ICICI Bank F1Q12: First Cut – In-Line Numbers :: Morgan Stanley Research,

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ICICI Bank
F1Q12: First Cut – In-Line
Numbers
Quick Comment: ICICI Bank reported F1Q12
earnings at Rs13.3 bn (-8% QoQ / +30% YoY) – This
compares with our estimate of Rs13.2 bn. Numbers
seem broadly in line with estimates – non-interest
income was weaker than expected, offset by lower
provisions. On an underlying basis, PBT (ex-cap gains)
was down 15% QoQ and up 40% YoY. Core PPoP was
up 13% YoY and down 9% QoQ.
1. Loan growth was 2% QoQ and 20% YoY. This
compares with 5% QoQ and 19% YoY in the
previous quarter.
2. Deposit growth was 2% QoQ, 15% YoY. This
compares with 4% QoQ and 12% YoY in the
previous quarter.  Period end CASA ratio at 42%
versus 45% in the last quarter.
3. NII growth was -4% QoQ, +21% YoY. Adjusted for
one-offs in previous quarter (from benefit from
breakage of deposits), NII growth was -1% QoQ.
4. Core fee income grew by 12% YoY (-12% QoQ) –
marginally lower than our estimate of 14%. The
bank reported MTM loss of Rs0.25 bn vs. a profit of
Rs1 bn in F1Q11 and a loss of Rs2 bn in F4Q11.
Costs were up 23% YoY and down 1% QoQ.
5. Provisions were higher at Rs4.5 bn vs. Rs3.8 bn in
the previous quarter (likely to due impact of change
in RBI provisioning norms). Total provision/Loans
was around 83 bps this quarter compared to 73 bps
in the previous quarter. Coverage ratio was at
76.9% versus 76% as of F4Q11. GNPLs were down
1% QoQ and up 2% YoY.


Target price discussion for ICICI Bank
We value ICICI Bank using a sum-of-the parts method. We
arrive at the target price of Rs1200 by assigning weightings of
70% to our base case fair value, 25% to our bull case fair value
and 5% to our bear case fair value.  
Key downside risks to our price target include
slower-than-expected loan growth, sharp compression in NIMs
and significant deterioration in asset quality.