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ICICI Bank — 1Q: Positive earnings quality;
Reiterate Buy
Country Overview
1Q: positive earnings quality; consol. earnings also up 53%
ICICI Bk (standalone) reported 1QFY11 earnings of Rs13.3bn (up 30% yoy).
Although, 1Q earnings were marginally below estimates (~3%), the quality of
earnings was better than expected. More importantly, consolidated earnings of
ICICI Bk grew a whopping +53% yoy driven by the life insurance business (profit
of Rs3.4bn vs. Rs1.2bn net loss in 1QFY11) that was the key contributor besides
the bank. Also, while most subs, barring life insurance, of ICICI Bk reported yoy
declines in profitability, they contribute less than 9-10% to consolidated profits.
Topline in-line; margins up; CASA flat; asset quality comfort
ICICI Bank’s topline was in-line and grew +21% yoy driven by 20% yoy loan
growth and margins at 2.6% (slightly better than expected) and up 10bps yoy.
CASA, although down from 45% in FY11, was ~42% and average CASA still
higher by at least 50bps qoq at +40%. Core fees were up 12% yoy. Asset quality
was also very comfortable with only ~Rs2.7bn of net NPL accretion, almost
Rs2bn of which was from MFI portfolio buyout, as also indicated by the bank.
Gross NPLs down 1% qoq (at 4.4%) and net NPLs down 4% qoq (at 1.0%).
Cover at +76%.
ROA at 1.7% by FY13, Core RoEs of ~17.5%; Reiterate Buy
We estimate the bank’s net profit to grow +30/27% in FY12/13 driven by +18-19%
volume growth, margin expansion by +20bps through FY11-13 and unwinding of
credit costs. Moreover, consolidated earnings to grow higher by +38/32% in
FY12/13 driven by the life insurance co. We reiterate our Buy reccomendation
and PO of Rs1400 as we think stock can trade up to +2.3-2.4x adj. BV given
consol. ROE of ~17.5%, good asset quality (most seasoned book), well
capitalized and delivering earnings growth of +35% CAGR (cons.) in FY11-13E.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank — 1Q: Positive earnings quality;
Reiterate Buy
Country Overview
1Q: positive earnings quality; consol. earnings also up 53%
ICICI Bk (standalone) reported 1QFY11 earnings of Rs13.3bn (up 30% yoy).
Although, 1Q earnings were marginally below estimates (~3%), the quality of
earnings was better than expected. More importantly, consolidated earnings of
ICICI Bk grew a whopping +53% yoy driven by the life insurance business (profit
of Rs3.4bn vs. Rs1.2bn net loss in 1QFY11) that was the key contributor besides
the bank. Also, while most subs, barring life insurance, of ICICI Bk reported yoy
declines in profitability, they contribute less than 9-10% to consolidated profits.
Topline in-line; margins up; CASA flat; asset quality comfort
ICICI Bank’s topline was in-line and grew +21% yoy driven by 20% yoy loan
growth and margins at 2.6% (slightly better than expected) and up 10bps yoy.
CASA, although down from 45% in FY11, was ~42% and average CASA still
higher by at least 50bps qoq at +40%. Core fees were up 12% yoy. Asset quality
was also very comfortable with only ~Rs2.7bn of net NPL accretion, almost
Rs2bn of which was from MFI portfolio buyout, as also indicated by the bank.
Gross NPLs down 1% qoq (at 4.4%) and net NPLs down 4% qoq (at 1.0%).
Cover at +76%.
ROA at 1.7% by FY13, Core RoEs of ~17.5%; Reiterate Buy
We estimate the bank’s net profit to grow +30/27% in FY12/13 driven by +18-19%
volume growth, margin expansion by +20bps through FY11-13 and unwinding of
credit costs. Moreover, consolidated earnings to grow higher by +38/32% in
FY12/13 driven by the life insurance co. We reiterate our Buy reccomendation
and PO of Rs1400 as we think stock can trade up to +2.3-2.4x adj. BV given
consol. ROE of ~17.5%, good asset quality (most seasoned book), well
capitalized and delivering earnings growth of +35% CAGR (cons.) in FY11-13E.
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