ICICI, HDFC Bank, Axis stocks recover in afternoon after brief fall

Analysts see no impact of Cobrapost report; Banks to probe money laundering charges

The stocks of Axis Bank, HDFC Bank and ICICI Bank recovered in afternoon trades and analysts see no risks to these stocks due to reports of online newspaper Cobrapost that these banks allegedly indulged in money laundering.

At 12:45 Axis Bank stock was up 1.06 per cent, HDFC Bank was up 1.40 per cent and ICICI Bank was up 2.16 per cent. Axis Bank is quoting at Rs 1,361.60, HDFC Bank at Rs 644.00 and ICICI Bank at Rs 1,109.30. All these stocks fell in early trade after money laundering allegations made by Cobrapost.

“We do not see any impact on the bank stocks due to this news. In the next one year we see upside in the stocks of these three banks, as they have a good asset quality and if interest rates fall the stock prices will rally further,” said Vaibhav Agrawal, vice president (research), Angel Broking.

Earlier today, Cobrapost, an online magazine, claimed that its undercover investigation has revealed that lenders such as ICICI Bank, HDFC Bank and Axis Bank run money laundering rackets.

These money laundering services are openly offered to even walk-in customers who wish to launder money. "A variety of options for laundering ill-gotten cash are being offered brazenly. These money laundering services are being offered practically as a standard product across the country," Cobrapost said in a press statement.

All the three banks concerned have said that they are probing the matter.

“Axis Bank has systems and processes that are robust and fully compliant with extant regulations. We will examine whatever information that is brought to our notice and investigate thoroughly. The bank has built a strong customer franchise over the years and maintains high corporate governance standards. Any deviations to such standards are viewed very seriously. Best practices across businesses are followed by the bank and we are confident that all our businesses will live up to the high standards we have set for ourselves as a bank,” a statement from Axis Bank said.

Earlier in the day, India's second largest bank ICICI Bank said it has constituted a high level committee to investigating the matter and the panel will submit its finding in two weeks.

“ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct, including AML and KYC norms. We have demonstrated our commitment to this by following a zero tolerance policy towards any violation.We are deeply concerned with the media reports.We want to assure our customers and all stakeholders that we are committed towards adherence to the high standards of business conduct, which is expected of us.We have constituted a high level inquiry committee to investigate into the matter and submit its findings in 2 weeks,” ICICI Bank said.

The one-year outlook of the stocks of these three banks is expected to be bright. “In the next 1 year the stock prices of these banks may climb up by another 20 per cent from current levels,” said a banking analyst with a domestic brokerage firm.