In a good set of numbers, India?s number two lender ICICI Bank on Friday reported a 31% year-on-year (y-o-y) growth in net profit to R1,901.76 crore for the fourth quarter of 2011-12. The bottom line was driven up by a 24% y-o-y increase in net interest income supplemented by strong other income growth, up 36% y-o-y to R2,228 crore. Profitability improved with net interest margins (NIMs) up 31 basis points sequentially to 3.01%. The ICICI Bank stock gained 2.28% to close at R860.75 on the Bombay Stock Exchange, on a day when the benchmark 30-share Sensex ended flat.
While the quantum of loans restructured during the three months to March 2012, was R,200 crore, taking the outstanding restructured portfolio to R4,256 crore, the bank?s asset quality improved. While gross net performing assets (NPAs) fell 20 bps sequentially to 3.62%, net NPAs came off to 0.73%, lower by 10 bps over the December 2011 quarter. ?The bulk of the restructuring has been completed and while there could be some restructuring in the pipeline, it would be a small amount,? Chanda Kochhar, MD and CEO, said, adding the outlook on asset quality was stable.
The CEO pointed out that the bank?s margins had expanded as a result of better yields on advances. ?We maintained a strategy focusing on profitability, growth and risk management, which was reflected in our NIMs,? Kochhar said. The bank?s current and savings account (CASA) deposits were flat on a sequential basis at 43.5%. ICICI Bank expects a 10-15 basis points expansion in NIMs this year and domestic credit to grow at 20%. ?Demand for retail loans appears stable but demand for corporate loans would depend on factors other than interest rates,? the CEO said. With a capital adequacy ratio of 18.52% including a tier 1 capital of 12.68%, the bank is well-poised to grow.
?There have been surprises on both margins and asset quality,? said Venkat Krishnan, who tracks the banking space at Ambit Capital. ?We are somewhat less optimistic than the bank on the loan growth this year and are building in 17%.?
Provisions rose to Rs 469 crore in the March 2012 quarter from Rs 385 crore a year earlier. The provisioning coverage ratio stood at 80.4%. The bank?s total income for the three months to March, 2012 stood at Rs 11,403 crore, up by 30% y-o-y. Advances grew 17% y-o-y to Rs 2,53,728 crore as on March 31, 2012. Corporate loans increased 26% y-o-y while retail loans grew 8% y-o-y. Retail loans form 36% of ICICI Bank?s loan book, domestic corporate loan account for 23%, overseas loans 27%, rural credit contributes 9% while SME brings in 5%. Deposits in 2011-12 grew 13.25% to Rs 2,55,500 crore. Kocchar believes deposits could grow at between 16-18% for this fiscal. Though the bank does not expect major pressure on deposit growth going forward, it said there has been a moderation in deposit growth for the industry owing to competing tax saving instruments.
Around Rs 1,728 crore came in from fee income, Rs 469 crore from treasury income, and Rs 342 crore from other income, of which dividend income contributed Rs 280 crore. The bank said that the dividend income came in from its subsidiaries which finally started making profits in the past financial year. This includes ICICI Bank?s UK subsidiary and insurance venture.