A bird flies past the facade of the ICICI bank head office in Mumbai, India, April 21, 2023. REUTERS
MUMBAI, Oct 26 (Reuters) – ICICI Bank India’s second-largest private lender, reported a bigger-than-expected second-quarter profit on Saturday, helped by healthy loan growth and core lending income, even as lending margins shrunk.
The Mumbai-based lender’s standalone net profit rose 14.5% to a record 117.46 billion rupees ($1.4 billion) in the July-September quarter.
That exceeded analysts’ average estimate of 109.87 billion rupees, according to LSEG data.
ICICI Bank’s total loans rose 15.7% in the quarter, while deposits grew by the same percentage.
Net interest income, or the difference between interest earned on loans and paid on deposits, increased by 9.5% to 200.48 billion rupees.
Indian banks have consistently reported double-digit loan growth over the past few months, helped by healthy economic growth and urban consumption.
Banks are also scrambling to raise deposits to fund loan growth, which has weighed on margins.
ICICI Bank’s net interest margin (NIM) — a key gauge of profitability — fell to 4.27% from 4.53% a year earlier and 4.36% in the previous quarter.
Private lenders Kotak Mahindra Bank and RBL Bank have also reported lower margins for the quarter.
ICICI Bank’s provisions and contingencies, or funds set aside for potential bad loans, rose sharply to 12.33 billion rupees, from 5.83 billion rupees a year ago.
U.S. stocks ended mixed on Friday as investors awaited quarterly results from some of the world’s most valuable companies next week.
Lenders like Kotak Mahindra Bank, IndusInd Bank (INBK.NS), and RBL Bank have all raised their provisions due to stress in their unsecured and microfinance loans businesses.
ICICI Bank’s asset quality improved, with the gross non-performing assets (NPA) ratio at 4.27% as of end-September, versus 2.15% at the end of the prior three months.
Shares of ICICI Bank ended 2.9% higher ahead of the results on Friday.
(This story has been corrected to say that the NIM fell from 4.53% a year earlier, not 4.36%, in paragraph 8)
Reporting by Siddhi Nayak Editing by Shri Navaratnam
