Axis Bank Versus ICICI Bank - Revisiting Performance Gap Over Recent Years: Motilal Oswal Analysis

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.ICICI Bank Ltd. has been delivering industry leading return on asset with the same being ~50 basis point higher than Axis Bank Ltd. over the past few years. Axis Bank’s elevated credit-deposit ratio will constrain credit growth, while continued re-pricing of deposits will likely exert pressure on margins in the coming quarters as well. The capitalisation level for ICICI Bank remains strong with a tier-I ratio of 16%, which will enable healthy growth trajectory, while healthy accretion of retail deposits will be a key growth enabler. We thus estimate ICICI Bank’s loan book to register a compound annual growth rate of ~18% over FY24-26E vs. 16% for Axis Bank. Also, while ICICI Bank is positioned well to benefit from operating leverage and grow the business on the back of strong technological investments, Axis Bank has been in an investment mode, which will thus keep the difference in cost-ratios of the two banks elevated. Axis Bank is currently trading at a 1.5 times FY26E adjusted book value and while the overall valuations look reasonable, the pressure on key operating metrics will limit stock performance in the near term and we continue to prefer ICICI Bank on steady return ratios and ability to deliver superior growth. We thus estimate ICICI Bank to deliver FY26E return on asset/return on equity of 2.2%/17.8% versus Axis Bank RoA/RoE of 1.7%/17.1%..Click on the attachment to read the full report:.IPO-Bound Good Glamm Group Enters JV With Serena Williams For Pan-US Brand Launch.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Axis Bank Versus ICICI Bank - Revisiting Performance Gap Over Recent Years: Motilal Oswal Analysis

Estimate RoA gap to sustain at 40-50 bp; maintain preference for ICICI Bank

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Axis Bank Versus ICICI Bank - Revisiting Performance Gap Over Recent Years: Motilal Oswal Analysis

Estimate RoA gap to sustain at 40-50 bp; maintain preference for ICICI Bank

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