%5bKotak%5d ICICI Bank%2c January 31%2c 2013

7/27/2019 %5bKotak%5d ICICI Bank%2c January 31%2c 2013

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For private Circulation Only. FOR IMPORTANT INFORMATION ABOUT KOTAK SECURITIES RATING SYSTEM AND OTHER DISCLOSURES, REFER TO THE END OF THIS MATERIAL.

Kotak Institutional Equities [email protected]

Mumbai: +91-22-6634-1100

Earnings grow 30% yoy led by strong revenue growth and lower provisions

ICICI Bank reported another stable quarter with earnings growth of 30% yoy led by healthy

revenue growth (NII grew 29% yoy; non-interest income grew 17% yoy), slower cost growth

(18% yoy) and lower provisions (8% yoy). NIM expanded 7 bps yoy. Loan growth is broadly in line

with industry average at 16.5% yoy but retail (17% yoy) has started to contribute better thanother segments. Loan impairment ratios were stablefresh slippages at 1.2% of loans and fresh

restructuring at 0.5% of loans resulting in lower provisions for the quarter. Non-interest income

was primarily driven by treasury income as fee income grew 4% yoy.

Delivering consistently but valuation comfort is gradually declining; maintain ADD

We maintain our ADD rating (12M TP at`1,260 from`1,140), factoring upward revision (~10%)

to our near-term earnings. Earnings growth at ~30% yoy (reported in the past few quarters) is

unsustainable at current levels of balance sheet growth (~20% yoy). We value the bank

(standalone) at 2X FY2014E (adjusted) book. The bank has delivered on its key metrics (NIM,

growth, asset quality and RoE improvement) but we remain concerned on the corporate asset

portfolio where slippages would by lumpy and irregular. RoE expansion will be constrained if these

assets turn up as stress loans over the next few years. We maintain our ADD rating (upsides are

limited) and note that the strong price performance leaves limited room for comfort.

Gross NPLs decline on the back of higher write-offs; negligible restructuring for the quarter

Gross NPL ratio declined ~20 bps qoq to 3.3% (write-off at 0.8% of loans) while net NPLs was

stable qoq at 0.8%. Slippages were at 1.2% of loans and primarily from the SME portfolio as the

retail loan portfolio continue to perform well. Gross NPLs in the retail loan portfolio declined 60

bps qoq to 4.8% while gross NPLs in the non-retail portfolio were flat qoq at 2.6%. The bank

reported negligible restructuring for the quarter at 0.5% of loans but indicated that it had a

pipeline of ~1.5% of loans that is expected to be completed over the next few quarters. Slippages

would be a key operating metrics than gross NPLs as the bank can show gross NPL ratios at these

levels by writing off loans in the retail portfolio (has coverage of ~90%).

ICICI Bank(ICICIBC)Banks/Financial Institutions

Growth is slow and steady; operating metrics stable. ICICI Bank is gradually

expanding its balance sheet across all loan products with retail loan growth (17% yoy)

taking center-stage (as it is marginally higher than overall loan growth). Key operatingratios (NIM, gross NPLs/restructured loans, cost ratios) were stable qoq. We continue to

like the bank but strong performance over the past year leaves limited room for comfort

as RoE improvement can be at risk if loan impairment rises from corporate loans.

Maintain ADD with TP at`1,260 (from`1,140 earlier).

ICICI Bank

Stock data Forecasts/Valuations 2013 2014E 2015E

52-week range (Rs) (high,low) EPS (Rs) 72.3 70.8 77.0

Market Cap. (Rs bn) 1,373.1 EPS growth (%) 29.0 (2.2) 8.8

Shareholding pattern (%) P/E (X) 16.5 16.8 15.5

Promoters 0.0 NII (Rs bn) 137.3 154.3 175.7FIIs 62.3 Net profits (Rs bn) 83.4 81.6 88.8

MFs 9.6 BVPS 558.0 594.5 635.7

Price performance (%) 1M 3M 12M P/B (X) 2.1 2.0 1.9

Absolute 4.6 13.4 32.0 ROE (%) 13.2 11.9 12.0

Rel. to BSE-30 2.2 5.5 14.1 Div. Yield (%) 1.8 1.8 1.9

Company data and valuation summary

1,232-767

ADD

JANUARY 31, 2013

RESULT

Coverage view:Cautious

Price (Rs):1,191

Target price (Rs):1,260

BSE-30: 19,895

QUICK NUMBERS

Revenue growth at24% yoy; earningsgrowth at 30% yoy

Fresh slippages at1.2%; restructured

loans at 1.5% of

loans

Maintain ADD withTP at`1,260 (from

`1,140 earlier)

M.B. [email protected]

Mumbai: +91-22-6634-1231

Nischint [email protected]

Mumbai: +91-22-6634-1545

Geetika [email protected]

Mumbai: +91-22-6634-1160


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Banks/Financial Institutions ICICI Bank

2 KOTAK INSTITUTIONAL EQUITIES RESEARCH

Coverage ratios have been stable in recent quartersNPLs and provision coverage, March fiscal year-ends, 3QFY10-3QFY13(%)

0

1

2

4

5

6

2QFY10

3QFY10

4QFY10

1QFY11

2QFY11

3QFY11

4QFY11

1QFY12

2QFY12

3QFY12

4QFY12

1QFY13

2QFY13

3QFY13

0

20

40

60

80

100

Gross NPL (LHS) Net NPL (LHS)Provision coverage (RHS)

Source: Company, Kotak Institutional Equities

Expect a marginal increase in restructured loansRestructured loans to total loans, March fiscal year-ends, 2007-3QFY13 (%)

-

0.7

1.4

2.1

2.8

3.5

2007

2008

2009

2010

2011

2012

1QFY13

2QFY13

3QFY13

Notes:

(a) ICICI Bank removes loans from the restructured book that has

displayed 1 year of satisfactory performance.


Higher write-offs in the retail portfolio have led to stable gross NPL qoqBreak-up of NPA, March fiscal year-ends, 2008-3QFY13

2008 2009 2010 2011 2012 1QFY13 2QFY13 3QFY13

Gross NPA (Rs bn) 84 99 96 101 96 99 101 98

Retail 55 71 65 66 60 59 53 48

Wholesale 28 28 32 35 36 40 48 50

Gross NPA (%) 3.7 4.5 5.3 4.7 3.8 3.7 3.7 3.4

Retail 4.1 6.5 7.8 7.4 6.3 6.2 5.4 4.8

Non retail 3.0 2.5 3.0 2.6 2.2 2.2 2.6 2.6

Net NPA (Rs bn) 36 46 39 25 19 19 21 22

Retail 24 31 24 12 7 7 6 6

Wholesale 12 15 15 12 12 13 15 16

Net NPA (%) 1.6 2.1 2.2 1.1 0.7 0.7 0.8 0.8

Retail 1.8 2.9 3.1 1.5 0.8 0.7 0.6 0.6

Wholesale 1.2 1.3 1.5 0.9 0.7 0.7 0.8 0.8

Provision coverage (%) 57.3 53.5 59.5 75.7 80.2 80.4 78.7 77.7

Retail 56.5 56.2 62.8 81.2 87.9 88.5 88.6 87.6

Wholesale 58.9 46.4 52.7 65.2 67.4 68.3 67.8 68.2

Credit cost (%) 1.3 1.7 2.2 1.0 0.4 0.7 0.7 0.7


Gradual improvement in loan growth; not too aggressive in our view

Overall loan growth was broadly in line with the industry average at 16.5% yoy.

Contribution from retail (17% yoy) is gradually growing with the current quarter showing

better performance than most of the other sectors. Growth in the domestic portfolio was

higher at 27% yoy as the bank is seeing a drawdown of existing sanctions and improving

the share of working capital loans in its portfolio. Foreign currency loans grew by 5% yoy asthe benefit of currency depreciation was lower.


3/14

ICICI Bank Banks/Financial Institutions

KOTAK INSTITUTIONAL EQUITIES RESEARCH 3

We are quite positive on the healthy growth in retail which is not too aggressive as

compared to its peers. The bank seems to be fairly satisfied with its current market share

across product portfolios and is focusing more on margins/risk than growth. Housing loans

(19% yoy) and auto loans (26% yoy) are driving loan growth within retail though the bank

has slowly started to expand its unsecured portfolio.

We are not too positive on corporate-led loan growth for the sector (and the bank) as thecapex cycle is yet to show any sign of strong revival. The banks own non-interest income

from these streams continues to struggle indicating that growth is likely to be led by

domestic working capital loans and retail. We are building loan growth at 16% CAGR for

FY2014-15E.

Expect contribution from retail and domestic corporate sector to riseComposition of loans, March fiscal year-ends, 2008-2QFY13 (%)

2008 2009 2010 2011 2012 1QFY13 2QFY13 3QFY13

Retail 58.4 48.6 43.6 38.7 35.5 34.0 33.9 33.7

Domestic corporate 4.4 20.3 17.4 21.3 23.0 25.0 28.5 28.7

Agriculture 10.0 10.0 9.7 8.8 7.7 6.8 6.9

SME 4.0 4.0 4.8 5.3 5.3 5.0 5.0International 21.2 25.0 25.0 25.5 27.4 28.0 25.8 25.7

Aggregate loan book (Rs bn) 2,256 2,183 1,812 2,164 2,537 2,684 2,751 2,868


Retail loan growth to move in line with overall loan growth over the next few quartersRetail and overall loan growth, March fiscal year-ends, 3QFY09-3QFY13 (%)

(30)

(15)

0

15

30

3QFY0

9

4QFY0

9

1QFY1

0

2QFY1

0

3QFY1

0

4QFY1

0

1QFY1

1

2QFY1

1

3QFY1

1

4QFY1

1

1QFY1

2

2QFY1

2

3QFY1

2

4QFY1

2

1QFY1

3

2QFY1

3

3QFY1

3

0

15

30

45

60

Retail loan growth (LHS) Overall loan growth (LHS)

Retail to overall loans (RHS)


Most of the improvement in NIM expansion appears to be factored

NIM showed a marginal improvement of 7 bps qoq to 3.1% led by an improvement in

international NIM as the excess liquidity (raised through borrowings previously) is actively

getting deployed. Domestic NIM was stable at 3.5%. Yields on assets showed a marginal

compression on the back of lower investment yields but was offset by a decline in funding

costs. The management highlighted that the focus would be to maintain NIM at these levels.


4/14



We believe that NIMs appears to have peaked at these levels. Asset yields have limited scope

for improvement as the benefit of cost decline is likely to be passed on to borrowers

aggressively as the shift towards loan growth gains focus. The bank has one of the lowest

costs of funds which should augur well to do a low-risk retail or wholesale business. Decline

in NIM is likely to occur only if there is a strong shift towards low NIM international business,

which looks unlikely in our view, or a sharp rise in slippages. We are factoring stable NIMs atthese levels.

Overall deposits grew 10% yoy on the back of 3% yoy growth in CASA deposits. Overall

average CASA ratio was stable at 41%.

No improvement in fee income business; treasury contribution improves

Overall non-interest income grew 17% yoy on the back of higher contribution from treasury

income (`2.5 bn of gains). The bank continued to receive a stable dividend from its

subsidiary. Fee income growth (4% yoy) continues to struggle as the big source of fee

income from the corporate business, driven by the capex cycle, is yet to show any signs of

revival. The bank is actively building a fee income platform in transaction banking and retail

but the contribution from these investments should be visible in FY2014-15E. We arebuilding overall fee income to grow by ~15% CAGR for FY2012-14E.

Cost metrics stable qoq at ~41%

Overall cost-income ratio was stable at 41% qoq and operating expenses to average assets

at 1.8%. Expansion of footprint was primarily through ATMs (2,430 ATMs opened in the

past year taking the total ATM net work past 10,000 as compared to an increase of 340

branches taking the total branch network to 2,895).

Consolidated profits up 22% yoy primarily led by banks earnings

Consolidated net profits grew 22% yoy to`26.5 bn primarily on the back of strong

contribution from the parent and contribution from life insurance. UK showed a further

decline in earnings while Canadian subsidiaries had a marginally better quarter.

Improvement in contribution from life insurance subsidiariesConsolidated profit for ICICI Bank, March fiscal year-ends (`mn)

3QFY12 3QFY13 YoY (%) 2QFY13 QoQ (%)

ICICI Bank PAT 17,281 22,502 30.2 19,561 15.0

Subsidiaries (profits) 4,461 3,948 (11.5) 4,343 (9.1)

ICICI Securities 180 280 55.6 80 250.0

ICICI Ventures 530 40 (92.5) 60 (33.3)

ICICI Prudential Life 3,670 3,970 8.2 3,960 0.3

ICICI Lombard 1,010 950 (5.9) 1,010 (5.9)

ICICI Home 670 534 (20.3) 534 (0.1)

ICICI UK 385 293 (24.0) 235 24.6

ICICI Canada 330 454 37.6 671 (32.4)

ICICI AMC 220 280 27.3 230 21.7

ICICI PD 490 230 (53.1) 270 (14.8)

Consolidated PAT 21,742 26,450 21.7 23,904 10.7

Source: Kotak Institutional Equities, Company

ICICI Prudential Life: Profits flat over the past few quarters

ICICI Lifes APE increased by about 5% yoy with total premium growth being subdued at

5% (AUM increased by 19% yoy). Reported NBAP margin was flat qoq at 15%. Reported

PAT has been broadly flat at`4 bn over the past few quarters.


5/14



International subsidiaries: UK subsidiary sees a marginal shift in loan mix

UK and Canadian subsidiaries continued their weak performance though we see a marginal

change in mix in the UK subsidiary. While the UK subsidiary has not increased its balance

sheet, it is looking to actively deploy the excess cash by selectively taking exposure to low-

risk corporate loans. There has been no further update on the dividend declaration or net

worth repatriation in the current quarter. The banks overall exposure to derivativescontinued to decline as is at negligible levels (0.3% of assets). Weak RoE performance led by

excess net worth in a business environment that is not likely to see a sharp expansion of

business continues to impact the bank.

Proportion of UK and Canada to overall loans has dropped to 7.5% from a peak of 13% in 2QFY10Contribution of international loans to total loans, March fiscal year-ends, 3QFY10-3QFY13

3QFY10 4QFY10 1QFY11 2QFY11 3QFY11 4QFY11 1QFY12 2QFY12 3QFY12 4QFY12 1QFY13 2QFY13 3QFY13

Balance sheet (Rs bn)

Domestic 3,563 3,634 3,597 3,900 3,929 4,062 4,152 4,407 4,593 4,736 4,835 4,971 5,273

UK 349 333 321 324 313 285 268 249 255 206 216 213 217

Canada 256 252 227 218 210 207 236 246 262 265 288 292 290

Eurasia 21 18 16 12 16 14 15 13 15 15 13 12 13

Total 4,189 4,237 4,161 4,455 4,469 4,569 4,671 4,916 5,125 5,223 5,352 5,488 5,793

International loans/assets (Rs bn)

Domestic 466 453 479 486 504 552 558 592 697 695 752 710 737

UK 311 276 282 275 261 225 213 190 193 158 165 172 184

Canada 223 199 198 184 178 182 209 221 230 232 249 252 249

Eurasia 16 11 10 10 9 10 9 9 9 11 10 10 9

Total 1,016 939 969 954 953 969 989 1,012 1,130 1,095 1,176 1,143 1,179

Proportion of international loans (%)

Domestic 11.1 10.7 11.5 10.9 11.3 12.1 12.0 12.0 13.6 13.3 14.0 12.9 12.7

UK 7.4 6.5 6.8 6.2 5.8 4.9 4.5 3.9 3.8 3.0 3.1 3.1 3.2

Canada 5.3 4.7 4.7 4.1 4.0 4.0 4.5 4.5 4.5 4.4 4.6 4.6 4.3

Eurasia 0.4 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Total 24.2 22.2 23.3 21.4 21.3 21.2 21.2 20.6 22.0 21.0 22.0 20.8 20.3

Notes:

(1) Period ending currency rates have been used for translation of the balance sheet of UK and Canada.(2) Canada has seen an increase in total loans in FY2012 due to a change in accounting policy.(3) Loans for UK and Canada only excludes cash and cash equivalentsSource: Company, Bloomberg, Kotak Institutional Equities


6/14



UK has witnessed marginal increase in advances and decline in liquid investmentsBreak-up of assets in UK, Canada and Eurasia, March fiscal year-ends, 3QFY10-3QFY13 (%)


ICICI Bank - UK

Advances 52.0 52.0 57.0 55.0 56.5 56.4 57.4 58.0 58.8 59.3 59.8 62.2 65.6

Bank bonds/ FI 25.0 19.0 18.0 18.0 16.1 10.6 10.7 5.6 4.8 4.3 3.2 2.5 2.5Asset backed securities 2.0 2.0 2.0 2.0 1.7 1.9 2.0 1.8 1.8 2.5 2.1 2.3 2.1

Cash and liquid investments 11.0 17.0 12.0 15.0 16.5 21.0 20.6 23.7 24.1 23.6 23.6 19.4 15.3

India linked investments 6.0 5.0 5.0 4.0 4.1 4.0 3.3 3.9 4.0 4.9 5.8 8.3 8.0

Others 4.0 5.0 6.0 6.0 5.1 6.1 6.0 7.0 6.5 5.4 5.5 5.3 6.5

ICICI Bank - Canada

Loans to customers 61.0 58.0 68.0 68.0 66.1 66.0 54.1 51.9 46.8 49.3 46.8 47.4 45.7

Federally insured mortgages 15.0 10.0 7.0 4.0 6.7 6.9 21.5 25.9 29.7 26.3 28.3 29.2 30.9

Asset backed securities 2.0 2.0 2.0 2.0 1.7 1.7 1.4 1.4 1.2 1.2 0.8 0.6 0.3

Ca sh a nd liquid se curities 13.0 21.0 13.0 16.0 15.2 11.9 11.6 10.0 12.2 12.6 13.8 13.7 14.2

India linked investments 3.0 3.0 3.0 3.0 2.5 1.8 0.8 0.8 0.4 0.4 0.0 0.0 0.0

Others 6.0 6.0 7.0 7.0 7.8 11.7 10.6 10.0 9.7 10.2 10.3 9.1 8.9

ICICI Bank - Eurasia

Loans to corporates 54.0 34.0 38.0 44.0 32.7 38.0 39.0 38.4 40.9 52.1 59.9 60.5 52.9

Corporate bonds 4.0 4.0 4.0 3.5 1.7 2.0 2.1 2.2 2.2 2.3 2.6 0.8 1.0

Retail loans 15.0 16.0 18.0 22.0 15.7 17.4 16.0 18.6 16.5 14.9 18.0 17.6 15.6Ca sh a nd ca sh e quiva le nt s 24.0 40.0 37.0 17.5 46.0 31.2 38.7 35.1 38.2 28.4 17.9 20.2 29.7

Others 3.0 6.0 3.0 13.0 3.9 11.4 4.2 5.7 2.2 2.3 1.6 0.9 0.8

Notes:

(1) Canada has seen increase in total loans in FY2012 due to a change in accounting policy.

Source: Company, Bloomberg, Kotak Institutional Equities

Indian corporate related credit derivatives has declined to negligible levels across all geographiesCredit derivative exposure (including off balance sheet exposure), March fiscal year-ends, 3QFY10-3QFY13 (`bn)


Standalone 51.9 48.3 49.4 45.1 42.4 38.8 21.3 20.2 11.2 10.1 10.3 6.5 3.2

UK 7.9 7.4 6.4 5.4 5.5 4.4 0.6 0.7 0.7 0.7 0.8 0.8 0.8

Canada 5.8 4.9 4.5 3.8 3.6 3.0 1.3 1.5 0.7 0.8 - - -

Total 65.6 60.6 60.4 54.3 51.5 46.1 23.3 22.4 12.6 11.6 11.1 7.3 4.0

% of balance sheet 6.6 6.5 6.3 5.8 5.5 4.8 2.4 2.2 1.1 1.1 1.0 0.6 0.3

Notes:

(1) Balance sheet of only these three entities has been taken.


ICICI Bank Rolling PER and PBRMarch fiscal year-ends, Jan 03-Jan 13

0

8

16

24

32

40

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

0

1

2

2

3

4Rolling PER (X) (LHS) Rolling PBR (X) (RHS)


ICICI Bank trading at discount to peers over the long termICICI Bank trading premium to private banks, Jan 03- Jan 13

0.5

0.7

0.9

1.1

1.3

1.5

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13



7/14



ICICI Bank - key analytical parametersMarch fiscal year-ends, 3QFY12-3QFY13 (%)

3QFY12 4QFY12 1QFY13 2QFY13 3QFY13

KS calculations

Yield on loans 9.5 9.8 9.9 10.1 10.1Yield on investments 6.6 6.8 6.9 7.0 6.8

Yield on funds 8.8 9.1 9.1 9.4 9.1

Cost of funds 6.3 6.2 6.3 6.5 6.2

Spread 2.6 2.8 2.8 2.9 2.9

NIM 2.7 3.0 3.0 3.1 3.1

NIM as per the mgmt 2.7 3.0 3.0 3.0 3.1

Domestic 3.0 3.3 3.3 3.4 3.5

International 1.4 1.5 1.6 1.2 1.4

Asset quality details

Gross NPLs (Rs bn) 98 96 99 101 98

Gross NPLs to advances (%) 4.0 3.8 3.7 3.7 3.4

Gross NPLs in retail (Rs bn) 62 60 59 53 48

Retail NPL excld non-collateral (%) 8 7 7 6 5

Net NPLs (Rs bn) 21 19 19 21 22Net NPLs to advances (%) 0.8 0.7 0.7 0.8 0.8

Net NPLs in retail (Rs bn) 8.3 7.3 6.8 6.0 5.9

Provisions and w/off (Rs bn) 77 77 80 79 76

Provision Coverage (%) 78.8 80.2 80.4 78.7 77.7

Additions to NPLs 8.8 6.4 8.7 12.2 8.5

Slippages (%) 1.5 1.0 1.4 1.8 1.2

Restructured assets (Rsbn) 31 43 42 42 42

Total rest. And NPLs 52 62 61 63 64

Capital adequacy details

CAR (%) 18.9 18.5 18.5 18.3 19.5

Tier I (%) 13.1 12.7 12.8 12.8 13.3

Source: Company, Kotak Institutional Equities estimates


8/14



ICICI Bank quarterly results and key balance sheet itemsMarch fiscal year-ends, 3QFY12-3QFY13 (`mn)


%

change 3QFY13E

Actual

Vs KS

Interest income 85,919 91,746 95,457 100,263 101,383 18 102,432 (1) Interest on advances 56,858 61,282 64,558 68,488 70,658 24 70,545 0

Interest on investments 24,725 26,155 27,019 27,445 27,424 11 27,989 (2)

Balance with RBI 4,335 4,310 3,879 4,330 3,301 (24) 3,897 (15)

Interest expenses 58,799 60,699 63,527 66,551 66,393 13 67,396 (1)

Net interest income 27,120 31,048 31,929 33,712 34,990 29 35,036 (0)

Non-interest income 18,919 22,285 18,799 20,430 22,146 17 21,331 4

Commission and fees 17,010 17,280 16,470 17,090 17,710 4 18,201 (3)

Investment income (650) 1,580 (210) 1,720 2,510 (486) 1,462 72

Other income 2,559 3,425 2,539 1,620 1,926 (25) 1,668 15

Total income 46,039 53,332 50,729 54,142 57,136 24 56,367 1

Total income excluding treasury 46,689 51,752 50,939 52,422 54,626 17 54,905 (1)

Operating expenses 19,168 22,216 21,235 22,209 22,612 18 22,523 0

Salary 8,366 11,031 9,870 9,659 9,406 12 10,045 (6)

Other costs 10,429 10,652 10,815 12,550 13,205 27 11,993 10

Preprovision profit 26,871 31,116 29,493 31,933 34,525 28 33,844 2

Provisions 3,411 4,693 4,659 5,079 3,687 8 5,543 (33)

Loan loss provisions 3,411 4,693 3,899 4,949 2,687 (21) 5,543 (52)

Profit before tax 23,460 26,423 24,835 26,854 30,838 31 28,301 9

Tax 6,179 7,405 6,684 7,293 8,335 35 7,641 9

Profit after tax 17,281 19,018 18,151 19,561 22,502 30 20,660 9

Effective tax rate(%) 26 28 27 27 27

PBT-invt inc+dep 24,110 24,843 25,045 25,134 28,328

PBT-Invt income+NPL provisions 27,521 29,536 28,943 30,083 31,015 13 32,382 (4)

Key balance sheet items (Rs bn)

Deposits 2,606 2,555 2,678 2,814 2,864 9.9

Savings 735 760 780 806 815 10.8 Current 400 350 308 338 357 (10.9)

CASA ratio (%) 44 44 41 41 41

Loans 2,462 2,537 2,684 2,751 2,868 16.5

Retail loans 825 901 913 933 965 17.1

Retail loans to total loans (%) 34 36 34 34 34

Housing loans 548 576 595 614 649 18.5

Auto loans 80 87 91 95 100 25.5

Personal loans 10 10 10 9 12 17.1

Credit cards 25 25 26 26 28 13.2

Commercial vehicles 141 177 167 161 151 6.8

Corporate and International 1,637 1,637 1,772 1,818 1,902 16.2

Domestic corporates 650 584 671 784 824 26.8

SME 116 134 142 138 143 23.9

International lending 697 695 752 710 737 5.8Rural (incl agri) 175 223 207 187 198 13.2



9/14



ICICI Bank balance sheet snapshot and key details of ICICI PrudentialMarch fiscal year-ends, 3QFY12-3QFY13


Balance sheet snapshot (Rs bn)Cash, balances with banks, SLR 1,163 1,232 1,194 1,283 1,335

Cash advances 393 362 363 424 411

SLR Investments 769 869 831 859 924

Advances 2,462 2,537 2,684 2,751 2,868

Retail 825 901 913 933 965

Housing loans 548 576 595 614 649

Other assets 240 241 237 216 326

Total assets 4,593 4,736 4,835 4,971 5,273

Networth 610 604 630 645 671

Deposits 2,606 2,555 2,678 2,814 2,864

Total borrowings 1,223 1,402 1,372 1,354 1,471

Domestic 552 743 644 623 780Overseas 671 662 728 731 692

Other liabilities 154 176 155 158 267

Total liabilities 4,593 4,736 4,835 4,971 5,273

ICICI Pru Life

Total Premium 31,320 48,530 23,850 34,980 32,070

NBAP margin (Qtly) 16.0 16.0 15.0 15.0 15.0

Expense Ratio (%) 21.4 17.9 21.8 18.9 19.4


ICICI Bank - change in estimatesMarch fiscal year-ends, 2013-15E (`mn)

New estimates Old estimates

2013E 2014E 2015E 2013E 2014E 2015E 2013E 2014E 2015E

Net interest income 137,336 154,308 175,710 137,865 155,277 187,284 (0.4) (0.6) (6.2)

Spread 2.5 2.6 2.6 2.5 2.6 2.8

NIM (%) 3.0 3.0 3.0 3.0 3.0 3.2

Customer asse ts (Rs bn) 3,506 3,974 4,502 3,466 3,924 4,438 1.1 1.3 1.4

Loan loss provisions 16,457 31,829 42,333 27,233 40,795 48,924 (39.6) (22.0) (13.5)

Other income 83,567 92,455 108,606 83,730 93,824 105,801 (0.2) (1.5) 2.7

Fee income 59,373 66,767 79,123 61,036 68,136 76,893 (2.7) (2.0) 2.9

Treasury income 5,500 5,000 6,500 4,000 5,000 6,000 37.5 0.0 8.3

Operating expenses 89,714 103,188 120,401 91,439 107,924 126,324 (1.9) (4.4) (4.7)

Employee expenses 39,548 46,572 56,998 42,590 52,794 64,613 (7.1) (11.8) (11.8)

PBT 114,231 111,746 121,583 102,423 100,381 117,838 11.5 11.3 3.2

Tax 30,842 30,171 32,827 27,654 27,103 31,816 11.5 11.3 3.2

Net profit 83,389 81,575 88,756 74,769 73,278 86,022 11.5 11.3 3.2

PBT-treasury+provisions 125,189 138,575 157,416 125,655 136,177 160,762 (0.4) 1.8 (2.1)

% change in

estimates



10/14



ICICI Bank SOTP (FY2013) valuation

ICICI Share (%) FY2013 Valuation methodoly adopted

Value of ICICI standalone 100 893 Based on Residual growth model

Subsidiaries

ICICI Financial Services 94 133

ICICI Prudential Life 74* 104 16X NBAP, margin assumed is 11%

General Insurance 74* 19 1.5X FY2014 PBR

Mutual Fund 51* 10 3% of AUMs

Other subsidiaries/associates

ICICI Securities Ltd 100 7 10X FY2014 PER

ICICI Securities Primary Dealer 100 6 1X FY2014 PBR

ICICI Homes Ltd 100 20 1.5X FY2014 PBR

ICICI Bank UK 100 20 0.6XFY2014 PBR

ICICI Bank Canada 100 26 0.6XFY2014 PBR

Venture capital/MF 100 10 10% of AUM of US$2 bn

Value of subsidiaries 221 `

Value of company 1,114


ICICI Bank SOTP (FY2014) valuation

ICICI Share (%) FY2014 Valuation methodoly adopted

Value of ICICI standalone 100 1046 Based on residual growth model

Subsidiaries

ICICI Financial Services 94 152

ICICI Prudential Life 74* 121 16X NBAP, margin assumed is 11%

General Insurance 74* 20 1.5X FY2014 PBRMutual Fund 51* 11 3% of AUMs

Other subsidiaries/associates

ICICI Securities Ltd 100 8 10X FY2014 PER

ICICI Securities Primary Dealer 100 6 1X FY2014 PBR

ICICI Homes Ltd 100 20 1.5X FY2014 PBR

ICICI Bank UK 100 21 0.6XFY2014 PBR

ICICI Bank Canada 100 27 0.6XFY2014 PBR

Venture capital/MF 100 10 10% of AUM of US$2 bn

Value of subsidiaries 243 `

Value of company 1,289


ICICI Bank - forecasts and valuationMarch fiscal year-ends, 2010-15E

PAT EPS P/E BVPS P/B RoE Core RoE

P/E

(standalone)

BVPS

(standalone)

P/B

(standalone)

(Rs bn) (Rs) (X) (Rs) (X) (%) (%) (X) (Rs) (X)

2010 40.2 36.1 33.0 463 2.6 8.0 9.4 29.6 348 2.8

2011 51.5 44.7 26.6 478 2.5 9.7 11.5 23.6 365 2.7

2012 64.7 56.1 21.2 524 2.3 11.2 12.8 19.5 410 2.4

2013E 83.4 72.3 16.5 571 2.1 13.2 15.2 14.7 457 2.1

2014E 81.6 70.8 16.8 617 1.9 11.9 13.3 15.2 503 1.9

2015E 88.8 77.0 15.5 667 1.8 12.0 12.1 15.2 553 1.8



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ICICI Bank, growth rates, key ratios and Du Pont analysisMarch fiscal year-ends, 2010-15E

2010 2011 2012 2013E 2014E 2015E

Growth rates (%)

Net loan growth (17.0) 19.4 17.3 16.2 15.9 15.4

Customer assets growth (10.4) 24.4 15.4 13.3 13.4 13.3

Corporate loans (9.3) 29.8 24.4 15.2 14.5 14.8

Total retail loans (24.6) 7.2 7.1 17.8 18.1 16.5

Deposits growth (7.5) 11.7 13.3 16.3 17.0 16.4

Borrowings growth 2.1 16.5 27.2 9.6 9.2 9.8

Net intere st income (3.0) 11.1 19.0 27.9 12.4 13.9

Loan loss provisions 16.3 (54.7) (49.8) 65.7 93.4 33.0

Non-interest income (1.7) (11.1) 12.9 11.4 10.6 17.5

Net fee income (14.1) 14.2 (1.4) 9.2 12.5 18.5

Net capital gains (43.1) (133.3) (69.6) (843.4) (9.1) 30.0

Total income (2.4) 0.5 16.4 21.1 11.7 15.2

Operating expenses (16.8) 12.9 18.6 14.3 15.0 16.7

Employee expenses (2.3) 46.3 24.8 12.5 17.8 22.4

DMA (76.3) 25.1 2.2 40.1 11.4 34.1Asset management measures (%)

Yield on average earning assets 7.8 7.5 8.3 8.7 8.3 8.2

Interest on advances 8.7 8.2 9.4 10.1 9.4 9.3

Interest on investments 6.4 6.8 7.1 7.3 7.0 6.8

Average cost of funds 5.7 5.3 6.2 6.2 5.7 5.6

Interest on deposits 5.5 4.7 5.9 6.3 5.6 5.4

Other interest 6.3 6.6 6.6 6.0 5.9 5.9

Difference 2.0 2.2 2.2 2.5 2.6 2.6

Net interest income/earning assets 2.4 2.6 2.7 3.0 3.0 3.0

New provisions/average net loans 2.2 1.0 0.4 0.6 1.0 1.2

Loans-to-deposit ratio 60.6 63.9 63.6 64.9 65.8 66.5

Share of deposits

Current 15.3 15.4 13.7 13.0 12.8 12.5

Fixed 58.3 54.9 56.5 58.1 58.6 59.1

Savings 26.3 29.6 29.8 28.9 28.6 28.3

Tax rate 24.7 23.8 26.6 27.0 27.0 27.0

Dividend payout ratio 33.2 31.3 29.4 30.0 30.0 30.0

Asset quality metrics (%)

Gross NPL 4.9 4.3 3.5 3.2 3.4 3.6

Net NPL 2.1 1.1 0.7 0.8 1.2 1.4

Slippages 2.9 1.6 1.4 1.6 2.0 2.2

Provision coverage (ex write-off) 57.0 74.3 79.2 75.7 66.3 61.3

RoA composition - % of average assets

Net interest income 2.2 2.3 2.4 2.7 2.7 2.7

Loan loss provisions 1.2 0.5 0.2 0.3 0.6 0.7

Net other income 2.0 1.7 1.7 1.7 1.6 1.7

Operating expenses 1.6 1.7 1.8 1.8 1.8 1.9Invt. Depreciation ()

(1- tax rate) 75.3 76.2 73.4 73.0 73.0 73.0

RoA 1.1 1.3 1.5 1.7 1.4 1.4

Average assets/average equity 7.3 7.2 7.6 8.0 8.3 8.7

RoE 8.0 9.7 11.2 13.2 11.9 12.0



12/14



ICICI Bank income statement and balance sheetMarch fiscal year-ends, 2010-15E (`mn)

2010 2011 2012 2013E 2014E 2015E

Total interest income 257,069 259,741 335,427 401,995 432,715 484,767

Interest on advances 173,727 164,248 221,299 276,167 300,589 343,757

Interest on investments 64,663 79,052 96,840 110,208 114,302 121,526Total interest expense 175,926 169,572 228,085 264,659 278,407 309,057

Deposits from customers 115,135 100,709 143,041 173,594 181,481 201,754

Net interest income 81,144 90,169 107,342 137,336 154,308 175,710

Loan loss provisions 43,622 19,769 9,932 16,457 31,829 42,333

Net in terest income (after prov.) 37,522 70,400 97,410 120,879 122,479 133,378

Other income 74,777 66,479 75,028 83,567 92,455 108,606

Net fee income 48,308 55,146 54,351 59,373 66,767 79,123

Net capital gains 7,316 (2,434) (740) 5,500 5,000 6,500

Miscellaneous income 3,054 73 1,479 1,257 1,509 1,886

Operating expenses 58,598 66,172 78,504 89,714 103,188 120,401

Employee expense 19,258 28,169 35,153 39,548 46,572 56,998

DMA 1,255 1,570 1,604 2,248 2,503 3,356

Pre-tax income 53,453 67,607 88,034 114,231 111,746 121,583Tax provisions 13,203 16,093 23,382 30,842 30,171 32,827

Net profit 40,250 51,514 64,653 83,389 81,575 88,756

% growth 7.1 28.0 25.5 29.0 (2.2) 8.8

PBT+provision-treasury gains 90,005 92,909 104,605 125,689 138,575 157,416

% growth 17.8 3.2 12.6 20.2 10.3 13.6

Balance sheet (Rs mn)

Cash and bank balance 388,737 340,901 362,293 435,312 474,837 520,084

Cash 33,410 37,844 46,696 54,293 63,499 73,920

Balance with RBI 241,733 171,226 157,917 225,506 257,949 294,857

Balance with banks 45,742 56,014 49,307 49,307 49,307 49,307

Outside India 67,852 75,817 108,373 106,206 104,082 102,000

Net value of investments 1,208,928 1,346,860 1,595,600 1,667,932 1,816,445 1,986,105

Investments in India 1,117,553 1,252,941 1,514,212 1,578,094 1,726,607 1,896,267

Govt. and other securities 683,991 641,287 869,480 928,782 1,077,295 1,246,955Shares 27,557 28,134 22,923 27,507 27,507 27,507

Subsidiaries 62,227 64,797 64,797 64,797 64,797 64,797

Debentures and bonds 36,354 161,463 195,135 195,135 195,135 195,135

Net loans and advances 1,812,056 2,163,659 2,537,277 2,948,556 3,417,301 3,944,873

Corporate loans 980,866 1,272,919 1,583,347 1,824,520 2,089,790 2,398,858

Total retail loans 831,190 890,740 953,930 1,124,036 1,327,511 1,546,016

Fixed assets 32,127 47,443 46,147 60,879 66,220 70,800

Net leased assets 3,534 2,570 2,394 2,035 1,730 1,470

Net owned assets 28,593 44,872 43,753 58,844 64,490 69,329

Other assets 192,149 163,475 195,154 234,185 281,022 337,226

Total assets 3,633,997 4,062,337 4,736,471 5,346,864 6,055,825 6,859,088

Deposits 2,020,166 2,256,021 2,555,000 2,970,670 3,474,395 4,044,561

Borrowings and bills payable 969,705 1,129,848 1,437,205 1,575,002 1,720,142 1,888,126

Preference capital 3,500 3,500 3,500 3,500 3,500 3,500

Other liabilities 127,943 125,559 140,213 143,018 150,169 157,677

Total liabilities 3,117,813 3,511,427 4,132,418 4,688,689 5,344,706 6,090,365

Pa id-up capital 11,149 11,518 11,528 11,528 11,528 11,528

Reserves & surplus 505,035 539,391 592,525 646,647 699,591 757,196

Total shareholders' equity 516,184 550,909 604,052 658,174 711,119 768,724



13/14

Disclosures


"I, MB Mahesh, hereby certify that all of the views expressed in this report accurately reflect my personal views about the

subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be,

directly or indirectly, related to the specific recommendations or views expressed in this report."

Kotak Institutional Equities Research coverage universeDistribution of ratings/investment banking relationships

Source: Kotak Institutional Equities As of December 31, 2012

Perce ntage of companies covered by Kotak Institutional

Equities, within the specified cat egory.

Perce ntage of companies within each cate gory for which

Kotak Institutional Equities and or its af filiates has provided

investment banking services within the previous 12 months.

* The above categories are defined as follows: Buy = We

expect t his stock to deliver more t han 15% returns over

the next 12 months; Add = We expect this stock to deliver

5-15% returns over the ne xt 12 months; Reduce = We

expect this stock to deliver -5-+ 5% returns over the next

12 months; Sell = We expe ct this stock to deliver less than -

5% returns over the next 12 months. Our target prices are

also on a 12-month horizon basis. These ratings are used

illustratively to comply with applicable regulations. As of

31/12/2012 Kotak Institutional Equities Investment

Research ha d investment rat ings on 173 equity securities.

19.7%22.0%

35.3%

23.1%

4.0% 4.6%1.7% 2.3%

0%

10%

20%

30%

40%

50%

60%

70%

BUY ADD REDUCE SELL

Ratings and other definitions/identifiers

Definitions of ratings

BUY. We expect this stock to deliver more than 15% returns over the next 12 months.

ADD.We expect this stock to deliver 5-15% returns over the next 12 months.

REDUCE. We expect this stock to deliver -5-+5% returns over the next 12 months.

SELL. We expect this stock to deliver


14/14

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