IDBI Capital: ICICI Bank - Better Prepared To Pass Through Storm
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IDBI Capital Report
ICICI Bank Ltd. is well prepared among its peers to weather the Covid-19 storm with -
a) highest provision coverage ratio (at 75%), b) highest Covid-19 provisions (1.3% of advances), and c) higher home loan portfolio (31% of advances).
Strong liability franchise and higher Tier-I capital ratio will advantage bank when the economy growth recovers.
We expect credit growth for the bank to remain higher than the banking industry led by market share gain.
We expect loan growth and margin to improve, thus resulting into 50 basis points YoY improvement in return on asset over FY20- FY22E to 1.3%.
While the uncertainty over the impact of Covid-19 would weigh on the valuation in the near term but we expect ICICI Bank to emerge stronger given strength in its business model.
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