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ICICI Bank Ltd.

BSE: 532174 Sector: Financials
NSE: ICICIBANK ISIN Code: INE090A01021
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VOLUME 1497019
52-Week high 552.40
52-Week low 269.00
P/E 30.67
Mkt Cap.(Rs cr) 243,303
Buy Price 375.70
Buy Qty 79.00
Sell Price 375.70
Sell Qty 1038.00
OPEN 362.20
CLOSE 361.80
VOLUME 1497019
52-Week high 552.40
52-Week low 269.00
P/E 30.67
Mkt Cap.(Rs cr) 243,303
Buy Price 375.70
Buy Qty 79.00
Sell Price 375.70
Sell Qty 1038.00

ICICI Bank Ltd. (ICICIBANK) - Auditors Report

Company auditors report

To the Members of

ICICI Bank Limited

Report on the Audit of the Standalone Financial Statements Opinion

1. We have audited the accompanying standalone financial statements ofICICI Bank Limited (‘the Bank') which comprise the Balance Sheet as at 31 March2019 the Profit and Loss Account and the Cash Flow Statement for the year then ended anda summary of the significant accounting policies and other explanatory information.Incorporated in these standalone financial statements are the returns of the internationalbranches for the year ended 31 March 2019. The branches in Dubai South Africa and NewYork have been audited by the respective local auditors.

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the section 29 of the Banking Regulation Act 1949 as well as theCompanies Act 2013 (‘Act') and circulars and guidelines issued by the ReserveBank of India in the manner so required for banking companies and give a true and fairview in conformity with the accounting principles generally accepted in India includingthe Accounting Standards prescribed under section 133 of the Act read with rule 7 of theCompanies (Accounts) Rules 2014 (as amended) of the state of affairs of the Bank as at31 March 2019 and its profit and its cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit in accordance with the Standards on Auditingspecified under section 143(10) of the Act. Our responsibilities under those standards arefurther described in the Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements section of our report. We are independent of the Bank in accordancewith the Code of Ethics issued by the Institute of Chartered Accountants of India(‘ICAI') together with the ethical requirements that are relevant to our auditof the financial statements under the provisions of the Act and the rules thereunder andwe have fulfilled our other ethical responsibilities in accordance with these requirementsand the Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

4. Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the standalone financial statementsof the current period. These matters were addressed in the context of our audit of thefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters.

5. We have determined the matters described below to be the key auditmatters to be communicated in our report.

a. Information Technology (‘IT') systems and controls impacting financial reporting
(Refer chapter ‘Key risks impacting the Bank's business' under the Integrated Report of the Annual Report)
Key Audit Matter How our audit addressed the key audit matter
The IT environment of the Bank is complex and involves a large number of independent and inter- dependent IT systems used in the operations of the Bank for processing and recording a large volume of transactions at numerous locations. As a result there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the Bank. In assessing the integrity of the IT systems we involved our IT experts to obtain an understanding of the IT infrastructure and IT systems relevant to the Bank's financial reporting process for evaluation and testing of IT general controls and IT automated controls existing in such IT systems.
Appropriate IT general controls and application controls are required to ensure that such IT systems are able to process the data as required completely accurately and consistently for reliable financial reporting. Access rights were tested over applications operating systems networks and databases which are relied upon for financial reporting. We also assessed the operating effectiveness of controls over granting removal and periodical review of access rights. We further tested segregation of duties including preventive controls to ensure that access to change applications the operating system or databases in the production environment were granted only to authorized personnel.
The accuracy and reliability of the financial reporting process depends on the IT systems and the related control environment including:
ITgeneralcontrolsoveruseraccessmanagement and change management across applications networks database and operating systems; Other areas that were assessed under the IT control environment included password policies security configurations and controls around change management.
IT automated application controls.
Due to the importance of the impact of the IT systems and related control environment on the Bank's financial reporting process we have identified testing of such IT systems and related control environment as a key audit matter for the current year audit. We also evaluated the design and tested the operating effectiveness of key automated controls within various business processes. This included testing the integrity of system interfaces the completeness and accuracy of data feeds and automated calculations.

b. Identification and provisioning for non-performing assets(‘NPAs')

As at 31 March 2019 the Bank reported total loans and advances (net ofprovisions) of र 5866466 million (2018:

र 5123953 million) gross NPAs of र 456760 million (2018: र 532402million) and provision for non-performing assets of र 322263 million (2018: 254166million). The provision coverage ratio as at 31 March 2019 is 70.6% (2018: 47.7%).

(Refer schedules 9 18.18 and 18.21)

Key Audit Matter How our audit addressed the key audit matter
The identification of NPAs and provisioning for advances is made in accordance with the extant RBI regulations or host country regulations in the case of international branches. Based on our risk assessment the following are significant in assessment of the NPA provisions: We tested the design and operating effectiveness of key controls including IT based controls focusing on the following:
IdentificationandclassificationofNPAsinlinewith RBI IRAC norms and certain qualitative aspects;
Recognition of defaults in accordance with the criteria set out in the RBI Prudential norms on Income Recognition Asset Classification and Provisioning pertaining to Advances (IRAC norms) or in accordance with the host country regulations as applicable. Further the Bank is also required to apply its judgement to determine the identification of NPAs by applying certain qualitative aspects;
Periodic internal reviews of asset quality;
Assessment of adequacy of NPA provisions; and Periodic valuation of collateral for NPAs.
The measurement of provision under RBI guidelines is dependent on the ageing of overdue balances secured/ unsecured status of advances stress and liquidity concerns in certain sectors and valuation of collateral. The provision on NPAs at certain overseas branches requires estimation of amounts and timing of expected future cash flows and exit values. To test the identification of loans with default events and other triggers we selected a sample of performing loans and independently assessed as to whether there was a need to classify such loans as NPAs.
Considering the significance of the above matter to the financial statements the heightened regulatory inspections and significant auditor attention required we have identified this as a key audit matter for the current year audit. With respect to provisions recognised towards NPAs we selected samples based on high risk industry sectors such as shipping rigs power mining and oil and gas exploration. For the samples selected we re- performed the provision calculations and compared our outcome to that prepared by the management and challenged various assumptions and judgements which were used by the management.
We assessed the appropriateness and adequacy of disclosures against the relevant accounting standards and RBI requirements relating to NPAs.

c. Provisions for litigation and taxation and contingentliabilities

As at 31 March 2019 the Bank has reported the following:

( र in millions)

Particulars Included under contingent liabilities
At 31.03.2019 At 31.03.2018
Legal cases 1096 647
Taxes 53913 62013

(Refer schedules 12 18.40 and 18.41)

Key Audit Matter How our audit addressed the key audit matter
As at 31 March 2019 the Bank has ongoing legal and tax cases with varied degrees of complexities. This indicates that a significant degree of management judgement is involved in determining the appropriateness of provisions and related disclosures. Our audit procedures included but were not limited to the following:
We tested the design and operating effectiveness of the Bank's key controls over the estimation monitoring and disclosure of provisions and contingent liabilities.
Significant management judgement is needed in determining whether an obligation exists and whether a provision should be recognised as at the reporting date in accordance with the accounting criteria set under Accounting Standard 29 - Provisions Contingent Liabilities and Contingent Assets (‘AS 29') or whether it needs to be disclosed as a contingent liability. Further significant judgements are also involved in measuring such obligations the most significant of which are: For significant legal matters we sought external confirmations and also reviewed the confirmations obtained by the management from external legal counsels and corroborated with management's documented conclusions on the assessment of outstanding litigations against the Bank.
Assessment of liability: Judgement is involved in the determination of whether an outflow in respect of identified material matters are probable and can be estimated reliably; In respect of taxation matters we involved our tax specialists to gain an understanding of the current status of the outstanding tax litigations including understanding of various orders / notices received by the Bank and the management's grounds of appeals before the relevant appellate authorities and critically evaluated the management's assessment of the likelihood of the liability devolving upon the Bank in accordance with the principles of AS 29.
Adequacy of provisions: The appropriateness of assumptions and judgements used in the estimation of significant provisions; and For the significant provisions made we understood assessed and challenged the adequacy of provisions recognised by the management. We also reviewed the historical accuracy of the provisions recognised to determine the efficacy of the process of estimation by the management.
Adequacy of disclosures of provision for liabilities and charges and contingent liabilities. Considering the significance of the above matter to the financial statements and significant auditor attention required to test such estimates we have identified this as a key audit matter for current year audit. Further we assessed whether the disclosures related to significant litigations and taxation matters were fairly presented.

d. Valuation of derivatives

( र in millions)

Particulars Included under At 31.03.2019 At 31.03.2018
Notional value of derivatives Contingent liabilities 17566162 11336607

(Refer schedules 12 and 18.15)

Key Audit Matter How our audit addressed the key audit matter
Derivatives are valued through models with external inputs. The derivatives portfolio of the Bank primarily includes transactions which are carried out on behalf of its clients (and are covered on a back-to-back basis) and transactions to hedge the Bank's interest and foreign currency risk. Our audit procedures included but were not limited to the following:
A significant degree of management judgement is involved in the application of valuation techniques through which the value of the Bank's derivatives is determined. The financial statement risk arises particularly with respect to complex valuation models parameters and inputs that are used in determining fair values. We included our valuation experts as a part of our audit team to obtain an understanding evaluate the design and test the operating effectiveness of the key controls over the valuation processes including: independent price verification performed by a management expert; and model governance and validation.
Considering the significance of the above matter to the financial statements significant management estimates and judgements and auditor attention required to test such estimates and judgements we have identified this as a key audit matter for current year audit. On a sample basis our valuation experts performed an independent reassessment of the valuation of derivatives to ensure compliance with the relevant RBI regulations reasonableness of the valuation methodology and the inputs used.
We also challenged the appropriateness of significant models and methodologies used in valuation.

Information other than the Standalone Financial Statements andAuditor's Report thereon

The Bank's Board of Directors are responsible for the otherinformation. The other information comprises the information included in theManagement's Discussion and Analysis Directors' Report including annexures tothe Directors' Report but does not include the standalone financial statements andour auditor's report thereon.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

6. The Bank's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these standalonefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Bank in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards prescribed under section133 of the Act read with rule 7 of the Companies (Accounts) Rules 2014 (as amended) andprovisions of section 29 of the Banking Regulation Act 1949 and circulars and guidelinesissued by Reserve Bank of India (‘RBI') from time to time. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Bank and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.

7. In preparing the financial statements management is responsible forassessing the Bank's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Bank or to cease operationsor has no realistic alternative but to do so.

8. The Board of Directors is also responsible for overseeing theBank's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements

9. Our objectives are to obtain reasonable assurance about whether thefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with Standards on Auditing will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these financial statements.

10. As part of an audit in accordance with Standards on Auditing weexercise professional judgement and maintain professional skepticism throughout the audit.We also: Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

Obtain an understanding of internal control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for explaining our opinion on whether theBank has adequate internal financial controls system in place and the operatingeffectiveness of such controls.

Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theBank's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Bankto cease to continue as a going concern.

Evaluate the overall presentation structure and content of thefinancial statements including the disclosures and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

11. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

12. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.

13. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the financialstatements of the current period and are therefore the key audit matters. We describethese matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Other Matters

14. We did not audit the financial statements of 3 internationalbranches included in the standalone financial statements of the Bank whose financialstatements reflects total assets of र 657940 million as at 31 March 2019 and totalrevenue and net cash outflows of र 22507 million and र 5168 million respectively for theyear ended on that date as considered in the standalone financial statements. Thefinancial statements of these branches have been audited by the branch auditors whosereports have been furnished to us by the management and our opinion on the standalonefinancial statements in so far as it relates to the amounts and disclosures included inrespect of branches is based solely on the report of such branch auditors.

Our opinion on the standalone financial statements is not modified inrespect of the above matter.

15. The financial statements of the Bank for the year ended 31 March2018 were audited by the predecessor auditors who have expressed an unmodified opinion onthose financial statements vide their audit report dated 7 May 2018.

Report on Other Legal and Regulatory Requirements

16. The Balance Sheet and the Profit and Loss Account have been drawnup in accordance with the provisions of section 29 of the Banking Regulation Act 1949 andsection 133 of the Act read with rule 7 of the Companies (Rules) 2014 (as amended).

17. As required by sub-section (3) of section 30 of the BankingRegulation Act 1949 we report that: a) we have obtained all the information andexplanations which to the best of our knowledge and belief were necessary for thepurpose of our audit and have found them to be satisfactory; b) the transactions of theBank which have come to our notice have been within the powers of the Bank; and c) sincethe key operations of the Bank are automated with the key applications integrated to thecore banking system the audit is carried out centrally as all the necessary records anddata required for the purposes of our audit are available therein. However during thecourse of our audit we have visited 102 branches to examine the records maintained atsuch branches for the purpose of our audit. Further as stated above returns frombranches were received duly audited by other auditors and were found adequate for thepurpose of our audit.

18. With respect to the matter to be included in the Auditor's Reportunder section 197(16) of the Act we report that since the Bank is a banking company asdefined under Banking Regulation Act 1949 the reporting under section 197(16) inrelation to whether the remuneration paid by the Bank is in accordance with the provisionsof sections 197 of the Act and whether any excess remuneration has been paid in accordancewith the aforesaid section is not applicable.

19. Further as required by section 143 (3) of the Act we report that:a) we have sought and obtained all the information and explanations which to the best ofour knowledge and belief were necessary for the purpose of our audit; b) in our opinionproper books of account as required by law have been kept by the Bank so far as itappears from our examination of those books and proper returns adequate for the purposesof our audit have been received from the branches not audited by us; c) the reports onthe accounts of the branch offices of the Bank audited under section 143(8) of the Act bythe branch auditors of the Bank have been sent to us and have been properly dealt with byus in preparing this report; d) the standalone financial statements dealt with by thisreport are in agreement with the books of account and with the returns received from theinternational branches not audited by us; e) in our opinion the aforesaid standalonefinancial statements comply with Accounting Standards prescribed under section 133 of theAct read with rule 7 of the Companies (Accounts) Rules 2014 (as amended) to the extentthey are not inconsistent with the accounting policies prescribed by RBI; f) on the basisof the written representations received from the directors as on 31 March 2019 and takenon record by the Board of Directors none of the directors is disqualified as on 31 March2019 from being appointed as a director in terms of section 164(2) of the Act; g) we havealso audited the internal financial controls over financial reporting (IFCoFR) of the Bankas on 31 March 2019 in conjunction with our audit of the standalone financial statementsof the Bank for the year ended on that date and our report dated 06 May 2019 as perAnnexure A expressed an unmodified opinion; h) with respect to the other matters to beincluded in the Auditor's Report in accordance with rule 11 of the Companies (Auditand Auditors) Rules 2014 (as amended) in our opinion and to the best of our informationand according to the explanations given to us: i. the Bank as detailed in schedule 18.40to the standalone financial statements has disclosed the impact of pending litigations onits financial position as at 31 March 2019; ii. the Bank as detailed in schedule 18.40 tothe standalone financial statements has made provision as at

31 March 2019 as required under the applicable law or AccountingStandards for material foreseeable losses if any on long-term contracts includingderivative contracts; iii. there has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Bank during the yearended 31 March 2019; iv. the disclosure requirements relating to holdings as well asdealings in specified bank notes were applicable for the period from 8 November 2016 to 30December 2016 which are not relevant to these standalone financial statements. Hencereporting under this clause is not applicable.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Khushroo B. Panthaky
Place: Mumbai Partner
Date: 06 May 2019 Membership No.: 042423

ANNEXURE A to the Independent Auditor's Report of even date to themembers of ICICI Bank Limited on the standalone financial statements for the year ended 31March 2019

Independent Auditor's Report on the Internal Financial Controlsunder Clause (i) of sub-section 3 of Section 143 of the Companies Act 2013 (‘theAct')

1. In conjunction with our audit of the standalone financial statementsof ICICI Bank Limited (‘the Bank') as at and for the year ended 31 March 2019we have audited the internal financial controls over financial reporting(‘IFCoFR') of the Bank as at that date.

Management's Responsibility for Internal Financial Controls

2. The Bank's Management is responsible for establishing andmaintaining internal financial controls based on the internal control over financialreporting criteria established by the Bank considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of the Bank's business including adherence to the Bank's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor's Responsibility

3. Our responsibility is to express an opinion on the Bank's IFCoFRbased on our audit. We conducted our audit in accordance with the Standards on Auditingissued by the Institute of Chartered Accountants of India (‘ICAI') and deemed tobe prescribed under Section 143(10) of the Act to the extent applicable to an audit ofIFCoFR and the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (‘the Guidance Note') issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate IFCoFR were established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFRincludes obtaining an understanding of IFCoFR assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Bank's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

6. An enitity's IFCoFR is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally acceptedaccounting principles. An entity's IFCoFR include those policies and procedures that (1)pertain to the maintenance of records that in reasonable detail accurately and fairlyreflect the transactions and dispositions of the assets of the entity; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the entity are being made only in accordance withauthorisations of management and directors of the entity; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the entity's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

7. Owing to the inherent limitations of IFCoFR including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the IFCoFR to future periods are subject to the risk that the IFCoFR maybecome inadequate because of changes in conditions or that the degree of compliance withthe policies or procedures may deteriorate.

Opinion

8. In our opinion the Bank has in all material respects adequateinternal financial controls over financial reporting and such controls were operatingeffectively as at 31 March 2019 based on the internal control over financial reportingcriteria established by the Bank considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the ICAI.

For Walker Chandiok & Co LLP
Chartered Accountants
Firm's Registration No.: 001076N/N500013
Khushroo B. Panthaky
Place: Mumbai Partner
Date: 06 May 2019 Membership No.: 042423