ICICI Bank Q2 Net Profit Up 5%: Highlights and Analysis
ICICI Bank has reported a robust standalone net profit of Rs 12,359 crore for the second quarter of the fiscal year, marking a significant 5.2% increase from Rs 11,746 crore in the same quarter last year. This performance exceeded market expectations, primarily driven by reduced provisions during the period under review. The private sector lender allocated Rs 914 crore for provisions and contingencies, a decrease from Rs 1,233 crore the previous year.
Strong Financial Indicators
The bank’s pre-provision operating profit rose by 3.4%, reaching Rs 17,298 crore compared to Rs 16,723 crore in the previous year. Sandeep Batra, Executive Director at ICICI Bank, forecasts a slight increase in credit costs for the upcoming quarter. However, he remains optimistic about loan growth, attributing it to favorable fiscal and monetary measures aimed at boosting consumption demand. “We expect credit cost to normalize upwards,” Batra stated, mentioning that provisions against Kisan Credit Card-linked loans are typically made only in the first and third quarters.
Advancements and Loan Portfolio Growth
ICICI Bank’s total advances grew by an impressive 10.3% year-on-year, totaling Rs 14.09 lakh crore. The gross non-performing loans (NPL) ratio improved to 1.58%, down from 1.67% three months ago, and significantly better than the 1.97% recorded a year ago. The net NPL ratio stood at a low 0.39%. Meanwhile, the net interest margin (NIM) for the quarter was slightly down at 4.3% compared to 4.34% in the prior quarter, with expectations that it will remain relatively stable thanks to the benefits derived from the cash reserve ratio (CRR) cut and adjustments in deposit rates.
Deposits and Future Prospects
Deposits also showed strong growth, increasing by 7.7% to Rs 16.13 lakh crore, with low-cost deposits constituting 40.9% of the total. The bank opened 263 new branches in the first half of the fiscal year, bringing its total to 7,246. Despite booking Rs 5,034 crore in fresh NPAs during the quarter, the bank effectively managed to write off NPAs amounting to Rs 2,263 crore, which enhanced its provision coverage ratio to a solid 75%.
In conclusion, ICICI Bank has demonstrated resilience and growth in its second-quarter results, aided by lower provisions and strategic management of its loan and deposit portfolios. The outlook for the rest of the fiscal year remains optimistic, supported by improving credit quality and effective risk management strategies.