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IDBI Capital Report
ICICI Bank Ltd. reported strong credit growth at 16% YoY better than its peers while deposit growth slowed down to 15% YoY (versus 20% YoY FY24). We expect 15% compound annual growth rate (FY24-26E) loan growth. Net interest margins declined slightly by 4 bps QoQ to 4.36% led by decline in yields.
Further, management guided yield on advances to remain stable in near future. Asset quality remains stable although slippages increased due to agri non-performing asset.
ICICI Bank reported strong profitability growth at 15% YoY led by lower provisions. Pre-provision operating profit grew by 13% YoY led by lower net interest income growth (up 7% YoY).
Lower credit costs led by better recoveries resulted in best return ratios in last few years; return on asset at 2.3%. We have maintained estimates and ‘Buy' rating with a new target price of Rs 1,400 (Rs1,375), valuing parent business at Rs 1,187 at 2.6 times price/adjusted book value FY26E and rest for the subsidiaries.
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