The second-largest private lender in India, ICICI Bank, exceeded expectations on Saturday to post a record first-quarter net profit, supported by greater interest revenue and loan growth.

According to Refinitiv IBES data, the Mumbai-based lender exceeded analysts’ expectations and increased net profit for the April-June quarter by almost 40% year over year to 96.48 billion rupees ($1.18 billion).

The difference between interest paid and received, known as net interest income, increased 38% to 182.27 billion rupees.

Although it increased to 4.78% from 4.01% a year earlier, net interest margin (NIM) was less than the 4.90% reported for the January-March quarter.

“As deposits get re-priced, we do expect some (margin) compression to continue,” the bank’s executive director, Sandeep Batra, told reporters at a conference call.

According to Batra, the bank had anticipated a fall in NIM, and there may also be some margin moderation in the current quarter, which runs from July to September.

He stated that he anticipated NIM to be “similar” to previous year for the entire 2023–2024 year.

While deposits increased 17.9%, total loans increased by 20.6%, mostly driven by retail loans.

Despite a rise in interest rates of 250 basis points since May of last year, loan growth in India has remained in the double digits in recent months.

In light of tighter liquidity conditions, banks have sought to strengthen their deposit base while also strengthening their balance sheets.

The largest private lender in India, HDFC Bank, announced this week that loans for the April-June quarter increased by 15.8% while deposits increased.

With a gross non-performing assets (NPA) ratio of 2.76% as of the end of June compared to 2.81% at the end of March, ICICI Bank’s asset quality was constant.

Its net NPA ratio remained constant from one quarter to the next at 0.48%.

In comparison to a year ago, the bank recorded provisions and contingencies at 12.92 billion rupees, an increase.

Batra predicted that the lender would keep up its bottom-up branch expansion strategy.

(Adapted from ThePrint.in)

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