ICICI Bank’s fiscal third quarter net profit has jumped 14.8% year-on-year to Rs 11,792 crore amid stable core income growth while personal loans have slowed down and slippages in retail and rural credit have seen a rise. 

The country’s second-largest lender saw loan slippages of Rs 6,085 crore in the December quarter, with Rs 5,304 crore coming from retail and rural segments. Incidentally, fresh slippages in the third quarter was higher than Rs 5,073 crore in Q2 and Rs 5,916 crore in Q1FY25. 

The bank said the Kisan (farmer) credit card portfolio accounted for bad loans of Rs 714 crore in the quarter. 

Explaining the cyclical nature of the rural stress, the bank said it typically witnesses higher non-performing asset (NPA) additions from the kisan credit card portfolio in the first and third quarter of a fiscal year. 

On the personal loan front, growth slowed to 8.8% on year in Q3 from mid-30 levels in the year-ago period. The slowdown was a conscious decision and was more about risk assessment. 

Indian banks have been tightening underwriting and slowing down growth in the unsecured loan space after the Reserve Bank of India’s cautionary note last year.

ICICI Bank expects its margins to be broadly stable until the RBI cuts interest rates, which have remained frozen since February 2023 The lender’s net interest margin (NIM) stood at 4.25% in the quarter ended December 2024, lower than 4.27% a quarter ago and 4.43% a year ago.

“We do expect the margin to be broadly stable until the rate cycle starts. After the rate cuts happen, margins will be impacted due to the lead-lag effect as floating rate loans get repriced much faster than fixed deposits. The bank will continue to be disciplined in pricing across loan segments, while focusing on having a healthy funding profile,” said ICICI Bank executive director Sandeep Batra.

ICICI Bank’s net interest income (NII) rose 9.1% YoY to Rs 20,371 crore for the quarter ended December 2024. NII is the difference between interest earned and interest paid. 

Non-interest income grew 12.1% to Rs 6,697 crore in Q3, as fee income was up 16.3% YoY to Rs 6,180 crore during this period.

Loan Growth

The bank’s net advances rose 15.1% YoY and 3.2% sequentially to Rs 12.82 lakh crore.

The retail loan book saw a 10.5% YoY growth and a 1.4% sequential rise to Rs 7 lakh crore, accounting for 52.4% of the lender’s total advances.

The personal loan book, which fell 1.3% on a quarter-on-quarter basis, stood at Rs 1.2 lakh crore as of 31 December 2024, comprising 17.2% of total retail loans. The credit card portfolio grew 17.9% on year and 2.8% sequentially to Rs 56,847 crore, accounting for 8.1% of retail loans.

Domestic corporate loans grew 13.2% YoY and 4.3% sequentially, forming 21% of overall loans. The business banking portfolio increased by 31.9% on year and the rural portfolio by 12.2%.

Total advances grew 13.9% on year and 2.9% sequentially to Rs 13.1 lakh crore as of 31 December.

Deposits

The bank’s total deposits stood at Rs 15.20 lakh crore in Q3, up 14.1% YoY and 1.5% sequentially. 

Average deposits grew 13.7% YoY and 2.1% sequentially to Rs 14.58 lakh crore in Q3.

Low-cost CASA (current account and savings account) deposits grew 16.6% at Rs 6.2 lakh crore, comprising 40.5% of the bank’s total deposits. The share of CASA in overall deposits moderated slightly sequentially.

Asset quality

The bank’s gross NPA ratio stood at 1.96% as of 31 December 2024, compared to 1.97% at the end of September quarter and 2.30% a year ago. 

Net NPA ratio was unchanged at 0.42% on a sequential basis and marginally better than 0.44% in the year-ago period. 

During the quarter, ICICI Bank reported loan recoveries of Rs 3,392 crore, of which retail recoveries were Rs 2,786 crore. 

ICICI Bank wrote off Rs 2,011 crore of loans in Q3, lower than Rs 3,336 crore in Q2. 

Recoveries and upgrades stood at Rs 3,392 crore, higher than Rs 3,319 crore reported in the last quarter.

Provisions was at Rs 1,227 crore in Q3, from Rs 1,233 crore in Q2 and Rs 1,050 crore a year ago.

The provisioning coverage ratio for bad loans stood at 78.2% as of December-end.