Taking advantage of the 20 per cent rise in the price over the previous week, profit booking saw the price open at Rs 103 before closing lower at Rs 96 on Tuesday.
ICICI's performance in the first half is admirable, registering a 47 per cent growth, even after excluding the capital gains from ICICI Banks share disinvestment. There has been an overall healthy growth in all its income segments. The fully diluted EPS has gone up 37 per cent to Rs 19.2 for the half-year ended September 30 against Rs 14 over the corresponding period in the previous year.
Its entry into the shorter maturity loan segment has enabled it to improve performance in a difficult period. Short and medium term loans accounted for nearly 15 and 20 per cent of the disbursements in the period. The income from loans and debentures went up by 25 per cent to Rs 2,085 crore. Interest expenditure has grown at a relatively lower rate of 23 per cent. During this period ICICI borrowed about Rs 4,700 crore from the domestic market and a substantial portion of these funds were raised through private placements taking advantage of the fall in interest rates. This enabled it to keep a check on growth in interest expenditure.
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Approvals in the first half have seen a 87 growth to Rs 11,565 crore and infrastructure and oil and gas sector account for nearly 30 per cent of aggregate approvals and disbursals. Guarantees issued saw a steep rise of 53 per cent to Rs 728 crore in the first half. Fee and commission income was also consequently higher by 50 per cent at Rs 87 crore.
NPAs continue to be a cause for concern, though in percentage terms they have come down marginally from 7.8 per cent as on June 30, to 7.7 per cent as on September 30. Provisions and write-offs charged in the first half were up by 100 per cent to Rs 102 crore.
However, since the asset base has increased substantially, there would have been an increase in NPAs in absolute terms. Analysts are expecting a higher provisioning in the second half.
However, the position of the financial institutions, relative to the commercial banks, will be clearer after the announcement of the credit policy. Banks have been demanding creation of a level playing field by imposing reserve requirements on financial institutions too. This will adversely affect sentiment for all FI stocks as it will have a negative impact on valuations.