A Report on

“A Study on Profitability of ICICI bank ’’

(From investor point of view)

Submitted by;

M. ZABIULLA (MBA)
BIT IT HINDUPUR.

Submitted to;

MBA DEPRTMENT, BIT IT HINDUPUR.

 ICICI
(INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA.)
Introduction
Profitability of a firm is the ability to generate profits. A common man can
analyze the profitability position of a company by there net profits generated
in the financial year. But an investor is interested in there future earnings.

This project is all about analyzing the profitability and operating efficiency
of the firm by using one of the important tools in financial statement
analysis RATIO ANALYSIS.

Ratios are well known and most widely used tools of financial analysis. The
analysis of ratios can disclose relationship as well as basis of comparison
that reveals conditions and trends that can not be detected by going through
individual components of the ratio.
 Objectives of the study

• To analyze the profitability of the funds invested by share holders.

• To analyze the operating efficiency of the firm

 (INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA.)

History of ICICI

• 1955: The Industrial Credit and Investment Corporation of India Limited (ICICI)
was incorporated at the initiative of World Bank, the Government of India and
representatives of Indian industry, with the objective of creating a development
financial institution for providing medium-term and long-term project financing
to Indian businesses.
• 1994: ICICI established Banking Corporation as a banking subsidiary.formerly
Industrial Credit and Investment Corporation of India. Later, ICICI Banking
Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal
entity, ICICI Bank, to undertake normal banking operations - taking deposits,
credit cards, car loans etc.
• 2001: ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar
bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank
(established 1904) in the 1960s.
• 2002: The Boards of Directors of ICICI and ICICI Bank approved the reverse
merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited,
into ICICI Bank. After receiving all necessary regulatory approvals, ICICI
integrated the group's financing and banking operations, both wholesale and
retail, into a single entity. At the same time, ICICI started its international
expansion by opening representative offices in New York and London. In India,
ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank
had inherited when it acquired Grindlays Bank.
• 2003: ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in
the UK it established an alliance with Lloyds TSB. It also opened an Offshore
Banking Unit (OBU) in Singapore and representative offices in Dubai and
Shanghai.
• 2004: ICICI opened a representative office in Bangladesh to tap the extensive
trade between that country, India and South Africa.
• 2005: ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with
about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a
branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI
established a branch in Dubai International Financial Centre and in Hong Kong.
• 2006: ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened
representative offices in Bangkok, Jakarta, and Kuala Lumpur.
• 2007: ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in
Maharashtra State, and which had 158 branches in Maharashtra and another 31 in
 Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong
in rural areas. With respect to the international sphere, ICICI also received
permission from the government of Qatar to open a branch in Doha. Also, ICICI
Bank Eurasia opened a second branch, this time in St. Petersburg.

• 2008: The US Federal Reserve permitted ICICI to convert its representative office in
New York into a branch. ICICI also established a branch in Frankfurt.
• 2009: ICICI made huge changes in its organistion like elimination of loss making
department and restreching outsourced staff or renegotiate their charges in
consequent to the recession. In addition to this, ICICI adopted a massive approach
aims for cost control and cost cutting. In consequent of it, compesation to staff
was not increased and no bonus declared for 2008-09.

About Us

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$
77 billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8
million) for the nine months ended December 31, 2009. The Bank has a network of 1,694
branches and about 4,883 ATMs in India and presence in 18 countries. ICICI Bank offers
a wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialized subsidiaries and
affiliates in the areas of investment banking, life and non-life insurance, venture capital
and asset management. The Bank currently has subsidiaries in the United Kingdom,
Russia and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri
Lanka, Qatar and Dubai International Finance Centre and representative offices in United
Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our
UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs)
are listed on the New York Stock Exchange (NYSE).
Corporate Profile
ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$
77 billion) as on December 31, 2009
 AN OVER VIEW OF ICICI

Private
Type
BSE & NSE:ICICI, NYSE: IBN

Banking
Industry Insurance
Capital Markets and allied industries

Founded 1955 (as Industrial Credit and Investment Corporation of India)

ICICI Bank Ltd.,

ICICI Bank Towers,
Headquarters
Bandra Kurla,
Mumbai, India

K.V. Kamath,Chairman
Chanda Kochhar, Managing Director & CEO
Sandeep Bakhshi, Deputy Managing Director
Key people
N.S. Kannan, Executive Director & CFO
K. Ramkumar, Executive Director
Sonjoy Chatterjee, Executive Director

Products Loans, Credit Cards, Savings, Investment vehicles, Insurance etc.

Revenue ▲ USD 15.06 billion

Total assets ▲ USD 120.61 billion (at March 31, 2009.)

Website www.icicibank.com

CHAIRMAN & DIRECTORS

S.No Name Designation

1 K V Kamath Chairman

2 N S Kannan Executive Director & Chief Financial Officer

3 Sridar Iyengar Director

4 Narendra Murkumbi Director

5 M K Sharma Director

6 P M Sinha Director

7 V Prem Watsa Director

8 Anup K Pujari Director

9 M S Ramachandran Director

10 K Ramkumar Executive Director

12 Homi R Khusrokhan Non Executive Director

13 V Sridar Non Executive Director

11 Tushaar Shah Non Executive Director

14 Sandeep Bakhshi Deputy Managing Director

Present Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited. Overseas, its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008,
ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and
profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008.

Branches & ATMs

ICICI Bank has a wide network both in Indian and abroad. In India alone, the bank has
1,420 branches and about 4,644 ATMs. Talking about foreign countries, ICICI Bank has
made its presence felt in 18 countries - United States, Singapore, Bahrain, Hong Kong,
Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in
United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and
Indonesia. The Bank proudly holds its subsidiaries in the United Kingdom, Russia and
Canada out of which, the UK subsidiary has established branches in Belgium and
Germany.

Products & Services

Personal Banking

• Deposits
• Loans
• Cards
• Investments
• Insurance
• Demat Services
• Wealth Management

NRI Banking

• Money Transfer
• Bank Accounts
• Investments
• Property Solutions
• Insurance
• Loans

Business Banking

• Corporate Net Banking

• Cash Management
 • Trade Services
• FXOnline

• SME Services
• Online Taxes
• Custodial Services

Head Office:
ICICI Bank

9th Floor, South Towers

ICICI Towers
Bandra Kurla Complex
Bandra (E)
Mumbai
Phone: 91-022-653 7914
Website: www.icicibank.com

Achievements/ recognition:
2009

• ICICI Bank Mobile Banking was adjudged 'Best Bank Award for Initiatives in
Mobile Payments and Banking' by IDRBT, on May 18, 2009 in Hyderabad.
• ICICI Bank's b2 branchfree banking was adjudged 'Best E-Banking Project
Implementation Award 2008' by The Asian Banker, on May 11, 2009 at the China
World Hotel in Beijing.
• ICICI Bank bags the “Best bank in SME financing (Private Sector)” at the Dun &
Bradstreet Banking awards 2009.
• ICICI Bank NRI services win the “Excellence in Business Model Innovation
Award” in the eighth Asian Banker Excellence in Retail Financial Services
Awards Programme.
• ICICI Bank's Rural Micro Banking and Agri-Business Group wins WOW Event
& Experiential Marketing Award in two categories - “Rural Marketing
programme of the year” and “Small Budget On Ground Promotion of the Year”.
These awards were given for Cattle Loan 'Kamdhenu Campaign' and 'Talkies on
the move campaign' respectively.
• ICICI Bank's Germany Branch has been certified by “Stiftung Warrentest”. ICICI
Bank is ranked 2nd amongst 57 savings products across 19 banks
• ICICI Bank Germany won the yearly banking test of the investor magazine euro
in the “call money” category.
• The ICICI Bank was awarded the runner's up position in Gartner Business
Intelligence and Excellence Award for Asia Pacific for its Business Intelligence
functions.
• ICICI Bank's Organisational Excellence Group was recently awarded ISO
9001:2008 certification by TUV Nord. The scope of certification comprised
processes around consulting and capability building on methods of quality &
improvements.
• ICICI Bank has been awarded the following titles under The Asset Triple A
Country Awards for 2009:
• Best Transaction Bank in India
• Best Trade Finance Bank in India
• Best Cash Management Bank in India
• Best Domestic Custodian in India
• ICICI Bank has bagged the Best Cash Management Bank in India award for the
second year in a row. The other awards have been bagged for the third year in a
row.
• ICICI Bank Canada received the prestigious Canadian Helen Keller Award at the
Canadian Helen Keller Centre's Fifth Annual Luncheon in Toronto. The award
was given to ICICI Bank its long-standing support to this unique training centre
for people who are deaf-blind.
• ICICI Bank wins World Finance 2009 Banking Awards for Best NRI Services
Bank. ICICI Bank wins Asset Triple A Investment Awards for the Best
Derivative House, Indi
 Vision:
To be the leading provider of financial services in India and a major global bank.

Mission:
We will leverage our people, technology, speed and financial capital to:

• be the banker of first choice for our customers by delivering high quality, world-
class products and services.
• expand the frontiers of our business globally.
• play a proactive role in the full realization of India’s potential.
• maintain a healthy financial profile and diversify our earnings across businesses
and geographies.
• maintain high standards of governance and ethics.
• contribute positively to the various countries and markets in which we operate.
• create value for our stakeholders.
 S.W.O.T. analysis of ICICI BANK

Introduction to SWOT Analysis.

The overall evaluation of the company’s Strength, Weakness, Opportunities and

Threats is called as SWOT Analysis.

The external environment analysis of any business will give you the opportunities
and threats facing the business. The external environment consist of two parts:

1) Macro Environment: Demographic, Economic, Technology, Political-legal,

Socio-cultural

2) Micro Environment: Customers, Competition, Distributors, Suppliers.

The Internal Environment Analysis will give you the strength and weakness of the
business.

Opportunity Matrix

A Marketing opportunity is an area of interest in which a company can perform

profitably. An opportunity can take many forms. Some of them are:

1) Buying process made easy- Internet shopping

2) Meet the information needs of the customers in a better way.
3) A company can customize the product which was originally offered in standard
form.
 OPPORTUNITY MATRIX.

The opportunities that fall under the first quadrant are higher on the side of
success probability and also on the attractiveness, so the company should tap
those opportunities as early as possible.

The opportunities falling under the second quadrant should be

tapped only after the success of the opportunities in the first quadrant. Although
the success probability is on the lower side still the attractiveness is on the
higher side.

The opportunities in the third quadrant are less important as compared to the
opportunities in the first and second quadrant. Although the attractiveness is on
the lower side but the success probabilities of these opportunities are on the
higher side.

The opportunities in the fourth quadrant are negligible as the success probability
and attractiveness both are on the lower side
 Threat Matrix.

An Environmental Threat is a challenge posed by an unfavourable trend or

development. In the absence of any defensive marketing action these threats may
lead to deterioration in sales and indirectly in the profits of the company.

THREAT MATRIX.

The Threats falling under the first quadrant are harmful to the progress of the firm.
Their occurrence probability and also the seriousness is on the higher side.
Therefore the company should take immediate actions against these threats.

The Threats falling under the second quadrant are also very harmful as their
seriousness of these threats is on the higher side, although the probability
occurrence is on the lower side.

The Threats coming under the third quadrant are less serious as compared to the
threats in the first and second quadrant. The company should keep a backup plans
for these threats as this can also affect the profitability of the company.

The Threats under the fourth quadrant are negligible as the probability occurrence
and seriousness both are on the lower side of the matrix.
 Introduction to ICICI Bank

-The ICICI Bank Managing Director and CEO, Mr K.V. Kamath, and the Joint
Managing Director, Ms Lalita D. Gupte, addressing a press conference to the
announce bank's results in Mumbai on Saturday.

INTRO:
The Bank went on to cross-sell and up-sell its products aggressively,
growing into India’s second largest bank. But ICICI was not only looking at
banking. In 1993, the company set-up ICICI Securities and Finance Company
Limited in a joint venture with JP Morgan, and the same year, it set up ICICI Asset
Management Company. This was the just the beginning; several mergers,
acquisitions and joint ventures followed
ICICI is one of the leading private sector banks in India,
which combines financial strength with a reputation for innovation and a universal
culture that embraces change.ICICI, a colossal presence on the Indian financial
scene, has an element of enormity in all that it does from ambition to projections
and achievements. Ranked as the number one bank in India several times, this
institution appears virtually unstoppable, but can it, in fact, fall prey to weakness?
ICICI’s
impressive rise over the last couple decades cannot be denied, but now as the brand
starts to over extend with a dizzying array of products and services, one worries
that an impressive fall may follow.
SWOT Analysis of ICICI Bank.

STRENGHTS:
1) Online Services: ICICI Bank provides online services of all it’s banking facilities.
It also provides D-Mart account facilities on-line, so a person can access his account
from anywhere he is.
[D-Mart is a dematerialized account opened by a salaried person for
purchase & sale of shares of different companies.]

2) Advanced Infrastructure: Branches of ICICI Bank are well equipped with

advanced technology to provide the customers with taster banking services. All the
computerized machines are located in suitable manner & are very useful to the
customers & staff of the bank.

3) Friendly Staff: The staff of ICICI Bank in all branches is very friendly & help the
customers in all cases. They provide faster services along with bonding & personal
relationship with the customers.

4) 12 hrs. Banking services: Compared to other bank ICICI bank provides long hrs.
of services i.e. 8-8 services to the customers. This service is one of it’s kind & is very
helpful for the customers who are in urgent need of money.

5) Other Facilities to the Customers & Employees: ICICI Bank also provides other
facilities like drinking water facilities, proper sitting arrangements to the customers.
And there are also proper Ventilation & sanitary facilities for the employees of the
bank.

6) Late night ATM services: ICICI bank provides late night ATM services to the
customers. The ATM centers of ICICI bank works even after 11:00pm. at night in
certain branches.

Weakness:

1) High Bank Service Charges: ICICI bank charges highly to customers for the
services provided by them when compared to other bank & that is why it is only in
the reach of higher class of society.
 2) Less Credit Period: ICICI bank provides credit facilities but only upto limited
period. Even when the credit period is not over it sends reminder letters to the
customers which may annoy the

OPPORTUNITIES:

1) Bank –Insurance services: The bank should also provide insurance services. That
means the bank can have a tie-up with a insurance company. The bank will
advertise & promote the different policies introduced by the insurance company &
convince their customers to buy insurance policies.

2) Increase in percentage of Returns on increase: The bank should provide higher

returns on deposits in comparison of the present situation. This will also upto large
extent help the bank earn profits & popularity.

3) Recruit professionally guided students: Bank & Insurance is a special non-aid

course where the students specialize in the functioning & services of the bank & also
are knowledge about various tax policies. The bank can recruit these students
through tie-ups with colleges. Such students will surely prove as an asset to the
bank.

4) Associate with social cause: The bank can also associate itself with social causes
like providing relief aid patients, funding towards natural calamities. But this falls
in the 4th quadrant so the bank should neglect it.

THREATS

1) Competition: ICICI Bank is facing tight competition locally as well as

internationally. Bank like CITI Bank, HSBC, ABM, Standered Chartered, HDFC
also provide equivalent facilities like ICICI do and also ICICI do not have
consistency in its international operation.

2) Net Services: ICICI Bank provides all kind of services on-line. There can be easy
access to the e-mail ids of the customers through wrong people. The confidential
information of the customers can be leaked easily through the e-mail ids.
3) Decentralized Management: Each branch manager is given the authority of
taking decisions in their respective branches. The decisions made by different
managers are diverse and any one wrong decision can laid to heavy losses to the
bank.

4) No Proper Facilities To Uneducated customers: ICICI Bank provides all services

through electronic computerized machines. This creates problems to the less
educated people. But this threat falls in the 4th quadrant so its negligible. The
company can avoid this threat.

Conclusion.
Thus, ICICI has been able to use technology to provide value-added service to its
customers during the last few years. For ICICI, technology is an integral part of
their business. However, their overall progress could have been smoother but for
certain internal and extraneous factors and also a pressure on spreads due to a
competitive market (Annual report, 2000 –01). E-banking has become a necessary
survival weapon and is fundamentally changing the banking industry worldwide. To
day, the click of the mouse offers customers banking services at a much lower cost
and also empowers them with unprecedented freedom in choosing vendors for their
financial service needs. No country today has a choice- whether to implement E-
banking or not given the global and competitive nature of the economy. ICICI have
toupgrade and constantly think of new innovative customized packages and services
to remain competitive. The invasion of banking by technology has created an
information age and commoditization of banking services. ICICI have come to
realize that survival in the new e-economy depends on delivering some or all of their
banking services on the Internet while continuing to support their traditional
infrastructure. The rise of E-banking is redefining business relationships and the
most successful banks will be those that can truly strengthen their relationship with
their customers. Without any doubt, the international scope of E-banking provides
new growth perspectives and Internet business is a catalyst for new technologies and
new business processes.
Competition:

State Bank of India - State Bank of India, a public sector bank, is the largest bank in
India.[24] Besides personal and corporate banking, SBI is also involved in NRI (Non
Resident Indian) services through its network in India and overseas. It is the only bank
that figures in Fortune’s top 100 banks. Its 11,000 branches and 5,600 automatic teller
machines give it a reach throughout the length and breadth of the country; its work force
of 200,000 dwarfs all other banks in India.

Punjab National bank - Punjab National Bank (PNB) is the second largest
government-owned commercial bank in India with about 4,500 branches across 764 cities.
This financial institution offers services in personal and corporate banking, including
industrial, agricultural, and export finance, as well as international banking. It competes
with ICICI mostly in retail lending and wholesale businesses

HDFC - Housing Development Finance Corporation Limited Bank Limited or HDFC

Bank is one of the largest private banks in India. The company competes with ICICI in
each segment, over a wide range of banking services covering commercial and investment
banking on the wholesale side and transactional/branch banking on the retail side.
Recently, HDFC has overtaken ICICI Bank in terms of number of branches. HDFC's
Standard Life Insurance company competes with ICICI's insurance subsidiaries. Their mutual
fund and asset management businesses are also in direct tussle.

Bank of Baroda - Bank of Baroda is another private player. It has an edge over ICICI
due to its rich countrywide network of over 2800 branches. It also has significant
international presence with a network of 74 offices in 25 countries.

Total Deposits Total Advances Net profit Total Assets Branches

ICICI Bank 2,305.10 1,958.66 31.10 3,453.12 1,400
State Bank of India 4,355.21 3,373.36 45.41 5,665.65 10,186
Punjab National Bank 1, 398.60 1,990.48 20.48 1,990.48 4,500
HDFC Bank 1,007.69 634.27 15.90 1,332.51 1,412
Bank of Baroda 1,520.34 1,067.01 14.35 1,795.99 2,800
(all money figures in Rs. billions, as on 31st March, 2008) Sources: [31] [32] [33]
Company Overview

The bank, headquartered in Mumbai, has a network of about 1,400 branches and 4,530
ATMs in India and a presence in 18 countries. It offers a wide range of banking products
and financial services to corporate and retail customers through its specialized subsidiaries
and affiliates in the areas of investment banking, life and non-life insurance, venture capital
and asset management. The bank currently has subsidiaries in the United Kingdom, Russia
and Canada, branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar
and Dubai.

ICICI Company Structure (as on 31st December, 2007)

Business and Financial Metrics

In the quarter ended September 30, 2008, the bank reported a 42% year-on-year increase
in core operating profit. The bank's current and savings account (CASA) ratio increased to
30% in 2008 from 25% in 2007.[9] ICICI's earnings and net income have grown
continuously -- its income increased by a compound annual growth rate (CAGR) of 58%
from1999-2008 to Rs 31.15 billion.[2] Its interest income has grown at CAGR 56% from
1999-2008. This growth has been sustained in part by achieving robust growth in its fee
income from both corporate and retail businesses. Its fee income, about 40% of its total
income, is the highest among Indian banks and comparable with global banks. The
growth has also been fueled by strengthening its deposit franchise and significantly
scaling up its international banking operations.
Key Financial Metrics (in Rs. billions) 2008 2007 2006
Interest Income 340.94 240.02 151.35
Net Income 31.15 26.33 23.99

Net Interest Income / Total Funds (%) 1.96 1.89 2.24

Revenue 605.31 415.42 254.68
Total Assets 4,862.48 3,949.84 2,776.56
Business Per Employee 0.1008 0.1027 0.0905
Source: Company reports

Net Income and Revenue

Business Segments

Retail Banking (58% of Revenue)

ICICI Bank is the largest provider of retail credit in India. Its total retail portfolio was Rs.
1,316.63 billion at March 31, 2008, constituting 58% of total loans at that date. ICICI has
continued its focus on strengthening its retail deposit franchise to create a stable funding
base. Its current and savings account (CASA) deposits as a percentage of total deposits
increased from 22% at March 31, 2007 to 26% at March 31, 2008, with savings account
deposits increasing by 36% during fiscal 2008. During the year, it also expanded its
branch network substantially. At March 31, 2008, it had 1,262 branches & extension
counters compared to 755 branches & extension counters at March 31, 2007, including
the addition of about 200 branches through the merger of Sangli Bank. Its branch
network has further increased to 1,367 as of May 31, 2008.
ICICI Revenue Decomposition (as on 30th September, 2008)
Small Enterprises (8% Revenue)

During fiscal 2008, ICICI's small enterprises customer base increased by 26% to about
1.1 million accounts. It has introduced its service offerings in over 400 new branches,
increasing its coverage to over 1,000 branches. During 2008, ICICI focused on product
specialization including investment banking for SMEs.

Corporate Banking & Project Finance (13% Revenue)

ICICI offers a complete range of corporate banking products including rupee and foreign
currency debt, working capital credit, structured financing, syndication and transaction
banking products and services. Fiscal 2008 saw continued demand for credit from the
corporate sector, with growth and additional investment demand across all sectors.
Making use of its rich international presence, during fiscal 2008, ICICI was involved in
75% of outbound mergers and acquisitions deals from India. It is now a preferred partner
for Indian companies for syndication of external commercial borrowings and other fund
raising in international markets and has been ranked number one in offshore loan
syndications of Indian corporates in calendar year 2007.
Project Finance is the financing of long-term infrastructure and industrial projects based
upon a complex financial structure where project debt and equity are used to finance the
project, rather than the balance sheets of project sponsors. ICICI has the lead arranger
position across a variety of project finance transactions in diverse sectors. In 2008, it also
forayed into select international project finance transactions.

International Banking (21% Revenue)

In 2001, ICICI identified international banking as a key opportunity. This business

segment is ICICI's highest growth segment (95.6% year-on-year growth). ICICI's
international strategy is focused on building a retail deposit franchise, diverse wholesale
funding sources and strong syndication capabilities to support its corporate and
 business, and achieving the status of a non-resident Indian (NRI)
investment banking
community bank in key markets.
Key Trends and Forces:

Indian companies increasing commercial borrowing for both international and domestic
growth– a key lever for ICICI's growth
ICICI Bank is a the preferred partner for a large number of Indian companies that need to
raise debt from foreign credit markets in the form of external commercial borrowing
(ECB). The aggregate external commercial borrowing by Indian companies increased by
a CAGR of 59.1% between 2004-07. ICICI Bank is the preferred lead arranger for a large
number of these transactions and this revenue stream should continue to boost ICICI’s fee
income.
ICICI Bank is currently the best-placed Indian bank to cater to Indian companies’
increasing appetite for international mergers and acquisitions. During fiscal 2008, ICICI
was involved in 75% of outbound mergers and acquisitions deals from India. It is now a
preferred partner for Indian companies for syndication of external commercial
borrowings and other fund raising in international markets and has been ranked number
one in offshore loan syndications of Indian corporates in calendar year 2007.
Reserve Bank of India (RBI) approval for new branches leads to increase in low-cost
deposits
The RBI approved 587 new deposit-taking branches for ICICI Bank in 2008. In 2007, it
had approved 450 branches for ICICI. Bank branch expansion in India is regulated by
RBI and banks cannot expand their branch network without RBI’s approval. As low-cost
deposits are directly tied to the size of the branch network, the number of branches a bank
has, is a key success factor for any bank in India. While public sector banks (state owned
banks) enjoy a pre-eminent position in terms of low-cost deposit base (also called CASA
deposits in India – stands for Current Accounts and Savings Account), private-sector banks
have been increasing their CASA base steadily over the years. ICICI Bank has expanded
its CASA market share by 218% over the period of 2003-2007. The bank’s CASA deposits
have grown at a CAGR of 61% over the same period, compared with a growth of 17.1%
for public-sector banks, 32.5% for private sector banks and 29% for foreign banks in
India.
Interest rate fluctuations increase ICICI Bank debt payments Taking advantage of the
easy liquidity conditions in the international markets and depreciating foreign currencies,
ICICI Bank

Borrowing Mix for ICICI Bank (Source: BNP Paribas Research)

dramatically increased its external commercial borrowing between FY04 and FY07 (as
the green line in the Borrowing Mix of ICICI graph shows). While this strategy has
served it well in the past, the recent turmoil in the international credit markets have caused
its borrowing costs (over LIBOR) to widen. The global currencies- American dollar and
euro have also appreciated with respect to the Indian Rupee, increasing their borrowing
costs. An inability to improve the funding mix in favour of low cost deposits hampers the
bank’s ability to improve its net interest margins in line with the competition. Prolonged
dependence on wholesale deposits will cause the net interest margins for the bank to be
volatile and could result in some loss of market share, especially in the retail lending
portfolio.
In the domestic market, RBI had tightened domestic liquidity conditions in 2007 and first
half of 2008 through cash reserve ratio increases, repot rate hikes and other mechanisms.
Interest rates have been eased in the last quarter of 2008 and this should further boost the
bank’s net interest margins.

FIANCIAL STATEMENT OF ICICI BANK

Latest Quarterly/Halfyearly
As on(Months) 31-Mar-10(3) 31-Mar-09(3) % Change
Interest Income 58269.80 75296.90 -22.61
Other Income 18908.40 16736.70 12.98
Total Income 77178.20 92033.60 -16.14
Interest Expenses 37920.40 53908.50 -29.66
Other Expenses 15268.90 16570.50 -7.85
Provision & Contingencies 9897.50 10845.40 -8.74
OPBDT 14091.40 10709.20 31.58
Depreciation 0.00 0.00 --
Extra-Ordinary / Cash Adjustment 0.00 0.00 --
Provision for Tax 4035.70 3271.60 23.36
After tax Profit 10055.70 7437.60 35.20
Equity Capital 11148.90 11132.90 0.14
Reserves 505034.80 484197.30 4.30
Notes to Accounts Click here Click here Click here
Income Statement
31-Mar-09(12) 31-Mar-08(12) 31-Mar-07(12)
Profit/Loss A/C Rs. mn %OI Rs. mn %OI Rs. mn %OI
310925.4 307883.4 229942.9
Interest Income Earned 80.35 77.75 79.50
8 3 2
Commission, Exchange and Brokerage
56258.93 14.54 56053.13 14.16 43308.56 14.97
Income
Lease Income 0.00 0.00 0.00 0.00 0.00 0.00
Dividend Income 3348.23 0.87 11519.50 2.91 4484.91 1.55
Miscellaneous Income 16430.10 4.25 20535.00 5.19 11498.22 3.98
Other Income 76037.27 19.65 88107.63 22.25 59291.69 20.50
386962.7 100.0 395991.0 100.0 289234.6
Total Income (OI) 100.00
6 0 6 0 0
227259.3 234842.4 163584.9
Interest Expenditure 58.73 59.30 56.56
4 2 8
Employee Expenditure 19717.04 5.10 20788.97 5.25 16167.49 5.59
Depreciation 6785.97 1.75 5783.51 1.46 5447.83 1.88
Other Operating Expenditure 43948.12 11.36 54969.33 13.88 45290.25 15.66
Provision and Contingencies 38082.58 9.84 29045.84 7.33 22263.66 7.70
335793.0 345430.0 252754.2
Total Expenditure 86.78 87.23 87.39
6 8 1
Pretax Income 51169.70 13.22 50560.98 12.77 36480.39 12.61
Tax 13588.36 3.51 8983.70 2.27 5378.19 1.86
Extra Ordinary and Prior Period Items Net 0 0.00 0 0.00 0 0.00
Net Profit 37581.33 9.71 41577.28 10.50 31102.20 10.75
Adjusted Net Profit 37581.33 9.71 41577.28 10.50 31102.20 10.75
Dividend - Preference 0.04 0.00 0.04 0.00 0.04 0.00
Dividend - Equity 12245.77 3.16 12277.02 3.10 9011.69 3.12
Balance Sheet
31-Mar-09 %BT 31-Mar-08 %BT 31-Mar-07 %BT
Equity Capital 11132.90 0.29 11126.79 0.28 8898.57 0.26
Preference Capital 3500.00 0.09 3500.00 0.09 3500.00 0.10
Share Capital 14632.90 0.39 14626.79 0.37 12493.44 0.36
Reserves and Surplus 484197.29 12.77 453575.31 11.35 234139.21 6.79
Deposits 2183478.25 57.57 2444310.50 61.14 2305101.86 66.88
Borrowings 673236.89 17.75 656484.34 16.42 512560.26 14.87
Other Provisions and Liabilities 437464.30 11.53 428953.83 10.73 382286.36 11.09
Capital and Liabilities (BT) 3793009.62 100.00 3997950.76 100.00 3446581.13 100.00
Fixed Assets 38016.21 1.00 41088.97 1.03 39234.23 1.14
Investments 1030583.08 27.17 1114543.42 27.88 912578.42 26.48
Advances 2183108.49 57.56 2256160.83 56.43 1886140.06 54.72
Cash & Money at Call 299665.64 7.90 380411.29 9.52 371213.25 10.77
Other Current Assets 241636.20 6.37 205746.26 5.15 164899.23 4.78
Properties and Assets (BT) 3793009.62 100.00 3997950.76 100.00 3446581.13 100.00

Ratio Analysis
As on 31-Mar-09 31-Mar-08 31-Mar-07

Profitablility
Interest Income/Total Income (%) 80.40 77.80 76.00
Non Interest Income/Total Income (%) 19.60 22.20 24.00
Reported Net Profit/Total Income (%) 9.70 10.50 10.80
Net Interest Income/Total Income (%) 21.60 18.40 19.50
Net Interest Margin (%) 3.80 3.20 3.00

Return Related
ROE (%) 7.50 8.90 12.60
ROA (%) 1.00 1.00 0.90
Leverage & Capital Measures
Customer loans/deposits (%) 100.00 92.30 81.80
Investments/Deposits (%) 47.20 45.60 39.60
Total Liabilities/Networth 7.70 8.60 14.20

Growth (%)
Growth in Interest Income 0.99 39.98 53.75
Growth in Interest Expenses -- 43.56 70.45
Growth in Employee cost -- 28.59 49.38
Growth in PAT -- 33.68 22.45
Growth in Deposits -- 6.04 39.63
Growth in Borrowings 2.55 28.08 33.06

Per Share
Book Value Per Share (Rs) 444.90 417.50 269.70
Earnings Per Share (Rs) 33.80 37.40 34.60
Dividend Per Share (Rs) 11.00 11.00 10.00
Financial Statement Analysis - Efficiency Ratios

Efficiency Ratios:
Efficiency ratios are ratios that come off the the Balance Sheet and the Income Statement
and therefore incorporate one dynamic statement, the income statement and one static
statement , the balance sheet. These ratios are important in measuring the efficiency of a
company in either turning their inventory, sales, assets, accounts receivables or payables.
It also ties into the ability of a company to meet both its short term and long term
obligations. This is because if they do not get paid on time how will you get paid paid on
time. You may have perhaps heard the excuse 'I will pay you when I get paid' or 'My
customers have not paid me!'

FIRST EFFICIENCY RATIO

DSO (Days Sales Outstanding): The Days Sales Outstanding ratio shows both the
average time it takes to turn the receivables into cash and the age, in terms of days, of a
company's accounts receivable. The ratio is regarded as a test of Efficiency for a
company. The effectiveness with which it converts its receivables into cash. This ratio is
of particular importance to credit and collection associates.
Best Possible DSO yields insight into delinquencies since it uses only the current portion
of receivables. As a measurement, the closer the regular DSO is to the Best Possible
DSO, the closer the receivables are to the optimal level.
Best Possible DSO requires three pieces of information for calculation:

• Current Receivables
• Total credit sales for the period analyzed
• The Number of days in the period analyzed

Formula:

Best Possible DSO = Current Receivables/Total Credit Sales X Number of Days

The formula:
Regular DSO = (Total Accounts Receivables/Total Credit Sales) x Number of Days in
the period that is being analyzed
An example from our Balance sheet and Income Statement:
Total Accounts Receivables (from Balance Sheet) = $97,456
Total Credit Sales (from Income Statement) = $727,116
Number of days in the period = 1 year = 360 days ( some take this number as 365 days)
DSO = [ $97,456 / $727,116 ] x 360 = 48.25 days
The Interpretation:

Lumber & Building Supply Company takes approximately 48 days to convert its
accounts receivables into cash. Compare this to their Terms of Net 30 days. This means
at an average their customers take 18 days beyond terms to pay.
Review the Industry Norms and Ratios for this ratio to compare and see if they are above
below or equal to the others in the same industry.

SECOND EFFICIENCY RATIO

Inventory Turnover ratio: This ratio is obtained by dividing the 'Total Sales' of a
company by its 'Total Inventory'. The ratio is regarded as a test of Efficiency and
indicates the rapiditity with which the company is able to move its merchandise.

The formula:

Inventory Turnover Ratio = Net Sales / Inventory

It could also be calculated as:
Inventory Turnover Ratio = Cost of Goods Sold / Inventory
An example from our Balance sheet and Income Statement:
Net Sales = $727,116 (from Income Statement)
Total Inventory = $156,822 (from Balance sheet )
Inventory Turnover Ratio = $727,116/ $156,822
Inventory Turnover = 4.6 times

The Interpretation:
Lumber & Building Supply Company is able to rotate its inventory in sales 4.6 times in
one fiscal year.
Review the Industry Norms and Ratios for this ratio to compare their efficiency and see if
they are above, below or equal to the others in the same industry.

THIRD EFFICIENCY RATIO

Accounts Payable to Sales (%): This ratio is obtained by dividing the 'Accounts Payables'
of a company by its 'Annual Net Sales'. This ratio gives you an indication as to how much
of their suppliers money does this company use in order to fund its Sales. Higher the ratio
means that the company is using its suppliers as a source of cheap financing. The
working capital of such companies could be funded by their suppliers..

The formula:

Accounts Payables to Sales Ratio = [Accounts Payables / Net Sales ] x 100

An example from our Balance sheet and Income Statement:
Accounts Payables = $152,240 (from Balance sheet )
Net Sales = $727,116 (from Income Statement)
Accounts Payables to Sales Ratio = [$152,240 / $727,116] x 100
Accounts Payables to Sales Ratio = 20.9%

The Interpretation:

21% of Lumber & Building Supply Company's Sales is being funded by its suppliers.
Review the Industry Norms and Ratios for this ratio to compare and see if they are above
below or equal to the others in the same industry.

Financial Statement Analysis - Profitability Ratios

Profitability Ratios:
Profitability Ratios show how successul a company is in terms of generating returns or
profits on the Investment that it has made in the business. If a business is Liquid and
Efficient it should also be Profitable.

FIRST PROFITIBILITY RATIO

Return on Sales or Profit Margin (%): The Profit Margin of a company determines its
ability to withstand competition and adverse conditions like rising costs, falling prices or
declining sales in the future. The ratio measures the percentage of profits earned per
dollar of sales and thus is a measure of efficiency of the company.

The formula:

Return on Sales or Profit Margin = (Net Profit / Net Sales) x 100

An example from our Balance sheet and Income Statement:
Total Net Profit after Interest and Taxes (from Income Statement) = $5,142
Net Sales (from Income Statement) = $727,116
Return on Sales or Profit Margin = [ $5,142 / $727,116] x 100
Return on Sales or Profit Margin = 0.71%

The Interpretation:

Lumber & Building Supply Company makes 0.71 cents on every $1.00 of Sale
Review the Industry Norms and Ratios for this ratio to compare and see if they are above
below or equal to the others in the same industry.

SECOND PROFITABILITY RATIO

Return on Assets: The Return on Assets of a company determines its ability to utilize the
Assets employed in the company efficiently and effectively to earn a good return. The
ratio measures the percentage of profits earned per dollar of Asset and thus is a measure
of efficiency of the company in generating profits on its Assets.

The formula:

Return on Assets = (Net Profit / Total Assets) x 100

An example from our Balance sheet and Income Statement:
Total Net Profit after Interest and Taxes (from Income Statement) = $5,142
Total Assets (from Balance sheet) = $320,044
Return on Assets = [ $5,142 / $320,044] x 100
Return on Assets = 1.60%

The Interpretation:

Lumber & Building Supply Company generates makes 1.60% return on the Assets that it
employs in its operations.
Review the Industry Norms and Ratios for this ratio to compare and see if they are above
below or equal to the others in the same industry.

THIRD PROFITABILITY RATIO

Return on Equity or Net Worth: The Return on Equity of a company measures the ability
of the management of the company to generate adequate returns for the capital invested
by the owners of a company. Generally a return of 10% would be desirable to provide
dividends to owners and have funds for future growth of the company

The formula:

Return on Equity or Net Worth = (Net Profit / Net Worth or Owners Equity) x 100
Net Worth or Owners Equity = Total Assets (minus) Total Liability
An example from our Balance sheet and Income Statement:
Total Net Profit after Interest and Taxes (from Income Statement) = $5,142
Net Worth (from Balance sheet) = $133,522
Return on Net Worth = [ $5,142 / $133,522] x 100
Return on Equity or Return on Net Worth = 3.85%
The Interpretation:

Lumber & Building Supply Company generates a 3.85% percent return on the capital
invested by the owners of the company.
Review the Industry Norms and Ratios for this ratio to compare and see if they are above
below or equal to the others in the same industry.