News

Published: October 28, 2024
Updated: October 28, 2024

ICICI Bank Exceeds Q2 Expectations with 14.5% Profit Growth and Strong NII Gains

1. Impressive Q2 Earnings Beat Projections

ICICI Bank reported its second-quarter results on October 26, showcasing a robust 14.5% increase in net profit, reaching ₹11,745.9 crore. This figure comfortably surpassed Street expectations, which had pegged net profit at around ₹11,029.8 crore, and marked an improvement over the previous year’s ₹10,261 crore. The bank’s net interest income (NII) also impressed, standing at ₹20,048 crore, slightly ahead of forecasts.

2. Steady Decline in Non-Performing Assets

ICICI Bank’s asset quality reflected positive trends, with gross non-performing assets (NPA) reducing to 1.97%, down from 2.15% in the previous quarter. The bank’s gross NPA stood at ₹27,121.15 crore, compared to ₹28,718.6 crore in the June quarter. Net NPA also saw a minor improvement, decreasing to 0.42% from the prior quarter’s 0.43%.

3. Strategic Growth in Loan and Deposit Portfolios

Sandeep Batra, ICICI Bank’s Executive Director, noted a 15.7% year-over-year growth in the domestic loan portfolio, along with a 5% increase from the last quarter. Total deposits also surged by 15.7% compared to the same period in the previous year. The bank’s retail portfolio, including non-fund exposures, accounted for 44.9% of its overall loan book.

4. Expanding Branch Network and Focus on Retail Lending

ICICI Bank expanded its reach by opening 90 new branches in the first half of the fiscal year, bringing its total branch count to 6,613 and its ATM and cash recycling network to 16,120 as of Q2. The bank carefully calibrated its retail loan growth in Q2, and Batra highlighted that ICICI’s personal and credit card loans currently make up around 14% of its total loan book.

5. Strengthened Provisions and Robust Recovery Performance

During the earnings call, Batra emphasized that the bank’s provisioning coverage ratio on non-performing loans was 78.5% in the September quarter. Recovery and upgrades of NPAs, excluding write-offs and sales, totaled ₹3,319 crore, with ₹16 crore in NPAs sold to Asset Reconstruction Companies (ARCs).

6. Outlook on Interest Margins and Loan Growth

ICICI Bank anticipates stable net interest margins (NIMs) in the near term, maintaining caution on personal loan growth. The bank’s cash deposit ratio remained strong at 85%, and Batra suggested that potential rate cuts by the Reserve Bank of India (RBI) may be modest this time around.

7. Market Performance

ICICI Bank’s stock ended Friday, October 25, up by 0.55%, closing at ₹1,259.6 per share. Year-to-date, the bank’s shares have gained 26.04%, underscoring investor confidence in its consistent growth trajectory. ICICI Bank’s strong Q2 performance demonstrates its solid standing in the financial sector, backed by strategic asset quality improvements, portfolio growth, and an expansive branch network. With a stable outlook on margins and a cautious approach to loan growth, the bank remains well-positioned for continued resilience amid evolving market conditions.