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ICICI Bank
Key highlights of 3QFY11 and what can be expected for the rest of FY11
Loan book grew by 6.4% q-q and 15.3% y-y in 3QFY11, with contributions coming
from corporate loans (37.5% y-y, within this domestic corporate loans growing at
76.4% y-y) and rural loans (21.9% y-y). Retail loans were largely flat, declining
2.1% y-y (growing 1.1% q-q). This loan growth was backed by a deposit growth of
10.2% y-y – CASA deposits grew 23% y-y and term deposits were flat increasing
1.8% y-y. Blended CASA ratio was stable at the 2QFY11 level of 44%.
The bank maintained NIM at the 2QFY11 level of 2.6% on the back of sharp spike
in LDR to 95% for 4QFY11 from 87% in 3QFY11. Net-interest income grew by an
impressive 12.3% y-y and 4.9% q-q. Non-interest income increased 10.8% q-q and
4.5% y-y.
GNPLs were flat sequentially, increasing 14.1% y-y – GNPL ratio closed at 4.75%.
NNPL ratio closed at 1.39% on the back of a core provision cover of 71.8%. Loanloss
provisions for 3QFY11 at INR4.98b were in line with our estimates – 93bp of
average loans.
What the bank needs to achieve in 4QFY11 to meet our expectations
Loans of INR67b will have to be disbursed in 4QFY11 to meet our loan growth
expectation of 17.8% for FY11. We are reducing NIM estimate to 2.37% for 4QFY11.
We need to bear in mind the higher incidence of priority sector loans in 4Q (which
should drag loan yields down) and a further pass-through of higher funding costs. We
are factoring in LLPs of 60bp for 4QFY11.
What to expect in FY12
We are budgeting for a loan growth of 20%, NIM of 2.4%, core fee income growth of
26% – leading to a PAT growth of 15%. Our loan-loss provisions decline to 70bp for
FY12. We are factoring in a cost-income ratio of 44% for FY12.
Valuation: We have cut our TP to INR1,200 (from INR1,270), implying a FY12E P/BV
of 2.0x. The stock trades at 1.5x our FY12E adjusted BV for adjusted ROE of 10%. Our
TP is based on a three-stage residual income model, which assumes a risk-free rate of
8.3%, equity risk premium of 6%, terminal growth rate of 4% and beta of 1.5. Key risks
to TP are: higher-than-expected NIM compression and LLPs.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank
Key highlights of 3QFY11 and what can be expected for the rest of FY11
Loan book grew by 6.4% q-q and 15.3% y-y in 3QFY11, with contributions coming
from corporate loans (37.5% y-y, within this domestic corporate loans growing at
76.4% y-y) and rural loans (21.9% y-y). Retail loans were largely flat, declining
2.1% y-y (growing 1.1% q-q). This loan growth was backed by a deposit growth of
10.2% y-y – CASA deposits grew 23% y-y and term deposits were flat increasing
1.8% y-y. Blended CASA ratio was stable at the 2QFY11 level of 44%.
The bank maintained NIM at the 2QFY11 level of 2.6% on the back of sharp spike
in LDR to 95% for 4QFY11 from 87% in 3QFY11. Net-interest income grew by an
impressive 12.3% y-y and 4.9% q-q. Non-interest income increased 10.8% q-q and
4.5% y-y.
GNPLs were flat sequentially, increasing 14.1% y-y – GNPL ratio closed at 4.75%.
NNPL ratio closed at 1.39% on the back of a core provision cover of 71.8%. Loanloss
provisions for 3QFY11 at INR4.98b were in line with our estimates – 93bp of
average loans.
What the bank needs to achieve in 4QFY11 to meet our expectations
Loans of INR67b will have to be disbursed in 4QFY11 to meet our loan growth
expectation of 17.8% for FY11. We are reducing NIM estimate to 2.37% for 4QFY11.
We need to bear in mind the higher incidence of priority sector loans in 4Q (which
should drag loan yields down) and a further pass-through of higher funding costs. We
are factoring in LLPs of 60bp for 4QFY11.
What to expect in FY12
We are budgeting for a loan growth of 20%, NIM of 2.4%, core fee income growth of
26% – leading to a PAT growth of 15%. Our loan-loss provisions decline to 70bp for
FY12. We are factoring in a cost-income ratio of 44% for FY12.
Valuation: We have cut our TP to INR1,200 (from INR1,270), implying a FY12E P/BV
of 2.0x. The stock trades at 1.5x our FY12E adjusted BV for adjusted ROE of 10%. Our
TP is based on a three-stage residual income model, which assumes a risk-free rate of
8.3%, equity risk premium of 6%, terminal growth rate of 4% and beta of 1.5. Key risks
to TP are: higher-than-expected NIM compression and LLPs.
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