Will continue to focus on delivering consistent, predictable returns to our shareholders: Sandeep Batra, ICICI Bank

Mumbai: ICICI Bank, India’s second largest private lender, reported it's highest profit after tax of Rs 5,511 crore for the quarter ending September 2021, an increase of 30% as compared to the year-ago period. The net non-performing assets (NPA) ratio i.e. the ratio of NPA to net advances (loans) declined to 0.99% in the September quarter, the lowest since December 2014. This improvement is primarily due to a substantial growth in retail loans through digital initiatives, decline in provision for bad loans and improved asset quality performance.

Sandeep Batra, Executive Director, ICICI Bank addressing the media post announcing the stellar quarter numbers said, “During the challenging period of the last 18 months, we at ICICI Bank have continued to strengthen our franchise, delivery and servicing capabilities. With a range of digital initiatives, our loan portfolio has performed well in the face of the challenges posed by the two waves of the pandemic, behaving either in line with or better than our expectations.”

The Bank’s core operating profit for the quarter grew by 23% y-o-y to Rs. 9,518 crore (US$ 1.3 billion).

Remarkable growth in advances and deposits

The retail loan portfolio grew 20% on a y-o-y basis and 5% sequentially which accounted for 62% of the total loan portfolio as on September 30. Within the retail portfolio, the mortgage loan portfolio grew by 25% y-o-y, business banking by 43%, rural loans by 16%, commercial vehicle and equipment loans by 5% and the auto loan portfolio by 16%. Further, the value of credit card spends grew 47% sequentially.

The Bank’s business banking portfolio saw 43% y-o-y growth (up 12% q-o-q). The SME business, comprising borrowers with a turnover of less than Rs. 250 crore, grew 42% y-o-y (11% q-o-q) on September 30.

Also on the domestic wholesale banking portfolio, the book grew 14% y-o-y at September 30. Deposit growth, meanwhile, was at 17% y-o-y  at Rs. 9,77,449 crore. Average current account deposits rose 36% y-o-y  while savings account deposits rose 25% y-o-y.

The net interest income (NII) for the quarter climbed 25% y-o-y to Rs 11,690 crore in September quarter compared with Rs 9,366 crore in the year-ago quarter.

“With the increase in economic activity, disbursements across all retail products increased sequentially in Q2-2022. Mortgage disbursements were close to the level seen in March 2021 quarter reflecting the increase in demand coupled with the Bank’s seamless customer onboarding experience through preapproved offers and digitisation”, said Sandeep Batra. “Disbursements of personal loans and auto loans were also close to Q4-2021 levels. The Bank continues with its focus on providing the full suite of banking products to corporate clients and their ecosystems and focused on lending to well-rated corporates.”

Growth in Deposits

Deposit growth continued to be robust, with total deposits growing at 17% y-o-y to Rs. 977,449 crore at September 30, 2021.

The average current and savings account (CASA) deposits have grown by 28% y-o-y in Q2-2022; average CASA ratio stood at 44% in Q2-2022. The term deposits grew by 12% y-o-y to Rs. 526,745 crore at September 30, 2021.

Asset quality

ICICI Bank’s asset quality improved further with increase recoveries and upgrades, and decline in NPA additions during the quarter. Gross non-performing assets (GNPA) as a percentage of gross advances at 4.82% fell by 33 bps sequentially and net NPAs at 0.99%, the lowest since December 2014, declined 17 bps q-o-q, in Q2 FY22. The provision coverage ratio was 80.1% at September 30, 2021.

Covid-19 Provision

ICICI Bank is well-positioned with best-in-class growth rates and the protection from Covid-19 provisions buffer. The Bank continued to hold Covid-19 related provision of Rs 64.25 bn (0.8% of advances) at September 30, 2021, the same level as Jun 30, 2021. The bank had provisions and contingencies at Rs 2,713.48 crore as of September 2021, declining 9.4% year-on-year and 4.8% quarter-on-quarter.

Digital Initiatives

The value of mobile banking transactions climbed 62% year-on-year to Rs 4,06,501 crore for September quarter. Digital channels like internet, mobile banking, PoS and others accounted for over 90% of the savings account transactions in H1FY22.

The bank is the market leader in electronic toll collections through FASTag. The bank had a market share of 37% by value in electronic toll collections through FASTag in Q2 2022, with a 63% year-on-year growth in collections.

Sandeep Batra said, “We believe that our ongoing investments in technology, people and distribution network, our prudent risk management practices and our strong balance sheet will enable us to drive growth in our core operating profit in a risk-calibrated manner. We will continue to focus on delivering consistent and predictable returns to our shareholders.”

In December 2020, the Bank had expanded its state-of-the-art mobile banking app, iMobile, to iMobile Pay which offers payment and banking services to customers of any bank. There were about 15 lakh activations from non-ICICI Bank account holders in the current quarter, taking the total activations to 40 lakhs as of end-September. The transactions by non-ICICI Bank account holders in terms of value and volume respectively, were three times and 13 times higher in September 2021 compared to June 2021. We are seeing a rapid rise in payment transactions through repeat use of features such as ‘Pay to Contact’ and ‘Scan to Pay’.

The proportion of end-to-end digital sanctions and disbursements across various products has been increasing steadily. About 32% of Bank’s mortgage sanctions and 40% of our personal loan disbursements, by volume, were end-to-end digital in H1 of 2022.

“Looking ahead, we are optimistic about the growth of the Indian economy and we see many opportunities to grow our core operating profit in a risk calibrated manner. We will continue to build flexibility and agility in the Bank to tap into opportunities across ecosystems,” said Sandeep Batra.  

-This is a featured content