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ICICI Bank's (IBN) Q1 Earnings Up Y/Y, Provisions Decline

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ICICI Bank’s (IBN - Free Report) first-quarter fiscal 2022 (ended Jun 30) net income was INR46.16 billion ($621 million), up 78% 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, mainly driven by reserve releases. However, higher operating expenses posed a headwind.

Net Interest Income & Fee Income Up, Expenses Jump

Net interest income rose 18% year over year to INR109.36 billion ($1.5 billion). Net interest margin was 3.89%, up 20 basis points (bps).

Non-interest income (excluding treasury income) was INR37.06 billion ($499 million), up 56%. Fee income surged 53% to INR32.19 billion ($433 million).

Treasury income was INR2.9 billion ($39 million), down substantially from INR37.63 billion ($506 million) in the year-ago quarter. The prior-year quarter figure included INR30.36 billion ($408 million) of gains from sale of shares of subsidiaries.

Operating expenses totaled INR60.37 billion ($812.82 million), soaring 30%.

Loans & Deposits Increase

As of Jun 30, 2021, ICICI Bank’s total advances were INR7,385.98 billion ($99.4 billion), up 17% year over year. Total deposits grew 16% to INR9,262.24 billion ($124.6 billion).

Credit Quality Improves

As of Jun 30, 2021, net non-performing assets (NPA) ratio was 1.16%, up 2 bps sequentially. Recoveries and upgrades (excluding write-offs and sale) from non-performing loans were INR36.27 billion ($488 million) in the quarter.

Gross NPA additions were INR36.04 billion ($485 billion).

Provisions (excluding provision for tax) plunged 62% from the prior-year quarter to INR28.52 billion ($384 million). During the quarter, the company changed its policy on non-performing loans. The change in policy resulted in higher provision on non-performing advances amounting to INR11.27 crore ($152 million) for aligning provisions on outstanding loans, per the revised policy.

Also, the company wrote back Covid-19-related provisions of INR10.5 billion ($141 million) during the reported quarter. As of Jun 30, 2021, ICICI Bank held Covid-19-related provision of INR64.25 billion ($864 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 19.27% and Tier-1 capital adequacy was 18.24% as of Jun 30, 2021. 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. 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-eps-surprise-chart | 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 & Earnings Dates of Other Foreign Banks

UBS Group AG (UBS - Free Report) reported second-quarter 2021 net profit attributable to shareholders of $2 billion, up 63% from the prior-year quarter. The company’s performance was supported by a 29% increase in net fee and commission income, year over year, along with a 17% rise in net interest income. Net credit loss release acted as a tailwind as well. However, rise in expenses was an undermining factor.

Barclays (BCS - Free Report) is scheduled to announce second-quarter 2021 results on Jul 28, while HSBC Holdings (HSBC - Free Report) will report on Aug 2.


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