ICICI Bank share price up 12% in 2025; private lender still a buy?

Nirmal Bang  has maintained its 'Buy' rating on ICICI Bank, affirming a target price of Rs 1,723. This valuation includes a standalone value per share of Rs 1,510 and an additional subsidiary value per share of Rs 213, after a 15% holding company discount. The target multiple for ICICI Bank is set at a 6.4% premium over its past five-year average multiple of 2.73 times, the domestic brokerage said.

ICICI Bank is experiencing a favourable loan growth outlook, projected to benefit from fiscal and monetary policy measures and the forthcoming festive season. Management notes that retail and business banking, which comprise around 72% of its loan book, are expected to drive this growth. The impact of a recent 50 basis points rate cut is anticipated to be reflected in lending yields during the second quarter of FY26, strengthening the bank's market position.

ICICI Bank shares are down 2 per cent in the past one month but are up 12 per cent in 2025 so far.

Nirmal Bang projects a loan and earnings compound annual growth rate (CAGR) of 12% and 9.1% respectively for FY25-FY27E. These projections are expected to yield a Return on Assets (RoA) of 2.2% and a Return on Equity (RoE) of 15.7% by FY27. The bank's asset quality remains solid across retail, business banking, and corporate loans, with no significant rise in credit costs expected. This reflects the bank's effective risk management strategies, ensuring stability and growth.

ICICI Bank's deposit strategy focuses on establishing itself as the primary banker for its customers. Key areas include capital markets, self-employed customers, multinational corporations, and Gulf Cooperation Council segments to sustain and grow current account balances. The full impact of the Cash Reserve Ratio (CRR) cut is set to materialise in the latter half of FY26, ensuring a steady deposit flow crucial for loan growth.

The banking sector has seen a slowdown in loan growth due to seasonal factors and geopolitical challenges. The Reserve Bank of India has, however, ensured adequate liquidity provision. ICICI Bank has been disciplined in reducing savings and term deposit interest rates, with retail term deposit rates decreasing by 60-65 basis points from peak rates. This approach helps manage the cost of funds effectively, positioning the bank for future growth.

ICICI Bank anticipates a resurgence in loan growth, particularly in retail, aided by benign inflation and fiscal measures. The bank aims to balance growth with profitability in the mortgage segment, while the non-banking financial company (NBFC) book gains momentum. Despite lower interest rates, high-rated NBFCs are turning to capital markets for borrowing due to reduced costs, highlighting growth prospects across various segments.

Corporate loans are expected to gather pace as MCLR-linked loans begin to reprice. Growth is also forecasted in credit cards and personal loans, with the bank prioritising profitability over sheer expansion. Management underscores that loan growth will adhere to risk management and compliance standards, focusing on loan quality. This careful growth calibration is integral to the bank's long-term strategy.

As the banking industry navigates both challenges and opportunities, ICICI Bank's strategic focus on retail and business banking is poised to enhance its market position. Given the favourable economic conditions and strategic policy efforts, ICICI Bank is set for substantial growth and financial stability. The bank's proactive strategies in adapting to market dynamics underscore its commitment to maintaining robust and resilient financial performance, ensuring long-term success.