Re: {LONGTERMINVESTORS} Research Reports extracts & summaries - Thread

 

Margins under pressure; Challenges on asset quality persists  

·         ICICI Bank's loan book grew a modest (12.4%YoY, 3.4%QoQ) to INR 4494bn in 1QFY17 led by growth in retail (22.1%YoY). Segments like SME (2.1%YoY) and domestic corporate (11.2%YoY) contained the growth of the loan book.  Consequently the loan book mix stands at Retail – 46.4%, Domestic Corporate - 28.4%, and overseas – 21.2%. Overseas growth contracted by (1.5%YoY) to INR 953bn. In US dollar terms, the net advances of overseas branches decreased by 7.1%.

·         Growth in retail loan portfolio was led by Personal Loans (43.6%YoY, 5.2% of portfolio), Credit cards (40.9%YoY, 2.8% of portfolio), home loans (21%YoY, 54.3% of portfolio), rural & others (23.7%YoY, 15.2% of portfolio) and vehicle loans (+18.8%YoY, 17.4% of portfolio). Management indicated to grow its loan book at around 18% in FY17 led by focus on retail and SME book. Portfolio quality remains the strategic priorities for FY17.

·         Deposits grew (15.3%YoY, 0.6%QoQ) to INR 4241bn. Growth in deposits was supported by an increase in CASA of (17.9%YoY). Share of CASA deposits increased by 100bpsYoY to 45.1% and Retail deposit contributes 77% of the total deposits.

·         NIM declined by 21bps to 3.16% for the quarter due to lower yield on advances on account of non-accrual of income – due to higher level of additions to non-performing assets. Domestic NIM was noted at 3.45% and Overseas NIM was noted at 1.65%

Valuation: ICICI bank has reported tepid earnings on account of increased slippages arising largely from restructured book. With the bank steadily declining its exposure to stressed sectors over the past 3 years, its strong focus on retail growth and a healthy CAR gives us a positive outlook on the stock. We rate the stock an OUTPERFORMER with a target price of INR 275, valuing it at a P/BV of 1.6X FY18E. Risks: Slippages in stressed sectors, Cost of Funds higher than expected.

 

Regards,

CSEC Research

--
You received this message because you are subscribed to the Google Groups "LONGTERMINVESTORSRESEARCH" group.
To unsubscribe from this group and stop receiving emails from it, send an email to longterminvestorsresearch+unsubscribe@googlegroups.com.
Visit this group at https://groups.google.com/group/longterminvestorsresearch.
For more options, visit https://groups.google.com/d/optout.