ICICI Bank Share Price - An Investment in the 'India Growth Story'

The September quarter results of ICICI Bank were keenly awaited by investors in a bid to understand the impact of rising interest rates on net interest margins (NIM), loan growth and asset quality of the bank.

And while loan growth has been fairly strong for leading private sector banks, rising interest rates has led to a moderation in NIMs on a sequential basis.

ICICI Bank's net interest margin was 4.5% in the September 2023 quarter vis-a-vis 4.31% a year earlier and 4.78% in the June 2023 quarter.

Nearest rival HDFC Bank, which reported its results earlier with the inclusion of HDFC for the first time, reported NIMs of 3.6% for the September 2023 quarter vis-a-vis 4.3% in the June 2023 quarter.

Smaller rival, Kotak Mahindra had NIMs of 5.22% in the second quarter of current fiscal vis-a-vis 5.15% a year earlier and 5.57% in the June 2023 quarter.

With regard to loan growth, the domestic loan portfolio of ICICI Bank grew by 19.3% year on year (YoY) to Rs 10.74 trillion (tn) in the second quarter of current fiscal vis-a-vis a growth of 20.6% YoY in the June 2023 quarter.

Meanwhile, Kotak Mahindra's net advances grew 18% YoY in the September 2023 quarter broadly in tune with the growth reported in the June 2023 quarter on a YoY basis.

Important to note that asset quality of ICICI Bank has also been fairly steady - its percentage of net non-performing customer assets to net customer assets was 0.43% in the September 2023 quarter vis-a-vis 0.61% a year earlier and 0.48% in the June 2023 quarter.

Dalal Street is watching cautiously

ICICI Bank's results were declared on Saturday and on Friday the stock was broadly flat at Rs 932.5.

ICICI Bank share price reached its 52-week high of Rs 1,008 on 24 July 2023 and investors have been watching carefully the impact of rising interest rates on the bank's performance.

In the first quarter of FY24, the bank has achieved exceptional results with a remarkable 37% growth in core pre-provision operating profit (PPOP).

The deposits also grew handsomely, increasing by 18% over the same period.

ICICI Bank's performance in Q2 continues to be remarkable, characterised by robust growth in both loans and deposits.

Going forward, the management is confident of strong growth, predominantly driven by retail activities.

Beyond its core banking operations, ICICI's subsidiaries and joint ventures play a vital role in the non-banking financial services arena, encompassing areas like life and general insurance, asset management and equity broking.

At the current price, ICICI Bank trades at 16 times estimated standalone earnings for the year ended 31 March 2024 while it is 17.8 times on a standalone basis for HDFC Bank, and 26 times for Kotak Mahindra Bank on a standalone basis.

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