ICICI Bank Q3 Results: Profit Exceeds Estimates Aided By Rise In NII

Rise in net interest income and stable asset quality helped ICICI Bank Ltd. to report nearly a 15% year-on-year rise in profit after tax at Rs 11,792 crore, exceeding analysts' expectations of Rs 11,495 crore, polled by Bloomberg.

Provisions and contingencies for the quarter rose 17% on the year to Rs 1,227 crore.

Net interest income rose 9% on the year to Rs 20,371 crore. Meanwhile, net interest margin fell to 4.25% in the December quarter as against 4.27% a quarter ago and 4.43% a year ago.

While the bank did provide margin guidance, it expects margins to be broadly stable till the rate cut cycle starts.

"Once the rate cut cycle starts, there will be some impact on margins as loans will get repriced faster than deposits, which will impact margins," Executive Director Sandeep Batra said in the post-earnings call.

Asset quality remained stable during the quarter ended December.

Gross non-performing assets ratio of the bank fell to 1.96% at the end of December as against 1.97% a quarter ago and 2.30% a year ago. Net NPA remained flat at 0.42% sequentially but was lower than 0.44% a year ago.

The gross NPA additions were Rs 6,085 crore in the December quarter compared to Rs 5,073 crore in the September quarter. This has come as the bank typically witnesses higher NPA additions from the kisan credit card portfolio in the first and third quarters of a financial year.

Of this, retail and rural accounted for Rs 5,300 crore, and the balance is corporate and business banking, Batra said. This includes Rs 714 crore worth additions from Kisan credit cards during the quarter.

The bank is comfortable in growing its retail and rural loan book and will continue to closely monitor the portfolio over time, he said.

Recoveries and upgrades of NPAs, excluding write-offs and sales, were Rs 3,392 crore during the third quarter, higher than Rs 3,319 crore in Jul-Sep. The bank has written off gross NPAs amounting to Rs 2,011 crore.

Healthy loan growth continued to aid the bank’s performance. Domestic gross advances of the bank clocked a growth of 14% on the year to Rs 13.14 lakh crore.

The net domestic advances grew by over 15% year-on-year during the quarter, while the retail loan portfolio grew by nearly 11% year-on-year, and unsecured personal loans have grown 8.8% year-on-year.

The business banking portfolio grew by 33% year-on-year, the rural portfolio rose over 12%, and the domestic corporate portfolio increased by 13%.

When asked about the fall in the bank's BB portfolio, Batra said that the amounts toward the BB-rated and below book are small at Rs 2,193 crore. It was Rs 3,386 crore a quarter ago.

He said that over the years, the bank's focus has been toward better-rated corporate loan portfolios. As of December, A- and above-rated corporate loan books were 76% of their overall loans in that category.

Deposits grew over 14% on the year to Rs 15.20 lakh crore. Current account savings account deposits accounted for 39% of total deposits, flat quarter-on-quarter. While term deposits rose 14.4%, CASA deposits rose 12.6% year-on-year.