ICICI Bank Reiterated at Neutral - Analyst Blog
07 Enero 2014 - 8:50AM
Zacks
On Jan 6, 2014, we reaffirmed our long-term recommendation on
ICICI Bank Ltd. (IBN) at Neutral. Though the
company’s fiscal second-quarter 2014 results were impressive,
deterioration of credit quality remains a concern.
Justifying the Stance
Domestic loans constitute the major portion (68.8% as of Sep 30,
2013) of ICICI Bank’s overall loan portfolio. Further, the company
has been marketing retail deposits on a large scale, primarily to
reduce the cost of funds and create a stable funding base.
Additionally, on Oct 25, 2013, ICICI Bank announced robust fiscal
second-quarter 2014 results, which marked a 20.2% year-over-year
rise in net income. The results were mainly driven by top-line
growth, partly offset by an increase in loan loss provisions as
well as operating expenses.
However, ICICI Bank has been witnessing deterioration in its asset
quality in the last few quarters. We believe that there will be
near-term pressure on the asset quality due to the company’s
increased proportion of higher margin (and higher risk) unsecured
loans in its portfolio mix. Further, mounting operating expenses is
another challenge for ICICI Bank, as it is expected to drag the
company’s bottom line in the coming quarters.
Moreover, estimates over the past 60 days have been declining, with
the Zacks Consensus Estimate for fiscal 2014 going down 2.6% to
$2.62 per share. Further, for fiscal 2015, the Zacks Consensus
Estimate decreased by a penny to $3.04 per share. Hence, ICICI Bank
now has a Zacks Rank #3 (Hold).
Other Foreign Banks Worth Considering
Some better performing foreign banks include Bank of China
Limited (BACHY), BBVA Banco Franc (BFR)
and Barclays PLC (BCS). While Bank of China and
BBVA Banco Franc carry a Zacks Rank #1 (Strong Buy), Barclays has a
Zacks Rank #2 (Buy).
BANK CHINA LTD (BACHY): Get Free Report
BARCLAY PLC-ADR (BCS): Free Stock Analysis Report
BANCO FRANC-ADR (BFR): Free Stock Analysis Report
ICICI BANK LTD (IBN): Free Stock Analysis Report
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