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IDBI Capital Report
ICICI Bank Ltd.'s (one of our top picks) reported decline in net interest margins by 12 basis points QoQ to 4.78% during Q1 FY24 led by higher cost of deposits.
Asset quality remain stable with gross non-performing asset at 2.76% versus 2.81% QoQ led by higher slippages. Also, restructured assets stood at 0.4% versus 0.4% QoQ.
Credit growth declined to 18% YoY versus 19% YoY (FY23) as overseas book declined by 29.5% YoY.
ICICI Bank reported strong profitability growth at 40% YoY led by strong net interest income growth. During Q1 FY24, NII grew by 38% YoY against a loan growth of 19% YoY; however margins declined QoQ.
Pre provision operating profit grew by 37% YoY led by lower other income (up 17% YoY).
Lower credit costs led by better recoveries resulted in best return ratios in last few years; return on asset maintained at 2.4%.
We maintain ‘Buy' with a target price of Rs 1,240, valuing parent business at Rs 1,082 at 2.9 times price/adjusted book value FY25E and rest for the subsidiaries.
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