Bull of the Day: ICICI Bank (IBN) - Bull of the Day

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The trend of declining economic growth in India for the past couple of years appears to be coming to an end now. And the banking sector continues its strong growth thanks mainly to rising demand for consumer loans.
 
About the Company
 
Headquartered in Mumbai, India, ICICI Bank IBN is the largest private sector bank in India. The Bank has a network of 3,620 branches and 11,292 ATMs in India, and also has presence in 16 countries, outside India.
 
The bank has 7 main business segments: Treasury, Wholesale Banking, Life Insurance, Retail Banking, Other Banking, Other, and General Insurance.  During FY 2013, 30% of bank's revenue came from its Treasury operations and 27% from Wholesale Banking.
 
ICICI Bank's ADRs are listed on the NYSE.
 
Robust Third Quarter Results
 
IBN reported its Q3 FY 2014 results on January 29, 2014. The results were ahead of analysts' expectations.
 
Total advances grew 16.0% year-over-year driven mainly by 22.3% growth in the retail portfolio. Retail portfolio continues to be driven by strong demand for mortgage and auto loan products. On the other hand, commercial business loans declined 17.0% year-over-year.
 
Net interest income grew 22% while the non-interest income surged 26% year over year. After-tax profit jumped 12.5% from the previous-year quarter, driving annualized return on average assets to 1.75%.
 
Capital levels remained strong, with 16.8% overall CAR and 11.5% Tier I ratio, per Basel III norms. On the flip side, NPAs rose to 0.94% at the end of December from 0.76% a year earlier.
 
For the full-year, the management expects continued momentum in retail lending, healthy deposit growth and mix and improved margins and fee income growth relative to the previous year.
 
Positive Earnings Estimates Revisions  
 
After excellent results, analysts have raised their estimates for the company. Zacks Consensus Estimates for the current and next year are now $2.81 and $3.28 per share up from $2.68 and $3.08 per share respectively, 30 days ago.
 
Rising estimates sent IBN to a Zacks Rank #1 (Strong Buy) this week.
 
The Bottom Line
 
ICICI bank continues to expand its foothold in India and other overseas locations. Further rising demand for mortgage and auto loans will help the bank going forward.
 
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