ICICI Bank Q2 Results: ICICI Bank Q2 net profit rose 5% to Rs 12,359 cr, beating estimates due to lower provisions.
The private sector lender had previously set aside Rs 914 crore as provisions and contingencies for the quarter under review against Rs 1233 crore. Operating profit before provisions was 3.4% higher at Rs 17,298 crore compared to Rs 16,723 crore.
Sandeep Batra, managing director of the bank, expected credit costs to rise slightly in the third quarter, even as he expressed optimism that loan growth would pick up better given the measures taken by fiscal and monetary authorities to stimulate consumer demand.
“We expect credit costs to normalize,” Batra said, referring to the practice of setting provisions for Kisan credit card-linked loans only in the first and third quarters. But he said credit quality was holding up overall.
“We expect the second half of the fiscal to be better than the first half and should reflect better loan growth,” he added.
The bank’s total loans rose 10.3% year-on-year to Rs 14.09 billion at the end of September, while its gross non-performing loans ratio further improved to 1.58% from 1.67% three months ago. The NPA ratio was 1.97% a year ago. The net NPA ratio was 0.39%. Net interest margin for the quarter was 4.3% compared to 4.34% in the previous quarter. Batra expects NIM to remain range-bound, with NIM expected to benefit some from the CRR cut and deposit pricing adjustments.
ICICI Bank’s net interest income (difference between interest paid to depositors and interest earned) rose 7.4% year-on-year to Rs 21,530 crore. Other income rose 5.6% to Rs 7576 crore due to lower financial returns.
The bank’s retail loan portfolio grew by 6.6% compared to the previous year, accounting for 52% of the total loan portfolio, and its domestic corporate portfolio grew by 3.5%. The rural portfolio decreased by 1.3% year-on-year.
ICICI’s deposits grew 7.7% year-on-year to reach Rs 161.3 billion, with low-cost deposits accounting for 40.9%. During the first two quarters, 263 branches were opened, for a total of 7,246 branches.
During the quarter, the bank booked new NPAs worth Rs 5,034 crore. After adjusting for write-offs and sales, the net addition to NPAs was Rs 1,386 crore. NPAs amounting to Rs 2263 crore were written off, increasing the provision coverage ratio to 75%.
Private sector lenders have provided a contingency provision of Rs 13,100 crore to help them while transitioning the proposed expected credit loss regime.
“We do not believe that this framework will have a material impact on our capital and profitability,” Batra said in response to questions from ET.
