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ICICI Bank Q3 results preview: Profit may jump up to 3-fold on Essar Steel resolution

Analysts expect ICICI Bank to post 28-30% rise in net interest income (NII) on Saturday.

Last Updated: Jan 24, 2020, 09.48 PM IST
Analysts expect the bank to post a 28-30 per cent rise in net interest income, over 20 per cent growth in pre-provision profit and stable net interest margins (NIM).
NEW DELHI: Private lender ICICI Bank is expected to report 150-200 per cent surge in December quarter profit, thanks to the resolution of its big non-performing asset Essar Steel.

Analysts expect the bank to post a 28-30 per cent rise in net interest income, over 20 per cent growth in pre-provision profit and stable net interest margins (NIM).

The lender will report its quarterly results on Saturday.

Reliance Securities expects ICICI Bank to clock 197 per cent surge in profit at Rs 4,767.50 crore compared with Rs 1,604.90 crore in the same quarter last year. The brokerage sees NII growing at 28.9 per cent to Rs 8,864.90 crore. NIM may improve to 3.70 per cent from 3.64 per cent in the September quarter and 3.4 per cent in the year-ago period.

“High reversal on provisions from Essar Steel recovery, estimated at Rs 2,000 crore may aid profitability. Margin expansion to continue on the back of improving deposit rates, decline in bad loans, and rising share of retail and unsecured loans. Slippages may rise led by agri and NBFC slippages (including DHFL), but elevated reductions (Essar Steel, Ruchi Soya) will aid asset quality,” the brokerage said.

Prabhudas Lilladher sees profit soaring 156.80 per cent to Rs 4,122 crore. It projects NII growth at 22 per cent and NIM at 3.7 per cent.

NII, it said, should benefit from interest write back from the Essar recovery, helping NII growth. The brokerage expects the bank to benefit from lower taxes.

According to Edelweiss Securities, stress accretion is likely to be relatively low as ICICI Bank has minimal exposure to the most-talked about stressed groups (except for recognition of Karvy Stock Broking). “Slippages would be relatively steady and will largely flow from the existing stress pool. We need to watch out for further additions to BBB and below list, which saw some rise in the previous quarter,” it said.

The brokerage said that the resolution of Essar Steel would also lead to a decline in credit cost.

“Essar Steel would provide one-time gain, which should help contain credit cost at 1.2–1.3 per cent for FY20 as guided earlier. The bank is focused on re-orienting its balance sheet towards lower risk, superior mix and more granular portfolio – we expect domestic credit growth of 14 per cent with retail portfolio growing 20 per cent, and growth in the corporate segment driven by non-stressed segments,” Edelweiss said.

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