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ICICI Bank has been the best performer in the banking sector as it delivered 80 per cent/42 per cent returns over FY21/FY22 Year to date, Motilal Oswal Institutional Equities said in a report.

Its market capitalization ranking within the BFSI space has improved to two from five in FY18. Stability of the top management has helped improve its operational performance. Sandeep Bakhshi's appointment as CEO has brought stability which enabled value creation and drove re-rating as the bank delivered 31 per cent CAGR in m-cap since FY18-21 v/s 7 per cent over FY10-18.

ICICI Bank reclaims the second slot after 7-8 years, overtaking Kotak Mahindra and HDFC Bank.

ICICIBC has delivered 34 per cent earnings CAGR over FY18-21 v/s a 15 per cent decline over FY15- 18. This has enabled 31 per cent CAGR in m-cap over FY18-21. During FY21/FY22 YTD, the stock has returned 80 per cent/42 per cent, making it one of the best performers in the Banking sector.

Consequently, its m-cap rankings within the BFSI space improved to second from fifth in FY18. ICICIBC's share in total Private Banks' m-cap under our coverage rose to 20 per cent from 11 per cent in FY18. We expect the bank to deliver 28 per cent earnings CAGR over FY21-24E. This will enable its continued outperformance vs. its peers and further raise its m-cap contribution in the Private Banking space, in our view, the report said.

It has reported strong progression in NIMs, narrowing the gap with sector leaders. With a higher mix of floating rate loans and our view on a reversal in the rate cycle, we expect portfolio yields to remain steady, driving 20 per cent CAGR in NII over FY21-24E. NNPA declined to sub-1 per cent -- the lowest level since December 2014.