ICICI Bank likely to deliver superior profitability, return ratios - Here's why

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26 Aug, 2025 12:21

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Anand Rathi

ICICI Bank is strongly positioned in most of the retail banking products along with the diversified nature of its loan portfolio. This has allowed the bank to register strong advances growth of ~11 percent CAGR in the past four years with asset quality staying under control.

ICICI Bank reported a net interest income growth of 24.3 percent in its Q3FY20 standalone results at Rs 8,545 crore as against Rs 6,875 crore in Q3FY19, driven by asset growth and a net interest margin of 3.7 percent.

Provisions declined by 51 percent YoY to Rs 2,083 crore in Q3FY20 from Rs 4,244 crore in Q3FY19. PAT came in at Rs 4,146 crore in Q3FY20 compared to Rs 1,605 crore in Q3FY19, registering a growth of 158 percent YoY.

Total advances increased by 13 percent YoY to Rs 6,35,654 crore at December 31, 2019 from Rs 564,308 crore at December 31, 2018. The YoY growth in domestic advances was 16 percent at December 31, 2019. The Bank has continued to leverage its strong retail franchise, resulting in a 19 percent YoY growth in the retail loan portfolio at December 31, 2019.

During the quarter, the gross additions to NPAs were Rs 4,363 crore. Recoveries, upgrades and other deletions, excluding write-offs, from non-performing loans were Rs 4,088 crore in Q3 2020.

Net NPA decreased by 36 percent from Rs 16,252 crore at December 31, 2018 to Rs 10,389 crore at December 31, 2019. The net NPA ratio decreased from 2.58 percent at December 31, 2018 to 1.49 percent at December 31, 2019.

Growth in loan book strongly supported by retail advances growth. Retail have been doing strong growth from most segments with unsecured/business banking and mortgages are growing fast and this is due to retail market share in some segments is lower for the bank and is catching up.

With improving asset quality and better growth trends, we believe ICICI Bank is favourably positioned to deliver superior profitability and return ratios. We have factored in the latest information into our model and revised our estimates. We continue to remain positive on the company over medium to longer term perspective with a buy rating and target of Rs 617 per share.

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