ICICI Bank Q1 Results Review: Credit Costs May Inch Up But Growth Trajectory To Continue
Middle and senior management attrition is another key development to look out for, analysts said.
ICICI Bank Ltd.'s first quarter earnings for fiscal 2025 were in-line with most estimates and in some cases, better than peers, according to analysts.
While the private sector lender is expected to see its growth trajectory continue, credit costs, and middle and senior management attrition, would be some key things to watch out for in the near future, analysts said.
The private sector lender's standalone net profit rose 14.6% year-on-year to Rs 11,059 crore in the quarter-ended June, according to an exchange filing on Saturday.
Net interest income, or core income, for the lender increased 7.3% year-on-year to Rs 19,552.9 crore.
Asset quality remained stable with gross non-performing asset ratio improving one basis points quarter-on-quarter to 2.15%. Net NPA ratio too, remained stable at 0.43%, compared to 0.42% in the previous quarter.
Here is what analysts said about ICICI Bank Q1FY25 results:
Nuvama
Sequential dip in NIM of 4 basis points and 11% year-on-year increase in slippages was lower than expected.
Despite elections and the heat wave, the bank's retail slippage ratio declined YoY.
Yield on loans decreased 8 bps QoQ due to higher reversals on KCC and competitive intensity in corporate/mortgage loans.
High treasury income at Rs 6 billion driven by investment revaluation after new norms.
Reiterate 'buy' with a target price of Rs 1,207.
Emkay Global
Deposits outpaced industry and grew 15% YoY.
LDR expansion to 86% along with better investment yields led to contained margin contraction of 4 bps.
Bank has industry-high specific PCR of 80% and contingent provision buffer, providing comfort amid rising system level risk.
Lender seeing gradual slowing of growth in select retail segments, with risk-reward being unfavorable.
Higher middle/senior management attrition leading to business dislocation, and slower-than-expected growth/margin trajectory owing to macro disruptions are key risks.
Maintain 'buy' with a target price of Rs 1,450.
Dolat Capital
Credit costs at 50 bps, after adjustment for release of AIF provisions worth Rs 389 crore.
NIM to be range-bound until rate cuts.
Expect loan growth of 15% YoY over FY25-26.
Lower than expected growth metrics, higher than expected opex, and pressure on margins, could be key risks going forward.
Maintain 'buy' with a target price of Rs 1,415
Nirmal Bang
PAT grew by 14.6% YoY due to continued loan growth momentum.
Employee expenses up 12.5% YoY, reflecting an increase due to annual increment.
Estimate earnings CAGR of 13.9% over FY24-26, driven by loan CAGR of 15.6% and stable NIM of 4.4%.
Estimate average RoA of 2.3% during FY24-26.
Maintain 'buy' with a target price of Rs 1,450.
Systematix Institutional Equities
Loan growth was driven by business banking and SME, whereas, there was some moderation in unsecured credit.
Bank has LCR of 122.7% on a consolidated basis and expects an impact of 10-15% due to new LCR guidelines.
Expect credit deposit growth rates to be impacted by new guidelines.
Credit costs to inch up on normalisation of recoveries and slippages.
Nearly 2x higher miscellaneous income due to higher dividends from subsidiaries.
Retain 'buy' with a target price of Rs 1,380.
