ICICI Bank Q4 preview: Net profit may rise 46% YoY, NII 20%, say analysts

ICICI Bank Q4 preview: The net interest income is expected to grow in the range of 17 per cent to 24 per cent over previous year, up to Rs 12,890 crore

ICICI Bank Q4 preview: Private lender ICICI Bank is all set to report its March quarter (Q4FY22) result on Saturday, April 23. The bank, analysts say, may report a 46 per cent year-on-year (YoY) rise in net profit while net interest income (NII) could grow about 20 per cent YoY on an average.

ICICI Bank had reported net profit of Rs 4,402.6 crore in the year-ago period, while NII was Rs 10,431.1 crore. In the previous quarter of the fiscal under review (Q3FY22), PAT was Rs 6,193.8 crore and NII was Rs 12,236 crore.

On the bourses, the stock of the lender slipped 1.3 per cent during the quarter under review as against 0.5 per cent gain in the S&P BSE Sensex.

Here’re the top 5 things to track:

Net profit: Analysts, unequivocally, expect the bank’s net profit to rise around 45.5-46.5 per cent YoY to Rs 6,450 crore. Sequentially, it would be up by 4.5 per cent.

An outlier estimate by Kotak Institutional Equities, however, pegs the same at Rs 7,215.9 crore, up 64 per cent YoY.  

NII, margins: The net interest income is expected to grow in the range of 17 per cent to 24 per cent over previous year, up to Rs 12,890 crore. Net interest margin (NIM), meanwhile, is seen between 3.9 per cent and 4.3 per cent relative to 4.1 per cent in Q4FY21 and 3.9 per cent in Q3FY22.

“We expect NII to grow at 17 per cent YoY aided by stable loan growth of 15 per cent. Margins, too, would remain steady on QoQ basis as deposit rates start hardening,” said analysts at Prabhudas Lilladher.

Loan book: The bank’s credit book is expected to expand around 15-18 per cent over the previous year, in the range of Rs 8.48 trillion to Rs 8.64 trillion. This, KIE says, would be led by small and medium enterprises’ (SME) loans.

Loan book was Rs 7.33 trillion in Q4FY21 and Rs 8.14 trillion in Q3FY22.

The deposits, on the other hand, may increase about 13-17 per cent YoY, up to Rs 10.88 trillion. The same was Rs 9.32 trillion in the year-ago quarter, and Rs 10.17 trillion in Q3FY22.

Cost-to-income ratio could be 42 per cent this quarter, down from 41.3 per cent in Q4FY21 and 41.1 per cent in Q3FY22, said IIFL Securities.

Asset quality: Analysts are divided on the likely asset quality of the bank. While Motilal Oswal expects gross non-performing asset (GNPA) ratio to improve from 4.13 per cent in Q3FY22 to 4.0 per cent in Q4FY22, Prabhudas Lilladher sees it rising marginally to 4.17 per cent.

On a yearly basis, it would be lower than 4.96 per cent reported in Q4FY21.

NNPA ratio, meanwhile, is pegged at 0.8 per cent, down from 0.9 per cent QoQ, and 1.1 per cent YoY.

Slippages and provisions: We expect provisions to slide down to 1 per cent of loans as there is negligible risk on asset quality currently, and are building slippages of 1.8 per cent (Rs 3,700 crore), said KIE’s preview report.

In absolute terms, the bank is expected to create provisions between Rs 1,599.2 crore and Rs 2,150 crore. This is relative to provisions worth Rs 2,883.5 crore in Q4FY21 and Rs 2,007.3 crore in Q3FY22.

Slippage ratio was 6.8 per cent in the previous year and 2.1 per cent in December quarter of FY22.

Key monitorables

Analysts say investors should track recovery trends, credit costs, NIM outlook, and movement in stressed loans.