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ICICI Bank Results Reviews

January 21, 2008

ICICI’s profits were ahead of expectations, if qualitatively a little mixed. Key takeaways: a) P&L pickup, on fairly broad-based gains; b) asset quality drift continues, and growth appears to be slipping away; c) business focus: subsidiaries to the fore, as its (questionable) international focus continues. Overall, the P&L shine was likely dulled a bit by the balance sheet and its direction.

While margins are up (remaining low, but getting better positioned for expansion), fee income growth has accelerated to over 33% (in spite of slackening growth), and cost pressures appear to be stabilizing. There is some evidence of ICBK’s potential to raise profitability (a long-held expectation) through its franchise.

Balance sheet issues are likely to take center stage as: a) domestic loan growth moderates further (retail 12% yoy), b) int’l ops remain a key focus, in spite of questionable economics, and challenging markets, and c) asset deterioration continues at a steady (expected) pace. In sum, there are more questions than answers.

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