ICICI Bank shares jump 7% despite 50% drop in Q4 proft
ICICI Bank shares closed 6.86% to Rs309.25 on BSE, even as the bank reports in-line but a 50% drop in its fourth quarter profit
Mumbai: Shares of ICICI Bank Ltd jumped more than 7% on Tuesday, even as it reported in-line but a 50% drop in its fiscal-fourth quarter profit as it set aside cash to cover a surge in bad loans, which was a fallout of the central bank’s revised scheme on resolution of stressed assets.
Investors took solace in the fact that the management gave clear guidance for the next two years on various parameters. By March 2020, the bank wants to achieve a 60% share of retail loans in its overall book, and a net bad loan ratio of 1.5%. The bank would also focus towards a 25% growth in loans to small businesses.
ICICI Bank shares closed 6.86% to Rs309.25 on BSE, while the Sensex ended 0.02% higher at 33,216.32 points. During the day, the stock rose as much as 8.67% to hit a high of Rs314.50.
“While credit cost is likely to stay elevated in the near term (NPL (non-performing loans) ageing + requirement toward the second list), we expect it to moderate from 2HFY19, enabling ICICIBC (ICICI Bank) to deliver ~14% RoE (return on equity) by FY20,” Motilal Oswal Securities Ltd. said in a note while reiterating buy with a revised target price of Rs380, from Rs370 earlier.
Jefferies India Pvt Ltd. pointed that fresh NPLs came mostly from known stressed assets and there were a few large recoveries which held up NIMs (net interest margins) and lowered gross stressed assets.
“From hereon, revenue and Core PPOP (pre-provision operating profit) trajectory is key, though a 15% consol RoE (return on equity) guidance seems a tad soft,” Jefferies said while retaining its buy rating on the stock.
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