ICICI Bank’s stellar show in Quarter One of FY24

ICICI Bank (CMP: Rs 997; Mcap: Rs 697,414 crore) has demonstrated exceptional performance in the first quarter of FY24, achieving its highest-ever quarterly profit. The bank’s net profit surged to Rs. 9,648 crore in Q1 FY24, marking an impressive growth of 40% compared to the same quarter last year Q1 FY23. This remarkable profitability is attributable to strong loan growth despite an increase in operating expenses.

Key factors contributing to ICICI Bank’s outstanding Q1 FY24 results:

1. Robust Loan Growth: ICICI Bank experienced an 18.1% year-on-year growth in total advances, reaching Rs 10,57,583 crore on June 30, 2023. Additionally, the bank’s advances book grew by 4% sequentially, showcasing the bank’s resilience in its lending activities.
2. Net Interest Income (NII) Surge: The bank’s NII rose by 38.0% year-on-year to Rs 18,227 crore in Q1 FY24, compared to Rs 13,210 crore in Q1 FY23. This growth was primarily driven by business expansion and lending rate increases.
3. Repricing of Deposits: ICICI Bank faced an increase in deposit rates during the last six to nine months, leading to a sequential decline in Net Interest Margin (NIM). However, the impact was partially offset by an increase in yields on loans and investments.
4. Non-Interest Income Growth: The bank witnessed a 12.0% year-on-year increase in non-interest income to Rs 5,183 crore in Q1 FY24, aided by fee income growth of 14.1%.
5. Effective Cost Management: Despite the rise in operating expenses, ICICI Bank’s executive director, Sandeep Batra, remained optimistic about the bank’s performance, emphasizing that the bank has built a strong unsecured loan portfolio with a focus on the return of capital.
6. Improved Asset Quality: Asset quality was stable with gross NPA falling 5 bps sequentially to 2.76 percent and net NPA flat at 0.48 percent for the quarter.

Future Outlook:

ICICI Bank’s Q1 FY24 earnings reaffirm its strong fundamentals and attractive valuations. The Q1 FY24 results also prompted most of the brokerages to maintain a ‘buy’ rating on the stock as ICICI Bank is well-positioned to deliver steady earnings, supported by stable asset quality and strong momentum in business growth.

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