ICICI Bank hits record high post stellar Q1; slips later on profit booking

Shares of ICICI Bank hit a frsh record high of Rs 681.40, up 1 per cent on the BSE in Monday's intra-day trade, after the private sector lender reported a strong set of numbers for the quarter ended June 2021 (Q1FY22). The stock surpassed its previous high of Rs 679, touched on February 16, 2021.

The stock, however, slipped nearly 3 per cent from its intra-day high on profit booking. At 09:21 am, it traded 1.4 per cent lower at Rs 667.20 on the BSE. In comparison, the S&P BSE Sensex was down 143 points at 52,833 levels. Prior to Q1 results, in the past three trading days, the stock of ICICI Bank had rallied 5.5 per cent till July 23.

In Q1FY22, ICICI Bank's net profit rose 78 per cent year-on-year to Rs 4,616 crore in Q1FY22 on improvement in interest margins and lower provisioning. Its net profit was Rs 2,599 crore in the same quarter last year (Q1FY21). Sequentially, the profit rose, albeit marginally, from Rs 4,402 crore in the fourth quarter ended March 31, 2021 (Q4FY21).

The lender's net interest income (NII) surged 18 per cent to Rs 10,936 crore in the June quarter as against Rs 9,280 crore in the year-ago period. NII was Rs 10,431 crore in Q4FY21. The net interest margin (NIM) was 3.89 per cent in Q1FY22 compared to 3.84 per cent in the previous quarter (Q4FY21) and 3.69 per cent in Q1FY21.

Non-interest income, excluding treasury income, increased by 56 per cent year-on-year to Rs 3,706 crore in the June quarter from Rs 2,380 crore in the year-ago period. Sequentially, it fell sharply from Rs 4,137 crore in the March 2021 quarter.

On the asset quality front, the gross non-performing assets (NPA) additions were Rs 7,231 crore during the quarter. Gross NPAs at the end of the quarter stood at 5.15 per cent, higher than 4.96 per cent in the March quarter, but lower than last year's 5.46 per cent. The net NPAs in Q1 stood at Rs 9,306 crore as against Rs 9,180 crore in the previous quarter. Meanwhile, the net NPA ratio was 1.16 per cent at the end of June quarter compared to 1.14 per cent at March 31, 2021.

"ICICI Bank reported a strong earnings performance, led by robust core PPOP (pre-provisioning operating profit) performance and controlled provisions. The steady mix of high yielding portfolio such as Retail/Business banking portfolio, deployment of excess liquidity, and low cost liability franchise is aiding margin expansion," Motilal Oswal Financial Services said in a result update.

Covid 2.0 has disrupted collections, leading to elevated slippages in the Retail/Business Banking portfolio. However, the management is confident of improved asset quality trends over FY22, mainly from the second half of FY22 (H2FY22) onwards. Restructured loans remain under control at 0.7 per cent of loans. Provision coverage remains best in the industry and additional Covid-19 provision buffer (0.9 per cent of loans) provides comfort on normalization in credit cost, the brokerage firm added. It maintains a 'Buy' rating with a revised SoTP-based target price of Rs 835/share (2.6x FY23E ABV for the bank).