Dear All,
Forwarding you the Result Flash on ICICI Bank for 4QFY2011.
ICICI Bank - 4QFY2011 Results Flash
For 4QFY2011, ICICI Bank registered a healthy net profit growth of 44.4% yoy to Rs1,452cr, below our estimates of Rs1,522cr, mainly due to treasury loss of Rs196cr. Adjusting for this on post-tax basis, net profit was well above estimates. Provisioning expenses for 4QFY2011 declined materially to just 0.4% of average assets (1.1% in 4QFY2010), reflecting the strong qualitative improvement in the bank’s balance sheet and earnings quality that we have been building into our estimates. Operating expenses grew by 7.4% qoq on the back of sharp rise of 12.6% qoq and 47% yoy in staff expenses, though this was more than compensated by the stronger operating income growth. On account of higher operating expenses, the cost-to-income ratio increased to 44.5% from 42.3% in 3QFY2011.
Advances continued the momentum shown in 3QFY2011, growing by 4.7% qoq and 19.4% yoy. Deposits growth was a bit moderate with sequential growth of 3.6% and yoy growth of 11.7%. The CASA ratio improved further to 45.1% from 44.2% in 3QFY2011 and 41.7% in 4QFY2010, led by growth in savings account deposits of 25.6% yoy. On a sequential basis, calculated NIMs improved sharply by 14bp to 2.65%. This resulted into a healthy NII growth of 8.6% qoq and 23.3% yoy to Rs2,510cr.
Asset quality showed further signs of improvement with absolute Gross NPAs declining by 1.5% qoq while Net NPAs declined sharply by 16.2% sequentially. The banks provision coverage ratio including write-offs improved further to 76% from 71.8% as of 3QFY2011 and from 59.6% as of 4QFY2010. The capital adequacy ratio continues to be strong at 19.5% with tier-I capital of 13.2% (constituting 67.4% of the total CAR).
In our view, the Bank’s substantial branch expansion (1,574 branches added since 3QFY2008, including entire branch network of BoR) as well as strong Capital Adequacy at 19.5% (Tier-I at 13.2%) have positioned it to gain market share that will contribute to substantial Core business growth. We expect the bank to deliver strong earnings CAGR of over 25% over FY2011-13E and a ROE of 16.2% by FY2013E.
At the CMP, the stock is trading at 2.0x FY2013E ABV, without adjusting the SOTP value of subsidiaries. We maintain a Buy recommendation on the stock with a Target Price of Rs1,405. We may revise our estimates post interaction with the management.
| Exhibit 1: 4QFY2011 Actual vs. Estimates | |||
| (Rs cr) | Actual | Estimates | Var (%) |
| Net interest income | 2,510 | 2,322 | 8.1 |
| Non-interest income | 1,641 | 1,841 | (10.9) |
| Operating income | 4,150 | 4,163 | (0.3) |
| Operating expenses | 1,845 | 1,740 | 6.0 |
| Pre-prov. profit | 2,305 | 2,422 | (4.8) |
| Provisions & contingencies | 384 | 417 | (8.0) |
| PBT | 1,921 | 2,006 | (4.2) |
| Prov. for taxes | 469 | 483 | (2.9) |
| PAT | 1,452 | 1,522 | (4.6) |
Source: Company, Angel Research
Exhibit 2: 4QFY2011 Performance summary
| (Rs cr) | 4QFY2011 | 3QFY2011 | % chg (qoq) | 4QFY2010 | % chg (yoy) |
| Interest earned | 7,156 | 6,696 | 6.9 | 5,827 | 22.8 |
| Interest expenses | 4,647 | 4,384 | 6.0 | 3,792 | 22.5 |
| Net interest income | 2,510 | 2,312 | 8.6 | 2,035 | 23.3 |
| Non-interest income | 1,641 | 1,749 | (6.2) | 1,891 | (13.2) |
| Operating income | 4,150 | 4,061 | 2.2 | 3,926 | 5.7 |
| Operating expenses | 1,845 | 1,718 | 7.4 | 1,527 | 20.9 |
| Pre-prov. profit | 2,305 | 2,343 | (1.6) | 2,399 | (3.9) |
| Provisions & contingencies | 384 | 464 | (17.4) | 990 | (61.2) |
| PBT | 1,921 | 1,878 | 2.3 | 1,409 | 36.4 |
| Prov. for taxes | 469 | 441 | 6.3 | 404 | 16.3 |
| PAT | 1,452 | 1,437 | 1.1 | 1,006 | 44.4 |
| EPS (Rs) | 12.6 | 
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