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Finance Ministry backs ICICI Bank

The government on Friday said there is no problem with the leading private sector lender ICICI Bank, shares of which tumbled more than 20 per cent in the early trade, while the bank asserted it had adequate rupee liquidity. 

"We do not see any problem with the ICICI Bank," said a senior Finance Ministry official, adding, all Indian banks are well-capitalised and well-regulated.

He added the Capital Adequacy Ratio of each bank is above 10 per cent, well above the regulatory requirement of nine per cent.

ICICI Bank at 3-year low

The ICICI Bank stock is down 37.47% from its recent high of Rs 551.45 on 1 October 2008.

Meanwhile, the BSE Sensex was down 957.96 points, or 8.54%, to 10360.40. The market tumbled on worries about a global recession despite worldwide central bank measures to stave off a crisis.

On BSE, 44.59 lakh shares were traded in the counter. The scrip had an average daily volume of 24.24 lakh shares in the past one quarter.

The stock hit an intraday low of Rs 351.65, its lowest level in more than three years. It hit an intraday high of Rs 423.70 so far. The stock had a 52-week high of Rs 1465 on 14 January 2008.

The stock had underperformed the market over the past one month till 8 October 2008, declining 37.08% as compared to the Sensex’s decline of 24.20%. It had also underperformed the market in the past one quarter, falling 23.63% as compared to the Sensex’s decline of 15.14%.

India’s largest private sector bank by market capitalisation has an equity capital of Rs 1113.23 crore. Face value per share is Rs 10.

The current price of Rs 344.80 discounts its Q1 June 2008 annualised EPS of Rs 26.16, by a PE multiple of 13.18.

The bank had earlier on 1 October 2008 assured investors that it was well-capitalised.

ICICI Bank had said on 16 September 2008 it held 57 million euros ($81 million) of senior bonds issued by Lehman Brothers, and would increase its provision on the debt by about $28 million to cover half of that exposure. The bank had also later clarified that 98% of ICICI Bank UK PLC's non-India investment book is rated investment grade and above.

ICICI Bank UK PLC has zero exposure to US subprime-credit, it had added in an announcement made on 29 September 2008.

ICICI Bank chief K V Kamath had on 30 September 2008 also issued a statement on the bank's financial health and said that the bank has a very strong capital position with a capital adequacy ratio of 13.4% as against the statutory requirements of 9%.

ICICI Bank's net profit fell 6.1% to Rs 728.01 crore on a 1.6% rise in operating income to Rs 9429.98 crore in Q1 June 2008 over Q1 June 2007.

ICICI Bank provides retail-banking, corporate banking, cash management and treasury management services.

ICICI Bank facing no liquidity crisis: Chanda Kochhar

ICICI Bank is facing no liquidity crisis and has as much as Rs 12,000 crore liquidity even in international markets and the bank does not
use rupee liquidity to find the growth of its international operations, according to ICICI Bank Joint Managing Director and CFO Chanda Kochhar.

Stepping in to clarify rumours that have lead to a near 26 per cent dip in the ICICI Bank stocks on Friday, Kochhar said: “We have no sizable international investments and the ones that are present are in the form of international loans to Indian companies to fund their international operations. As far as the UK subsidiary is concerned, yes we have investments but the exposure is very small for a company with a networth of Rs 47,000 crore.”

Commenting on rumours that ICICI Bank’s exposure is large as it has given easy loans with inadequate collaterals in form of shares, and with the shares taking a beating, the Bank’s loss may be more than is made obvious, Kochhar said: “All the loans are secure and we have enough cash against them that will help us tide over any uncertainly in their share values. Our NPAs are zero even in the UK subsidiary and we have a cash collateral of $45 million from Bumi on a loan amount of $100 million, which is being cited as a risky case for ICICI Bank in UK,” she added.



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Source - Ndtv profit, economictimes

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