ICICI Bank's 2QFY11 PAT grew 19% YoY :: Motilal Oswal

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ICICI Bank's 2QFY11 PAT grew 19% YoY to Rs12.4b (v/s our estimate of Rs11.6b). Adjusted for the merger impact, NII
and PAT growth would be 3-4% higher than our estimates. Reported NII grew 11% QoQ to Rs22b. There were no negative
shocks on asset quality post merger of the erstwhile BoR. Key highlights:

 Loans were up 5.3% QoQ and 1.8% YoY at Rs1.9t; adjusted for the merger, growth was 1.8% QoQ.





 Margins improved 10bp QoQ to 2.6%; domestic margins improved 20bp QoQ to 3% while margins on international
business remained stable at 0.8%.

 CASA grew 34.5% YoY to Rs981b (adjusted growth of 33.9% YoY). While SA deposits grew 28% YoY (12% QoQ),
CA deposits grew 48% YoY (24% QoQ). On an average daily basis, CASA ratio stood at 39% for 2QFY11.
 Fee income grew 14.6% YoY driven by higher income from the corporate and international segments, which grew
20%+. Management expects fee income growth to be in line with asset growth.
 Credit cost was down to 1.35% v/s 1.75% in 1QFY11. Provisions charge was Rs6.4b, of which Rs4b was used for
improving coverage ratio to 70%. With PCR at 69% and asset quality improving, NPA provisions should decline.
Valuation and view: We have upgraded our earnings estimates by 4% for FY11/12 to factor in BoR merger and lower
credit cost. Adjusted for the Rs258/share value of subsidiaries, the stock trades at 2.2x FY12E ABV and 15.6x FY12E
EPS. We expect ICICI Bank to report core RoE of ~14% by FY12, with tier-I capital strong at ~12%. Our FY12E-based
SOTP value is Rs1,270 (rounded off), an upside of 9%.