ICICI Bank surges 9%, hits new high on strong September quarter results

Shares of ICICI Bank surged 9 per cent to hit a new record high of Rs 827 on the BSE in Monday's intra-day trade after the private sector lender on Saturday reported a 30 per cent year-on-year (YoY) jump in net profit in the July-September quarter (Q2FY22), aided by robust net interest income (NII) and other income as well as lower provisions. In comparison, the S&P BSE Sensex was down 0.17 per cent at 60,717 points at 09:33 am.

The bank posted its highest-ever quarterly net profit of Rs 5,511 crore in the reporting period, beating Street estimates, as against Rs 4,251 crore in the same period last financial year. NII of the lender rose 25 per cent to Rs 11,690 crore in the same period and non-interest income was up 26 per cent to Rs 4,400 crore. Net interest margin (NIM), a measure of profitability, stood at 4 per cent as against 3.89 per cent in Q2FY21 and 3.57 per cent in Q1FY22.

Asset quality also improved during the quarter with gross NPA additions declining to Rs 5,578 crore in Q2FY22 from Rs 7,231 crore in Q1FY22. The gross NPA ratio of the bank stood at 4.82 per cent in the reporting as against 5.15 per cent in the preceding quarter. Net NPAs also declined to below 1 per cent (0.99 per cent) in the September quarter from 1.16 per cent in the June quarter. CLICK HERE FOR FULL REPORT

"ICICI Bank is seeing a strong recovery in business trends across key segments such as Retail, SME, and Business Banking. The Retail and Rural segment is showing robust trends, barring Commercial Vehicles. On the asset quality front, slippages have moderated, and the management expects 2HFY22 to be much better. The bank holds Covid-19 related provisions of Rs 6,425 crore (0.8 per cent of loans) provides a comfort on stable credit cost trends," Motilal Oswal Financial Services said in a results update.

"The steady mix of a high yielding portfolio (Retail/Business Banking) and a low cost liability franchise is aiding margin expansion. We increase our estimates for FY22/FY23 by 5 per ent/2.5 per ent and expect RoA/RoE to improve to 2 per cent/16.6 per cent by FY24E," the brokerage firm said, maintaining a 'Buy' rating on the stock with a target price of Rs 1,000 per share.

Meanwhile, those at Jefferies said: ICICI Bank's Q2FY22 results were impressive on most counts as a strong topline growth lifted profit by 30 per cent YoY to Rs 5,500 crore & above estimate. Loan growth & wider NIMs were key drivers as bank is gaining from ramp-up of SME/BB loans (+43 per cent YoY).

"Covid-restructuring & slippages there are below HDFC Bank’s, but total slippages would need to fall from 3.4 per cent now. Bank is progressing well on the Beta to Alpha trade and stays as our top pick," they said. The foreign brokerage, too, maintains a 'Buy' rating on the stock with a target price of Rs 1,000 per share.