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UBS Investment Research
ICICI Bank
We hosted ICICI Bank management at UBS
g lobal FIG conference in NY this week
Loan to grow at 20%: existing sanctions to support growth for 2 years
The bank expects system loan growth of ~20% in FY12 and plans to grow at a
similar level, while recent sanctions have slowed the existing pipeline to ensure
loan growth in the next two years. The bank does not anticipate significant stress
on asset quality as Corporate balance sheets are healthy and leverage is still low.
The bank believes the tightening cycle is yet to reach its summit and expects a
50bp hike.
Margin stable in the near term, expand to 3% in 2 years
The bank expects stable margin in the near term and expansion to 3% over the next
two years—in line with our expectation. The bank expects fee income to grow at
balance sheet rate. It will strive to maintain the cost to income ratio at current
levels of 41%.
Credit cost could fall below normalised level
Credit cost in the near term could fall below normalised levels of 80-100bp due to
the good retail credit cycle. There are no near-term plans to divest stake in the life
insurance subsidiary.
Valuation: top pick in the sector
Adjusted for the value of subsidiaries at Rs320 per share, the stock trades at 15x
FY12E earnings and 1.8x FY12E book. ICICI Bank remains our preferred pick.
We maintain our Buy rating and sum-of-the-parts-derived price target of Rs1,350.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
ICICI Bank
We hosted ICICI Bank management at UBS
g lobal FIG conference in NY this week
Loan to grow at 20%: existing sanctions to support growth for 2 years
The bank expects system loan growth of ~20% in FY12 and plans to grow at a
similar level, while recent sanctions have slowed the existing pipeline to ensure
loan growth in the next two years. The bank does not anticipate significant stress
on asset quality as Corporate balance sheets are healthy and leverage is still low.
The bank believes the tightening cycle is yet to reach its summit and expects a
50bp hike.
Margin stable in the near term, expand to 3% in 2 years
The bank expects stable margin in the near term and expansion to 3% over the next
two years—in line with our expectation. The bank expects fee income to grow at
balance sheet rate. It will strive to maintain the cost to income ratio at current
levels of 41%.
Credit cost could fall below normalised level
Credit cost in the near term could fall below normalised levels of 80-100bp due to
the good retail credit cycle. There are no near-term plans to divest stake in the life
insurance subsidiary.
Valuation: top pick in the sector
Adjusted for the value of subsidiaries at Rs320 per share, the stock trades at 15x
FY12E earnings and 1.8x FY12E book. ICICI Bank remains our preferred pick.
We maintain our Buy rating and sum-of-the-parts-derived price target of Rs1,350.
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