Friday, November 1, 2013
STOCK FOCUS: India's ICICI Bank Bounces Back After Shrugging Off Crunch
TOKYO (NQN)--ICICI Bank, India's largest private-sector bank, is regaining momentum on the stock market after its July-September earnings beat investors' expectations. Improving liquidity conditions are providing a boost as well.
The bank's stock had been falling since June. Investors scurried out of Indian shares on speculation that the U.S. Federal Reserve Board would shift its quantitative easing program into reverse. The Reserve Bank of India, meanwhile, in July implemented a liquidity squeeze in an effort to halt the rupee's decline. In late August, ICICI Bank hit a year-to-date low of 758.8 rupees.
The central bank, however, decided at its September and October meetings to ease the squeeze. And on Oct. 25, ICICI announced that its net profit for the July-September quarter rose 20% on the year to 23.52 billion rupees, or about 37 billion yen.
The sunnier business climate and ICICI's results helped propel the bank's stock to 1,107 rupees on Oct. 30 -- a 46% gain from the year-to-date nadir and the highest level in about four and a half months.
This was part of a surge in the Bombay Stock Exchange's Sensex index, which set its first record high in about three years.
Despite the severe conditions ICICI faced in the July-September period, its loan-deposit interest margin rose to 3.31%, up on both the year and the quarter. This measure of profitability -- basically the difference between what a bank earns on loans and pays out on deposits -- draws particularly close attention from the market. The increase was attributed to stable growth in current accounts and a strengthening of financial resources overseas.
ICICI also upgraded its annual interest margin forecast to 3.3% from 3.2%.
--Translated from an article by Nikkei staff writer Asuka Kondo
(Nikkei Quick News, Nov. 1)