ICICI Bank (IBN) Positioning to Grow with India - Barron's
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ICICI Bank (NYSE: IBN) is looking fairly-valued, making it a little risky should the Indian stock market (a recent doubler) take a dive, Barron's reports today.
The bank is one of the best in India, an emerging powerhouse in itself. The bank recently reported their third quarter earnings that beat analyst estimates. The expectations of the stock for their FY09 values it at 23x estimated EPS.
Loan growth is expected to be flat, after sliding for the past five quarters. There's a risk, too, that loan action may be muted.
The new CEO, Chanda Kochhar, aims to increase low-cost deposits, and reduce costs and nonperforming assets. "We had a crisis of perception," Kochhar said in an interview. "Our balance sheet is not growing this year," she concedes, "very different from the 25% to 30% [annual growth rates] of the past. But our branches are growing 30%, deposits are growing 30%, and trade finance is growing 50%. This is the first step of our longer three-year journey to double return on equity" to close to 15%. She states that, ""there's a lot of hidden value -- investments in the insurance company, securities company, private equity arm. These are not visible in a bank, but will be realized as we monetize."
The bank currently has 40% in low-cost names, compared to 28.7% last March, and nonperforming loans were equal to 2.4% of total assets.
The bank is no focusing on the domestic market to grow their loan portfolio. Because of India making serious investments in the infrastructure, including adding roads and power capacity, the bank expects mortgage and vehicle loans to rise. ICICI controls India's largest insurer, which is expected to turn profitable next year.
The bank is one of the best in India, an emerging powerhouse in itself. The bank recently reported their third quarter earnings that beat analyst estimates. The expectations of the stock for their FY09 values it at 23x estimated EPS.
Loan growth is expected to be flat, after sliding for the past five quarters. There's a risk, too, that loan action may be muted.
The new CEO, Chanda Kochhar, aims to increase low-cost deposits, and reduce costs and nonperforming assets. "We had a crisis of perception," Kochhar said in an interview. "Our balance sheet is not growing this year," she concedes, "very different from the 25% to 30% [annual growth rates] of the past. But our branches are growing 30%, deposits are growing 30%, and trade finance is growing 50%. This is the first step of our longer three-year journey to double return on equity" to close to 15%. She states that, ""there's a lot of hidden value -- investments in the insurance company, securities company, private equity arm. These are not visible in a bank, but will be realized as we monetize."
The bank currently has 40% in low-cost names, compared to 28.7% last March, and nonperforming loans were equal to 2.4% of total assets.
The bank is no focusing on the domestic market to grow their loan portfolio. Because of India making serious investments in the infrastructure, including adding roads and power capacity, the bank expects mortgage and vehicle loans to rise. ICICI controls India's largest insurer, which is expected to turn profitable next year.
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