Sandeep Batra, ICICI Bank: Strategic focus continues to grow core operating profit

ICICI Bank, a leading private lender, reported the highest-ever net profit in the quarter ended June 30, 2023, registering a growth of 39.7% year-on-year to Rs 9,648 crore. The core operating profit increased by 35.2% year-on-year to Rs 13,887 crore in the quarter. The Bank reported the lowest gross and net NPA ratios in the last 8 years at 2.76% and 0.48% respectively. The Bank’s Net Interest Margin (NIM) demonstrated steady growth, reaching 4.78% in Q1 FY24, an improvement from 4.01% in Q1 FY23. Net Interest Margin (NIM) expanded to 4.78% in Q1 FY24 from 4.01% a year earlier. 

Sandeep Batra, Executive Director, ICICI Bank said, "Our strategic focus continues to be on growing our core operating profit through the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets. We continue to operate within our strategic framework and strengthen our franchise, enhance our delivery and servicing capabilities, and expand our technology and digital offerings."

Rise in Deposits:

ICICI Bank's deposit portfolio also showed strong growth, with a total period-end deposit increasing by 17.9% year-on-year to Rs 12,38,737 crore in Q1 FY24. While the period-end term deposit increased by 25.8% year-on-year to Rs 7,02,511 crore. The average current account deposits increased by 9.2% year-on-year, and the average savings account deposits increased by 5.6% year-on-year.

Credit Growth:

In terms of loan growth, the Bank's overall loan portfolio grew by 18.1% year-on-year as on June 30, 2023. The domestic loan portfolio grew by 20.6% year-on-year and 4.0% sequentially as on June 30, 2023. The retail loan portfolio which constitutes 54.3% of the total loan portfolio grew by 21.9% year-on-year. The business banking portfolio grew by 30.4% year-on-year and the SME business, comprising borrowers with a turnover of less than Rs 250 crore, grew by 28.5% year-on-year.

The rural portfolio grew by 17.6% year-on-year. Growth in the domestic corporate portfolio was 19.3% year-on-year as on June 30, 2023. 72.2% of the total loan portfolio, excluding, retail and rural, was rated A- and above as on June 30, 2023.

Commenting on credit growth, he said, “We are doing reasonably well and there are enough and more opportunities for us to grow using all the data that we have at our end. We will continue to decongest processes, invest in technology and keep on growing in a risk calibrated manner.”

Asset Quality:

The asset quality of ICICI Bank has improved as indicated by the decline in the gross NPA ratio from the previous year. The Bank’s gross NPA ratio declined to 2.76% at the end of June 2023, from 2.81% in the last quarter. Notably, the net NPA ratio remained stable at 0.48% as of June 30, 2023, showcasing the Bank's robust risk management measures.

As of June 30, 2023, the total fund based outstanding to all borrowers under resolution, excluding NPAs, decreased to Rs 3,946 crores, which accounts for 0.4% of the total advances. This amount was lower compared to Rs 4,508 crores reported on March 31, 2023. The Bank has allocated provisions of Rs 1,224 crore for these borrowers under resolution, and in addition, maintains contingency provisions amounting to Rs 13,100 crore as of June 30, 2023.

Digital initiatives:

ICICI Bank's growth strategy centers around leveraging digital and technology across its businesses to increase risk-calibrated core operating profit. The bank has witnessed significant growth in the adoption of its digital platforms by customers. Notably, iMobile Pay has seen over one crore activations by non-ICICI Bank account holders, and InstaBIZ has garnered approximately 2,30,000 registrations from such customers. The Merchant STACK offers various banking and value-added services to retailers, online businesses, and e-commerce firms, leading to an impressive growth in merchant acquiring transactions through UPI. In Q1 FY24, the Bank reported a 30% market share by value in electronic toll collections through FASTag, demonstrating a significant 16% year-on-year growth in collections.

As of June 30, 2023, the Bank has a network of 6,074 branches, 16,731 ATMs, and cash recycling machines. The bank inaugurated 174 branches during the recent quarter, taking its overall tally to over 6,000. Additionally, the Bank has hired 27,650 people in the last year, closing the overall employee strength to over 1.35 lakh.

ICICI Bank's Executive Director further added, “We will continue to expand our branch network based on our overall growth strategy, assessment, what's happening on the micro markets, and including the fact that we have a pretty strong digital profit making. We will be guided by what we are seeing on the ground internally and not necessarily get influenced by competitors' approach.”