ICICI Bank Q1 Results Preview: Robust Loan Growth Seen But NIM Pressure To Weigh

ICICI Bank is expected to post mixed results for the quarter ended June, with modest profit growth tempered by margin pressures and seasonal slippages, according to brokerage reports.

The private sector bank, which will announce its March-quarter earnings on Saturday, is likely to report a standalone net profit of Rs 11,770 crore, up 6% year-on-year, according to a poll by Bloomberg. In the March quarter, the bottom line was Rs 12,630 crore.

Kotak Institutional Equities expects a 7% on-year growth in pre-provision operating profit driven by slower net interest income growth due to recent policy rate cuts.

Loan growth is likely to be at 13% on-year, outperforming the industry average, although showing some slowdown across segments.

• Net profit seen up 6% to Rs 11,770 crore

• NII rising 8% to Rs 21,045 crore

• NIM seen at 4.21%, lower than 4.41% (QoQ)

• Provisions seen at Rs 5,099.7 crore

NII growth will be slower than average loan growth due to fall in yield on advances outpacing cost of deposits. Consequently, net interest margins will be lower sequentially.

"We are building NIM to decline 20 bps qoq at 4.0%," Kotak Institutional Equities said in a pre-earnings note.

This reflects the lag in deposit cost reduction versus policy easing. Analysts at Bloomberg expect the bank's NII to rise by nearly 8% on-year to Rs 21,045 crore. NIM is seen at 4.21%, lower than 4.41% in the prior quarter.

Motilal Oswal Securities has also echoed margin pressure concerns due to rate cuts but expects stable asset quality.

The brokerage expects credit costs to remain stable with slippages around 2%, roughly Rs 7,000 crore, without any negative commentary on asset quality.

"Slippages are expected to increase sequentially, driven by seasonally high agri slippages. Hence, provisions are also expected to increase sequentially," Yes Securities said.

Fee income growth should broadly track loan growth, while operating expenses may rise ahead of business growth due to appraisal season, Yes Securities said.

In a nutshell, analysts expect ICICI Bank’s operating profit growth might be modest but positive, around mid-single digits, while margin compression and higher provisions could weigh on overall earnings performance in the near term.

Market participants will watch out for the bank’s ability to re-expand margins, sustain loan growth momentum, and manage provisioning effectively amid a cautious yet optimistic outlook.