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

[email protected]

+91-22-6171-7328

Aakash Dattani

[email protected]

+91-22-6171-7337

Punit Bahlani

[email protected]

+91-22-6171-7354

mailto:[email protected]

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

https://www.hdfcsec.com/hsl.docs/Banking%20-%20Update%20-%20Near-term%20NIM%20headwinds%20-%20HSIE-202008271010565762717.pdf

https://www.hdfcsec.com/hsl.docs/Banking%20-%20Update%20-%20Near-term%20NIM%20headwinds%20-%20HSIE-202008271010565762717.pdf

Page | 3


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


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


Loan growth continued to slow Loan mix: retail continues to gain share



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


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


NIMs dip Sequential rebound in fee traction



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


Slippages rise QoQ G/NNPA % lower QoQ



(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


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


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


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


Page | 8


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%


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

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

No

v-1

9

Dec

-19

Jan

-20

Feb

-20

Mar

-20

Ap

r-20

May

-20

Jun

-20

Jul-

20

Au

g-2

0

Sep

-20

Oct

-20

ICICI Bank TP

Page | 10


Disclosure:

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

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recommendation(s) or view(s) in this report.

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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

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