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1. November 9, 2010
ICICI BANK LTD HOLD
ICICI bank Ltd has reported modest performance in the Q2FY11 with 8% rise in NII at Rs
22bn. Despite a 13% dip in the other income, the bank has reported a 19% rise in the Net
Profit at Rs 12.36bn on the back of improvement in the asset quality and lower provisions
& contingencies.
The key takeaways from the result are
The total business of the bank has improved by 7% on a Y-o-Y and 8% on a Q-o-Q
basis to Rs 4173bn. Total deposits of the Bank increased to Rs 2230bn, a 13%Y-o-Y
jump from Rs 1,978bn in September 2009.
CASA deposits increased by 34.5% to Rs 981bn from Rs 729bn last year and the CASA
ratio increased to 44.0% from 36.9% in Q2FY10.
Advances increased by 5.3% to Rs 194bn from Rs 184bn at June 30, 2010 while the
NIMs expanded to 2.6% in quarter under review against 2.5% a year ago.
Asset quality improved as Net NPAs decreased by 30% to Rs 31.4bnfrom Rs 44.9bn at
the end of September 2009 and declined by 9% Q-o-Q from Rs 34.5bn in Q1FY11. The
Net NPA ratio stood at 1.62% & 1.37% (excluding BOR) at September 2010 against
1.62% a quarter ago and 2.19% a year ago.
The Bank's capital adequacy was 20.2% and Tier-1 capital adequacy was 13.8%, well
above RBI's requirement of total capital adequacy of 9.0% and Tier-1 CAR of 6.0%.
Based on a P/Book Value multiple of 2.75, the fair value per share for the company
works out to Rs 1,347.
Robust NII growth as higher CASA deposit
growth and ratio helped improved the NIMs
Recommendations <= 1 year 1 - 2 yrs 2 - 5 yrs
Strong Buy
Buy
Hold
Reduce
Sell
StrongBuy– ExpectedReturns> 20%p.a.
Buy– ExpectedReturnsfrom 10to20%p.a.
Hold– ExpectedReturnsfrom 0%to10%p.a.
Reduce–ExpectedReturnsfrom 0%to10%p.a.with possibledownsiderisk
Sell – Returns< 0%
BSE/ NSECode
CMPRs(5th Nov’10)
Market Cap ( Rsmn)
52 Week High-low
30D 3M 6M 1Y
ICICI Bank 11% 32% 43% 48%
Sensex 3% 16% 23% 31%
Nifty 3% 16% 23% 32%
1,277 / 773
STOCKRETURN (%)
STOCKDATA
532174 / ICICIBANK
1,270
1,457,616
Projections(RsMn) Q2FY10 Q2FY11 % chg FY09A FY10A % chg FY11E FY12E
Interest Earned 66,569 63091 -5% 310,926 257,069 -17% 265,144 308,294
Interest Expenditure 46,209 41047.2 -11% 227,259 175,926 -23% 180,699 209,505
Net Interest Income 20,361 22,044 8% 83,666 81,144 -3% 84,445 98,789
Non-Interest Income 18,238 15,779 -13% 76,037 74,777 -2% 66,286 77,074
Total Income 84,807 78,870 -7% 386,963 331,846 -14% 331,431 385,368
PAT 10,401 12,363 19% 37,581 40,250 7% 38,562 45,759
EPSRs 9.3 10.8 15% 32.7 35.1 7% 33.6 39.9
Adj BVPSRs 420 443 5% 391.8 416.2 6% 453.7 490.0
NIM % 2.5% 2.6% 2.5% 2.5% 2.6% 2.8%
RoE% 7.8% 8.0% 7.2% 7.9%
PERx 37.8 31.9
Price/ Adj BV 2.8 2.6
EPS&BVPSadjusted for dilution on BORamalgamation
Financial Snapshot

2. November 9, 2010
OTHER HIGHLIGHTS
During the quarter, the Bank received approval of Reserve Bank of India (RBI) for merger of Bank of Rajasthan which
was effective from August 12, 2010. The financials for Q2-2011 reflects the Bank of Rajasthan financials for the
period August 13, 2010 to September 30, 2010.
The management has indicated strong loan growth going forward, driven by corporate, international and retail
loans. Growth in the retail loans is expected to be from the home and auto loans. In addition, the bank expects
project financing to do well in Q3 and Q4 FY11. We believe that earnings growth in Q2FY11 results will be sustained
in the coming quarters, led by higher margins and decline in loan provisions.
We expect ICICI Bank Ltd’s NII to grow at a CAGR of 10% over FY2010-12 to Rs 98.8bn by FY2012. We further
estimate that PAT would grow at a CAGR of 7% over FY2010-12 to 45.8bn in FY2012.
Based on a P/Book Value multiple of 2.75, the fair value per share for the company works out to Rs 1,347.
We recommend a ‘HOLD’ rating on the stock.
The Bank had 2,501
branches, the largest
branch network among
private sector banks in the
country.
The bank has witnessed no
accretion to NPL's from the
ICICI books in the quarter
under review
The bank's operating
expenses grew by 10.2% Y-
o-Y owing to 38.9% Y-o-Y
growth in employee
expenses
Particulars(RsMn) FY2008 FY2009 FY2010 FY2011E FY2012E
Interest Earned 307,883 310,926 257,069 265,144 308,294
Interest Expenditure 234,842 227,259 175,926 180,699 209,505
Net Interest Income 73,041 83,666 81,144 84,445 98,789
Other Income 88,108 76,037 74,777 66,286 77,074
Total income 395,991 386,963 331,846 331,431 385,368
Non-Interest Expense 81,542 70,451 58,598 60,983 73,220
Provisions&Contingencies 29,046 38,083 43,869 38,333 41,632
Less: Tax 8,984 13,588 13,203 12,854 15,253
Profit After Tax 41,577 37,581 40,250 38,562 45,759
EPS(Rs) 36 33 35 34 40
Adjusted Book Value (Rs) 377.4 391.8 416.2 453.7 490.0
Net Interest Margin (%) 2.2% 2.5% 2.5% 2.6% 2.8%
RoA (%) 1.1% 1.0% 1.1% 1.0% 1.1%
RoE(%) 11.6% 7.8% 8.0% 7.2% 7.9%
Valuation Ratios(x) FY2011E FY2012E
P/E 37.8 31.9
Price/ BV 2.6 2.4
Price/Adjusted BV 2.8 2.6
EPS&BVPSadjusted for dilution on BORamalgamation
Financial Analysisand Projections