Q1 Performance: ICICI Bank net profit surges 78% to Rs 4,616 crore

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July 25, 2021 4:45 AM

Although the management did not gave any specific guidance on margins, the lender expects NIMs to maintain the same level in the coming quarters.

Over a medium term, margins can expand further as growth in SME and unsecured loans picks-up. ICICI Bank remains our top pick. Reiterate ‘Buy’.Over a medium term, margins can expand further as growth in SME and unsecured loans picks-up. ICICI Bank remains our top pick. Reiterate ‘Buy’.

Private lender ICICI Bank on Saturday reported a 78% year-on-year (y-o-y) jump in its net profit to Rs 4,616 crore during the June quarter (Q1FY22). The bank was able to report a strong bottomline mainly on account of robust net interest income (NII) and lower provisioning. NII of the lender rose 18% y-o-y and 5% quarter-on-quarter (q-o-q) to Rs 10,936 crore. However, provisions fell sharply to Rs 2,852 crore in the reporting quarter, down 62% y-o-y, compared to Rs 7,594 crore in Q1FY21.

Sandeep Batra, executive director, ICICI Bank, said, “The retail disbursements moderated in April and May due to the containment measures in place across various parts of the country.” With the gradual easing of restrictions, disbursements picked up in June and July, he added.

The net interest margins (NIM) of the bank increased 20 basis points (bps) y-o-y and 5 bps sequentially to 3.89%. Although the management did not gave any specific guidance on margins, the lender expects NIMs to maintain the same level in the coming quarters. The asset quality of the lender worsened during the June quarter. Gross non-performing assets (NPAs) ratio of the lender increased 19 basis points (bps) to 5.16%, compared to gross NPAs of 4.96% in the previous quarter.

Similarly, net NPAs ratio increased 2 bps to 1.16% from 1.14% in the March quarter. The gross NPA additions were Rs 7,231 crore in Q1FY22. Recoveries and upgrades of NPAs, excluding write-offs and sale, were Rs 3,627 crore during the June quarter.

As of June 30, the bank had restructured loans worth Rs 3,891 crore under the Reserve Bank of India’s one time restructuring scheme. This included retail loans worth Rs 925 crore and corporate loans worth Rs 2,956 crore. The bank held provisions worth Rs 632.35 crore against these restructured loans.

The bank claims to have made higher than required provisioning due to change in policy for non-performing advances. “The change in policy resulted in higher provision on non-performing advances amounting to Rs 1,127 crore for aligning provisions on outstanding loans to the revised policy,” it said. Based on current assessment of the portfolio, the bank also wrote back Covid-19 provisions amounting to Rs 1,050 crore made in earlier periods.

The non-interest income (excluding treasury income) increased by 56% y-o-y to Rs 3,706 crore. The non-interest income included fee income of Rs 3,219 crore, which grew 53% y-o-y.

Total advances increased by 17% y-o-y to Rs 7.38 lakh crore. The retail loan portfolio grew by 20% y-o-y and comprised 61.4% of the total loan portfolio. 4.0% of total loans at June 30, 2021. The growth in the domestic corporate portfolio was about 11% y-o-y driven by disbursements to higher rated corporates and public sector undertakings across various sectors.

Total deposits increased by 16% y-o-y to Rs 9.26 lakh crore. Average current account deposits increased by 32% y-o-y and average savings account deposits increased by 22% y-o-y in Q1FY22. Similarly, total term deposits increased by 9% to Rs 5.01 lakh crore during the June quarter.

The bank’s capital adequacy ratio remained 19.27%, compared to the minimum regulatory requirements of 11.08%.

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