Discover many opportunities to grow core operating profit in a risk-calibrated manner: Sandeep Batra, ICICI Bank
ICICI Bank, India’s second-largest private lender, reported an impressive tripling of its stand-alone net profit to Rs. 4,403 crore for the quarter ended March 31, 2021 compared to Rs. 1,221 crore for the same period last year. This increase is mainly due to a substantial increase in personal loans thanks to digital initiatives and the halving of the allowance for bad debts.
Here are the main takeaways from grassroots management comments.
Large growth loans
The overall domestic loan portfolio grew 18% year-on-year, far outpacing overall banking sector growth of 5.6%.
At the same time, the retail loan portfolio grew 20% year-over-year and 7% sequentially. Within the retail portfolio, the mortgage loan portfolio grew 22% year-on-year, merchant banking 41%, rural loans 27%, commercial vehicle and equipment loans 8% and the auto loan portfolio by 13%.
In addition, the growth of the personal loan and credit card portfolio was 9% year-on-year.
On the corporate portfolio side, the bank recorded growth of 13% year-on-year and 5% sequentially. Overall, the domestic loan portfolio grew 18% year-over-year and 6% sequentially.
Growth in core operating income
In the quarter ended March 31, 2021, core operating income (earnings before provisions and taxes, excluding cash income) increased 20% year-on-year to Rs. 8,565 crore ($ 1.2 billion US).
Additionally, the bank had a net worth of approximately Rs. 1.5 lakh crore and total capital adequacy ratio of 19.12%, as of March 31, 2021.
Mr. Sandeep Batra, Executive Director, said: “Looking ahead, we see many medium-term opportunities to increase core operating profit in a risk-calibrated manner. We continue to innovate, invest in technology and conduct analytics to gain deeper insights into customer behavior. “
Growth in deposits
Deposit growth continued to be robust, with total deposits increasing 21.0% year-on-year to Rs. 9.3 lakh crore as of March 31, 2021.
Average current account and savings deposits (CASA) increased 24% year-on-year in Q4-2021; The average CASA ratio stood at 42% in Q4-2021. Term deposits increased 18% year-on-year to Rs. 5 lakh crore as of March 31, 2021.
The bank’s net non-performing assets (ANP) ratio fell to 1.14% as at March 31, 2021 from 1.26% (on a pro forma basis) as at December 31, 2020 and 1.41% as at March 31, 2020 While the provision ratio coverage was 77.7% at March 31, 2021.
ICICI Bank is well positioned with best-in-class growth rates and protection against Covid-19 provisions. The bank made an additional provision of Rs. 1,000 crore (US $ 137 million) in Q4-2021 and held Covid-19 related provisions of Rs. 7,475 crore (US $ 1.0 billion) as of 31 March 2021.
“The portfolio’s performance in the face of the pandemic has demonstrated the robustness of our underwriting and our portfolio selection in recent years. Even after taking into account the higher NPA additions due to the pandemic, we have maintained healthy supply coverage, including making our supply policy more conservative. Additionally, we continue to hold provisions of Rs related to Covid-19. 7,475 crores. According to Sandeep Batra.
Digital channels like internet, mobile banking, point of sale and others accounted for over 90% of savings account transactions in fiscal year 2021. Mobile banking transaction volume grew by 61% over one year in Q4-2021.
“Our micro-market strategy to exploit opportunities based on market potential and our 360-degree customer coverage using ICICISTACK have played an important role in expanding our franchise and deepening relationships with our clients. We continue to strengthen our position in the digital payments ecosystem by creating seamless user journeys, facilitating higher transaction rates and generating repeat transactions, ”added Sandeep Batra.
ICICI Bank’s iMobile Pay, which offers payment and banking services to customers of any bank, recorded more than 15 million activations from non-ICICI Bank customers within four months of its launch. It has experienced high customer engagement through repeated use of features like Pay2Contact, Scan to Pay and Bill Payments among others.
On the way forward, Sandeep Batra said, “We see many medium-term opportunities to increase core operating profit in a risk-calibrated manner. We will calibrate our near-term growth based on the operating environment and conditions resulting from the second wave of the Covid-19 pandemic. We continue to innovate, invest in technology and conduct analytics to gain deeper insights into customer behavior. ”
The Bank will continue to focus on delivering consistent and predictable returns to its shareholders, added Sandeep Batra.