ICICI Bank’s profit after tax (PAT) rose to ₹7,558 crore in Q2FY23, reporting a growth of 37 per cent y-o-y, led by strong loan growth of 23 per cent y-o-y and 5 per cent q-o-q.

Total loans of the bank were pegged at ₹9.4 lakh crore on September 30, led by a 24 per cent rise in domestic advances. Retail loans were up 25 per cent and comprised 54 per cent of total loans. The business banking portfolio grew 43 per cent y-o-y whereas the SME business was up 27 per cent and domestic corporate loans were up 23 per cent.

The business banking and SME franchise continue to grow on the back of digital offerings and platforms like InstaBIZ along with the extensive branch network, the bank said.

Net interest income (NII) for the quarter was higher by 26 per cent y-o-y to ₹14,787 crore. The net interest margin (NIM) was 4.3 per cent compared with 4 per cent both a year and a quarter ago.

In the post earnings call, Executive Director Sandeep Batra said that about 44 per cent of loans are linked to the repo rate and another 5 per cent to other external benchmarks.

Due to the faster increase in lending rates compared with deposit rates, the bank has seen margin benefit this quarter, he said, adding that over a period of time, however, deposit and lending rates and lending rates will match. 

Deposits for the bank were up 12 per cent y-o-y and 4per cent q-o-q to ₹10.9 lakh crore as of September 30. Batra said that the bank is very comfortable on liquidity, with a liquidity coverage ratio at 127 per cent—which is higher than most peer banks.

“We continue to focus on risk-calibrated growth. At this point of time, we are pretty comfortable and we do not see deposit growth to be a constraint,” he said.

Asset quality improves

ICICI Bank made contingency provisions of ₹1,500 crore during the quarter on a prudent basis, taking total contingency provisions to ₹10,000 crore. However, overall provisions declined 39 per cent y-o-y to ₹1,644 crore. The provisioning coverage ratio was at 81 per cent at the end of September.

Slippages for the quarter were at ₹4,366 crore, largely off-set by recoveries and upgrades of ₹3,761 crore and write-offs of ₹1,103 crore.

The gross NPA ratio declined to 3.2 per cent as of September 30 from 3.4 per cent a quarter ago and 4.8 per cent a year ago. Net NPA ratio at 0.6 per cent was also better than 0.7 per cent in the previous quarter and 0.9 per cent in the previous year.

Including profits for H1FY23, capital adequacy ratio of the bank was at 18.3 per cent as on September 30, of which tier-1 capital was at 17.5 per cent.

Asked about the US Office of the Comptroller of the Currency charging ICICI Bank’s New York branch with violating the US anti-money laundering (AML) norms, Batra said that the bank is in discussion with the OCC and has filed its comments. “This is just for the New York branch. The consent order basically says that we have agreed to strengthen certain parts of AML framework in line with what OCC requires us to do,” he said.