Understand ICICI Bank Q4 2017

If you are not the finance expert then reading and understanding those financial results could be very hard for you. Let me make it easy for you to understand those results. This blog is for the investors who are juggling between ICICI Bank and Axis Bank for investment.

We recently shared our view in regards to what to do with the Axis Bank on our blog post recently. I will recommend you to read that before going ahead. It will help you to understand ICICI Bank results clearly.

ICICI Bank Q4 Results in comparison to previous quarters

Comparing Q-on-Q results helps us to understand the trend of the performance. It also tells you how much steam remaining for uptrend or downtrend in their performance and what to expect in the next quarter. So if we look at the table below it throws a lot of light on its quarter results.

ICICI Bank Q4 – 2017 Q3 – 2017 % change
Total Income 28,603.29 27,875.67 2.61%
Interest expended 8,129.41 8,854.65 -8.19%
Gross Profits 20,473.88 19,021.02 7.64%
Operating Expenses 14,209.03 12,349.80 15.05%
Operating Profits 6,264.85 6,671.22 -6.09%
Net Profits 2,082.75 2,610.83 -20.23%


So in the Q4 they collected 2.61% more in revenues compare to last quarter. Axis Bank on the other end collected 2.2% less in Q4 against in Q3. So ICICI Bank did a good job compare to Axis Bank in this front.

Interest expenses fell down by 8.19% and this was because interest rates on deposits were slashed down post demonetisation of notes. This helped its gross profits shoot up by 7.64% compare to last quarter. The gross margin stood at 71.58% for the quarter compare to 54.59% of Axis Bank. This big difference is due to their different business model and their focus on different verticals of the business. ICICI banks 45% income is generated from other income (Other than lending business) compare to Axis Banks’ lending business represents 75% of their total income.

The bad news starts in the statements from here, operating expenses. The operating expenses shoot up by 15% compare to last quarter. This results into a fall of 6% in their operating income. The operating profits margin for ICICI Bank stand at 21.90%. Whereas Axis Banks operating margin stood at 30.85%.

Net profits for ICICI Bank Q4 stand at Rs 2,082.75 down 20% compare to last quarter. We are not stressing on this figure as it completely manipulative for the banks. The profitability depends on the banks Asset quality and what kind of provisions they are making every quarter. We will get on to that subject soon.

ICICI Bank 2017 full year results

Let us have a look and compare its 2017 results with 2016.

ICICI Bank 2017 2016 % change
Total Income 113,397.63 101,395.85 11.84%
Interest expended 34,835.83 33,996.47 2.47%
Gross Profits 78,561.8 67,449.38 16.48%
Operating Expenses 48,169.97 40,789.56 18.09%
Operating Profits 30,391.83 26,609.82 14.21%
Net Profits 10,188.38 10,179.96 0%


If we look at the yearly report card than they are growing revenues at healthy rates and also their gross profits. Operating expenses and asset quality had eaten up all their good work they did to grow their revenues.

Is it their operating expense grew because of expansion of branches in the rural India? Will let you do a bit of research on it.

Asset Quality

Fresh addition of NPA’s in this quarter was around Rs 5,378 crore. Management have come out and is stressing that it is gradually falling down from Rs 8,249 crore reported in the first quarter of 2017. Investors should compare these NPA’s with operating profits of the banks. To me it is alarming when NPA’s reported are 50% above their operating profits. The NPA’s for the Q4 stand at 86% and for the year at 94%!


This is my formula right now to look at any Indian banks (NPA’s Issue) profitability.

Operating profits – NPA (fresh NPA’s reported in every quarter) = Net Profits

ICICI Bank profits for 2017 stands around Rs 1,900 crore and Axis Bank should not report any profits for the year as their NPA’s for the year crossed 20% more to their operating profits according to that formula.

Looking and comparing financial statements of both the banks it looks ICICI Bank is in better shape and can grow its profits with NPA’s issue by curbing its operating expenses. We valued this business on its 2017 financial results to Rs 120 per share. Also ICICI Bank stock price is trading at 38% premium to its expected upper band of 2018 intrinsic value. We are waiting for analysts to come out with their earnings expectations for 2019 to calculate its 2019 intrinsic value band.

But there is a good chance for ICICI Bank stock price to move downward compare to its chances to climb up from here on.