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Analyst Blog

On Jul 3, 2014, we issued an updated research report on ICICI Bank Ltd. (IBN - Analyst Report). The company reported robust fourth-quarter fiscal 2014 results, driven by growth in fee income and net interest income.

In fiscal 2014, ICICI Bank’s fee revenues rose 12% year over year. Further, an improvement in asset mix and enhanced pricing power are expected to support margins in the near term.

Additionally, ICICI Bank has been marketing retail deposits on a large scale, chiefly to lower its funding cost and create a stable funding base. As of Mar 31, 2014, retail loans grew 23% from the year-ago period. This makes the company well positioned to deal with a more challenging rate environment.

Given the impressive fourth-quarter results, the Zacks Consensus Estimate depicted bullish response over the last 60 days. The Zacks Consensus Estimate for fiscal 2015 climbed 3.4% to $3.33 per ADR, while for fiscal 2016 it was $4.22 per ADR.

On the flip side, mounting operating expenses remain a major headwind for ICICI Bank. With the company continuing to strengthen its network, we anticipate non-interest expenses to rise going forward.

ICICI Bank currently has a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Some better-ranked foreign banks include BBVA Banco Franc (BFR - Snapshot Report), Mitsubishi UFJ Financial Group, Inc. (MTU - Analyst Report) and The Royal Bank of Scotland Group plc (RBS - Snapshot Report). All these stocks sport a Zacks Rank #1 (Strong Buy).

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