ICICI Bank shares slip ahead of Q3; analyst see 20% PAT drop

The bank's provisions and contingencies for the quarter (Q2FY17) had increased by 651.75% to Rs 7082.69 crore.

In the previous quarter (Q2FY17) the bank had reported net profit of Rs 3102.27 crore. Photo: Reuters

India's one of the largest private bank, ICICI Bank is set to announce its financial result for the quarter ended on December 31. Ahead of the announcement, the shares of the bank during early trade dropped.

At 1057 hours the shares of the company were trading at Rs 268.05 per piece, down 1.03% or Rs 2.74 on BSE.

In the previous quarter (Q2FY17) the bank had reported net profit of Rs 3102.27 crore, registering growth of 2.38% year-on-year (yoy) and 38.96% quarter-on-quarter (qoq).

The bank's provisions and contingencies for the quarter (Q2FY17) had increased by 651.75% to Rs 7082.69 crore against Rs 942.16 crore for the corresponding quarter of the previous year. On quarter-on-quarter basis, the provisions were up by 181.67%.

Private banks which are hit by the recent demonetisation exercise, Kotak Institutional Equities, in a report released on January 5, had said that the performance of private banks is expected to be weaker with 20% yoy expected earnings decline led by higher provisions for ICICI Bank.

As per the report, the research agency stated that it expects the loan loss provisions of ICICI Bank at Rs 21,248 million, down from Rs 28,441 million during the December, 2015 quarter.

Moreover, Alpesh Mehta, Analyst, Motilal Oswal, had said, "We expect loan growth to moderate to 4.5% YoY. Retail loan growth has picked up over the last two years. However, demonetisation may have resulted in a temporary moderation. Fee income growth will remain muted. We have factored in approx. 2% YoY growth in fee income, led by low corporate fees. Trading gains should be healthy. Overall, we expect non-interest income to decline 12% YoY owing to gains booked on stake sale in PruLife in 3QFY16."

Mehta believes that the gross slippages are expected to remain high in Q3FY17, with slippage ratio estimated at around 7%. He anticipates profit after tax (PAT) to decline 26% yoy, led by higher operating expenses and elevated credit costs.

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