Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank posted strong core earnings in 4QFY11, but this was offset by a treasury loss.
Going forward, we expect a moderate improvement in ROAs from hereon (+30bp yoy in
FY11 to 1.4%). Given the expected business growth, only a gradual improvement in RoEs is
likely. Maintain Hold.
4QFY11: Strong core earnings and lower provisions, treasury loss acts as dampener
For the quarter, net interest income increased 23% yoy (+9% qoq) on the back of 19% yoy
loan growth (+5% qoq). Net interest margins (NIMs) were up 10bp yoy to 2.7% (+10bp qoq).
The domestic NIM was 3.1%; the international NIM was 85bp. Core fee income grew 18%
yoy in 4Q (+13.6% yoy in FY11). The bank booked a treasury loss of about Rs2bn in the
quarter (making a Rs2.15bn loss in FY11 vs a Rs11.8bn gain in FY10). The provision charge
for bad loans was largely stable qoq at 20bp. According to management, the average lowcost
deposits (CASA) ratio increased to about 39% in FY11 (+650bp yoy).
FY11: Lower provision for bad loans drove RoAs higher
For FY11, NIMs improved 10bp yoy to 2.3%. Core fee income contributed positively but was
more than offset by the treasury loss. On balance, non-interest income to assets fell 30bp in
FY11 to 1.7%. Operating cost to assets increased 10bp. However, provision fell 60bp, largely
on the back of an improvement in asset quality. Overall, RoAs improved 30bp yoy to 1.4%.
Management guidance: Stable margins and healthy business growth
Going forward, management guides for 20% yoy loan growth in FY11 (+19% yoy in FY10) and
expects overall NIMs to be largely stable yoy at 2.6% in FY12. It expects international NIMs to
increase to 120-125bp from 85bp currently, but domestic NIMs to remain stable as the higher
yield on assets should be largely offset by the full impact of the rise in cost of funds and a lower
yield on Rural Infrastructure Development Fund (RIDF) investments. In general, management is
targeting a consolidated ROE of 15-16% over the medium term.
No material change in estimates; maintain Hold with an SOTP-based TP of Rs1,197
Post the balance sheet restructuring over the last few years, ICICI Bank appears to be geared up
to deliver growth and improve profitability. Going forward, we expect a moderate improvement in
ROAs from hereon (+30bp yoy in FY11 to 1.4%). Given the expected business growth, only a
gradual improvement in RoEs is likely. We maintain our Hold rating. At our nudged-up target price
of Rs1,197, the stock would trade at 2.4x FY12F book value.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank posted strong core earnings in 4QFY11, but this was offset by a treasury loss.
Going forward, we expect a moderate improvement in ROAs from hereon (+30bp yoy in
FY11 to 1.4%). Given the expected business growth, only a gradual improvement in RoEs is
likely. Maintain Hold.
4QFY11: Strong core earnings and lower provisions, treasury loss acts as dampener
For the quarter, net interest income increased 23% yoy (+9% qoq) on the back of 19% yoy
loan growth (+5% qoq). Net interest margins (NIMs) were up 10bp yoy to 2.7% (+10bp qoq).
The domestic NIM was 3.1%; the international NIM was 85bp. Core fee income grew 18%
yoy in 4Q (+13.6% yoy in FY11). The bank booked a treasury loss of about Rs2bn in the
quarter (making a Rs2.15bn loss in FY11 vs a Rs11.8bn gain in FY10). The provision charge
for bad loans was largely stable qoq at 20bp. According to management, the average lowcost
deposits (CASA) ratio increased to about 39% in FY11 (+650bp yoy).
FY11: Lower provision for bad loans drove RoAs higher
For FY11, NIMs improved 10bp yoy to 2.3%. Core fee income contributed positively but was
more than offset by the treasury loss. On balance, non-interest income to assets fell 30bp in
FY11 to 1.7%. Operating cost to assets increased 10bp. However, provision fell 60bp, largely
on the back of an improvement in asset quality. Overall, RoAs improved 30bp yoy to 1.4%.
Management guidance: Stable margins and healthy business growth
Going forward, management guides for 20% yoy loan growth in FY11 (+19% yoy in FY10) and
expects overall NIMs to be largely stable yoy at 2.6% in FY12. It expects international NIMs to
increase to 120-125bp from 85bp currently, but domestic NIMs to remain stable as the higher
yield on assets should be largely offset by the full impact of the rise in cost of funds and a lower
yield on Rural Infrastructure Development Fund (RIDF) investments. In general, management is
targeting a consolidated ROE of 15-16% over the medium term.
No material change in estimates; maintain Hold with an SOTP-based TP of Rs1,197
Post the balance sheet restructuring over the last few years, ICICI Bank appears to be geared up
to deliver growth and improve profitability. Going forward, we expect a moderate improvement in
ROAs from hereon (+30bp yoy in FY11 to 1.4%). Given the expected business growth, only a
gradual improvement in RoEs is likely. We maintain our Hold rating. At our nudged-up target price
of Rs1,197, the stock would trade at 2.4x FY12F book value.
No comments:
Post a Comment