ICICI Bank ED: SME lending growing at healthier pace, focus is on customer quality

Sandeep Batra, Executive Director (ED) at ICICI Bank.

Lending to Small and medium-sized enterprises (SME) has been growing at a healthier pace and remains a key focus area, said Sandeep Batra, Executive Director (ED) at ICICI Bank.

“SMEs have been growing at a healthier pace at this time. In fact, during the quarter ended December 2022, our SME portfolio grew by 25 percent YoY,” Batra said.

Batra, in a press conference after announcing the bank’s results for the quarter ended December 2022, said that the bank is focusing on retail, SME, corporate, rural, wholesale and all parts of the economy.

The bank reported a net profit of Rs 8,312 crore for the December quarter (Q3FY23), a 34.2 percent year-on-year increase helped by a healthy 21.4 percent growth in the domestic loan book and stable net interest margin (NIM).

The bank’s net interest income (NII) rose 34.6 percent to Rs 16,465 crore from Rs 12,236 crore in the corresponding quarter last year.

Q3 results

The private sector lender’s net profit beat analysts’ estimates by a big margin. A Moneycontrol poll of seven brokerages had expected the lender’s net profit to be Rs 7,994 crore for the quarter, a growth of 29 percent.

NII was expected to have grown 28 percent year-on-year (YoY) to Rs 15,639 crore for the three months ended December.

Balance sheet growth

ICICI Bank’s domestic loan book grew a healthy 21.4 percent, driven mainly by loans to small businesses and retail.

Business banking loans which are a credit to small informal businesses and rural businesses grew the fastest at 37.9 percent YoY, followed by 25 percent growth in loans to SME loans.

The growth in both these loan segments is higher partly owing to a low base. Retail loans grew by 23.4 percent while corporate loans grew by 18.3 percent.

Bank's sectoral credit growth

The retail loan portfolio grew by 23.4 percent YoY and comprised 54.3 percent of the total loan portfolio as on December 31, 2022.

Including non-fund outstanding, the retail portfolio was 44.9 percent of the total portfolio for the quarter ending December 2022.

The business banking portfolio grew by 37.9 percent YoY on December 31, 2022.

The SME business, comprising borrowers with a turnover of less than Rs 250 crore, grew by 25 percent YoY.

Also read: ICICI Bank Q3 net profit surges 34% to Rs 8,312 crore, beats estimates

Plans ahead

Earlier too, ICICI Bank’s management had indicated its focus on loans to SMEs.

Further, the bank has multiple times pushed its digital heft through a super app that provides prospective and existing customers with a full stack of products of the ICICI Group as well as other financial companies.

“We’ll be focusing on risk-calibrated growth that can come from retail, SME, corporate, rural, and wholesale all parts of the economy,” Batra said.