ICICI Bank (IBN) Q1 Earnings Increase on Rising NII & Loans
ICICI Bank IBN released its first-quarter fiscal 2023 (ended Jun 30) results. Net income was INR 96.48 billion ($1.2 billion), up 39.7% from the prior-year quarter.
Results were driven by a rise in net interest income (NII), non-interest income, growth in loans and deposits, and higher rates. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor.
NII & Fee Income Improve, Expenses Rise
NII jumped 38% year over year to INR 182.27 billion ($2.2 billion). The net interest margin was 4.78%, up 77 basis points.
Non-interest income (excluding treasury income) was INR 51.83 billion ($632 million), up 12%. Fee income increased 14.1% to INR 48.43 billion ($590 million).
In the reported quarter, IBN incurred a treasury gain of INR 2.52 billion ($31 million) compared with the treasury income of INR 0.36 billion ($4 million) in the year-ago quarter.
Operating expenses totaled INR 95.23 billion ($1.2 billion), jumping 25.9% year over year.
Loans & Deposits Increase
As of Jun 30, 2023, ICICI Bank’s total advances were INR 10,575.83 billion ($128.9 billion), up 18.1% year over year. Growth was primarily driven by a solid rise in retail loan balances, business banking loans and SME loans.
Total deposits grew 17.9% to INR 12,387.37 billion ($151 billion).
Credit Quality: Mixed Bag
As of Jun 30, 2023, the net non-performing assets (NPA) ratio was 0.48%, down from 0.70% in the prior-year period. Recoveries and upgrades (excluding write-offs and sale) of NPAs were INR 35.11 billion ($428 million) in the quarter.
In the fiscal first quarter, there were net additions of INR 18.07 billion ($220 million) to gross NPA. Gross NPA additions were INR 53.18 billion ($648 million), while gross NPA written-off was INR 11.69 billion ($142 million).
Provisions (excluding provision for tax) increased 13% to INR 12.92 billion ($157 million). As of Jun 30, 2023, the bank held a total contingency provision of INR 131 billion ($1.6 billion).
Capital Ratios Strong
In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 17.47% and Tier-1 capital adequacy was 16.76% as of Jun 30, 2023. Both ratios were well above the minimum requirements.
Our Take
ICICI Bank’s quarterly performance was impressive on a robust rise in demand for consumer loans. Growth in NII was a major tailwind, which is expected to keep supporting the company's financial performance. However, elevated expenses and macroeconomic concerns are major near-term headwinds.
ICICI Bank Limited Price, Consensus and EPS Surprise
ICICI Bank Limited price-consensus-eps-surprise-chart | ICICI Bank Limited Quote
ICICI Bank currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Foreign Banks
Deutsche Bank DB is scheduled to announce its second-quarter 2023 numbers on Jul 26.
Over the past 30 days, the Zacks Consensus Estimate for Deutsche Bank’s quarterly earnings has decreased 6.3% to 45 cents, suggesting a 28.6% rise from the prior-year reported number.
HSBC Holdings plc HSBC is slated to announce its second-quarter 2023 numbers on Aug 7.
Over the past seven days, the Zacks Consensus Estimate for HSBC’s quarterly earnings has remained unchanged at $1.50, implying an 11.1% jump from the prior-year reported number.
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