BoA-ML sees improved asset quality for ICICI Bank, reiterates 'buy' callCIC

Bank of America-Merrill Lynch (BoA-ML) expects a 15 per cent rise in gross non-performing loans of India's biggest private lender, ICICI Bank, versus earlier forecast of 25 per cent increase. BoA-ML has reiterated its 'buy' rating on ICICI Bank and has raised its price objective to Rs 1,200 from Rs 1,075.

BoA-ML met ICICI Bank CEO Chanda Kochhar and said that the asset quality may be 'much better than expected' and could lead to 're-rating of the stock.'

According to BoA-ML, 'High' tier I capital also positions ICICI Bank well for potential regulatory changes. It adds that the lender may not see a 'marked rise' in restructured loans.

BoA-ML is of the opinion that ICICI Bank is much better positioned to manage credit cycle due to its high share of retail loans and low percentage of SME loans.

The top six banks and the biggest mortgage lender, Housing Development Finance Corporation, may report an average 48% increase in net profit, skewed by a 145% jump in SBI's net profit, a survey of five brokerage estimates by ET shows.

ET reported that public sector banks will lag behind the private ones in their June quarter earnings as they will be plagued by rising bad loans to state electricity distributors, textile and steel industries. But the net profit of the nation's biggest, State Bank of India, will more than double year on year due to low profit last year.

HDFC Bank, the first of the major banks to report the June quarter results on Friday, may say its quarterly earnings rose 28%, a bit lower than its customary 30%, as demand for funds and customers may have lowered profitability. Net interest income, the difference between the interest paid for funds and income earned from lending, may rise 20%, the forecast shows.