The private sector lender on Monday reported a 5 percent drop in its fourth-quarter profit on Monday, missing estimates after being hit by a rise in expenses and a higher accumulation of bad loans, said a Reuters report
Global brokerage firms such as Nomura, CLSA, and Macquarie retained their positive rating on ICICI Bank, but raised their respective target price after March quarter results.
The private sector lender on May 6 reported a 5 percent drop in its fourth-quarter profit to Rs 969 crore, missing estimates after being hit by a rise in expenses and a higher accumulation of bad loans.
The bank’s net interest income though jumped 27 percent to Rs 7,620 crore against Rs 6,022 crore in the corresponding quarter of last year.
The net interest margin stood at 3.72 percent compared to 3.4 percent in the quarter ended December 31, 2018.
Reacting to the results, Macquarie maintained its buy call on ICICI Bank and raised its 12-month target price to Rs 500 from Rs 480 earlier.
The NII/Core PPOP growth of 20/18 percent YoY was in-line with estimates. The net profit missed due to higher provisioning as well as write-offs.
Exposure to new stressed names has been quite low and that is a positive sign. Jet Airways was also classified as NPL and carried sufficient provisioning.
The NPA coverage was at over 71 percent despite large write-off. Nomura expects net interest margins (NIMs) to inch up 10 bps in FY20. ROEs will trend up to 15.5 percent in FY21 & 16 percent in FY22, according to the brokerage.
Here how other brokerage firms reacted on ICICI Bank post Q4 results:
CLSA: Buy| Raise target to Rs 500 from Rs 470
CLSA maintained its buy rating on ICICI Bank and raised its 12-month target to Rs 500 from Rs 470 earlier.
The normalisation of credit costs is likely to aid an earnings recovery. CLSA expects slippage to stabilise around 2 percent. The CASA growth of 12 percent needs to improve to support loan growth, CLSA said.
The global investment bank raises earnings estimates by 1-3 percent and expect earnings and return on equity (RoE) to rebound from FY20.
Macquarie: Outperform| Raise target to Rs 465 from Rs 450
Macquarie maintained its outperform rating on ICICI Bank and raised its target price to Rs 465 from Rs 450 earlier.
Q4 net profit missed estimates on higher provisions, as well as write-offs. The global investment bank builds in 1.25 percent credit costs over FY20-22.
The management sees a 3.4-3.5 percent net interest margins (NIMs) for FY20. ICICI Bank is a global marquee idea and preferred play on asset quality normalisation theme.
Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
