ICICI Bank –Buy- Angel Securities
ICICI Bank has announced its 1QFY2011 results, wherein it has registered net profit growth of 16.8% on a y-o-y basis and muted growth of 2.0% on a sequential basis to Rs1,026 crore, which is close to our estimate of Rs1,036 crore.
In-line operating performance and stable asset quality with improvement in coverage ratio were the key highlights of the result. Advances were down by 6.9% y-o-y but were up by 1.8% on a sequential basis to Rs1,84,378cr. Deposits were down by 4.4% y-o-y and by 0.5% q-o-q at Rs2,00,913 crore.
The CASA ratio increased to 42.1% as compared to 30.4% in 1QFY2010 and 41.7% in 4QFY2010. CASA deposits increased by 32% y-o-y to Rs84,618 crore. NII grew by 0.3% on a y-o-y basis, while it was down by 2.2% on a sequential basis to Rs1,991 crore.
Non-interest income stood at Rs1,681 crore, down by 19.6% y-o-y and by 11.1% sequentially. Operating costs decreased 2.8% y-o-y and by 4.0% on a sequential basis. The cost-to-income ratio stood at 40.4%, lower than its eight-quarter average of 41.0%. Gross NPAs were up by 3.7% sequentially to Rs9,829 crore, while net NPAs were down by 10.0% sequentially to Rs3,456 crore compared to Rs3,841cr in 4QFY2010. The bank’s gross NPA ratio was stable at 5.1% compared to 4QFY2010. While net NPA ratio improved to 1.9% (from 2.1% in
4QFY2010). The provision coverage ratio as per the RBI’s guidelines stood at 64.8% compared to 59.5% in 4QFY2010. The bank’s CAR was at 20.2%, with Tier-I CAR at 14.0%, as compared to 19.4% in 4QFY2010.
Including subsidiaries, the stock is trading at 1.7x FY12E ABV. We have valued the bank’s subsidiaries at Rs307 per share of ICICI Bank and the core bank at Rs839 (2.25x FY12E ABV). We maintain a BUY on the stock with a target price of Rs1,163.
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