By Siddhi Nayak
MUMBAI (Reuters) -ICICI Bank, India’s second-largest private lender, beat expectations to deliver a record first-quarter net profit on Saturday, helped by higher interest income and loan growth.
The Mumbai-based lender reported a near-40% rise year-on-year in net profit to 96.48 billion rupees ($1.18 billion) for the April-June quarter, beating analysts’ forecast of 91.8 billion rupees, Refinitiv IBES data showed.
Net interest income – the difference between interest earned and paid – rose 38% to 182.27 billion rupees.
Net interest margin (NIM) expanded to 4.78% from 4.01% a year earlier, but was lower than 4.90% reported in the January-March quarter.
“As deposits get re-priced, we do expect some (margin) compression to continue,” the bank’s executive director, Sandeep Batra, told reporters at a conference call.
The decline in NIM was in line with the bank’s expectations, and there could be some moderation in margins in the current July-September quarter too, Batra said.
For the 2023-24 year as a whole, he said he expected NIM to be “similar” to last year. Total loans grew by 20.6%, largely led by retail loans, while deposits grew 17.9%. Loan growth in India has stayed in double digits in recent months, despite a 250 basis points increase in interest rates since May last year. Banks have looked to shore up their deposit base amid tightened liquidity conditions, while simultaneously cleaning up their balance sheets. HDFC Bank, India’s largest private lender, this week reported a 15.8% rise in loans for the April-June quarter and deposits up 19.2%.
ICICI Bank’s asset quality was stable, with its gross non-performing assets (NPA) ratio at 2.76% as of end-June versus 2.81% at the end of the March. Its net NPA ratio was unchanged quarter-on-quarter at 0.48%. The bank booked provisions and contingencies of 12.92 billion rupees, up from 11.44 billion a year earlier.
Batra said the lender would continue its bottom up strategy of expanding branches.
($1 = 81.9800 Indian rupees)
(Reporting by Siddhi Nayak; editing by William Mallard, Jason Neely and Clelia Oziel)
