Shares of the second-largest private sector bank in India offering a diversified portfolio of financial products and services slumped by 1 percent on BSE to Rs. 1,225.7, during the trading session of Wednesday.
With a market capitalisation of Rs. 8.68 lakh crores, the shares of ICICI Bank Limited opened at Rs. 1,234.75, as compared to its previous closing price of Rs. 1,237.2.
Brokerage Target:
The international brokerage firm CLSA initiated a ‘buy’ rating on ICICI Bank Limited and assigned a target price of Rs. 1,500 per share, representing a potential upside of nearly 22 percent from the current trading price of Rs. 1,233.15.
The positive outlook is based on the view of analysts that the private sector lender is in a strong position with its deposits. This is particularly notable as the banking industry is experiencing a growing gap between deposit growth and credit growth.
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Brokerage Outlook:
CLSA has indicated that it does not expect any significant increase in deposit costs in the near future. Generally, rising deposit costs can affect a bank’s net interest margins (NIMs), as the interest it pays on deposits often exceeds the interest earned on loans.
However, analysts anticipate that ICICI Bank’s margins will remain stable in the upcoming quarters, with any rate cuts likely leading to only temporary NIM compression. In Q1 FY25, ICICI Bank reported a year-over-year NIM contraction of 42 basis points, reducing the margin to 4.36 percent.
Regarding unsecured lending, CLSA noted that the bank’s disciplined underwriting and sourcing strategy has helped keep its portfolio well-managed. They expect loan growth to remain robust, with business banking and MSME lending projected to continue their rapid expansion.
CLSA anticipates that the bank will achieve profitable growth, although it has not set specific guidance for the cost-to-income ratio. Additionally, the bank is expected to report healthy loan growth, with continued strong performance in business banking or MSME lending.
Financials:
The company experienced significant growth in its net interest income (NII), showing a year-on-year rise of around 13 percent from Rs. 20,738crores in Q1 FY24 to Rs. 23,460 crores in Q1 FY25.
Similarly, its net profit increased during the same period from Rs. 11,014 crores to Rs. 12,463 crores, representing a growth of nearly 13.2 percent YoY.
As of Q1 FY25, the total advances grew by 15.7 percent YoY to Rs. 12,23,154 crores, while domestic loans grew by 16 percent YoY to Rs. 11,88,587 crores.
Stock Performance:
The stock has delivered positive returns of nearly 26.5 percent in one year, as well as around 14.5 percent returns in the last six months. So far in 2024, it has given about 23.3 percent of positive returns.
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About the company:
ICICI Bank Limited is a publicly held banking company engaged in the business of providing a wide range of banking and financial services including commercial banking and treasury operations.
The bank also has overseas branches in Bahrain, China, Dubai, Hong Kong, Singapore, and the USA, as well as offshore banking units.
Written by Shivani Singh
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