ICICI Bank Q1 net up 25%, meets forecast

Net interest margin at 3.27% for the quarter-ended June compared with 3.01% a year ago

ICICI Bank, the largest private sector lender in the country, on Wednesday said its net profit for the quarter ended June 30 increased by 25 per cent from a year earlier to Rs 2,274 crore, aided by higher treasury gains, improved margin and growth in interest income.

“For this quarter, we have reported 32 per cent year-on-year growth in our consolidated profit after tax. This has translated into consolidated return on equity of 15.6 per cent, highest for the last several quarters,” said Chanda Kochhar, managing director and chief executive.

Net interest income, the difference between interest income and expense, expanded 20 per cent from a year before to Rs 3,820 crore in the first three months of this financial year. Net interest margin (NIM) improved by 26 basis points (bps) to 3.27 per cent during the quarter.

The bank reiterated its guidance (expectation) of a 10 bps improvement in its NIM in 2013-14 over last year’s 3.11 per cent.

Other income was up 32 per cent, driven by growth in treasury earnings. Treasury gains in the April-June quarter were Rs 403 crore, compared to a loss of Rs 21 crore in the corresponding period of last year.

The bank improved its cost-to-income ratio to 39.4 per cent, despite a 17 per cent rise in operating expenses.

Provisioning increased to Rs 593 crore in the first three months of this financial year, compared to Rs 466 crore a year before as asset quality deteriorated slightly. The net non-performing asset ratio increased by five bps sequentially to 0.69 per cent at the end of June. Fresh slippages during the quarter were Rs 1,116 crore, while recoveries amounted to Rs 310 crore. The provision coverage ratio was 75.4 per cent.

Net loans to companies whose facilities have been restructured were Rs 5,915 crore, compared to Rs 5,315 crore at the end of March.

Total advances increased by 12 per cent year-on-year to Rs 301,370 crore, helped by growth in retail loans. Mortgage and automobile loan disbursements during the quarter increased by 36 per cent and 17 per cent, respectively, on a year-on-year basis.

Kochhar said the bank's loan book was expected to grow two to three per cent higher than the sectoral growth rate.

Deposit growth was relatively muted, around nine per cent year-on-year. The bank closed the quarter with total deposits of Rs 291,185 crore. The share of low-cost current account and savings account deposits improved to 43.2 per cent at the end of June. Retail deposits accounted for 71 per cent of all deposits.

The capital adequacy ratio was 17.04 per cent and tier-I capital adequacy was 11.72 per cent on the Basel-III norms.