ICICI Bank Q1 Results Preview: Net profit to rise over 8% YoY on steady loan growth; NIM key monitorable

ICICI Bank Q1 Results Preview: ICICI Bank will declare its April-June quarter results for fiscal 2024-25 (Q1FY25) on Saturday, July 27, after reporting a solid performance in the previous quarter led by improved asset quality and credit growth. Most D-Street analysts and domestic brokerages have estimated a decent and steady growth for India's second-largest lender by market cap in the quarter under review over loan growth and enhanced asset quality.

An average of brokerage estimates indicates that ICICI Bank's net profit will likely rise 8-10 per cent in the June quarter while net interest income (NII) growth is estimated at 12 per cent. Net interest margin (NIM) and deposit growth are the key monitorable metrics. NIM reflects the margin a bank earns in its core lending business and is a key profitability metric. 

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Shares of ICICI Bank have rallied 20.6 per cent year-to-date (YTD) and around 22 per cent in the last one year. The banking heavyweight has given 8.39 per cent returns to investors in the last three months. On Friday, shares of ICICI Bank settled 0.81 per cent higher at ₹1,207.70 against a 52-week high of ₹1,257.65 apiece on the BSE. The bank commands a market cap of ₹8,50,020.53 crore.

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Here's what leading brokerages expect from ICICI Bank Q1 Scorecard:

 

Axis Securities

Advances growth is expected to be healthy at 16 per cent year-on-year (YoY), led by the retail and SME segment; deposit growth is expected to mirror credit growth. The quantity of margin compression is likely to be slightly higher quarter-on-quarter (QoQ). Credit costs will likely remain under control, and there will be no major challenges to asset quality. The key monitorable are NIM outlook and comments on growth in the unsecured book.

Kotak Institutional Equities

Loan growth is at ~15 per cent YoY, led by contributions from all segments (slowdown in unsecured loans). Given our current low ratios, we expect provisions growth to track closer to loan growth but less surprising. We are building slippages of ~2.1 per cent). The key concern would be the progress of NIM, as the cost of funds is yet to peak, especially with slower CASA growth. Deposit mobilisation is likely to be another key area of discussion.
 

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Elara Capital -Elara Securities (India)

Yet another steady quarter, with steady loan growth but deposit growth (period-end) might be softer. ICICI Bank has been focussing on average CASA balances, which, we believe, would show strong traction versus industry trends. We expect 4-5 bps NIM decline QoQ, which will feed into sub-10 per cent YoY NII growth.

This is with sticky opex in Q1 (bonus and hike effect). Slippages are likely to rise QoQ, largely due to higher agri slippages. A softer recovery (shrinking pool and absence of corporate recovery) may slightly raise QoQ credit costs.

Manish Chowdhury, Head of Research, StoxBox

We expect ICICI Bank to release decent numbers in Q1FY25 and anticipate that the bank will deliver a high single-digit net profit for the quarter ended June 2024 on a YoY basis. However, the bank is experiencing steady loan growth but softer deposit growth. The bank will experience some NIM compression owing to an increase in the cost of funds, especially in the retail deposits. 

We believe the bank’s return ratios are at a peak and likely to moderate soon. However, better visibility of loan growth, given diversification into SME lending, low market share, and strong loan-loss reserves, will help ICICI Bank maintain the upward growth trend this quarter.
 

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Motilal Oswal Financial Services

ICICI Bank is well-prepared with ample provisions on its balance sheet and does not foresee an immediate need to utilize these provisions. Over the past year, its margin has corrected 50 bps to 4.4 per cent. However, the bank's pace of NIM compression has moderated sharply. 

The bank is well-positioned to deliver superior performance characterized by healthy loan growth, strong asset quality, and industry-leading return ratios. We estimate its RoA/RoE at 2.2 per cent/17.6 per cent in FY26. Adjusted for its subsidiaries, the standalone bank trades at 2.2x FY26E ABV.
 
 

Prabhudas Lilladher

While loan growth could come in at 3.5 per cent, we expect softer NII growth QoQ due to a 2 bps NIM decline led by a faster rise in the cost of funds. GNPAs are set to improve by 2 bps QoQ, whereas credit costs could increase by 12 bps QoQ. Net profit growth is estimated at 10 per cent YoY, while NII could rise around eight per cent YoY.
 

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Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, and not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.