Customers wearing protective masks wait in line at an ICICI Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
Customers wearing protective masks wait in line at an ICICI Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

ICICI Bank Q1 Results: Net Profit Surges, Asset Quality A Tad Lower

Private sector lender ICICI Bank Ltd. saw its April to June quarter net profit rise 77.6% over the same period last year, on higher core income and lower provisions.

The bank's net profit for the quarter stood at Rs 4,616 crore, as compared to Rs 2,599 crore a year ago. On a quarter-on-quarter basis it was up by 4.8%.

Analysts at Bloomberg estimated a net profit of Rs 4,362 crore in the Apr-Jun quarter.

Net interest income rose 18% from a year ago to Rs 10,936 crore. This is against a Bloomberg estimate of Rs 10,599 crore. The core income for the bank rose 4.8% sequentially.

Asset Quality

ICICI Bank's asset quality position worsened with gross non-performing asset ratio at 5.15% as of June 30, compared with 4.96% as of March 31. Net NPA ratio was flat at 1.16% at the end of the first quarter.

  • Gross additions to bad loans during the quarter were at Rs 7,231 crore.

  • Slippages include Rs 6,773 crore worth slippages from retail and business banking portfolio, while Rs 458 crore worth NPAs were added from corporate and SME loans

  • Among the retail slippages, Kisan credit cards added Rs 961 crore worth bad loans and Rs 1,130 crore bad loans were added from the gold loan book.

  • Recoveries and upgrades stood at Rs 3,627 crore

  • The bank has written off Rs 1,589 crore worth bad loans

  • Standard loans to companies rated BB and below stood at Rs 13,957 crore as of June 30, compared with Rs 13,098 crore as of March 31

Loans to builders stood at Rs 23,005 crore, up 5.3% year-on-year. The bank disclosed that 13% of these loans were either classified as BB or below, or were NPAs.

As on June 30, the bank had restructured loans worth Rs 3,891 crore under the Reserve Bank of India's one time restructuring scheme. This included retail loans worth Rs 925 crore and corporate loans worth Rs 2,956 crore. The bank held provisions worth Rs 632.35 crore against these restructured loans.

Total provisions fell 62.4% year-on-year to Rs 2,852 crore. During the first quarter, the bank wrote back floating provisions worth Rs 1,050 crore it made last year to combat the stress from Covid-19.

"This shows the confidence we have in the performing book. We have made our provisioning policy more conservative for some of the retail NPAs. We have added about Rs 1,200 crore worth provisions to that book," said Sandeep Batra, executive director, ICICI Bank in a post-earnings media briefing.

Advances & Deposits

Total advances for the bank rose 17% year-on-year to Rs 7.4 lakh crore. Total deposits rose to Rs 9.26 lakh crore, a growth of 16% from a year ago.

  • The bank's domestic loan book improved 20% from a year ago.

  • Retail advances rose 20% year-on-year and constituted 61.4% of the total loan book.

  • Domestic corporate loan book rose 11% year-on-year, driven by higher rated corporates and public sector companies

  • The business banking loan book rose 53% year-on-year and constituted 5.4% of the loan book

  • Small and medium enterprises loans, comprising of borrowers with turnover of Rs 25 crore and below, rose 43% year-on-year

  • Total term deposits rose 9% from a year ago to over Rs 5 lakh crore.

Also Read: Mastercard In The Dock. For Everything Else, There's...?

Mastercard Curbs

According to Batra, the bar placed on Mastercard by the RBI will not affect ICICI Bank's credit card business as such.

"We are expecting zero impact on our business. The existing cards on the Mastercard network will continue. For new acquisitions we can easily give Visa cards to our customers," Batra told reporters.

When asked whether Visa is compliant with the RBI's data localisation norms, Batra responded that the obligation is with Visa.

ICICI Bank has been the biggest beneficiary of the RBI's embargo on HDFC Bank, which has not been allowed to issue new credit cards since December 2020. As of June 30, ICICI Bank's outstanding credit card base stood at 1.1 crore cards, up from 1 crore cards in March.

While the bank is consistently adding new credit card customers, spends have declined. In the April - June quarter, total credit card spends stood at Rs 31,871 crore, as compared with Rs 32,226 crore in January - March.

"Spends during April and May were affected by the second wave for the industry. We have still managed to corner a higher market share in card spends," Batra said.

Also Read: Analysts Bet On ICICI Bank's Valuations Catching Up With HDFC Bank's

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