ICICI Bank Q3 Results Review - PPOP Inline; Net Earnings Lower On AIF Related Provisions: Systematix

Systematix Research Report

ICICI Bank Ltd. reported Q3 FY24 earnings of Rs 103 billion (flat QoQ, +24% YoY) which was lower than estimates largely due to Rs 6.3 billion provisions on alternative investment fund investments.

However, operating profit was 3% higher than estimates on account of lower than expected net interest margin decline (aided by IT refund), higher other income and tighter opex control. Key highlights for the quarter were:

1. Net advances growth of 4% QoQ, 18% YoY (year-to-date annualised run rate of 18%) was led by 5-7% QOQ growth in retail, business banking, small and medium enterprise and rural while domestic corporate advances growth (+3% QoQ) remained subdued.

2. While deposit growth was muted at 3% QoQ, 19% YoY. and current account and savings account growth was also flat qoq, average CA balances increased 2.4% QoQ on the back of improved traction in payments products.

3. NIMs (4.4%) decline of -10 basis points QoQ was lower versus expectation of 15 bps QoQ decline due to 19 bps QoQ increase in cost of deposits which was partly offset by benefits from IT refund (4 bps) and higher investment yields,

4. other income was aided by treasury gains of Rs 1.2 billion (versus Rs 0.85 billion loss in Q2) due to lowering bond yields.

5. Cost to income declined to 40.6% (-35 bp QoQ).

6. Slippages were higher due to seasonally higher slippages, in the Kisan Credit portfolio. Higher recovery from one large corporate account aided in gross non-performing asset declining QoQ.

ICICI Bank delivered an return on asset of 2.3% (nine months: 2.4%) and return on equity of 18.5% (9M: 18.9%).

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