ICICI Bank, one of India's leading private-sector banks, has posted a consistent quarter marked by an 18% year-on-year (YoY) loan growth, according to an analysis conducted by HDFC Securities. This growth was mainly propelled by retail term deposits, which in turn decreased the bank's credit costs to 23 basis points of its loans, thereby strengthening its robust asset quality.
The bank also experienced a 19% YoY deposit growth. However, the Current Account Savings Account (CASA) ratio fell to 40.8%, leading to a 22-basis point quarter-on-quarter increase in deposit costs. Despite improvements in the retail mix and limited yield reflation, the bank's net interest margins (NIMs) slipped by 25 basis points quarter-on-quarter to 4.53%.
Adjustments have been made to the bank's financial year 2024 and 2025 predictions due to increased fund and operational costs. These increases are offset by normalized credit costs. ICICI Bank continues to hold a BUY rating with a sum-of-the-parts (SOTP) based target price of INR1,190 (USD 1 = INR 83.2). The standalone value is calculated at 2.9 times the March 2025 adjusted book value per share (ABVPS).
The bank has also maintained a healthy Provision Coverage Ratio (PCR), which stands at approximately 83%. This ratio is an indicator of the provision made against bad loans from the profit generated by banks. A higher PCR ratio means that the bank has provided more for potential losses and is in a better position to absorb losses if non-performing assets (NPAs) rise.
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