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ICICI Bank's (IBN) Q4 Earnings Improve on Rising Loan Demand

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ICICI Bank’s (IBN - Free Report) fourth-quarter fiscal 2022 (ended Mar 31) net income was INR70.19 billion ($926 million), jumping 59% from the prior-year quarter.

Shares of IBN have rallied 2.9% in pre-market trading, gaining investors’ confidence on solid quarterly performance. The full-day trading session will display a clearer picture.

Results were driven by a rise in net interest income, non-interest income and growth in loans and deposits. Provisions also declined during the quarter. However, higher operating expenses posed a headwind.

In fiscal 2022, net income of INR233.39 billion ($3.1 billion) surged 44% from the prior year.

Net Interest Income & Fee Income Up, Expenses Rise

Net interest income rose 21% year over year to INR126.05 billion ($1.7 billion). Net interest margin was 4.00%, up 16 basis points (bps).

Non-interest income (excluding treasury income) was INR46.08 billion ($608 million), up 11%. Fee income increased 14% to INR43.66 billion ($576 million). Fees from retail, business banking and SME customers constituted approximately 77% of total fees in the quarter.

Treasury income gain was INR1.29 billion ($17 million) in the reported quarter against a treasury loss of INR0.25 billion ($3 million) in the year-ago quarter.

Operating expenses totaled INR70.49 billion ($930 million), increasing 17%.

Loans & Deposits Increase

As of Mar 31, 2022, ICICI Bank’s total advances were INR8,590.2 billion ($113.3 billion), up 17% year over year. The growth was driven by a solid rise in demand for retail loans (excluding rural loans), which improved 20% and accounted for 52.8% of the total loan portfolio.

Total deposits grew 14% to INR10,645.72 billion ($140.5 billion).

Credit Quality Improves

As of Mar 31, 2022, net non-performing assets (NPA) ratio was 0.76%, down 38 bps sequentially. Recoveries and upgrades (excluding write-offs and sale) of NPAs were INR46.93 billion ($619 million) in the quarter.

Gross NPA deletions were INR4.89 billion ($65 million) compared with INR1.91 billion ($25 million) in the prior quarter. During the fiscal fourth quarter, gross NPAs additions were INR42.04 billion ($555 million), while gross NPA written off was INR26.44 billion ($349 million).

Provisions (excluding provision for tax) plunged 63% from the prior-year quarter to INR10.69 billion ($141 million). This included an additional contingency provision of INR10.25 billion ($135 million) made on a prudent basis during the reported quarter. Thus, as of Mar 31, 2022, ICICI Bank held a total contingency provision of INR74.5 billion ($983 million).

Capital Ratios Strong

In compliance with the Reserve Bank of India's guidelines on Basel III norms, ICICI Bank's total capital adequacy was 19.16% and Tier-1 capital adequacy was 18.35% as of Mar 31, 2022. Both the ratios were well above the minimum requirements.

Our Take

ICICI Bank’s quarterly performance was impressive on the back of a robust rise in demand for consumer loans. Growth in net interest income was a major tailwind, which is expected to support the company's financial performance, going forward. However, elevated expenses are likely to adversely impact the bank’s bottom line.
 

ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited Price, Consensus and EPS Surprise

ICICI Bank Limited price-consensus-eps-surprise-chart | ICICI Bank Limited Quote

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.

Earnings Dates of Other Foreign Banks

Now we look forward to the earnings releases of UBS Group AG (UBS - Free Report) , HSBC Holdings (HSBC - Free Report) and Barclays (BCS - Free Report) .

Both UBS Group and HSBC are scheduled to announce first-quarter 2022 results on Apr 26. Barclays is slated to report the same on Apr 28.


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