 645.09 billion at March 31 compared to INR 576.29 billion at December 31. The total outstanding loans to NBFCs and HFCs were about 7% of our advances at March 31. The details are given on Slide 41 of the presentation. Our exposure is largely to well-rated entities with PSUs, long vintage, entities owned by banks and well-established corporate groups. In sequential increase in the outstanding during the quarter was mainly due to increase in outstanding to government-owned NBFCs. The proportion of the NBFC and HFC portfolio internally rated BB and below or nonperforming is about 1%. Coming to our overseas portfolio, excluding exposures to financial institutions and retail lending against deposits, the total corporate fund and nonfund outstanding of overseas branches net of cash or bank or insurance-backed lending was USD 4.14 billion at March 31 compared to USD 5.2 billion at December 31, and USD 7.48 billion at March 31, 2020. 70% of the outstanding at March 31, 2021, was to Indian corporates and their subsidiaries and joint ventures. 16% of outstanding was to non-India companies, with Indian or India-linked operations and activities. The portfolio in this segment is well-rated, and the Indian operations of these companies are target customers for the bank's deposit and transaction banking franchise, and we would continue to pursue risk-calibrated opportunities in this segment. 6% of the outstanding was to companies owned by NRIs or PIOs. 8% of outstanding was to other non-India companies, which is less than 1% of the total portfolio of the bank. Coming to subsidiaries. The details of the financial performance of subsidiaries is covered in slides 46, 47 and 68 to 73 in the presentation. Value of new business of ICICI Life grew by 25.7% year-on-year to INR 5.91 billion in Q4. The new business margin increased from 21.7% in FY 2020 to 25.1% in FY 2021. The new business margin was 23.6% this quarter. The annualized premium equivalent grew by 27.1% year-on-year to INR 25.09 billion in Q4. The protection-based annualized premium equivalent was INR 10.46 billion and accounted for 16.2% of the total annualized premium equivalent in FY 2021. The new business premium was INR 130.32 billion in FY 2021. The gross direct premium income of ICICI General increased by 9.4% year-on-year to INR 34.78 billion in Q4 of this year compared to INR 31.81 billion in Q4 last year. The combined ratio was 101.8% in Q4 compared to 100.1% in Q4 last year. The profit after tax grew by 22.6% year-on-year to INR 3.46 billion this quarter from INR 2.82 billion in Q4 last year. The profit after tax of ICICI AMC was INR 3.48 billion in the current quarter compared to INR 2.17 billion in Q4 of last year. The profit after tax of ICICI Securities on a consolidated basis was INR 3.29 billion in the current quarter compared to INR 1.56 billion in Q4 of last year. ICICI Bank Canada had a profit after tax of CAD 5.1 million in the current quarter compared to a loss of CAD 7.5 million in Q4 of last year and a profit after tax of CAD 5.1 million in Q3. The loan book of ICICI Bank Canada at March 31 declined by 11.4% year-on-year and 3.1% sequentially. ICICI Bank U.K. had a profit after tax of USD 2.8 million this quarter compared to a loss of USD 6.8 million in Q4 of last year and USD 2.2 million in Q3. The loan book of ICICI Bank U.K. at March 31 declined by 24.7% year-on-year and 10.1% sequentially. ICICI Home Finance made a profit after tax of INR 0.15 billion in the current quarter compared to INR 0.64 billion in Q4 of last year. The profit after tax was higher in Q4 last year due to gains on sell-down of loans. With this, we conclude our opening remarks, and we'll be happy to take your questions.

[Operator]

[Operator Instructions] The first question is from the line of Mahrukh Adajania from Elara Capital.

[Mahrukh Adajania, Analyst]

Congratulations. I have a couple of questions. Firstly, in terms of credit costs, now that you already -- you continue to hold good enough COVID provision, would -- can we still expect despite the second wave for cost to be in the range of 1.2% to 1.3% in '22?

[Rakesh Jha, Chief Financial Officer]

So Mahrukh, given the current second wave of COVID that we are seeing. I think we'll have to just wait and see how this plays out over the next month or 2 before kind of making firm comments on the credit cost. As I said, we are confident about the portfolio in terms of the underwriting that we have done. We have start to stronger profile in terms of underwriting. Plus from a balance sheet point of view, the NPAs are well covered. We are carrying surplus provisions of nearly or slightly over 1% of loans. So all of that does give us confidence. But as we have said earlier also, the pandemic trajectory is something that we cannot predict, and that's something we will have to just see. And right now, it's very difficult to comment on that given the situation which is there.

[Mahrukh Adajania, Analyst]

So when you give the granular details of BB, you no longer include power. So is that -- has that been upgraded now? Because there has been a decent size of upgrades in the BB. You had earlier included a power account in the BB. Now it's only telecom and construction.

[Rakesh Jha, Chief Financial Officer]

Yes. So whatever is -- exceeds the particular size is what we give because there were questions earlier about the lumpiness in that portfolio. So we kind of gave the loans which are above INR 6 billion. So the sector which is not referred, it could either have been removed or would have gone below INR 6 billion, we don't comment on that individually.

[Mahrukh Adajania, Analyst]

Okay. And just one last question, which is on slippages. So basically, the pre-COVID, the retail slippages were around INR 20 billion or under that. And obviously, with COVID, they've risen to around INR 44 billion. I mean that is where you exited the fourth quarter. So when do you -- or in how many quarters do you expect the retail slippages to go back to the normalized level or somewhere close to the normalized level?

[Sandeep Bakhshi, MD, CEO & Executive Director]

So there are a few things. I think one, of course, is that our retail portfolio itself has grown significantly over the last 2 or 3 years. Plus on the portfolio itself, even aside from the pandemic, even prior to that, we had said that we will see some increase in addition to NPAs as the portfolio kind of seasons. So those impacts were any way expected. And also on the retail side, it's very important to see both gross additions as well as the gross deletions and upgrades because that's something which happens on a continuous basis. Coming to right now, again, given the second wave of COVID that we are seeing currently, we'll have to just wait and see how this trajectory unfolds, how the vaccination drive kind of goes ahead, what steps are taken in terms of lockdowns and restrictions. So all of that, we will have to kind of wait and watch maybe a month or 2 before we can comment on more precise outlook.

[Mahrukh Adajania, Analyst]

Okay. And just one last thing, the employee count.

[Rakesh Jha, Chief Financial Officer]

So it's about 98,750.

[Operator]

The next question is from the line of Suresh from Macquarie.

[Suresh Ganapathy, Head of Financial Research]

So I had a question for both Anup and Vishakha here more a qualitative aspect here because the retail loan growth was 20%, almost double than that of the system. The overall domestic loan book, is at 18%, 3x the growth of the system, and you have done this at the time which has been exceptionally tough for everyone. So I mean the worry here a lot of people have is ICICI Bank back to its old days of very high growth and especially coming in a pandemic year. Can you give a qualitative assessment, both in the retail as well as the corporate book that you are very confident that this is no adverse selection of assets? And you're very confident and we are genuine assets taken on board is it market share gain purely? Any color on that would be appreciated.

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

Yes, so Suresh, let me go on it. So 2 or 3 things. One is that our growth on the retail asset has been consistently growing. It is not just this year. Actually, if you go back even quarters before that, it has been quite solid. This year, also it has been quite solid. I feel that there are a couple of reasons for that. One is that during pandemic, I must say that because of our work on digital side, we were able to capture opportunity perhaps faster than most of us. Particularly, if you see on the non-mortgage business -- I'll come to the mortgage business, but on the non-mortgage business, over the last 1, 1.5 years and ICICI STACK, et cetera, we have worked very, very hard on making sure that the credit delivery is as seamless as possible, as fast as possible. And we have worked hard on the underwriting abilities on the digital footprint so that we make sure that most of the things are preapproved. And we lightened the whole process of credit delivery so that we are able to do the credit delivery faster, better and to the good profile customers. So I would say that market share gain essentially has come on back of that. And the book has gone through the stress of COVID. And as Rakesh mentioned in his remarks, it has reasonably stood the test of the stress so far. We look at them very closely, particularly on the business loan side and SME side, et cetera, on the credit submission, et cetera. So far, they are holding on quite, quite, quite well. On the mortgage side, I must add that again, decongestion on the mortgage side, plus the fact of the matter is that we were slightly underpenetrated in our own customer base and competitive pricing, and the fact that we had used, say, our physical distribution but more than that on the digital field, I would say, it did help us in gaining share. Overall, I would put 60% weightage on the fact that we had worked on the process of credit delivery. That has helped us in gaining share. I would also put 20% on the fact that the competitive intensity has come down a little bit more so because of the non -- in our case, the contrast of the digital nature of our processes vis-a-vis many others who may not have that level of digitization in the processes. So the whole credit delivery process itself become lower. And in times like this, faster credit is -- speed is also important capital which clients are looking at when all things remaining equal. So that has also helped. And as you know, on the InstaBIZ side and on the MSME side, the Trade Online and all of it that has also has been moving the clients towards us. So I would say that these would be the reasons why we have been able to gain share from the market. So Vishakha?

[Vishakha Vivek Mulye, Executive Director]

Yes. So quickly on the corporate side, if you look at in the last 3 to 4 years, we have been growing at around 14% to 15% on our performing book, mainly driven by the higher-rated corporates as well as PSUs. And again, therefore, our portfolio, if you look at it is quite seasoned in terms of the disbursements that we have done in the last 3 to 4 years. If you look at, I think the tests is during the last 1 year, when RBI come out with the restructuring guideline, our restructured book is less than 1% of our total book. So our portfolio has actually sold the test of the extreme impact of the COVID in the last 1 year. Also, if you look at incremental additions to NPL, it has come down and actually has tapered even during last 1 year. In the last quarter also, it has been quite low. So to be frank -- and again, it is driven mainly by the opportunities which are there in the market in terms of deploying liquidity even in the short-term opportunities that we are seeing. So to be frank, I feel quite nice about our portfolio. And hopefully, we'll of course have to watch, as Rakesh said, the wave 2. But at the moment, we feel very nice about the performing portfolio on the corporate side.

[Sandeep Batra, President & Executive Director]

Suresh, just -- Sandeep Batra here. Suresh, I just also mentioned, if you see our rating mix that has changed for the bank as a whole, I mean I can draw your attention to Slide 33. If you look at A- and above portfolio, I mean, in 2017, it was 56%. It is now 73%. Even if I compare to, what, year back, it was about 70%. So there is clearly a focus on quality. So the books, what you are really talking about now to what was there in the past were significantly different if you see it from a rating perspective.

[Operator]

The next question is from the line of Rohan Mandora from Equirus.

[Rohan Mandora, Analyst]

Sir, if you can share some segment-wise comments on the collection trend seen in April within the retail portfolio? And also second related question was that within the detailed disbursements that we are doing by value, what percentage of portfolio would have credit decision-making without any manual intervention? And within which portfolio would have a higher share? So basically, it's all machine learning and AI-driven credit decision making.

[Rakesh Jha, Chief Financial Officer]

In terms of the retail collection, I think April is just way too early to kind of comment on even as we see those trends, it is just too early. It is logical to expect that all lenders would have seen some impact of the second wave on the collections. And for us, it would be no different. But like I said, I think we have to wait for a month or 2 to really gauge how this plays out and how things evolve. So that's what it is. Again, from last year, our experience was it is better not to jump to conclusions very soon. We will have to wait and see. I think on the portfolio, Anup talked about on how we have been focused in terms of our underwriting. So we are considering that it should play out well. In terms of the underwriting part, Anup, can you talk about that.

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

Yes. So on the underwriting part, first is that unsecured lends itself to better preapproved and Straight Through Processing . On the BLG and other part, in addition to complete Straight Through Processing , the scorecards really, really help. We have seen that as the ticket sizes come down and as the portfolio which has a lot of large numbers come in, scorecards gives a much, much better output than human intervention in credit decisioning with its own flavors of overriding the credit, et cetera. So we have seen, time and again, time and again, time and again that scorecard gives you better credit decisioning. But you have to keep updating the scorecard with the inputs and the learnings that you get from this credit. And so basically, you have to keep refreshing the scorecards, but it takes away bias of credit decisioning, when you have very large number of cases that you go through and it lends itself well.On the unsecured side, the beauty is that you can do full Straight Through Processing. For example, on the credit card and personal loan side with the video KYC, et cetera, coming in, it is like complete, complete, complete Straight Through Processing. And when you do it to your own customers, it is even better. You have solid underwriting abilities. You have a solid credit delivery process. And the AI/ML essentially is used, a, to figure out patterns; b, most importantly, getting the feedback of the early warning signal back into your credit and underwriting processes. And the biggest learning essentially comes from cases which become overdue because they are from a pre-delinquency management and the cases which become 0 plus, which is overdue. They actually give you a lot of feedback and the constant feedback of updating your scorecard, updating your credit model to ensure that you are going exactly where you would want to go. In retail -- and I would not say that for larger loans, but for retail, essentially, the equation ROA tree essentially comes from NIM plus fees, less cost of acquisition, less OpEx, less cost of collection, less credit cost. And that is where it grows. And you can actually do intervention basis, the micro market basis the customer segment on the yields and fees. But internally, also, there is a lot of scope on cost of acquisition. If you do to it to your internal customers, reducing the OpEx, if you di it through our digital models, et cetera and making a Straight Through and decongesting the processes completely and collection costs by making sure that we do pre-delinquency management. And you collect digitally. Predominantly, most of our collections is now digital. It is not physical at all. And thus, when you do select the profile and the client segment and the product properly, you also manage the credit cost. So that is also -- so all the 7 variables we look at as one. We don't look at individual variables in isolation. We don't think that, that's the right way of looking at the business in retail because you have opportunities everywhere. However, as you move up ladders on the business loans and SMEs, essentially, this AI/ML because the number of cases are small, it is not that much amenable to AI/ML, but that you do get on sectors, et cetera. There the AI/ML essentially comes an early warning signal comes from credit submission, which is the inflows and outflows. So there is a lot of work that we do on the inflows and outflows and ensure whether there is volatility or whether there is stability, whether it is increasing, decreasing, et cetera, et cetera. But the credit decisioning essentially happened on the scorecard, which again we see when we get input from all these variables back into the model. Mortgage, et cetera is more difficult because the collateral -- unfortunately, the collateral part of the mortgage is not standardized. The title searches are not so online. So that part -- on the collateral part where we have a very large collateral, the value of the collateral, et cetera, that is today not very amenable to full digitization. But the good thing is that even the land titles, et cetera, they are becoming more and more and more digital as we move on. We have seen, for example, in auto loan, et cetera, coming in. There are a lot of stuff which is getting more digital and so your ability to check fraud, your ability to check many things is improving by the day. And we feel that, going forward, as we look out, we Are more and more and more convinced that digital using AI/ML, using everything which is available digitally, but putting it all together and synthesizing it is the way to go. It reduces all the internal cost. It reduces the congestion in the processes and help us in our ability to pick up good customers at a faster speed.

[Operator]

The next question is from the line of Abhishek Murarka from IIFL Capital.

[Abhishek Murarka, Vice President]

Congratulations for the quarter. I have one question on this payment disclosure that you have made. So in debit cards, the value and volume have fallen -- both have fallen. And in the last quarter, you had mentioned that some inactive cards are being culled. But this quarter, the drop in the number of cards is actually quite sharp and same with the volume. The second observation is that in UPI P2M, even those volumes and values have fallen. And I would have thought that if UPI is actually cannibalizing some of the card payments, at least volumes would have increased there. So can you just sort of elaborate on what should be happening on the payment instrument and the payment volume side?

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

So very, very quickly, Abhishek, on the debit card, on the number of cards, the inactive cards, et cetera, we are sort of flushing it out of the system, which is why you will see that the number of cards, et cetera, would have fallen. As far as share is concerned, inter pay, sharing in the debit card has not moved. However, if you look at different payment systems, UPI certainly will, over a period of time, we think that it will put pressure on debit cards because the proposition of UPI is almost as strong as the debit card proposition. So that is what is going to happen. Between credit cards and other modes of payment, we don't think that the cannibalization will be that far, but that is where it is. So we'll have to look at all payment system. And our bet is that we have to keep betting on all payment systems. We -- and things which is growing, we have to ensure that we partner, we make it open architecture like what we have done. We are very, very, very, sort of clear that, that is the way to go. And as you know, payment standalone may or may not make your money perhaps, will never make your money on a stand-alone basis fully. But for us, we already have, the moment we get more and more digital footprint, we are able to put it in the underwriting because it is the behavioral data and the velocity of the data, which is more important than the static data. So earlier it used to be static data only on demography age, et cetera, et cetera. It's not that it is not important. But it is important to keep structuring data with high velocity and with behavioral characteristics. That helps us underwrite better. So we have -- we can use the data to underwrite, and we are using that data to underwrite. Now we are seeing in FASTag, et cetera, very, very good quality data comes in with that. But on the payment, this is what it -- no share loss on inter debit card. But will UPI cannibalize? We feel that it will cannibalize every quarter for most period.

[Abhishek Murarka, Vice President]

So Anup, just a very quick follow-up, sir. On your UPI P2M on the previous slide, you've given that through Eazypay or merchant transaction values have increased by 4x, et cetera. But in terms of the value and volume, both have fallen in 4Q. It just sort of appears to go in different directions. Any reason for this?

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

No, no -- essentially is on the merchants. See on the merchant side, there is a large amount of merchant transaction which happened almost INR 2.2 lakh crores the merchant transactions happens per month. So Eazypay is more on the merchant side. On the debit card side, if you -- we have to add up all the payment system and then look at the throughput where it is healthily increasing, Abhishek.

[Operator]

The next question is from the line of Jai Mundhra from B&K Securities.

[Jai Mundhra, Research Analyst]

Sir, I have a question on mortgage book. So this is the largest segment for ICICI Bank, which now has become 33%. And if I look at the same business that we are doing in the subsidiary, where the GNPA or the stage 3, et cetera number is around 6% to 7%. So I wanted to get more clarification there that why is there so divergent asset quality performance between the mortgage business that is done by the bank and the Home Finance?

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

No. So on the HFC, let me just very quickly do. HFC now is completely focused on the affordable so that the balance sheet is getting transformed. You see a slightly elevated credit cost, et cetera, there because of some very old -- a little bit of builder finance and old portfolio, which we are sort of in an accelerated manner, putting provisioning there. And so that is affordable, and the rest of the mortgage is in the bank, which is, as you know, is there [indiscernible]. So that is why the divergence.

[Jai Mundhra, Research Analyst]

Right. Okay. And second question is, sir, on the core operating profit side, so you have done an exceptionally good job, and you have been consistent in above 15% Y-o-Y growth, right, in this core operating profit. And if I were to -- just wanted to understand the impact of the second wave, right? So while we have some cushion on the provisioning and we have made adequate ECR on the existing NPA. But if you can highlight any cushion, if I may use that word, or how are you looking at protecting that 15% or at least 15% growth in the core operating earnings amidst the second wave? Or would you -- how would you assess the risk of the 15% plus growth on core operating profit earnings from second wave?

[Rakesh Jha, Chief Financial Officer]

Again, it is too early to kind of quantify what that impact would be. I think if you go back to last year, what we had seen that for a period of a few months, the loan demand was lower, the collections were impacted. So you have to see how it plays out. I think what our focus is to ensure that we continue to raise low-cost deposits, keep our cost of deposits amongst the best in the industry, which then allows us to do well-rated lending while earning a good amount of spread as well. So for us, that is the key focus and then we will continue to be efficient in terms of expenses and focus on the core fee franchise. But all of this is with the focus on core operating profit. So it's very difficult to say how it would get impacted. If things go really bad, of course, we will calibrate our growth also accordingly. So let's see how it plays out. We are confident about calibrating our approach towards risk return growth based on the evolving trajectory of the pandemic. And I think in the next month or 2, one will have a pretty good sense of that.

[Operator]

The next question is from the line of Adarsh Parasrampuria from CLSA.

[Adarsh Parasrampuria, Research Analyst]

So question -- 2 questions. First to Vishakha. There is a fairly strong bounce back in corporate profitability after 5 years. Just wanted to understand that profitability bounce is quite strong given the nature of business that we are doing now, right? It's 70% AAA, AA, A. So is that a sustainable profitability for the corporate book? I think it looks like 1.8% on a pretax basis.

[Vishakha Vivek Mulye, Executive Director]

Yes. So the most important thing, as I said, that there are 2, 3 principles that we are following. One is the return of capital is the paramount and an underlying principle as we have reiterated. We look at risk-calibrated operating profit. If you look at our growth in the last 3 to 4 years, as I said, depending upon the market conditions, it has been underperforming asset side anywhere between 10% to 15%. Second driver for the profitability is that we look at not only providing the solution to the corporate but also to the entire ecosystem. And therefore, there are various drivers of the fee income. We try to capture the entire ecosystem of the corporate, including the money in motion within the ecosystem. And therefore, the further drivers in addition to the NII that we have is, of course, providing the solution on the transaction banking side, providing the solution on the ForEx and derivative side. We also have been ranked as #1 on the PRIME League Tables for the bonds. So we provide -- depending upon the market condition, we provide solutions to our corporate in terms of underwriting the large bond issuances and then distributing it in the market. Similarly, when it comes to the various segments that I spoke about, so there are new segments of the clients that we have started focusing. So in addition to the traditional manufacturing and the others, the other focus areas that we have identified is the entire service sector. We are focusing largely on the entire -- the institutional investors, what we call it as a financial sponsors and provide again the complete solution to them in terms of not only giving them services at their level -- if I take an example of a financial sponsor, not only providing solution at the AMC level but at a fund level, including the investee company level, So I think if you look at the overall the offering for the corporate that we have created and the franchise that we have built over the last 4 years, by underlying principle of return of capital, I'm quite confident that the franchise is sustainable and delivering the results that we have seen in the past.

[Adarsh Parasrampuria, Research Analyst]

This is useful, Ma'am. And second question is, broadly, I'm asking specific numbers, but on the retail slippages, could you indicate or just quantify what the mortgage slippages could have been? The reason why I'm asking that is that may really not require a 70%, 80% cover, right, so which we have on our NPA book. So if you can just quantify out of the INR 125 billion or INR 130 billion of slippages, how much is mortgages this year?

[Rakesh Jha, Chief Financial Officer]

So we have not given that breakup. But like we said earlier, I guess that given that the EMI is high in case of mortgage loans, we do expect some near-term impact of the lockdown of last year and the moratorium period which was there. So we will have -- the mortgage NPAs would have gone up. We have not given the breakup separately here.

[Adarsh Parasrampuria, Research Analyst]

No, the only purpose -- I understand that, Rakesh, the only purpose of asking that is that really is unlike the unsecured book or even vehicle, the LGD in the portfolio can be quite low, right? So it is more somebody not able to pay EMI for a few months, but eventually, you're not likely to lose $0.70, $0.80 to $1, so.

[Rakesh Jha, Chief Financial Officer]

Yes. So you can assume we have some more buffer in the coverage ratio than it is.

[Operator]

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

[Saurabh S. Kumar, Senior Analyst]

Sir, I have 2 questions. One is, can you indicate what is the technology spend to revenue for ICICI Bank? And if you can just give what this number would have been for last year and year before last? And secondly, just on the corporate banking fees, how would you -- how would the operating profit margins would have compared in fiscal '21 versus fiscal '22 -- versus fiscal '20?

[Rakesh Jha, Chief Financial Officer]

So we don't disclose the technology spends separately. Again, there is no uniform way of doing that across banks. That's something we have not done. On the -- but like I said earlier, I think in terms of all the investments that are required, we are very happy to make, if I look at our operating expenses or CapEx, the line item, which is -- has been going for us is indeed the technology expenses and other franchise-related expenses. On the corporate side, your question was the -- how the operating margin has made between this year and last year?

[Saurabh S. Kumar, Senior Analyst]

Yes. Correct.

[Rakesh Jha, Chief Financial Officer]

So on the corporate side, there are a couple of things. One, of course, if you look at below the operating margin, the provisions like Vishakha was mentioning earlier, in the last couple of years, we have not really seen much NPA additions. So the provisions have pretty much had normalized for that part of the portfolio in the last financial year. On the operating profit, I think what we have been able to do is to kind of maintain that or see some slight improvement despite the increased focus on better-rated exposures. So the way we look at it is, one, of course, is just the corporate part of the business in which itself we would have been able to do that. The lower cost of deposits has definitely helped there as well as the focus that Vishakha talked about on the transaction banking. What has reduced for us, Saurabh, that would have had some impact on a Y-o-Y basis, is the loan processing or the credit-linked fees, which is there because that's something which you don't really earn if you're lending primarily to A and above-rated clients. But other than that, we would have seen an improvement in other aspects. And more importantly, I think the entire focus for us has been on the entire ecosystem. So we don't look at just what we are making from the corporate client or opportunities there with the corporate client. We also look at -- along with the retail team, the corporate team works to look at what all we can do with the employees of the corporate on raising deposits, issuing credit cards, lending. Similarly on the dealer, vendor, the SME part of the business also works along. So what we look at is not just the corporate revenue but also the retail and the SME fees in aggregate. So that focus has really sharpened over the last, I would say, 12 months or so. And that is something which is very helpful in maintaining the profitability despite the focus on the higher-rated clients.

[Operator]

The next question is from the line of Manish Shukla from Citigroup.

[Manish B. Shukla, Director & Lead Analyst]

So first question is on fees. Despite the strong balance sheet growth and probably the base effect of March '20, fee income growth looks muted. Anything there?

[Rakesh Jha, Chief Financial Officer]

So I think if you look at the trends that we have been seeing -- so in the first quarter, we were down about 30% Y-o-Y. And from there on, the Y-o-Y numbers have been improving for us. I think in the last quarter, we were pretty much flat, and now we are at about a 6% growth. I think for us, maybe on the corporate side, the loan processing fees, that is something which will not have grown or declined a bit because that is not a focus area for us. Other fee revenues have been doing well. The retail lending-linked fees or the other fees, post the first half when the decline was there. So nothing really to worry on that trend. As we have said earlier, I think each of the businesses looks at the core operating profit as the key metric. So it's a combination of NII, fees and expenses. And we try to optimize the 3 levers to get the best outcome possible on a risk-calibrated basis for the core operating profit.

[Manish B. Shukla, Director & Lead Analyst]

But Rakesh, retail would be about 75% of fees, right? And that at least should have seen a healthy double-digit growth, given especially the base effect and balance sheet?

[Rakesh Jha, Chief Financial Officer]

It saw about a 10% Y-o-Y growth which was there. So if you look at the various fee items which are there, for example, third-party distribution may not have grown as much as for us as you will see for other banks, lending-linked fees would have definitely grown. So as I said, it's a quarter-on-quarter kind of a thing. Overall, this is actually pretty much in line with the trend that we were expecting for the quarter.

[Manish B. Shukla, Director & Lead Analyst]

Okay. The second question is on cost to income. Despite the steady increase in share of retail and SME assets, the cost to income has been trending down gradually. Do you think, directionally, this can still continue?

[Rakesh Jha, Chief Financial Officer]

So again, I'm not talking about the near term, but in the medium term, as we target to grow our risk-calibrated core operating profit, one of the drivers will definitely be to grow our revenues faster than expenses. And that is the focus area for us. So we definitely believe that in the medium to long term, that's something which should happen. We don't have any internal metric or a number that we are targeting there or any time line for that but just the focus on the core operating profit. I think expenses is also an important variable to manage that. But we would continue to make investments or make expenses, CapEx or revenue for all areas where we believe it will help us in the long-term franchise, so technology, distribution, people, all of those expenses, we will make, if required, we'll make them upfront as well. So that's how we look at it, Manish.

[Operator]

We take the last question from the line of Krishnan from HDFC Securities.

[Krishnan ASV]

I had two questions, one on whether you have any fungibility to move housing loan assets from the Home Finance portfolio to the bank portfolio at all, is that something that has happened in this last year? That's number one. Because most of your retail growth has not come on personal loans or credit cards, but it seems to have come on the back of the housing loan portfolio this time around. So just wanted to make sure that's all organic and there is no fungibility or -- I mean even if that's something that has allowed. That's number one. Number two, wanted to understand just on the credit card portfolio that you have incrementally been building, obviously, there is competitive intensity coming off. That's been a tailwind for you. Just wanted to understand how would you look at raising the receivables on the card portfolio, given that's one of the big metrics that you should ideally try to maximize. You are about 20% below where the peer set seems to be. So If you could just help us understand what are you doing about raising that receivables per card?

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

So Krishnan, let me take this question. So part A was HFC is -- HFC moving to -- HFC assets moving to the bank. Actually, if you look at the numbers, HFC is very, very small. Their full portfolio will be maybe 5% of the mortgage portfolio of ICICI Bank. So there is nothing material which moves from there to here. So it's all organic within ICICI Bank, and that is the way one should look at it. The second one is on credit card. 2, 3 things, credit card. The first is that from a credit card perspective, you would have seen that our numbers of credit cards that we are issuing is very healthy, and we are able to also capture. So we look at credit card from 2 angles. The credit card is one of the high-frequency usage product. And the brand gets reinforced every time you use a credit card. And if it is ICICI Bank credit card, and you're searching credit card or using credit card, so the brand gets info. So it is one of the very few high-frequency products. So we look at credit card from -- also from a liability perspective and making sure that the customer is primary with us. That is one. Second one, also, it is that credit card is a very profitable portfolio and credit card, you make some money on spend and some money on revolve. Now some money on revolve is a function of what kind of profile you're coming. And we always like episodic revolvers. The episodic revolvers are people who revolve from time to time but they are not chronic revolvers. And that is one mining we continuously keep doing. And so that is our approach. So our approach is not just growing the book on the credit card and going on the lower side of the credit of the credit card. We would want to have a healthy mix of making customers primary and so large vendors also but also episodic revolver. We don't like chronic revolvers on our book. Chronic revolver, we have seen that in general, they do badly over a cycle.

[Krishnan ASV]

Right. So I only -- the point was you and a few other issuers, obviously, have now mastered, perfected the art of delivering 4.5%, 5%, 6%% ROA on the credit card, right. Because I mean you have had enough security in running that.

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

Yes.

[Krishnan ASV]

But now it's about where you can take the unit to profitability because everybody can generate a 5% or 4.5%, when you see what a 50 basis points, 100 basis points, everybody is there and thereabout, at least some of the mature players. From a unit profitability perspective, one of the big variables will be receivables per card, which is where you have been generally conservative given the kind of episode that happened in the last cycle set. I just wanted to understand what can you do about that?

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

No. I think there, I think you have -- it's an important question. There we keep experimenting with receivables per card. And we don't look at averages. We look at distribution very, very closely. And when we look at distribution, we also look at the stability of the distribution closely as to how many are episodic, how many are chronic. The chronic revolvers, obviously, they are very, very profitable for some time and then they just go out of the system. So that is an experiment that we continuously keep doing within our micro segment of customers. As you know, there is no sort of perfect answer. It is a science, but it's also an art and art comes to science and that cycle keeps moving in credit card. But also the function is we have seen that in this COVID time, it hasn't behaved much worse. Because now over a period of time, it is becoming a very important source of credit. And in tough times, people do require sometimes 1 month of extra credit, 1 month of salary in the extra credit. And that comes by way of credit cards because they can repay at will. So that is another behavior change in behavior that we have seen in COVID. So it is behaving reasonably well. So -- but it's a function of experimentation that we keep doing. We experiment small, and we test and run and then we scale up and then we kill some segments which don't behave well. So that's a constant theme. But will we go and aggressively increase our receivables per card without testing? The answer is no.

[Operator]

We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

[Sandeep Bakhshi, MD, CEO & Executive Director]

Yes. Thank you, everyone, for your time this evening. Please stay safe and take care. Thank you.

[Rakesh Jha, Chief Financial Officer]

Thank you.

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

Thank you.

[Operator]

Thank you very much. On behalf of ICICI Bank Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.