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									India Equity Research I Banking                       Result UPDATE (Large Cap)



ICICI Bank                                                       INR: 373

Better than expected results……..                                       BUY

                                                                                   Outlook INR:                                                                      608
ICICI Bank has reported a muted growth in profits in Q3FY09
amidst global financial crisis. However, the results are still better              Market Data                                                    January, 27 2009
than our estimate
                                                                                       Shares outs (Cr)                                                                                 111.3
We have analyzed the ICICI Bank Q3FY09 results & our key
                                                                                       Equity Cap (Rs Cr)                                                                      1,113.2
findings are:
Q3FY09 Results – Key Highlights                                                        Mkt Cap (Rs. Cr)                                                                            41,524

                                                                                       52 Wk H/L (Rs)                                                               1,300/282.15
•   Interest earned : Rs 7,836.1 crore (↓1.2% Y-o-Y, ↑0.0% Q-o-Q )
                                                                                       Avg Vol (1yr avg)                                                                   21,28,684
• Interest exp. : Rs 5,845.7 crore (↓1.8% Y-o-Y, ↑2.8% Q-o-Q)
                                                                                       Face Value (Rs)                                                                                            10
• Net Int. Income : Rs 1,990.4 crore (↑0.4% Y-o-Y, ↓ 7.3% Q-o-Q)
                                                                                       Bloomberg Code                                                                      ICICIBC IN
• Net profit : Rs 1,272.2 crore (↑1.6% Y-o-Y, ↑ 25.4% Q-o-Q)
                                                                                   Market Info:
                                                                                   SENSEX                                         - 9,004
Key highlights of the results                                                      NIFTY                                          - 2,771

Margins of the bank positively surprised                                           Price Performance

• Q3FY09 net profit margins of the bank improved by 330 bps (q-                     120

                                                                                    100
    o-q) to 16.2%
                                                                                     80

• The Bank registered 0.4% y-o-y growth in Q3FY09 in its Net Interest                60
                                                                                     40
    Income of Rs 1,990.5 crore as against Rs 1,982.2 crore in Q3FY08.                20




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                                                                                                                                                                      Sep-08
                                                                                                            Mar-08
• Interest earned declined by 1.2% y-o-y to Rs 7,836.1 crore , while
                                                                                                                                             ICICI Bank
    interest expended decrease by 1.8% y-o-y to Rs 5,845.7 crore                                                                             Sensex



• NIMs were stable at 2.4%.
                                                                                  Share Holding Pattern (%)
• ROA of 1.36% in Q3FY09, as compared to 1.05% in Q2FY09 and 1.30%
                                                                                   Particulars                                31/12                        30/6                         Chg (%)
    in Q3FY08
                                                                                   Promoter                                             0.0                         0.0                            0.0
                                                                                   Institution                                   59.0                      56.1                                   +2.9
Robust Growth in other income
                                                                                   Public                                        41.0                      43.9                                    -2.9
•   Other income increased by 3.6% y-o-y to Rs 2,514.4 crore. The
                                                                                   Total                                      100.0                        100.0
    growth in other income was aided by impressive growth in Fee
                                                                                  Source: BSE, KRC Research
    Income.

•   The fall in yields of ~320 bps over previous quarter also helped               Analyst
    other income to grow.                                                          CA Vipul Shah
                                                                                   vipul.shah@krchoksey.com
                                                                                   ℡ 91-22-6696 5574
Valuations
At current price of Rs 373.0 the stock is trading at 0.9x FY09E
book value of Rs 414. We recommend a “BUY” on the stock with                       www.krchoksey.com
a 12 MONTH target price of Rs 608, giving an upside potential                      ℡ 91-22-6696 5203

of 63% from current level.                                                            91-22-6691 9569




              KRC Research is also available on Bloomberg KRCS<GO>, Thomson First Call, Reuters, Factset and Capital IQ
ICICI Bank Ltd.


                       Other Key positive factors

                          •   The Capital Adequacy Ratio for the Bank has improved to 15.58% as on 31st
                              December, 08 compared to 14.01% as on 30 th September 08 on back of reduction in
                              risk weightages for some of the sectors affected by the global credit crisis. The
CAR has decreased by          full impact of the same has been factored into this quarter and we do not
~150 bps to 15.58%            expect any further improvement in CAR unless there are any changes in
                              prudential norms.

                          •   The cost to income ratio is constantly improving. The operating expenses for the
                              quarter ended Dec’08 decreased by 18.5% to Rs 1,734.1 crore with the staff cost
                              decreasing by 11.8% (y-o-y) to Rs 503 crore and other operating cost increasing by
                              20.9% to Rs 1,231.1 crore on y-o-y basis.

                       Some Concerns

                          •   CASA ratio (Current and Saving account as a percentage to total deposits)
                              increased to 27.4% as on 31st December,08 compared to 27.2% as on 31st December
                              07. But CASA ratio has declined from the previous quarter by 250 bps due to flight
                              of deposits.

                          •   No pressure seen on corporate loan book but retail asset quality is a major
                              concern as the slowdown has hit the sector badly.

                          •   Gross NPA have gone up as proportion of customer assets. Gross NPA has increased
                              by 38.8% to Rs 8,988.08 crore and Net NPA has increased by 36.3% to Rs 4,400.23
                              crore (y-o-y).

                          •   The % of Gross NPAs has shot up from 3.0% to 4.1% y-o-y. While % of Net NPAs has
                              gone up from 1.5% to 2.1% clearly showing the pressure on the asset quality.

                          •   Loans declined 1% y-o-y and 4% q-o-q to Rs 2.1 lakh crore. NIMs were stable at
                              2.4%. Fee income at Rs 13.5 Bn was down 25% y-o-y and 28% q-o-q.

                          •   Treasury income rose from Rs 291 crore in 3QFY08 to Rs 920 crore in 3QFY09 –
                              driving PAT. Treasury Income during the quarter includes Rs 250 crore on MTM
                              reversal.

                          •   Operating profit ex-treasury is down 10% y-o-y and 26% q-o-q.

                          •   Total assets of the bank declined by 6% at Rs 3,74,410 crore versus Rs 3,76,700
                              crore. The bank's advances declined by 1.39% and deposits declined by 9%.

                          •   Fee income declined by 24.5%. ICICI's UK arm saw net MTM impact of USD 71
                              million in Q3.




                                                                                              KRC Equity Research
 ICICI Bank Ltd.


Financials                                                                                Rs in crore

 Particulars                            Q3FY09         Q3FY08        % ch       Q2FY09             % ch
 Interest earned                        7,836.1        7,934.3      -1.2%       7,835.0              0%
 -Interest on advances/bills            5,658.4        5,752.2      -1.6%       5,711.4            -0.9%
 -Income on investments                 1,846.8        1,959.9      -5.8%       1,794.1            2.9%
 -Interest on bal. with RBI               148.3          211.0     -29.7%        136.1             9.0%
 -Others                                  182.6           11.3    1522.7%        193.4             -5.6%
 Interest expenses                      5,845.7        5,952.1      -1.8%       5,687.4            2.8%
 Net Interest Income (NII)              1,990.4        1,982.2       0.4%       2,147.6           -7.3%
 Other Income                           2,514.5        2,426.6       3.6%       1,877.3           33.9%
 Total income                           4,505.0        4,408.8       2.2%       4,025.0           11.9%
 Operating expenses                     1,734.1        2,127.6     -18.5%       1,740.0            -0.3%
 -Employee cost                           503.0          570.5     -11.8%        488.1             3.1%
 -Other operating expenses              1,231.1        1,557.1     -20.9%       1,252.0            -1.7%
 Operating profit                       2,770.8        2,281.2      21.5%       2,284.9           21.3%
 Provision for contigencies             1,007.7          760.3      32.5%        923.5             9.1%
 PBT                                    1,763.1        1,520.8      15.9%       1,361.4           29.5%
 Provision for taxes                      491.0          268.1      83.1%        347.2            41.4%
 Net profit                             1,272.2        1,252.7       1.6%       1,014.2           25.4%
 Equity                                 1113.29          1112.3      0.1%        1113.3
 EPS                                        11.4           11.3      1.5%           9.1           25.4%
 Ratios (%)
 Int. exp/Int earned (%)                    74.6           75.0             -      72.6                 -
 Cost/Income ratio (%)                      38.5           48.3             -      43.2                 -
 Emp. cost/Int. Income (%)                      6.4         7.2             -       6.2                 -
 GPM (%)                                    35.4           28.8             -      29.2                 -
 Prov & Cont/Int Income (%)                 12.9            9.6             -      11.8                 -
 Tax/PBT (%)                                27.8           17.6             -      25.5                 -
 NPM (%)                                    16.2           15.8             -      12.9                 -
 Gross NPAs (Rs)                        8988.08          6474.8     38.8%        9501.5           -5.4%
 Net NPAs (Rs)                          4400.23         3227.82     36.3%       4232.93            4.0%
 Gross NPAs (%)                            4.1%            3.0%                    4.2%
 Net NPAs (%)                             2.07%           1.50%                   1.91%
 ROA (%)                                  1.36%           1.30%                   1.05%
 CAR (%)                                 15.58%          15.82%                  14.01%
 Source: Company Data, KRC Research




Key Financials
 Particulars                            FY07            FY08      FY09E          FY10E           FY11E
 Net Profit (Rs. in crore)            3,110.0         4,158.0     4,014.0       4,415.4         4,856.9
 EPS (Rs.)                              32.9            36.0         36.1          39.0             42.9
 P/E                                    25.9            21.4        10.6            9.8              8.9
 Dividend per share (Rs.)               10.0            11.0         11.0          11.0             11.0
 BV per share (Rs.)                    270.4           417.6       447.3         475.9            508.6
 P/BV                                     3.2             1.8         0.9           0.8              0.7
 Source: Company Data, KRC Research




                                                                                     KRC Equity Research
ICICI Bank Ltd.




Rajiv Choksey                     Institutional Sales                                                             rajiv.choksey@krchoksey.com                  +91-22-6653 5135

Anuj Choksey                      Institutional Sales                                                             anuj.choksey@krchoksey.com                   +91-22-6696 5500

Alok Agarwal                      Head Research                                                                   alok.agarwal@krchoksey.com                   +91-22-6696 5502



 ICICI Bank Ltd.                                                                                                                  Rating


       1,400                                                                                                                      Buy                      Appreciate over 15%
       1,200
       1,000
                                                                                                                            BUY
         800                                                                                                                      Accumulate/Hold          Appreciate upto 15%
         600
         400
         200                                                                                                                      Reduce                   Depreciate upto 10%
               Jan-08




                                                            Jun-08

                                                                     Jul-08




                                                                                                                   Jan-09
                        Feb-08

                                 Mar-08

                                          Apr-08

                                                   May-08




                                                                              Aug-08

                                                                                       Sep-08

                                                                                                Oct-08

                                                                                                         Dec-08

                                                                                                                                  Sell                     Depreciate over 10%


Other Stocks in the sector under our active coverage: Banking and Metals



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                        Coverage 22                                                                                   Avg Rating: 4.7           -9.83%   -19.25%       9.41%
KMB            IN       Kotak Mahindra Bank Ltd                                                                       buy          01/22/09    15.53%    -10.08%      25.61%      3rd
BOI            IN       Bank of India                                                                                 buy          01/22/09    -18.76%   -15.16%       -3.60%
HDFCB          IN       HDFC Bank Ltd                                                                                 buy          01/21/09    -13.37%   -19.78%       6.41%
HZ             IN       Hindustan Zinc Ltd                                                                            buy          01/21/09    10.00%    -12.03%      22.03%      3rd
AXSB           IN       Axis Bank Ltd                                                                                 buy          01/09/09    -35.95%   -35.64%       -0.31%
SBIN           IN       State Bank of India Ltd                                                                       buy          12/31/08    -16.20%   -12.14%       -4.06%
HNDL           IN       Hindalco Industries Ltd                                                                       buy          12/31/08    -30.42%     0.55%      -30.96%
STLT           IN       Sterlite Industries India Ltd                                                                 buy          12/31/08    26.48%    -37.88%      64.36%      1st
TATA           IN       Tata Steel Ltd                                                                                buy          12/31/08    -17.90%   -45.71%      27.81%
JSTL           IN       JSW Steel Ltd                                                                                 buy          12/31/08    -15.34%   -24.38%       9.04%
NACL           IN       National Aluminium Co Ltd                                                                     buy          12/31/08     3.47%     29.66%      -26.20%
SESA           IN       Sesa Goa Ltd                                                                                  buy          12/31/08    -15.55%   -17.98%       2.43%
SAIL           IN       Steel Authority Of India Ltd                                                                  buy          12/31/08     -5.10%   -11.37%       6.27%
IDBI           IN       IDBI Bank Ltd                                                                                 hold         12/31/08     0.00%      3.48%       -3.48%
HDFC           IN       Housing Development Finance Corp                                                              buy          12/31/08     -3.42%   -27.52%      24.10%
BOB            IN       Bank of Baroda                                                                                buy          12/31/08    -12.14%   -17.80%       5.66%
UNBK           IN       Union Bank Of India                                                                           reduce       12/31/08    10.43%    -10.68%      21.11%      5th
WGS            IN       Welspun-Gujarat Stahl Ltd                                                                     buy          12/31/08    -37.02%   -51.94%      14.92%
ICICIBC        IN       ICICI Bank Ltd                                                                                buy          12/31/08    -14.77%   -29.49%      14.71%
PNB            IN       Punjab National Bank Ltd                                                                      buy          12/31/08    -25.76%   -24.82%       -0.95%
IDFC           IN       Infrastructure Development Finance Co Ltd                                                     buy          12/31/08    -16.92%   -32.96%      16.04%
JSP            IN       Jindal Steel & Power Ltd                                                                      buy          12/31/08     -3.65%   -19.80%      16.15%


________________________________________________________________________________________________________

                                                                                                                                                                  KRC Equity Research
ICICI Bank Ltd.




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. While the information contained therein has been obtained from
sources believed to be reliable, investors are advised to satisfy themselves before making any investments.
Kisan Ratilal Choksey Shares & Sec Pvt Ltd., does not bear any responsibility for the authentication of the
information contained in the reports and consequently, is not liable for any decisions taken based on the
same. Further, KRC Research Reports only provide information updates and analysis. All opinion for buying
and selling are available to investors when they are registered clients of KRC Investment Advisory Services.
As per SEBI requirements it is stated that, Kisan Ratilal Choksey Shares & Sec Pvt Ltd., and/or individuals
thereof may have positions in securities referred herein and may make purchases or sale thereof while this
report is in circulation.
__________________________________________________________________________________________________________

                               Please send your feedback to krc.research@krchoksey.com

                                             Visit us at www.krchoksey.com

                                  Kisan Ratilal Choksey Shares and Securities Pvt. Ltd.

                                                   Registered Office:
                            1102, Stock Exchange Tower, Dalal Street, Fort, Mumbai – 400 001.
                                      Phone: 91-22-6633 5000; Fax: 91-22-6633 8060.

                                                      Branch Office:
                  ABHISHEK, 5th Floor, Link Road, Dalia Industrial Estate, Andheri (W), Mumbai – 400 058.
                                     Phone: 91-22-6696 5555; Fax: 91-22-6691 9576.




                                                                                                   KRC Equity Research

								
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