Earnings Outlook
ICICI Bank Apr-Jun PAT seen up 10%; fall in net interest margin to weigh
This story was originally published at 21:46 IST on 20 July 2024
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By Richard Fargose
MUMBAI - ICICI Bank is expected to report a 9.9% on-year rise in net profit for Apr-Jun as contraction in the net interest margin is likely to weigh on the bottomline, despite steady loan growth. Sequentially, the net profit is seen largely flat.
According to the average of the estimates of 13 brokerage firms, the private sector bank's bottomline is seen at 106.04 bln rupees. Estimates for the net profit ranged from 101.43 bln rupees to 108.76 bln rupees.
ICICI Bank is scheduled to announce its earnings on Jul 27. On Friday, shares of the bank closed 0.1% lower at 1,248.65 rupees on the National Stock Exchange.
Most analysts estimated the lender's net interest margin to shrink 5-10 basis points during the quarter under review. Net interest margin fell to 4.40% in Jan-Mar from 4.43% a quarter ago and 4.90% a year ago.
In a media call post Jan-Mar earnings, Executive Director Sandeep Batra had said that the management expects net interest margin to be rangebound, adjusted for seasonality of cost.
"NII growth will be slightly slower than average loan growth due to rise in cost of deposits outpacing yield on advances," YES Securities (India) Ltd said in a pre-earnings report. "Consequently, NIM (net interest margin) will be slightly lower sequentially."
Nuvama Wealth Management said among large private banks, ICICI Bank could report the highest sequential loan growth of around 4% Apr-Jun after a conscious pullback in the previous quarter.
Brokerage houses see the bank reporting a steady 14-17% on-year rise in loan book, aided by broad-based growth in all segments. Motilal Oswal Financial Services said loan growth will be led by retail, and small and medium enterprises segments. Kotak Institutional Equities said the bank will continue to slow down unsecured loans.
The net interest income – the difference between interest earned and interest expended – is seen at 196.19 bln rupees, up 7.6% on year and 2.8% on quarter, according to the average of 13 estimates.
As on Mar 31, ICICI Bank's total loans grew 16% on year to 11.84 trln rupees. Within this, net domestic advances were 11.50 trln rupees, up nearly 17%. Within domestic loans, retail loans grew 19% on year, led by a 15% growth in mortgage loans to 3.95 trln rupees.
Brokerage firms see the bank's deposits rising 16-18% on year, outpacing the loan growth.
The bank's total deposits were 14.12 trln rupees as on Mar 31, up nearly 20% on year.
Nuvama Wealth Management Ltd said as ICICI Bank has managed to reduce seasonality, it may not see too much of a quarter-on-quarter decline in fee income.
Most brokerages see the lender's asset quality to remain steady in Apr-Jun. However, Emkay Global Financial Services Ltd said slippages could be elevated due to Kisan Credit Card stress.
Kotak Institutional Equities pegged slippages of around 2.1%, or 62 bln rupees. The bank had slippages of 51.39 bln rupees in Jan-Mar.
The asset quality of the bank improved in Jan-Mar, with the gross non-performing assets ratio declining to 2.16% as on Mar 31 from 2.30% a quarter ago. The net bad loan ratio fell slightly to 0.42% as on Mar 31 from 0.44% on Dec 31.
Management commentary on deposit growth and margins outlook will be key monitorables.
Following are the Apr-Jun earnings estimates for ICICI Bank based on reports compiled by Informist from 13 brokerage firms:
Brokerage Name |
Net interest income (in mln rupees) | Net Profit(in mln rupees) |
| Anand Rathi Share and Stock Brokers | 1,98,760 | 1,01,431 |
| Axis Securities Ltd | 1,94,730 | 1,03,470 |
| Emkay Global Financial Services Ltd | 1,96,191 | 1,08,225 |
| IDBI Capital Market Services Ltd | 1,95,538 | 1,05,951 |
| Kotak Institutional Equities | 1,91,745 | 1,04,331 |
| KR Choksey Research | 1,98,054 | 1,07,628 |
| Motilal Oswal Financial Services Ltd | 1,95,300 | 1,06,300 |
| Nirmal Bang Equities Pvt Ltd | 1,97,895 | 1,06,030 |
| Nomura Equity Research | 1,97,000 | 1,06,800 |
| Nuvama Wealth Management Ltd | 1,96,700 | 1,07,000 |
| Prabhudas Lilladher Pvt Ltd | 1,97,266 | 1,06,117 |
| Sharekhan Ltd | 1,94,690 | 1,06,470 |
| YES Securities (India) Ltd | 1,96,659 | 1,08,757 |
| Average | 1,96,194 | 1,06,039 |
End
Edited by Deepshikha Bhardwaj
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