Maintain 'buy' on ICICI Bank – TP Rs.1106 - Geojit BNP Paribas

- Buy rating on ICICI Bank is maintained with a target price of Rs.1106 over one year.

- The bank reported net interest income (NII) of Rs.3100 crore for 4QFY12. NII is up 23.7% yoy and better than market expectations.

- NII increase is mainly driven by NIM (net interest margin) expansion. Domestic NIM expanded by 30bps to 3.3% qoq and overseas NIM increased to 1.5% from 1.4% qoq. NIM expansion seemed to have surprised the market.

- Standalone net profit at Rs.1900 crore increased 31% yon.

- Restructured assets jumped by Rs.1200 crore and % NNPA (Net non – performing assets) declined 10bps qoq.

- Other income increased 35.85 yoy and surprised positively. Other income increase was driven by treasury gains and dividend income from subsidiaries. Dividend income from subsidiaries is expected to go up further in FY13, as more subsidiaries are expected to start paying dividend in the year.

- During the quarter, advances increased moderately at 17.3% yoy. Retail loan growth was muted at 8% yoy, but domestic corporate loan growth was more comfortable at 26% yoy.

- Consolidated net profit increased 59.1% yoy. ( This is after adjusting for one time third party motor losses of ICICI General at Rs.685 crore).

- Improving NIM, return on assets (RoA) and return on equity (RoE) may lead to a re-rating of the stock to 2 multiple of expected book value for FY13 from 1.4 multiple of expected book value for FY13.

- The stock is our top pick in the banking space and 'buy' rating is maintained with a TP of Rs.1106 over one year.

Source : Equity Bulls

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