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ICICI Bank Shares Rally After Strong Q3 Results


Shares of ICICI Bank Ltd. soared to record levels on Monday following the release of the India-based bank’s fiscal third-quarter results. Investors reacted positively to the news that the compression in net interest margin (NIM) was coming to an end.

This was particularly encouraging for ICICI Bank, as rival HDFC Bank Ltd. had reported disappointing NIM results last week, which had negatively impacted ICICI’s stock.

In morning trading, ICICI’s U.S.-listed stock surged 4%, reaching a value higher than the previous record closing price of $24.69 set on December 13.

According to the recently released report, ICICI Bank’s NIM for the quarter ending December 31 was 4.43%. Although this was lower compared to the previous quarter’s 4.53% and the 4.65% reported in the same period last year, J.P. Morgan analyst Saurabh Kumar expressed optimism, stating that the decline in NIM was in line with expectations.

In fact, Kumar reiterated his overweight rating for ICICI Bank’s stock and raised his stock-price target to INR1,180 ($14.20) from INR1,150 ($13.84), suggesting a potential upside of 17%.

Furthermore, ICICI Bank exceeded expectations in terms of third-quarter profit, total revenue, and net interest income, according to FactSet data.

The bank also experienced significant growth in deposits, with a 2.9% increase from the end of the previous quarter and an 18.7% increase from the same period the previous year. Additionally, the overall loan portfolio saw a sequential increase of 3.9% and a year-on-year jump of 18.5%.

Pranav Gundlapalle from Bernstein described ICICI Bank’s results as “steady and healthy,” noting the bank’s strong performance in loan growth and return on assets, and only a “slight” compression in margin.

Gundlapalle believes that the compression in NIM is close to an end and projects that the NIM level in fiscal 2024 will be similar to that of fiscal 2023.

With a positive outlook, he maintained his market-perform rating for ICICI Bank and kept the stock-price target at INR1,150.

Over the past three months, ICICI Bank’s stock has risen by 11.6%, outperforming the iShares MSCI India exchange-traded fund (INDA), which increased by 13.5%, as well as the S&P 500 index (SPX), which saw a rise of 15.2%.

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