Icici Project

ACKNOWLEDGEMENT

“Work is Worship”- so goes the old adage, Herculean task have been overheard by dedicated and concerted effort of various people who have sensibly and systematically blended their thoughts. We acknowledge deep sense of gratitude towards our faculty guide Mr. Mohit Jain, for giving us time and support. We express our profound sense of gratitude towards to each and every person in NIAS for have provided us with facilities and help for the successful completion of the report and also for the moral support and co-operation. Finally, we would like to thank our family and all our friends for helping us to overcome the hurdles that we faced during the preparation of the report.

Suva Biswas, Haldar, Debraj Das

Rupes Dey, Soumen Das, Gourav

INDEX Introduction

3

History of ICICI Bank

4

Products and service

7

What is merger?

8

Procedure of merger

9

RBI guidelines on mergers and acquisitions

10

Merger of ICICI Bank with ICICI Ltd

11

Merger of ICICI Bank with Bank of Madura

14

Financial standing of ICICI Bank and Bank of Madura

16

Merger of ICICI Bank with Anagram Finance Ltd

16

Merger of ICICI Bank with Sangli Bank

17

5 years balance sheet of ICICI Bank

19

Annual results of ICICI Bank in details

20

SWOT analysis of ICICI Bank

21

TOWS matrix

24

Conclusion

25

INTR

DUCTION

ICICI is a diversified financial services company that provides a range of banking and financial services to customers, including retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking, and treasury products and services. The company operates in, India, the UK, Canada and Russia. It is headquartered in Mumbai, India and employs about 40,686 people. The company recorded revenues of INR600.5 billion (approximately $14.9 billion) in the financial year ended March 2008, an increase of 45.2% over 2007. The net profit was INR33.9 billion (approximately $0.8 billion) in the financial year 2008, an increase of 35.1% over 2007. ICICI Bank started as a wholly owned subsidiary of ICICI Limited, an Indian financial institution, in 1994. Four years later, when the company offered ICICI Bank's shares to the public, ICICI's shareholding was reduced to 46%. In the year 2000, ICICI Bank offered made an equity offering in the form of ADRs on the New York Stock Exchange

(NYSE), thereby becoming the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In the next year, it acquired the Bank of Madura Limited in an all-stock amalgamation. Later in the year and the next fiscal year, the bank made secondary market sales to institutional investors. With a change in the corporate structure and the budding competition in the Indian Banking industry, the management of both ICICI and ICICI Bank were of the opinion that a merger between the two entities would prove to be an essential step. It was in 2001 that the Boards of Directors of ICICI and ICICI Bank sanctioned the amalgamation of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. In the following year, the merger was approved by its shareholders, the High Court of Gujarat at Ahmedabad as well as the High Court of Judicature at Mumbai and the Reserve Bank of India. ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited. Overseas, its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of December 31, 2008, ICICI is India's second-largest bank, boasting an asset value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine months, that ended on December 31, 2008.

HISTORY OF ICICI •

1955 The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses.

•

1994 ICICI established Banking Corporation as a banking subsidiary. Formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate

legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. •

2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s.

•

2002 The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the group's financing and banking operations, both wholesale and retail, into a single entity. Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank. ○ ICICI started its international expansion by opening representative offices in New York and London. ○

•

2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance with Lloyds TSB. ○ It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.

•

2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country, India and South Africa.

•

2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank Eurasia. ○

•

Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.

2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.

•

2007 ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. ICICI also received permission from the government of Qatar to open a branch in Doha. ○ ICICI Bank Eurasia opened a second branch, this time in St. Petersburg. ○

•

2008 The US Federal Reserve permitted ICICI to convert its representative office in New York into a branch. ICICI also established a branch in Frankfurt. ○ ICICI Banks has exposure to Subhiksha Trading Ltd which is facing Credit Crunch. ○

Head Office

:

ICICI Bank 9th Floor, South Towers ICICI Towers Bandra Kurla Complex Bandra (E) Mumbai

Website

:

http:// www.icicibank.com

Phone

:

91-022-653 7914

Employees

:

84,134

Net income Income growth

: :

$779.8M 28.6%

Key People

:

Kundapur V. Kamath – Chairman Chanda D. Kochhar – Managing Director and CFO N. S. Kannan – Executive Director and CFO

Total Assets

:

Rs. 3793.01 billion (US$ 75 billion) at March 31, 2009

PRODUCTS AND SERVICES

Personal Banking • • • • • • •

Deposits Loans Cards Investments Insurance Demat Services Wealth Management

NRI Banking •

• • • • •

Money Transfer Bank Accounts Investments Property Solutions Insurance Loans

Business Banking • • • • • • •

Corporate Net Banking Cash management Trade Services FX online SME Services Online Taxes Custodial Services

MERGER What is Merger? A merger occurs when two companies combine to form a single company. A merger is very similar to an acquisition or takeover, except that in the case of a merger existing stockholders of both companies involved retain a shared interest in the new corporation. By contrast, in an acquisition one company purchases a bulk of a second company's stock, creating an uneven balance of ownership in the new combined company. The entire merger process is usually kept secret from the general public, and often from the majority of the employees at the involved companies. Since the majority of merger attempts do not succeed, and most are kept secret, it is difficult to estimate how many potential mergers occur in a given year. It is likely that the number is very high, however, given the amount of successful mergers and the desirability of mergers for many companies. A merger may be sought for a number of reasons, some of which are beneficial to the shareholders, some of which are not. One use of the merger, for example, is to combine a very profitable company with a losing company in order to use the losses as a tax write-off to offset the profits, while expanding the corporation as a whole. Increasing one's market share is another major use of the merger, particularly amongst large corporations. By merging with major competitors, a company can come to dominate the market they compete in, giving them a freer hand with regard to pricing and buyer incentives. This form of merger may cause problems when two dominating companies merge, as it may trigger litigation regarding monopoly laws. Another type of popular merger brings together two companies that make different, but complementary, products. This may also involve purchasing a company which controls an asset your company utilizes somewhere in its supply chain. Major manufacturers buying out a warehousing chain in order to save on warehousing costs, as well as making a profit directly from the purchased business, is a good example of this. PayPal's merger with eBay is another good example, as it allowed eBay to avoid fees they had been paying, while tying two complementary products together. A merger is usually handled by an investment banker, who aids in transferring ownership of the company through the strategic issuance and sale of stock. Some have alleged that this relationship causes some problems, as it provides an incentive for

investment banks to push existing clients towards a merger even in cases where it may not be beneficial for the stockholders.

Procedure of Bank Merger

➢ The procedure for merger either voluntary or otherwise is outlined in the respective state statutes/ the Banking regulation Act. The Registrars, being the authorities vested with the responsibility of administering the Acts, will be ensuring that the due process prescribed in the Statutes has been complied with before they seek the approval of the RBI. They would also be ensuring compliance with the statutory procedures for notifying the amalgamation after obtaining the sanction of the RBI. ➢ Before deciding on the merger, the authorized officials of the acquiring bank and the merging bank sit together and discuss the procedural modalities and financial terms. After the conclusion of the discussions, a scheme is prepared incorporating therein the all the details of both the banks and the area terms and conditions. ➢ Once the scheme is finalized, it is tabled in the meeting of Board of directors of respective banks. The board discusses the scheme thread bare and accords its approval if the proposal is found to be financially viable and beneficial in long run. ➢ After the Board approval of the merger proposal, an extra ordinary general meeting of the shareholders of the respective banks is convened to discuss the proposal and seek their approval. ➢ After the board approval of the merger proposal, a registered valuer is appointed

to valuate both the banks. The valuer valuates the banks on the basis of its

share capital, market capital, assets and liabilities, its reach and anticipated growth and sends its report to the respective banks. ➢ Once the valuation is accepted by the respective banks , they send the proposal

along with all relevant documents such as Board approval, shareholders approval, valuation report etc to Reserve Bank of India and other regulatory bodies such Security & exchange board of India (SEBI for their approval. ➢ After obtaining approvals from all the concerned institutions, authorized officials

of both the banks sit together and discuss and finalize share allocation proportion by the acquiring bank to the shareholders of the merging bank (SWAP ratio ➢ After completion of the above procedures , a merger and acquisition agreement is signed by the bank

RBI Guidelines on Mergers & Acquisitions of Banks

➢ With a view to facilitating consolidation and emergence of strong entities and providing an avenue for non disruptive exit of weak/unviable entities in the banking sector, it has been decided to frame guidelines to encourage merger/amalgamation in the sector. ➢ Although the Banking Regulation Act, 1949 (AACS) does not empower Reserve Bank to formulate a scheme with regard to merger and amalgamation of banks, the State Governments have incorporated in their respective Acts a provision for obtaining prior sanction in writing, of RBI for an order, inter alia, for sanctioning a scheme of amalgamation or reconstruction.

➢ The request for merger can emanate from banks registered under the same State Act or from banks registered under the Multi State Co-operative Societies Act (Central Act) for takeover of a bank/s registered under State Act. While the State Acts specifically provide for merger of co-operative societies registered under them, the position with regard to take over of a co-operative bank registered under the State Act by a co-operative bank registered under the CENTRAL ➢ Although there are no specific provisions in the State Acts or the Central Act for the

merger of a co-operative society under the State Acts with that under the Central Act, it is felt that, if all concerned including administrators of the concerned Acts are agreeable to order merger/ amalgamation, RBI may consider proposals on merits leaving the question of compliance with relevant statutes to the administrators of the Acts. In other words, Reserve Bank will confine its examination only to financial aspects and to the interests of depositors as well as the stability of the financial system while considering such proposals.

ICICI merger creates India's 2nd largest bank ICICI create the nation's first universal bank, or one-stop provider of virtually all types of financial services. The merged entity represent ICICI to India's second-largest bank after state-run colossus State Bank of India, which along with its subsidiaries accounts for a third of the Indian banking industry's loans and deposits. "This is basically a survival move from ICICI, as their core business doesn't look too good and they need some kind of a bank because only a bank has access to low-cost funds." Another reason for merging is to get access to cheaper funds after the Reserve Bank of India said it would begin processing applications to create universal banks. The move towards a universal bank will be positive for the firm in the long term.

Current rules prohibit ICICI and other long-term lenders from raising deposits of less than one-year maturity, which usually pay lower rates of interest. But that restriction is not applicable to commercial banks. That was enable ICICI to compete more effectively in the retail finance market dominated by banks, to compensate for slowing loan demand from corporations and for big projects.

MERGER OF ICICI BANK WITH ICICI LTD. India's largest finance company and largest private bank were merging on 31 March, 2002, thus creating the nation's first universal bank, or one-stop provider of virtually all types of financial services. The merged entity was create India's second-largest bank after state-run colossus State Bank of India, which along with its subsidiaries accounts for a third of the Indian banking industry's loans and deposits. The swap ratio has been decided at 2:1 that is 1 share of ICICI Bank for every 2 shares held in ICICI Ltd. It is also include merger of two ICICI subsidiaries, namely, ICICI Personal Finance Services Limited and ICICI Capital Services Limited with ICICI Bank. The American Depository Shares (ADS) holder of ICICI would be issued five ADS of ICICI Bank in exchange for four ADS of ICICI. The ICICI universal bank was control assets of Rs 940 billion, surpassed only by SBI's Rs 3.16 trillion and ahead of third-placed state-run Industrial Development Bank of India with Rs 718 billion. The merged entities have a capital base of Rs 95 billion, 8,300 employees and a huge nationwide branch network. As of September 30, 2002, ICICI Bank had 396 branches, India's largest ATM network of 601 automatic teller machines, and 3.2 million retail customers, including both depositors and borrowers. ICICI founded ICICI Bank eight years ago and owns a 46 per cent stake. Both companies are listed on the New York Stock Exchange and are based in Bombay, the Indian financial capital.

Financials

Before merging financial statements of two firms:-

ICICI Bank Particulars Interest income

(Rs. In Crs.) Q2 01-02 Q2 00-01

% Change

H1 FY02

H1 FY01

% Change

464.69

287.34

61.7

933.0

570.9

63.4

Other Income

95.11

34.12

178.8

222.3

65.3

240.2

Total Income

559.80

321.46

74.1

1155.3

636.2

81.6

Operating expenses

139.26

71.56

94.6

277.4

126.2

119.7

Interest expense

323.58

191.36

69.1

642.1

389.5

64.9

96.96

58.54

65.6

235.6

120.4

95.7

1.25

22.43

-94.4

46.91

36.5

28.5

PBT

95.71

36.11

165.1

188.7

83.9

124.9

Tax

29.56

6.05

388.6

57.3

13.7

318.1

PAT

66.15

30.06

120.1

131.4

70.2

87.2

Int. exp/Int. inc. (%)

69.6

66.6

68.8

68.2

NPM (%)

11.8

9.4

11.4

11.0

EPS (Rs)

3.00

1.53

5.96

3.57

Gross Profit Provisions & cont.

Financial Highlights: •

Net Profit up by 120 per cent to Rs 66.2 crs.

•

Operating Profit up by 66 per cent to Rs 97 crs.

•

Total Deposits up by 80 per cent to Rs 17515 crs since September ’00.

•

Total customer assets up by 80.4 per cent to Rs 11409 crs.

•

Return on Assets up from 1.29 per cent to 1.37 per cent on annualized basis.

•

Return on Net Worth up from 11.85 per cent to 19.07 per cent on annualized basis.

•

Market share in Deposits up from 0.97 per cent to 1.52 per cent in the first half.

•

Market share in customer assets up from 1.26 per cent to 2.01 per cent in first half.

•

Cost to Income ratio up from 51.2 per cent to 54.1 per cent in first half.

ICICI Ltd. Particulars

% Change

Q2 FY01

Income from Operations

2381.17

2191.91

Other Income

24.49

15.01

Total Income

2405.66

2206.92

9.0

Total Expenditure

195.19

193.09

1.1

Interest Expense

1739.33

1639.56

6.1

Gross Profit

471.14

374.27

25.9

972.48

786.76

23.6

Depreciation

115.28

97.35

18.4

230.98

196.37

17.6

PBT

355.86

276.92

28.5

741.5

590.39

25.6

Current Tax

26.45

23

15.0

74.45

49

51.9

Deffered Tax

47.55

0

59.55

0

281.86

253.92

607.5

541.39

8.6 63.2

H1 FY02 H1 FY01

% Change

Q2 FY02

4809.7 4329.68 47.86

11.1

31.04

54.2

4857.56 4360.72

11.4

410.6

397.88

3.2

3474.48 3176.08

9.4

Provision for Tax

PAT

Int. exp/Total Income

11.0

73%

75%

72%

73%

NPM

14.9%

12.6%

15.4%

13.6%

EPS

3.6

3.2

7.7

6.9

12.2

Financial Highlights: •

Net Profit up by 11 per cent to Rs 282 crs.

•

Total assets up by 8.7 per cent to Rs 74371 crs.

•

Return on Assets remained stable at 1.8 per cent on an annualized basis in the first half.

•

Return on Net Worth up from 13.5 per cent to 14.7 per cent on annualized basis in the first half.

•

Overheads / Net Income from Operations down from 18.5 per cent to 14.2 per cent on an annualized basis in the first half.

•

Overheads / Average net assets down from 0.6 per cent to 0.5 per cent on an annualized basis in the first half.

MERGER OF ICICI BANK WITH BANK OF MADURA

The merger between ICICI Bank and Bank of Madura (BoM) is a remarkable one. The pre--merger market capitalization of ICICI Bank was roughly Rs.2500 crore while BoM was at roughly Rs.100 crore. BoM is known to have a poor asset portfolio. As a benchmark calculation, however, suppose we pretend that there are no synergies, and focus on a purely financial evaluation of the merged entity. This is not easy to do using conventional accounting measures. Instead, arguments based on option pricing theory yield useful insights. In applying these ideas to ICICI Bank and to BoM, we need to believe that the stock market effectively processes information to produce estimates of the price and volatility of the shares of both these banks. This assumption is suspect, because both securities have poor stock market liquidity. Hence, we should be cautious in interpreting the numbers shown here. There are many other aspects in which this reasoning leans on models, which are innately imperfect depictions of reality. Pre-Merger status ofICICI Bank: The pre--merger status of ICICI Bank is as follows: it had liabilities of Rs.12,073 crore, equity market capitalization of Rs.2,466 crore and equity volatility of 0.748. Working through options reasoning, we find that this share price and volatility are consistent with assets worth Rs.13,249 crore with volatility 0.15.

Thus, ICICI bank had assets which are 9.7% ahead of liabilities, which is roughly consistent with the spirit of the Basle Accord, and has leverage of 5.37 times. Pre-Merger Status ofBank of Madura: The pre--merger status of Bank of Madura is as follows: it had liabilities of Rs.4,444 crore, equity market capitalization of Rs.100 crore and equity volatility of 0.69. Working through options reasoning, we may say that the stock market thinks that its assets are worth Rs.4,095 crore with a volatility of 0.02. Hence, BoM is bankrupt (with assets which are Rs.350 crore behind liabilities) and has a leverage of 41 times. If we needed to bring BoM up to a point where its assets were 10% ahead of liabilities, which is broadly consistent with the Basle Accord, this would require an infusion of Rs.800 crore of equity capital. How do we combine these to think of the merged entity? Assets and liabilities are additive, so the total assets of the merged entity would prove to be roughly Rs.17,345 crore and the liabilities would prove to be Rs.16,517 crore. The merged entity would hence need roughly Rs.800 crore of fresh equity capital in order to come up to a point where assets were at least 10% ahead of liabilities. How can we estimate the market capitalization of the merged entity? The value of equity is the value of a call option on the assets of the merged entity. Pricing the call requires an estimate of the volatility of the merged assets, i.e. it requires a knowledge of the extent to which the assets of the two banks are uncorrelated. We find that using values of the correlation coefficient ranging from 80% to 95%, the volatility of assets of the merged entity proves to be around 0.12. In this case, the valuation of the call option, i.e. an estimate of the market capitalization of the merged entity, proves to be roughly Rs.2,500 crore. This number is not far from the pre--merger market capitalization of ICICI Bank, which was Rs.2,466 crore. Hence, we can say that on purely financial arguments, the merger is roughly neutral to ICICI Bank shareholders if BoM was merged into ICICI Bank for free. Indeed, if banking regulators took their jobs more seriously, they would force the shareholders of BoM to walk into such a merger at a zero share price as a way of reducing the number of bankrupt banks in India by one. Such a forced-merger would be a politically easier alternative for the RBI when compared with closing down BoM. The shareholders of ICICI Bank have paid a non-zero fee for BoM. This reflects a hope that the products and processes of ICICI Bank will rapidly improve the value of assets of BoM in order to compensate. In addition, the merged entity will have to rapidly raise roughly Rs.800 crore of equity capital to obtain a 10% buffer between assets and liabilities.

Hence, this proposed merger is a godsend for BoM, which was otherwise a bankrupt entity which was headed for closure given the low probability that it would manage to raise Rs.800 crore of equity on a base of Rs.100 crore of market capitalization. It is useful to observe that BoM probably did not see things in this way, given the willingness of India's banking regulators to interminably tolerate the existence of bankrupt banks. Closure of BoM would normally involve pain for BoM's shareholders and workers; instead both groups will get an extremely pleasant ride if the merger goes through. The proposed merger is a daunting problem for ICICI Bank. It will need to rapidly find roughly Rs.800 crore in equity. If India's banking regulators were serious about capital adequacy, ICICI Bank should have to pay roughly zero to merge with BoM (it is doing a favor to BoM and to India's banking system); instead ICICI Bank has paid a positive price for BoM. The key question that will be answered in the next two/three years is: Will ICICI Bank's superior knowledge of products and processes revitalise the assets and employees of BoM, and generate shareholder value in the merged entity? ICICI's top management clearly thinks so, and it would be a very happy outcome if this did indeed happen. The proposed merger is a good thing for India's economy, since the headcount of bankrupt banks will go down by one, and there is a possibility of obtaining higher value added out of the poorly utilized assets and employees of BoM. If the merger goes through, then it will reduce the say of the management team of BoM in India's resource allocation, which is a good thing

Financial standing of ICICI Bank & Bank of Madura

Parameters Net worth Total Deposit Advances Net Profit

ICICI Bank 1998-1999 308.33 6072.94 3377.60 63.75

1999-2000 1129.90 9866.02 5030.96 105.43

Bank of Madura 1998-1999 1999-2000 211.32 247.83 3013.00 3631.00 1393.92 1665.42 30.13 45.58

Share Capital

165.07

196.81

11.08

11.08

Capital Adequacy Ratio

11.06%

19.64%

18.83%

14.25%

Gross Advances / Gross 4.72%

2.54%

8.13%

11.09%

NP’s Net Advances /

1.53%

4.66%

6.23%

2.88%

Net NP’s

MERGER OF ICICI BANK WITH ANAGRAM FINANCE LTD

Anagram Finance Ltd (AFL), a non banking finance company, amalgamated with the Industrial Credit and Investment Corporation of India (ICICI). The swap ratio for the amalgamation is expected to be in the region of 1:10-1:15. Financial Performance of Anagram Finance Ltd (Rs. In crore):

PARTICULARS

1997

1996

Total Income

140.06

142.45

Interest

71.33

71.36

Gross Profit

52.72

51.56

Depreciation

48.16

26.70

Tax

00.00

2.25

Net Profit

4.56

22.61

The impending merger of Anagram Finance Ltd (AFL) with the Industrial Credit and Investment Corporation of India (ICICI) resulting in leveraging the complementary strengths of the two companies. AFL, which is merged with ICICI, has presence in retail car and truck financing. It has 50 branches in Gujarat, Rajasthan and Maharashtra and a depositor base of 250,000. ICICI is expected to benefit from the merger as AFL will give it a foothold in the western part of India.

MERGER OF ICICI BANK WITH SANGLI BANK

The merger, that was announced on APRIL’18, 2007 between ICICI Bank and SANGLI Bank. All branches of Sangli Bank functions as branches of ICICI Bank from April 19, said the Reserve Bank of India. Sangli Bank is an unlisted private bank headquartered at Sangli in Maharashtra. As on March 31, 2006, Sangli Bank had deposits of Rs. 2,004 crore, advances of Rs. 888 crore, net NPA (non-performing assets) ratio of 2.3 per cent and capital adequacy of 1.6 per cent. Its loss at the end of 2005-06 amounted to Rs. 29 crore. It has 198 branches and extension counters, including 158 branches in Maharashtra and 31 branches in Karnataka. About 50 per cent of the total branches are located in rural and semi-urban areas and 50 per cent in metropolitan and urban centers. The bank has about 1,850 employees. ICICI Bank is the second largest bank in India and the biggest in terms of market capitalization. As on September 30, 2006, ICICI Bank had total assets of Rs. 282,373 crore. In the six months ended September 30, 2006, it made a net profit of Rs. 1,375 crore.

It had 632 branches and extension counters and 2,336 ATMs as on that date, and is in the process of setting up additional branches and ATMs pursuant to authorizations granted by the RBI. It has about 31,500 employees. ICICI Bank offers a wide range of financial products and services directly and through subsidiaries in the areas of life and general insurance, asset management and investment banking. Its shares are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited and its American Depositary Shares are listed on the New York Stock Exchange

Merger profile of ICICI Bank and Sangli Bank (In Rs cr.) ICICI Bank

Sangli Bank

Advances

1,55,400

888

Deposits

1,90,000

2,004

Net NPAs(%)

0.9

2.3

CAR(%)

14.3

1.6

Branches

198

632

(Figures for ICICI Bank are as on Sept.’30, 2006 and for Sangli Bank as on March’31, 2006)

5 YEARS BALANCE SHEET OF ICICI BANK LTD. (All Items in Millions)

Cash & Equivalents Receivables Notes Receivable Inventories Other Current Assets Total Current Assets Net Property & Equipment Investments & Advances Other Non-Current Assets Deferred Charges Intangibles Deposits & Other Assets Total Assets

Notes Payable Accounts Payable Current Portion Long-Term Debt Current Portion Capital Leases Accrued Expenses Income Taxes Payable Other Current Liabilities Total Current Liabilities Mortgages Deferred Taxes/Income Convertible Debt Long-Term Debt Non-Current Capital Leases Other Non-Current Liabilities Minority Interest (Liabilities) Total Liabilities

Preferred Stock Common Stock (Par) Capital Surplus Retained Earnings Other Equity Treasury Stock Total Shareholder's Equity Total Liabilities & Shareholder's Equity

03/31/09 Assets -93,406.48 N/A N/A N/A N/A 6,592.52 6,152.52 22,672.76 N/A N/A N/A 48,028.40 83,446.22

03/31/08

03/31/07

03/31/06

03/31/05

11,326.50 0 0 0 0 11,326.50 1,169 39,991.69 0 0 0 68,856.20 121,343.47

9,208.61 0 0 0 0 9,208.61 1,006.99 27,985.31 0 0 0 53,292 91,492.97

4,104.11 0 0 0 0 4,104.11 931.40 18,888.01 0 0 0 38,403.20 62,326.79

5,300 23,317 0 0 1,699 30,316 597 8,841 0 278 266 2,422 42,720

Liabilities & Shareholder's Equity N/A 0 48,036.56 69,211.20 N/A 0 N/A 0 N/A 0 N/A 0 N/A 0 48,036.56 69,211.20 N/A 0 N/A 0 N/A 0 20,417.10 21,130.94 N/A 0 4,018.30 19,556.19 N/A 182.70 72,471.96 110,081.04

0 57,682.97 0 0 0 0 0 57,682.97 0 0 0 14,306.15 0 13,744.07 118.22 85,851.43

0 38,770.45 0 0 0 0 0 38,770.45 0 0 0 10,116.89 0 8,298.54 61.81 57,247.70

3,807 23,304 0 0 410 0 556 28,077 0 13 0 8,425 0 3,199 47 39,761

Shareholder's Equity 77 0 N/A 0 244.86 365.48 10,652.40 10,896.93 N/A 0 N/A 0 10,974.26 11,262.42 83,446.22 121,343.47

0 0 289.87 5,351.66 0 0 5,641.54 91,492.97

0 0 278.74 4,800.34 0 0 5,079.08 62,326.79

24 169 2,220 472 74 0 2,959 42,720

Total Common Equity Shares Outstanding Book Value Per Share

10,897.26 556.50 19.58

11,262.42 547.50 20.57

5,641.54 447.10 12.62

5,079.08 444.70 11.42

2,935 368.20 7.97

Annual results of ICICI bank in details:-

Other income Stock adjustment Raw material Power and fuel Employee expenses Excise Admin and selling expenses Research and development expenses Expenses capitalised Other expenses Provisions made Depreciation Taxation Net profit / loss Extra ordinary item Prior year adjustments Equity capital Equity dividend rate Agg.of non-prom. shares (Lacs) Agg.of non promotoHolding (%) OPM (%) GPM (%) NPM (%)

Mar ' 09 7,603.72 1,971.70 -

Mar ' 08 8,810.77 2,078.90 -

Mar ' 07 5,929.17 1,616.75 -

Mar ' 06 4,983.14 1,082.29 -

Mar ' 05 3,416.14 737.41 -

-

-

-

-

-

5,073.41 3,808.26 1,358.84 3,758.13 1,113.29 11132.51 100.00 65.09 23.06 9.71

6,075.28 2,904.59 898.37 4,157.73 1,112.68 11126.87 100.00 64.08 20.10 10.50

5,073.81 2,226.36 537.82 3,110.22 899.34 8992.67 100.00 61.22 20.31 10.75

3,918.86 1,594.07 556.53 2,540.07 889.83 8898.24 100.00 53.90 24.32 13.17

2,561.74 428.80 522.00 2,005.20 736.78 7367.15 100.00 60.38 23.05 15.63

SWOT ANALYSIS OF ICICI STRENGHTS: 1) Online Services: ICICI Bank provides online services of all its banking facilities. It also provides D-Mart account facilities on-line, so a person can access his account from anywhere he is. [D-Mart is a dematerialized account opened by a salaried person for purchase & sale of shares of different companies.]

2) Advanced Infrastructure: Branches of ICICI Bank are well equipped with advanced technology to provide the customers with taster banking services. All the computerized machines are located in suitable manner & are very useful to the customers & staff of the bank.

3) Friendly Staff: The staff of ICICI Bank in all branches is very friendly & helps the customers in all cases. They provide faster services along with bonding & personal relationship with the customers.

4) 12 hrs. Banking services: Compared to other bank ICICI bank provides long hrs. of services i.e. 8-8 services to the customers. This service is one of its kinds & is very helpful for the customers who are in urgent need of money.

5) Other Facilities to the Customers & Employees: ICICI Bank also provides other facilities like drinking water facilities, proper sitting arrangements to the customers. And there are also proper Ventilation & sanitary facilities for the employees of the bank.

6) Late night ATM services: ICICI bank provides late night ATM services to the customers. The ATM centers of ICICI bank works even after 11:00pm. at night in certain branches.

WEAKNESSES: 1) High Bank Service Charges: ICICI bank charges highly to customers for the services provided by them when compared to other bank & that are why it is only in the reach of higher class of society.

2) Less Credit Period: ICICI bank provides credit facilities but only up to limited period. Even when the credit period is not over it sends reminder letters to the customers which may annoy them.

OPPORTUNITIES: 1) Bank –Insurance services: The bank should also provide insurance services. That means the bank can have a tie-up with an insurance company. The bank will advertise & promote the different policies introduced by the insurance company & convince their customers to buy insurance policies.

2) Increase in percentage of Returns on increase: The bank should provide higher returns on deposits in comparison of the present situation. These will also up to large extent help the bank earn profits & popularity.

3) Recruit professionally guided students: Bank & Insurance is a special non-aid course where the students specialize in the functioning & services of the bank & also are knowledge about various tax policies. The bank can recruit these students through tie-ups with colleges. Such students will surely prove as an asset to the bank.

4) Associate with social cause: The bank can also associate itself with social causes like providing relief aid patients, funding towards natural calamities. But this falls in the 4th quadrant so the bank should neglect it

THREATS: 1) Competition: ICICI Bank is facing tight competition locally as well as internationally. Bank like CITI Bank, HSBC, ABM, Standard Chartered, HDFC also provide equivalent facilities like ICICI do and also ICICI do not have consistency in its international operation.

2) Net Services: ICICI Bank provides all kind of services on-line. There can be easy access to the e-mail ids of the customers through wrong people. The confidential information of the customers can be leaked easily through the e-mail ids.

3) Decentralized Management: Each branch manager is given the authority of taking decisions in their respective branches. The decisions made by different managers are diverse and any one wrong decision can laid to heavy losses to the bank.

4) No Proper Facilities to Uneducated customers: ICICI Bank provides all services through electronic computerized machines. This creates problems to the less educated people. But this threat falls in the 4th quadrant so it’s negligible. The company can avoid this threat.

TOWS MATRIX

STRENGTHS

WEAKNESSES

O P

S-O STRATEGIES

W-O STRATEGIES

P O R

Strength: Large capital base.

Weakness: Workforce responsiveness.

Opportunity: Market expansion.

Opportunity: Outsourcing of Non-Core business.

T U N I T I

Strategy: Deep penetration into rural market.

Strategy: Outsource Customer Care & other E-helps.

E S

S-T STRATEGIES

T

Strength: Low operating costs.

H R E A

Threat: Increased competition from other private banks.

W-T STRATEGIES

Weakness: Not equal to international standers.

Threat: Entry of many foreign banks.

T S

Strategy: Steps to ensure loyalty by old customers.

Strategy: Consider additional benefits.

Conclusion Thus, ICICI has been able to use technology to provide value-added service to its customers during the last few years. For ICICI, technology is an integral part of their business. However, their overall progress could have been smoother but for certain internal and extraneous factors and also a pressure on spread due to a competitive market. E-banking has become a necessary survival weapon and is fundamentally changing the banking industry worldwide. Today, the click of the mouse offers customers banking services at a much lower cost and also empowers them with unprecedented freedom in choosing vendors for their financial service needs. No

country today has a choice- whether to implement E-banking or not given the global and competitive nature of the economy. ICICI have to upgrade and constantly think of new innovative customized packages and services to remain competitive. The invasion of banking by technology has created an information age and commoditization of banking services. ICICI have come to realize that survival in the new e-economy depends on delivering some or all of their banking services on the Internet while continuing to support their traditional infrastructure. The rise of E-banking is redefining business relationships and the most successful banks will be those that can truly strengthen their relationship with their customers. Without any doubt, the international scope of E-banking provides new growth perspectives and Internet business is a catalyst for new technologies and new business processes.

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