ICICI Bank shares hit 52-week peak on back of Q1 profits

Shares of ICICI Bank went up 1.29 per cent and 1.30 per cent on the BSE and NSE, respectively on Monday. The bank’s shares touched a 52-week peak following the announcement of the company’s Q1 results. The bank’s shares touched Rs 685.40 on the BSE, while it stood at Rs 685.45 on the NSE at close on Monday. ICICI Bank’s net profit for the June quarter went up 52 per cent to touch a little over Rs 4,747 crore.

The bank reported a standalone net profit of a little over Rs 4616 crore for the quarter, a nearly 78 per cent increase vis-a-vis the April to June quarter of fiscal year 2021, when the first wave of the pandemic led to a stringent nationwide lockdown. The increase has been led by solid net interest income (NII) and provisions which were reduced. The NII rose by 18 per cent to hit Rs 10,936 crore for the April-June quarter of this fiscal as compared to Rs 9,280 crore in the year-ago quarter. Provisions overall, barring those for tax stood at Rs 2852 crore, in the first quarter when compared to Rs 7594 crore in the same quarter last year.  The bank also wrote back Rs 1050 crore from the pandemic provisions, as it closed the quarter at a buffer of Rs 6425 crore.

NPAs rise

The other income of the bank dropped by 35 per cent year on year touching Rs 3996 crore for the quarter. The total income dropped 6.5 per cent to touch Rs 24,379 crore for the first quarter when compared to Rs 26,067 in the prior year. Meanwhile, the bank’s gross NPA (non-performing asset) went up when compared to the same quarter the previous year, touching Rs 7,231 crore. The gross NPA stood at Rs 1160 crore in the same quarter in the prior year. The addition of non performing assets was attributed by the bank to its business and retail banking, including Rs 961 crore that came from the portfolio of Kisan Credit Card and another Rs 1,130 crore that came from jewel loans. The remaining six per cent was attributed to the SME and corporate portfolios of the bank.

The bank also reportedly took up restructuring of loans worth over Rs 3891 crore as part of the Reserve Bank of India’s policy announced in June 2021, that was aimed at restructuring debt of stressed small businesses, MSMEs or individuals. The bank’s portfolio of retail loans went up by 20 per cent year on year, and accounted for more than 61 per cent of the overall loan portfolio. The SME business also increased by 43 per cent year on year. ICICI Bank’s overall deposits touched Rs 9,26,224 crore, a y-o-y rise of 16 per cent, as on June 30 this year.

India Inc Q1 earnings

The 52-week high of ICICI Bank shares comes amidst solid two-digit increase in net profits and aggregate revenues for India’s corporates in Q1. Experts attribute this strong growth to the recovery following the first and second waves of the pandemic, apart from the low base of the last year, when nationwide lockdowns hit businesses. A solid earnings reason is expected to contribute towards the Nifty50 Index breaching 16k levels in the near future. Meanwhile, in early trade on Tuesday, Nifty briefly tested the 15,850 levels on the back of metals and bank stocks.

Solid earnings reports coming in along with progress in vaccinations are likely to play a key role in the sustainability of positive sentiments in the market. As the second wave recedes, and vaccinations increase, business activities are likely to pick up. Further, the upcoming festive season may bring a boost in consumer spending, and lift the markets. It may be recalled that the Nifty benchmark index ended FY21 with an earnings increase of 14 per cent, even as India Inc put up a resilient show. The same momentum is expected to be sustained in FY22, according to analysts.

Conclusion

Shares of ICICI Bank gained over 1 per cent to touch a 52-week high on the BSE and the NSE on the back of the bank’s 78 per cent increase in its standalone net profits for the June quarter. India Inc is expected to sustain the momentum of the last quarter. With the second wave of the pandemic having receded and vaccinations progressing, analysts expect that the markets may continue to stay buoyant albeit with a few corrections.