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ICICI Bank's substantial branch expansion (from 955 branches at the end of
3QFY2008 to 2,535 branches as of 2QFY2012) and strong capital adequacy at
19.0% (tier-1 at 13.1%) have positioned it to gain CASA and credit market share,
respectively. The bank improved its market share of savings deposits by
10bp in FY2011 compared to FY2010, capturing a substantial 5.8% incremental
market share.
The bank has been able to increase its CASA ratio to 45% as of FY2011 and,
contrary to the overall trend in the sector, we expect this favorable change in the
bank's liability mix to improve its NIM to ~2.6% by FY2013.
The bank's asset quality continues to show further improvement, with a declining
trend in additions to gross as well as net NPAs. We expect the reduction in risk
profile of advances (and the consequent lower yield on advances) to result in a
~30bp decline in NPA provisioning costs by 2013E over FY2011.
The stock is trading at attractive valuations of 1.4x FY2013E P/ABV. Hence,
we maintain our Buy view on the stock with a target price of `1,092, valuing the
core bank at 2.15x FY2013E P/ABV and assigning a value of `160 to its subsidiaries.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank's substantial branch expansion (from 955 branches at the end of
3QFY2008 to 2,535 branches as of 2QFY2012) and strong capital adequacy at
19.0% (tier-1 at 13.1%) have positioned it to gain CASA and credit market share,
respectively. The bank improved its market share of savings deposits by
10bp in FY2011 compared to FY2010, capturing a substantial 5.8% incremental
market share.
The bank has been able to increase its CASA ratio to 45% as of FY2011 and,
contrary to the overall trend in the sector, we expect this favorable change in the
bank's liability mix to improve its NIM to ~2.6% by FY2013.
The bank's asset quality continues to show further improvement, with a declining
trend in additions to gross as well as net NPAs. We expect the reduction in risk
profile of advances (and the consequent lower yield on advances) to result in a
~30bp decline in NPA provisioning costs by 2013E over FY2011.
The stock is trading at attractive valuations of 1.4x FY2013E P/ABV. Hence,
we maintain our Buy view on the stock with a target price of `1,092, valuing the
core bank at 2.15x FY2013E P/ABV and assigning a value of `160 to its subsidiaries.
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