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ICICI Bank takes a hit
March 13, 2003 15:29 IST
ICICI Bank was the subject of institutional selling in a weak market.
So much so, that by 13:25 IST, the scrip of the second-largest bank in the country was among the biggest losers on BSE, down 2.08% to Rs 138.75. It came off its day's high of Rs 142. A total of 300,000 ICICI Bank shares changed hands on BSE so far. The stock has so far lost 9% from Rs 152.40 on 3 March 2003.
As per market talk, State Bank of India was offloading its stake in the bank. SBI was also offloading positions on other major counters like HPCL and BPCL, it was believed.
Analysts say that due to the general anxiety over the outcome of events in West Asia and the long weekend, players are selling currently. There's general fear that the market may tank further.
However, analysts are very confident about ICICI's fundamentals and feel that, at current levels, the stock is very attractive.
Recently, ICICI Bank announced plans to acquire retail financial services company Transamerica Apple Distribution Finance for around Rs 74 crore. The deal will be finalised after the completion of the audit of accounts of TADF for April-November 2002. The deal will also be subject to RBI and other necessary approvoals, ICICI Bank had said earlier.
Total assets of TADF stood at Rs 218 crore (Rs 2.18 billion) as on 31 March 2002, and the company had reported a net profit of Rs 4.6 crore. TADF is primarily engaged in financing two-wheelers and tractors.
TADF is a 70:30 JV between Transamerica Distribution Finance and the Atul Nishar-promoted Apple Credit Corporation. TDF is a wholly-owned arm of Transamerica Finance Corporation,USA, which in turn is a subsidiary of Aegon N V, a Netherlands-based global insurance major.
Meanwhile, ICICI Bank is expected to witness major improvement in performance following the passage of the Securitisation Bill. As on 31 December 2002, the bank's net non-performing assets were Rs 3,012 crore (Rs 30.12 billion). The Securitisation Bill allows banks to seize defaulters' assets and hasten recovery from defaulting borrowers without additional court procedures. The bill also paves the way for setting up asset reconstruction companies. Analysts say even partial recovery of NPAs should enhance debt recovery and improve asset quality and profitability.
For the quarter ended 31 December 2002, ICICI Bank earned a net profit of Rs 330.3 crore on a total income of Rs 2,826.53 crore (Rs 28.26 billion).
The results for the quarter ended 31 December 2002 include the results of the erstwhile ICICI and its subsidiaries, amalgamated with the bank wef 30 March 2002. The financials for the quarter are therefore not comparable.
As on 31 December 2002, the bank's non-performing customer assets were Rs 3012 crore (Rs 30.12 billion), constituting 4.90% of customer assets. The bank continues to focus on restructuring of intrinsically viable companies as well as recovery actions, including the institution of proceedings under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act 2002. It also plans to focus on retail banking, and is expected to declare better dividends to its shareholders in the near future. Retail operations contributed 40% to the total revenues of ICICI Bank for the full year ended 31 March 2002.
The bank's capital adequacy as on 31 December 2002 was 12.6% (including Tier-1 capital adequacy of 8.2%).
The promoters' holding in ICICI Bank stood at 16.5%, while the public, domestic and foreign institutions held 10%, 22.5% and 45.8%, respectively.
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