ICICI Bank conducted a concall on 27 April 2024 to discuss the financial results for the quarter ended March 2024 and prospects of the bank. Sandeep Bakhshi, MD&CEO of the bank addressed the call:

Highlights:

The strategic focus of the bank continues to be on growing core operating profit through the 360-degree customer centric approach and by serving opportunities across ecosystems and micro markets.

The bank continues to operate within strategic framework to strengthen franchise and expand technology and digital offerings.

Total deposits grew by 19.6% yoy and 6.0% sequentially end March 2024. Bank’s average liquidity coverage ratio for the quarter was about 123%.

The domestic loan portfolio grew by 16.8% yoy and 3.2% sequentially end March 2024.

The retail loan portfolio grew by 19.4% yoy and 3.7% sequentially.

The business banking portfolio grew by 29.3% yoy and 5.7% sequentially.

The SME portfolio grew by 24.6% yoy and 3.8% sequentially.

The rural portfolio grew by 17.2% yoy and 4.5% sequentially.

The domestic corporate portfolio grew by 10.0% yoy and was flat sequentially.

The net NPA ratio was 0.42% end March 2024 compared to 0.44% end December 2023 and 0.48% end March 2023.

The provisioning coverage ratio on NPAs was 80.3% end March 2024. In addition, the Bank continues to hold contingency provisions of Rs 13100 crore or about 1.1% of total loans end March 2024.

The capital position of the Bank continued to be strong with a CET-1 ratio of 15.60% and total capital adequacy ratio of 16.33% end March 2024, after reckoning the impact of proposed dividend.

Looking ahead, the bank see many opportunities to drive risk calibrated profitable growth.

The bank will continue to make investments in technology, people, distribution and building brand.

Operational resilience is a key area of focus and the bank continues to work towards enhancing the same.

The bank will remain focused on maintaining a strong balance sheet with prudent provisioning and healthy levels of capital. The bank remains focused on delivering consistent and predictable returns to shareholders.

The Bank continued to work on increasing pricing, further refining credit parameters and optimising sourcing costs resulting in lower disbursements of personal loans during the quarter as compared to the previous quarter.

The credit card portfolio grew by 35.6% yoy and 6.5% sequentially.

The personal loans and credit card portfolio were 9.9% and 4.3% of the overall loan book respectively end March 2024.

The overseas loan portfolio, in US dollar terms, declined by 3.4% yoy end March 2024. The non-India linked corporate portfolio declined by 10.1% on a yoy basis.

The gross NPA additions were Rs 5139 crore in Q4FY2024 compared to Rs 5714 crore in the previous quarter. Recoveries and upgrades from gross NPAs, excluding write-offs and sale, were Rs 3918 crore in Q4FY2024 compared to Rs 5351 crore in the previous quarter.

The gross NPA additions from the retail, rural and business banking portfolio were Rs 4928 crore in Q4FY2024 compared to Rs 5482 crore in the previous quarter.

The gross NPA additions from the corporate and SME portfolio were Rs 211 crore compared to Rs 232 crore in the previous quarter.

The gross NPAs written-off during the quarter were Rs 1707 crore.

There was sale of gross NPAs of Rs 327 crore in Q4FY2024 compared to Rs 36 crore in the previous quarter.

The sale of NPAs includes about Rs 21 crore in cash and about Rs 64 crore of security receipts. As these NPAs were fully provided, the bank continues to hold provisions against the security receipts.

The non-fund based outstanding to borrowers classified as non-performing was Rs 3671 crore end March 2024 compared to Rs 3694 crore end December 2023. The Bank holds provisions amounting to Rs 2090 crore against this non-fund based outstanding.

The total fund based outstanding to all standard borrowers under resolution as per various guidelines declined to Rs 3059 crore or about 0.3% of the total loan portfolio end March 2024. Of this Rs 2545 crore was from the retail, rural and business banking portfolio and Rs 514 crore was from the corporate and SME portfolio. The Bank holds provisions of Rs 975 crore against these borrowers, which is higher than the requirement as per RBI guidelines.

The net interest margin was 4.40% in Q4FY2024 compared to 4.43% in the previous quarter and 4.90% in Q4 of last year. The net interest margin was 4.53% in FY2024.

The impact of interest on income tax refund on net interest margin was nil in Q4 of this year compared to 4 bps in the previous quarter and nil in Q4 of last year.

The cost of deposits was 4.82% in Q4FY2024 compared to 4.72% in the previous quarter.

Of the total domestic loans, interest rates on 49% of the loans are linked to the repo rate, 2% to other external benchmarks, 17% to MCLR and other older benchmarks. The balance 32% of loans has fixed interest rates.

Fee income increased by 12.6% yoy to Rs 5436 crore in Q4FY2024. Fees from retail, rural, business banking and SME customers constituted about 77% of the total fees in Q4FY2024

Non-interest income, excluding treasury, grew by 15.7% yoy to 59.30 crore in Q4 of 2024.

The Bank had about 141,000 employees end March 2024 up by about 12,000 in the last 12 months and by about 180 in Q4FY2024.

Branch count has increased by 623 in the last 12 months and by 152 in Q4FY2024. The bank had 6,523 branches end March 2024.

The technology expenses were about 9.4% of operating expenses in FY2024.

The total provisions were Rs 718 crore or 0.24% of average advances in Q4FY2024. The total provisions during FY2024 decreased by 45.3% yoy to Rs 3643 crore.

The provisioning coverage on NPAs was 80.3% end March 2024.

In addition, the bank holds Rs 975 crore of provisions on borrowers under resolution. Further, the Bank continues to hold contingency provision of Rs 13100 crore end March 2024.

At the end of March, the total provisions, other than specific provisions on fund-based outstanding to borrowers classified as non-performing, were Rs 23459 crore or 2.0% of loans.

There was a treasury loss of Rs 281 crore in Q4FY24 compared to a loss of Rs 40 crore in Q4FY2023.

The loan and non-fund based outstanding to performing corporate and SME borrowers rated BB and below was Rs 5528 crore end March 2024 compared to Rs 5853 crore end December 2023. This portfolio is about 0.47% of advances end March 2024.

The total outstanding to NBFCs and HFCs was Rs 77068 crore (6.5% of advances) end March 2024 compared to Rs 78484 crore end December 2023.

The builder portfolio including construction finance, lease rental discounting, term loans and working capital was Rs 48292 crore end March 2024 compared to Rs 45685 crore end December 2023. About 2.7% of the builder portfolio end March 2024 was either rated BB and below internally or was classified as non-performing, compared to 3.1% end December 2023.