MUMBAI: ICICI Bank Ltd, India’s second-largest private lender, posted better-than-expected earnings on strong growth in its loan book.
Net income grew 8.5% to 137 billion Indian rupees (US$1.5bil) in the three months ended March 31 from a year earlier, according to a statement by the lender last Saturday.
That topped the average estimate of 127.03 billion rupees in a Bloomberg survey of analysts.
Loans at the Mumbai-based bank jumped 15.8% year-on-year during the quarter, helped by an acceleration in business banking and rural lending.
Net interest income, or the difference between interest earned on loans and paid on deposits, expanded 8.4% during the quarter from a year earlier, while margins shrank to 4.32% from 4.41%.
The central bank has cut the repo rate by 125 basis points in the current easing cycle.
Loans are usually repriced faster than deposits, which reduces the gap between lending and deposit rates in a low interest rate environment and keeps margins under pressure.
ICICI Bank expects net interest margins to be range-bound in the current fiscal year, executive director Sandeep Batra told reporters during a conference call.
The lender also reported a treasury loss of 1.06 billion rupees in the quarter, compared with a gain of 2.39 billion rupees a year earlier.
Treasury income has come under pressure as bond yields rose following inflation concerns linked to the Middle East conflict.
The Reserve Bank of India’s (RBI) measures to support the rupee, including steps that pushed banks to unwind bearish positions, are also expected to have weighed on lenders’ treasury income.
The bank’s treasury loss in the quarter reflected the RBI’s forex measures, Batra said. The conflict in the Middle East also impacted market yields and consequently its treasury income, he added.
ICICI Bank’s gross non-performing assets stood at 1.4% at the end of March, compared with 1.53% previously. — Bloomberg
