ICICI Bank Q3 results: Key takeaways and how it stacks up against HDFC Bank

ICICI Bank, India’s second-largest private-sector lender, has reported a 25% increase in its standalone net profit for the third quarter as revenue rose and provisions fell.

Net profit for the quarter ended December 31, 2021 rose to Rs 6,194 crore from Rs 4,940 crore a year earlier.

Net interest income—interest earned minus interest expended—grew 23% to Rs 12,236 crore from Rs 9,912 crore. Non-interest income, excluding treasury income, increased 25% to Rs 4,899 crore from Rs 3,921 crore.

The bank’s core operating profit—profit before provisions and tax, excluding treasury income—increased 25% year-on-year to Rs 10,060 crore from Rs 8,054 crore.

Key takeaways from ICICI Bank’s Q3 results

1) The net interest margin widened to 3.96% from 3.67% a year earlier but shrank from 4% in the second quarter.

2) Provisions (excluding provision for tax) declined 27% year-on-year to Rs 2,007 crore.

3) Retail loan portfolio grew 19% year-on-year and 5% sequentially. It comprised 61% of the total loan portfolio.

4) Total deposits increased 16% year-on-year and 4% sequentially to Rs 10.17 trillion at December 31, 2021.

5) CASA deposits grew 21.6%, and now comprise 47.2% of total deposits.

6) Net non-performing assets declined by 10% sequentially to Rs 7,344 crore at December 31, 2021.

7) The net NPA ratio declined to 0.85% at December 31 from 0.99% at September 30; Gross NPA ratio fell to 4.13% from 4.82%.

8) Total capital adequacy at December 31 was 19.79% and Tier-1 capital adequacy was 18.81%, compared with the minimum regulatory requirements of 11.7% and 9.7%, respectively.

ICICI Bank versus HDFC Bank

HDFC Bank, India’s most valued lender, earlier this month reported strong earnings growth for the third quarter thanks to an increase in advances and a decline in provisions for possible bad loans.

HDFC Bank’s standalone net profit rose 18.1% to Rs 10,342.2 crore for the three months ended Dec. 31. This means ICICI Bank’s profit growth exceeded HDFC Bank’s, albeit at a lower base.

HDFC Bank’s net interest margin stayed at 4.1% while ICICI Bank managed to expand its NIM.

HDFC Bank’s net interest income grew 13% to Rs 18,443.5 crore. This is again a far slower pace than ICICI Bank’s, but the NII is still about 50% larger in absolute terms.

HDFC Bank’s total deposits increased 13.8% to Rs 14.46 trillion, slower than ICICI’s 16% growth but on a much higher base. However, HDFC’s current and saving account (CASA) deposits grew at the faster pace of 24.6%. Both banks are neck and neck when it comes to the share of CASA deposits in total deposits.

HDFC Bank’s asset quality is much better than ICICI Bank’s. HDFC Bank’s gross NPA ratio was at 1.26% as on December 31 while net NPA was 0.37%. In comparison, ICICI Bank’s gross NPA ratio is more than thrice and net NPA is more than double.