ICICI’s Q3FY09 net interest income (NII) at Rs19.9 billion increased 2% y-o-y on the back of NIM increasing to 2.4% and asset de-growth of 1%.
Fee-based income at Rs13.4bn declined 25% y-o-y. Treasury income at Rs9.7 billion increased 246% y-o-y.
Incremental NPAs added during the quarter was Rs12 billion. Net profits increased 3% y-o-y due to higher treasury gains on bond portfolio and steep fall in direct marketing expenses.
At current price of Rs381, the stock is trades at P/E of 10.1x FY09E earnings and 0.8x FY09E book value. ICICI Bank now quotes at P/BV multiple, which is below that of Large state owned Banks.
We believe that ICICI Banks strategy of de-growing in the current credit environment is a step in right direction that will help contain NPAs in FY10. On a relative valuation basis the stock seems an attractive BUY.