ICICI Bank's (IBN) Q1 Earnings Increase on Rising Loan Demand

ICICI Bank’s IBN first-quarter fiscal 2023 (ended Jun 30) net income was INR69.05 billion ($874 million), jumping 50% from the prior-year quarter.

Results were driven by a rise in net interest income, non-interest income and growth in loans and deposits. Provisions also declined during the quarter. However, higher operating expenses posed a headwind.

Net Interest Income & Fee Income Up, Expenses Rise

Net interest income rose 21% year over year to INR132.10 billion ($1.7 billion). Net interest margin was 4.01%, up 12 basis points (bps).

Non-interest income (excluding treasury income) was INR46.29 billion ($586 million), up 25%. Fee income jumped 32% to INR42.43 billion ($537 million). Fees from retail, business banking and SME customers constituted approximately 79% of total fees in the quarter.

Treasury income gain was INR0.36 billion ($5 million) in the reported quarter compared with INR2.90 billion ($37 million) in the year-ago quarter.

Operating expenses totaled INR75.66 billion ($958 million), rising 25%.

Loans & Deposits Increase

As of Jun 30, 2022, ICICI Bank’s total advances were INR8,956.25 billion ($113.4 billion), up 21% year over year. The growth was driven by a solid rise in demand for retail loans, which improved 24% and accounted for 53.1% of the total loan portfolio.

Total deposits grew 13% to INR10,503.49 billion ($133 billion).

Credit Quality Improves

As of Jun 30, 2022, net non-performing assets (NPA) ratio was 0.70%, down 46 bps year over year. Recoveries and upgrades (excluding write-offs and sale) of NPAs were INR54.43 billion ($689 million) in the quarter.

Gross NPA deletions were INR3.82 billion ($48 million) compared with INR36.04 billion ($456 million) in the prior-year quarter. During the fiscal first quarter, gross NPAs additions were INR58.25 billion ($738 million), while gross NPA written off was INR11.26 billion ($143 million).

Provisions (excluding provision for tax) plunged 60% from the prior-year quarter to INR11.44 billion ($145 million). This included an additional contingency provision of INR10.50 billion ($133 million) made on a prudent basis during the reported quarter. Thus, as of Jun 30, 2022, ICICI Bank held a total contingency provision of INR85 billion ($1.1 billion).

Capital Ratios Strong

In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 18.74% and Tier-1 capital adequacy was 17.95% as of Jun 30, 2022. Both the ratios were well above the minimum requirements.

Our Take

ICICI Bank’s quarterly performance was impressive on a robust rise in demand for consumer loans. Growth in net interest income was a major tailwind, which is expected to support the company's financial performance, going forward. However, elevated expenses are likely to adversely impact the bank’s bottom line.

ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited price-consensus-eps-surprise-chart | ICICI Bank Limited Quote

ICICI Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates of Other Foreign Banks

Now we look forward to the earnings releases of Deutsche Bank DB, HSBC Holdings HSBC and Barclays BCS.

Deutsche Bank and Barclays are scheduled to announce second-quarter 2022 results on Jul 27 and Jul 28, respectively. HSBC is slated to report the same on Aug 1.

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