ICICI Bank - 4QFY2012 Result Update - Angel Broking

ICICI Bank reported healthy performance for 4QFY2012. Net profit for the bank grew by 20.3% yoy to Rs.1,728cr. Key highlights of the results were a) 33bp sequential increase in domestic NIMs mainly driven by no securitization losses during the quarter and full impact of base rate hike and b) continued improvement in asset quality front. We maintain our Buy view on the stock.

NIMs and asset quality, both improved: During the quarter, advances for the bank increased by healthy 17.3% yoy (3.1% qoq), aided by a strong 29.5% yoy (16.2% qoq) growth in SME book, 26.6% yoy growth in corporate book and 26.0% yoy growth in Overseas book (excl. positive impact of INR depreciation 10.4% yoy). Deposits accretion moderated with growth of 13.2% yoy (sequential decline of 2.0%), mainly on account of subdued current deposits growth and moderate 13.7% yoy saving deposits growth. Consequentially, CASA ratio declined 160bp yoy (10bp qoq) to 43.5%. Domestic NIMs improved by 33bp sequentially to 3.3%; while, Overseas NIMs improved by 12bp qoq to 1.5%. Non-interest income (excl. treasury) increased by only 12.7% yoy, on back of moderation in corporate fee income. Misc. other income for the bank grew to Rs.342cr from Rs.46cr in 4QFY2011, aided mainly by higher dividend income of ~Rs.175cr. The bank's asset quality improvement continued during this quarter as well, with both gross and net NPA ratio declining sequentially by 20bp and 10bp, respectively. Provision coverage ratio remained healthy at 80.4%. The bank's restructured book grew by Rs.1,186cr (38.6% qoq) to Rs.4,256cr, in line with the management guidance and primarily included accounts such as GTL and 3i Infotech. The management indicated that no major restructuring is in the pipeline. They also specified that based on their past experiences, slippages from restructured assets is ~5%.

Outlook and valuation: The bank's substantial branch expansion in the past 3-4 years is expected to sustain a far more favourable deposit mix going forward. Moreover, a lower risk balance sheet has driven down NPA provisioning costs, which we believe will enable RoE of 16% by FY2014E (with further upside from financial leverage). At the CMP, the bank's core banking business (after adjusting for subsidiaries) is trading at 1.5x FY2014E ABV (including subsidiaries, at 1.4x FY2014E ABV). We maintain our Buy recommendation on the stock with a target price of Rs.1,183.

Source : Equity Bulls

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