Treasury gains help ICICI Bank post 10% rise in Q1 profit

Treasury gains helped ICICI Bank post a nearly 10 per cent increase in the consolidated net profit for the April-June quarter at Rs 11,696 crore on Saturday.

Growth in the core income slowed for the country's second largest private sector lender, but the treasury operations helped it report a 14.62 per cent rise in its post-tax profit at Rs 11,059 crore on a standalone basis.

The core net interest income (NII) growth came at a multi quarter low of 7.3 per cent to Rs 19,553 crore for the reporting quarter.

The NII growth was restricted majorly by the over 0.40 per cent narrowing in the net interest margin at 4.36 per cent as against the year-ago period, and a nearly 16 per cent domestic loan growth.

The non-interest income grew 23 per cent to Rs 6,389 crore excluding the performance of the treasury operations, while the treasury gains alone more than doubled to Rs 613 crore from the year-ago period's Rs 252 crore.

The bank's executive director Sandeep Batra told reporters that the process of a decline in NIMs - which has been falling in the last five quarters - has stopped, and the crucial metric influencing profit will be "rangebound" from here on.

Declining to give any number on the outlook on NIMs, he, however, said that the new norms on liquidity coverage ratio (LCR) and RBI's rate cuts will also have an influence on the number.

To a question on the draft LCR norms, under which RBI is proposing to make banks set aside larger sums of deposits to take care of any exigencies, Batra conceded that the move may have a bearing on the cost of deposits and liquidity but added that it is early to comment on it as the final norms will only be announced after public feedback.

Amid concerns on the unsecured lending being expressed by the RBI, Batra said the bank has reduced its personal loan growth to 24 per cent, while the credit card portfolio grew over 30 per cent.

There are no specific concerns about the quality of the unsecured book, the bank management said.

The fresh slippages increased to Rs 5,916 crore for the reporting quarter and were driven majorly by the retail, rural and business banking segments which collectively contributed Rs 5,732 crore of the dud loans.

The bank management attributed the uptick to a seasonal impact coming from on the Kisan Credit Card (KCC), where it experienced fresh slippages of Rs 721 crore.

Batra said the system had been in a benign credit cycle for long and things are normalising now, and was quick to add that the bank had guided towards the same earlier.

The credit costs are contained, the bank said, pointing out that the overall provisions excluding taxes grew marginally to Rs 1,332.18 crore, as against Rs 1,292.44 crore for the year-ago period, and Rs 718.49 crore in the March quarter.

The gross non-performing assets ratio was stable at 2.36 per cent as of June 30, 2024.

The capital adequacy ratio for the bank stood at 16.63 per cent, including core tier-I capital at 15.92 per cent.

With the technology areas coming under greater scrutiny from the RBI lately, Batra said its overall tech spends have risen to 9.5 per cent of the operational expenses, and added that they have grown significantly over the last 3-4 years.

The bank added 64 branches during the quarter to take its total network size to 6,587 branches.

When asked about employee additions during the quarter, the bank management did not share the exact number.

Among its subsidiaries, its life insurance arm's net increased to Rs 225 crore from Rs 207 crore in the year-ago period.

The general insurance arm posted a 49 per cent jump in net at Rs 580 crore and the asset management company saw its net profit increase to Rs 633 crore from Rs 474 crore in the year-ago period.

The bank management also informed that during the quarter, it infused Rs 500 crore into the dedicated home loan finance arm.