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ICICI retains the coveted mantle of “boring bank”

Our view – By “boring”, we imply a picture of stability

Asset Quality – Slippages remained broadly under control, undergoing a moderate sequential decline: Gross NPA additions amounted to Rs 50.73bn for 2QFY25, translating to an annualized slippage ratio of 1.6% for the quarter. Gross NPA additions had amounted to Rs 59.16bn during 1QFY25. It may be noted that agri slippages are usually odd quarter phenomena. Provisions were Rs 12.33bn, down by -7.4% QoQ but up by 111.6% YoY, translating to calculated annualised credit cost of 39bps. The bank repeated that there will be a gradual normalization of credit cost but it will remain below historical levels

Net Interest Margin - NIM saw a marginal contraction sequentially while management guided for stable margin before rate cuts: NIM was 4.27%, down -9bps QoQ and - 26bps YoY. The yield on advances was at 9.73%, down by -7bps QoQ. The yield on advances was negatively impacted due to this being a longer quarter, due to the calculation approach adopted. NIM is expected to be broadly stable in 2H compared with 1H, until rate cuts start. When there is a rate cut cycle, there will be a lead lag impact but the cycle is expected to be shallow.

Balance sheet growth – Total advances have grown 15.7% YoY with non-corporate segments driving growth: Total advances have grown 15.0% YoY and 4.4% QoQ. Retail loans have grown 14.2% YoY and 2.9% QoQ, Rural loans have grown by 16.5% YoY and 1.7% QoQ and Business banking book has grown 30% YoY and 10.7% QoQ. The deposits were at Rs 14,978 bn, up by 5.0% QoQ and 15.7% YoY.

We maintain ‘Buy’ rating on ICICI with an unchanged price target of Rs 1525: We value the standalone bank at 2.8x FY26 P/BV for an FY25/26/27E RoE profile of 17.0/16.2/16.4%. We assign a value of Rs 255 per share to the subsidiaries, on SOTP.

(See Comprehensive con call takeaways on page 2 for significant incremental colour.)

Result Highlights (See “Our View” above for elaboration and insight)

* Opex control: Total cost to income ratio at 38.6% was down by -108/-235bps QoQ/YoY and the Cost to assets was at 2.2% down by -7/-17bps QoQ/YoY.

* Fee income: Core fee income to average assets was at 1.2%, up/down 5/-2bps QoQ/YoY. Exhibit 1: Result table 

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