ICICI Bank Ltd profit could increase by 36-46%, Net Interest Income projected at 20-24%

For the quarter ended March 2022, ICICI Bank Ltd is expected to announce a robust 36-46 percent year-on-year (YoY) increase in net profit.

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For the quarter ended March 2022, ICICI Bank Ltd is expected to announce a robust 36-46 percent year-on-year (YoY) increase in net profit. When the private lender announces its results on Saturday, April 23, analysts estimate it to report a 20-24 percent increase in net interest income (NII) year over year.

Experts predict that ICICI Bank will continue to have good loan growth, particularly in the SME (small and medium company) segment, with both slippages and provisions projected to fall further, leading in improved earnings.

During the same quarter of the previous financial year, the bank reported a standalone profit after tax (PAT) of Rs 4,403 crore, while its NII (the difference between interest earned and interest expended) was Rs 10,341 crore.

During the current financial year’s October to December period, PAT was Rs 6,194 crore on NII of Rs 12,236 crore.

PAT is expected to rise 46.5 percent on an annualised basis to Rs 6,450 crore, while NII is expected to rise 23.6 percent to Rs 12,890 crore, according to brokerage Motilal Oswal Financial Services. Net interest margins are predicted to stay the same at 4%.

“The bank is becoming a new growth leader in the SME and retail segments aided by continued investments in technology and partnerships with new ecosystem players,” Motilal Oswal said in its report. Over the next four years, the bank intends to grow its loan portfolio by 18 percent on a compound yearly basis.

During the quarter, deposit and loan growth are expected to be 13.5 percent and 16.4 percent, respectively. Gross non-performing assets (NPAs) are predicted to drop 100 basis points (bps) year over year to 4%, and by 10 bps sequentially. Net NPAs are expected to fall by 30 basis points from last year to 0.8 percent this quarter, and by 10 basis points sequentially.

Emkay Research predicts a 36 percent increase in PAT year over year for the quarter, but a 3 percent drop in profit sequentially to Rs 5,996 crore.

On an annualised basis, the NII at Rs 12,814 is expected to rise by 22.8 percent, and by 4.7 percent quarterly. Net interest margins are expected to remain steady at 4% in the next quarters, while improving somewhat on an annual basis.

A study from Emkay Research stated, “Bank to report robust profitability led by better margins, fees, and contained credit cost.” With retail stress subsiding, it anticipates slippages to moderate quarter to quarter. During the quarter, the bank also reversed some of its Covid provisions.

According to a research from Kotak Institutional Equities, “we expect provisions to drop down to 1% of loans given there is negligible risk on asset quality today.”

NII is expected to increase 19.5 percent annually to Rs 12,463 crore, and 1.9 percent sequentially, according to Kotak. The company’s net profit has increased by 63.9 percent to Rs 7,216 crore.

“We build in 1.8 percent (Rs 3,700 crore) slippages”. Kotak said in its analysis, “but we see a good narrative on recovery to continue. Resulting in lesser stress from an asset quality standpoint.”

Commentary on credit cost, net interest margin forecast, asset quality. And movement in stressed loans are expected to be important focus areas, according to experts.

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