ICICI Bank, the largest private sector lender in the country, today said its consolidated net profit for the quarter ended December 31, 2012 increased by 22% from a year earlier to Rs 2,645 crore on the back of improved financial performance of banking and life insurance businesses.
On a standalone basis, profit after tax grew by 30% from a year ago to Rs 2,250 crore. Higher interest income, better net interest margin and gains of treasury operations aided the earnings growth.
"The biggest highlight for this quarter was our return on equity on a consolidated basis crossed the 15% mark. It is now at 15.7%. In 2009, we had indicated that we will improve our return on equity to 15% from 8%. We have achieved it because of our profit number," Chanda Kochhar, managing director and chief executive of ICICI Bank, said in her post-earnings comments.
The bank's net interest income, or the difference between interest income and interest expense, was up 29% year-on-year at Rs 3,499 crore. Net interest margin improved 37 basis points from a year ago to 3.07% during the quarter.
Gains from treasury operations was estimated at Rs 251 crore in October-December period compared to a loss of Rs 65 crore in the corresponding period of previous year. Cost-to-income ratio narrowed 200 basis points to 39.5% at the end of December, 2012.
Provisions increased by 8% from a year earlier to Rs 369 crore. But sequentially it fell by 27% as asset quality remained stable. Net non-performing asset ratio was at 0.64% at the end of the quarter. The provision coverage ratio was 77.7%. Net restructured loans were almost flat from a quarter ago at Rs 4,169 crore.
Advances increased by 16% year-on-year to Rs 286,766 crore. While domestic corporate loans expanded by 20%, retail loans grew by 17%.
"We have the capability to grow a little faster than the system. We expect the pace of retail loan growth to accelerate further and touch 20% in coming quarters," Kochhar said. Retail advances currently have around 34% share in the bank's total loan book.
Deposits were up nearly 10% from a year ago at Rs 286,418 crore. The share of low-cost current account savings account (CASA) deposits was 40.9% of total deposits at the end of December, 2012.
ICICI Bank closed the quarter with a capital adequacy ratio of 19.53%. Kochhar ruled out any plans to raise fresh capital in the near-term.
She was also confident of keeping the bank's margin steady at current level and said the lender was yet to decide on revising its lending rates.
The insurance subsidiaries maintained their profitability during the quarter. ICICI Prudential Life Insurance's net profit was Rs 397 crore, while ICICI Lombard General Insurance reported Rs 95 crore of profit after tax.
"We expect the bank to continue to relatively perform much better than industry average...It is still trading cheaper than some of its peers like HDFC Bank, even though profitability has shown consistent structural improvement. So, we continue to maintain the stock as one of our top picks," Vaibhav Agrawal, vice president of research at Angel Broking, said.
ICICI Bank shares today touched a 52-week high on the National Stock Exchange. But later it erased its gains and ended 1.9% down at Rs 1,189.35.
