ICICI Bank - Top pick in Private Banks - Motilal Oswal

ICICI BANK 3QFY11: Above est; loan growth improves further; Margins and Asset quality stable; Top pick in private banks

Stable margins QoQ at 2.6% led by higher CD ratio; domestic margins stable at 3%, margins on international business up ~5bp QoQ at 0.85%.

Loan growth picks up further and grew 6.5% QoQ and 15%+ YoY; YTD loans grew 14% driven by higher disbursals in corporate segment

CASA grew by 23% YoY (down 2% QoQ) to Rs962b. While SA deposits grew 26% YoY (+2% QoQ), CA deposits grew 16% YoY however, declined 2% QoQ.

Fee income grew 2% QoQ and 14% YoY to Rs16.3b, driven by higher income from corporate and international business.

Provisions have declined 28% QoQ to Rs4.6b (exp of Rs5b), led by stable asset quality. PCR increased to ~72% vs 69% a quarter ago.

We have upgraded our earnings estimates by ~2% for FY11/12 to factor in higher loan growth. BV would be Rs514 in FY12 and Rs559 in FY13. We expect ICICI Bank to report core RoE of ~14% by FY12, with a strong Tier I CAR at ~12%. Our FY13 based SOTP is Rs1383, an upside of 29%. The stock trades at 2.1x FY12E ABV (adjusted for investment in subs) and 14.6x FY12 EPS and 1.8x AP/ABV FY13 and 12.3x AP/EPS. Maintain Buy.

Source : Equity Bulls

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