ICICIBC's 4Q PPOP was in line with estimates, although NIM expansion surprised. PAT registered a sharp QoQ fall on the back of COVID-19 related provisions (similar to peers') and was lower than expected. COVID-19 will impact growth and asset quality across the board. However, a stronger b/s (granular, sticky liability base, lower stress levels, higher PCR and adequate CAR), improved underwriting practices and lower exposure to contextually vulnerable products will help ICICIBC emerge stronger. ICICIBC remains our preferred. Maintain BUY (TP of Rs 442, 1.6x core FY22E ABV+ Rs 126 for subs).
Strong funding profile: Deposits grew 18/8%, led by 29/11% growth in term deposits. CASA growth at just 7/3% (avg. CASA grew 12%) was slower than one might expect. Nevertheless, ICICIBC has one of the best in class CASA at 45.1%. ICICIBC's deposit profile is fairly granular and the bank stands to benefit from the growing polarisation of deposit flows. Additionally, CRAR at 16.1% (Tier 1 at 14.7%) provides comfort in uncertain times.
GNPA growth curtailed optically: GNPAs dipped ~5% QoQ to Rs 414bn (5.53%) led by higher w/os (Rs 54.7bn, 2.2x QoQ) even as slippages were elevated at Rs 53.1bn (3.3% ann., ~Rs 13bn lower due to standstill classification). Corp & SME (+47/62%) a/c for ~80% of gross slippages. While, COVID-19 will adversely impact asset quality, we derive some comfort from (1) recent underwriting improvements (70.2% of loans rated A- & above, vs. 67.1% YoY), (2) limited SME (3.5% of loans), and unsecured retail (9.4% of loans) exposure.
Loan growth: The retail segment (+16/3%) drove overall growth (+10/1.5%). Within the retail book, unsecured loans - PL (+46/8%) and CC (+27/-4%) grew the fastest. This segment showed slowing growth trends, accentuated by COVID-19 related disruptions. De-growth in the international book (8.4%, -14.4/-4.6%) persisted. We expect loan growth of ~10% over FY20-22E.
COVID-19 related commentary: ~30% of borrowers (by value) availed of the moratorium as at Apr-20. Like its peers did, ICICIBC offered this facility on an 'opt-in' basis to corp and SME borrowers and on an 'opt-out' basis to retail borrowers. Consequently, retail segments (CV, rural and 2w) saw a higher proportion of borrowers availing of the moratorium. The standstill classification of a/cs had an 18bps impact on GNPLs. 85% of PL & CC loans are to salaried individuals. Of the remaining 15% (self employed), the bank's exposure to travel and hotel sectors is limited. LAP forms 30% of the bank's mortgages portfolio. LTVs here are 55%.
Shares of ICICI BANK LTD. was last trading in BSE at Rs.320.1 as compared to the previous close of Rs. 337.75. The total number of shares traded during the day was 3216480 in over 47120 trades.
The stock hit an intraday high of Rs. 344.9 and intraday low of 318.15. The net turnover during the day was Rs. 1056384623.