ICICI Bank (IBN Quick QuoteIBN - Free Report) released third-quarter fiscal 2023 (ended Dec 31, 2022) results. Net income was INR83.12 billion ($1.01 billion), up 34.2% from the prior-year quarter.

Results were driven by a rise in net interest income (NII) and non-interest income, higher rates, and growth in loans and deposits. However, provisions increased in the quarter. Also, higher operating expenses posed as the undermining factor.

NII & Fee Income Improve, Expenses Rise

NII rose 34.6% year over year to INR164.65 billion ($2 billion). The net interest margin was 4.65%, up 69 basis points (bps) year over year.

Non-interest income (excluding treasury income) was INR49.87 billion ($0.61 billion), up 1.8% year over year. Fee income increased 3.7% to INR44.48 billion ($0.54 billion).

In the reported quarter, IBN recorded a treasury income of INR0.36 billion ($4.4 million), down 59.1% from the year-ago quarter.

Operating expenses totaled INR82.17 billion ($1 billion), rising 16.1% year over year.

Loans & Deposits Increase

As of Dec 31, 2022, ICICI Bank’s total advances were INR9,740.47 billion ($117.6 billion), up 19.7% year over year. Growth was primarily driven by a solid rise in retail loan balances, business banking loans and SME loans.

Total deposits grew 10.3% year over year to INR11,220.49 billion ($135.5 billion).

Credit Quality: Mixed Bag

As of Dec 31, 2022, the net non-performing assets (NPA) ratio was 0.55%, down from 0.85% in the prior-year period. Recoveries and upgrades (excluding write-offs and sale) of NPAs were INR46.04 billion ($0.56 billion) in the quarter.

In the fiscal third quarter, there were net additions of INR11.19 billion ($0.14 billion) to gross NPA. Gross NPA additions were INR57.23 billion ($ 0.70 billion), while gross NPA written-off was INR11.62 billion ($0.14 billion).

Provisions (excluding provision for tax) increased 12.5% from the prior-year quarter to INR22.57 billion ($0.27 billion). This included an additional contingency provision of INR15.00 billion ($0.18 billion) made on a prudent basis in the reported quarter.

Capital Ratios Strong

In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 18.33% and Tier-1 capital adequacy was 17.58% as of Dec 31, 2022. Both ratios were well above the minimum requirements.

Our Take

ICICI Bank’s quarterly performance was impressive on a robust rise in demand for consumer loans. Growth in net interest income was a major tailwind, which is expected to keep supporting the company's financial performance. However, elevated expenses and macroeconomic concerns are major near-term headwinds.

ICICI Bank currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of US Banks

Washington Federal’s (WAFD Quick QuoteWAFD - Free Report) first-quarter fiscal 2023 (ended Dec 31, 2022) earnings of $1.16 per share handily surpassed the Zacks Consensus Estimate of $1.11. The figure reflects a year-over-year jump of 63%.

Results were primarily supported by robust loan balances and an increase in net interest income. However, a substantial increase in provision for credit losses, rising expenses and a decrease in other income were headwinds for WAFD.

Bank of New York Mellon Corporation’s (BK Quick QuoteBK - Free Report) fourth-quarter 2022 adjusted earnings of $1.30 per share surpassed the Zacks Consensus Estimate of $1.22. The bottom line reflects a rise of 25% from the prior-year quarter. Our estimate for earnings was $1.09.

BK’s results were aided by a rise in net interest revenues. However, asset balances witnessed a decline, which was a negative. Higher expenses and lower fee revenues hurt BK’s results to some extent.