ICICI Bank

Money Times - - Best Bet -

(BSE Code: 532174) (CMP: Rs.354.30) (FV: Rs.2) By Amit Ku­mar Gupta

In­cor­po­rated in 1955, ICICI Bank, to­gether with its sub­sidiaries, pro­vides bank­ing and fi­nan­cial ser­vices. It op­er­ates through the fol­low­ing seg­ments - Re­tail Bank­ing, Whole­sale Bank­ing, Trea­sury, Other Bank­ing, Life In­sur­ance, Gen­eral In­sur­ance and Oth­ers. It of­fers sav­ings, salary, pen­sion, cur­rent, other ac­counts and fixed, re­cur­ring and se­cu­rity de­posits. It also pro­vides home, car, two-wheeler, per­sonal, gold and com­mer­cial busi­ness loans as well as loans against

se­cu­ri­ties; busi­ness loans such as work­ing cap­i­tal fi­nance, term loans, col­lat­eral free loans, fi­nance for im­porters and ex­porters, se­cured loans for credit card swipes as well as loans for new en­ti­ties, schools and col­leges; and credit, debit, pre­paid, travel and cor­po­rate cards. In ad­di­tion, it of­fers life, health, travel, car, two-wheeler, home and stu­dent med­i­cal in­sur­ance prod­ucts; pock­ets wal­let; fixed in­come prod­ucts; in­vest­ment prod­ucts such as mu­tual funds, gold mon­e­ti­za­tion schemes and ini­tial pub­lic of­fer­ings (IPOs); on­line in­vest­ment ser­vices; farmer fi­nance, trac­tor loans and mi­cro bank­ing ser­vices; and agri-re­lated ser­vices. It also pro­vides port­fo­lio man­age­ment, trade, for­eign ex­change, locker, pri­vate and NRI bank­ing and cash man­age­ment ser­vices; fam­ily wealth and de­mat ac­counts; com­mer­cial bank­ing, in­vest­ment bank­ing, cap­i­tal mar­kets, cus­to­dial, project and tech­nol­ogy fi­nance and in­sti­tu­tional bank­ing ser­vices as well as in­ter­net, mo­bile and phone bank­ing ser­vices. As at 31 March 2018, it had a net­work of 4,867 branches and 14,367 ATMs.

The key strate­gic point­ers of ICICI Bank’s Q2FY19 re­sults were: (1) Gross slip­page was Rs.31.17 bil­lion com­pared to a 8quar­ter aver­age of Rs.80.46 bil­lion till Q4FY18, which in­di­cates that the Bank has en­tered a lower slip­page regime; (2) Global NIM (net in­ter­est mar­gin) im­proved by 14 bps QoQ to 3.33%, driven en­tirely by ex­pan­sion in do­mes­tic NIM; (3) Core fee in­come grew 16.5% YoY; (4) NII (net in­ter­est in­come) grew 12% YoY to Rs.64176 mil­lion; and (5) PAT de­clined 56% YoY at Rs.9089 mil­lion.

Of the to­tal cor­po­rate slip­page of Rs.23.57 bil­lion, Rs.10.14 bil­lion of slip­page emerged from the sub-in­vest­ment grade cor­po­rate and SME credit, which is the non-re­tail loan book stress pipe­line su­per­set. This de­fined sub-in­vest­ment grade credit now stands at Rs.217.88 bil­lion, which is 192 bps of Q1FY19 to­tal credit (in­clud­ing non-fund). For the to­tal loan book, sub-in­vest­ment grade loans had a 6.8% share. Net se­cu­rity re­ceipts stood at Rs.34.36 bil­lion, which was no­tion­ally 63 bps of the loan book. PCR (pro­vi­sion cov­er­age ra­tio) with and with­out writ­ten-off ac­counts stood at a healthy 69.4% and 58.9% re­spec­tively.

Do­mes­tic NIM im­proved to 3.71% on the back of (1) in­ter­est cost con­trol driven by (a) not ag­gres­sively par­tic­i­pat­ing in bid­ding for whole­sale de­posits; (b) tak­ing re­course to rel­a­tively low-cost re­fi­nance bor­row­ings; (2) Yield im­prove­ment of 8 bps QoQ to 8.79% on the back of MCLR re­sets and loan mix change. While the share of do­mes­tic re­tail re­mained largely static QoQ at 57.3% of the global loan book, trac­tion in higher yield­ing re­tail seg­ment such as busi­ness bank­ing (up 45% YoY to 5% share in re­tail book) and un­se­cured loans (up 43% YoY to 11.4% share) was salu­tary.

Tech­ni­cal Out­look: The stock looks good on the daily chart for medium-term in­vest­ment. It has formed a ‘cup and han­dle’ pat­tern on the weekly chart and trades above all im­por­tant mov­ing av­er­ages like the 200 DMA level on the daily chart.

Start ac­cu­mu­lat­ing at this level of Rs.354.30 and on dips to Rs.324 for medium-to-long term in­vest­ment and a pos­si­ble price tar­get of Rs.420+ in the next 12 months.

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