ICICI Bank Ltd. share price target

While Mr Bakhshi presented last quarterly results at ICICIBC, the upcoming results announcement now becomes much more important as it will provide much-needed clarity on the banks performance and the revised business strategy under the new leadership. We believe that the development has raised hopes of a quicker turnaround in the banks earnings/business performance. Mr Bakhshi has been associated with ICICI Group for 32 years and also served as CEO at two well-performing subsidiaries ICICI Prudential Life and ICICI Lombard early in his career. Under the leadership of Ms Kochhar, ICICIBC had shared its strategy to achieve 15% consolidated RoE by Jun-20 and a net NPL ratio of <1.5% by Mar-20. Mr. Bakhshi started his career with ICICI Ltd. in 1986 and has worked across different functions/businesses of ICICI Group. Prior to this role, Mr Bakhshi was Deputy MD of ICICI Bank.

ICICI Bank board today announced for a) appointment of Mr. Sandeep Bakhshi (currently COO) as MD & CEO of the bank for 5 years (subject to regulatory and other approvals) and b) accepted the early retirement request by Ms. Chanda Kochhar. The change of guard, in our view, puts to rest concerns around leadership. The enquiry instituted against the out-going MD continues and one awaits the outcome on the same. Focus shifts to asset growth and resolution of certain large NPA accounts. Capital position remains healthy; subsidiaries remain profitable. Valuations continue to remain undemanding. Retain BUY with SOTP...

ICICIBC has remained conservative lender in recent past with focus mainly on retail assets. However the management has started exploring corporate/mid corporate/SME segments that have survived the last 5-6 years and have decent business experience with the bank. In the retail loan segment, ICICIBC is concentrating on granularity, high risk - high spreads unsecured business (eg. credit cards, personal loans) and cross selling of retail products to existing good quality customers. The bank is bringing about a transformation in its organizational culture by setting market share oriented targets on a product specific level. The emphasis is also on easing the growth constraints, decongesting the internal system,...

With considerably lower slippages of Rs 4,036cr (74% QoQ and 19% YoY), Gross NPA ratio declined by 25 bps QoQ to 9.7%. Notably, it was the lowest slippages recorded in the last eleven quarters. Net NPA ratio declined by 76 bps QoQ to 4.7% supported by accelerated provisions. As a result, provision coverage ratio (PCR) improved by 560 bps QoQ to 66.1%. ICICI Bank disclosed the quantum of its BB & below' rated exposure in corporate and SME book which stood at Rs24,630cr, of which, nearly 51% is already identified as stressed assets in the drilldown list, restructured loans and various other dispensations. Further, more than 55% of the remaining exposure pertains to accounts with outstanding of less than Rs100cr. Hence, the management is confident that slippages will remain lower in FY19E as...

ICICI Bank continued to surprise negatively on core operating and credit cost front in 1QFY19. Its operating profit excluding exceptional item declined by 9.4% YoY to Rs58.1bn led by lower other income and relatively lower growth in NII. Its NII remained sequentially subdued at Rs61bn (+9.2% YoY and +1.3% QoQ) despite continued revival in domestic loan growth and sustained higher CASA base. Continuing to move southwards, domestic NIMs declined to 3.54% from 3.67% in 4QFY18 despite recognition of one-time interest income on recovery from Bhushan Steel. Further, core fee income remained sequentially flat at Rs27.5bn, which clearly indicates that improving balance sheet metrics are not percolating down to operating profit...

NII rose to Rs. 6101.9 Cr in Q1FY19 compared to Rs. 6021.67 Cr in Q4FY18. ICICI Bank Ltd Q1FY19 results Comment

30 July 2018 ICICI Bank Reported NIM for the quarter declined 5bp/8bp QoQ/YoY to 3.19%. Domestic margins declined 13bp QoQ to 3.54% while overseas NIMs increased to 0.30% (26bp QoQ). CASA growth of +16.1% YoY was driven by 17.4% YoY growth in SA deposits. Overall CASA ratio declined by 120bp QoQ to 50.5% while average CASA mix increased by 20bp QoQ to 46.1% Overall loan growth slowed down to 0.8% QoQ led by continued traction in retail loans. Domestic loans grew 15.1% YoY, while international loans were down 9.7% YoY.

We retain BUY on ICICI Bank with SOTP based TP unchanged at Rs360. Q1'19 results were broadly in-line with our estimates on operational / asset quality front. Core operating profit remains healthy (+13% YoY); new NPA addition moderates (slippages at 3.1% of loans) and loan growth (+11% YoY) gathers pace. Drill-down list (<1% of loans) coupled with BB and below-rated portfolio (5% of loans) remain the new watchlist. We see provisions remain elevated in the near term (FY19E); however draw comfort in pace of resolution and ~69% coverage ratio (combined) against list-1 and list-2 IBC accounts. Capital position remains healthy; subsidiaries remain profitable. Valuations continue to remain undemanding....

ICICI Bank reported loss of `120cr owing to MTM losses (after IPru Life stake sale) and elevated provisions (increased coverage on NCLT exposure). Net interest income grew by 9.2% and reported NIM compressed by 5bps/8bps qoq/yoy to 3.19%. Slippage for Q1FY19 was `4,036cr, which is lowest from last 11 quarter. Outlook & Valuation: At t..

We assess the bank's Q1FY19 performance as extremely encouraging. While the head line loan growth numbers are muted we see much healthier underlying current. Sequential pressure on NIMs was largely on expected lines and we see improvement in core spreads going ahead.