ICICI Bank reported a 34.2% year-on-year rise in its net profit to Rs 8,312 crore for the fiscal third quarter ended December 2022, despite an increase in provisions.

The surge in net profit came on the back of strong growth in the loan book, dip in non-performing assets (NPAs) and a jump in net interest income (NII).

The country’s second-largest private lender reported a 19.7% YoY jump in total advances to Rs 9.7 trillion while deposits grew 10.3% to Rs 11 trillion as of December 31, 2022. 

“We are quite comfortable with the way all segments of credit are growing, including credit cards and personal loans. If at all we may be concerned, it is about the pricing of the personal loans, given that the space has become very competitive. Corporate spends have gone down, but high-quality retail spends have risen,” ICICI Bank group chief financial officer Anindya Banerjee told analysts.

Domestic advances were up 21.4% YoY and 4.5% quarter on quarter. Retail loans grew 23.4% YoY to Rs 5.3 trillion, comprising 54.3% of the total loan book as of December 31, 2022. Home loans grew by 19% over the previous year  and  credit cards and personal loans grew by 51.5% and 42.1%, respectively. The bank had loan outstanding of Rs 34,546 crore on credit cards and Rs 80,932 on personal loans.

The bank’s corporate advances grew by 18% to Rs 2.3 trillion in Q3FY23. “There is a lot happening in the overall economy. Credit demand is seen across segments, although the bank has turned conservative in assessing credit risk without turning sector agnostic. When we assess the corporate portfolio, it has to fall within our risk framework,” said ICICI Bank executive director Sandeep Batra.

The bank’s term deposits grew 14.2% YoY to Rs 6.1 trillion while its CASA (current account savings account) ratio dipped marginally to 44.6% as of December 31 from 44.9% a year ago.

The bank’s NII grew 34.6% to Rs 16,465 crore from Rs 12,236 crore a year ago. It was up by 11.35% from Rs 14,786.81 crore in the preceding quarter.

Net interest margin (NIM) expanded to 4.65% as of December 31, 2022, from 3.96% a year ago and 4.31% a quarter ago.

The bank’s provisions increased 12% YoY to Rs 2,257 crore, despite an improvement in the asset quality. The bank said that during Q3, it changed its provisioning norms on NPAs to make them more conservative. The provisioning coverage ratio on NPAs was 82% on December 31.

On the asset quality front, the bank’s gross NPA ratio dropped to 3.07% (Rs 37,053 crore) as of December 31, from 3.19% a quarter ago and 4.13% a year ago. 

The net NPA ratio fell to 0.55%, from 0.61% a quarter ago and 0.85% a year ago.

During Q3FY23, ICICI Bank made net bad loan additions of Rs 1,119 crore, up from Rs 605 crore in the previous quarter. The overall gross NPA additions were at Rs 5,723 crore in Q3FY23 compared to Rs 4,366 crore in the preceding quarter. Recoveries and upgrades of NPAs, excluding write-offs and sale, were Rs 4,604 crore in Q3 of FY23 compared to Rs 3,761 crore a quarter ago. 

During the quarter, the bank wrote off Rs 1,162 of loans and did not have any sales to the asset reconstruction companies (ARCs).  Net investment in security receipts of ARCs was Rs 490 crore as on Dec 31, 2022.