Motilal Oswal has come out with its fourth quarter (January-March) earnings estimates for the banking sector. The brokerage house expects ICICI Bank to report a 0.6 percent growth quarter-on-quarter (growth of 9.6 percent year-on-year) in net profit at Rs 2906.1 crore.
Net interest income is expected to increase by 3.8 percent Q-o-Q (up 14.7 percent Y-o-Y) to Rs 4996.7 crore, according to Motilal Oswal.
Motilal Oswal's Report on ICICI Bank:
Loan growth is expected to pick up to 16 percent YoY from 12.8 percent in 3QFY15. Retail loan growth has picked up over the last year and is expected to remain a key driver of loan growth. Margins are expected to remain stable QoQ at 3.5 percent. NII is expected to grow 4 percent QoQ and 15 percent YoY.
Fee income/non-interest income is expected grow at 11 percent/10 percent YoY. Dividend from subsidiaries (including repatriation from foreign subsidiaries) can provide positive surprise
Slippages are expected to remain elevated in 4QFY15 due to higher relapse from restructured loans. Based on guidance, fresh stress addition for 4Q is INR35b (vs INR32b in 3QFY15). This does not include relapse from RL (9M/3Q at INR23/7.4b).
We factor a credit cost of 90bp. PAT is expected to grow at 10 percent YoY.
ICICIBC trades at 1.6x FY17E BV and 9.1x FY17E EPS. We expect earnings CAGR of 17 percent over FY14-17E v/s 14 percent balance sheet CAGR.
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