Customers wait for their turn to withdraw cash from an ATM at the ICICI Bank Connaught Place branch in New Delhi, India (Photographer: Amit Bhargava/Bloomberg News)

Q4 Results: What Brokerages Made Of ICICI Bank’s Performance

Analysts seemed upbeat on ICICI Bank Ltd. as the private lender’s asset quality improved in the quarter ended March.

The bank’s gross non-performing assets ratio fell to 6.7 percent from 7.75 percent last quarter, according to its exchange filing. Its net NPA also contracted to lowest in 13 quarters to 2.06 percent from 2.58 percent in the preceding three months.

But the bank’s provisions rose more than 28 percent sequentially to Rs 5,451 crore. That hurt its profit. ICICI Bank’s net profit fell 5 percent over the last year to Rs 969 crore in the January-March period.

The bank’s gross slippages also rose 69 percent over the preceding quarter to Rs 3,547 crore.

Also read: Q4 Results: ICICI Bank’s Profit Misses Estimates, Asset Quality Improves

Here’s the first cut of what the brokerages make of the bank’s earnings:

Antique Broking

  • Decent set of results.
  • Builds up provision coverage to strengthen balance sheet.
  • Building up of coverage ratio, strong CASA ratio and high tier- 1 capital ratio should lay a foundation for a better financial year 2020.

Morgan Stanley

  • Control of funding cost should help drive core pre-provision operating profit in FY20.
  • Credit costs were high as the bank provisioned and wrote off aggressively.
  • ICICI Bank's valuation remains attractive relative to other Indian financial stocks.
  • Strong balance sheet, improving earnings and attractive multiple imply upside potential.

Phillip Capital

  • Maintains ‘Buy’ on inexpensive valuations and a visible turnaround in the NPA cycle with a target of Rs 450 apiece.
  • Net interest income includes one-off pertaining to interest on income tax refund of Rs 414 crore.
  • Slippage includes Renuka Sugar whose payment obligations are being met but has been classified as an NPA pursuant to regulatory interpretation.
  • As the bank enters the ‘NPA recovery’ phase, factors like high credit growth, recovery of NPAs, and margin improvement should trigger earnings upgrades.


  • Core pre-provision operating profit is strong, but provisions dragged the earnings.
  • Slippages and credit costs likely to moderate; sees steady improvement in net interest margin.
  • Strong pre-provision operating profit growth and lower credit costs should drive earnings growth.


  • Profit was below estimate due to higher credit costs.
  • Slippage higher but visibility for normalised credit cost rises.
  • Pick-up in current account-savings account (CASA) deposit growth key to loan growth, and new initiatives can help.
  • Management reiterated its consolidated return on equity target of 15 percent by June 2020.

Credit Suisse

  • Operating profitability continues to improve.
  • Management is confident of further improvement in net interest margins.
  • Bank is well-positioned to sustain the pick up in loan growth.
  • Expect return on equities to improve to 14 percent in FY20.

Deutsche Bank

  • Path of recovery is getting stronger for the bank.
  • Expect better growth, higher net interest margins and sharply lower credit costs.
  • Better visibility for over 15 percent return on equities in FY21.

Edelweiss Broking

  • Sustained core operating momentum and strengthening of balance sheet.
  • Fourth-quarter reaffirms our confidence that the bank will clock 17 percent return on equities by FY21.
  • Well geared for the next cycle with improved traction in quality assets and improved net interest margins.


  • Results were slightly disappointing on CASA slowdown and operating expenses pick-up.
  • Slowing CASA and operating expenses growth pick up highlight challenges on return on equity expansion.
  • High provisions drag fourth quarter’s earnings, but stressed assets continue to shrink.
  • Visibility for return on equity expansion is low.


  • Earnings came in below expectations on account of higher provisions.
  • Believe that the "peak non-performing loans" hypothesis is now well discounted in stock price.
  • The deposit franchise at ICICI continues to be rock solid.

Macquarie Group

  • Profit after tax missed estimates on higher provisions, write-offs.
  • Build in around 1.25 percent credit costs over FY20-22 and exit FY21 return on equity of 14.5 percent.
  • Management did not quantify their exposure to Jet Airways or comment on the provisions.
  • ICICI Bank is a global Macquarie Marquee Idea and our preferred play on asset quality normalization theme.


  • Expect net interest margins to gradually trend up and that coupled with normalising credit costs.
  • Believe current valuation at 1.6 times FY21 stress adjusted book is still undemanding
  • ICICI Bank remains one of our preferred sector picks.

UBS Group

  • Better margin trends partly offset by higher credit cost guidance.
  • Higher provisions expenses and higher operating expenses led to earnings miss despite higher net interest income.
  • Continue to prefer ICICI for its strong retail franchise and inexpensive valuations.