ICICI Bank’s Q4 results: Three key takeaways

ICICI Bank’s net NPA ratio declined to 0.76 percent on March 31 from 0.85 percent on December 31, 2021.

ICICI Bank reported a 59 percent increase in net profit to Rs 7,019 crore in the January-March quarter from a year ago. According to analysts, a fall in non-performing assets and a better digital presence were among the factors that helped the bank overcome pandemic problems in the last quarter of FY22.

Like other banks, ICICI too was hit by the COVID-19 waves but the economic momentum recovered in February and March.

Digital initiatives, technology

Analysts said ICICI Bank’s growth was driven by its corporate customers, of which small and medium enterprises (SME) constituted a major part.

“The corporate book was led by well-rated entities as per its stated strategy,” analysts at Motilal Oswal said.

They said the considerable growth in small business banking credit was driven by digital initiatives. The bank said growth in the SME and business banking portfolios was driven by its digital offerings and platforms such as InstaBIZ and Merchant Stack.

“The bank has higher exposure towards working capital loans compared to term lending,” said analysts of Systematix Group.

Credit growth

The bank’s retail loan portfolio, excluding rural loans, grew by 19.7 percent year-on-year and 6 percent sequentially. Growth in personal loans and the credit card portfolio was 31.9 percent year-on-year.

The value of credit card spending grew by 77 percent year-on-year in Q4, driven by a higher activation rate. According to analysts, the factors that contributed to this growth included tie-ups in credit cards.

“The bank has recently tied up with Emirates, while its Amazon co-branded card is performing well. RBI master guidelines on credit and debit cards should not have any impact,” Motilal Oswal analysts said.

The SME loan portfolio grew by 33.6 percent y-o-y and 11.3 percent q-o-q. Overseas loans also contributed significantly, growing 9.8 percent y-o-y.

“Overseas loan book growth was primarily driven by India-linked trade finance book,” stated a report by Systematix Group.

Fall in NPAs

With the recovery in the economy, the financial position of customers, including individuals, improved gradually, leading to a reduction in non-performing assets or bad loans.

“The last two years were very bad in terms of growth and repayment,” said Vinod Nair, a banking analyst. Now, new business growth is happening, he added.

ICICI Bank’s net NPA ratio declined to 0.76 percent on March 31 from 0.85 percent on December 31, 2021. Net deletions from gross NPAs, excluding write-offs and sale, were Rs 489 crore in the quarter.