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ICICI Bank reported a steady performance, with net interest income growing 22 per cent in the March quarter. This was backed by an 18 per cent growth in the domestic loan book, improvement in net interest margins and stable asset quality. However, fee income growth continued to remain lacklustre, rising by a mere 2.7 per cent over the corresponding year-ago period.
Notable has been ICICI Bank’s 38 basis points improvement in net interest margin (NIM) in FY13. The bank maintained a NIM of above 3 per cent through FY13 on the back of a healthy deposit mix. In the March quarter, the bank improved its NIM sequentially by 26 basis points to 3.33 per cent.
At 41.9 per cent, the CASA ratio continued to remain healthy in the March quarter, and was 100 basis points more than in the previous quarter. The bank has expanded its branch network over the past three years and had 3,100 branches as of March 2013.
The branch expansion has in turn led to market-share gains in savings deposit over the years. The CASA per branch for ICICI Bank still remains at Rs 39 crore as against Rs 49 crore in March 2010 (HDFC Bank’s current CASA/branch at Rs 46 crores).
Asset quality remained steady with net non-performing assets (NPAs) at 0.64 per cent of loans, similar to that in the December quarter.
However, the provisioning for bad loans as a per cent of the overall gross NPAs declined by 90 basis points from the December quarter.
The addition to the bank’s restructured book has been Rs 788 crore in the March quarter, lower than the earlier guidance of Rs 1,000 crore. While the management remains cautious on the asset quality in FY14, the provisioning costs as a per cent of loans are expected to be 75 basis points in spite of further slippages. ICICI Bank continues to maintain a healthy Tier-I capital adequacy of 12.8 per cent and looks set to meet the Basel III norms. The overseas subsidiaries have excess capital adequacy of above 30 per cent.
The bank will try to repatriate capital back from its subsidiaries, subject to regulatory and tax considerations. This should be giving the bank sufficient capital cushion to improve returns.
The bank has been able to increase its return on assets from 1.4 per cent in FY12 to 1.7 per cent in FY13.
>radhika.merwin@thehindu.co.in
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