Explore ICICI Bank’s robust Q3 FY24 results, showcasing a remarkable 23.6% surge in net profit. Discover the strategic moves driving financial strength, non-interest income surge, and prudent management decisions for sustained growth.
In a robust display of financial prowess, ICICI Bank has reported a substantial 23.6% increase in net profit for the third quarter ending December 2023 (Q3 FY24), reaching Rs 10,272 crore. This remarkable growth is primarily attributed to a surge in non-interest income and the bank’s steadfast asset quality.
Quarterly Performance
Comparing year-on-year (Y-o-Y) figures, ICICI Bank’s Q3 FY24 net profit soared from Rs 8,311.8 crore in Q3 FY23. Furthermore, the bank witnessed a modest sequential increase from Rs 10,261 crore in the preceding quarter (Q2 FY24). This positive trajectory underscores the bank’s resilience and strategic financial management.
Net Interest Income (NII) and Margins
The bank’s Net Interest Income (NII) witnessed a commendable 13.4% growth, reaching Rs 18,678 crore in Q3 FY24, up from Rs 16,465 crore in the corresponding quarter of the previous year. However, the Net Interest Margin (NIM) experienced a slight dip to 4.43% in Q3 FY24, compared to 4.65% in Q3 FY23. This decline was anticipated due to an increase in the cost of term deposits. Bank executives project NIMs for FY24 to align with the previous fiscal year (4.48%).
Capital Adequacy Ratio (CAR) Adjustment
ICICI Bank’s Capital Adequacy Ratio (CAR) moderated to 14.61% at the end of December 2023, down from 16.07% in September 2023 and 16.26% in December 2022. The adjustment in CAR is attributed to the Reserve Bank of India’s (RBI) decision to raise risk weights for unsecured loans. This move was highlighted in a media call post the Q3 FY24 results announcement.
Non-Interest Income Growth
Non-interest income, encompassing fees, commissions, and recoveries, demonstrated robust growth with a 19.8% Y-o-Y increase to Rs 5,975 crore in Q3 FY24. This diversification of income sources contributes to the bank’s overall financial stability.
Provision Coverage Ratio (PCR) and AIF Exposure
The Provision Coverage Ratio (PCR), excluding write-offs, eased to 80.7% in December 2023, compared to 82% a year earlier. Notably, the bank allocated a provision of Rs 627 crore for exposure to Alternative Investment Funds (AIFs). Although AIFs constitute a small portion of the bank’s total assets, officials emphasize a cautious approach, making decisions based on shareholder benefits.
Loan Portfolio Expansion
Advances demonstrated a robust 18.37% Y-o-Y growth, reaching Rs 11.53 trillion in Q3 FY24. The retail loan portfolio, accounting for 54.3% of the total loan portfolio as of December 31, 2023, expanded by 21.4% Y-o-Y. However, the pace of personal credit (unsecured loans) growth slowed to approximately 37% Y-o-Y in December 2023, reflecting the bank’s tightened norms for such loans.
Conclusion
In conclusion, ICICI Bank’s Q3 FY24 results showcase a commendable financial performance with significant growth in net profit, NII, and non-interest income. Despite adjustments in the Capital Adequacy Ratio and provisions for AIF exposure, the bank remains well-positioned for sustained growth. The strategic focus on a diversified loan portfolio and prudent financial management underscores ICICI Bank’s commitment to long-term stability and shareholder value.
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