Result Update Q1FY22

ICICI Bank Ltd.8th August, 2021

Bloomberg Code ICICIBC:IN

No of share O/S 691.76

Market Cap (Rs. In Cr.) 485,850

Face Value 2.00

Dividend Yield 0.35

52 Wk High/Low 333/717

Shareholding

Promoters 0.00

Institutional 89.97

Public 10.03

Total 100.00

Key Highlights:

ICICI Bank reported a net interest income of Rs. 10,935 cr in Q1FY22 with a YoY and QoQ growth of 17.8% and4.8%, respectively, on the back of reduced cost of funds and improved loan growth in the retail and SMEsegment. The cost of funds increased to 4.1% as against 3.95% in Q4FY21 and 3.82% in Q3FY21. Fee income grewby 53% YoY to Rs. 3,219 cr and dipped by 15.6% QoQ, reflecting the increase in customer spending, borrowingand investment activity. Fees from retail, business banking and SME customers increased by 65% YoY andconstituted about 76% of total fees in Q1-2022. Treasury income for the quarter included a gain of Rs. 3,763 cr,as the bank accrued gains of INR 3,036 crore (US$ 408 million) from sale of shares of subsidiaries.

The net interest margin stood at 3.89% in Q1FY22 compared to 3.69% in Q1FY21 and 3.84% in the previousquarter. The margins improved by 20 bps YoY and 5 bps QoQ despite the impact of interest reversal of 11 bpsduring the quarter. The bank’s operating expenses grew 29.9% on a YoY basis and 0.5% on a QoQ basis, mainlyaided by improvement in volumes as business activities started resuming and increased spend in technology.

Operating profits before provisions de-grew by 17.4% YoY and improved by 4.1% QoQ sequentially to Rs. 8,894 cron the back of improved NII, and reduced operating expenditure. The bank made contingent provisions of Rs.2,852 cr in Q1FY22 down by 1.2% QoQ. During Q1-2022, the Bank has changed its policy on nonperforming loansto make it more conservative. The change in policy resulted in higher provision on non-performing advancesamounting to Rs. 1,127 crore (US$ 152 million) for aligning provisions on outstanding loans to the revised policy.PAT surged by 77.6% YoY and 4.8% QoQ to Rs. 4,616 cr on the backs of improved operating performances andlower provisioning.

CMP Rs. 701

Business Highlights:

Loan book grew 17.5% YoY and 1.0% on a QoQ basis, to Rs. 7,41,598 cr. The retail loan portfolio grew by 20%year-on-year and comprised 61.4% of the total loan portfolio at June 30, 2021. Including non-fund outstanding,retail was 50.4% of the total portfolio at June 30, 2021. The business banking portfolio grew by 53% year-on-yearand was 5.4% of total loans at June 30, 2021. The SME business, comprising borrowers with a turnover of lessthan Rs 250 crore (US$ 34 million), grew by 43% year-on-year and constituted 4.0% of total loans at June 30,2021. Growth in the domestic corporate portfolio was about 11% year-on-year driven by disbursements tohigher rated corporates and public sector undertakings across various sectors. The growth in performingdomestic corporate portfolio, excluding the builder portfolio, was 15% year-on-year at June 30, 2021. Thedomestic advances grew by 20% year-on-year. Total advances increased by 17% year-on-year to Rs 738,598 crore(US$ 99.4 billion) at June 30, 2021 from Rs 631,215 crore (US$ 84.9 billion) at June 30, 2020.

Deposits growth remained healthy, increasing by 14.5% YoY to Rs. 9,26,223 cr and remained stagnant QoQ. Thegrowth in Average current account deposits increased by 32% year-on-year in Q1-2022. Average savings accountdeposits increased by 22% year-on-year in Q1-2022. Total term deposits increased by 9%YoY to Rs. 501,122 crore(US$ 67.4 billion) at June 30, 2021. The Bank had a network of 5,268 branches and 14,141 ATMs at June 30,2021. Provision Coverage Ratio (PCR) stood at 78% for the quarter.

GNPA and NNPA for the quarter stood at 5.15% and 1.16%, respectively. NPA recognition was lower mainly onaccount of Hon’ble Supreme Court’s interim order on standstill of NPA recognition. The Capital Adequacy Ratiostood at 19.2% with the Tier 1 ratio at 18.2% during the quarter, compared to the minimum regulatoryrequirements of 11.08% and 9.08%, respectively.

Concall Highlights:

• The bank is carrying an additional provision of Rs 6,430 cr (~0.9% of loans), while Rs 1,660 cr is non-fund-based outstanding to NPAs. It holds a further Rs

5,800 cr of general provisions on standard assets and other provisions.

• Collections could not happen due to COVID-related disruptions which affected the Jewelry loan segment (fully secured). The management expects a full

recovery from this portfolio.

• The BB & below book stood at Rs 18,100 cr (~2.4% of loans). In the BB & below book, only 3 accounts viz. Construction, Power and Telecom have exposure

over Rs 600 cr. The SR portfolio stood at Rs 1,700 cr. Within the Retail/Business Banking (excluding the Rural portfolio), slippages from the Mortgage portfolio

were similar to last year but were relatively higher in the CV segment. Personal loans/Credit Cards witnessed lower slippages.

• Domestic Corporate portfolio (excluding the Builder portfolio) was up 15% YoY on disbursements to higher-rated corporates and PSU entities. The bank has

added 2 branches and 5 ATMs in Q1FY2022. It had a network of 5268 branches and 14141 ATMs at end June 2021. Many corporates have also raised funds

through the bond market. While private Capex has yet to pick up, PSU Capex has seen expansion.

• Gross slippages in Q1FY22 stood at Rs 7,230 cr with Retail slippages at Rs 6,770 cr, while Corporate and SME slippages stood at Rs 460 cr. Within Retail, Rs 9,60

cr/Rs 1,130 cr came from the Kisan Credit Card/Jewelry portfolio. Vehicle loans are performing poorly compared to last year, whereas personal and credit card

loans have been better. Slippages are expected to be elevated over the coming quarters, but the pace of it will slow down. Other interest income during the

quarter was high on account of surplus liquidity being deployed in the form of FX swaps.

Valuation:

At the CMP of Rs. 701 the stock is trading at 3.3X P/BV FY22.

Financial Summary

Net Interest Income grew by 17.8% YoYmainly on account of reduced cost of fundsand growth in retail loan segment. Theinterest grew income by 2.3% on account ofhigher loan taken.

Operating Expenses grew by 29.9% YoY onaccount of improved business volumes andincreased spends towards technology.

The bank made contingent provisions of Rs.2,852 cr in Q3FY21 in relation to proformaNPAs and utilized Rs. 4,750 cr of Covid 19related provisions made in the FY21. DuringQ1FY22 held Covid-19 related provision ofRs. 6,425.00 crore at June 30, 2021.

Year ending Mar (Rs Cr) Q1FY22 Q1FY21 YoY (%) Q4FY21 QoQ (%) FY20 FY21 YoY (%)

Total Income 24,379 26,066 -6.47 23,953 1.78 91,247 98,087 7.50

- Interest Income 20,383 19,924 2.30 19,842 2.73 74,798 79,118 5.78

- Other Income 3,996 6,142 -34.94 4,111 -2.81 16,449 18,969 15.32

- Fee Income 3,219 2,104 52.99 3,815 -15.62 13,711 12,659 -7.67

- Fee Income as % of TI 13.20 8.07 15.93 15.03 12.91

Interest Expense 9,448 10,645 -11.25 9,411 0.39 41,531 40,129 -3.38

Net Interest Income (NII) 10,935 9,279 17.85 10,431 4.83 33,267 38,989 17.20

Net Interest Margin (NIM, %) 3.89% 3.69% 3.84% 3.73% 3.69%

Operating Expenses 6,037 4,646 29.94 6,003 0.57 21,614 21,561 -0.25

Opex to Total Income (%) 24.76 17.82 25.06 23.69 21.98

PPoP 8,894 10,775 -17.45 8,540 4.15 28,101 36,397 29.52

Cost to Income Ratio (%) 40.43 30.13 41.28 43.48 37.20

Provisions & Contingencies 2,852 7,593 -62.44 2,883 -1.09 14,053 16,214 15.38

PBT 6,042 3,182 89.89 5,656 6.82 14,048 20,183 43.67

Tax Rate (%) 23.61 18.32 22.17 43.55 19.77

PAT 4,616 2,599 77.61 4,403 4.85 7,931 16,193 104.17

Loan Book 7,41,598 6,31,214 17.49 7,33,729 1.07 6,45,290 7,41,598 14.92

- Corporate 1,76,853 1,58,754 11.40 1,76,635 0.12 1,60,470 1,76,853 10.21

- Share of Corporate (%) 23.8 25.2 24.1 24.9 23.8

- Retail 4,94,868 4,04,576 22.32 4,89,220 1.15 4,08,003 4,94,868 21.29

- Share of Retail (%) 66.7 64.1 66.7 63.2 66.7

- SME 29,778 20,857 42.77 30,284 -1.67 22,851 29,778 30.31

- Share of SME (%) 4.0 3.3 4.1 3.5 4.0

- Overseas 40,099 47,027 -14.73 37,590 6.67 53,967 40,099 -25.70

- Share of Overseas (%) 5.4 7.5 5.1 8.4 5.4

Deposits 9,26,223 8,08,825 14.51 9,32,522 -0.68 7,70,969 9,26,223 20.14

- Term Deposits 5,01,122 4,61,007 8.70 5,00,899 0.04 4,23,151 5,01,122 18.43

- Share of Term Deposit (%) 54.1 57.0 53.7 54.9 54.1

- CASA 4,25,101 3,47,818 22.22 4,31,623 -1.51 3,47,818 4,25,101 22.22

- Share of CASA 45.9 43.0 46.3 45.1 45.9

* CA deposit 1,18,492 95,708 23.81 1,36,170 -12.98 1,02,227 1,18,492 15.91

* Share of CA Deposit (%) 12.8 11.8 14.6 13.3 12.8

*SA deposit 3,06,609 2,44,836 25.23 2,95,453 3.78 2,45,591 3,06,609 24.85

*Share of SA Deposit (%) 33.1 30.3 31.7 31.9 33.1

Financial Summary

Year ending Mar (Rs Cr) Q1FY22 Q1FY21 YoY (%) Q4FY21 QoQ (%) FY20 FY21 YoY (%)

Stressed Assets

Slippages 7,231 5,306 11,818 14,295 16,123

GNPA 43,148 40,386 6.8 41,373 4.3 41,409 -100.0

GNPA (%) 5.15 5.46 4.96 5.53

SMA 1

SMA 1 %

SMA 2

SMA 2 %

SMA 3

SMA 3 %

PCR % 78.2 75.7 77.7 75.7 77.7

NNPA 9,306 8,675 7.3 9,180 1.4 10,114 9,180 -9.2

NNPA % 1.16 1.23 1.14 1.41 1.14

CAR (%) 19.27 16.11 19.12 16.11 19.12

Tier I Capital (%) 18.24 14.72 18.06 14.72 18.06

Tier II Capital (%) 1.03 1.39 1.06 1.39 1.06

RoAA 1.54 0.95 1.51 0.81 1.42

RoAE 12.3 8.9 12.3 7.1 12.3

No of branches 5,268 5,324 -1.1 5,266 0.0 5324 5266 -1.1

Adj P/BV (x) 1.5 2.9

P/E (x) 19.2 23.7

1 year forwarded valuation band chart

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Adj Price 0.98x 1.58x 2.18x 2.78x 3.38x

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