• JANUARY 24, 2001

ICICI Bank: Operating profits up 139%

Retail initiatives taken by ICICI Bank resulted in substantial improvement in operating margins for the third quarter ended December 2000. The bank's interest income jumped by 47%, led by 106% growth in core fee income. Better operating margins and higher interest income resulted in a 139% growth in operating profits. Further, the proposed merger with Bank of Madura will help it in maintaining fantastic growth in future.

(Rs m) 3QFY00 3QFY01 Change
Interest Income 2,055 3,021 47.0%
Other Income 492 551 12.0%
Interest Expenditure 1,647 2,046 24.2%
Operating Profit (EBDIT) 408 975 139.0%
Operating Profit Margin (%) 19.9% 32.3%  
Other Expenditure 282 757 169.1%
Depreciation 53 106 99.6%
Profit before Tax 565 663 17.3%
Provisions & Contingencies 101 37 -63.6%
Tax 182 221 21.5%
Profit after Tax/(Loss) 283 405 43.4%
Net profit margin (%) 13.7% 13.4%  
No. of Shares (eoy) 197 197  
Diluted Earnings per share* 5.7 8.2  
P/E (at current price) 29.1 20.3  

ICICI Bank's other expenses during the quarter increased by 169% due to investment in infrastructure (setting up of ATMs) and technology. It has also incurred Rs 105 m during the quarter on account of credit card programme and data centres. These investment are expected to yield benefits to the bank in the coming quarters.

Its deposits base crossed Rs 100 bn mark, a YoY growth of 18.2% during nine months ended FY01. Retail deposits now constitutes 57% of total deposits compared to 31% as on March 2000. During the same period the bank has added over 1 m customers (it had 0.65 m as on March 2000). Its Internet banking customers witnessed an increase of 264% facilitated by significant enhancement of product portfolio offered through 'Infinity' (its Internet banking platform). Further, it has the largest number of ATMs (401) covering over 106 locations across India.

The bank has maintained its NPA ratio at 1.32%. Its capital adequacy ratio (CAR) has come down to 14.6% (from 17.6% in 2QFY01) due to increasing asset base. Still the CAR is well above the minimum 9% stipulated by the RBI.

At the current market price of Rs 167, ICICI Bank is trading at 20 times its 3QFY01 annualised earnings. Its Price/Book value ratio of 2.6 times compares well with other private sector banks. However, compared to HDFC Bank its valuations are lower due to concerns over quality of its assets. The valuations are likely to improve in future keeping in mind the bank's initiative to reduce its NPA ratio through retail thrust.

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