10 May 2020
4QFY20 Results Update | Sector: Financials
ICICI Bank
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
ICICIBC IN
6,470
2180.2 / 29.2
552 / 269
-1/-7/5
11312
CMP: INR338
TP: INR475 (+41%)
Buy
Stable operating performance; COVID-19 drags down
earnings, tempers growth outlook
High moratorium places asset quality as key monitorable
Financials & valuations (INR b)
Y/E March
FY20 FY21E
NII
332.7 376.6
OP
281.0 312.6
NP
79.3 122.2
NIM (%)
3.7
3.7
EPS (INR)
12.3
18.9
EPS Gr (%)
135.0
53.8
ABV/Sh. (INR)
152.1 167.0
Cons. BV/Sh. (INR) 191.3 211.0
Ratios
RoE (%)
7.2
10.3
RoA (%)
0.8
1.1
Valuations
P/BV (x) (Cons)
1.8
1.6
P/ABV (x)
1.5
1.4
P/E (x)
19.2
12.5
Div. Yield (%)
0.0
0.5
*Adjusted for Investment in Subs
FY22E
424.7
347.4
163.5
3.7
25.3
33.8
193.0
234.4
12.4
1.3
1.4
1.2
9.3
0.6
The bank has created higher than the required provisions toward COVID-
19 which affected earnings. On the other hand, operating performance
remains strong, supported by robust NII at 17% YoY, despite higher tax
refunds in 4QFY19. On the asset quality front, slippages remain elevated,
led by one healthcare and one oil trading account, although higher write-
offs have led to GNPA improvement. ~30% of the loan book has availed
moratorium, with a higher incidence of the CV, 2-Wheeler, and Rural
portfolios.
We cut our FY21/22 PAT estimate by 8%/3% as we factor in higher credit
cost and moderation in fee growth. Maintain
Buy.
COVID-19 provisions drag down earnings; Slippages stand elevated
due to select corporate accounts
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
0.0
0.0
0.0
DII
36.4
34.4
34.4
FII
54.5
57.2
57.2
Others
9.1
8.4
8.4
FII Includes depository receipts
PAT grew 26% YoY to INR12.2b (71% QoQ decline; MOSLe: INR26.7b),
affected by higher provisions (INR59.7b), as the bank made COVID-19
provisions of INR27.25b, higher than the requirement as per RBI
guidelines.
NII grew 17% YoY to INR89.3b, led by ~16% YoY growth in retail loans and
10bp QoQ expansion in margins to 3.87%. In FY20, NII/PPoP/PAT grew at
23%/20%/136% YoY.
Other income rose 18% YoY, with core fees growing 13% YoY to ~INR36b
(retail forms 75% of the total fees). Opex grew 16% YoY to INR57.9b,
resulting in PPoP growth of 19% YoY to INR73.9b (8% beat).
Advances grew 10% YoY, with the domestic book growing at 13% YoY
(~16% YoY growth in retail), while the overseas loan mix declined to
8.4%. Deposit growth came in strong at 18% YoY, led by term deposits
growing ~29% YoY. The avg. CASA mix stood at 42.3% v/s 42.8% in
3QFY20.
Fresh slippages increased to INR53.1b, led by one healthcare and one oil
trading account, resulting in corporate and SME slippages of INR40.1b,
and retail slippages at INR12.9b. Overdue loans (90+ dpd) worth
INR13.1b were not classified as GNPA as the bank availed RBI relaxation,
which otherwise would have impacted GNPA by 18bp. Higher write-offs
(INR54.5b) led to improvement in the GNPA/NNPA ratio by 42bp/8bp
QoQ to 5.5%/1.4%. PCR stood largely stable at 75.6%.
The BB and below book declined to INR166.7b (v/s INR174b in 3QFY20).
Downgrades in the BB and below pool have come from certain accounts
in the CRE sector.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal
January 2020
14
Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
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