ICICI Bank is India’s largest private sector bank with a network of over 2,500 branches in India and a
presence in around 18 countries. The bank has once again entered an expansionary mode after making
a conscious effort to contract its advances book due to asset quality concerns. The bank offers substantial
value unlocking opportunities with the expected listing of its subsidiaries like ICICI Securities
and ICICI Prudential Life Insurance.
During the first half of FY2013, the bank has posted a top line and a profit growth of over 30%. On the
operational front, the bank’s net interest margins (NIMs) are high at 3.0% during first half. The asset
quality is also good with low non-performing assets (NPAs) and high coverage ratios. In Q2FY2013, the
asset quality of bank remained stable as the gross and net NPAs were at 3.54% and 0.78% respectively.
The bank is adequately capitalised at 18.3% as against the Reserve Bank of India (RBI)’s norm of 12% as
on September 2012.
ICICI Bank continued to report a healthy growth in the balance sheet with an improved asset quality
and stable margins. In view of the strong performance, we expect earnings to grow at a compounded
annual growth rate (CAGR) of 15% over FY2012-14. This should result in a return on asset (RoA) of 1.5%.
Our sum of the parts (SOTP)-based price target is set upwards to Rs1,230.
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