Brokerage firm CLSA has given a ‘buy’ rating for ICICI Bank, stating that growth continues to remain strong (+15 percent retail growth in the third quarter) driven by a high share of secured assets, continued momentum in retail disbursements, and an increasing focus on SME lending.
CLSA has a price target of Rs 800 for the stock.
The brokerage report mentioned that “post-COVID-19, the industry growth pick-up has only been +6.4 percent year-on-year (YoY). ICICI’s relative growth of 15 percent in retail in the quarter ending December 2020 has been the strongest. The share of secured loans, like mortgages, is high at +30 percent, and disbursements continue to remain strong. The bank is bridging the gap on business banking and small and medium-sized enterprises lending with peers. So, the small and medium-sized enterprises’ growth continues to remain strong. Also, its overseas book is just 6 percent to 7 percent of loans and is unlikely to be a material drag on growth.”
The bank NIMs has improved by 30 basis points over the past three years and 60-70 basis points since FY13/14. Risk to net interest margin now is evenly placed as the deployment of excess liquidity and a lower share of overseas loans will aid its margins while lower incremental lending spreads and higher secured retail growth will exert downward pressure. states the CLSA report
News Source: CNBC TV 18