MOSL: ICICI BANK (Buy)-Core profitability surprises positively-Stress pool down 3% QoQ
ICICI Bank: Core profitability surprises positively; Stress pool down 3% QoQ
(ICICIBC IN, Mkt Cap USD23.2b, CMP INR272, TP INR365, 34% Upside, Buy)
- ICICIBC’s reported PAT of INR20.2b missed our estimate by 12% due to higher-than-expected provisioning. Core PPoP growth of 8% YoY surprised positively (15% beat). Key positives: a) Strong NII growth of 10% QoQ, aided by an impressive NIM performance (+45bp QoQ; includes interest collection from NPLs). b) 85% of Q4 slippages originated from watch list and OSRL of 3Q. c) Pool of net stressed loans (NNPA + other forms of stress loans) declined 3% QoQ to INR548b (11.8% of loans). d) Fee income growth of 10% YoY, helped by strong retail fee growth of ~20% YoY. e) Average daily CASA ratio improvement of 170bp QoQ to 46.5%.
- Slippages during the quarter were INR112.9b, of which INR53.8b relates to a cement account (part of the watch list), which the RBI has asked banks to recognize as NPA. Nearly half of this exposure is expected to be upgraded soon, as it is part of an impending M&A transaction. Excluding this, slippages continued to moderate to ~INR59b, as against INR70b in 3Q and ~INR80b in 2Q. Non-watch list and RL slippages declined to INR15b from INR20.5b a quarter ago.
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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