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On Mar 13, 2013, we upgraded ICICI Bank Ltd. (IBN - Analyst Report) to Outperform based on the company’s strong fiscal third quarter 2013 (ended Dec 31) results. Moreover, ICICI Bank has a long-term earnings growth rate of 22.0%.

Why the Upgrade?

On Jan 31, ICICI Bank announced its fiscal third quarter 2013 net income of INR22.50 billion ($409 million), reflecting a 30% year-over-year rise. The solid results were mainly driven by top-line growth, partly offset by an increase in loan loss provisions and higher operating expenses.

Estimates over the past 60 days have also been rising with the Zacks Consensus Estimate for fiscal 2013 going up 5.4% to $2.75 per share. Similarly, the Zacks Consensus Estimate for fiscal 2014 advanced 5.1% to $3.30 per share. With the Zacks Consensus Estimates for both the years moving north, ICICI Bank now has a Zacks Rank #1 (Strong Buy).

Reasons for Positive Bias

Domestic loans represent the major portion of ICICI Bank’s overall loan portfolio. Further, the company has been marketing retail deposits on a large scale, primarily to bring down the cost of funds and create a stable funding base.

Moreover, on the international front, ICICI Bank is expanding its retail franchise through technology-based banking services as well as opening of additional offshore branches. Additionally, it has been improving its services for offshore banking units by offering foreign currency deposits.

Other Stocks That Warrant a Look

Besides ICICI Bank, other foreign banks that are worth considering include Banco Bilbao Vizcaya Argentaria, S.A. (BBVA - Snapshot Report), BBVA Banco Franc (BFR - Snapshot Report) and Banco Macro S.A. (BMA - Snapshot Report). The first two stocks carry a Zacks Rank #1 (Strong Buy), while the latter holds a Zacks Rank #2 (Buy).

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