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Last Updated : Oct 27, 2019 07:27 PM IST | Source:

ICICI Bank ends flat after hitting record high, as stress pool increases marginally

Deposits growth was very strong at 25 percent YoY with average CASA deposits increasing by 11 percent YoY and term deposits rising 35 percent.

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Shares of ICICI Bank ended flat after hitting a record high of Rs 473 intraday in Muhurat trading on October 27, due to lower-than-expected loan growth and a marginal increase in stress pool.

The stock closed at Rs 469.40, up 0.06 percent.

The country's largest private sector lender, ICICI Bank, on October 26 reported a 28 percent year-on-year (YoY) decline in its September quarter profit due to deferred tax assets adjustment (DTA), but overall earnings (except credit growth and increase in 'BB' and below rated book) were healthy with improvement in asset quality.


Profit after tax (PAT) dipped to Rs 654.96 crore in Q2FY20, against Rs 908.88 crore in the same period last year, but was supported by strong PPoP and other income, and lower provisions.

"Excluding impact of one-time additional charge due to remeasurement of accumulated deferred tax, PAT would have been Rs 3,575 crore in Q2FY20, a growth of nearly four-fold compared to Rs 909 crore in Q2FY19," the bank said.

Net interest income (NII) during the quarter grew by 26 percent to Rs 8,057.43 crore with a 13 percent credit growth YoY.

Domestic loan growth stood at 16 percent as the bank continued to leverage its strong retail franchise, resulting in a 22 percent YoY growth in the retail loan portfolio (which was 49.9 percent of the total portfolio) at September 2019, ICICI said.

Deposits growth was very strong at 25 percent YoY with average CASA deposits increasing by 11 percent YoY and term deposits rising 35 percent.

Net interest margin for the quarter came in at 3.64 percent, improving 3bps sequentially and 31bps YoY, the bank said.

Brokerages remained bullish on the stock and also raised the target price.

"ICICI remains our top buy (revised target price of Rs 580, implying 24 percent potential upside from current levels)/overweight in Emkay Alpha Portfolio (EAP) given its focus on profitability versus growth, strengthening liability/retail platform, risk-based pricing approach, de-bulking balance sheet and making it more resilient to shocks by improving PCR," said Emkay.

Asset quality of the bank improved as per street expectations with gross non-performing assets (NPA) as a percentage of gross advances, falling 12bps sequentially to 6.37 percent in Q2FY20. Net NPAs as a percentage of net advances dropped QoQ 17bps to 1.6 percent during the quarter.

Gross slippages (or fresh addition of accounts in NPA list) dropped to Rs 2,482 crore for the quarter ended September 2019, down 11 percent sequentially and 20 percent YoY.

"Recoveries and upgrades of non-performing loans were Rs 1,263 crore in Q2FY20, which increased compared to Rs 931 crore in Q1FY20," the bank said.

But its fund-based and non-fund based outstanding to borrowers was rated BB and below (excluding non-performing assets) at Rs 16,074 crore in September 2019, compared to Rs 15,355 crore at the end of June 2019.

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First Published on Oct 27, 2019 06:51 pm
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