ICICI Bank: Netting gains
ICICI Bank has reported an increase of 31% in consolidated profit after tax to Rs 4,670 crore in FY2010 from Rs 3,577 crore during FY2009. For the fourth quarter ended March 2010, it registered a 35% y-o-y increase (standalone basis) in profit after tax to Rs 1,006 crore.
After steadily contracting on a quarterly basis over the last few years, the recently concluded quarter saw a modest turnaround in deposit and advances growth q-o-q, posting a 2% growth in deposits and 1% rise in advances.
The balance-sheet continued to shrink on a y-o-y basis, however with total deposits down 7.5% and advances down 17% y-o-y attributed by management to the repayments from the retail loan portfolio and the loan portfolio of overseas branches. Operational parameters like CASA looked good improving to 41.7% compared to 28.7% in Q4FY09 and expanding 211 bps sequentially over the previous quarter boosted by 7.6% growth in CASA deposits.
Gross NPAs are up 6% sequentially, a distressing sign, but are down 2% y-o-y but higher coverage (up 830 bps to 59.5%) has seen net NPAs shrink sequentially to 2.12% from 2.43%. However, provisioning coverage is below the RBI’s prescribed 70% ratio and one must wait and see what the central bank prescribes. Net interest income has predictably dipped 5% y-o-y to Rs 2035 crore in Q4FY10 and 3% y-o-y in FY10 to Rs 8,114 crore.
The bank has an impeccable capital adequacy ratio of 19.4% with a Tier I ratio of 14%. Analysts have been waiting for some time for the expected spurt in advances growth given that the bank has adequate capital. However, this quarter has been muted at best and below industry averages.
The stock closed at Rs 975.75 on 23rd April, up 3.4% over previous close. It currently trades at a P/B valuation of about 2x consensus analyst estimates of FY11 book value per share.