02 November 2020 Results Review 2QFY21 ICICI Bank
Transcript of 02 November 2020 Results Review 2QFY21 ICICI Bank
02 November 2020 Results Review 2QFY21
ICICI Bank
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Balance sheet strengthened further
ICICIBC’s 2Q earnings were significantly ahead of estimates, led by better-
than-anticipated operating performance and lower-than-expected provisions.
Like most banks in 2Q, ICICIBC reported a swift improvement in collections
and disbursals. Unlike some banks, ICICBC did see some slippages this
quarter (~1.9%). The bank has built significant provision buffers in terms of
COVID-19 related (~1.3% of loans), standard assets and other provisions
(~0.9%) and specific loan loss provisions (81.6% PCR), which should limit the
need for incremental provisions. Lower LLPs are likely to drive return ratios
beyond the near term. ICICIBC’s robust funding position (CRAR+ deposit
franchise) will allow the bank to capture resurgent growth. ICICIBC remains
our preferred bet. Maintain BUY with a revised target price of Rs 503.
Asset quality: GNPAs dipped 120/29bps YoY/QoQ to 5.2%. However, this
was optical due to (1) the recent SC order, (2) the recent moratorium, and (3)
high write-offs (6.1% of opening NPAs). Despite (1) and (2), slippages came
in at ~1.9% (+23/115bps, retail- ~1.7%, corporate and SME- ~2.3%). Adjusted
for the impact of the SC order, slippages and GNPAs would have been
2.8/5.36%. Corporate slippages were almost entirely from the BB and below-
rated pool (proactive recognition in some cases). Retail slippage trends are
slightly worrisome. BB and below-rated corporate and SME exposures
dipped ~5.5% QoQ to Rs 161.7bn (2.5% of loans). The bank has received
restructuring requests of ~Rs 21bn so far. The management guides for higher
slippages and downgrades into the pool of BB and below-rated exposures in
2HFY21 (and expectedly so).
Collection trends: Interestingly, collections neared pre-COVID-19 levels in
September and October. Several banks have positively surprised on this
front with similar commentary/metrics. ‘Demand resolution’ for September
was at ~97% of pre-COVID-19 levels (99%+). Retail and credit card demand
resolution too was at ~97%.
Non-tax provisions dipped ~60.6% QoQ to Rs 30bn, but remained elevated
YoY (+19.5%, 1.87% of loans). Incremental COVID-19 related provisions
amounted to Rs 5bn, taking the total stock of such provisions to Rs 87.72bn
(1.34% of loans). ICICIBC provided for ~35% of the value of accounts that
would have slipped, adjusted for the recent SC order. Calculated PCR rose
to 81.6%, which is creditable, given the sizeable write-offs and material NPL
accretion during the quarter. We like the prudent approach to provisioning
the bank has followed so far. The management expects provisions to
normalise in FY22 and stated that normalised provisions would equal ~25%
of PPOP. We expect LLPs of 1.9% in FY21E and 1.4% over FY22-23E (31% of
PPOP). Lower credit provisions would be the biggest driver of return ratios.
Financial Summary
(Rs bn) 2Q
FY21
2Q
FY20
YoY
(%)
1Q
FY21
QoQ
(%) FY20 FY21E FY22E FY23E
Net int inc. 93.66 80.57 16.2% 92.80 0.9% 332.7 367.0 411.5 455.1
PPOP 82.61 68.74 20.2% 107.76 -23.3% 281.0 350.7 358.9 386.3
PAT 42.51 6.55 549.1% 25.99 63.6% 79.3 155.1 178.3 208.6
EPS (Rs) 6.16 1.01 509.9% 4.00 54.0% 12.3 22.5 25.9 30.3
ROAE (%) 7.5 11.1 10.8 11.4
ROAA (%) 0.77 1.34 1.39 1.48
Core ABVPS (Rs) 155 189 214 242
P/ABV (x)# 1.75 1.42 1.24 1.07
P/E (x)# 22.1 11.9 10.3 8.5
Source: Bank, HSIE Research. # adjusted for the embedded value of subs
BUY
CMP (as on 30 Oct 2020) Rs 393
Target Price Rs 503
NIFTY 11,642
KEY
CHANGES OLD NEW
Rating BUY BUY
Price Target Rs 496 Rs 503
EPS % FY21E FY22E
4.9% 1.2%
KEY STOCK DATA
Bloomberg code ICICIBC IN
No. of Shares (mn) 6,897
MCap (Rs bn) / ($ mn) 2,708/36,316
6m avg traded value (Rs mn) 14,939
52 Week high / low Rs 552/268
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) 13.8 3.3 (16.7)
Relative (%) 8.8 (14.2) (15.6)
SHAREHOLDING PATTERN (%)
June-20 Sept-20
Promoters
FIs & Local MFs 45.7 43.8
FPIs 43.0 45.7
Public & Others 11.3 10.5
Pledged Shares
Source : BSE
Darpin Shah
+91-22-6171-7328
Aakash Dattani
+91-22-6171-7337
Punit Bahlani
+91-22-6171-7354
Page | 2
ICICI Bank: Results Review 2QFY21
Credit growth came in at 6.4/3.4%. Domestic advances registered a growth of
10.3/4.5%, as the bank saw a significant decline in its overseas exposure, in line
with its previous guided strategy. The bank’s non-India linked overseas portfolio
de-grew 48.3/19.6%. The proportion of retail loans continued to trend upwards
and now stands at 65.8%. Within retail loans, the bank is likely to continue to
focus on secured products in the near term. Mortgage disbursals in August and
September were higher than pre-COVID-19 levels. Auto finance (PV) disbursals
reached pre-COVID-19 levels in September. Domestic corporate credit growth
was surprisingly muted at 3% YoY. We expect the bank to register a gradual
uptick in credit growth, and we build in a loan CAGR of ~12% over FY21-23E
ICICIBC continues to be one of the best-performing banks on the deposits front,
and the bank continued to log strong deposit growth (+19.6/3.9%). The CASA
ratio increased 128bps QoQ to 43.8% but was 291bps lower YoY. The recent
fundraise bolstered the bank’s CRAR, which now stands at 19.3% (Tier 1 of
17.9%). The bank’s strong funding position will better enable it to capture
resurgent credit growth.
Margins shrunk 7/12bps to 3.6%, led by (1) a sharp 205/46bps fall in yields on
advances, and (2) high balance sheet liquidity. While a reduction in liquidity
buffers will ease some pressure on margins, this will be mitigated by a rise in
slippages in 2HFY21. Further, focus on secured products will limit the scope for
NIM improvement in the near term. In our note titled ‘Near-term NIM
headwinds’, we had highlighted the factors responsible for downward NIM
pressure for the industry. We build in NIMs of 3.6% over FY21-23E.
Non-interest income at Rs 40.3bn, was 34.4% lower QoQ, as 1Q included ~Rs
30.9bn of profits from stake sales in ICICIGI and IPRU (Rs 3.1bn from stake sale
in ISEC in 2QFY21). Core fee income rebounded sharply QoQ (+49.2%)—a
phenomenon seen across most banks in 2Q.
SOTP
Rs bn Per Share Rationale
ICICI Bank 2,596 377 1.65x Sept-22E ABV of Rs 228
ICICI Life Insurance 365 53 Sept-22 EV + 22.7x Sept-22E VNB
ICICI Lombard 269 39 26.4x Sept-22E EPS
ICICI AMC 173 25 8% of FY21E AUM
ICICI UK 40 6 1x FY22E BV
ICICI Canada 47 7 1x FY22E BV
ICICI Housing Finance 23 3 1x FY22E BV
ICICI Sec 137 20 23x Sept-22E EPS
Others 34 5 I Ventures and Others
Total Value Of Subsidiaries 1,088 158
Less: 20% Holdco Discount 218 32
Net Value Of Subsidiaries 870 126
Total Value 3,466 503
Current Value 2,706 393
Upside (%) 28.1 28.1
Source: Bank, HSIE Research
Page | 3
ICICI Bank: Results Review 2QFY21
Five quarters at a glance
Rs bn 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 YoY
Growth
QoQ
Growth
Income statement
Net interest income 80.6 85.5 89.3 92.8 93.7 16.2% 0.9%
Non-interest income 41.9 45.7 42.5 61.4 40.3 -4.0% -34.4%
Treasury income 3.4 5.3 2.4 37.6 5.4 58.9% -85.6%
Operating income 122.5 131.2 131.8 154.2 133.9 9.3% -13.1%
Operating expenses 53.8 55.7 57.9 46.5 51.3 -4.5% 10.5%
PPOP 68.7 75.5 73.9 107.8 82.6 20.2% -23.3%
Provisions 25.1 20.8 59.7 75.9 30.0 19.5% -60.6%
PBT 43.7 54.7 14.2 31.8 52.7 20.6% 65.5%
Provision for Tax 37.1 13.2 2.0 5.8 10.1 -72.7% 73.9%
PAT 6.5 41.5 12.2 26.0 42.5 549.1% 63.6%
Balance sheet items
Deposits (Rs bn) 6,963 7,163 7,710 8,016 8,329 19.6% 3.9%
CASA (%) 46.68 46.96 45.11 42.49 43.77 -291 bps 128 bps
Advances (Rs bn) 6,134 6,357 6,453 6,312 6,526 6.4% 3.4%
CD Ratio (%) 88.1 88.7 83.7 78.7 78.4 -974 bps -39 bps
Domestic CD Ratio (%) 80.1 81.7 77.4 73.6 73.9 -620 bps 30 bps
CAR (%) 16.1 16.5 16.1 16.3 19.3 319 bps 301 bps
Tier 1 (%) 14.6 15.0 14.7 14.9 17.9 327 bps 296 bps
Profitability ratios (%)
Yield on advances 9.52 9.52 9.41 9.30 8.88 -64 bps -42 bps
Cost of funds 5.19 5.03 4.92 4.61 4.35 -84 bps -26 bps
NIMs 3.64 3.77 3.87 3.69 3.57 -7 bps -12 bps
Domestic NIMs 3.92 4.04 4.14 3.91 3.72 -20 bps -19 bps
Cost-income ratio 43.9 42.5 43.9 30.1 38.3 -557 bps 820 bps
Tax rate 85.0 24.1 14.1 18.3 19.3 -6574 bps 94 bps
Asset quality
Gross NPAs 456.4 434.5 414.1 403.9 389.9 -14.6% -3.5%
Net NPAs 109.2 103.9 101.1 86.7 71.9 -34.2% -17.1%
GNPA (%) 6.37 5.95 5.53 5.46 5.17 -120 bps -29 bps
NNPAs (%) 1.60 1.49 1.41 1.23 1.00 -60 bps -23 bps
Slippage ratio (%) 1.65 2.79 3.31 0.73 1.88 23 bps 115 bps
Calc. PCR (%) 76.1 76.1 75.6 78.5 81.6 548 bps 304 bps
Source: Bank, HSIE Research
Changes in estimates
Rs bn FY21E FY22E FY23E
Old New Change Old New Change Old New Change
NII 364.7 367.0 0.6% 407.7 411.5 0.9% 453.7 455.1 0.3%
PPOP 348.8 350.7 0.5% 356.3 358.9 0.7% 386.3 386.3 0.0%
PAT 147.8 155.1 4.9% 176.3 178.3 1.2% 205.8 208.6 1.4%
Adj. BVPS (Rs) 185.5 188.7 1.7% 211.6 214.3 1.3% 239 242 1.2%
Source: HSIE Research
NII was just 2.5% ahead of
our estimates
Non-interest income was
15.9% ahead of our
estimates, led by a sharp
sequential rebound in fee
income
Sequential rise in
operating expenditure was
linked to the rise in
business volumes
CRAR boosted by the
recent capital raise
Sharp fall in yield on
advances was a result of
MCLR cuts, repo rate cuts,
and faster growth in
secured retail loans
GNPAs were optically
lower
Page | 4
ICICI Bank: Results Review 2QFY21
Loan growth continued to slow Loan mix: retail continues to gain share
Source: Bank, HSIE Research
Source: Bank, HSIE Research
Retail loan mix- management guides for faster growth in secured products
(%) 4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
1Q
FY21
2Q
FY21
Home 54.0 54.3 54.3 54.6 53.2 53.6 53.5 52.9 51.8 52.0 51.6 51.4 50.5 50.6 50.1 49.4 49.1 49.7 49.3
Vehicle 17.4 17.4 17.1 17.2 16.9 16.7 16.5 16.4 16.2 16.0 15.7 15.9 15.8 15.4 14.9 14.7 14.3 14.2 13.9
Other secured 21.0 20.3 20.4 19.5 20.9 20.3 20.3 20.6 21.6 21.0 21.3 20.9 21.4 20.8 21.2 21.3 21.7 21.5 22.8
PL 5.0 5.2 5.4 5.7 5.9 6.1 6.4 6.8 7.2 7.5 8.0 8.3 8.8 9.5 9.9 10.6 11.1 10.9 10.4
CC & Others 2.7 2.8 2.8 3.2 3.1 3.3 3.2 3.3 3.2 3.5 3.4 3.4 3.5 3.8 3.9 4.1 3.8 3.6 3.6
Source: Bank, HSIE Research
Deposit growth remains strong CASA ratio rises QoQ
Source: Bank, HSIE Research Source: Bank, HSIE Research
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1,250
2,250
3,250
4,250
5,250
6,250
7,250
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
Advances (Rs bn) (LHS) Growth (YoY) (RHS)
Rs bn %
21 20 18 16 15 15 14 13 12 13 12 11 10 10 9 8 7 6
46 48 49 52 53 54 54 57 58 57 59 60 61 62 63 63 64 66
28 28 28 27 27 27 27 26 25 27 24 24 26 25 25 25 25 24
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
Overseas Retail SME Domestic corporate%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1,500
2,500
3,500
4,500
5,500
6,500
7,500
8,500
9,500
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
Deposits (Rs bn) (LHS) Chg (YoY) (RHS)
Rs bn %
-
10.0
20.0
30.0
40.0
50.0
60.0
-
5.0
10.0
15.0
20.0
25.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
CASA Chg (YoY) (RHS) CASA (%) - RHS
%%
Page | 5
ICICI Bank: Results Review 2QFY21
NIMs dip Sequential rebound in fee traction
Source: Bank, HSIE Research
Source: Bank, HSIE Research
Non-interest income split
Rs bn 4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
1QFY
21
2QFY2
1
Treasury 21.9 7.7 64.1 8.9 5.0 8.6 21.9 0.7 26.9 7.7 (0.4) 4.8 1.6 1.8 3.4 5.3 2.4 37.6 5.4
Fees 22.1 21.6 23.6 25.0 24.5 23.8 25.7 26.4 27.6 27.5 30.0 30.6 31.8 30.4 34.8 36.0 36.0 21.0 31.4
Others 7.1 5.1 3.5 5.5 0.7 1.5 4.2 4.6 2.4 3.3 2.0 3.4 2.9 2.1 3.8 4.5 4.2 2.8 3.5
Total 51.1 34.3 91.2 39.4 30.2 33.9 51.9 31.7 56.8 38.5 31.6 38.8 36.2 34.3 42.0 45.7 42.6 61.4 40.3
% of Total 48.6 39.9 63.5 42.3 33.6 37.7 47.6 35.7 48.5 38.7 33.0 36.1 32.2 30.7 34.2 34.9 32.3 39.8 30.1
Source: Bank, HSIE Research
Slippages rise QoQ G/NNPA % lower QoQ
Source: Bank, HSIE Research
Source: Bank, HSIE Research
(40.0)
(30.0)
(20.0)
(10.0)
-
10.0
20.0
30.0
-
0.5
1.0
1.5
2.0
2.5
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
Fee income % loan (annu) Fee income Chg (YoY) (RHS)
%%
82 80 70
113
50 47 44
157
40 31 2135 28 25
44 53
1230
1 06
0
27 27
0
0
00
00
0 0
00
0
0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
Slippages Restructured asset (incl. 5:25)
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
-
100.0
200.0
300.0
400.0
500.0
600.0
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
GNPA (Rs bn) NNPA (Rs bn)
GNPA (%, RHS) NNPA (%, RHS)
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.8
3.0
3.2
3.4
3.6
3.8
4.0
4.2
4.4
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
1Q
FY
21
2Q
FY
21
NIM Domestic NIM Foreign NIM (RHS)
% %
Page | 6
ICICI Bank: Results Review 2QFY21
Asset quality movement: Higher w/os limit GNPAs
Rs bn 4Q
FY16
1Q
FY17
2Q
FY17
3Q
FY17
4Q
FY17
1Q
FY18
2Q
FY18
3Q
FY18
4Q
FY18
1Q
FY19
2Q
FY19
3Q
FY19
4Q
FY19
1Q
FY20
2Q
FY20
3Q
FY20
4Q
FY20
1Q
FY21
2Q
FY21
Opening 211.5 262.2 271.9 325.5 380.9 425.5 431.5 444.9 460.4 540.6 534.6 544.9 515.9 462.9 457.6 456.4 434.5 414.1 403.9
Additions 70.0 82.5 80.3 70.4 112.9 49.8 46.7 43.9 157.4 40.4 31.2 20.9 35.5 27.8 24.8 43.6 53.1 11.6 30.2
Slippages (%) 6.44 7.46 7.11 6.17 9.80 4.29 3.95 3.55 12.37 3.14 2.35 1.51 2.47 1.89 1.65 2.79 3.31 0.73 1.88
Recoveries 7.8 7.9 8.0 6.3 14.1 27.8 10.3 11.1 42.3 20.4 10.1 19.2 15.2 9.3 12.6 40.9 18.8 7.6 19.5
W/O 1.5 66.2 22.4 8.8 54.1 16.1 23.0 17.2 34.8 26.0 10.9 30.7 73.2 23.8 13.3 24.6 54.7 14.3 24.7
Closing 272.2 270.6 321.8 380.9 425.5 431.5 444.9 460.5 540.6 534.6 544.9 515.9 462.9 457.6 456.5 434.5 414.1 403.9 389.9
Source: Bank, HSIE Research
Peer Set Comparison
BANK
Mcap
(Rs
bn)
CMP
(Rs) Rating
TP
(Rs)
ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)
FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
AUBANK 236 776 ADD 770 155 182 212 29.7 28.9 21.7 4.93 4.18 3.60 16.6 14.6 16.8 1.36 1.54 1.71
AXSB 1,507 492 BUY 616 306 348 396 19.3 11.5 9.3 1.55 1.35 1.20 8.0 11.5 12.9 0.80 1.23 1.36
BANDHAN 466 289 BUY 367 103 125 152 16.4 13.0 9.7 2.82 2.31 1.91 17.0 18.2 20.4 2.79 2.95 3.34
CUBK 109 148 BUY 196 65 77 88 20.7 14.5 12.1 2.26 1.93 1.67 9.5 12.3 13.0 1.04 1.39 1.48
DCBB 24 77 ADD 123 94 113 127 8.0 6.3 5.0 0.82 0.68 0.61 8.4 9.8 11.1 0.76 0.90 0.99
FB 101 51 BUY 78 66 76 85 8.3 6.4 5.3 0.77 0.66 0.59 8.0 9.6 10.7 0.64 0.76 0.84
ICICIBC 2,708 393 BUY 503 189 214 242 11.9 10.3 8.5 1.42 1.24 1.07 11.1 10.8 11.4 1.34 1.39 1.48
IIB 452 586 ADD 690 514 567 621 15.5 9.7 7.8 1.14 1.03 0.94 7.7 10.4 11.7 0.91 1.33 1.47
KMB 3,061 1,548 ADD 1,426 292 332 375 37.5 33.1 27.7 4.34 3.75 3.25 12.5 11.5 12.0 1.77 1.78 1.88
KVB 26 33 REDUCE 39 51 63 68 8.1 5.7 4.1 0.64 0.52 0.47 4.8 6.7 9.0 0.46 0.61 0.78
RBK 104 174 REDUCE 179 195 211 228 18.7 12.1 8.9 0.89 0.83 0.77 4.8 6.6 8.3 0.60 0.83 1.00
SBIN 1,689 189 BUY 316 170 210 243 5.4 2.7 2.0 0.39 0.31 0.26 4.6 8.3 10.1 0.27 0.48 0.59
UJJIVANS 53 31 ADD 40 17 19 22 24.5 17.5 10.3 1.82 1.59 1.38 7.0 9.1 13.7 1.07 1.23 1.72
Source: Company, HSIE Research, # Adjusted for subsidiaries value
Page | 7
ICICI Bank: Results Review 2QFY21
Financials Income Statement
(Rs bn) FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Interest earned 527.4 541.6 549.7 634.0 748.0 807.7 890.3 976.6
Interest expended 315.2 324.2 319.4 363.9 415.3 440.7 478.8 521.6
Net interest income 212.2 217.4 230.3 270.1 332.7 367.0 411.5 455.1
Other income 153.2 195.0 174.2 145.1 164.5 209.3 194.6 206.9
Fee income (CEB) 74.6 80.3 87.9 102.3 116.5 120.6 139.0 153.2
Treasury income 38.0 86.2 57.9 13.4 16.4 51.7 15.0 10.0
Total income 365.5 412.4 404.5 415.3 497.2 576.3 606.1 662.0
Operating expenses 126.8 147.6 157.0 180.9 216.1 225.6 247.2 275.7
Employee expenses 50.0 57.3 59.1 68.1 82.7 87.3 92.5 102.7
PPOP 238.6 264.9 247.4 234.4 281.0 350.7 358.9 386.3
Provisions and contingencies 116.7 152.1 171.1 196.6 140.5 143.5 120.6 107.5
Provisions for std. and non-performing advances 75.1 143.5 145.2 168.1 88.1 126.0 118.1 106.3
Profit before tax 122.0 112.8 76.3 37.8 140.5 207.2 238.3 278.8
Tax expense 24.7 14.8 8.6 4.1 61.2 52.2 60.0 70.2
Profit after Tax 97.3 98.0 67.8 33.6 79.3 155.1 178.3 208.6
Source: Company, HSIE Research
Balance Sheet
(Rs bn) FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Source of funds
Share capital 11.6 11.7 12.9 12.9 12.9 13.8 13.8 13.8
Reserves and surplus 885.7 987.8 1,038.7 1,070.7 1,152.1 1,456.3 1,616.8 1,804.5
Shareholders’ funds 897.3 999.4 1,051.5 1,083.6 1,165.0 1,470.1 1,630.6 1,818.3
Savings deposits 1,342.3 1,718.4 2,009.7 2,276.7 2,455.9 2,701.5 3,052.7 3,419.0
Current deposits 588.7 749.8 889.6 962.7 1,022.3 1,124.5 1,203.2 1,263.4
Term deposits 2,283.3 2,432.2 2,710.5 3,289.8 4,231.5 4,950.9 5,545.0 6,154.9
Total deposits 4,214.3 4,900.4 5,609.8 6,529.2 7,709.7 8,776.9 9,800.9 10,837.3
Borrowings 1,748.1 1,475.6 1,828.6 1,653.2 1,629.0 1,384.7 1,426.2 1,497.5
Other liabilities 347.3 342.5 302.0 378.5 479.9 527.9 564.9 604.4
Total equity and liabilities 7,207.0 7,717.9 8,791.9 9,644.6 10,983.7 12,159.5 13,422.5 14,757.6
Application of funds
Cash and bank balances 598.7 757.1 841.7 803.0 1,191.6 1,364.1 1,418.4 1,575.9
Investments 1,604.1 1,615.1 2,029.9 2,077.3 2,495.3 2,981.7 3,057.3 3,092.0
Government securities 1,106.5 1,125.1 1,391.9 1,479.2 1,883.3 2,369.8 2,450.2 2,492.6
Advances 4,352.6 4,642.3 5,124.0 5,866.5 6,452.9 6,892.1 7,940.0 9,012.1
Fixed assets 75.8 78.1 79.0 79.3 84.1 85.8 87.5 89.3
Other assets 575.7 625.3 717.3 818.5 759.8 835.8 919.3 988.3
Total Assets 7,207.0 7,717.9 8,791.9 9,644.6 10,983.7 12,159.5 13,422.5 14,757.6
Source: Company, HSIE Research
Page | 8
ICICI Bank: Results Review 2QFY21
Key Ratios
FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E
Valuation ratios
EPS (Rs) 16.7 16.8 10.5 5.2 12.3 22.5 25.9 30.3
Earnings growth (%) (13.0) 0.8 (30.9) (50.4) 135.8 95.5 15.0 17.0
Core BVPS (Rs) 154.3 171.6 163.6 168.1 180.0 213.3 236.6 263.8
Core ABVPS (Rs) 113.0 110.6 110.7 137.7 155.2 188.7 214.3 242.0
DPS (Rs) 5.0 4.4 1.5 1.0 0.0 0.0 2.6 3.0
RoAA (%) 1.42 1.31 0.82 0.36 0.77 1.34 1.39 1.48
RoAE(%) 11.1 10.0 7.2 3.3 7.5 11.1 10.8 11.4
P/E (x) 19.4 18.3 28.0 53.0 22.1 11.9 10.3 8.5
P/ABV (x) 2.9 2.8 2.67 2.01 1.75 1.42 1.24 1.07
P/PPOP (x) 1.9 1.7 2.0 2.2 1.8 1.5 1.5 1.4
Dividend yield (%) 1.3 1.1 0.4 0.3 - - 0.7 0.8
Profitability (%)
Yield on advances 9.5 8.8 8.4 8.7 9.3 9.0 8.9 8.8
Yield on investments 6.7 7.1 6.3 6.2 6.4 6.4 6.4 6.3
Cost of funds 5.6 5.3 4.6 4.7 4.7 4.5 4.5 4.4
Cost of deposits 5.5 5.0 4.5 4.4 4.6 4.3 4.3 4.3
Core spread 3.9 3.6 3.7 4.1 4.6 4.4 4.4 4.3
NIM 3.6 3.3 3.2 3.4 3.7 3.5 3.6 3.6
Operating efficiency
Cost/average assets 1.9 2.0 1.9 2.0 2.1 1.9 1.9 2.0
Core Cost/income 38.7 45.2 45.3 45.0 45.0 43.0 41.8 42.3
Balance sheet structure (%)
Loan growth 12.3 6.7 10.4 14.5 10.0 6.8 15.2 13.5
Deposit growth 16.6 16.3 14.5 16.4 18.1 13.8 11.7 10.6
CD ratio 103.3 94.7 91.3 89.8 83.7 78.5 81.0 83.2
Equity/ assets 12.5 12.9 12.0 11.2 10.6 12.1 12.1 12.3
Equity/ advances 20.6 21.5 20.5 18.5 18.1 21.3 20.5 20.2
CASA 45.8 50.4 51.7 49.6 45.1 43.6 43.4 43.2
Capital adequacy (CAR) 16.6 17.4 18.4 16.9 16.1 18.0 18.0 17.9
w/w Tier 1 13.1 14.4 15.9 15.1 14.7 16.8 16.9 16.9
Asset quality
Gross NPLs (Rs bn) 262.2 421.6 532.4 456.8 408.3 422.9 390.1 367.5
Net NPLs (Rs bn) 129.6 252.2 278.2 134.5 99.2 111.5 97.9 97.8
Gross NPL (%) 5.82 7.89 8.84 6.70 5.53 5.78 4.68 3.92
Net NPL (%) 2.98 4.20 4.77 2.06 1.41 1.62 1.23 1.08
Slippage ratio (%) 4.06% 7.46% 5.86% 1.93% 2.24% 2.70% 2.25% 2.00%
Calc. PCR (%) 50.6 40.2 47.7 70.6 75.7 73.6 74.9 73.4
Provisions/ average loans (%) 1.8 3.2 3.0 3.1 1.4 1.9 1.6 1.3
RoAA Tree
Net interest income 3.11% 2.91% 2.79% 2.93% 3.23% 3.17% 3.22% 3.23%
Non-interest income 2.24% 2.61% 2.11% 1.57% 1.59% 1.81% 1.52% 1.47%
Treasury income 0.56% 1.16% 0.70% 0.15% 0.16% 0.45% 0.12% 0.07%
Operating cost 1.86% 1.98% 1.90% 1.96% 2.10% 1.95% 1.93% 1.96%
Non-tax provisions 1.71% 2.04% 2.07% 2.13% 1.36% 1.24% 0.94% 0.76%
Provisions for std. & non-performing assets 1.06% 1.97% 1.73% 1.82% 0.85% 1.09% 0.92% 0.75%
Tax expense 0.36% 0.20% 0.10% 0.04% 0.59% 0.45% 0.47% 0.50%
RoAA 1.42% 1.31% 0.82% 0.36% 0.77% 1.34% 1.39% 1.48%
Leverage (x) 8.03 7.87 8.05 8.63 9.17 8.78 8.25 8.17
RoAE 11.43% 10.33% 6.61% 3.15% 7.05% 11.77% 11.50% 12.10%
Source: Company, HSIE Research
Page | 9
ICICI Bank: Results Review 2QFY21
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: > 10% Downside return potential
Date CMP Reco Target
9-Oct-19 437 BUY 510
27-Oct-19 469 BUY 510
9-Jan-20 526 BUY 580
27-Jan-20 534 BUY 587
2-Mar-20 497 BUY 639
15-Apr-20 327 BUY 435
20-Apr-20 362 BUY 435
10-May-20 338 BUY 442
29-Jun-20 343 BUY 442
7-Jul-20 362 BUY 442
10-Jul-20 371 BUY 456
10-Oct-20 402 BUY 496
2-Nov-20 393 BUY 503
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
200
250
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350
400
450
500
550
600
Oct
-19
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v-1
9
Dec
-19
Jan
-20
Feb
-20
Mar
-20
Ap
r-20
May
-20
Jun
-20
Jul-
20
Au
g-2
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Sep
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Oct
-20
ICICI Bank TP
Page | 10
ICICI Bank: Results Review 2QFY21
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