ICICI Bank: Marching ahead of HDFC Bank?

ICICI Bank has shown strong performance despite a challenging macroeconomic environment, making it an attractive option for long-term investors interested in benefiting from India’s growth story. Below is a summary of key points and outlook:

Performance Overview (Q3 FY25):

• Net Interest Margin (NIM): 4.25%, a slight decline from 4.43% in the previous year, reflecting broader sector trends.
• Advances Growth: ICICI Bank reported a robust 13.9% year-on-year growth in advances, reaching Rs 13.14 lakh crore, outpacing its peers like HDFC Bank (3%) and Axis Bank (9%).
• Asset Quality: Net non-performing assets (NPAs) remained stable at 0.42%, signaling good asset quality compared to HDFC Bank (0.46%) and Kotak Mahindra Bank (0.41%).
• Net Profit Growth: ICICI Bank’s net profit grew by 14.8% to Rs 11,792.4 crore, the highest among the major private sector banks.
• Return on Assets (RoA): At 2.36%, ICICI Bank outperformed HDFC Bank (1.9%) and Kotak Mahindra Bank (2.3%).

#Q3WithCNBCTV18 | ICICI Bank reports #Q3 earnings
Here’s how the actual numbers compare with the CNBC-TV18 poll ????

Net Profit At ₹11,792.4 Cr Vs CNBC-TV18 Poll Of ₹11,332.7 Cr

NII At ₹20,370.6 Cr Vs CNBC-TV18 Poll Of ₹20,461.4 Cr pic.twitter.com/apb8kzTQuw

— CNBC-TV18 (@CNBCTV18Live) January 25, 2025

Stock Performance:

• ICICI Bank Stock: The stock has fared better than its larger rival, HDFC Bank, in recent months. ICICI Bank’s stock declined by about 3% over the past three months, compared to a 5% decline in the Sensex and a 6% fall in HDFC Bank shares.

Outlook:

• While the Reserve Bank of India (RBI) has cut the Cash Reserve Ratio (CRR), interest rate cuts are unlikely in the short term due to the elevated inflation forecast.
• The domestic economy, particularly in urban areas, shows signs of slowdown, but investments in IT and business lending platforms by ICICI Bank position it well for long-term growth, especially as private capex is expected to pick up.
• The Union Budget, expected soon, will be crucial for understanding government actions to revive the economy, which could impact the banking sector.

Valuation:

• P/E Ratio: ICICI Bank trades at a P/E of nearly 19 times its estimated standalone FY25 earnings, which is in line with HDFC Bank but more attractive than Kotak Mahindra Bank, which trades at a higher 23.6x.

Conclusion:

ICICI Bank has demonstrated solid operating performance, strong asset growth, and a stable balance sheet despite macroeconomic challenges. Given its market position, robust fundamentals, and potential to benefit from India’s long-term growth trajectory, it may be worth adding to a long-term investment watchlist.

Disclaimer:
This article is for educational purposes only and does not constitute investment advice. Please consult your financial advisor before making any investment decisions.