Bernstein, the Wall Street research firm, has upgraded its rating on ICICI Bank to 'outperform', citing a sustained pickup in retail lending across India's domestic market. The upgrade comes as the lender reports stronger loan growth in its personal and small business segments, which Bernstein analysts say is outpacing broader sector trends.
The upgrade sent shares of ICICI Bank 2.3% higher on the National Stock Exchange of India on Monday, outperforming the benchmark Nifty 50 index, which was flat. The stock has gained approximately 18% year-to-date, reflecting investor optimism about India's consumption-driven recovery.
Bernstein's analysts noted that ICICI Bank's retail loan book has expanded at a mid-teens percentage rate in recent quarters, supported by digital banking initiatives and a stabilising credit environment. Non-performing loan ratios have also improved, reducing the drag on profitability. The upgrade is seen as a positive signal for emerging market bank stocks more broadly.
For UK investors with exposure to Indian equities through emerging market funds or exchange-traded products, the upgrade underscores the potential for dividend growth from India's largest private-sector lenders. However, analysts caution that currency risk and regulatory changes in India remain key factors to monitor.
The move also reflects a broader rotation into financials in emerging markets, as central banks in Asia begin to ease monetary policy. ICICI Bank's strong capital adequacy ratio and return on equity metrics were highlighted as key strengths in Bernstein's note.