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ICICI Bank (IBN) Stock Jumps 6.1% as Q1 Earnings Increase
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Shares of ICICI Bank (IBN - Free Report) have rallied 6.1% on the NYSE since the release of its first-quarter fiscal 2020 (ended Jun 30) results. Net income was INR19.08 billion ($276 million) against net loss of INR1.2 billion ($17 million) in the prior-year quarter.
Results were driven by rise in revenues and growth in loans and deposits. Further, credit costs declined. However, an increase in operating expenses is a headwind.
Revenue Components Grow, Expenses Rise
Net interest income jumped 27% year over year to INR77.37 billion ($1.1 billion). Net interest margin was 3.61%, up 42 basis points (bps).
Non-interest income, excluding treasury income, came in at INR32.47 billion ($470 million), up 5% from the prior-year quarter. Notably, fee income increased 10% to INR30.39 billion ($447 million). Additionally, treasury income was INR1.79 billion ($26 million), down 77%.
Operating expenses totaled INR48.74 billion ($601 million), increasing 18% year over year.
Loans & Deposits Increase
As of Jun 30, 2019, ICICI Bank’s total advances amounted to INR5,924.15 billion ($85.8 billion), up 15% year over year. The rise was mainly driven by 22% loan growth in the retail segment.
Total deposits grew 21% to INR6,607.32 billion ($95.7 billion) as of Jun 30, 2019. Also, as of the same date, current and savings account ratio was 43.4%.
Credit Quality Improves
As of Jun 30, 2019, net nonperforming assets (NPA) ratio was 1.77%, decreasing 242 bps year over year. Recoveries, upgrades and resolution of non-performing loans through sale were INR9.31 billion ($135 million) during the reported quarter.
Further, gross NPA additions declined 31% to INR37.79 billion ($403 billion) as of Jun 30, 2019. Also, provisions and contingencies were down 41% from the prior-year quarter to INR34.96 billion ($507 million).
Strong Capital Ratios
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 16.19% and Tier-1 capital adequacy was 14.60% as of Jun 30, 2019. Both the ratios were well above the minimum requirements.
Our Take
ICICI Bank seems to have reported a decent quarter. Growth in revenues is a major tailwind, which is expected to support the company's financial performance, going forward. However, mounting expenses (owing to continued investment in franchise and digital initiatives) are likely to adversely impact the bank’s bottom line.
ICICI Bank Limited Price, Consensus and EPS Surprise
Performance & Earnings Dates of Other Foreign Banks
Marred by significant restructuring costs, Deutsche Bank (DB - Free Report) reported second-quarter 2019 net loss of €3.15 billion ($3.54 billion) against net income of €401 million in the year-ago quarter. Also, the German lender incurred loss before taxes of €946 million ($1.06 billion).
Barclays (BCS - Free Report) and HSBC Holdings (HSBC - Free Report) are scheduled to announce their results on Aug 1 and Aug 5, respectively.
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ICICI Bank (IBN) Stock Jumps 6.1% as Q1 Earnings Increase
Shares of ICICI Bank (IBN - Free Report) have rallied 6.1% on the NYSE since the release of its first-quarter fiscal 2020 (ended Jun 30) results. Net income was INR19.08 billion ($276 million) against net loss of INR1.2 billion ($17 million) in the prior-year quarter.
Results were driven by rise in revenues and growth in loans and deposits. Further, credit costs declined. However, an increase in operating expenses is a headwind.
Revenue Components Grow, Expenses Rise
Net interest income jumped 27% year over year to INR77.37 billion ($1.1 billion). Net interest margin was 3.61%, up 42 basis points (bps).
Non-interest income, excluding treasury income, came in at INR32.47 billion ($470 million), up 5% from the prior-year quarter. Notably, fee income increased 10% to INR30.39 billion ($447 million). Additionally, treasury income was INR1.79 billion ($26 million), down 77%.
Operating expenses totaled INR48.74 billion ($601 million), increasing 18% year over year.
Loans & Deposits Increase
As of Jun 30, 2019, ICICI Bank’s total advances amounted to INR5,924.15 billion ($85.8 billion), up 15% year over year. The rise was mainly driven by 22% loan growth in the retail segment.
Total deposits grew 21% to INR6,607.32 billion ($95.7 billion) as of Jun 30, 2019. Also, as of the same date, current and savings account ratio was 43.4%.
Credit Quality Improves
As of Jun 30, 2019, net nonperforming assets (NPA) ratio was 1.77%, decreasing 242 bps year over year. Recoveries, upgrades and resolution of non-performing loans through sale were INR9.31 billion ($135 million) during the reported quarter.
Further, gross NPA additions declined 31% to INR37.79 billion ($403 billion) as of Jun 30, 2019. Also, provisions and contingencies were down 41% from the prior-year quarter to INR34.96 billion ($507 million).
Strong Capital Ratios
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 16.19% and Tier-1 capital adequacy was 14.60% as of Jun 30, 2019. Both the ratios were well above the minimum requirements.
Our Take
ICICI Bank seems to have reported a decent quarter. Growth in revenues is a major tailwind, which is expected to support the company's financial performance, going forward. However, mounting expenses (owing to continued investment in franchise and digital initiatives) are likely to adversely impact the bank’s bottom line.
ICICI Bank Limited Price, Consensus and EPS Surprise
ICICI Bank Limited price-consensus-eps-surprise-chart | ICICI Bank Limited Quote
ICICI Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Dates of Other Foreign Banks
Marred by significant restructuring costs, Deutsche Bank (DB - Free Report) reported second-quarter 2019 net loss of €3.15 billion ($3.54 billion) against net income of €401 million in the year-ago quarter. Also, the German lender incurred loss before taxes of €946 million ($1.06 billion).
Barclays (BCS - Free Report) and HSBC Holdings (HSBC - Free Report) are scheduled to announce their results on Aug 1 and Aug 5, respectively.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>