ICICI Bank Research Report

ICICI Bank Research Report
COMPANY PULSE: A Research Report of ICICI Bank The Company Pulse is a no-nonsense decision enabling report which gives the details of the company, 10 Year X-Ray analysis, and the companys future prospects. The Company Pulse is extremely useful information which you need to read before investing in a particular stock. There is no need to go through a large number of pages & data to know the past & future potential of the company. Just reading the Company Pulse will suffice. MoneyWorks4me.com
Report Date: 08 Aug 2013
http://www.moneyworks4me.com
10 YEAR X-RAY of ICICI Bank: Analysis of Financial Track Record
More Related Links: ICICI Bank Stock Analysis, Live ICICI Bank Share Price, ICICI Bank Latest News, Price Chart of ICICI Bank
Page | 1 Share this Report on

Get more Free Company Reports on http://www.moneyworks4me.com/
About ICICI Bank:

ICICI Bank is Indias second largest bank and largest private sector bank, with total assets of Rs. 5367.95 billion as on March 31, 2013. It mainly operates in Retail Banking, Wholesale Banking and Treasury. It has a large customer base of around 24 million. The bank has a presence in 19 countries, including India. It has subsidiaries in UK, Russia and Canada, branches in US, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Its UK subsidiary has established branches in Belgium and Germany.
Revenue Segregation (FY13)
ICICI Bank also offers wide range of financial services to corporate and retail customers through its specialized subsidiaries in the areas of investment banking, life and non-life insurance, venture capital and asset management.

10 YEAR X-RAY Analysis of ICICI Bank: ICICI Bank, in the last 10 years, increased its net interest income by 29.17% on a stand-alone basis, from Rs. 2185 Cr. in FY04 to Rs. 13866 Cr. in FY13. On a consolidated basis, its net interest income was Rs. 16599.18 Cr. in FY13. Its CASA ratio was below 30% till FY09; but in the last two financial years, it boosted its CASA ratio was 43.5% at March 31, 2012, which is quite remarkable. The bank earned net interest margins of 3.11% in FY13. Its book value per share grew only by 10.71% in FY12. The book value of the bank increased from Rs. 125.28 in FY04 to Rs. 578 in FY13. ICICI Bank acquired Bank of Rajasthan in 2010.
ICICI Bank managed to attain ROE (Return on Equity) of 13.62% in FY12. The net non-performing assets to net advances ratio of the bank have been continuously above 1% in the last five years, which shows its asset quality is not up to the mark. If we look at its trend, it is showing decreasing net non-performing assets to net advances ratio in the last two years, from 1.11% in FY11 to 0.73% in FY12. This shows it is continuously improving its asset quality with a large focus on it. At the end of FY13, its capital adequacy ratio was at 18.74%; much higher than the RBI guideline of 9%, which will help the bank grow its operation comfortably. Considering all the above factors we can say that the 10 YEAR X-RAY of ICICI Bank is Orange (somewhat good).

LONG-TERM PROSPECTS:
Introduction of Basel III norms: The latest norm now seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the banks' transparency. The minimum requirement for common equity has been raised under Basel III from 2% to 4.5% of total risk-weighted assets. The overall Tier 1 capital requirement will also increase from the current minimum of 4% to 6%. The required total capital will increase to 10.5% when combined with the conservation buffer. It will be a challenging task for banks, especially public sector banks to meet the minimum capital requirement according to new norms. Pressure on Return on Equity: To meet the new norms, apart from government support a significant number of banks have to raise capital from the market. This will push the interest rate up, and in turn, cost of capital will rise while return on equity (RoE) will come down. To compensate the RoE loss, banks may increase their lending rates. However, this will adversely affect the effective demand for loan and, thereby, interest income. Also, the government's large fiscal deficit will limit its ability to inject capital into government-owned banks, which currently have less capital adequacy than the private and foreign banks operating in India. Pressure on Yield on Assets: On account of higher deployment of funds in liquid assets that give comparatively lower returns, banks' yield on assets, and thereby their profit margins, may be under pressure. A few of the smaller banks could become potential takeover targets, which could result in consolidation in India's currently fragmented banking sector Another major event which could impact banking industry is the passing of Banking laws (Amendment) Bill on 20th December 2012.The Bill would pave the way for new bank licenses by RBI resulting in opening of new banks and branches. NBFCs like PFC, L&T finance, Shriram group well as some corporate groups Reliance, Tata etc) have applied for the banking licenses New Entrants in the market may result in price based competition on deposits, loans and human resources. Entry of New banks, with the issuance of banking licenses has sparked the hope for M&A. In order to achieve a rapid growth, new banks may target smaller private banks with larger distribution. The potential targets may be Federal Bank, Karur Bank, Dhanalaxmi Bank, LakshmiVilas Bank.

Another proposal to increase voting rights from 10% to 26% for the investors in Private Banks not only increases FIIs interest but also gives them better say in the management decisions. During 2011-12 Indian Banking Industry faced major challenges regarding asset quality deterioration with banks gross non-performing asset showing a sharp increase in sectors such as aviation, infrastructure and power. In 2012-13, Banks started focusing on lending to more profitable sectors such as SME which displays better risk management and effective monitoring. Strategic Path of ICICI Bank With a market share of 4.2% in the domestic loans and largest branch network in the private financials, above industry growth and favorable margins will drive earnings. Cut down on unsecured retail loans To build a healthy loan portfolio and resolve asset quality issues, ICICI Bank reworked its strategy by running down unsecured retail loan portfolio in favor of lowrisk secured loans and corporate loans. In fiscal 2012, there was an increase in retail lending volumes in secured retail products. In FY 2012, total retail portfolio grew by 7.1% and secured retail portfolio grew by 9.4%. In future, ICICI Bank has plans to grow its unsecured loan but in a measured way. Also, bank restricted new exposures to the segment on which it has outstanding loans and focused on those industrial segments which are showing growth opportunities.
One of the major concerns for ICICI is that it has one of the most concentrated loan books. ICICIs exposure to its top 20 borrowers is quite

large. This accounts for large corporate credit risk. Also it has limited exposure to SME. Impact of Basel III norms on ICICI Bank: The norm forbids banks from using the consolidated capital of any insurance or non-financial subsidiaries for calculating capital adequacy. Repatriation of capital from international subsidiaries will reduce capital charge ensuring dilution-free growth. Once capital is brought back into the parent company, it shall not only translate to higher RoEs for international subsidiaries but also provide cushion to parent capitalization. Stringent norms for capital deductions will have some impact on reported capital levels for ICICI bank (given large proportion of investment in subsidiaries) but the impact on tier-1 for ICICI is manageable. International subsidiaries are adequately capitalized. Capital adequacy ratios for ICICI UK and ICICI Canada improved from 17.3% and 23.4% in FY10 to 33.6% and 34.1% in 2QFY13. Technological Advancement ICICI Bank has been at the forefront of technological innovations in banking. With Vodafone, ICICI launched M-Pesa in March13, unique service to transfer money and make payments via mobile phone. The Bank now offers a unique and innovative service that provides basic banking facilities to millions of Indians who still depend on informal channels for their banking needs. ICICI took much such initiative such as Mobile Money, iWish, Instanetexpress etc, which shows consistent innovation in technology. Technological developments facilitate the flow of Information, leading to reduced cost, better customer satisfaction and faster decision-making. Focus on SME The other key drivers for growth are SME and CV loans. ICICI Bank along with IFC and IBM launched SME toolkit an online resource centre in 2007.It is a free online resource centre that contains up-to-date information and tools to enable SMEs in emerging markets learn how to increase their productivity, efficiency and capacity, as well as improve their access to capital and new markets.

Conclusion:
On the whole, the 10 YEAR X-RAY of ICICI Bank appears to be Orange (somewhat good). Long-term future prospects of ICICI Bank will be Green (Very Good)
MoneyWorks4me.com Address: B-101, Signet Corner Building, Baner Road, Baner, Pune - 411 045, India. Tel: 91-20-27293990, 91-20-67210400 Website: http://www.moneyworks4me.com/ Blog: http://stockshastra.moneyworks4me.com/
Disclaimer: This publication has been prepared solely for information purpose and does not constitute a solicitation to any person to buy or sell a security. MoneyWorks4me.com makes no representation, warranty or claim that the information made available is current or accurate. MoneyWorks4me.com is not responsible for any errors or omissions in the resources or information made available. This document is not to be reported or copied or made available to others without prior permission of Moneyworks4me.com. It does not constitute personal recommendations or take into account the particular investment objectives, financial situations or needs of an individual client or a corporate/s or any entity/s. All investments involve risk and past performance doesn't guarantee future results. The value of, and income from investments may vary because of the changes in the macro and micro factors at a certain period of time. The person should use his/her own judgment while taking investment decisions. The transmission of information from Moneyworks4me.com to you is not intended to create nor does it create an advisor-client relationship between MoneyWorks4me.com and you. Though every effort is made to make accurate, reliable and current information available, MoneyWorks4me.com makes no representation, warranty or claim that the information made available is current or accurate. MoneyWorks4me.com is not responsible for any errors or omissions in the resources or information made available. MoneyWorks4me.com is not a Portfolio Manager, Broker or a Sub-broker and is not registered with any stock exchange. MoneyWorks4me.com does not manage your funds or advices or directs you to acquire, dispose of or retain any securities. MoneyWorks4me.com does not come under the purview of the SEBI (Portfolio Managers) Regulations 1993 or SEBI (Stock Brokers and Sub Brokers) Regulations 1992.


ICICI Bank Research Report

Încărcat de

Informații document

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

ICICI Bank Research Report

Încărcat de

Drepturi de autor:

Formate disponibile

ICICI Bank Research Report

Report Date: 08 Aug 2013