We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why is ICICI Bank (IBN) Stock Up Despite Dismal Q4 Earnings?
Read MoreHide Full Article
ICICI Bank Ltd. (IBN - Free Report) announced fourth-quarter and fiscal 2018 (ended Mar 31) results. Its quarterly net profit plunged 50% year over year to INR10.20 billion ($157 million). Similarly, the bank’s fiscal 2018 net profit of INR67.77 billion ($1 billion), declined 31% from last year.
Despite the dismal performance, shares of ICICI Bank gained 4.3% on the NYSE on Monday. Perhaps improvement in fee income was the primary reason for the bullish investor sentiment.
Results were adversely impacted by drastic rise in provisions and an increase in operating expenses. However, a slight rise in net interest income, higher fee income and improving loan and deposit balances were the tailwinds.
Non-Interest Income Growth Offset by Expense Rise
Net interest income inched up 1% year over year to INR60.22 billion ($924 million). Net interest margin was 3.24%.
Also, non-interest income of INR56.78 billion ($871 million) surged 88% from the prior-year quarter. The rise was driven by gain on sale of shareholding in ICICI Securities. Notably, fee income increased 13% from the year-ago quarter to INR27.55 billion ($432 million).
Operating expenses totaled INR41.86 billion ($642 million), increasing 8% year over year.
Loans & Deposits Increase
As of Mar 31, 2018, ICICI Bank’s total advances amounted to INR5,123.95 billion ($78.6 billion), up 10% year over year. The rise was mainly driven by robust growth in the retail segment, with a 21% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 14% from the prior-year quarter to INR5,609.75 billion ($86.1 billion) as of Mar 31, 2018. Moreover, as of the same date, current and savings account ratio was 51.7%.
Credit Quality: A Mixed Bag
As of Mar 31, 2018, net nonperforming assets ratio was 4.77%, decreasing 12 basis points year over year. Net loans to companies whose facilities have been restructured were INR15.53 billion ($238 million) as of Mar 31, 2018.
However, provisions and contingencies jumped significantly from the prior quarter to INR66.26 billion ($1 billion).
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 18.42% and Tier-1 capital adequacy was 15.92% as of Mar 31, 2018. Both the ratios were well above the minimum requirements.
Our Take
Mounting expenses owing to continued investment in franchise are likely to adversely impact ICICI Bank’s bottom line. Also, deteriorating asset quality continues to be a major near-term concern, which is expected to keep hurting the company's financial performance. However, it remains well positioned to capitalize on growth opportunities driven by increased dependence on domestic loans and a stable fund base.
ICICI Bank Limited Price, Consensus and EPS Surprise
UBS Group AG (UBS - Free Report) reported first-quarter 2018 net profit attributable to shareholders of CHF 1.5 billion ($1.6 billion), up around 19% from the prior-year quarter. Results displayed rise in net fee and commission income (up 3% year over year) and higher net interest income (up 3% year over year). However, the quarter reflected elevated expenses.
Barclays (BCS - Free Report) incurred first-quarter 2018 net loss attributable to ordinary equity holders of £764 million ($1.06 billion). Net income attributable to ordinary equity holders was £190 million ($248 million) in the prior-year quarter. A fall in interest income and muted underwriting fees acted as headwinds. However, lower expenses, rise in trading income and decline in credit impairment charges supported the results.
HSBC Holdings (HSBC - Free Report) recorded first-quarter 2018 pre-tax profit of $4.8 billion, down 4% year over year. Further, net income attributable to shareholders of $3.1 billion reflect 1% fall from the year-ago quarter. Results were adversely impacted by increase in operating expenses as the company continued to invest in growth programs. On the other hand, higher revenues and a decline in loan impairment charges acted as tailwinds.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Why is ICICI Bank (IBN) Stock Up Despite Dismal Q4 Earnings?
ICICI Bank Ltd. (IBN - Free Report) announced fourth-quarter and fiscal 2018 (ended Mar 31) results. Its quarterly net profit plunged 50% year over year to INR10.20 billion ($157 million). Similarly, the bank’s fiscal 2018 net profit of INR67.77 billion ($1 billion), declined 31% from last year.
Despite the dismal performance, shares of ICICI Bank gained 4.3% on the NYSE on Monday. Perhaps improvement in fee income was the primary reason for the bullish investor sentiment.
Results were adversely impacted by drastic rise in provisions and an increase in operating expenses. However, a slight rise in net interest income, higher fee income and improving loan and deposit balances were the tailwinds.
Non-Interest Income Growth Offset by Expense Rise
Net interest income inched up 1% year over year to INR60.22 billion ($924 million). Net interest margin was 3.24%.
Also, non-interest income of INR56.78 billion ($871 million) surged 88% from the prior-year quarter. The rise was driven by gain on sale of shareholding in ICICI Securities. Notably, fee income increased 13% from the year-ago quarter to INR27.55 billion ($432 million).
Operating expenses totaled INR41.86 billion ($642 million), increasing 8% year over year.
Loans & Deposits Increase
As of Mar 31, 2018, ICICI Bank’s total advances amounted to INR5,123.95 billion ($78.6 billion), up 10% year over year. The rise was mainly driven by robust growth in the retail segment, with a 21% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 14% from the prior-year quarter to INR5,609.75 billion ($86.1 billion) as of Mar 31, 2018. Moreover, as of the same date, current and savings account ratio was 51.7%.
Credit Quality: A Mixed Bag
As of Mar 31, 2018, net nonperforming assets ratio was 4.77%, decreasing 12 basis points year over year. Net loans to companies whose facilities have been restructured were INR15.53 billion ($238 million) as of Mar 31, 2018.
However, provisions and contingencies jumped significantly from the prior quarter to INR66.26 billion ($1 billion).
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 18.42% and Tier-1 capital adequacy was 15.92% as of Mar 31, 2018. Both the ratios were well above the minimum requirements.
Our Take
Mounting expenses owing to continued investment in franchise are likely to adversely impact ICICI Bank’s bottom line. Also, deteriorating asset quality continues to be a major near-term concern, which is expected to keep hurting the company's financial performance. However, it remains well positioned to capitalize on growth opportunities driven by increased dependence on domestic loans and a stable fund base.
ICICI Bank Limited Price, Consensus and EPS Surprise
ICICI Bank Limited Price, Consensus and EPS Surprise | ICICI Bank Limited Quote
ICICI Bank currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Foreign Banks
UBS Group AG (UBS - Free Report) reported first-quarter 2018 net profit attributable to shareholders of CHF 1.5 billion ($1.6 billion), up around 19% from the prior-year quarter. Results displayed rise in net fee and commission income (up 3% year over year) and higher net interest income (up 3% year over year). However, the quarter reflected elevated expenses.
Barclays (BCS - Free Report) incurred first-quarter 2018 net loss attributable to ordinary equity holders of £764 million ($1.06 billion). Net income attributable to ordinary equity holders was £190 million ($248 million) in the prior-year quarter. A fall in interest income and muted underwriting fees acted as headwinds. However, lower expenses, rise in trading income and decline in credit impairment charges supported the results.
HSBC Holdings (HSBC - Free Report) recorded first-quarter 2018 pre-tax profit of $4.8 billion, down 4% year over year. Further, net income attributable to shareholders of $3.1 billion reflect 1% fall from the year-ago quarter. Results were adversely impacted by increase in operating expenses as the company continued to invest in growth programs. On the other hand, higher revenues and a decline in loan impairment charges acted as tailwinds.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>