Home >Market >Stock-market-news >ICICI Bank shares hit 19-month low

Mumbai: Shares of ICICI Bank Ltd, India’s largest private sector lender by assets, hit a 19-month low on Tuesday on persisting concerns over asset quality in the banking sector. Continued selling in Indian markets by foreign investors—who hold a significant stake in ICICI Bank—too has depressed the stock.

ICICI Bank fell as much as 2.4% in morning trade and touched an intra-day low of 242.95, a level last seen on 5 May 2014.

The stock closed 1.04% lower at 246.35 apiece on Tuesday.

The stock has fallen during 10 of the last 11 trading sessions. Since 30 November, the ICICI Bank stock is down 10.12% and in the year so far, it is down 30.21%.

Concerns over stressed assets continue to haunt India’s banks, particularly those with a large exposure to corporate loans. Recent decisions by banks to convert some defaulting loans into equity under the strategic debt restructuring (SDR) scheme have also raised eyebrows. Some analysts have questioned the ability of banks to sell these stressed assets in the 18 months given to them under the scheme.

Citing these concerns, brokerage house Credit Suisse in a 7 December report said it remains cautious on corporate lenders like State Bank of India Ltd, Punjab National Bank Ltd, Bank of Baroda Ltd and ICICI Bank Ltd. “Among private banks, ICICI share in announced SDRs is relatively high," said the Credit Suisse report.

For 39 listed banks, gross non-performing assets (NPAs) rose 26.87% to 3.4 trillion for the quarter ended September 2015 from 2.68 trillion a year ago.

At ICICI Bank, gross NPAs were at 3.77% at the end of the September quarter, against 3.12% a year ago. During the September quarter, the bank had gross NPA additions worth 2,242 crore. The bank’s restructured asset base stood at 11,868 crore as on 30 September compared with the 12,604 crore at the end of the June quarter. ICICI Bank also refinanced 2,000 crore loans under the 5/25 scheme, which allows lenders to extend the tenure of infrastructure loans.

“Risks to asset quality remain elevated due to the bank’s large exposure to highly leveraged and distressed companies," said domestic brokerage IIFL Institutional Equities in a note on 2 November. It maintained a “buy" rating on the stock.

On Monday, the Reserve Bank of India (RBI) met top bankers to discuss various issues, including asset quality and the way forward for improving the quality of banks’ balance-sheets, an RBI statement said. In his last monetary policy speech, RBI governor Raghuram Rajan expressed hope that banks would clean up their balance sheets by March 2017.

To be sure, most bank shares have underperformed this year.

Year-to-date, Bank of India has slipped 61.61%, Oriental Bank of Commerce 60.74% and Indian Overseas Bank has fallen 50.96%. The broader BSE Bankex has slipped 12.90%. However, shares of IndusInd Bank have risen 14.57% this year, while HDFC Bank Ltd and Kotak Mahindra Bank Ltd have gained 11.05% and 8.21%, respectively.

Frontline stocks have also been under pressure due to foreign institutional investor (FIIs) selling in the markets. Since the start of November, FIIs have sold a net of $1.64 billion in the domestic equity markets. During this period, the Sensex fell 3.16%.

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