ICICI Bank Shares Jump Nearly 5 Percent After Strong Q1 Earnings

ICICI Bank Ltd shares jumped nearly 5% in early trade on Monday, i.e. 29 July, after the lender on Saturday reported a standalone net profit of Rs 1,908 crore in the first quarter ended June (Q1), against a loss of Rs 120 crore in the same period last year.

At 10:14 am, shares of ICICI Bank were trading at Rs 431.80, up 3.9%, on BSE after hitting an intra-day high of Rs 435.35. The stock has risen by over 35% in the last one year.

ICICI Bank’s earnings were driven a healthy growth in net interest income (NII), which rose 26.8% year-on-year to Rs 7,737.43 crore for the June quarter on a strong loan growth of 15%.

“We continued to leverage strong retail franchise, resulting in a 22% year-on-year growth in the retail loan portfolio in Q1. Excluding non-performing and restructured loans, the growth in domestic corporate loans was about 13% y-o-y,” ICICI Bank said in its BSE filing.

Deposits increased by 21% year-on-year to Rs 6.6 lakh crore, with average Casa deposits growth of 12.3% and term deposits growth of 34% in

the June quarter.

ICICI Bank’s net interest margin (NIM) remained strong at 3.61% in the June quarter compared with 3.19% in the year-ago quarter.

Asset quality improved in the June quarter. ICICI Bank’s gross non-performing assets (NPAs), as a percentage of gross advances, declined 21 basis points sequentially to 6.49% during the June quarter, while net NPAs fell 29 basis points to 1.77%. Fresh additions to bad loans stood at Rs 2,779 crore, down from Rs 3,547 crore in the year-ago quarter.

Provisions dropped significantly to Rs 3,495.7 crore in the June quarter, down nearly 36% compared to previous quarter and lower by 41.5% year-on-year.

Jefferies gave a ‘buy’ call on the ICICI Bank stock with target price raised to Rs 480 per share from Rs 455 earlier. It expects improvement in the lender’s core operational profit.

Siddharth Purohit of SMC Institutional Equities also said the bank delivered better-than-expected numbers on all parameters. SMC has a buy call on the stock with a target of Rs 480. “We will probably upgrade our target given encouraging numbers in Q1,” Purohit said.