Target: ₹1,210

CMP: ₹904.65

ICICI Bank’s (one of our top picks) reported improvement in NIMs by 25bps QoQ to 4.9 per cent led by re-pricing of loans. Asset quality improved with GNPA at 2.81 per cent vs 3.07 per cent q-o-q led by lower slippages. Also, restructured assets stood at 0.4 per cent vs 0.5 per cnet q-o-q.

Credit growth declined to 19 per cent y-o-y vs 20 per cent y-o-y (Q3FY23) as corporate (including IBPC) growth declined to 14 per cent y-o-y vs 15 per cent y-o-y (Q3FY23).

During Q4 FY23, NII grew by 40 per cent y-o-y against a loan growth of 19 per cent y-o-y; margins improved sequentially. PPoP grew by 34 per cent y-o-y led by lower other income (up 7 per cent y-o-y). Lower credit costs led by better recoveries resulted in best return ratios in last few years; RoA at 2.4 per cent.

For FY23, NIMs improved by 52bps y-o-y and stood at 4.5 per cent; all time high for the bank. However, cost of funds continues to rise (Q4-FY23; up 34bps q-o-q) in FY23 which should have impact on the NIMs going forward. Management highlighted that liability growth is inching up and impact of re-pricing on deposit rates should be visible in FY24.

We maintain ‘Buy’ with a target price of ₹1,210, valuing parent business at ₹1,081 at 2.9X P/ABV FY25E and rest for the subsidiaries.