CLSA on Tuesday maintained its 'buy' rating on ICICI Bank but brought down its target price for the private sector lender's stock to Rs 1,050 from Rs 1,125.
Omicron had a marginal impact on growth in January 2022 but the ICICI Bank management has a strong growth outlook, the brokerage said in a research note dated March 22. The bank is seeing strong growth outcomes across its mortgage, unsecured and SME segments, it said.
CLSA also said the macro situation has become tougher in the past two months but
ICICI Bank's asset quality is likely to remain stable with little risk to the brokerage's under-shooting credit cost expectations.
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Rising rates will benefit margins eventually, but in the near term, margins will be constrained by the RBI's repo rate action, it said.
"The bank’s asset quality fully normalised in 3QFY22 with negative net slippage. The bank has reduced its overseas exposure, direct exposure to Russia is negligible and Nayara Energy has been a sanctioned entity since 2014," the brokerage added.
CLSA does not see a material impact on the lender's earnings from the current macro volatility.
In January, ICICI Bank reported a 25.4 percent year-on-year rise in net profit to Rs 6,193.8 crore for the October-December period, beating Street estimates. Its net interest income (NII) increased 23.4 percent to Rs 12,236 crore.
Analysts in a CNBC-TV18 poll had predicted the banking major's quarterly profit at Rs 5,933.4 crore and NII at 12,114.2 crore.
Its gross non-performing assets (NPAs) as a percentage of total loans came down to 4.13 percent in the third quarter of FY22 from 4.82 percent in the July-September period.
Besides ICICI Bank, CLSA has SBI and Axis Bank among its top banking picks.
(Edited by : Akanksha Upadhyay)
