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ICICI Bank - Asset quality continues its improving trend - Karvy
Posted On : 2012-07-30 10:37:26( TIMEZONE : IST )
ICICI Bank's operating numbers are in line with our expectations with stable sequential NIMs of 3.0% and credit growth of 21%. GNPA improved by 8 bps sequentially to 3.5% resulting in lower provisions. Slippage was slightly up sequentially at 1.3%. Fee Income has grown by 4% reflecting moderation in corporate activity. It received first dividend from Canadian subsidiaries of Rs1.3bn and from life insurance subsidiary of Rs0.8bn. After security receipt write-off of Rs1bn, it made a treasury loss of Rs0.2bn.
- Higher credit growth driven by corporate and international segment: Credit grew at a higher rate of 21% primarily driven by corporate/SME book growth of 28% and international book growth on account of rupee depreciation. Retail book has grown only by 10%. Management has guided higher growth in retail to compensate for lower growth in international book going ahead.
- NIMs maintained sequentially: It was able to maintain NIMs sequentially at 3.0%; however, it improved by 40bps as against last year. Improvement in NIMs is seen across domestic as well as international segment. Average CASA was maintained sequentially at 39.1%. Management has guided full year NIMs of 3.0%.
- Improvement in asset quality continues: Asset quality improved further with gross NPAs declining 8bps sequentially to 3.5%, with slippages contained at 1.3% for the quarter. Provision coverage is comfortable at 80.4%. Restructured book flat sequentially at 1.6% of loan book. The management continues its credit costs guidance, including restructuring related provision, to be within 0.75% for FY13E.
Outlook & Valuation
At the CMP, the stock trades at 13.1x and 12.2x FY13E and FY14E earnings, and at 1.6x and 1.5x P/ABV FY13E and FY14E, respectively. Stripping off value of subsidiaries, it is trading at 9.6x P/E FY14E and 1.2x P/ABV FY13E, which we feel is cheap considering its pan-India presence, asset quality comfort and improving ROE. We continue to maintain a BUY rating on the stock, retaining our price target of Rs1,110 based on P/ABV of 1.5x FY14E and Rs200 for its subsidiary.
