Lower provisions and core income drive ICICI Bank Q2 profit up 36%

Mumbai: ICICI Bank on Saturday reported a 36.08 per cent jump in its consolidated net profit at Rs 10,896.13 crore for the September quarter, helped by a sharp decline in provisions and growth in core income.

The second largest private sector lender's standalone net grew to Rs 10,261 crore from Rs 7,557.84 crore in the year-ago period and Rs 9,648.20 crore in the preceding June quarter.

The total standalone income rose to Rs 40,697 crore in the second quarter of the current fiscal from Rs 31,088 crore in the same period a year ago, according to a filing.

Its core net interest income grew 23.8 per cent to Rs 18,308 crore on the back of a 19.3 per cent expansion in domestic loans and a widening of net interest margin to 4.53 per cent as against the year-ago period's 4.31 per cent.

However, on a sequential basis, the NIM for the reporting quarter contracted from 4.78 per cent in the June quarter.

Its executive director Sandeep Batra told reporters that the trend of decline in NIMs will moderate going ahead, and added that the narrowing is offset by the loan growth.

Its non-interest income excluding treasury operations grew 14 per cent to Rs 5,861 crore, while the treasury losses were at Rs 85 crore, which was similar to the year-ago period.

At a time when the RBI has expressed concerns over unsecured loans, Batra said the performance of the ICICI Bank's personal loans of over Rs 1 lakh crore and credit card outstandings of Rs 43,000 crore has been “quite good”.

He said the bank does not have meaningful exposure in the low ticket size market of lending less than Rs 50,000, which has been impacted in the industry, and added that it also undertakes other risk mitigation strategies like lending to customers having previous relationships and preferring salaried individuals for such credit.

The overall retail growth was over 21 per cent, and the personal loans (over 40 per cent growth) and credit card ourstanding (over 30 per cent growth) seemed to be leading it, as the traditional mainstay of housing loan growth has come at 16 per cent.

The unsecured loans currently constitute 13.3 per cent of the overall book, and the bank follows a slew of risk management measures including aggressive provisioning and writing off an account if unpaid for 120 days, he said, adding that it also continuously monitors the job market trends.

The overall provisions came down to Rs 582.63 crore in the reporting quarter, as against 1,644.52 crore in the year-ago period.

Batra said the bank continues to carry contingent provisions of Rs 13,100 crore made in the last few years.

On the asset quality front, its gross non-performing assets ratio improved to 2.48 per cent from 3.19 per cent in the year-ago period and 2.78 per cent in the preceding June quarter.

Its gross slippages came down to Rs 4,687 crore during the quarter, and the net slippages were low at Rs 116 crore courtesy of aggressive recoveries and upgrades.

The bank, which reported a 15.3 per cent growth in corporate loans in the quarter, feels that the capital expenditure demand is being led by the government or state-run entities, while corporates, who have deleveraged over the last two years, are largely resorting to using internal resources for undertaking some capital expenditure for brownfield projects, Batra said.

Its overall capital adequacy was 16.07 per cent as of September 30, 2023.

Among the subsidiaries, ICICI Prudential Life Insurance Company's post-tax net rose 22.6 per cent to Rs 244 crore, ICICI Lombard General Insurance Company's net came down marginally to Rs 577 crore, ICICI Prudential Asset Management Company witnessed a 23.5 per cent growth to Rs 501 crore, while ICICI Securities' net went up to Rs 501 crore.