ICICI Bank: Retail business profitability improving sharply

27 July 2015

Annual Report Update | Sector: Financials

ICICI Bank

BSE Sensex

27,561

S&P CNX

8,361

CMP: INR291

TP: INR460 (+58%)

Buy

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support in the Asiamoney

Brokers Poll 2015 for India

Research, Sales and Trading

team. We

request your ballot.

Retail business profitability improving sharply

Corporate business remains under pressure

ICICIBC’s annual report analysis suggests continued improvement in both retail and

treasury segments (58% of overall PBT v/s 30% in FY12). However, the wholesale

segment remains challenged, led by asset quality pressures. The bank has seen sharp

improvement on the liability side, providing much needed stability on margins and

core profitability. Continued improvement in ALM profile, release of capital from

foreign banking subsidiaries (via capital return or dividend), and increasing risk

aversion in wholesale business are noteworthy. ICICIBC is well placed for the next

growth cycle, with significant capacity (4,050 branches, 12,000+ ATMs) and several

digital initiatives. Release of capital from subsidiaries would ensure dilution-free

growth till FY18. Strong focus on core profitability would lead to further improvement

in core RoA (1.6%+) and RoE (18%+). Buy; our SOTP-based target price is INR460.

Retail gains traction; intensity on digitalization increases

Stock Info

Bloomberg

Equity Shares (m)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

M.Cap.(INR b)/(USDb)

Avg Val(INRm)/Vol‘000

Free float (%)

ICICIBC IN

5,775.2

393/272

-6/-16/-7

1682/26.4

4295/9829

100.0

Financial Snapshot (INR Billion)

Y/E Mar

2016E 2017E 2018E

NII

219.3 259.1 310.9

225.8 264.5 317.1

129.9 153.0 183.2

NIM (%)

3.4

3.5

EPS (INR)

22.4 26.4 31.6

EPS Gr. (%)

16.2 17.8 19.8

BV/Sh. (INR)

132 151 173

ABV/Sh. (INR) 124 143 167

RoE (%)

15.6 16.1 17.0

RoA (%)

1.9

Payout (%)

30.2 30.2 30.2

Valuations

P/E(X)

10.2

8.3

6.6

P/BV (X)

1.7

1.5

1.2

P/ABV (X)

1.8

1.5

1.2

Div. Yield (%)

2.0

2.4

2.8

Contribution of the retail segment has increased from 7% of PPP and 6% of

PBT in FY12 to 14% of PPP and 17% of PBT, driven by strong operating

performance. Share of retail fees in overall fees has increased from 38% in

FY12 to 52%. Cost to income ratio of the retail segment has improved from

88% in FY12 and 82% in FY14 to 75%.

On the asset side, retail loan disbursements grew 32%, driven by 33%

growth in housing loans and 20% growth in auto loans. The share of retail

loans has increased to ~42% (38% in FY12), primarily driven by mortgages.

On the liability side, deposit concentration (top-20 depositors contribute

only 6% of deposits v/s 10% in FY13) has declined further, and retail

deposits now account for 76% of overall deposits.

Internet or mobile banking accounts for ~50% of overall transactions.

Mobile applications like

iMobile

and

Pockets

have been introduced to cater

to mobile banking and payment solution needs.

Wholesale banking PBT at FY12 levels

Corporate business PBT declined 6% YoY to INR62b, similar to FY12. Though

NII contribution declined marginally, asset quality deteriorated, leading to

higher provisioning costs (provisions-to-PPP was 36% v/s 29% in FY14).

The share of wholesale fee income in overall fee income has been declining

and is now 47% v/s 52% in FY14 (61% in FY12). C/I ratio has remained stable

at 21%. PPP contribution declined to 49% from 69% in FY12.

Non-retail GNPA increased to 5.2% from 3.1% in FY14. Top-4 non-

performing accounts constituted 41% of overall GNPA v/s 17% in FY14.

Stress loans accounted for ~10% of the non-retail portfolio. Exposure to

certain large corporate accounts remains a key challenge in the near term.

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415

Vallabh Kulkarni

(Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430

Investors are advised to refer through disclosures made at the end of the Research Report.

Motilal Oswal research is available on

www.motilaloswal.com/Institutional-Equities,

Bloomberg, Thomson Reuters, Factset and S&P Capital.

ICICI Bank

Shareholding pattern (%)

Jun-15 Mar-14 Jun-14

Promoter

DII

FII

0.0

22.3

69.3

0.0

21.7

70.1

0.0

23.2

69.3

Capital repatriation from subsidiaries continues to increase

Others

8.4

8.2

7.6

FII includes depository receipts

Stock Performance (1-year)

ICICI Bank

Sensex - Rebased

410

370

330

290

250

PAT contribution from subsidiaries declined to 14% of consolidated profits v/s

16% in FY14 (19% in FY12). The key reason for the decline was subdued

earnings growth in the insurance business and profit decline in foreign

banking subsidiaries.

Dividend income for the parent has increased to INR15.6b from INR13b in

FY14 and INR7.4b in FY12. Adjusted for dividend income from subsidiaries,

PAT grew 13% (14%) v/s 14% (18%) reported in FY15 (FY14).

The bank also received USD75m of capital repatriation from ICICI UK and

CAD80m from ICICI Canada. Foreign banking subsidiaries now account for 2%

of PAT but 10% of overall net worth (v/s 15% in FY12). Capital repatriation

remains a key.

Other key takeaways from annual report

INR9.29b utilized from reserves to account for FITL pertaining to the

restructuring prior to the issuance of restructuring guidelines (pre-2008)

ESOS granted till date are 6.28% of the outstanding issued equity capital.

ESOS granted and exercised during FY15 (FY14) stood at 0.6% (0.4%) and

0.4% (0.1%) of the equity capital, respectively. If the fair value method were

adopted, PAT would have been lower by ~2%.

Achieved PSL target of 41%; share of Agri PSL in overall loans increased to

12.1% v/s 10.8% a year ago (against requirement of 18%)

Top-20 concentration mix largely stable YoY

Share of top-20 depositors has reduced to 6% of overall deposits v/s 10%

in FY13 (15% in FY10)

Share of top-20 borrowers has been trending higher (17% of overall loans

in FY15 v/s 15% in FY13)

Exposure to large corporate accounts remains a key concern – top-4 NPAs

constitute 41% of overall NPAs v/s 17% in FY14 (13% in FY13).

Our view on the stock

ICICIBC has seen structural improvement in its liability profile (leading to

improvement in margins) and is well placed for the next growth cycle, with

significant capacity built up (4,050 branches; 12,000+ ATMs) and several

digital initiatives.

Continued focus on capital release from subsidiaries would lead to further

improvement in core RoA (1.6%+) and RoE (18%+). However, while capital

position remains healthy (tier-1 of 12.8%), asset quality pressure from

corporate segment remains a key challenge in the near term.

With expected improvement in economic cycle in 2HFY16, fee income growth

is likely to accelerate (driven by wholesale business).

We expect ICICIBC to report earnings CAGR of 18% over FY15-18. Core RoA

should improve from 1.6% to 1.7% and core RoE from 15.2% to 17%.

Maintain

Buy

with a target price of INR460 (2.6x FY17E ABV).

27 July 2015

ICICI Bank

Exhibit 1: 1-year forward P/BV

3.1

2.5

1.8

1.2

0.7

0.5

1.9

2.0

PB (x)

Median(x)

Peak(x)

Min(x)

Avg(x)

2.9

Exhibit 2: 1-year forward P/E

9.0

17.3

16.5

13.1

PE (x)

Median(x)

Peak(x)

Min(x)

Avg(x)

35.6

Source: MOSL, Company

Exhibit 3: ICICIBC stock performance v/s Bankex

250

225

200

175

150

125

100

HDFCB

Bankex

ICICIBC

AXSB

YES

IIB

Source: Bloomberg, MOSL

27 July 2015

ICICI Bank

Significant push on digitalization

More than half the transactions are either on internet or mobile

Quoting Mr Rajiv Sabharwal, Executive Director – Head Retail Banking

“We, at ICICI Bank, always strive to empower our customers by providing them with a best-in-class banking

experience. We continuously innovate and introduce first-of-its kind technology solutions for our customers. We are

the first bank in India to launch a mobile digital bank – ‘Pockets’, banking on ‘Apple Watch’, voice identification at

the call center, banking on Facebook & Twitter, Tap n Pay credit/debit cards, prepaid electronic toll collection cards

for highways & metro rail and self-service kiosks for varied banking services. We will continue to introduce and

adapt new technology solutions to offer the best experience to our customers and help realize the dream of a

‘Digital India’.”

Digital initiatives taken by ICICIBC during FY15

101 fully electronic touch banking branches

across

33 cities. Touch banking branches include

InstaBanking

kiosks, cash acceptance machines,

internet banking, video banking and phone banking

facilities. These branches give customers the ability

to complete their banking transactions at their

convenience and also access 24X7 customer service

support.

Pockets:

A digital mobile wallet, which is India’s first

Other offerings

digital bank, allowing users to undertake complete

iMobile: Comprehensive

mobile banking application

Tap n Pay:

Contactless payment solution, which

suite of banking and e-commerce transactions.

Paperless account opening for NRIs

(only in the US),

enables

customers

to simply tap their cards for

Call2Remit, Touch n Remit

facility (only in Bahrain) to

quicker payment transactions

transfer money to India using self-service kiosks. The

Launched mobility based solutions

such as

InstaBanking,

mPassbook,

Video Banking,

iTrack,

bank has 1.5m+ NRI customers.

Personalize debit card:

ICICIBC offers a digital

iLoans

solution to its customers to personalize their debit

cards. Users can visit the website, upload their

favorite picture and design their own

‘Expressions

Debit Card’.

Digital village:

Approach is based on 3Cs –

Cashless

payment ecosystem;

Comprehensive

application of

digital technology spanning education, healthcare &

skill development; and making the village fully

Connected

through Wi-Fi.

Personalised ‘Expressions

Debit Cards’

have proved to be

very popular among customers

1st bank in India

to offer an e-

wallet which can be used to make

payments on all sites and apps

1st bank in India

to offer the

convenience of a Metro Smart Card

embedded with a credit or a debit card

27 July 2015

ICICI Bank

Other takeaways from annual report

ESOS granted till date are 6.28% of the outstanding issued equity capital. ESOS

granted and exercised during FY15 (FY14) stood at 0.6% (0.4%) and 0.4% (0.1%)

of the equity capital, respectively. If the fair value method were adopted, PAT

would have been lower by ~2%.

ICICI Bank Eurasia has ceased to be a subsidiary of the bank from March 17,

2015. The bank has also closed its representative office in Thailand.

INR9.29b utilized from reserves to account for FITL pertaining to the

restructuring prior to the issuance of guidelines (pre-2008)

Achieved PSL target of 41%; share of Agri PSL in overall loans increased to

12.1% v/s 10.8% a year ago (against requirement of 18%)

MTM value of investments held in the HTM category was INR1,271b, including

investments in subsidiaries/JVs and RIDF deposits.

Board and structure:

ICICIBC has 12 directors, of which seven are independent,

one is a GoI nominee, and four are whole-time directors. Mr Alok Tandon, Joint

Secretary, Ministry of Finance has been nominated by GoI on the board in place

of Mr Arvind Kumar.

Pursuant to invocation of pledge for recovery of monies, Falcon Tyres Limited

became an associate company of the bank effective December 4, 2014 for the

purpose of reporting under the Companies Act, 2013.

Others: (a) ICICIBC has presence across 17 countries including India, (b) ICICIBC

has 3.5m Facebook fans.

27 July 2015

ICICI Bank

Retail business – back in limelight

Exhibit 4: Retail PBT up 4x over FY12-15 – fall in stress

addition driving improvement (INR b)

PBT (INR b)

Growth YoY (%)

74%

92%

-5

-13

FY12

Source: MOSL, Company

FY13

49%

Exhibit 5: Retail segment now accounts for 17% of overall PBT

v/s 6% in FY12

Wholesale

Others

Treasury

Retail

FY15

FY14

Source: MOSL, Company

Exhibit 6: Retail fees share in overall fees has increased to

>50%, led by cross-selling and strong disbursement growth

Retail fees / overall fee income (%)

Exhibit 7: Contribution from 3 party fees & commission has

been increasing

3rd party fees / Retail fees (%)

FY11

FY12

FY13

FY14

FY15

FY11

FY12

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 8: Healthy core revenue growth and controlled opex

(despite strong disbursement growth and branch expansion)

driving C/I ratio lower

Cost to Income Ratio (%)

Exhibit 9: ICICI Bank’s employee head count is down YoY for

the first time since FY09

80,000

60,000

40,000

20,000

32 41 31

-15

-6

No of employees

Growth YoY (%)

FY11

FY12

FY13

FY14

FY15

Source: MOSL, Company

Note: Our segmental analysis is based on annual report disclosures and may differ from bank’s internal segmental classification

27 July 2015

ICICI Bank

Exhibit 10: Employees per branch has come down sharply in

FY15 even after adjusting for Touch Banking branches

Avg. Cost per employee (mn)

0.7

0.6

24 24

23 21 20 19

0.6 0.6

0.5

0.5 0.5

0.5

Emp / branches

Exhibit 11: Branch additions have moderated in FY15 (up 8%)

after sharp increase in FY14 (up 10%)

No. of branches

32% CAGR

16% CAGR

12% CAGR

Source: MOSL, Company

Exhibit 13: Improving revenue contribution and control on

Exhibit 12: ATM expansion has moderated over last two years costs has led to higher share in overall operating profits

No. of ATMs

16% CAGR

20% CAGR

Wholesale

Treasury and others

Retail

21% CAGR

FY12

Source: MOSL, Company

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 14: Provisioning costs have remained very low

led by aggressive write-offs of

unsecured loans

Provisions to PPP ratio (%)

166%

159%

25%

-3%

-5%

Exhibit 15: Retail GNPA ratio is at the lowest level since FY07

GNPA (%)

7.8

6.4

4.1

2.4

1.2

2.9

1.8

3.1

1.5

0.8

7.4

5.9

3.8

0.5

3.0

0.6

NNPA (%)

2.0

0.6

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: MOSL, Company

27 July 2015

ICICI Bank

Exhibit 16: On balance sheet front, liability profile continues

to get more granular

Share of top 20 depositors (%)

Deposits less than 1yr (%)

FY12

FY14

FY15

-26

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: MOSL, Company

-19

Exhibit 17: Retail loan growth is back to 25% levels (highest

since FY08)

Retail Loans (INR b)

1,277

1,317

1,070

790

964 1,074

1,320

Growth YoY (%)

1,644

837

FY10

FY11

FY13

Source: MOSL, Company

Exhibit 18: Mortgages continue to grow at 20%+ levels

Mortgages

Unsecured Loans

Auto

Business Banking

CVs

Others

Exhibit 19: Proportion of unsecured loans is much lower in

this cycle

16.9

14.5

15.5

11.0

6.1

3.7

4.0

5.5

6.6

Unsecured Loans

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: MOSL, Company

27 July 2015

ICICI Bank

Wholesale business – contribution declining; asset quality remains under pressure

Exhibit 20: PBT has remained flat since FY12 …

PBT (INR b)

34%

-5%

27%

29%

-6%

11%

14%

20%

36%

Growth YoY (%)

Exhibit 21: … Impacted by significant increase in provisions

Provisions to PPP ratio (%)

Source: MOSL, Company

Exhibit 22: Wholesale segment contribution to overall NII has Exhibit 23: However, contribution to overall fee income has

remained broadly unchanged

been declining

Retail

Treasury and Others

Wholesale

FY12

FY13

FY14

FY15

FY12

Retail

Wholesale

Others

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 24: Wholesale fee income growth has remained tepid

due to sluggish loan growth

Exhibit 25: Wholesale cost-income ratio has remained stable

Wholesale fee income (INR b)

-7

FY10

FY11

FY12

FY13

FY14

-4

FY15

FY10

FY11

FY12

FY13

FY14

FY15

Growth YoY (%)

Cost to Income Ratio (%)

Source: MOSL, Company

27 July 2015

ICICI Bank

Exhibit 26: However, asset quality continues to remain under Exhibit 27: Industry and services segment GNPAs at 7-year

pressure; non-retail stressed loans stand at ~10%

highs…

GNPA (%)

Restructured loans (%)

4.8

7.0

5.1

5.4

5.1

1.5

2.5

3.0

2.5

3.0

2.6

2.9

2.2

2.8

5.2

2.9

3.1

5.0

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Note: Assuming entire portfolio of restructured loans as non-retail.

Source: MOSL, Company

FY09

FY10

FY11

FY12

FY13

FY14

FY15

Industry

Agri and allied

Services

Personal

Source: MOSL, Company

Exhibit 28: …Also, large corporate stress has been increasing; Exhibit 29: This has led to increase in overall asset quality

top-4 NPAs constitute 41% of overall GNPAs

stress (%)

1.6

1.0

0.4

Slippage Ratio

Credit costs

1.6

1.2

0.9

2.4

1.7

1.4

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY11

FY12

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 30: Higher slippages over last two years have resulted Exhibit 31: Also, credit RWA mix has remained stable despite

in increasing proportion of D1/D2 assets

increase in share of retail loans…

Sub Standard

0.4

1.0

1.1

1.3

0.9

FY11

0.5

0.8

FY12

0.3

0.2

2.2

0.4

0.6

1.1

0.7

0.8

FY13

0.6

0.8

0.7

0.9

FY14

0.7

0.2

1.2

1.3

1.0

FY15

FY10

FY11

FY12

Loss Assets

less than 100%

Equal to 100%

More than 100%

FY13

FY14

FY15

Break-down of overall GNPA (%)

Source: MOSL, Company

27 July 2015

ICICI Bank

Exhibit 32: …Resulting in elevated RWA to assets ratio

Exhibit 33: Exposure to top-20 accounts continues to rise

Loans

Exposure

FY13

FY14

FY15

FY10

FY11

FY12

FY13

FY14

FY15

FY11

FY12

Source: MOSL, Company

ALM profile

Exhibit 34: Long duration liabilities funding 1-3 year assets

(FY14 ALM)

Deposits

37 36

Borrowings

Advances

FY14

Investments

Exhibit 35: Investment book shifted towards lower maturities

(48% of portfolio); well placed to benefit from decline in

interest rates (FY15 ALM)

Deposits

Borrowings

FY15

Advances

Investments

<1 Year

1 to 3 yrs

> 3 yrs

Source: MOSL, Company

<1 Year

1 to 3 yrs

> 3 yrs

Source: MOSL, Company

27 July 2015

ICICI Bank

Basel III – exposure to stressed sectors

Exhibit 36: Growth moderating in riskier segment exposures

Fund based - % to Total

-2

-1

YoY Growth (%)

Exhibit 37: However, proportion remains high (%)

FY12

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 38: Stress sectors like Infra, Iron and Steel, and

Construction are also among the top non-funded exposures

Non-Fund based - % to Total

-24

-19

YoY Growth (%)

Exhibit 39: Non-funded exposure (% of total) to Construction

sector was at 8%, similar to FY14

FY12

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 40: Overall exposure grew by 8% while retail finance

exposure grew by 19%; major stressed sector exposures grew Exhibit 41: Overall exposure to Infra sector (including Power)

by 0-6%

stands at 10%, similar to FY14

Overall exposure - % to Total

-2

YoY Growth (%)

FY12

FY13

FY14

FY15

-2

Source: MOSL, Company

27 July 2015

ICICI Bank

Treasury segment – continues to drive profitability

Exhibit 42: While NII contribution of treasury segment

remains stable…(%)

Retail

Wholesale

Treasury and Others

Exhibit 43: … PBT contribution remains very high led by

capital repatriation and higher dividend from subs (%)

PBT - Treasury & Others

FY12

FY13

FY14

FY15

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

Source: MOSL, Company

Exhibit 44: This is partly driven by increasing dividend income

and capital repatriation from subsidiaries…

Exhibit 45: … and partly by increasing treasury gains

Dividend & Repatriation income as % of PBT

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY09

FY10

-3

FY11

FY12

FY13

FY14

FY15

Treasury gains as % of PBT

Source: MOSL, Company

Subsidiaries – profit contribution moves lower

Exhibit 46: Subsidiaries now account for 14% of consolidated

profits (pre-minorities)

Profit from Subs (% of consol.)

FY15

Exhibit 47: Foreign subsidiaries account for 2% of

consolidated PAT (pre-minorities) and 10% of overall net

worth

Profit % from foreign subs

Networth % of foreign subs

FY13

FY14

FY10

FY11

FY12

FY13

FY14

FY15

FY10

FY11

FY12

Source: MOSL, Company

27 July 2015

ICICI Bank

Exhibit 49: Subsidiaries net worth (INR b) – contribution from

insurance businesses continues to rise

Others

Insurance

Foreign subs

Home Finance

Others

Exhibit 48: Dividend from subsidiaries increasing

Life Insurance

Home Finance

Foreign Subs

0.5

4.4

1.8

1.5

1.7

2.3

FY12

1.5

3.0

1.4

3.3

FY13

1.1

6.9

5.9

1.9

1.6

6.2

FY15

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

Note: Dividend from foreign subs was lower in FY15 as ICICI Canada

did $80m buyback

Source: MOSL, Company

Yields and costs

Exhibit 50: While yield on assets remained broadly stable,

cost of funds continued to decline…

Yield on assets

8.53

7.60

8.97

Cost of funds

8.92

8.96

7.70

Exhibit 51: … driven by lower cost of borrowings; in FY15,

despite deposit rate cuts, cost of term deposits was higher by

+10bp, reflecting the shift in deposit mix to >3 years bucket

Cost of deposits

Cost on term deposits

8.21

6.51

6.71

6.12

2.87

FY12

8.47

6.54

6.38

2.97

FY13

Cost on CASA deposits

Cost of borrowings

8.15

6.39

6.11

2.99

FY14

8.25

6.16

6.18

3.00

FY15

7.90

5.80

FY10

6.33

5.35

FY11

FY12

6.43

6.21

5.80

6.17

2.00

4.92

2.46

FY11

FY13

FY14

FY15

FY10

Source: MOSL, Company

Employee stock options

Exhibit 52: Cumulative ESOS granted are 6.3% of the o/s

equity

0.4

0.3

Granted as % of shares o/s

0.3

0.2

0.1

0.2

0.1

0.0

0.1

0.0

0.1

Exhibit 53: Proportion of exercised options was highest since

FY07

0.5

Exercised as % of shares o/s

0.2

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Source: MOSL, Company

27 July 2015

ICICI Bank

Exhibit 54: DuPont Analysis: Core PPP to remain superior; loan growth key for healthy earnings growth (%)

Y/E March

Net Interest Income

Core Fee Income

Fee to core Income

Core Income

Operating Expenses

Cost to Core Income

Employee cost

Employee to total exp (%)

Others

Core operating Profits

Trading and others

Operating Profits

Provisions

NPA

Others

PBT

Tax

Tax Rate

RoA

Less: Dividend from Subs

Core RoA

(ex-income from subs)

Core Leverage

RoE

FY09

2.15

1.67

43.8

3.82

1.81

47.3

0.51

28.0

1.30

2.01

0.28

2.29

0.98

0.96

0.01

1.31

0.35

26.6

0.96

0.09

0.88

10.3

9.1

FY10

2.19

1.52

41.0

3.71

1.58

42.6

0.52

32.9

1.06

2.13

0.49

2.62

1.18

1.17

0.01

1.44

0.36

24.7

1.08

0.10

0.98

9.7

9.6

FY11

2.34

1.67

41.6

4.01

1.72

42.9

0.73

42.6

0.99

2.29

0.06

2.35

0.59

0.51

0.08

1.76

0.42

23.8

1.34

0.11

1.23

9.4

11.5

FY12

2.40

1.50

38.5

3.90

1.75

45.0

0.79

44.8

0.97

2.14

0.18

2.32

0.35

0.22

0.13

1.97

0.52

26.6

1.44

0.16

1.28

10.0

12.8

FY13E

2.70

1.35

33.2

4.05

1.76

43.4

0.76

43.2

1.00

2.29

0.28

2.57

0.35

0.27

0.08

2.22

0.60

26.9

1.62

0.18

1.45

10.2

14.8

FY14

2.91

1.37

32.0

4.28

1.82

42.5

0.75

40.9

1.08

2.46

0.47

2.93

0.46

0.40

0.07

2.47

0.73

29.8

1.73

0.23

1.51

10.1

15.2

FY15

3.07

1.34

30.3

4.40

1.85

42.1

0.77

41.3

1.09

2.55

0.63

3.18

0.63

0.51

0.12

2.55

0.75

29.4

1.80

0.25

1.55

9.8

15.2

FY16E

3.13

1.36

30.3

4.49

1.89

42.2

0.79

41.5

1.11

2.60

0.63

3.22

0.59

0.51

0.09

2.63

0.78

29.5

1.85

0.26

1.60

9.7

15.6

FY17E

3.16

1.37

30.3

4.53

1.91

42.1

0.79

41.5

1.12

2.62

0.60

3.22

0.58

0.49

0.09

2.65

0.78

29.5

1.86

0.25

FY18E

3.23

1.40

30.3

4.63

1.92

41.4

0.80

41.5

1.12

2.71

0.58

3.29

0.59

0.50

0.09

2.70

0.80

29.5

1.90

0.25

1.61

1.66

10.0

10.2

16.1

17.0

Source: MOSL, Company

Exhibit 55: ICICI Bank - SOTP FY17E

Stake

(%)

ICICI Bank

Total Value Total Value Value Per

INR b

USD b

Share INR

2,251

35.4

388

% of Total

Value Rationale

84.3

Based on residual income model (1yr

fwd); Implied 2.5x FY17E Adj. BV; Core

ROA of 1.62% and Core ROE of 16%

9.0

2.1

1.3

1.2

1.8

2.0

1.3

0.4

0.5

19.6

15.7

100

Apprisal Value

1x FY17E BV

2x FY17E BV

Valued at 4% of AUM exp in FY17

15x FY17E PAT

1x FY17 Networth

10% FY17E AUMs

1x FY17 Networth

ICICI Pru Life Insurance

ICICI Bank Canada

ICICI Bank UK

ICICI Home Finance

ICICI Pru AMC

ICICI Securities

ICICI Lombard Gen. Ins

ICICI Ventures

ICICI Sec. PD

Total Value of Ventures

Less: 20% holding Discount

Value of Key Ventures

Target Price Post 20% Holding Co. Disc.

Current Value

Upside - %

Target Price w/o 20% Holding Co. Disc.

CMP (INR)

Upside - %

100

240

521

104

417

2,668

1,807

47.7

2,773

1,807

53.4

3.8

0.9

0.5

0.7

0.8

0.5

0.2

8.2

1.6

6.6

41.9

28.4

47.7

43.6

28.4

53.4

460

313

47.2

479

313

52.9

Source: MOSL, Company

27 July 2015

ICICI Bank

Financials and valuations

Income Statement

Y/E March

Interest Income

Interest Expended

Net Interest Income

Change (%)

Other Income

Net Income

Change (%)

Operating Exp.

Operating Profits

Change (%)

Provisions & Cont.

PBT

Tax

Tax Rate (%)

PAT

Change (%)

Dividend (Including Tax)

Core PPP*

Change (%)

*Core PPP is (NII+Fee income-Opex)

Balance Sheet

Y/E March

Share Capital

Equity Share Capital

Reserves & Surplus

Net Worth

Of which Equity Net Worth

Deposits

Change (%)

Of which CASA Deposits

Change (%)

Borrowings

Other Liabilities & Prov.

Total Liabilities

Current Assets

Investments

Change (%)

Loans

Change (%)

Net Fixed Assets

Other Assets

Total Assets

Asset Quality

GNPA (INR m)

NNPA (INR m)

GNPA Ratio

NNPA Ratio

PCR (Excl Technical write off)

E: MOSL Estimates

2012

335,427

228,085

107,342

19.0

75,028

182,369

16.4

78,504

103,865

14.8

15,830

88,034

23,382

26.6

64,653

25.5

21,228

103,995

12.3

2013

400,756

262,092

138,664

29.2

83,457

222,121

21.8

90,129

131,992

27.1

18,025

113,967

30,712

26.9

83,255

28.8

25,996

127,042

22.2

2014

441,782

277,026

164,756

18.8

104,279

269,034

21.1

103,089

165,946

25.7

26,264

139,682

41,577

29.8

98,105

17.8

28,336

155,776

22.6

2015

490,911

300,515

190,396

15.6

121,761

312,157

16.0

114,958

197,199

18.8

39,000

158,199

46,446

29.4

111,754

13.9

31,729

180,269

15.7

2016E

547,550

328,285

219,265

15.2

139,179

358,444

14.8

132,677

225,767

14.5

41,502

184,264

54,358

29.5

129,906

16.2

37,153

207,144

14.9

2017E

629,784

370,681

259,104

18.2

161,984

421,088

17.5

156,559

264,529

17.2

47,524

217,005

64,016

29.5

152,988

17.8

43,755

244,043

17.8

(INR Million)

2018E

748,842

437,920

310,923

20.0

190,880

501,802

19.2

184,740

317,063

19.9

57,177

259,886

76,666

29.5

183,220

19.8

52,401

294,529

20.7

(INR Million)

2018E

15,097

11,597

1,125,503

1,140,599

1,137,099

6,548,418

21.6

2,430,502

13.1

2,226,575

491,121

10,406,713

652,335

2,715,614

12.5

6,656,065

20.3

49,987

332,711

10,406,713

(%)

198,233

54,879

2.9

0.8

72.3

2012

15,028

11,528

592,525

607,552

604,052

2,555,000

13.3

1,110,194

9.2

1,398,149

329,987

4,890,688

362,293

1,595,600

18.5

2,537,277

17.3

46,147

349,371

4,890,688

94,753

18,608

3.6

0.7

80.4

2013

15,036

11,536

655,523

670,560

667,060

2,926,136

14.5

1,225,763

10.4

1,449,915

321,336

5,367,947

414,175

1,713,936

7.4

2,902,494

14.4

46,471

290,871

5,367,947

96,078

22,306

3.2

0.8

76.8

2014

15,050

11,550

720,583

735,633

732,133

3,319,137

13.4

1,423,784

16.2

1,544,091

347,555

5,946,416

415,296

1,770,218

3.3

3,387,026

16.7

46,781

327,094

5,946,416

105,058

32,980

3.0

1.0

68.6

2015

15,097

11,597

792,697

807,794

804,294

3,615,627

8.9

1,643,799

15.5

1,720,673

317,199

6,461,293

423,046

1,865,800

5.4

3,875,221

14.4

47,255

249,971

6,461,293

150,947

62,555

3.8

1.6

58.6

2016E

15,097

11,597

885,450

900,547

897,047

4,431,595

22.6

1,876,717

14.2

1,857,719

366,744

7,556,604

483,818

2,145,670

15.0

4,603,983

18.8

48,166

274,968

7,556,604

171,631

67,665

3.6

1.5

60.6

2017E

15,097

11,597

994,684

1,009,780

1,006,280

5,386,187

21.5

2,148,858

14.5

2,029,978

424,408

8,850,353

551,224

2,413,879

12.5

5,533,709

20.2

49,076

302,464

8,850,353

183,403

62,347

3.2

1.1

66.0

27 July 2015

ICICI Bank

Financials and valuations

Ratios

Y/E March

Spreads Analysis (%)

Avg. Yield - Earning Assets

Avg. Yield on loans

Avg. Yield on Investments

Avg. Cost-Int. Bear. Liab.

Avg. Cost of Deposits

Interest Spread

Net Interest Margin

Profitability Ratios (%)

RoE

Adjusted RoE

RoA

Int. Expended/Int.Earned

Other Inc./Net Income

Efficiency Ratios (%)

Op. Exps./Net Income*

Empl. Cost/Op. Exps.

Busi. per Empl. (INR m)

NP per Empl. (INR lac)

* ex treasury

Asset-Liability Profile (%)

Loan/Deposit Ratio

CASA Ratio %

Invest./Deposit Ratio

G-Sec/Invest. Ratio

CAR

Tier 1

Valuation

Book Value (INR)

BV Growth (%)

Price-BV (x)

ABV (for Subsidaries) (INR)

ABV Growth (%)

Price-ABV (x)

ABV (for Subs Invst & NPA) (INR)

Adjusted Price-ABV (x)

EPS (INR)

EPS Growth (%)

Price-Earnings (x)

Adj. Price-Earnings (x)

Dividend Per Share (INR)

Dividend Yield (%)

2012

8.5

9.4

6.6

5.6

5.9

2.8

2.7

2013

8.8

10.1

6.7

5.7

6.2

3.0

2014

8.7

10.0

6.6

5.5

5.7

3.2

2015

8.7

9.8

6.6

5.5

5.9

3.3

3.38

2016E

8.5

9.5

6.4

5.3

5.5

3.3

3.4

2017E

8.3

9.3

6.1

5.1

5.3

3.2

3.4

2018E

8.4

9.4

6.1

5.1

5.4

3.3

3.5

11.3

12.8

1.4

68.0

41.1

13.3

14.8

1.62

65.4

37.6

14.4

15.2

1.73

62.7

38.8

15.0

15.2

1.80

61.2

39.0

15.6

1.85

60.0

38.8

16.4

16.1

1.86

58.9

38.5

17.4

17.0

1.90

58.5

38.0

43.0

44.8

81.6

11.1

41.5

43.2

88.0

13.4

39.8

40.9

86.8

13.6

38.9

41.3

104.6

16.5

39.0

41.5

112.5

17.7

39.1

41.5

128.7

19.7

38.5

41.5

147.7

22.4

99.3

43.5

62.5

54.5

18.5

12.7

99.2

41.9

58.6

53.9

18.7

12.8

102.0

42.9

53.3

53.8

17.7

12.8

107.2

45.5

51.6

56.6

17.0

12.8

103.9

42.3

48.4

58.2

16.2

12.4

102.7

39.9

44.8

61.4

15.6

12.2

101.6

37.1

41.5

64.9

15.1

12.1

103.3

7.9

2.8

81.7

10.2

3.1

79.5

3.2

11.2

25.4

26.0

22.5

3.3

1.1

113.2

9.6

2.6

91.9

12.5

2.7

89.2

2.8

14.4

28.7

20.2

17.3

4.0

1.4

122.9

8.5

2.4

102.1

11.1

2.4

98.1

2.5

17.0

17.7

17.1

14.5

4.6

1.6

135.2

10.0

2.2

116.1

13.7

2.0

108.5

2.2

19.3

13.5

15.1

12.3

5.0

1.7

151.2

11.8

1.9

132.1

13.8

1.7

123.9

1.8

22.4

16.2

13.0

10.2

5.8

2.0

170.1

12.5

1.7

150.9

14.3

1.5

143.4

1.5

26.4

17.8

11.0

8.3

6.9

2.4

192.6

13.3

1.5

173.5

14.9

1.2

166.9

1.2

31.6

19.8

9.2

6.6

8.2

2.8

27 July 2015

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