ICICI Bank shares surge nearly 8% as net profit jumps six-fold in Q2

"We expect normalisation of credit losses by FY22," Sandeep Batra, president, ICICI Bank said after the announcement of second-quarter earnings. Alluding to the recovery seen during the quarter from peak-COVID lows, he added, collection efficiencies had reached pre-COVID levels already.

"Post the easing of restrictions, there has been a substantial month-on-month increase in disbursements across retail products," the bank noted in its statement.

Net interest income (NII), the difference between the interest income from lending and the interest paid to depositors, during the quarter was up 16.2 percent at Rs 9,366.1 crore from Rs 8,057.4 crore, YoY.

The bank has posted a net interest margin at 3.57 percent against 3.69 percent in the previous quarter QoQ. Gross non-performing assets (NPA) for the quarter stood at 5.2 percent versus 5.5 percent and the net NPA was at 1 percent versus 1.2 percent, QoQ.

Brokerage houses were also very upbeat on the lender's Q2 results. Citi maintained a 'buy' call on the stock with a target at Rs 550 per share. ICICI Bank remains the brokerage's preferred pick in the sector, it said.

It further added that credit cost normalisation by FY22 should drive RoA and raised FY21/FY22 profit estimates by 12 percent and 8 percent.

Meanwhile, Nomura also has a 'buy' call on the stock with a target at Rs 525 per share. It increased FY21-23 EPS estimates for ICICI Bank by 10-20 percent after a stellar Q2 show and retained the company as a top pick. It also added that normalisation may happen faster than expected.

CLSA also retained a 'buy' call and raised the target to Rs 560 from Rs 500. The management expects normalised credit costs by FY22. The company delivered strong Q2 with a big core PPoP beat. CLSA also increased its FY21/22 profit estimates by 49 percent/19 percent and expects RoE to be back to 14-15 percent by FY23.