ICICI Bank, the country's second largest private sector lender by assets and market capitalisation, is likely to show double-digit growth in earnings for the quarter ended September 2021, with expected decline in provisions, and solid commentary.
The share price has given strong returns of 20 percent since the beginning of September 2021 quarter and 30 percent in the current financial year FY22. Now the street will closely watch whether the bank can deliver earnings to support the stock price or not.
Experts largely expect profit to grow in the range of 17-25 percent, and net interest income to rise around 19 percent compared to a year-ago quarter, with steady margin and 16-17 percent increase in loan growth for the quarter.
Prabhudas Lilladher expects earnings to remain steady on lower cost of funds, while core pre-provision operating profit (PPOP) to grow at 13 percent YoY. The brokerage, which has buy call on the stock with a target price of Rs 819, expects net interest income growth at 18.6 percent, profit to increase 17 percent and loan book growth at 16.8 percent YoY.
"ICICI Bank should continue undeterred on its loan growth especially retail and both slippages/provisions should be under much control and remain best of the lot on asset quality metrics," said Prabhudas Lilladher.
Kotak Institutional Equities expects PPOP to grow 14 percent YoY as the base quarter had a minor stake sale of ICICI Securities of Rs 300 crore. "Loan growth would be stable at around 15 percent. Net interest margin (core) would remain stable QoQ at 3.8-3.9 percent."
The brokerage also said provisions are expected to decline QoQ as the bank is likely to use some of the Covid provisions made in FY2021. "We are building slippages of 2.1 percent (Rs 4,000 crore) but we see a solid commentary on recovery to normalized levels of their loan book from an asset quality perspective."
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In the quarter ended June 2021, asset quality was weakened with the gross non-performing assets as a percentage of gross advances rising 19 bps QoQ to 5.15 percent and net NPAs climbing 2 bps to 1.16 percent. One percent is equal to 100 basis points.
The bank had reported a loan growth of 17 percent and deposits had grown by 16 percent in the June 2021 quarter.
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