MOSL: ICICI BANK (buy)- Asset quality woes – end in sight; core performance strong
ICICI BANK: Asset quality woes – end in sight; core performance strong
(ICICIBC IN, Mkt Cap USD28.9b, CMP INR289, TP INR380, 31% Upside, Buy)
- ICICI Bank's (ICICIBC) 4QFY18 PBT declined 40% QoQ (-60% YoY) to INR8.9b (53% miss) due to elevated provisions of INR66.3b (5.2% annualized credit cost), despite an INR33.2b capital gain from stake sale in I-Sec. Tax write-backs of INR1.3b led to PAT of INR10.2b (-38%/-50% QoQ/YoY).
- NII growth stood at 5.5%/1% QoQ/YoY (3% beat), driven by 1.4%/10% QoQ/YoY loan growth and 10bp expansion in reported NIM to 3.24%. Core other income grew 19% YoY to INR29.9b, while total other income stood at INR56.8b. Total opex grew 10%/8% QoQ/YoY to INR41.8b (core CI ratio stood at 46.4%, +310bp QoQ).
- Advances grew 1.4%/10.5% QoQ/YoY, led by continued traction in retail loans (+21% YoY; ~57% of total loans), while the SME portfolio grew 15% YoY. Deposit growth also stood healthy at 8.4%/14.5% QoQ/YoY, taking the credit deposit ratio to a multi-quarter-low of 91%. CASA ratio, thus, improved 130bp QoQ to 51.7% (20bp increase on average basis to 45.7%).
- Asset quality deteriorated due to elevated slippages (INR157.4b, with INR99.7b from RBI schemes), driving up GNPA/NNPA by 17% each QoQ. However, the bank maintained PCR at ~48.4% (~10bp increase over 3QFY18). Overall net stressed assets declined to 7.8% of total loans v/s 9.9% in 3QFY18. However, including non-fund-based exposures to NPAs/S4A/restructured loans, total net stressed loans stood at 8.7%.
ICICI Bank Limited is a banking company. The Bank is engaged in providing a range of banking and financial services, including commercial banking, retail banking, project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking and treasury products and services. The Bank's business segments are Retail banking, Wholesale banking, Treasury, Other banking, Life insurance, General insurance and Others. It has a network of approximately 18,210 branches and automated teller machines (ATMs). The Bank has approximately 110 Touch Banking branches across over 30 cities. Its international banking is focused on providing solutions for the international banking requirements of its Indian corporate clients and leveraging economic corridors between India and the rest of the world. The Bank caters to the financial needs of women entrepreneurs through its Self-Help Group (SHG) program as a part of its microfinance initiatives.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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