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ICICI Bank — Meeting with CEO: Growth on track; Reiterate Buy
Company Update
Met with the CEO of ICICI Bank; Improving RoAs key focus
We recently met Ms. Chanda Kochhar, MD &CEO of ICICI Bk. It was encouraging
to note that she remained confident of capitalizing on the growth opportunities,
having successfully implemented the “4C” strategy of high CASA, conserving
capital and maintaining good credit quality. She reiterated her expectation of ROA
rising to ~ 1.6%; margins being flat to improving (FY12) and loan growth around
20%. In addition, lower credit costs (on improving asset quality) to drive RoA.
Loan growth of 20% in FY12; Asset quality comfort high
The most positive takeaway, in our view, was that the bank is still confident of
margins trending up (avg for FY12) even though there may be sequential decline;
and loan growth being at 20%. Volume growth driven by domestic corporate
(sanctions of Rs150bn), mortgage and auto loans. Margins may be under
pressure qoq due to higher agri. lending. Asset quality comfort also high.
Reiterate Buy and PO; 4Q earnings growth of +50-55% yoy
We reiterate our Buy as the quality of earnings continues to improve. We maintain
our earnings growth est. of +30% pa in FY11-12 (ROA at 1.7%) supported by
lower credit costs, volume growth of 18-20% and margins expanding in FY12 as
1) re-pricing of loan book; 2) overseas spreads improve on asset re-pricing (~20%
of book in FY12) and re-pricing of funding costs in overseas book. Further, we
est. 4Q earnings to grow by +50-55% yoy. Our PO (Rs1400) factors value of subs
at Rs237/shr. that has some cushion (on the insurance value).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank — Meeting with CEO: Growth on track; Reiterate Buy
Company Update
Met with the CEO of ICICI Bank; Improving RoAs key focus
We recently met Ms. Chanda Kochhar, MD &CEO of ICICI Bk. It was encouraging
to note that she remained confident of capitalizing on the growth opportunities,
having successfully implemented the “4C” strategy of high CASA, conserving
capital and maintaining good credit quality. She reiterated her expectation of ROA
rising to ~ 1.6%; margins being flat to improving (FY12) and loan growth around
20%. In addition, lower credit costs (on improving asset quality) to drive RoA.
Loan growth of 20% in FY12; Asset quality comfort high
The most positive takeaway, in our view, was that the bank is still confident of
margins trending up (avg for FY12) even though there may be sequential decline;
and loan growth being at 20%. Volume growth driven by domestic corporate
(sanctions of Rs150bn), mortgage and auto loans. Margins may be under
pressure qoq due to higher agri. lending. Asset quality comfort also high.
Reiterate Buy and PO; 4Q earnings growth of +50-55% yoy
We reiterate our Buy as the quality of earnings continues to improve. We maintain
our earnings growth est. of +30% pa in FY11-12 (ROA at 1.7%) supported by
lower credit costs, volume growth of 18-20% and margins expanding in FY12 as
1) re-pricing of loan book; 2) overseas spreads improve on asset re-pricing (~20%
of book in FY12) and re-pricing of funding costs in overseas book. Further, we
est. 4Q earnings to grow by +50-55% yoy. Our PO (Rs1400) factors value of subs
at Rs237/shr. that has some cushion (on the insurance value).
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