ICICI Bank posts 37% rise in Q2 profit on higher net interest income

Its net interest income (NII), the difference between interest earned and interest expended, rose 26.5% year-on-year (y-o-y) to ₹14,787 crore in the Q2 of FY23. Net interest margin (NIM), a key measure of profitability, expanded 30 basis points (bps) sequentially to 4.31%. On the other hand, the bank’s net provisions were down 39.4% y-o-y to ₹1,644 crore.

“We have got our overall risk framework and anything which falls within this, we are happy to grow,” said Sandeep Batra, executive director, ICICI Bank.

ICICI Bank’s provision coverage ratio, which is a measure of the funds set aside to cover bad loans, increased to 80.6% at the end of the September quarter of FY23, from 79.6% in the previous quarter.

The private sector lender saw improvement in asset quality as its gross non-performing assets (NPAs) as a percentage of gross advances declined 22 bps sequentially to 3.19% and the net NPA ratio stood at 0.61%, down 9 bps from the June quarter.

Gross additions to bad loans stood at ₹4,366 crore, down from ₹5,578 crore in the same period last year. Of the fresh additions in the quarter, ₹3,658 crore originated from its retail, rural and business banking portfolio.

The bank’s total loan book grew 22.7% y-o-y to ₹9.39 trillion, with retail loans growing at 24.6% to ₹5.07 trillion.

“Given the tightening of liquidity, the incremental growth will largely be a function of deposit growth and borrowings that we may do. We will be focused on this in a risk-calibrated fashion and whatever falls within that framework, we will continue to grow,” said Batra.

Total deposits of ICICI Bank increased 11.5% y-o-y ₹10.9 trillion as on 30 September. Average current account savings account (CASA) deposits ratio was at 45% in Q2 FY23, up 90 bps from the same period last year.

“We are very comfortable on liquidity. At this point of time, we are pretty comfortable and we do not see deposit growth to be a constraint,” said Batra.