Buy ICICI Bank; target of Rs 340: Centrum

Centrum's research report on ICICI Bank

ICICI Bank’s Q2FY18 NII at Rs 57bn (+8.7% YoY) was a tad ahead our estimates, led by 13% YoY growth in domestic loans and further improvement in NIM (reported) to 3.27% (+14bps YoY). Fee income grew 9% YoY; adjusted for gains on sale of stake in insurance business, overall non-interest income declined 7.6% YoY. Adjusted operating profit thus came in at stood at Rs49.7bn (flat YoY).

Outlook

We have tweaked our estimates marginally on the revenues (following improved margins) / credit costs (higher provisions). Retain Buy with SOTP based TP unchanged at Rs 340. Key risk – a spike in stressed assets or higher-than-expected margin compression.