ICICI Bank Shares Surge 10% On Strong Q2 Numbers

ICICI Bank's stock soared over 10.63% to $840 today after the lender announced a nearly 30% increase in net profit in the second quarter to a new high, boosted by strong loan growth.

In the three months to September, ICICI Bank's bad loan ratio fell to 4.82 percent, down from 5.15 percent the previous quarter. In the September quarter, the bank set aside a total of 2713 crore in provisions, down from a total of 2852 crore three months prior.

According to the private sector lender, the reported net profit of 5,511 crores for the quarter was a record high. It's reassuring that it came on the heels of a strong 25 percent increase in core revenue.

The stock returned 135.19 percent over three years, compared to 76.81 percent for the Nifty 100. Over a three-year period, the stock returned 135.19 percent, while the Nifty Bank provided investors a 61.47 percent return.

ICICI Bank is one of Motilal Oswal's top choices for the sector, with a target price of 1,000 rupees. "ICICI Bank has COVID-19-related provisions of Rs 6425 crore (0.8 percent of loans), which provides us confidence in consistent credit cost trends," says the bank. "We raise our FY22/FY23 projections by 5%/2.5 percent, and project a RoA/RoE of 2%/16.6 percent by FY24E," the brokerage added.

"Even amid increased opex and no Covid provision reversal, ICICI once again reported a beat on PAT at 5500 crore- up 30% yoy on solid core profitability," according to Emkay. Solid loan growth of 17% yoy, historically high NIMs of 4%, strong fees and dividend, and better asset-quality outcomes drove this." It has recommended the stock with a target price of 962, ICICI Bank remains one of its top banking recommendations.

"On the back of (1) better margins as we expect further improvement led by unwinding of surplus liquidity and increasing share of high margin unsecured portfolio (2) lower provisioning as asset quality improves further," Nirmal Bang has raised its earnings predictions for ICICI Bank.