Strong Quarterly Performance Surprises Analysts Amid Volatile Macroeconomic Conditions
Shares of ICICI Bank rose by 2% on April 21, after the bank reported an 18% year-on-year increase in standalone net profit for the quarter ended March FY2025, delivering a stellar earnings performance that exceeded market expectations. The bank’s robust performance came despite macroeconomic headwinds, including elevated competition for deposits and a normalization of asset quality in the broader banking sector.
Domestic brokerage Motilal Oswal remarked that it is rare for a bank of ICICI Bank’s size to deliver such an exceptional operating performance, especially amidst a challenging macroeconomic environment. This strong earnings show has prompted brokerages to raise their target prices on ICICI Bank’s stock.
Highlights:
ICICI Bank reports 18% YoY increase in net profit for Q4FY25
Shares surged 2% following the earnings release
Brokerages, including Motilal Oswal and CLSA, raise target prices on ICICI Bank shares
Net Interest Income (NII) and Net Interest Margin (NIM) show impressive growth
Record Profits and Robust Asset Quality Drive Performance
ICICI Bank posted a net profit of Rs 12,629.58 crore for the quarter, marking an 18% increase year-on-year, with a sequential rise of 7.1%. The performance was underpinned by impressive growth in Net Interest Income (NII), which rose 11% YoY to reach Rs 21,193 crore in Q4FY25. Meanwhile, the Net Interest Margin (NIM) for the quarter stood at 4.41%, showing a 15 basis point increase compared to the previous quarter, and maintaining the same level as Q4FY24.
Asset quality also showed improvement during the quarter, as the bank’s gross non-performing asset (NPA) ratio declined to 1.67% from 1.96% in Q3FY25, and 2.16% a year ago, signaling effective management of loan portfolios and proactive risk mitigation strategies.
Highlights:
ICICI Bank’s net profit rises 18% YoY to Rs 12,629.58 crore
NII rises 11% YoY to Rs 21,193 crore
Gross NPA ratio reduces to 1.67% from 1.96% in Q3FY25
NIM improves by 15 bps sequentially to 4.41%
Brokerages Upgrade Target Prices Amid Positive Market Sentiment
Following the impressive earnings report, leading global and domestic brokerage firms have upgraded their target prices for ICICI Bank shares, with CLSA, Jefferies, Nomura, and Motilal Oswal among those revising their ratings.
CLSA highlighted that ICICI Bank continues to prioritize profitability over growth, with a surprising improvement in NIM despite the ongoing rate-cut cycle. The brokerage noted that the bank’s margin performance was particularly noteworthy given the prevailing macroeconomic conditions.
Domestic brokerages, including Nuvama Institutional Equities, also praised the bank’s improving asset quality, particularly in business banking. Nuvama pointed out that ICICI Bank’s careful focus on lending to better-rated borrowers, as well as its investment in robust credit models, had contributed to better-than-expected asset quality despite high growth in the business banking segment.
Highlights:
Brokerages including CLSA, Jefferies, and Nomura have upgraded target prices
CLSA notes profitability prioritization amid rate-cut challenges
Nuvama highlights strong asset quality in business banking
Motilal Oswal commends ICICI Bank’s 16 bps NIM expansion
Loan Growth Slips Below Expectations But Bottoming Out
While ICICI Bank delivered a stellar performance in terms of profitability and asset quality, its loan growth for Q4FY25 was somewhat modest, clocking in at 13% YoY. This figure was lower than expected, marking a slower pace compared to Q3FY25, when the loan growth stood at 14%. A significant factor in the slower growth was the weak performance in the personal loan segment, particularly the personal loans on credit cards.
Macquarie, a global brokerage, noted that the bank’s loan growth had come in below expectations. However, analysts view this as a temporary setback, with the decline in growth likely bottoming out, suggesting that the growth trajectory may improve in the subsequent quarters as demand for personal loans picks up.
Highlights:
Loan growth of 13% YoY for Q4FY25, slightly below expectations
Slower growth in personal loans on credit cards blamed for the dip
Analysts expect loan growth to improve as volume growth recovers
Stock Performance and Investor Sentiment
ICICI Bank’s stock continued to perform well following the earnings release, with shares briefly rising by 2% during the trading session on April 21. By mid-morning, the stock trimmed some of its early gains but still quoted Rs 1,419.2 on the NSE, up by 0.9%. Investor sentiment remains bullish, especially following the positive revisions in target prices and the bank’s strong performance despite the challenging macroeconomic conditions.
Highlights:
ICICI Bank’s stock rises 2% on April 21 post-earnings
Shares trade at Rs 1,419.2 by mid-morning, up 0.9%
Positive investor sentiment backed by strong results and analyst upgrades
