Reduce ICICI Bank: IIFL
IIFL has recommended a reduce rating on ICICI Bank in its March 27, 2009 research report.
“ICICI Bank is a financial conglomerate with multiple lines of businesses, domestic and overseas. In this note we analyse the capital allocated to, and profitability of, its various businesses.
We estimate that one-third of the total equity capital (USD 9.6 billion) is invested in overseas banking subsidiaries, domestic non-banking subsidiaries and lending through overseas branches; the balance two-thirds is invested in domestic banking operations.”
“ICICI Bank’s domestic operations are less profitable than those of its peers, and its non-banking and overseas subsidiaries further drag down the consolidated ROE. The bank remains in a transition phase— we expect it to revisit its strategy in many business lines and undergo a major restructuring of its assets and liabilities. As such, a quick recovery from the current situation is unlikely, in our view. After cutting our FY09 and FY10 net profit estimates, we now expect it to decline in both FY09 and FY10. “REDUCE”, says IIFL’s research report.
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