A strong growth in net interest income and fall in provisions have led to a 30 per cent growth year-on-year in ICICI Bank's standalone net profit during the June 2011 quarter.

Lower other income, thanks to losses in investment book and marginal shrinkage in net interest margin (NIM), did not dent the overall impressive performance by the bank. The bank also witnessed improvement in asset quality with gross non-performing asset ratio falling to 4.36 per cent in June 2011 from 4.47 per cent in March. As a result, the stock of ICICI Bank reacted positively closing the day with a 2 per cent gain.

Despite a sharp rise in term deposit costs and higher savings deposit rate, the bank managed to maintain NIM at 2.6 per cent (as against 2.7 per cent for the March 2011) thanks to high levels of daily average CASA (current account savings account) maintenance. Additionally, high levels of capital also helped the bank maintain margins. The proportion of daily average CASA balances has improved from 39 per cent to 40 per cent sequentially, according to the management. The Net Interest Income grew by 21 per cent year-on-year mainly due to improvement of margins year-on-year. In June 2010 quarter, the NIM was 2.5 per cent.

Provisions and contingencies were down by 44 per cent year-on-year despite an improvement in net NPA ratio and provision coverage. For the fifth quarter in a row (on a year-on-year basis), the bank has managed to bring down the provisions sharply. There is however, a jump in provisions compared with the March quarter which can be attributed to higher standard asset provisioning, NPA provisioning and investment depreciation (mark-to-market losses on treasury portfolio).

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