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Updated: 20/11/2008 | 12:00 AM IST
ICICI Bank drops as ADR tumbles
Capital Market
Thursday, November 20, 2008 (New Delhi)
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ICICI Bank's American depository receipt (ADR) fell 13.63% to $12.55 overnight.

Meanwhile, the BSE Sensex was down 381.29 points, or 4.35%, to 8392.49.

On BSE, 6.25 lakh shares were traded in the counter. The scrip had an average daily volume of 34.79 lakh shares in the past one quarter.

The stock hit a high of Rs 330 and a low of Rs 312 so far during the day. The stock had a 52-week high of Rs 1465 on 14 January 2008 and a 52-week low of Rs 282.15 on 27 October 2008.

The stock is down 31.94% from a recent high of Rs 471.10 on 10 November 2008.

The stock had outperformed the market over the past one month till 19 November 2008, declining 11.23% as compared to the Sensex's 12.05% decline. It had, however, underperformed the market in the past one quarter, falling 48.74% as compared to the Sensex's fall of 39.67%.

The large-cap private sector bank has an equity capital of Rs 1113.26 crore. Face value per share is Rs 10.

The current price of Rs 320.60 discounts its Q2 September 2008 annualised EPS of Rs 36.44, by a PE multiple of 8.79.

The sentiment for the banking sector weakened after shares of the No. 2 US bank Citigroup tumbled to a 13-year low on Wednesday, 19 November 2008, as investors questioned survival prospects on concerns about mounting losses from credit cards, mortgages and toxic debt. Meanwhile, turmoil in the US commercial real estate market deepened on Wednesday as securities backed by loans on commercial properties such as office buildings fell in value.

Closer home, ICICI Bank has reportedly halved its target for growth in lending to 15%, instead of 30% target rate set earlier, as high interest rates have slowed down domestic growth cycle. The bank's loan growth has slumped to 16% from a peak of 55% in the year that ended March 2006.

ICICI chief Kamath said in a recent media interview that lending rates must fall by another 3% to ignite a rebound in loan demand. He further added that domestic bad loans may increase unless borrowing costs fall.

Meanwhile, Fitch Ratings said on Tuesday (18 November 2008), that weakening asset quality and liquidity pressure, especially in its overseas business, could lead to ICICI Bank's individual ratings getting affected.

The agency, in a release, said the bank's individual ratings may be downgraded if its asset quality, which is already showing signs of weaknesses, deteriorates significantly more than anticipated at the current juncture. This may put further pressure on the bank's funding, particularly for its growing international business, where market borrowings have a relatively large share, and refinancing risk has already increased steeply, possibly leading to a liquidity problem.

However, ICICI Bank officials have reportedly told the media that the bank has sufficient liquidity and it has repaid $300 million in the past few weeks.

ICICI Bank raised provisions for delinquent loans and losses on investments by 43% to Rs 923.53 crore in Q2 September 2008 over Q2 September 2007.

ICICI Bank's net profit rose 1.2% to Rs 1014.21 crore on a 1.3% rise in operating income to Rs 9712.31 crore in Q2 September 2008 over Q2 September 2008.

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

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