EQUITY RESEARCH REPORT: ICICIBANK (BSE)

28th April 2021

ICICI Bank (ICICIB) reported better than expected profit to Rs44 bn in Q4FY21 on the back of strong NII growth, contained OPEX and sharp decline in provisioning. Interest cost declined -8.3% YoY which provided a strong boost to NII which grew by 16.9% YoY, above our estimates. Other income remained weak due to weak treasury income, though fee income witnessed improvement (6% YoY). NIM expanded significantly by 17bps sequentially to 3.84% mainly driven by healthy NII growth due to -8/+1 bps QoQ movement in CoF/YoA. Domestic NIM moved back to ~4% (3.94%) from 3.78% in Q3FY21. On business growth front, credit growth further improved to 11.5% YoY with sustained sequential pick up in corporate portfolio.

Gross slippages reported at Rs118.2 bn (proforma slippages of Rs83 bn in Q3) which came mainly due to retail slippages of Rs99.6 bn. As per mgmt, higher slippages from retail segment was on account of seasoning of portfolio which would normalize. Meanwhile we drive comfort from building strength in corporate portfolio with continued lower slippages from this segment (Rs18.6 bn in Q4). We expect lower corporate NPAs because of higher recognition of NPAs over the past years and underwriting to better rated corps (73% of loan book rated A or above as of Q4). GNPA/NNPA improved to 4.96%/1.14% (from proforma of 5.42%/1.26% in Q3) with PCR at 77.8%, one of the best in the industry. Standard provisions at Rs141 bn including Rs75 bn of Covid related provision (Rs10 bn of contingent provisions made during the quarter) stood at 1.9% of loans providing comfort from the impact of second Covid wave. Restructuring book stood at 0.5% of loans by Q4 (0.4% in previous quarter) while the share of BB & below rated book also reduced to 1.8% of loans (2.0% of loans in Q3).

Company Name

ICICIBANK

Our Recommentation is to

Buy
CMP

621

Upside potential

18.36

Holding period

12 Months

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