ICICI Bank Q4 preview: Lower provisions may lift profit by multifolds; stable NIM likely

NEW DELHI: is all set to report a multifold jump in net profit for March quarter, but the quantum would vary on the level of provision the private lender makes. Analysts are forecasting a 220-320 per cent surge in profit so far as they see provisions for the quarter falling by at least 50 per cent on YoY basis. They see stability in asset quality and net interest margin (NIMs) and a double digit growth in net interest income (NII).

Analysts noted that ICICI Bank had substantially increased its provision coverage ratio (PCR) to 86 per cent with pro forma PCR of 78 per cent, the highest in the industry. They see lower provisioning as the bank was already carrying unutilised Covid-related provisions of Rs 6,470 crore at the end of December quarter that was nearly 1 per cent of loans.

Kotak Securities expects profit for the bank to grow 313.50 per cent to Rs 5,050 crore from Rs 1,221.40 crore in the year-ago quarter. Net interest income (NII) is seen rising 13.7 per cent to Rs 10,150.50 crore from Rs 8,926.90 crore. NIM is seen at 4 per cent compared with 4.1 per cent in December quarter and 4 per cent in March quarter of last year.

Kotak said provisions may slide down to normalised levels but believes the bank is likely to use some of the Covid provisions made earlier in the quarter.

“We are building slippages of 4 per cent but we see a solid commentary on recovery to normalised levels of their loan book from an asset quality perspective. We expect a PPoP growth of 15 per cent YoY with revenue growth at 13 per cent YoY. Loan growth to accelerate to 13 per cent. NIM (core) may remain stable sequentially at 3.7 per cent,” Kotak said.

PPoP stands for pre-provision operating profit on an 14.4 per cent rise in NII.

Axis Securities estimates a 315 per cent surge in profit at Rs 5,069 crore, as it sees provisions falling 64.2 per cent YoY to Rs 2,139 crore. It pegs NII at Rs 10,210 crore, up 14.4 per cent. Housing and auto loans are seen leading the credit offtake.

Edelweiss Securities believe the bank may report a high single digit in loan growth. It said that the key monitorable will be the likely downgrades to BBB and below the list. “Credit cost could be lower as the bank might choose not to make excess Covid-19 provisions,” it said, while expecting the core profit for the bank at Rs 4,618.70 crore, up 278 per cent YoY.

Analysts said that the commentary on credit cost and asset quality outlook will be the key monitorable.