ICICI Bank’s Net Profit Jumps 25% In June Quarter

ICICI Bank has announced its Q1FY14 results on July 31. The net profit of the company rose by an impressive 25% on a yearly basis and stood at Rs 2274.21 crore. The rise in the net profit was aided by the increase in the company’s Net Interest Income (NII) and Other Income.

The bank’s NII has increased by 19.25% to Rs 3820.47 crore in Q1FY14 against Rs 3192.94 crore in Q1FY13. This, in turn, was helped by credit growth of 12% on a yearly basis. Moreover, the yearly growth in domestic advances was at 14%. The Other Income has grown 32% to Rs 2484.29 YoY. Moreover, the operating profit has also improved by 29.32% to Rs 3814.16 crore.

The asset quality of ICICI Bank, however, saw some deterioration. On an absolute basis, the Gross NPAs and Net NPAs went up by 4.18% and 10.41% respectively. Even as a percentage of assets, while the Gross NPAs remained at 3.23% (3.22% in the last quarter), the Net NPAs increased by 5 basis points to 0.82%.

The bank’s net loans to companies whose facilities have been restructured stood at Rs 5915 crore against Rs 5315 crore in the same quarter last year. The Current Account and Savings Account (CASA) ratio improved to 43.2% in Q1FY13 against 41.9% a year ago. The return on assets has declined by 7 basis points and stood at 1.75% on a sequential basis.

The Net Interest Margin (NIM) of the company crawled up by 26 basis points on a YoY basis, at 3.27% (against 3.01%). The domestic NIM was at 3.63%.

The total capital adequacy was strong at 17.04%, while Tier-1 capital adequacy came in at 11.72% as per the RBI’s guidelines on Basel III norms.

The stock is currently trading at Rs 909.30, which is 1.56x its book value. Although this is attractive, looking at the volatility in the market and especially in the banking sector, only value investors with an investment horizon of more than one year should take exposure in the counter now.