ICICI bank stock price made a new 52-week high at Rs 1,160 on April 29, 2024. Stable net interest margin at 4.4%, robust deposit growth of 19.6% YoY and improved Gross and Net non-performing assets at 2.16% and 0.42% respectively drove the stock price to a new 52-week high. Investors were also enthused with strong credit growth of 16.2% YoY in March Quarter 2024, higher than benchmark HDFC Bank and Axis Bank. HDFC Bank and Axis Bank reported loan growth of 12.5% and 14% YoY respectively in Q4FY24. Likewise net interest margin was also better for ICICI Bank at 4.4% compared to 3.6% for HDFC Bank and 4.04% for Axis Bank in March Quarter 2024.
Net interest margin is a function of business mix, pricing behavior and competition in various loan segments. Retail loans with higher yields aid margin expansion. While retail loans are a major driving force for the growth of bank credit, the higher proportion of secured mortgage loans in the overall loan mix provides crucial support in the present dynamic times. Home loans are high yield products and can be easily recovered at the time of default. Retail loans constitute 55% of ICICI Bank’s total loan book of which 33% are secured home loans.
On the other hand HDFC bank’s home loans constitute 30% of its total loan mix, 300 basis points lower than ICICI Bank even after merging with HDFC. Retail loans constitute 50% of total gross advances. Axis Bank mortgage loans are 17% of the total loan book and retail loans constitute 60% of total net loans.
