ICRA assigned a LAAA (pronounced L triple A) rating of Rs 20 billion to the subordinated bonds program of ICICI Bank (NYSE: IBN). This is the highest rating for credit quality for any bank. The ratings took into consideration the bank’s strong position in the Indian financial system as the second largest commercial bank, its improving profitability, its extensive corporate relationships and the bank’s increasing retail franchise (source: MyIris).
ICICI Bank has done a lot to improve its visibility among its corporate and retail customers and these steps are paying off now in terms of profitability, increased customer base, all around acceptance and customer satisfaction-- all a must in a service related industry. The ratings also take into account ICICI banks improved capitalization levels following its successful public offerings in the last two years. The banks creditability can be seen from the good response it got from its public offering during the last two years. It is the largest private sector bank and second largest commercial bank next to public sector bank SBI (State Bank of India). During 2005-06, the bank reported net profits of Rs.25.40 billion on assets of Rs. 2,514 billion and a regulatory capital adequacy of 13.35% as of March 31, 2006.
With a presence in the banking, insurance, asset management and private equity sectors, the ICICI Group is an important and large player in the Indian financial system. ICICI Bank has become the one stop shop for all banking and finance related needs of the customer. With its customer service being one of the best in the industry and its branches and ATM’s spread well across all major cities, it is the most preferred bank by retail customers.
If any one wanted to play the Indian economy and specifically the banking sector, which is growing day by day, ICICI Bank is one of the best stocks to have in such a portfolio. With middle class income growing, ICICI Bank will continue to benefit from the general increase in retail spending.
IBN 1-yr chart: