ICICI Bank posted a net profit of ₹10,261 crore for Q2 FY24, a growth of 35.8 per cent year-on-year. Total advances increased 18.3 per cent y-o-y and  5 per cent quarter on quarter (q-o-q) to ₹11.1-lakh crore, of which domestic loans were up 19.3 per cent y-o-y and 4.8 per cent q-o-q at ₹10.7-lakh crore.

The overall advances rose by 18.3 per cent to ₹11,10,542 crore. Retail loans grew 21.4 per cent comprising 54.3 per cent of total loans. Business banking loans were up 30 per cent, SME business 29 per cent and rural portfolio up 17 per cent. Domestic corporate loans grew by 15 per cent.

In the post earnings call, Executive Director Sandeep Batra said the capex cycle has been largely led by the government and PSU companies, whereas private capex has been lighter, and mainly in infrastructure and industrials. Demand for private credit is low because corporates are de-veleraged, have strong balance sheets and are able to undertake incremental brownfield investments from internal accruals without borrowing significantly from banks, he added.

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Net interest income (NII) for the quarter increased 23.8 per cent to ₹18,308 crore. Net interest margin (NIM) was 4.53 per cent, lower than 4.78 per cent in the previous quarter but better than 4.31 per cent a year ago.

Batra said the sequential NIM compression has been largely driven by the lagged impact of increase in term deposit rates which has led to higher cost of deposits. The decline in margins is expected to moderate over the coming quarters. Further, strong growth in loans and fee income has offset some of this impact and the bank will continue to optimise NIMs though ALM management, Batra said pegging NIM for FY24 at a similar level to 4.48 per cent for FY23. 

Repo-linked loans accounted for 48 per cent of the total portfolio, MCLR-linked loans for 18 per cent and fixed rate loans for 31 per cent as at the end of September.

Deposits of the bank were up 18.8 per cent at ₹12.9-lakh crore, led by 32 per cent growth in term deposits to ₹7.7-lakh crore. Average current account deposits were up 14 per cent and savings deposits 4.5 per cent. Average CASA ratio was at 40.8 per cent.

Asset quality trends

Gross slippages for the quarter were ₹4,687 crore, of which corporate and SME additions were ₹323 crore, whereas from retail and rural were ₹4,364 crore. Slippages were lower sequentially due to the seasonal effect wherein Q2 is traditionally a better quarter, Batra said.

Recoveries and upgrades comprised ₹4,571 crore, of which corproate and SME were about ₹1,500 crore and retail, rural and business banking were around ₹3,000 crore. The bank wrote-off loans worth ₹1,922 crore. Provision coverage ratio was at 82.6 per cent as of September 30.

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Unsecured loans, primarily personal loans and credit cards, accounted for 13.3 per cent for total loans. Personal loans were up 40 per cent y-o-y and 10.2 per cent q-o-q at ₹1.4-lakh crore, whereas credit cards were up 30 per cent y-o-y and 6.2 per cent sequentially at ₹43,230 crore.

Batra said most of the growth has come from existing customers and nearly 85 per cent are salaried employees. While industry reports and trends suggest risk build-up in lower ticket size of ₹50,000 and below, ICICI Bank does not have “meaningful” exposure to this segment, he said adding that the bank continues to monitor these portfolios even as current risk levels are within the defined thresholds.

Gross NPA ratio declined to 2.48 per cent from 2.76 per cent a quarter ago. The net NPA ratio at 0.43 per cent too was better than 0.48 per cent in the previous quarter and 0.61 per cent in the previous year.