ICICI Bank will be in focus on January 23 after the private sector lender posted its December quarter results on Saturday.
ICICI Bank reported a net profit of Rs 8,312 crore for the December quarter (Q3FY23), a 34.2 percent increase over the last year, helped by a healthy 21.4 percent growth in domestic loan book and stable net interest margin (NIM).
The bank’s net interest income (NII) rose 34.6 percent to Rs 16,465 crore from Rs 12,236 crore in the corresponding quarter last year
The domestic loan book grew at a healthy 21.4 percent, driven mainly by loans to small businesses and retail.
The gross bad loans as a percentage of its loan book came down to 3.07 percent from 3.19 percent a year ago.
Here is what brokerages have to say about the stock and the company after its December quarter earnings:
Retain ‘buy’ with SOTP based target price at Rs 1,090.
ICICI Bank saw another steady quarter with core PAT at Rs 83 billion, beating the broking house estimates by 4 percent.
While NIM was higher at 5.08 percent (PLe 4.91 percent) driven by lower interest cost, higher provisions were offset by lower opex. As revenue growth would lag that of loans in FY24, opex intensity remains a key.
Loans grew at 3.8 percent QoQ which was led by corporate (+4.7 percent), retail (+4.5 percent), and SME/BuB (+6.5 percent); brokerage house factoring a loan CAGR of 17 percent over FY23-25.
Motilal Oswal
Reiterate ‘buy’ with the target price at Rs 1,150.
The bank reported a strong performance in 3QFY23, driven by healthy NII/Core PPoP growth and controlled provisions (despite creation of contingent and additional NPA provisions) underpinned by pristine asset quality.
The stable mix of a high-yielding portfolio (retail/business banking) and a low-cost liability franchise is driving steady NII growth, resulting in margin expansion to 4.65 percent.
The bank is seeing a strong recovery across segments, while asset quality trends remain steady with industry-best PCR at ~83 percent. The additional Covid-related provision buffer (1.2% of loans) provides further comfort.
Morgan Stanley
Research firm has kept overweight rating on the stock with a target at Rs 1,250 per share.
It was another strong quarter, with 30 percent core PPoP growth, however, the key investor question is whether PPoP growth can be sustained in FY24-25, reported CNBC-TV18.
JPMorgan
Brokerage house has kept ‘overweight’ rating on the stock with a target at Rs 1,150 per share.
The bank has continued the strong earnings momentum in Q3. Gains on NIM/PPoP were re-invested in boosting standard reserves.
It believes the bank has levers on provisions/opex to keep RoA stable, while bank to deliver a 19-20 percent EPS growth over the next two years, reported CNBC-TV18.
CLSA
The broking house has kept the ‘buy’ rating on the stock with a target at Rs 1,175 per share.
The impeccable Q3, core PPoP growth driven by NIM expansion and robust loan growth.
The management indicated they do not see growth challenges due to deposit accretion issues. The opex growth moderated after 6-7 quarters, should provide offset to normalise margin in FY24.
The risk to RoE seems low given a high contingency buffer & flexibility on Opex, reported CNBC-TV18.
Bernstein
Research firm has maintained ‘outperform’ rating with a target at Rs 1,000 per share as the Q3 beat led by margin expansion & moderation in expense growth.
Banks healthy Q3 with EPS increase driven by healthy NII growth with healthy loan growth & a sharp increase in NIM.
The weak deposit growth given high LDR now would be key concern, reported CNBC-TV18.
Jefferies
Brokerage house has maintained the ‘buy’ rating on the stock with a target at Rs 1,150 per share. The profit was ahead of estimates aided by stronger than expected NIMs that lifted NII growth.
The SME & unsecured lending continue to lead loan growth, however, fee growth lagged at 4 percent, partly as bank is re-orienting staff responsibilities.
The CASA growth slowed, while asset quality stays robust & bank beefed up reserves, reported CNBC-TV18.
Broking house estimate bank to deliver RoA/RoE of 2.2 percent/17.0 percent in FY25.
