ICICI Bank set to raise up to ₹15,000 crore
The funds will be raised through share sale as the bank looks to strengthen its balance sheet in an uncertain scenario
MUMBAI: Country’s second largest private lender ICICI Bank Ltd on Wednesday said that it will raise up to ₹15,000 crore via share sale as it looks to strengthen its balance sheet in an increasingly uncertain pandemic induced economic environment .The proposed fund raise by the bank comes after a gap of 13 years.
The private lender had last raised ₹8,750 crore via fresh issuance of shares in June 2007.
The latest fund raise plans were announced after the bank’s board voted in favour of enabling resolution allowing it to raise fresh funds through issuance of shares via private placement, preferential issue, qualified institutions placement, follow-on public offering or a combination of any of these routes.
On Sunday, ICICI Bank had stated in an exchange filing that it would look at further strengthening the balance sheet. As on March 31, 2020, ICICI Bank’s common equity tier 1 (CET 1) capital, a yardstick to assess a bank’s ability to provide for loan losses, write-off loans and spend money on potential acquisitions or capital infusion plans, stood at 13.39%, which is lower than 13.64% as at the end of March last year.
The bank’s tier-1 capital ratio was at 14.72% for fiscal 2020 as against 15.09% for fiscal 2019.
The bank’s capital to riskweighted assets ratio (CRAR) has fallen from 16.89% in fiscal 2019 to 16.11% as on March 31, 2020. Now, with the bank’s capital position weakening, ICICI Bank is in a rush to raise as much money as possible via share sales.
The bank has already raised ₹3,090 crore by selling a part of its holdings in its two insurance subsidiaries last month.
On June 22, ICICI Bank sold 1.5% stake in its life insurance arm ICICI Prudential Life Insurance Co. Ltd. for ₹840 crore.A week earlier, the private lender sold 3.96% stake in its general insurance arm ICICI Lombard General Insurance CO. Ltd. for ₹2,250 crore.
For fiscal 2020, ICICI Bank’s gross non-performing loans ratio was at 5.93% while on a net basis NPL was at 1.53% for the fiscal year that ended on March 31, 2020.
Like many other lenders ICICI Bank may face business headwinds due to prolonged lockdown which has impacted the repayment ability of borrowers.