ICICI Bank share price up nearly 4%: CLSA says BUY, price target Rs 825

ICICI Bank share price: In its report, CLSA has increased its target price from Rs 800 to Rs 825. ICICI Bank, the private lender had reported a 2.6 times YoY growth in the profit at Rs 4,402.6 crore for the quarter ended March 31, 2021, as compared to Rs 1,221 crore posted in the year-ago period. It reported a 17 per cent growth in net interest income (NII) to Rs 10,431 crore during the quarter as compared to Rs 8,927 crore posted in the last year. 

Net interest margin remained almost flat in Q4FY21 at 3.84 per cent as compared to 3.87 per cent posted in Q4FY20. The bank said that it made provisioning of Rs 2,883 crore in the reported quarter down 52 per cent compared to Rs 5,967 crore posted last year.

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ICICI Bank’s GNPA QoQ stood at 4.96% as against 5.42 per cent while NNPA was 1.14 per cent against 1.26 per cent. ICICI Bank's board has recommended a dividend of Rs 2 per share. The bank in its release said, PAT jumped due to low base + lower Provisions + NII. Its domestic advances grew by 18 per cent while the Retail loan growth stood at 20 per cent and Bank Corporate loan growth stood at 13 per cent. BB & Below book has declined for the 3rd consecutive quarter and now stands at Rs 13,098 crore Vs Rs 13,654 crore. Bank used provisions of Rs 3,509 crore in Q3FY21. It made an additional COVID-19 related provision of Rs 1,000 crore, total COVID provisioning available Rs 7,475 crore.

CLSA says ICICI Bank delivered strong 4QFY21 results with a big core PPOP beat (+22% YoY) and slippage at 0.75% of loans (better than expected). The key positive was the strong pick up in domestic loan growth (+18%YoY) which looks sustainable (ICICI Bank- Going strong on growth). The retail slippage spike was <2x versus FY20, better than expected, and corporate net slippage was almost negligible implying the end of the past five years of credit cycle leading to corporate book profitability improving to +1.8% (PBT on assets).

CLSA said that it has further increased ICICI Bank's earnings by 4%-6% factoring-in better growth and NII. With an end to the past 5-6-year intense corporate credit cycle, its improving granularity of earnings and potentially ICICI Bank being the new growth leader among large banks, CLSA expects its rerating cycle to continue. 

ICICI Bank and Axis Bank remain CLSA's top sector picks.