New Delhi
ICICI Bank on Wednesday said it will conduct an independent inquiry into an anonymous whistleblower’s complaint against the bank’s Managing Director and Chief Executive Officer Chanda Kochhar for allegedly violating the bank’s of conduct.
The inquiry will be conducted by an ‘’independent and credible” person appointed by the bank, ICICI Bank said in a regulatory filing.
“The scope of the inquiry would be comprehensive and would include all important matters arising out of and in the course of examination of the facts, and wherever warranted, use of forensics/email reviews and record of statements of relevant personnel etc.,” the statement read.
The bank’s stock is likely to remain under pressure till the final outcome of the inquiry.
ICICI’s board mandated its audit committee to appoint a head for the inquiry, determine its terms of reference, and period covered. The committee will also help the head of inquiry with the required independent legal and other professional support.
The whistleblower complaint is in addition to a 2016 letter by investor Arvind Gupta, who had alleged that loans to Videocon Group pointed to Kochhar’s conflict of interest.
This comes four days after Sebi issued a show-cause notice to the bank and its CEO for alleged violation of disclosure requirements under securities law in the case involving Videocon Group and NuPower Renewables, a firm run by her husband Deepak Kochhar.
ICICI Bank is expected to register ~17% PPOP CAGR over FY18-20E led by higher granularity in the loan mix and expected NII growth at 22% CAGR over FY18-20E; valuing at 1.9x FY20E P/BV.
We forecast advances growth of 18% CAGR over FY18-20E driven by retail & SME segment. Slippages are under watchlist to reduce with lending to higher rated companies and upgrades from lumpy steel and infra sector. Further, bank’s focus on lending to higher rated companies is expected to assuage its NPAs woes. With robust retail advances and lower cost of funds we see NIMs to increase by 30bps to 3.3% over FY18-20E. We forecast earnings CAGR of 96% over FY18-20E due to improved asset quality and higher PPOP.
Hence, we expect RoE and RoA to improve by ~340bps and 30bps to 11.8% and 1.3% respectively by FY20E. The stock trades at ~1.4x on FY20E P/BV. We have positive outlook on the stock.
