ICICI Bank, one of India’s largest private sector banks, has reported a first quarter net profit of Rs1,815 crore which grew 36.2% year-on-year (y-o-y) aided by strong net interest income growth, steady fee income and lower provisions. For the quarter to end-June, the lender’s net interest income grew 32.4% y-o-y and 2.8% quarter-on-quarter (q-o-q) to Rs3,193 crore aided by 5.8% q-o-q growth in its loan book. 

 

Despite increase in revenues and profits, ICICI Bank’s capital adequacy ratio deteriorated from 19.6% to 18.54%, while tier-I capital adequacy ratio slumped from 13.4% to 12.78%. However, it posted 40 basis percentage points, y-o-y improvement in its net interest margins to 3.01%.
 

Its operating profit rose 32%, y-o-y, to Rs2,949 crore for the quarter ended June 2012, which is higher than the preceding three quarters y-o-y growth rates of 27%. However, it declined sequentially from Rs3,111 crore. It managed to boost operating profit despite sub-par revenues which grew only by 22% when compared to its past three quarter y-o-y growth rates of 26%. Its fee income grew by 4.37% y-o-y, to Rs1,647 crore. The bank quotes at a respectable return on equity of 12%. However, it commands single digit valuations when its market capitalisation is quoting at only eight times its operating profits. This is due to the fact that the bank had hit a plateau recently, in terms of operating profits while the banking industry is going through a lean patch.

 

Despite a good showing by the bank, areas of concerns are its decline in its capital adequacy ratio, from 19.57% to 18.54% and an increase in its current account-savings account (CASA) ratio from 41.9% it recorded during June 2011 quarter to 40.6% for the current quarter. This was due to the fact that savings account deposits increased by 17%, y-o-y, to Rs77,923 crore, while current account was at Rs30,754 crore. Its loan book advanced increased by 22% y-o-y to Rs2,68,430 crore for the current quarter.

 

The drawbacks seems minor as its asset quality improved, when its non-performing asset ratio decreased by 30 basis percentage point to 0.61%, for this quarter when compared to 0.91% for the corresponding quarter last year. It remained stable on a sequential basis. The bank’s provision coverage ratio was 80.6% for the current quarter when compared to 76.9% for the June 2011 quarter. Its restructured asset stood at Rs4,172 crore as on 30 June 2012. 

 

In its press release, the bank said that it is continuing its strategy of pursuing profitable growth. In this direction, the bank continues to leverage its strong corporate franchise, its international presence and its expanded branch network. The bank has 2,755 branches as 9.366 ATMs as of 30 June 2012.