Sharekhan's research report on ICICI Bank
ICICI Bank reported strong earnings growth of 34% y-o-y/10% q-o-q, with RoA at 2.2%. Core PPOP grew 35% y-o-y. NIM expanded by 34 bps q-o-q to 4.65%. We believe NIMs are expected to peak out for the bank by Q1FY2024, taking a base case as the last hike by the RBI in February 2023. Slippages were higher at 2.8% annualised vs. 2.3% in the last quarter. However, higher recoveries restricted the increase in net slippages to Rs. 1,119 crore. Asset quality showed improvement q-o-q and coverage ratio stands comfortable at 83%. While reported credit costs were at 90 bps (annualised), the bank made a contingent provision of 15 bps of loans this quarter, taking the total contingent provision to 1.2% of loans. Loan growth remained healthy and was broad-based, up 20% y-o-y and 4% q-o-q, led by the retail and corporate segments. Total deposits grew by 10% y-o-y and 3% q-o-q, while CASA deposits grew by 6% y-o-y/flat q-o-q. CASA ratio moderated to 45.3% vs. 46.6% q-o-q.
Outlook
The stock is currently trading at 2.5x/2.1x/1.8x its FY2023E/FY2024E/FY2025E core BV estimates. We maintain our Buy rating on the stock with an unchanged PT of Rs. 1,120. The strong outperformance in recent years implies that further re-rating is likely to be a very gradual one.