Shares of ICICI Bank Ltd gained nearly 3 per cent on Thursday, a day after the private sector lender posted an improvement in asset quality and an investigation found former Chief Executive Chanda Kochhar had violated internal bank policies.

The board has decided to “claw back” all bonuses paid to Kochhar between April 2009 until March 2018, following the conclusion of investigation led by former Supreme Court judge BN Srikrishna. Kochhar said she was “utterly disappointed, hurt and shocked by the decision.”

But investors welcomed the news, with shares rising as much as 2.9 per cent to a more than one-week high of Rs 376.65 in heavy trade. Nearly 32.6 million shares had changed hands by 0437 GMT, compared with the 30-day average of 15.8 million.

Shares of the country's third-largest private sector lender by market value were last up 1 per cent at Rs 369.95 .

Analysts at Jefferies said they fear legal options being pressed from both sides, pulling in both current and past executives, and which at best would be a “nuisance and noise”.

Brokerages upbeat on Q3 results

At least four brokerages raised their target price on the stock, though the lender posted a fall in third-quarter profit on Wednesday. Gross bad loans as a percentage of total loans, a measure of asset quality, fell to 7.75 per cent at the end of December, from 8.54 per cent in the previous quarter and 7.82 per cent a year earlier. ICICI Bank, however, accounts for a chunk of the country's bad loans.

ICICI Bank “continues to show promise with trending lower new NPL formation, and balance sheet growth with higher granularity on both asset and liability side,” Jefferies analysts wrote in a note. The brokerage raised its target price to Rs 450 from Rs 385, while HSBC hiked it to Rs 415 from Rs 400.

Credit Suisse analysts said the asset quality trends further reinforced the view of credit cycle turning.

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