Shares of ICICI Bank rallied 3.5 percent intraday to hit a record high of Rs 470.70 on October 25. Its September quarter earnings are scheduled to be announced on October 26. Healthy quarterly numbers by SBI also lifted sentiment.
It already rallied 30 percent year-to-date (YTD). The stock was quoting at Rs 469.95, up Rs 15.30, or 3.37 percent on the BSE at 15:10 hours IST.
According to brokerage houses, the country's second largest lender, on October 26, is expected to report healthy earnings growth in the July-September quarter with reduction in non-performing loans and fresh slippages.
The profit during the quarter is expected to decline sharply in the range of 50-70 percent YoY on deferred tax assets (DTA) adjustment due to lower corporate tax rate. However, the bottomline is likely to be supported by higher operating profit and net interest income, and lower provisions.
The net interest income and pre-provision operating profit (PPoP) may grow more than 20 percent YoY with improvement in net interest margin, and better than industry loan growth of around 15 percent YoY, according to brokerages.
"We expect a solid PPoP growth of around 28 percent YoY led by healthy loan growth (around 15 percent YoY) and better NII growth (24 percent YoY)," said Kotak Institutional Equities which expects profit to fall 73 percent YoY.
Brokerages see non-performing assets falling due to write-offs and reduction in slippages, hence there could be normalisation of credit cost.
"Slippages would stabilise and will largely flow from existing stress pool. ICICI has minimal exposure to the most talked about stressed groups; this coupled with high coverage, should lead to normalization of credit cost," said Edelweiss which expected the profit to fall 66 percent YoY.
Its rival and country's largest lender State Bank of India shares gained more than 8 percent intraday after it reported more than three-fold increase YoY in second quarter profit at Rs 3,012 crore despite higher provisions with improvement in asset quality.
The profit included one-time gain of Rs 3,484 crore on sale of partial investment in SBI Life Insurance.
Net interest income grew by 17.7 percent YoY to Rs 24,600 crore in the quarter ended in September, with loan growth at 9.6 percent YoY.The asset quality improved sequentially, as well as YoY. Gross non-performing assets (NPA) as a percentage of gross advances (Rs 1.61 lakh crore) fell 34bps QoQ to 7.19 percent while fresh slippages fell significantly to Rs 8,805 crore at the end of September, against Rs 16,212 crore reported in the June quarter.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.