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ICICI Bank (IBN) Reports Higher Q4 Earnings, Stock Up
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Shares of ICICI Bank Ltd. (IBN - Free Report) were up 8.8% on NYSE following the release of fourth-quarter fiscal 2017 (ended Mar 31, 2017) results. The company’s net profit increased about 189% year over year to INR20.25 billion ($312 million).
Results were primarily supported by higher revenues, backed by solid deposit balances. Further, strong capital ratios were the tailwinds. However, elevated expenses were an offsetting factor.
Revenue Growth More than Offsets Higher Expenses
Net interest income grew 10% year over year to INR59.62 billion ($919 million). Non-interest income was INR30.17 billion ($465 million), up 1% from the prior-year quarter.
Operating expenses totaled INR38.67 billion ($596 million), increasing 14% year over year.
As of Mar 31, 2017, ICICI Bank’s total advances amounted to INR4,642.32 billion ($71.6 billion), up 7% year over year. The rise was mainly driven by a robust growth in the retail segment, with a 19% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 16% from the prior-year quarter to INR4,900.39 billion ($75.6 billion) as of Mar 31, 2017. Moreover, as of the same date, the current and savings account ratio came in at 50.4%.
Deteriorating Credit Quality
ICICI Bank’s credit quality continued to worsen. As of Mar 31, 2017, net nonperforming assets (NPAs) were INR254.51 billion ($3.9 billion), increasing significantly year over year. However, provisions declined 13% year over year to INR28.98 billion ($447 million).
The NPAs reported in the quarter included INR53.78 billion ($829 million) from an account in the cement sector. The company responsible for the account is involved in a M&A transaction, which was awaiting certain approvals as of Mar 31, 2017. As a result, the account has been classified as NPA, per Reserve Bank of India guidelines.
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 17.39% and Tier-1 capital adequacy was 14.36% as of Mar 31, 2017. Both the ratios were well above the minimum requirements.
Our Take
We believe that the company’s increased dependence on domestic loans, focus on improving fee income, a stable fund base and market leadership in the insurance business will continue to generate synergies. Further, the company’s several digital initiatives especially in rural areas are likely to benefit it going forward.
However, a highly competitive operating environment, continuously rising expenses, deteriorating asset quality and stringent regulatory requirements will likely curb ICICI Bank’s bottom-line improvement.
HSBC Holdings plc (HSBC - Free Report) recorded first-quarter 2017 net profit attributable to shareholders of $3.5 billion, down 19% from the year-ago quarter. Basically, the decline reflected absence of Brazil business results, which was divested last July.
Deutsche Bank AG (DB - Free Report) reported net income of €575 million ($612.6 million) for first-quarter 2017, significantly up on a year-over-year basis. Income before income taxes came in at €878 million ($935.4 million), up 52% year over year.
HDFC Bank Ltd. (HDB - Free Report) is scheduled to announce results on May 8.
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ICICI Bank (IBN) Reports Higher Q4 Earnings, Stock Up
Shares of ICICI Bank Ltd. (IBN - Free Report) were up 8.8% on NYSE following the release of fourth-quarter fiscal 2017 (ended Mar 31, 2017) results. The company’s net profit increased about 189% year over year to INR20.25 billion ($312 million).
Results were primarily supported by higher revenues, backed by solid deposit balances. Further, strong capital ratios were the tailwinds. However, elevated expenses were an offsetting factor.
Revenue Growth More than Offsets Higher Expenses
Net interest income grew 10% year over year to INR59.62 billion ($919 million). Non-interest income was INR30.17 billion ($465 million), up 1% from the prior-year quarter.
Operating expenses totaled INR38.67 billion ($596 million), increasing 14% year over year.
As of Mar 31, 2017, ICICI Bank’s total advances amounted to INR4,642.32 billion ($71.6 billion), up 7% year over year. The rise was mainly driven by a robust growth in the retail segment, with a 19% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 16% from the prior-year quarter to INR4,900.39 billion ($75.6 billion) as of Mar 31, 2017. Moreover, as of the same date, the current and savings account ratio came in at 50.4%.
Deteriorating Credit Quality
ICICI Bank’s credit quality continued to worsen. As of Mar 31, 2017, net nonperforming assets (NPAs) were INR254.51 billion ($3.9 billion), increasing significantly year over year. However, provisions declined 13% year over year to INR28.98 billion ($447 million).
The NPAs reported in the quarter included INR53.78 billion ($829 million) from an account in the cement sector. The company responsible for the account is involved in a M&A transaction, which was awaiting certain approvals as of Mar 31, 2017. As a result, the account has been classified as NPA, per Reserve Bank of India guidelines.
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 17.39% and Tier-1 capital adequacy was 14.36% as of Mar 31, 2017. Both the ratios were well above the minimum requirements.
Our Take
We believe that the company’s increased dependence on domestic loans, focus on improving fee income, a stable fund base and market leadership in the insurance business will continue to generate synergies. Further, the company’s several digital initiatives especially in rural areas are likely to benefit it going forward.
However, a highly competitive operating environment, continuously rising expenses, deteriorating asset quality and stringent regulatory requirements will likely curb ICICI Bank’s bottom-line improvement.
At present, ICICI Bank carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ICICI Bank Limited Price and EPS Surprise
ICICI Bank Limited Price and EPS Surprise | ICICI Bank Limited Quote
Other Foreign Banks
HSBC Holdings plc (HSBC - Free Report) recorded first-quarter 2017 net profit attributable to shareholders of $3.5 billion, down 19% from the year-ago quarter. Basically, the decline reflected absence of Brazil business results, which was divested last July.
Deutsche Bank AG (DB - Free Report) reported net income of €575 million ($612.6 million) for first-quarter 2017, significantly up on a year-over-year basis. Income before income taxes came in at €878 million ($935.4 million), up 52% year over year.
HDFC Bank Ltd. (HDB - Free Report) is scheduled to announce results on May 8.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>