ICICI Bank reported a 39.7% year-on-year rise in net profit to Rs 9,648 crore for the quarter ended June on the back of a healthy growth in net interest income and an improved asset quality. 

In the year-ago period, the private sector lender had reported a net profit of Rs 6,905 crore.

The core operating profit rose 35.2% year-on-year to Rs 13,887 crore while fee income grew by 14.1% to Rs 4,843 crore.

NII and NIM

The bank’s net interest income (NII) rose 38% to Rs 18,227 crore in the fiscal first quarter ended June, from Rs 13,210 crore a year before.

Net interest margin (NIM) was at 4.78%, improving from 4.01% that the bank reported in the year-ago period. But it was lower than the preceding quarter’s 4.9%.

“The fall in NIM reflects the lagged repricing of retail deposits. We expect further NIM compression as more deposits get repriced. We expect NIM to remain approximately at FY23 levels this year," said ICICI Bank executive director Sandeep Batra.

Non-interest income, excluding treasury gains, increased by 12.0% over the previous year to Rs 5,183 at the end of the reporting quarter. 

Provisions

Provisions (excluding provision for tax) were at Rs 1,292 crore in Q1 of FY24 compared to Rs 1,144 crore in the year- ago period. The bank had a treasury gain of Rs 252 crore during the quarter while in the year-ago period, the bank just made a gain of Rs 36 crore.

The provision coverage ratio on NPAs was 82.4%, as of 30 June.

Asset quality

The bank’s asset quality improved, with gross non-performing asset (NPA) ratio declining to 2.76% from 3.4% a year ago and 2.81% a quarter ago. 

The net addition to gross NPAs, excluding write-offs and sales, was Rs 1,807 crore during the quarter. The bank wrote of Rs 1,169 crore of bad loans during this period.

Net NPA ratio declined to 0.48% in the June quarter from 0.70% a year ago. In absolute value, it stood at Rs 5,381.77 crore.

The bank continues to hold contingency provisions of Rs 13,100 crore.

Deposits

The bank’s deposits grew to Rs 12,38,737 crore in the June quarter, up 17.9% year-on-year and 4.9% from the preceding quarter. 

Total term deposits increased by 25.8% year-on-year and by 9.8% sequentially to stand at Rs 7,02,511 crore at the end of June 2023. 

CASA (current account savings account) deposits grew 9% to Rs 5,362.26 crore, constituting 42.6% of the total deposits. About 80% of the deposits are in the retail segment.

Advances

The bank’s loan book grew 18.1% year-on-year and 3.7% sequentially to stand at Rs 10,57,583 crore as on 30 June.

The domestic advances grew by 20.6% year-on-year and 4.0% sequentially to stand at Rs 10,25,310 crore as on 30 June 2023. 

The retail loan portfolio, which grew by 21.9% year-on-year and 4.5% sequentially, comprised 54.3% of the bank’s total loan portfolio as of 30 June 2023. The business banking portfolio rose 30.4% year-on-year and 3.8% sequentially.

The SME business, comprising borrowers with a turnover of less than Rs 250 crore, grew by 28.5% year-on-year and 5% sequentially.

The domestic corporate portfolio grew by 19.3% year-on-year and the rural segment by 17.6%.

 “Most of the corporate loans came from government sources. The private sector had lighter capex and the internal accruals were used for their brown field operations,” Batra told analysts. 

Capital adequacy ratio was 17.47% and Tier-1 capital adequacy ratio was 16.76% on a standalone basis.