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ICICI Bank (IBN) Stock Hits All-Time High as Q2 Earnings Jump

·4-min read

Shares of ICICI Bank IBN surged on the NYSE and touched an all-time high of $22.14 per share. A strong second-quarter fiscal 2022 (ended Sep 30) performance was the primary reason for investor optimism. Net income was INR55.11 billion ($742 million), up 30% from the prior-year quarter.

Results were driven by a rise in net interest income, non-interest income, and growth in loans and deposits. Provisions also declined during the quarter. However, higher operating expenses posed a headwind.

Net Interest Income & Fee Income Up, Expenses Jump

Net interest income rose 25% year over year to INR116.90 billion ($1.6 billion). Net interest margin was 4.00%, up 43 basis points (bps).

Non-interest income (excluding treasury income) was INR44 billion ($593 million), up 26%. Fee income increased 21% to INR38.11 billion ($513 million). Fees from retail, business banking, and SME customers constituted approximately 78% of total fees in the quarter.
Treasury income was INR4 billion ($53 million), down from INR5.42 billion ($73 million) in the year-ago quarter. The prior-year quarter figure included INR3.05 billion ($41 million) of gains from the sale of shares of ICICI Securities.

Operating expenses totaled INR65.72 billion ($885.36 million), soaring 28%.

Loans & Deposits Increase

As of Sep 30, 2021, ICICI Bank’s total advances were INR7,649.37 billion ($103 billion), up 19% year over year. The growth was driven by a solid rise in demand for retail loans, which improved 20% and accounted for 62.1% of total loan balance.

Total deposits also grew 17% to INR9,774.49 billion ($131.7 billion).

Credit Quality Improves

As of Sep 30, 2021, net non-performing assets (NPA) ratio was 0.99%, down 17 bps sequentially. Recoveries and upgrades (excluding write-offs and sale) from NPAs were INR54.82 billion ($739 million) in the quarter.

Gross NPA additions were INR55.78 billion ($751 million), which declined from similar additions of INR72.31 billion ($974 million) in the prior quarter. During the fiscal second quarter, gross NPAs written off were INR17.17 billion ($231 million).

Provisions (excluding provision for tax) fell 9% from the prior-year quarter to INR27.14 billion ($366 million). As of Sep 30, 2021, ICICI Bank held a Covid-19-related provision of INR64.25 billion ($866 million).

Capital Ratios Strong

In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 19.52% and Tier-1 capital adequacy was 18.53% as of Sep 30, 2021. Both the ratios were well above the minimum requirements.

Our Viewpoint

ICICI Bank’s quarterly performance was impressive on the back of a robust rise in demand for consumer loans. Growth in net interest income was a major tailwind, which is expected to support the company's financial performance, going forward. However, elevated expenses are likely to adversely impact the bank’s bottom line. Coronavirus-induced slowdown is a major headwind as well.

ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited Price, Consensus and EPS Surprise
ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited price-consensus-eps-surprise-chart | ICICI Bank Limited Quote

ICICI Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance & Earnings Dates of Other Foreign Banks

Barclays BCS reported third-quarter 2021 net income attributable to ordinary equity holders of £1.45 billion ($2 billion), up significantly from the prior-year quarter. Results were aided by a rise in revenues, partly offset by higher operating expenses. The company recorded a decline in credit impairment charges in the quarter.

HSBC Holdings HSBC reported third-quarter 2021 pre-tax profit of $5.4 billion, up 75.8% from $3.1 billion recorded in the prior-year quarter. Results benefited from net reserve releases and a slight fall in expenses. However, lower adjusted revenues were the undermining factor.

Deutsche Bank DB is scheduled to announce quarterly numbers of Oct 27.

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