ICICI Bank slumps over 3% as Q4 profit misses Street’s estimate


MUMBAI: Shares of ICICI Bank Ltd slipped over 3% as the private lender’s earnings for the March quarter were lower than the Street’s estimates. The miss was because of higher provisions made to combat the impact of the covid-19 disruptions. Net profit for the quarter was at ?1,221.36 crore, up 26% from ?969.06 crore a year ago. However, the profit was lower than ?3,510.50 crore estimated by a Bloomberg poll of 16 analysts.

At 1 pm, shares traded at ?328.45, down 2.8% from its previous close, while the benchmark index, Sensex, rose 0.9% to 31,937.89 points.

Provisions and contingencies increased 9.5% to ?5,967.44 crore in Q4 of fiscal 2020 from ?5,451.41 crore in the same quarter last year. However, the bank’s provisions have jumped 186.5% from ?2,083.20 crore in the December quarter.

On several other growth parameters though, ICICI Bank seems to have fared better. Net interest income (NII) increased by 17% year-on-year (yoy) to ?8,927 crore in the reporting quarter from ?7,620 crore in the year-ago period. Net interest margin (NIM) was at 3.9% as on 31 March, 2020, compared to 3.72% in the same quarter last fiscal.

The ratio of gross non-performing assets (NPAs) to total advances was at 5.5% as on 31 March, as against 5.9% in the previous quarter, 2019, and 6.7% as on 31 March, 2019. The ratio of net NPAs to net advances was at 1.4% as on 31 March, compared to 1.5% in the December quarter and 2.06% as on 31 March, 2019.

“On the asset quality front, slippages remain elevated, led by one healthcare and one oil trading account, although higher write-offs have led to GNPA improvement. About 30% of the loan book has availed moratorium, with a higher incidence of the commercial vehicles, two-wheeler, and rural portfolios,” said Motilal Oswal Financial Services in a note.

Nevertheless, analysts have cut FY2021 profit growth estimate taking into account the economic impact of the pandemic. “We cut our FY2021/2022 PAT (profit after tax) estimate by 8%/3% as we factor in higher credit cost and moderation in fee growth,” added the Motilal Oswal report.

As on 31 March, the bank made covid-19 related provisions of ?2,725 crore. Provisions, excluding those made for covid-19 and set aside for tax, were ?3,242 crore in the March quarter.

Total advances increased by 10% to ?645,290 crore as at 31 March from ?586,647 crore in the year-ago period. The bank reported a 16% yoy growth in retail loan portfolio in the quarter ended March. Including non-fund outstanding, retail was 53.3% of the total portfolio as on 31 March.

However, some analysts point out that the banks business model is better placed. “We believe ICICI Bank is better-placed in this cycle, with revamped business model/risk underwriting, strong provisioning/capital buffer and healthy operating profitability to absorb any pandemic-induced shocks,” said Emkay Global Financial Services Ltd in a recent report.

News Source:- livemint

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