ICICI Bank Unleashed Q2 FY22 Results

The Board of Directors of ICICI Bank Limited (NSE: ICICIBANK, BSE: 532174,  NYSE: IBN) at its meeting held at Mumbai today, approved the standalone and consolidated accounts of the Bank for the quarter ended September 30,  2021 (Q2-2022). The statutory auditors have conducted a limited review and have issued an unmodified report on the standalone and consolidated financial statements for the quarter ended Q2-2022. 

Profit & loss account 

∙ The core operating profit (profit before provisions and tax, excluding  treasury income) increased by 23% year-on-year to ₹ 9,518 crore (US$  1.3 billion) in Q2-2022 from ₹ 7,719 crore (US$ 1.0 billion) in the quarter  ended September 30, 2020 (Q2-2021) 

∙ Net interest income (NII) increased by 25% year-on-year to ` 11,690 crore (US$ 1.6 billion) in Q2-2022 from ` 9,366 crore (US$ 1.3 billion) in  Q2-2021 

∙ The net interest margin increased to 4.00% in Q2-2022 from 3.89% in the  quarter ended June 30, 2021 (Q1-2022) and 3.57% in Q2-2021 

∙ Non-interest income, excluding treasury income, increased by 26%  year-on-year to ₹ 4,400 crore (US$ 593 million) in Q2-2022 from ₹ 3,486 crore (US$ 470 million) in Q2-2021 

∙ Fee income grew by 21% year-on-year to ₹ 3,811 crore (US$ 513 million)  in Q2-2022 from ₹ 3,139 crore (US$ 423 million) in Q2-2021. Fees from  retail, business banking and SME customers increased by 25% year-on year and constituted about 78% of total fees in Q2-2022 

∙ Treasury income was ` 397 crore (US$ 53 million) in Q2-2022 compared  to ` 542 crore (US$ 73 million) in Q2-2021. The treasury income in Q2- 2021 included gain of ` 305 crore (US$ 41 million) from sale of shares of  ICICI Securities 

∙ Provisions (excluding provision for tax) declined by 9% year-on-year to  ` 2,714 crore (US$ 366 million) in Q2-2022 from ` 2,995 crore (US$ 403  million) in Q2-2021 

∙ The profit before tax grew by 37% year-on-year to ₹ 7,201 crore (US$  970 million) in Q2-2022 from ₹ 5,266 crore (US$ 709 million) in Q2-2021 ∙ On a standalone basis, the profit after tax grew by 30% year-on-year to  ` 5,511 crore (US$ 742 million) in Q2-2022 from ₹ 4,251 crore (US$ 573 million) in Q2-2021 

Growth in digital and payments platforms 

In December 2020, the Bank had expanded its state-of-the-art mobile  banking app, iMobile, to iMobile Pay which offers payment and banking  services to customers of any bank. There were about 1,500,000 activations  of iMobile Pay from non-ICICI Bank account holders in Q2-2022, taking the  total such activations to 4,000,000 within nine months of launch. The  transactions by non-ICICI Bank account holders in terms of value and volume respectively, were three times and 13 times higher in September 2021  compared to June 2021. The value of transactions through the ‘Pay to  Contact’ feature, which enables users to easily transfer money to any  payment app or digital wallet via UPI, was about three times higher in  September 2021 compared to June 2021.  

The Bank continues to expand the suite of services offered through iMobile  Pay to achieve high engagement levels with users. Recently, the Bank launched a facility which enables its savings account holders to manage  dues of credit cards of any bank through iMobile Pay. The Bank also  launched a contactless payment facility on iMobile Pay which enables users  of android based smartphones to make credit and debit card payments on  POS terminals in a safe and secure manner by tapping their phones. 

The business banking and SME franchise continues to grow on the back of  digital offerings and platforms like InstaBIZ. InstaBIZ offers various services  such as instant overdraft facility, payment of Goods and Services Tax (GST),  foreign exchange deal booking, business loans based on revenues reported  in GST returns, automatic bank reconciliations and inward and outward  remittances. The value of financial transactions on InstaBIZ has grown by  about 80% year-on-year in Q2-2022. The Bank’s supply chain platforms enable corporates to seamlessly manage their supply chain financing and  payments, collection and reconciliation requirements of their dealers and  vendors in a convenient and paperless manner. The Bank has onboarded  about 200 corporate customers on these supply chain platforms. About 70%  of the dealers of these customers are active on the supply chain platforms.  The value of transactions through these platforms increased 4.7 times year on-year in Q2-2022. 

In the Unified Payment Interface (UPI) space, the Bank’s strategy is to  participate directly through the Bank’s own platforms as well as partner with  third party players, in both the peer-to-peer and payment-to-merchant segments. The value of the Bank’s merchant acquiring transactions through  UPI more than doubled year-on-year and grew by 34% sequentially in Q2- 2022.

The value of mobile banking transactions increased by 62% year-on-year to  ₹ 406,501 crore (US$ 54.8 billion) in Q2-2022. Digital channels like internet,  mobile banking, PoS and others accounted for over 90% of the savings  account transactions in H1-2022. The Bank is the market leader in electronic  toll collections through FASTag. The Bank had a market share of 37% by  value in electronic toll collections through FASTag in Q2-2022, with a 63%  year-on-year growth in collections. 

The Bank had launched ICICI STACK for corporates and has created 19  industry specific STACKs which provide bespoke and purpose-based digital  solutions to corporate clients and their ecosystems. The volume of  transactions through these solutions grew 2.4 times year-on-year in Q2.

These solutions along with the depth of the Bank’s coverage have supported the strong growth in average current account deposits. Further,  the Bank is well positioned to capture the opportunities arising from the  growing FDI and capital market flows. 

The Bank is focusing holistically on the merchant ecosystem, both directly  and through partnerships. The Super Merchant current account which offers  various benefits such as digital account opening and instant overdraft  facilities based on point-of-sale transactions has received good response  from customers. The Bank has partnered with Amazon India to offer instant  overdraft to sellers, including non-ICICI Bank customers, on its portal. The  Bank has also launched an instant overdraft facility for MSMEs registered on the GEM Sahay application through API integration with the OCEN network. 

Operating review 

With the increase in economic activity, disbursements across all retail  products increased sequentially in Q2-2022. Mortgage disbursements were  close to the level seen in the quarter ended March 31, 2021 (Q4-2021) reflecting the increase in demand coupled with the Bank’s seamless  customer onboarding experience through pre-approved offers and  digitisation. Disbursements of personal loans and auto loans were also close  to Q4-2021 levels. The value of credit card spends grew by 47.0%  sequentially in Q2-2022. Spends across most categories other than travel  crossed March 2021 levels in September 2021. The Bank continued to focus  on providing the full suite of banking products to corporate clients and their  ecosystems and lending to well-rated corporates.

Credit growth 

The retail loan portfolio grew by 20% year-on-year and 5% sequentially, and comprised 62.1% of the total loan portfolio at September 30, 2021.  Including non-fund outstanding, the retail loan portfolio was 51.6% of the total portfolio at September 30, 2021. The business banking portfolio grew  by 43% year-on-year and 12% sequentially at September 30, 2021. The SME  business, comprising borrowers with a turnover of less than ` 250 crore  (US$ 34 million), grew by 42% year-on-year and 11% sequentially at  September 30, 2021. Growth in the domestic wholesale banking portfolio  was 14% year-on-year at September 30, 2021. The domestic advances grew  by 19% year-on-year and 4% sequentially at September 30, 2021. Total  advances increased by 17% year-on-year and 4% sequentially to ` 764,937 (US$ 103.0 billion) at September 30, 2021 from ` 652,608 crore (US$ 87.9 billion) at September 30, 2020 and ` 738,598 crore (US$ 99.5 billion) at June  30, 2021. 

Deposit growth 

Total deposits increased by 17% year-on-year and 6% sequentially to ` 977,449 crore (US$ 131.7 billion) at September 30, 2021. Average current  account deposits increased by 36% year-on-year and 5% sequentially in Q2- 2022. Average savings account deposits increased by 25% year-on-year and  4% sequentially in Q2-2022. Total term deposits increased by 12% year-on year to ` 526,745 crore (US$ 71.0 billion) at September 30, 2021.  

The Bank had a network of 5,277 branches and 14,045 ATMs at September 30, 2021. 

Asset quality 

The net non-performing assets declined by 12% sequentially to ` 8,161 crore  (US$ 1.1 billion) at September 30, 2021 from ` 9,306 crore (US$ 1.3 billion)  at June 30, 2021. The net NPA ratio declined to 0.99% at September 30, 2021  from 1.16% at June 30, 2021. The net addition to gross NPAs declined to ` 

96 crore (US$ 13 million) during Q2-2022 from ` 3,604 crore (US$ 486 million) in Q1-2022. The gross NPA additions declined to ` 5,578 crore (US$  751 million) in Q2-2022 from ₹ 7,231 crore (US$ 974 million) in Q1-2022. Recoveries and upgrades of NPAs, excluding write-offs and sale, increased  to ` 5,482 crore (US$ 739 million) in Q2-2022 from 3,627 crore (US$ 489 million) in Q1-2022. The gross NPAs written off were ` 1,717 crore (US$ 231 million) in Q2-2022. Excluding NPAs, the total fund based outstanding to all  borrowers under resolution as per the various extant regulations/guidelines was ` 9,684 crore (US$ 1.3 billion) or 1.3% of total advances at September  30, 2021 compared to ` 4,864 crore (US$ 655 million) at June 30, 2021. The  Bank holds provisions amounting to ` 1,950 crore (US$ 263 million) against  therese borrowers under resolution as of September 30, 2021.

the Bank continues to hold Covid-19 provisions of ` 6,425 crore (US$ 866 million) as of September 30, 2021, the same level as June 30, 2021. The loan and non-fund based outstanding to performing borrowers rated BB and  below reduced to ` 12,714 crore (US$ 1.7 billion) at September 30, 2021  from ` 13,975 crore (US$ 1.9 billion) at June 30, 2021. 

Capital adequacy 

The Bank’s total capital adequacy at September 30, 2021 was 19.52% and  Tier-1 capital adequacy (including profits for H1-2022) was 18.53% compared to the minimum regulatory requirements of 11.08% and 9.08%  respectively. 

Consolidated results 

In accordance with the Scheme of Arrangement (Scheme) between ICICI  Lombard General Insurance Company Limited (ICICI General) and Bharti  AXA General Insurance Company Limited (Bharti AXA), assets and liabilities  of Bharti AXA’s general insurance business vested with ICICI General on the  Appointed Date of April 1, 2020. The Bank’s consolidated financial results  for Q2-2022 reflect the impact of the Scheme and the accounting for  investment in ICICI General as an associate, and consolidated financial  results for Q1-2022 have also been restated accordingly. 

The consolidated profit after tax was ` 6,092 crore (US$ 821 million) in Q2- 2022 compared to ` 4,763 crore (US$ 642 million) in Q1-2022 and ` 4,882 crore (US$ 657 million) in Q2-2021.