Healthy PAT, interest income and better asset quality in Q1 fail to cheer ICICI Bank stock

Broadly, the bank's first-quarter result for FY21 was healthy with asset gross NPA dropping to its lowest in 20 years and provisions declining if not included the Covid-19 impact.

Jul 27, 2020 04:07 IST India Infoline News Service

ICICI Bank Hyderabad office
The private lender ICICI Bank was the top underperformer on BSE and NSE during Monday's market hours post-June 2020 (Q1FY21) result announcement. Broadly, the bank's first-quarter result for FY21 was healthy with asset gross NPA dropping to its lowest in 20 years and provisions declining if not included the Covid-19 impact.

However, on Sensex, the ICICI Bank stock finished at Rs358.50 per piece down by 6.11%, while, on Nifty, the stock completed at Rs358.70 per piece lower by 6.05%.

In Q1FY21, the bank's PAT grew by 36% year-on-year to Rs2,599cr ($344M) in Q1FY21 from Rs1,908cr ($253M) in Q1FY20.

Standalone net interest income (NII) increased by 20% year-on-year to Rs9,280cr ($1.2B) in Q1FY21 from Rs7,737cr ($1.0B) in Q1FY20.

Net interest margin was 3.69% in Q1FY21 compared to 3.87% in the quarter ended March 31, 2020 (Q4-2020) and 3.61% in Q1FY20, for which the lender said, "reflecting the higher liquidity with the Bank due to strong deposit inflows and limited credit demand due to the lockdown."

ICICI Bank in its audit report said, "The impact of Covid-19 pandemic on the Bank is highly uncertain and will depend on the ongoing spread of Covid-19, the effectiveness of current and future steps taken by governments and central banks to mitigate the economic impact, steps taken by the Bank and the time it takes for economic activities to return to pre-pandemic levels. The Bank’s capital and liquidity position is strong and would continue to be the focus area for the Bank during this period. During Q1FY21, the Bank has made an additional Covid-19 related provision amounting to Rs5,550cr ($735M). At June 30, 2020, the Bank held Covid-19 related provision of Rs8,275cr ($1.1B). This additional provision made by the Bank is more than requirement as per the RBI guideline dated April 17, 2020".

ICICI President Sandeep Batra during the earnings call stated that the bank’s GNPA lowest in the last 20 quarters.

In the quarter, ICICI Bank recorded a gross NPA of 5.46% and net NPA of 1.23% compared to 6.49% and 1.77% of Q1FY20.

Total capital adequacy at June 30, 2020, including profits for Q1- 2021, was 16.32% and Tier-1 capital adequacy was 14.93% compared to the minimum regulatory requirements of 11.08% and 9.08% respectively.

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