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Why ICICI Bank share price closed 5% lower today despite 26% rise in Q4 net profit

Share price of ICICI Bank ended 5.23% lower at Rs 320.10 compared to the previous close of Rs 337.75  on BSE

Aseem Thapliyal | May 11, 2020 | Updated 18:32 IST
Why ICICI Bank share price closed 5% lower today despite 26% rise in Q4 net profit
Share price of ICICI Bank opened with a gain of 2.12% at Rs 344.90 today. ICICI Bank is trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages

ICICI Bank share price closed lower today after the private sector lender reported earnings which came below street expectations. Share price of ICICI Bank ended 5.23% lower at Rs 320.10 compared to the previous close of Rs 337.75  on BSE. ICICI Bank stock touched an intraday low of Rs 318.15 (5.8%) .

The stock opened with a gain of 2.12% at Rs 344.90 today. ICICI Bank is trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.  The stock has fallen 6.58% in last one month.  Share price of ICICI Bank has declined 40.58% since the beginning of this year and lost 16.81% during the last one year. Total 32.16  lakh shares changed hands amounting to turnover of Rs 105.63 crore on BSE.

The stock hit its 52-week high of Rs 552.4 on December 30, 2019 and touched its 52-week low of Rs 269 on March 14, 2020. 43 of 45 brokerages rate the stock "buy" or 'outperform' and two "hold", according to analysts' recommendations tracked by Reuters.

ICICI Bank to raise up to Rs 25,000 crore via debt securities

ICICI Bank on May 9 reported a 26 per cent rise in Q4 net profit at Rs 1,221 crore compared to Rs 969 crore a year ago. The lender had made COVID-19 related provision of around Rs 2, 725 crore against standard assets to strengthen balance sheet.

Excluding COVID-19 related provisions, the profit after tax would have been Rs 3,260 crore in Q4 FY20, the bank said. The profit was way lower than brokerages' expectations. Edelweiss Securities expected the  lender to report 278 per cent YoY rise in Q4 net profit to Rs 3,664 crore. Global brokerage Nomura forecasted Q4 profit after tax (PAT) to come at Rs 4,252 crore, up 339 per cent.

In last fiscal, the lender logged a rise of 135 per cent year-on-year (YoY) growth in its net profit at Rs 7,931 crore for the financial year ended March 31, 2020, driven by rise in other income, operating income, NII and lower tax cost. The bank posted net profit of Rs 3,363 crore in the financial year 2018-19.

For the full year FY20, the bank's net interest income, the difference between interest earned and interest expended, rose 23.14 per cent to Rs 33,267 crore versus Rs 27,015 crore in the previous fiscal. Non-interest income rose to Rs 15,156 crore as compared to Rs 13,146 crore in FY19.

ICICI Bank cuts fixed deposit rates by up to 0.50% effective May 11

The bank's board did not recommended any dividend for financial year 2019-20. "In line with the Reserve Bank of India's circular issued on April 17, the board has not recommended any dividend for FY20," the lender said in the exchange filing.

The lender has classified Singapore based oil trading company Hin Leon Trading Pte and a West Asia based healthcare group as NPAs.

On April 21, ICICI Bank share closed lower amid reports that the lender has $100 mn exposure to  Singapore-based oil trading firm Hin Leon Trading Pte which has filed for bankruptcy in that country. ICICI Bank share price ended 8.28% or 30 points lower at Rs 331.55 compared to the previous close of Rs 361.50 on BSE.

The bank has lent $100 million to Ocean Tankers, a unit of Singapore oil-trading firm,  of which $75 million is secured through investory, according to a report by S&P owned Platts agency. "Hin Leong and its sister company Ocean Tankers, which owns more than 100 cargo ships, have both filed for bankrutpcy on Friday which will give 30 days to restructure debt.

Hin Leong founded by Chinese billionaire Lim Oon Kuin has total debt of close to $4 billion which will have to bw restructured," the report said. Later, the lender in a communication to BSE confirmed having exposure to the company.

"We confirm that the Bank, in the normal course of its business, has exposure to the borrower group in question, and is taking due steps to protect its interests, and will appropriately reflect the same in its financial statements, as it would do in respect of all its banking exposures," it said in a statement.

By Aseem Thapliyal

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