Strong loan growth continues to fuel record profit
- 3QFY24 net profit of ?102.7bn continued strong momentum, surpassed consensus estimates
- Robust loan growth continues to offset NIM compression during the quarter
- Asset quality improved as NPL declines
3QFY24 net profit ahead of consensus with record high profit. ICICI Bank’s core operating income grew 14.9% y-o-y/2% q-o-q to ?246.53bn in 3QFY24 on the back of higher net interest income. Net interest income improved 13.4% y-o-y/ 2% q-o-q to ?186.8bn in the quarter, largely driven by 18.8% y-o-y/3.8% q-o-q growth in overall loans, partially offset by lower net interest margin (NIM), which contracted to 4.43% from 4.53% in 2QFY24 from higher deposit costs as deposits continue to grow at 18.7% y-o-y/2.9% q-o-q. Non-interest income (excluding treasury gains) grew 19.8% y-o-y/2% q-o-q to ?59.8bn, which continued to be driven by continued momentum from higher fee income from retail, rural, business banking and SME customers. ICICI Bank achieved a record 3Q net profit of ?102.7bn (+23.6% y-o-y/+0.1% q-o-q), ahead of consensus expectations by c.2.5%. The bank saw higher provisions this quarter of ?10.5bn (+80.1% q-o-q) inclusive of ?6.27bn on investments in Alternate Investment Funds. NPL ratio continue to decline from 2.48% in the previous quarter to 2.30%. CET1 ratio remains strong at 16.0% (2QFY24: 16.8%).
Repricing on deposit continues. Management believes that loan growth and deposit growth continued to be balanced and guides for additional repricing on the deposit in 4QFY24 and potentially extending into 1QFY25. The increase in the cost of deposits is projected to be lower than what has been observed previously. Consequently, the impact on the net interest margin is expected to be less than current quarter.