MOSL: ICICI BANK (Buy)-Earnings normalization on track-performing well on asset quality front
icici bank: Earnings normalization on track; performing well on asset quality front
(ICICIBC IN, Mkt Cap USD27.6b, CMP INR315, TP INR400, 27% Upside, Buy)
- ICICIBC reported 2QFY19 PAT of INR9.1b (ahead of our estimate), led by improving margins and steady loan growth. Asset quality improved as fresh slippages subsided to INR31.2b – the bank also guided for a significant decline in NPL formation over FY19.
- NII increased 12% YoY to INR64.18b (5% beat), as the margins improved 14bp QoQ to 3.33%, while funding cost held stable. Core fee income grew ~17% YoY.
- Advances grew ~13% YoY (21% YoY growth in retail loans; ~57% of total loans). Deposit growth also stood healthy at 12% YoY (CASA growth of 15% YoY). CASA ratio stood at 50.8% (on avg. basis, CASA stood at 47.1% v/s 46.1% in 1QFY19).
- Fresh slippages stood at INR31.2b (INR13.04b due to currency depreciation; INR40.36b in 1QFY19), while PCR increased by a sharp 330bp QoQ to 59.5%. ICICIBC carries high coverage on NCLT exposure (89.7%/62.1% coverage on NCLT list-1/list-2, total IBC exposure: INR132.5b fund-based and INR9.29b non-fund based), and thus, has good probability of write-backs.
- GNPA/NNPA ratio, thus, improved 27bp/54bp QoQ to 8.54%/3.65%. The quantum of total BB and below loans declined to INR218b (INR246b in 1QFY19), of which the drilldown list stood at INR32.8b (-25% QoQ).
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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