ICICI Bank gains 5% in weak market after posting Rs 1,980 cr profit in Q1

Shares of ICICI Bank rallied 5 per cent to Rs 435 on the BSE on Monday in early morning trade, after the bank reported a standalone net profit of Rs 1,908 crore in June quarter (Q1FY20), mainly on account of lower provisioning for bad loans and higher retail loan growth. The private sector lender had posted net loss of Rs 120 crore in the same period a year ago.

The stock was trading close to its all-time high level of Rs 444 touched on June 27, 2019, on the BSE in intra-day trade. The trading volumes on the counter jumped nearly three-fold with a combined 29 million shares changing hands on the BSE and NSE so far.

The bank's asset quality improved sequentially as well as on year-on-year basis. At Q1FY20, the percentage of gross non-performing advances (NPA) to gross advances was 6.49 per cent against 6.70 per cent in Q4F18 and 8.81 per cent in Q1FY19. Net non-performing advances to net advances were at 1.77 per cent against 2.06 per cent in previous quarter and 4.19 per cent in year ago quarter.

Net interest margin, or the difference between the yields on advances and cost of deposits, was 3.61 per cent compared to 3.19 per cent in the year-ago quarter and 3.72 per cent in the March quarter. The bank’s domestic loan book grew 18 per cent year-on-year, while total loan growth was 15 per cent.

Analysts at Elara Capital expect ICICI Bank to continue to gain credit and deposit market share by 25 basis points and 30 basis points, respectively. "Margin would expand due to contained net delinquency rate and a sharp fall in net NPA; likely reduction in CASA composition is already factored into brokerage estimates. Higher margin and lower credit cost would add to return ratios; the brokerage firm expect a ROA in the range of 113-132bp over FY20-21E," it said, while reiterating ‘Accumulate’ rating on the stock with a revised target price of Rs 488 per share.

At 10:24 AM, the stock was trading 3.86 per cent higher at Rs 431.55 as compared to a 0.32 per cent decline in the benchmark S&P BSE Sensex.


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