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Result and Price Analysis:

Earnings in 1QFY24 re-acknowledge our conviction that ICICI Bank is maintaining a sustainable and prudent growth led by tech-driven initiatives. The bank has reported its 1QFY24 results with the key pointers being: 1) Strong NII growth of 38% YoY, with headline NIMs (Domestic: 4.88% & Overall: 4.78%) down sequentially led by higher COF. 2) PPoP growth higher sequentially driven by healthy NII and stable C/I (40.2%), 3) Reported slippages (?53bn v/s ?43bn in 1QFY24) increased sequentially, 4) NNPA ratio improved further at 0.48%, 5) PCR (excluding technical write-offs) stood at 83%. However the bank didn’t include contingent & floating provision (~?224bn) in PCR calculation; 7) Contingent provision (excluding PCR) stood at 2.1% of the loan book, 8) BB & below exposure down sequentially to 0.6% of net advances, 9) the bank’s net advances grew by 18.1% YoY and 3.7% sequentially; and 8) deposits stood at ?12.4tn mark and grew sequentially by 4.9% with average CASA at 42.6%. Moreover, provision expenses inched down sequentially to ?12.9bn v/s 16.2bn in 4QFY23. Factoring stable balance sheet growth and credit cost of below 1% in FY24E, we estimate the bank’s FY24E ROA and ROE of 2.1% and 16.8% respectively. We have positive outlook on the bank with BUY rating.

Gazing the Core:

Asset Quality intact; however, retail slippages is a key concern: Slippages were up to ?53bn v/s ?43bn in the previous quarter. Retail slippages and Corporate & SME slippages contributed 95% and 5% respectively. Despite significant contribution, retail slippages increased by 26% sequentially. The standard restructured (0.37% of portfolio) book inched down sequentially to ~?40bn. Retail book contributed ~85% of restructured pool (Over 95% are secured), while rest is from corporate and SME book. The bank carries provision worth ?12.2bn (~31% covered) against the restructured pool. The absolute GNPA increased by 2% sequentially led by higher slippages and stagnant upgrades. As on 1QFY24, the bank’s GNPA/ NNPA/PCR stood at 2.76%/0.48%/83% against 2.81%/0.48%/83% in the previous quarter

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