ICICI Bank Q3 Preview: Analysts expect robust loan book to drive PAT growth

ICICI Bank Q3 result preview: Private lender ICICI Bank will likely outperform private peers when it reports its October-December quarter (Q3) results for 2022-23 financial year (FY23) on Saturday, January 21.

According to analysts, the bank may clock robust topline growth on the back of healthy loan growth, especially in the retail segment. Margins, they said, may also expand due to better product mix.

Overall, consensus estimate by Bloomberg pegs ICICI Bank's net profit growth at 33 per cent year-on-year (YoY)/9 per cent quarter-on-quarter (QoQ) at Rs 8,242 crore. PAT was Rs 6,194 crore in Q3FY22, and Rs 7,558 crore in Q2FY23.

Net interest income (NII), meanwhile, is forecasted at Rs 20,965 crore, up 22 per cent YoY/5.7 per cent QoQ. 

Here's what key brokerages expect from the results:

Nomura
The brokerage expects ICICI Bank to post a robust operational performance in Q3FY23 with NII growth pegged at 27 per cent YoY, and 5 per cent QoQ at Rs 15,512 crore. Pre-provision operating profit (PPOP), meanwhile, is seen increasing by 26 per cent YoY to Rs 12,782 crore.

It further expects net profit to rise 36.6 per cent YoY/12 per cent QoQ to Rs 8,463 crore, owing to higher fee income and higher margins. 

"While loan growth is expected to be strong across the board, we believe retail and SME book will stand out. We expect net interest margin (NIM) to expand by 10bp sequentially," it said.

Morgan Stanley
This brokerage expects loan growth to remain strong at 21 per cent YoY and about 5 per cent sequentially. Further, margins are projected to improve 20bps QoQ to 4.48 per cent as against 4.31 per cent last quarter (Q2FY23).

"This will be driven by repricing of floating-rate loans, and continued loan mix shift towards the retail and SME segments. A part of it, however, will be offset by rising cost of funds. NII growth should improve to 32 per cent YoY/4 per cent QoQ to Rs 16,090 crore. 

On the asset quality front, Morgan Stanley expects bad loan formation to remain stable at Rs 4,500 crore vs Rs 4,370 crore last quarter. Credit cost will remain benign at 78bps vs. 72bps last quarter.

The bottomline growth is estimated at 28 per cent YoY at Rs  crore.

Prabhudas Lilladher
The domestic brokerage said NII could grow higher than industry average aided by stable loan growth of 19 per cent (Rs 9.7 trillion). NII may stand at Rs 15,879 crore, up 29.8 per cent YoY. 

Margins would continue to expand, however, at a slower rate as cost of funds go up. NIM is seen at 4.9 per cent this quarter. 

Asset quality could improve as recoveries would be higher than slippages. Gross non-performing asset (GNPA) ratio is seen at 3.13 per cent, down 100 bps YoY and 11 bps QoQ. 

KR Choksey
The brokerage said ICICI Bank is projected to grow its loan book by 20.2 per cent YoY, driven by strong traction across all segments and healthy festive season. It expects the deposits to grow by 12.5 per cent YoY, with current account-savings account (CASA) at 46 per cent as of December 30, 2022. 

NII for the quarter is expected to grow by 29.5 per cent YoY to Rs 15.849.6 crore, led by asset re-pricing and strong business growth. Slight expansion in NIMs on sequential basis, it said, will be led by the favorable portfolio. 

The brokerage expects PPOP to grow by 23.5 per cent YoY/7.3 per cent QoQ at Rs 12,534.8  crore, led by heathy growth in operating income. PAT is likely to grow by 31.6 per cent YoY/8 per cent QoQ at Rs 8,153.3 crore, driven primarily by operating income and lower provisions.