ICICI Bank’s improving growth and higher provisioning positive for stock

India’s second largest private bank by market capitalisation just saw its quarterly net profit jump
ICICI Bank reported 104 per cent increase in its standalone net profit for the financial year ended March 31, 2021, at Rs 16,192.68 crore. The private lender had posted a net profit of Rs 7,930.81 crore in the financial year ended March 31, 2020
Net interest income, the difference between interest earned and interest expended, for the entire FY21 increased by 17.2 per cent. On March 31, 2021, the bank held aggregate COVID-19-related provision of Rs 7,475 crore,” ICICI Bank said in its filing.
ICICI Bank Domestic loan book rose by 17.7% amounting to ₹7 Lakh crore and retail loan book rose by 20% amounting to ₹4.9 Lakh crore at the end of March 2021 mainly driven by strong traction in mortgages, auto and business loans. In the same case the leader HDFC domestic loan book rose by 14% amounting to ₹11.3 Lakh crore and retail loan book rose by 6.7% amounting to ₹5.3 Lakh crore. This outperforming growth in ICICI bank is seen after long time , first time was seen in Mid 2000s.
ICICI Bank’s total capital adequacy on March 31, 2021, was 19.12 % compared to the minimum regulatory requirements of 11.08 %. In the past asset quality cycles, margins were very low at sub 3% and provision coverage ratio (PCR) was low at around ~50% vs. ~3.7% margins and PCR of ~78% today.
Is ICICI Bank back to its old days of aggressive lending considering such a strong loan growth has happened during a very tough year? We do believe that ICICI Bank has been cautious in this cycle largely lending to secured assets and well rated corporate loans

On the other hand, HDFC Bank’s struggles with its online banking has been a recurrent theme. Hardware challenges have caused repeated app outages and moving to cloud could take 12-18 months, according to analysts at Nirmal Bang, another Mumbai-based broking firm.