On Monday, BofA Securities expressed a positive outlook on ICICI Bank (ICICIBC:IN) (NYSE: IBN), raising the price target to INR1,350 from INR1,300 while sustaining a Buy rating on the stock.
The adjustment follows ICICI Bank's announcement of its fourth-quarter earnings, which showed a profit after tax (PAT) of Rs107 billion, marking a 4% increase from the previous quarter and a 17% rise year-over-year.
"Overall, a strong qtr across drivers demonstrating the bank's execution capability," said the analysts.
The bank's performance exceeded expectations, primarily due to stable net interest margins (NIM), which saw a minor decrease of 3 basis points quarter-over-quarter. Additionally, ICICI Bank benefited from reduced operating expenses and benign credit costs, which were reported at 24 basis points. The bank also demonstrated consistent loan growth at 3.2% quarter-over-quarter and robust deposit growth at 6% quarter-over-quarter.
With an eye on the fiscal year 2025, the bank's NIM outlook, previously a concern for investors, appears to be on an upswing. Organic NIMs are bottoming out, and sustained higher interest rates are expected to support the NIM outlook for FY25. The trajectory for operating expenses is also projected to improve, contributing to a stable return on assets (RoA) and return on equity (RoE) into FY25.
ICICI Bank is well-positioned to achieve RoAs of 2.0-2.1%, which would translate to ROEs between 16.0-16.5% through the fiscal year 2026, as per the analyst's comments.
InvestingPro Insights
ICICI Bank's recent financial performance and the positive outlook provided by BofA Securities are further complemented by real-time data and InvestingPro Tips. With a market capitalization of $97.71 billion and a P/E ratio standing at 19.13, ICICI Bank is demonstrating its strength in the market. The bank's recent revenue growth is notable, with a 35.34% increase over the last twelve months as of Q1 2023, and an even more impressive quarterly revenue growth of 77.65% for Q1 2023.
The bank's commitment to shareholder value is evident through its consistent dividend growth, with a remarkable 53.8% increase in dividends over the last twelve months. Additionally, ICICI Bank has raised its dividend for three consecutive years, reflecting a strong financial discipline and a commitment to its investors. InvestingPro Tips also highlight that the stock generally trades with low price volatility and is trading near its 52-week high, which could suggest stability and investor confidence in the bank's performance.
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