ICICI Bank's Profit Shoots Up in Q4 - Analyst Blog
April 27 2012 - 11:15AM
Zacks
ICICI Bank Limited’s (IBN) fiscal
fourth-quarter 2012 (ended March 31, 2012) came in at INR19.02
billion ($374 million), reflecting an impressive 31% rise from
INR14.52 billion ($285 million) recorded in the year-ago
quarter.
For the fiscal year ended 2012, ICICI bank’s net income saw a
26% improvement from the prior year to INR64.65 billion ($1.3
billion).
Results in the quarter improved primarily due to higher net
interest income, fee income and a fall in loan loss provisions.
Further, asset quality continued to show signs of betterment and
the capital ratios remained strong. However, higher operating
expenses were the headwinds.
Behind the Headlines
ICICI Bank’s net interest income surged 24% year over year to
INR31.05 billion ($610 million) from INR25.10 billion ($493
million) reported in the prior-year quarter.
Similarly, non-interest income also improved 36% year over year
to INR22.28 billion ($438 million) from INR16.41 billion ($323
million).
Operating expenses for the quarter totaled INR21.60 billion
($426 million), up 20.7% year over year. The increase was primarily
a result of the expansion in branch network.
ICICI Bank has the largest branch network among private sector
banks in India. As of March 31, 2012, the bank had 2,752 branches
and 9006 ATMs.
Provisions for the reported quarter declined 22.1% year over
year to INR4.69 billion ($92 million).
Asset Quality
ICICI Bank witnessed continuous improvement in asset quality
during the reported quarter. As of March 31, 2012, net
nonperforming assets were INR18.94 billion ($372 million) shrinking
23% from INR24.59 billion ($483 million) in the prior-year quarter.
Also, the bank's net nonperforming asset ratio stood at 0.62%,
declining 32 basis points from the year-ago period.
Balance Sheet
As of March 31, 2012, ICICI Bank’s total advances were INR2537.3
billion ($49.9 billion), rising 17% from INR2163.7 billion ($42.5
billion) as of March 31, 2011.
In the quarter under review, ICICI Bank’s savings account
deposits totaled INR760.46 billion ($14.9 billion), while current
account deposits were INR349.73 billion ($6.9 billion). Moreover,
as of March 31, 2012, the current and savings account (CASA) ratio
was 43.5% compared with 43.6% in the year-ago quarter.
Capital Ratios
As per the Reserve Bank of India's Basel II norm, ICICI Bank's
capital adequacy was 18.52% and Tier-1 capital adequacy was 12.68%
as of March 31, 2012, well above the requirements of 9.0% and 6.0%,
respectively.
Dividend Update
Concurrent with the earnings releases the company’s Board of
Directors has recommended a dividend of INR16.50 per equity share
(equivalent to $0.65 per ADS) for fiscal year 2012. The
declaration and payment of dividend is subject to mandatory
approvals and record/book closure dates will be announced in due
course.
Peer Performance
HDFC Bank Ltd. (HDB) reported fiscal
fourth-quarter 2012 (ended March 31, 2012) net profit of INR14.53
billion ($0.28 billion), up 30.4% over the prior-year quarter. The
quarterly results benefited mainly from strong growth in net
revenue and a drop in provisions and contingencies (primarily
comprising loan loss provisions). These were partially offset by
higher operating expenses.
Our Take
We anticipate continued synergies from ICICI Bank’s increased
dependence on domestic loans, almost stable funding base, improving
asset mix and enhanced pricing power. Nevertheless, we are
concerned about the company’s highly competitive operating
environment and below-average credit quality.
ICICI Bank currently retains a Zacks #2 Rank, which translates
into a short-term Buy rating.
HDFC BANK LTD (HDB): Free Stock Analysis Report
ICICI BANK LTD (IBN): Free Stock Analysis Report
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