MUMBAI (Reuters) – ICICI Bank, India’s second-largest private lender by assets, reported higher quarterly profit on Saturday, helped by healthy loan growth and net interest income, although its lending margins shrank.
The bank’s standalone net profit rose 14.8% to a record 117.92 billion rupees ($1.37 billion) in the October-December quarter, above the average analyst forecast of 114.94 billion rupees, according to data compiled by LSEG.
ICICI Bank’s total loans rose 13.9% from the same period a year earlier, while deposits grew by 14.1%. Net interest income, the difference between interest earned on loans and paid on deposits, increased by 9.1% to 203.71 billion rupees.
Indian banks have enjoyed double-digit loan growth, led by strong retail demand. But they are scrambling to raise deposits to meet credit growth needs, which has led them to either raise rates on deposits or scale back loan growth, in turn squeezing margins.
ICICI Bank’s net interest margin, a key gauge of profitability, fell to 4.25% from 4.43% a year earlier and from 4.27% in the previous quarter.
Provisions and contingencies, the funds set aside for potential bad loans, rose nearly 17% to 12.27 billion rupees from 10.49 billion rupees a year earlier.
Other Indian banks, including Kotak Mahindra Bank, HDFC Bank and RBL Bank, all raised provisions in the third financial quarter due to stress in unsecured, agriculture and microfinance loans.
ICICI Bank’s asset quality was largely stable, with the gross non-performing assets (NPA) ratio at 1.96% at the end of December, versus 1.97% three months earlier.
The bank typically experiences higher NPA additions from the kisan credit card portfolio, a credit scheme for farmers in India, during the first and third financial quarters, ICICI said in a release.
Shares of ICICI Bank ended 0.6% higher ahead of the results on Friday.
($1 = 86.2000 Indian rupees)
(Reporting by Siddhi Nayak in Mumbai; Editing by William Mallard)
