Motilal Oswal`s research report on ICICI Bank"ICICI Bank’s (ICICIBC) 2QFY15 NII/PPP/PAT growth of 15/21/16% YoY were largely in line with estimates. Stable NIM QoQ (3.4%), decline in net stress additions QoQ (INR9.9b v/s INR15.5b in 1QFY15), healthy traction in CA deposits (+15% QoQ and 19% YoY) and retail disbursements (+25% YoY) were the key positives. Gross slippages and fresh restructuring were INR16.7b (v/s INR11.9b in 1QFY15) and INR8.3b (v/s INR13.9b) respectively. Repayment/slippages net reduction resulted in INR2.5b decline in restructured loans. Net stress loans contained at 3.6% of customer assets. Pipeline for restructuring stood at INR18b. Loan book grew 14% YoY (+4% QoQ) led by strong traction in SME (+7% QoQ) and Housing (+7% QoQ) loans.""Healthy core operations driven by gradual NIM improvement and strong control over opex are leading to strong core RoA of 1.6%+, despite a moderate fee income. Improvement in macro-economic environment and resolution of infrastructure bottlenecks shall lead to reduction in NSL (currently at 3.6%). ICICIBC is well positioned to leverage the opportunities with high core RoA, strong distribution network and capitalization (Tier I of 12.6%). We maintain estimates and expect earnings CAGR of 18%+ over FY14-17E v/s 16% balance sheet CAGR. Buy,” says Motilal Oswal research report.
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