ICICI Bank Q3 Preview: PAT Likely To Rise On Healthy Margins, Provisions May Stay At Low Levels

Ahead of earnings, on Friday, ICICI Bank shares closed at ₹870.40 apiece up by 0.47%. The bank's market cap is over ₹6.07 lakh crore.

In Q2FY23, the bank posted a net profit of ₹7,558 crore up by 37% from ₹5,511 crore in the same quarter last year. Net interest income (NII) jumped by 26% yoy to ₹14,787 crore in Q2FY23 as against ₹11,690 crore in Q2 of FY22. Net interest margin stood at 4.31% in Q2FY23.

As of September 30, 2022, Gross NPA ratio improved to 3.19% versus 3.41% in Q1FY23 and 4.82% in Q2FY22.

What to expect from ICICI Bank's Q3FY23?

Emkay Global in its Q3 preview report said, better growth and asset re-pricing should keep ICICI Bank's margins in the healthy zone, thereby supporting core profitability. Also, with stronger provision cover including contingent, ICICI Bank is expected to accelerate write-offs.

Meanwhile, in its Q3 preview note, Kotak Institutional Equities said, "We expect a PPoP to grow at ~25% yoy as we see most operating metrics to be stable to positive. Loan growth to be solid at ~20% led by healthy contribution from all segments. The rate cycle is still favourable and hence NIM still has an upward bias."

Further, Kotak Institutional expects the bank's provisions to remain at low levels given lower slippages and better trends on recovery/upgradation. The brokerage is building slippages of ~2% (~Rs50 billion) but also sees a solid commentary on recovery to continue resulting in lower stress coming from asset quality perspective.

Among key concerns are said to 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 expects ICICI Bank's net interest income to come at ₹122,360 crore up by 24.1% YoY and 2.7% QoQ. PAT is seen at ₹61,938 crore higher by 32.2% YoY and 8.4% QoQ.

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