ICICI Bank 2003 Annual Report Download - page 57

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Management’s Discussion & Analysis
55
Operating Expense
Operating expense for fiscal 2003 was Rs. 15.35 billion (excluding lease depreciation of Rs. 3.14 billion and
DMA expense of Rs.1.62 billion) compared to Rs. 5.98 billion for fiscal 2002. The increase in operating expense
was primarily due to inclusion of the operations of ICICI, ICICI Capital and ICICI PFS and the growth in the retail
franchise, including lease and maintenance of ATMs, credit card expenses, call centre expenses and technology
expenses. The number of savings accounts increased to about 4.26 million at March 31, 2003 from about 2.1
million at March 31, 2002. The credit and debit cards increased to about 4.50 million at March 31, 2003 from
about 1.30 million at March 31, 2002. The number of ATMs increased to 1,675 at March 31, 2003 from 1,000
at March 31, 2002. The operating expenses as a percentage to average assets was 1.46% for fiscal 2003
compared to 2.55% for fiscal 2002.
The following table sets forth, for the periods indicated, the break-up of the principal components of operating
expense.
Rs. billion
Fiscal 2002 Fiscal 2003
Salary ............................................................................ 1.47 4.03
Rents, taxes & lighting ................................................ 0.66 1.12
Printing & stationery .................................................... 0.35 0.75
Postage & courier ........................................................ 0.38 1.04
Repairs & maintenance ................................................ 0.78 1.45
Insurance ...................................................................... 0.14 0.25
Bank charges ............................................................... 0.12 0.23
Depreciation ................................................................. 0.52 1.91
Others ........................................................................... 1.56 4.57
Operating expenses ..................................................... 5.98 15.35
DMA Expense
ICICI Bank incurred DMA expenses of Rs. 1.62 billion on the retail asset portfolio (other than auto loans). Retail
assets increased to Rs. 191.32 billion at March 31, 2003 from Rs. 61.25 billion at March 31, 2002.
Provisions and Write-offs
ICICI Bank makes provisions/write-offs aggregating 50% of the secured portion of non-performing assets over
a three-year period instead of the five-and-a-half year period prescribed by RBI. Loss assets and the unsecured
portion of doubtful assets are fully provided for / written off. Additional provisions are made against specific
non-performing assets if considered necessary by the management. For restructured or rescheduled assets,
provision is made in accordance with the guidelines issued by the RBI, which require that the difference
between the present values of the future interest as per the original loan agreement and the present values
of future interest on the basis of the rescheduled terms be provided at the time of restructuring.