Country's second largest private sector lender ICICI Bank on October 23 recorded profit after tax of Rs 5,511 crore for the September 2021 quarter, increasing significantly by 30 percent compared to year-ago period, as provisions for bad loans declined, with improved asset quality performance. Double digit growth in net interest income, operating profit and other income also aided earnings for the quarter.
Net interest income, the difference between interest earned and interest expenses, has grown 25 percent to Rs 11,690 crore in Q2FY22, with 43 bps improvement YoY (11 bps QoQ) in net interest margin at 4 percent, said the bank in its BSE filing on October 23. One percent is equal to 100 basis points.
Loan and Deposits Growth
The bank further said total advances grew by 17 percent year-on-year to Rs 7.64 lakh crore in Q2FY22, with retail loan book (which accounted for 62.1 percent of total loan portfolio) growth at 20 percent, and 19 percent increase in domestic loan growth.
"The business banking portfolio grew by 43 percent year-on-year, and SME segment, comprising borrowers with a turnover of less than Rs 250 crore, registered a 42 percent YoY growth, for the September 2021 quarter," it added.
The bank, which had a network of 5,277 branches and 14,045 ATMs at September 2021, said total deposits increased by 17 percent year-on-year to Rs 9.77 lakh crore in Q2.
Asset Quality
Asset quality of the private sector lender improved further with increase recoveries & upgrades, and decline in NPA additions during the quarter. Gross non-performing assets (NPA) as a percentage of gross advances at 4.82 percent fell by 33 bps sequentially and net NPAs at 0.99 percent, the lowest since December 2014, declined 17 bps QoQ, in Q2FY22.
In absolute terms, "The net NPAs declined by 12 percent sequentially to Rs 8,161 crore at September 2021 from Rs 9,306 crore at June 2021," said ICICI Bank.
The bank further said the net addition to gross NPAs declined to Rs 96 crore during Q2FY22 from Rs 3,604 crore in Q1FY22. The gross NPA additions declined to Rs 5,578 crore from Rs 7,231 crore in the same period.
"Recoveries and upgrades of NPAs, excluding write-offs and sale, increased to Rs 5,482 crore from Rs 3,627 crore on sequential basis. The gross NPAs written off were Rs 1,717 crore in Q2FY22," it added.
Excluding NPAs, the bank said the total fund based outstanding to all borrowers under resolution was Rs 9,684 crore or 1.3 percent of total advances at September 2021 compared to Rs 4,864 crore June 2021. "The bank holds provisions amounting to Rs 1,950 crore against these borrowers under resolution."
The loan and non-fund based outstanding to performing borrowers rated BB and below, reduced to Rs 12,714 crore from Rs 13,975 crore on quarter-on-quarter basis, said the bank.
Provisions. In addition, ICICI Bank continued to hold Covid-19 provisions of Rs 6,425 crore as of September 2021, the same level as June 2021.
The bank had provisions and contingencies at Rs 2,713.48 crore as of September 2021, declining 9.4 percent year-on-year and 4.8 percent quarter-on-quarter.
NII & PPOP
Non-interest income (other income) during the quarter grew by 19.1 percent YoY to Rs 4,797.18 crore, including few income, which contributed 79 percent to other income, grew 21 percent YoY to Rs 3,811 crore. However, there was a fall in treasury income to Rs 397 crore from Rs 542 crore YoY due to high base in Q2FY21 that included gain of Rs 305 crore from sale of shares in ICICI Securities.
Pre-provision operating profit (PPOP) during the quarter increased by 20 percent to Rs 9,915 crore compared to corresponding period previous fiscal.
The bank said with the increase in economic activity, disbursements across all retail products increased sequentially in Q2FY022. "Mortgage disbursements were close to the level seen in the quarter ended March 2021, reflecting the increase in demand coupled with the bank’s seamless customer onboarding experience through pre-approved offers and digitisation. Disbursements of personal loans and auto loans were also close to Q4FY21 levels."
The consolidated profit after tax (which included key subsidiaries and associates) was Rs 6,092 crore in Q2FY22, increasing from Rs 4,882 crore in Q2FY21.
Earlier this month, global rating agency Moody's has affirmed the long-term local and foreign current deposit ratings of ICICI Bank at Baa3. At the same time, its rating outlook has also been changed to stable from negative.
"The affirmation of ICICI Bank's deposit ratings and change in outlook to stable follows the change in outlook on the sovereign rating to stable. The previous negative outlook on the sovereign rating drove the negative outlook on the bank, because of strong linkages to the sovereign credit profile," said Moody's in its report dated October 6, 2021.
The private sector lender on October 1 acquired 9.9 percent equity stake in Midland Microfin, a non-banking financial company - microfinance institution, for Rs 52.42 crore.
Apart from this, in August, the bank had received approval from banking regulator Reserve Bank of India to re-appointment of Sandeep Bakhshi as Managing Director & CEO of the bank with effect from October 15, 2021 till October 3, 2023.
The stock has given significant return in the current financial year FY22, rising more than 30 percent with more than Rs 5 lakh crore in market capitalisation, outperforming Nifty Bank index by a strong margin which gained 21 percent in the same period. In fact both bank as well as index hit fresh record highs on Friday.
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