ICICI Bank net up 12% on retail loan growth

Bank's overall credit up 17% despite muted corporate loans; Retail loans also bettered industry growth of 16-17%

ICICI Bank, India’s largest private sector lender, posted a 12 per cent rise in net profit for the quarter ended September to Rs 3,030 crore. This was driven by 25 per cent growth in retail loans. The bank’s earnings were in line with market expectations.

Overall credit growth stood at 17 per cent despite muted loan demand from corporate borrowers. Retail loan growth was higher than the sector’s, which stands at 16-17 per cent. Now, retail loans account for 44 per cent of ICICI Bank’s overall loan book, compared with 40 per cent a year ago.

“We will grow more than the sector in segments in which we have chosen to grow,” said Managing Director and Chief Executive Officer Chanda Kochhar. She expects corporate demand to improve in the coming quarters, with the bank forecasting double-digit growth in wholesale credit for the current financial year.

While net interest income grew 13 per cent to Rs 5,251 crore, fee income growth was a muted seven per cent, reflecting subdued corporate activity, Kochhar said. The bank’s profitability was aided by Rs 222 crore of gains from treasury operations, apart from Rs 360 crore of dividend income from subsidiaries.

Net interest margin improved to 3.52 per cent during the September quarter, up 10 basis points from the year-ago period, primarily due to improved margins from international operations. The bank expects margins to be stable, despite a sharp cut in the base rate, announced recently.

“Our cost of funds has also come down. We expect costs to come down further,” Kochhar said. Since April this year, the bank has reduced its base rate by 65 basis points.



The lender’s asset quality worsened, with gross non-performing assets (NPAs) rising to 3.77 per cent from 3.12 per cent a year ago. The net NPA ratio was 1.65 per cent as of September-end, against 1.09 per cent a year ago.

“During the quarter, gross NPA addition was Rs 2242 crore, including slippages of Rs 931 crore from standard restructured assets,” Kochhar said. The bank has refinanced about Rs 2,000 crore under the 5/25 scheme.

It expects addition to gross NPAs would be lower this financial year compared to the last.

“ICICI Bank reported 12 per cent growth in standalone profits, in line with estimates. We believe unlocking of value in subsidiaries will be an added icing on the cake for investors,” Motilal Oswal Securities said in a report, referring to the bank’s announcement to sell an additional nine per cent stake in its general insurance subsidiary to its foreign partner for Rs 1,550 crore.