ICICI Bank Q2 takeaways: Record profit, prudent provisioning & more

NEW DELHI: A record net profit, an improvement in asset quality, a fall in sequential provisioning, recovery in disbursements to pre-Covid levels, soft NIM and increase in mobile transactions were some of the key highlights of ICICI Bank‘s September quarter results.

Record profit
While a multifold jump in profit in ICICI Bank’s September quarter results was expected, a 6.5 times jump in year-on-year profit beat analysts estimates. The Rs 4,251 crore profit reported by the bank was its highest ever quarterly profit so far. The growth was aided by the bank’s low base, as the lender incurred taxes of Rs 3,712 crore in the year-ago quarter due to one -time additional charge. This past quarter, total expenses for the bank stood at Rs 1,015 crore.

The numbers were also boosted by the bank’s treasury income, which jumped on Rs 305 crore worth stake sale by the bank in ICICI Securities during the quarter.

Disbursements at pre-Covid levels
The bank said, there has been a substantial month-on-month increase in disbursements across retail products.

It noted that mortgage disbursements crossed pre-Covid levels and reached an all-time monthly high in September. Auto loan disbursements, it said, continued to rise since June and have reached pre-Covid levels in September, reflecting the rise in passenger car sales. “Disbursements across the rural portfolio have crossed pre-Covid levels in the months of August and September 2020,” the bank said.

Credit card spends recovered to about 85 per cent of pre-Covid levels in September 2020, led by increased spends in categories such as health & wellness, electronics and e-commerce,” the bank said.

Prudent provisioning
The bank made provisions and contingencies amounting to Rs 2,995 crore for the September quarter, compared with Rs 2,507 crore in the year-ago quarter. The numbers, however, included Rs 497 crore in provisions that the bank made on a prudent basis on loans aggregating to Rs 1,410 crore. These loans, the bank said, were not classified as non-performing pursuant to the Supreme Court’s interim order.

According to ET NOW, the bank’s President Sandeep Batra said that the bank has not utilised any Covid-related provision in the September quarter. The bank said it held Covid-19 related provisions worth Rs 8,772 crore as of September 30. Batra said, Covid provisions will completely cushion the bank’s balance sheet. He said this while suggesting that his bank is seeing a small amount of restructuring applications.

Non-interest income, NIM ease
For the quarter, the bank’s non-interest income, excluding treasury income, stood at Rs 3,486 crore compared with Rs 3,854 crore YoY. Fee income fell to Rs 3,139 crore from Rs 3,478 crore YoY, even as it was up 49 per cent sequentially. The bank said a sequential rise in fee income suggested increase in customer spending, borrowing and investment activity.

ICICI Bank said retail fees accounted for 76 per cent of total fees during the quarter. Treasury income for the bank came in at Rs 542 crore compared with Rs 341 crore YoY. This included Rs 305 crore raised by the bank by selling 2 per cent stake in ICICI Securities during the quarter.

Net interest margin (NIM) for the quarter stood at 3.57 per cent for the quarter compared with 3.69 per cent in the June quarter and 3.64 per cent in the year-ago quarter. It reflects surplus liquidity with the bank, ICICI Bank said.

Retail outperforms corporate credit growth
The bank said its retail loan portfolio rose 13 per cent year-on-year and comprised 65.8 per cent of the total loan portfolio as of September 30.

“Including non-fund outstanding, retail was 53.6 per cent of the total portfolio. Growth in the domestic corporate portfolio was about 7 per cent year-on-year. The domestic advances grew 10 per cent. Total advances rose 6 per cent year-on-year to Rs 6,52,608 crore from Rs 6,13,359 crore YoY,” the bank said.

Deposit growth at 20%
The bank said its total deposits rose 20 per cent year-on-year to Rs 8,32,936 crore. Average current account deposits increased 21 per cent, it said, while suggesting that the average savings account deposits were up 15 per cent, while total term deposits were up 26 per cent to Rs 4,68,356 crore.

Mobile transactions jump 65%
The volume of mobile banking transactions increased 65 per cent YoY, with the value of merchants acquiring transactions on Unified Payments Interface (UPI) rising 287 per cent YoY.

“Digital channels like internet, mobile banking, POS and others accounted for over 90 per cent of the savings account transactions in the six months ended September 30, 2020,” the bank said.

BB and below book drops
The private lender said its fund-based and non-fund based outstanding to borrowers rated BB and below (excluding non performing assets) decreased to Rs 16,167 crore for the quarter compared with Rs 17,110 crore as on June 30, 2020.

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