scorecardresearchS&P affirms 'BBB-' rating on ICICI Bank on improved asset quality

S&P affirms 'BBB-' rating on ICICI Bank on improved asset quality

Updated: 27 Jun 2022, 03:58 PM IST
TL;DR.
ICICI Bank's better customer profile and underwriting relative to the Indian banking sector will likely limit losses from the spillover impact of geopolitical tensions. Retail loans form about 53 per cent of the bank's loan portfolio, it said.
ICICI Bank: The brokerage has a 'buy' call on the stock with a target price of  <span class='webrupee'>₹</span>990 per share for the stock, indicating an upside of 33 percent. Strong traction in loan book, strengthening operating performance and comfort on asset quality are key positives for the stock, it said. The bank has been outperforming its peers and has been ticking most boxes on growth, margins and asset quality added the brokerage. On the valuation front, it believes the bank continues to be on a comfortable footing.

ICICI Bank: The brokerage has a 'buy' call on the stock with a target price of 990 per share for the stock, indicating an upside of 33 percent. Strong traction in loan book, strengthening operating performance and comfort on asset quality are key positives for the stock, it said. The bank has been outperforming its peers and has been ticking most boxes on growth, margins and asset quality added the brokerage. On the valuation front, it believes the bank continues to be on a comfortable footing.

(PTI) Global rating agency S&P on Monday affirmed 'BBB-' on ICICI Bank with stable outlook on improved asset quality.

This is despite an uneven economic recovery in India and macroeconomic challenges.

"In our base case, the bank's weak loans, defined as nonperforming loans (NPLs) and restructured loans, will decline to 3-3.5 per cent of total loans over the next 12 months, from about 4.6 per cent as of March 31, 2022," S&P Global Ratings said in a statement.

Broadly stable credit conditions will support this and credit costs should remain at about 1 per cent over the next 12-18 months, it said, adding the bank's asset quality should remain better than the Indian sector average and in line with international peers over the next two years.

"The bank's better customer profile and underwriting relative to the Indian banking sector will likely limit losses from the spillover impact of geopolitical tensions. Retail loans form about 53 per cent of the bank's loan portfolio," it said.

These are well diversified among home loans, vehicle loans, and unsecured loans, including personal loans and credit cards.

The stable outlook reflects that ICICI Bank will maintain a strong market position in the Indian banking sector, it said.

The bank should maintain good capitalization over the next 12-18 months, supported by healthy earnings, it added.

An upgrade of ICICI Bank is unlikely over the next one to two years as an upgrade will require an improvement in the bank's financial profile as well as the credit rating on India, it said. 

First Published: 27 Jun 2022, 03:58 PM IST