Sharekhan's research report on ICICI Bank
ICICI Bank reported solid earnings growth of 30% y-o-y/10% q-o-q, with RoA at 2.4%. Core PPOP grew 36% y-o-y/ 5% q-o-q led by strong NII growth (up 40% y-o-y/ 7% q-o-q driven by a 25 bps q-o-q rise in NIM to 4.90%), healthy core fee income (9% q-o-q/11% y-o-y) partly offset by higher opex growth (9% q-o-q/ 27% y-o-y). Core credit cost & net slippages were almost negligible, which was a key major positive. The bank currently has contingent provision buffers of 1.3% of loans. Deposits growth marginally outpaced loan growth q-o-q, which was also a key positive. Loan growth remained healthy and was broad-based, up 19% y-o-y and 5% q-o-q. Total deposits grew by 11% y-o-y and 5% q-o-q, driven by both CASA (up 6% q-o-q/ 4% y-o-y) and term deposits (up 17% y-o-y/ 4% q-o-q).
Outlook
We maintain a Buy rating with an unchanged PT of Rs. 1,120. We believe now in terms of ROA expansion levers from here on, only operating leverage can help, which could be partly offset by NIMs moderation. Thus, strong outperformance and further re-rating from here on is likely to be a very gradual one based on sustainable performance and quality earnings. Stock currently trades at 2.3x/1.9x its FY2024E/FY2025E core BV estimates.
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