Visit http://indiaer.blogspot.com/ for complete details �� ��
ICICI Bank
ICICI Bank announced its 2QFY2011 results on Friday, reporting healthy net profit growth
of 20.5% qoq and 18.9% yoy to `1,236cr, above our estimates of `1,143cr, mainly on
account of higher NIMs and lower effective tax rate. The financials for 2QFY2011 include
the impact of the Bank of Rajasthan merger. The bank registered substantial traction in
CASA deposits, with 10.5% sequential growth excluding BOR numbers (CASA ratio
improved further to 44% from 42% in 1QFY2011). At the same time, NPA provisions
declined materially to just 0.7% of assets (1.2% in FY2010), reflecting the strong qualitative
improvement in the bank’s balance sheet and earnings quality that we have been building
into our estimates for the bank.
Advances registered growth of 5.3% qoq and 1.8% yoy. Sequential deposit growth was
strong at 11.0% and 12.8% on a yoy basis. Excluding the financials of Bank of Rajasthan
as of merger date, advances grew sequentially by 1.8% and de-grew by 1.7% yoy while
deposits grew by 4.3% qoq and 6.0% yoy. The CASA ratio (excluding BoRs CASA and total
deposits as of merger date) improved to 44.6%, reflecting the strong traction in CASA
deposits accretion. On a sequential basis, calculated NIMs improved by 9bp to 2.38%.
This resulted into NII growth of 10.7% qoq and 8.3% yoy.
Gross NPAs increased by 3.2% qoq, while net NPAs declined by 9.0% sequentially. The
bank’s provision coverage ratio including write-offs improved to 69.0% from 64.8% as of
1QFY2011 and from 51.7% as of 2QFY2010. The capital adequacy ratio continues to be
strong at 20.2% with tier-I capital of 13.8% (constituting 68.3% of the total CAR).
In our view, the bank’s substantial branch expansion (1,508 branches added since
3QFY2008, including entire branch network of BoR) as well as strong capital adequacy at
20.2% (tier-I at 13.8%) have positioned it to gain market share that will contribute to
substantial core business growth. We expect the bank to deliver strong earnings CAGR of
31.0% over FY2010–12E and a ROE of 15.6% by FY2012E. At the CMP, the stock is
trading at 2.4x FY2012E ABV, excluding value of subsidiaries. We maintain a Buy
recommendation on the stock with a Target Price of `1,335.
No comments:
Post a Comment