ICICI Bank trades flat after reporting 5% fall in Q4 profit

Shares of ICICI Bank were trading flat in the morning trade on Tuesday, a day after the lender reported 5 per cent fall in net profit for the quarter ended March 2019 (Q4) to Rs 969 crore. The decline in profit was due to higher operating expenses and treasury income plunging to Rs 156 crore versus Rs 2,685 crore a year-ago padded with Rs 3,320 crore of profit from stake sale in ICICI Securities.

The stock dropped as much as 1.29 per cent in the early trade to Rs 396 apiece on the BSE. However, it recovered later and was trading over 0.50 per cent lower at Rs 399 apiece. In comparison, the S&P BSE Sensex was trading 0.25 per cent higher at 38,695 level.

Net interest income (NII) during the quarter under review grew by 27 per cent at Rs 7,620 crore in Q4. Net interest margins (NIM or a measure of profitability) rose to 3.72 per cent for from 3.4 per cent a year-ago. Yet, these numbers lagged Bloomberg estimates of Rs 7,192 crore of NII and Rs 2,292 crore of net profit, said a Business Standard report. CLICK TO READ FULL REPORT

Gross non-performing assets (NPA) ratio stood at 6.7 per cent as of March 2019 — lowest in 13 quarters; down 105 basis points (bps) sequentially and 214 (bps) year-on-year. The bank wrote off Rs 7,324 crore of bad loans during the quarter against Rs 926 crore a quarter ago.

During the quarter, the bank reported Rs 1,880 crore of slippages from below investment grade portfolios, including Jet Airlines. Apart from this, in the retail segment fresh delinquency was at 820 billion at an annualized rate of 110 basis points. The management said in future, the slippages would be primarily coming from retail and Kisan credit card loan products and to a lesser degree from corporate.

Analysts at Elara Capital estimate gross slippages ratio at 220 bp and credit cost at 170 bp vs guidance of 120-130 bp. "We arrive at a ROA (return on assets) of 98bp and 127 bp and a ROAE (return on average equity) at 9.0 per cent and 12.3 per cent in FY20E & FY21E, respectively. We reiterate Accumulate with a revised target price of Rs 431 from Rs 389 on a standalone entity) value of Rs 325 at 2.0x (from 1.6x) FY20E P/ABV and value subsidiaries at Rs 106," the brokerage says.