Q2 performance: ICICI Bank profit up 549% y-o-y on higher income

Private-sector lender ICICI Bank on Saturday reported a 549% year-on-year (y-o-y) jump in standalone net profit to Rs 4,251 crore in the September quarter of FY21 on the back of a 16% y-o-y rise in net interest income (NII). In the corresponding quarter of FY20, the bank had seen its profit figure slide because of a tax-related adjustment.

The bank’s NII — the difference between interest earned and interest expended — stood at Rs 9,366 crore in Q2. The net interest margin (NIM) — a key measure of profitability —stood at 3.57%, down 12 basis points (bps) from 3.69% in the previous quarter. The bank’s management attributed the shrinkage in margin to surplus liquidity and said they would rather focus on getting good customers than specifically on margins. “It will be a function of how the credit growth pans out. We are really not targeting a credit growth. If growth comes and it meets our expectations, automatically the carry that we have on excess liquidity will come down,” they said.

ICICI’s total advances increased 6% y-o-y to Rs 6.53 lakh crore from Rs 6.13 lakh crore a year ago. The retail loan portfolio grew 13% y-o-y and constituted 65.8% of the total loan portfolio as on September 30, 2020. Total deposits increased 20% y-o-y to Rs 8.33 lakh crore and the bank’s average current account
savings account (CASA) ratio stood at 40.3%, down from 42.2% a year ago. Term deposits increased 26% to Rs 4.68 lakh crore.

Provisions rose 19.5% y-o-y to Rs 2,995 crore. This includes provisions of Rs 497 crore made on a prudent basis on loans aggregating Rs 1,410 crore that were not classified as non-performing pursuant to a Supreme Court order.

At the end of September 2020, ICICI Bank held Covid-19 related provisions of Rs 8,772 crore.

Additions to gross non-performing assets (NPA) increased to Rs 3,017 crore in the September quarter from Rs 1,160 crore in the June quarter. ICICI Bank’s gross NPA ratio at the end of September stood at 5.17%, 29 bps lower than 5.46% at the end of June, while the net NPA ratio decreased 23 bps sequentially to 1%.

Including loans amounting to Rs 1,410 crore not classified as non-performing following the apex court’s interim order, the gross NPA ratio would have been 5.36% and the net NPA ratio would have been 1.12%. On September 30, 2020, the fund-based and non-fund based outstanding to borrowers rated BB and below was Rs 16,167 crore, down from Rs 17,110 crore on June 30, 2020.

Recoveries and upgrades of NPAs were to the tune of Rs 1,945 crore, while loans worth Rs 2,469 crore were written off. The provision coverage ratio on non-performing loans increased to 81.5% on September 30, 2020 from 78.6% a quarter ago.

The bank’s total capital adequacy as on September 30, 2020, including profits for H1FY21, was 19.33% and the tier-1 capital adequacy was 17.89%, compared to the minimum regulatory requirements of 11.08% and 9.08% respectively.

ICICI Bank shares on the BSE closed at Rs 392.55 on Friday, down 1.84% from their previous close.