India’s second-largest private sector bank in terms of assets, ICICI Bank Limited will release its FY2022 second quarter results on October 23 after market hours. On October 21, the stock opened at Rs 748.90 and peaked at Rs 759.85, and saw a low of Rs 737.40 on NSE. The script closed at 758.2, up 1.66% from the previous day’s close of Rs 745.85. In particular, the action closed for the third consecutive day. The intra-day share high of Rs 759.85 remained its 52-week high.
Performance expected in the second quarter of fiscal 2022
The performance of a bank is measured by the growth of its liabilities, the quality of its assets, the cost of funds, the improvement of collections and the reduction of arrears. ICICI Bank (NS 🙂 has experienced strong year-over-year CASA (Current Account / Savings Account) growth in recent quarters. During the first quarter closures, its CASA growth in rupees terms was 24.8% year-on-year, where the current account growth was 23.7% while the savings account growth was 25.2. %. With the opening of market activities in the second quarter, the bank is expected to record strong growth on the CASA front. The cost of bank deposits was 3.65% in the first quarter and is expected to decline further in the second quarter.
ICICI Bank’s stable mix of high-yield vertical loans such as business and personal loans, the steady increase in low-cost liabilities and the deployment of excess liquidity are expected to contribute to its margin. Its return on equity and return on assets are expected to improve to 15.3% and 1.8% respectively for fiscal 2023E. The bank’s basic income and net interest margin (or NIM) are expected to improve in the second quarter quarter over quarter as well as year over year. ICICI posted widespread growth across all product categories, which bodes well for its overall growth.
Quality of ICICI Bank’s assets
Arrears of the performing portfolio in various segments increased in April and May due to the second wave of the Covid-19 pandemic. However, with the easing of restrictions and the resumption of economic activity, delays in the various segments of the performing portfolio are expected to decrease in the second quarter and beyond. We anticipate further improvement in collections and lower arrears over the next few quarters of fiscal 2022. In fact, lower collections in the loan portfolio should not be of concern due to the gold mortgage. customers with the bank. . A surge in gold prices should provide a solid cushion going forward.
The bank canceled floating provisions worth Rs 1,050 crore in the first quarter of fiscal 2022. At the same time, it increased the provisions for retail NPAs by Rs. 1,200 crore. The bank has seen remarkable improvement in business and financial parameters, in addition to moving in the right direction during the pandemic period. It led to a decline in gross NPA additions in the second quarter of fiscal 2022, with a significant drop likely to occur from the second half of fiscal 2022. Improving yield ratios, a basis Strong capital and prudent provisioning bode well for ICICI Bank.
Investors should closely monitor the pace of digital initiatives undertaken by the bank in the July-September 2021 quarter. Digital and other initiatives include new customer acquisition, InstaBiz app downloads, iMobile activation Pay from non-ICICI Bank customers, issuance of new credit cards, active app users, and app downloads.
Analysts’ price target
Chandan Taparia from Motilal Oswal (NS 🙂 has a call to buy on ICICI Bank with a target price of Rs 760. Sharekhan is also bullish with a “buy recommendation and a target price of Rs 876. Macquarie Securities has improved its Price target on the bank at Rs 820 per share. Jefferies has a price target of Rs 780 on the share. Bernstein, a stock research firm, has raised its price target to Rs 790 per share, from 610 Rs, citing the technological prowess of ICICI Bank.
Investec Capital Services also raised its target price to Rs 790 per share from Rs 715 per share earlier. HSBC Global Research has also raised the price target to Rs 800 per share, against Rs 700 per share previously. Nomura, a renowned brokerage and research firm, increased its price target to Rs 790 per share from Rs 690. Credit Suisse (SIX :), increased its price target for the bank’s share to Rs 740 from Rs 660. All 50 analysts who follow the action recommend a “buy” on the shares of ICICI bank.
What the technical indicators suggest
ICICI Bank’s stock looks good based on key technical parameters like RSI, Momentum, MACD and EMA 10 days / 20 days / 30 days / 50 days / 100 days / 200 days.