There are six main reasons why investors love SBI over ICICI.
- CASA franchise of 42% provides comfort on margin sustainability for SBI.
- Asset-liability match of SBI is better
- Life Insurance: Cost ratios of SBI Life are better than ICICI Prudential Life due to its strong
bancassurance model and better agency productivity.
- Asset quality risks persist for both banks, SBI’s loan book is well diversified across a variety of segments; ICICI’s loan book is still skewed towards retail. In the next 18 months the retail segment is likely to be more vulnerable
- SBI will continue to gain market share in both advances and deposits a ICICI’s expense due to the latter’s strategy of going slow.
- SBI is trading at 0.94x FY10E adjusted book, while ICICI is trading at 1.0x FY10E adjusted book
Infact we have never liked ICICI Bank. Maybe with the exit of Kalpana Morparia ICICI bank will see some improvement but the aggressive Kamath is still in the Driver’s seat and hence we will avoid it for now.