ICICI Bank Q1 FY2019-20 Result Review

ICICI Bank Q1 FY20 Results Key Highlights

Introduction

In this article, we will see ICICI Bank Q1 FY2019-20 results key highlights. The bank has reported net profit of Rs.1,908 Cr in Q1 FY20 against loss of Rs.119 Cr in Q1 FY19 (for June quarter last year).

ICICI Bank Q1 FY2019-20 Results

• Net Interest Income (NII) : NII grew by 21.7% Y-o-Y and by 4% Q-o-Q. NII growth was supported by sustained loan growth (market share gain) along with sustained NIM.
• Non-Interest Income : It is lowered by 11% Y-o-Y and 5.4% Q-o-Q mainly led by lower growth in advances. Non-interest income numbers has decreased due to muted fee income.
• Total Net Income : It has seen a growth of 15.2% Y-o-Y and 2.3% Q-o-Q.
• Operating Profit : It is improved marginally by 8.2% Y-o-Y to Rs.6,288 Cr in Q1 FY20. Operating profit growth is mainly subdued due to muted growth of non-interest income in Q1 FY20.
• Provisions : Provisions are reduced Y-o-Y by 41% to Rs.3,495 Cr in Q1 FY20 from Rs.5,971 Cr in Q1 FY19. Provisions were lowered for Q-o-Q by 36% inspite of improvement in provisioning coverage ratio (PCR) on asset quality which is a positive sign for the bank.
• Net Profit (PAT) : Lower Y-o-Y and Q-o-Q provisioning has improved Net profit numbers. The bank has reported net profit of Rs.1,908 Cr in Q1 FY20 against loss of Rs.119 Cr in Q1 FY19 (for June quarter last year). Also, Net profit is grown by 97% Q-o-Q compared with Q4 FY19 results.

ICICI Bank Balance Sheet Summary

Advances, Deposits & CASA Growth

• For Q1 FY20, Advances, Total Deposits and CASA deposits have seen a Y-o-Y growth of 14.7%, 20.8% and 8.2% respectively as compared with the respective numbers in Q1 FY19.
• While if the Q-o-Q growth is considered, Advances and Total Deposits have increased by 1% and 1.2% respectively. And CASA deposits is decreased by 8.4% Q-o-Q.

Advances Mix

• Retail growth remained strong at 22% Y-o-Y, with its share now at 61% of loans
• The share of unsecured loans at 8%, leading to healthy domestic growth 18% Y-o-Y.
• Within retail, mortgages, PL/Cards, CV and Business Banking have been growing at a faster pace, while the bank has slowed down in car and dealer funding businesses.

Key Balance Sheet Ratios

1. Gross NPA & Net NPA : In Q1 FY20, Gross NPAs is increased by 25bps Q-o-Q to 6.45% from 6.70% in Q4 FY19, while Net NPAs declined by 29bps QoQ to 1.73% from 2.06%.
2. Provision Coverage Ratio (PCR) : The Bank raised its Provision Coverage Ratio (PCR) by 340bps QoQ to 74% as on Q1 FY20 from 70.6% in Q4 FY19 and 54.1% in Q1 FY19.
3. Capital Adequacy Ratio (CAR) : CAR has eroded to 16.19% in Q1 FY20 from 18.35% in Q1 FY19 and 16.89% in Q4 FY19. It is not a appreciating sign for the bank.
4. Net Interest Margin (NIM)
   • NIM was improved 42bps Y-o-Y at 3.61% Q1 FY20 from 3.19% in Q1 FY19 and lowered on Q-o-Q comparison.(3.72% in Q1 FY19).
   • The bank has recently reduced MCLR by 10bps, while Term Deposits rates by 20bps in the high-end bucket, which should support core NIMs.

Conclusion

• On the positive side, the bank claims that its exposure to stressed corporates recently in news remains limited due to its de-bulking strategy, while negligence in retail are lower than industry trends.
• The bank could meaningfully benefit from long-due uneven or bulging corporate resolutions, leading to a further reduction in NPAs.