ICICI Bank Q1FY24 preview: Muted QoQ performance likely on high provisions

ICICI Bank: Net profit is estimated to come in the range of Rs 8,654.9 crore to Rs 9,200 crore, down up to 5 per cent QoQ

ICICI Bank Q1FY24 results preview: ICICI Bank, India's second-largest private bank, may see its June quarter (Q1FY24) net profit stay unchanged, or fall a maximum of five per cent, quarter-on-quarter. This, analysts said, would be on te back of higher provisions.
 

The lender is scheduled to report its Q1FY24 results on Saturday, July 22. At the bourses, shares of the lender have rallied 13.4 per cent thus far in financial year 2023-24 (FY24), as against 15 per cent rise in the benchmark Nifty50 index and 13.7 per cent gain in the Nifty Bank index.
 

A read through of seven brokerages shows that net profit is estimated to come in the range of Rs 8,654.9 crore to Rs 9,200 crore. By comparison, it was Rs 9,121.9 crore in the March quarter of FY23 (Q4FY23) and Rs 6,904.9 crore in Q1FY23. 
 

 

Analysts at Prabhudas Lilladher expect the Mumbai-based bank's provisions to rise 17.3 per cent on quarter and 66 per cent on year to Rs 1,900 crore. 
 

Those at Kotak Institutional Equities peg the same at Rs 1,700.8 crore, up five per cent QoQ (from Rs 1,619.8 crore) and 49 per
cent YoY (from Rs 1,143.8 crore).

Also Read: Hindustan Unilever Q1 results: Net profit rises 7.3% to Rs 2.6K crore
 

"We expect provisions at Rs 1,701 crore, and expect to see lower recovery/upgrades hereon. We are building slippages of 2.5 per cent (around Rs 6,500 crore) as Q1FY24 slippages could be higher from the agriculture portfolio. The key concern would be the reversal of net interest margin (NIM) as cost of funds is starting to move up sharply for the sector, especially with slower current account-savings account (CASA) growth," Kotak Institutional Equities said in a results preview report.
 

Analysts expect NIM to contract 10 basis points sequentially to 4.8 per cent from 4.9 per cent. In the corresponding quarter of the previous year, NIM stood at four per cent. 
 

Operationally, net interest income (NII) is also expected to stay muted quarter-on-quarter with brokerages forecasting a drop of up to two per cent to Rs 17,275.2 crore. 
 

"We expect NII to de-grow by 1.3 per cent QoQ even as loan growth seen at two per cent, since NIM decline of 11bps QoQ would be more due to higher floating rate portfolio," said Prabhudas Lilladher.
 

NII was Rs 17,666.8 crore in Q4FY23 and Rs 13,210 crore in Q1FY23. 
 

Loan book by the brokerage is pegged at Rs 10.4 trillion, up from Rs 10.19 trillion QoQ and Rs 8.95 trillion YoY. 
 

Deposits, on the other hand, are seen at Rs 11.97 trillion, up one per cent QoQ from Rs 11.8 trillion and 14 per cent YoY from Rs 10.5 trillion by global brokerage Nomura.

Also Read: Infosys Q1FY24 result: Net profit up 10.9% to Rs 5,945 cr; attrition falls
 

"We expect credit growth to remain healthy, but pick-up in deposit growth and cost of funds (CoF) should weigh on margins. Gross slippages to remain elevated QoQ, but so should recovery," said Emkay Global.
 

On average, brokerages expect cost-to-income (C/I) ratio to rise by 193bps QoQ (down 117bps YoY) to 41.2 per cent. Credit costs, meanwhile, may stay between 0.5 per cent and 0.7 per cent. 
 

Gross NPA ratio is seen rising marginally to 2.9 per cent from 2.8 per cent QoQ.