BackIndia Infoline puts SELL on ICICI Bank
India Infoline puts SELL on ICICI Bank
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ICICI Bank reported a decline of 6% in its net profits for Q1FY09, primarily due to a large Rs590 crore treasury loss compared to Rs190 crore gain in the corresponding period last year.
With economic headwinds unlikely to ease in the near term, banking stocks will continue to remain under pressure. ICICI Bank, being a leader among the banking space is likely to underperform led by concerns over sustainability of NIMs, slowing credit growth and rising levels of NPLs.
Many banks are guilty of aggressive loan portfolio build up during the last few years resulting in higher levels of NPLs.
Marketing of exotic derivatives to small corporates is a case in point. Going ahead, performance of core assets such as SME loans, vehicle loans and housing loans would also be under threat as interest rates continue to mount and demand slows down. We recommend a SELL with a target price of Rs615.
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