ICICI Bank Ltd. share price target

Maintain BUY with a TP of Rs 364 (1.8x Sept-19 core ABV of Rs 142 + subs-value of Rs 107). After quite a few uninspiring quarters, ICICIBC showed evidence of recovery in 2QFY18. Loan growth resumed (+13% QoQ in the domestic book), costs crawled (+3% QoQ) and NIM was stable (3.3%). Slippages, mercifully, were at an 8-qtr low. Management utilised profits from the subsidiary stake sale to beef up coverage (59.3%, +410bps QoQ) and provided for NCLT a/cs two quarters in advance.

ICICIBC reported 2QFY18 PAT of INR20.6b (19% miss), affected by elevated provisions; however, stable margins, in-line slippages and an improvement in the coverage ratio provided comfort. NII grew 9% YoY to INR57.09b (1.5% beat), while core fee growth remained soft at 9% YoY. NIM held stable at 3.27%, and management maintained its >3% NIM guidance for FY18. Business growth picked up, with the advances portfolio growing 4% QoQ (flattish in 1QFY18), led by continued traction in retail loans (+19% YoY; ~54% of total loans), and the corporate portfolio growing 5.6% QoQ. Deposit growth,...

The total Provision coverage against the 12 accounts refererd to IBC/NCLT was 56.5% and the additional provision of Rs 651 crores (required over three quarters) were made in Q22018, utilizing the listing gains of its General Insurance subsidiary. Provision coverage ratio during the quarter improved by 410 BPS QoQ to 59.3%. The drilldown list during the quarter declined to Rs19590 crore from Rs20358 crore...

We met the management of ICICI Bank (ICICIBC) to get insights of the business and outlook on asset quality. Overall loan growth will remain soft due to run-down of overseas portfolio (15% in Q1FY18 vs. 24% in Q1FY16) but robust growth in retail/SME will keep domestic loan growth strong.

ICICI Bank's Q1FY18 earnings were marginally lower than estimates, on soft core operating performance.

ICICI Bank reported a soft Q1 with an in-line PAT (Rs 20.5 bn down 8% YoY), subdued advances growth (3% YoY) and 30 bps QoQ margin drop (NIM included 10 bps benefit from income tax refunds).

Maintain BUY with a revised SOTP of Rs 338 (1.9x FY19E core ABV of Rs 132 and sub-value of Rs 88/sh. ICICIBCs 1Q performance was a tad disappointing on the core front, as NIMs dipped and growth slowed optically. While the slippages were lower (despite one large non-watchlist NPA) and the restructured book almost halved the net stressed assets were stable, as watchlist increased 7% QoQ.

NII increased to Rs. 7097.66 Cr in Q4FY17 compared to Rs. 6454.4 Cr in Q3FY17.

ICICIBC reported Q4 PAT of ~Rs 20.2 bn (below estimate, but up ~3x YoY on favorable base). Slippages were high (Rs 112.9 bn) but include Rs 53.8 bn of slippages from a large cement account'; excluding this, slippages would have been ~Rs 59 bn (lower than the Rs 70-80 bn run-rate).

Gross/Net non-performing assets (NPA) ratios increased by 83/108 bps QoQ to 8.7%/5.4% led by the higher slippages (60% QoQ). However, out of the total slippages, one single account from the cement sector contributed 48% to the fresh NPA addition (added as per the RBI's instruction to banks). On a positive note, nearly half of this exposure is expected to be upgraded soon as it is part of an impending M&A; transaction. Apart from this, other slippages resulted from the drilldown list (~22%), restructured loans (~16%) and retail (~4%). Although we expect slippages to remain elevated in FY18E, it will be much lower...