ICICI Bank’s net profit increased by 35.2% y-o-y, which was in line with our estimates. The key positives from the results are further improvement in CASA to 41.7% and a declining trend in slippages from retail loans for 4 consecutive quarters, though we would have liked to see higher balance sheet and network growth from this quarter.
Total deposits increased by 2.2% q-o-q (declined by 7.5% y-o-y) to Rs2,02,017 crore during 4QFY2010; advances increased by 1.1% q-o-q (a decline of 17.0% y-o-y) to Rs1,81,206cr. The de-growth in advances was sharper than expected especially considering the strong uptick in systemic credit demand during 4QFY2010. The sharp drop in the advances book was attributable to the repayments from retail, and short-term corporate loans.
The key positive from the results was the improvement in the bank’s CASA ratio to 41.7%% (from 39.6% in 3QFY2010 and 28.7% in 4QFY2009). The asset quality of the bank showed signs of stabilising, with gross slippages at Rs700cr, driven by a sharp declining trend in slippages in retail loans. At the CMP, the bank’s Core Banking business (after adjusting Rs307 per share towards the value of the subsidiaries) is trading at 1.9x FY2012E ABV of Rs518.
We value the Bank’s subsidiaries at Rs307 per share and the core bank at Rs862 (2.25x FY2012E ABV). We maintain a BUY on the stock, with a target price of Rs1,169, implying an upside of 20.0%
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