Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
ICICI Bank: Write-back cushion - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Apr 25, 2003

    ICICI Bank: Write-back cushion

    ICICI Bank, the private sector banking behemoth, posted lackluster 4QFY03 numbers. While the sequential topline growth is healthy at 8%, its bottomline growth is subdued at 2%. What is also noteworthy is the fact that in the March quarter there has been a tax writeback which has led to the bottomline growth. If it were not for the writeback, net profits would have fallen sequentially in the March quarter. The bank also announced its full year results. The year on year comparison is not possible since the bank has now been merged with its parent, ICICI.

    (Rs m) 3QFY03 4QFY03 Change FY03
    Income from Operations 22,587 24,340 7.8% 93,681
    Other Income 5,678 4,094 -27.9% 31,588
    Interest Expenses 19,162 19,956 4.1% 79,440
    Net interest income 3,425 4,384 28.0% 14,241
    Other Expenses 5,206 5,668 8.9% 20,117
    Operating Profit (1,781) (1,284) -27.9% (5,876)
    Operating Profit Margin (%) -7.9% -5.3%   -6.3%
    Provisions and Contingencies 293 -438 -249.2% 17,908
    Profit before Tax 3,604 3,248 -9.9% 7,804
    Extra-ordinary income/(expense) - -   -
    Tax 301 -129 -142.8% -4,258
    Profit after Tax/(Loss) 3,303 3,377 2.2% 12,062
    Net Profit Margin (%) 14.6% 13.9%   12.9%
    No. of Shares (m) 612.6 612.6   612.6
    Diluted Earnings per share* (Rs) 21.6 22.0   19.7
    P/E Ratio (x)   6.0   6.7

    Interest income on advances has grown by 3% on a sequential basis in the March quarter. This seems to have been mainly due the bank's aggressive thrust in to the retail segment. ICICI Bank has cut interest rates aggressively on home loans in order to capture a larger chunk of the market. But what is noticeable about the March quarter is the growth seen in income from investments. The sequential growth from this segment stood at 9%, indicating that the bank is likely to have significantly increased its investments as higher income on current yields is less of a possibility. this could also mean that the bank is facing difficulty in growing its lending business apart form the retail sector.

    (Rs m) 3QFY03 4QFY03 Change
    Interest on advances 15,175 15,608 2.9%
    Income from investments 6,530 7,111 8.9%
    Interest on Balances 357 396 10.9%
    Others 525 1,225 133.4%
    Total 22,587 24,340 7.8%

    There has been an unusual growth in other income, further contributing to the 8% topline growth. Net interest income has therefore shown a robust 28% growth sequentially. This indicates that the bank seems to have managed to reduce its interest costs further. Interest costs fell last quarter too due to the thrust on the retail segment. The same seems to have been the condition in the March quarter too.

    There has been a strong sequential increase in operating expenses of the bank. This is mainly due to the aggressive expansion spree that the bank is undertaking in order to expand its reach. Due to this expansion spree cost to income ratio (which indicates the efficiency of the bank) has suffered. for 4QFY03 this ratio stood at 67% compared to 57% in 3QFY03. For the full year the ratio stood at 44%.

    While the bank's topline as well as net interest income performance has been encouraging, higher other expenses have dampened the effect on the bottomline. In fact if it we do not account for the provisioning writeback and tax write-back we would have seen a sequential decline in net profits for the March quarter. A fall in other income in the March quarter has further restricted the sequential growth in net profits of the bank.

    At Rs 132 the stock is trading at a price to book ratio of 1.2x (not adjusted for NPAs). ICICI Bank has been growing at a blistering pace due to its retail initiatives and it has also done well to pare its exposure to corporate assets. Large amount of NPAs (4.9% of net customer assets) in the books could however restrict the earnings growth. Going forward investors may want to keep a tab on the bank's initiatives to reduce NPAs. Also, aggressive home loan disbursals by the bank should also be viewed cautiously.

    We will put up a detaile analysis shortly.



    Equitymaster requests your view! Post a comment on "ICICI Bank: Write-back cushion". Click here!


    More Views on News

    ICICI Bank: Loan Slippages Trending Downwards (Quarterly Results Update - Detailed)

    Aug 10, 2017

    Asset quality will be the key thing to watch out for going forward.

    ICICI Bank: Provision Costs Up 5 Fold In First Half of FY17 (Quarterly Results Update - Detailed)

    Nov 18, 2016

    ICICI Bank declared the results for the second quarter of financial year ending March 2017 (2QFY17). The bank reported a flattish net interest income while net profits grew by 2.4%YoY in 2QFY17.

    IDFC Bank: Strong Trading Income Shields Credit Slowdown (Quarterly Results Update - Detailed)

    Aug 10, 2017

    IDFC Bank is taking steps to address contracting NIMs and successfully transition in to a retail bank.

    Axis Bank: Outside Watchlist Slippages a Big Worry (Quarterly Results Update - Detailed)

    Jul 31, 2017

    Almost 74% of the watchlist as provided by the bank of Rs 226 billion in FY16 has turned into non-performing assets.

    HDFC Bank: Asset Quality Deteriorates due to Farm Loan Waiver (Quarterly Results Update - Detailed)

    Jul 25, 2017

    Asset quality was under pressure on account of farm loan waivers. Despite the higher provisioning, the company reported a healthy profit growth of 20%.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 18, 2017 (Close)


    • Track your investment in ICICI BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts