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Analyst Research Report Snapshot


ICICI Bank (ICICIBC) - Qtr. Update - Dtd. - January 31, 2013




Axis Capital Limited


01 Feb 2013





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ICICI Bank delivered a consistent performance along with stable asset quality. While loan book growth was diversified and margin improved, fee income was muted due to lower corporate activity.  Core performance was in line as NII rose 29% YoY led by loan growth of 16% YoY and margin increase of 37 bps YoY (and 7 bps QoQ) to 3.1%. Controlled increase in staff and other opex led to decline in cost-income ratio at 39.6% (down 206 bps YoY and 145 bps QoQ).  NIM increase was led by decline in cost of domestic funds. Domestic NIM rose 50 bps YoY to 3.5%. Management expects overall NIM to improve led by NIM of overseas book (currently 1.3%) with re-deployment of excess liquidity in overseas branches. For FY13E, we expect calculated NIM at 3% (FY12 NIM at 2.7%).  Asset quality remained stable as (1) gross NPA ratio declined 23 bps QoQ with marginal decline in absolute NPAs and (2) restructured book (as % of loans) declined 5 bps QoQ to 1.4%. Valuation Rise in leverage to expand RoE to ~15% in FY15E (from ~11% in FY12). Management expects RoA to improve to 1.7% in next two years (1.5% in FY12), which we believe is achievable. We maintain our BUY rating on the stock with TP of Rs 1,425 [1.9x FY15E ABV (adj. for invest.) + Rs 347 value of invest.]; upside of 20% from CMP of Rs 1,191. The stock trades at 1.7x FY14E and 1.5x FY15E adj. ABV. of Rs 502 and Rs 568 respectively. Regards, Praveen Agarwal (Executive Director – BFSI) Institutional Equity Research Axis Capital Ltd. Tel.: + 91 22 4325 1102 Siddharth Goel (AVP – BFSI) Institutional Equity Research Axis Capital Ltd. Tel.: +91 22 4325 1126 Namesh Chhangani (AVP – BFSI) Institutional Equity Research Axis Capital Ltd. Tel.: +91 22 4325 1127

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