1QFY2019 Result Update | Banking
July 30, 2018
ICICI Bank
BUY
CMP
`307
Performance Highlights
Target Price
`411
Particulars (` cr)
3QFY18
2QFY18
% chg (qoq) 3QFY17
% chg (yoy)
Investment Period
12 Months
NII
6,102
6,022
1.3
5,590
9.2
Pre-prov. profit
5,808
7,513
(22.7)
5,184
12.0
Stock Info
PAT
(120)
1,019
-
2,050
-
Sector
Banking
Source: Company, Angel Research
Market Cap (` cr)
1,97,635
ICICI Bank reported loss of `120cr owing to MTM losses (after IPru Life stake sale)
Beta
1.6
and elevated provisions (increased coverage on NCLT exposure). Net interest
52 Week High / Low
365.7/256
income grew by 9.2% and reported NIM compressed by 5bps/8bps qoq/yoy to
Avg. Daily Volume
13,74,077
3.19%. Slippage for Q1FY19 was `4,036cr, which is lowest from last 11 quarter.
Face Value (`)
2
Healthy growth in retail advances; slippages at low
BSE Sensex
37,494
Nifty
11,319
During 1QFY19, the bank’s advances grew by 11.3% yoy (0.6% qoq), aided by
Reuters Code
ICBK.NS
healthy retail loan book growth of 20% yoy. The main drivers leading to the
Bloomberg Code
[email protected]
growth in the retail loan book were Personal loans/credit card/business banking
loan, which grew by 47.7%/27.9%/40.7 yoy respectively. Retail contribution to
total loans increased to 57.5% as compared to 53.3% in the corresponding
Shareholding Pattern (%)
quarter of the previous year. The corporate loan book grew 5.4% yoy, declined
0.8% qoq.
Promoters
NA
Deposits growth was modest at 12.5% yoy, while CASA deposits saw a growth of
MF / Banks / Indian Fls
31.7
16.1% yoy, resulting in improvement in CASA ratio by 157bps yoy to 50.5%. The
FII / NRIs / OCBs
60.4
reported NIM fell by 5bps/8bps qoq/yoy to 3.19%, with domestic NIM at 3.54% as
Indian Public / Others
7.7
compared to 3.67% in 4QFY18.
On the asset quality front, the bank witnessed slippages during the quarter to the
tune of `4,036cr, which were at multi quarter lows and largely driven by drill down
Abs. (%)
3m 1yr
3yr
list and existing addition to NPA (exchange fluctuation). The Gross NPA ratio
Sensex
6.2
14.8
35.5
declined 3bps sequentially to 8.81%, whereas the Net NPA declined 58bps qoq to
ICICI Bank
3.1
(2.9)
10.8
4.2% in Q1FY19. The bank has sequentially enhanced provision in NCLT-1 from
52.6% to 87.9% and in NCLT-2 from 47.8% to 6.7%. Total exposure (funded and
Non- funded) stand at `14,300cr.
3-year price chart
Outlook & Valuation: At the current market price, the bank’s core banking
400
350
business (after adjusting value of subsidiaries) is trading at 1.16x FY20E ABV. We
300
believe strength of liability franchise (CASA-50%), shift in loan mix towards retail
250
assets and better rated companies, Strong capitalization (tier I of 14.42%), and
200
150
steady improvement in stress loan and going forward quick resolution under IBC
100
would be the key trigger for multiple expansion. We recommend a Buy rating on
the stock, with a target price of `411.
Key financials (Standalone)
Source: Company, Angel Research
Y/E March (` cr)
FY2017
FY2018
FY2019E
FY2012E
NII
21,738
23,025
26,781
30,126
% chg
2
6
16
12
Net profit
9,802
6,645
6,807
12,339
% chg
0.8
(32.2)
2.4
81
NIM (%)
3.2
3.1
3.2
3.3
EPS (`)
15
10
11
19
P/E (x)
20
30
29
16
Jaikishan Parmar
P/ABV (x)
3
2
2
2
Research Analyst
RoA (%)
1.3
0.8
0.7
1.2
022 - 39357600 Ext: 6810
RoE (%)
10
6
6
11
[email protected]
Source: Company, Angel Research; Note: CMP as of July 30, 2018
Please refer to important disclosures at the end of this report
1
ICICI Bank | 1QFY2019 Result Update
Exhibit 1: quarterly results summary
Particulars (` cr)
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
% YoY
% QoQ
Interest earned
13,639
13,618
13,569
13,459
13,577
13,665
14,264
14,722
9.4
3.2
- on Advances / Bills
9,905
9,870
9,991
9,847
10,090
10,238
10,690
10,982
11.5
2.7
- on investments
2,997
2,948
2,622
2,827
2,879
2,860
3,001
3,136
10.9
4.5
- on balance with RBI & others
38
126
282
199
145
154
166
227
14.1
36.5
- on others
699
675
674
586
463
412
406
378
(35.5)
(7.0)
Interest Expended
8,386
8,254
7,606
7,869
7,868
7,960
8,243
8,620
9.5
4.6
Net Interest Income
5,253
5,364
5,962
5,590
5,709
5,705
6,022
6,102
9.2
1.3
Other income
9,119
3,938
3,017
3,388
5,186
3,167
5,678
3,851
13.7
(32.2)
- Fee income
2,356
2,495
2,446
2,377
2,570
2,639
2,755
2,754
15.9
(0.0)
- Treasury income
6412
893
503
858
2193
66
2685
766
(10.7)
(71.5)
- Others
351
550
68
153
423
462
238
331
116.3
39.1
Operating income
14,372
9,302
8,979
8,978
10,895
8,872
11,700
9,953
10.9
(14.9)
Operating expenses
3,736
3,778
3,867
3,794
3,909
3,814
4,186
4,145
9.3
(1.0)
- Employee expenses
1,556
1,406
1,480
1,511
1,514
1,363
1,526
1,514
0.2
(0.8)
- Other Opex
2,180
2,372
2,387
2,283
2,395
2,452
2,660
2,631
15.3
(1.1)
Pre-provision Profit
10,636
5,524
5,112
5,184
6,986
5,057
7,513
5,808
12.0
(22.7)
Provisions & Contingencies
7082
2713
2898
2609
4503
3570
6626
5971
128.9
(9.9)
PBT
3,554
2,812
2,214
2,575
2,483
1,488
888
(164)
-
-
Provision for Tax
451
369
189
526
425
(162.1)
(131.8)
(43.4)
-
-
PAT
3,103
2,442
2,025
2,050
2,058
1,650
1,019
(120)
-
-
Source: Company, Angel Research
Exhibit 2: Strong Retail lending supports Loan Growth
Particulars (` cr)
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
% YoY
% QoQ
Domestic Corporate
1,29,921
1,26,735
1,24,372
1,31,316
1,35,949
132198
131137
5.4
(0.8)
Overseas branches
82,802
74,741
71,468
71,934
70,754
64562
64536
(9.7)
(0.0)
SME
21,044
22,283
20,883
20,760
24,764
25620
23749
13.7
(7.3)
Retail Total
2,23,703
2,40,472
2,47,352
2,58,770
2,73,920
291040
296866
20.0
2.0
Total
4,57,469
4,64,232
4,64,075
4,82,780
5,05,387
513420
516289
11.3
0.6
Loan Mix (%)
Domestic Corporate
28
27
27
27
27
26
25
Overseas branches
18
16
15
15
14
13
13
SME
5
5
5
4
5
5
5
Retail Total
49
52
53.3
53.6
54.2
56.7
57.5
Source: Company, Angel Research
July 30, 2018
2
ICICI Bank | 1QFY2019 Result Update
Exhibit 3: Slippages at multi quarter lows
Particulars (` cr)
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Opening gross NPA
32,548
38,085
42,552
43,148
44,489
46,039
54,063
Add: gross additions
7,037
11,289
4,976
4,674
4,380
15,737
4,036
slippages
1.54%
2.43%
1.07%
0.97%
0.87%
3.07%
0.78%
Slippages Annulised
3.87%
3.47%
12.29%
3.13%
- of which: slippages from
Restructured assets
239
1,803
1,476
372
197
327
82
Drilldown
2,943
7,957
359
1,135
614
11,776
303
Existing NPA2 & non-fund
2,040
40
195
220
146
655
1,192
Loans under RBI resolution
-
32
111
192
2,022
877
246
Less: recoveries & upgrades
625
1,413
2,775
1,029
1,108
4,234
2,036
% of Adv recoveries & upgrades
0.14%
0.30%
0.60%
0.21%
0.22%
0.83%
0.39%
Net additions
6,412
9,876
2,201
3,645
3,272
11,503
2,000
Less: write-offs & sale
875
5,409
1,605
2,304
1,722
3,479
2,598
% of Adv recoveries & upgrades
0.19%
1.17%
0.35%
0.48%
0.34%
0.68%
0.50%
Closing gross NPAs
38,085
42,552
43,148
44,489
46,039
54,063
53,465
GNPA (%)
7.20%
7.89%
8.0%
7.87%
7.82%
8.84%
8.81%
Less - Provision
17,930
17,101
17,842
20,359
22,229
26,177
29,295
Net NPAs
20,155
25,451
25,306
24,130
23,810
27,886
24,170
Net NPA (%)
3.96%
4.89%
4.86%
4.43%
4.20%
4.77%
4.19%
PCR (Calc)
47.08%
40.19%
41.35%
45.76%
48.28%
48.42%
54.79%
Source: Company, Angel Research
Exhibit 4: Declining trend in stress loans
Particulars (` cr)
4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
Outstanding stock of bad loans
53,300
48,100
44,300
38,200
30,100
28,300
28,300
25,800
13,461
11,898
(% of loans)
12.2%
10.7%
9.8%
8.4%
6.5%
6.1%
5.9%
5.1%
2.6%
2.3%
NPA
Sub investment grade
44,100
38,700
32,500
27,500
19,000
20,400
19,600
19,100
4,728
4,401
Security receipts
600
2,200
2,800
2,800
3,300
3,400
3,500
3,400
3,438
3,438
Other dispensation
8,600
7,200
9,000
7,900
7,800
4,500
5,200
3,300
5,295
4,059
Restructured loans
8,600
7,200
6,300
6,400
4,300
2,400
2,000
1,800
1,595
1,445
...5.25
-
-
2,700
900
1,700
200
200
200
-
2,004
SDR
-
-
-
600
1,500
1,500
2,700
1,000
-
-
S4A
-
-
-
-
300
400
300
300
2,200
610
Other
-
-
-
-
-
-
-
-
1,500
-
Source: Company, Angel Research
July 30, 2018
3
ICICI Bank | 1QFY2019 Result Update
Exhibit 5: SOTP valuation summary
Valuation
Particulars
%
Value/share (`)
Methodology
Value of ICICI standalone
100
1.9x FY20E ABV
306
Subsidiaries
ICICI Prudential Life
55
On Current M.Cap
49
General Insurance
56
On Current M.Cap
30
Mutual Fund
51
8% of current AUM
19
Other (Home Fin, VC, Securities PD and
33
Overseas subsidiaries)
Total subsidiaries' value @ 20% discount
105
Fair value per share
411
Source: Company, Angel Research
Outlook & Valuation: At the current market price, the bank’s core banking
business (after adjusting value of subsidiaries) is trading at 1.16x FY20E ABV. We
believe strength of liability franchise (CASA-50%), shift in loan mix towards retail
assets and better rated companies, Strong capitalization (tier I of 14.42%), and
steady improvement in stress loan and going forward quick resolution under IBC
would be the key trigger for multiple expansion. We recommend a Buy rating on
the stock, with a target price of `411.
July 30, 2018
4
ICICI Bank | 1QFY2019 Result Update
Income Statement
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
Net Interest Income
21,224
21,738
23,025
26,781
30,126
- YoY Growth (%)
11
2
6
16
12
Other Income
15,323
19,503
17,419
14,458
15,957
- YoY Growth (%)
26
27
(11)
(17 )
10
Operating Income
36,547
41,241
40,444
41,239
46,083
- YoY Growth (%)
17
13
(2)
2
12
Operating Expenses
12,684
14,754
15,704
17,196
19,812
- YoY Growth (%)
10
16
6
10
15
Pre - Provision Profit
23,863
26,487
24,741
24,042
26,271
- YoY Growth (%)
21
11
(7)
-3
9
Prov. & Cont.
11,668
15,207
17,307
15,209
9,820
- YoY Growth (%)
199
30
14
(12)
(35)
Profit Before Tax
12,196
11,279
7,434
8,833
16,451
- YoY Growth (%)
(23)
(8)
(34)
19
86
Prov. for Taxation
2,469
1,478
789
2,026
4,113
- as a % of PBT
20
13
11
23
25
PAT
9,726
9,802
6,645
6,807
12,339
- YoY Growth (%)
(13)
1
(32)
2.4
81
Balance Sheet
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
Equity
1,170
1,171
1,292
1,292
1,292
Reserve & Surplus
88,566
98,780
1,03,868
1,09,592
1,19,463
Net worth
89,736
99,951
1,05,160
1,10,883
1,20,754
Deposits
4,21,426
4,90,039
5,60,975
6,18,036
7,09,211
- Growth (%)
17
16
14
10
15
Borrowings
1,74,807
1,47,556
1,82,859
1,91,026
2,17,938
Other Liab. & Prov.
34,726
34,245
30,195
25,807
40,243
Total Liabilities
7,20,695
7,71,791
8,79,189
9,45,752 10,88,146
Cash Balances
27,106
31,702
33,102
38,523
44,622
Bank Balances
32,763
44,011
51,067
27,689
32,072
Investments
1,60,412
1,61,507
2,02,994
2,21,287
2,55,165
Advances
4,35,264
4,64,232
5,12,395
5,72,419
6,56,863
- Growth (%)
12
7
10
12
15
Fixed Assets
7,577
7,805
7,904
9,390
10,877
Other Assets
57,574
62,535
71,727
76,445
88,547
Total Assets
7,20,695
7,71,791
8,79,189
9,45,752 10,88,146
July 30, 2018
5
ICICI Bank | 1QFY2019 Result Update
Key Ratio
Y/E March
FY16
FY17
FY18
FY19E
FY20E
Profitability ratios (%)
NIMs
3.3
3.2
3.1
3.2
3.3
Cost to Income Ratio
35
36
39
42
43
RoA
1.4
1.3
0.8
0.7
1.2
RoE
11
10
6
6
11
B/S ratios (%)
CASA Ratio
46
50
52
51
51
Credit/Deposit Ratio
1.03
0.95
0.91
0.93
0.93
Asset Quality (%)
Gross NPAs
5.2
7.9
8.8
7.0
5.8
Net NPAs
2.7
4.9
3.5
2.8
2.3
Slippages
4.2
7.5
6.4
2.5
2.0
Loan Loss Prov. /Avg. Assets
1.71
2.04
2.10
1.67
0.97
Provision Coverage
50
60
60
60
60
Per Share Data (`)
EPS
15
15
10
11
19
ABVPS (75% cover.)
112
116
125
145
161
DPS
5
2
2
2
4
Valuation Ratios
PER (x)
20
20
30
29
16
P/ABVPS (x)
2.7
2.6
2.5
2.1
1.9
Dividend Yield (%)
1.5
0.7
0.7
0.7
1.2
DuPont Analysis
Int Income
7.7
7.3
6.7
6.8
7.0
Int Exp
4.6
4.3
3.9
3.9
4.1
NII
3.1
2.9
2.8
2.9
3.0
(-) Prov. Exp.
1.7
2.0
2.1
1.7
1.0
Adj. NII
1.4
0.9
0.7
1.3
2.0
Other Inc.
2.2
2.6
2.1
1.6
1.6
Op. Inc.
3.6
3.5
2.8
2.9
3.6
Opex
1.9
2.0
1.9
1.9
1.9
PBT
1.8
1.5
0.9
1.0
1.6
Taxes
0.4
0.2
0.1
0.2
0.4
RoA
1.4
1.3
0.8
0.7
1.2
Leverage
8.0
7.9
8.0
8.4
8.8
RoE
11.4
10.3
6.5
6.3
10.7
Source: Company
July 30, 2018
6
ICICI Bank | 1QFY2019 Result Update
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
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public offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
ICICI Bank
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
July 30, 2018
7