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ICICI Bank Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from ICICI Bank Limited (ICICIBANK) Q2 FY24 Earnings Concall

  • Loan Growth And Credit Quality
    • Domestic loan portfolio grew 19.3% year-on-year and 4.8% sequentially at September 30, 2023.
    • The retail loan portfolio grew 21.4% year-on-year and 5.5% sequentially. Retail loans were 46% of total loans.
    • The net NPA ratio declined to 0.43% at September 30, 2023 from 0.48% last quarter and 0.6% a year ago.
    • There were net additions of INR 1.16 billion to gross NPAs this quarter compared to INR 18.07 billion last quarter.
    • The Bank continues to hold contingency provisions of INR 131 billion or 1.2% of total loans.
  • Net Interest Income
    • NII increased by 23.8% year-on-year to INR 183.08 billion in Q2 FY2024.
    • The net interest margin was 4.53% this quarter compared to 4.31% in Q2 last year.
    • The sequential decline in NIM reflects the lagged impact of higher term deposit rates.
    • The domestic NIM was 4.61% this quarter compared to 4.45% in Q2 last year.
  • Fee Income And Profitability
    • Fee income increased by 16.2% year-on-year to INR 52.04 billion in Q2 FY2024.
    • Fees from retail, rural, business banking and SME customers were 78% of total fees.
    • Growth in fees reflects increased digital adoption and transactions by customers.
    • PBT excluding treasury grew by 35.7% year-on-year to INR 137.31 billion.
    • The core operating profit increased by 21.7% year-on-year to INR 143.14 billion.
    • PAT grew by 35.8% year-on-year to INR 102.61 billion in Q2 FY2024.
  • Operating Expenses
    • Operating expenses increased by 20.8% year-on-year in Q2 FY2024.
    • Employee expenses increased by 29% year-on-year due to increase in headcount to 139,000.
    • Number of employees increased by 29,000 in last 12 months.
    • Non-employee expenses increased 16.3% year-on-year due to technology and retail business expenses.
    • Branch count increased by 174 in Q2 FY2024 to 6,248 branches.
  • Provisions And Digital Offerings
    • Total provisions declined sequentially to INR 5.83 billion in Q2 FY2024.
    • Provisioning coverage ratio was 82.6% and contingency provisions were INR 131 billion.
    • 71% of trade transactions were done digitally in Q2 FY2024, up 29.7% year-on-year.
    • Digital platforms seeing increased adoption for transactions and payments.
  • Unsecured Loans Portfolio
    • Trends in ICICI Bank’s unsecured loans portfolio are stable based on monitoring of delinquencies and credit costs.
    • Focus has been on existing customers with credit scores above a threshold and assessing leverage.
    • Industry outlook shows distinction between smaller and larger ticket size segments.
  • Recovery and Upgrades
    • Retail slippages have been around 3% of portfolio, with recovery/upgrades at 60% of that amount.
    • Expect the trends in recovery and upgrades to remain reasonably stable going forward.
    • Could see some quarterly variations.
  • Branch Expansion Strategy
    • Added about 350 branches in H1 FY2024.
    • Expansion is based on growth opportunities in micro-markets and not driven by expansion strategies of other banks.
  • Mortgage and Auto Loan Growth
    • Mortgage portfolio has been growing at 16-17% year-on-year.
    • Auto loans have been growing at above 20% year-on-year.
    • Commercial vehicle loans growing at 12-14% now.
  • Margin Outlook
    • Expect some further moderation in margins from Q2 levels.
    • But full year margin likely to be similar to FY2023 levels.
    • Deposit repricing impact will continue over next few quarters.
  • Yield on Loans
    • 5 basis points decline in yields due to computation conventions.
    • Some pricing competition in the market but not a major movement in yields.
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