ICICI Bank Ltd. share price target

ICICI Bank reported a mixed Q4FY20 with negatives marginally outweighing the positives.

COVID related provisions of `27bn and lower other income led to weaker than expected PAT for ICICI Bank. The disappointment on asset quality was driven by high corporate slippages, led by two overseas exposures. Substantial provisions on these however ensured PCR was sequentially stable. Margins showed healthy trends despite a sequential 500 bps decline in CD ratio. We factor in near-doubling of slippages in FY21E but high contingency buffers of ~`45bn (including all STD asset provisions except for general...

Maintain affected by higher provisions (INR59.7b), as the bank made COVID-19 provisions of INR27.25b, higher than the requirement as per RBI NII grew 17% YoY to INR89.3b, led by ~16% YoY growth in retail loans and 10bp QoQ expansion in margins to 3.87%. As a prudent measure, the bank has made additional provisions of INR27.2b toward COVID-19-related stress; furthermore, lower exposure to the SME segment (3.5% of loans) and high granularity in the BB and below book provides some comfort. The domestic margin improved 10bp QoQ to 4.14% (v/s 4.04% in 3QFY20), while overseas NIMs declined to 0.28% v/s 0.38% Overall loan growth moderated to ~10%/1.5% YoY/QoQ to INR6.5t, driven by a 16% YoY increase in retail loans. As a prudent measure, the bank has made additional provisions of INR27.2b toward COVID-19-related stress; also, lower exposure to the SME segment (3.5% of loans) and high granularity in the BB and below book provide some comfort.

Bank's liability-side strength was reflected in deposit mobilization (up 8% qoq and 18% yoy), texture (avg. CASA stable at 42%) and funding cost (fell 50bps qoq on computed basis). Reported NIM was...

ICICI Bank maintains a stable performance amid all the chaos of advance provisioning by major banks, well beyond RBI mandated 5% provisioning for Covid-19. NII increased by 17.1% YoY/4.5% QoQ, PPOP increased by 18.6% YoY/down 2.1% QoQ and Net Income increased to Rs 1,221 Cr, up by 26.0% YoY / down 70.5% QoQ. The decline in the bottomline could be attributed to the advance provisioning as per RBI guidelines for Covid-19 of Rs 2,725 Cr. Apart from the Corona crisis hit, the pre corona macroeconomic lull and slowing economy had an impact on the bank's...

continue to keep faith in its strong brand franchise, while high PCR of +75%, strong CASA & pricing power will help it to mitigate adverse impact from COVID-19. We are unable to foresee hits on asset quality as yet but see high probability of rising stress, hence conservatively build 2.5% slippage ratio and 180bps of credit cost in FY21 with residual flow in FY22 as well. We retain BUY with revised TP of Rs436 (from Rs509) based on 1.8x (from 2.0x) FY22...

ICICI Bank's (ICICIBC) Q4FY20 PAT at Rs 12bn (+26% YoY) missed estimates as the bank made Covid-related provisions of Rs 27bn.

ICICI Bank posted mixed numbers for Q4FY20 in these tough times, wherein operating performance was largely in line, but large provisions (partly due to one large account and COVID-19) resulted in lower-than-expected PAT. Net Interest margin (NIM) improved to 3.87% levels and sequential improvement in asset quality was also positive, though elevated slippages were dampeners. Net interest income (NII) increased by 17% y-o-y to Rs. 8,927 crore and were in-line with expectations. Profit after tax (PAT), at Rs. 1,221 crore, declined by 70% q-o-q, but rose by 26% y-o-y (still below expectations). Provisions jumped to Rs 5967...

We believe there will be a wide of range of opportunities for quality companies across sectors; however, we believe that some themes are more likely to play out and benefit the leader companies in that space disproportionately.

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