Prabhudas Lilladher's research report on ICICI Bank
ICICIBC reported loss contrary to expectations of profits (PLe: Rs15.5bn) mainly on treasury losses (even post IPru Life stake sale) and higher provisions (increase in NCLT provisions). Core PPOP was slightly better than our expectations mainly on benefit on staff opex retiral benefits. NIM was under pressure despite bank booking a large interest recognition from recovery. Positive was slippages of Rs40.36bn at multi quarter lows which has been from drill down list and existing addition to NPA (exchange fluctuation). Immediate risk remains of 2.4% of loans (excl. new disclosures) under BB & below BB book and from drill down and non-fund based exposures and hence slippages from corporate confined largely. Bank has also seen improving coverage ratios mainly on NCLT and likely to increase further on ageing.
Outlook
Valuations remain much attractive compared to peers but recent noise on corporate governance keep the upside capped. Retain Accumulate with revised TP of Rs329 (reduced from Rs338).
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