30 October 2014
2QFY15 Results Update | Sector:
Financials
ICICI Bank
BSE SENSEX
27,346
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
S&P CNX
8,169
ICICIBC IN
1,157.4
1,620/944
10/7/17
CMP: INR1,611
TP: INR1,900
Buy
M.Cap. (INR b) / (USD b) 1,865.1/30.3
Financials & Valuation (INR Billion)
Y/E Mar
NII
OP
NP
NIM (%)
EPS (INR)
EPS Gr (%)
BV/Sh (INR)*
ABV/Sh (INR)*
RoE (%)
RoA (%)
2015E 2016E 2017E
190.0
190.4
113.2
3.3
98
15.4
579
551.9
15.3
1.8
220.8
222.4
134.3
3.4
116
18.7
664
634.7
15.7
1.9
271.4
273.8
166.1
3.5
144
23.6
769
738.0
16.8
1.9
* BV adjusted for investment in
subsidiaries, Prices adj. for sub value
ICICI Bank’s (ICICIBC) 2QFY15 NII/PPP/PAT growth of 15/21/16% YoY were
largely in line with estimates. Stable NIM QoQ (3.4%), decline in net stress
additions QoQ (INR9.9b v/s INR15.5b in 1QFY15), healthy traction in CA deposits
(+15% QoQ and 19% YoY) and retail disbursements (+25% YoY) were the key
positives.
Gross slippages and fresh restructuring were INR16.7b (v/s INR11.9b in 1QFY15)
and INR8.3b (v/s INR13.9b) respectively. Repayment/slippages net reduction
resulted in INR2.5b decline in restructured loans. Net stress loans contained at
3.6% of customer assets. Pipeline for restructuring stood at INR18b.
Loan book grew 14% YoY (+4% QoQ) led by strong traction in SME (+7% QoQ)
and Housing (+7% QoQ) loans.
Other highlights:
(1) on a higher base, Fees grew 5% YoY, though QoQ growth
was healthy at 9%, (2) average CASA ratio was stable QoQ at 39.5%,
(3) provisions were 21% above expectation at INR8.5b (0.96% credit cost), (4)
consolidated PAT grew 14% YoY to INR30.7b and consolidated RoE stood at 15%.
Valuation and view:
Healthy core operations driven by gradual NIM improvement
and strong control over opex are leading to strong core RoA of 1.6%+, despite a
moderate fee income. Improvement in macro-economic environment and resolution
of infrastructure bottlenecks shall lead to reduction in NSL (currently at 3.6%).
ICICIBC is well positioned to leverage the opportunities with high core RoA, strong
distribution network and capitalization (Tier I of 12.6%). We maintain estimates and
expect earnings CAGR of 18%+ over FY14-17E v/s 16% balance sheet CAGR.
Buy.
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
Vallabh Kulkarni
(Vallabh.Kulkarni@MotilalOswal.com); +91 22 3982 5430
Investors are advised to refer through disclosures made at the end of the Research Report.