RESULTS REVIEW 1QFY17

1 AUG 2016

ICICI Bank
BUY
INDUSTRY
CMP (as on 29 July 2016)
Target Price

BANKS
Rs 263
Rs 280

Nifty

8,639

Sensex

28,052

KEY STOCK DATA

Bloomberg

ICICIBC IN

No. of Shares (mn)

5,817

MCap (Rs bn) / ($ mn)

1,529/22,812

6m avg traded value (Rs mn)

4,794

STOCK PERFORMANCE (%)

52 Week high / low

Rs 320/181

3M

6M

12M

Absolute (%)

11.0

14.2

(9.1)

Relative (%)

1.4

1.4

(10.9)

SHAREHOLDING PATTERN (%)

Promoters

FIs & Local MFs

35.01

FIIs

52.58

Public & Others

12.41

Source : BSE

Darpin Shah
[email protected]
+91-22-6171-7328
Parul Gulati
[email protected]
+91-22-6639-3035
Siji Philip
[email protected]
+91-22-6171-7324

Wholesale pain, retail delight

ICICIBCs 1Q results were below expectations with
asset quality issues continuing to hit performance.
Slippages were elevated at 7.5% ann., with the only
solace that 71% was from the watch-list (Rs 45.6bn)
and the restructured book (Rs 13.2bn). Higher
slippages rubbed off negatively on margins (down
21bps QoQ) with consequent interest reversals.
Headline GNPAs were optically stable, aided by sale
to ARCs and write-offs. Sequentially, the watch-list
and the restructured book fell to Rs 387bn (4.1% of
exposure) and Rs 72bn (1.6% of loans).
Overall loan growth was moderate, even as the
domestic book fared relatively better. CASA growth
remains strong. Fees, too, were muted led by
corporate fees.
We have revised our ABV estimates lower by 3% to
factor a drop in margins and higher provisions on
elevated slippages and higher opex growth. A
superior retail franchise (asset, liability and fees),
healthy CRAR, value-accretive subsidiaries and
Financial Summary

valuations (below long term average) at a steep

discount to peers provide us comfort. Maintain BUY
with a revised STOP of Rs 280 (1.6x FY18E core ABV
and sub-value of Rs 63/sh.

(Rs bn)
Net Interest Income
PPOP
PAT
EPS (Rs)
Core ROAE (%)
Core ROAA (%)
Adj. BVPS (Rs)
P/ABV (x)#
P/E (x)#

4QFY16 QoQ (%)

54.05
-4.6%
71.08
-26.6%
7.02 218.0%
1.2 218.0%

1QFY17
51.59
52.15
22.32
3.8

1QFY16
51.15
50.38
29.76
5.1

YoY (%)
0.8%
3.5%
-25.0%
-25.1%

Highlights of the quarter

Headline GNPAs (Rs 272bn, 5.9%) were stable

QoQ, with sale to ARC (Rs 53bn) and higher W/O,

even with elevated slippages at Rs 82.5bn (~71%
from watch-list and relapse). We have revised our
slippages assumption to 3.2% vs. 2.4% over FY1718E.

A sharp NIM decline (40/20bps YoY/QoQ), slower

fee traction (led by corporate fees) and higher

provisions (2.27% ann. +2.6x YoY) dragged net
earnings (Rs 22bn, -25% YoY). With elevated
stress, we see pressure on NIMs (despite a rise in
the domestic book and higher CASA) and elevated
provisions (even as it utilises the contingent
provisions).

Source: Bank, HDFC sec Inst Research; Note : # adjusted for embedded value of subs

FY15
190.4
197.2
111.8
19.3
14.8
1.80
108
1.99
11.1

FY16
212.2
238.6
97.3
16.7
11.1
1.42
113
1.87
12.7

FY17E
229.4
234.8
104.1
17.9
10.7
1.36
119
1.74
11.6

FY18E
257.9
253.7
122.5
21.1
11.6
1.41
136
1.47
9.5

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters

ICICI BANK : RESULTS REVIEW 1QFY17

ICICI Banks persistent stumble on asset quality

Watch-list Exposure
Rs bn
Power
Iron/Steel
Mining
Cement
Rigs
Promoter entity
Total watch-list (A)

1QFY17 Chg (%)

114.3
(4.5)
49.0
(37.0)
77.3
(14.2)
56.7
(14.6)
25.6
1.9
64.4
4.4
387.2
(12.1)

Movement in watch-list
Opening
Reduction in exposure
Rating upgrade
Slippage
Closing

Rs bn
440.7
3.7
4.2
45.6
387.2

continued, led by the large corporate segment

(that characterized the credit boom years of the
early 2010s). We see no respite here unless
there is a (fortuitous) pickup in macros.
Aggregate slippages were higher at Rs 82.5bn
(7.46% ann.) vs. Rs 70bn in 4QFY16 (6.44% ann.).
About 55% of this was from the watch-list (10.3%
of the opening watch-list) and 16% was from the
restructured book (15% of the opening
restructured book).
O/S SDR stood at ~Rs 26bn (largely NPAs or
restructured) and 5:25 at Rs 27bn (standard
assets), with no major incremental SDR or 5:25
or restructuring in the quarter.
Headline GNPAs were optically stable at Rs
272bn (5.9%) with Rs 53bn sale to ARC and
higher write-offs. PCR declined 390bps QoQ to
57%; NNPAs rose ~16% to Rs 150bn (3.35%).
The banks corporate stress watch-list remains at
a worrying Rs 387bn (~4.1% of the total
exposure), even as it declined ~12% QoQ. These
exposures include (1) All internally belowinvestment-grade rated companies in stressed
sectors (iron & steel: Rs 49bn, power: Rs 114bn,
mining: Rs 77bn, rigs: Rs 26bn and cement: Rs
57bn) across domestic corporate, SME and
foreign branches, (2) Promoter entities internally
below investment grade, (3) Fund and nonfund-based exposures, and (4) SDR and 5:25
refinancing. However, it does not include the
standard restructured book of Rs 72bn (1.6% vs.
2.0% QoQ).
We have raised our average slippage estimate
over FY17/18 to 3.2% vs 2.4% earlier. Credit costs
stand revised to ~190bps vs. 150bps in FY17-18E.

Notably, ICICIBC has contingent provisions of Rs

~27.5bn towards the stressed sectors.

We estimate loan CAGR of 16% in FY17-18E.

Domestic loans should rise, led by a gradual

shift to retail in the mix. Improvement in asset
quality in the corporate segment remains
elusive. Growth in retail assets is heartening
and is an increasingly welcome respite from the
limping corporate book. While overall loan
growth was muted at 12.4/3.3% YoY/QoQ, the
growth in retail was strong (22/2% YoY/QoQ),
gaining 360bps YoY in the loan mix to 46%.

With a stated focus on high-rated corporate,

working capital loans and PSUs, domestic

corporate loans grew ~11/7% YoY/QoQ to form
28.4% of loans vs. 27.5% in 4Q. SME growth was
muted (5% YoY and down 4% QoQ) given higher
repayments.

NIMs dropped 21bps QoQ to 3.16% (domestic

NIM at 3.45% vs. 3.73% in 4Q, intl NIM at 1.65%

vs. 1.62% in 4Q). The drop was largely led by
elevated slippages and zero interest on tax
refund vs. Rs 1bn YoY and Rs 0.7bn QoQ.

Average CASA ratio inched up 120bps QoQ to

41.7% with SA growth of ~18%. With elevated
stress, we see pressure on NIMs despite a rise in
the domestic book and higher CASA. We
estimate NIMs at avg. 3.4% in FY17-18.

Core fee income was muted at 2.2/-2.5%

QoQ/YoY. The growth in retail fees was better at
11% YoY and now constitutes 70% of the total
fees. Higher YoY treasury gains (Rs 7.7bn) and
repatriation gains of Rs 2.1bn and dividend
income of Rs 2.9bn cushioned non-interest
income.
Page | 2

ICICI BANK : RESULTS REVIEW 1QFY17

SOTP
Rs bn
1,265
204
53
31
39
46
35
33
15
456
91
364
1,629
1,528
6.6

ICICI Bank
ICICI Life Insurance
ICICI General Insurance
ICICI AMC
ICICI UK
ICICI Canada
ICICI Housing Finance
ICICI Sec
Others
Total Value Of Subsidiaries
Less: 20% Holdco Discount
Net Value Of Subsidiaries
Total Value
Current Value
Upside (%)

Per Share
218
35
9
5
7
8
6
6
3
78
16
63
280
263
6.6

Rationale
1.6x FY17E ABV of Rs 136
16.5% APE CAGR FY16-18E; NBAP Margin at 12%.
10x FY18E PAT
5% of FY18E AUM
1x FY18E BV
1x FY18E BV
1.8x FY18E ABV
10x FY18E PAT
I Ventures and others

Source: HDFC sec Inst Research;

Core P/ABV Chart

3.3

350

2.8

2.5x

300

2.3
1.8

+1SD

250

Avg.

200

-1SD

1.3

2.1x
1.7x
1.3x

150

Jul-16

Jul-15

Jul-14

Jul-13

Jul-12

Jul-11

Jul-10

Jul-09

Jul-16

Jul-15

Jul-14

Jul-13

Jul-12

Jul-11

Jul-10

0.3

Jul-09

50

Jul-08

0.8

Jul-08

100

Source: Bank, HDFC sec Inst Research

Page | 3

ICICI BANK : RESULTS REVIEW 1QFY17

Five Quarters At A Glance

Rs bn
Net Interest Income
Non-interest Income
Treasury Income
Operating Income
Operating Expenses
Pre Provision Profits (PPoP)
Provisions And Contingencies
PBT
Provision For Tax
PAT

1QFY17 YoY Growth QoQ Growth

51.6
0.8%
-4.6%
34.3
14.7%
-32.9%
-64.9%
7.7
271.0%
85.9
6.0%
-18.3%
33.7
10.0%
-1.0%
52.1
3.5%
-26.6%
25.1
163.2%
-63.7%
27.0
-33.9%
1389.4%
-189.9%
4.7
-57.7%
22.3
-25.0%
218.0%

1QFY16
51.2
29.9
2.1
81.0
30.7
50.4
9.6
40.8
11.1
29.8

2QFY16
52.5
30.1
2.2
82.6
31.0
51.6
9.4
42.2
11.8
30.3

3QFY16
54.5
42.2
14.4
96.7
31.1
65.6
28.4
37.2
7.0
30.2

4QFY16
54.0
51.1
21.9
105.1
34.1
71.1
69.3
1.8
(5.2)
7.0

3,679
1,622
3,997
108.7
16.4
12.3

3,846
1,735
4,097
106.5
16.2
12.1

4,073
1,841
4,348
106.7
15.8
11.8

4,214
1,931
4,353
103.3
16.6
13.1

4,241
1,913
4,494
106.0
16.5
13.0

15.3%
17.9%
12.4%
-269 bps
8 bps
76 bps

0.6%
-1.0%
3.3%
269 bps
-19 bps
-7 bps

8.9
6.0
3.5
37.8
27.1

8.8
5.9
3.5
37.5
28.1

8.7
5.8
3.5
32.2
18.8

8.4
5.7
3.4
32.4
(287.2)

8.2
5.7
3.2
39.3
17.3

-70 bps
-38 bps
-38 bps
143 bps
-977 bps

-23 bps
-1 bps
-21 bps
688 bps
NA

151.4
63.3
3.68
1.58
1.70
58.2
3.2

158.6
67.6
3.77
1.65
2.22
57.4
2.9

211.5
99.1
4.7
2.3
6.2
53.2
2.6

262.2
129.6
5.8
3.0
6.4
50.6
2.0

271.9
150.4
5.9
3.4
7.5
44.7
1.6

79.6%
137.5%
219 bps
177 bps
576 bps
-1347 bps
-154 bps

3.7%
16.0%
5 bps
37 bps
102 bps
-587 bps
-36 bps

New
258
254
123
136.0

Change
-1.8%
-1.9%
-7.2%
-3.3%

Balance Sheet items/ratios

Deposits
CASA Deposits
Advances
CD Ratio (%)
CAR (%)
Tier I (%)
Profitability
Yield On Funds (%)
Cost Of Funds (%)
NIM (%)
Cost-Income Ratio (%)
Tax Rate (%)
Asset quality
Gross NPA (Rs bn)
Net NPA (Rs bn)
Gross NPAs (%)
Net NPAs (%)
Delinquency ratio (%)
Coverage Ratio (%)
Restructuring O/s (%)

Change In Estimates
(Rs bn)
NII
PPOP
PAT
Adj. BVPS (Rs)
Source: HDFC sec Inst Research

FY17E
Old
235
231
116
123.7

FY18E
New
229
235
104
119.4

Change
-2.2%
1.7%
-10.5%
-3.5%

Old
263
259
132
140.6

Impacted by interest reversals even as

loans grew ~12%
Fees grew a mere 2% with retail fees
growth of 11% (70% of total fees), Misc.
income includes Rs 2.1bn repatriation
gain and dividend income of Rs 2.9bn
Largely towards LLP; utilised Rs 8.65bn
from contingent provisions
CASA ratio stable QoQ at ~45.1%; avg
CASA ratio jumped 120bps QoQ to 41.7%
Strong growth in retail (22/2% YoY/QoQ)
to form ~46%; corp loans grew ~11/7%
YoY/QoQ
NIMs impacted by higher slippages and
NIL interest on tax refund; domestic NIM
stood at 3.45% (-28bps QoQ) and foreign
NIM at 1.65% (+3bps QoQ)
Watch-list down ~12% to Rs 387bn with
37% decline in iron & steel and ~14%
decline in mining and cement segments
71% of the slippages were led from the
watch-list (Rs 45.6bn) and relapse (Rs
13.2bn); of the remaining slippages, the
management expects to upgrade 30% in
the next two quarters

Page | 4

ICICI BANK : RESULTS REVIEW 1QFY17

Advances Growth Moderate At 12% YoY

Source: Company, HDFC sec Inst Research

33

32

30

30

30

29

29

29

28

29

28

28

36

36

37

39

40

40

41

43

43

44

44

47

46

27

27

28

27

26

26

26

24

24

23

23

22

21

3QFY15

4QFY15

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

4QFY14

1QFY15

3QFY14

2QFY14

1QFY14

1,250

33

2QFY15

1,750

Domestic corporate

1QFY15

2,250

SME

4QFY14

2,750

Retail

3QFY14

3,750

Overseas

17
16
15
14
13
12
11
10

3,250

Corporate loans grew ~11/7%

YoY/QoQ to form 28.4% vs.
27.5% QoQ

Within retail loans, PL and CC

segments delivered higher
growth, albeit on a smaller
base

growth (YoY) (RHS)

%
18

4,250

Retail grew 22/2% YoY/QoQ

to form ~46% of loans

Corporate loan growth was

driven by focus towards highrated corporates, PSUs and
working capital loans

Advances (Rs bn) (LHS)

Rs bn

2QFY14

4,750

Advances Mix: Retail Continues To Gain

1QFY14

The bank continued its

strategy of increasing the
domestic books share led by
retail

Source: Company, HDFC sec Inst Research

Retail Loans Break-up: Unsecured Book At 8.0%

(%)

1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17

Home
55
55
55
Vehicle
23
22
21
Other secured
18
18
19
PL
2
2
3
CC & Others
3
3
3
Source: Company, HDFC sec Inst Research

54
21
20
3
3

54
20
20
3
3

55
19
20
4
3

55
19
20
4
3

54
18
21
4
2

55
18
20
4
2

55
18
20
5
3

55
18
20
5
3

54
17
21
5
3

54
17
21
5
3

Retail unsecured loans stood

at 8.0% vs. 6.8% YoY and 7.7%
QoQ of the retail segment

Over FY16-18E, we expect

16% loan CAGR

Page | 5

ICICI BANK : RESULTS REVIEW 1QFY17

Corporate fees income growth

was muted

12.0
10.0
8.0

46.5
46.0
45.5
45.0
44.5
44.0
43.5
43.0
42.5
42.0
41.5
41.0

20.0
15.0
10.0

6.0

5.0

2.0

Source: Bank, HDFC sec Inst Research

Source: Bank, HDFC sec Inst Research

NIMs Down QoQ

Fee Growth Dragged By Corp Fees

3.0

1.2

0.5

2.8

1.0

Source: Bank, HDFC sec Inst Research

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

1QFY14

3.2

1QFY17

4QFY16

8.0
6.0
4.0
2.0
-

1QFY17

1.0

4QFY16

1.4

3.4

10.0

3QFY16

1.5

2QFY16

1.6

12.0

1QFY16

2.0

3.6

14.0

4QFY15

1.8

3.8

16.0

3QFY15

2.5

2QFY15

2.0

1QFY15

4.0

Fee income Chg (YoY) (RHS)

18.0
%

4QFY14

3.0

3QFY14

Foreign NIM (RHS)

2.2

2QFY14

Domestic NIM

1QFY14

NIM

Fee income % loan (annu)

4.2

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY15

0.0

1QFY14

1,500

4QFY14

4.0

3QFY14

2,500

CASA (%) - RHS

%

2QFY14

2,000

Growth in retail fees was

much better at 11% YoY and
constitutes 70% of the total
fees

14.0

CASA Chg (YoY) (RHS)

25.0

1QFY14

NIMs dropped 21bps QoQ to

3.16% largely owing to higher
slippages

Overall core fees grew a mere

2%

16.0

3,500
3,000

Elevated slippages will lead to

decline in NIMs even as a rise
in the domestic book provides
cushion. We estimate NIMs at
3.4% in FY17/18 vs. 3.6% in
FY16

Chg (YoY) (RHS)

%
18.0

4,000

SA grew ~18/3% and CA grew

~17% YoY (down 10% QoQ)

Domestic NIM at 3.45% vs.

3.73% in 4Q, international
NIM at 1.65% vs. 1.62% in 4Q

CASA Ratio Held Stable

Deposits (Rs bn) (LHS)

Rs bn

4,500

3QFY14

Avg. CASA ratio inched up

120bps QoQ to 41.7%

Deposits Grew At ~15%

2QFY14

CASA grew ~18% YoY to form

~45.1% of deposits

Source: Bank, HDFC sec Inst Research

Page | 6

ICICI BANK : RESULTS REVIEW 1QFY17

Restructured book, too,

declined QoQ to Rs 72.4bn
(1.6% of loans)

4.5
20.0
3.6
28.0
39.7

2.5
19.7
7.6
29.8
40.6

3.9
19.4
5.3
28.5
38.8

Gross Stress Additions Remains Elevated

1.4
21.0
5.0
27.4
37.0

4.4
21.1
5.4
30.9
39.1

7.3
21.4
6.3
35.0
40.8

1
10

2.1
21.1
6.7
29.9
36.9

2.2
22.4
5.5
30.1
36.4

14.4
22.6
5.1
42.1
43.6

21.9
22.1
7.1
51.1
48.6

7.7
21.6
5.1
34.3
39.9

GNPA Rise Contained With ARC Sale

GNPA (Rs bn)
GNPA (%, RHS)

Restructured asset (incl. 5:25)

Slippages

300.0

NNPA (Rs bn)

NNPA (%, RHS)

Source : Bank, HDFC sec Inst Research

17

22

82

5.0
4.0

150.0

3.0

100.0

2.0

50.0

1.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

1QFY17

23

70

4QFY16

17

65

3QFY16

12

20

2QFY16

12

33

30

1QFY16

12

4QFY15

11

14

3QFY15

22

11

2QFY15

20

8
11

17

12

7.0
6.0

250.0
200.0

1QFY15

Watch-list declined ~12% QoQ

to Rs 387.2bn (8.6% of loans)

Treasury
4.0
(0.8)
Fees
17.9
19.9
Others
2.9
2.5
Total
24.8
21.7
% of Total inc
39.4
34.9
Source: Bank, HDFC sec Inst Research

4QFY14

Sale to ARC of Rs 53bn

restricted GNPA rise to a mere
4%

1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17

3QFY14

Slippages of Rs 82.5bn include

relapse of Rs 13.2bn and Rs
45.6bn from the watch-list;
retail slippages stood at Rs
6.4bn

Rs bn

2QFY14

Misc. income includes

repatriation gains of Rs2.1bn,
and dividend income of Rs
2.9bn

Retail Fees (+11% YoY) Form ~70% Of Total Fees

1QFY14

Treasury gains were higher

YoY at Rs 7.7bn

Source: Bank, HDFC sec Inst Research

O/S SDR Rs 26.4bn (largely

NPL or restructured) and O/S
5:25 Rs 27bn (std. assets)

Page | 7

ICICI BANK : RESULTS REVIEW 1QFY17

Peer Valuations
BANK

Mcap CMP
(Rs bn) (Rs)

AXSB
CUB
DCBB
FB
ICICIBC #
IIB
KMB#
BOB
OBC
SBIN#
UNBK
UJJIVAN

1,301
78
32
111
1,529
699
1,399
350
35
1,781
88
60

546
130
111
65
263
1,176
764
152
117
229
127
511

Rating

TP
(Rs)

NEU
BUY
BUY
BUY
BUY
BUY
BUY
BUY
NEU
BUY
NEU
BUY

522
132
115
70
280
1,188
761
170
112
241
133
510

FY16
213
46
58
41
113
285
120
72
138
99
91
118

ABV (Rs)
FY17E FY18E
234
265
52
60
63
71
44
50
119
136
329
383
135
153
88
121
126
160
109
127
110
156
153
169

FY16
15.8
17.5
16.3
23.4
12.7
30.6
57.0
-6.5
26.0
13.2
6.5
29.2

P/E (x)
FY17E FY18E
15.5
13.2
15.8
13.5
18.3
14.5
17.1
13.2
11.6
9.5
23.6
18.6
36.4
29.0
16.1
9.7
8.9
5.3
11.5
8.5
5.3
3.7
23.4
28.8

P/ABV (x)
FY16 FY17E FY18E
2.57
2.34
2.06
2.85
2.50
2.17
1.93
1.76
1.56
1.56
1.48
1.30
1.87
1.74
1.47
4.12
3.57
3.07
5.43
4.67
3.98
2.10
1.72
1.26
0.85
0.93
0.73
1.71
1.59
1.31
1.39
1.16
0.82
4.35
3.35
3.02

ROAE (%)
FY16 FY17E FY18E
16.8
14.8
15.3
15.5
15.1
15.6
11.9
9.5
10.6
6.0
7.8
9.5
11.1
10.7
11.6
16.6
16.0
17.5
11.0
12.5
14.0
-14.4
5.9
9.2
1.2
3.3
5.3
7.9
8.5
10.3
7.0
7.8
10.4
18.3
17.1
10.9

ROAA (%)
FY16 FY17E FY18E
1.67
1.45
1.45
1.50
1.46
1.46
1.10
0.81
0.82
0.55
0.66
0.74
1.42
1.36
1.41
1.82
1.89
1.94
1.41
1.53
1.59
-0.78
0.31
0.47
0.07
0.19
0.29
0.46
0.49
0.57
0.34
0.39
0.51
3.65
3.46
1.88

Source: Company, HDFC sec Inst Research, # Adjusted for embedded value of subs

Page | 8

ICICI BANK : RESULTS REVIEW 1QFY17

Income Statement

Balance Sheet

(Rs bn)

FY14

FY15

FY16

FY17E

FY18E

(Rs bn)

Interest Earned

441.8

490.9

527.4

582.7

662.2

SOURCES OF FUNDS

Interest Expended
Net Interest Income

277.0
164.8

300.5
190.4

315.2
212.2

353.3
229.4

404.3
257.9

Other Income
Fee Income (CEB)
Treasury Income

104.3
63.1
7.7

121.8
69.8
15.5

153.2
74.6
38.0

150.9
85.3
22.5

161.8
98.1
17.5

Total Income

269.0

312.2

365.5

380.3

419.7

Total Operating Exp

103.1

115.0

126.8

145.4

Employee Expense
PPOP

42.2
165.9

47.5
197.2

50.0
238.6

Provisions & Contingencies

Prov. For NPAs (Incl. Std Prov.)
PBT

26.3
25.0
139.7

39.0
35.3
158.2

Provision For Tax

41.6

PAT

98.1

Source: Bank, HDFC sec Inst Research

FY14

FY15

FY16

FY17E

FY18E

Share Capital
Reserves

11.6
720.5

11.6
792.6

11.6
885.7

11.6
956.3

11.6
1,040.5

Shareholders' Funds
Savings
Current

732.1
991.3
432.5

804.2
1,148.6
495.2

897.3
1,342.3
588.7

967.9
1,577.2
647.6

1,052.1
1,837.4
712.3

Term Deposit

1,895.4

1,971.8

2,283.3

2,648.6

3,098.8

165.9

Total Deposits

3,319.1

3,615.6

4,214.3

4,873.4

5,648.6

58.0
234.8

66.9
253.7

Borrowings
Other Liabilities

1,547.7
347.6

1,724.2
317.2

1,748.1
347.3

1,908.1
381.9

2,083.0
420.0

116.7
75.1
122.0

100.5
100.5
134.3

90.4
90.4
163.3

Total Liabilities

5,946.4

6,461.3

7,207.0

8,131.3

9,203.7

46.4

24.7

30.2

40.8

415.3

423.0

598.7

650.7

683.6

111.8

97.3

104.1

122.5

Investments
G-Secs
Advances

1,770.2
958.9
3,387.0

1,581.3
1,056.1
3,875.2

1,604.1
1,106.5
4,352.6

1,747.3
1,242.7
5,048.1

1,924.5
1,412.2
5,874.7

Fixed Assets

46.8

47.3

75.8

77.7

79.6

Other Assets
Total Assets

327.1
5,946.4

534.5
6,461.3

575.7
7,207.0

607.5
8,131.3

641.3
9,203.7

APPLICATION OF FUNDS
Cash & Bank Balance

Source: Bank, HDFC sec Inst Research

Page | 9

ICICI BANK : RESULTS REVIEW 1QFY17

Key Ratios
FY14

FY15

FY16

FY17E

VALUATION RATIOS
EPS (Rs)
Earnings Growth (%)

17.0
17.8

19.3
13.9

16.7
(13.0)

17.9
7.0

21.1
17.7

126.8
99.4
1.73

138.7
108.0
1.80

154.3
113.0
1.42

166.4
119.4
1.36

180.9
136.0
1.41

ROAE (%)

14.9

14.8

11.1

10.7

11.6

P/E (x)

13.0

11.1

12.7

11.6

9.5

P/ABV (x)
P/PPOP (x)

2.2
1.8

1.99
1.5

1.87
1.3

1.74
1.3

1.47
1.2

Dividend Yield (%)

PROFITABILITY
Yield On Advances (%)

1.7

1.9

1.9

2.0

2.3

BVPS (Rs)
Adj. BVPS (Rs)
ROAA (%)

10.0

9.8

9.5

9.3

9.2

Yield On Investment (%)

6.6

6.3

6.7

6.6

6.5

Cost Of Funds (%)

Cost Of Deposits (%)
Core Spread (%)

6.0
5.7
4.0

5.9
5.9
3.9

5.6
5.5
3.9

5.5
5.4
3.7

5.6
5.4
3.6

NIM (%)

3.2

3.5

3.6

3.4

3.4

OPERATING EFFICIENCY
Cost/Avg. Asset Ratio (%)

FY15

FY16

FY17E

FY18E

105.1

149.9

261.2

345.2

351.4

Net NPLs (Rs bn)

Gross NPLs (%)

33.0
3.1

62.6
3.9

129.6
5.8

168.7
6.8

161.9
6.0

Net NPLs (%)

Coverage Ratio (%)
Provision/Avg. Loans (%)

1.0
68.6
0.8

1.6
58.3
1.0

3.0
50.4
1.8

3.3
51.1
2.1

2.8
53.9
1.7

Net Interest Income

2.91%

3.07%

3.11%

2.99%

2.98%

Non-interest Income
Treasury Income

1.84%
0.14%

1.96%
0.25%

2.24%
0.56%

1.97%
0.29%

1.87%
0.20%

Operating Cost
Provisions
Provisions For NPAs

1.82%
0.46%
0.40%

1.85%
0.63%
0.51%

1.86%
1.71%
1.06%

1.90%
1.31%
1.27%

1.91%
1.04%
1.00%

Tax

0.73%

0.75%

0.36%

0.39%

0.47%

1.73%
8.09
14.02%

1.80%
8.08
14.55%

1.42%
8.03
11.43%

1.36%
8.22
11.16%

1.41%
8.58
12.13%

ASSET QUALITY
Gross NPLs (Rs bn)

ROAA TREE

ROAA
Leverage (x)
ROAE
Source: Bank, HDFC sec Inst Research

1.8

1.9

1.9

1.9

1.9

Cost-Income Ratio (Ex. Treasury)

BALANCE SHEET STRUCTURE
Loan Growth (%)

39.4

38.7

38.7

40.7

41.3

16.7

14.4

12.3

16.0

16.4

Deposit Growth (%)

13.4

8.9

16.6

15.6

15.9

102.0
12.3
21.6
42.9
17.7
12.8

107.2
12.4
20.8
45.5
17.0
12.8

103.3
12.5
20.6
45.8
16.6
13.1

103.6
11.9
19.2
45.7
15.8
12.6

104.0
11.4
17.9
45.1
15.0
12.2

C/D Ratio (%)

Equity/Assets (%)
Equity/Advances (%)
CASA (%)
Capital Adequacy Ratio (CAR, %)
W/w Tier I CAR (%)

FY14

FY18E

Page | 10

ICICI BANK : RESULTS REVIEW 1QFY17

RECOMMENDATION HISTORY
ICICI Bank

400

Date
1-Aug-15
2-Nov-15
29-Jan-16
2-May-16
1-Aug-16

TP

350
300

CMP
302
277
233
237
263

Reco
BUY
BUY
BUY
BUY
BUY

Target
382
363
285
274
280

250
200

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

150

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 11

ICICI BANK : RESULTS REVIEW 1QFY17

Disclosure:
We, Darpin Shah, MBA, Parul Gulati, MBA & Siji Philip, MBA, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately
reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or
view(s) in this report.
Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its
Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further
Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest.
Any holding in stock No
Disclaimer:
This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or
arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of
warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for
information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be
construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments.
This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any
locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HDFC
Securities Ltd or its affiliates to any registration or licensing requirement within such jurisdiction.
If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may
not be reproduced, distributed or published for any purposes without prior written approval of HDFC Securities Ltd .
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived
from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk.
It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HDFC Securities Ltd may from time to time solicit from, or perform broking, or other services
for, any company mentioned in this mail and/or its attachments.
HDFC Securities and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies)
mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and
other related information and opinions.
HDFC Securities Ltd, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any
action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the
dividend or income, etc.
HDFC Securities Ltd and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report,
or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.
HDFC Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any
other assignment in the past twelve months.
HDFC Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report
for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or
specific transaction in the normal course of business.
HDFC Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research
report. Accordingly, neither HDFC Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is
not based on any specific merchant banking, investment banking or brokerage service transactions. HDFC Securities may have issued other reports that are inconsistent with and reach
different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served
as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research
Report. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475

HDFC securities
Institutional Equities
Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,
Senapati Bapat Marg, Lower Parel, Mumbai - 400 013
Board : +91-22-6171 7330 www.hdfcsec.com
Page | 12