ICICI Bank nears record high; stock gains on hopes of healthy Q3 earnings

Shares of ICICI Bank were up 1.5 per cent at Rs 371 apiece on the BSE on Monday, trading close to their all-time high, on hopes of strong earnings in October-December (Q3FY19) quarter.

The stock of the private sector lender had hit a record high of Rs 375 on November 16, 2018, in intra-day trade.

The board of directors of the bank is scheduled to meet on January 30, 2019, to consider the approval of audited financial results for the quarter and nine months ended December 31, 2018.

The brokerage firm Reliance Securities expects ICICI Bank to report 39.6 per cent year-on-year (YoY) growth in its net profit at Rs 2,303 crore in Q3FY19. Net interest income (interest earned minus interest expended) to grow 13 per cent at Rs 6,454 crore on YoY basis.

“We expect margins to rise led by higher loan growth and shift in pricing power. The bank’s treasury profits to rise in a declining interest rate environment, while operating efficiencies to continue during the quarter,” the brokerage firm said in results preview.

Even as the pace of the National Company Law Tribunal (NCLT) resolution for large accounts has been slow, the positive impact of resolutions outside NCLT and lower residual stress in corporate portfolios of banks will reflect in the quarterly financials.

Nonetheless, slippages are expected to be higher than 2QFY19. While 2 large accounts under NCLT’s first list are in the final stages of resolution, the quarter witnessed initiation of resolutions from the power sector, where the recovery rates were higher than expectations, Reliance Securities said in banking sector update.

Equirus Securities have ‘buy’ rating on ICICI Bank with a 12-month target price of Rs 435 per share.

“We expect ICICI Bank’s RoAs/RoEs to improve to 1.6 per cent/14.6 per cent by FY21E (FY19E: 0.5 per cent/4.7 per cent) led by a around 30bps expansion in NIMs over FY19E NIMs of around 3.2 per cent, a sharp around 115bps decline in provisions, contained incremental slippages (FY20E/FY21E: 1.8 per cent/ 1.3 per cent) and acceleration in loan growth (FY20E/FY21E: 17 per cent each),” the brokerage firm said company update.

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