ICICI Bank Q1 Results: Profit up but margins slow, NPA additions increase

economictimes.indiatimes.com:

Bank's net profit rose 40% year on year due to a strong rise in interest income and helped by higher treasury gains. Net profit increased to Rs 9,648 crore in the quarter ended June 2023 from Rs 6,905 crore a year ago and was higher than ET Now's estimate of Rs 9300 crore. Domestic advances grew 18% led by a 29% growth in loans to small and medium enterprises (SMEs) and a 22% growth in the retail loan book.

Corporate loans grew 19% year on year. As a result, net interest income (NII) or the difference between interest earned on loans and that paid on deposits rose 38% to Rs 18,227 crore. Non-interest income, which includes fees and commissions increased 12% year-on-year to Rs 5,183 crore in June 2023 from Rs 4,629 crore a year ago.

Treasury gains rose to Rs 252 crore June 2023 from Rs 36 crore a year ago. However, net interest margin (NIM), which is the difference between yield earned on loans and that paid on deposits, decreased to 4.78% in June 2023 from 4.90% in March 2023. Executive director Sandeep Batra said the bank expects NIM to contract this year as deposits move from current and savings accounts to higher-yielding term deposits.

«What we are seeing is a lagged impact of higher term deposit rates. We expect this repricing of our deposits to continue for another couple of quarters and as a result of which there will be moderation in NIM. Broadly, by the end of this fiscal year NIM should end up where we started in April- June 2022,» Batra said.

ICICI's NIM fell to 4.78% in June 2023 from 4.90% in March. But it was higher than the 4.01% reported a year ago. The migration of savings towards term deposits also impacted the bank's current and savings account (CASA) ratio which dropped to 42.6% in June 2023 from