In a recent analysis conducted by Motilal Oswal, it has been revealed that ICICI Bank Ltd. has consistently outperformed Axis Bank Ltd. in crucial financial metrics. According to the report, ICICI Bank has maintained an industry-leading return on assets (RoA) which stands approximately 50 basis points higher than that of Axis Bank over the past few years.
Despite Axis Bank’s challenge of an elevated credit-deposit ratio, potentially constraining credit growth, ICICI Bank exhibits a strong capitalization level with a tier-I ratio of 16%. This robust capitalization is expected to facilitate a healthy growth trajectory for ICICI Bank, further cementing its position in the banking sector.
Furthermore, the report forecasts a compound annual growth rate (CAGR) of around 18% for ICICI Bank’s loan book over FY24-26E, compared to a 16% CAGR estimated for Axis Bank during the same period. This projection indicates ICICI Bank’s ability to sustain and potentially accelerate its lending activities in the coming years.
ICICI Bank’s strategic focus on leveraging technology and operational efficiencies also sets it apart. In contrast, Axis Bank’s emphasis on investments may keep its cost-ratios elevated, further differentiating the two banks in terms of operational strategies.
Despite Axis Bank’s current trading valuation standing at 1.5 times FY26E adjusted book value, the report suggests that the pressure on key operating metrics may limit its stock performance in the near term. In light of these findings, Motilal Oswal continues to express a preference for ICICI Bank, citing its steady return ratios and superior growth potential.
According to Motilal Oswal’s estimates, ICICI Bank is projected to deliver a return on assets/return on equity of 2.2%/17.8% for FY26E, whereas Axis Bank’s corresponding figures are estimated at 1.7%/17.1%. This disparity underscores ICICI Bank’s dominance in key financial indicators, positioning it favorably in the banking landscape.
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