ICICI Bank Ltd. share price target

ICICI Bank's (ICICIBC) Q1FY20 PAT at Rs 19.1bn was above our estimate due to below-expected provisions.

We initiate with a BUY for a 24 months price target of Rs.566, representing an upside of 30% from the CMP of Rs.439

ICICI Bank (ICICIBC) reported a healthy core performance in Q4FY19. While loan and NII growth was healthy, net profit growth was lower due to a spike in provision costs. NIM increased by 32bps QoQ to 3.72% owing to interest on income tax refund and interest received on NPA a/cs.

Structural changes at the bank are increasingly evident, as the bank continues to re-orient itself towards retail lending (~60% of the book). Shrinking pools of identified stress and low rated corporate loans will insulate the bank from asset quality shocks. A consistent improvement in core operating parameters (growth, NIMs, CASA) give us confidence that the bank is put, on its revival (of sorts) trajectory. The spurt of credit downgrades, may throw only a temporary spanner in its works. Its creditable franchise and reach gives it an edge over its peers. While slippages for the qtr were higher vs. expected, the overall stress declined, keeping the banks prospects remain largely unchanged. Maintain (2.0x Mar-21 core ABV of Rs 172 and sub-value of Rs 109).

Operating performance marred by Credit costs. Maintain Accumulate. The bank reported a 5% YoY lower profit (missed our estimates), due to higher credit costs of 230 bps (our estimate was 160 bps). This is despite a lower accretion in GNPA (ex of special cases) and improved asset quality by 105 bps to 6.7%. In other parameters, results were strong with NIM expansion, 17% deposits growth, robust domestic and retail advance growth of 17% at 21% YoY respectively. We expect the operating performance to remain strong but marred by credit costs in near term. At...

US & UK yields rose as US GDP, payroll and consumer confidence data surprised positively and BoE delivered hawkish comments. Crude prices fell after US inventories rose. Global currencies appreciated against the US$ and equity markets were stable. However, volatility to markets might return as US may soon impose US$ 200bn tariffs on Chinese imports. Indian equity markets fell led by consumer, auto and IT stocks. Consumer firms reported sharp deceleration in rural volume. We expect muted growth in H1FY20....

ICICI Bank reported 5% decline in net profit at Rs 969.06 crore for the quarter ended March 2019 (Q4FY2019). The bank has exhibited sharp improvement in margins and asset quality in Q4FY2019. The global NIM of the bank has increased to one of the best level of 3.72% in Q4FY2019, while the bank has sharply reduced net NPA ratio closer to 2% end March 2019. The net interest income of the bank has surged 27%, while the core fee income of the bank has also increased at healthy pace of 15% in Q4FY2019....

ICICI Bank Ltd reported Q4FY19 numbers largely inline with our/market expectations on the net revenue front.

In Q4FY2019, ICICI Bank's net interest income (NII) rose by 26.5% y-o-y to Rs. 7,620crore, was better than expectations, aided by margin expansion. However, its other income witnessed a prima facie de growth due to stake sale gain in Q4FY18. Hence, excluding the one off, other income grew ~53% y-o-y, margins expanded to a multi-quarter high, but more importantly,...

6 May 2019 ICICIBC reported PAT of INR9.7b (significantly below our estimate) in 4QFY19, NII grew 17%, while PAT declined 50% YoY to INR33.6b owing to higher provisions (credit cost of ~3.6%). NII increased 26.5% YoY to INR76.2b in the quarter, led by a 32bp QoQ improvement in the margin to 3.72%. The NIM was driven by a one-off impact of (a) 20bp on account of income tax refund (INR4.1b) and (b) 5bp due to interest collection from NPLs. On a like-to-like basis, the margin improved 25bp QoQ. Core fee income grew ~15% YoY, with retail forming 74% of total fees. Advances rose 14.5% YoY, with domestic book growing by 17% YoY (~22% YoY growth in retail), while the overseas loan mix declined to 10.7%.