The brokerage firm expects a 14 per cent year-on-year (YoY) growth in credit at around Rs 5.66 trillion from Rs 4.97 trillion in Q1FY20. This, however, would be approximately 1 per cent sequential decline from Rs 5.71 trillion in Q4FY20.
“We have factored in higher loan loss provisions, up 21 per cent YoY, even as the bank has a provision coverage ratio (PCR) of around 69 per cent, and contingent provisions at 20 per cent of gross non-performing assets (GNPAs). Higher provisions will drag net earnings 10 per cent YoY lower to Rs 1,230 crore,” analysts at the brokerage said in a results preview note.
“Loan momentum will be tepid as lockdown continued for most of the quarter. Retail deposits growth, however, could be steady but traction on corporate deposits needs to be monitored,” cautioned the brokerage in a recent report.
It pegs the net profit at Rs 1,713.9 crore, a jump of 25 per cent YoY, from Rs 1,370.1 crore in the corresponding quarter of the previous fiscal. The bank had reported a net loss of Rs 1,387.8 crore in the March quarter of FY20.
ICICI Securities remains hopeful that credit disbursement to micro, small and medium enterprises (MSMEs) and corporate segment could keep the loan growth at around 15 per cent YoY to Rs 573,966 crore.
“Deposit inflow is expected to remain healthy at Rs 651,942 crore. Meanwhile, impact of lower credit-deposit (CD) ratio and cut in marginal cost of funds based lending rate (MCLR) would be curtailed by aggressive reduction in deposit rates safeguarding margins, which is expected to decline by 5 bps to 3.5 per cent,” noted the analysts in their results expectation report.
They see operational performance under pressure, with pre-provision profit at Rs 5,570 crore, due to muted fee income. Besides, they remain extremely cautious on the net profit front and see the PAT at Rs 753 crore, plunge of a shocking 45 per cent YoY.
The brokerage sees the private lender reporting total revenue of Rs 9,528.6 crore for the quarter under review, down 2 per cent YoY from Rs 9,712.4 crore, and around 12 per cent sequentially from Rs 10,793.2 crore logged in Q4FY20.
It, too, expects the bank’s net profit to decline on a yearly basis to Rs 1,089.5 crore. PPP, on the other hand, is seen declining 7.5 per cent YoY to Rs 5,452.7 crore. On a quarter-on-quarter (QoQ) basis, this would be a 6.8 per cent fall from Rs 5,851.1 crore in Q4FY20.
“We expect net interest income (NII) of Rs 6,500 crore, up 11 per cent YoY, but down 4.6 per cent QoQ. Net interest margin (NIM) would remain stable QoQ at 3.5 per cent, despite cut in MCLR, owing to declining cost of funds,” said their analysts. The bank had NII of Rs 5,844 crore in Q1FY20 and Rs 6,808 crore in Q4FY20.
They expect the lender to create contingent provision amounting to Rs 700 crore, and estimate its slippages at Rs 4,000 crore. GNPA and NNPA ratio are seen stable on a quarterly basis at 4.7 per cent and 1.4 per cent, respectively.
According to the brokerage, improved NIM coupled with decline in provision (QoQ) would lead to strong growth in PAT at around Rs 1,752.1 crore, up 28 per cent YoY. That apart, it sees the NII growing at 17 per cent YoY, but just 1 per cent QoQ, to Rs 6,875.5 crore.
With loans under moratorium and business activity being suspended for the better part of the quarter, analysts would eye the management’s commentary on growth prospects in H2FY21. Moreover, commentary on moratorium trends, comments on proposed fundraising plans, outlook on growth and NIMs, trends in deposit traction, and outlook on asset quality in H2FY21 would be tracked by the analysts.