ICICI Bank Q2 net rises 37% to Rs 7,558 cr on healthy loan growth

Advances of ICICI Bank grew 23 per cent YoY and 5 per cent sequentially to Rs 9.38 trillion at the end of the September quarter

Private sector lender ICICI Bank reported a 37 per cent year-on-year (YoY) jump in net profit to Rs 7,558 crore in July-September (Q2FY23) quarter, aided by lower provisions and higher net interest income (NII), supported by healthy loan growth. Net profit for the quarter beat street estimates as analysts polled by Bloomberg had estimated a net profit of Rs 7,411.6 crore for the bank.

The bank reported a net profit of Rs 5,511 crore in the year-ago period.

The NII of the lender rose 26 per cent YoY to Rs 14,787 crore in Q2FY23 from Rs 11,690 crore in the year-ago period. The bank's net interest margin, a measure of profitability, stood at 4.31 per cent in the period under review compared to 4.01 per cent in the previous quarter.

The non-interest income, excluding treasury income, increased by 17 per cent YoY to Rs 5,139 crore in Q2FY23, compared to Rs 4,400 crore in the year-ago period. Fee income rose 18 per cent YoY to Rs 4,480 crore. The lender, however, reported a treasury loss of Rs 85 crore in the period under review compared to a Rs 397 crore gain in the year-ago period.

Provisions of the lender dropped 39 per cent YoY to Rs 1,644 crore in Q2FY23 compared to Rs 2,714 crore in the same period a year ago. Provisions for Q2FY23 include a contingency provision of Rs 1,500 crore made on a prudent basis, the lender said in a statement.

Advances of the lender grew 23 per cent YoY and 5 per cent sequentially to Rs 9.38 trillion at the end of the September quarter. The retail portfolio, which constitutes 54 per cent of the loan portfolio, grew 25 per cent YoY and 6 per cent sequentially. The business banking segment grew 43 per cent YoY and 11 per cent sequentially. As far as the corporate segment is concerned, it grew 23 per cent YoY and 7 per cent sequentially, while the rural loan portfolio grew 12 per cent YoY and 4 per cent sequentially.

Deposit growth was seen trailing credit growth as deposits grew 12 per cent YoY to Rs 10.90 trillion. The average current account and savings account deposits increased by 16 per cent YoY Q2FY23.

“Given the tightening of liquidity, incremental loan growth will largely be a function of deposit growth and borrowings that we may do. We have got our overall risk framework. So whatever falls within framework, we will continue to grow,” said Sandeep Batra, Executive Director, ICICI Bank. 

"In line with the repo rate increase, there has been a corresponding increase in lending rate increase. Over a period of time, the lending rates and deposit rate will match. But at this point of time, the lending rate increase has been a little faster than deposit rates, and that is where we have got the benefit of NIM expansion", Batra said. 

The bank's gross non-performing asset (GNPA) ratio fell by 22 basis points sequentially to 3.19 per cent at the end of the September quarter. Similarly, net NPA improved to 0.61 per cent. Gross additions to bad loans were at Rs 4,366 crore during the second quarter, while recoveries and upgrades stood at Rs 3,761 crore. During the July-September period, the bank wrote off loans worth Rs 1,103 crore.

The board of directors of the bank in a meeting approved the re-appointment of Sandeep Bakshi as the managing director and chief executive officer for a period of three years, with effect from October 4, 2023 to October 3, 2026, subject to approval of Reserve Bank of India (RBI) and the shareholders of the bank.