ICICI Bank delivered another stable quarter in a highly uncertain environment as credit costs stood at just 37bp, Q3 slippage rate came in lower than Q1, and reported ROA at 2.36% (2.37% for 9m FY25).
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ICICI Bank Ltd once again reported a healthy performance even in the current challenging environment characterized by controlled provisions, impressive cost control, healthy other income and stable asset quality (ex-Agri). Growth in net interest income was in line, while net interest margin contracted 2bp qq. The bank’s substantial investment in technology provides some cushion while continued productivity gains have helped maintain a tight leash on cost ratios.
A steady mix of high yielding portfolio and broad-based growth across product lines is enabling profitable growth while maintaining healthy business diversification.
Secured asset quality remained stable (ex-Agri) with no signs of stress, leading to improvement in GNPA ratio. A contingency provision buffer of Rs 131 billion (1.0% of debt) provides further comfort in case of any future cyclical stress.
We twist our earnings estimates and ROA/ROE to 2.2%/16.8% in FY27. Buy with a revised target price of Rs 1,550 (based on 2.5x FY27E adjusted book value).
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