ICICI Bank - 1QFY2013 Result Update - Angel Broking

ICICI Bank reported strong performance for 1QFY2013, with 36.2% growth in Net profit, which was in-line with our estimates. Growth in earnings came largely on account of solid operating performance, with 32.0% yoy higher pre provisioning profits and was also aided by continued improvement on the asset quality front. Overall NIMs flattish sequentially; Asset quality improved marginally qoq: During the quarter, advances for the bank increased by healthy 21.6% yoy (5.8% qoq), aided by a strong 28.9% yoy (5.8% qoq) growth in SME book, 28.3% yoy (15.0% qoq) growth in corporate book and 34.6% yoy growth in Overseas book (excl. positive impact of INR depreciation growth in overseas and overall advances would have been ~8.0% and ~17.0% yoy, respectively). Deposits accretion remained healthy during the quarter with growth of 16.1% yoy (4.8% sequentially). Despite healthy accretion in savings deposits, subdued current account deposits led the CASA ratio for the bank to decline to 40.6%. Domestic NIMs remained flat sequentially at 3.3%; while, Overseas NIMs improved by ~10bp to 1.6%. Growth in non-interest income (excl. treasury) remained moderate at 14.0% yoy, on back of moderation in corporate fee income. Misc. other income for the bank grew to Rs.254cr from Rs.90cr in 1QFY2012, aided mainly by higher dividend income of ~Rs.208cr. The bank's asset quality improvement continued during this quarter as well, with both gross and net NPA ratio declining (though marginally), on a sequential basis. Provision coverage ratio remained healthy at 80.6%. The bank restructured additional advances worth ~Rs.350cr during the quarter, in line with their guidance. As of 1QFY2013, their outstanding restructured book (which is stated post upgradation on one year of satisfactory performance) stood at Rs.4,172cr. 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 ~5-6%.

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 15.5% by FY2014E (with further upside from financial leverage). At the CMP, the bank's core banking business (after adjusting for subsidiaries) is trading at 1.48x FY2014E ABV (including subsidiaries, at 1.46x FY2014E ABV). We maintain our Buy recommendation on the stock with a target price of Rs.1,169.

Source : Equity Bulls

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