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HDFC Securities Institutional Equities
ICICI Bank Ltd.'s Q4 FY26 earnings beat expectations, largely benefitting from strong loan growth (~16% YoY) and negligible credit costs, partly offset by relatively soft operating performance. Loan growth was healthy, driven by continued traction in business banking loans, and an uptick in mortgage loans.
Deposit growth (~11% YoY; 8% QoQ) witnessed uptick but continues to lag loan growth, even as end-period current accoung and savings account percentage improved to 41.4% (+121bps QoQ), led by strong seasonality in current account balances (+23% QoQ).
ICICI Bank is placed comfortably on liquidity coverage ratio and loan-to-deposit ratios to outgrow the industry in medium-term. Credit costs were negligible owing to recoveries from written-off accounts, higher corporate recoveries, and lower retail slippages.
Softer traction in other income owing to hardening of bond yields and curb on forex trading, coupled with soft NII growth led to relatively weak operating performance (FY26 pre-provision operating profit growth: ~3%).
ICICI Bank's superior tech capabilities, coupled with distribution expansion, are likely to help sustain operating efficiencies. We maintain Buy with a revised SOTP-based target price of Rs 1,630 (standalone at 2.4x Mar-28 adjusted book value per share).
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