Moneycontrol News

ICICI Bank reported a mixed set of results for the quarter ended September where net profit fell below analyst’ estimates while net interest income was a beat. But, stable asset quality and no divergence from RBI should keep the stock afloat when it opens for trading on Monday.

The consolidated profit after tax was Rs2,071 crore (US$ 317 million) in September quarter compared to Rs2,605 crore (US$ 399 million) in the June quarter and Rs2,979 crore (US$ 456 million) for Q2-2017.

“ICICI Bank reported a good set of results for the quarter ended September 30. One, there was no negative surprise and there was no deviation in terms of asset quality,” AK Prabhakar, HoR, IDBI Capital told Moneycontrol News. “We feel that ICICI Bank should open with gains of 2-3 percent,” he said.

Krishnan ASV of SBICap Securities also feels numbers are very commendable as slippages are under control and assuming no divergence during the quarter. In fact, the firm like ICICI Bank does not need to report divergence as it already learned lessons from past experiences.

ICICI Bank closed 0.57 percent higher at Rs300.95 on Friday. It rose to an intraday high of Rs305.15, and an intraday low of Rs285.40.

We have collated a list of top 5 takeaways from ICICI Banks’s Q2 results:

Standalone PAT:

The standalone net profit after tax was Rs2,058 crore (US$ 315 million) for the quarter ended September 30 compared to Rs2,049 crore (US$ 314 million) for the quarter ended June 30, 2017 (Q1-2018) and Rs3,102 crore reported in the year-ago period.

Net Interest Income:

Net interest income (NII) increased by 9 percent on a year-on-year basis to Rs5,709 crore (US$ 874 million) in the quarter ended September 30, 2017, compared to Rs5,253 crore (US$ 805 million) in the corresponding quarter of last fiscal.

The net interest margin was stable sequentially at 3.27 percent in the September quarter, and increased by 14 basis points compared to the net interest margin of 3.13 percent in the corresponding quarter of last fiscal.

Credit Growth:

The year-on-year growth in domestic advances was 13 percent. The Bank has continued to leverage its strong retail franchise, resulting in a year-on-year growth of 19% in the retail portfolio.

The retail portfolio constituted about 54 percent of the loan portfolio of the Bank at September 30, 2017. Total advances increased by 6 percent year-on-year to Rs482,780 crore (US$ 73.9 billion) at September 30, 2017, from Rs454,256 crore (US$ 69.6 billion) at September 30, 2016.

Asset Quality:

The gross NPA additions declined to Rs4,674 crore (US$ 716 million) in the September quarter compared to Rs4,976 crore (US$ 762 million) in the June quarter and Rs8,029 crore (US$ 1.23 billion) in the year-ago period.

The Net non-performing assets (NPAs) decreased from Rs25,306 crore (US$ 3.9 billion) at June 30, 2017 to Rs24,130 crore (US$ 3.7 billion) at September 30, 2017.

The Bank’s net nonperforming asset ratio declined from 4.86 percent at June 30, 2017, to 4.43 percent at September 30, 2017.

The Net loans to companies whose facilities have been restructured were Rs2,029 crore (US$ 311 million) at September 30, 2017, compared to Rs2,370 crore (US$ 363 million) at June 30, 2017.

There was a sequential increase of 410 bps in provision coverage ratio on the non-performing loans, including cumulative technical/prudential write-offs to 59.3 percent, further strengthening the balance sheet.

Capital Adequacy

The Bank’s capital adequacy at September 30, 2017 as per Reserve Bank of India’s guidelines on Basel III norms was 17.56 percent and Tier-1 capital adequacy was 14.50 percent compared to the regulatory requirements of 10.35 percent and 8.35 percentrespectively.

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