We expect near-term NIM to remain stable: Sandeep Batra, ICICI Bank
Mumbai: ICICI Bank, a leading private sector bank in India, anticipates that its net interest margins (NIM) will remain stable in the near term, highlighting a carefully calibrated approach to profitability amid changing rate conditions. Sandeep Batra, Executive Director at ICICI Bank, said during the Q2 FY25 earnings call, “We expect near-term NIM to broadly remain stable until the rates cut cycle starts. There would be a lead lag in terms of floating rate loan portfolio repricing faster than the fixed-rate deposit base. The current expectation is of a relatively moderate rates cut cycle in India. Our objective is to maximise overall profitability through optimising various levers including NIM as one of the anchors."
ICICI Bank posted a 14.5% growth in net profit to ₹11,746 crore in the quarter ended September 30, 2024, compared to the same period last year. The net interest income (NII) increased by 9.5% to ₹20,048 crore in Q2 FY25, from the same period last year. Core operating profit grew by 12.1% year-on-year to ₹16,043 crore.
The bank’s cost-to-income ratio is at 38.6%, the best in the last seven quarters, showcasing operating efficiency. The capital position of the bank continues to be strong, with a CET-1 ratio of 15.96% and a total capital adequacy ratio of 16.66% as of September 30, 2024. “We aim to be the trusted financial services provider of choice for our customers and deliver sustainable returns to our shareholders. We focus on building a culture where every employee in the Bank serves customers with humility and upholds the values of brand ICICI,” he added.
Digital Initiatives:
The bank has processed 76% of fixed deposits through digital channels, with the remainder handled offline, during the first six months of the current financial year. Even 46% of the personal loans were digitally disbursed, while the rest were digitally processed and physically assisted, in H1 FY2025. Approximately 72% of trade transactions were conducted digitally in Q2 FY25, and the volume of transactions done through the Trade Online platform grew by 20% year-on-year in this quarter. Additionally, the bank holds a 32.4% market share by value in electronic toll collections through FASTag, with a 19.6% year-on-year growth in Q2 FY25. “We continue to enhance the use of technology in our operations to provide simplified solutions to customers,” said Sandeep Batra.
Rise in Deposits:
ICICI Bank's deposit portfolio showed robust growth, with total period-end deposits increasing by 15.7% year-on-year to ₹14,97,761 crore in Q2 FY25. The period-end term deposits, which constitute 59.4% of the total deposits, increased by 15.9% year-on-year and 5.5% sequentially as of September 30, 2024. During this quarter, average deposits grew by 15.6% year-on-year, while average term deposits and CASA deposits grew by 19.3% and 10.4% year-on-year, respectively, as of September 30, 2024.
Loan Growth:
In terms of loan growth, the bank's overall loan portfolio grew by 15% year-on-year to ₹12,77,240 crore in Q2 FY25. The retail loan portfolio, which constitutes 53% of the total loan portfolio, grew by 14.2% year-on-year. The largest share of retail loans is held by mortgage loans, at 60.4%, with an average ticket size of ₹36 lakh. The vehicle loan portfolio, which comprises 13.6% of the bank's retail portfolio, is made up of 87% new vehicle loans and 13% used vehicle loans. The personal loan portfolio grew by 17.7%, while the credit card portfolio saw an 8% year-on-year increase.
He also added, "At ICICI Bank, our strategic focus continues to be on growing profit before tax excluding treasury through the 360-degree customer centric approach and by serving opportunities across ecosystems and micromarkets. We continue to operate within our strategic framework to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing delivery capabilities are focus areas for our risk calibrated profitable growth."
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