ICICI Bank Q3 Results Review - Net Interest Margins Continue To Decline; Asset Quality Improved: IDBI Capital

IDBI Capital Report

ICICI Bank Ltd.’s (one of our top picks) net interest margin continue to decline during Q3 FY24 led by higher cost of deposits. Further, management guided for margin pressure to sustain in Q4 FY24 however, extent of compression will be lower.

Asset quality improved led by lower slippages. Credit growth remains strong led by domestic book. We expect 16% compound annual growth rate (FY23-26E) loan growth.

ICICI Bank reported strong profitability growth at 24% YoY led by decline in provisions. Pre-provision operating profit grew by 1% YoY led by higher operating expense.

Lower credit costs led by better recoveries resulted in best return ratios in last few years; return on asset at 2.3%. We have moved to FY26E estimates and expect earnings per share to grow at 17% CAGR (FY23-26).

We maintain ‘Buy’ with a new target price of Rs 1,350 (Rs 1,240), valuing parent business at Rs 1,192 at 2.7 times price/adjusted book value FY26E and rest for the subsidiaries.

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