Citi has reiterated its ‘Buy’ rating on ICICI Bank with a target price of ₹1,600 following a recent management interaction that reaffirmed the lender’s robust operating strategy. The brokerage noted that the bank remains well-positioned to manage near-term rate cuts, with a 50bps repo rate reduction likely to impact net interest margins (NIMs) by just 20-25bps in FY26. Management indicated a positive NIM bias in Q4, suggesting potential earnings stability.
Unsecured loan stress is reportedly stabilizing, and a chunky corporate recovery could aid lower credit costs. Credit costs are expected to normalize gradually from FY26 onwards. The bank is also seeing improved traction in unsecured retail products, with a focus on optimizing in-house sourcing of personal loans and enhancing credit card penetration and usage. On the liability front, deposit mobilization was not flagged as a concern and is sufficient to support profitable, risk-adjusted loan growth.
Additionally, ICICI Bank is stepping up its investments in the franchise, including marketing and promotional spend. While this may keep operating expenses elevated in the near term, the cost-to-income ratio is expected to remain broadly stable. Citi believes these factors collectively reinforce ICICI Bank’s position as one of the most well-managed large private sector banks in India.
