Key takeaways from Sandeep Batra on ICICI Bank’s record Q2 profit

At Rs 4, 251 crores, ICICI Bank’s quarterly net profit rises over six times despite higher provisions, according to Sandeep Batra, ICICI Bank - President

ICICI Bank’s results for Q2-2021 have exceeded expectations, with the profit after tax being at Rs 4,251 crore in Q2-2021 compared to Rs 655 crore in Q2-2020. The Bank has also registered an 18% Y-o-Y increase in core operating profits (profit before provisions and tax, excluding treasury income) to Rs 7,719 crore.

The net interest income also saw an increase, by 16% Y-o-Y, to Rs 9,366 crore. The net interest margin this quarter was lower than that of the previous quarters (3.57% in Q2-2021, compared to 3.69% in Q1-2021 and 3.64% in Q2-2020). This can be attributed to higher overall liquidity in the bank. Notably, the operating expenses decreased by 5% Y-o-Y in this quarter, with non-employee expenses seeing a 2% decrease as well.

Optimistic Figures Across the Board: Loans, Deposits, and CASA

“Post the easing of restrictions, there has been a substantial month-on-month increase in disbursements across retail products,” says Sandeep Batra, ICICI Bank, President.

This was due to low interest rates, seamless on-boarding through process decongestion, and digital sanctions. The retail loan portfolio grew by 13% Y-o-Y, and 6% sequentially. In a similar vein, the domestic loan portfolio grew by 4% and 10% Y-o-Y.

The quarter saw mortgage disbursements reach an all-time high in September, even crossing pre-Covid levels. Auto loans have been increasing from June and successfully reached pre-Covid levels in September, indicative of a rise in the sales of passenger automobiles.

Even across the rural portfolio, ICICI Bank has impressed by crossing pre-Covid levels in August and September.

This quarter also saw robust deposit growths. Year-on-Year the total deposits increased by 20% to Rs 832,936 crore on September 30, 2020. The Bank saw a year-on-year increase in average savings account deposits by 15% in Q2-2021.

Current account deposits also saw an increase of 21% Y-o-Y. On September 30, 2020, there was also a Y-o-Y increase in term deposits, by 26%, to Rs 468,356 crore. ICICI Bank also enjoyed a significant surplus of liquidity, with a liquidity coverage ratio of 150%.

In this quarter there was a 17% growth in average current and savings account (CASA) deposits. In Q2-2021, the average CASA ratio was 40.3%.

Strong Provisioning Measures to Cushion the Balance Sheet

According to Sandeep Batra, the Bank is confident in the robustness of their underwriting, and believe that the provisions made in March and June quarters will protect the balance sheet in case of credit losses caused by Covid-19. As of September 30, 2020, the average coverage ratio increased to 81.5% from 78.6% by June-end 2020. So far, the bank has not utilized any of the Covid-19 provisions in this quarter.

Provisions unrelated to Covid stood at Rs 2,498 crore in Q2-2021, a reduction from Rs 2,507 crore in Q2-2020.

ICICI Bank has impressed all stakeholders with these quarterly figures. The strong results can be attributed to maintaining robust fundamentals and sensible provisioning.