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ICICI Bank Q3 PAT increased 34% to ₹8,312 Cr, NII increased 35%
22
Jan
2 Comments

ICICI Bank Q3 PAT increased 34% to ₹8,312 Cr, NII increased 35%

On Saturday, ICICI Bank released its financial data for the third quarter that concluded on December 31, 2022 (Q3FY23). The bank beat street expectations by reporting a net profit of Rs 8,311.85 crore in the third quarter of the current fiscal year, up from a profit of Rs 6,193.81 crore reported in a similar quarter of the previous year, posting an interannual growth of 34.19% registers growth. While gross NPAs declined further in the third quarter of fiscal 2023, provisions increased during the quarter.

ICICI Bank Q3 PAT grew 9.97% from Rs 7,557.84 crore in Sep 2022.

The third quarter of FY23 saw a 34.6% increase in net interest income from the corresponding quarter of FY22, rising to Rs 16,465 crore from Rs 12,236 crore. From 14,786.81 crores in the prior quarter, NII increased by 11.35%.

In addition, the net interest margin increased from 3.96% in the third quarter of FY22 and 4.31% in the second quarter of FY23 to 4.65% in the third quarter of the current fiscal year.

In contrast, the current quarter’s provisions and contingencies came to 2,257.44 crores, up from 1,644.52 crores in the previous quarter and 2,007.30 crores in the third quarter of FY22. ICICI Bank noted that during the third quarter, there was a change in its NPA provisioning rules to make them more conservative. This change resulted in an increased provision of Rs 1,196 crore in Q3 2023. The provisions for Q3 2023 also include a contingency provision of Rs 1,500 crore on a prudential basis.

Regarding asset quality, the gross NPA has decreased from 3.19% as of September 30, 2022, and 4.13% as of December 31, 2021, to 3.07% as of December 31, 2022. The net NPA ratio fell from 0.61% in Q3FY23 to 0.55% in Q2FY23 and 0.85% in Q3FY22.

During Q3FY23, ICICI Bank reported a net increase in gross NPAs of ₹1119 crore, up from ₹605 crores in the previous quarter. NPA’s total gross additions in Q3FY23 were ₹5,723 crores, compared to ₹4,366 crores in Q2FY23. NPA recovery and update, excluding cancellations and sales, was Rs 4,604 crore in Q3 FY2023, up from Rs 3,761 crore in Q2 FY2023. Whereas gross NPA in the Q3 2023 was ₹1162 crore. The provision coverage ratio for hard assets stands at 82.0% as of December 31, 2022.

In terms of loan growth, ICICI Bank’s retail loan portfolio grew by 23.4% and represented 54.3% of the total loan portfolio in Q3FY23. The business banking portfolio grew by 37.9% YoY, while the SME portfolio comprised of borrowers with less than Rs 250 crore in turnover grew by 25% YoY. The national corporate portfolio increased by 18.2% YoY; The rural portfolio grew by 12.5%. The bank’s domestic advances stood at 21.4% YoY.

Advances grew 19.7% YoY and 3.8% QoQ to ₹974,047 crore.

Likewise, on the deposit front, the bank registered an interannual growth of 14.2% in term deposits at the end of the period. Average deposits in checking and savings accounts grew by 10.4% in the third quarter. Total deposits stood at ₹11,22,049 crore in Q3FY23, with a growth of 10.3% YoY.

As of December 31, 2022, ICICI Bank reported having 86 inactive non-ICICI Bank account holders on its mobile banking app, iMobile Pay, in the digital and payment platforms category. Furthermore, about 215,000 non-ICICI bank account holder registrations were made on InstaBIZ as of December 31, 2022.

Additionally, the value of the bank’s merchant acquisition transaction through UPI grew 10.6% sequentially and 78% year-over-year in Q3 2023. The bank’s market share in electronic toll collection through FASTag was 30.6% in 3Q-2023, with a year-over-year growth of 22.2% in collections.

In the first nine months of FY23, ICICI Bank opened close to 300 branches. As of December 31, 2022, it’s estimated to have a network of 5,718 branches and 13,186 ATMs.

On the BSE, ICICI Bank shares ended the day at 870.40, an increase of 0.47%. In terms of market share on the stock market, the bank is the fourth-largest firm. The bank’s value at around 6.07 lakh crore as of January 20.

SBI strolls lending rates by 50 bps, observes impact on home loans, interest
04
Oct
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SBI strolls lending rates by 50 bps, observes impact on home loans, interest

With the Reserve Bank of India (RBI) lifting the repo rate once again to tackle inflation, banks have to raise interest rates on loans. In its fifth economic policy for the financial year (FY) on September 30, 2022, the central bank expanded (100 basis points = 1%) the policy rate by 50 bps.

Once made the official statement, NBFCs and some banks announced a comparable stroll in their external benchmark lending rates (EBLR).

One such bank is the public sector lender (PSL), State Bank of India (SBI). According to its website, SBI has increased its external benchmark lending rate (EBLR) and repo-linked lending rate (RLLR) by 50 bps. SBI’s EBLR is 8.55%, and RLLR is 8.15% as on October 1, 2022.

With the home loan rate increase, here is an example showing that the home loan EMI will increase significantly.

Assume you have carried a home loan of Rs 35 lakh for 20 years. The elder interest rate levied on your home loan is 8.05%, and the latest interest rate will increase to 8.55% (after the final interest rate hike).

The example above shows how an increase of 50 bps will likely impact the monthly EMI spend. The substantial rise in EMI will depend on the outstanding loan amount, the outstanding tenure of the loan, and the interest rate charged by the bank.

The bank will determine the interest rate for the mortgage loan, considering several factors. These include CIBIL score, borrower profile (salaried or non-salaried, female or male), risk assessment, loan-to-value ratio, etc.

Experts say that with the central bank raising policy rates further, borrowers can expect a further increase in interest rates on loans. However, if a borrower cannot afford the higher EMI outlay, they can choose to extend the tenure of the loan.

It notes that if borrowers extend the loan tenure instead of the EMI expense, they will pay more interest on the loan accepted.

Another possibility is to prepay the loan amount. If a borrower can prepay an exhaustive portion of the loan amount, this will reduce the outstanding loan amount. The bank will recalculate the EMI on the exceptional amount of the loan. That will be the EMI the borrower will have to pay until the interest rate rises again.

Neeraj Dhawan, Country Manager, Experian India, says, “Although the RBI has operated to bring down consumer price inflation (CPI) below its highs, it is still above the target range. The rising geopolitical tensions worldwide can be mainly attributed to this growth. 

The rupee depreciated sequentially against the dollar. The rupee has outperformed reserve currencies and emerging currencies. The rate has increased by 50 basis points due to the recent interest rate hike by the US Federal Reserve and developments in the foreign exchange market. 

Also, with the bank’s liquidity temporarily slipping into deficit territory, RBI seeks to support the market through increasing interest rates.

Atul Monga, Founder & CEO of Basic Home Loan, says: “RBI has increased its repo rate by 50 bps to curb inflation and control the volatility of the Indian rupee. 

While banks will eventually have to pass on the higher costs to borrowers, this is less likely to happen during the current holiday season. With many Indians buying decisions during this time of year, financial institutions may not want to dampen the holiday spirit by hiking rates too soon. 

From a homebuyer’s point of view, you should take advantage of these opportunities and take advantage of market discounts and seasonal offers to make your purchases, as interest rates remain below 9% per annum.”