Motilal Oswal Financial Services

3 December 2019

Update | Sector: Financials

ICICI Bank

BSE SENSEX

40,675

S&P CNX

11,994

CMP: INR509

TP: INR625 (+23%)

Buy

Growth momentum robust; technology remains a key

business enabler

One Bank One RoE; core operating profits – the key focus

We attended ICICI Bank’s (ICICIBC) analyst day, wherein the bank highlighted the

progress that its different businesses are making and how well it is positioned to

capitalize on the exciting opportunities in financial services. The topics of discussion

ranged around (a) management’s efforts to build a strong bank with best-in-class digital

capabilities, (b) the usage of technology to accelerate growth across business verticals

and maintain healthy operating metrics, (c) collaboration with start-ups to offer

improved customer proposition, penetrate newer markets and reduce operating costs,

and (d) maximizing the risk calibrated core operating profit as it follows ‘One Bank One

RoE’ approach.

ICICIBC has historically been a technology savvy bank with several innovations to its

credit. However, asset quality challenges over the past few years have taken the center

stage and many digital capabilities were not getting duly appreciated. Over the past few

years, the bank has been reporting strong growth in retail advances, supported by an

impressive share of digital originations across key product lines. With asset quality issues

getting sorted, ICICIBC appears firmly positioned to deliver healthy sustainable growth,

led by continued investments in technology and further expansion in digital offerings.

We thus estimate RoA/RoE of 1.6%/15.7% in FY21. Reiterate Buy with a revised SOTP-

based target price of INR625 (2.5x Sep’21E ABV).

Stock Info

Bloomberg

Equity Shares (m)

M.Cap.(INRb)/(USDb)

52-Week Range (INR)

1, 6, 12 Rel. Per (%)

12M Avg Val (INR M)

Free float (%)

ICICIBC IN

6,461

3291 / 45.9

520 / 336

9/21/31

7908

100.0

Financials Snapshot (INR b)

Y/E March

FY19 FY20E

NII

270.1 325.1

234.4 274.8

33.6 109.7

NIM (%)

3.4

3.6

EPS (INR)

5.2 17.0

EPS Gr (%)

-52.8 225.6

ABV/Sh .INR

135.5 152.1

Cons. BV/Sh. INR 177.2 201.7

RoE (%)

3.2 10.1

RoA (%)

0.4

1.1

Valuations

P/BV (x) (Cons)

2.9

2.5

P/ABV (x)

2.7

2.4

P/E (x)

69.5 21.4

Div. Yield (%)

0.3

1.1

FY21E

383.5

322.9

188.9

3.6

29.3

72.3

174.5

234.0

15.7

1.6

2.2

2.1

12.4

1.3

Retail Banking – continued strong traction in building retail franchise

ICICIBC has been building strong digital capabilities with a focus on improving on

all five key operating parameters: margins, fee income, acquisition cost, opex and

credit cost. The bank aims to increase customer stickiness and further gain liability

market share by offering a wide range of digital asset solutions to its customers.

The bank sources 56% of its personal loans through digital channels, with ~75% of

the unsecured products being sourced through its existing customers. ICICIBC has

started offering online credit cards to pre-approved customers, while the effective

use of technology has facilitated a significant improvement in opex and

delinquency trends across key product segments. ICICIBC suggested for robust

traction in its unsecured loans business – it has reported a 41% CAGR since FY15

and will continue growing strongly as the market share in these segments is not

very high.

Shareholding pattern (%)

As On

Sep-19 Jun-19 Sep-18

Promoter

0.0

DII

37.4

34.8

33.3

FII

54.0

56.8

58.9

Others

8.6

8.4

7.9

FII Includes depository receipts

Stock Performance (1-year)

ICICI Bank

Sensex - Rebased

550

500

450

400

350

300

Business Banking – growth engine set to revive

The business banking segment remains significantly under-penetrated and the

bank has identified focus sectors like tourism, retail, e-commerce, IT and financial

services for pursuing growth opportunities. ICICIBC has built customized digital

solutions to accelerate growth in business banking and expects this segment to

grow at 35-40% over the next few years. The bank follows four levers of business

strategy: (i) segmentation of markets into micro market and customer profile

based on risks, (ii) customized product offering, (iii) partnership with fin techs and

(iv) strong distribution.

Research Analyst: Nitin Aggarwal

(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |

Parth Gutka

(Parth.Gutka@motilaloswal.com); +91 22 6129 1567

Alpesh Mehta

(Alpesh.Mehta@MotilalOswal.com); |

Himanshu Taluja

(Himanshu.Taluja@motilaloswal.com); |

Yash Agarwal

(Yash.Agarwal@motilaloswal.com)

Investors are advised to refer through important disclosures made at the last page 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

Start-up engagements – collaborating with fintechs to achieve business

goals

ICICIBC is engaging with various start-ups to provide improved customer

proposition, penetrate into newer markets and reduce operating costs across

product segments. For example, it has entered into a partnership with Factor HR to

offer payroll solutions to its SME customers. Also, the bank provides digital GST OD

based through its partnership with Karza Technologies. It is making equity

investments into high growth and disruptive fintech start-ups which helps build

cutting-edge customized banking solutions for customers and improves competitive

positioning.

Wholesale and transaction banking – credit framework strengthened;

approach shifts to ‘One Bank One RoE’

Management has adopted a two-pronged strategy focusing on the quality of the

portfolio and earnings. Key variable in wholesale banking is ‘lumpy provisions’ and

the bank targets this to be limited to 20%-25% of core operating profits. ICICIBC

believes significant opportunities are available as corporates wants to deal with

stable and technologically equipped banks, while the rapid emergence of several

new-age service companies has driven huge demand for working capital loans.

Strong built-up in liability franchise has helped reduce funding cost, providing a

competitive advantage to the bank. Wholesale banking segment now aims to tap

opportunities across the entire business chain across corporates, customers,

suppliers and employees, rather than having separate business segments working in

silos, as the bank has shifted its strategy to ‘One Bank One RoE’.

Valuation view

ICICIBC appears firmly positioned to deliver healthy sustainable growth, supported

by continued investments in technology and expansion in its digital offerings. The

bank has navigated well through a challenging macro environment with limited

exposure to newly surfaced stressed names. It has in fact built one of the highest

provisioning coverage in the banking sector. ICICIBC remains one of our top ideas in

the BFSI space – we estimate RoA/RoE to improve to 1.6%/15.7% in FY21. Reiterate

Buy with a revised SOTP-based TP of INR625 (2.5x Sep’21E ABV), primarily as we roll

forward our valuations.

3 December 2019

ICICI Bank

Key takeaways from session with top management

Session #1: Retail Banking – Mr. Anup Bagchi (Executive Director), Mr.

Pranav Mishra (Head-Liabilities), Mr. Ravi Narayan (Head- Secured Assets),

Mr. Sudipta Roy (Head-Unsecured Assets)



Intends to capture three

types of customer profiles:

Do it yourself (DIYer),

validator, and the

delegator.



Instant digital loans help in

lower delinquencies and

reduce cost of acquisition.



Data analytics helps in risk

management and

generating cross-sell leads.



ICICIBC aims on building digital infrastructure with a focus on five key elements

of retail: NIM, fees, cost of acquisition, opex to assets, and credit cost.

The bank’s endeavor is to improve the credit underwriting standards by

bettering the culture and sharpening the decision-making process.

The focus is on building a micro-market-based strategy to capture growth

opportunities by analyzing both internal and external data points like credit

bureau, volume locations, consensus, trends and delinquency.

There is a high focus on digitally affluent customers by creating digital

infrastructure with all the necessary products like SIPs, protection needs and

retirement planning.

The bank is building strong relations with corporates by providing complete

solutions like salary accounts and business needs products.

For international customers, it is looking to capture the money in motion like

NRI remittances both inward and outward in a digital manner.

Secured loans business:

It is using the digital platform to decongest the loan

process by improving productivity and efficiency. The focus is on using analytics-

based prospecting to enable customers to understand products and create

automated rule-based underwriting.

Unsecured business:

Growth is primarily led by its own customers. Around 75%

of the cards business is toward its own customers. Unsecured business CAGR

has been 41% since FY15.

In personal loans, the bank is looking for major partnerships like Google Pay and

Bank Bazaar.

ICICIBC has cards partnership with Amazon Pay, Make My Trip and Manchester

which gives access to a large pool of affluent customers. The bank has market

leadership in co-brand partnerships.

The bank has more than 50% market share in Fast Tag business which provides

access to a huge pool of affluent customer database. It has conceptualized and

operationalized the FAST Tag adopted by NPCI in 2016. Around 80k+ fleet

operators have signed in with FAST Tag.

Risk Management and Retail Collection:

The bank uses the information

available to segment customers under different buckets based on assets and

liability customers. It categorizes risk in the form of high, medium and low with

a different treatment plan.

ICICIBC is building a satellite database for rural customers which help in reaching

the customer at the right time with the right plan. Around 75% of the portfolio is

covered in 106 districts.

Data Analytics:

It is working toward building world-class data analytics

infrastructure capabilities across business and functional areas.

Digital Platforms and Solutions:

The focus is on frictionless journey and

improving lifestyle banking. 65% of the accounts are digitally active, while 70%

of incremental activations are through mobile. 87% of the saving account

transactions are done digitally.

3 December 2019

ICICI Bank



Tier-3 and 4 cities are

moving faster compared to

other cities.



Focus remains on

partnership model; it has

therefore collaborated with

different partners both on

the asset and the liability

side.



It is the first bank to sanction home loans digitally, instant SIP with profile-based

recommendations, instant cards issuance, etc.

iMobile helps in providing personalized recommendations for all banking needs

of customers. Further, it also helps in providing lifestyle products: ~0.6m

lifestyle banking products sold per month.

The bank is a significant acquirer on the UPI platform. Customers can decide

what products the customer needs. The bank has given 10k loans through the

API portal and all these customers are new to credit.

Structure of the market today is to focus on metro cities only. However, tier-3

and tier-4 are growing very fast. Thus, bank growth in these cities is high

compared to metro-urban cities.

ICICIBC is improving its market share in high-yielding segments and continues to

see strong opportunities as the market share currently is not very high.

The bank believes that the market is underpenetrated and thus branch banking

is still very important. The format of branches has changed and is generally a

four-employee branch only. The size of the new branch has also reduced

significantly.

Around 70% of personal loans are bank customers only.

Cross selling helps in reducing the cost of acquisition and the credit underwriting

cost for the bank. Also, it helps in building/increase customer stickiness.

Large pool of customers is available from government employees.

Digital customers are better in every way like lower delinquency, high cross

selling and customers stickiness.

Session #2: Business Banking – Mr. Ajay Gupta (Head- Transaction Banking

& SMEG), Mr. Pankaj Gadgil (Head- Self Employed Segment)



Business banking is

expected to grow at 35%-

40% over the next few

years.



Most of the branches are catering to this segment. The bank has 115+ services

for business banking customers catered through the Insta Biz mobile

application.

Industries like tourism, retail, e-commerce, IT, financial services and healthcare

are growing faster than other industries which provide growth opportunities for

the bank.

Business banking is expected to grow at 35%-40% over the next few years. The

bank believes the cloud market will grow 3x to INR0.5t by FY22.

Four levers of business strategy execution: (1)

Segmentation of market into

micro market and customer profile for risk classification, (2) Product – offering

customized solution, (3) Partnership – collaboration with fintechs for on-

boarding, payments, lending, cross border etc., and, (4) Distribution – skill &

capacity building, CA affinity based infrastructure and distribution.

Around 50% of the small businesses have gone digital post GST. Around 36% of

the customers prefer fulfillment of their needs through the digital mode.

Easy Pay solution:

A typical retailer needs a multi-model collection platform

with customers having high average CASA. The bank has ~36k customers on this

solution.

Connected Banking:

This ensures faster payments and collections, tracks

business instantly and provides auto bank reconciliations. The bank witnessed

~29% YoY growth in CA balances of these customers.

3 December 2019

ICICI Bank



50% of the solutions in

business banking were built

over the last 18 months.



Supply chain solutions:

It provides seamless banking (digital and paperless),

better risk control and helps in managing the working capital cycle.

Transformation of SME underwriting process to digital: The bank is running a

pilot project across 4-5 locations and expects it to achieve scale and efficiency.

The bank offers instant OD loan in three clicks. Around 68% of the transactions

are through digital channels, ~65% of the customers are active on digital

banking and ~93% of the cross-border transactions are done online.

Affluent customers in the business banking are based in urban and semi-urban

regions. Of these, ~15-17% are salaried, while ~35% are self-employed.

Self-employed customers are willing to pay higher fees due to faster transaction.

Shifting of loans and current accounts is faster from public sector banks to

private banks, while saving accounts shifting is slow.

On the business banking side, 50% of the solutions that the bank provides were

built in the last 18 months.

Cost of sourcing and onboarding is not very high, while the number of

transactions remains high. Around 90-95% of the customer sourcing is in-house

only.

Session #3: Start-up engagements – Mr Hitesh Sachdev (Head- Start-up

Engagement & Investments)



India is the third largest ecosystem in the world.

The bank has developed voice bots in partnerships with fintechs. In India, ~20%

of the searches in goggle are through voice module.

Neo banking for the SME segment provides enhanced and customized solutions

to its customers. The bank entered into a partnership with Factor HR for payroll

solutions of its SME customers. It has also engaged in partnership with lending

fintechs like LENDINGKART, PAY U and CASHBEAN.

The bank entered into GST data analytics partnership with Karza Technologies

providing digital GST OD.

It recently initiated an e-Alternate Dispute Resolution platform which is running

on a pilot mode. Basis its outcome, the platform will be launched for third party

users. The bank has uploaded ~20k cases on this platform.

The bank has made various investments in fintechs providing banking solutions

such Fingpay - digital biometric payment solution, Truebalance - mobile app for

digital utility payments, Remit Guru – white labeled remittances solution

platform, Arteria - supply chain solution.

The bank undertakes technical audit of fintechs before making investments or

partnership engagements which are synergetic to the banks business.

3 December 2019

ICICI Bank

Session #4: Wholesale and transaction banking – Ms. Vishakha Mulye

(Executive Director), Mr. Sumit Sanghai (Head-Large Clients Group), Mr.

Anuj Bhargava (Head- Global Clients Group)

The bank aims to limit

provisioning expenses at

~20-25% of pre-provision

operating profits.



Key driver in wholesale banking is provisioning. The bank targets ~20-25% of

pre-provisioning profits will be required toward provision cost.

The bank has adopted a

two prolonged strategy – quality of portfolio and

quality of earnings.

The focus on existing portfolio is to reduce concentration and stress. The bank

has set up a separate portfolio management team to monitor risk & reward in

the existing portfolios.

The bank targets ~75% of incremental disbursements to be in A- & above

category.

Large clients groups:

Opportunities are available at a large scale as corporates

want to do business with large banks only.

Higher CASA has helped the bank in taking pricing decisions as cost of funds

gives competitive advantage to the bank.

New-age service companies are growing at a rapid pace in the economy which

will need banks to manage their working capital requirements.

The bank has set up a dedicated team for each global client, large clients and

mid corporates segments. The focus remains on earnings high return on capital.

The bank has a credit monitoring team that tracks the utilization of working

capital limits which in turn helps in getting early warning signals.

RM Workbench:

RM assistant is an in-house tool available to RM. It provides

complete client overview and account plan for every client. This helps the RM to

decide the product solution to pitch to its client.

Global clients group:

It helps in providing a complete suite of corporate eco-

system. The bank has overseas branches across 70 locations.

Transaction banking:

ICICIBC has reinvested and reimagined its transaction

banking. It is a B2B model from physical to digital.

Partnership with fintechs helps in targeting new customers and products.

Blockchain technology:

It helps in trade finance, enhancing information on a

real-time basis on closed groups. It has on-boarded 360 customers on this

platform.

iXpress Connect: A self-build & run platform with fast integration of

inbound/outbound of customer APIs to drive business. The bank has partnered

with IBM to develop one of a kind platform.

The bank has market share of 9% in tax collections, 8% in payments, 8% in bank

guarantees, 7% in letter of credit, 10% in imports and 5% in exports.

The bank believes customized solutions, lower turnaround time and strong

relationship are the key differentiators v/s 4-5 other banks.

It assigns internal credit to each exposure and has further reduced the absolute

limit which is much lower than the regulatory requirement.

Performing book is still a drag on RoEs of the banks. However, incremental book

is fine and meets the desired RoE.

3 December 2019

ICICI Bank

Session #5: Technology and Operations – Mr. Sandeep Batra (President),

Ms. Anubhuti Sanghai (Head-Operations & Customer Service) and Mr. Balaji

V.V (Head- Business Technology Group)



The bank is reimagining customer’s life-cycle by onboarding a frictionless

process.

It is focusing on reducing the need for validations by operations team by linking

tab-based sales to external sources such that minimum data entry is required by

the agents and branch level verification is eliminated.

Software robotics is being used very frequently to increase the number of

transactions and complete repetitive works with more accuracy. The purpose is

to reduce the time and efforts.

Around 85% of the customer queries are being handled online. Around 50% of

the cheques are processed using data science.

Instant personal loan is 140 indexed over non-instant while instant OD is 109

indexed over non-instant.

3 December 2019

ICICI Bank

Story in charts

Exhibit 1: Domestic NIM stood flat at 3.92%

Blended NIMs

Domestic

Exhibit 2: Average daily CASA ratio at 42.2%

Source: MOFSL, Company

Exhibit 3: Fee income growth at 16% YoY continued to show

healthy traction

Fee Inc. (INR b)

% to Avg. Assets

Exhibit 4: Core operating performance showed healthy

growth (+21% YoY)

Core Op. Profit (INR b)

YoY Gr (%)

Source: MOFSL, Company

Exhibit 5: Overall loan growth at 12.6% YoY

Loans (INR b)

YoY Gr. (%)

Exhibit 6: Retail loans continue driving loan growth

Intl

Unsec Ret.

Sec Retail

SME

Corp / others

29 28 29 28 28 28 28 27 27 27 27 26 25 27 24 24 26 25

5 4 5 5 5 3 5 5 3 3

4 4 5 4 4 4 5 5

40 41 41 43 43 44 45 47 48 48 49 51 51 51 52 53 53 54

3 3 3 4 4 4

24 23 23 22 21 20 18 5 5 5 5 6 6 7 7 7 8 9

16 15 15 14 13 13 13 12 11 10 10

Source: MOFSL, Company

3 December 2019

ICICI Bank

Exhibit 8: GNPA/NNPA ratio declined 12/17bp

calculated PCR increased to 76.1% (~+200bp QoQ)

GNPA (%)

NNPA (%)

PCR (%)

68 71 74

47.1

44.549.4

41.4 46

48 48

QoQ,

Exhibit 7: Credit cost came in at 1.7%

40.2

Source: MOFSL, Company

Exhibit 9: Share of retail loans in overall loans increased to

~62% of overall loans

Exhibit 10: Share of international loans in overall loans at

9.8% of overall loans

Share of international loans (%)

Source: MOFSL, Company

Valuation and view

Buy with a revised SOTP-

based TP of INR625 (2.5x

Sep21E ABV).



In the near term, business growth will be driven by retail and the share of high-

profit-making products (mainly by cross sell) like credit cards, personal loans and

business banking is likely to go up.

BB & below pool is showing consistent decline – now at 2.6% of total loans.

Meanwhile, the bank has sharply increased PCR to ~76% (highest compared to

peers).

Retail business metrics remain healthy with (a) average CASA ratio of 42.2%, (b)

contribution to fees at 74%, (c) a higher share of secured loans and continued

healthy growth. Structural improvement in liability and ALM profile over the last

few years has helped ICICIBC to gradually improve NIM, despite intensifying

competition within the retail business.

Strong capitalization (Tier-1 of ~14.6%), a significant improvement in granularity

of book and a sustained improvement in the liability profile are the key

positives.

Valuation and view:

ICICIBC appears firmly positioned to deliver healthy

sustainable growth, supported by continued investments in technology and

expansion in its digital offerings. The bank has navigated well through a

challenging macro environment with limited exposure to newly surfaced

stressed names. It has in fact built one of the highest provisioning coverage in

the banking sector. ICICIBC remains one of our top ideas in the BFSI space – we

3 December 2019

ICICI Bank

estimate RoA/RoE to improve to 1.6%/15.7% in FY21. Reiterate Buy with a

revised SOTP-based TP of INR625 (2.5x Sep21E ABV), primarily as we roll

forward our valuations.

Exhibit 11: One-year forward P/BV

P/B (x)

Min (x)

3.5

2.8

2.0

1.3

0.5

1.4

1.0

2.7

2.1

1.8

2.7

Avg (x)

+1SD

Max (x)

-1SD

Exhibit 12: One-year forward P/E

P/E (x)

Min (x)

66.0

51.0

36.0

21.0

6.0

19.3

8.1

9.6

29.1

Avg (x)

+1SD

Max (x)

-1SD

57.0

20.3

Source: MOFSL, Company

Exhibit 13: ICICI Bank: Sept’ 21E based SOTP

Stake Total Value Value Per

(%)

INR b

Share INR

100

3,092

479

100

394

391

167

1,177

235

942

4,033

183

146

625

Source: MOFSL, Company

% of Total

Rationale

Value

76.6



2.5x

Sep'21E

ABV

9.8

9.7

4.2

2.1

0.9

1.6

29.2

5.8

23.4



2.3x Sep21 Embedded Value

40x Sep21E PAT

24x Sep21E PAT

15x Sep21E PAT

1.2x Sep21E Net-worth

1x Sep21E Net-worth

10% Sep21E AUM for ventures, 1.5x/1x Sep21E Net-

worth for Home finance/PD

ICICI Bank

ICICI Pru Life Insurance

ICICI Lombard Gen. Ins

ICICI Pru AMC

ICICI Securities

ICICI Bank UK

ICICI Bank Canada

Others (Ventures, Home Finance,

PD)

Total Value of Ventures

Less: 20% holding Discount

Value of Key Ventures (Post

Holding Co. Disc)

Target Price Post 20% Holding Co. Disc.

3 December 2019

ICICI Bank

Exhibit 14: DuPont Analysis: Return ratio to pick up over FY20/21

Y/E March

Interest Income

Interest Expense

Net Interest Income

Core Fee Income

Trading and others

Non-Interest income

Total Income

Operating Expenses

Employee cost

Others

Operating Profits

Core operating Profits

Provisions

NPA

Others

PBT

Tax

RoA

Leverage

RoE

Core RoE

FY15

7.91

4.84

3.07

1.56

0.41

1.96

5.03

1.85

0.77

1.09

3.18

2.77

0.63

0.51

0.12

2.55

0.75

1.80

8.1

14.5

17.2

FY16

7.72

4.61

3.11

1.56

0.69

2.24

5.35

1.86

0.73

1.12

3.49

2.80

1.71

1.06

0.65

1.78

0.36

1.42

8.2

11.6

13.4

FY17

7.26

4.34

2.91

1.54

1.07

2.61

5.53

1.98

0.77

1.21

3.55

2.48

2.04

1.97

0.07

1.51

0.20

1.31

8.1

10.7

12.1

FY18

6.66

3.87

2.79

1.32

0.79

2.11

4.90

1.90

0.72

1.19

3.00

2.21

2.10

1.73

0.37

0.90

0.08

0.82

8.3

6.8

7.6

FY19

6.88

3.95

2.93

1.26

0.31

1.57

4.50

1.96

0.74

1.22

2.54

2.23

2.13

1.82

0.31

0.41

0.04

0.36

8.9

3.2

3.6

FY20E

7.14

4.00

3.14

1.27

0.31

1.58

4.73

2.07

0.79

1.28

2.66

2.34

0.89

0.85

0.04

1.76

0.70

1.06

9.5

10.1

11.0

FY21E

7.20

3.99

3.21

1.24

0.33

1.56

4.77

2.07

0.79

1.28

2.70

2.37

0.62

0.58

0.04

2.08

0.50

1.58

10.0

15.7

17.0

Source: MOFSL, Company

3 December 2019

ICICI Bank

Financials and Valuations

Income Statement

Y/E March

Interest Income

Interest Expended

Net Interest Income

Growth (%)

Other Income

Total Income

Growth (%)

Operating Exp.

Operating Profits

Growth (%)

Core PPP

Growth (%)

Provisions & Cont.

PBT

Tax

Tax Rate (%)

PAT

Growth (%)

Balance Sheet

Y/E March

Equity Share Capital

Reserves & Surplus

Net Worth

Deposits

Growth (%)

Of which CASA Deposits

Growth (%)

Borrowings

Other Liabilities & Prov.

Total Liabilities

Current Assets

Investments

Growth (%)

Loans

Growth (%)

Net Fixed Assets

Other Assets

Total Assets

Asset Quality

GNPA

NNPA

GNPA Ratio (%)

NNPA Ratio (%)

Slippage Ratio (%)

Credit Cost (%)

PCR (Excl. Technical write off) (%)

E: MOSL Estimates

FY15

490.9

300.5

190.4

15.6

121.8

312.2

16.0

115.0

197.2

18.8

181.7

14.8

39.0

158.2

46.5

29.4

111.8

13.9

FY16

527.4

315.2

212.2

11.5

153.2

365.5

17.1

126.8

238.6

21.0

200.7

10.4

116.7

122.0

24.7

20.2

97.3

-13.0

FY17

541.6

324.2

217.4

2.4

195.0

412.4

12.8

147.6

264.9

11.0

178.6

-11.0

152.1

112.8

14.8

13.1

98.0

0.8

FY18

549.7

319.4

230.3

5.9

174.2

404.5

-1.9

157.0

247.4

-6.6

189.5

6.1

173.1

74.3

6.6

8.8

67.8

-30.9

FY19

634.0

363.9

270.1

17.3

145.1

415.3

2.7

180.9

234.4

-5.3

221.0

16.6

196.6

37.8

4.1

10.9

33.6

-50.4

FY20E

739.1

414.1

325.1

20.3

164.0

489.1

17.8

214.2

274.8

17.3

258.8

17.1

92.5

182.3

72.6

39.8

109.7

226.1

(INR b)

FY21E

861.0

477.5

383.5

18.0

186.9

570.4

16.6

247.5

322.9

17.5

305.2

17.9

74.3

248.6

59.7

24.0

188.9

72.3

FY15

12.8

791.5

807.8

3,615.6

8.9

1,643.8

15.5

1,720.7

317.2

6,461.3

423.0

1,581.3

-10.7

3,875.2

14.4

47.3

534.5

6,461.3

FY16

12.8

884.6

900.9

4,214.3

16.6

1,931.0

17.5

1,744.6

347.3

7,207.0

598.7

1,604.1

1.4

4,352.6

12.3

75.8

575.7

7,207.0

FY17

12.8

979.0

995.3

4,900.4

16.3

2,468.2

27.8

1,472.1

350.1

7,717.9

757.1

1,615.1

0.7

4,642.3

6.7

78.1

625.3

7,717.9

FY18

12.9

1,038.7

1,051.6

5,609.8

14.5

2,899.3

17.5

1,828.6

302.0

8,791.9

841.7

2,029.9

25.7

5,124.0

10.4

79.0

717.3

8,791.9

FY19

12.9

1,070.8

1,083.7

6,529.2

16.4

3,239.4

11.7

1,653.2

378.5

9,644.6

803.0

2,077.3

2.3

5,866.5

14.5

79.3

818.5

9,644.6

FY20E

12.9

1,145.1

1,158.0

8,030.9

23.0

3,694.2

14.0

1,445.8

416.4

11,051.0

904.2

2,451.2

18.0

6,746.4

15.0

84.9

864.3

11,051.0

FY21E

12.9

1,291.6

1,304.5

9,637.1

20.0

4,510.2

22.1

1,469.3

458.0

12,868.9

1,008.9

2,917.0

19.0

7,893.3

17.0

93.4

956.3

12,868.9

150.9

62.6

3.8

1.6

2.4

0.9

58.6

262.2

129.6

5.8

3.0

4.3

1.8

50.6

425.5

256.1

8.8

5.4

8.0

3.3

39.8

540.6

278.9

10.0

5.4

6.1

2.9

48.4

462.9

135.8

7.5

2.3

2.0

3.1

70.7

425.4

96.1

6.0

1.4

1.9

1.4

77.4

425.3

105.7

5.2

1.3

1.8

1.0

75.1

3 December 2019

ICICI Bank

Financials and Valuations

Ratios

Y/E March

Yield and Cost Ratios (%)

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

Capitalisation Ratios (%)

CAR

Tier I

Tier II

Business and Efficiency Ratios (%)

Loan/Deposit Ratio

CASA Ratio %

Cost/Assets

Cost/Total Income

Cost/Core Income

Int. Expended/Int. Earned

Other Inc./Net Income

Emp. Cost/Op. Exp.

Valuation

RoE (%)

Core RoE (%)

RoA (%)

RoRWA (%)

Standalone ABV

ABV Growth (%)

Adjusted Price-ABV (x)

Consol Book Value (INR)

BV Growth (%)

Price-Consol BV (x)

EPS (INR)

EPS Growth (%)

Adj. Price-Earnings (x)

Dividend Per Share (INR)

Dividend Yield (%)

E: MOSL Estimates

FY15

8.9

9.8

6.3

5.9

3.5

FY16

8.9

9.5

6.7

5.6

5.5

3.6

FY17

8.3

8.8

7.1

5.3

5.0

3.4

3.3

FY18

7.7

8.4

6.3

4.6

4.5

3.0

3.2

FY19

7.9

8.7

6.2

4.7

4.4

3.3

3.4

FY20E

8.2

8.9

6.6

4.7

4.6

3.5

3.6

FY21E

8.2

8.9

6.6

4.6

4.5

3.5

3.6

17.0

12.8

4.2

16.6

13.1

3.6

17.4

14.4

3.0

17.9

15.6

2.3

16.9

15.1

1.8

16.4

14.7

1.7

15.4

14.0

1.4

107.2

45.5

1.8

36.8

38.7

61.2

39.0

41.3

FY15

14.5

17.2

1.8

2.1

111.3

10.0

3.3

146.1

10.4

3.5

19.3

13.6

18.8

4.5

0.9

103.3

45.8

1.8

34.7

38.7

59.8

41.9

39.4

FY16

11.6

13.4

1.4

1.7

117.1

5.2

3.1

161.8

10.8

3.1

16.7

-13.3

21.7

4.5

0.9

94.7

50.4

1.9

35.8

45.2

59.9

47.3

38.9

FY17

10.7

12.1

1.3

1.6

120.2

2.7

3.0

179.6

11.0

2.8

16.8

0.5

21.6

4.0

0.8

91.3

51.7

1.8

38.8

45.3

58.1

43.1

37.7

FY18

6.8

7.6

0.8

1.1

115.3

-4.0

3.1

172.1

-4.2

3.0

11.1

-34.3

32.8

2.3

0.4

89.8

49.6

1.9

43.6

45.0

57.4

34.9

37.6

FY19

3.2

3.6

0.4

0.5

135.5

17.5

2.7

177.2

3.0

2.9

5.2

-52.8

69.5

1.5

0.3

84.0

46.0

1.9

43.8

45.3

56.0

33.5

38.1

FY20E

10.1

11.0

1.1

1.5

152.1

12.2

2.4

201.7

13.8

2.5

17.0

225.6

21.4

5.5

1.1

81.9

46.8

1.9

43.4

44.8

55.5

32.8

38.0

FY21E

15.7

17.0

1.6

2.1

174.5

14.7

2.1

234.0

16.0

2.2

29.3

72.3

12.4

6.6

1.3

3 December 2019

ICICI Bank

NOTES

3 December 2019

ICICI Bank

Explanation of Investment Rating

Investment Rating

BUY

SELL

NEUTRAL

UNDER REVIEW

NOT RATED

Expected return (over 12-month)

>=15%

< - 10%

< - 10 % to 15%

Rating may undergo a change

We have forward looking estimates for the stock but we refrain from assigning recommendation

*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30

days take appropriate measures to make the recommendation consistent with the investment rating legend.

Disclosures

The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).

Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,

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(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of

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interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the

analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in

some of the stocks mentioned in the research report

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and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.

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This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use

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This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities

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professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer

or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.

For U.S.

Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state

laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934

Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by

MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as

defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on

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only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and

interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a

chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be

executed within the provisions of this chaperoning agreement.

The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered

broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading

securities held by a research analyst account.

For Singapore

In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services

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such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.

Specific Disclosures

1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.

2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company

3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months

4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report

5 Research Analyst has not served as director/officer/employee in the subject company

6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months

8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months

9 MOSL has not received any compensation or other benefits from third party in connection with the research report

10 MOSL has not engaged in market making activity for the subject company

********************************************************************************************************************************

The associates of MOFSL may have:

financial interest in the subject company

actual/beneficial ownership of 1% or more securities in the subject company

received compensation/other benefits from the subject company in the past 12 months

3 December 2019

ICICI Bank

other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific

recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there

might exist an inherent conflict of interest in some of the stocks mentioned in the research report.

acted as a manager or co-manager of public offering of securities of the subject company in past 12 months

be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)

discussed herein or act as an advisor or lender/borrower to such company(ies)

received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.

The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report

Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider

demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not

considered in above disclosures.

Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research

analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

Terms & Conditions:

This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be

altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is

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constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers

simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.

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The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or

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provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The

Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and

the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform

or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a

separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is

already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the

views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any

locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or

licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose

possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be

liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.

The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not

to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,

costs, damages,

expenses that may be suffered by the person accessing this information due to any errors and delays.

Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website

www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-

400 064. Tel No: 022 7188 1000.

Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:

ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration

No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:

INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,

NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered

through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk

Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,

read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.

* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law

Tribunal, Mumbai Bench.

3 December 2019