ICICI Bank Q1 Results Review: Robust Quarter Driven By Strong Loan Growth
Brokerages maintain a 'buy' rating as the bank is well-positioned to deliver steady earnings supported by pristine asset quality.
ICICI Bank Ltd.’s first-quarter earnings beat market expectations, mainly driven by high core income and stable asset quality, according to analysts.
The private sector lender’s net profit surged 39.7% year-on-year to Rs 9,648 crore in the quarter ended June, according to an exchange filing. This is higher than the Bloomberg estimate of a net profit of Rs 9,222 crore. Net interest income increased 38% year-on-year to Rs 18,226 crore.
The bank’s asset quality also improved. The gross non-performing asset ratio fell sequentially to 2.76%. However, the net NPA ratio remained flat at 0.48% quarter-on-quarter. Provisions rose 13% to Rs 1,292 crore year-on-year.
While the bank experienced a slight increase in slippages on the Kisaan credit card portfolio, the management has stated that it is expected to normalise with time.
The lender’s overall advances grew by 18% year-on-year to Rs 10.57 lakh crore, whereas, the total deposits increased by 17.9% year-on-year to Rs 12.38 lakh crore.
This prompted most of the brokerages to maintain a 'buy' rating on the stock as the bank is well-positioned to deliver steady earnings, supported by pristine asset quality and strong momentum in business growth.
Shares of ICICI Bank closed 0.49% higher at Rs 1,000.45 apiece, compared with a 1.17% decline in the benchmark Nifty 50 at close of market on Friday.
Out of the 48 analysts tracking the company, 46 maintain a ‘buy’ and two recommend a ‘hold’ on the stock, according to Bloomberg data. The average 12-month consensus price target implies an upside of 16%.
Here is what analysts said about ICICI Bank’s Q1FY24 results:
Morgan Stanley
Deposit growth accelerated sharply amid sustained domestic loan growth, which remains strong and broad-based across retail, business banking, and SME segments.
Expect funding costs to increase by 40–50 bps and margins to trough around 4.25% to 4.3% in the next few years.
RoA likely to moderate but expected to remain above 2%.
Maintain ‘overweight’ with a target price of Rs 1,350 apiece; reiterates ‘top pick.’
Motilal Oswal
The bank is well-positioned to deliver steady earnings, supported by pristine asset quality and strong momentum in business growth.
Expect earnings growth to moderate to an 18% CAGR over FY23–25, primarily due to a decline in margins and the limited availability of levers in opex and credit costs.
A steady NII growth was driven by a stable mix of the high-yielding retail and business banking portfolio and the low-cost liability franchise.
A treasury gain of Rs 2.5 billion significantly aided the bank's other income growth, which increased by 17% year over year.
Maintain ‘buy’ with a target price of Rs 1,150, implying an upside of 15%.
Elara Capital
NIM is likely to be under pressure due to a rise in the cost of deposits. However, an aggressive NIM dip in FY24 is not expected.
ICICI Bank is seeing strong momentum across retail products.
A rise in slippages in the quarter was attributed to a seasonal addition to the KCC portfolio.
Maintain ‘buy’ with a target price of Rs 1,192, implying an upside of 20%.
Investec Securities
Cost of funds repricing may continue for two more quarters due to the relatively higher maturity of term deposits.
Stabilised NIMs are expected to remain at least 35–40 bps higher due to a steadily improving product mix.
Expect ICICI Bank to continue growing at an 18% plus CAGR over the next few years without any compromises to asset quality.
Maintain ‘buy’ with a target price of Rs 1,132.
