icici prudential banking and financial services final presentation

ICICI Prudential Banking and Financial Services Fund(An Open Ended Equity Scheme)

NFO closes on August 7, 2008Drashti [email protected]

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Presentation Structure

1.Current Market Dynamics

2.Banking and Financial Services

3.ICICI Prudential Banking and Financial Services Fund

Drashti [email protected]

3

Current Market Dynamics


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Inflation Rates are RisingWPI (YoY%)

3

4

5

6

7

8

9

10

11

12

Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08

Inflation at 13-year high due to rise in Fuel & other Commodity prices

Data Source: Bloomberg


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Interest Rates are Rising10 Year G-Sec Yields(%)

7.0

7.2

7.4

7.6

7.8

8.0

8.2

8.4

8.6

Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08

Expectation of RBI hiking key rates is pushing up rates



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Deposit Rates are HighAverage 2-5 year deposit rate (%)

5.00

6.00

7.00

8.00

9.00

10.00

Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

Data Source: Emkay Share and Stock Brokers Ltd


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PLR = Lending rates are not rising fast

8.00

9.00

10.00

11.00

12.00

13.00

14.00

Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07

PLR (%)

Data Source: Emkay Share and Stock Brokers Ltd


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Net Interest Margins Under Pressure

ICICI Bank NIM (%)

0.00

1.00

2.00

3.00

4.00

5.00

FY

95

FY

96

FY

97

FY

98

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

SBI NIM (%)

0.00

1.00

2.00

3.00

4.00

5.00

FY

95

FY

96

FY

97

FY

98

FY

99

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

Data Source: Emkay Share and Stock Brokers Ltd, The Stock mentioned above does not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.


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Recent IIP numbers suggest some softening

0

4

8

12

16

Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08

IIP (% change YoY)



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Banking & Financial Services Sector is under stress from Macro environment point of view

Inflation rates are risingInterest rates are risingDeposit rates are highLending rates are not rising fastNet Interest Margins under pressureRecent IIP numbers suggest some softening


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Do Prices factor majority of bad news?

Bank 52-Week High CMP (18/06/08)

% Fall from 52-Week High

State Bank of India 2397 1351 43.64%

ICICI Bank 1465 785 46.42%

Bank of Baroda 501 245 51.10%

Federal Bank 395 215 45.57%

Development Credit Bank

162 63 61.11%

Data Source: Capital line (As on 18/06/2008), The Stock mentioned above does not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.


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Price-to-Book Value

1.7

0.8

1.6

0.8

5.0

3.2 3.3

1.8 1.81.1

2.2

1.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

BoB FedBk HDFC ICICI PNB SBI

At 52-Week High Current

Majority of bad news already Priced in ?Data Source: Capital line, Bloomberg, Current P/BV as on 18/06/08, The Stock mentioned above does not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.


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Banking and Financial Services


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Standard Chartered Bank – Branch in Kolkata

1858 2008

sau saal pehale banking tha.... aaj bhi hai aur kal bhi rahega

Data Source: Company website


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CHINA

GDP for FY08

ICBC Market Cap

: US$ 3.94 trillion

: US$ 242 billion

Data Source: Bloomberg, World Economic Outlook 2008(IMF), Market Cap as on 18/06/08, The Stock mentioned above does not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.


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SPAIN

GDP for FY08

Banco SantanderMarket Cap

: US$ 1.62 trillion

: US$ 118 billion



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INDIA

GDP for FY08

SBI Market Cap

: US$ 1.23 trillion

: US$ 20 billion



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Top 5 Banks in the World in terms of Market Cap

RANK NAME COUNTRY MARKET CAP (USD Bn)

1 ICBC China

UK

China

China

US

242

2 HSBC 191

3 China Construction Bank

190

4 Bank of China 141

5 J P Morgan Chase 134

Where is India?Data Source: Bloomberg, Market Cap as on 18/06/08, The Stock mentioned above does not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.


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ICICI Prudential Banking and Financial Services Fund


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About the FundSector Fund:Cannot be part of the Core portfolioShould be small fraction of overall portfolio

Invest through SIP

Investment Universe: Invest into following types of companiesBanking CompaniesBroking CompaniesAsset Management CompaniesWealth Management CompaniesInsurance CompaniesNon-Banking Financial Companies (NBFC)Investment Banking CompaniesLeasing and Finance CompaniesTerm Lending InstitutionsAny other company engaged in providing banking and financial

servicesDrashti [email protected]

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Investment Strategy

Bottom-up Stock PickingIntrinsic value arrived at after intensive, internal research; reference to analyst

reports and face-to-face meetings with management to analyze company’s strengths, business model, sustainable competitive advantages and ability to grow

Across Market CapitalizationThe fund would look at stocks across the universe of banking and financial

services companies without any capitalization bias

Target Investment CompaniesFocus will be on companies gaining market share in businesses through

excellent customer service, product innovation and operating efficiency


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Scheme FeaturesType of Scheme An Open-ended Equity Scheme seeking to generate long-term capital

appreciation

Options Retail and Institutional Option I

Sub-Options Retail Option: Growth and Dividend (Payout and Reinvestment)Institutional Option I: Growth

Minimum Application Amount

Retail – Rs. 5,000Institutional Option I – Rs. 10 crores

Entry LoadRetail: (i) For investments of less than Rs.5 Crores: 2.25% of applicable NAV (ii) For investments of Rs.5 Crores and above: NilInstitutional Option I: Nil

Exit Load

Retail: (i) For investments of Rs.5 Crores and above: Nil (ii) For investments of less than Rs.5 Crores made during the NFO period and redeemed before 6 months from the date of allotment: 1% of applicable NAVInstitutional Option I: Nil


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Risk Factors• Statutory Details: ICICI Prudential Mutual Fund (the Fund) was set up as a Trust sponsored by Prudential plc (through its

wholly owned subsidiary namely Prudential Corporation Holdings Ltd) and ICICI Bank Ltd. ICICI Prudential Trust Limited (the Trust Company), a company incorporated under the Companies Act, 1956, is the Trustee to the Fund. ICICI Prudential Asset Management Company Ltd (the AMC). a company incorporated under the Companies Act, 1956, is the Investment Manager to the Fund. ICICI Bank Ltd and Prudential Plc (acting through its wholly owned subsidiary namely Prudential Corporation Holdings Ltd) are the promoters of the AMC and the Trust Company.

• Risk Factors: Mutual Funds and securities investments are subject to market risks and there is no assurance or guarantee that the objectives of the Schemes will be achieved. As with any securities investment, the NAV of the Units issued under the Schemes can go up or down, depending on the factors and forces affecting the capital markets. Past performance of the Sponsors, AMC/Fund does not indicate the future performance of the Schemes of the Fund. The Sponsors are not responsible or liable for any loss resulting from the operation of the Schemes beyond the contribution of an amount of Rs.22.2 lacs, collectively made by them towards setting up the Fund and such other accretions and additions to the corpus set up by the Sponsors.

• Investment Objective: ICICI Prudential Banking and Financial Services Fund is an Open-ended equity scheme that seeks to generate long-term capital appreciation to unitholders from a portfolio that is invested predominantly in equity and equity related securities of companies engaged in banking and financial services. Asset Allocation Pattern: Equity & equity related securities of companies engaged in Banking and Financial Services Sector # $ - 70% to 100%, Debt *$ - 0% to 30% $ Including derivatives instruments to the extent of 75% of the Net Assets as permitted by SEBI #Including investment in ADR/GDR up to 50% of allocation to Equity & Equity related securities maximum to the extent permitted under SEBI Regulations.*Including 50% inSecuritized debt. Stock lending upto 30% of the Net Asset of the Scheme Terms of issue: The Units of the Scheme can be subscribed during the New Fund Offer (NFO) at Rs. 10/- per unit plus applicable loads and at NAV bases prices subject to load upon re-opening. Liquidity: Being open-ended in nature, the Scheme will commence sale and redemption of units not later than 30 days after the close of the New Fund Offer period Retail and Institutional Option I are available for investments. Entry Load -Retail Option: i)For investment of Rs. 5 crores and above: Nil. ii) For investment of less than Rs. 5 crores 2.25 % of the applicable NAV. Institutional Option I: Nil. Exit Load - Retail Option : i)For investment of Rs. 5 crores and above: Nil. ii) For investment of less than Rs. 5 crores and redeemed before 6 months from the date of allotment: 1% of the applicable NAV. Institutional Option I: Nil. ICICI Prudential Banking and Financial Services Fund is only the name of the scheme and does not inany manner indicate either the quality of the scheme, its future prospects or returns. Investors in the scheme are not offered any guaranteed returns.For Scheme Specific Risk Factors and other details, Please refer to Offer Document and Key Information Memorandum, contact your financial advisor or log onto www.icicipruamc.com or visit any of the branches of the AMC. Mutual Fund Investments are subject to market risks. Please read the Offer Document carefully before investing.


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Risk Factors• Disclaimer: In the preparation of the material contained in this document, ICICI Prudential Asset Management Company Ltd.

(the AMC) has used information that is publicly available, including information developed in-house. Some of the material used in the document may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used in this document is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and / or completeness of any information. We have included statements / opinions / recommendations in this document, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, which have an impact on our services and / or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices etc.

• The Stock (s) /Sector(s) mentioned in this material do not constitute any recommendation of the same and the portfolios may or may not have any future positions in this Stock.(s) /Sector(s)

• ICICI Prudential Asset Management Company Limited (including its affiliates), the Mutual Fund, The Trust and any of its officers, directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, special, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner. The recipient alone shall be fully responsible/are liable for any decision taken on this material.


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Thank you


icici prudential banking and financial services final presentation

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