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ICICI Bank - Results in line but slowdown to hurt earnings growth - Religare
Posted On : 2013-08-01 21:53:08( TIMEZONE : IST )
ICICIBC's Q1FY14 NII came in marginally below estimates but PAT in line (+25% YoY to Rs 23bn) buoyed by strong trading profits (of Rs 4bn vs. Rs 1bn in Q4FY13). Advances grew at 3.8% QoQ (12.3% YoY) while NIMs contracted ~6bps QoQ to 3.27%. Asset quality was under pressure with incremental slippages/restructuring at Rs 11.2bn/Rs 8bn. We believe a poor macro could hurt credit offtake/asset quality, and therefore trim our FY14/FY15 earnings estimates and our Mar'14 TP to Rs 1,075 (from Rs 1,225). Maintain HOLD.
- Advances growth lower than expected: Overall advances growth moderated to 12.3% YoY (from 14.4% YoY in Mar'13) driven by slower domestic credit growth (at 14% YoY). The overseas book grew by ~8% YoY largely due to INR depreciation. The retail book grew only by 12.6% YoY, but growth was healthy at 26.6% adjusted for buyouts. Corporate growth picked up with advances growing by 3.9% QoQ while the SME segment remained weak. Deposits were up 3.7% QoQ and the domestic LDR was higher by 80bps QoQ. SA deposits mobilisation was strong at 3.7% QoQ (14% YoY) and the average CASA proportion improved by 90bps QoQ to 39%.
- Asset quality slips; credit costs higher: Slippages were higher at Rs 11.2bn (slippage ratio: 1.6%), while incremental restructuring at Rs 8bn was in line. Gross retail NPLs shot up to Rs 54.1bn from Rs 41.8bn in Q4FY13. Outstanding net restructured loans rose from Rs 53.1bn to Rs 59.1bn. Credit costs were higher than expectations at 82bps; however, the bank maintained its FY14 credit cost guidance at 75bps.
- NIMs decline marginally; fee income sluggish: Domestic NIMs declined by 7bps QoQ to 3.63%, leading to a 6bps QoQ drop in Q1FY14 NIMs even as international NIMs improved to 1.6%. The uptick in NIMs was due to a dip in the yield on advances. The management has maintained its guidance for a 10bps NIM expansion in FY14. Fee income remained muted (+9% YoY). A sharp slowdown in corporate fee income coupled with negligible growth in other fee avenues hurt fee growth. The C/I ratio was flat QoQ at 40%.
