ICICI Bank Expects NIM To Moderate In 2023–24, Says CEO

ICICI Bank Ltd. expects a moderation in its net interest margin in FY 2024, Chief Executive Officer Sandeep Bakhshi said on Wednesday.

For FY23, the private sector bank's NIM stood at 4.4%. But now, the bank expects its margin to moderate due to an increase in the cost of deposits, Bakhshi said at the 29th annual general meeting. "For FY24, the full-year NIM is expected to stay in the range that we had in FY23."

As of March 31, the retail loan portfolio comprised 53.9% of the domestic loan portfolio, while business banking was at 7%, small and medium enterprises at 4.7%, and the corporate portfolio at 22.7%.

An analysis of Q1 earnings by BQ Prime also showed a pattern of margin falling sequentially in the quarter ended June.

Like other banks, ICICI Bank is also aggressively expanding its branch network, and over the last 12 months, this pace has picked up, Bakhshi said.

In the last fiscal, the lender's branch count increased by 480, and it rose by 174 in the first quarter of fiscal 2024. As of June 30 this year, the bank had 6,074 branches, and out of these, 51% were located in semi-urban and rural areas, indicating an uptick in its rural penetration as well.

Chief Executive Officer Sandeep Bakhshi. (Source: ICICI Foundation website)

On ICICI Securities

On the delisting of ICICI Securities, Bakhshi said: "We will have a separate meeting, which will be convened as required in law for considering the delisting proposal."

On June 29, ICICI Bank approved the delisting of ICICI Securities in a share-swap deal. ICICI Securities became a wholly-owned subsidiary of the bank. The public shareholders of the entity will be allotted 67 equity shares of ICICI Bank at a face value of Rs 2 each for every 100 equity shares of the company.

On Jio Financial Services

Concerns over competition have popped up with Reliance Industries Ltd.'s foray into the financial services business with Jio Financial Services Ltd.

"The market continues to be competitive, and to that extent, as we mentioned, it will be an attractive market," Bakhshi said. "We will have competition, and each institution will have to devise its strategy in order to ensure it gets its rightful positioning in a competitive landscape."

Bakhshi highlighted that the banking system is in a healthy state and said that 2.46% of the bank's overall revenue came from overseas business centres.

With rapid digitisation, lenders have been grappling with the problem of increased online fraud. In the last fiscal, ICICI Bank saw an uptick in fraud count to 6,641 with a value of Rs 3.83 billion, as compared with 5,678 frauds in FY22.

However, in terms of customer complaints, the bank saw an improvement with 2.48 lakh complaints in fiscal 2023 as compared with 4.09 lakh in FY22, according to Bakhshi.