ICICI Bank Q3 results: Profits jump 25% on-year, asset quality improves

Profit beats estimates: The net profit grew 25% year-on-year to Rs 6,194 crore, beating street expectations. Last year, for the October to December quarter, the net profit reported by the bank was Rs 4,940 crore. Sequentially, the net profit was up by 12.4%. The bank was able to post a higher profit on the back of a healthy rise in Net Interest Income.

Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as Net Interest Income. 

Net interest income for ICICI Bank grew at 23% YoY to Rs 12,236 crore compared to Rs 9,912 crore reported in the same period last year. Sequentially, net interest income was up by 4.8%. 

The bank reported a net interest margin of 3.96% in Q3FY22 compared with 4% in Q2FY22. The non-interest income (excluding treasury income) reported was Rs 4,899 crore, up by 25% YoY.

The bank has reported a fall in treasury income to Rs Rs 88 crore compared to Rs 766 crore in the year-ago period. In Q3FY21, the bank gained Rs 329 crore from the sale of shares in ICICI Securities.

ICICI Bank Q3 results

Asset quality improves: The asset quality of ICICI bank improved sequentially. The net NPAs declined 10% sequentially to Rs 7,344 crore in Q3FY22. In the September quarter, it was Rs 8,161 crore. The net NPA ratio declined to 0.85% in Q3FY22 from 0.99% in Q2FY22.

Capital Adequacy: Capital Adequacy Ratio (CAR) is the ratio of a bank's capital in relation to its risk-weighted assets and current liabilities. ICICI reported Capital Adequacy at 19.79% in the December quarter and Tier-1 capital adequacy at 18.81% as compared to the minimum regulatory requirements of 11.7% and 9.7% respectively.

Provisions: Provisions (excluding provision for tax) declined by 27% year-on-year to Rs 2,007 crore in Q3FY22 from Rs 2,742 crore in Q3FY21.

Business Growth: The domestic advances for the bank grew by 20% YoY and 6.5% QoQ for the quarter ending September. The total advances reported by the bank increased from Rs 7.64 lakh crore in Q2 to Rs 8.14 lakh crore in Q3FY22. The retail loan portfolio compromised 61.3% of the total loan book, it was up by 5% sequentially and 19% YoY. The business banking portfolio grew by 9% sequentially and 39% YoY while the domestic wholesale banking portfolio was up 13% compared to the same period last year.

Deposits: The bank has shown exceptional numbers in terms of deposits. Total deposits rose 16% year-on-year to Rs 10.17 lakh crore. Average current account deposits increased by 34% YoY, while average saving account deposits increased by 25% YoY. As of 31 December 2021, the total term deposits were at Rs 5.36 lakh crore, up by 12% YoY.

ICICI Bank results: Update from subsidiaries

• ICICI Prudential Life Insurance - Value of New Business (VNB) increased by 35% YoY to Rs 1,388 crore in 9M2022 from Rs 1,030 crore in the nine months ended December 31, 2020. The profit after tax was Rs 311 crore in Q3FY22 compared to Rs 306 crore in Q3FY21.
• ICICI Lombard General Insurance - The Gross Direct Premium Income (GDPI) grew by 26% YoY to Rs 13,311 crore in 9M-2022 from Rs 10,525 crore in 9M-2021. The combined ratio was 111.0% in 9M-2022 compared to 99.1% in 9M-2021. The profit after tax of ICICI General was Rs 318 crore in Q3FY22 compared to Rs 314 crore in Q3FY21. 
• ICICI Securities - The profit after tax of ICICI Securities, on a consolidated basis, as per Ind AS, grew by 42% YoY to Rs 380 crore in Q3FY22 from Rs 267 crore in Q3FY21.

ICICI Bank Q3 results: Review

ICICI Bank has reported a strong set of numbers for the Oct-Dec quarter beating street estimates. The deposits as well as the loan book saw a sequential increase. The gross and net NPAs also reduced sequentially. The business banking and SME franchise continues to grow on the back of digital offerings and platforms like InstaBIZ. The SME business, comprising borrowers with a turnover of less than Rs 250 crore grew both sequentially and YoY.  The value of transactions from the bank's supply chain platforms was 3.5 times the value of transactions in the year-ago quarter. 

The bank is also confident about its healy asset quality position. It has made  Covid-related provisions worth Rs 6,400 crore. “As the situation with respect to the third wave becomes clearer, we will see what we need to do with this. Our balance sheet is fully cushioned against any future impact of the third wave," the bank has said.