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ICICI Bank
1Q: Positive earnings quality;
Reiterate Buy
„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
„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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