ICICI Bank rallies 6%, hits record high on strong December quarter results

Shares of ICICI Bank rallied 6 per cent to hit a record high of Rs 568 on the BSE in intra-day trade on Monday after reporting strong December quarter (Q3FY21) results, with net profit increasing 19 per cent at Rs 4,940 crore, on steady revenue growth. The private sector lender had posted a net profit of Rs 4,146 crore in the quarter ended December 2019 (Q3FY20). The stock surpassed its previous high of Rs 561, touched on January 13, 2021.

The bank’s net Interest Income (NII) in the reporting quarter rose by 16 per cent at Rs 9,912 crore from Rs 8,545 crore in Q3FY20. Net Interest Margin for the reporting quarter declined to 3.67 per cent from 3.77 per cent in the year-ago quarter.

Following an order by the Supreme Court, no new non-performing assets (NPAs) were recognised since September 1 of last year. If such NPAs were recognised, the pro forma gross NPAs were 5.42 per cent and Net NPAs were 1.26 per cent. The resultant pro forma provision coverage ratio (PCR) was 77.6 per cent.

ICICI Bank’s loan growth is showing a strong revival in both wholesale, small and medium-sized enterprises (SME), and retail, with disbursement in many business segments crossing pre-COVID levels, led by festive demand, improving economic outlook, and strong digital eco-system build by the bank across business segments.

The restructuring pursuant to Reserve Bank of India (RBI) resolution framework stood at Rs 2,546 crore (0.4 per cent of advances) at December 31, 2020. This is less than the earlier guidance of one per cent of loan book as corporate India and the broader economy seem to be doing better than anticipated, the bank said in a media call after announcing the results.

“ICICI Bank reported a strong Q3FY21, led by robust operating performance, while strong asset quality trends enabled decline in provisioning expenses. Loan growth is showing a strong revival in both Wholesale and Retail, with disbursement in many business segments surpassing pre-COVID levels. Asset quality remains under control, with controlled slippages and total restructuring at 0.4 per cent of loans,” Motilal Oswal Securities said in result update.

“On the asset quality front, controlled slippages led to a 6 basis points (bps) quarter on quarter rise in the pro forma GNPA ratio, while total restructuring stood at 0.4 per cent of loans (v/s 1 per cent guided earlier). Pro forma PCR stood around 78 per cent, the highest in the industry. It holds unutilized COVID provisions of Rs 6,470 crore (1 per cent of loans), offering comfort on normalization in credit cost. We raise our FY21E estimate by 20 per cent due to lower credit cost while largely maintaining our FY22E/FY23E estimates,” the brokerage firm said.