Q3FY2019 Result Update | Banking
Feb 15, 2019
ICICI Bank
BUY
CMP
`343
Performance Highlights
Target Price
`460
Particulars (` cr)
Q3FY19
Q2FY19
% chg (qoq) 3QFY18
% chg (yoy)
Investment Period
12 Months
NII
6,875
6,418
7.13
5,705
20.52
Pre-prov. profit
6,146
5,250
17.08
5,057
21.54
Stock Info
PAT
1,605
909
76.60
1,650
-2.72
Sector
Banking
Source: Company, Angel Research
Market Cap (` cr)
2,21,590
ICICI Bank reported net profit of `1,605cr in Q3FY2019, lower than estimates
Beta
1.3
owing to higher provisions (up 19% yoy). Higher provisions due to aging of bad
52 Week High / Low
383/256
assets, this Led to PCR increasing sharply by 900pbs qoq to 68.5% (considering
Avg. Daily Volume
17,06,885
Technical/prudential write-offs it stood at 76%)
Face Value (`)
2
BSE Sensex
35,876
Healthy growth in retail advances; slippages at low
Nifty
10,746
Reuters Code
ICBK.NS
During Q3FY2019, the bank’s advances grew by 11.7% yoy (3.6% qoq) aided by
Bloomberg Code
ICICIBC@IN
healthy retail loan book growth of 21.6% yoy. The main drivers leading to the
growth in the retail loan book were personal loans/business banking, which grew
by 50%/41% yoy respectively. Retail contribution to total loans increased to 59%
Shareholding Pattern (%)
vs. 54.21% in Q3FY2018.
Promoters
NA
Deposits growth was healthy at 17% yoy, while CASA deposits also saw a growth
MF / Banks / Indian Fls
34.6
of 17% yoy. Reported NIM for the quarter expanded 7bps/26bps qoq/yoy to 3.4%
mainly due to interest collection on NPAs.
FII / NRIs / OCBs
57.3
On the asset quality front, the bank witnessed slippages (fresh formation of NPA)
Indian Public / Others
8.1
during the quarter to the tune of `2,091cr, which were at multi quarter lows and
largely driven by the portfolio rated BB & below. Further, GNPA/NNPA ratio
declined by 79bps/107bps qoq to 7.75%/2.58% respectively due to higher
Abs. (%)
3m
1yr
3yr
provisioning.
Sensex
1.2
4.6
51.3
Outlook & Valuation: At the current market price, the bank’s core banking
ICICI Bank
(6.3)
4.6
86.0
business (after adjusting the value of subsidiaries) is trading at 1.4x FY2021E ABV.
We believe strength of liability franchise (CASA - 50%), shift in loan mix towards
3-year price chart
retail assets & better rated companies, strong capitalization (tier I of
15.1%),
400
steady improvement in stressed loan and going forward quick resolution under
350
300
IBC would be the key triggers for expansion. We recommend a Buy on the stock
250
with a Target Price of `460.
200
150
100
Exhibit 1: Key Financials
Y/E March (` cr)
FY17
FY18
FY19E
FY20E
FY21E
NII
21,738
23,025
26,952
33,084
37,858
% chg
2
6
17
23
14
Source: Company, Angel Research
Net profit
9,802
6,645
5,077
14,230
16,033
% chg
0.8
(32.2)
(23.6)
180
13
NIM (%)
3.2
3.1
3.3
3.6
3.6
EPS (`)
15
10
8
22
25
P/E (x)
23
34
44
16
14
P/ABV (x)
3
3
2
2
2
Jaikishan Parmar
RoA (%)
1.3
0.8
0.6
1.4
1.4
Research Analyst
022 - 39357600 Ext: 6810
RoE (%)
10
6
5
12
13
Source: Company, Angel Research; Note: CMP as of February 14, 2018
Please refer to important disclosures at the end of this report
1
ICICI Bank | Q3FY2019 Result Update
Exhibit 1: Quarterly Summary
Particular(` cr)
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
YoY QoQ
Interest Income
13,459
13,577
13,665
14,264
14,722
15,106
16,280
19.1
7.8
Interest Expenses
7,869
7,868
7,960
8,243
8,620
8,688
9,405
18.2
8.3
Net Interest Income (NII)
5,590
5,709
5,705
6,022
6,102
6,418
6,875
20.5
7.1
Other Income
3,388
5,186
3,167
5,678
3,851
3,156
3,883
22.6
23.0
Total Income
16,847
18,763
16,832
19,942
18,573
18,262
20,163
19.8
10.4
Net Income
8,978
10,895
8,872
11,700
9,953
9,574
10,758
21.3
12.4
Operating Expenses
3,794
3,909
3,814
4,186
4,145
4,324
4,612
20.9
6.6
Employee Expenses
1,511
1,514
1,363
1,526
1,514
1,661
1,734
27.3
4.4
Other Operating Expenses
2,283
2,395
2,452
2,660
2,631
2,663
2,878
17.4
8.1
Cost / Income %
42.3%
35.9%
43.0%
35.8%
41.6%
45.2%
42.9%
-12bp-230bp
Operating Profit
5,184
6,986
5,057
7,513
5,808
5,250
6,146
21.5
17.1
Provisions
2,609
4,503
3,570
6,626
5,971
3,994
4,244
18.9
6.3
PBT
2,575
2,483
1,488
888
-164
1,255
1,902
27.9
51.5
Provisions for Tax
526
425
-162
-132
-43
347
297
-283.5
-14.2
Tax Rate %
20.4%
17.1%
-10.9%
12.0%
23.0%
23.0%
23.0%
PAT
2,050
2,058
1,650
1,019
-120
909
1,605
-2.7
76.6
Balance Sheet
Advances
4,64,075
4,82,780
5,05,387
5,12,395
5,16,289
5,44,487
5,64,308
11.7
3.6
SME
20,883
20,760
24,764
25,620
23,749
25,294
27,788
12.2
9.9
Domestic Corporate
1,24,372
1,31,316
1,35,949
1,32,198
1,31,137
1,38,329
1,36,147
0.1
-1.6
Overseas Branches
71,468
71,934
70,754
64,562
64,536
69,051
67,164
-5.1
-2.7
Retail Loans
2,47,352
2,58,770
2,73,920
2,91,040
2,96,866
3,11,813
3,33,208
21.6
6.9
Deposits
4,86,254
4,98,643
5,17,403
5,60,975
5,46,878
5,58,669
6,06,755
17.3
8.6
Savings
1,69,950
1,78,480
1,85,851
2,00,967
1,99,604
2,07,476
2,10,793
13.4
1.6
Current
68,073
68,396
74,784
88,958
76,689
76,072
88,581
18.4
16.4
CASA
2,38,023
2,46,876
2,60,635
2,89,925
2,76,293
2,82,250
3,06,544
17.6
8.6
CASA%
49.0%
50%
50.4%
51.7%
50.5%
50.75%
49.34%
-103% -141%
Term
2,48,231
2,51,767
2,56,768
2,71,050
2,70,585
2,75,121
3,07,381
19.7
11.7
Borrowings
1,41,460
1,50,702
1,58,176
1,82,859
1,61,970
1,74,686
1,64,293
3.9
-5.9
Profitability (%)
Change In bps
Yield Advance
8.49%
8.53%
8.29%
8.40%
8.54%
8.68%
9.04%
74.7
35.4
Yield on Investment
6.52%
6.30%
6.36%
6.27%
6.44%
6.60%
6.72%
36.1
11.8
Yield on Maneycal
2.75%
2.95%
2.52%
1.78%
2.18%
2.08%
1.91%
-61.1
-17.4
Yiled on Other
0.51%
0.39%
0.33%
0.32%
0.29%
0.27%
0.28%
-5.6
0.6
Cost of Fund
4.8%
4.93%
4.75%
4.49%
4.54%
4.78%
4.62%
-13.1
-16.2
Calculated NIM
3.35%
3.38%
3.27%
3.27%
3.25%
3.44%
3.55%
28.0
10.5
Reported NIM
3.27%
3.27%
3.14%
3.24%
3.19%
3.33%
3.40%
26.0
7.0
Domestic
3.62%
3.57%
3.53%
3.67%
3.54%
3.71%
3.72%
19.0
1.0
Overseas
0.73%
0.95%
0.29%
0.04%
0.30%
0.05%
0.77%
48.0
72.0
Source: Company
Feb 15, 2019
2
ICICI Bank | Q3FY2019 Result Update
Exhibit 2: GNPA Movement and fresh formation of NPA are at multi year low
Particular(` cr)
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Q3FY19
Opening gross NPA
42,552
43,148
44,489
46,039
54,063
53,465
54,489
Add: gross additions
4,976
4,674
4,380
15,737
4,036
3,117
2,091
Slippages (%)
1.07%
0.97%
0.87%
3.07%
0.78%
0.57%
0.37%
Slippages Annulised (%)
3.87%
3.47%
12.29%
3.13%
2.29%
1.48%
Less: recoveries & upgrades
2,775
1,029
1,108
4,234
2,036
1,006
1,916
% of Adv recoveries & upgrades
0.60%
0.21%
0.22%
0.83%
0.39%
0.18%
0.34%
Net additions
2,201
3,645
3,272
11,503
2,000
2,111
175
Less: write-offs & sale
1,605
2,304
1,722
3,479
2,598
1,087
3,037
% of Adv recoveries & upgrades
0.35%
0.48%
0.34%
0.68%
0.50%
0.20%
0.54%
Closing gross NPAs
43,148
44,489
46,039
54,063
53,465
54,489
51,627
Reported GNPA (%)
8.0%
7.87%
7.82%
8.84%
8.81%
8.54%
7.75%
Less - Provision
17,842
20,359
22,229
26,177
29,295
32,403
35,339
Net NPAs
25,306
24,130
23,810
27,886
24,170
22,086
16,288
Reported Net NPA ratio (%)
4.86%
4.43%
4.20%
4.77%
4.19%
3.65%
2.58%
PCR
41.35%
45.76%
48.28%
48.42%
54.79%
59.47%
68.45%
Source: Company
Exhibit 3: SOTP Summary
Valuation
Value/share
Particular
%
Methodology
(`)
Value of ICICI standalone
100
2x FY21E ABV
370
Subsidiaries
ICICI Prudential Life
54.9
On Current M.cap
36
General Insurance
56
On Current M.cap
36
AMC
51
5% of current AUM
12
Other (Home Fin, VC, Securities PD and
25
Overseas subsidiaries)
Total subsidiaries' value @ 20% discount
87
Fair value per share
460
Source: Company, valuation done on closing price of 14/2/19
Outlook & Valuation: At the current market price, the bank’s core banking
business (after adjusting the value of subsidiaries) is trading at 1.4x FY2021E ABV.
We believe strength of liability franchise (CASA - 50%), shift in loan mix towards
retail assets & better rated companies, strong capitalization (tier I of 15.1%), 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 `460.
Feb 15, 2019
3
ICICI Bank | Q3FY2019 Result Update
Income Statement
Y/E March (` cr)
FY17
FY18
FY19E
FY20E
FY21E
Net Interest Income
21,738
23,025
26,952
33,084
37,858
- YoY Growth (%)
2
6
17
23
14
Other Income
19,503
17,419
14,623
16,282
18,396
- YoY Growth (%)
27
(11)
-16
11
13
Operating Income
41,241
40,444
41,575
49,366
56,254
- YoY Growth (%)
13
(2)
3
19
14
Operating Expenses
14,754
15,704
17,729
20,373
23,378
- YoY Growth (%)
16
6
13
15
15
Pre - Provision Profit
26,487
24,741
23,846
28,993
32,875
- YoY Growth (%)
11
(7)
-4
22
13
Prov. & Cont.
15,207
17,307
17,368
10,019
11,498
- YoY Growth (%)
30
14
0
(42)
15
Profit Before Tax
11,279
7,434
6,479
18,974
21,378
- YoY Growth (%)
(8)
(34)
-13
193
13
Prov. for Taxation
1,478
789
1,402
4,743
5,344
- as a % of PBT
13
11
22
25
25
PAT
9,802
6,645
5,077
14,230
16,033
- YoY Growth (%)
1
(32)
(23.6)
180
13
Balance Sheet
Y/E March (` cr)
FY17
FY18
FY19E
FY20E
FY21E
Equity
1,171
1,292
1,294
1,294
1,294
Reserve & Surplus
98,780
1,03,868
1,08,021
1,19,405
1,32,232
Net worth
99,951
1,05,160
1,09,315
1,20,699
1,33,526
Deposits
4,90,039
5,60,975
6,40,126
7,34,560
8,42,924
- Growth (%)
16
14
14
15
15
Borrowings
1,47,556
1,82,859
1,77,436
2,02,434
2,36,820
Other Liab. & Prov.
34,245
30,195
20,422
32,197
37,404
Total Liabilities
7,71,791
8,79,189
9,47,299
10,89,890
12,50,673
Cash Balances
31,702
33,102
37,406
43,328
49,720
Bank Balances
44,011
51,067
28,678
33,218
38,119
Investments
1,61,507
2,02,994
2,08,253
2,40,145
2,75,572
Advances
4,64,232
5,12,395
5,84,059
6,70,221
7,69,094
- Growth (%)
7
10
14
15
15
Fixed Assets
7,805
7,904
9,726
11,265
12,927
Other Assets
62,535
71,727
79,177
91,712
1,05,241
Total Assets
7,71,791
8,79,189
9,47,299
10,89,890
12,50,673
Feb 15, 2019
4
ICICI Bank | Q3FY2019 Result Update
Key Ratio
Y/E March
FY17
FY18
FY19E
FY20E
FY21E
Profitability ratios (%)
NIMs
3.2
3.1
3.3
3.6
3.6
Cost to Income Ratio
36
39
43
41
42
RoA
1.3
0.8
0.6
1.4
1.4
RoE
10
6
5
12
13
B/S ratios (%)
CASA Ratio
50
52
49
51
51
Credit/Deposit Ratio
0.95
0.91
0.91
0.91
0.91
Asset Quality (%)
Gross NPAs
7.9
8.8
6.9
5.7
4.4
Net NPAs
4.9
3.5
2.8
2.3
1.7
Slippages
7.5
6.4
2.5
2.0
1.5
Loan Loss Prov. /Avg. Assets
2.04
2.10
1.90
0.98
0.98
Provision Coverage
60
60
60
60
60
Per Share Data (`)
EPS
15
10
8
22
25
ABVPS (70% cover.)
120
129
147
165
185
DPS
2
2
2
4
5
Valuation Ratios
PER (x)
23
34
44
16
14
P/ABVPS (x)
2.9
2.7
2.4
2.1
1.9
Dividend Yield (%)
0.7
0.6
0.5
1.3
1.4
DuPont Analysis
Int Income
7.3
6.7
6.9
7.4
7.4
Int Exp
4.3
3.9
4.0
4.2
4.2
NII
2.9
2.8
3.0
3.2
3.2
(-) Prov. Exp.
2.0
2.1
1.9
1.0
1.0
Adj. NII
0.9
0.7
1.0
2.3
2.3
Other Inc.
2.6
2.1
1.6
1.6
1.6
Op. Inc.
3.5
2.8
2.7
3.9
3.8
Opex
2.0
1.9
1.9
2.0
2.0
PBT
1.5
0.9
0.7
1.9
1.8
Taxes
0.2
0.1
0.2
0.5
0.5
RoA
1.3
0.8
0.6
1.4
1.4
Leverage
7.9
8.0
8.5
8.9
9.2
RoE
10.3
6.5
4.7
12.4
12.6
Source: Valuation done on Closing price of 14/2/2019
Feb 15, 2019
5
ICICI Bank | Q3FY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
Stock Exchange Limited, Metropolitan Stock Exchange Limited, Multi Commodity Exchange of India Ltd and National Commodity &
Derivatives Exchange Ltd It is also registered as a Depository Participant with CDSL and Portfolio Manager and Investment Adviser with
SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Limited is a registered entity with SEBI for Research
Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
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fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any
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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
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
Feb 15, 2019
6
