ICICI Q2: Asset quality, NPA are key takeaways, say experts

India's largest private sector lender ICICI Bank's second quarter (July-September) net profit rose to forecast-beating 22% year-on-year to Rs 1,503 crore on lower provisions as asset quality improved during the three month period.

The key takeaway from the ICICI Bank result is that it managed to bring down its gross non-performing asset (NPA), said Vaibhav Agrawal of Angel Broking and Rajiv Mehta, banking analyst of IIFL. Both are of the view that the company has managed to maintain their margins this quarter on the asset as well as deposit side. Here is the edited transcript of their interview to CNBC-TV18. Also watch the accompanying video. Q: How have you read the ICICI Bank numbers? Agrawal: The numbers are inline on the operating income front. The bottomline numbers are marginally above our estimates. They have managed to further bring down their gross and net NPAs. In light of the other results, these are good set of numbers. Q: What do you expect to hear on the margin front? What is your price target on the stock? Agrawal: On the margin front, they have more or less managed to maintain their margins this quarter. In terms of target price, we see about 20% upside on the stock from these levels. Q: What did you make of the ICICI numbers? Mehta: The numbers look pretty good and are inline with our expectations. The key positive is on the asset quality front. The gross NPA has declined, which is why the provision has been lower on a sequential basis. At the bottomline front, the numbers are slightly ahead of estimate. Q: What do you expect to hear on the margins? What have you made of the fact that provisions have been almost slashed by half in this quarter? Mehta: On sequential basis, it is not exactly half. It is lower, but it is in responses to a similar asset quality that is a key positive. On the margins front, ICICI Bank profile has structurally improved, both on the asset side as well as deposit side. Now, they are much more stable in margin visibility. We will not see any extreme movements on any side as far as margins are concerned. It should be steady.