10 May 2020 Results Review 4QFY20 ICICI Bank Bank... · ICICI Bank 2,047 316 1.6x Mar-22E ABV of Rs...

10 May 2020 Results Review 4QFY20

ICICI Bank

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters

Well placed for a bumpy ride

ICICIBC’s 4Q PPOP was in line with estimates, although NIM expansion

surprised. PAT registered a sharp QoQ fall on the back of COVID-19 related

provisions (similar to peers’) and was lower than expected. COVID-19 will

impact growth and asset quality across the board. However, a stronger b/s

(granular, sticky liability base, lower stress levels, higher PCR and adequate

CAR), improved underwriting practices and lower exposure to contextually

vulnerable products will help ICICIBC emerge stronger. ICICIBC remains our

preferred. Maintain BUY (TP of Rs 442, 1.6x core FY22E ABV+ Rs 126 for subs).

Strong funding profile: Deposits grew 18/8%, led by 29/11% growth in term

deposits. CASA growth at just 7/3% (avg. CASA grew 12%) was slower than

one might expect. Nevertheless, ICICIBC has one of the best in class CASA

at 45.1%. ICICIBC’s deposit profile is fairly granular and the bank stands to

benefit from the growing polarisation of deposit flows. Additionally, CRAR

at 16.1% (Tier 1 at 14.7%) provides comfort in uncertain times.

GNPA growth curtailed optically: GNPAs dipped ~5% QoQ to Rs 414bn

(5.53%) led by higher w/os (Rs 54.7bn, 2.2x QoQ) even as slippages were

elevated at Rs 53.1bn (3.3% ann., ~Rs 13bn lower due to standstill

classification). Corp & SME (+47/62%) a/c for ~80% of gross slippages. While,

COVID-19 will adversely impact asset quality, we derive some comfort from

(1) recent underwriting improvements (70.2% of loans rated A- & above, vs.

67.1% YoY), (2) limited SME (3.5% of loans), and unsecured retail (9.4% of

loans) exposure.

Loan growth: The retail segment (+16/3%) drove overall growth (+10/1.5%).

Within the retail book, unsecured loans - PL (+46/8%) and CC (+27/-4%)

grew the fastest. This segment showed slowing growth trends, accentuated

by COVID-19 related disruptions. De-growth in the international book

(8.4%, -14.4/-4.6%) persisted. We expect loan growth of ~10% over FY20-22E.

COVID-19 related commentary: ~30% of borrowers (by value) availed of the

moratorium as at Apr-20. Like its peers did, ICICIBC offered this facility on

an ‘opt-in’ basis to corp and SME borrowers and on an ‘opt-out’ basis to

retail borrowers. Consequently, retail segments (CV, rural and 2w) saw a

higher proportion of borrowers availing of the moratorium. The standstill

classification of a/cs had an 18bps impact on GNPLs. 85% of PL & CC loans

are to salaried individuals. Of the remaining 15% (self employed), the bank’s

exposure to travel and hotel sectors is limited. LAP forms 30% of the bank’s

mortgages portfolio. LTVs here are 55%.

Financial Summary

(Rs bn) 4Q

FY20

4Q

FY19

YoY

(%)

3Q

FY20

QoQ

(%) FY19 FY20P FY21E FY22E

Net int inc. 89.3 76.2 17.1% 85.5 4.5% 270.1 332.7 362.0 404.0

PPOP 73.9 62.3 18.6% 75.5 -2.1% 234.4 281.0 312.0 351.3

PAT 12.2 9.7 25.9% 41.5 -70.5% 33.6 79.3 140.9 173.0

EPS (Rs) 1.9 1.5 24.9% 6.4 -70.6% 5.2 12.3 21.8 26.7

ROAE (%) 3.3 6.3 10.9 12.1

ROAA (%) 0.36 0.77 1.23 1.39

Core ABVPS (Rs) 138 155 173 201

P/ABV (x)# 1.65 1.42 1.24 1.03

P/E (x)# 43.5 18.0 9.9 7.7

Source: Bank, HSIE Research. # adjusted for embedded value of subs

BUY

CMP (as on 8 May 2020) Rs 338

Target Price Rs 442

NIFTY 9,252

KEY

CHANGES OLD NEW

Rating Buy Buy

Price Target Rs 435 Rs 442

EPS % FY21E FY22E

-3.7% -0.6%

KEY STOCK DATA

Bloomberg code ICICIBC IN

No. of Shares (mn) 6,474

MCap (Rs bn) / ($ mn) 2,187/28,936

6m avg traded value (Rs mn) 13,774

52 Week high / low Rs 552/268

STOCK PERFORMANCE (%)

3M 6M 12M

Absolute (%) (37.0) (31.0) (11.6)

Relative (%) (14.0) (9.5) 4.6

SHAREHOLDING PATTERN (%)

Dec-19 Mar-20

Promoters

FIs & Local MFs 41.7 42.9

FPIs 45.8 43.7

Public & Others 12.5 13.4

Pledged Shares NA NA

Source : BSE

Darpin Shah

[email protected]

+91-22-6171-7328

Aakash Dattani

[email protected]

+91-22-6171-7337

Page | 2

ICICI Bank: Results Review 4QFY20

More on asset quality: Of the corporate slippages, Rs 4.7bn were due to forex

movements, and Rs 17bn (43% of corp slippages) were from BB. Commentary

indicates that 2 overseas entities (SE Asian oil trader and W Asian healthcare co)

formed a significant portion of the bal. corp slippages. Retail slippages (Rs 13bn)

were disproportionately impacted by the standstill classification.

ICICIBC’s BB and below rated pool of corp and SME loans (a fairly reliable

predictor of stress), dipped 4.9/4.2% YoY/QoQ to Rs 166.7bn (~2.5% of loans). The

influx into this pool was lower QoQ (14.2%) but ~2x YoY. Higher slippages (into

NPL, 2.4x QoQ) and upgrades (2x QoQ), curtailed growth. We anticipate a higher

influx into this pool as COVID-19 related downgrades manifest.

Non-tax provisions registered a sharp 2.9x QoQ rise to Rs 59.7bn, as ICICIBC

made COVID-19 related provisions of Rs 27.3bn, of which ~Rs 6bn correspond to

half (5%) of the total provisions (10%) on overdue a/cs mandated by the RBI.

Additionally, this incl. provisions on ~Rs 13bn of a/cs affected by the standstill

classification (which would’ve otherwise slipped). On these a/cs, we believe

ICICIBC made higher provisions than those required by the IRAC norms.

ICICIBC’s COVID-19 related provisions (excl. min. required by RBI) and general

standard asset provisions are Rs 55.7bn (~13% of GNPLs). LLPs are likely to

remain on the higher side, in view of anticipated stress, consequently, we model

for LLPs of ~1.8% over FY20-22E.

Margins surprise: NII growth at 17.1/4.5% was ahead of estimates and led by a

surge in NIMs (+15/10bps) to 3.87%. NIM expansion is particularly surprising

given the fall in the CD ratio (-615/504bps), and was aided by (1) a fall in CoF (-

28/-11bps) to 4.92% (one of the lowest amongst private banks) (2) the increasing

share of high yielding retail loans and (3) de-growth in relatively low yielding

overseas loans. Slower loan growth and consequently higher b/s liquidity will

limit margins. We anticipate NIMs of ~3.6% over FY20-22E.

SOTP

Rs bn Per Share Rationale

ICICI Bank 2,047 316 1.6x Mar-22E ABV of Rs 201

ICICI Life Insurance 349 54 Mar-21 EV + 21.1x Mar-22E VNB

ICICI Lombard 265 41 26.2x Mar-22E EPS

ICICI AMC 183 28 8% of FY21E AUM

ICICI UK 40 6 1x FY22E BV

ICICI Canada 47 7 1x FY22E BV

ICICI Housing Finance 23 4 1x FY22E BV

ICICI Sec 81 12 18x Mar-22E EPS

Others 32 5 I Ventures and Others

Total Value Of Subsidiaries 1,020 158

Less: 20% Holdco Discount 204 32

Net Value Of Subsidiaries 816 126

Total Value 2,863 442

Current Value 2,187 338

Upside (%) 30.9 30.9

Source: Bank, HSIE Research

Page | 3


Five quarters at a glance

Rs bn 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YoY

Growth

QoQ

Growth

Income statement

Net interest income 76.2 77.4 80.6 85.5 89.3 17.1% 4.5%

Non interest income 36.2 34.3 41.9 45.7 42.5 17.5% -7.0%

Treasury income 1.6 1.8 3.4 5.3 2.4 55.1% -54.4%

Operating income 112.4 111.6 122.5 131.2 131.8 17.3% 0.5%

Operating expenses 50.1 48.7 53.8 55.7 57.9 15.7% 4.0%

PPOP 62.3 62.9 68.7 75.5 73.9 18.6% -2.1%

Provisions 54.5 35.0 25.1 20.8 59.7 9.5% 186.5%

PBT 7.8 27.9 43.7 54.7 14.2 81.9% -74.0%

Provision for Tax (1.9) 8.8 37.1 13.2 2.0 -207.1% -84.7%

PAT 9.7 19.1 6.5 41.5 12.2 25.9% -70.5%

Balance sheet items

Deposits (Rs bn) 6,529 6,607 6,963 7,163 7,710 18.1% 7.6%

CASA (%) 49.61 45.23 46.68 46.96 45.11 -450 bps -185 bps

Advances (Rs bn) 5,866 5,924 6,134 6,357 6,453 10.0% 1.5%

CD Ratio (%) 89.8 89.7 88.1 88.7 83.7 -615 bps -504 bps

Domestic CD Ratio (%) 80.9 81.4 80.1 81.7 77.4 -350 bps -430 bps

CAR (%) 16.9 16.2 16.1 16.5 16.1 -78 bps -39 bps

Tier 1 (%) 15.1 14.6 14.6 15.0 14.7 -37 bps -26 bps

Profitability ratios (%)

Yield on advances 9.29 9.36 9.52 9.52 9.41 12 bps -11 bps

Cost of funds 5.20 5.23 5.19 5.03 4.92 -28 bps -11 bps

NIMs 3.72 3.61 3.64 3.77 3.87 15 bps 10 bps

Domestic NIMs 4.12 3.93 3.92 4.04 4.14 2 bps 10 bps

Cost-income ratio 44.5 43.7 43.9 42.5 43.9 -61 bps 148 bps

Tax rate (24.0) 31.7 85.0 24.1 14.1 3819 bps -998 bps

Asset quality

Gross NPAs 462.9 457.6 456.4 434.5 414.1 -10.5% -4.7%

Net NPAs 135.8 118.6 109.2 103.9 101.1 -25.5% -2.6%

GNPA (%) 6.70 6.49 6.37 5.95 5.53 -117 bps -42 bps

NNPAs (%) 2.06 1.77 1.60 1.49 1.41 -65 bps -8 bps

Slippage ratio (%) 2.47 1.89 1.65 2.79 3.31 85 bps 52 bps

Calc. coverage ratio (%) 70.7 74.1 76.1 76.1 75.6 491 bps -52 bps

Rep. coverage ratio (%) 80.7 83.4 85.0 85.7 86.8 610 bps 110 bps


Change In Estimates

Rs bn FY21E FY22E

Old New Change Old New Change

NII 352.4 362.0 2.7% 398.6 404.0 1.3%

PPOP 314.2 312.0 -0.7% 353.4 351.3 -0.6%

PAT 146.4 140.9 -3.7% 174.0 173.0 -0.6%

ABV (Rs) 168.0 173.1 3.0% 190.2 201.0 5.6%

Source: HSIE Research

Margin expansion

contributed significantly

to NII growth

Fees were ~90% of other

income and grew ~13% YoY

(flat QoQ); Retail fees

were ~75% of fees

Opex growth was driven

by growth in staff costs

(+17.7/15.5%), on a/c of

higher retirement benefit

provisions

Provisions incl. Rs 27.5bn

of COVID-19 related

provisions

Retail loans form 63.2% of

overall loans

Overseas NIMs were 28bps

(+25/-10bps)

Segment-wise slippages:

Retail (1.28%)

Corporate & SME (8.8%)

Page | 4


Loans grew 10% YoY (slowing) Loan mix: retail continues to gain share



Retail loan mix- faster growth in unsecured loans

(%) 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

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

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

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

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

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


Deposits grew 18.1% YoY CASA ratio dips YoY/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

Advances (Rs bn) (LHS) Growth (YoY) (RHS)

Rs bn %

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

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

Deposits (Rs bn) (LHS) Chg (YoY) (RHS)

Rs bn %

40.0

42.0

44.0

46.0

48.0

50.0

52.0

54.0

-

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

CASA Chg (YoY) (RHS) CASA (%) - RHS

%%

21 20 18 16 15 15 14 13 12 13 12 11 10 10 9 8

46 48 49 52 53 54 54 57 58 57 59 60 61 62 63 63

28 28 28 27 27 27 27 26 25 27 24 24 26 25 25 25

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

Overseas Retail SME Domestic corporate%

Page | 5


NIM improvmenet surprises Fee traction



Fee growth slows

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

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

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

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

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

% 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


Higher slippages QoQ G/NNPA % lower QoQ



-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

-

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

Fee income % loan (annu)

Fee income Chg (YoY) (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

NIM Domestic NIM Foreign NIM (RHS)

% %

82

80

70

11

3

50

47

44

15

7

40

31

21 3

5

28

25 4

4 53

1 0 6

0

27 270

0

00

00

0 0

00

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

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

GNPA (Rs bn) NNPA (Rs bn)

GNPA (%, RHS) NNPA (%, RHS)

Page | 6


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

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

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

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

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

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

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


Peer Set Comparison

BANK

Mcap

(Rs

bn)

CMP

(Rs) Rating

TP

(Rs)

ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)

FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E

AUBANK 128 421 ADD 549 124 137 163 20.6 20.2 16.6 3.29 2.98 2.50 16.6 13.3 14.1 1.61 1.35 1.39

AXSB# 1,079 382 BUY 541 268 292 341 62.3 11.0 8.3 1.34 1.24 1.06 2.1 10.4 12.4 0.19 0.98 1.20

CUBK 100 136 BUY 176 66 72 83 13.1 13.3 12.3 2.05 1.88 1.63 14.6 12.7 12.1 1.61 1.47 1.43

DCBB 21 68 ADD 114 94 101 116 5.8 5.6 5.2 0.72 0.67 0.58 11.0 10.4 10.2 0.96 0.92 0.90

FB 85 43 BUY 71 65 67 77 5.3 5.1 5.0 0.66 0.64 0.56 11.5 10.8 10.2 0.95 0.89 0.84

ICICIBC# 2,187 338 BUY 442 155 173 201 18.0 9.9 7.9 1.42 1.24 1.05 6.3 10.9 12.1 0.77 1.23 1.39

IIB 312 440 ADD 575 459 512 575 6.9 10.6 7.5 0.96 0.86 0.77 14.7 8.1 10.2 1.51 0.93 1.21

KMB# 2,326 1,219 ADD 1,263 237 255 295 28.6 28.2 25.0 3.85 3.58 2.97 13.4 12.2 11.7 1.84 1.70 1.69

KVB 21 26 REDUCE 33 56 53 62 8.9 5.3 4.6 0.48 0.49 0.43 3.7 6.0 6.9 0.33 0.53 0.59

RBK 61 119 REDUCE 136 185 194 215 12.0 12.5 7.4 0.65 0.61 0.56 5.6 4.5 7.2 0.60 0.53 0.84

SBIN# 1,488 167 BUY 316 179 183 227 3.2 2.5 1.9 0.32 0.31 0.24 7.0 8.2 9.6 0.43 0.50 0.60

Source: Company, HSIE Research, # Adjusted for subsidiaries value

Page | 7


Financials Income Statement

(Rs bn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E

Interest earned 490.9 527.4 541.6 549.7 634.0 748.0 804.7 880.9

Interest expended 300.5 315.2 324.2 319.4 363.9 415.3 442.8 476.9

Net interest income 190.4 212.2 217.4 230.3 270.1 332.7 362.0 404.0

Other income 121.8 153.2 195.0 174.2 145.1 164.5 175.1 191.8

Fee income (CEB) 69.8 74.6 80.3 87.9 102.3 112.9 115.8 131.4

Treasury income 15.5 38.0 86.2 57.9 13.4 12.9 17.5 15.0

Total income 312.2 365.5 412.4 404.5 415.3 497.2 537.1 595.8

Operating expenses 115.0 126.8 147.6 157.0 180.9 216.1 225.1 244.5

Employee expenses 47.5 50.0 57.3 59.1 68.1 82.7 87.1 91.8

PPOP 197.2 238.6 264.9 247.4 234.4 281.0 312.0 351.3

Provisions and contingencies 39.0 116.7 152.1 171.1 196.6 140.5 123.6 120.2

Provisions for std. and non-performing advances 35.3 75.1 143.5 145.2 168.1 133.0 126.1 122.7

Profit before tax 158.2 122.0 112.8 76.3 37.8 140.5 188.3 231.1

Tax expense 46.4 24.7 14.8 8.6 4.1 61.2 47.4 58.2

Profit after Tax 111.8 97.3 98.0 67.8 33.6 79.3 140.9 173.0

Source: Company, HSIE Research

Balance Sheet

(Rs bn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E

Source of funds

Share capital 11.6 11.6 11.7 12.9 12.9 12.9 12.9 12.9

Reserves and surplus 792.6 885.7 987.8 1,038.7 1,070.7 1,152.1 1,278.9 1,434.6

Shareholders’ funds 804.2 897.3 999.4 1,051.5 1,083.6 1,165.0 1,291.8 1,447.5

Savings deposits 1,148.6 1,342.3 1,718.4 2,009.7 2,276.7 2,455.9 2,701.5 3,052.7

Current deposits 495.2 588.7 749.8 889.6 962.7 1,022.3 1,093.8 1,170.4

Term deposits 1,971.8 2,283.3 2,432.2 2,710.5 3,289.8 4,231.5 4,866.2 5,352.9

Total deposits 3,615.6 4,214.3 4,900.4 5,609.8 6,529.2 7,709.7 8,661.6 9,576.0

Borrowings 1,724.2 1,748.1 1,475.6 1,828.6 1,653.2 1,629.0 1,384.7 1,426.2

Other liabilities 317.2 347.3 342.5 302.0 378.5 479.9 527.9 564.9

Total equity and liabilities 6,461.3 7,207.0 7,717.9 8,791.9 9,644.6 10,983.7 11,866.0 13,014.6

Application of funds

Cash and bank balances 423.0 598.7 757.1 841.7 803.0 1,191.6 1,358.0 1,323.0

Investments 1,581.3 1,604.1 1,615.1 2,029.9 2,077.3 2,495.3 2,694.3 2,815.1

Government securities 1,056.1 1,106.5 1,125.1 1,391.9 1,479.2 1,883.2 2,078.8 2,202.5

Advances 3,875.2 4,352.6 4,642.3 5,124.0 5,866.5 6,452.9 6,892.1 7,869.6

Fixed assets 47.3 75.8 78.1 79.0 79.3 84.1 85.8 87.5

Other assets 534.5 575.7 625.3 717.3 818.5 759.8 835.8 919.3

Total Assets 6,461.3 7,207.0 7,717.9 8,791.9 9,644.6 10,983.7 11,866.0 13,014.6


Page | 8


Key Ratios

FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E

Valuation ratios

EPS (Rs) 19.3 16.7 16.8 10.5 5.2 12.3 21.8 26.7

Earnings growth (%) 13.9 (13.0) 0.8 (30.9) (50.4) 135.8 77.7 22.7

Core BVPS (Rs) 138.7 154.3 171.6 163.6 168.1 180.0 199.5 223.6

Core ABVPS (Rs) 108.0 113.0 110.6 110.7 137.7 155.4 173.1 201.0

DPS (Rs) 5.0 5.0 4.4 1.5 1.0 0.0 2.2 2.7

RoAA (%) 1.80 1.42 1.31 0.82 0.36 0.77 1.23 1.39

RoAE(%) 14.8 11.1 10.0 7.2 3.3 6.3 10.9 12.1

P/E (x) 14.0 16.1 15.0 22.8 43.5 18.0 9.9 7.9

P/ABV (x) 2.50 2.4 2.3 2.17 1.65 1.42 1.24 1.05

P/PPOP (x) 2.0 1.6 1.5 1.8 1.9 1.6 1.4 1.2

Dividend yield (%) 1.5 1.5 1.3 0.4 0.3 - 0.6 0.8

Profitability (%)

Yield on advances 9.8 9.5 8.8 8.4 8.7 9.3 9.1 9.0

Yield on investments 6.3 6.7 7.1 6.3 6.2 6.4 6.4 6.4

Cost of funds 5.9 5.6 5.3 4.6 4.7 4.7 4.6 4.5

Cost of deposits 5.9 5.5 5.0 4.5 4.4 4.5 4.4 4.4

Core spread 3.9 3.9 3.6 3.7 4.1 4.6 4.5 4.5

NIM 3.5 3.6 3.3 3.2 3.4 3.7 3.6 3.6

Operating efficiency

Cost/average assets 1.9 1.9 2.0 1.9 2.0 2.1 2.0 2.0

Core Cost/income 38.7 38.7 45.2 45.3 45.0 44.6 43.3 42.1

Balance sheet structure (%)

Loan growth 14.4 12.3 6.7 10.4 14.5 10.0 6.8 14.2

Deposit growth 8.9 16.6 16.3 14.5 16.4 18.1 12.3 10.6

CD ratio 107.2 103.3 94.7 91.3 89.8 83.7 79.6 82.2

Equity/ assets 12.4 12.5 12.9 12.0 11.2 10.6 10.9 11.1

Equity/ advances 20.8 20.6 21.5 20.5 18.5 18.1 18.7 18.4

CASA 45.5 45.8 50.4 51.7 49.6 45.1 43.8 44.1

Capital adequacy (CAR) 17.0 16.6 17.4 18.4 16.9 16.1 16.4 16.6

w/w Tier 1 12.8 13.1 14.4 15.9 15.1 14.7 15.1 15.4

Asset quality

Gross NPLs (Rs bn) 150.9 262.2 421.6 532.4 456.8 414.1 426.3 390.2

Net NPLs (Rs bn) 62.6 129.6 252.2 278.2 134.5 101.1 116.0 94.0

Gross NPL (%) 3.78 5.82 7.89 8.84 6.70 5.53 5.82 4.72

Net NPL (%) 1.61 2.98 4.20 4.77 2.06 1.41 1.68 1.19

Slippage ratio (%) 2.19 4.06 7.46 5.86 1.93 2.42 2.70 2.25

Calc. PCR (%) 58.6 50.6 40.2 47.7 70.6 75.6 72.8 75.9

Provisions/ average loans (%) 1.0 1.8 3.2 3.0 3.1 2.2 1.9 1.7

RoAA Tree

Net interest income 3.07% 3.11% 2.91% 2.79% 2.93% 3.23% 3.17% 3.25%

Non-interest income 1.96% 2.24% 2.61% 2.11% 1.57% 1.59% 1.53% 1.54%

Treasury income 0.25% 0.56% 1.16% 0.70% 0.15% 0.13% 0.15% 0.12%

Operating cost 1.85% 1.86% 1.98% 1.90% 1.96% 2.10% 1.97% 1.97%

Non-tax provisions 0.63% 1.71% 2.04% 2.07% 2.13% 1.36% 1.08% 0.97%

Provisions for std. & non-performing assets 0.51% 1.06% 1.97% 1.73% 1.82% 1.27% 1.10% 0.98%

Tax expense 0.75% 0.36% 0.20% 0.10% 0.04% 0.59% 0.41% 0.47%

RoAA 1.80% 1.42% 1.31% 0.82% 0.36% 0.77% 1.23% 1.39%

Leverage (x) 8.08 8.03 7.87 8.05 8.63 9.17 9.30 9.08

RoAE 14.55% 11.43% 10.33% 6.61% 3.15% 7.05% 11.47% 12.63%


Page | 9


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

7-May-19 401 BUY 454

9-Jul-19 426 BUY 454

29-Jul-19 416 BUY 492

22-Sep-19 418 BUY 499

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

From 2nd March 2020, we have moved to new rating system

RECOMMENDATION HISTORY

200

250

300

350

400

450

500

550

600

May

-19

Jun

-19

Jul-

19

Au

g-1

9

Sep

-19

Oct

-19

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-20

May

-20

ICICI Bank TP

Page | 10


Disclosure:

We, Darpin Shah, MBA & Aakash Dattani, ACA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this

research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of

publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or

view(s) in this report.

Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative

or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding

the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material

conflict of interest.

Any holding in stock –No

HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475.

Disclaimer:

This report has been prepared by HDFC Securities Ltd and is solely for information of the recipient only. The report must not be used as a singular basis of any

investment decision. The views herein are of a general nature and do not consider the risk appetite or the particular circumstances of an individual investor;

readers are requested to take professional advice before investing. Nothing in this document should be construed as investment advice. Each recipient of this

document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in securities of the companies

referred to in this document (including merits and risks) and should consult their own advisors to determine merits and risks of such investment. The

information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be

reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy,

completeness or correctness. All such information and opinions are subject to change without notice. Descriptions of any company or companies or their

securities mentioned herein are not intended to be complete. HSL is not obliged to update this report for such changes. HSL has the right to make changes and

modifications at any time.

This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen

or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be

contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction.

If this report is inadvertently sent or has reached any person in such country, especially, United States of America, the same should be ignored and brought to

the attention of the sender. This document may not be reproduced, distributed or published in whole or in part, directly or indirectly, for any purposes or in

any manner.

Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or

price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively

assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security.

This document is not, and should not, be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report

should not be construed as an invitation or solicitation to do business with HSL. HSL may from time to time solicit from, or perform broking, or other services

for, any company mentioned in this mail and/or its attachments.

HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of

the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a

market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any

other potential conflict of interests with respect to any recommendation and other related information and opinions.

HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments

made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates,

diminution in the NAVs, reduction in the dividend or income, etc.

HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt

in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations

described in this report.

HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject

company for any other assignment in the past twelve months.

HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t

date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage

services or other advisory service in a merger or specific transaction in the normal course of business.

HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with

preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this

report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may

have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of

the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report.

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg

(East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022)

3045 3600

HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg. No. POP: 11092018; IRDA

Corporate Agent License No.: CA0062; SEBI Research Analyst Reg. No.: INH000002475; SEBI Investment Adviser Reg. No.: INA000011538; CIN -

U67120MH2000PLC152193

HDFC securities

Institutional Equities

Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,

Senapati Bapat Marg, Lower Parel, Mumbai - 400 013

Board: +91-22-6171-7330 www.hdfcsec.com

mailto:[email protected]

10 May 2020 Results Review 4QFY20 ICICI Bank Bank... · ICICI Bank 2,047 316 1.6x Mar-22E ABV of Rs...

Documents

Transcript of 10 May 2020 Results Review 4QFY20 ICICI Bank Bank... · ICICI Bank 2,047 316 1.6x Mar-22E ABV of Rs...