ICICI Bank’s Profit After Tax (PAT) reached ₹7,558,000,000 in Q2FY23, recording 37% YoY growth, driven by strong loan growth of 23% YoY and 5% YoY annual.
The bank’s total lending was pegged at ₹9.4 lakh crore on September 30, driven by a 24% increase in domestic advances. Personal loans increased by 25% and accounted for 54% of total loans. The corporate banking portfolio increased 43% year-on-year, while SME business increased 27% and domestic corporate lending increased 23%.
The business and SME banking franchise continues to grow thanks to digital offerings and platforms like InstaBIZ as well as the extensive branch network, the bank said.
Net Interest Income (NII) for the quarter rose 26% YoY to ₹14,787 crore. Net interest margin (NIM) was 4.3% versus 4% a year ago and a quarter ago.
On the post-results call, chief executive Sandeep Batra said around 44% of loans are linked to the repo rate and another 5% to other external benchmarks.
Due to lending rates rising faster than deposit rates, the bank saw a margin profit this quarter, he said, adding that over a period of time, however, interest rates deposit and loan and lending rates will match.
The bank’s deposits increased by 12% y-o-y and 4% y-o-y to ₹10.9 lakh crore as of September 30. peer banks.
“We continue to focus on growth calibrated to risk. Right now we’re pretty comfortable and we don’t see deposit growth as a constraint,” he said.
Asset quality is improving
ICICI Bank made contingency reserves of ₹1,500 crore during the quarter on a conservative basis, bringing the total contingency reserves to ₹10,000 crore. However, overall provisions decreased by 39% YoY to ₹1,644 crore. The provisioning coverage rate was 81% at the end of September.
Slippages for the quarter amounted to ₹4,366 crore, more than offset by recoveries and upgrades of ₹3,761 crore and write-offs of ₹1,103 crore.
The gross NPA ratio fell to 3.2% as of September 30, from 3.4% a quarter ago and 4.8% a year ago. The net NPA ratio of 0.6% was also better than 0.7% in the prior quarter and 0.9% in the prior year.
Including earnings for the first half of FY23, the bank’s capital adequacy ratio was 18.3% as of September 30, of which Tier 1 capital was 17.5%.
Asked if the U.S. Office of the Comptroller of the Currency is accusing ICICI Bank’s New York branch of violating U.S. anti-money laundering (AML) standards, Batra said the bank was in discussion with the OCC and had submitted its comments. “It’s just for the New York branch. The consent order basically states that we have agreed to strengthen certain parts of the AML framework in accordance with what the OCC asks us to do,” he said.