ICICI Bank Q2 Results: Net Profit Rises 36% On Higher Interest Income

Private lender ICICI Bank Ltd. reported a net profit growth of 36% year-on-year on higher core income and lower provisions in the quarter ended September.

Net profit rose to Rs 10,261 crore, as compared with Rs 7,558 crore a year earlier, according to its exchange filing. Analysts polled by Bloomberg had estimated a net profit of Rs 9,459 crore.

Net interest income for the quarter rose to Rs 18,308 crore, up 24% year-on-year. Other income for the quarter increased to Rs 5,777 crore, up 14.3% year-on-year.

Net interest margin, as of Sept. 30, was at 4.53%, down 25 bps quarter-on-quarter.

"We expect the NIM reduction to moderate in the coming quarters," Sandeep Batra, executive director, told reporters over a conference call on Saturday.

Asset quality for the lender improved as gross non-performing asset ratio improved by 28 basis points quarter-on-quarter to 2.48%. Net NPA ratio also improved by 5 bps sequentially to 0.43%.

The gross NPA additions were Rs 4,687 crore in Q2 as compared with Rs 5,318 crore in Q1. The bank has written-off gross NPAs amounting to Rs 1,922 crore in the quarter. Recoveries and upgrades stood at Rs 4,571 crore.

According to Batra, the recoveries and upgrades were marginally lower owing to a seasonally weak quarter for the rural banking portfolio. The bank's aim is to build a strong book, he said, adding that it is difficult to give a clear guidance on recoveries in the future.

Total provisions dropped 64.5% year-on-year to Rs 583 crore.

Domestic advances for the lender rose 19.3% from a year earlier to Rs 10.74 lakh crore. Total advances were up 18.3% year-on-year at over Rs 11 lakh crore.

The domestic corporate loan book rose 15.3% year-on-year, while the retail book recorded a growth of 21.4%. Currently, retail loans comprise 46% of the total loan book.

According to Batra, there is limited demand for capital expenditure coming from the private sector. Companies are using internal accruals to fund their brownfield expansions, he said. However, ICICI Bank remains agnostic to the source of the demand and focuses purely on risk-adjusted return, he said.

Total deposits rose to Rs 12.94 lakh crore, up 19%. Period-end term deposits increased 31.8% year-on-year and 9.2% sequentially to Rs 7.67 lakh crore.