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ICICI Bank’s (IBN - Free Report) third-quarter fiscal 2021 (ended Dec 31) net income was INR49.40 billion ($676 million), up 19% from INR41.46 billion ($567 million) in the prior-year quarter.
The company’s shares on the NYSE have rallied 10% in the pre-market trading. A full day’s trading session will provide a better picture.
Results were driven by a rise in net interest income, and growth in loans and deposits. However, provisions surged owing to coronavirus-related concerns. Also, decline in non-interest income and higher operating expenses were headwinds.
Net Interest Income Up, Expenses Rise
Net interest income rose 16% year over year to INR99.12 billion ($1.4 billion). Net interest margin was 3.67%, down 10 basis points.
Non-interest income (excluding treasury income) was INR39.21 billion ($537 million), down 3% from the prior-year quarter. Fee income, however, increased marginally to INR36.01 billion ($493 million).
Further, treasury income was INR7.66 billion ($105 million), up 44% from the year-ago quarter. During the reported quarter, the company sold 2.2% stake in ICICI Securities, which resulted in gains of INR3.29 billion ($45 million).
Operating expenses totaled INR57.79 billion ($790.89 million), up 4% year over year.
Loans & Deposits Increase
As of Dec 31, 2020, ICICI Bank’s total advances amounted to INR6,990.17 billion ($87 billion), up 10% year over year. Total deposits grew 22% to INR8,743.48 billion ($119.7 billion).
Credit Quality Worsening
As of Dec 31, 2020, net nonperforming assets (NPA) ratio was 1.26%. Recoveries and upgrades (excluding write-offs) from non-performing loans were INR17.76 billion ($243 million) in the quarter. Further, gross NPA additions were INR4.71 billion ($64 billion).
Provisions (excluding provision for tax) rose 32% from the prior-year quarter to INR27.42 billion ($375 million). During the quarter, the company made contingency provision amounting to INR30.12 billion ($412 million) for borrower accounts not classified as non-performing pursuant to the interim order of the Supreme Court. Further, it utilized INR18 billion ($246 million) of Covid-19 related provisions made in the prior quarters.
As of Dec 31, 2020, ICICI Bank held Covid-19-related provision of INR99.84 billion ($1.2 billion).
Capital Ratios Strong
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 19.51% and Tier-1 capital adequacy was 18.12% as of Dec 31, 2020. Both the ratios were well above the minimum requirements.
Our Take
ICICI Bank’s quarterly performance was decent. 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. Also, coronavirus-induced market mayhem is a major headwind.
ICICI Bank Limited Price, Consensus and EPS Surprise
Performance & Earnings Dates of Other Foreign Banks
UBS Group AG (UBS - Free Report) reported fourth-quarter 2020 net profit attributable to shareholders of $1.71 billion, up significantly from $722 million in the prior-year quarter.
HSBC Holdings (HSBC - Free Report) and Barclays (BCS - Free Report) are scheduled to announce results on Feb 18 and Feb 23, respectively.
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ICICI Bank's (IBN) Q3 Earnings Rise Y/Y, Provisions Jump
ICICI Bank’s (IBN - Free Report) third-quarter fiscal 2021 (ended Dec 31) net income was INR49.40 billion ($676 million), up 19% from INR41.46 billion ($567 million) in the prior-year quarter.
The company’s shares on the NYSE have rallied 10% in the pre-market trading. A full day’s trading session will provide a better picture.
Results were driven by a rise in net interest income, and growth in loans and deposits. However, provisions surged owing to coronavirus-related concerns. Also, decline in non-interest income and higher operating expenses were headwinds.
Net Interest Income Up, Expenses Rise
Net interest income rose 16% year over year to INR99.12 billion ($1.4 billion). Net interest margin was 3.67%, down 10 basis points.
Non-interest income (excluding treasury income) was INR39.21 billion ($537 million), down 3% from the prior-year quarter. Fee income, however, increased marginally to INR36.01 billion ($493 million).
Further, treasury income was INR7.66 billion ($105 million), up 44% from the year-ago quarter. During the reported quarter, the company sold 2.2% stake in ICICI Securities, which resulted in gains of INR3.29 billion ($45 million).
Operating expenses totaled INR57.79 billion ($790.89 million), up 4% year over year.
Loans & Deposits Increase
As of Dec 31, 2020, ICICI Bank’s total advances amounted to INR6,990.17 billion ($87 billion), up 10% year over year. Total deposits grew 22% to INR8,743.48 billion ($119.7 billion).
Credit Quality Worsening
As of Dec 31, 2020, net nonperforming assets (NPA) ratio was 1.26%. Recoveries and upgrades (excluding write-offs) from non-performing loans were INR17.76 billion ($243 million) in the quarter. Further, gross NPA additions were INR4.71 billion ($64 billion).
Provisions (excluding provision for tax) rose 32% from the prior-year quarter to INR27.42 billion ($375 million). During the quarter, the company made contingency provision amounting to INR30.12 billion ($412 million) for borrower accounts not classified as non-performing pursuant to the interim order of the Supreme Court. Further, it utilized INR18 billion ($246 million) of Covid-19 related provisions made in the prior quarters.
As of Dec 31, 2020, ICICI Bank held Covid-19-related provision of INR99.84 billion ($1.2 billion).
Capital Ratios Strong
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 19.51% and Tier-1 capital adequacy was 18.12% as of Dec 31, 2020. Both the ratios were well above the minimum requirements.
Our Take
ICICI Bank’s quarterly performance was decent. 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. Also, coronavirus-induced market mayhem is a major headwind.
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
UBS Group AG (UBS - Free Report) reported fourth-quarter 2020 net profit attributable to shareholders of $1.71 billion, up significantly from $722 million in the prior-year quarter.
HSBC Holdings (HSBC - Free Report) and Barclays (BCS - Free Report) are scheduled to announce results on Feb 18 and Feb 23, respectively.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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