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ICICI Bank Results – EPS Growth is 2%

So ICICI Bank has announced it’s 3rd Quarter Results.

What they highlight: Net Profit up 35%, Interest Income up 32%, Deposits up 33%.

What I would highlight: None of the above is comparable year on year, because a) they acquired Sangli Bank and b) they did a huge-ass dilution of 20K crore in July. Earnings per share is the only thing comparable. It’s up 2% YOY from Rs. 9.81 to Rs. 10.01 per share for the December quarter, and up about 10% in the 9 months ended December (from Rs. 24.48 to Rs. 26.48) Assuming the higher end – 10% – they will end up with an EPS of about Rs. 34 in this financial year. At current prices of Rs. 1240, that’s a P/E of 36. For a bank growing at 10% on EPS, it’s a tad high, donyathink?

Another thing of concern is that the subprime losses are not mentioned. They don’t have to provide a balance sheet to the Indian exchanges but they must to the exchanges abroad, so come Monday we may see something they will release on US GAAP and on the writedowns. With the ABX indices diving to record lows, we may see a lot more writedowns on the CDO exposure.

Note also that retail loans are 61% of assets, and NPAs are increasing (up to 3% from 2.1%). Also the minor fact that KV Kamath, CEO had sold nearly 1/5th of his personal stake in September, and Nachiket Mor who headed their credit stuff, has sold all of his.

Disclosure: Short ICICI Bank.

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