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

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ICICI Bank’s IBN 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 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 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 is scheduled to announce second-quarter 2021 results on Jul 28, while HSBC Holdings HSBC will report on Aug 2.

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