ICICI Bank Share price  surged nearly 9% on Tuesday, despite the bank having reported a weak fourth quarter result ended March 2018. It is early days yet, but this signals that investors faith has been restored to an extent in CEO and MD Chanda Kochhar’s growth strategy for the bank, which as per analysts was quite evident in the financial audit report. After touching a high of Rs 314.50 per piece, the share price of ICICI Bank was trading at Rs 309.40 per piece above Rs 20 or 6.91% at around 1457 hours on BSE. 
 
ICICI Bank posted net profit of Rs 1,020 crore which was down by a massive 49.62% from Rs 2,024.64 crore in the corresponding period of previous year. Q4FY18 net profit was also poor compared to earnings of Rs 1,650 crore of preceding quarter, as they witnessed a decline of 38.19%.

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Reason behind the decline was the massive parking of money in provisions as gross non-performing assets (NPAs) surged at a higher rate when compared to previous quarter. 

Talking to media Kochhar stated that, going forward, ICICI Bank’s strategy will be anchored around three key factors. They are ‘Preserve, Change, Grow’ . A meeting is being held on Tuesday itself to discuss budget and strategy for the financial year ahead. 

Morgan Stanley says, “Focus for the quarter was on asset quality given RBI's move on classifying stressed loans as NPLs. Slippages were Rs 157 bn (MSE of Rs 135 bn) and drilldown list declined Rs 143 bn QoQ. Core PPoP was 8% ahead of our estimate, surprising on margins, fee growth and opex.”

Credit Suisse said, “Management guided to raising NPL cover to 70% over next two years. Pre-prov ROA is healthy at 2.3% and with residual non-NPA stress now ~2.8% of loans; bank is comfortably capitalized with CET1 at ~14.5% to sustain loan growth pick-up without an equity dilution.”

Deutsche Bank said, “As largely expected, ICICI Bank recognized a significant part of stress (slippages at INR 157 bn) emanating from its watchlist. The overall stress book is now largely recognized with residual stress at 2.6% of loans.”

Provisions of ICICI was at Rs 6,625.75 crore in Q4FY18, surging by a whopping 128.61% as against Rs 2,898.22 crore a year ago same period. Provision coverage ratio increased by 690 bps from 53.6% at Q4FY17 to 60.5% atQ4FY18, further strengthening the balance sheet.

GNPA of the Bank stood at Rs 54,062.51 crore this quarter, higher by 27.05% from GNPA of Rs 42,551.54 crore in Q4FY17. In percentage terms, GNPA was at 8.84% in Q4FY18 higher from 7.82% in Q4FY17 and 7.89% in Q3FY18. 

Analysts at Goldman Sachs said, “ICBK addressed one of the most important investor concerns by cleaning up its balance sheet issues, partly driven by the recent RBI regulations; in the quarter, recognition of earlier-identified stressed pool of loans was Rs157bn, 13.6% of loans - annualized.”

They added, “We believe this should help boost confidence in an inflection in asset quality and earnings trajectory, in line with our thesis.”

Therefore the above mentioned analysts have maintained a buy call on ICICI Bank, as Kochhar’s business plan for the bank comes as a good sign ahead. 

Edelweiss Financial Service said, “ Pick up in growth, robust retail segment and moderation in credit cost (major stress recognition done) will enable ICICI Bank clock >15% RoE by FY20E. Maintain ‘BUY’ with TP of Rs 370.”