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EARNINGS REVIEW
ICICI Bank (ICBK.BO)
Buy Equity Research
In line with expectations as lower provision offsets fee income miss
NIM decline limited; Lower provisions as asset quality stable
ICICI Bank reported 1QFY12 net profit of Rs13.3 bn (up 30% yoy, 2% above
GSe). Key takeaways: (1) NII grew 21% yoy (inline with GSe) despite CASA
declining 270bps qoq to 41.9% as international book repricing helped limit
the NIM decline and loan book grew 20% yoy, 2% qoq. We expect margins
to remain stable driven by international margin expansion (ICBK guided
international margins to rise to 1.25% from sub 1% levels) and focus on
CASA. (2) Retail loan book has declined 1% qoq, +8% yoy and constitutes
38% of the loan book. We expect 17% loan growth for FY12. (3) Fee income
came in at Rs15.8bn (+12% yoy, 5% below GSe) while expenses too
remained under control. (4) Provisions including Rs1.45bn for increased
RBI provisioning requirement, came in 17% below GSe at 0.8% of loans as
asset quality remained stable: Gross and restructured loans all remained
flat qoq at 4.4% and 0.9% respectively while Net NPLs declined 2% qoq. Of
the Rs9bn exposure to micro finance companies (0.4% of loans), Rs2bn
slipped into NPLs and Rs7bn are in the process of being restructured. PCR
improved 90bps qoq to 76.9%.
Retain Buy given high ROA, earnings growth, attractive valuation
We lower our FY12E-FY14E estimate by up to 3% to factor in lower NII,
fees and subsequently lower our 12m SOTP-based target price to Rs1250
(from Rs1255). We retain our Buy rating on ICICI Bank given the high RoA
of 1.5%, earnings growth of 24% in FY2012 and 18% in FY2013 v/s which
the stock trades at 1.7X PBR standalone entity. Key risks: Bulk borrowing,
higher slippages.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
EARNINGS REVIEW
ICICI Bank (ICBK.BO)
Buy Equity Research
In line with expectations as lower provision offsets fee income miss
NIM decline limited; Lower provisions as asset quality stable
ICICI Bank reported 1QFY12 net profit of Rs13.3 bn (up 30% yoy, 2% above
GSe). Key takeaways: (1) NII grew 21% yoy (inline with GSe) despite CASA
declining 270bps qoq to 41.9% as international book repricing helped limit
the NIM decline and loan book grew 20% yoy, 2% qoq. We expect margins
to remain stable driven by international margin expansion (ICBK guided
international margins to rise to 1.25% from sub 1% levels) and focus on
CASA. (2) Retail loan book has declined 1% qoq, +8% yoy and constitutes
38% of the loan book. We expect 17% loan growth for FY12. (3) Fee income
came in at Rs15.8bn (+12% yoy, 5% below GSe) while expenses too
remained under control. (4) Provisions including Rs1.45bn for increased
RBI provisioning requirement, came in 17% below GSe at 0.8% of loans as
asset quality remained stable: Gross and restructured loans all remained
flat qoq at 4.4% and 0.9% respectively while Net NPLs declined 2% qoq. Of
the Rs9bn exposure to micro finance companies (0.4% of loans), Rs2bn
slipped into NPLs and Rs7bn are in the process of being restructured. PCR
improved 90bps qoq to 76.9%.
Retain Buy given high ROA, earnings growth, attractive valuation
We lower our FY12E-FY14E estimate by up to 3% to factor in lower NII,
fees and subsequently lower our 12m SOTP-based target price to Rs1250
(from Rs1255). We retain our Buy rating on ICICI Bank given the high RoA
of 1.5%, earnings growth of 24% in FY2012 and 18% in FY2013 v/s which
the stock trades at 1.7X PBR standalone entity. Key risks: Bulk borrowing,
higher slippages.
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