Kotak Institutional Equities as well as
Prabhudas Lilladher expect 22 percent decline year-on-year and 15 percent
sequential fall in provisions for bad loans.
Country's largest private sector
lender ICICI Bank July 27 is expected to report a profit in the range
of Rs 1,300-2,100 crore for the June quarter, backed by double-digit
year-on-year (YoY) growth in loan book and net interest income.
The bank had reported a loss
of Rs 119.6 crore in the June quarter last year and a profit of Rs 969.1 crore
in the March 2019 quarter.
The stock gained 1.6 percent
to close at Rs 415.50 on July 26. It has gained 51 percent over the last year
amid hope of improvement in the asset quality.
Brokerages expect Q1 net
interest income growth around 17-19 percent and loan growth around 13-15
percent YoY.
"We expect core earnings (base quarter had stake sale gains
of ICICI Life) trajectory to remain strong at around 15 percent YoY, led by
healthy loan growth (around 15 percent YoY) and better NII growth (19 percent
YoY). NIM will decline QoQ by around 10 bps due to lower one-offs," said
Kotak which expects profit at Rs 1,393.1 crore for the quarter.
Prabhudas Lilladher also said
adjusting for one-off stake sale gains of Q1FY19, core pre-provision operating
profit (PPOP) growth will be better. Loan growth will also be better than the
industry led by domestic & retail growth. NIMs, however, could be
sequentially lower on one of I-T refund impact. Core NIMs though should be
steady.
The likely double-digit YoY
and sequential fall in provisions are also expected to boost profitability.
Kotak Institutional Equities
as well as Prabhudas Lilladher expect 22 percent decline year-on-year and 15
percent sequential fall in provisions for bad loans.
Asset quality could see
further improvement sequentially on write-offs. Prabhudas Lilladher sees gross non-performing
assets as a percentage of gross advances declined to 6.61 percent in the June
quarter, against 6.7 percent in the previous quarter.
"We expect a reduction
in gross NPLs on the back of write-offs. Credit costs will decline QpQ led by
lower slippages (around less than 1.7 percent of loans, primarily from
agriculture). Below-investment-grade portfolio would decline QoQ and coverage
ratio would improve QoQ," Kotak said.
According to Motilal Oswal
also, gross slippages are expected to moderate to 2.5 percent due to a
reduction in corporate slippages. Net stress loans (including BB & below)
as on Q4FY19 stood at 5.9 percnet of loans and are expected to decline further
as incremental stress addition moderates.
Key things to watch out for
would be an outlook on asset quality and trend on further relapse from
restructured loans, and growth in CASA + retail term deposits.
Source: https://www.moneycontrol.com/news/business/earnings/icici-bank-likely-to-post-strong-q1-profit-with-double-digit-nii-loan-growth-4252041.html
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