ICICI Bank Shares Gain on Stock Split

ICICI Bank shares rose as much as 1.35 per cent to Rs 1,568 on Wednesday after the lender's board approved a five-for-one stock split yesterday. ICICI Bank shares outperformed the broader Bank Nifty, which traded 0.5 per cent lower.

However, ICICI Bank's American Depositary Share will continue to represent two underlying equity shares, the lender, which is also traded in New York, said in a statement. The number of ADSs will increase in proportion to the increase in equity shares, it said.

The split is subject to shareholder and regulatory approvals, the bank said, adding it would set the record date for the split later.

ICICI Bank is India's top private sector lender by assets.

Why companies split shares?

ICICI did not give a reason for the stock split, but companies typically split their stocks to keep prices attractive for retail investors. Here are the reasons why companies spilt their shares,

1) The face value of ICICI Bank will come down from Rs 10 to Rs 2 post the stock split. Its share price will also come down to a little over Rs 300 per share.
So, the split will make ICICI Bank shares more affordable for retail investors.

2) The higher number of shares will lead to greater liquidity in the stock. This will facilitate trading and may narrow the bid-ask spread.

3) A split often results in renewed investor interest, which can have a positive impact on the stock price.

As of 10.23 a.m., ICICI Bank shares traded 0.90 per cent higher at Rs 1,559.65 on the National Stock Exchange.