B.B.A., L.L.B. (Hons.

) / Third Semester- 2021

FINANCE

Topic:
ICICI BANK ANALYSIS

Submitted To: Prof. Naveen Rohatgi

Submitted by: Anoushka Sud (F003)

Sap Id: 81022019327

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 INDEX

SR. NO. PARTICULARS PAGE NO.

A.1.
INTRODUCTION 3
2.
COMPANY PROFILE, GROWTH 3
3.
NPA AND COVERAGE RATIO 6
5.
FINANCIAL ANALYSIS 8
6.
SWOT ANALYSIS 9
B.1.
RATIO ANALYSIS 12

FINDINGS AND CONCLUSION 17

INTRODUCTION

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An efficient banking system is recognized as basic requirement for of any economy as they play
crucial role in the economic development of an economy. Banks mobilize the savings of
community into productive channels. The Indian banking system is featured by a large network
of bank branches, serving many kinds of financial needs of the people. It is currently in a
transition phase. On the one hand, the PSBs, which are the mainstay of the Indian Banking
system, are in the process of shedding their flab in terms of massive manpower, excessive Non
Performing Assets (NPAs), while on the other hand the private sector banks are consolidating
themselves through mergers and acquisitions. PSB’s share is 78 and 79 percent in total deposits
and advances respectively. Over the last four years their deposits and advances have grown 2.2
and 2.3 times respectively.

ICICI COMPANY PROFILE:

ICICI Bank was originally promoted in 1994 by the Industrial Credit and Investment
Corporation of India (ICICI), an Indian financial institution, as a wholly owned subsidiary. ICICI
Limited, an Indian financial institution, and was its whollyowned subsidiary. ICICI was formed
in 1955 at the initiative of the World Bank, the Government of India and representatives of
Indian industry. The bank was initially known as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to the abbreviated ICICI Bank. The parent
company was later merged with the bank. ICICI Bank launched internet banking operations in
1998 ICICI Bank Ltd is a major banking and financial services organization in India. The Bank
is the second largest bank in India and the largest private sector bank in India by market
capitalization. They are a publicly held banking company engaged in providing a wide range of
banking and financial services including commercial banking and treasury operations. The Bank
and their subsidiaries offers a wide range of banking and financial services including commercial
banking, retail banking, project and corporate finance, working capital finance, insurance,
venture capital and private equity, investment banking, broking and treasury products and
services. They offer through a variety of delivery channels and through their specialised
subsidiaries in the field of investment banking, life and non-life insurance, venture capital and
asset management. The Bank has a network of 2,035 branches and around 5,518 ATMs in India
and presence in 18 countries. They have subsidiaries in the United Kingdom, Russia and Canada,

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branches in United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai
International Finance Centre and representative offices in United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. ICICI Bank is India's largest private
sector bank with total assets of Rs. 5,946.42 billion (US$ 99 billion) at March 31, 2014 and
profit after tax Rs. 98.10 billion (US$ 1,637 million) for the year ended March 31, 2014. In 2000,
ICICI Bank became the first Indian bank to list on the New York Stock Exchange with its five
million American depository shares issue generating a demand book 13 times the offer size. The
bank has contributed to the set up of a number of Indian institutions like National Stock
Exchange of India (NSE), Credit Rating Information Services of India Limited (CRISIL),
National Commodity & Derivatives Exchange Limited (NCDEX), Entrepreneurship
Development Institute of India (EDII) etc. to establish financial infrastructure in the country over
the years. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the
National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are
listed on the New York Stock Exchange (NYSE).

ICICI COMPANY VISION:

ICICI Bank’s vision is “To be the leading provider of financial services in India and a major
global bank.” In other words, its vision is to be the preferred bank for total financial and banking
solutions for both corporate and individuals. For over five decades, the ICICI Group has
partnered India in its economic growth and development. Promoting inclusive growth has been a
priority area for the Group from both a social and business perspective. The ICICI Group strives
to make a difference to its customers, to the society and to the nation’s development directly
through its products and services, as well as through development initiatives and community
outreach. ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI
Group in early 2008 to carry forward and build upon its legacy of promoting inclusive growth.
ICICI Foundation works within public systems and specialised grassroots organisations to
support developmental work in four identified focus areas.

GROWTH:

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In financial year 2020, India's GDP increased by 4.2 percent compared to 6.1 percent in 2019.
Investment decisions, as defined by gross fixed asset creation, fell by 2.8 percent in fiscal 2020
compared to a 9.8 percent increase in financial year 2019. Private final consumer spending
development slowed to 5.3 percent in the financial year 2020 from 7.2 percent in 2019.
Agribusiness increased by 4.1 percent in fiscal 2020, in comparison to 2.5 percent in the
financial year 2019, manufacturing increased by 1 percent in the financial year 2020, in
comparison to 4.9 percent in the financial year 2019, as well as the services industry increased by
5.6 percent in the financial year 2020, compared to 7.8 percent in the financial year 2019. Key
financial indices such as national sales of passenger and commercial automobiles, freight traffic,
credit flow, and others were sluggish throughout the year. Throughout the year, the Indian
government unveiled several policies aimed at boosting economic development[5]. A major
disclosure was a decrease in the corporation tax rate from 30% to 22% of earnings for companies
that do not take advantage of any deductions or benefits.

The Covid-19 outbreak has been affecting most nations, particularly India, since the first quarter
of Calendar Year 2020. As a consequence, nations have announced lockdown and isolation
procedures, effectively halting economic growth. The Indian government imposed a three-week
nationwide lockdown on March 25, 2020, which was prolonged until May 31, 2020. Several
nations, like India, have adopted extraordinary monetary and fiscal measures to assist mitigate
the catastrophe' effect. The RBI has declared several initiatives aimed at easing financial sector
strain, including increased system liquidity, lower interest rates, a moratorium on mortgage
payouts for debtors, an asset classification standstill profit for overdue transactions in which a
moratorium has been awarded, as well as a leisure of the liquid asset prerequisite, among many
other things[6]. The administration proposed an economic program that includes direct benefit
payments to low-income people, free meals delivery, government-guaranteed loans for small
companies, and policy changes. Since March 2020, economic development, investor as well as
consumer sentiment have been severely affected. The world economy is projected to shrink by
3.1% in the year 2020, as per the IMF, with development improving in 2021 if the outbreak goes
back in the 2nd half of the year 2020 and restraining measures can be undone.

NPA (NON- PERFORMING ASSETS) & PROVISION COVERAGE RATIO:

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A nonperforming asset (NPA) refers to a classification for loans or advances that are in 
default or in arrears. For example, assume a company with a $10 million loan with interest-only
payments of $50,000 per month fails to make a payment for three consecutive months. The
lender may be required to categorize the loan as nonperforming to meet regulatory requirements.
Alternatively, a loan can also be categorized as nonperforming if a company makes all interest
payments but cannot repay the principal at maturity.

Formula:

 Net non-performing assets = Gross NPAs – Provisions.

 Gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank.
 Net NPA to Advances (loans) Ratio is the ratio of Net NPA to advances. It is used as a
measure of the overall quality of the bank’s loan book.
 Provision Coverage Ratio = Total provisions / Gross NPAs.

NPA RATIOS (ICICI BANK) Rs. In MAR’05 MAR’06 MAR’07

billion.
GROSS NPA 34.37 22.73 41.68
NET NPA 19.83 10.75 20.19
NET CUSTOMER ASSETS 978.94 1,520.07 2,053.74
% OF NET NPA TO NET 2.03% 0.71% 0.98%
CUSTOMER ASSETS

The ratio of net non-performing assets to net customer assets increased to 0.98% at year-end
fiscal 2007 compared to 0.71% at year-end fiscal 2006. At year-end fiscal 2007, the gross non-
performing assets (net of write-offs and unpaid interest) were Rs. 41.68 billion compared to Rs.
22.73 billion at year end fiscal 2006. Gross of technical write-offs, the gross non-performing
assets at year- end fiscal 2007 were Rs. 48.50 billon compared to Rs. 29.63 billion at year-end
fiscal 2006. 

The coverage ratio (i.e. total provisions and technical write-offs made against non-performing
assets as a percentage of gross non performing assets) at year-end fiscal 2007 was 58.37%

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compared to 63.72% at year-end fiscal 2006. In addition, total general provision made against
standard assets was Rs.12.95 billion at year-end fiscal 2007. Our investments in security
receipts issued by Asset Reconstruction Company (India) Limited, a reconstruction company
registered with RBI were Rs. 25.38 billion at year-end fiscal 2007. Our net restructured standard
loans decreased from Rs. 53.16 billion at year-end fiscal 2006 to Rs. 48.83 billion at year-end
fiscal 2007.

ANALYSIS OF FINANCIAL STATEMENT:

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 SUMMARIZED BALANCE SHEET

(ON MARCH 31, 2007)

PARTICULARS 2005 2006 2007 %CHANGE %CHANGE

(2006) (2007)
Cash balance with 47,412 68,115 104,487 43.7% 53%
banks & SLR
-Cash & bank 12,390 16,040 37,121 31.8% 118%
balances
-SLR investment 34,482 51,075 67,368 48.1% 32%
Advances 91,405 1,46,163 1,95,866 59.9% 34%
Other Investment 2,858 20,473 23,890 49.1% 17%
Fixed and other 12,836 16,638 20,413 29.61% 23%
Assets
TOTAL ASSETS 1,67,659 2,51,389 3,44,658 49.9% 37%
Net Worth 12,550 22,206 24,313 76.9% 9%
-Equity capital 737 890 899 20.8% 1%
-Reserves 11,813 21,316 23,414 80.4% 10%
Preference Capital 350 350 350 - -
Deposits 99,819 1,65,083 2,30,510 65.4% 40%
Erstwhile ICICI 19,348 13,190 10,837 (31.16%) (18%)
Borrowings
Other Borrowings 22,405 35,477 59,823 58.2% 69%
Other Liabilities 13,187 15,083 18,824 14.4% 25%
TOTAL 1,67,659 2,51,389 3,44,658 49.9% 37%
LIABILITIES

By anlysing the balance sheet of ICICI Bank, the following trends are presented:

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 Total assets and total liabilities are increased in 2007 from Rs. 251389 crore to Rs.
344658 Crore i.e. 37% which is less than as compared to increase in 2006 from Rs.
167659 crore to Rs. 251389 crore ie. 49.9%.
 Increase in cash balance with bank in 2007 is more than in the previous year 2006. In
2006 it is 32% and in 2007 it is 118%. But increase in SLR investment in 2007 is less
than the previous year. In 2006 it is 48% and in 2007 it is 32%.
 Increase in advances in 2007 is 60% from 2006 which is less than as compared to
increase in advances in 2006 is 34% from 2005.
 Increase in fixed and other assets is also less than in 2007 from 2006 ie 23% as compared
to 30% in 2006 from 2005.
 Erstwhile ICICI borrowings is decreasing in both years but rate of decreasing is less in
2007 i.e. 18% but in 2006 it is 31%.
 Increase in net worth is also less than from previous year in 2007 i.e 80% in 2006 to 9%
in 2007.
 Increase in equity capital is only 1% in 2007  whereas in 2006 it is 21% and increase in
reserve in 2007 is very less as compared to increase in 2006 i.e. from 10% to 80%.
 40%Deposits is increased in 2007 from 2006 which is less than as compared to 65%
increase in deposits in 2006 from 2005.
 Increase in other liabilities is more in 2007 than in 2006 i.e from 14% in 2006 to 25% in
2007.
 69%borrowing is increased in 2007 from 2006 which is more than as compared to 58%
increase in borrowing in 2006 from 2005.

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SWOT ANALYSIS OF ICICI BANK

SWOT analysis of ICICI Bank analyses the brand by its strengths, weaknesses, opportunities &
threats. In ICICI Bank SWOT Analysis, the strengths and weaknesses are the internal factors
whereas opportunities and threats are the external factors.

STRENGTHS

Below are the Strengths in the SWOT Analysis of ICICI Bank:

1. ICICI bank is the front runner in the Indian Private Banking Sector.
2. ICICI has a strong presence via its branches & 14000+ ATMs.
3. High use of technology to make life simpler for the customers.
4. Large number of facilities for the customers in terms of products and services.
5. Over 75,000 employees at ICICI.
6. Decades of Experience in the Banking sector along with marketing has added to the
brand name.
7. ICICI has presence in over 19 countries.
8. Marketing & branding using celebrity brand ambassadors has boosted the brand's image.
9. Services like net banking, mobile banking, NRI services, apps etc offered by ICICI.
10. It has been given several awards for its banking, CSR activities and other initiatives.

WEAKNESSES

Here are the weaknesses in the ICICI Bank SWOT Analysis:

1. High competition means limited market share growth for ICICI bank.

2. Controversies like alleged money laundering, debt recovery etc hurt the brand image.

OPPORTUNITIES

Following are the Opportunities in ICICI Bank SWOT Analysis.

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 1. Opening more branches in the rural areas can boost ICICI's business.
2. Use of technology to penetrate rural markets.
3. Venturing into countries like Africa where the economy is coming up.
4. ICICI bank can tap the youth by promoting their app and net banking.

THREATS

The threats in the SWOT Analysis of ICICI Bank are as mentioned:

1. Ever changing RBI policies can affect operations of ICICI bank.

2. International and other Competitors.
3. Inability to adapt to changing conditions due to large size.
4. Concern on privacy of user accounts using net banking can be a threat for ICICI.

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RATIO ANALYSIS

1. PROFITIBILITY AND RETURN

 NET PROFIT RATIO: This ratio indicates the Net margin on a sale of Rs.100.

It is calculated as follows:

Net Profit Ratio = (Net Profit/Net Sales) x 100.

This ratio helps in determining the efficiency with which affairs of the business are being
managed. An increase in the ratio over the previous period indicates improvement in the
operational efficiency of the business. The ratio is thus on effective measure to check the
profitability of business.

Interpretation: Although both the sales and net profit have increased during the above period
but the Net Profit Ratio of the bank is declining continuously. This is because of the reason that
net profits have not increased in the same proportion as of the sales.

 RETURN ON CAPITAL EMPLOYED:

It establishes relationship between profit before interest and tax and capital employed. It
indicates the percentage of return on the total capital employed in the business. This ratio is also
known as Return On Investment. It measures the overall efficiency and profitabilityof the
business in relation to investment made in business. It also shows how efficiently the resources
are used in the business.comparison of one unit with that of the other or performance in one year
with that of the same unit is possible. It is calculated as below:

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Interpretation:

The above table exhibit the return on capital employed ratio of the bank for last five years. This
ratio measures the earning of the net assets of the business. The ratio was 6.22% in year 2005.
After that it rose to the tune of 5.61%,6.52%,7.99% and 8.29% in year 2006, 2007, 2008 and
year 2009 respectively. It leads to the conclusion bank rising but very little proportion of return
on capital employed

2. OPERATING RATIO

This ratio is calculated as follows:

Operating Profit Ratio = (Operating Profit/ Net Sales) x 100.

The difference between net profit ratio and net operating profit ratio is that net operating profit is
calculated without considering non-operating expenses and non-operating incomes. If we deduct
this ratio from 100, the result will be operating ratio. Higher operating profit ratio enables the
organization to recoup non-operating expenses out of operating profits and provide reasonable
return.

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Interpretation:

In the year 2005 & 2006 the operating profit is 31.41% & 34.02% respectively. After that it has
been consistently declined from the year 2007 till 2008 and again gaining momentum in 2009.
This may be due to the reason that operating expenses have been increased more as compared to
sales during the above period consequently reducing the operating profits. Therefore the bank
should check on unnecessary operating expenses to correct this situation and to provide a
sufficient return.

3. VALUATION RATIO:

Particulars MAR 2021 MAR 2020 MAR 2019 MAR MAR 2017
2018
Price to Sales Ratio 5.08 2.81 4.06 3.26 2.98
Enterprise Value (Rs. 1,380,175.57 1,108,657.4 1,037,532.15 889,716.20 767,318.40
Cr) 0

Price to Book Value 2.78 1.85 2.44 1.75 1.67

In the above table we see various metrics to obtain the valuation ratio of a company. These stats
are highly clear and precise for the interpretation of the valuation of the company in the last 5
years. We can see a rising curve in the years of 2017 and 2018 with a gradual increase in the
valuations of P/S and P/B value as well as an overall increase in the EV. The enterprise value
doesn’t fall despite the disturbance in the other two ratios which may help in proving the stability
of the companies valuation, yet the stock rate fluctuations could have otherwise been a stain in
the valuation progression of the company. Those fluctuations must have happened because of the
coronavirus outbreak and despite that, we already see the companies valuation going up
continuously now that the things around are getting normalised slowly and the economy is
reviving. It’s a tragic grip of the company that the ratios fell to almost the half of their 2019
ratios and revived back with a gain in 2021.

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FINDINGS AND SUGGESTIONS

 Profit before tax for the year ended March 31, 2009 (FY2009) was Rs. 5,117 crore (US$
1,009 million), compared to Rs. 5,056 crore (US$ 997 million) for the year ended March
31, 2008 (FY2008).
 Profit after tax for FY2009 was Rs. 3,758 crore (US$ 741 million) compared to Rs. 4,158
crore (US$ 820 million) for FY2008 due to the higher effective tax rate on account of
lower proportion of income taxable as dividends and capital gains.
 Net interest income increased 15% from Rs. 7,304 crore (US$ 1,440 million) for FY2008
to Rs. 8,367 crore (US$ 1,650 million) for FY2009. While the advances declined
marginally year-on-year, the net interest income increased due to improvement in net
interest margin from 2.2% in FY2008 to 2.4% in FY2009.
 Operating expenses (including direct marketing agency expenses) decreased 14% to Rs.
6,835 crore (US$ 1,348 million) in FY2009 from Rs. 7,972 crore (US$ 1,572 million) in
FY2008. The cost/average asset ratio for FY2009 was 1.8% compared to 2.2% for
FY2008.
 During the year, the Bank has pursued a strategy of prioritizing capital conservation,
liquidity management and risk containment given the challenging economic environment.
This is reflected in the Bank’s strong capital adequacy and its focus on reducing its
wholesale term deposit base and increasing its CASA ratio. The Bank is maintaining
excess liquidity on an ongoing basis. The Bank has also placed strong emphasis on
efficiency improvement and cost rationalization. The Bank continues to invest in
expansion of its branch network to enhance its deposit franchise and create an integrated
distribution network for both asset and liability products.
 In line with the above strategy, the total deposits of the Bank were Rs. 218,348 crore
(US$ 43.0 billion) at March 31, 2009, compared to Rs. 244,431 crore (US$ 48.2 billion)
at March 31, 2008. The reduction in term deposits by Rs. 24,970 crore (US$ 4.9 billion)
was primarily due to the Bank’s conscious strategy of paying off wholesale deposits.
During Q4-2009, total deposits increased by Rs. 9,283 crore (US$ 1.8 billion), of which
Rs. 5,286 crore (US$ 1.0 billion), or about 57%, was in the form of CASA deposits. The

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 CASA ratio improved to 28.7% of total deposits at March 31, 2009 from 26.1% at March
31, 2008.

SUGGESTIONS:

1. Although the short term liquidity position is quite satisfactory as per revealed by liquid
ratio but the current ratio is below the ideal ratio of 2:1.So the bank should make efforts
to increase its current assets to maintain a safety margin and to maintain a better liquidity
position.
2. The profitability of the bank for the period under study is not satisfactory. Profits are
increasing but not with same pace as of the expenditure due to higher reliance on debt
capital in the form of borrowings and loans for financing capital structure. So in order to
improve profitability, the bank should reduce its dependence on external equities for
meeting capital requirements. Consequently, the interest expenses will decline and profits
will increase which is good for the bank. Similarly non productive expenses should be
curtailed to improve profitability.
3. Higher trend of credit deposit ratio reveals that the bank has performed satisfactorily as
regard to granting loans and advances to generate income. It suggests that the credit
performance of bank is good and it is performing its business well by fulfilling the major
objective of granting credit and accepting deposit. So in order to have more creditability
in the market the bank should maintain its credit deposit ratio.
4. The bank should simplify the procedure of advances for quick disbursement.
5. To achieve organizational success a proper independent working atmosphere should be
developed to achieve desired objective more effectively. Last but not least, bank should
adopt branch automation experiment to control the operational cost.

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CONCLUSION

The bank has succeeded in increasing its share capital also which has increased around 50% in
the those 5 years. Individuals are the major shareholders. The major achievement of the bank has
been a tremendous increase in its deposits, which has always been its main objective. Fixed and
current deposits have also shown an increasing trend.

For the years 2019 to 2021 the total financial achievement of ICICI banks in India. The CAR
parameter of ICICI bank was determined to be average, financial performance important
parameters of ICICI bank was average, adequacy component of ICICI bank was rising, income
quality indicator of ICICI bank was growing, and flexibility parameter of ICICI bank had been at
the maximum.

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