ICICI Bank Ltd’s stand-alone net profit increased by 30.5% year-on-year for the December quarter. Operating profit, however, declined marginally and the entire increase in net profit is due to lower provisions. But then, a decline in the operating profit was on expected lines.
A look at the balance sheet of ICICI Bank shows that advances outstanding increased by Rs 12,491 crore at end-December, compared with end-September. The bank has certainly started to increase its loan book again.
During the third quarter, deposits went down by Rs 5,347 crore, between end-September and end-December.
The rise in advances was funded by borrowings, which increased by Rs 8,317 crore, and by drawing down investments and cash balances. Analysts say the bank borrowed internationally to fund its domestic book.
The proportion of low-cost current and savings account deposits remained more or less the same at 44.2%, compared with 44% at end-September. Now that interest rates on deposits have been revised up, deposit growth should follow.
The bank maintained its net interest margins at the same level as the previous quarter. Operating expenses rose as a result of branch additions.
Asset quality continued to improve, with its net non-performing assets ratio coming down to 1.16% as at end-December, compared with 1.37% at end-September. What’s more, the provision cover ratio, at 71.8%, is now more than Reserve Bank of India’s stipulated norm of 70%. Restructured assets are more or less at the same level as at end-September.
The ICICI Bank stock has outperformed the Bombay Stock Exchange’s Bankex index in the past quarter. Looking ahead, it should mirror the Bankex, simply because much of the turnaround story is now behind it.
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