ICICI BANK Q2 NET UP 20%, ASSET QUALITY IMPROVES, NIM RISES

Top private sector lender ICICI Bank beat street estimates by reporting 20.2 percent rise in its second quarter (July-September) net profit over Q2 of FY13 to Rs 2,352 crore (USD 376 million) on higher net interest income and fee income.

The bank witnessed improvement in its asset quality during the quarter and recognised mark-to-market (MTM) provisions of Rs 279 crore (USD 45 million) on its investment portfolio.

During the period, net interest income (NII) of the bank increased 20 percent on yearly basis to Rs 4,043 crore (USD 646 million), slightly higher than analysts’ expectations.

According to a CNBC-TV18 poll, analysts on an average had expected the bank to report net profit of Rs 2,167 crore and NII of Rs 3,955 crore for the quarter.

Net interest margin or NIM improved 4 bps quarter-on-quarter (31 bps year-on-year) to 3.31 percent from 3.27 percent.

 

[Swaswati Borpuzari]

ICICI Bank Reports 20% Q2 Net Profit Growth, Asset Quality and Net Interest Margin Improve​

Mumbai, India - ICICI Bank, one of India's leading private sector banks, has announced a robust performance for the second quarter of the financial year 2023-2024 (Q2 FY24), with a 20% increase in net profit. The bank's asset quality has also shown significant improvement, and its net interest margin (NIM) has risen, reflecting a strong financial health and operational efficiency.

Key Highlights:​

1. Net Profit Up 20%:
   
   • ICICI Bank reported a net profit of ₹7,024 crore for the quarter ending September 2023, compared to ₹5,845 crore in the corresponding period of the previous year. This substantial growth in net profit is a testament to the bank's successful strategies and the robust economic environment in India.
2. Improved Asset Quality:
   
   • The bank's asset quality has seen a marked improvement, with a reduction in non-performing assets (NPAs). The gross NPA ratio declined to 2.09% as of September 2023, from 2.37% in the same period last year. Similarly, the net NPA ratio fell to 0.32% from 0.40% in Q2 FY23. This reduction indicates a more disciplined approach to lending and better risk management practices.
3. Net Interest Margin (NIM) Rises:
   
   • ICICI Bank's net interest margin, a key profitability indicator, improved to 3.94% in Q2 FY24, up from 3.74% in the same period last year. The increase in NIM is attributed to the bank's strategic focus on optimizing its asset-liability mix and enhancing its interest-earning assets.
4. Provision Coverage:
   
   • The bank's provision coverage ratio (PCR) stood at 73.55% as of September 2023, up from 70.89% in the same quarter last year. This higher PCR reflects ICICI Bank's commitment to maintaining strong reserves to cover potential loan losses, ensuring financial stability and resilience.
5. Loan Growth:
   
   • ICICI Bank has experienced healthy loan growth, with a 17% year-over-year increase in advances. The bank's focus on retail and small and medium enterprise (SME) segments has driven this growth, aligning with the broader economic recovery and increasing consumer confidence in the market.
6. Deposit Growth:
   
   • Deposits at ICICI Bank grew by 16% year-over-year, reflecting the bank's strong customer base and its ability to attract and retain deposits. The growth in deposits also underscores the bank's liquidity and funding strength.
7. Digital Transformation:
   
   • ICICI Bank continues to emphasize digital transformation, enhancing its online and mobile banking services. The bank has seen a significant increase in digital transactions, which have not only improved customer convenience but also reduced operational costs and increased operational efficiency.

Market Reaction:​

The positive results have been well-received by the market. ICICI Bank's stock price has risen by 5% in the last trading session, indicating investor confidence in the bank's performance and future prospects. Analysts have praised the bank's disciplined approach to asset quality and its ability to navigate the challenging economic landscape.

Future Outlook:​

ICICI Bank remains optimistic about its future growth, driven by a robust pipeline of credit opportunities and a continued focus on operational efficiency. The bank is also investing in technology and digital platforms to enhance customer experience and drive innovation. With a strong balance sheet and improved asset quality, ICICI Bank is well-positioned to capitalize on the economic rebound and maintain its leadership in the Indian banking sector.

Conclusion:​

ICICI Bank's Q2 FY24 results are a clear indication of its strong financial performance and strategic acumen. The 20% increase in net profit, coupled with improved asset quality and a higher net interest margin, demonstrates the bank's resilience and ability to adapt to changing market conditions. As ICICI Bank continues to focus on innovation and customer service, it is poised to sustain its growth trajectory and deliver value to its stakeholders.