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ICICI Bank likely to see significant jump in Q2 profit, but loan growth may slow down

Net interest income is expected to be more than 12 percent year-on-year with slowing down loan growth to around 5-6 percent YoY, but deposits growth could be around 18-20 percent YoY.

The country's second largest private sector lender, ICICI Bank, on October 31, is expected to report significant year-on-year growth in September quarter profit due to low base in the year-ago period. In Q2FY20, profit was affected by deferred tax assets hit following change in corporate tax rate by the government.

Profit is likely to be in the wide range of Rs 3,000-4,000 crore against Rs 655 crore in same period last year. Provisions may remain elevated on year-on-year basis, but the sequentially may decline as the bank already made high contingent provisions for likely COVID-19 related defaults.

Net interest income is expected to be more than 12 percent year-on-year with slowing down loan growth to around 5-6 percent YoY, but deposits growth could be around 18-20 percent YoY.

"We expect a pre-provision operating profit (PPoP) growth of around 15 percent YoY with NII growth at 12 percent YoY partly aided by operating leverage. Loan growth to slow to around 6 percent but NIM (core) to remain stable QoQ at 3.7 percent," said Kotak Institutional Equities which sees 547.6 percent YoY growth in Q2 profit.

"We expect provisions to remain high but lower than the previous quarter as we don't see the bank making the same quantum of contingent provisions as we saw in Q1FY21. We expect focus to remain on the expected restructuring by Q4FY21," the brokerage added.



HDFC Securities also expects loan growth to slow further to 5.7 percent YoY, and core earnings to grow at 13 percent YoY.

Incremental COVID-19 related provisions, comments on collection efficiency, and movement in BB and below-rated book and outlook on asset quality (including restructuring) would be key factors to watch out for, said the brokerage.

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