ICICI Bank, the country's second largest private sector lender, is expected to see a hit on the profitability due to elevated provisions for the quarter ended December 2020.
Net interest income in Q3FY21 is seen rising more than 11 percent compared to corresponding period with moderated loan growth at around 7 percent in Q3FY21 and stable net interest margin, while deposits growth could be around 20 percent YoY.
In the base quarter (Q3FY20), the bank had recovery from Esser Steel. NII growth may slow down to over 11 percent, brokerages feel.
"We expect a pre-provision operating profit (PPoP) growth of around 14 percent YoY with NII growth at 12 percent YoY partly aided by operating leverage. Loan growth to slow to around 7 percent, and NIM (core) will remain stable QoQ at 3.6 percent" said Kotak Institutional Equities.
According to Narnolia Financial Services, asset quality of the bank is expected to remain largely stable, however the management guidance on expected slippages post lifting of non-recognition of NPA and updates on collection efficiency needs to be looked at.
As of Q2FY21, ICICI Bank held COVID-19 related provisions of Rs 8,772 crore and general provisions on standard asset worth Rs 4,522 crore. Total provision including specific PCR were 119 percent of the gross NPA as of Q2FY21.
