ICICI Bank Q1 Results 2023: India’s second-largest private sector bank, ICICI Bank, has reported strong Q1 financial results for FY24. The private sector lender delivered a standout performance on a YoY basis, with a profit that jumped 40%. However, this quarter saw a substantial rise in NPAs at ICICI Bank.
Let’s focus on the key highlights of the bank’s performance and its share price analysis.
Key Highlights of ICICI Bank Q1 Results
- Net profit grew by 39.7% year-on-year to ₹ 9,648 crore (US$ 1.2 billion).
- NII grew by 38% year-on-year to ₹ 18,227 crore (US$ 2.2 billion).
- The gross NPA ratio declined to 2.76% at the end of Q1 FY23.
- The retail loan portfolio grew by 21.9% year-on-year to ₹ 5,43,527 crore (US$ 70.1 billion).
- The business banking portfolio grew by 30.4% year-on-year to ₹ 3,74,435 crore (US$ 46.5 billion).
- The digital banking platform continued to grow, with more than one crore activations on iMobile Pay by non-ICICI Bank account holders.
- NPA’s increased for ICICI Bank
- ICICI Bank’s Share Price is in the blue sky zone.
Core Operating Profit and Net Interest Income
ICICI Bank reported strong financial results for the first quarter of fiscal year 2023 (Q1 FY24), with core operating profit growing by 39.7% year-on-year to ₹ 9,648 crore (US$ 1.2 billion). The bank’s net interest income (NII) also grew by 38% year-on-year to ₹ 18,227 crore (US$ 2.2 billion), while non-interest income grew by 12% year-on-year to ₹ 5,183 crore (US$ 632 million).
In June 2023, the bank’s Net Interest Margin (NIM) declined to 4.78% from 4.90% in March of the same year. However, it remained higher than the 4.01% reported in the corresponding period a year ago.
Deposit and Loan Portfolio Growth
The bank’s total period-end deposits recorded a significant year-on-year growth of 17.9%, amounting to ₹12,38,737 crore (US$ 151.0 billion) at the end of June 2023. Sequentially, it has grown 4.9%. Additionally, ICICI Bank’s domestic loan portfolio showcased strong performance, growing by 20.6% year-on-year to ₹10,25,310 crore (US$ 125.0 billion) on June 30, 2023. Total term deposits were the main driver of deposit growth, increasing by 25.8% year-on-year and 9.8% sequentially.
Credit Growth
ICICI Bank’s credit growth was strong in the first quarter of FY24, with net domestic advances growing by 20.6% YoY and 4.0% sequentially. The retail loan portfolio was the star performer, growing by 21.9% year-on-year and 4.5% sequentially. The business banking portfolio also grew strongly, by 30.4% year-on-year and 3.8% sequentially.
Asset Quality and Provisioning
ICICI Bank’s gross NPA ratio declined to 2.76%, from 2.81% in Q4 FY23. This was driven by a combination of factors, including strong recoveries and upgrades of NPAs, as well as write-offs of gross NPAs.
The net NPA ratio remained unchanged at 0.48% at the end of June 2023, compared to the previous quarter. This is a significant improvement at the end of June 2022 from 0.70% a year ago.
The bank’s provision coverage ratio on NPAs was 82.4% on June 30, 2023, which is well above the regulatory requirement of 78.5%. This indicates that the bank is well-provisioned for any potential losses from its NPAs.
The bank’s total outstanding loans to borrowers seeking resolution decreased to ₹3,946 crore (US$481 million), or 0.4% of total loans. This is a significant improvement from ₹4,508 crore (US$549 million) in the previous quarter.
NPA of ICICI Bank Increased
The number of Non-Performing Assets (NPAs) added to ICICI Bank’s portfolio increased significantly in June 2023, while recoveries decreased. In that month, the net addition to NPAs, excluding write-offs and sales, totaled Rs 1,807 crore, a significant increase from Rs 14 crore in March 2023.
The total amount recovered or upgraded from NPAs in June 2023 was Rs 3,511 crore, which was lower than the Rs 4,283 crore reported in March 2023.
You can read about ICICI Bank’s Q4 results in 2023
Digital and Payment Platforms
ICICI Bank’s iMobile Pay app has been activated by over 10 million non-ICICI Bank account holders, and its InstaBIZ app has been registered by over 230,000 non-ICICI Bank account holders.
The bank’s UPI transactions for merchant acquisition increased in value by 88% YoY. It also had a 30% market share by value in electronic toll collections via FASTag.
About 70% of trade transactions were done digitally in the first quarter of this fiscal year. The value of transactions done through Trade Online and Trade Emerge platforms grows 1.4 times YoY.
Strong Capital Adequacy Ratio(CAR)
The capital adequacy ratios of ICICI Bank are significantly higher than the required minimums. The bank has a 17.47% total capital adequacy ratio and a 16.76% Tier 1 capital adequacy ratio. It shows that the bank has a sizable amount of cash on hand. So, it can easily absorb losses and support potential future expansion.
Stock Analysis of ICICI BANK
(NSE: ICICIBANK): ICICI Bank (NSE: 997) is a top pick for investors who are looking for a solid financial investment with a strong track record. The bank has a long history of profitability and stability. So its share price has also been consistently performing well with the Bank Nifty. ICICI Bank is also well-positioned for future growth due to its strong presence in India’s growing economy.
As per the daily chart of ICICI Bank, 960 will be a very strong support zone. Because in the past, we saw a double-top formation there. But ICICI Bank recently broke that zone with decent volume and made an all-time high of 1001.45 on July 21, 2023.
Below 960, 910–900 will be a very strong and critical support level for ICICI Bank. It will be under a bear’s grip only when it trades below that area.
As of right now, there is no indication of weakness; instead, the share price of ICICI Bank is trading in a blue-sky zone. But the leading indicators are showing some sort of overbought condition right now, so any pullback can’t be ruled out at the current level either.
But any pullback towards 960 will be a great opportunity to accumulate again for a further rally above 1000, as per its very simple price action. So, only a closing below 960 on the daily chart will bring bear territory for ICICI Bank.
ICICI Bank Share Return
On the NSE, ICICI Bank’s 52-week high (21-Jul-2023) was 1,001.45, and its 52-week low (21-Jul-2022) was 780.10.
For ICICI Bank shares, the annual return on investment is about 27%. The weekly and monthly returns were 4 percent and 8 percent, respectively. Its returns to investors over multiple time horizons are reasonable.
As of July 21, 2023, the bank’s total market capitalization was 7,00,03,746.44 lakhs, and its free-float market capitalization was 6,97,47,129.26 lakhs.
Conclusion
The ICICI Bank Q1 results for 2023 (FY24) indicate a strong performance in recording net profits on a YoY and QoQ basis. It’s in line with street expectations, though the rise in NPAs is a little concerning now. Also, the stock price has been performing consistently on the upside over the last year. So, any pullback will be a good opportunity to add this stock for long-term gain.
Disclaimer: Discussion on “Stock Analysis of ICICI Bank” is only for educational purposes. So, one shouldn’t consider it as a recommendation for any means of trading or investment. You can read our site’s disclaimer.
Source of financial data
ICICI Bank’s website.
