ICICI Bank on Saturday turned in a sterling set of numbers for the September quarter, reporting a 37% year-on-year growth in net profits at Rs 7,557.84 crore on the back of strong loan growth and a steep drop in provisions. The lender’s asset quality improved meaningfully with the net non-performing asset (NPA) ratio at just 0.6%. The return on assets (RoA) rose to 2.06% annualised from 1.79% a year ago.
Profits before provisions and tax (excluding treasury income) jumped 24% y-o-y to `11,765 crore. The private sector lender’s net interest income (NII) grew 26% y-o-y to Rs 14,787 crore. Provisions (excluding tax provisions) fell 39% y-o-y to Rs 1,644 crore in Q2FY23.
The profits were driven by a smart 23% y-o-y increase in advances with the domestic loan book growing at 24% y-o-y. The lender earned a strong net interest margin (NIM) of 4.31%, helped by a faster transmission of rising repo and benchmark rates into loan rates.
The growth in deposits was relatively slow at 12% y-o-y. Sandeep Batra, executive director, ICICI Bank, said deposits would not be a constraint in growing the loan portfolio.
“While it is true that liquidity is tightening, we do have options to borrow. We will continue to pursue our micro-market strategy for liabilities and see how it goes,” he said on a call with the media. The bank’s liquidity coverage ratio, he said, was 127% and higher than that for most banks. Batra ruled out any capital raise at this stage, saying the bank is well-capitalised to support loan growth.
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The demand for corporate credit, Batra said, was coming both from the working capital and term loan segments. ICICI Bank reported a 23% y-o-y increase in its corporate loan book during Q2FY23; retail loans account for 54% of the bank’s total portfolio.
The lender’s asset quality improved during the quarter with the gross NPA ratio falling to 3.19% from 3.41% at the end of June and 4.82% in September 2021. The bank’s net NPA ratio decreased to 0.61% from 0.70% in June 0.99% in September 2021. The gross NPA additions during the quarter of `4,366 crore were smaller than the `5,825 crore in Q1-2023.
ICICI Bank’s s non-interest income, excluding treasury income, increased by 17% y-o-y to `5,139 crore during the quarter. Compared with a gain of `397 crore in Q2FY22, ICICI Bank reported a treasury loss of `85 crore in Q2FY23.
On the matter of the Office of the Comptroller of the Currency (OCC) in the US asking ICICI Bank’s New York branch to enhance secrecy act processes, Batra said the bank has entered into a consent order with the OCC. The lender, he said, was in dialogue with the OCC and would strengthen processes in the ALM (anti-money laundering) and Bank Secrecy Act framework.