Bank Results season (India Earnings): ICICI Bank keeps showing long term tracking to objectives – Q2 FY2014

Your favourite bank did start showing  hidden wrinkles as it eagerly snapped up a 26 bp NIM increase to 3.26% this quarter an Net interest income grew in line with the bank’s voracious appetite to INR 38.88 Bln. The retail surge which slowed down to 20% and Deposit growth continues without buyouts of deposits  at the industry rate of 14%. That means the retail team is unlikely to prove other results without the earlier snafus with retail processes even as it opened 250 new branches, 150 in the unbanked regions. The chink in the armor is that the bank will smooth over its increasing gross NPAs as the continuing expansion in margins gets the bank to override and lay down the news of a jump in gross and net NPAs. Gross NPAs for a large bank as such are horribly disavowable at 3.23% and Net NPAs are also thrice the rate at equally sized HDFC Bank.

The stresses however may not be l

India decadal growth rate map en
India decadal growth rate map en (Photo credit: Wikipedia)

inked to its growth as one looks askance at the 15% plus ROE. At this moment however I am unable to more than cast a  doubt on the Capital Structure for such ROEs and the same however is not to be confused with the global banks which still have a entirely different Order of magnitude of liquidity and derivative profits/risk management. It might still have an audience requesting that they be treated as peers especially on the comments on Capital Structure while structured product profits would still seem unseemly. The results will probably bring the bank under fire from its Indian peers , starting here at the ROE growth which seems awkwardly as always one step ahead o f the coming high interest rate regime when it actually expands margins.

Profits are only up 25% less than the expected INR 24-25 Bln mark at INR 22.54 Bln

The Active CaSA strategy for the bank seems to have worked wonders again with another 1.95 increase quarter on quarter to more than 43%. From here CASA would go on reducing once it reaches 47-49% levels in three-four quarters(at this pace). Average CASA as been reported duly at 39% , ad the gap is showing , which may be a disconcerting note for investors as the surge in retail and commercial deposits continues to bank the margin till rates are hiked.

However to reiterate, The Bank thus now has been completely clean on the paper trail in terms of its profit, asset growth and retail loan growth objectives , also fulfilling its rural objectives , covering the unbanked and continuing to improve its show while the fissures in its wholesale international book and the growth in retail NPAs coming hither will well be masked in the current reporting as well, leaving it another show of increased transparency  The bank has however totally dominated its peer HDFC Bank in the banking sweepstakes for the two universal banks heralded in India at the first stage of bank reforms in 1995.

Bank Results Season (India Earnings): ICICI Bank flashes positivity for a Nifty re-rating

While not beating expectations, ICICI Bank’s improving fortunes, better retail traction and control on NPAs seem to have paid off for it to score the #2 bank in the country soon aheadof PNB and HDFC Bank (Pvt sector)  with NII coming to INR 37 bln in the quarter and Other income INR 22 bln (standalone) , mainly advisory, dividend and fees and charges in commercial and retail banking totting up from its tarried state two years ago. Since, foreign banks have virtually skipped the Indian unsecured market making a fresh start. CASA has dropped in 2012, with even PNB scoring just 38% in CASA. At their best performance, ICICI Bank CDS still trade at near default scores of 160 bps

With the bank likely to report hawkish NPA policy compared to the PSU units looking to cop out of provisioning at the first sign of improvement, its profit growth in the Q3 of FY 2013 being flashed is indeed muted on year, but much better than the Q4 of previous fiscal and improving in course of the eyar but missing YOY growth except at a 30% growth in NII and just 20% profit growth even in Operating profit terms.

However the bank has already shown the required scale to jump into an imprtant #2 position in all parameters. (Rest after the management advice on the Q3 results)



Bank Results season: What’s so great about HDFC Bank(Q3 2012)?

Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last quarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

December 2011 gross income topline has come to INR 86.22 bln or 7.5% up on quarter. September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%.

October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown assets in the new quarter and NIM is good at 4.1% As I expected, Cost income ratio has come down from 48.7% with Loan income at two thirds, of the total topline, branch costs should be controlled to lower 40% levels

Net interest income at INR 31.16 bln and Other income at INR 14.20 bln are also thus higher on September but NII has a yoy growth of 12% down from 16% in September  YOY growth in total income (Indian GAAP) and profits is nearly 35%

Net Profits increased to INR 14.29 bln up 19% on quarter reflecting the seasonal growth in October, year on year growth close to 40% while growing Provision Coverage Ratio to 80% against the required 56% improving Cost Income to 46.7% despite 420 new branches from last year December and 340 were new cities in the bank’s distribution network. ATMs grew from 5000 to 7110.

Deposit growth of 21% on the year despite a CASA of 47.7% and interest rates having plateaued at a peak of around 9.5% and 11% (less than 1 year lending) CASA deposits are now INR 700 bln maintaining the Sept 30 figure of INR 690 bln. Tier I ratio is 11.2% before 3Q profits CASA and other deposits had grown 6.5% and 13% from the June quarter and have not gone down since

Provisions are lower by 50% at INR 3.29 bln Retail is 51% of the book and wholesale 49% with retail loans having grown in the latest quarter at 29% yoy against 15% in wholesale as the bank shuts down ipon its short and medium term lending to reduce risk

India Earnings Season: IDBI Bank results, September 2011

IDBI Bank results


Though we have published in depth reports pursuant to the bank’s quarterly announcements earlier, we rather worry we may have the wrong end of the stick given IDBI’s 8% exposure to the Power sector loans and the historically high NPA rate moving from 1.25% to a higher 1.57% this quarter.


Bank increased profits 20% after relief from 70% PCR by RBI and CASA has improved to 19%


CASA is a low 19% with a lack of transformation mandate from the government for the bank. Its Advances are bigger than Axis with a book of INR 1.56 Tln or $31 bln (20% yoy)


NII tracked a stagnant 1122 crs or $224.4 mln and NIM fell 7bp to 2%, Cost of Funds a high 8.40% for its aggressive retail push supporting its higher cost structure model Expansion is already limited but the bank remains attractive to depositors and reach to good credit seekers remains a plus

Bank Results Season: HDFC Bank showcases awesome retail growth

An HDFC Bank Branch in Hyderabad
Image via Wikipedia

With deposits increasing 9% over the June quarter and Savings accounts increasing 6% year n year of the total 18% growth in Deposits, HDFC Bank did well to run in to September end with a NIM of 4.1%. Advances have grown by 25% from September 2010, for Balance sheet size increase of 20% based on retail loans growth of 30%

The Bank has proved again that efficient management can still help it scale its mature management model as Net NPAs remained a low 0.2% of its Net Advances. and Capital Adequacy also remained at 16% and 11.5% for overall and Tier I based on the current Basel norms in India. India’ s breed of banks continue to grow on equity infusions than a hankering for Tier II capital and thus the bank sizes are inherently not comparable in size to those in China and the USA.

The bank increased PAT to a humongous INR 12 bln ( INR 1199 crores ) or $240 mln for a $1 bln runrate in FY2012 total Balance Sheet assets now exceed INR 3 Tln against INR 8 Tln for SBI and INR 2.5 Tln for ICICI Bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark More details would be apparent in our series after ICICI Bank results come out at the end of the month and HDFC bank results presentation is formally created/shared for the bank

Advances rose to Rs 189,917 crores or $38 bln and deposits outgrew past the $40 bln watermark Fee income was higher by 15% over 2010, at INR 983 crs comparing well with Q1’s 1100 crores. The year on year growth in Topline is the same as for Q1 and profits are up nearly 4% from June Other Income also grew more than 8% as Deposits grew 9% from June 2011 keeping the CASA healthy at 47.1% ( CASA had reached 49% last year)

Net Interest Income rose above expectations to cross INR 3000 crores rising less than 10% QOQ from June 2011 Loan provisions were 393 crores or $78 mln a mere 12% of the NII and the Cost Income Ratio was less than 49%

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