icici bank buy - business...

Please refer to important disclosures at the end of this report 1

Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)

NII 2,712 2,506 8.2 2,312 17.3

Pre-prov. profit 2,687 2,354 14.2 2,343 14.7

PAT 1,728 1,503 15.0 1,437 20.3 Source: Company, Angel Research

ICICI Bank reported healthy performance for 4QFY2012. Net profit for the bank grew by 20.3% yoy to `1,728cr. Key highlights of the results were a) 33bp sequential increase in domestic NIMs mainly driven by no securitization losses during the quarter and full impact of base rate hike and b) continued improvement in asset quality front. We maintain our Buy view on the stock.

NIMs and asset quality, both improved: During the quarter, advances for the bank increased by healthy 17.3% yoy (3.1% qoq), aided by a strong 29.5% yoy (16.2% qoq) growth in SME book, 26.6% yoy growth in corporate book and 26.0% yoy growth in Overseas book (excl. positive impact of INR depreciation 10.4% yoy). Deposits accretion moderated with growth of 13.2% yoy (sequential decline of 2.0%), mainly on account of subdued current deposits growth and moderate 13.7% yoy saving deposits growth. Consequentially, CASA ratio declined 160bp yoy (10bp qoq) to 43.5%. Domestic NIMs improved by 33bp sequentially to 3.3%; while, Overseas NIMs improved by 12bp qoq to 1.5%. Non-interest income (excl. treasury) increased by only 12.7% yoy, on back of moderation in corporate fee income. Misc. other income for the bank grew to `342cr from `46cr in 4QFY2011, aided mainly by higher dividend income of ~`175cr. The bank’s asset quality improvement continued during this quarter as well, with both gross and net NPA ratio declining sequentially by 20bp and 10bp, respectively. Provision coverage ratio remained healthy at 80.4%. The bank’s restructured book grew by `1,186cr (38.6% qoq) to `4,256cr, in line with the management guidance and primarily included accounts such as GTL and 3i Infotech. The management indicated that no major restructuring is in the pipeline. They also specified that based on their past experiences, slippages from restructured assets is ~5%.

Outlook and valuation: The bank’s substantial branch expansion in the past 3-4 years is expected to sustain a far more favourable deposit mix going forward. Moreover, a lower risk balance sheet has driven down NPA provisioning costs, which we believe will enable RoE of 16% by FY2014E (with further upside from financial leverage). At the CMP, the bank’s core banking business (after adjusting for subsidiaries) is trading at 1.5x FY2014E ABV (including subsidiaries, at 1.4x FY2014E ABV). We maintain our Buy recommendation on the stock with a target price of `1,183.

Key financials Y/E March (` cr) FY2011 FY2012 FY2013E FY2014E

NII 9,017 10,734 13,180 15,462

% chg 11.1 19.0 22.8 17.3

Net profit 5,151 6,465 7,843 9,369

% chg 28.0 25.5 21.3 19.5

NIM (%) 2.6 2.7 2.8 2.8

EPS (`) 44.7 56.0 67.9 81.1

P/E (x) 19.4 15.5 12.8 10.7

P/ABV (x) 1.8 1.7 1.5 1.4

RoA (%) 1.3 1.4 1.5 1.5

RoE (%) 11.7 13.5 14.7 16.0 Source: Company, Angel Research

BUY CMP `869 Target Price `1,183

Investment Period 12 Months Stock Info

Sector Banking

Market Cap (` cr) 99,858

Beta 1.3

52 Week High / Low 1119/641

Avg. Daily Volume 653,759

Face Value (`) 10

BSE Sensex 17,187

Nifty 5,209

Reuters Code ICBK.BO

Bloomberg Code ICICIBC@IN

Shareholding Pattern (%)

Promoters -

MF / Banks / Indian Fls 26.9 FII / NRIs / OCBs

62.8

Indian Public / Others 10.3

Abs. (%) 3m 1yr 3yr

Sensex (0.3) (10.9) 56.2

ICICI Bank (2.2) (22.2) 97.8

Vaibhav Agrawal 022 – 3935 7800 Ext: 6808

[email protected]

Varun Varma

022 – 3935 7800 Ext: 6847

[email protected]

Sourabh Taparia

022 – 3935 7800 Ext: 6872

[email protected]

ICICI Bank Performance Highlights

4QFY2012 Result Update | Banking

April 28, 2012

ICICI Bank | 4QFY2012 Result Update

April 28, 2012 2

Exhibit 1: 4QFY2012 performance

Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)

Interest earned 9,175 8,592 6.8 7,156 28.2

- on Advances / Bills 6,128 5,686 7.8 4,535 35.1

- on investments 2,615 2,473 5.8 2,209 18.4

- on balance with RBI & others 128 134 (4.6) 91 40.5

- on others 303 299 1.2 321 (5.6)

Interest Expended 6,070 5,880 3.2 4,647 30.6

Net Interest Income 3,105 2,712 14.5 2,510 23.7

Other income 2,228 1,892 17.8 1,641 35.8

Other income excl. treasury 2,070 1,957 5.8 1,837 12.7

- Fee income 1,728 1,701 1.6 1,791 (3.5)

- Treasury income 158 (65) (343.1) (196) (180.6)

- Other income 342 256 33.8 46 649.9

Operating income 5,333 4,604 15.8 4,150 28.5

Operating expenses 2,222 1,917 15.9 1,845 20.4

- Employee expenses 1,103 837 31.9 857 28.8

- Other Opex 1,119 1,080 3.6 989 13.1

Pre-provision Profit 3,112 2,687 15.8 2,305 35.0

Provisions & Contingencies 469 341 37.6 384 22.3

PBT 2,642 2,346 12.6 1,921 37.5

Provision for Tax 741 618 19.8 469 57.8

PAT 1,902 1,728 10.0 1,452 31.0

Effective Tax Rate (%) 28.0 26.3 169bp 24.4 360bp

Source: Company, Angel Research

Exhibit 2: 4QFY2012 – Actual vs. estimates

Particulars (` cr) Actual Estimates Var. (%)

Net interest income 3,105 2,844 9.2

Other income 2,228 2,032 9.7

Operating income 5,333 4,875 9.4

Operating expenses 2,222 2,051 8.3

Pre-prov. profit 3,112 2,824 10.2

Provisions & cont. 469 476 (1.5)

PBT 2,642 2,348 12.5

Prov. for taxes 741 629 17.7

PAT 1,902 1,719 10.7



April 28, 2012 3

Exhibit 3: 4QFY2012 performance analysis

Particulars 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)

Balance sheet Advances (` cr) 253,728 246,157 3.1 216,366 17.3

Deposits (` cr) 255,500 260,589 (2.0) 225,602 13.3

Credit-to-Deposit Ratio (%) 99.3 94.5 484bp 95.9 340bp

Current deposits (` cr) 34,973 40,039 (12.7) 34,878 0.3

Saving deposits (` cr) 76,046 73,498 3.5 66,869 13.7

CASA deposits (` cr) 111,019 113,537 (2.2) 101,747 9.1

CASA ratio (%) 43.5 43.6 (12)bp 45.1 (165)bp

CAR (%) 18.5 18.9 (36)bp 19.5 (102)bp

Tier 1 CAR (%) 12.7 13.1 (45)bp 13.2 (49)bp

Profitability Ratios (%) Reported NIM 3.0 2.7 31bp 2.7 27bp

Cost-to-income ratio 41.7 41.6 2bp 44.5 (281)bp

Asset quality Gross NPAs (` cr) 9,475 9,723 (2.5) 10,034 (5.6)

Gross NPAs (%) 3.6 3.8 (20)bp 4.5 (85)bp

Net NPAs (` cr) 1,861 2,048 (9.1) 2,407 (22.7)

Net NPAs (%) 0.7 0.8 (10)bp 1.1 (38)bp

Provision Coverage Ratio (%) 80.4 78.9 150bp 76.0 439bp

Provision exps. to avg. assets (%) 0.4 0.3 10bp 0.4 2bp


Overall NIMs improve 27bp sequentially

During 4QFY2012, advances for the bank increased by healthy 17.3% yoy (3.1% qoq), aided by a strong 29.5% yoy (16.2% qoq) growth in SME book, 26.6% yoy growth in corporate book and 26.0% yoy growth in Overseas book (excl. the positive impact of INR’s depreciation, the growth in international advances would have been much lower at 10.4% yoy). Rural segment loans grew at 6.4% yoy (27.8% qoq on account of year ending phenomena of higher priority sector lending in the last quarter). Retail loans grew by 7.6% yoy (9.2% qoq), partly due to the bank’s conscious strategy to reduce the share of unsecured personal and credit card loans. Personal loans came off by a sharp 57.7% yoy, while credit card debt declined by 8.7% yoy. Secured vehicle and housing advances grew by 18.0% and 6.9% yoy, respectively. Consequently, the retail segment’s overall contribution to the advances book came at 35.5% as of 4QFY2012 as against 38.7% as of 4QFY2011 (33.5% in 3QFY2012).

Deposits accretion moderated during the quarter with growth of 13.2% yoy (sequential decline of 2.0%), mainly on account of subdued current deposits growth and moderate 13.7% saving deposits growth. Consequentially, credit to deposit ratio for the bank rose sharply to 99.3% in 4QFY2012 from 95.9% in 4QFY2011 and 94.5% in 3QFY2012. Muted growth in current deposits and moderate growth in saving deposits led the CASA ratio for the bank to decline 160bp yoy (10bp sequentially) to 43.5%.


April 28, 2012 4

Reported overall NIM improved by 27bp sequentially to 3.01%, on account of improvement in both domestic and international NIMs. Domestic NIMs improved by 33bp qoq to 3.3%, aided by higher investment income on account of no securitization loss during the quarter and higher yield on advances on account of full impact of base rate hike. Overseas NIM improved by 12bp qoq to 1.52% mainly on account of higher yield on advances.

Going ahead, Management expects the banks’ domestic loan book to grow by ~20% in FY2013 mainly driven by corporate and secured retail loans. They anticipate the bank’s consolidation in overseas loan book to continue in current year as well. According to the management, while 1QFY2013 NIMs are likely to be sequentially lower due to priority sector lending, overall NIMs are expected to improve by 10-15bp in FY2013 as compared to FY2012.

Exhibit 4: Consolidation in unsecured retail advances continue

Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy) % to total

Rural 22,328 17,477 27.8 20,987 6.4 8.8

Overseas 69,521 69,663 (0.2) 55,173 26.0 27.4

Corporate 58,357 64,986 (10.2) 46,086 26.6 23.0

SME 13,448 11,569 16.2 10,386 29.5 5.3

Retail 90,073 82,463 9.2 83,734 7.6 35.5

- Housing 57,647 54,755 5.3 53,924 6.9 22.7

- Vehicle 26,572 22,182 19.8 22,524 18.0 10.5

- Personal 991 990 0.1 2,345 (57.7) 0.4

- Credit cards 2,522 2,474 1.9 2,763 (8.7) 1.0

- Other retail 2,342 2,062 13.6 2,177 7.6 0.9 Total Advances 253,728 246,157 3.1 216,366 17.3 100.0


Exhibit 5: CDR picks due to moderation in deposits gr.


Exhibit 6: CASA ratio remain flat sequentially


96 96 95 94 99

60

70

80

90

100

110

(3.0)

-

3.0

6.0

9.0

4QFY11 1QFY12 2QFY12 3QFY12 4QFY12

Adv. qoq growth Dep. qoq growth CDR (%, RHS)

45

.1

41

.9

42

.1

43

.6

43

.5

20.8

14.2

5.1

18.0

9.1

-

5.0

10.0

15.0

20.0

25.0

5.0

15.0

25.0

35.0

45.0


CASA ratio (%) CASA yoy growth (%)


April 28, 2012 5

Exhibit 7: NIMs improve sharply by 27bp qoq


Exhibit 8: NII growth trends


Fee income moderation continues

During 4QFY2012, non interest income excl. treasury for the bank increased by 12.7% yoy to `2,070cr, on back of moderation in fee income. Fee income declined by 3.5% yoy due to moderation in corporate fee income despite traction witnessed in income from transaction banking and remittance segments. Treasury income came in at `158cr as against loss of `196cr in 4QFY2011, on account of higher proprietary trading income and improved performance on equity portfolio, despite MTM losses on security receipts. Other income for the bank grew to `342cr from `46cr in 4QFY2011, mainly aided by dividend income of `100cr received from ICICI Bank UK and ~`75cr from its life insurance subsidiary.

Going ahead, the management expects fee income growth to be in low double digits in FY2013, on account of, continued traction anticipated in transaction banking and remittance business; while stabilization expected in corporate fee income.

Exhibit 9: Other Income aided by dividends from subsidiaries Particulars (` cr) 4QFY12 3QFY12 % chg (qoq) 4QFY11 % chg (yoy)

Fee income 1,728 1,701 1.6 1,791 (3.5)

Treasury 158 (65) (343.1) (196) (180.6)

Others 342 256 33.6 46 648.9

Other income 2,228 1,892 17.8 1,641 35.8

Other income excl. treasury 2,070 1,957 5.8 1,837 12.7


2.7 2.6 2.6

2.7

3.0

2.2

2.4

2.6

2.8

3.0


NIM (Reported, %)

23.3 21.1

13.7

17.3

23.7

-

5.0

10.0

15.0

20.0

25.0

2,000 2,150 2,300 2,450 2,600 2,750 2,900 3,050 3,200


NII (` cr) YoY growth (%, RHS)


April 28, 2012 6

Exhibit 10: Fee income moderation continues


Exhibit 11: Still healthy share of fee income in RoA


Asset quality continues to improve

The bank’s asset quality improvement continued during 4QFY2012 as well, with both gross and net NPA ratio declining sequentially by 20bp and 10bp, respectively. As of 4QFY2012 gross NPA ratio stands at 3.6% (3.8% in 3QFY2012), while net NPA ratio stands at 0.7% (0.8% in 3QFY2012). Provision coverage ratio for the quarter remained healthy at 80.4%.

Gross slippages ratio for FY2012 stood at 1.36%. During the quarter, the bank’s restructured book grew by `1,186cr (38.6% qoq) to `4,256cr, in line with the management guidance and primarily included accounts such as GTL and 3i Infotech. The management indicated that no major restructuring is in the pipeline. They also specified that based on their past experiences, slippages from restructured assets is ~5%. Further they guided for credit cost to be 75bp for FY2013.

Exhibit 12: Restructured loans rise during 4QFY2012


Exhibit 13: Declining NPAs with improving coverage


Operating costs rise due to higher employee bonus provisions

Operating expenses increased by 20.5% yoy (16.0% qoq), primarily due to increase of `267cr in employee expenses on the back of higher bonus provisions. Consequently, the operating expenses to average assets ratio increased to 1.9% in 4QFY2012 compared to 1.8% in 4QFY2011 and 1.7% in 3QFY2012. Cost-to-income ratio also inched up sequentially by 10bp to 41.7%. The management expects to contain cost-to-income ratio below 42% in FY2013.

1,7

91

1,5

78

1,7

00

1,7

01

1,7

28

17.8

11.7

6.9 4.7

(3.5)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

1,400

1,500

1,600

1,700

1,800

1,900


Fee Income (` cr) yoy growth (%, RHS)

1.8

1.5 1.6

1.5 1.5

1.0

1.2

1.4

1.6

1.8

2.0


Fee income to average assets (%)

1,970 1,966 2,501

3,070

4,256

-

750

1,500

2,250

3,000

3,750

4,500


(` cr)

4.5

4.4

4.1

3.8

3.6

1.1

1.0

0.9

0.8

0.7

76.0 76.9 78.2 78.980.4

60.0

65.0

70.0

75.0

80.0

85.0

-

1.0

2.0

3.0

4.0

5.0


Gross NPAs (%) Net NPAs (%) Coverage ratio (%, RHS)


April 28, 2012 7

Exhibit 14: Staff expenses increased Total Opex


Exhibit 15: Opex to avg assets ratio increase in 4QFY12


Under-leveraged branch network

The number of branches for the bank has almost doubled over the past three years. Branch network improvement was partly aided by the merger with the Bank of Rajasthan. This extensive pan India network of 2752 branches as of 4QFY2012 is under-leveraged, as reflected in the falling CASA deposits/branch of ~`40cr compared to `65cr as of 3QFY2008 and the total assets/branch of `172cr compared to `394cr as of 3QFY2008.

Further, management plans to maintain the branch addition rate in the range of 200-300 in coming year as well. Going forward, we expect the bank to leverage this network to grow its CASA market share.

Exhibit 16: Robust branch expansion


Exhibit 17: Under-leveraged branch network


Overview of performance of subsidiaries

Consolidated net profit for FY2012 rose by a healthy 25.4% yoy to `7,643cr (ex ICICI General additional third party motor pool losses, consolidated net profit would have grown by 33.6% to `8,146cr).

Consolidated reported RoE’s for FY2012 improved to 13.0% from 11.6% in FY2011. However, overseas subsidiaries of the bank (viz. ICICI Bank Canada and ICICI Bank UK) continue to remain a drag on the consolidated RoE’s, as both remain over capitalized, reflecting bank’s strategy of consolidating their

98

9

1,0

87

1,0

50

1,0

80

1,1

19

85

7

73

3

84

3

83

7

1,1

03

-

10.0

20.0

30.0

-

500

1,000

1,500

2,000

2,500


Other opex Staff exps Opex yoy growth (RHS)(` cr) (%)

44

.5

44

.9

44

.6

41

.6

41

.7

1.8 1.8 1.8

1.7

1.9

1.4

1.5

1.6

1.7

1.8

1.9

2.0

30.0

35.0

40.0

45.0

50.0


Cost-to-income ratio (%) Opex to avg assets (%, RHS)

1,3

08

1,4

38

1,7

41

2,5

29

2,7

52

-

450

900

1,350

1,800

2,250

2,700

3Q

FY0

84

QFY

08

1Q

FY0

92

QFY

09

3Q

FY0

94

QFY

09

1Q

FY1

02

QFY

10

3Q

FY1

04

QFY

10

1Q

FY1

12

QFY

11

3Q

FY1

14

QFY

11

1Q

FY1

22

QFY

12

3Q

FY1

24

QFY

12

-10 20 30 40 50 60 70

-

90

180

270

360

450

3Q

FY0

84

QFY

08

1Q

FY0

92

QFY

09

3Q

FY0

94

QFY

09

1Q

FY1

02

QFY

10

3Q

FY1

04

QFY

10

1Q

FY1

12

QFY

11

3Q

FY1

14

QFY

11

1Q

FY1

22

QFY

12

3Q

FY1

24

QFY

12

Total Assets/Branch (` cr) CASA Deposits/Branch (` cr, RHS)


April 28, 2012 8

operations (CAR in excess of 31% in both), and profitability continue to decline for ICICI Bank UK (US$ 25.4mn in FY2012 vs. US$ 36.6mn in FY2011).

The bank received ~`100cr as dividend from its UK subsidiary in 4QFY2012 and similar discussions are in progress with the Canadian regulator. In the short term, we expect the over-capitalized subsidiaries to drag the consolidated RoEs.

ICICI Prudential Life reported PAT of `1,384cr for FY2012 (growth of 72.4% yoy) and maintained its leadership position with a market share based on retail weighted received premium of 5.9%.

ICICI Lombard General Insurance reported loss after tax of `416cr for FY2012 (vs. loss after tax of `80cr in FY2011) after recognizing additional third party motor pool losses of `685cr. Management expects the company to turn profitable in FY2013, despite some more impact of third party motor pool liabilities on account of actuarial valuation anticipated in FY2013.

FY2012 performance for other smaller subsidiaries was mixed. ICICI securities PD and ICICI AMC reported PAT growth of 62.3% and 22.2%, respectively. While ICICI securities and ICICI ventures reported PAT de-growth of 31.9% and 8.1%, respectively.

Exhibit 18: Performance of subsidiaries

Subsidiary Parameter FY2012 FY2011 % chg

ICICI Bank UK PAT (USD mn) 25.4 36.6 (30.6)

ICICI Bank Canada PAT (CAD mn) 34.4 32.4 6.2

ICICI Bank Eurasia PAT (USD mn) 4.3 - -

ICICI Home Finance PAT (` cr) 260 233 11.6

ICICI Prudential Life Insurance APE (` cr) 3,118 3,975 (21.6)

NBP (` cr) 500 713 (29.9)

NBP margin (%) 16.0 17.9 (10.6)

AuM (` cr) 70,771 68,150 3.8

PAT (` cr) 1,384 808 71.3

ICICI Lombard Gen. Insurance Gross Premium (` cr) 5,358 4,408 21.6

PAT (` cr) (416) (80) -

ICICI Securities PAT (` cr) 77 113 (31.9)

ICICI Securities PD PAT (` cr) 86 53 62.3

ICICI Venture PAT (` cr) 68 74 (8.1)

ICICI Prudential AMC PAT (` cr) 88 72 22.2



April 28, 2012 9

Investment arguments

Well positioned to garner strong market share gains in CASA deposits

In our view, the bank’s substantial branch expansion from 955 branches at the end of 3QFY2008 to 2,752 branches by 4QFY2012, and strong capital adequacy, at 18.5% (Tier-I at 12.7%) have positioned it to gain both CASA and credit market share, respectively. In fact, the bank has once again started gaining market share in savings accounts since FY2010. During FY2011, the bank improved its market share of savings deposits by 10bp over FY2010, capturing a substantial 5.8% incremental market share.

Improved deposit mix to lead to better NIM

The bank’s strategic transformation has expectedly resulted in significantly better balance sheet and earnings quality. The distinguishing feature of the bank’s performance in FY2010 was the improvement in CASA ratio to 42.1% (transformative considering that the ratio was as low as 22% at the end of FY2007 and 29% even as recently as FY2009). CASA ratio has remained healthy at 43.5% even in 4QFY2012. Apart from the paradigm shift in the deposit mix reflected in its 43.5% CASA ratio, the bank has largely exited unattractive business segments such as small-ticket personal loans in the domestic segment and most non-India related exposures in its international business.

Asset quality trends remain healthy

The bank’s asset quality continues to show further improvement, with a declining trend in additions to gross as well as net NPAs. For FY2012 gross slippages ratio stood at comfortable ~1.36%. Also, the bank has maintained a comfortable provision coverage ratio of 80.4% in 4QFY2012. Though the bank’s restructured loans increased by 38.6% qoq during the quarter to `4,256cr, the management indicated that no major restructuring is in the pipeline. Management also specified that based on their past experiences, slippages from restructured assets is ~5%.

The reduction in risk profile of advances has expectedly resulted in commensurate decline in NPA provisioning costs and reflected in improved RoA from 1.0% in FY2010 to 1.4% in FY2012.

Valuations attractive

We have a positive view on ICICI Bank, given its market-leading businesses across the financial services spectrum. Moreover, we believe the bank is decisively executing a strategy of consolidation, which has resulted in an improved deposit and loan mix and should drive improved operating metrics over the medium term. The bank’s substantial branch expansion in the past 3-4 years is expected to sustain a far more favourable deposit mix going forward. Moreover, a lower risk balance sheet has driven down NPA provisioning costs, which we believe will drive 21.3% yoy growth in net profit for FY2013E and enable RoE of 16.0% by FY2014E (with further upside from financial leverage).

At the CMP, the bank’s core banking business (after adjusting `134/share towards value of the subsidiaries) is trading at 1.5x FY2014E ABV (including subsidiaries,


April 28, 2012 10

the stock is trading at 1.4x FY2014E ABV). We value the bank’s subsidiaries at `134/share and the core bank at `1,049/share (2.1x FY2014E ABV). We maintain our Buy rating on the stock with a target price of `1,183. Exhibit 19: SOTP valuation summary

Particulars Target multiple Value/share (`)

ICICI Bank 2.1x FY2014E ABV 1,049

Life Insurance 15.5x FY2014E NBP 60

General Insurance 12x FY2012 PAT 12 Others (Home Fin, AMC, VC, Securities Securities PD and Overseas subsidiaries) 62

SOTP value 1,183

Source: Angel Research

Exhibit 20: Key assumptions

Particulars (%) Earlier estimates Revised estimates

FY2013 FY2014 FY2013 FY2014

Credit growth 21.0 22.0 18.0 23.0

Deposit growth 22.0 22.0 19.0 23.0

CASA ratio 44.3 44.0 43.5 42.9

NIMs 2.6 2.6 2.8 2.8

Other income growth 26.4 21.8 20.7 22.8

Growth in staff expenses 20.0 22.0 22.0 22.0

Growth in other expenses 20.0 22.0 15.0 18.0

Slippages 1.7 1.7 1.5 1.6

Treasury gain/(loss) (% of investments) 78.0 75.0 80.0 75.0


Exhibit 21: Change in estimates

Particulars (` cr) FY2013 FY2014

Earlier estimates

Revised estimates Var. (%) Earlier

estimates Revised

estimates Var. (%)

NII 12,418 13,180 6.1 14,941 15,462 3.5

Non-interest income 9,191 9,029 (1.8) 11,164 11,051 (1.0)

Operating income 21,609 22,209 2.8 26,105 26,512 1.6

Operating expenses 9,216 9,274 0.6 11,244 11,115 (1.1)

Pre-prov. profit 12,393 12,935 4.4 14,862 15,397 3.6

Provisions & cont. 1,701 1,782 4.7 1,777 1,790 0.8

PBT 10,691 11,153 4.3 13,085 13,607 4.0

Prov. for taxes 3,168 3,311 4.5 4,069 4,238 4.2

PAT 7,524 7,843 4.2 9,016 9,369 3.9



April 28, 2012 11

Exhibit 22: Angel EPS forecast vs. consensus

Year (`) Angel forecast Bloomberg consensus Var. (%)

FY2013E 67.9 64.6 5.1

FY2014E 81.1 76.9 5.5

Source: Bloomberg, Angel Research

Exhibit 23: P/ABV band


Exhibit 24: P/E band


-200 400 600 800

1,000 1,200 1,400 1,600 1,800 2,000

Apr-

02Se

p-02

Feb-

03Ju

l-03

Dec

-03

May

-04

Oct

-04

Mar

-05

Aug-

05Ja

n-06

Jun-

06N

ov-0

6Ap

r-07

Sep-

07Fe

b-08

Jul-0

8D

ec-0

8M

ay-0

9O

ct-0

9M

ar-1

0Au

g-10

Jan-

11Ju

n-11

Nov

-11

Apr-

12Se

p-12

Feb-

13

Price (`) 1x 1.5x 2x 2.5x 3x

0

400

800

1,200

1,600

2,000

2,400

2,800

Apr

-05

Aug

-05

Dec

-05

Apr

-06

Aug

-06

Dec

-06

Apr

-07

Aug

-07

Dec

-07

Apr

-08

Aug

-08

Dec

-08

Apr

-09

Aug

-09

Dec

-09

Apr

-10

Aug

-10

Dec

-10

Apr

-11

Aug

-11

Dec

-11

Apr

-12

Price (`) 7x 17x 27x 37x


April 28, 2012 12

Exhibit 25: ICICI Bank – Premium/Discount to the Sensex

Source: Bloomberg, Angel Research

Exhibit 26: Recommendation summary

Company Reco. CMP (`)

Tgt. price (`)

Upside (%)

FY2014E P/ABV (x)

FY2014E Tgt P/ABV (x)

FY2014E P/E (x)

FY2012-14E EPS CAGR (%)

FY2014E RoA (%)

FY2014E RoE (%)

AxisBk Buy 1,121 1,587 41.6 1.5 2.2 8.1 16.4 1.5 20.3

FedBk Neutral 417 - - 1.0 1.0 7.3 13.0 1.3 14.5

HDFCBk Neutral 543 - - 3.1 3.3 15.3 27.0 1.7 22.1

ICICIBk* Buy 869 1,183 36.1 1.4 1.9 10.7 20.4 1.5 16.0

SIB Neutral 24 - - 1.0 1.1 6.0 6.7 0.9 17.7

YesBk Buy 350 470 34.3 1.8 2.4 8.4 22.5 1.4 23.3

AllBk Buy 165 205 24.9 0.6 0.8 4.0 (2.1) 1.0 17.0

AndhBk Accumulate 115 125 8.6 0.7 0.8 4.3 6.5 1.0 16.7

BOB Buy 764 943 23.4 0.9 1.1 5.0 12.2 1.1 19.2

BOI Buy 337 392 16.2 0.9 1.0 5.2 21.3 0.8 16.5

BOM Buy 51 62 21.0 0.6 0.8 3.8 26.8 0.9 17.5

CanBk Buy 430 532 23.6 0.7 0.9 4.5 10.9 0.9 16.7

CentBk Neutral 95 - - 0.8 0.8 4.8 45.7 0.5 13.8

CorpBk Buy 410 508 23.9 0.6 0.7 3.7 2.5 0.8 16.2

DenaBk Buy 91 118 29.6 0.6 0.7 3.6 6.2 0.9 16.9

IDBI# Buy 101 117 15.2 0.6 0.7 4.2 22.7 0.9 14.8

IndBk Accumulate 213 240 12.8 0.7 0.8 4.4 5.4 1.2 18.2

IOB Buy 87 104 19.8 0.5 0.7 4.1 29.9 0.6 13.9

J&KBk Neutral 895 - - 0.8 0.8 4.6 8.8 1.4 18.6

OBC Buy 242 296 22.7 0.5 0.7 4.0 17.1 0.8 13.6

PNB Buy 839 1,138 35.6 0.8 1.1 4.7 8.8 1.1 18.5

SBI* Buy 2,131 2,593 21.7 1.3 1.6 7.9 23.6 1.0 19.1

SynBk Buy 101 128 26.9 0.6 0.8 3.7 8.7 0.8 17.2

UcoBk Neutral 76 - - 0.7 0.8 4.0 7.7 0.7 16.2

UnionBk Buy 219 266 21.5 0.7 0.9 4.4 27.2 0.8 17.4

UtdBk Buy 65 87 33.9 0.5 0.7 3.0 11.4 0.7 16.0

VijBk Neutral 57 - - 0.7 0.7 4.9 14.2 0.5 13.2

Source: Company, Angel Research; Note:*Target multiples=SOTP Target Price/ABV (including subsidiaries), #Without adjusting for SASF

(40)

(20)

0

20

40

60

80

100

Apr

-06

Aug

-06

Dec

-06

Apr

-07

Aug

-07

Dec

-07

Apr

-08

Aug

-08

Dec

-08

Apr

-09

Aug

-09

Dec

-09

Apr

-10

Aug

-10

Dec

-10

Apr

-11

Aug

-11

Dec

-11

Apr

-12

Premium/Discount to Sensex Avg. Historical Premium(%)


April 28, 2012 13

Income statement Y/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E

Net Interest Income 9,092 8,114 9,017 10,734 13,180 15,462

- YoY Growth (%) 10.9 (10.8) 11.1 19.0 22.8 17.3

Other Income 7,783 7,478 6,648 7,503 9,029 11,051

- YoY Growth (%) (12.3) (3.9) (11.1) 12.9 20.3 22.4

Operating Income 16,875 15,592 15,665 18,237 22,209 26,512

- YoY Growth (%) (1.2) (7.6) 0.5 16.4 21.8 19.4

Operating Expenses 7,045 5,860 6,617 7,850 9,274 11,115

- YoY Growth (%) (13.6) (16.8) 12.9 18.6 18.1 19.8

Pre - Provision Profit 9,830 9,732 9,048 10,387 12,935 15,397

- YoY Growth (%) 10.1 (1.0) (7.0) 14.8 24.5 19.0

Prov. & Cont. 5,048 4,390 2,290 1,583 1,782 1,790

- YoY Growth (%) 30.4 (13.0) (47.8) (30.9) 12.5 0.5

Profit Before Tax 4,782 5,342 6,758 8,803 11,153 13,607

- YoY Growth (%) (5.4) 11.7 26.5 30.3 26.7 22.0

Prov. for Taxation 1,359 1,317 1,606 2,338 3,311 4,238

- as a % of PBT 28.4 24.7 23.8 26.6 29.7 31.1

PAT 3,423 4,025 5,151 6,465 7,843 9,369

- YoY Growth (%) (17.7) 17.6 28.0 25.5 21.3 19.5

Balance sheet Y/E March (` cr) FY09 FY10 FY11 FY12 FY13E FY14E

Share Capital 1,463 1,465 1,502 1,505 1,505 1,505

- Equity 1,113 1,115 1,152 1,155 1,155 1,155

- Preference 350 350 350 350 350 350

Reserve & Surplus 48,420 50,503 53,939 59,250 63,695 69,010

Deposits 218,348 202,017 225,602 255,500 304,045 373,975

- Growth (%) (10.7) (7.5) 11.7 13.3 19.0 23.0

Borrowings 67,324 60,947 72,813 90,027 103,851 123,522

Tier 2 Capital 25,482 32,967 36,391 49,788 50,784 51,800

Other Liab. & Prov. 18,265 15,501 15,987 17,577 20,588 25,428

Total Liabilities 379,301 363,400 406,234 473,647 544,468 645,241

Cash Balances 17,536 27,514 20,907 20,461 18,243 22,439

Bank Balances 12,430 11,359 13,183 15,768 18,189 21,635

Investments 103,058 120,893 134,686 159,560 180,962 200,173

Advances 218,311 181,206 216,366 253,728 299,399 368,260

- Growth (%) (3.2) (17.0) 19.4 17.3 18.0 23.0

Fixed Assets 3,802 3,213 4,744 4,615 5,164 5,957

Other Assets 24,164 19,215 16,347 19,515 22,512 26,776

Total Assets 379,301 363,400 406,234 473,647 544,468 645,241

- Growth (%) (6.3) (4.4) 12.1 17.3 15.4 18.9


April 28, 2012 14

Ratio analysis Y/E March FY09 FY10 FY11 FY12 FY13E FY14E

Profitability ratios (%) NIMs 2.6 2.4 2.6 2.7 2.8 2.8

Cost to Income Ratio 41.7 37.6 42.2 43.0 41.8 41.9

RoA 0.9 1.0 1.3 1.4 1.5 1.5

RoE 9.2 9.7 11.7 13.5 14.7 16.0

B/S ratios (%) CASA Ratio 28.7 41.7 45.1 43.5 43.5 42.9

Credit/Deposit Ratio 100.0 89.7 95.9 99.3 98.5 98.5

CAR 15.5 19.4 19.5 18.5 22.2 19.8

- Tier I 11.8 14.0 13.2 12.7 12.3 11.3

Asset Quality (%) Gross NPAs 4.3 5.1 4.5 3.6 3.7 3.8

Net NPAs 2.1 2.1 1.1 0.7 0.8 1.0

Slippages 2.2 1.5 1.5 1.4 1.5 1.6

Loan Loss Prov. /Avg. Assets 1.0 1.2 0.5 0.3 0.3 0.3

Provision Coverage 52.8 59.5 76.0 80.4 80.0 75.0

Per Share Data (`) EPS 30.7 36.1 44.7 56.0 67.9 81.1

ABVPS (75% cover.) 425.7 449.8 478.3 522.9 561.4 607.4

DPS 11.0 12.0 14.0 18.5 22.5 27.0

Valuation Ratios PER (x) 28.3 24.1 19.4 15.5 12.8 10.7

P/ABVPS (x) 2.0 1.9 1.8 1.7 1.5 1.4

Dividend Yield 1.3 1.4 1.6 2.1 2.6 3.1

DuPont Analysis NII 2.4 2.3 2.4 2.5 2.7 2.7

(-) Prov. Exp. 1.3 1.2 0.6 0.4 0.4 0.3

Adj. NII 1.1 1.0 1.8 2.1 2.3 2.3

Treasury 0.5 0.2 (0.1) (0.0) 0.0 0.0

Int. Sens. Inc. 1.5 1.2 1.7 2.1 2.3 2.4

Other Inc. 1.6 1.8 1.7 1.7 1.7 1.8

Op. Inc. 3.1 3.0 3.5 3.8 4.0 4.2

Opex 1.9 1.6 1.8 1.8 1.9 1.9

PBT 1.3 1.4 1.7 2.0 2.2 2.2

Taxes 0.4 0.4 0.4 0.5 0.7 0.7

RoA 0.9 1.0 1.3 1.4 1.5 1.5

Leverage 10.1 9.5 9.2 9.5 9.9 10.6

RoE 9.2 9.7 11.7 13.5 14.7 16.0


April 28, 2012 15

Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com DISCLAIMER This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment.

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Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have investment positions in the stocks recommended in this report.

Disclosure of Interest Statement ICICI Bank

1. Analyst ownership of the stock No

2. Angel and its Group companies ownership of the stock No

3. Angel and its Group companies' Directors ownership of the stock No

4. Broking relationship with company covered No

Ratings (Returns): Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%) Reduce (-5% to 15%) Sell (< -15%)

Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors

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