The Hindu Business Line : ICICI Bank: Higher growth on retail loans, fee income

The few banks that have so far come out with their numbers, including public sector banks, have all announced good results. Higher volumes in retail loans (particularly in credit card and personal loans) and strong growth in fee income besides treasury gains have driven profit growth for ICICI Bank.

For the banking sector, this has been traditionally been a quarter of sluggish loan growth and relatively steady growth in deposits. After interest rates peaked towards the end of the last fiscal, there have been no fresh hikes in rates this quarter.

Pressure on margins

ICICI Bank’s net interest margins have dipped a shade from its long-term average of about 2.5 per cent. Although there has been concurrent increase in lending rates whenever interest rates moved up, the bank has seen margins under pressure, as it had to pay higher costs on deposits.

Comparatively, its immediate competitor, HDFC Bank, managed to maintain its margins at about 4 per cent in this quarter.

Loan portfolio

Asset quality concerns are beginning to show up just a bit after ICICI’s bad loans rose to 1.3 per cent from 0.8 per cent in the corresponding period last year.

The loan portfolio, particularly the retail side, has been watched closely for signs of delinquencies in the backdrop of a sharp rise in interest rates during the past fiscal.

Bank officials have, however, consistently maintained that there is no room for any anxiety on this score. The bank management expects to see softer interest rates in the next quarter. Re-pricing of deposits at expected lower levels of interest rates and consequent improvement in collections might therefore see an improvement in margins.

More Stories on : Private Banks | Financial Performance | ICICI Bank Ltd

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