(Kotak) ICICI Bank, January 31, 2013

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 Research
kotak.research@kotak.com
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 than
other 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 operating
ratios (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) 137.3 154.3 175.7
FIIs 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 at
24% yoy; earnings
growth at 30% yoy
Fresh slippages at
1.2%; restructured
loans at 1.5% of
loans
Maintain ADD with
TP at `1,260 (from
`1,140 earlier)

M.B. Mahesh
mb.mahesh@kotak.com
Mumbai: +91-22-6634-1231

Nischint Chawathe
nischint.chawathe@kotak.com
Mumbai: +91-22-6634-1545

Geetika Gupta
geetika.gupta@kotak.com
Mumbai: +91-22-6634-1160

Banks/Financial Institutions ICICI Bank
2 KOTAK INSTITUTIONAL EQUITIES RESEARCH
Coverage ratios have been stable in recent quarters
NPLs and provision coverage, March fiscal year-ends, 3QFY10-3QFY13
(%)
0
1
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20
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60
80
100
Gross NPL (LHS) Net NPL (LHS)
Provision coverage (RHS)

Source: Company, Kotak Institutional Equities

Expect a marginal increase in restructured loans
Restructured loans to total loans, March fiscal year-ends, 2007-
3QFY13 (%)
-
0.7
1.4
2.1
2.8
3.5
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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 qoq
Break-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 as
the benefit of currency depreciation was lower.

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 the
capex 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 rise
Composition 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 5.0
International 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 quarters
Retail and overall loan growth, March fiscal year-ends, 3QFY09-3QFY13 (%)
(30)
(15)
0
15
30
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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.

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 at
these 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 are
building 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 subsidiaries
Consolidated 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.

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 derivatives
continued 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 2QFY10
Contribution 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 equivalents
Source: Company, Bloomberg, Kotak Institutional Equities

UK has witnessed marginal increase in advances and decline in liquid investments
Break-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 2.5
Asset 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
Cash and liquid securities 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 15.6
Cash and cash equivalents 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.

Indian corporate related credit derivatives has declined to negligible levels across all geographies
Credit 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 PBR
March fiscal year-ends, Jan 03-Jan 13
0
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Rolling PER (X) (LHS) Rolling PBR (X) (RHS)


ICICI Bank trading at discount to peers over the long term
ICICI Bank trading premium to private banks, Jan 03- Jan 13
0.5
0.7
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ICICI Bank - key analytical parameters
March fiscal year-ends, 3QFY12-3QFY13 (%)
3QFY12 4QFY12 1QFY13 2QFY13 3QFY13
KS calculations
Yield on loans 9.5 9.8 9.9 10.1 10.1
Yield 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 22
Net 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

ICICI Bank quarterly results and key balance sheet items
March 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 5.8
Rural (incl agri) 175 223 207 187 198 13.2


ICICI Bank balance sheet snapshot and key details of ICICI Prudential
March 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 552 743 644 623 780
Overseas 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 estimates
March 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 assets (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


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 PBR
Mutual 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 valuation
March 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


ICICI Bank, growth rates, key ratios and Du Pont analysis
March 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 interest 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 34.1
Asset 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 1.9
Invt. 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


ICICI Bank income statement and balance sheet
March 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 96,840 110,208 114,302 121,526
Total 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 interest 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 88,034 114,231 111,746 121,583
Tax 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 1,246,955
Shares 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
Paid-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


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 universe
Distribution of ratings/investment banking relationships
Source: Kotak Institutional Equities As of December 31, 2012
Percentage of companies covered by Kotak Institutional
Equities, within the specified category.
Percentage of companies within each category for which
Kotak Institutional Equities and or its affiliates has provided
investment banking services within the previous 12 months.
* The above categories are defined as follows: 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 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 had investment ratings 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 <-5% returns over the next 12 months.
Our target prices are also on a 12-month horizon basis.
Other definitions
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Other ratings/identifiers
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RS = Rating Suspended. Kotak Securities Research has suspended the investment rating and price target, if any, for this stock, because there is not a sufficient
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NA = Not Available or Not Applicable. The information is not available for display or is not applicable.
NM = Not Meaningful. The information is not meaningful and is therefore excluded.

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