ICICI Bank 1QFY20 Results: Decent growth in advances, Asset quality intact

Dated: 29th July 2019

Result update:

• Reported NII grew 27% YoY (+2% QoQ) to Rs 77,374 mn from Rs 61,019 mn. NIMs for 1QFY20 expanded by 42 bps YoY 3.61% compared to 3.19% in 1QFY19.
• PPOP grew 8% YoY (+1% QoQ) to Rs 62,884 mn from Rs 58,083 mn.
• Provisions were Rs 34,957 mn, 41% lower YoY.
• Reported PAT was Rs 19,080 mn in 1QFY20 against loss of Rs 1,196 mn in 1QFY19.
• GNPA and NNPA improved slightly sequentially at 6.49% and 1.77% respectively for 1QFY20 compared to 6.70% and 2.06% respectively in 4QFY19.
• Advances grew 15% YoY to Rs 59,24,150 mn. Retail and SME segment showed a solid growth of 22% and 24% YoY respectively.

Management commentary:

• The bank maintained its guidance that credit costs in FY20 would be significantly lower than 2% levels of FY19. Credit costs would be in the range of 1.2-1.3% in FY20. In 1QFY20, credit cost was 1.5%.
• While provisioning in FY20 is expected to be lower than FY19, management does not expect slippages to come down significantly in FY20 compared to FY19, as it have already come down substantially in FY19.
• The bank stated it is not looking at raising the PCR from current levels of 74% as they are now at comfortable levels.
• The bank reiterated its consolidated RoE target of 15% by June’20.
• Q1FY20 tax rate of 32% is an estimate for the full year tax rate.

 Consensus Estimate (Source: marketscreener website)

• The stock price was Rs 428/- on 29th July 2019 and traded at 2.2x/1.9x  consensus Book value of Rs 199/222 for FY20E/21E respectively. 
• Consensus target price is Rs 485/- implying PB of 2.2x for FY21E BVPS of Rs. 222/-

Note:

NII- Net interest income

NIM- Net interest margins

PPOP- Pre-provision profits

NPA- Non-performing assets

AUM- Assets under management