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ICICI Bank's (IBN) Q2 Earnings Decline as Costs Increase
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ICICI Bank Ltd. (IBN - Free Report) reported second-quarter fiscal 2018 (ended Sep 30) results on Friday. The company’s net profit plunged 34% year over year to INR20.58 billion ($315 million).
Results were adversely impacted by fall in non-interest income, higher operating expenses and a rise in provisions. However, increase in net interest income (reflecting rise in loans) was not enough to support the profits.
Net Interest Income Growth Offset by Higher Expenses
Net interest income grew 9% year over year to INR57.09 billion ($874 million).
However, non-interest income of INR31.74 billion ($486 million) declined 8% from the prior-year quarter. Notably, it excluded exchange rate gain related to overseas operations and quarterly dividend from ICICI Prudential Life Insurance Company (ICICI Life).
Operating expenses totaled INR39.09 billion ($599 million), increasing 5% year over year.
Loans & Deposits Increase
As of Sep 30, 2017, ICICI Bank’s total advances amounted to INR4,857.80 billion ($73.9 billion), up 6% year over year. The rise was mainly driven by robust growth in the retail segment, with a 19% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 11% from the prior-year quarter to INR4,986.43 billion ($76.4 billion) as of Sep 30, 2017. Moreover, as of the same date, current and savings account ratio came in at 49.5%.
Credit Quality: A Mixed Bag
As of Sep 30, 2017, net nonperforming assets were INR241.30 billion ($3.7 billion), decreasing 5% sequentially. However, provisions and contingencies jumped 115% from the prior quarter to INR45.03 billion ($683 million).
Net loans to companies whose facilities have been restructured were INR20.29 billion ($311 million) as of Sep 30, 2017.
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 17.56% and Tier-1 capital adequacy was 14.50% as of Sep 30, 2017. Both the ratios were well above the minimum requirements.
Our Take
Mounting expenses owing to continued investment in franchise is likely to adversely impact ICICI Bank’s bottom line. Also, deteriorating asset quality continues to be a major near-term concern, which is expected to keep hurting the company's financial performance. However, the company remains well positioned to capitalize on growth opportunities driven by increased dependence on domestic loans and a stable fund base.
ICICI Bank Limited Price, Consensus and EPS Surprise
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, significantly up on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
Credit Suisse Group AG is scheduled to announce third-quarter 2017 results on Nov 2.
Zacks’ Best Private Investment Ideas
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Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
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ICICI Bank's (IBN) Q2 Earnings Decline as Costs Increase
ICICI Bank Ltd. (IBN - Free Report) reported second-quarter fiscal 2018 (ended Sep 30) results on Friday. The company’s net profit plunged 34% year over year to INR20.58 billion ($315 million).
Results were adversely impacted by fall in non-interest income, higher operating expenses and a rise in provisions. However, increase in net interest income (reflecting rise in loans) was not enough to support the profits.
Net Interest Income Growth Offset by Higher Expenses
Net interest income grew 9% year over year to INR57.09 billion ($874 million).
However, non-interest income of INR31.74 billion ($486 million) declined 8% from the prior-year quarter. Notably, it excluded exchange rate gain related to overseas operations and quarterly dividend from ICICI Prudential Life Insurance Company (ICICI Life).
Operating expenses totaled INR39.09 billion ($599 million), increasing 5% year over year.
Loans & Deposits Increase
As of Sep 30, 2017, ICICI Bank’s total advances amounted to INR4,857.80 billion ($73.9 billion), up 6% year over year. The rise was mainly driven by robust growth in the retail segment, with a 19% year-over-year increase in total retail loan portfolio.
ICICI Bank’s total deposits rose 11% from the prior-year quarter to INR4,986.43 billion ($76.4 billion) as of Sep 30, 2017. Moreover, as of the same date, current and savings account ratio came in at 49.5%.
Credit Quality: A Mixed Bag
As of Sep 30, 2017, net nonperforming assets were INR241.30 billion ($3.7 billion), decreasing 5% sequentially. However, provisions and contingencies jumped 115% from the prior quarter to INR45.03 billion ($683 million).
Net loans to companies whose facilities have been restructured were INR20.29 billion ($311 million) as of Sep 30, 2017.
Capital Ratios Improve
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's capital adequacy was 17.56% and Tier-1 capital adequacy was 14.50% as of Sep 30, 2017. Both the ratios were well above the minimum requirements.
Our Take
Mounting expenses owing to continued investment in franchise is likely to adversely impact ICICI Bank’s bottom line. Also, deteriorating asset quality continues to be a major near-term concern, which is expected to keep hurting the company's financial performance. However, the company remains well positioned to capitalize on growth opportunities driven by increased dependence on domestic loans and a stable fund base.
ICICI Bank Limited Price, Consensus and EPS Surprise
ICICI Bank Limited Price, Consensus and EPS Surprise | ICICI Bank Limited Quote
At present, ICICI Bank carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performances & Upcoming Release
Deutsche Bank AG (DB - Free Report) reported net income of €649 million ($762.6 million) in third-quarter 2017, significantly up on a year-over-year basis. Income before income taxes grew 50.7% year over year to €933 million ($1.1 billion).
Barclays PLC’s (BCS - Free Report) third-quarter 2017 net income attributable to ordinary equity holders was £583 million ($763.1 million), reflecting a significant improvement from £190 million in the prior-year quarter.
Credit Suisse Group AG is scheduled to announce third-quarter 2017 results on Nov 2.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>