ICIC BANK

INTRODUCTION

ICICI Bank Limited is an Indian multinational banking and financial

services company with its registered office in Vadodara, Gujarat and corporate
office in Mumbai, Maharashtra . It offers a wide range of banking products and
financial services for corporate and retail customers through a variety of
delivery channels and specialised subsidiaries in the areas of investment
banking, life, non-life insurance, venture capital and asset management. The
bank has a network of 5,275 branches and 15,589 ATMs across India and has a
presence in 17 countries.[6]

ICICI Bank is one of the Big Four banks of India.[7] The bank has subsidiaries
in the United Kingdom and Canada; branches in United States, Singapore,
Bahrain, Hong Kong, Qatar, Oman, Dubai International Finance Centre,
China[8] and South Africa;[9] and representative offices in United Arab Emirates,
Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has also
established branches in Belgium and Germany.[10]

HISTORY

ICICI Bank was established by the Industrial Credit and Investment

Corporation of India (ICICI), an Indian financial institution, as a wholly
owned subsidiary in 1994 in Vadodara. The parent company was formed in
1955 as a joint-venture of the World Bank, India's public-sector banks and
public-sector insurance companies to provide project financing to Indian
industry.[11][12] The bank was founded as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to ICICI Bank. The
parent company was later merged with the bank.

ICICI Bank launched internet Banking operations in 1998.[13]

ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public
offering of shares in India in 1998, followed by an equity offering in the form
of American depositary receipts on the NYSE in 2000.[14] ICICI Bank acquired
the Bank of Madura Limited in an all-stock deal in 2001 and sold additional
stakes to institutional investors during 2001–02.[15]

In the 1990s, ICICI transformed its business from a development financial

institution offering only project finance to a diversified financial services group,
offering a wide variety of products and services, both directly and through a
number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become
the first Indian company and the first bank or a financial institution from non-
Japan Asia to be listed on the NYSE.[16]

In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by the Reserve Bank of India in April
2002.[17]

In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs
and branches in some locations due to rumours of an adverse financial position
of ICICI Bank. The Reserve Bank of India issued a clarification on the financial
strength of ICICI Bank to dispel the rumours.[18]

In March 2020, the board of ICICI Bank Ltd. approved an investment of Rs

1,000 crore in Yes Bank Ltd. This investment resulted in ICICI Bank Limited
holding in excess of a five percent shareholding in Yes Bank.

Acquisitions[edit]

• 1996: ICICI Ltd. A diversified financial institution with headquarters in

Mumbai[19]
• 1997: ITC Classic Finance. incorporated in 1986, ITC Classic was a non-
bank financial firm that engaged in hire, purchase and leasing operations. At
the time of being acquired, ITC Classic had eight offices, 26 outlets and 700
brokers.[20]
• 1997: SCICI (Shipping Credit and Investment Corporation of India)[21]
• 1998: Anagram(ENAGRAM) Finance. Anagram had built up a network of
some 50 branches in Gujarat, Rajasthan, and Maharashtra that were
primarily engaged in the retail financing of cars and trucks. It also had some
250,000 depositors.[22]
• 2001: Bank of Madura[23]
• 2002: The Darjeeling and Shimla branches of Grindlays Bank[24]
• 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank[25]
• 2007: Sangli Bank. Sangli Bank was a private sector unlisted bank, founded
in 1916, and 30% owned by the Bahte family. Its headquarters were in
Sangli in Maharashtra, and it had 198 branches. It had 158 in Maharashtra
and 31 in Karnataka, and others in Gujarat, Andhra Pradesh, Tamil Nadu,
Goa, and Delhi. Its branches were relatively evenly split between
metropolitan areas and rural or semi-urban areas.[26]
• 2010: The Bank of Rajasthan (BOR) was acquired by the ICICI Bank in
2010 for ₹30 billion (US$420 million). RBI was critical of BOR's promoters
not reducing their holdings in the company. BOR has since been merged
with ICICI Bank.[19]

Role in Indian financial infrastructure[edit]

ICICI bank has contributed to the setting up of a number of Indian institutions

to establish financial infrastructure in the country over the years:

• The National Stock Exchange was promoted by India's leading financial

institutions (including ICICI Ltd.) in 1992 on behalf of the Government of
 India with the objective of establishing a nationwide trading facility for
equities, debt instruments and hybrids, by ensuring equal access to investors
all over the country through an appropriate communication network.[27]
• In 1987, ICICI Ltd along with UTI set up CRISIL as India's first
professional credit rating agency.[28]
• NCDEX (National Commodities and Derivatives EXchange) was set up in
2003, by ICICI Bank Ltd, LIC, NABARD, NSE, Canara Bank, CRISIL,
Goldman Sachs, Indian Farmers Fertiliser Cooperative Limited (IFFCO)
and Punjab National Bank.[29]
• ICICI Bank facilitated the setting up of "FINO Cross Link to Case Link
Study" in 2006, as a company that would provide technology solutions and
services to reach the underserved and underbanked population of the
country. Using technologies like smart cards, biometrics and a basket of
support services, FINO enables financial institutions to conceptualise,
develop and operationalise projects to support sector initiatives
in microfinance and livelihoods.[30]
• Entrepreneurship Development Institute of India (EDII), was set up in 1983,
by the erstwhile apex financial institutions like IDBI, ICICI, IFCI and SBI
with the support of the Government of Gujarat as a national resource
organisation committed to entrepreneurship development, education,
training and research.[31]
• Eastern Development Finance Corporation (NEDFI) was promoted by
national level financial institutions like ICICI Ltd in 1995 at Guwahati,
Assam for the development of industries, infrastructure, animal husbandry,
agri-horticulture plantation, medicinal plants, sericulture, aquaculture,
poultry and dairy in the North Eastern states of India.[32]
• Following the enactment of the Securitisation Act in 2002, ICICI Bank,
together with other institutions, set up Asset Reconstruction Company India
 Limited (ARCIL) in 2003. ARCIL was established to acquire non-
performing assets (NPAs) from financial institutions and banks with a view
to enhance the management of these assets and help in the maximisation of
recovery.[33][34]
• ICICI Bank has helped in setting up Credit Information Bureau of India
Limited (CIBIL), India's first national credit bureau in 2000. CIBIL provides
a repository of information (which contains the credit history of commercial
and consumer borrowers) to its members in the form of credit information
reports.[35]
• Firstsource, an Indian BPO firm, since divested
• 3i Infotech, an Indian IT/ITES firm, since divested

CAPITAL STRUCTURE

The capital structure is the particular combination of debt and equity used by a
company to finance its overall operations and growth. Debt comes in the form
of bond issues or loans, while equity may come in the form of common
stock, preferred stock, or retained earnings. Short-term debt such as
working capital requirements is also considered to be part of the capital
structure. Both debt and equity can be found on the balance sheet.
Company assets, also listed on the balance sheet, are purchased with this debt
and equity. Capital structure can be a mixture of a company's long-term debt,
short-term debt, common stock, and preferred stock. A company's proportion of
short-term debt versus long-term debt is considered when analyzing its capital
structure.

According to Solomon, E, the same is defined as ‘that capital structure or

combination of debt and equity that leads to the maximum value of the firm’.
Thus, we cannot ignore the importance of capital structure of a firm as we
believe that there is a clear relationship between the value of the firm and the
capital structure although some others do not accept it.

When analysts refer to capital structure, they are most likely referring to a
firm's debt-to-equity (D/E) ratio, which provides insight into how risky a
company's borrowing practices are. Usually, a company that is heavily financed
by debt has a more aggressive capital structure and therefore poses greater risk
to investors. This risk, however, may be the primary source of the firm's growth.

Debt is one of the two main ways a company can raise money in the capital
markets. Companies benefit from debt because of its tax
advantages; interest payments made as a result of borrowing funds may be tax
deductible. Debt also allows a company or business to retain ownership, unlike
equity. Additionally, in times of low interest rates, debt is abundant and easy to
access.

Equity allows outside investors to take partial ownership in the company.

Equity is more expensive than debt, especially when interest rates are low.
However, unlike debt, equity does not need to be paid back. This is a benefit to
the company in the case of declining earnings. On the other hand, equity
represents a claim by the owner on the future earnings of the company.

Capital structure refers to a company’s outstanding debt and equity. It allows a

firm to understand what kind of funding the company uses to finance its overall
activities and growth. In other words, it shows the proportions of senior debt,
subordinated debt and equity (common or preferred) in the funding. The
purpose of capital structure is to provide an overview of the level of the
company’s risk. As a rule of thumb, the higher the proportion of debt financing
a company has, the higher its exposure to risk will be.
Capital structure is commonly known as the debt-to-equity ratio.

Types of Capital Structure

Firms can either issue either more debt or equity to fund its operations. By
issuing equity, firms give up some ownership in the company without the need
to pay back investors; by issuing debt, companies increase their leverage by
needing to pay back investors. A company's debt-to-equity ratio is a measure of
risk for investors.

COMPONENTS OF CAPITAL STRUCTURE

Capital structure involves different sources from which the required long-term
capital is collected by the company. It differs from financial structure.

Cost components of capital structure are given in the diagram below.

Optimal capital structure are follows:

Shareholder's Funds (owned capital)

1. Equity Capital
2. Preference Capital
3. Retained Earnings

Borrowed Funds

1. Debentures
2. Term Loans
3. Deposits

Determinants of capital structure are discuss in brief:

Shareholder's Funds (Owned Capital)

In components of capital structure, shareholder's funds (owned capital) means

funds provided or contributed by the owners. It is also known as owned capital
or ownership capital. Various constituents of owned capital are:

1. Equity Capital

In components of Capital structure, equity share capital represents the

ownership capital of the company. It is the permanent capital and cannot be
withdrawn during the lifetime of the company. They are the real risk bearers,
but they also enjoy rewards. Their liability is restricted to their capital
contributed. Equity shares are popular among the investing class. “Equity
Capital is also known as 'Owned Capital' or 'Risk Capital' or 'Venture Capital.'”
2. Preference Capital

In components of capital structure, preference shareholders are also owners of

the firm, and they get preference regarding payment of dividends and repayment
of Capital. They are cautious investors. Preference Shares carry a stipulated
dividend. Preference Shares are of different types such as:
• Redeemable and Non-Redeemable,
• Convertible and Non-Convertible,
• Cumulative and Non-Cumulative preference shares.

3. Retained Earnings

In components of capital structure, instead of distributing all the profits to

shareholders by way of a dividend, the firm retains / keeps / saves a part of the
profit for self-financing. Retained earnings constitute the sum total of those
profits which have been realized over the years and have been reinvested in the
business. Thus, it is also known as self-financing or ploughing back of profits.
Thus, it is also known as self-financing or working back of profits.

Borrowed Capital

Borrowed capital is the amount raised by way of loans or credit. Various parts
of borrowed capital are:
1. Debentures

In components of capital structure, debenture capital is a part of borrowed

capital. The creditors of the company are the debenture holders. Different types
of debentures are issued for the convenience of investors.

2. Term Loan

In components of capital structure, organizations can obtain long-term and

medium term loans from banks and financial institutions. Further, banks
advance loans in US dollar. Term loans are repayable by installments. For
obtaining term loans, collateral security has to be offered by the organization.

3. Public Deposits

Public deposit means any money received by a non-banking company by way of

deposit or loan from the public, including employees, customers and
shareholders of the company other than in the form of shares and debentures.
Companies prefer this method as such deposits are unsecured. A company can
accept public deposits for a period of up to 3 years.
BALANCE SHEET
BALANCE SHEET MAR '19 MAR '18 MAR '17 MAR '16 MAR '15
OF ICICI BANK (in
Rs. Cr.)

12 mths 12 mths 12 mths 12 mths 12 mths

CAPITAL AND
LIABILITIES:

Total Share Capital 1,289.46 1,285.81 1,165.11 1,163.17 1,159.66

Equity Share Capital 1,289.46 1,285.81 1,165.11 1,163.17 1,159.66

Reserves 104,029.40 100,864.37 95,737.57 85,748.24 79,262.26

NET WORTH 105,323.54 102,155.75 96,908.94 86,918.11 80,429.36

Deposits 652,919.67 560,975.21 490,039.06 421,425.71 361,562.73

Borrowings 165,319.97 182,858.62 147,556.15 174,807.38 172,417.35

TOTAL DEBT 818,239.64 743,833.83 637,595.21 596,233.09 533,980.08

Other Liabilities & 37,851.46 30,196.40 34,245.16 34,726.44 31,719.86

Provisions

TOTAL LIABILITIES 961,414.64 876,185.98 768,749.31 717,877.64 646,129.30

ASSETS

Cash & Balances 37,858.01 33,102.38 31,702.41 27,106.09 25,652.91

with RBI

Balance with Banks, 42,438.27 51,067.00 44,010.66 32,762.65 16,651.71

Money at Call

ADVANCES 586,646.58 512,395.29 464,232.08 435,263.94 387,522.07

INVESTMENTS 207,732.68 202,994.18 161,506.55 160,411.80 186,580.03

Gross Block 7,931.43 7,903.51 7,805.21 7,576.92 4,725.52

Revaluation 3,044.51 3,003.19 3,042.14 2,817.47 0.00

Reserves
NET BLOCK 4,886.92 4,900.32 4,763.07 4,759.45 4,725.52

Capital Work In 0.00 0.00 0.00 0.00 0.00

Progress

Other Assets 81,852.17 71,726.80 62,534.55 57,573.70 24,997.05

TOTAL ASSETS 961,414.63 876,185.97 768,749.32 717,877.63 646,129.29

Contingent Liabilities 1,971,430.27 865,409.07 606,063.80 922,453.51 868,190.58

Book Value (Rs) 163.38 158.91 166.37 149.47 138.72

EQUITY ANALYSIS FOR LAST 5 YEARS OF ICIC BANK

YEAR EQUITY SAHRE NET WORTH

CAPITAL
2015 1,159.66 80,429.36

2016 1,163.17 86,918.11

2017 1,165.11 96,908.94

2018 1,285.81 102,155.75

2019 1,289.46 105,323.54

INTERPRETATION
From the above equity analysis table it can be interpreted that, in 2015, 2016,
2017 the equity share capital are gradually increasing . In 2018 equity shares
are decreasing and in 2019 the shares gradually increases.
NET WORTH OF ICIC BANK

In the year 2015 - 80,429.36cr

In the year 2016 - 86,918.11cr
In the year 2017 - 96,908.94cr
In the year 2018 - 102,155.75cr
In the year 2019 - 105,323.54cr

DEBT ANALYSIS OF 5 YEARS OF ICIC BANK

SECURED LOANS
A secured loan is a loan in which the borrower pledges some asset (e.g. a car or
property) as collateral for the loan, which then becomes a secured debt owed to
the creditor who gives the loan.

UNSECURED LOAN
An unsecured loan is a loan that is issued and supported only by the borrower’
creditworthiness, rather than by any type of collateral.

YEAR DEPOSIT BORROWING TOTAL DEBT

2015 361,562.73 172,417.35 533,980.08

2016 421,425.71 174,809.38 596,233.09

2017 490,039.06 147,556.15 637,595.21

2018 560,975.21 182.858.62 743,833.83

2019 652,919.67 165,319.97 818,239.64

INTERPRETATION

From the above debt analysis table it can be interpreted that,

In the year 2015 the deposit is 361,562.73cr and the borrowing is 172,417.35cr
and the total debt is 533,980.08cr.

In the year 2016 the deposit is 421,425.71cr and the borrowing is 174,809.38cr
and the total debt is 596.233.09cr

In the year 2017 the deposit is 490.039.06cr and the borrowing is 147,556.15cr
and the total debt is 637,595.21

In the year 2018 the deposit is 560,975.21cr and the borrowing is 182,858.62cr
and the total debt is 743,833.83

In the year 2019 the deposit is 652,919.67cr and the borrowing is 165,319.97cr
and the total debt 818,239.64

TOTAL LIABILITIES OF ICIC BANK

The total liabilities can be calculated by summation of both equity and debt

Debt Ratio=Debt\Total liability*100

Equity Ratio=Equity/Total liability*100
YEAR EQUITY DEBT TOTAL DEBT EQUITY
LIABILITY RATIO RATIO
2015 80429.36 533980.08 646129.30 82.64% 12.44%

2016 86918.11 596233.09 717877.64 83.05% 12.10%

2017 96908.94 637595.21 768749.31 82.93% 12.60%

2018 102155.75 743833.83 876184.98 84.89% 11.65%

2019 105323.54 818239.64 961414.64 85.10% 10.95%

PROFIT AND LOSS ACCOUNT

Mar'19 Mar'18 Mar'17 Mar'16 Mar'15

12Months 12Months 12Months 12Months 12Months

INCOME:

Sales Turnover 63401.19 54965.89 54156.28 52739.43 49091.14

Excise Duty .00 .00 .00 .00 .00

NET SALES 63401.19 54965.89 54156.28 52739.43 49091.14

Other Income 14512.1636 17419.6326 19504.4831 15323.0516 12176.1305

TOTAL INCOME 77913.36 72385.52 73660.76 68062.49 61267.27

EXPENDITURE:

Manufacturing Expenses .00 .00 .00 .00 .00

Material Consumed .00 .00 .00 .00 .00

Personal Expenses 6808.24 5913.95 5733.71 3012.69 4749.88

Selling Expenses 729.05 401.37 288.06 210.97 .00

Administrative Expenses 29436.00 9793.00 7889.01 20429.20 6547.80

Expenses Capitalised .00 .00 .00 .00 .00

Provisions Made 19661.14 17306.98 15208.14 11667.82 3899.99

TOTAL EXPENDITURE 56634.43 33415.30 29118.91 35320.68 15197.66

Operating Profit -9958.49 6917.52 7826.55 -2428.83 7741.93

EBITDA 60601.20 57462.32 59663.36 56077.44 50430.39

Depreciation 776.91 780.74 757.65 698.51 658.95

Other Write-offs .00 .00 .00 .00 .00

EBIT 59824.29 56681.58 58905.70 55378.93 49771.44

Interest 36386.40 31940.05 32418.96 31515.39 30051.53

EBT 3776.76 7434.55 11278.61 12195.72 15819.92

Taxes 413.46 657.13 1477.52 2469.43 4644.57

Profit and Loss for the Year 3363.30 6777.42 9801.09 9726.29 11175.35

Non Recurring Items .00 .00 .00 .00 .00

Other Non Cash Adjustments .00 .00 .00 .00 .00

Other Adjustments .00 .00 .00 .00 .00

REPORTED PAT 3363.30 6777.42 9801.09 9726.29 11175.35

KEY ITEMS

Preference Dividend .00 .00 .00 .00 .00

Equity Dividend 965.13 1448.74 8.13 2628.14 2627.66

Equity Dividend (%) 74.85 112.67 .70 225.95 226.59

Shares in Issue (Lakhs) 64462.40 64279.91 58244.76 58147.68 57972.45

EPS - Annualised (Rs) 5.22 10.54 16.83 16.73 19.28

Rs (in Crores)

EARNINGS PER SHARES

Earnings per share (EPS) is the monetary value of earnings per outstanding
share of common stock for a company.
It can be calculated by means of two aspects they are:
❖ Basic EPS
❖ Diluted EPS
PROFIT BEFORE TAX

In the year 2015 profit is 15819.92cr

In the year 2016 profit is 12195.75cr
In the year 2017 profit is 11278.61cr
In the year 2018 profit is 7434.55cr
In the year 2019 profit is 3776.76cr

TAXES
In the year 2015 tax is 4644.57cr
In the year 2016 tax is 2469.43cr
In the year 2017 tax is 1477.52cr
In the year 2018 tax is 657.13cr
In the year 2019 tax is 413.46cr

PROFIT AFTER TAX

In the year 2015 profit is 50430.39cr

In the year 2016 profit is 56077.44cr
In the year 2017 profit is 59663.36cr
In the year 2018 profit is 57462.32cr
In the year 2019 profit is 60601.20cr
YEAR PBT TAX PAT PBT IN PAT IN
RATIO RATIO
2015 15819 4644 50430 29.35% 9.20%

2016 12195 2469 56077 20.24% 4.40%

2017 11278 1477 59663 13.09% 2.47%

2018 7434 657 57462 8.83% 1.14%

2019 3776 413 60601 10.93% 0.68%

TAX RATIO CALCULATION

Profit Before Tax Ratio:

Tax Ratio of PBT=Tax/PBT*100

Profit After Tax Ratio:

Tax Ratio of PAT=Tax/PAT*100

CONCLUSION

Knowing that the ability to access capital directly affects the value of a
business, owner managers find it urgent to understand the ramifications
of this value‐capitalization relationship in the private capital markets. It
directly influences a company's ability to create shareholder value
because the balance sheet sets the minimum threshold for a company's
cost of capital. Investments in the business must meet this threshold, or
value is destroyed.