ICICI Bank Q1 Results Review - Another Solid Quarter; RoE Sustains At ~19%: Motilal Oswal

Motilal Oswal Report

ICICI Bank Ltd. reported another strong quarter (return on asset of 2.4%), led by robust loan growth, stable asset quality and a slight decline in margins.

Core pre-provision operating profit grew 35% YoY, while net interest margins moderated 12 basis point QoQ to 4.8%. Business growth was strong, with overall loans growing 18% YoY.

Asset quality remained broadly stable with provision coverage ratio at 83%. The bank maintains a total contingency buffer of Rs 131 billion.

ICICI Bank is well positioned to deliver steady earnings, supported by pristine asset quality and strong momentum in business growth. We estimate return on asset/return on equity of 2.2%/17.9% in FY25.

After a strong outperformance backed by robust earnings growth (three year compound annual growth rate of ~60%), we estimate earnings growth to moderate to an 18% CAGR over FY23-25, affected largely by a decline in margins and limited levers available on the opex/credit cost front.

We thus expect stock returns to be moderate for ICICI Bank and many other large-cap banking stocks. Maintain 'Buy'.

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