1
Please refer to important disclosures at the end of this report
1
1
Particulars (` cr)
Q2FY20
% chg (qoq)
Q2FY19
% chg (yoy)
NII
8,057
4
6,418
26
Pre-prov. profit
6,874
9
5,250
31
PAT
655
(66)
909
(28)
Source: Company
For Q2FY2020, ICICI Bank reported net profit of `655cr and if we adjust for DTA
mark down charges of `2,920cr PAT would have been `3,575cr. On operating
front, bank has reported very healthy set of numbers. Pre-Prov profit grew at 31%
yoy led by strong growth in NII (26% yoy) and non interest income (33% yoy).
Further, on asset quality front, bank improved almost in all parameters except
moderate addition to BB & Below book.
Stable asset quality; BB & Below book marginally increased: During the quarter,
the key monitorable was contained slippages, which was worth `2,482cr, of
which `1,323cr slipped from retail book and `1,159cr slid from corporate book.
Consequently, GNPA/NPA ratios improved 10bps/20bps qoq to 6.4%/1.6%. Key
positive was PCR improvement of 200bps qoq to 76.1% (85% including Tech
W/O), which is one of the highest in the industry. Key negative was increase in BB
& Below book though it grew 5% qoq, however street was expecting lower trend in
this book. Management comments indicate moderate addition in 2H, considering
more number of rating downgrade. Management has guided credit cost of 1.2-
1.3% for FY2020 (Considering recovery from IBC).
Advances led by retail lending; NIM stable: The bank’s advances grew by 13%
yoy (4% qoq) aided by healthy retail loan book growth of 22% yoy. The main
drivers leading to the growth in the retail loan book were personal loans/credit
card lending, which grew by 51%/40% yoy respectively. Retail contribution to total
loans increased to 62% vs. 57.5% in Q2FY2019. NIM stood at 3.64% against
3.61% in Q1FY20 and 3.33% in Q2FY19. CASA ratio declined to 46.7% vs.
50.8% in Q4FY2019 as growth in term deposits (35% yoy) outpaced that in CASA
deposits.
Outlook & Valuation: At the current market price, the bank’s core banking
business (after adjusting the value of subsidiaries) is trading at 1.9x FY2021E
ABV. We believe strength of liability franchise (CASA – 46.7%), shift in loan mix
towards retail assets & better rated companies, strong capitalization (tier I of
14.62%), steady improvement in stressed loan and going forward quick resolution
under IBC would be the key triggers for expansion. We recommend a Buy on the
stock with a Target Price of `532.
Key Financials
Y/E March (` cr)
FY17
FY18
FY19
FY20E
FY21E
NII
21,738
23,025
27,015
32,145
37,259
% chg
2
6
17
19
16
Net profit
9,802
6,645
3,362
9,559
16,443
% chg
0.8
(32.2)
(49.4)
184
72
NIM (%)
3.2
3.1
3.2
3.5
3.5
EPS (`)
15
10
5
15
26
P/E (x)
31
46
91
32
19
P/ABV (x)
4.0
3.7
3.1
2.9
2.6
RoA (%)
1.3
0.8
0.4
0.9
1.4
RoE (%)
10.3
6.5
3.1
8.5
13.4
Source: Company, CMP as on 29/10/2019, Valuation done closing price of 29/10/2019
BUY
CMP `477
Target Price `532
Investment Period 12 Months
Stock Info
Sector
Bloomberg Code
Shareholding Pattern (%)
Promoters 0.0
MF / Banks / Indian Fls 37.4
FII / NRIs / OCBs 31.7
Indian Public / Others 33.6
Abs. (%) 3m 1yr 3yr
Sensex 3.8 16.5 40.6
ICICI Bank 14.8 46.8 81.8
Beta
1.4
Banking
Market Cap (` cr)
3,08,513
52 Week High / Low
482/326
Avg. Daily Volume
9,92,442
Face Value (`)
2
BSE Sensex
39,831
Nifty
11,786
Reuters Code
ICBK.BO
ICICIBC IN
3 Year Price Chart
Source: Company
Jaikishan Parmar
Research Analyst
022 – 39357600 Ext: 6810
Jaikishan.parma[email protected]om
100
200
300
400
500
Oct-16
Feb-17
Jun-17
Oct-17
Feb-18
Jun-18
Oct-18
Feb-19
Jun-19
Oct-19
ICICI Bank
Healthy Operating Performance
Q2FY2020 Result Update| banking
Oct 29, 2019
2
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
2
Exhibit 1: Quarterly Performance
Particulars (` cr)
Q1FY19
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
% chg (qoq)
% chg (yoy)
Interest Earned
14,722
15,106
16,280
17,293
17,980
18,565
3
23
on Advances / Bills
10,982
11,512
12,524
12,925
13,616
14,304
5
24
on investments
3,136
3,086
3,237
3,338
3,645
3,726
2
21
on bal with RBI & others
227
147
135
227
147
136
(8)
(8)
on others
378
360
385
802
571
399
(30)
11
Interest Expended
8,620
8,688
9,405
9,673
10,243
10,508
3
21
Net Interest Income
6,102
6,418
6,875
7,620
7,737
8,057
4
26
Non Interest Income
3,851
3,156
3,883
3,621
3,425
4,194
22
33
Operating income
9,953
9,574
10,758
11,241
11,163
12,252
10
28
Operating Expenses
4,145
4,324
4,612
5,008
4,874
5,378
10
24
Employee expenses
1,514
1,661
1,734
1,899
1,953
2,141
10
29
Other Opex
2,631
2,663
2,878
3,109
2,921
3,236
11
22
Pre-prov. profit
5,808
5,250
6,146
6,233
6,288
6,874
9
31
Provisions & Contingencies
5,971
3,994
4,244
5,451
3,496
2,507
(28)
(37)
PBT
(164)
1,255
1,902
782
2,793
4,367
56
248
Provision for Taxes
(43)
347
297
(187)
885
3,712
320
971
Tax rate
26
28
16
(24)
32
85
168
208
PAT
(120)
909
1,605
969
1,908
655
(66)
(28)
Source: Company, Angel Research
Exhibit 2: Balance Sheet
Particular
Q2FY19
Q3FY19
Q4FY19
Q1FY20
Q2FY20
% chg (qoq)
% chg (yoy)
Advance (` cr)
5,44,487
5,64,308
5,86,647
5,92,415
6,13,359
4
13
Deposit (` cr)
5,58,669
6,06,755
6,52,920
6,60,732
6,96,273
5
25
Credit-to-Deposit Ratio (%)
97
93
90
90
88
(18.9)bp
(474.6)bp
CA (` cr)
76,072
88,581
96,269
80,401
94,431
17
24
SA (` cr)
2,07,476
2,10,793
2,27,671
2,18,476
2,30,569
6
11
CASA deposits (` cr)
2,83,548
2,99,374
3,23,940
2,98,877
3,25,000
9
15
CASA %
50.8
49.3
49.6
45.2
46.7
(438)bp
(528.8)bp
Tier-I ratio
15.4
15.1
15.1
14.6
14.6
(49)bp
(124)bp
of which - CET1
14.0
13.7
13.6
13.2
13.2
(43)bp
(121)bp
Tier-II ratio
2.5
2.0
1.8
1.6
1.5
(21)bp
(92)bp
Total CAR ratio
17.8
17.2
16.9
16.2
16.1
(70)bp
(216)bp
Source: Company, Angel Research
3
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
3
Exhibit 3: NIM and Asset quality improved
particular
Q1FY19
Q2FY19
Q3FY19
Q1FY20
% chg (qoq)
% chg (yoy)
Rep. Yield on Advance
8.71
8.79
9.00
9.36
7bp
65bp
Rep. Cost of fund
4.99
5.00
5.14
5.23
3bp
24bp
Cost of Deposit
4.81
4.76
4.88
5.08
8bp
27bp
Reported NIM
3.19
3.33
3.22
3.61
(11)bp
42bp
Cost-to-income ratio
41.6
45.2
42.9
43.7
(88.2)bp
201.7bp
Asset quality
Gross NPAs (` cr)
53,465
54,489
51,627
45,799
(1)
(14)
Gross NPAs (%)
8.8
8.5
7.8
6.5
(21)bp
(232)bp
Net NPAs (` cr)
24,170
22,086
16,288
11,893
(13)
(51)
Net NPAs (%)
4.2
3.7
2.6
1.8
(29)bp
(242)bp
PCR (%)
52
57
67
73
347.4bp
2028.7bp
Slippage ratio (%)
0.8
0.6
0.4
0.5
(13.6)bp
(31.3)bp
Credit Cost on Adv (Annl)
4.6
3.0
3.1
2.4
(141.7)bp
(227.2)bp
Exhibit 4: Stressed book on declining trend
Particular (` cr)
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
3QFY19
4QFY19
Q1FY20
Q2FY20
GNPA
43,148
44,489
46,039
54,063
53,465
54,489
51,627
46,328
45,799
45,695
Outstanding bad loans
28,300
28,300
25,800
13,461
11,898
10,720
3,690
3,299
3,280
3,280
(% of loans)
6.1%
5.9%
5.1%
2.6%
2.3%
2.0%
0.7%
0.6%
0.6%
0.5%
Stressed asset
Sub investment grade
20,400
19,600
19,100
4,728
4,401
3,283
Security receipts
3,400
3,500
3,400
3,438
3,438
3,436
3,299
3,299
3,280
3,280
Other dispensation
4,500
5,200
3,300
5,295
4,059
4,001
391
Restructured loans
2,400
2,000
1,800
1,595
1,445
1,443
391
...5.25
200
200
200
-
2,004
2,005
SDR
1,500
2,700
1,000
-
-
S4A
400
300
300
2,200
610
553
Other
1,500
-
BB&Below
17,100
18,812
17,525
15,355
16,074
71,448
72,789
71,839
67,524
65,363
82,309
74,129
67,152
64,434
65,049
Stressed pool to loans (%)
15.4
15.1
14.2
13.2
12.7
15.1
13.1
11.4
10.9
10.6
4
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
4
Outlook & Valuation: At the current market price, the bank’s core banking
business (after adjusting the value of subsidiaries) is trading at 1.9x FY2021E ABV.
We believe strength of liability franchise (CASA – 46.7%), shift in loan mix towards
retail assets & better rated companies, strong capitalization (tier I of 14.62%),
steady improvement in stressed loan and going forward quick resolution under IBC
would be the key triggers for expansion. We recommend a Buy on the stock with a
Target Price of `532.
Exhibit 5: SOTP
Particular
%
Valuation
Methodology
Value/share
(`)
Value of ICICI standalone
100
2.2x FY21E ABV
408
Subsidiaries
ICICI Prudential Life
54.9
On Current M.Cap
57
General Insurance
56
On Current M.Cap
52
Mutual fund s
51
5.5% of current AUM
15
Other (Home Fin, VC, Securities
PD and Overseas subsidiaries)
31
Total subsidiaries' value @ 20% discount
124
Fair value per share
532
Valuation done on closing price of 29/10/2019
5
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
5
Income Statement
Y/E March (` Cr)
FY17
FY18
FY19
FY20E
FY21E
Net Interest Income
21,738
23,025
27,015
32,145
37,259
- YoY Growth (%)
2
6
17
19.0
15.9
Other Income
19,503
17,419
14,511
15,631
18,302
- YoY Growth (%)
27
(11)
-17
8
17
Operating Income
41,241
40,444
41,526
47,776
55,561
- YoY Growth (%)
13
(2)
3
15
16
Operating Expenses
14,754
15,704
18,089
20,834
23,628
- YoY Growth (%)
16
6
15
15
13
Pre - Provision Profit
26,487
24,741
23,437
26,942
31,933
- YoY Growth (%)
11
(7)
-5
15
19
Prov. & Cont.
15,207
17,307
19,661
10,453
10,009
- YoY Growth (%)
30
14
14
(47)
(4)
Profit Before Tax
11,279
7,434
3,776
16,489
21,924
- YoY Growth (%)
(8)
(34)
-49
337
33
Prov. for Taxation
1,478
789
413
6,929
5,481
- as a % of PBT
13
11
11
42
25
PAT
9,802
6,645
3,362
9,559
16,443
- YoY Growth (%)
1
(32)
(49.4)
184
72
Balance Sheet
Y/E March (` Cr)
FY17
FY18
FY19
FY20E
FY21E
Equity
1,171
1,292
1,294
1,297
1,297
Reserve & Surplus
98,780
1,03,868
1,07,074
1,14,911
1,28,065
Networth
99,951
1,05,160
1,08,368
1,16,208
1,29,362
Deposits
4,90,039
5,60,975
6,52,920
7,45,865
8,55,897
- Growth (%)
16
14
16
14
15
Borrowings
1,47,556
1,82,859
1,65,320
1,61,322
1,88,723
Other Liab. & Prov.
34,245
30,195
37,851
57,164
83,222
Total Liabilities
7,71,791
8,79,189
9,64,459
10,80,558
12,57,204
Cash Balances
31,702
33,102
37,858
44,074
50,576
Bank Balances
44,011
51,067
42,438
33,730
38,706
Investments
1,61,507
2,02,994
2,07,733
2,37,973
2,75,572
Advances
4,64,232
5,12,395
5,86,647
6,60,219
7,72,363
- Growth (%)
7
10
14
13
17
Fixed Assets
7,805
7,904
7,931
11,439
13,126
Other Assets
62,535
71,727
81,852
93,123
1,06,861
Total Assets
7,71,791
8,79,189
9,64,459
10,80,558
12,57,204
- Growth (%)
7
14
10
12
16
6
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
6
Key Ratio
Y/E March
FY17
FY18
FY19
FY20E
FY21E
Profitability ratios (%)
NIMs
3.2
3.1
3.2
3.5
3.5
Cost to Income Ratio
36
39
44
44
43
RoA
1.3
0.8
0.4
0.9
1.4
RoE
10
6
3
9
13
B/S ratios (%)
CASA Ratio
50
52
50
47
49
Credit/Deposit Ratio
0.95
0.91
0.90
0.89
0.90
Asset Quality (%)
Gross NPAs
7.9
8.8
6.7
5.2
3.8
Net NPAs
4.9
3.5
2.0
1.6
1.1
Slippages
7.5
6.4
2.5
2.0
1.5
Loan Loss Prov. /Avg. Assets
2.04
2.10
2.13
1.02
0.86
Provision Coverage
40
48
71
70
70
Per Share Data (`)
EPS
15
10
5
15
26
ABVPS (70% cover.)
119
129
153
165
185
DPS
2
2
1
3
5
Valuation Ratios
PER (x)
31
46
91
32
19
P/ABVPS (x)
4.0
3.7
3.1
2.9
2.6
Dividend Yield (%)
0.5
0.4
0.2
0.6
1.1
DuPont Analysis
NII
2.9
2.8
2.9
3.1
3.2
(-) Prov. Exp.
2.0
2.1
2.1
1.0
0.9
Adj. NII
0.9
0.7
0.8
2.1
2.3
Other Inc.
2.6
2.1
1.6
1.5
1.6
Op. Inc.
3.5
2.8
2.4
3.7
3.9
Opex
2.0
1.9
2.0
2.0
2.0
PBT
1.5
0.9
0.4
1.6
1.9
Taxes
0.2
0.1
0.0
0.7
0.5
RoA
1.3
0.8
0.4
0.9
1.4
Leverage
7.9
8.0
8.6
9.1
9.5
RoE
10.3
6.5
3.1
8.5
13.4
Valuation done on closing price of 29/10/2019
7
ICICI Bank | 2QFY2020 Result Update
Oct 29, 2019
7
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement ICICI Bank
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
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