AIF reversals are expected to drive strong PAT growth of 19.2% in ICICI Bank’s Q4 results preview

Private lender ICICI Bank is set to reveal its January-March quarter (Q4) financial year 2023–24 (FY24) earnings on Saturday, April 27. The brokerage company KRChoksey Research anticipates the bank to report a 19.2% YoY improvement in earnings after tax, mostly due to the reversal of AIF provisions for non-performing assets (NPAs), given the improving macroeconomic situation and decreasing credit risk.

The loan book of ICICI Bank is anticipated to grow by 2.2% quarter over quarter and 17.7% year over year. According to KRChoksey Research, small and medium-sized enterprises (SME) and the retail sector are expected to be the primary drivers of this expansion.

Furthermore, KRChoksey Research projects that ICICI Bank’s deposits would increase by 17.4% YoY and 4.0% QoQ, assuming a consecutive increase in the CASA. The predicted growth rates of deposits and the expected improvement in CASA point to a healthy increase in total deposits with a favorable mix of low-cost funds. These elements may positively impact the bank’s overall profitability as well as its financial performance.

Additionally, the brokerage projects that the bank’s PPOP would increase by 7.8% YoY, to a cost-to-income ratio of 41.3%, up from 39.1% in Q4 FY23.

Brokerage firm Nomura predicts that ICICI Bank will record a net profit of Rs 10,540 crore, up 16% year over year from Rs 9,121.9 crore in Q4 FY23. Operationally, it is anticipated that net interest income (NII) will climb to Rs 19,010 crore, signifying an 8% YoY and 2% QoQ increase. BNP Paribas predicted that ICICI Bank’s net profit will increase to Rs 9,551.6 crore, or only 4.7% per year, or 7% per quarter. It said that in the quarter under review, PPoP and NII would increase by almost 6% each, to Rs 14,666.6 crore and Rs 18,798.9 crore, respectively.

According to Equirus Securities, ICICI Bank might report a net profit of Rs 10,571.9 crore, NII earnings of Rs 18,850.9 crore, and PPoP profits of Rs 14,967.5 crore. The brokerage expects net interest margins (NIMs) to drop by 10 basis points quarter over quarter, from 4.4% in Q3 FY24 to 4.3% in Q4 FY24. Equirus predicts that in Q4 FY24, ICICI Bank will see robust year-over-year growth in deposits and advances of 17% and 19%, respectively.

In ICICI Bank’s Q4 2024 results, Kotak Securities pointed out the main areas of concern, stating, “Key concern would be the progress of NIM as the cost of funds is yet to peak, especially with slower CASA growth.” Another important topic of conversation will probably be deposit mobilization.”