BofA maintains ICICI Bank buy rating, $35 price target

On Monday, BofA Securities affirmed a Buy rating on ICICI Bank (NYSE:IBN) shares, maintaining a price target of $35.00. This aligns with the strong analyst consensus, as revealed by InvestingPro data showing a highly favorable 1.25 consensus recommendation. BofA Securities' analyst noted minor adjustments to earnings per share (EPS) estimates, altering them by 1-2%. Despite these tweaks, the analyst emphasized that the price objective of Rs 1,500, equivalent to $35 per American Depository Receipt (ADR), remains consistent.

The analyst highlighted the bank's current valuation at 2.3 times the FY26E standalone price-to-book (P/B) ratio as presenting an attractive risk-reward balance. InvestingPro data shows the bank maintains a "GOOD" overall financial health score, with particularly strong marks in profitability and growth. The perspective is that concerns regarding overcrowded market positions are exaggerated and there is potential for the bank's premium valuations to expand further, driven by sustained growth and return on equity (ROE) performance of 19%.

The report detailed key successes for the bank, including improved cost efficiency, with a focus on productivity and controlled operational expenditure growth, which has brought the cost-to-income ratio (CIR) down to 38.5%. Additionally, the bank posted a low credit cost of 37 basis points, which is the lowest among its private sector peers. Robust fee income growth of 16% year-over-year was also noted, even in the face of a deceleration in loan growth to 13-14%. According to InvestingPro, the bank has demonstrated strong financial discipline, maintaining low price volatility and consistently raising dividends for four consecutive years. Subscribers can access 6 additional ProTips and comprehensive valuation metrics in the Pro Research Report.

On the other hand, the bank experienced a slight slowdown in balance sheet growth, with overall loan growth declining to 13.5% year-over-year. There was a noted slowdown in unsecured retail loans, which grew by only 10% year-over-year, but this was partially offset by strong growth in business banking and a pickup in corporate lending. The bank's deposit growth was softer, with a 1.5% quarter-over-quarter increase and a 14% year-over-year increase. However, growth in the current account and savings account (CASA) book was more robust, at 1.1% quarter-over-quarter and 16.6% year-over-year, which bodes well for the bank's net interest margin (NIM) going forward.

In other recent news, ICICI Bank has been the subject of significant financial developments. The bank's robust return on assets of 2.4% and return on equity of 18% were highlighted in its recent earnings report. Furthermore, ICICI Bank reported a substantial increase in its consolidated profit after tax, with a rise to Rs. 44,256 crore (US$ 5,310 million) under Indian GAAP and an increase to Rs. 61,376 crore (US$ 7,365 million) under U.S. GAAP in fiscal year 2024.

In response to these financial results, Citi reiterated its Buy rating for ICICI Bank and raised its price target to INR1,600, citing the bank's resilient asset quality and consistent performance. Additionally, HSBC increased its price target for ICICI Bank to INR1,520, indicating a potential 21% upside, while Kotak maintained a Buy rating with a price target of INR1,400.

On the analyst front, Axis Capital (NYSE:AXS) Limited adjusted its stance on ICICI Bank from 'Buy' to 'Add', recognizing the bank's consistent earnings growth. Furthermore, Jefferies and CLSA maintained 'Buy' ratings, emphasizing the bank's operational strategies and commitment to environmental, social, and governance standards.

In other company developments, ICICI Bank has seen changes in key management positions and is considering raising funds through the issuance of debt securities. These recent updates underscore ICICI Bank's strong performance and resilience in the financial sector.

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