New Delhi: In the July–September (Q2FY23) quarter, private sector lender ICICI Bank reported a 37% year-over-year (YoY) increase in net profit to Rs 7,558 crore, helped by fewer provisions and greater net interest income (NII), backed by solid loan growth. As predicted by analysts surveyed by Bloomberg, the bank’s net profit for the quarter was more than expected at Rs 7,411.6 crore.

In the same time last year, the bank declared a net profit of Rs 5,511 crore.

The lender’s NII increased 26% YoY to Rs 14,787 crore in Q2FY23 from Rs 11,690 crore in the comparable quarter. An indicator of the bank’s profitability, the net interest margin, was 4.31 percent in the quarter under review compared to 4.01 percent the previous quarter.

When compared to the same quarter a year prior, the non-interest revenue, excluding treasury income, increased by 17% YoY to Rs 5,139 crore in Q2FY23. Revenue from fees increased 18% YoY to Rs 4,480 crore. However, the lender reported a treasury loss of Rs 85 crore in the reviewed period as opposed to a gain of Rs 397 crore in the comparable period last year.

In Q2FY23, the lender’s provisions decreased 39% YoY to Rs 1,644 crore from Rs 2,714 crore during the same quarter last year. A sensible contingency provision of Rs 1,500 crore is included in the provisions for Q2FY23, according to a statement from the lender.

At the conclusion of the September quarter, the lender’s advances increased by 23% YoY and 5% sequentially to Rs 9.38 trillion. 54% of the loan portfolio, or the retail portfolio, saw sequential and year-over-year growth of 25% and 6%, respectively. The business banking sector expanded by 43% year over year and 11% sequentially.

The corporate segment saw growth of 23% YoY and 7% sequentially, while the rural loan portfolio had growth of 13% YoY and 4% sequentially.

As deposits increased 12% YoY to Rs. 10.90 trillion, credit growth was seen to lag behind deposit growth. The average deposits into savings and current accounts rose by 16% YoY Q2FY23.

Given the tightening of liquidity, incremental loan growth will largely be a function of deposit growth and borrowings that we may do. We have got our overall risk framework. So whatever falls within framework, we will continue to grow,” said Sandeep Batra, Executive Director, ICICI Bank.

“In line with the repo rate increase, there has been a corresponding increase in lending rate increase. Over a period of time, the lending rates and deposit rate will match. But at this point of time, the lending rate increase has been a little faster than deposit rates, and that is where we have got the benefit of NIM expansion”, Batra said.

At the conclusion of the September quarter, the bank’s gross non-performing asset (GNPA) ratio dropped by 22 basis points sequentially to 3.19 percent. The net NPA also increased to 0.61 percent. Gross additions to bad loans totaled Rs 4,366 crore in the second quarter, compared to Rs 3,761 crore for recoveries and upgrades. In the months of July through September, the bank wrote off loans totaling Rs. 1,103 crore.

Sandeep Bakshi has been reappointed by the bank’s board of directors as managing director and chief executive officer for a term of three years, beginning on October 4, 2023, and ending on October 3, 2026, subject to the approval of the Reserve Bank of India (RBI) and the bank’s shareholders.