ICICI Bank on Friday said its standalone net profit for the quarter ended June 30 expanded 36 per cent to Rs 1,815 crore from Rs 1,332 crore in the corresponding period last year.
Higher interest income from advances, improvement in net interest margin (NIM) and tight control on costs aided the private lender’s earnings growth during the quarter. On a consolidated basis, profit after tax rose 25 per cent year-on-year to Rs 2,077 crore, driven by growth in earnings of its subsidiaries.
The bank’s net interest income, the difference between interest income and expense, was up 32 per cent from a year earlier, at Rs 3,193 crore. The NIM improved by 40 basis points (bps) to 3.01 per cent during April-June.
“Our focus has been on growth, risk management and profitability. The NIM improved as yield on interest-earning assets went up and the cost of funds remained under control. We are reducing our reliance on high-cost wholesale deposits. We expect our NIM to remain at three per cent or slightly above this financial year,” said Chanda Kochhar, managing director and chief executive officer of the country’s largest private lender, in her post-earnings comments.
Non-interest income grew 14 per cent to Rs 1,880 crore during the quarter. While fee income growth was muted at four per cent, lease and other income almost trebled from a year before. The cost-to-income ratio declined 290 bps to 41.8 per cent during the first quarter, as the rise in operating expenses was capped.
ICICI closed the quarter with 2,755 branches and 9,366 ATMs.
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Asset quality
Asset quality improved during the three-month period, with net non-performing assets (NPAs) declining 17 per cent to Rs 1,941 crore. The net NPA ratio fell 30 bps to 0.61 per cent at the end of June. The provisioning coverage ratio was 80.6 per cent. “We have been able to maintain our asset quality. Our restructured portfolio continues to be stable and we only have a small pipeline of loans that will be restructured,” Kochhar said.
The net restructured assets portfolio narrowed to Rs 4,172 crore at the end of June, from Rs 4,256 crore a year before. This was primarily because the bank sold its restructured Kingfisher Airlines loans to SREI during the quarter.
On a gross basis, the bank added Rs 380 crore of loans to its restructured portfolio in the first three months of this financial year.
The bank’s advances grew 22 per cent year-on-year to Rs 268,430 crore. The growth in advances was driven by the corporate loan book. Domestic corporate advances were up 28 per cent, while retail loans grew 10 per cent.
“We are increasing our market share in working capital loans. We are also seeing disbursements of loans sanctioned earlier. For the year, we expect our domestic credit growth to be around 20 per cent,” Kochhar said.
Deposits were up 16 per cent at Rs 267,794 crore. The share of low-cost current account/savings account (Casa) deposits was 40.6 per cent of total deposits.
The bank closed the quarter with a capital adequacy ratio of 18.54 per cent, of which the tier-I ratio was 12.78 per cent.
Subsidiaries
The life insurance arm, ICICI Prudential Life Insurance Company reported a net profit of Rs 349 crore for the quarter ended June 30, compared to Rs 339 crore a year before.
ICICI Lombard General Insurance Company’s profit after tax more than doubled to Rs 83 crore during this period.
Kochhar said the three foreign subsidiaries — in Canada, Britain and Russia — were performing well and had started paying dividends to the bank.k.
Gautam Trivedi, Managing Director & Head of Equities of Religare Capital Markets Ltd, said: “NII growth was driven by robust growth in advances. However, fee income growth was muted due to lower project financing activities. CASA declined in this quarter due to outflow in the current account deposits; however, this is a industry trend due to tight liquidity conditions.”
Stock
ICICI Bank’s shares ended on Friday at Rs 930.45 on the National Stock Exchange, up 2.6 per cent from the previous close.