ICICI Bank surges 11% on better-than-expected Q2 results

Shares of ICICI Bank climbed nearly 11 per cent to Rs 349apiece on BSE in the intra-day deals on Monday after the lender reported a better-than-expected results for the September quarter of FY19. 

The private sector lender saw its net profit fall by 55.8 per cent to Rs 9.09 billion against Rs 20.58 billion a year ago, which was lower than Rs 9.49 billion according to a Bloomberg poll of analysts. READ MORE

That apart, the bank also reported improvement in the asset quality as fresh slippages subsided to Rs 31.2 billion. It also guided for a significant decline in NPL (non-performing loans) formation over FY19. 

Net interest income rose 12.4 per cent to Rs 64.18 billion in September 2018, compared with Rs 57.09 billion in the year-ago quarter.

Net interest margin (NIM) stood at 3.33 per cent, compared to 3.27 per cent in the year-ago period. In the June quarter, NIM was 3.19 per cent.

ICICI Bank is in the midst of an improvement in the operating environment (stressed asset resolution and growth pick-up) and is showing healthy signs of earnings normalisation. With challenges related to management transition getting addressed, the bank is now focusing on growing its core operating profits, notes Motilal Oswal Securtities. "We revise our FY19/20 earnings by (1.7 per cent)/4.8 per cent, and estimate ICICI Bank to deliver nearly 1.2 per cent RoA (return on assets) by FY20. The brokerage has maintained 'BUY'rating on the stock with a sum-of-the-parts analysis (SOTP)-based target price of Rs 400.

The gross non-performing asset (GNPA) ratio for the quarter stood at 8.54 per cent, up 67 basis points over 7.87 per cent in the year-ago quarter. However, it was lower over the previous quarter’s GNPA ratio of 8.81 per cent.

Slippages during the quarter saw a decline at Rs 21.11 billion against Rs 36.45 billion in year-ago quarter but were slightly higher than Rs 20 billion in the June quarter.

The stock eventually closed at Rs 349 apiece on BSE, up 11 per cent.