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Business News/ Companies / Company Results/  ICICI Bank Q2 Results Preview: Net profit likely to rise 25% YoY; margins to remain stable
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ICICI Bank Q2 Results Preview: Net profit likely to rise 25% YoY; margins to remain stable

ICICI Bank Q2 result is expected to report strong net profit growth and net interest income (NII) growth during the July-September quarter of FY24, while net interest margin (NIM) is likely to remain stable.

ICICI Bank is well-cushioned with higher provisions on its balance sheet and does not expect to utilize these provisions in the near term, as per analysts. (Image: Bloomberg)Premium
ICICI Bank is well-cushioned with higher provisions on its balance sheet and does not expect to utilize these provisions in the near term, as per analysts. (Image: Bloomberg)

Q2 results: ICICI Bank, the second largest private sector lender in the country, will announce its financial results for the quarter ended September 30, 2023, on Saturday, September 21. The lender has been reporting strong growth and profitability for the past few years.

The overall banking sector is expected to report resilient earnings in Q2FY24 despite compression in net interest margins (NIM). Systemic loan growth is expected to remain healthy, driven by continued traction in the Retail and SME segments.

Meanwhile, deposit growth in the banking system has improved to 12.8% YoY (adjusted for merger), aided by a benign base, the discontinuance of the 2,000 currency note and an improved real rate of return, analysts said.

ICICI Bank is expected to report strong net profit growth and net interest income (NII) growth during the July-September quarter of FY24, while net interest margin (NIM) is likely to remain stable.

Also Read: HDFC Bank Q2 Results Highlights: Net profit at 15,980 crore, NII at 27,385 crore

The bank’s slippages have moderated over the past few quarters and are likely to remain under control. The lender is well-cushioned with higher provisions on its balance sheet and does not expect to utilize these provisions in the near term, as per analysts.

“Margins have peaked out in Q4FY23 at around 4.9%, and the re-pricing of liabilities and SA deposits churning into TD would keep funding costs elevated and exert pressure on margins. With ~70% of the book being floating in nature, most of the asset re-pricing has happened, and loan yields might stagnate going further," brokerage firm Motilal Oswal Financial Services said.

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The brokerage believes ICICI Bank is becoming a growth leader in the SME and Retail segments, aided by continued investments in technology and partnerships with new ecosystem players. It expects an 18% loan CAGR over FY23-25 for the bank. 

According to Motilal Oswal, ICICI Bank’s net profit in Q2FY24 may rise 27.8% to 9,660 crore from 7,557.8 crore in the corresponding quarter of last fiscal. It expects NII to grow 24% to 18,330 crore from 14,786.8 crore, YoY.

“Expect loan growth to remain healthy, led by Retail and SME segments. Expect credit costs to remain under control, supported by adequate contingency buffers. Margin trajectory is likely to compress," said the brokerage house.

Emkay Global Financial Services expects ICICI Bank’s margins to slip on a QoQ basis due to rising cost of funds, but lower provisions should support profitability.

Also Read: Q2 result review: ITC vs HUL - which stock to buy post earnings

It expects net profit growth of 29.5% at 9,787 crore and NII growth of 22.6% to 18,134 crore during the quarter under review.

Kotak Institutional Equities expects pre-provision operating profit (PPoP) to grow at 20% YoY as it sees NIM reversing from peak levels. 

“Loan growth to be healthy at 16%, led by contribution from all segments. We model NIM to decline 25 bps QoQ to 4.3%. We expect provisions to remain low as we see lower slippages given the current economic environment. We are building slippages of 2% ( 5000 crore). Key concern would be the reversal of NIM as cost of funds is starting to move up sharply for the sector, especially with slower CASA growth" Kotak Institutional Equities said.

Meanwhile, ICICI Bank share price has remained stable this year. The stock is up only 5% year-to-date (YTD). In the last one month, ICICI Bank shares have fallen over 5%. However, ICICI Bank share price has rallied over 125% in the last three years.

Read all Q2 Results here 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 21 Oct 2023, 06:07 AM IST
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