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ICICI Bank (IBN) Stock Hits All-Time High as Q2 Earnings Jump
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Shares of ICICI Bank (IBN - Free Report) 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.
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
Performance & Earnings Dates of Other Foreign Banks
Barclays (BCS - Free Report) 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 - Free Report) 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 - Free Report) is scheduled to announce quarterly numbers of Oct 27.
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ICICI Bank (IBN) Stock Hits All-Time High as Q2 Earnings Jump
Shares of ICICI Bank (IBN - Free Report) 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-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 - Free Report) 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 - Free Report) 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 - Free Report) is scheduled to announce quarterly numbers of Oct 27.