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ICICI Bank Ltd.’s IBN net income for the second quarter of fiscal 2025 (ended Sept. 30, 2024) was INR 117.5 billion ($1.4 billion), up 14.5% from the prior-year quarter.
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Results were driven by a rise in net interest income (NII), non-interest income, and growth in loans and deposits. However, higher operating expenses and provisions were the undermining factors.
IBN’s NII & Fee Income Improve, Expenses Rise
NII grew 9.5% year over year to INR 200.5 billion ($2.39 billion). The net interest margin was 4.27%, down 26 basis points.
Non-interest income was INR 65 billion ($775 million), up 10.8% year over year. Fee income increased 13.3% year over year to INR 58.9 billion ($703 million).
In the reported quarter, IBN recorded a treasury income of INR 6.8 billion ($81 million), up significantly from the prior-year quarter.
Operating expenses totaled INR 105 billion ($1.25 billion), up 6.6% year over year.
ICICI Bank’s Loans & Deposits Increase
As of Sept. 30, 2024, ICICI Bank’s total advances were INR 12,772.4 billion ($152.42 billion), up 4.4% sequentially. Growth was primarily driven by a solid rise in business banking loans and retail loans.
Total deposits grew 5% sequentially to INR 14,977.6 billion ($178.73 billion).
IBN’s Credit Quality: Mixed Bag
As of Sept. 30, 2024, the net non-performing assets (NPA) ratio was 0.42%, which declined from 0.43% in the prior-year period. Recoveries and upgrades (excluding write-offs and sales) of NPAs were INR 33.19 billion ($396 million) in the reported quarter.
In the fiscal second quarter, there were net additions of INR 17.54 billion ($209.3 million) to gross NPA. Gross NPA additions were INR 50.73 billion ($605 million), while gross NPA written-off was INR 33.4 billion ($398 million).
Provisions (excluding provision for tax) increased substantially year-over-year to INR 12.3 billion ($147 million). As of Sept. 30, 2024, the bank held a total contingency provision of INR 131 billion ($1.56 billion).
Capital Ratios Strong For ICICI Bank
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 16.66%, and Tier-1 capital adequacy was 15.96% as of Sept. 30, 2024. Both ratios were well above the minimum requirements.
Our Take on IBN
ICICI Bank’s quarterly performance was impressive, driven by increased consumer loan demand, improved deposit balances and growth in NII and non-interest income. These factors are anticipated to continue to support the bank’s financials. However, elevated expenses and weak asset quality amid macroeconomic uncertainties are significant near-term challenges.